20110126 barack obama state union 35
U.S. President Barack Obama addresses a Joint Session of Congress while delivering his State of the Union speech January 25, 2011 in Washington, D.C. - 


Kai Ryssdal: So there I was last night, watching the State of the Union, and just about the time the president was saying this:

Barack Obama: Tonight I am proposing that starting this year, we freeze annual domestic spending for the next five years. This would reduce the deficit by more than $400 billion over the next decade.

Just about then, I was reading something interesting on my laptop. A plan by Kentucky Senator Rand Paul to cut spending a whole lot more. $500 billion in the next eight months. He gets there by shutting down whole chunks of the government.

But between the two -- $40 billion a year for a decade, and $500 billion right now -- surely there's a middle ground. Here's Marketplace's David Gura.

David Gura: When you look at the federal budget, the part the president wants to freeze doesn't amount to a whole lot.

Maya MacGuineas: That, of course, is the smallest part of the budget.

Maya MacGuineas is a fellow at the New America Foundation. She says discretionary domestic spending covers things like roads and bridges, education and housing programs. But it doesn't include:

MacGuineas: All the various checks that the government sends out, or services it gives directly to people -- for health care, retirement, public pensions.

MacGuineas is talking about Medicare, Medicaid and social security. She says entitlement programs have to be on the table, right alongside defense spending.

Don Kettl agrees. He teaches public policy at the University of Maryland. He says if politicians want to reduce the deficit, they should follow "The Dillinger Rule."

Don Kettl: People ask John Dillinger why he robbed banks, and he said, Well, that's where the money is. And if we're interested in trying to balance the budget, we're going to have to follow the Dillinger rule and go where the money is.

But Kettl says Rand Paul's plan is too radical.

Kettl: You would have to try to tell some grandmother that maybe she can't have her wheelchair when she comes out of hospital into nursing care. You'd be talking about nothing but truly unpalatable options to be able get to numbers that large.

Still, Maya MacGuineas says Paul's plan and the president's do have something in common.

MacGuineas: These are very large cuts that they're talking about, whether you're looking at somebody like Rand Paul's proposal, or the president's. They're much larger cuts than we've seen in the past, and we shouldn't fool ourselves into thinking they're gonna be painless.

But middle ground sure is hard to find.

In Washington, I'm David Gura for Marketplace.

Follow David Gura at @davidgura