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1530342 tn?1405016490

President's debt offer: risky but could be win-win

WASHINGTON (AP) — It's hard to know which is more surprising: a Democratic president pushing historic cuts in spending, including Social Security and Medicare. Or a Republican-controlled House refusing to accept the deal and declare a huge victory for long-sought GOP goals.
http://news.yahoo.com/presidents-debt-offer-risky-could-win-win-211537107.html

Political orthodoxy has been turned on its head ever since President Barack Obama stepped up his call for a bipartisan "grand bargain" to raise the national debt ceiling and avert a default on U.S. obligations. The deal would include $4 trillion in deficit reduction over 10 years, mainly through steep spending cuts but also including up to $1 trillion in new federal revenue.

Those are far bigger targets than typical budget negotiations. And the spending cuts would seem more appropriate for a Republican president than a Democrat.

Some pundits and political insiders say Republicans should leap at the offer. But there's a hitch: The new revenue — mainly from overhauling the tax code and lowering rates by eliminating or limiting a broad swath of loopholes, deductions and tax breaks — presumably would violate a no-net-tax-hike pledge that scores of Republican lawmakers have signed.

Mostly for that reason, House Republicans so far have rejected Obama's overture, despite the interest shown by Speaker John Boehner. Some pro-Republican analysts seem bewildered.

Obama's offer of big spending cuts would have "brutally fractured the Democratic Party," and congressional Republicans probably "will come to regret this missed opportunity," wrote David Brooks, a moderate-to-conservative columnist for The New York Times.

Such comments lead to a question: Why did Obama make the overture, and how might it affect him and his party as he ramps up his re-election campaign?

The consensus answer, based on interviews with key players in Congress, the White House and elsewhere, is that Obama may be maneuvering himself into a win-win political position for 2012, although it's not without risks.

If Congress approves a version of the "grand bargain," Obama can run next year as a president who began taming the runaway deficit, extracted concessions on higher taxes from Republicans and put Medicare and Social Security on a possible path toward greater stability.

If congressional Republicans block the plan — and especially if the Aug. 2 debt ceiling deadline is missed — Obama might persuasively argue that he tried his best to strike a compromise, at some political risk to himself. Recent polls suggest that strategy is working, as Americans seem disgruntled with the Republicans' dug-in opposition.

Either way, Obama can appeal to the all-important independent voters next year, portraying himself as above the bitterly partisan House and Senate squabbles. Polls show that independents are deeply unhappy with Congress. Even if Obama's ratings are not spectacular, he fares better.

A CBS-New York Times poll found that 68 percent of independents think an agreement on spending and the debt ceiling should include "a combination of both tax increases and spending cuts," which is the president's position. Fifty-five percent of Republicans in the survey hold that view.

Regardless of what happens to his plans to phase in tax and spending changes in future decades, Obama would be on record as pushing dramatic changes to government finances and Democratic traditions.

They include:

—Increasing the eligibility age for Medicare recipients from 65 to 67 by 2036.

—Raising co-pays and premiums for Medicare beneficiaries based on their incomes. Such "means testing" already exists; the president's proposal would expand it.

—Decreasing the size of annual cost-of-living increases in Social Security benefits.

Obama first talked of tackling Medicare, Medicaid and Social Security spending in his State of the Union speech in January. After a budget stalemate nearly shut down the government, he revived the talk in April.

In a speech at George Washington University, the president offered the outlines of a $4 trillion deficit reduction plan over 12 years. It included reductions in Medicare and Medicaid spending of $340 billion by 2021, or $480 billion by 2023.

Initial deficit-reduction talks with a bipartisan group of lawmakers and led by Vice President Joe Biden focused on a smaller number — $2.4 trillion over 10 years. That was Boehner's price for an increase in the debt ceiling of a similar amount. The plan included modest changes in Medicare and Medicaid. Democrats also envisioned closing some tax loopholes and limiting some deductions.

When conservative Republicans' objections to tax increases prompted GOP negotiators to back away, Obama resumed talk of a "big deal" of about $4 trillion.

