Progressives have plenty of reason to be concerned about the upcoming fiscal cliff negotiations. There was the ugly “grand bargain” Obama reportedly agreed to in 2011, which would have kept all of the Bush tax rates while raising $800 billion in unspecified tax code simplification (yes, this is basically the Romney plan) while cutting deeply from domestic spending, Medicare and Social Security. And even in recent days, top Democrats like Senator Chuck Schumer have been saying they would be willing to “compromise” on the Bush rates, and leave them alone while raising revenue elsewhere.
But the White House is apparently tossing down the gauntlet—on taxes and entitlement cuts. Wednesday morning, The Washington Post reported that Obama’s opening bid on taxes is to raise $1.6 trillion in revenue, via not only the expiration of the Bush rates on earners over $250,000 but also the Buffet Rule, the restoration of the estate tax to 2009 levels, deduction limits and closing tax loopholes.
And at the White House on Tuesday, Obama, Vice President Biden and the president’s economic team met with a coalition of liberal groups and assured them the administration would hold the line on both taxes and protecting safety net beneficiaries, according to several attendees interviewed by The Nation.
“I was actually very pleasantly surprised. I feel like I was not expecting it to be a particularly good meeting,” said one attendee. “I feel like the president was extremely committed on the tax issues, in kind of ‘throw-down mode’ on those.”
“It was clear that you couldn’t get there on the deductions,” said the attendee, thus undercutting the plans floating around Washington in recent days. “There was some exchange on the deductions. I think that was where there was no give…. there was real strength on the amount that needs to be generated by tax increases.”
The liberal groups, mainly unions, think tanks and advocates for safety net beneficiaries, met with Obama and Biden along with senior adviser Valerie Jarrett, director of the National Economic Council Gene Sperling, Treasury Secretary Timothy Geithner, acting director of the Office of Management and Budget Jeffrey Zients and economic adviser Jason Furman, according to those present.
It was notable, then, that the meeting included essentially the entire Obama economic team and wasn’t just a glad-handing event with the president. Members of that team have already echoed what was said on taxes in the meeting—Geithner told reporters at a conference later in the day that “I don’t see how you do this without higher rates. I don’t think there’s any feasible, realistic way to do it.”
Of course it’s not just tax rates the liberal groups are concerned about—deep cuts to the safety net are also in play. But Max Richtman, president of the Committee to Protect Medicare and Social Security and who attended the meeting, said he felt reassured by what he heard.
“What I can say with certainty is that I, and I think everybody that was invited, walked out of that room feeling better than they did when they walked in,” Richtman said. “We got a clear statement from the president that he made commitments about protecting seniors and the middle class in the campaign and he’s committed to fulfilling that commitment.”
Social Security has not contributed to the deficit and shouldn’t be slashed in the fiscal cliff negotiations, Richtman told the president and his team, and Obama agreed, according to his account. “He agreed that it was not bankrupt and it should be used as a bargaining chip in negotiations—that if there were changes to Social Security they should be done with the purpose of improving the program, extending the life of the program. That is a big deal for us.”
Richtman also said that he was relatively reassured that Medicare beneficiaries would remain protected under any deal the White House agreed to. “All of the people from the administration seemed to express a commitment to protecting the beneficiaries of Medicare,” Richtman said. “I think if there are any changes, I’m not saying we’d be for them—but they’d be around the edges, and we hope would be on the provider side. At the same time we know that if providers are cut too much, it’s going to lead to access issues for beneficiaries.”
If Medicare was able to negotiate prescription drug prices, it could save substantial money—as much as $156 billion over ten years. Richtman said he raised this issue with the president and his team. “They didn’t say no, they didn’t say yes, but I think I made the strongest case I could for that,” he said.
Other attendees were similarly slightly wary about what’s coming for Medicare cuts—but were quite encouraged by what they heard about Medicaid. “I was heartened on Medicaid, I was unsure on Medicare and Social Security. Meaning that there weren’t clear, definitive, absolutely-never answers,” said one attendee.
“The cuts agenda was really where I was most worried about where we were and where they were [heading into the meeting],” the attendee continued. “And I would not say we got any ironclad commitments on anything, it wasn’t really that kind of a meeting, but it was better than I thought in terms of understanding the issues around the how the Medicaid cuts would be devastating, and why Social Security should not be part of this deal.”
Additionally, attendees described a very proactive approach from the White House on not only delaying harmful cuts but actually investing in the economy as part of any final deal.
“I think there were very clear and good signals around the jobs components of this, in terms of both more demand and more spending in 2013 and 2014, given that we’re in a recession, and more of the cuts coming in the out years,” said one attendee. “Also [there was] a commitment to infrastructure and some of the other jobs-related things in the American Jobs Act. That was positive.”
Publicly, meeting attendees sounded very positive notes after the meeting. “We appreciate that the President again promised not to balance the budget on the backs of the middle class and the poor,” said Justin Ruben of MoveOn.Org in a statement. “I was pleased that the President reiterated his commitments to higher taxes on the wealthy, job creation, and protecting middle class and low-income people from any cuts to vital programs,” said Deepak Bhargava of the Center for Community Change, also in a statement. AFL-CIO President Richard Trumka was also all smiles outside the White House.
Privately, some attendees were a little more candid—but still cautiously optimistic. “The general message was, we don’t want to balance this on the middle class and the poor. The general thrust was right, but they’re not negotiating with us,” said one attendee. There are still of course tough negotiations with House Republicans ahead, and it remains to be seen if Obama will stand firm throughout.
“I’ve been concerned for months that we are headed towards a disaster, in terms of yes, tax increases on the rich, but commensurately bad changes to the entitlements and further cuts on domestic discretionary [side],” the attendee continued. “I’m still worried, because it’s hard to see how you end up on the other side of this without some real damage being done, given the desire to have $4 trillion total [in cuts]. I’m still worried. But I think the president’s opening is at least muscular.”
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