Thursday :: Jul 7, 2011

What Obama Is Actually Proposing


by Deacon Blues
Pew Center image

For some clarity, let's focus on the facts surrounding the debt ceiling discussions today.

First, the public is against any reduction in Social Security or Medicare benefits to solve the debt/deficit problem. The GOP is internally divided on the issue, with low income Republicans against cutting Social Security or Medicare benefits.

Second, the White House disputed the Washington Post story that Obama is willing to cut Social Security or Medicare benefits. What Obama said today is that he is willing, as part of a larger $4 trillion debt reduction package to change the Social Security benefit indexing method and adopt changes that force higher income Medicare recipients to pay more for their care. Changing the Social Security benefit index would reduce benefits over time. However, Obama told the GOP today that in order to get these entitlement changes and the large package, Republicans would have to agree to revenue increases and significant changes in the corporate tax code that would eliminate many of the loopholes and corporate welfare that is out there. Not surprisingly, when Eric Cantor heard that, he stated his preference for a smaller "cuts-only" package of $2 trillion without revenue increases. The problem for Cantor is that Obama has now boxed him in by insisting that any deal regardless of size will include a debt limit extension through 2012. Plus, of the eight leaders in the room today, he and Jon Kyl found themselves as the only ones wimping out for the smaller package.

What Obama put on the table today as part of a grand bargain was the following:

Among the proposals being discussed are a change in the way cost-of-living increases are calculated for Social Security; an increase in the payments that upper-income seniors make for Medicare; an overhaul of the corporate tax system; elimination of a variety of tax breaks that primarily benefit upper-income taxpayers; and significant cuts in the military budget, farm programs and other domestic spending.

Despite Nancy Pelosi's point-blank statement to Obama that there will be no Medicare or Social Security cutting just to finance more tax cuts or balance the budget, she and Harry Reid also boxed in Boehner and McConnell by stating they would support the larger $4 trillion grand bargain even with the changes to Social Security and Medicare. Why did they do this? Because the Medicare and Medicaid changes offered by Obama would not affect vulnerable recipients but only the drug companies and providers. So the GOP and Tea Party would now have to explain for the 2012 election why they passed up a chance at $4 trillion in savings and a significant long-term debt fix just to side with the wealthy and Corporate America one more time.

I'm as guilty as anyone else about blasting Obama for his limp negotiating record, but it's possible that he might have outfoxed the GOP here.

Deacon Blues :: 6:25 PM :: Comments (7) :: TrackBack (0) :: Spotlight :: Digg It!