Robert Greenstein on the Obama Speech:
RG:
TUnlike the Ryan plan, the President’s plan puts all parts of the budget on the table.... 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.... 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.... [T]he President’s plan takes two-thirds of its deficit reduction from budget cuts and one-third from revenue increases.... Domenici and... 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... $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....
Another significant concern stems from the President’s proposal to limit the annual growth in Medicare costs per beneficiary to the per capita rate of growth in the Gross Domestic Product (GDP) plus only 0.5 percentage points and to require automatic cuts in Medicare if this target would otherwise be exceeded. This goal is laudable. But it may be unrealistic....
Finally, the President’s plan calls for a mechanism to trigger automatic reductions in programs and tax expenditures if the debt would exceed certain benchmarks.... [T]riggers like this that have been designed in the past have suffered from a fatal flaw — they required the deepest budget cuts when the economy was weakest and the smallest cuts when it was strongest....
[T]he 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...
