Obama to Aim Low on Deficit Reduction Plan
Social Security, Medicare Eligibility Off the Table for Obama
“As the president has consistently said, he does not believe that Social Security is a driver of our near- and medium-term deficits.”
-- White House spokeswoman Amy Brundage in a statement to the Wall Street Journal.
There is a small subset of Washington centrists who believe that President Obama may yet step forward before the election with a bold, moderate proposal to deal with deficits.
But as the Chicago Cubs have proven for 66 years, some fans just never give up.
The three-step process by which the president wants to enact his third stimulus, a package of spending and temporary tax cuts with an estimated price tag of $450 billion, is based in large part on Obama’s call for the 12-member, debt-ceiling supercommittee to step up its game.
The bipartisan panel is charged with finding reductions to the size of the deficits of the next decade in order to offset the second, $1.5 trillion tranche of the president’s August debt-ceiling increase. The president has repeatedly said that he wants the panel to aim higher in order to finance his current stimulus proposal and some additional deficit reductions.
Obama has promised to put forward a plan in the coming days by which these deficit reductions can be achieved That’s step three of his stimulus process: the initial pitch, his proposal of a series of tax hikes to pay for the plan if the supercommittee can’t find the cash and, finally, his deficit proposal.
Some Washington mandarins still feeling residual thrills up their legs about a president who arrived in town preaching a doctrine of bold centrism thought that this would be the moment when Obama embraced entitlement reform and serious deficit reduction. When they dream in Georgetown these days, it’s of Obama holding up a copy of the Simpson-Bowles plan and calling on Congress to get real on debt and deficits.
They can keep dreaming.
The Wall Street Journal reports today that the president will be including neither Social Security nor eligibility changes to Medicare in his forthcoming deficit proposal, bolstering blind quotes with a strong wink on the record from a White House spokeswoman.
What this sets up is a proposal in which the president tells the supercommittee to find future savings by aggressively implementing his health care law. The president has long held that his proposed reductions in Medicare payments to doctors and hospitals was an entitlement El Dorado that would simultaneously improve the quality of care for seniors.
Recall how Obama argued during the debate over passage of the March 2010 law that cutting $500 billion from Medicare would strengthen it.
What deficit hawks want is to see small changes made now to eligibility and benefits for Social Security and Medicare that would save trillions over time, things like a one-year increase in the Social Security eligibility for Americans who are currently 12 years old or means-testing Medicare co-payment rates 20 years hence.
But Obama, who had talked up the idea of altering the formula by which future Social Security cost of living increases are calculated, is now preparing to skip Social Security entirely and limit entitlement reform to the monies paid to health care providers. Not exactly audacious. Neither is it, as Obama said it would be, the same plan he had on the table with House Speaker John Boehner back in July.
But with Social Security swashbuckler Rick Perry at the head of the class for the Republican nomination, Obama is pretty clearly not interested in doing anything that would diminish his and his party’s ability to bash Republicans for elder abuse next year. It didn’t work very well in 2010 or in the special election this week in Nevada, but with 1 percent growth and 9 percent unemployment it’s kind of all they’ve got right now.
This gives us another insight into the kind of pessimistic campaign that is brewing up in Chicago.
Liberals have long been complaining about Obama’s fearful governance when it comes to reinvigorating the economy. Many more moderates will join them if the president skips entitlement reform and instead doubles down on new taxes and aggressive implementation of his health law as a way to finance the shredded system.
Congress Successfully Ignoring Obama on Jobs
"If you love me, you got to help me pass this bill."
-- President Obama campaigning at North Carolina State University in Raleigh.
House Speaker John Boehner will today lay out his stimulus counterproposal. Aides say it will include some of the president’s package (likely the continuation and extension of temporary payroll tax cuts) and then propose a suite of tax and regulatory reforms.
The core of the House GOP proposal will be that the tax code should be simplified – a point Obama has embraced – but will insist that the funds from closing the loopholes be used to lower rates overall in an effort to increase predictability and spur economic growth.
Boehner will also call for the rollback of several Obama-era regulations.
This plan will certainly not pass, but it is instructive to note that the Boehner plan should do about as well in Congress as President Obama’s proposal that calls for increased taxes on the wealthy to finance new spending to subsidize state and local government salaries and for public works projects.
Congress is likely to pass the items where Boehner and Obama agree – continuing and expanding the payroll tax cuts – and will likely bog down on other, tougher concepts.
Democrats are fuming over Obama’s plan. They mostly either feel Stimulus Three is too small to help or think that the tax increases are a bad idea. And the solons of the Senate have made it very plain that there isn’t time to enact substantial tax reform on the timeline set for the debt-ceiling supercommittee.
Obama’s strategy for his current swing-state campaign swing has been to use Congress as a foil, but while he’s been on the road his fellow Democrats have seen little reason to keep the home fires burning. Not only did Obama prove to be a liability in two vastly different special House elections, but the signature project of Stimulus One, the half-billion subsidized loan to solar-panel manufacturer Solyndra, has become a morass and spurred allegations of crony capitalism and incompetence.
But there are problems on the road, too.
Obama started his campaign swing last week in Virginia where Quinnipiac University says the president’s disapproval has reached its highest point ever – 54 percent. That’s higher than when Bob McDonnell routed Obama-backed Creigh Deeds for governor in 2009, and higher than when the GOP bagged three congressional seats in Virginia in 2010.
If Obama only has a 40 percent job approval rating (29 percent among independents) in Virginia, a must-win state for him in 2012, how can he be effective in turning up the heat in Congress?
As Congress moves ahead on an eventual bipartisan stimulus package, the greatest danger for Obama is that he won’t have much bearing on the discussion. Irrelevancy is a fate worse than unpopularity for American presidents.
And Now, A Word From Charles
“I do think it's a problem on two levels. There is the problem of the fast tracking and the pressure from the White House to get it done with minimal or faulty analysis so that you could have a photo op with [Vice President Joe] Biden. It may be the most expensive photo in American history, it cost half a billion dollars. It could show wrongdoing. It's not obvious yet who and when.
But the larger issue is why the government involved in this in the first place? Waxman talked about how the CEO misled him. Why is a CEO reporting to member of Congress? He could report to board of directors, shareholders and workers, not members of Congress. This is a corruption of the process. This is industrial policy, government which is not equipped to pick winners or losers. It's lemon socialism.”
-- Charles Krauthammer on “Special Report with Bret Baier.”