The Debt Deal Operation Conditional Surrender

Terrance Heath

So, just when it looked like President Obama was finally calling the GOP’s bluff debt ceiling negotiations, it turns out he was preparing to fold.

Obama administration officials are offering to cut tens of billions of dollars from Medicare and Medicaid in negotiations to reduce the federal budget deficit, but the depth of the cuts depends on whether Republicans are willing to accept any increases in tax revenues.

Administration officials and Republican negotiators say the money can be taken from health care providers like hospitals and nursing homes without directly imposing new costs on needy beneficiaries or radically restructuring either program.

Before the talks led by Vice President Joseph R. Biden Jr. broke off 12 days ago, negotiators said, they had reached substantial agreement on many cuts in the growth of Medicare, which provides care to people 65 and older, and Medicaid, which covers lower-income people. Those proposals are still on the table when Congress reconvenes this week, aides said, and are serious options that Democrats could accept in exchange for Republican concessions that raise revenues.

“Congress smells blood,” said William L. Minnix Jr., the chief lobbyist for nonprofit nursing homes.

If I could give the administration’s apparent strategy on the debt deal a name similar to many special forces operations, I’d call it “Operation Conditional Surrender.”

I should have expected it. As a progressive who’s often supported Democrats I should have seen it coming. It’s part of an established pattern I recognized nearly three years ago, when President Obama was still candidate Obama, and progressives were petitioning candidate Obama to prioritize progressive concerns.

Progressives have become political prisoners, of a sort. After we work to get a candidate elected, the real work of then moving that candidate towards more progressive positions begins. We will get them elected so that we may begin lobbying and petitioning them and hoping they will listen.

From the moment Rep. Paul Ryan presented his “Road to Prosperity,” to the moment it became the Republican Party’s budget, progressives have been pointing out that it’s really a “Roadmap to Ruin”. Poll after poll, including our own poll with Democracy Corps., show that Americans rejected the GOP’s plan to dismantle Medicare.

The Republican plan provides Democrats with a strong argument that Republicans have the wrong priorities for America and will break the long-standing agreement the country has with its seniors. The budget opens up a fundamental debate about values that could end up defining Republicans in the public mind and allowing Democrats to draw sharp differences and regain their standing on the economy and spending priorities and advocacy for the middle class. The decision to end Medicare and shift costs to seniors in continuing tough times may be the Republicans’ undoing.

Confidence in Washington is at a low. This new survey shows an electorate increasingly doubtful about the economy and country’s direction, the performance of the president and particularly the ‘Republicans in Congress.’ They are also pretty negative about the Democrats in Congress, the Tea Party movement and above all, the ‘Tea Party Republicans.’

The Republican deficit reduction plan does not even win majority support, but when voters learn almost anything about it, they turn sharply and intensely against it. They have particularly grave concerns about the plan to end Medicare and slash Medicaid spending, pushing seniors into the private insurance market and costing them thousands of dollars more in out-of-pocket expenses.

That’s all “past-tense,” now. “The Republican plan provided Democrats with a strong argument that Republicans have the wrong priorities for America,” until the White House essentially accepted the basic frame of that argument. Remember when we thought Medicare and New York 26 would change the budget debate? They didn’t. Remember when Medicare was the turning point battle for 2012? It’s not anymore.

Remember when the GOP was losing the argument over Medicare? Not any more. It only took a month for Democrats to hand Republicans a win, by disarming themselves and agreeing to cuts for which their party will be blamed.

Greg Sargent followed up with pollster Jeff Liszt to find out what this means for Democrats currently trying to figure out how much they should trade away to appease the Republicans in debt ceiling negotiations, and “to ask whether his polling indicated that Dems could lose those advantages if they agree to a deficit reduction deal that cuts Medicare benefits and shifts costs to seniors. His answer was unequivocal.”

Agreeing to benefits cuts takes the foot off the gas in terms of going on the offensive against Republicans,” said Liszt, who did the poll for the Herndon Alliance and Know Your Care. “You have to draw a bright line somewhere and Medicare benefits are the best place to do that.”

Liszt pointed out that Republicans had made big gains in 2010 by accusing Dems of cutting Medicare in the Affordable Care Act, and said his new poll showed that Ryancare had enabled Dems to successfully rebuild trust with voters since then on health care and as defenders of the middle class. Liszt said that Republicans would continue to attack Dems from the left on Medicare no matter what they agree to in deficit talks, but warned that agreeing to actual Medicare benefits cuts could make it easier for Republicans to reverse their losses on the issue.

“Republicans are going to make the same argument irrespective of whether or not Democrats agree to more cuts,” he said. “But I still think [agreeing to benefits cuts] would be politicaly problematic for Democrats right now. They’re in a period where they’re building their advantage on health care issues. It’s an important component of the Democratic advantage on fighting for the middle class, which was central to Democratic victories in 2006 and 2008 and eroded in 2010.”

Said Liszt: “Benefits cuts could set that back.”

So much for that.

Then there’s Medicaid. Remember when Democrats appeared to stand up for Medicaid?

Well.

I have spent the better part of a month writing about what the Republican budget would do to Medicaid, and what the GOP’s plan to gut Medicaid would mean for millions of middle- and working-class Americans — Americans who understand that Medicaid is not “just for poor people.”

There’s a reason why 60% of Americans rejected the GOP’s Medicaid proposal.

We all have parents or grandparents. As they age, the medical care most of them will need will only get more expensive. Some of them will need long-term care or nursing home care, the cost of which will outstrip our families already stressed financial resources.

