Reporting is coming in from the New York Times and Washington Post saying that President Obama is closing in on a much bigger deficit cutting deal with the Republican leadership, a deal that involves Social Security.
Kevin Drum argues that this is evidence Obama is converging on what he wants. Another data point for this argument is that the idea of a President and a Speaker of different parties could come together and agree on a deal for the welfare state is one of the hallmark stories in the Obama vision. Obama brings up President Reagan and Speaker Tip O’Neill’s 1983 compromise on Social Security as one of the core examples of bipartisan agreements, the very definition of what he wants to achieve in Washington.
Let’s get a quick chronology of quotes from President Obama at key moments. Starting with a 2007 interview with George Stephanopoulos, Presidential candidate Barack Obama (his first question on Social Security):
STEPHANOPOULOS: You’ve also said that with Social Security, everything should be on the table….
OBAMA: Everything should be on the table. I think we should approach it the same way Tip O’Neill and Ronald Reagan did back in 1983. They came together. I don’t want to lay out my preferences beforehand, but what I know is that Social Security is solvable. It is not as difficult a problem as we’re going to have with Medicaid and Medicare.
From January 29th, 2010, Obama does a heated Q&A with House Republicans over the health care bill:
The major driver of our long-term liabilities, everybody here knows, is Medicare and Medicaid and our health care spending. Nothing comes close. Social Security we could probably fix the same way Tip O’Neill and Ronald Reagan sat down together and they could figure something out. That is manageable. Medicare and Medicaid — massive problem down the road. That’s where — that’s going to be what our children have to worry about.
And from a February 15th, 2011 Press Conference:
All of these steps are going to be difficult. And that’s why all of them will require Democrats, independents, and Republicans to work together. I recognize that there are going to be plenty of arguments in the months to come, and everybody is going to have to give a little bit. But when it comes to difficult choices about our budget and our priorities, we have found common ground before. Ronald Reagan and Tip O’Neill came together to save Social Security….
Now, you talked about Social Security, Medicare and Medicaid. The truth is Social Security is not the huge contributor to the deficit that the other two entitlements are.
I’m confident we can get Social Security done in the same way that Ronald Reagan and Tip O’Neill were able to get it done, by parties coming together, making some modest adjustments. I think we can avoid slashing benefits, and I think we can make it stable and stronger for not only this generation but for the next generation.
And finally, during the April 13th speech at George Mason University, attacking the Ryan Plan:
Of course, there are those who will simply say that there’s no way we can come together and agree on a solution to this challenge. They’ll say the politics of this city are just too broken; that the choices are just too hard; that the parties are just too far apart. And after a few years in this job, I certainly have some sympathy for this view.
But I also know that we’ve come together and met big challenges before. Ronald Reagan and Tip O’Neill came together to save Social Security for future generations.
The rumored policy changes, a chained-CPI for Social Security, some level of overhaul of Medicaid from blending to block-granting and means-testing Medicare are massive changes to the social safety net, things that a Republican President could be remembered as a hero for accomplishing in two terms (even more for a Speaker in half a year).
Dave Dayen walks through the CPI changes here with this graph:
Roosevelt Institute’s Richard Kirsh at New Deal 2.0 walks through some of the problems with proposed changes to Medicaid, especially placing in the context of weakening the perpetually under-siege Affordable Care (“Obamacare”) Act:
The new so-called “blended rate” would be set at a lower amount than current health spending. Like the Ryan plan, the proposal is simply a cut to states, albeit a much smaller one than Ryan proposed and without the loosening of rules on who and what to cover included in the Republican budget. States would still cut back on who and what it covers, if only to the extent allowed within the current rules…
The “blended rate” proposal also strikes a blow at the Affordable Care Act, which is counting on Medicaid to provide care to more than half of the 33 million uninsured who will be covered under the new law. Under the Affordable Care Act, the federal government will reimburse states 100% of the cost of these new enrollees for the first three years and gradually reduce that to 90%. Compare that to the average 57% now that the federal government pays as its share of Medicaid. The blended rate would result in states having to pay a lot more for people who become eligible for Medicaid under the Affordable Care Act. As a result, states will throw up more barriers to enroll these working families and will scream more loudly about how the ACA is hurting their budgets. That later charge has almost no basis in fact now, but will become true under the blended rate proposal.
A second Obama administration proposal would close off one source that states now use to finance Medicaid, taxes on health care providers. Since states would be reluctant to replace these taxes with other taxes, they would also cut their spending on Medicaid, lowering federal spending.
In fact, only 10% to 15% of the cuts in Medicaid spending in the Obama proposal would come from rational savings in the system – increased efficiencies in providing medical equipment and prescription drugs – as opposed to simply giving states less money and making it harder for them to raise money for Medicaid. The Affordable Care Act was a huge step toward a more rational health system, but the Obama proposals for Medicaid in the budget take us backward…
CBPP has more. As far as I see the landscape, the next progressive goal for Medicaid should be federalizing it, which would improve health and take pressure off state budgets, as Greg Anrig argued in a proposal for The Century Foundation and New America. These proposed “fixes” to Medicaid takes us quite a bit away from both the short term of health care – Obamacare – and the ultimate future of progressive health care.