Obama's Sense of Entitlements

By Dan Froomkin
1:27 PM ET, 02/20/2009

A big question looming over the White House's "fiscal responsibility summit" on Monday is whether President Obama is willing to consider major cuts in future benefits for the poor and elderly to win bipartisan support for his long-term budget plans -- or whether he's going to try to redirect the "entitlement reform" fervor toward the goal of bringing down skyrocketing health costs for everyone.

It's turning into something of a public contest for Obama's soul. Some liberals are alarmed that he could be casting his lot with an alliance of Washington elites who believe that "entitlement reform" is essential to preserve the long-term fiscal health of the country -- and that only non-serious thinkers could possibly disagree.

What's odd about all this is that, despite a few puzzling signs to the contrary, Obama and his top economic advisers have made it abundantly clear that they don't consider Social Security a major problem and think the answer to Medicare and Medicaid's unsustainability is taming health care inflation -- a goal which fits neatly into their wider agenda to cut costs and make health care available to everyone.

Obama has long resisted the "entitlement reform" movement, which is currently focused on establishing a blue-ribbon commission that would present Congress with a finished proposal -- presumably calling for steep cuts in the nation's bedrock social safety programs -- for an up-or-down vote. But the coverage of his comments during a meeting with Washington Post editors a few days before his inauguration set off a new round of speculation about his intentions.

"Obama Pledges Entitlement Reform" said the front-page headline over Michael D. Shear's story the next morning. Shear wrote: "President-elect Barack Obama pledged yesterday to shape a new Social Security and Medicare 'bargain' with the American people, saying that the nation's long-term economic recovery cannot be attained unless the government finally gets control over its most costly entitlement programs."

Obama did say, according to the transcript, that "the real problem with our long-term deficit actually has to do with our entitlement obligations" and that "we're going to have to craft what George Stephanopoulos called a 'Grand Bargain.'"

But consider this, from further down in the story: "Obama was careful not to outline specific fixes for Social Security and Medicare, refusing to endorse either a new blue-ribbon commission or the concept of submitting an overhaul plan to Congress that would be subject only to an up-or-down vote, similar to the one used to reach agreement on the closure of military bases...

"'Social Security, we can solve,' he said, waving his left hand. 'The big problem is Medicare, which is unsustainable....We can't solve Medicare in isolation from the broader problems of the health-care system.'"

Similarly, in an interview with opinion columnists last Friday, Obama had this to say: "Medicare and Medicaid on their current trajectory cannot be sustained. And the only way I think we're going to fix it is if we see those two problems in the broader contest of bending the curve down on health care inflation.

"The problem is not just demographics. Peter Orszag, before he joined us, loved to make this presentation -- you sat through the chart -- that, yes, people are getting older, but that's not the problem. The problem is health care costs going up 6, 7, 8, 10 percent a year."

A slide from Peter Orszag's PowerPoint presentation on health-care costs.

Orszag is Obama's new budget director. And here is the PowerPoint presentation Obama was talking about.

So although some of the leading advocates of "entitlement reform" will be at the summit on Monday, I suspect this will be the beginning of an attempt by Obama to co-opt them into supporting his preferred approach -- and the kickoff of a campaign to educate the general public on the issues as he sees them.

William Greider's recent essay in the Nation provides a lot of essential background on the battle over entitlements.

Ben Smith interviews Orszag for Politico: "Orszag's long-running project — something that has made him the left's favorite Cabinet member — has been replacing talk of an 'entitlement crisis' with his argument that Social Security requires only modest tax hikes and benefit cuts, while Medicare and Medicaid have much more dramatic fiscal woes.

"'Social Security faces an actuarial deficit over the next 75-100 years. In the past, I've resisted the term 'crisis' to describe that kind of situation,' he said. 'This is not quantitatively as important as getting health care done.'"

Nevertheless, as Walter Alarkon writes for The Hill: "Liberal groups are worried that the White House bipartisan fiscal responsibility summit on Monday will set the stage for President Obama to compromise with deficit hawks....

"Obama's announcement of the event last month and his initial invite list alarmed his allies on the left...Obama said in January that the summit would have a special focus on Social Security, Medicare and Medicaid and that he would invite Sen. Kent Conrad (D-N.D.), Sen. Judd Gregg (R-N.H.), Blue Dog Democrats and fiscal health advocacy groups. They have all called for a reduction of the deficit and have proposed a bipartisan commission to produce a plan to do it."

Firedoglake's Jane Hamsher is among the liberal bloggers worried that Obama is paying too much attention to -- and might even heed -- the people she calls "'entitlement reform' fetishists."

