Sen. Max Baucus (Mitch Dumke/REUTERS)
What sticks out to you in this
story at TPM?
One of the Democrats participating in bipartisan debt discussions said he's "very disappointed" his Republican counterpart has ditched negotiations over an impasse on taxes, but says he hopes to continue working with the group in a different context.
He also made an impassioned case that new tax revenues be part of any deal to raise the debt limit that involves significant cuts to entitlement programs.
"I'm disappointed that Leader Cantor's withdrawn," said Senate Finance Committee Chairman Max Baucus during a hearing on health care spending. "I think we should stay at the table. I think we should keep working, difficult as it is, and try to balance between Medicare cuts—additional Medicare cuts—so long as there is commensurate additional revenue. We need balance here."
And there, apparently, is the deal the Biden negotiators have been working on: "Medicare cuts—additonal Medicare cuts"—for revenue increases. Presumably that means they were already talking Medicare cuts, and then tossed in extra ones in order to try to get some revenue increases. David Dayen catches the same bit of this story.
Now, there’s literally no connection between Medicare cuts and revenue increases (which could include the elimination of tax expenditures, presumably), just like there’s no connection between a dollar-value increase in the debt limit and spending cuts. These connections are all made for political reasons. Baucus can go back to his party and constituents and say, “Sure, we cut Medicare by $200 billion but we got $200 billion in new revenue.”
But who exactly cares about that relationship? Cutting Medicare by $200 billion is probably bad policy. I say probably because there are ways to “cut” $200 billion which would be quite good policy – like allowing Medicare to negotiate for lower prescription drug prices, for example, or changing the patent expiration for expensive biologic drugs, or moving dual eligibles into Medicaid at a cheaper rate (as long as the coverage is roughly equal). But I suspect that’s not what conservatives will agree to....
So the devil’s in the details here, but keep in mind that this is outside the other $1.5-$2 trillion in spending cuts that moves discretionary spending to an absurdly low baseline and makes spending cuts that the economy cannot sustain at this time. It’s possible that gimmickry will make these cuts appear larger than reality. But it’s just as possible that they are, in fact, real cuts. So we’re not talking about a balanced program of cuts and revenues, we’re only talking about balance on the ENTITLEMENT CUTS, and just one portion of them: Medicare. The total ratio could be as high as 90-10 spending to revenues, by these numbers.
Those devilish details need to be brought out into the open, now that Baucus has opened the door on them. As dday says, cuts in the form of negotiated drug prices would be great, but that's not something likely to put Republicans in a bargaining mode. Democrats have very successfully made a very big deal out of their commitment to protecting Medicare from Republicans. They've done so because it's good policy and good politics. Good luck in 2012 if they renege on that commitment now.