Obama risks losing the left by considering entitlement cuts

Rep. Keith Ellison
REUTERS/Eric Miller
Rep. Keith Ellison

Leading the way was Minnesota Rep. Keith Ellison’s Progressive Caucus, which announced they’d sent a letter to Obama with a simple ultimatum: cut Medicare, Medicaid or Social Security spending and you’ve lost our votes.

The letter said reform for to the programs should come in the form of “well-conceived improvements, not deep, ideologically driven cuts with harmful consequences.”

“Cutting core benefits for recipients, changing eligibility standards, reducing the amount of money for the program … all bad ideas,” Ellison said.

Both Ellison and Minnesota Sen. Al Franken pointed to one way to cut Medicare costs without affecting benefits: allow Medicare to negotiate with pharmaceutical companies over the price of prescription drugs. Franken estimates such a measure would save $24 billion a year.

“That could go straight to paying off the debt,” he said in a Thursday speech on the Senate floor. “There. I got you a $240 billion cut [over 10 years] to Medicare. Now can we please vote to raise the debt ceiling and avert a worldwide economic catastrophe?”

But Ellison said he would take the lead on opposing any plan with broader cuts.

Sen. Al Franken
REUTERS/Rich Clement
Sen. Al Franken

“Not only am I not going to vote for it, I am going to whip my caucus as hard as I can to persuade them not to support it,” he said.

No deficit negotiators have said exactly how they expect to extract savings from those — or any other — programs. House Minority Leader Nancy Pelosi was coy when asked what cuts might specifically be part of a deficit reduction package. She would only reiterate that she told fellow negotiators how strongly House Democrats— beyond just the Progressive Caucus — feels about the issue.

“Their views have been heard and very strongly so,” she said. “I think the president wants a bipartisan bill and I think that the Democrats stand ready to help…but we want to do so without hurting our seniors or people with a disability.”

Rank-and-file try to influence negotiations
The White House has said the programs are on the table in an effort to help spur a deficit reduction deal with Republicans.

“[There is a] greater good here that needs to be reached for, which is significant agreement on deficit reduction created by an opportunity that does not come very often and has not come in Washington since the mid-’90s, and that that is good for America, it’s good for Democrats and it’s good for Republicans, and that we ought to do it,” White House spokesman Jay Carney said Thursday. “I mean, really, the message is not very complicated. The issues here have been substantive and not political because this is really a case where good policy is good politics.”

But as Democrats take a hard stand against cuts to entitlement programs and Republicans continue to push back against calls for more revenue, it’s become difficult to see how negotiators can hatch a plan that is agreeable for everyone.

Franken said that in the end, threats to vote down a plan because of any of its potential provisions is just the easiest way for rank-and-file members of Congress to try and influence conversations at the negotiating table.

“I think everyone is trying to apply pressure anywhere they can,” he said in an interview. “Ultimately, we’ve got to come to some agreement. We just do.”

Progressive Caucus Vice-Chair Sheila Jackson Lee said that any plan with deep entitlement cuts could still pass Congress, if all of the Republicans banded together to support the measure. “If Republican leadership can find votes in their own caucus to pass such a deal, let them do it,” Lee said at a press conference.

But such a strategy would require incredible party discipline from Republicans, a caucus that has seen splintering on issues from opposing the mission in Libya to passing a final 2011 budget. If the final deficit reduction plan includes any type of revenue increases — be it increased taxes or, more likely, the end of some tax code loopholes — it’s anticipated that a share of House Democrats would need to sign on to the legislation to give it enough votes to pass.

So if a significant faction of that party is opposing a bill with large entitlement cuts, such cuts could sink the plan.

“I think Democrats in the House … I think we do have more leverage than people anticipate,” Progressive Caucus Co-Chair Raul Grijalva said. “Without overwhelming support from our caucus, its going to be a hard deal to pass … We’re not trying to be the skunk at the garden party in these negotiations … What I do feel is that there is a huge opinion in our base about protecting these programs. I think it merits listening to.”

Comments (17)

  1. Submitted by Dennis Tester on 07/08/2011 - 09:30 am.

    The rumor is that democrats are going to suggest saving money by cutting payments to Medicare providers. That would be counterproductive if they really want to avoid hurting seniors as they say they do.

