Major papers, including The New York Times, The Washington Post, and The Wall Street Journal, are hiding compromises in a White House proposal on federal spending and budgets, claiming that the proposal was “loaded with Democratic priorities” and lacking in cuts. In fact the White House plan made many compromises, such as $400 billion in savings to entitlement programs that many progressives have opposed.
White House Offers Proposal To Congress For Revenue Increases And Spending Cuts
Huffington Post: Treasury Secretary Geithner Went To Capitol Hill To Deliver Proposal For Deficit Reduction. The Huffington Post reported that “Republicans in Congress reacted angrily to an Obama administration proposal delivered Thursday by Treasury Secretary Timothy Geithner that offered to avert the fiscal cliff by raising $1.6 trillion in new taxes, in exchange for some $400 billion in cuts to entitlement programs to be negotiated next year”:
Republicans in Congress reacted angrily to an Obama administration proposal delivered Thursday by Treasury Secretary Timothy Geithner that offered to avert the fiscal cliff by raising $1.6 trillion in new taxes, in exchange for some $400 billion in cuts to entitlement programs to be negotiated next year.
Geithner's offer would delay the sequester -- automatic spending cuts to the Pentagon and social programs -- for a year, and effectively eliminates the congressional requirement to lift the debt ceiling in perpetuity. The offer included an extension of unemployment insurance, the payroll tax and even money to help homeowners modify mortgages and invest in infrastructure. “I think there was a leprechaun in there somewhere, too,” quipped one GOP aide.
The proposal is based on a two-step plan that would decouple the high-end tax and capital gains rates from the middle-class rates, extending only those for the middle class. It would revert estate taxes to their higher 2009 level, and raise an additional $600 billion in taxes elsewhere, according to the GOP summary. It then proposes tax reform required to raise at least as much as the tax hikes, and entitlement reform that would trim $400 billion from the programs. [Huffington Post, 11/29/12]
The White House's Proposal Comes On Top Of $1.5 Trillion In Savings That Obama Has Already Signed Into Law. The Center for Budget and Policy Priorities has reported that laws Obama has signed have already “produced $1.5 trillion in savings” over ten years:
Policymakers and budget experts generally agree on the need to reduce projected deficits and put the federal budget on a sustainable path. They have focused less attention, however, on the amount of deficit reduction that the 112th Congress and the President have enacted. Reductions in funding for discretionary (i.e., non-entitlement) programs enacted last year, primarily in the Budget Control Act, have produced $1.5 trillion in savings in discretionary spending for fiscal years 2013 through 2022.
These reductions will shrink non-defense discretionary spending to its lowest level on record as a share of GDP, with data going back to 1962. [CBPP, 11/8/12]
Wash. Post, NY Times, WSJ Claim The Proposal Is Short On Compromises
Wash. Post: White House Proposal “Lacks Any Concessions To Republicans.” The Washington Post reported that the proposal brought to Congress by Geithner lacked “any concessions to Republicans”:
The proposal, delivered to the Capitol by Treasury Secretary Timothy F. Geithner, mirrors previous White House deficit-reduction plans and satisfies Democrats' demands that negotiations begin on terms dictated by the newly-reelected president.
The offer lacks any concessions to Republicans, most notably on the core issue of where to set tax rates for the wealthiest Americans. After two weeks of talks between the White House and aides to House Speaker John A. Boehner (R-Ohio), it seemed to take Republicans by surprise. [The Washington Post, 11/29/12]
NY Times: White House Proposal Is “Loaded With Democratic Priorities.” The New York Times reported that the proposal brought to Congress was “loaded with Democratic priorities and short on detailed spending cuts”:
The proposal, loaded with Democratic priorities and short on detailed spending cuts, met strong Republican resistance. In exchange for locking in the $1.6 trillion in added revenues, President Obama embraced the goal of finding $400 billion in savings from Medicare and other social programs to be worked out next year, with no guarantees.
He did propose some upfront cuts in programs like farm price supports, but did not specify an amount or any details. And senior Republican aides familiar with the offer said those initial spending cuts might be outweighed by spending increases, including at least $50 billion in infrastructure spending, mortgage relief, an extension of unemployment insurance and a deferral of automatic cuts to physician reimbursements under Medicare. [The New York Times, 11/29/12]
Wall Street Journal: White House Proposal “Represented A Particularly Expansive Version Of The White House's Wish List.” The Wall Street Journal reported that Obama's proposal was actually the “White House's wish list,” and Republicans contended it “represented a step backward” in negotiations over the federal deficit:
President Barack Obama made an opening bid in budget talks with Republicans that calls for a $1.6 trillion tax increase, $50 billion in infrastructure spending in 2013 and new power to raise the federal debt limit, a provocative set of demands that Republicans said represented a step backward in efforts to avoid looming tax increases and spending cuts.
The proposal marked an opening salvo in negotiations over the fiscal cliff and represented a particularly expansive version of the White House's wish list, with a heavy focus on tax increases and spending proposals--including keeping in place a payroll-tax cut and extended unemployment benefits.
Republicans haven't put any comparable offer on the table. They have indicated willingness to accept $800 billion in revenues over 10 years, half the amount Mr. Obama proposed. And they have sought far more in spending cuts in exchange for their concessions on taxes. [The Wall Street Journal, 11/29/12]
But The White House Proposal Actually Contains “Substantial Concessions” From A Progressive Point Of View
Reich: “The White House Has Started The Bidding With Substantial Concessions On Tax Increases And Spending Cuts.” Former labor secretary and University of California-Berkeley economist Robert Reich said that the White House “ceded important ground” to congressional Republicans by making a proposal that includes cuts to Medicare and other entitlements even as the White House has signaled openness to negotiate on its proposal to raise the top tax rate back to its Clinton-era levels:
The $50 billion in added stimulus is welcome. We need more spending in the short term in order to keep the recovery going, particularly in light of economic contractions in Europe and Japan, and slowdowns in China and India.
