The Most Important Chart About the Deficit You'll Ever See

Matthew O'Brien
Feb 12 2013, 4:13 PM ET

The only way to close the budget deficit is to close the jobs deficit

It's State of the Union season, which means it's time for the usual suspects to tell President Obama to "go big" on the deficit. Never mind that jobs, not the deficit, top voters' list of priorities, or that austerity has failed everywhere it's been tried recently (including here). It's always a good time to lament the lack of bipartisan golf-playing and call for a grand bargain.

But what exactly makes a bargain grand in Washington? It's not just a matter of trading spending cuts for higher taxes. If it were, the combination of the sequester and the fiscal cliff tax deal would count. No, it has to be a specific kind of spending cut. It has to be a cut to social insurance. That's what Obama has offered with chained CPI, which cuts Social Security and raises taxes by using a lower measure of inflation to calculate benefits and brackets, but Republicans and centrist pundits don't think that's enough. They want Obama to increase the Medicare eligibility age from 65 to 67 too. Now, this sounds like the kind of "painful choice" that will put us on the path to fiscal sustainability, but it's not. The Congressional Budget Office figures it will only save about $150 billion over a decade, while, as Matthew Yglesias of Slate points out, costing patients twice that much. (If every state implements Obamacare's Medicaid expansion, it might not be regressive; just wasteful.).