Obama Cuts Deal To Reduce Social Security, Medicare, Medicaid

Hopes for any pretense of liberal change from the Obama administration collapsed yesterday, and not only because of the election in Massachusetts. While the Massachusetts voters were casting their ballots to install the upstart Republican Scott Brown to Ted Kennedy’s Senate seat, the White House was hammering out a closed-door deal to cut entitlements. Obama won the support of Democratic leaders for a plan to issue an executive order that would inevitably lead to reductions in Social Security, and especially Medicare and Medicaid.

The plan represents a capitulation to conservatives in both parties, and would leave Democratic liberals accepting unconditional surrender not only on health care, but on the most basic of all New Deal programs.  As hopes of even a tepid health care reform wane, the effect of this  plan, if accepted by Congress, will be to undermine the only single-payer health care programs this nation has ever known–Medicare for elders, and Medicaid for the poor. As an attack on entitlements, it has the potential to go beyond anything the Reagan and Bush administrations were able to achieve.

As the Washington Post explains this morning:

Under the agreement, President Obama would issue an executive order to create an 18-member panel that would be granted broad authority to propose changes in the tax code and in the massive federal entitlement programs — including Medicare, Medicaid and Social Security — that threaten to drive the nation’s debt to levels not seen since World War II.

The accord comes a week before Obama is scheduled to deliver his first State of the Union address to a nation increasingly concerned about his stewardship of the economy and the federal budget. After a year in which he advocated spending hundreds of billions of dollars on a huge economic stimulus package and a far-reaching overhaul of the health-care system, Obama has pledged to redouble his effort to rein in record budget deficits even as he has come under withering Republican attack.

The commission would deliver its recommendations after this fall’s congressional elections, postponing potentially painful decisions about the nation’s fiscal future until after Democrats face the voters. But if the commission approves a deficit-reduction plan, Congress would have to act on it quickly under the agreement, forged late Tuesday in a meeting with Vice President Biden, White House budget director Peter R. Orszag, and Democratic lawmakers led by Senate Majority Leader Harry M. Reid (Nev.), House Speaker Nancy Pelosi (D-Calif.) and House Majority Leader Steny H. Hoyer (Md.).

Senate Budget Committee Chairman Kent Conrad (D-N.D.), who has long advocated creation of an independent budget panel, called the agreement an “understanding in concept” that holds the promise of at last addressing the nation’s most wrenching budget problems.

“This goes to the question of the country’s credibility with managing its own finances. This is essential for the nation,” Conrad said.

The commission is likely to form the centerpiece of Democrats’ efforts to reduce projected budget deficits, which have soared into record territory in the aftermath of the worst recession in a generation. Government spending to bail out the troubled financial sector and to stimulate economic activity have combined with sagging tax collections to push last year’s budget deficit to a record $1.4 trillion. The budget gap is projected to be just as large this year and to hover close to $1 trillion a year for much of the next decade. 

In other words: The national treasury has been driven into deep deficits by a financial crisis caused by Wall Street greed, compounded by two wars, tax cuts for the rich, and the high prices charged by health care profiteers. And where will we turn to make up for this loss? To the poor and the old, who cling greedily to their “entitlements.”

The claim is made that we need to make these entitlements “solvent” and “sustainable” in their own right, so they don’t “run out of money”–but that’s just political flim-flam. Social Security is in fact perfectly solvent, and the fiscal problems of the Medicare and Medicaid programs stem from the excesses of profit-based health care. If cuts are made to these programs, which have saved millions of Americans out of desperate straits, it will be because there’s simply no political will to do anything else to address the deficit.

All this represents a major victory for the corporate take-over mogul Pete Peterson whose foundation has put up $1 billion to lobby the proposal. His efforts have even involved  a financial news service that pushes this rich man’s plan, and that  has wormed its way into the Washington Post.  William Greider, who has long been covering the Peterson story, writes in The Nation:

The retired mogul has created a digital news agency he dubs “The Fiscal Times” and hired eight seasoned reporters to do the work there. “An impressive group of veteran journalists,” Peterson calls them. I hope they have shaken a lot of money out of this rich geezer. Because I predict doing hack work for him will seriously soil their reputations for objectivity and independence.

