CBPP statement on speech: "this plan is...significantly to the right of the Rivlin-Domenici plan"

brentspeak

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Thu Apr-14-11 11:07 AM
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CBPP statement on speech: "this plan is...significantly to the right of the Rivlin-Domenici plan"

http://www.cbpp.org/cms/index.cfm?fa=view&id=3469

Center on Budget and Policy Priorities

CBPP Statement: April 13, 2011
For Immediate Release
Statement: Robert Greenstein, President, on President Obama's Deficit-Reduction Plan

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The President’s plan stands in sharp contrast to the budget plan that House Budget Committee Chairman Paul Ryan unveiled, and his committee approved, last week. Unlike the Ryan plan, the President’s plan puts all parts of the budget on the table, including defense and revenues. Unlike the Ryan plan, which the Congressional Budget Office (CBO) has found would increase the costs of providing health care to Medicare beneficiaries, the President’s plan contains measures to reduce these costs. CBO estimates that Chairman Ryan’s Medicare proposals would substantially raise overall costs per beneficiary. Ryan’s plan reduces federal Medicare expenditures only because it dramatically shifts more of these costs on to the backs of beneficiaries, who CBO says would see the amount they pay for health care more than double by 2022 (for people turning 65 in 2022 or subsequent years). In short, Ryan’s plan doesn’t lower health costs; it shifts them. The President’s plan, by contrast, seeks to reduce underlying health costs themselves.

Nevertheless, we have several significant concerns about the President’s plan. First, like the plan of his fiscal commission (the Bowles-Simpson plan), the President’s plan takes two-thirds of its deficit reduction from budget cuts and one-third from revenue increases. (This two-to-one split does not include the interest savings that the deficit reduction measures would generate; counting those savings, both the Obama and Bowles-Simpson plans would get three-quarters of their savings from spending reductions and one-quarter from increased revenues.) The deficit reduction plan issued last fall by a bipartisan panel co-chaired by former Senate Budget Committee Chairman Pete Domenici and former Clinton White House Budget Office and CBO Director Alice Rivlin offered a more balanced approach — with half of its deficit savings from budget cuts and half from revenue increases. Such a 50-50 split represents a fairer and more balanced approach.

Because the Obama plan relies on budget cuts for two-thirds of its deficit reduction measures, it goes dangerously far in two areas. It calls for $360 billion in cuts in mandatory programs other than Medicare, Medicaid, and Social Security. The large budget-cut target for this part of the budget risks leading to substantial cuts in core programs for low-income Americans, our most vulnerable people. To the President’s credit, his plan states that “reforms to mandatory programs should protect and strengthen the safety net for low-income families and other vulnerable Americans.” And the Bowles-Simpson plan enunciates the same basic principle. But to achieve $360 billion in savings in this part of the budget without cutting programs for low-income families and thereby increasing poverty and hardship will require very tough choices that entail confronting powerful special-interest lobbyists to a degree that neither party has proved capable of doing in the past.

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To be sure, the President’s plan represents an important step forward in the debate. But it should be recognized that this plan is a rather conservative one, significantly to the right of the Rivlin-Domenici plan. While we worry about some particular elements of the President’s plan, we worry much more that the deficit-reduction process that’s now starting could produce an outcome that is well to the right of the already centrist-to-moderately-conservative Obama proposal, by reducing its modest revenue increases and cutting more deeply into effective programs that are vital to millions of Americans.