Baucus Gives Away the Game: Medicare Cuts in Debt Limit Deal - FDL

[WillyT]

Baucus Gives Away the Game: Medicare Cuts in Debt Limit Deal
By: David Dayen
Thursday June 23, 2011 11:37 am

<snip>

Max Baucus, a participant in the now-stalled debt limit talks led by Joe Biden, told the Senate Finance Committee that the new “grand bargain” in the deal, what Eric Cantor balked at and left to John Boehner to authorize, is a swap of Medicare cuts for tax increases.

“I’m disappointed that Leader Cantor’s withdrawn,” said Senate Finance Committee Chairman Max Baucus during a hearing on health care spending. “I think we should stay at the table. I think we should keep working, difficult as it is, and try to balance between Medicare cuts — additional Medicare cuts — so long as there is commensurate additional revenue. We need balance here.”

Baucus made clear that the talks frayed over Democrats’ insistence that tax increases of some sort be part of the final deal.

“The largest deficit reduction measures in the post-World War II era both had significant revenue increases. About one-half the total amount of deficit reduction in each bill,” Baucus said. “I think we can raise revenues and have a positive economic outcome. Revenue increases in the 90s gave us 23 million new jobs. The longest economic expansion in U.S. history and a balanced budget.”

OK, so let’s parse this. Medicare cuts are apparently on the table in the deal. It seems that, in exchange for any additional Medicare cuts, revenue increases of commensurate value would be needed.

Now, there’s literally no connection between Medicare cuts and revenue increases (which could include the elimination of tax expenditures, presumably), just like there’s no connection between a dollar-value increase in the debt limit and spending cuts. These connections are all made for political reasons. Baucus can go back to his party and constituents and say, “Sure, we cut Medicare by $200 billion but we got $200 billion in new revenue.”

<snip>

More: http://news.firedoglake.com/2011/06/23/baucus-gives-away-the-game-medicare-cuts-in-debt-limit-deal/

:mad:

:kick:

[fascisthunter]

1. and cutting it will do no good

these people are sick frauds.... pay your fucking taxes you rich parasites!!!!

[glinda]

5. Here here.

[Uben]

6. No, I'm not going to, so don't ask again.

Just because I'm now rich, you expect me to break my twenty dollar bill to pay more taxes? Harrumphh! I'm saving the whole twenty, come hell or high water! However, I will pay you Tuesday for a hamburger today!

[nineteen50]

9. Pig squeal!

If you want to hear it cut across the board 12% on all income
tax deductions for personal, business and corporate income.
Including all allowances, and subsidies until the budget is
balanced. Find out who really gets the breaks just follow the
squeals.

[Doctor Hurt]

2. depends what and how they cut

there's some things in medicare that can be cut without significant harm, or perhaps even benefit. Wonder if the R's would settle for such cuts, though.

[amborin]

3. the bogus debt issue:

Sally Kohn: "Don’t Believe the Hype About U.S. Debt"
Share214Vice President Joe Biden met with congressional negotiators last Thursday to discuss ways to curb the federal deficit and permit new borrowing after August 2, the day the U.S. government is expected to reach its $14.3 trillion borrowing limit. Democrats want to curb the federal deficit by pushing for new taxes and eliminating many tax loopholes, while Republicans have called for steep spending reductions but no new taxes.

To discuss the ongoing debate over how to curb the federal deficit, Democracy Now! recently spoke with Sally Kohn, author of a May 24 USA Today op-ed titled Don’t Believe the Hype About U.S. Debt.

JUAN GONZALEZ: Vice President Joe Biden met with congressional negotiators last Thursday to discuss ways to curb the federal deficit and permit new borrowing after August 2nd, the day the U.S. government is expected to reach its $14.3 trillion borrowing limit. Democrats are pushing for new taxes and the elimination of many tax loopholes to be part of any deficit reduction deal, while Republicans want to see steep spending reductions but no new taxes.

