SENATE RESOLVE

The reliable U.S. House likely will soon approve the size of the president’s tax-cut package, which provides little for short-term stimulus but plenty to encourage long-term budget deficits and discourage badly needed reform. The Senate Budget Committee probably will act similarly; but the package should be stopped and significantly amended on the Senate floor, and senators should act before they approve a budget resolution in the coming weeks.

The resolution will establish the size of the next budget, which will in turn determine whether Congress will have resources to protect Social Security, overhaul Medicare, help states or pay for a war without burdening the nation with punishing deficits for decades to come. As is often the case, Maine’s two senators, Susan Collins and Olympia Snowe, are among the centrists who will determine what will pass and how. Their message to colleagues and the White House need not be overt, but it must be clear: the tax cut as planned is too large, too skewed toward long-term theoretical benefits and pays too little attention to pressing demands at the state and local levels of government.

Sens. Snowe and Collins have already expressed concern about parts of the administration’s proposed cut, particularly the elimination of the tax on dividends. That is a beginning. But package, estimated by the congressional Joint Committee on Taxation at $1.6 trillion through fiscal year 2013, still would remain too large and too distant in its benefits. The Center on Budget and Policy Priorities examined the tax cut and concluded that, long term, the administration’s proposal was “between one-third and one-half larger than the combined actuarial deficit in Social Security and the Medicare Hospital Insurance program.” The choice is not as simple as tax cuts or overhauling Medicare and protecting Social Security, but with the surpluses gone and deficits blooming, Congress is facing tough choices about what it can afford.

Senate centrists are well aware of the dangers of the administration’s plan. They met throughout this week to fashion a response to the tax cut and will meet next week to conclude their work. They have the votes – perhaps a half dozen Republicans attended some or all of the meetings – to greatly influence the budget resolution and the specific cuts. Their aim should be to balance immediate economic stimulus and long-term investment while still leaving substantial funding to reform Medicare and protect Social Security. Certainly, under the five-year estimates used by the White House, the tax-cut should be below $300 billion. The president himself has argued for the importance of strengthening these two programs, but there must be money available to make the reforms meaningful and lasting.

Though the debate over the budget will continue for months, reducing the size of the tax cut now in the resolution is essential to produce a positive outcome. Senate centrists will be the most important part of the debate. They can be most effective by presenting a clear, united argument for putting the priorities of Medicare reform and Social Security ahead of tax breaks on dividends; they can prevent Congress now from shutting off the possibility of saving these programs in the future.