Today on the Fiscal Slopes
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I don’t think this will be a regular feature, but here are a few things on everybody’s favorite cliff/slope metaphor that caught my eye at the end of the day:
First of all, unions are so far following through on protecting social insurance against potential attacks from both parties:
The American Federation Of State, County and Municipal Employees, the National Education Association and the Service Employees International Union are teaming up on the project. It will include a “six-figure buy” with an “opening salvo of ads” focused on protecting health care, education and Social Security in any deficit or debt reduction deal, according to a labor source. The unions have argued that any final deal should instead lean more on higher tax rates for the wealthiest Americans.
Copies of the ads were not immediately available. But a source familiar with the campaign says they will air in Virginia, Missouri and Colorado, among other states. The Democratic senators in those states — Mark Warner of Virginia, Claire McCaskill of Missouri, and Mark Udall and Michael Bennet of Colorado — have all already voted to extend the Bush-era tax cuts only for income below $250,000. But they also considered to be among the likelier suspects to cut a deal with Republican lawmakers on a measure that would include more dramatic entitlement reforms.
This is the kind of maneuver that would have gotten you called a certain unfortunate epithet for mentally challenged Americans by Rahm Emanuel. But I guess it’s a new day and the unions, at least for now, have no problem pressuring Democrats.
And it’s clear that Democrats need the pressure:
Q: Obama has already suggested raising the retirement age for Medicare. Should that be the starting point for thinking about entitlement savings?
Sen. Conrad: I wouldn’t want that to be the starting point, but as part of an overall package, that’s balanced and fair. Given that we now have exchanges to purchase insurance because of the president’s health-care reform law, it makes it much more acceptable, much more reasonable, over a long period of time to gradually increase the age given that people are living so much longer.
Kent Conrad also said that Social Security has nothing to do with the deficit and should be handled separately. And he highlighted other areas of mandatory spending – “agriculture, federal employees, military health care” – for cuts, while saying “We should not look just to entitlements for savings.” But this mindset, that you can throw in an increase in the Medicare eligibility age if it gets you to a deal, is quite pernicious. First of all, there are all kinds of ways to save money in Medicare without going to a benefit cut like raising the eligibility age. Moreover, I don’t see the exchanges as a viable replacement for Medicare, and neither does Conrad, otherwise he would have endorsed dismantling Medicare and moving it into the exchanges for the purposes of broadening the risk pool.
In fact, Nancy Pelosi rejected this logic today:
Why are we relating revenue to Medicare, or Medicaid, whatever? Those issues, Social Security, Medicare, Medicaid, they should be in their own realm.
One new wrinkle here is that Democrats are starting to talk about more stimulus as a bright line in the debate, a must-include in any deal. That could take the form of extending the payroll tax cut or something like it, or infrastructure spending. This hearkens back to the “barbell” approach, with spending up-front and deficit reduction on the back end. Conrad, in his interview with Suzy Khimm, floated something like $300 billion of stimulus in 2013 as part of the deal.
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