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Obama Budget Plan With Medicare Cuts, Tax Hikes Draws Critique From Congress

April 10, 2013 at 12:00 AM EDT
The Obama administration rolled out its new budget proposal, which includes Medicare cuts and tax hikes for the wealthy. Kwame Holman has more on reactions to the budget from both sides of the aisle. Gwen Ifill gets views from Rep. Cathy McMorris Rodgers, R-Wash., and White House economic adviser Gene Sperling.

JUDY WOODRUFF: The Obama administration has rolled out a new budget, but it was clear today the plan is in for a bumpy ride. Democrats objected to provisions to save money on Medicare and Social Security. Republicans dismissed any talk of raising taxes again on the well-off.

NewsHour congressional correspondent Kwame Holman begins our coverage.

KWAME HOLMAN: The president’s plan arrived at the Capitol this morning bearing a price tag of $3.8 trillion dollar for the coming fiscal year. And the chief executive made his pitch in the White House Rose Garden.

PRESIDENT BARACK OBAMA: If we want to keep rebuilding our economy on a stronger, more stable foundation, then we have got to get smarter about our priorities as a nation. And that’s what the budget I’m sending to Congress today represents.

KWAME HOLMAN: The blueprint aims to reduce the deficit by another $1.8 trillion over 10 years. That’s on top of $2.5 trillion dollars in reductions agreed to at the end of last year.

The cuts in this new budget also replace most of sequestration, those across-the-board spending reductions that already have begun taking effect. To make it all possible, the president would raise $580 billion in new revenue from higher taxes on the wealthy. And he anticipated Republican objections.

PRESIDENT OBAMA: If anyone thinks I will finish the job of deficit reduction on the backs of middle-class families, or through spending cuts alone that actually hurt our economy short-term, they should think again. When it comes to deficit reduction, I have already met Republicans more than halfway.

KWAME HOLMAN: But on the Senate floor this morning, Republican Leader Mitch McConnell rejected the president’s math.

SEN. MITCH MCCONNELL, R-Ky.: But when you cut through the spin and get to the facts, it looks like there’s less than $600 billion dollars worth of reduction in there, and that’s over a decade, all of it coming, not surprisingly, from tax increases. In other words, it’s not a serious plan.

MAN: It’s nice to see you today.

MAN: Thank you.

KWAME HOLMAN: Mr. Obama hoped Republicans would appreciate $400 billion dollars in savings from Medicare and other health programs, plus lower cost of living adjustments for Social Security.

PRESIDENT OBAMA: I don’t believe that all these ideas are optimal, but I’m willing to accept them as part of a compromise, if and only if they contain protections for the most vulnerable Americans.

KWAME HOLMAN: House Speaker John Boehner said he does give Mr. Obama some credit for moving on entitlements, but not at the price of higher taxes.

REP. JOHN BOEHNER, R-Ohio: But I would hope that he wouldn’t hold hostage these modest reforms for his demand for bigger tax cuts — tax hikes. Listen, why don’t we do what we can agree to do? Why don’t we find the common ground that we do have and move on that?

KWAME HOLMAN: While House Speaker Boehner and other Republicans welcomed the president’s offer on entitlements, many Democrats expressed displeasure. They said the changes in Social Security and Medicare would hurt seniors and other Americans struggling to make ends meet.

Arizona Rep. Raul Grijalva is co-chair of the Congressional Progressive Caucus.

REP. RAUL GRIJALVA, D-Ariz.: Quite frankly, Social Security doesn’t cause the deficit. It should be a separate discussion away from this whole budget issue. And it’s been a trophy the Republicans have wanted since I have been here for 10 years, to begin to undo Social Security. I don’t think Democrats should hand them that opportunity readily.

KWAME HOLMAN: The budget does include new spending that Democrats can support on jobs, infrastructure and expanded preschool education. That last item would be funded by a 94-cent increase in the federal tax on a pack of cigarettes.

Now it falls to the president to try to sell his plan to both sides. He’s scheduled to host a dozen Republican senators at the White House for dinner this evening.

GWEN IFILL: For reaction to the president’s budget, we go to Capitol Hill and the White House.

Rep. Cathy McMorris Rodgers of Washington state is the chairwoman of the Republican Conference. I spoke with her a short time ago from the Capitol.

Cathy McMorris Rodgers, welcome. Thank you for joining us.

As you look at the president’s budget proposal today, what do you think, who do you think the winners are and the losers?

REP. CATHY MCMORRIS RODGERS, R-Wash.: Well, I thought the winners were those people that — well, see, it’s hard for me to quickly think of winners.

