Medicare Cuts: Not the Way to Voters' Hearts

Last week, Obama finally got some traction with a speech that had a clear, consistent message -- jobs, jobs, jobs. Even the Republicans were reluctant to oppose him frontally.

Now, once again, Obama will mix his own message by emphasizing belt tightening in general and cuts in Medicare in particular. There is one silver lining:

The latest White House leaks suggest that a lobbying effort by progressives in Congress and nationally has persuaded the president not to increase the Medicare eligibility age from 65 to 67 as part of his deficit plan to be released today (Monday). Campaign for America's Future deserves particular thanks for its heroic efforts on this issue.

If accurate, these reports also suggest progress on Obama's advisers part in recognizing that blurring party distinctions and throwing social insurance on the deficit bonfire is bad economics and bad politics. Earlier lobbying efforts by progressives kept Social Security cuts out of Obama's deficit-reduction package. This is welcome news.

Even so, the deficit package still cuts Medicare by close to $300 billion over a decade, and proposed Medicare cuts will only reinforce the damage that was done in 2010 when Republicans convinced a lot of seniors that the Affordable Care Act would come at the expense of Medicare. In truth, you can demonstrate that the ACA will actually save costs without cutting care. But to establish that, you have to get so far down in the weeds of health policy that you lose most voters.

Yes, Medicare is running a deficit, but there are far better ways to fix that. One would be to call on Congress to reverse the policy created under the Bush II era, prohibiting Medicare from negotiating volume discounts with drug companies. Republican policies have literally created a box where a Democratic president is taking benefits away from citizens rather than cutting drug-company profits. Why not call them on that?

To believe that blending Medicare cuts with deficit-reduction medicine is effective politics, you have to believe two things about economics and politics that are demonstrably untrue.

As a matter of economics, you have to believe that the road to recovery leads through fiscal tightening. To believe that, you have to believe businesses are failing to invest because they are worried that the deficits might create inflation. But inflation is such a distant concern that bondholders are willing to lend the government money for ten years, at less than 2 percent.

As politics, you have to believe that cutting deficits is the way to win the hearts of independent voters. Strategists can show that in a superficial reading of polls and focus groups -- voters will tell pollsters that they care about deficits. Why? Because the media and people like Peter G. Peterson and the Bowles-Simpson Commission keep drilling it into the collective consciousness that the deficit is a monster.

But dig a little deeper, and you find that the deficit is a surrogate issue for the real concern that the economy is going down the drain and government can't seem to fix it. Do you really think, if the debt-to-GDP ratio in 2021 looks better but the jobs and wages story is still dismal, that voters will be grateful?

Obama has been talking relentlessly about deficit reduction for two years now, and his popularity keeps sinking. In the most recent New York Times-CBS poll, 59 percent of independents now report that they disapprove of the president, his worst showing among independents ever. Banging away at the deficit will not help.

The Democratic base is very upset at his tempering with Medicare. He hopes to reassure the base with a call for higher taxes on the wealthy. The White House has branded this idea "The Buffett Rule," after billionaire Warren Buffett, who contends that people like him should be paying higher taxes.

Republicans have termed this call "class warfare" and have vowed to block it.

The problem with Obama's approach is that raising taxes on the rich but not doing enough on the jobs front and mixing the message by cutting Medicare does not add up to a politically effective politics of class. It alienates people who don't like higher taxes on anyone -- but without rallying people who are waiting for government to do something big and positive.

The "Buffett Rule" is reminiscent of the "Volcker Rule" -- the administration's hastily contrived call to separate commercial banking from financial speculation. Obama embraced it (to Paul Volcker's amazement) when he needed to sound populist, after the shock of Scott Brown's surprise victory in the Massachusetts special election in January 2010 following the death of Ted Kennedy.

But the administration never spent any serious political capital to enact such a rule, much less to change the business model of the big banks that caused the financial collapse. The version of the Volcker Rule contained in the Dodd-Frank Act is a far cry from what Volcker proposed, and it will only get weaker as Tim Geithner's Treasury Department implements it.

So the Volcker Rule was a half-hearted feint at populism on the cheap, and the Buffett Rule could turn out to be the same.

The fact remains, it is the dismal economy that is killing Obama with the voters. It is hard to see how cutting Medicare will help, even if the president throws in a call to raise taxes on millionaires.

The practical question for voters is: What is President Obama doing or demanding to help my own economic predicament and that of my family? And the answer still has to be: not enough.

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