THE BLOG
11/16/2012 04:09 pm ET Updated Jan 16, 2013

Obama Must Be Tough: But Also Willing to Compromise

There is no conflict between standing tough in negotiations and being willing to compromise to get the results you want. President Obama has the upper hand after the election but there are still enough Republicans in the House and Senate to stymie some of what he wants to get done. So his difficult task is to be a tough negotiator and yet not torpedo his own goals.

There are some of Obama's objectives that the Republican leadership has agreed to even though the path to reach them isn't clear. They include: raising more revenue; cutting spending; securing Medicare and Social Security for the next 30 years; and doing all this without hurting the economy and speeding up the path to full employment. Not easy but eminently doable.

While Democrats want to raise tax rates on the wealthy is it possible to do it without going all the way back to the Clinton tax rates? Can we combine raising rates with closing some loopholes and reach the revenue target? And where Democrats will agree to cut federal spending in many areas as they already have, there needs to be a recognition that the cuts we make don't prevent us from funding programs that will fix our nation's infrastructure and at the same time provide good living wage jobs. That the cuts still allow us to maintain funding for education and research that will build our economy for the future.

Then there are what Republicans like to call entitlement programs, Medicare and Social Security. This is really a misnomer because they are actually programs that people pay for. The problem is that the revenue collected from taxpayers today no longer covers their costs. So the goal is to find long term solutions to keep these programs solvent. Those solutions aren't easy to accept for some. Many believe that to truly fix both these programs without turning them over to the private sector we will need to index Medicare and raise the retirement age for social security. Both of these solutions will allow the government to continue to run these programs and not leave them up to the vagaries of the private insurance sector or the stock market.

In the case of Medicare it may be the time has come to recognize that asking wealthier retirees to contribute a little more to their healthcare than those who retire after a lifetime at minimum wage jobs is realistic and fair. Medicare should continue to be a program guaranteed by the federal government and not a voucher program. But if it is to survive those who can must contribute a little more to their own healthcare. Someone retiring who lives on just social security or anywhere up to $75,000 a year would receive the entire benefit now available. If you earn from $75,000 to $125,000 in retirement you could be asked to pay an additional deductible of $750 a year and if you earn between $125,000 and $200,000 your additional deductible could be $1,000 and so on to a potential cap of $5,000. Actuaries and economists could determine the exact amounts.

To keep Social Security solvent it may be time again to raise the retirement age. More people are working into their late 60s and early 70s and they are doing so because they are healthy and able to work. So over the next 20 years we slowly raise the retirement age to 69 for full benefits yet still allow people to retire at a younger age with minimum benefits. In addition it may be time to raise the amount people pay social security tax on to $150,000 or even more to guarantee the long-term viability of the system. While these changes wouldn't impact those collecting Social Security today it will impact their children and grandchildren and they want to ensure that Social Security will be available to them.

There is a very simple logic to many of the things that need to be done to keep the nation from falling off the 'fiscal cliff'. The hard part will be to put together the coalition of Democrats and Republicans willing to step forward and make the hard decisions and take the consequences whatever they may be.

I think the president is in the best position he has ever been in to lead and take that message to the American people. I believe he will get Congress to make the tough decisions.

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