    Many doctors are already refusing to take on new Medicare patients because of the reduced reimbursement. That trend will increase if their payments are cut even more. We’ve been with the same family doctor for 30 years. When he retires and we’re forced to find a new doctor, will any take us as new patients if we’re on Medicare?

    Think about this if the democrats’ offer of cuts to Medicare is accomplished by cuts to providers.

  2. Submitted by James Hamilton on 07/08/2011 - 10:57 am.

    Both Target and Walmart, America’s two largest retailers, use their purchasing power to negotiate the best possible price from their suppliers, presumably including pharmaceutical companies. Health insurers use the same power to negotiate pricing with medical providers.

    I know many would replace negotiate with dictate, but that’s the way our economy functions.

    Those who demand government function as efficiently as private enterprise should have no problem with permitting it to do so in this instance. Unless, perhaps, they’re concerned with losing campaign funds?

  3. Submitted by James Hamilton on 07/08/2011 - 11:07 am.

    Post script: Regardless of the merits of government negotiation of pharmaceutical prices, objecting to proposed cuts before their nature is known makes as little sense as demanding cuts without specifying what those might be. Time for everyone to grow up and act like the adults they claim to be.

  4. Submitted by Richard Pecar on 07/08/2011 - 12:36 pm.

    The people I voted for may vote as they want, and they will, they always have. But, I am not again voting for any candidate who is endorsed by a major politcal party. Never again.

    I regret taking this position so far in advance of the 2012 general election. Even though there are many events yet to unfold before 2012; I am not voting for President Obama again. In my opinion, he hasn’t got what it takes to lead as president. I believe Obama is a man for our time, that he is likeable, and I believe he knows what needs to get done, but Obama is unable to lead, hire, fire and manage his inner circle.

    And folks, a wheel without a hub is just a bent hoop and a pile of sticks that wish they could be spokes again.

    I believe the people who developed Obama’s so-called economic policies were academics, and typical for the academics, they bail out when the going get tough, and it became clear they didn’t know much about the real world. They didn’t have the spine to stay with the programs they designed, (HARP was one among several), and they were fearful of losing what careers they had.

    The way the administration mismanaged the lame duck session last year when the demo’s held the future of America in their hands…what happened? They gave away the farm… “lame duck” is the right characterization to describe them.

    Then, there were the administration folks who spent a year developing a so-called “affordable healthcare law”…or whatever it’s called…and today, a year and half later, most citizens still wonder what the thing will do, or not do, and for who, and when, and how much will it cost? Month after month, countless secret meetings, and it’s still a secret.

    The banking bill by Dodd and Franks was another watered down nothing highlighted by its fanfare…my prediction: We will again bailout those who are too big to fail.

    The effort to protect equity loss in residential housing was another failure.

    The federal government’s wimping-out and not taking any lead role in mitigating the BP Deep Horizon oil well rupture in Gulf of Mexico.

    The unjust firing of General McChrystal who wasn’t insubordinate, and who was the kind of guy we needed somewhere in the military. The General didn’t deserve being “branded” by a bunch of civilians who never wore a uniform.

    I left out our nation’s military missteps on purpose. We are in field now, and we need to get out of these “wars of choice” begun by people who — again — didn’t spend time in uniform.

    I left out a more detailed comment on the administration’s failure to deal with the economy and not preventing “a jobless recovery”. Of course, that can’t really happen, because we aren’t recovering, and the Dow Jones Industrial Average mean nothing in terms of the economy. And in terms of the economy, it can’t recover without good jobs, so we are sinking deeper and deeper.

    I voted for President Obama in 2008, I gave his campaign money, I wore a Veteran’s for Obama button, I wrote blogs and a “republican for Obama”….but not this time around…I will vote Libertarian or Green, no more repub’s or dem’s…never again…

    By the way, I am not alone in my thinking. The democrats need to lead the charge, and take whatevery incoming political fire head their way, they need to fall on their sword if need be, and I don’t think they have the spine.

    It’s time to start anew (at least for me), and support the libertarians or greens.

