Tag Archives: deficit reduction

President Obama’s Tea Party Credentials

By Marc Seltzer; originally published at care2.com on November 14, 2010

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I wonder if the story of the midterm elections is what it seems:  Tea Party Rejection of President Obama’s policies ushers in a Republican agenda.

In that story, President Obama is either the same old Washington problem, out to use tax-payer money and gov’t power for his own out-of-touch interests or an out-of-control Democrat-Socialist on a wild spending spree.  The deficit and debt represent the proof of the irresponsibility of the incumbents, and the new Republicans are the populist heroes who will reign in spending and balance the budget.

But I keep remembering candidate Obama saying “I am not doing this so I can pass the buck on the hard decisions.”  Difficult decisions are the ones where you take things from powerful people or make them pay what they cost, rather than offer give-aways.

Leave the financial crisis aside for a moment.

The current President inherited both short-term deficit spending (war, tax cuts, excess gov’t spending, etc. — unpaid for) and long term structural debt (Medicare, Medicaid, Social Security going up unsustainably per existing law and future demographics).  There are sometimes reasons to borrow money, to spend now and pay off debts later, but the past decade was not WWII.  Congress simply spent more than it took in, and it gave gifts such as tax cuts and Medicare benefits by borrowing money.

Along comes Barack Obama, talking about “bending the cost curve.”  Significant in the health care reform was removing tax subsidies for generous employer-sponsored health plans. Most Americans get their insurance from employer-sponsored health plans, and this substantial reform, however unpopular, will reduce the costs and waste of excessive medical care.  Mr. Obama also approved taking funds out of Medicare.  That’s hurting doctors and potentially forcing more cost containment on publicly funded health care for seniors.

The President also talked about reducing earmarks (the first budget under Obama contained earmarks prepared before his inauguration).  That hurts corporate interests and the politicians so aligned.   Then, Mr. Obama sought to reduce defense spending, with his Secretary of Defense standing up to criticism by congressional and corporate defense interests.

This sure seems like the long-term path of fiscal discipline.

What I’m wondering is, could the Tea Party movement be going in the same direction as the President?  Could it be that in order to balance the budget a lot of sacrifices will have to be made?  The President started down that path. (The financial crisis brought some unexpected costs — Bush’s TARP and Obama’s Stimulus — but not a recurring give-away). Now, the Tea Party-rejuvenated Republicans are all about cutting spending.

Doesn’t that really put them in the President’s camp?  Everyone with an interest, special or otherwise, will argue for their piece of the pie.  Tea Party Republicans are proposing to reform earmarks, cut defense spending and balance the budget.  They come at the problem as if it was the government that was devouring all the money.  But if they stay in the game for long enough, they will see that it’s not that simple.

In that case, President Obama may again appear the reformer:  A leader with a clear understanding of what needs to change to create a more sustainable America, waiting for people with integrity and discipline, a willingness to sacrifice, and political courage to join the fight against a system of entrenched interests.

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Listen to Marc Seltzer’s weekly podcasts on the U.S. Supreme Court at SupremePodcast.com

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Republican Calls for Repeal Invite Deficit Scrutiny and Skepticism

By Marc Seltzer; originally published on March 29, 2010 at care2.com

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Reform is Bitter Medicine

One aspect of President Obama’s health care reform legislation that has not received enough serious discussion is deficit reduction.  Despite claims that the legislation expands government, the non-partisan Congressional Budget Office (CBO) says that it will reduce the deficit by a significant amount over the next twenty years.

This has not stopped Republicans, such as Lindsey Graham, from announcing a campaign to “repeal and replace” the legislation.  What the Republicans have not said, is whether they would increase the deficit by such repeal, or find a way to match or improve upon the projected $130+ billion dollars in deficit reduction over first ten years and more than a trillion dollars in projected saving by 2030 contained in the Obama plan.  (Atul Gawande in the New Yorker gives some context)

It’s not hard to create popular legislation if it gives benefits that it does not pay for.  Remember that President Bush’s Medicare Prescription Drug benefit was popular, but was also a giveaway, increasing the deficit.  The harder part is to create legislation that lowers the deficit, without losing support among constituents, who like the idea of deficit reduction, but don’t want to see their own benefits taken away.

No matter what happens in November, President Obama would surely veto any attempts to repeal health care reform.  He may be open to improving upon current legislation, but he has promoted the “PayGo” (from pay-as-you-go) rule, which requires that new legislation not raise the deficit.  “PayGo” requires cuts in spending or increases in taxes to offset any new program spending.  “PayGo” led to surpluses in the Clinton presidency, and will again, so long as it is followed.  However, Republicans have no credibility on fiscal discipline.  They may run for office on a repeal platform, but will they propose alternatives to health care reform that cut the deficit?

Remember, repealing the current law would, in itself, raise the deficit, since Obama’s new legislation substantially lowers the deficit.

Republicans’ most appealing political argument, superficially, at least, against Obama’s health care reform, is that it takes money from Medicare.  Republicans claim it will bankrupt Medicare and hurt senior care.  Democrats refute these claims, arguing that the elimination of waste, fraud and abuse and the establishment of an independent panel to review Medicare spending will lower costs without cutting the quality of senior’s care.

An ongoing disagreement over doctor reimbursement rates may be another difficult challenge or an opportunity for creative problem solving, when it resurfaces in coming months or years.

It is no surprise that Republicans have come down on the side of spending more, and reassuring constituents, rather than bold action and fiscal responsibility.  But if Republicans are going to have any relevant part in the health-care debate going forward, they must be willing to offer potentially unpopular proposals that the CBO agrees will cut the deficit.  So far, Republicans have shown no appetite for the politically difficult task of cutting spending, not in Medicare, not in Social Security, and not in Defense.

President Obama has taken criticism for his stimulus spending.  But this was one-time emergency spending to stave off economic crisis, and the benefit of a rebounding economy should include increased tax revenues and a lowering of the deficit over time.  The President has since made it clear that he came to Washington to make the tough decisions, including long-term deficit reduction.  His health care reform triumph follows through on that promise.

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For more on health care reform:  You’ve Got to Hand it To Them:  Obama, Pelosi and Reid.