It's not just taxes: Benefit cuts divide Democrats

WASHINGTON (AP) ? It's not just about taxes. There's another big obstacle to overcome as Congress and President Barack Obama work to skirt the fiscal cliff: deep divisions among Senate Democrats over whether to consider cuts to popular benefit programs like Medicare and Medicaid.

Much of the focus during negotiations seeking an alternative to $671 billion in automatic tax increases and spending cuts beginning in January has centered on whether Republicans would agree to raising taxes on the wealthy. Obama insists that tax increases on the wealthy must be part of any deal, even as White House officials concede that government benefit programs will have to be in the package too.

But even if GOP lawmakers agree to raise taxes, there is no guarantee Democrats can come up with enough votes in the Senate to cut benefit programs ? as Republicans are demanding.

"We cannot come up with the solution for Medicare in the next two or three weeks," said Sen. Dick Durbin of Illinois, the No. 2 Democrat in the Senate. "It's too important, it's too serious, when it comes to this fiscal cliff debate."

Durbin has long said Democrats must be willing to discuss cuts to benefit programs in exchange for tax increases on the wealthy. But, he said Wednesday, the issue is too complicated to address in a short postelection session of Congress.

Republicans complain that Democrats are taking issues off the table, even as more GOP lawmakers are reluctantly considering tax increases.

"Democrats like to pretend as though they're the great protectors of Social Security, Medicare and Medicaid," said Senate Republican Leader Mitch McConnell of Kentucky. "They make solemn pledges all the time about how they won't even entertain a discussion about reform. What they don't say is that ignoring these programs is the surest way to guarantee their collapse."

There's a growing consensus among Senate Democrats and the White House that Social Security should be exempt from any deficit-reduction package. But some centrist Democrats in the Senate argue that fellow Democrats must be willing to consider cuts to Medicare and Medicaid in order to get concessions from Republicans on taxes.

"It has to be both ? a significant revenue increase as well as spending cuts," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee.

Sen. Kent Conrad, D-N.D., who is retiring as chairman of the Senate Budget Committee, said rising health care costs in Medicare and Medicaid are helping to drive future spending, making them an essential part of a long-term deficit-reduction package.

"I've been part of every bipartisan group here. We've always put everything on the table," Conrad said. "If you're going to solve this problem, you're going to have to deal with where the spending is and the revenue can be raised."

But senators like Baucus and Conrad increasingly are being drowned out by other Democrats emboldened by the recent election results to fight against benefit cuts.

"I think the election spoke very strongly about the fact that the vast majority of American people don't want to cut these programs," said Sen. Tom Harkin, D-Iowa.

Further complicating the issue, some Democrats say they are willing to look for savings in programs like Medicare and Medicaid, as long as cuts don't lead to higher costs for beneficiaries. Obama's new health care law, for example, assumes more than $700 billion in Medicare savings over the next decade.

"I'm willing to look at ways of making the programs work better," Harkin said.

Congress and the White House are devoting the next three weeks to finding at least a bridge over the fiscal cliff by reducing the sudden jolt of higher taxes and spending cuts in January while laying a framework for addressing the nation's long-term financial problems next year.

Obama wants to let tax rates rise for wealthy families while sparing middle- and low-income taxpayers. Some Republican leaders, including House Speaker John Boehner of Ohio, have said they were willing to consider making the wealthy pay more by reducing their tax breaks. But most Republicans in Congress adamantly oppose raising anyone's tax rates.

Negotiations are going slowly as each side waits for the other to make concessions.

Democrats already have tried to take Social Security off the table. White House press secretary Jay Carney said this week that changes to the massive retirement and disability program should be done separately from any plan to reduce the deficit. That's the same position taken by 28 Democratic senators and independent Sen. Bernie Sanders of Vermont in a letter to fellow senators in September.

"We will oppose including Social Security cuts for future or current beneficiaries in any deficit-reduction package," said the letter, which was signed by many top Democrats, including Majority Leader Harry Reid of Nevada. In the House, Democratic leader Nancy Pelosi has taken the same position, not only on Social Security, but also on Medicare and Medicaid.

"There hasn't been the slightest suggestion about what they're going to do about the real problems, and that's entitlements," said Sen. Orrin Hatch of Utah, the top Republican on the Senate Finance Committee. "There's a certain cockiness that I've seen that is really astounding to me since we're basically in the same position we were before" the election.

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Follow Stephen Ohlemacher on Twitter: http://twitter.com/stephenatap

Source: http://news.yahoo.com/not-just-taxes-benefit-cuts-divide-democrats-190529091--finance.html

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