Obama Yields to Liberal Outcry on Entitlement Reform

President Obama has tried for months to convince critics on the left that entitlement programs such as Medicare had to be cut in order to save the programs, but he seems to have yielded under pressure from his political base.

In his new $1.5 trillion deficit-cutting plan, unveiled Monday at the White House, Obama backed away from the changes he had been talking about for months.

Those changes had been part of Obama's pitch as recently as Sept. 8, when in his speech to a joint session of Congress Obama called for changes to the popular insurance program for Americans age 65 and over.

"With an aging population and rising health care costs, we are spending too fast to sustain the program," he said. "And if we don't gradually reform the system while protecting current beneficiaries, it won't be there when future retirees need it. We have to reform Medicare to strengthen it."

But after that speech, several Democratic groups and lawmakers sent letters, held news conferences and even staged protests, including one Monday in front of the White House by activists challenging the idea of any cuts in Medicaid benefits.

The president seems to have heard the objections. In his Rose Garden speech Monday, he proposed only half as much in savings as he did in debt talks this summer, offering $320 billion in changes instead of $650 billion, and he took a very different tone:

"We will reform Medicare and Medicaid, but we will not abandon the fundamental commitment that this country has kept for generations," he said.

"He's pulled way back on those proposals specifically on Medicare, Medicaid," says Alison Fraser of the conservative Heritage Foundation, "Even on Social Security, which at one point was in the mix, now it's completely off the table. So it's a disappointing step, rather than an encouraging one."

The president had proposed changes in Social Security to keep the program from having to cut benefits across the board in future decades. That is now gone. And he had proposed raising the eligibility age for Medicare from 65 to 67. That too is gone.

The changes to Medicare may or may not soften criticism from the left. The liberal group MoveOn.org urged its members last week to call the White House. And the group warned in a letter, "if the President comes out on Monday calling for cuts to Medicare and Medicaid benefits, the enthusiasm he's built up in the last week will disappear in an instant."

Ninety percent of the changes Obama has proposed are in the form of cuts to providers, such as doctors and hospitals instead. But reimbursements to them have already been cut.

And many policy experts are concerned about access to care for seniors on Medicare, a trend already under way in some areas of the country.

"So what we've seen from the president so far: more price controls and rationing," House Budget Committee Chairman Paul Ryan told Fox News. "No plans to save it from bankruptcy."

Taken together, the Medicare and Social Security programs have promised $46 trillion dollars more in benefits than the government can pay for with the revenues it now receives. Most agree cuts are inevitable, and conservatives warn that unless eligibility rules are tightened, beneficiaries will suffer, especially in Medicare.

"If we continue with even more of these provider crackdowns, you know, you're going to have a lot more doctors, hospitals, pharmacists, and so forth, dropping out of the program," Fraser said.

The plan does shift a small portion of additional costs to beneficiaries, but those changes would not start until 2017, after Obama’s second term, if he wins one.

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Chicago Editorial Writer Suggests Obama Step Down After First Term

Published September 19, 2011

| FoxNews.com

President Obama's hometown newspaper has some startling advice for the commander-in-chief -- quit while you're behind. 

Citing the president's record-low approval ratings and unease in the Democratic base, a Chicago Tribune editorial writer recommended over the weekend that Obama need not feel obligated to run for a second term. 

Steve Chapman said that with Obama facing the prospect of a double-dip recession and, if he wins reelection, a gridlocked second term, it might be better to call it a presidency and let someone else -- maybe Hillary Clinton -- carry the Democratic mantle in the 2012 election. 

"I checked the Constitution, and he is under no compulsion to run for re-election," Chapman wrote in the Tribune. "He can scrap the campaign, bag the fundraising calls and never watch another Republican debate as long as he's willing to vacate the premises by Jan. 20, 2013. That might be the sensible thing to do." 

Chapman said the high unemployment already makes it difficult for Obama to run. He noted that his recently unveiled jobs bill has not yet lit a brushfire of support, and that his party just lost two special elections in Congress. 

"In hard times, voters have a powerful urge to punish incumbents. He could slake this thirst by stepping aside and taking the blame. Then someone less reviled could replace him at the top of the ticket," Chapman wrote. 

Though ex-Obama rival and now-Secretary of State Hillary Clinton has brushed off talk of presidential aspirations, Chapman said Clinton would be just the right fit. 

"Her husband presided over a boom, she's been busy deposing dictators instead of destroying jobs, and she's never been accused of being a pushover," he wrote. "Not only that, Clinton is a savvy political veteran who already knows how to run for president."

Obama was the first Democratic candidate for president ever endorsed by The Chicago Tribune. Chapman was on the board at the time.

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Democrats Balk at Obama Tax Plan

Democrats Balking at Obama Tax Plan

“This is the time for new ideas, not re-fighting old battles for short-term political gain.”

