Policy: Entitlements

Obama, Republicans see entitlement reform very differently

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Photo - June 15, 2012, file photo (AP Photo/Haraz N. Ghanbari, File)
June 15, 2012, file photo (AP Photo/Haraz N. Ghanbari, File)
Politics,White House,Brian Hughes,Politics Digest,Barack Obama,Republican Party,Entitlements

"Entitlement reform" has become the buzzword ahead of the release of President Obama's budget this week.

But reforming programs like Medicare and Social Security means very different things to the White House and congressional Republicans, and the two sides remain far apart on how to deal with the primary cause of annual federal budget deficits.

"The divide is pretty deep -- they are literally still 180 degrees apart," said Daraius Irani, an economist at Towson University in Maryland. "That means both sides will likely just give up something minor and not really solve the actual problem."

Obama on Wednesday will propose a change in the cost-of-living calculation for Social Security benefits, calling for a cheaper option known as "chained CPI," a new method of calculating inflation that Republicans also support. Such a plan would slow the program's future growth, but it wouldn't reduce current benefits.

The president will also call for modest means-based testing for Medicare, which would lower the cost of outpatient care and prescription drugs by increasing the premiums paid by wealthier seniors.

Republicans would go much further, including privatizing Medicare for those under the age of 55, to balance the budget in just 10 years. The GOP also wants to convert Medicaid, the health program for the elderly and poor, and food stamps into block grants to the states, a nonstarter for Obama.

The White House insists that Obama's budget will not be a menu of options from which Republicans can pick and choose. The president said he won't make any concessions on entitlements unless Republicans agree to raise taxes as part of the effort to reduce the deficit. Effectively, the proposed entitlement reductions aren't a starting point; they're the administration's endgame.

"We have to see if there's any 'grand' in the 'grand bargain,' " said former Congressional Budget Office Director Douglas Holtz-Eakin. "Chained CPI won't change the trajectory of the budget in a big way. To be serious, Obama has to do something about all the major entitlement programs, including Medicare and Medicaid."

But liberals are threatening to revolt if Obama capitulates to Republicans on entitlements reforms.

"You can't call yourself a Democrat and support Social Security benefit cuts," said Stephanie Taylor, co-founder of the Progressive Change Campaign Committee. "The president is proposing to steal thousands of dollars from grandparents and veterans by cutting cost-of-living adjustments, and any congressional Democrat who votes for such a plan should be ready for a primary challenge."

Republicans counter that Obama is already backing away from some of his own earlier proposals, such as raising the eligibility age for Medicare beneficiaries from 65 to 67. The White House also is no longer backing a shift of more Medicaid costs to the states.

Republicans contend that Obama is merely putting a fresh coat of paint on a watered-down package of cuts that both sides already deemed reasonable.

"It seems the more time goes by," said House Speaker John Boehner's spokesman, Brendan Buck, "the president moves further and further in the wrong direction."

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Brian Hughes

White House Correspondent
The Washington Examiner