Everyone Knows Obama Supports Entitlement Cuts — Here’s What They Are

Republicans are beginning to acknowledge that President Obama indeed supports and has even proposed cutting spending on Medicare and Social Security.

“He certainly understands that you can’t fix the country without adjusting entitlements to fit the demographics of our country,” Minority Leader Mitch McConnell (R-KY) told reporters in the Capitol on Thursday after Obama met with Senate Republicans.

Setting aside whether McConnell’s characterization of the country’s fiscal situation is accurate, his comments present an opportunity to take stock of what policy measures Obama does and does not support.Broadly speaking, the entitlement spending cuts at the center of the budget debate fit into four categories: policies Obama openly supports; policies Obama supports, but won’t outwardly champion unless Republicans agree to tax increases; policies Obama doesn’t support, but nevertheless persist in negotiations with the GOP; and GOP wish list items Obama will never support.

In the first category are a number of provider-side cuts to Medicare spending listed in Obama’s budget (.pdf).

The most significant of these would align the rebates Medicare receives for prescription drugs with higher rebates that Medicaid receives for the same drugs. That would save $156 billion over 10 years. But the budget also calls for a variety of payment reforms, the elimination of waste, fraud, and abuse, and for strengthening the health care law’s Independent Payment Advisory Board, empowering it to cut provider payments if the per capita growth rate of Medicare spending exceeds GDP growth plus 0.5 percent.

In the second category are two key benefit cuts.

One, called Chained CPI, would use a less generous measure of inflation to calculate Social Security cost of living adjustments. Obama administration officials have expressed support for the idea on the merits, but Obama won’t officially back it except as part of a broader budget agreement that includes limiting tax expenditures for high income earners.

Separately, Obama supports greater means testing for Medicare outpatient and prescription drug benefits. Those provisions are included in Obama’s budget, but would likely have to be part of broader deficit legislation for Obama to sign them into law.

In the third category is the GOP-backed notion that the Medicare eligibility age should be increased from 65 to 67. This is one to watch. Obama entertained the idea in 2011 during budget negotiations with House Speaker John Boehner (R-OH). And the two broached the idea again during their failed attempt to reach an agreement to avoid the fiscal cliff. But House Minority Leader Nancy Pelosi (D-CA) strongly opposes the proposal, and notes, correctly, that it will have only a minimal impact on spending, as 65 and 66 year olds would simply qualify for Affordable Care Act benefits instead. White House press secretary Jay Carney similarly says the issue is now off the table. But as Obama negotiates with rank and file Republicans to reach a grand bargain, many expect the GOPers to demand a higher Medicare eligibility age as the price for their agreement to support higher taxes.

Finally, there are the centerpiece reforms in the GOP budget — voucherizing Medicare and turning Medicaid and food stamps into block grant programs. Obama has outright rejected these ideas, and they won’t conceivably happen unless and until Republicans unify control of government in the future.