White House officials say Obama concluded that if both sides wanted to take on each other's sacred cows — Republicans' opposition to tax increases, and Democrats' support for entitlement programs — then why not seek a major deal with a long-term impact?

Republicans, and some Democrats, complain that Obama's proposals are maddeningly vague. Some suspect he's laying a trap for Republicans with gauzy proposals and ample chances for Democrats to wriggle out of their obligations in the coming years and decades.

"I don't know what the $4 trillion deal is," said Sen. Lindsey Graham, R-S.C. "These cuts don't have any definitions," he said, nor do the proposed revenue hikes.

Obama also risks alienating his liberal base by even entertaining such ideas as entitlement cuts in broad terms. His advisers believe the potential gain in support from independent voters is worth angering some liberal stalwarts.

Liberal leaders, including labor unions and House Democratic leader Nancy Pelosi, have been relatively quiet so far. They say the entitlement programs' benefits must be protected, and revenues must be raised, but they've avoided ultimatums.

Congressional insiders say Pelosi and her allies realize that, thus far, Republicans are taking the chief blame for appearing obstinate. If the "grand bargain" approach fails, liberal Democrats can appear to have been more open-minded while avoiding hits to their favorite programs.

If the grand bargain approach succeeds, however, liberals will fight to minimize cuts in entitlement benefits.

Other components of Obama's offer include:

—Limiting the growth in federal health care costs to national economic growth as measured by the gross domestic product, plus one-half of 1 percent.

—Giving a strengthened Independent Payment Advisory Board authority to force Medicare cuts if costs rise beyond certain levels. Lately the administration has been playing down the agency as a "backstop."

—Finding about $200 billion in savings over 10 years through cuts to Medicare and Medicaid providers, including drug companies, hospitals, home health agencies and nursing homes.

Past efforts to include such savings have run aground. The most notable example is a 1997 law that requires a cut in physician fees, a requirement that Republican and Democratic Congresses have routinely postponed.
11 Responses
1530342 tn?1405016490
Ballsy....It's a plan non the less....I actually like it.

Increasing the eligibility age for Medicare recipients from 65 to 67 by 2036.
-I'd rather have this than NO medicare at all....I'll work an extra 2yrs if I know for sure Medicare will be there waiting for me. People work past 65 yrs now so it wouldn't be any different. IMO

The new revenue — mainly from overhauling the tax code and lowering rates by eliminating or limiting a broad swath of loopholes, deductions and tax breaks — presumably would violate a no-net-tax-hike pledge that scores of Republican lawmakers have signed. '
-Don't see a problem with this...Anyone?

Raising co-pays and premiums for Medicare beneficiaries based on their incomes. Such "means testing" already exists; the president's proposal would expand it.
-What's wrong with this If it already exists and is just going to get expanded?

Decreasing the size of annual cost-of-living increases in Social Security benefits.
- Again I's rather have this than NO SS

"I don't know what the $4 trillion deal is," said Sen. Lindsey Graham, R-S.C. "These cuts don't have any definitions," he said, nor do the proposed revenue hikes."
-How can he not know. It's outlined right in the article?...

Other components of Obama's offer include:

—Limiting the growth in federal health care costs to national economic growth as measured by the gross domestic product, plus one-half of 1 percent.

—Giving a strengthened Independent Payment Advisory Board authority to force Medicare cuts if costs rise beyond certain levels. Lately the administration has been playing down the agency as a "backstop."

—Finding about $200 billion in savings over 10 years through cuts to Medicare and Medicaid providers, including drug companies, hospitals, home health agencies and nursing homes.

* I like this plan. I actually understand it. It's a very "in the middle" plan. He's Trying...If this is all going to help our economy and our country, why would republicans be against it? I mean, it has cuts to Medicare and SS like they want...Oh yea, the tax hikes...They just can't seem to let that one go..SMH......We'll see how this chess game plays out!

Avatar universal
He needs to be careful when messing with SS and Medicare if he wants to be re elected because people will be in the streets if those programs are messed with. The reason being they did not create the deficit and will not cure it. They are not part of the deficit period.

