What might Democrats give up in 'fiscal cliff' talks?

OK, Republicans have ceded ground on tax revenues. Now, under Obama's 'balanced' approach to averting the fiscal cliff, Democrats presumably would consent to spending cuts on entitlement programs or Obamacare. But what Dems would accept may not be what GOP has in mind.

What might Democrats give up in “fiscal cliff” talks? That question arises Tuesday as Republicans complain that they’ve acceded to increases in government revenue but Democrats haven’t detailed any spending cuts they’d accept.

President Obama has talked about his preference for a “balanced” solution to the crisis, with about $1.6 trillion of new revenue as part of a $3 trillion deficit-reduction package spread over 10 years. He’s been largely silent on the spending reduction side of this balance, however, and some Democrats have indicated they’ll fight if Mr. Obama tries to slash entitlement programs, as the GOP wants.

“In the past, Democrats have demanded tax hikes now for spending cuts that never happened. Not this time. A balanced approach means real cuts, now,” said Senate minority leader Mitch McConnell of Kentucky on the Senate floor Tuesday.

Of course, to some extent GOP lawmakers have also fuzzed their proposed fiscal cliff solutions. While House Speaker John Boehner and others have talked vaguely about “new revenues,” they’ve haven’t said how those new revenues might be produced. Plus, they’ve continued to resist allowing Bush-era tax cuts to expire for the very wealthy, as Obama wants.

But Republicans say that they’ve stepped out of their comfort zone by even discussing revenue hikes, and that in return Democrats must talk about sweeping entitlement changes. What sorts of changes? Consider the provisions of a 10-year, $4.5 trillion deficit-cutting plan that Sen. Bob Corker (R) of Tennessee is currently circulating. He calls for a gradual increase in the Social Security retirement age to 68 and in the Medicare eligibility age to 67, plus a less generous mechanism for adjusting Social Security outlays due to inflation, among other things.

The GOP also wants provisions of the Affordable Care Act, aka “Obamacare,” revisited.

“It’s ridiculous to suggest that we make changes to Medicare and Medicaid, while leaving $1.6 trillion in new Obamacare spending untouched,” said Senator McConnell on Tuesday.

The White House, for its part, continues to make noises about the big entitlement programs, saying they’re on the table as part of a multipart deficit solution that also includes increased revenue.

In past fiscal negotiations with Congress, Obama has indicated he might be open to a gradual increase in the Medicare eligibility age, as well as some limits on future Social Security checks. But in recent days White House spokesman Jay Carney has said the administration believes Social Security shouldn’t be part of the current talks, since by itself it isn’t adding to the deficit. And some core Democratic constituencies, particularly liberals and unions, would fight hard to keep the age of Medicare eligibility from rising.

Unions and progressive groups met Tuesday with administration officials and reported themselves satisfied as to where the president currently stands.

“One person at the meeting ... came away convinced that the White House would ultimately prove willing to go over the fiscal cliff if necessary, rather than give ground on core demands,” writes liberal Greg Sargent Tuesday on his Plum Line blog at the Washington Post.

The left might be open to more means-testing of Medicare, however. Sen. Richard Durbin (D) of Illinois, an adamant foe of raising the age of eligibility, said Tuesday during an appearance on MSNBC’s "Morning Joe" that one solution is to have higher-income people pay more toward their government-run health plans.

As to Medicaid, the joint federal-state health program for lower-income Americans, the administration might resist large reductions. Under terms of the Affordable Care Act, Obama is trying to entice states to join in expanding the program to many more people. Big reductions in federal subsidies would not help in this effort.

One last issue that’s sure to come up is Obamacare itself – specifically, the subsidies the government will offer beginning in 2014 to help the uninsured buy health coverage.

The Obamacare bill that emerged from the Senate Finance Committee contained less generous aid than the final legislation authorized. It’s possible the two sides might agree to scale back this cost.

“I don’t see how the subsidies [for people earning] up to 400 percent of poverty could remain in this environment,” said G. William Hoagland, senior vice president at the Bipartisan Policy Center and a longtime Senate staffer, at a recent symposium sponsored by The Alliance for Health Reform.