With his great wealth, Peterson could have also bought a newspaper to publish his dispatches, but he did better than that. He hooked up with the Washington Post, which has agreed to “jointly produce content focusing on the budget and fiscal issues.” (This media scandal was first uncovered by economist Dean Baker.) The newspaper is thus compromising its own integrity. It’s like buying political propaganda from a Washington lobbyist, then printing it in the news columns as if it was just another news story. Shame on the Post, my old newspaper. I predict a big stink like the one that greeted the Post when its publisher decided to hold pay-for-access “salons” for corporate biggies.

The deal is based on rickety interpretation of the country’s basic laws governing taxation.  Normally, any change in taxes must be passed first by the House, with legislation wending its way through the Ways and Means Committee up to the floor. This proposed arrangement short cuts—indeed appears to bypass—this procedure. The appointed commission is to make a recommendation on the budget after the election and that recommendation then goes straight to Congress where it might go through hearings,floor debate and a vote,or as some proponents of the idea would like, just get an up or down vote. To rub salt in the wounds, it was largely crafted not by members of the House, but by vice president and former Delaware senator Joe Biden along two senators–Kent Conrad, the North Dakota Democrat, once considered heir to the Great Plains progressive tradition, and conservative Judd Gregg, from New Hampshire. The man behind the commission plan is Pete Peterson.

The National Committee to Preserve Social Security and Medicare, which has been fighting against the creation of the commission, recently sent a letter to Congress, saying in part: 

We appreciate the concerns of legislators who are looking for a means of reducing the federal deficit and slowing the growth in the debt. However, we have significant concerns about any process – including the Conrad-Gregg Commission – that would disenfranchise American voters and subject Social Security beneficiaries to harmful cuts in benefits. As supporters of Social Security, we are surprised to see the federal deficit and the federal debt cited as the reason a commission needs to be established to make cuts in Social Security. The truth is that neither the $1.4 trillion deficit nor the nearly $12 trillion debt has anything to do with Social Security benefits.   

For nearly three decades, Social Security has taken in more revenue each year than it has paid out in benefits. These excess funds have been invested in special issue U.S. government securities. Thus, Social Security has effectively been loaning its excess funds to the federal government to spend on other programs. Rather than increasing the federal deficit, Social Security’s annual surpluses have actually been covering up the true size of the deficit in the general fund.


14 responses to “Obama Cuts Deal To Reduce Social Security, Medicare, Medicaid

  1. If they cut Medicaid any further, I will proabaly die..thanks Dems…

  2. Please read “How the Democrats Might Privatize and Cut Social Security” http://wp.me/p3xLR-g6 . It was written in the summer of 2008, before Obama was a candidate, let alone an elected president. Yet even then you could see, by his choice of economic advisors, that Obama was closely tied to Robert Rubin, Lawrence Summers, and the rest of the high finance crowd. It then speculates, based on perusal of the Brookings Institute, how he might gradually privatize Social Security and cut its benefits.

  3. Pingback: Obama getting ready to gut Social Security « Not Your Sweetie

  4. Thank you for the last paragraph in the article regarding how the Social Security Trust fund surplus is simply handed over to make the federal debt look smaller. That surplus which is probably decreasing because of unemployment could be used for domestic concerns, the SS law actually had provisions for investing the trust fund in other than US debt when it was in the public interest. . But with the Peterson
    C0mmission coming in someone better check to make sure they don’t recommend amending that provision for investing in domestic needs that serve the public interest out of the law.
    This leads me to something else no one seems to be talking about. Massachusetts has a strong
    peace activism base. And Obama is just as disappointing on that issue as on health care et al.
    I would wager that peace base is a part of the disaffected base and am wondering why no one has mentioned that as part of the disaffection last Tuesday. It better be understood and discussed as a part of the disaffection equation or I believe there will be an even greater fall off of the Obama base in the elections upcoming.

