This Is Not Class Warfare-- It's Math

Good line (that title up there from Obama's speech yesterday), ostensibly aimed right at Wall Street darling Paul Ryan (not at Krugman, thankfully); everyone I know tweeted it. But the devil's the details and the math, alas, isn't as soaring as the rhetoric. Above is the video of President Obama's speech. Listen carefully. It sure sounds good, doesn't it... even like almost, if I dare say, semi/quasi/kinda populist. And two of the most trustworthy Members of Congress, Raúl Grijalva (D-AZ) and Keith Ellison (D-MN), co-chairs of the Congressional Progressive Caucus, issued a statement of support as soon as Obama had delivered it:

“As co-chairs of the Congressional Progressive Caucus, we congratulate President Obama on many of his proposals to cut our deficits and balance our national budget. The president’s determination to reduce the large national debt that he inherited after years of costly wars, unchecked defense spending, corporate welfare and giveaways to the wealthy few is admirable. We stand with the President in his efforts to end these costly wars and tax breaks while protecting working and middle class Americans. We will continue to stand with the President against failed Republican tax and domestic policies, which have led to nearly one in five Americans living in poverty while the rich get richer.
 
"While we support cutting waste, fraud and abuse, we reject any proposal that cuts benefits in Medicare or Medicaid. We reject false Republican assertions that the solution to our deficit is deep cuts to programs that millions of Americans rely on, and we would hope President Obama would as well. We have fought tirelessly to stop Republican efforts to sell off and privatize our nation’s retirement security. Cuts to Medicare and Medicaid represent a serious threat to our society and are highly unpopular with the American people. Every dime taken away from beneficiaries in these programs is a dime the recipients don’t have to spend in our economy. 
 
"If we let wealthy Americans and corporations pay taxes at the rate they used to and focus our attentions to put Americans back to work, we will solve our deficit crisis. Now is not the time to cut Medicare and Medicaid.”

Well... it was supportive, even if a little wary about the Medicare cuts implicit in the "bargain" Obama was offering. Similarly, progressive organizations like MoveOn.org (video) and the Campaign for Community Change were out fast with supporting statements. Deepak Bhargava, executive director of the Campaign for Community Change:

“The President’s decision to push millionaires, Wall Street firms and big corporations to pay their fair share in taxes, could bring in billions in revenue, and his jobs plan will jump start the economy and start the ball rolling to create good jobs. Our ‘Change Nation’ campaign is dedicated to rebuilding the economy and that can’t happen if Washington is focused on failed austerity measures. We need a conversation that focuses on raising revenue and implementing smart investments that lead to shared prosperity.

“We call on Republicans to cease being the mouthpiece for the 400 richest people in America who have more wealth than 50 percent of the population and start paying attention to everyone they are supposed to be serving. Some billionaires have said publicly they are paying a lower rate in taxes than they should, and want that corrected. I hope that Washington sees fit to lift the burden of reducing the deficit off the backs of the middle class.

"We are pleased that the President's plan does not propose to seek an increase in the Medicare eligibility age, or cuts to Social Security.

"We commend the President for pledging that he will veto any bill that takes one dime from programs like Medicare that are a critical lifeline to American families if the wealthiest of Americans and the biggest corporations are not asked to pay their fair share in taxes."

Now we need to dig a little deeper and ask ourselves what a center-right president is really asking for in the fine print. Here's the example, is a depressing list of the benefit cuts to Medicare and Medicaid that would have had Grijalva, Ellison, MoveOn and everyone else screaming bloody murder had they been put forward by Bush-- or Boehner:

Modify Part B deductible for new beneficiaries. Beneficiaries who are enrolled in Medicare Part B are required to pay an annual deductible. This deductible helps to share responsibility for payment of Medicare services between Medicare and beneficiaries. To strengthen program financing and encourage beneficiaries to seek high-value health care services, the Administration proposes to apply a $25 increase in the Part B deductible in 2017, 2019, and 2021 for new beneficiaries Current beneficiaries or near retirees would not be subject to the revised deductible. This proposal will save approximately $1 billion over 10 years.

Introduce home health co-payments for new beneficiaries. Medicare beneficiaries currently do not make co-payments for Medicarehomehealthservices. This proposal would create a home health copayment of $100 per home health episode, applicable for episodes with five or more visits not preceded by a hospital or other inpatient post-acute care stay. This would apply to new beneficiaries beginning in 2017. This proposal is consistent with a MedPAC recommendation to establish a per episode copayment MedPAC noted that “beneficiaries without a prior hospitalization account for a rising share of episodes” and that “adding beneficiary cost sharing for home health care could be an additional measure to encourage appropriate use of home health services.” This proposal will save approximately $400 million over 10 years.

