On the plus side of the ledger, Obama appears to be willing to officially embrace “chained-CPI,” which is a new measure of inflation used to determine Social Security benefits that takes into account a more realistic view of people’s shopping habits. As entitlement reform proposals go chained CPI is about as modest as you can get, but it’s also far more than we’ve seen from the president in the past. Ed Morrissey writes for the conservative blog HotAir:
“Strictly from a political standpoint, the public offer is surprising, almost shocking. Without a doubt, Democrats in the 2014 cycle would have used the senior-scaring tactics of the last decade or more when it comes to Republican demands for entitlement reform and deficit control. Most of those efforts have focused on Medicare and its greater threat to the nation’s fiscal health. When Paul Ryan offered two budgets to turn Medicare into an exchange program not dissimilar to ObamaCare for the rest of the nation, Democrats ran ads that pictured a Ryan stand-in pushing Grandma over a cliff.
That strategy is useless now that Obama has essentially endorsed entitlement reform . . .”
Democrats are already falling all over themselves to bash the president’s decision to dip his toe into the entitlement reform pool.
“I am terribly disappointed and will do everything in my power to block President Obama’s proposal to cut benefits for Social Security recipients through a chained consumer price index,” Sen. Bernie Sanders said in a statement.
And who could forget last year’s fiscal cliff negotiations when Senate Majority Leader Harry Reid actually tore up Obama’s chained CPI concession and “threw it into the blazing fire in his ornate green marble fireplace.”
As for Medicare, there are much fewer details about Obama’s reforms floating around, but early indications are that he will move towards a means-tested system whereby wealthy people pay more into the program. For all intents and purposes this is nothing more than a targeted tax hike that threatens to jack up peoples’ payroll taxes. It may also have the unintended side-effect of revealing Medicare’s true colors – as a redistributive welfare program, not a mechanism to ensure retirement. A more sensible course would be to stop nibbling around the edges and introduce market-based reforms a la Paul Ryan and Congressional Republicans.
Outside of the world of entitlements Obama’s budget gets even worse. According to the Washington Post:
“Obama is seeking to raise $580 billion in tax revenue by limiting deductions for the wealthy and closing loopholes for certain industries like oil and gas. Those changes are in addition to the increased tobacco taxes and more limited retirement accounts for the wealthy that are meant to pay for new spending.”
That’s a lot of new taxes, especially given the $600 billion in new revenue the Obama Administration sought and won in the fiscal cliff negotiations. And now they are back asking for another $600 billion? That’s a tough sell, made tougher by the fact that they don’t want to plow that revenue into deficit reduction, but are intent on using it to promote new spending.
Yes, new spending. As if they’ve learned nothing from the myriad failed stimulus programs of the past few years, Obama and his team are convinced that a few more billion dollars is just what the economy needs to get humming again. Forgive us our skepticism, but more government money (and the higher taxes that go along with it) isn’t what this economy needs.
And what do they couple this new spending with? By tossing sequestration – the one successful thing Washington has actually done to reduce the deficit – out the window. Apparently part of the mythical “grand bargain” to reduce the deficit is to undue all past things that reduced the deficit. This is a political sneaky trick, meant to build upon the public sentiment that deficit reduction has already been achieved, but hopefully the public won’t buy it.
All told, it appears Obama is going to attempt to sell America on the idea that one modest entitlement reform is enough to qualify this as a “balanced approach.” But one step forward and five steps backward isn’t progress.