AMY GOODMAN: We’re joined by Sally Kohn. She’s a community organizer, a political commentator, founder and chief education officer of Movement Vision Lab. And she wrote an op-ed piece, a very interesting op-ed piece, in USA Today called "Don’t Believe the Hype about U.S. Debt."

Well, what do you say about the debt?

SALLY KOHN: You know, this is the time when we should be worrying about other things than public spending. I mean, the fact of the matter is that corporations are sitting on record levels of capital. They’re not spending it. There’s new news out that, if anything, they’re not spending it on jobs; they’re spending it on new, you know, manufacturing equipment. So the problem is, in this situation, like it or not, government is the spender of last resort. And the irony with all this, when everybody says, "Well, government should be tightening its belt, so is everyone else," you know, we let corporations — we actually encourage corporations in this country to borrow and carry debt ratios sometimes three, sometimes four, 14, 50 times higher than government.

AMY GOODMAN: Give us examples.

SALLY KOHN: You know, Boeing, IBM, JPMorgan. JPMorgan has a debt-to-income ratio of 50 to one. The United States government? One to one. So, why is it that debt is good for private corporations, for successful private corporations, so they can invest in the future of their business, but not good for the government, especially at a time of anemic tax receipts, because we’ve cut taxes, among other things, and because the economy is sluggish? Why shouldn’t we use government to invest in the future of our nation and the future of our citizenry?

JUAN GONZALEZ: And the argument of the Republicans, that the deficits have gotten too high, now is the time to cut spending?

SALLY KOHN: You know, look, two things. First of all, long term? You know, this is a short-term and a long-term conversation. Long term, you’ve got to do something about the debt. But the way to fix it is not to start cutting spending now that would grow and recover the economy. What we have to do — again, like it or not — is borrow money, use government as the spender of last resort, and invest in the economy, so that we grow it, so that in the future we’ve reduced the debt. But the other issue here is that, look, you know, this is a long-term ideological agenda, and they’re using the deficit as a fig leaf to push through cuts on government that they have always wanted to get through. That’s why 70 percent of the Republican budget isn’t going to actually cutting the deficit; it’s just going to more tax cuts for the rich.

AMY GOODMAN: Well, I mean, the line most commonly used is you’ve got to treat the government’s budget like any family treats their own budget, and at the end of every month you have to balance the budget.

SALLY KOHN: Yeah, and that’s stupid. And frankly, I blame the Democrats just as much for buying into that line, including Barack Obama. You know, first of all, lots of families carry mortgages. I mean, mortgages is a form of strategic debt, long-term debt, where you are borrowing more money than you’re earning each year in order to make a long-term investment in the health of your family, right? People send their kids to college. They do so with loans. I mean, that’s a good thing. We don’t consider that to be stupid or wasteful. We consider it good.

JUAN GONZALEZ: Those who buy a car to get to work do it.

SALLY KOHN: But again, the sort of other analogy is everybody says, "Well, you know, government should be run more like business." Well, you know, we can debate the merits of that, but if you’re going to make that analogy, then why shouldn’t government be able to borrow at a fraction of the ratio that we encourage private companies to.

JUAN GONZALEZ: Well, Republican House Majority Leader Eric Cantor spoke to reporters last week after meeting with Vice President Joe Biden about the debt.

MAJORITY LEADER ERIC CANTOR: The news economically on the jobs front over the last several days I think underscore the importance of this meeting that we just came out of. And there’s a commitment for next week engaging once again a robust series of meetings to see if we can achieve a result. We believe that much of the problem surrounding the lack of job creation and growth in this country has to do with the fact that there isn’t a credible plan to manage down the debt and deficit of this country. That’s what we’re trying to produce here, and we had a much substantive discussion today, and I look forward to more next week.

JUAN GONZALEZ: You response?

