Any aging or disabled Americans who got nervous last week when Obama promised to make “reforming” old-age entitlements a “central part” of his fiscal program have still more cause for anxiety today. After a long interview with Obama, the Washington Post reported:
President-elect Barack Obama pledged yesterday to shape a new Social Security and Medicare “bargain” with the American people, saying that the nation’s long-term economic recovery cannot be attained unless the government finally gets control over its most costly entitlement programs.
That discussion will begin next month, Obama said, when he convenes a “fiscal responsibility summit” before delivering his first budget to Congress. He said his administration will begin confronting the issues of entitlement reform and long-term budget deficits soon after it jump-starts job growth and the stock market.
Obama didn’t get specific, and its much too soon to predict what he might propose. But he did juxtapose entitlement reform with his large fiscal stimulus package, which is where we start to get on dangerous ground.
The president-elect said he believes that direct government spending provides the most “bang for the buck” and that his advisers have worked to design tax cuts that would be most likely to spur consumer and business spending.
But he framed the economic recovery efforts more broadly, saying it is impossible to separate the country’s financial ills from the long-term need to rein in health-care costs, stabilize Social Security and prevent the Medicare program from bankrupting the government.
The National Committee to Protect Social Security and Medicare had already begun issuing warnings earlier in the week about a possible trade-off between stimulus and entitlements:
Anti-entitlement members of Congress want President-elect Obama to make a deal to gain their support for a desperately needed stimulus package. It’s a political quid-pro-quo that would trade away long-term benefits for generations of seniors, survivors, the disabled and their families for a short-term economic recovery package desperately needed to reverse the damage of eight years of flawed economic policies.
The trade-off goes something like this…Congress’ so-called “fiscal-hawks” will consider supporting the economic stimulus package if the Obama administration agrees to “entitlement reform” (translation: cuts to Social Security and Medicare). Of course, Social Security and Medicare didn’t create this economic crisis but some view this as a unique political opportunity to sell their entitlement hysteria to the public. The problem is we can’t balance the budget on the backs of Social Security and Medicare.
It might be tempting to blame this on the usual suspects–the Republicans. But what the possible trade-off actually reveals is Obama’s first bargaining session with the right wing of his own party. The Washington Post article refers to refers to Obama’s “frequent meetings with legislators,” which include
the Blue Dog Coalition of fiscally conservative Democrats, who repeatedly told Obama they would be willing to support his stimulus package only if he pledged not to lose sight of the larger budget picture. Those who will be invited to attend the summit include the Blue Dogs.
Since Obama cannott pass his stimulus package–or indeed, any legislation–without support from at least some of the Blue Dogs, this could be the first in a long line of intra-party Faustian bargains.
Or Obama could remain true to the promises–and the promise–of his campaign, making small adjustments to the Social Security formula that will not hurt the poor and middle class, and saving money on Medicare through a broader reform of the health care system.