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Obama’s Deficit Plan Sets Up a Battle With GOP on Medicare, Medicaid Cuts

More taxes on the wealthy, more cuts in defense

Obama’s program, by contrast, keeps the current program but could limit increases in payments to doctors who serve Medicare patients.

“You’re just rearranging deck chairs on the USS Medicare,” Franc says. Ryan’s plan instead acknowledges that keeping the current program is unaffordable because of growing medical costs and will cause “a heart attack to our economy.”

Franc says Obama doesn’t address the real threat to the budget — the health care costs for Medicare and Medicaid that are growing faster than inflation.

But John Rother, AARP executive vice president of policy and strategy, says Obama’s plan is better than Ryan’s because it doesn’t push costs off on seniors.

“Instead of just shifting who pays the bill, it tries to lower the growth of the programs,” Rother says.

Obama’s plan would cut Medicare by $480 billion through changes such as using its purchasing power to get lower prescription drug prices and tamping down increases in spending per beneficiary. Franc says that could come from the reimbursements to doctors, who could in turn refuse new Medicare patients.

Social Security would not be changed under Obama’s plan, and a senior administration official said Wednesday that Obama opposed raising the retirement age. He would set up a separate process to work on the long-term solvency of Social Security.

“While Social Security is not the cause of our deficit, it faces real long-term challenges in a country that is growing older,” Obama said.

Obama asked Vice President Joe Biden to work with congressional leaders to come up with a bipartisan deficit plan by the end of June.

Scott Lilly, senior fellow at the Center for American Progress, says the budget debate is painful but necessary. Much of the deficit is driven by programs for the elderly, he says. “The country is going to have to decide how much we want to contribute to those programs, or raise taxes or continue to borrow.”

Despite the coming elections, which could make it harder for the two parties to compromise, Lilly says progress is possible. Especially because the public is deeply concerned about the deficit.

“Sometimes you make a political breakthrough at a time you least expect it to happen,” Lilly says.

Tamara Lytle was Washington Bureau Chief for the Orlando Sentinel.

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