SALLY KOHN: You know, again, if they really cared so much about the deficit, then 70 percent of the Republican budget plan would be going — would not be going to give further tax breaks to the rich and corporations that already are paying the lowest tax rates in the last century. So, it’s an excuse. They’re sort of trying to scare the American public into thinking that debt and deficit is this horrible thing and is actually the cause of our problems, where in fact it’s the only thing that has the potential to bring us back from the edge.

AMY GOODMAN: This is White House Press Secretary Jay Carney addressing the debt question during a press briefing last week.

PRESS SECRETARY JAY CARNEY: I think it makes clear the case that we’ve been making, that there is no alternative here to raising the debt ceiling. This is not about additional spending. This is about honoring the obligations that the United States government has made. And the consequences of not raising the debt ceiling, as some of these rating agencies have suggested, would be severe.

AMY GOODMAN: Sally Kohn?

SALLY KOHN: You know, I’ve gone on record as calling this "ideological terrorism." This is the Republicans literally holding hostage the future of our country, the future of our citizenry, next generations, by threatening to blow up the American economy, just to make some political point. It’s offensive. It’s ridiculous. It’s bad politics. It’s unpatriotic. You know, look, at the very least, we can all agree that you have to pay the obligations of our country, maintain our economic standing and solvency, and then have a conversation about, you know, the ideological ins and outs of slashing versus raising taxes. But come on. Don’t ruin the economy just to prove a point.

JUAN GONZALEZ: But yet, you don’t have the Obama administration making a clear distinction and saying, yes, we do need to sharply increase the spending to do the infrastructure — recruit people to do the infrastructure work, do a Great Depression-type jobs program to lift the country out of its situation.

SALLY KOHN: Yeah, and shame on them. You know, and I think, look, Barack Obama has about a year to get back on the bully pulpit and start explaining to the American public why government spending is critical at the moment, why government is the spender of last resort, why government is needed to kickstart the anemic economy. You know, he made the mistake, I think, initially, of a stimulus bill that was too small and that was trying to please everyone. He had the illusion that he could get the Republicans, who have become more staunch in this category, who literally want to destroy government. They’re on record as wanting to drown it to — wanting to shrink it to the size where they can drown it in a bathtub. You can’t negotiate with that. But he tried to create a stimulus bill that would make them happy, and in so doing, created a stimulus bill that, yes, had some positive effect but wasn’t remotely large enough to prevent now some of the slip we’re seeing. You know, so he has to get back and explain to people why what he’s done has worked, and hopefully do more aggressive action, not worry about the political fallout, and instead worry about the future of our nation.


from dem now

[WillyT]

7. Thank You For That !!!

:yourock:

:bounce:

:hi:

[mmonk]

10. +1

[fascisthunter]

11. Kicking your Post

[PoliticAverse]

18. Kohn's comments on Debt to Income ratio are ridiculous.

And her analogy with mortgage debt indicates she may have in a coma
for the last few years.

Additionally, yes, some people do think that saddling college kids
with huge debt is not 'good'.

[Igel]

35. Debt to income?

Two points are relevant.

1. Most businesses also look at assets. 10-to-1 debt to income is fine if you have significant assets as collateral. The government's "asset" is the country, I guess, in some sense. Although I'm not quite sure I like thinking that my assets and those of my wife's employer are to be considered as government property. That would mean we're just serfs in waiting. That was my macroeconomic professor's attitude: The US could never default, even with a debt of $100 trillion, because it could just "tax" everything (lic. "confiscate") and "sell" it to the debtors.

2. She says that the US has a debt-to-income ratio of about 1 to 1. The US government has a $14.3 trillion budget? I thought it was just over $3 trillion. Oops: She's confused federal revenues with the US' gross domestic product. Again, implicit is the belief that all your income is the government's--again, something my macroecon prof actually said in class. That's fine, as long as you're ready for an accounting in which you have an annual income of $0 because pretty much everybody is subject to a 100% combined income and payroll tax.

Food and shelter are apparently no longer not just not a right, but are to be considered a privilege we're suffered to enjoy by our government.

