Obama's second term: The case for entitlement reform

Social Security is the dangerous "third rail of American politics," and Medicare is equally charged. Should President Obama risk the shock?

A registered nurse makes a house call for a 96-year-old Colorado woman on March 26
(Image credit: John Moore/Getty Images)

Tinkering with America's social safety net — Social Security, Medicare, and Medicaid — is fraught with political peril. Trying to overhaul any of those popular-but-expensive programs is even more dangerous. In 2005, George W. Bush squandered his political capital on an attempt to switch Social Security toward a free-market investment program, and even his own party didn't go along. In 1989, a mob of surly seniors chased Dan Rostenkowski (D-Ill.), the powerful chairman of the House Ways and Means Committee, to his car and blocked him in over a recently enacted (and soon repealed) big change to Medicare. Still, President Obama has hinted at making changes to at least one of the programs, as a way to prolong them and tame the national debt.

The issue: Rejiggering Medicare, Medicaid, and/or Social Security

Presidents have expanded Social Security, Medicare, and Medicaid in fits and starts since the programs were introduced by Franklin Roosevelt and Lyndon B. Johnson, respectively. Sometimes, leaders have even come up with mechanisms to make sure the popular entitlements remain solvent — for Social Security, the last big change was in 1983. With the baby boomers retiring and medical costs rapidly outpacing inflation, the programs have come under increasing financial strain.

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Days before his first term began, Obama told the Washington Post editorial board that we need to make changes to Medicare, especially, if the U.S. is going to solve its long-term deficits. "What we have done is kicked this can down the road," he said. "We are now at the end of the road and are not in a position to kick it any further." Obama reportedly agreed to pretty big cuts in his 2011 "grand bargain" negotiations with House Leader John Boehner (R-Ohio), to avoid a GOP-threatened default on U.S. debt: $250 billion in Medicare savings over a decade, then steeper cuts after that; a $110 billion shave for Medicaid; and a change to the cost-of-living increase to Social Security that will slow the growth of benefits. Republicans wanted more. Obama is widely seen to be holding a better bargaining hand this term.

Why Obama should push for big changes

The looming "fiscal cliff" makes this the perfect time to tackle entitlement reform, if Obama is serious about the issue, say Josh Levs and Tom Cohen at CNN. Chastened Republicans face "pressure from inside and outside the party to soften their fierce partisanship and adopt more moderate positions," and Obama can "push harder for a compromise that might anger core liberal supporters," since he won't have to face them at the ballot box again.

And just like Republican Richard Nixon could go to China without being accused of being soft on communism, says Eric Kingson of the liberal advocacy group Social Security Works, only a Democratic president can cut popular Democratic legacy programs like Medicare and Social Security. So now or soon, says Bob Rosenblatt at Next Avenue, "look for serious talk in Washington about a 'Grand Bargain' in which the president and Democrats would accept changes to Social Security and Medicare while Republicans accept tax increases."

Liberals are actually right that Medicare, Medicaid, and Social Security aren't major drivers of our budget deficit — Social Security, especially, since it has its own dedicated revenue stream, says Michael Tomasky at The Daily Beast. But "Obama has to bargain with something." In an ideal world, he could "just walk in there and show them a bunch of charts proving that entitlements aren't the problem and expect them to scratch their chins and say, 'Ah, I see, Mr. President, well okay then. Tax hikes it is.'" But in this world, he's going to have to compromise.

Why he should focus on other things

Obama should keep in mind that there's a reason entitlements are called the "third rail of American politics" — if you step on them, you get burned badly. Obama is signaling that, at least as far as Social Security is concerned, it's not on the table in the budget negotiations. "Medicare and Medicaid are a different story," but the solution doesn't involve "changing its benefits or tax structure," says Michael Hiltzik at The Los Angeles Times. The only fix is to lower our soaring medical costs across the board — and Obama has already started doing that: ObamaCare includes "the first measures specifically aimed at reducing healthcare costs ever to emerge from Washington," and the president should focus his energies on making sure those measures work.

Right, middle class entitlements face longer-term issues that can be addressed in a thoughtful, leisurely manner, not a hostage situation, says Michael Lind at Salon. Obama should just say no to any sort of Grand Bargain. It's worth repeating: "Social Security and Medicare have absolutely nothing to do with the short-term U.S. fiscal problem." So go ahead, Obama, kick that can down the road.

Read more analysis of Obama's second term:

-The case for an Arab-Israeli peace push

-The case for immigration reform

-The case for intervening in Syria

-The case for new climate change laws

Sources: AOL, CNBC, CNN, The Daily Beast, History News Network, The Huffington Post, The Los Angeles Times, The New York Times, Next Avenue, Salon, Washington Free Beacon, The Washington Post

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