A year in a nursing home costs an average of $72,000, according to the Department of Health and Human Services, and that’s if there aren’t an additional costs beyond just getting a bed in a nursing home. Medicare pays for about a month. It’s not hard to see how easily and quickly our parents and grandparents can “spend down” their assets to quality for Medicaid.

We love our parents and grandparents, and we won’t want their lack of resource or ours to keep them from getting the they need. Families USA’s report, “Cutting Medicaid: Harming Seniors and People with Disabilities,” shows that Medicare is a big part of how our parents and grandparents get the care they need.

  • Medicaid is the primary payer for an estimated 63.6 percent of all nursing home residents. In all states but one, Medicaid is the primary payer for more than 50 percent of nursing home residents.
  • In seven states and the District of Columbia, Medicaid is the primary payer for more than 70 percent of all nursing home residents. Those states are the District of Columbia (80.1%), Mississippi (74.7%), Alaska (73.8%), Louisiana (73.0%), New York (72.3%), West Virginia (72.2%), Georgia (71.9%), and Hawaii (70.1%).

It all means that Medicaid is an important program for middle- and working-class families, too.

It’s not just us forty-somethings-and-up who see it that way. It’s our parents and grandparents too. Many of them realize what the cost of long-term care or nursing home care out would mean to their children, and their grandchildren.

Medicaid pays the bill for 66% of all nursing home residents. And these aren’t the indigent — most\many of them are the result of middle-income people who have already run through their own money paying for their nursing home costs, and then become eligible for Medicaid. If Medicaid doesn’t pick that up anymore, who’s left? The children of the residents? Who are trying to send their kids to college and saving for their own retirement? Not that Paul Ryan cares, but essentially, states will need to choose between basic healthcare for low-income people and nursing home care for formerly-middle-income people with no money left. …Imagine their reaction when they learn (too late?) that the Medicaid changes Paul Ryan and the Republicans want to make would mean they have to pay several hundreds of dollars a day to keep their parents in the nursing home they have been in for months\years?

This is true for millions of middle class Americans, and it’s what makes Medicaid a program that helps support the middle class. Most of us are children of parents who worked hard to attain or maintain middle class status, and to pass its advantages. Most of our parents know that what kind of economic burden the Republicans’ proposed cuts would mean for us and their grandchildren — a reversal of the life they worked so hard for us to have in the first place.

If that’s not enough, Richard Eskow recently explained an “underhanded, unnecessary, unfair, un-American” plan underway to cut Social Security without “cutting” Social Security, per se, It’s called “chained CPI.”

Although they’re using hocus-pocus to make the idea sound complicated, it isn’t. The government calculates the cost of living in order to do things like determine next year’s Social Security benefits. The “chained CPI” approach would alter that calculation by including changes in the way people spend their money when prices go up.

As a government agency explains, “Pork and beef are two separate CPI item categories. If the price of pork increases while the price of beef does not, consumers might shift away from pork to beef.” So if people can no longer afford pork, they’re spending less. Under a chained-CPI approach cost of living adjustments (COLAs) would then go down.

…The “chain gang” insists that this wouldn’t be a benefit cut, just a more accurate calculation. That’s an attractive argument with only one flaw: It’s wrong. The “chained” approach would understate the cost of living for the elderly and disabled people who rely on Social Security.

In plain English, it would gyp them.

Despite majorities of Americans rejecting Republican plans to cut Medicare and Medicaid, and 51,000 signatures from Americans demanding that any deficit deal not cut Social Security, Medicare and Medicaid, it looks like Democrats and the White House may opt for “conditional surrender” on the debt deal. The conditions? It’s not the fair deal demanded by Sen. Bernie Sanders: one dollar in tax increases for the wealthy for every dollar in cuts. Instead, Republicans are hinting at a willingness to close tax loopholes as a means of raising revenue without raising taxes. But, as Digby pointed out, it’s merely a set up for the next round.

So Paul Ryan spouted some gibberish today about why the GOP can’t entertain even the tiniest change to the tax code in these debt ceiling negotiations. And while it sounds like he’s speaking in tongues, there is a logic to what he’s saying:

RYAN: What happens if you do what he’s saying, is then you can’t lower tax rates. So it does affect marginal tax rates. In order to lower marginal tax rates, you have to take away those loopholes so you can lower those tax rates. If you want to do what we call being revenue neutral … If you take a deal like that, you’re necessarily requiring tax rates to be higher for everybody. You need lower tax rates by going after tax loopholes. If you take away the tax loopholes without lowering tax rates, then you deny Congress the ability to lower everybody’s tax rates and you keep people’s tax rates high.

If you think Ryan is somehow signing on to the idea that “closing loopholes” on corporations will bring in more revenue, you need to re-read Atlas Shrugged. The only “loopholes” they want closed are those that benefit working people — like the Earned Income Tax Credit. They want to lower taxes and they can’t do that in the context of deficit reduction. And their ruse to get that done is to pretend they are “reforming” the tax code. If they start “reforming” it as a way to raise revenue in the debt talks, it will defeat their purpose.

And they have every reason to believe it will go their way in the next round. The administration has long signaled that they are eager to “close loopholes and lower tax rates” just as Ryan wants…

I’m tempted to ask, “How does such an overwhelmingly unpopular idea become politically tenable enough to be a part of the debt ceiling deal?” I used to ask those kind of questions, but after the health care reform debate — when many of us were asking “How can an idea with as much overwhelming public support at the public option become so politically infeasible that it’s not even up for discussion?” — I don’t have to. I already know. It’s “conditional surrender.” Again.

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