During the great budget battle of an earlier generation, President Reagan and Congress agreed to write into law a fail-safe similar to the one President Obama suggested Wednesday in a major speech on reining in the nation’s debt.
Reagan’s fail-safe was designed to automatically trigger sharp cuts in government spending if massive deficits continued to spin out of control. But politicians couldn’t keep their hands off the fail-safe, adjusting it when precious programs were threatened, and ultimately they killed the provision. The cuts were “too enormous to be politically tolerable,” said Rudolph Penner, who at the time was head of the nonpartisan Congressional Budget Office.
Now a similar fail-safe is a hallmark of President Obama’s plan, one of several proposals that might be more unrealistic than the president acknowledged in his speech, outside analysts and economists said in interviews Thursday.
(...)
A fight in Congress produced a landmark piece of legislation called the Gramm-Rudman-Hollings Act that required automatic cuts if the government didn’t reduce spending enough. It had prominent opponents, including then-Speaker Tip O’Neill (D-Mass.), who denounced it as “a gimmick” and “a disgraceful measure to subvert the Constitution.”
In an ironic twist, O’Neill’s principal domestic policy adviser at the time was a young staffer named Jack Lew, now Obama’s chief budget adviser.
(...)
But some experts question whether the measures the president has proposed to reduce the deficit are realistic.
Obama takes a light touch with Medicare and Medicaid, claiming he can achieve $480 billion in savings by reducing the price of drugs and taming the cost of the programs beyond what the landmark health insurance law of last year did.
Robert Kocher, director of the McKinsey Center for U.S. Health System Reform, said one of the top options for reducing drug prices is to negotiate directly with companies. “But for a multitude of reasons that’s not been a policy that’s been pursued and I’m uncertain whether it’s conceivable,” he said.
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http://www.washingtonpost.com/business/economy/echoes_of_80s_failure_in_obamas_fail_safe_budget_plan/2011/04/14/AFCaakfD_story.html
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