-- Aide to a Democratic senator talking to “Power Play” about President Obama’s tax proposals.

President Obama’s idea for a millionaire tax is hardly new. It’s a favorite idea in cash-strapped Democratic states like Maryland and New York and some version of it has been part of Obama’s economic agenda since his candidacy.

Obama is doing something different today, though, as he proposes a 4.5 percent surtax on those with incomes over $1 million in addition to his plan to raise taxes on individual incomes over $200,000 and reduce charitable deduction rates for high earners.

What’s different is the timing.

Obama kicked off his fall campaign swing two weeks ago today with a Labor Day speech at an AFL-CIO rally, followed up with an address to a joint session of Congress and then an aggressive swing-state schedule. His goal, repeated again and again, is to cast himself as an activist on jobs compared to a Congress that won’t act.

His explicit threat is that while the economy may not be getting better, voters will know it’s the Republicans’ fault. It was a strategy that initially thrilled the president’s supporters – the kind of in-your-face, confrontational style that they have long urged Obama to adopt.

The problem, though, has been that the president’s stimulus plan has mostly received a bipartisan shrug in Congress. When the best Obama can get as an answer to “pass this bill today” from Sen. Dick Durbin, the number two Senate Democrat, and longtime friend and home state senator is, “sometime next month” one gets the sense that the blue team is not feeling the fierce urgency of now.

Part is the fact that Obama served up mostly a rehash of his first, February 2009 stimulus package. The White House thought that would make it harder for Republicans to say no since the ideas aren’t controversial. But not only have Republicans been able to repeat “more failed stimulus” until they are hoarse, but Obama has not been able to win the support of key moderate Democrats.

Even the payroll tax cut extension and expansion, assumed to be the least controversial parts of the president’s plan, have been kind of a fizzle. Conservatives said such temporary measures don’t work since businesses crave predictability and many Democrats dislike the fact that taxes being lowered are the ones that finance Social Security.

There seems to be a lot of support for some kind of reform to unemployment benefits, but that’s hardly stimulus. There’s also a lot of interest in spurring road work through a new infrastructure bank and a speedy reauthorization of highway spending for next year, but again, nothing that makes either side in Congress stand up and cheer.

But maybe worse for the president’s re-election bid is that neither has there been anything to provoke a huge fight. After nine months of constant conflict with House Republicans on funding the government and raising the debt limit, Obama’s stimulus proposal has mostly been shrugged off.

To make his pitch to voters, Obama needs a foil. So far, congressional Republicans haven’t provided one. Part of the reason has been that Senate Democrats haven’t put them on the spot.

Obama has been trying to step up the pressure on House Republicans, following his initial jobs proposal with two proposals for tax increases. First came the idea for closing loopholes to finance $450 billion in stimulus last week. Now comes the idea of a $1.5 trillion package of tax increases to reduce future deficits. That includes the millionaire tax and the idea to allow current tax rates to lapse for the top bracket, sliding rates up to 40 percent from 35 percent.

Obama is also mostly taking a pass on entitlement reform, limiting his deficit-related proposal to calls for further reductions to the payments to doctors and hospitals – essentially doubling down on his own national health law’s premise.

The president is pretty plainly trying to bait House Republicans into a battle in which they are defending “millionaires and billionaires.” Obama is even naming the measure after billionaire Warren Buffett, one of his most prominent supporters, who has asked that he be taxed at a higher rate. And rather than talking about stimulating the economy, Obama is explicitly talking about flattening income inequality.

Obama knows that there isn’t support in either chamber of such a massive tax package, even if it is cast in stark terms of pitting the haves against the have nots, but if House Republicans can be made to resist on behalf of the haves, Obama will be able to add a new wrinkle to his stump speech.

But the congressional Democrats on whom Obama is relying to keep Republicans pinned down have so far not joined the president at the barricades. Part of that has been that liberals aren’t happy that the president has proposed stimulus lite, but mostly because Democrats don’t currently see Obama as a good friend to have these days.

Since Obama began his fall campaign effort, the administration has been beset by scandal (Fast and Furious, Solyndra and LightSquared) and Democrats have lost two special elections in which Obama himself was the central issue. The president has obtained no job-approval bounce from his latest publicity blitz. The administration is pushing back with vigor against a new book by Ron Suskind which shows a dysfunctional White House and a president who compares his own management style with that of Jimmy Carter.

Looking at all this, moderate Democrats are not eager to join the president in yet another violent clash with House Republicans. If Obama can’t rally them to his cause soon, his 2012 strategy will be a bust even before 2011 is over.

