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As President Obama and leading House Republicans make their cases to the American public about what should be part of fiscal cliff negotiations, there is a growing clash in the Senate over the inclusion of entitlement programs in any “grand bargain.”In order to avoid crushing tax hikes and deep spending cuts set to hit at the beginning of next year, the White House and congressional leaders are busy trying to hammer out some kind of “balanced” approach that would lead to deficit reduction without harming the economy’s slow recovery.
At this early stage of the negotiations, high-profile Republicans have indicated a willingness to accept higher taxation of some Americans to raise revenue, but Democrats have not shown the same readiness to compromise on issues similarly important to their base.
At issue are expensive entitlement programs, such as Medicare, Medicaid and Social Security. Republicans working on the deal say they are willing to stand down on certain revenue increases — like the elimination of loopholes and deductions that benefit wealthier Americans — so long as Democrats agree to move forward on reforms to those sacred entitlement programs.
One by one, however, Democratic senators have taken to the cable airwaves this week to say they are not willing to touch Social Security.
Speaking to reporters Tuesday afternoon, Senate Majority Leader Harry Reid echoed that sentiment: “President Obama said that Social Security is not part of what . . . we’re going to do in this. And I agree with him.”
He continued, “I personally believe there are things that we can do with entitlements that don’t hurt beneficiaries. But I’m not going to negotiate this with you simply other than to say that we hope that they can agree to the tax revenue that we’re talking about, and that is rate increases. And then as the president has said on a number of occasions, we’ll be happy to deal with entitlements.”
In prepared remarks earlier Tuesday, the second-ranking Senate Democrat, Dick Durbin, went further: He said all entitlement programs — including Medicare and Medicaid — should be dealt with, but not in any fiscal cliff negotiations.
Reid’s statement, along with comments from Republican leader Mitch McConnell, make clear that Social Security probably won’t make it into a final deal. Medicare has potential but is touchy.
“We know that the only way we can solve our long-term debt and deficit problems is to fix the unsustainable growth rates of our very popular entitlement programs,” McConnell stressed in subsequent remarks to reporters. “The president has from time to time indicated an openness to that. Now’s the time to actually do it.”
Pressed about general Democratic opposition, and particularly to Social Security’s inclusion, he said: “I think all of the entitlements need to be discussed, because they all, to one degree or another, are on an unsustainable path. Obviously, Medicare is in more immediate danger. We want to save these programs, and I understand the dilemma the president and the majority leader have. Their hard left doesn’t want to change anything, ever.
“They think any dollar spent, or any commitment made by the federal government on any program, at any time, ought to be there in perpetuity. Well, times change. And until we make sure these popular entitlement programs fit the demographics of a changing America, we can’t save them. We all know that. It’s simple maths. What we have lacked so far is the political courage to do what needs to be done.”
Indeed, Democrats face increasing challenges from the left in that regard. On Nov. 15, a collection of liberal Democratic senators sent a letter to Reid, encouraging him not to cave to the opposition in fiscal cliff negotiations.
One provision in that letter urged, “Any deal must protect Medicaid, Medicare, and Social Security from harmful cuts.” Despite claims to the contrary, the letter notes, “Medicare and Medicaid are already very efficient,” and it adds, “The projected rate of spending growth in Medicare and Medicaid continues to be much lower than the rate of growth in the private health insurance market.”
There were 14 signatories, including Iowa Sen. Tom Harkin and Vermont Sen. Patrick Leahy.
While 14 does not a majority make, any deal is likely to feature considerable Democratic backing in the Senate and a smaller level of Republican support, meaning that a bloc of opposition on the left could be harmful.
In that regard, three powerful unions — the American Federation of State, County and Municipal Employees, the Service Employees International Union, and the National Education Association — are sending 200 local labour leaders to the Senate on Wednesday to lobby Democrats on “creating good jobs, protecting Medicare, Medicaid, Social Security and Education, and not cutting vital services that millions of Americans rely on.”
Nonetheless, several key aides to Republican leaders told RCP in separate conversations that “the only Democrat who matters is President Obama.” They reason that enough Democratic legislators will fall in line after the White House announces its stance on any potential deal. One Republican source privy to some of the talks between Obama and congressional Republicans told RCP that the president has shown “some willingness to talk Medicare as long as it doesn’t affect his health-care bill.”
RCP asked a handful of those leadership aides whether Senate Republicans would consider raising tax rates on the top 2 per cent of earners — as Democrats are pushing — if the White House and Democratic leaders promised to move forward with entitlement reform next year. Responses were muddled: The consensus was that they might begrudgingly go along, but that it would be extremely difficult for such a concession to pass muster with House Republicans, even if Speaker John Boehner tried hard to sell it.
Still, Tennessee Sen. Bob Corker, a Republican who has indicated he would capitulate on revenue increases in a potential deal, this week proposed a $4.5 trillion deficit reduction bill that raises revenue of nearly $750 billion by capping itemized deductions at $50,000. But included in that legislation is a provision that hacks $641 billion out of Medicare.
This story was originally published by RealClearPolitics.
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