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Posted by on Jul 11, 2011 in Economy, Politics | 12 comments

Obama Tries to Pressure Both Parties for a Debt Ceiling Deal

More than ever President Barack Obama is positioning himself at the center of American politics — if, indeed, there is a center or strong center anymore. He is now pressuring both parties to exercise some give and take so that there can be not just a debt ceiling deal but a substantive one:

President Obama on Monday morning challenged Republicans to live up to their demands to cut the nation’s deficit and address its long-term debt by enacting spending cuts, revenue increases and changes to entitlement programs.

“Now is the time to deal with these issues,” Mr. Obama said at the start of a news conference at the White House. “If not now, when?”

The president also called on Congressional Democrats to be open to a deal that would makes changes to entitlement programs like Social Security and Medicare, which some parts of the caucus have strictly opposed.

Mr. Obama said he is continuing to push lawmakers for “as large a deal as possible” and said that Republicans should work toward the goal that they have said they wanted for months.

“I’ve been hearing from my Republican friends for quite some time that it is a moral imperative to tackle our debt and our deficit,” Mr. Obama said. “What I’ve said to them is, ‘let’s go.’”

Mr. Obama said he would not consider a short-term, stop-gap solution to raise the debt ceiling. “This is the United States of America. We don’t manage our affairs in three month increments.”

The news conference, his second in less than two weeks, came just hours before the president was to meet for a third time with Congressional leaders in an effort to reach a deal to raise the nation’s debt ceiling. The decision to take questions from reporters again reflects a new approach to press relations in recent months, as the president seeks to use the bully pulpit in a way that Republicans cannot.

Mr. Obama’s tone was a stark contrast to his previous press conference…

Specifically, he was more sympathetic to GOPers and a bit more assertive with his own party:

But on Monday, after a series of face-to-face negotiations over the past week, the president described the Congressional leadership in more sympathetic ways. He called them “sincere” and said they are in a “difficult” position as they attempt to sell a compromise to their rank-and-file members.

“Part of what the Republican Caucus generally needs to recognize is that American democracy works when people listen to each other; we’re willing to give each other the benefit of the doubt; we assume the patriotism and good intentions of the other side, and we’re willing to make some sensible compromises to solve big problems,” Mr. Obama said. “And I think that there are members of that caucus who haven’t fully arrived at that realization yet.”

The president’s tone about his Democratic allies changed as well. Mr. Obama appeared eager to demonstrate that the speaker’s difficulties with conservatives was matched on his own side by his willingness to talk tough to his own liberal constituency.

Politically, that gives Mr. Obama an opportunity to present himself to independent voters as a leader who is interested in getting something done in gridlocked Washington. He said he is “sympathetic” to the concerns of his liberal supporters but said their priorities cannot be achieved without tackling the nation’s debt.

“If you’re a progressive who cares about the integrity of Social Security and Medicare and Medicaid and believes that it is part of what makes our country great, that we look after our seniors and we look after the most vulnerable, then we have an obligation to make sure that we make those changes that are required to make it sustainable over the long term,” he said.

Be sure to read THIS POST discussing John Avlon’s take on the negotiations.

Here’s a clip from his press conference:

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Copyright 2011 The Moderate Voice
  • DLS

    Well, that’s what he and his campaign act would have people believe.

    (He even gestures! Oooo — don’t neglect the visual appeals.),0,6699593.story

    (“Eat our peas” hints at elitism. “Tax cuts — dessert before spinach*”)

    Whatever happened to the original position that the debt ceiling is a subject in and of itself and shouldn’t be “held hostage” to other, more ambitious things? Using the debt ceiling as a motivation (or just a pretext or excuse) to do much more is fine, but let’s be honest about it. That includes ending the tax-the-rich gimmickry which is not only slimy but is petty, far from grand.

    * Yes, someone at Brookings in the earlier 1990s actually said that.

  • DLS

    Here is an article featuring the views of Glenn Hubbard (Bush tax cuts) who correctly identifies the problem as spending and mainly with entitlements. I found it interesting that he tried to make the point that Medicaid isn’t just for the poor, it involves the elderly in nursing homes. (Hubbard neglected to mention the Medicaid trap, which forces spending-down to poverty to qualify for Medicaid, and “estate recovery” by governments to get assets from family and friends who receive transfers prior to nursing home admissions. As I’ve tried to warn people, this is what we face with Medicare and Social Security if means testing seriously is attempted in the future.)