  5. Submitted by Richard Pecar on 07/08/2011 - 12:47 pm.

    (#3) James Hamilton you should be aware the whole concept of “negotiat(ing) pharmaceutical prices” is trumped up malarkey. For over a decade, our nation has gone around and around on this one, and at the end of the day, the pharmaceutical industries pricing system is, in my opinion, in violation of anti-trust laws…but, heck, so are the phone companies, the limits on hospital licenses, on and one, the monopolies control government and are trying to make the U.S. another “McNation”.

    Anyway, in terms of pharmaceutical pricing, what is important follows:

    “Clause 3. The Congress shall have Power…To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”

  6. Submitted by Tim Larkin on 07/08/2011 - 12:59 pm.

    Just wondering…….

    Opposing changes to entitlements may be popular in one sense but what is the liberal response to the actuarial crisis looming over Medicare and Social Security?? Without serious attention these programs will END, not be reformed. What say you, liberals?

  7. Submitted by Jeff Wilfahrt on 07/08/2011 - 02:13 pm.

    Obama is sharp. He is playing his cards well and now he waits to see if the House will slough a card or try and trump for the trick. This is calculated for sure. I wouldn’t want to play cards with the man, I’d lose my home.

    Jeff Wilfahrt, Rosemount, MN

  8. Submitted by Bernice Vetsch on 07/08/2011 - 03:42 pm.

    Tim Larkin (#6)— You’ve been hearing a lot of right-wing scare talk, including the “promise” to cut benefits only for future generations, not current recipients. They seem to think that seniors don’t care about their children and other younger persons who will retire in coming years.

    Social Security is self-funded by current contributions from workers and by those from retirees who contributed for the 50 years or so they worked. Social Security does not and will not affect the deficit by one penny.

    Every year, the trustees examine the condition of the trust fund for the coming 75 years. When it showed a coming shortfall in 1983, the trustees raised the cap on which tax money was withheld from payrolls and increased very slightly the percentage withheld. This “fix” meant the entire boomer generation would receive the amounts promised them. Currently, a minor shortfall out a couple of decades or so will occur. Those who yell about SS “going broke” are lying — we can prevent that shortfall the same way we did in 1983. Or protect it forever by making all income, no matter how huge or how earned, subject to the withholding tax.

    Medicare: There’s traditional Medicare (Medicare pays 80% of allowed amounts; your gap insurance pays 80% of the remainder; your doctor can if s/he wishes bill you for the remaining 20%). And there are Medicare Advantage plans, the kind administered by HMOs, that often include drugs. The government gives them more money than traditional Medicare.

    What the president wants to cut is neither of these programs, but the PRIVATE Fee for Service Advantage plans. The government gives billions more to these plans than to traditional Medicare so its recipients (who pay only the same $100 as traditional Medicare patients per month) receive such goodies as free gym memberships. Cutting government payments by $500 billion (over some years) will just bring those plans into line with those plans that are not privatized.

    The PRIVATIZED drug plan costs us as a nation (taxpayersand out-of-pocket expenses for seniors) about $86 billion more per year than just adding drugs to Medicare as a regular benefit and negotiating drug prices, as the VA does. Room for huge savings here by at least requiring – rather than forbidding – Medicare to negotiate prices.

  9. Submitted by Lauren Maker on 07/08/2011 - 04:31 pm.

    There’s a simple fix to the Social Security funding issue and that is to remove the cap on income subject to Social Security –I believe it’s currently $109,000 and above is not subject to Social Security tax. If Social Security tax is based on earned salary income, why exempt any of it?

  10. Submitted by David Greene on 07/08/2011 - 05:23 pm.

    @Tim

    Social Security is not in any dire straights. If we stop borrowing from the fund to patch the general fund, we’ll be ok. If for some reason we are not, I would support raising the age at which benefits kick in, but only after income above the current ceiling is taxed for Social Security purposes.

    As for Medicare, the answer is to expand it to everyone. Go full bore for single payer. That will cut costs dramatically and will improve care outcomes, as every other nation with single payer has demonstrated.

  11. Submitted by Lynda Friedman on 07/08/2011 - 05:28 pm.

    Thanks, Bernice, for reminding us of facts about Medicare and Social Security. It gets tiresome refuting all the lies, distortions and simple misinformation posted by the same people in so many different places. Your efforts are really appreciated.

