Obama cracks Medicare club

Neil Munro White House Correspondent
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President Barack Obama today widened the hairline cracks in the Democrats’ united front against the wave of reformist, budget-cutting Republicans who were elected in 2010.

Congressional Democrats, including House Minority Leader Nancy Pelosi, have stood with the president and his push for an economy-boosting “grand bargain” on spending and a debt-ceiling extension.  But Republicans have rallied behind a call to trim spending and reform entitlement programs.

Hill Democrats have remained allied with the president as the White House has tried to derail the GOP reformers’ initiative, and as the president has used the debt-ceiling negotiation as a reason for tax increases.

They have stood by him even when he gave ground to the GOP by saying a debt-ceiling bargain should address entitlement spending. And they didn’t rebel when he suggested Medicare spending could be cut by shrinking payments to drug vendors, doctors and hospitals.

“We continue to say to the President: ‘Congratulations. We are proud of the work you are doing, and we are glad that it does not reduce benefits for Medicare and Social Security beneficiaries,’” Pelosi told reporters in a July 15 press conference.

Obama widened the hairline crack today by publicly endorsing Medicare means-testing that would deny benefits to wealthier Americans.

If adopted, the change would transform the universal Medicare program from a social insurance program for everyone to a welfare program for poor Americans.

Democrats have resisted such a shift for decades, out of fear that it would undermine widespread middle-class support for government health care programs.

Obama also responded to ABC’s Jake Tapper during today’s press conference, saying that “you can envision a situation where for somebody in my position, me having to pay a little bit more on premiums or co-pays or things like that would be appropriate.”

That statement is different from Pelosi’s position. She declared in the morning press conference that “we support our president on a grand bargain and hope that can still happen … [but] whatever happens, we will not be reducing benefits for Medicare and Social Security recipients.”

Republicans pounced. RNC research director Joe Pounder promptly tweeted that “somewhere Pelosi is exploding because Obama just took entitlements off the table as an election issue.”

If Obama is seen by the public as endorsing significant welfare reform, it would weaken the ballot-box impact of the Democrats’ extensive effort to portray the Republican entitlement-reforms as hostile to ordinary Americans. Democrat leaders say the Republican candidate lost the May election in New York’s 26th district because she embraced the GOP’s Medicare reform plans.

Obama opened the gap with his Hill allies because he needs a good debt-ceiling deal with the Republican reformers. He needs the deal because it might please independent voters, and also spur economic growth, business investment and voters’ optimism, sufficiently for him to reverse the downward trajectory of his poll ratings.

But Obama does not want to crack his alliance with progressives, if only because any suggestions of entitlement cuts prompt protests byleft-of-center advocacy groups, including the Strengthen Social Security Campaign, which is a coalition of 300 groups that claim to collectively represent 50 million Americans.

Obama needs the support of these groups, and the enthusiastic support of their members, to help him win the election amid a stalled economy and unemployment above 9 percent.

When answering Tapper, he confined his means-testing concession only to wealthy people, and ruled out even minor cuts that would impact recipients 20 years from now.

“If you’re a senior citizen,” said the president, “and a modification potentially costs you a hundred or two hundred bucks a year more, or even if it’s not affecting current beneficiaries, somebody who’s 40 today, 20 years from now is going to end up having to pay a little bit more.”

Afterward, an unidentified administration official rushed to patch the crack. Americans earning more than $85,000 already pay higher Medicare rates for doctors and drugs, the official told the left-of-center TalkingPointsMemo website.

“What the President referenced today was his openness, as part of a potential big deal, to asking Medicare recipients over those high-income thresholds to pay modestly higher premiums … At no point did the administration express openness to raising premiums on Medicare beneficiaries below those income levels,” the official said.

During the press conference, Obama also restated his opposition to free-market reforms that Republicans say will improve the efficiency and longevity of Medicare: “What we’re not willing to do is to restructure the program in the ways that we’ve seen coming out of the House over the last several months where we would voucherize the program and you potentially have senior citizens paying $6,000 more [per year] … I view Social Security and Medicare as the most important social safety nets that we have.  I think it is important for them to remain as social insurance programs that give people some certainty and reliability in their golden years.”

That’s the view championed by Democratic liberals and progressives.

The Strengthen Social Security Campaign, for example, has rallied its members to protest anonymous claims that the America’s budget deficit might be reduced by revising the calculation that determines annual cost-of-living adjustments, so-called COLAs, for Social Security recipients.

“Politicians in Washington promised that current beneficiaries would not have their benefits cut, but the Social Security COLA cut would do just that,” according to a statement from aid the campaign’s co-chairman, Eric Kingson. “People are feeling betrayed.”

There are other hairline cracks in the democratic coalition that may widen under the pressure of GOP reformists.

Senate Minority Leader Mitch McConnell is reportedly negotiating with Senate Majority Leader Harry Reid, on a fallback debt-ceiling measure. McConnell’s first version was intended to avert a default while giving the painful task of raising the ceiling to the president. A bipartisan version may be designed to minimize the political pain suffered by Republican and Democratic Senators, without reliving the pain suffered by the president.

The House’s progressive caucus doesn’t want to fight with its progressive ally in the White House, but may wish to burnish its progressive credentials by protesting any budget deal that cuts programs they like, such as education grants.

“When I came to the [negotiating] table two days ago, I brought with me the priorities expressed to me by a large number of students … But what we saw at the table was an attempt by the Republicans to increase the cost to students by over 30 billion dollars without taking one red cent of sacrifice from the wealthiest people in our country, from corporations sending jobs overseas, tax subsidies for Big Oil,” Pelosi said.

Obama, however, has already publicly endorsed some cuts to programs supported by progressives. The details of those proposed cuts have yet to be released, and they may turn out to be minimal, but they’re on the table, according to the president.

“We’ve identified over a trillion dollars in discretionary cuts [over 10 years], both in defense and domestic spending.  That’s hard to do.  I mean, that requires essentially that you freeze spending … [and counting inflation] you’d be looking at potentially a 10 percent cut in domestic spending,” he said.

Any further cuts would unfairly hurt “ordinary folks,” he told reporters. “You’re talking then about students accumulating thousands of dollars more in student loan debt every year; you’re talking about federal workers and veterans and others potentially having to pay more in terms of their health care.”

The fast-approaching 2012 election set the limit to Obama’s willingness to risk cracks in his coalition. “There will be huge differences between now and November 2012 between the parties, and whoever the Republican nominee is,” he said. “I’m confident that I will win that debate, because I think that we’ve got the better approach.”