I thought the losers at least were the American people in the aspect that it was a lot of the same old from the president. It was more taxes, more spending, another stimulus. These policies have not got our economy growing, and just look at the jobs report. It was — it showed that we have the least number employed today as we have since 1979. We’re not headed in the right direction.

And so it’s hard for me to think of the winners right now.

GWEN IFILL: The president said today that he feels like he’s gone halfway, especially by offering entitlement reform, what he had on the table before when he talked to House Speaker Boehner. Do you agree with him on that or disagree?

CATHY MCMORRIS RODGERS: Well, but the rest of that story that was he also was demanding more tax revenue, and the president got $600 billion dollars in new tax revenue on Jan. 1st.

And the Republicans, we believe it is time to address the other side of this equation, the spending, the out-of-control spending, the record deficits. And that’s why we put forward a budget that balances within 10 years, and we challenge the president, we challenge the Senate Democrats to come up with a budget that balances within 10 years.

And part of that may be tax reform. It may be entitlement reform, making sure that these programs are available for our seniors, important safety net programs. But the president continues to demand more tax revenue, instead of looking at the spending side of this equation.

GWEN IFILL: I want to ask you about some of that, because one of the details in his plan would call for couples, retired couples who earn more than $170,000 dollars a year to pay higher Medicare premiums. Is that not the kind of entitlement reform you had in mind?

CATHY MCMORRIS RODGERS: Well, the Republicans, we want to work on this. We believe that it is important that we address Medicare and that we put it on a path so that it is going to be available for our current seniors and the next generation. And we need to have this type of discussion with the president.

He’s been very reluctant when push comes to shove, though, to really move forward on these kind of reforms without there being — he continues to say there has to be more tax revenue on the table.

GWEN IFILL: Speaking of tax revenues, one of the things he suggested is raising the cigarette tax, doubling the cigarette tax to pay for pre-K initiatives. Is that not what you think — that’s not a tradeoff you would agree with?

CATHY MCMORRIS RODGERS: Well, again, he always comes back to raising taxes.

The American people — just on January 1, every American family saw that their paycheck was reduced because taxes went up. And so we need — we need the president to join in an effort to really look at the spending side of this equation. His default seems to be always to take more money. And the federal government continues to grow. It means that it makes it hard or families. They are having to tighten their belts. And we need the federal government to tighten its belt.

GWEN IFILL: No matter what the initiative is that the money is being raised for, as far as you’re concerned, raising taxes in and of itself is a problem?

CATHY MCMORRIS RODGERS: Well, yes, the Republicans recognize that we have a spending problem. The president early on in his time said he was going to reduce the deficit in half by the end of his first term.

And we need — we need the president, we need the Democrats to look at the spending side, the trillion-dollar deficits. They jeopardize our opportunities and our economic growth and the opportunities for young people that are graduating from college, and it jeopardizes important safety net programs for our seniors.

So that is where the Republicans are standing firm. The president got revenue on Jan. 1st. We need to look at the spending side.

GWEN IFILL: One of the things that you talk about — about safety nets. one of the safety nets is Social Security, and Democrats are unhappy with the president’s plan to change the formula for cost of living increases to Social Security.

Do you think that’s the right approach?

CATHY MCMORRIS RODGERS: Well, it’s certainly one that I think we need to look at closer. And that is a — you know, Republicans and Democrats, I believe we may be able to find some common ground here. And those are the kind of solutions that do give me hope moving forward that we can find the common ground so that these programs are secure for many generations to come.

GWEN IFILL: Bottom line, do you see any difference from where the president’s plan is today from when it was when you were negotiating with him in December?

CATHY MCMORRIS RODGERS: I was disappointed that he continued to make it all dependent upon there being new tax revenue. And that has — you know, from the Republicans’ perspective, he got $600 billion dollars on Jan. 1st. And we need the president to join us in looking at the spending side.

GWEN IFILL: Rep. Cathy McMorris Rodgers, thank you so much.


GWEN IFILL: For the view from the White House, I also spoke this afternoon with Gene Sperling, director of the president’s National Economic Council.

Gene Sperling, thank you for joining us.

The president said today in the Rose Garden what he is proposing was not optimal, is the word he used, and — but he needed to go this far for compromise. So far, both sides seem to be rejecting this.

