Alert
Close

Think you know AARP? What you don't know about us may surprise you. Discover all the 'Real Possibilities'

Highlights

Open
AARP Real Possibilities

 

FREE FUN!

AARP Games - Play Now!

Contests and
Sweeps

Dream Vacation Sweepstakes

10 weeks. 10 amazing trips. Seize your chance to win!
See official rules. 

MOST POPULAR

Viewed

Commented

Will Bin Laden Death Strengthen Obama's Political Hand?

Obama's 'bin Laden dividend' won't last for long

"There's no consensus across parties and little consensus within parties. We are in for a pretty long brawl," Bolger says.

John Rother, AARP executive vice president of policy and strategy, says he expects congressional leaders and the White House to agree on some sort of budget savings in exchange for raising the debt ceiling. Agriculture aid and food assistance programs for the poor also could be affected.

Rother says he expects some sort of change like a limit on the amount of the nation's debt as a percentage of the economy. But to get to a lower deficit, it's not clear which revenue increases or program cuts would be passed. "That's what matters to most people."

A major impact on the debate came not from bin Laden but from Standard and Poor's. The rating agency recently warned it will downgrade the United States' AAA credit rating unless Washington gets busy cutting the deficit.

"It wasn't just an academic report. It was an institutional player saying we looked at the situation and changed our behavior," says Mike Franc, Heritage Foundation vice president of government studies. "The markets are looking for a signal Washington gets it and are going to look for whether there will be a package of restraints on government [spending]."

Already, the idea of raising the debt ceiling without cutting the size of the federal government is off the table because of Wall Street's unease over the deficit, Franc says.

This may make serious defense cuts easier

A more literal "bin Laden dividend" could become part of the deficit debate now — a call to pull out of Iraq and Afghanistan more quickly and save money on defense costs.

Franc opposes the idea but says a new dynamic will develop if a broader spectrum of lawmakers than just liberals starts calling for defense cutbacks.

Most Republicans oppose major defense cuts. But House Budget Chairman Paul Ryan, R-Wis., is pushing for an overhaul of the Medicare program that would give seniors vouchers to buy health insurance on the private market.

Lawmakers who held town meetings during the spring recess heard an earful on the topic. Democrats have seized on the issue to paint Republicans as endangering the safety net for older people, although the plan would be phased in and not affect people who already are at or near retirement.

"It's pretty clear senior citizens are concerned about the plan and Republicans have not done a particularly good job of getting out the message it doesn't affect anyone older than 54," Bolger says.

Medicare may be untouchable

Republicans had been arguing that entitlement programs like Medicare are growing at such a rate they will overwhelm the federal budget unless changes are made. But now Medicare is returning to its position as an untouchable third rail of politics, MacManus says.

"Nearly every baby boomer has seen someone elderly with medical costs that made their life savings disappear," MacManus says.

But Franc of the conservative Heritage Foundation says seniors could be affected more by inaction on Medicare and the budget deficit than on changes to the program. If nothing is done and economic calamity hits the financial markets, he says, they would face soaring inflation and plummeting investment portfolios.

"This is one of those times the consequences of their negotiations could be calamitous or satisfactory," Franc says. "The markets are waiting and the world is watching."

Franc is optimistic that Washington will tackle Medicare and make major changes, because it's difficult to really address the deficit without touching Medicare.

But Rother expects Medicare will be pushed off until after the 2012 presidential campaign.

"The issue is likely going to go before the American voters — that's where it's going to get resolved, at the ballot box."

Tamara Lytle is a freelance writer and has covered politics and government in Washington for more than 20 years.

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts

Processing

Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.

TODAY'S NEWS

Discounts & Benefits