But by signaling its willingness not to raise top rates as high as they were under Clinton and to cut some $400 billion from projected increases in Medicare and other entitlement spending, the White House has ceded important ground.
Republicans obviously want much, much more.
No surprise. The GOP doesn't want to show any flexibility. Boehner and McConnell will hang tough until the end. Boehner will blame his right flank for not giving him any leeway, as he's done before.
It's also clear Republicans will seek whatever bargaining leverage they can get from threatening to block an increase in the debt limit - which will have to rise early next year if the nation's full faith and credit is to remain intact.
Meanwhile, the White House has started the bidding with substantial concessions on tax increases and spending cuts. [Robertreich.org, 11/29/12]
Progressives Also Say Entitlement Programs Such As Medicare Should Not Be Part Of Deficit Reduction Deal
NY Times Editorial Board: Medicare Can't Be Further “Cut Without Hurting The Most Vulnerable Americans.” A New York Times editorial asserted that because of the $1 trillion in savings already extracted from Medicare, there is “not much more that can be cut without hurting the most vulnerable Americans” and the best way to reign in Medicare spending is to “extend the provisions of the Affordable Care Act,” the health care reform bill passed in 2010:
Congressional Republicans are insisting that big cuts to Medicare and Medicaid be on the table in the negotiations over the so-called fiscal cliff and deficit reduction. That stance is largely a political move against two programs, which have been critical to the public welfare for the past half-century.
Postelection polls show that large majorities of voters for both President Obama and Mitt Romney opposed making large Medicare cuts as a way to reduce the budget deficit. And, the fact is, the Obama administration has already pledged to extract more than $1 trillion in savings over the next decade from these programs. There is not much more that can be cut without hurting the most vulnerable Americans.
The best way to rein in the Medicare and Medicaid costs is to speed up and extend provisions in the Affordable Care Act to encourage better and more efficient ways to deliver health care. That would help reduce federal deficits in the future and save substantial money for the private sector as well. [The New York Times, 11/28/12]
Sen. Durbin: Changes To Entitlement Programs Such As Medicare And Medicaid Shouldn't Be Part Of A Deficit Reduction Deal. The Wall Street Journal reported that Senate assistant majority leader Richard Durbin (D-IL) said “Progressives should be willing to talk about ways to ensure the long-term viability of Medicare and Medicaid, but those conversations should not be part of a plan to avert the fiscal cliff.” From The Wall Street Journal:
Democrats should be open to an overhaul of entitlement programs like Medicare and Medicaid, but changes to the program shouldn't be rushed as part of an effort to avoid the so-called fiscal cliff, a top Senate Democrat said Tuesday.
In a speech to the liberal think tank the Center for American Progress, Sen. Richard Durbin (D., Ill.), the assistant majority leader and a key point man for Democrats on fiscal issues, laid out the progressive position as negotiations between congressional leaders and the White House continue on a compromise to avert end-of-year tax increases on most Americans and hefty spending cuts on defense and other spending.
He said that his fellow liberals must be willing to accept changes to the two large medical-related entitlement programs, but said these changes should be dealt with next year, rather than in a hurried manner before the end of the current year.
“Progressives should be willing to talk about ways to ensure the long-term viability of Medicare and Medicaid, but those conversations should not be part of a plan to avert the fiscal cliff,” he said.
In a brief question and answer session afterwards, he provided more detail where savings could be generated.
Mr. Durbin said that he remained skeptical that the Medicare eligibility age should be raised from its current 65, but said there were other savings that could be wrung from the program.
He said that many people qualify for both Medicare and Medicaid. Streamlining those benefits, he said, could be another area of potential savings.
Mr. Durbin said that Social Security should be ring-fenced and not included in conversations that could see substantial changes to Medicare and Medicaid. He did call for the creation of a bi-partisan commission that should be tasked with recommending ways to keep Social Security solvent for the next 75 years. [The Wall Street Journal, 11/27/12]
And Progressives Have Proposed A Balanced Budget Without Cuts To Medicare And Other Programs
Congressional Progressive Caucus Plan “Protects Social Security, Medicare And Medicaid And Responsibly Eliminates The Deficit.” The Congressional Progressive Caucus has proposed the People's Budget, which eliminates the deficit in 10 years by focusing on eliminating the Bush tax cuts and corporate giveaways, decreasing military spending rather than on cuts to programs such as Medicare, Social Security, and Medicare:
The People's Budget eliminates the deficit in 10 years, puts Americans back to work and restores our economic competitiveness. The People's Budget recognizes that in order to compete, our nation needs every American to be productive, and in order to be productive we need to raise our skills to meet modern needs.
Our Budget Eliminates the Deficit and Raises a $31 Billion Surplus In Ten Years
Our budget protects Social Security, Medicare and Medicaid and responsibly eliminates the deficit by targeting its main drivers: the Bush Tax Cuts, the wars overseas, and the causes and effects of the recent recession.
Our Budget Protects Health
• Enacts a health care public option and negotiates prescription payments with pharmaceutical companies
• Prevents any cuts to Medicare physician payments for a decade
Our Budget Safeguards Social Security for the Next 75 Years
• Eliminates the individual Social Security payroll cap to make sure upper income earners pay their fair share
• Increases benefits based on higher contributions on the employee side
Our Budget's Bottom Line
• Deficit reduction of $5.6 trillion
• Spending cuts of $1.7 trillion
• Revenue increase of $3.9 trillion
• Public investment $1.7 trillion. [Congressional Progressive Caucus, accessed 11/30/12]