[high density]

4. How about this...

We cut defense spending and we raise taxes to offset the exact policy changes which have caused the deficit to explode over the past decade.

[pnwmom]

8. I think we should cut Medicare costs

by allowing the reimportation of drugs from Canada, at Canadian prices, which are much lower than ours.

[mmonk]

14. Me too.

We are working to buy a prescription from a Canadian Pharmacy. The medication (an injection) will cost us $1,800.00 here but there, we get it for $600.00.

[pnwmom]

15. So we're basically subsidizing the world's drug costs. n/t

[mmonk]

20. We're the "free market" for the Pharmaceutical industry.

Whatever the market will bear due to need.

[slipslidingaway]

34. In our refrigerator ...

we have 14 single shot injections of a drug that hopefully we'll never need again, but because the insurance company said it had to be ordered through the mail the doc ordered enough ... just to be sure we had it.

So there they sit, about 10K worth of drugs, and others cannot afford it.

:(

[slipslidingaway]

32. Remember when Obama put out a campaign ad entitleled "Billy"

and had Medicare negotiating for drug prices just like the VA, it was listed as part of the Obama/Biden HC plan that Medicare could save 300 billion over the next decade.

Then he made a deal with Billy Tauzin and gave that away in support of ads paid by Pharma for his HC plan.

Remember that?

[kenny blankenship]

12. This deal will mark the Official Date of Decease for the Democratic Party

Cut Medicare? Go fuck yourselves.

[fascisthunter]

16. yup... a minority of conservative bastards

given positions of leadership in our party. Gee... why did that happen?

[johnaries]

13. I'll wait for a reliable source.

[WillyT]

17. Aw Jeez...

Link: http://tpmdc.talkingpointsmemo.com/2011/06/baucus-revenues-in-debt-limit-deal-should-match-medicare-cuts.php

Link: http://www.google.com/#hl=en&authuser=0&cp=48&gs_id=3&xhr=t&q=%22I'm+disappointed+that+Leader+Cantor's+withdrawn&pf=p&sclient=psy&site=&source=hp&pbx=1&oq=%22I'm+disappointed+that+Leader+Cantor's+withdrawn&aq=f&aqi=&aql=&gs_sm=&gs_upl=&bav=on.2,or.r_gc.r_pw.&fp=cd6248f9e4a29d1b&biw=1024&bih=679

:shrug:

[Luminous Animal]

25. Is your google broken?

[PoliticAverse]

19. All they had to do to let the 'Bush tax cuts' expire was do nothing...

and they couldn't even do that...

[Jackpine Radical]

21. Maybe they could get Cantor to come back if they offer

to only increase taxes on the bottom half of the income distribution.

[Zorra]

22. Baucus should retire. nt

[BzaDem]

23. Sam Stein already reported that the cuts Baucus was referring to were NOT cuts to benefits. Rather,

they were cuts to providers -- just like in HCR.

http://www.huffingtonpost.com/2011/06/23/democrats-medicare-providers_n_883282.html

[Hell Hath No Fury]

27. "...they were cuts to providers..."

Wow, that way even more providers will refuse to see Medicare patients!

[BzaDem]

28. Even Kucinich and Sanders didn't have a problem with the cuts in HCR. It is literally impossible to

continue to give providers a 9% raise every year. If that continues then Medicare will eventually exceed 100% of GDP (which is mathematically impossible).

[slipslidingaway]

33. Medicare was a major reason to allow discussion of a national HC plan ...

did the Dems take that opportunity, no they did not.

As soon as universal HC advocates were silenced by the administration from attending the first WH HC summit people should have expected Medicare "cuts" to be on the table.

[bornskeptic]

24. There's a rather important update at the end of the article.

UPDATE: More on this tomorrow, but it looks like we’re talking about provider cuts, which is better than I feared.