  12. Submitted by Tim Larkin on 07/08/2011 - 10:32 pm.

    In re Medicare and Social Security…so I take your answer to the actuarial crisis is to disagree that there IS a crisis? Re SS, apparently the fact that we’ve been borrowing from the SS “trust fund” doesn’t pose any problem? The fact that we’re going from 10 workers supporting every SS recipient is now inverting doesn’t pose a problem? Re Medicare, the fact the administration cut $500BILLION doesn’t pose a problem? It seems no solutions can be approached unless we can agree that there IS a problem.

  13. Submitted by Michael Corcoran on 07/09/2011 - 10:51 am.

    Come’n over to this side of the pool, the water is just right…

    GOP ’12

  14. Submitted by David Greene on 07/09/2011 - 01:19 pm.

    @Tim,

    Yes, there is a problem, but it’s not the problem most people think it is. The problem is not that we can’t pay for these programs. We absolutely can. The probably is that we’ve heavily borrowed from them and shifted resources from them to pay for tax cuts for the wealthy and to pay for two wars that are now the longest in our nation’s history.

    Don’t borrow from Social Security and go single-payer country-wide and most of the problems disappear. The technical solution is easy. The difficulty is hubris, demagoguery and lack of political will.

  15. Submitted by Bernice Vetsch on 07/09/2011 - 06:46 pm.

    According to research performed by physicians from Harvard’s Med School, we would save $400 BILLION PER YEAR if we switched to a Medicare-for-All program that included every resident of our country.

    Only ideology prevents us from this step toward true fiscal conservatism.

  16. Submitted by will lynott on 07/09/2011 - 07:11 pm.

    “Many doctors are already refusing to take on new Medicare patients because of the reduced reimbursement. That trend will increase if their payments are cut even more. We’ve been with the same family doctor for 30 years. When he retires and we’re forced to find a new doctor, will any take us as new patients if we’re on Medicare?”

    Who cares, #1? Medicare is a socialist, government-run program (never mind that it’s extremely efficient and most seniors depend on it). Given that, I’m sure that a conservative like you will decide not to take advantage of it, and you want nothing to do with it. Don’t worry, be happy. Let your conservative beliefs keep you warm and pay for your double bypass.

    “Without serious attention these programs will END, not be reformed. What say you, liberals?”

    What say I, #6? Yes, reform is needed. Eliminate the cap on SS and medicare witholding. Eliminate borrowing from the trust fund to reduce the federal deficit. Establish means testing for recipients, and eliminate coverage for those who retire so rich that they don’t need it. Allow medicare to negotiate drug prices. Establish single payer nationwide, so people can take advantage of a system that is highly efficient and not set up merely to enrich insurance companies. Raise taxes on the rich, the single economic demographic that has not been asked to pitch in with the rest of us.

    Need more ideas? I’ve got ’em. Just ask. Now that’s reform we can believe in!

  17. Submitted by Glenn Mesaros on 07/09/2011 - 10:23 pm.

    There are still a few liberals and progressives who support Obama, but their numbers diminish daily, as the reality sinks in to most people that Obama is pure EVIL, who will make any “deal with devil” to serve his Wall Street masters.

    Among the ruses under discussion to slash Social Security, is to replace the existing Consumer Price Index used to calculate annual inflation adjustment for Social Security payments, by the so-called “chained CPI,” an artifice of the Simpson-Bowles “Catfood” Commission which significantly lowers the reported inflation rate by factoring in people switching to cheaper goods when prices rise. For example, if people switch from eating steak to chicken, because the price of steak rises, the “chained CPI” does not consider this to be inflation. The Congressional Budget Office calculated that this cheap accountant’s trick would cut $112 billion from Social Security payments over a decade, raise taxes by $60 billion, and reduce veterans’ payments by $24 billion.

    Rep. Jan Schakowsky (D-Ill.), a Glass-Steagall signer, refers to this as the “chainsaw CPI,” rightly arguing that even the existing CPI actually understates real inflation for seniors, who spend relatively more on health care and medicine.

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