    Means-testing is the only possible way to maintain help for the truly needy while limiting spiraling costs.

    BTW, I thought the President’s approach was very good. Unlike a lot of his supporters, he did not give Democrats a total pass for their own intransigence on entitlement reforms.

  • casualobserver

    Although, if “means-testing” is now under discussion, let’s at least acknowledge there is already a defacto means test in the income tax regs. If you want to increase it, that can be your position, but to ignore this income tax and imply there is no means-testing now is of questionable veracity.
    However, now on to the substance of the argument…….
    “The reason, as the CEPR analysis shows, is that there aren’t enough rich retirees — and they don’t collect enough in Social Security — to make much of a difference.  Only 2 percent of Social Security benefits go to retirees with other (non-Social Security) income of $100,000 or more each year.  (See chart.)  Only about 10 percent of benefits go to people with outside income of $40,000 or more a year — a figure that most of us would regard as middle class.”

  • DLS

    I was amazed that Obama (after he was one of the most prominent Democrats expressing refusal to make any changes to entitlements!) wanted to do a big deal (despite his initial desire to only raise the debt ceiling) that involved [gasp] entitlement reform. “Legacy”?

    I’d like to see some reform. It could involve not only raising FICA tax rates, but lifting or abolishing the income “cap” for FICA and subjecting all forms of compensation (stock options for executives included!) to FICA taxes. (The most sensible thing to do would be to raise the cap but keep it in place, then revise benefits only up to the cap amount. I wouldn’t be too bothered if the cap were abolished, because benefits already are set up to favor strongly lower-income people and disfavor the affluent.)

    You will have a problem with means testing, as I will continue to say from a wise devils’ advocate observational position. If the entitlements become poor-oriented, no longer truly universal, there will be a great loss of support for them as well as stigmata.

    Frankly I’d like to see a more intelligent entitlement reform, as follows: Combine Medicare with Medicaid, VA, Indian Health, etc., call it Medicare, make it universal, but gear it more toward the catastrophic-costs issues (typically involving hospitalization), and perhaps public-health issues and some preventive or periodic care (which actually isn’t cost effective often because so many do not have problems, nothing caught by screening that costs money).

    The best part is to change Social Security to the same (minimum) payment for everybody, the size of which could be increased (if the current minimum or even typical or average payments are in fact inadequate, as I suspect many may find them already, before the Baby Boomers retire in large numbers). The program would remain universal, with this “guaranteed minimum income” for all in the program; yes, the “rich” would then have investment funds coming from the taxpayers every month (but not a great amount), but they’d be more likely than before to remain supportive or at least accepting or tolerant of Social Security. And don’t forget, the minimum benefit paid to all could well be increased notably.

    The second part I would apply to Medicaid (future Medicare) as well as Social Security would be to end all work limits or restrictions, with corresponding reductions or ending of benefit payments. That is insane. Social Security really should be a guaranteed minimum, with no penalty for working after one begins to collect the payments (in “old age,” a sliding scale of benefits based on longevity, along a range of 59.5 to 70.5 years, the latter age being the official retirement age, a realistic value).

    Note that this has strong (or striking) similarities to the far Left’s advocacy for a guaranteed minimum income for all that was pushed in the 1960s-early 1970s. So be it. The concept actually can be put to good use, as I have just shown. That’s how to limit the size and growth of the benefits for Social Security, while still ensuring people aren’t destitute. Plus, ending stupid work rules lets people continue to work and earn all they want, improving this nation’s productivity along with the people’s living standards and probably older-age quality of life (having something to do that is valued by others, literally). I’ve studied this far-left concept much more than any liberal (or anyone else) on here, and I see how it could be applied rationally for entitlement reform and improvement. Same benefit for all, no work restrictions!

    (As a side note, while nobody I know was on record as saying that Social Security was the start of a guaranteed minimum income for every citizen, though I believe it was that, at least with Medicare we heard from Ball that indeed it was intended to be the start of universal federal health care. Why not implement it the right way, and Social Security, too?)