And Chris Bowers blogs on OpenLeft on one reason to worry about Obama's steadfastness in opposition to the blue-ribbon commission proposal championed by Conrad and Gregg (who, of course, just last week withdrew as Obama's commerce secretary nominee).

Lori Montgomery wrote in The Washington Post on February 2 that "Obama specifically mentioned the Gregg-Conrad proposal when he met with Senate Republicans last week.... But Obama 'was not supportive' of that idea, said Gregg."

And yet Jonathan Weisman wrote in the Wall Street Journal on February 14: "The president met with 44 fiscally conservative 'Blue Dog' Democrats this week and gave a nod to legislation that would set up commissions to deal with long-term deficit strains...

"'We feel like we've found a partner in the White House,' said Rep. Charlie Melancon (D., La.), a Blue Dog co-chairman."

Writes Bowers: "There are two possibilities here. First, President Obama changed his position on the commission between February 2nd and last week. Second, either the Wall Street Journal or the Washington Post is incorrect."

Other liberal bloggers, however, say not to worry.

Jonathan Cohn blogs for the New Republic: "Obama has said consistently that the federal government doesn't have an entitlements problem. It has a health care problem....

"So what's up with this fiscal responsibility summit? It's all about education--and, yes, some public relations. Obama wants to signal that he is serious about fiscal responsibility and he wants to make clear the linkage between fiscal responsibility and health care."

Ezra Klein blogs for the American Prospect: "The Obama administration believes that the entitlement problem is a health care entitlement problem, and the health care entitlement problem is a health care system problem. And so the focus now is on health care reform: The fiscal responsibility summit will be used, in part, to make this argument. In Obama's Washington, a plan to cut Social Security is no longer enough to qualify you as 'fiscally responsible.' You need an answer to the Medicare and Medicaid questions, which means you need an answer to the health care system. We will see the beginnings of the White House's answer -- an answer that has required a series of decisions by President Obama himself -- when the budget emerges next Thursday. That, and not Monday's summit, is where the nature of the administration's commitment to fiscal responsibility will come clear."

As for that budget, Lori Montgomery writes in today's Washington Post: "When President Obama rolls out his first budget proposal next week, it will contain some of the ugliest deficit numbers this nation has seen since the end of World War II. So the Obama administration is planning an entire week of budget-focused activities to prepare the country for the painful spending cuts and program changes that will be needed to begin reducing the red ink.

"The schedule kicks off Monday with a White House summit on fiscal responsibility...

"On Tuesday, Obama will lay out the severity of the nation's economic crisis in a speech to a joint session of Congress.

"And on Thursday, the president will deliver his budget plan to lawmakers."

Jackie Calmes writes in the New York Times: "For his first annual budget next week, President Obama has banned four accounting gimmicks that President George W. Bush used to make deficit projections look smaller. The price of more honest bookkeeping: A budget that is $2.7 trillion deeper in the red over the next decade than it would otherwise appear, according to administration officials....

"Mr. Obama's banishment of the gimmicks, which have been widely criticized, is in keeping with his promise to run a more transparent government....

"The $2.7 trillion in additional deficit spending, Mr. Orszag said, is 'a huge amount of money that would just be kind of a magic asterisk in previous budgets.'

"'The president prefers to tell the truth,' he said, 'rather than make the numbers look better by pretending.'"

Massimo Calabresi and Nancy Gibbs, in Time Magazine, look at how central the curbing of health care costs is to Obama's long-term budget plans -- along with "winding down the war in Iraq, cutting fat and raising taxes on the wealthiest Americans." They also raise what could be some important questions.

Orszag and his colleagues "think they can tackle this problem in part through better data processing. First, a massive investment in health-information technology will track how America's health-care dollars are being spent. Next, a $1.1 billion government study, funded as part of the stimulus package, will take that information and figure out which treatments get the best outcomes for the least money. Which makes more sense for a clavicle fracture: a simple sling and waiting six weeks or surgical repair with a stainless-steel plate? The final step could be to create a federal health-care board that would shape Medicare- and Medicaid-reimbursement plans based on those studies.

"Administration officials suggest that some savings would come from controlling drug costs and changing reimbursement procedures....

"If the President tries to go down this road, the line of opponents will stretch well past the horizon. Even the idea of the 'effectiveness' studies sparked a huge fight in Congress over the prospect of rationing health care in the U.S. It's easy to say better information will help doctors avoid expensive treatments that don't work. But what about expensive treatments that do work? Who decides whether they count as being sufficiently cost-effective? Might the same treatment be approved for a 25-year-old but not for a 75-year-old, who won't live as long to benefit from it? What about treatments that work differently for men and women, or blacks and whites? Doctors warn that treatment decisions will be made by bureaucrats whose interest in saving money competes with their interest in saving lives."

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