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Rob Horowitz: Obama Puts Retiree Entitlement Programs on the Table

Tuesday, February 19, 2013


Rob Horowitz believes progressives and liberals alike should support the President's approach on entitlement programs.

While other aspects of President Obama’s State of the Union Address last week, such as his emotional plea for common sense gun control measures and his proposal for raising the minimum wage, received most of the attention, perhaps the most significant part of his speech was that the President explicitly made the progressive case for fixing retiree entitlement programs. As Obama said, “Yet the biggest driver of our long-term debt is the rising cost of health care for an aging population. And for those of us who care deeply about programs like Medicare must embrace the need for modest reforms-otherwise our retirement programs will crowd out the investments we need for our children, and jeopardize the promise of a secure retirement for future generations.”

The President further demonstrated that he means business on this politically difficult issue by committing to achieve the same amount of health care savings over the remainder of the decade as proposed by the Simpson-Bowles Commission—the gold standard of debt reduction proposals. Among the ideas embraced by the President are requiring wealthy seniors to pay higher Medicare premiums. These specifics on Medicare combined with Obama’s support for implementing a chained CPI to provide a small reduction in Social Security cost-of-living increases during the recent fiscal cliff debate demonstrate once and for all that President Obama is serious about retiree entitlement reforms and make the Republican refrain that he won’t publicly commit to specific proposals in this area ring hollow.

The framing of Obama’s message about the need to act now on retiree entitlement reform, however, was aimed more at the resistance in his own base than at the Republicans in Congress. As the President asserted, modest adjustments in retiree entitlements are not only important because they reduce the long-term debt, but because without them sufficient funds will not be available for the critical investments needed to spark economic growth such as spending on infrastructure, research & development and education. Further, fixing these programs now means that less drastic cuts can be avoided later preserving retirement security for today’s and tomorrow’s seniors.

President Obama recognizes that the federal government spends seven times as much money on seniors than on youth—an unacceptable ratio that will get much worse as baby boomers begin to retire in larger numbers. Over the next 10 years, 18 million new beneficiaries will enter the Medicare program and the number of Social Security recipients will grow by about 40%. The math is simply inescapable.

It is up to all of us who believe that smart government investments are critical to future prosperity to grasp this reality and to stop defending an unworkable status quo. For liberalism should not be about fighting to preserve every specific line of programs developed during either the New Deal or the Great Society, but about working to craft a new social compact that is designed to ensure real equality of opportunity, an adequate social safety net and economic prosperity for the 21st century.

The fiscal imperative to fix retiree entitlement programs is coupled by the political imperative of doing so. The only possible way to achieve more government spending on domestic priorities in the short-term is by reaching an agreement on long-term debt reduction. As The Hamilton Project’s Michael Greenstone and Adam Looney, reflecting the consensus of most economists, write in a recent paper, “The textbook solution to the dual problems of continuing near-term economic weakness and long-run budget deficits is to pair short-run economic stimulus with gradual but credible changes to spending and taxes that reduce deficits in the long run.”

The plain political facts are that the only way to get enough Republican buy-in to pass needed modest new stimulus is to reach some form of “Grand Bargain” on long-term debt reduction. Further, progress on debt reduction is an important priority for independents—the swing voter group which as always will be a key to which party prevails in the 2014 mid-term elections.

With deadlines looming on the “so-called” sequester triggering automatic budget cuts as well as the debt ceiling, the fiscal and budget debates are about to pick up more steam. President Obama’s specific and credible retiree entitlement proposals could serve as a trigger for reaching a lasting bi-partisan agreement. Thinking progressives and liberals should support the President on his sensible and politically courageous approach.

Rob Horowitz is a strategic and communications consultant who provides general consulting, public relations, direct mail services and polling for national and state issue organizations, various non-profits and elected officials and candidates. He is an Adjunct Professor of Political Science at the University of Rhode Island


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