GENE SPERLING, White House National Economic Council: Well, the president rightly said that he was putting forward today something that was unquestionably a compromise offer to Speaker Boehner to try to get a balanced deficit reduction package that would get us out of this very harmful sequester, deal with some of our long-term fiscal challenges, and put us on a path to both lowering our deficit as a percentage of our economy, but also still investing in jobs right now, by accelerating infrastructure investment and still investing in our long-term competitiveness.

And the president said all along that we’re not going to get that type of a compromise unless everybody is willing to give a little. No one is going to get 100 percent. And the president’s very clear this is not his ideal proposal, but it shows his willingness to take a balanced approach. It does ask for the most fortunate to have a little bit less tax expenditures and tax loopholes, and has some sensible entitlement reforms, and again some measures that he might prefer not doing, but realizes you need to have out to be part of a bipartisan compromise to see if we can move our country forward.

GWEN IFILL: We just spoke to a member of the House leadership, Cathy McMorris Rodgers, and she said she couldn’t think of any winners in this budget proposal.

GENE SPERLING: Well, you know, deficit reduction is never easy.

We inherited this terrible deficit, along with a great recession, and we’re fighting our way out of it. And the question is how to do in a way that gets the balance right. And the balance is about having sensible entitlement savings, but also having revenues as part of a fair deficit reduction plan.

The balance is also about making sure your fundamental goal is about economic growth and job creation, and the type of plan the president has does have targeted investments to create job, investment infrastructure, worker training. You saw his preschool proposal. That would be very important.

And it does maintain investments in our future in manufacturing and in the skills of our workers. But the fact is, we all have to try to get ourselves back on a long-term fiscal path so we can give people more confidence that America is still the place to create jobs and make your future. And that’s going to require some tough choices.

GWEN IFILL: And yet Republicans are not happy because they say taxes — this is all about taxes going up again, and Democrats, some Democrats are not happy because they think that you’re hurting the poor. You’re not winning on either side of this.

GENE SPERLING: Well, Gwen, I look at it in a different way, when you see the president of the United States doing what he should do, lead, trying to bring both sides together.

And, yes, this is not going to be ideal for everyone. But the question is not whether it’s ideal for Democrats or ideal for Republicans, but whether it is an honorable compromise that is good for jobs, good for growth, that moves our country forward. Is it good for the American people?

And that’s going to require everyone to give a little and be unhappy on a few measures. But, if in doing that, we can replace the sequester that is harming millions of innocent people and hurting job growth, and replace it with something that is good for job growth, that has a balance of entitlement savings and revenues, and helps put our deficit on a strong path, that’s going to give more confidence. That’s going to be good for jobs. That’s going to be good for our competitiveness.

And that’s the bigger perspective that all of us have to take if we’re going to try to get by divided government to do something that’s unified that can help us strengthen our economy.

GWEN IFILL: But before you get by divided government, you have to get agreement. So, you have an agreement that you say you had on the table last year with Speaker Boehner. It didn’t go through then.

Taxing the wealthiest didn’t work before. How is it going to work now?

GENE SPERLING: Well, you know, despite all our problems and all our challenges, Gwen, we actually have lowered the deficit by $2.5 trillion, and that has been a mix of $600 billion dollars in revenues on very high-income individuals. There has been spending cuts. And we reduced deficit through lower projected interest costs.

So, it has been tough, but we have made progress, and we just have to — we have to stay at it, and I think that’s going to be the challenge. Now, the president tonight is going to be meeting and having dinner with 12 Republicans, because the president is looking at every moment for what he calls the caucus of common sense.

And I will repeat that one thing we have going for us is that the American public wants us to work together. They want to us compromise. They want us to have a balanced plan that’s good for growth, invest in our people, and deals with our long-term deficit. And I think that that’s what this president is trying to do in putting forward the budget he did today.

GWEN IFILL: Well, let me ask you, finally, tonight’s dinner, is that the first step towards the grand bargain everyone is talking about, or is it another step towards business as usual with these budgets?

GENE SPERLING: I think it is another step in the president’s outreach to look for those who want to be part of a solution.

And he did a previous dinner with 11 or 12 Republicans that I think was very good in creating some trust, starting to see that there can be some common ground, and moving towards where I think the American public would like, which is to see us in Washington, even with divided government, willing to make honorable compromises that are going to be good for our economy and good for job creation.

And I think we will all be better off. And his budget is an important step in doing that, and his outreach is just one more step again in looking for that — that coalition of the willing, that caucus of common sense that is willing to work together and try to strike compromise that’s good for jobs and the economy.

GWEN IFILL: Gene Sperling at the White House, thank you so much.

GENE SPERLING: Thank you, again.