Offering Entitlement Cuts, Obama Caves to Republicans

By offering cuts in Social Security and Medicare, two things are apparent: the Republicans are dictating all the terms of the debt limit deal and Mr. Obama has put his presidency on the line.

There is no question that Medicare needs reform; the date when its funds will be exhausted is now set at 2024, five years sooner than earlier projected. That Obama is willing to confront the problem is a major turning point and praiseworthy to that extent. But just what is to be cut? And why Social Security now? The money owed to it by the government is not forecast to run out until 2037.

The tax concessions he has sought are mere crumbs — $130 billion versus the $2 trillion in budget cuts the Republicans have been demanding and which now, according to the Washington Post, could amount to $4 trillion across 10 years.

It is as if Mr. Obama has decided he cannot win, so maybe by doubling down he might win history’s kudos as a bold leader.

There’s the question of what will he get in return? Will Republicans yield on raising the tax rate on those earning over $250,000 a year? If Obama accedes to Medicare and Social Security cuts but does not slash $100 billion or so annually from the defense budget, if subsidies to oil and gas companies remain in place, and if those hedge fund managers are not made to pay standard taxes on their gargantuan take home pay, more symbol than substance but a source of voter outrage, Democrats will stay home next November rather than vote for him.

Just what will happen when the deal is proposed to Congress suggests a total impasse leading to default beginning August 2nd. We will see Democratic leader Nancy Pelosi standing athwart the House yelling “Stop!”, she having said in early June, “I could never support any arrangement that reduce benefits for Medicare” and calling the idea a “non-starter”. Democrats don’t hold the majority there, but fearful of facing enraged seniors back home, a good many Republicans may go along with that.