Obama’s Deficit Plan Might Push the Super-Committee to the Left

Obama’s Deficit Plan Might Push the Super-Committee to the Left

Obama’s Deficit Plan Might Push the Super-Committee to the Left

The president’s plan for deficit reduction has several features that could change the dynamic on the super-committee. 


The super-committee is a natural vehicle to pass President Obama’s deficit plan, which he announced this morning in the Rose Garden. Obviously, its mandate is to issue a deficit bill and it has real power to enact it: once (or if) it passes something, the bill will be fast-tracked in Congress, meaning no amendments and no filibusters. While some parts of Obama’s plan are clear non-starters for the Republican members, the committee could realistically enact several chunks of the president’s vision—and if so, it could seriously dampen the slashing austerity being pushed by many Republicans.

Obama’s plans for Medicare cuts are the most intriuging development. Obama backed away from raising the eligibility age and a number of other potentially harmful actions, and instead proposed $248 million in cuts, of which 90 percent would be battling overpayments—meaning waste, fraud and abuse.

This is actually the preferred approach of at least one Republican on the super-committee. In the hearing I covered last week, Senator Jon Kyl explicitly and notably said he would rather deal with waste and fraud in Medicare than cut any payments to providers or beneficiaries.

There is now no longer a possibility that Obama could come out and push the debate right by asking for real sacrifice from Medicare beneficiaries. If Kyl and the committee Democrats form a bloc during negotiations to limit Medicare cuts similar to what the president is now also throwing his weight behind, it could stick in the committee’s final bill.

This is a significant development. Many progressives feared the super-committee represented the best chance in a generation to slash Medicare—Republicans enjoy the logistical advantages of fast-tracked legislation, and the political cover of a bipartisan commission signed into law by a Democratic president. If the vast share of Medicare cuts to come out of this committee address only waste and fraud, it will be an unlikely but very positive outcome.

When it comes to taxes, parts of Obama’s plan are already dead in the water with the super-committee. It’s extremely unlikely that any of the Republican members would endorse repealing the Bush tax cuts for top earners, nor would they approve a millionaire’s tax. Senator Pat Toomey, the only committee Republican to respond so far, has already put out a statement to that effect.

While this won’t pass, it at least moves the goalposts left for the super-committee. At last week’s hearing many Democrats called for higher taxes on the wealthy, and one can expect them to be even more vehement now that the president is muscling publically for that position. Obama also called for ending loopholes through tax code overhaul, which even House Speaker John Boehner seems to favor, and that might become a compromise position for the committee. If Democrats can tailor the overhaul in a way that still leaves room to fight over the Bush tax cuts next year, that, too, could be a positive outcome for the super-committee.

Most of the rest of Obama’s proposed cuts are recycled from the summer debt limit fight—reductions in agricultural subsidies and reducing waste and fraud elsewhere in the federal government. These were already on the table—many provisions were agreed upon during Vice President Biden’s bipartisan debt limit talks—and will continue to provide attractive to both sides on the super-commmittee.

Finally, Obama’s deficit reduction calculations included $1.1 trillion in savings from ending the wars in Iraq and Afghanistan. These are real dollars that will be saved, but Republicans don’t like to see it that way—Senate Majority Leader Mitch McConnell has already blasted them as “phantom savings.”

As I noted last week, allowing the entirety of the Bush tax cuts to expire would go far beyond the super-committee’s mandate for savings. In a similar vein, if the super-committee calculated deficit reduction the same way Obama does, the $1.1 trillion in war savings would almost get them to the finish line. There’s virtually no way the committee would simply pass a bill that says “the wars are ending, our work here is done,” but the dollar amounts and their revived placement in the deficit debate should provide some interesting grist for super-committee Democrats. 

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