Introduce a Part B premium surcharge for new beneficiaries that purchase near first-dollar Medigap coverage. Medigap policies sold by private insurance companies provide beneficiaries additional support for covering healthcare costs by covering most or all of the cost sharing Medicare requires. This protection, however, gives individuals less incentive to consider the costs of health care services and thus raises Medicare costs and Part B premiums. Of particular concern are Medigap plans that cover substantially all Medicare copayments, including even the modest co-payments for routine care that most beneficiaries can afford to pay out of pocket. To encourage more efficient health care choices, the Administration proposes a Part B premium surcharge equivalent to about 15 percent of the average Medigap premium (or about 30 percent of the Part B premium) for new beneficiaries that purchase Medigap policies with particularly low cost-sharing requirements, starting in 2017. Current beneficiaries and near-retirees would not be subject to the surcharge. Other Medigap plans would be exempt from this requirement while still providing beneficiaries options for protection against high out-of-pocket costs. This proposal will save approximately $25 billion over 10 years.

Apply a single blended matching rate to MedicaidandCHIPstartingin2017. Under current law, States face a patchwork of different Federal payment contributions for individuals eligible for Medicaid and CHIP Specifically,
State Medicaid expenditures are generally matched by the Federal Government using the Federal medical assistance percentage (FMAP); CHIP expenditures are matched with enhanced FMAP (eFMAP); and the Affordable Care Act provides increased match for newly- eligible individuals and certain childless adults beginning in 2014. Beginning in 2017 this proposal would replace these complicated formulas with a single matching rate specific to each State thatautomatically increases if a recession forces enrollment and State costs to rise. This proposal is projected to save $149 billion over 10 years.

Amend modified adjusted gross income (MAGI) for health insurance assistance programs to include Social Security benefits. Starting in 2014, eligibility for Exchange tax credits and cost sharing reductions, Medicaid, and CHIP will be determined based on an individual’s or families’ MAGI, as defined under the Affordable Care Act. Similar to legislation currently under consideration by the Congress, the Administration proposes to amend that definition to include the total amount of Social Security benefits in the calculation of MAGI, rather than just the taxable portion, when determining eligibility for these programs to better target those in need. This proposal is projected to save $146 billion over 10 years.

Jonathan Cohn took a the New Republic and finds them "less severe, and less worrisome, than some of the proposals Obama indicated he was willing to support over the summer, while he was negotiating with House Speaker John Boehner. In particular, Obama did not call for increasing the Medicare eligibility age from 65 to 67, as folks like me feared he would." He calls the cuts "a reasonable set of changes to government health care programs. In the long run we'll have to reduce Medicare spending more aggressively, unless we're willing to pay a great deal more for the program." One of my sharpest Washington friends, a former Senate staffer with a keener sense of reality, is less sanguine.

"It doesn't matter whether these proposals are reasonable or not," he told me after reading Cohn's defense. "He is failing to take into account that we are operating against a Republican party and a set of operatives who will have no problem lying with a straight face, pouring in millions (if not a billion) into neutralizing the advantage Democrats have built up on issues related protecting social safety nets.

"As soon as the Democrats get to the point they have to explain away how these cuts are reasonable, they will lose in the public arena when the Republicans launch their predictable attacks on Medicare.

"It's also not reasonable to assume many of the Democrats who are rushing out today to defend these Medicare cuts, would have been blitzing from all angles if these proposal were presented by a Republican administration to address 'deficit'."

I guess it's about as good as we can hope for from Obama and, obviously, a lot better than we can hope for from anyone further right on the political spectrum. So... what can I say? Let's build up the progressive bench inside the political system so we don't wind up with this kind of choice in the future. Anyone on this list is much, much, much better than... you know who-- or a Republican or Blue Dog. And who doesn't think the GOP will soon be accusing Obama and the Democrats of trying to destroy Medicare? And as if Obama didn't have enough sniping from Republicans, last week Ben Nelson, the Senate's most Republican Democrat, told reporters that "he's put off by all the talk about increasing taxes when he believes the primary and only goal of the deficit super committee should be finding cuts to hack away at the deficit. 'Tax increases have to come second to cutting,' he said. 'I was just home over the weekend and that's what [my constituents] we're all talking about'." I wonder how many middle class constituents he talked to as opposed to how many fellow millionaires. (Nelson is one of the richest men in the Senate and always votes to bolster his economic class against ordinary Nebraska working families. The report went on to discuss another arch conservative, corporate shill inside the Democratic Senate caucus, Mary Landrieu (D-LA), who has always represented her Big Oil campaign donors. Last week said the offset for Obama's new spending plans, which includes the elimination of oil and gas subsidies, "was not going to fly."