When the Center for American Progress recently pointed to some potential savings from entitlement programs, the political implications were more important than the numbers.
The left-of-center group’s entry into the battle over entitlement spending provided some political cover that could allow more Democratic lawmakers to support a deficit reduction compromise including savings from programs they have long defended with their political lives — Medicare, Medicaid and perhaps Social Security.
The report said Congress could reduce the cost of health care for seniors by $385 billion over 10 years by picking up some proposals that were either discussed during the 2011 debt limit standoff or included in President Barack Obama’s fiscal 2013 budget proposal — things such as higher premiums for upper-income Medicare beneficiaries and cuts in Medicare payments to hospitals and nursing facilities.
Many Democrats have sought to put the major entitlements off limits during deficit negotiations. But with automatic, across-the-board spending cuts scheduled to begin next year unless Congress and Obama change the law, liberals are starting to accept the inevitability of trimming the cost of entitlements as part of the “balanced” deficit agreement the president is demanding.
And just as Republicans may be looking for a nod from their key political supporters before they accept the tax component of such a compromise, Democrats are looking to the backers of entitlement programs for spending reductions that might be viewed as the least objectionable.
Although the partisan split over tax policy has dominated the public debate over how to avoid the fiscal cliff of tax increases and spending cuts due to begin Jan. 1, an agreement on entitlements may be more difficult to achieve.
In the wake of Obama’s re-election, Republican leaders have opened the door to accepting additional tax revenue as part of a grand bargain, but only if Democrats agree to reduce the projected growth of spending on Medicare and Medicaid.
Paul Van de Water, senior fellow at the liberal Center on Budget and Policy Priorities, said most Democrats will accept some changes in entitlement programs, provided Republicans go along with substantial revenue increases. “But it’s going to be a tricky balancing act,” he said.
While Obama has said he recognizes a need to do more to slow the growth of the cost of federal health care programs, House and Senate Democrats remain divided over changes to Medicare, Medicaid and Social Security.
Some Democrats remain opposed to any changes that would affect beneficiaries. During a rally at the Capitol earlier this month, a group of Democratic lawmakers vowed to oppose any cuts in benefits. “We are here today to send a very loud and very clear message to the leadership” in Congress and the White House, said Sen. Bernard Sanders, I-Vt. “Do not cut Social Security, do not cut Medicare, do not cut Medicaid and do not provide more tax breaks to the top 2 percent, who are doing phenomenally well and, in many cases, have never had it so good.”
Former Federal Reserve Chairman Alan Greenspan predicted at a recent fiscal issues forum sponsored by the Peter G. Peterson Foundation that it will be difficult to find agreement on entitlement spending cuts but that such a deal is well worth the effort. “It is extremely difficult to rescind entitlements to which people think they are legally entitled,” Greenspan said. “As far as I’m concerned, if we have to pay a large price in increasing taxes in order to get [at] this extraordinary, unstoppable rise in spending ... I think we have to do that, and then recognize that it’s politically far easier to lower taxes than it is to lower spending.”
There have been recent signs that bipartisan agreement on at least a few changes in Medicare and Medicaid is possible as part of a larger deal on taxes and spending.
Last weekend, Senate Majority Whip Richard J. Durbin, D-Ill., called on Democrats to address entitlement spending as part of the fiscal cliff negotiations, although he ruled out increasing Medicare’s eligibility age. And speaking to the Center for American Progress this week, Durbin said entitlement programs including Medicare and Medicaid are likely to face greater scrutiny. “Put everything on the table,” he said.
Some centrist brokers are also trying to pull Democrats toward a deal on entitlements.
Alice M. Rivlin, a former director of the Congressional Budget Office and a former Office of Management and Budget director in the Clinton administration, said Republicans and Democrats are “missing how close they are” to an agreement. “The campaign was focused on each side saying that the other side would destroy Medicare, for example,” she said. “But if you look at what they were actually proposing, neither side wants to destroy Medicare. And I think now that the campaigns are over, there may be some potential for actually working out some compromises.”