Very distressing news broke during this morning’s meeting of the supercommittee: aides told Reuters that Democratic members of the committee have proposed $2.5 to $3 trillion in deficit reduction measures, including $400 billion in cuts to Medicare—a half of which would come from benefits.
The Democratic proposal consists of an even split between tax increases and spending cuts, and also $200 to $300 billion in new stimulus spending that would be paid for because interest payments on the debt would be lowered if the plan passed. The $400 billion in Medicare cuts would be split evenly between beneficiaries and providers. It was reportedly a formal proposal advanced by Senator Max Baucus, though Clyburn is said to object to the Medicare cuts.
The supercommittee has largely been deliberating behind closed doors, but as far as anyone knows the Republicans have not proposed anything this concrete. This begs serious questions, once again, about Democrats’ negotiating techniques in the ongoing budget and debt ceiling dramas.
The additional stimulus is a terrific idea, and fulfills the calls for the supercommittee to address the jobs crisis as it forms a deficit reduction plan. And raising additional revenue is a must for any serious deficit package.
But this magnitude of Medicare cuts, presumably meant to entice Republicans, is astounding and out of line with previous Democratic proposals. President Obama’s own deficit plan calls for $320 billion in healthcare savings, only seven percent of which—not 50—would affect beneficiaries. I thought at the time perhaps Obama’s proposal would push the supercommittee left; instead, it’s gone far to the right, thanks to Baucus and the Democrats who support his plan.
Right now, approval ratings for Congressional Republicans are in the toilet, with just 20 percent of Americans saying they believe the party has a “clear plan” for job creation. Meanwhile, almost half of Americans (and counting) support the Occupy Wall Street movement and its demands for greater income equality and protections for the 99 percent.
So Republicans’ pull with the public is low, and on the supercommittee, it’s even lower. Unlike during the prolonged debt ceiling debate, the party has no real leverage. Then, Republicans seemed willing—even eager—to let the federal government default on its obligations, whereas Democrats and President Obama were not. But Republicans have the same number of votes as Democrats on the supercommittee, and control only the House of Representatives. Moreover, many Republicans have voiced serious fears about the triggers that would cut defense spending if the supercommittee cannot reach a deal. (Medicare, by the way, is entirely protected from the trigger process).
So why would the Democrats pre-negotiate cuts to Medicare—and if so, why go so far beyond what Obama already proposed? They either really want to cut the program, or are hoping to entice Republican votes to their side—a mission that’s proven fruitless in the Obama era, ever since the president went hunting for Republican votes on the stimulus in 2009 and didn't find a single one in the House and three in the Senate, one of which came from a senator, Arlen Specter, who soon became a Democrat.
And when Republicans on the supercommittee reject the stimulus and tax measures, they will surely be more than happy to keep talking about Medicare cuts, which are now officially on the supercommittee’s table.
This morning, I wondered whether income inequality would come up during the hearing, since the only witness, Congressional Budget Office Director Doug Elmendorf, just produced a dramatic report on the growing wealth divide. To their credit, Representatives Xavier Becerra and James Clyburn mentioned the report and urged the committee to address income inequality as it produces a deficit plan. If that’s what they want, they ought to push back hard against their party’s attempts to slash the social safety net.
UPDATE: In a not-so-shocking development, Republicans on the super-committee have already rejected Baucus' attempt to go big on deficit reduction. They don't like the stimulus and tax measures, and the committee is now deadlocked. Now that the GOP has pushed those items off the table, it will be very interesting to see if the Democrats pull the deep Medicare cuts right off the table as well.