  • DLS

    The point CO is making is that “there aren’t enough rich to tax” even at unrealistically high levels to yield the revenue that is desired or expected by so many people.

    Incidentally, do people know that so much of Medicare, for example, is paid for out of general revenues (largely from income taxes)? I am still fearful that some idiots wearing Blue will try to get all funding for Social Security and Medicare (and Medicaid) made “mandatory,” appropriated from general revenues — without raising the taxes to pay for this. Yet they’ll still say they wondrously saved entitlements!


    A 10% savings in overall benefits would be very, very helpful in balancing the budget.

  • Zzzzz

    A 10% savings would be very helpful for balancing. Even more helpful would be a return to Clinton era tax rates.

  • zephyr

    Better yet a return to pre-Reagan tax rates. Of course that would require more good sense than congress is capable of summoning up these days.

  • SteveinCH

    Pre-Reagan, how about 1970?

    Taking income and payroll tax rates back to 1970 is better for almost all of the top 20 percent (lower effective tax rates) than 2005 was. It’s worse for the top .5% but then again it’s also worse for the bottom 80 percent.

    Who knew? Bet you didn’t.

  • DLS

    Unfortunately we’re stuck with many, many dinosaurs on the Left.

    The worst think it’s another 1965 or another 1933. [sigh]

    (What do they want, New York City 1975 with massive federal funds, a debt trap, and even higher inflation than in the 1970s?)

    I’ve discussed a way for benefits to be greatly reduced (while being increased for many, those who could use the increase the most, if desired!) to save a lot of money, and to provide incentives for the “retired” to keep working, earning, and paying (more) taxes than they otherwise would. Too bad the “Romans” (in Washington, DC, and elsewhere where people consider themselves similar) aren’t so innovative. There even could be savings without the long overdue raising of the retirement age to something normal today (70s) and indexing for longevity.

  • DLS

    The extra-sanitized version of the Trustees’ report this year has this to say about the entitlements:

    The projected 75-year actuarial deficit for the combined Old-Age and Survivors Insurance and Disability Insurance (OASDI) Trust Funds is 2.22 percent of taxable payroll, up from 1.92 percent projected in last year’s report. This deficit amounts to 17 percent of tax receipts, and 14 percent of program outlays.

    Over 75 years, HI’s actuarial imbalance is estimated to be equivalent to 21 percent of tax receipts or 17 percent of program outlays.

    Part B of Supplementary Medical Insurance (SMI), which pays doctors’ bills and other outpatient expenses, and Part D, which provides access to prescription drug coverage, are both projected to remain adequately financed into the indefinite future because current law automatically provides financing each year to meet the next year’s expected costs. However, the aging population and rising health care costs will cause SMI costs to grow rapidly from 1.9 percent of GDP in 2010 to approximately 3.4 percent of GDP in 2035 and approximately 4.1 percent of GDP by 2085. Roughly three-quarters of these costs will be financed from general revenues and about one-quarter from premiums paid by beneficiaries. Small amounts of SMI financing are received from special payments by States and from fees on manufacturers and importers of brand-name prescription drugs.

    For many years, the Trustees Reports have contained illustrations of the magnitudes of changes to benefits or taxes required to place Social Security and Medicare on financially sustainable paths. This year’s Message to the Public, for example, explains that correcting these imbalances would require changes equal in the aggregate to 17 percent of Social Security tax receipts or 14 percent of the program’s scheduled benefits; for Medicare Hospital Insurance, the comparable figures are 21 percent of tax receipts or 17 percent of scheduled benefits. Useful though these illustrations are, they understate the likely effects of legislative actions over time. First, such illustrations assume that the full effect of legislation takes place immediately, with no phase-in or lead time. Perhaps even more importantly, the benefit examples assume that legislators would be equally willing to reduce support for current beneficiaries as to restrict the growth of benefits to future participants. In the past, policy makers have been reluctant to significantly reduce the benefits of those who have already begun to collect them. In a practical sense, therefore, changes adversely affecting younger generations are likely to be much more severe than indicated in these simple illustrations. The costs that will be borne by younger generations will grow significantly each year that a new cohort of baby boomers joins the benefit rolls.

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