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This is ALL THINGS CONSIDERED from NPR News, I'm Melissa Block.

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And I'm Audie Cornish. The gap between what the government takes in and what it spends is getting smaller. It is still a lot of money. The Congressional Budget Office now estimates that by the end of this fiscal year, the deficit will be down to about $514 billion. Last year, it was $680 billion. The national debt is a different matter and we'll get to that, but the deficit used to be the number one political issue.

Not so much these days. NPR's Mara Liasson tells us why.

MARA LIASSON, BYLINE: Maya MacGuineas is a professional deficit hawk. She's the president of the Committee for a Responsible Federal Budget and head of the campaign to fix the debt, and lately she's been on the losing side of this battle.

MAYA MACGUINEAS: Basically, the only thing that there's real bipartisan agreement on from the parties is, let's try to sweep this under the rug for a little bit longer.

LIASSON: After trying and failing to reach a grand bargain, that compromise where Democrats would agree to cut entitlements and Republicans would agree to raise revenue by closing tax loopholes, both sides have exhausted themselves politically. In his State of the Union Address last month, President Obama all but declared victory as he celebrated a housing rebound, more manufacturing jobs and...

PRESIDENT BARACK OBAMA: Our deficits cut by more than half.

LIASSON: In fact, the annual budget deficit has come down a lot from nearly 10 percent of GDP to four percent and dropping. Of course, the national debt is still a huge problem. It's the highest since 1950 at 74 percent of GDP and projected to grow. But the president didn't talk about that. Instead, he closed the door on the debt and deficit debate that's consumed Washington for the last three years as he hailed the most recent budget agreement.

OBAMA: Nobody got everything they wanted and we can still do more to invest in this country's future while bringing down our deficit in a balanced way. But the budget compromise should leave us freer to focus on creating new jobs, not creating new crises.

LIASSON: Translation: I'm finished with the futile effort to get a big deal with Republicans on the budget. House Speaker John Boehner, the president's on again off again partner in this futile exercise, feels the same way.

REPRESENTATIVE JOHN BOEHNER: It's become obvious to me after having tried to work with the president for the last three years that he will not deal with our long term spending problems unless Republicans agree to raise taxes, and we are not going to raise taxes.

LIASSON: Republicans even appear ready to throw in the towel on using the upcoming debt ceiling deadline as leverage on the deficit. Now, there's a whole new economic debate in Washington. It's about growth, mobility and income inequality. But where Republicans took the lead in the deficit debate, forcing a reluctant President Obama to deal with the issue after he lost control of Congress in 2010, in this year's debate about mobility, both sides are eager participants.

Veteran GOP strategist Vin Weber says that's something now and positive.

VIN WEBER: But when you talk about social mobility and income mobility, there really is common interest in solving that problem and it doesn't mean it automatically leads to a set of bipartisan solutions, but at least the problem itself is mutually recognized by people on the left and the right and that's where we ought to be focusing.

LIASSON: Even if, Weber says, his own party starts the new debate at a partisan disadvantage.

WEBER: The deficit was a better debate for Republicans. Income inequality, I would say, is Democrats' terrain.

LIASSON: And progressives, of course, are thrilled that President Obama is no longer locked into a debate about the debt and deficit that was conducted mostly on Republican terms, but the president is handicapped by his failure to reach a grand bargain. The deficit has shrunk mainly by cutting the domestic discretionary side of the budget, instead of the real long term drivers of the debt, like the cost of the baby boomers' retirement and that's not good says David Wessel of the Brookings Institution.

DAVID WESSEL: What's wrong with that is that everything that you might consider an investment in the future, infrastructure, education, health research, that's being squeezed. So if we do nothing, the share of the federal government spending that goes to Social Security, Medicare and Medicaid goes up and up and up so that will crowd out spending on things that people of both parties think would be good for future growth of the economy.

LIASSON: Things that Democrats want, like investments in infrastructure and early childhood education and things Republicans want, like tax reform, all things that both sides agree would boost growth and reduce inequality. Those bipartisan priorities were supposed to be the rewards of a grand bargain, the big compromise no one in Washington is able to make. Maya MacGuineas.

MACGUINEAS: Because we've been so irresponsible for years, our hands are kind of tied as a country. It's actually linked to economic mobility and income inequality. You can't deal with those when you're running unsustainable deficits.

LIASSON: But dealing with unsustainable debt means going back to that well examined but politically unattainable deal where Republicans agree to raise revenue by closing tax loopholes and Democrats agree to cut entitlements. While some small things might still be possible this year, a bit of corporate tax reform, some investments in education, the big fiscal problems are still out there waiting for new leadership to solve them. Mara Liasson, NPR News, the White House.

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