  5. There is another thing besides the banksters who have been looting our citizen’s legacy and that is the military, who have spent about $13 trillion since the 1960’s. Coincidentally, this about equals our total national debt.

  6. Whose side is this president on? Obama cannot stand up for what is required to sustain the middle working class people of this nation. He has to create a commission to look at entitlements in order to make them sustainable. What garbage.

    Simple stuff. We don’t need a commission to answer such a simple question.

  7. Johnny Rudick

    What is needed is MORE JOBS.

  8. Pingback: Time for Hell’s Grannies to Ride Again « Unsilent Generation

  9. Lyle Davidson

    I can not image the chaos that will result if there are signficant cuts on Social Security benefits for those over 65 or the current group between 55-65. To cut these much needed benefit to people who have spent a life-time paying into the program who because of the current ecomomic mess deperately need these benefits will end this country as we know it. Those responsible for such a decision will do so at their peril.

  10. Over a year ago I predicted this would happen and my friends and family told me it never would. I resent Social Security for the retirees being lumped in with “handouts” and other “entitlements” that people often didn’t work for-like SSI. I did work all my life and I never got a handout, scrimped to become debt free,etc., and now I’m being told my meager benefits will probably be decreased! ALL politicians are full of crap in my opinion, in BOTH parties!

  11. Elizabeth Rogers

    I agree. Social Security isn’t the problem. It’s NOT a handout and shouldn’t be classified as such. I worked full-time for 47 years and am still working part-time. I’ve earned it.
    Before our “leaders” make draconian program cuts that will hurt almost all middle and working class citizens, I suggest that Congress take the following three steps. (1) Remove the salary cap on S/S taxes so the wealthy are taxed on all their earned income. (2) Consider enacting a TEMPORARY progressive “Deficit Reduction Surtax” on incomes over a certain level. It could begin as low as 1% for incomes between $100-$499K, rise to 3% for $500-999K and 5% for $1M and up. (3) Enact REAL campaign finance reform. Yes, the tea baggers will scream, but aren’t they the ones shouting the loudest about the deficit? Challenge them to come up with a better plan that doesn’t punish the 99% of Americans who can’t afford to contribute $100K to buy face time with their representatives in Washington, D.C.!

  12. Wake up….it is more population control!!!!!!
    It is a clever sophisticated scheme much like
    Adolph Hitler used, but less obvious. Kill the
    elderly and give to the rich.
    This is America?!

  13. kenneth partridge

    Some of us are disabled before the age of 65. I have been disabled since i was 13 with a very dibilitating condition and almost died because of The ft hood military hospital Darnell because they didnt take care of me. I had to travel my whole life because my step parent went into the military, and didnt have a say so. I was put off of military medical before i had the time to even learn about how to care for myself. I was eighteen, sick and couldnt get any medical insurance becuase my condition was pre exsisting. I couldnt get ssi or social security. I fought them for years to get it, and becuase of that i am now into renal failure, and about to be blind, and have heart disease. People like me get Social security, and a small ssi check, which isnt much. I should have sued the military hospital, but i was a helpless child and my step parent was worried about nothing but his so called “career” which never benefited me. In the next 2 years i will need a kidney and a pancreas transplant. What will people like me do. This is a matter of life or death to some people. I have a daughter to think about, and three step children and four grand children. I am now 38.

  14. Obama is Hell bent to get this country to be ruled by Socialism. He is trying to take all the citizens rightas away and make him our dictator like Hitler. It amazes me people don’t see him for what he is. If people don’t take a stand against him he will more out of control than he is now.
    He is Hell bent to take Soc. Sec. away from people that worked and paid in. He is trying to take all he can away from Seniors and children. Please people, someone stop him!! Put a strong candidate against him in the upcoming election. Don’t give him a chance for a 2nd. term.

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