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Obama Unveils Deficit Plan Containing $1.5T in Tax Hikes, GOP Cringes

WASHINGTON –  President Obama, drawing immediate condemnation from congressional Republicans, unveiled a new deficit reduction plan Monday anchored by $1.5 trillion in new taxes, including an end to Bush-era rates for upper income earners making $250,000 or more and additional taxes on millionaires. 

Keying in on a populist message that millionaires and billionaires should pay more in taxes than their secretaries, the president announced a plan in the Rose Garden that includes more than $2 trillion total in entitlement cuts and tax increases over the next decade. 

Together with spending cuts enacted last month and projected savings from interest payments, the savings in the president's plan total more than $3 trillion. The Obama administration is also adding on another $1 trillion in savings over 10 years from winding down the wars in Iraq and Afghanistan, though that kind of accounting has been dismissed in past debates as a gimmick. 

The $4 trillion effort is tied to his American Jobs Act, aimed at putting nearly 14 million unemployed back to work. Critics have stated that targeting job creators -- the top 1 percent pays 38 percent of the tax burden, according to 2008 estimates -- won't help the jobless find employment.

House Speaker John Boehner last week warned that tax hikes should be off the table as a newly formed bipartisan committee meets to extract long-term deficit savings. 

"That's not smart. It's not right," Obama said of the GOP stance. 

In a combative set of remarks, the president vowed to veto any package that cuts into Medicare without raising "serious revenues" from wealthy Americans and corporations. He effectively dared Republicans to follow through on their no-tax-hike pledge as the deficit committee works under a strict timeline to find at least $1.2 trillion in deficit savings by Thanksgiving. 

"We can't just cut our way out of this hole. It's going to take a balanced approach," Obama said. "It's only right that we ask everyone to pay their fair share." 

The most controversial part of the plan was already shaping up to be the proposed tax increases. 

"Pitting one group of Americans against another is not leadership," Boehner said Monday. "The Joint Select Committee is engaged in serious work to tackle a serious problem: the debt crisis that is making it harder to get our economy growing and create more American jobs. Unfortunately, the president has not made a serious contribution to its work today. This administration's insistence on raising taxes on job creators and its reluctance to take the steps necessary to strengthen our entitlement programs are the reasons the president and I were not able to reach an agreement previously, and it is evident today that these barriers remain." 

In total, the new tax revenue Obama is seeking is nearly double the $800 billion that Boehner had been willing to consider in July, before the so-called "grand bargain" fizzled.

Sen. Pat Toomey, R-Pa., a Tea Party-aligned senator and member of the bipartisan deficit committee, said the panel does not have "time to waste on political games" and economy-harming tax increases. 

"I am concerned that his deficit reduction strategy sometimes seems more defined by political posturing, such as recycling tax hikes that even lawmakers in his own party have publicly opposed," he said in a statement. 

Senate Republican Leader Mitch McConnell said the joint deficit committee was taking its task "far more seriously" than the White House. 

"Veto threats, a massive tax hike, phantom savings, and punting on entitlement reform is not a recipe for economic or job growth -- or even meaningful deficit reduction," McConnell said. 

Treasury Secretary Tim Geithner disputed claims that the plan would hurt the economy, describing the tax changes as "modest" and fair. "I am very confident that the modest changes we're suggesting in terms of revenues would make the economy stronger in the long term," he said. 

The plan includes the tax hikes Obama previously proposed to pay for his $447 billion jobs plan -- those proposals ranged from limits on deductions for wealthy filers to an end to certain corporate loopholes and subsidies for oil and gas companies. And it includes about $800 billion over 10 years from letting the Bush tax cuts expire for families making more than $250,000 a year. 

In addition, the plan includes the so-called "Buffett Rule," named after billionaire Warren Buffett who complained he was paying a lower tax rate than his secretary. The provision would set a new tax rate for those making more than $1 million a year. Geithner suggested the administration would leave it up to Congress to work out the particulars. 

Based on early details of the plan over the weekend, Republicans on Sunday accused the president of playing "class warfare." 

But Obama rejected the claim. "This is not class warfare. It's math," he said. 

He said eliminating loopholes and making other changes would also allow lawmakers to simplify the tax code and ultimately lower the corporate tax rate, among the highest in the world. 

One administration official acknowledged that the plan represented the president's "vision," and not a "legislative compromise." 

The plan includes $580 billion in cuts to mandatory benefit programs, including $248 billion from Medicare and $72 billion from Medicaid and other health programs. Obama said it would also target farm subsidies. 

It includes no changes in Social Security and no increase in the Medicare eligibility age, which the president had been willing to accept this summer. 

Administration officials said 90 percent of the $248 billion in 10-year Medicare cuts would be squeezed from service providers. The plan does shift some additional costs to beneficiaries, but those changes would not start until 2017. 

The Associated Press contributed to this report.

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