The Republicans have always been after those programs and continually try to get them, probably because they have already spent the funds for other things and dont know how to tell us they robbed us blind? I hear SS is nothing more than an empty folder in a filing cabinet somewhere. I do not know that to be tru but would not be surprised.

I am also very curious about this pact under a man no one voted for, was not on any ballat, yet the republicans sign a pact with him and is ready to throw themselves over a cliff over it and take the country with it. That ticks me off to no end! I am investigating to see who this guy is and why he has so much power over our country, even over the very people we ELECTED to power. If they have another that they are serving over the country I want to know all about it.

My guess is they will change their verbage on what tax hike means. The bush tax CUTS cannot be considered a hike because they had an expiration date, and we would simply go back to paying pre cut taxes, and is not a hike in reality. We were on vacation from taxes which is part of what is on the credit card everyone is fighting about!
1530342 tn?1405016490
"He needs to be careful when messing with SS and Medicare if he wants to be re elected because people will be in the streets if those programs are messed with. The reason being they did not create the deficit and will not cure it. They are not part of the deficit period."

I COMPLETELY understand what you are saying. So what is he to do? He's not eliminating these programs. He has a Republican House and a Democratic Senate. Whether WE (the American People) like it or not, as President, he HAS TO find a common ground to appease BOTH sides. Do you agree that his plan is a good option?

No tax Pledge info: ( I found this artiucle @ http://www.thepilot.com/news/2011/jun/29/no-tax-pledge-puts-lawmakers-in-untenable-position/)

Currently in the U.S. Congress, almost 95 percent of all Republicans - and a handful of Democrats - have taken a pledge, some even before being sworn into office.

What distinguishes this pledge is the fact that it is to a lobbying organization known as Americans for Tax Reform (ATR), an organization presided over by Grover Norquist, author of the Taxpayer Protection Pledge (TPPP).

It's no surprise that there is stiff and ongoing resistance to raising revenues. In our own state, Congressman Howard Coble and Sen. Richard Burr have both signed this pledge, which says they will "oppose any and all efforts to increase the marginal income tax rate for individuals and business" and "oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates."

Inherent in the TPPP is the tacit assumption that there is no such thing as a beneficial piece of fiscal legislation if it involves raising taxes directly or indirectly; and that all such actions are categorically harmful to the public interest.

Granted few people or businesses wish to pay more taxes, but those put in place by the George H.W. Bush and W.J. Clinton administrations may well have contributed to the balanced budget we enjoyed soon thereafter.

The situation today is, of course, much more problematic and acute because of: (1) the size of the national debt; (2) the looming Aug. 2 deadline for extension of the federal debt ceiling; and (3) the House and Senate whips [who whip up party votes], Eric Cantor (R-Va.) and Jon Kyl (R-AZ), having "walked out" of negotiations.

Nevertheless, Sen. Thomas "Tom" Coburn (R-Okla.) - himself a signer of the TPPP - has taken the lead in renouncing his TPPP that calls for him NOT to eliminate a subsidy of 45 cents per gallon paid to ethanol blenders, who are further protected by a tariff upon ethanol imports. Net cost to the taxpayer: $5 billion annually.

Ordinarily, Republicans would oppose fettering of free markets by price supports, but not now, with the intense opposition to raising revenue. Though the measure did not pass, Coburn and colleagues truly defied GOP leadership, and he especially should be commended for the courage and leadership it took to do so.

Meanwhile, as Coburn was defecting, other TPPP-signers appear to be marching in lockstep formation to the cadence of Norquist, whose most famous quote is, "I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub."

Coburn may not be alone in his dilemma as a TPPP-signer; others may feel the same conflict between their TPPP and part of their oaths of office, "I will well and faithfully discharge the duties of the office." How the debt-ceiling votes shape up - or not - will be some indication of who is beholden to Norquist's ATR and who may be more beholden to their oath of office.

Democrats have certainly made their share of errors - e.g., only five voted with Coburn to end the ethanol subsidy. However, I am simply unaware of any comparable pledge made by most Democrats to any lobbying organization. Indeed, what the ATR and the TPPP may actually represent is a form of political patronage disguised as taxpayer protection, with Norquist's ATR being the benefactor-patron and the signers of the TPPP being the commissioned beneficiaries.

