President
Obama’s re-election and Democratic gains in Congress were supposed to make it
easier for the party to strike a deal with Republicans to resolve the year-end
fiscal crisis by providing new leverage. But they could also make it harder as
empowered Democrats, including some elected on liberal platforms, resist
significant changes in entitlement programs like Social Security and
Medicare.
As Congress
returned Monday, the debate over those programs, which many Democrats see as the
core of the party’s identity, was shaping up as the Democratic version of the
higher-profile struggle among Republicans over taxes.
In failed
deficit reduction talks last year, Mr. Obama signaled a willingness to consider
substantial changes in the social safety net, including a gradual increase in
the eligibility age for Medicare and limits in the growth rate of future Social
Security benefits. An urgent question hanging over the new round of deficit
talks is which of those changes Mr. Obama and Congressional Democrats would
accept today.
While a
potential change in calculating Social Security increases was part of the talks
with Speaker John A. Boehner last year, the White House press secretary, Jay
Carney, made clear on Monday that the administration was not considering changes
to the retirement program as part of the deficit talks.
“We should
address the drivers of the deficit, and Social Security is not currently a
driver of the deficit,” Mr. Carney said.
Republicans
insist that changes in the major entitlement programs be on the table in
exchange for their willingness to accept increases in tax revenue. But Democrats
have given no indication that they are willing to consider policy changes or
savings of the magnitude demanded by Republicans. The underlying dispute
highlights a reason the politics of the deficit are so thorny: even as many
voters say they want Washington to reduce the budget deficit, they oppose many
of the benefit cuts and tax increases that could help achieve that
goal.
As the
negotiations enter a crucial phase, influential outside advocacy groups like
AARP and the National Committee to Preserve Social Security and Medicare are
weighing in, alerting their members to possible changes in the popular
programs.
In the current
negotiations with Congress over deficits and the debt, Mr. Obama said he would
take a serious look at how to “reform our entitlements” because “health care
costs continue to be the biggest driver of our deficits.” Unless Mr. Obama and
Congress reach some agreement, tax increases and budget reductions will take
effect automatically on Jan. 1.
Mr. Obama’s room
for maneuvering is limited by several political factors. In the presidential
campaign, for example, he attacked cost-cutting proposals by his Republican
opponents and won support from millions of voters by promising to defend
Medicare.
Moreover, since
the Supreme Court upheld the new health care law in June, Mr. Obama has become
skittish about cutbacks in Medicaid, the federal-state program for low-income
people. The court said the expansion of Medicaid was an option for states but
not a requirement. Cutting federal Medicaid payments to states could reduce the
federal budget deficit, but could also cripple Mr. Obama’s efforts to persuade
governors to expand the program, the foundation of his health care
overhaul.
Even if Mr.
Obama and Republican leaders in Congress could agree on savings in Medicare and
Medicaid, the president would face resistance from some liberal members of his
party who oppose cuts in the two giant health care entitlement programs.
Medicare and Medicaid insure one-third of all Americans, account for more than
one-fifth of the federal budget and are expected to grow much faster than the
economy in the coming decade.
Two staunch
liberals, Senators Tom Harkin of Iowa and John D. Rockefeller IV of West
Virginia, said in a letter to Mr. Obama that he should “reject changes to
Medicare, Medicaid and Social Security that would cut benefits, shift costs to
states, alter the structure of these critical programs, or force vulnerable
populations to bear the burden of deficit reduction.”
More than 40
House members, led by the Congressional Progressive Caucus, declare in a
resolution that any deal on taxes and spending “should not cut Medicare,
Medicaid or Social Security benefits.”
Republicans say
the revenue to be gained from Mr. Obama’s tax proposals would be dwarfed by the
growing costs of the benefit programs.
“You can’t raise
taxes enough to solve the problem,” said the Senate Republican leader, Mitch
McConnell of Kentucky. “Additional revenue should be tied to the only thing that
will save the country in the long run, and that is reforming
entitlements.”
Mr. Boehner said
the newest entitlement - insurance subsidies for more than 20 million people
under the health care law - should be “on the table” in negotiations. White
House officials said the law should be given a chance to work before its budget
is cut.
In talks with
Congressional leaders, Mr. Obama is seeking $1.6 trillion in additional revenue
over 10 years and $340 billion in health care savings. If he hopes to get a
deal, lawmakers say, the additional revenue will have to come down and the
health care savings may have to go up.
Mr. Obama and
some Democrats in Congress say they are willing to squeeze savings from Medicare
by trimming payments to drug companies, hospitals and other health care
providers. They have generally ruled out structural changes that would increase
costs for a typical beneficiary.
In the
presidential campaign, Mitt Romney said Medicare should provide “less support”
to wealthier beneficiaries, and that is an idea on which Mr. Obama and
Congressional Republicans could perhaps agree.
Individuals with
incomes over $85,000 a year ($170,000 for couples) already pay higher premiums
for Medicare coverage of doctors’ services. For beneficiaries with incomes over
$214,000 ($428,000 for couples), the monthly premium is more than $300 per
person, about three times the standard premium.
Mr. Obama wants
to increase premiums for high-income people and increase the number of
beneficiaries who must pay higher premiums based on
income.
Congress should
“reduce the federal subsidy of Medicare costs for those beneficiaries who can
most afford it,” the president said this year. House Republicans voted for a
similar proposal last year.
Max Richtman,
the president of the National Committee to Preserve Social Security and
Medicare, which represents beneficiaries, said this idea had been “pushed as far
as it should be pushed.” Saddled with more and more costs, he said, high-income
beneficiaries may eventually want to leave the program.
“If Medicare
turns from an earned benefit into a welfare program,” Mr. Richtman said, “you
will see support dissipate.”
Mr. Obama also
wants to impose a surcharge on Medicare premiums for older Americans who buy the
most generous private insurance to supplement Medicare. The White House and some
economists say such Medigap insurance encourages the overuse of medical care
because beneficiaries are shielded from most co-payments and other costs. But
many beneficiaries are willing to pay for the extra protection, and major
insurers derive substantial revenue from the product.
The politics of
Medicaid are different.
As part of a
deficit reduction plan unveiled in April 2011, when he delivered an address on
fiscal policy at George Washington University, Mr. Obama proposed “Medicaid
savings of at least $100 billion over 10 years.”
Liberal
Democrats and health care providers expressed dismay, saying the changes would
hurt children, older Americans, poor people and those with disabilities. Mr.
Obama scaled back the proposals. In his budget in February, he proposed
legislative changes that would save Medicaid $55 billion over 10 years, mainly
by reducing federal payments to states.
In the wake of
the Supreme Court decision, Mr. Obama is coming under pressure from his allies
to drop these proposals.
ARA/HJ
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