Obama's Budget a Mixed Bag
Proposals could affect Medicare and other programs
President Obama offered a $3.7 trillion budget that would make cuts to some programs to help chip away at the nation's deficit but increase others that he said are crucial to America's economic future.
Republicans, energized by a large class of fiscally conservative freshmen in Congress, slammed Obama's budget, proposed Monday, as a spending binge the nation cannot afford.
Robert Greenstein, head of the liberal think tank Center on Budget and Policy Priorities, said the aging population and increasing health care costs for programs such as Medicare have caused a serious fiscal problem. The Obama proposal doesn't do enough to address the long-term fiscal problems, he said, but at least it stabilizes the debt as a share of the economy while politicians figure out a solution.
Obama pledged to work with Congress on revamping Social Security and Medicare, which will be short of funds in the long term as more Americans reach retirement age. But the budget largely avoids the topic in the short term. "It's not an urgent moment to do it," Jacob Lew, director of the Office of Management and Budget, told a news conference Monday, adding that Social Security does not add to the deficit in the next 10 years. "But it is the right thing to do, to do it way in advance."
Robert L. Bixby, executive director of the budget hawk group Concord Coalition, said the work of the president's deficit commission would be squandered if the White House does no more than pay lip service to the serious long-term problems.
"It is fine to be honest about how dire the outlook is," Bixby said, "but it would be better to get started on the solutions."
Obama's budget would make immediate changes to a number of programs important to older Americans:
- The president's budget would slash home-energy aid under LIHEAP in half but asserted that lower energy prices would help ease the impact. Lew acknowledged that the energy cut would have a real effect on people but said, "We can't just cruise at a historic high spending level." AARP's Martin Firvida said she's not convinced that energy prices will stay low, given realities such as unrest in the Middle East. Many older adults rely on the program. "We're troubled by this very, very deep cut," she said. "A lot of those folks are in cold-weather states."
- Housing for older Americans would be cut $68 million by reducing the amount that would be spent on new construction for needy seniors. The good news, Martin Firvida said, is that the cuts weren't as steep as what Obama proposed last year.
- Biologic drugs could become cheaper — both for the government, which pays Medicare bills, and for consumers. The budget would let drug companies have only seven years to reap the profits of biologics before generic drugs could provide competition and bring prices down. Currently, they have a 12-year monopoly. Biologics are protein-based treatments, such as injectable drugs, used to treat things such as cancer and rheumatoid arthritis. Nora Super, AARP director of federal government relations, health and long-term care, said biologics can cost as much as $10,000 a month. Getting generics to the market faster, Super said, means "real savings to the pocketbooks of Americans and gives them real health benefits."
- A one-time $250 payment to Social Security recipients would help offset the pain of two years without a cost-of-living increase, said Barbara B. Kennelly, president and chief executive officer of the National Committee to Preserve Social Security and Medicare.
- The budget funds two more years of the "doc fix" — a program to stave off changes to the rate that Medicare reimburses doctors. Without the fix, doctors would see their fees drop and some likely would stop accepting new Medicare patients.
- About $6.5 billion would be cut from Medicare over 10 years, but the biggest change would be tightening up on Medicare waste and fraud.
- The budget would add $96 million for a caregiver program to help families keep older adults living in the community for as long as possible. The money would go to agencies around the country that already provide help to seniors and caregivers.
- The Social Security Administration would see an increase of $1.1 billion, which Martin Firvida said would help with staffing to process applications and other services for beneficiaries.
- Obama would cancel tax breaks that wealthy citizens now receive, beginning in 2013. He would restore the higher level of estate taxes from 2009. And families with more than $250,000 in income would lose part of their current tax deductions.
None of those tax proposals is likely to win much support among Republicans in Congress.
Obama called on Republicans to work with him on the budget.
"We are all Americans, and we are all in this race together," he said in his budget message. "So those of us who work in Washington have a choice to make in this coming year: We can focus on what is necessary for each party to win the news cycle or the next election, or we can focus on what is necessary for America to win the future."
Tamara Lytle is former Washington bureau chief for the Orlando Sentinel.