The ATR's immediate goal appears to be a de facto effort to restrict Congress' constitutional taxing authority. However, that may merely be a means to the end of wiping out several Cabinet-level departments, rending the social safety net and /or eviscerating entitlement programs.

The TPPP seems extreme - without provisions for any exceptions or an escape clause. In any event, if pledge-signers continue their lockstep march toward blocking any revenue increases, existing tensions may rise as each side attempts to hold the other accountable for the impasse.

Is there a solution to this recurring debacle of "raw politics"? It's going to take courage and negotiations in good faith, a process that the TPPP seems to be complicating. Coburn and his colleagues should be respected for the example they have set, and the humility it may have taken to acknowledge a mistake in signing the TPPP. Others should do likewise.
1530342 tn?1405016490
http://www.atr.org/taxpayer-protection-pledge

Another link that explains the no tax pledge...
973741 tn?1342342773
I'm happy just to see something happening rather than everyone just being stubborn.  No one is going to be happy-------  everyone will have to compromise.  It's a rough rough time.  Who wants our country to be in this situation??  No one-------- but we are.  

I am sick of hearing about this election that is coming.  Honestly, I'd like to postpone just so we can stop worrying about that and do the job at hand.  WE elected these people into the house and senate to work together and help our country.  We did NOT elect them to sit around and argue things just for the sake of how the party or potential candidates will look.  
I think people that choose their answer before thinking about it based on what they think others in the party believe are a disaster to politics.  

Basically-------------  fed up here.  And many Republicans are fed up with our party just as many Dems are fed up with theirs.  

Let's just make a deal here.  We have to.  

I think this no tax pledge is ridiculous.  I don't support that.  I am not a fan of taxes and pay a lot but we need to do something.  If I have to pay (slightly -------  :>) ) more taxes to help us out of this crisis---------- so be it.  Wish the Republicans would talk to the main body of their constituents verses a more vocal few.
Avatar universal
Im right there with you. I am fed up as well and over pretty much the same things you mentioned. I am honestly getting to where I dont even want to know whats going on anymore.

Regardless, Obama was on this am and it sounds like he is optimistic. He went into some of the spending cuts and they sound tuff, but reasonable I think. Now lets see if the parties that do agree can convince the House.

He also cleard up the fact that an option under the 4th ammendment is something the lawyers have advised him against. So that is dead but he is optimistic, so hey! maybe!

Miss Pinence, thankyou, thankyou, thankyou for all your hard work in helping me out! Yer the bestest!
Avatar universal
I agree with you 100%.

Mike
377493 tn?1356502149
You know, the more I read all of the comments on threads like this one, the more I realize something.  Different countries, different issues, same behaviour from politicians.  Looks like a politician is a politician no matter where you are.  When did this happen?  When did they stop caring about the citizens they represent and more about just getting elected?

Here is what I have decided...the next time we here have an election, I will vote for whomever actually puts out a plan.  I don't want to hear anymore about how what others are doing isn't working or is bad for the country.  I just want to hear, plain and simple, what they are going to do.  No more voting for a specific party...I want answers and from here on in they have to really earn my vote.  Know what I think will happen?  I'll be destroying another ballot..good grief, when did I become so jaded....
1530342 tn?1405016490
@ teko You're welcome:) You inspire me to get knowledgeable about our politicians and our government..So THANK YOU!!!!!!
649848 tn?1534633700
Well, there ya go -- something we ALL agree on.  

I've said before and will keep on saying - we voted these politicians in, to do a job, NOT spend all their time getting ready for the next election.  They, obviously, only care about getting re-elected.  

306455 tn?1288862071
How do we solve this problem with the politicians not listening to us? Technology. We have the technology to set up a voting system to where the people could log onto their computer and vote for all these issues. We could then get rid of most of the $hity politicians we have in Washington.(Save big$) Yes, we would still need a few, to write up the issues for voting, etc. It would solve a lot of problems. And the people would have their say. Think about it.
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