Huffington Post has more detail.
(snip)
"No one has fought harder than Chairman Baucus against the House proposal to that would end Medicare as we know it and increase costs for seniors by thousands of dollars," a Senate Finance Committee aide emailed The Huffington Post. "Senator Baucus continues to fight for Medicare and made clear at the hearing that no changes in Medicare will be made unless Republicans agree to use revenue – in addition to spending reductions – to reduce the deficit, and any Medicare changes or savings would build on the type of efficiencies made in the Affordable Care Act, while protecting guaranteed benefits for seniors."

While such an explanation won't likely be enough to calm the nerves of inherently anxious progressives, the idea that lawmakers will build on the "efficiencies of the Affordable Care Act" is a notable tell. During the crafting of that legislation, Democrats had tried to lower the type of payments that Medicare makes to medical device manufacturers. They got fairly close to doing so, only to be told by now-former Sen. Evan Bayh (D-Ind.) that he would oppose the bill if it cut too deep. Desperate for 60 votes, it was an easy tradeoff to make. The language was dropped and Bayh, whose state houses many of those medical device manufacturers, became a yes vote.


Bayh is now gone from the Senate, and Democrats, eager to find some way to get Republicans to sign off on additional revenues, are now looking to trade in that chip. As one plugged in operative predicted: "There will be cuts on the provider side but not on the beneficiary side."
(snip)

http://www.huffingtonpost.com/2011/06/23/democrats-medicare-providers_n_883282.html

[BzaDem]

26. Then comes the question: will the OP mention this?

[WillyT]

30. Sure... It Either Wasn't There When I Posted, Or I Missed It...

I hope it's true, but I'm not a big fan of Baucus, and not sure I trust his deal-making abilities.

With all of these, Medicare, Medicaid, and Social Security, the proof will be in the pudding. We will be able to judge when the details of any final deal come out.

But... WHILE they are wheeling and dealing, I wan't them put on notice of the kind of political pain they may suffer for making a bad deal.

:shrug:

[sufrommich]

29. I'm sure Firedoglake will issue a retraction. Not. nt

[slipslidingaway]

31. The update is at the FDL link!!!

not sure when the update was added, but the Huff Post piece was posted later in the evening and original FDL piece posted before noon.

And do cuts to providers trickle down to beneficiaries, one has to wonder.

:shrug:


"No one has fought harder than Chairman Baucus against the House proposal to that would end Medicare as we know it and increase costs for seniors by thousands of dollars," a Senate Finance Committee aide emailed The Huffington Post. "Senator Baucus continues to fight for Medicare and made clear at the hearing that no changes in Medicare will be made unless Republicans agree to use revenue – in addition to spending reductions – to reduce the deficit, and any Medicare changes or savings would build on the type of efficiencies made in the Affordable Care Act, while protecting guaranteed benefits for seniors."

While such an explanation won't likely be enough to calm the nerves of inherently anxious progressives, the idea that lawmakers will build on the "efficiencies of the Affordable Care Act" is a notable tell. During the crafting of that legislation, Democrats had tried to lower the type of payments that Medicare makes to medical device manufacturers. They got fairly close to doing so, only to be told by now-former Sen. Evan Bayh (D-Ind.) that he would oppose the bill if it cut too deep. Desperate for 60 votes, it was an easy tradeoff to make. The language was dropped and Bayh, whose state houses many of those medical device manufacturers, became a yes vote.

Bayh is now gone from the Senate, and Democrats, eager to find some way to get Republicans to sign off on additional revenues, are now looking to trade in that chip. As one plugged in operative predicted: "There will be cuts on the provider side but not on the beneficiary side."

A second Senate source confirmed that cuts to Medicare providers were indeed being discussed as a tradeoff for revenue-raisers elsewhere. The source added that lawmakers would be looking beyond just medical device manufacturers, toward the hospital and prescription drug industries as well.

"We've been very careful distinguishing between cuts to Medicare beneficiaries and cuts to Medicare providers," the source said..."