Even Obama’s debt panel doesn’t buy Obamacare

December 6, 2010

President Barack Obama’s debt reduction commission defined tough fiscal choices for Washington, though its members weren’t unanimous enough to force the ideas on lawmakers. But even if they had, the panel pulled punches on healthcare cuts. Reducing that burden may be central to the next presidential election.

The 18-member panel needed 14 votes in support of its recommendations to trigger concrete action in Congress. Few if any members ever thought it was possible to clear such a high bar. Still, half of the 12 commission members drawn from Congress backed the final plan, with the recommendations getting the support of 11 members altogether.

That was a pleasantly surprising result for deficit hawks because any decent political consultant would tell clients to flee most of the ideas in the blueprint. It would, for instance, sharply limit the tax deductibility of mortgage interest. The plan would also cut Social Security benefits for higher-income retirees and accelerate the rise in the eligibility age. Three conservative Republicans on the panel even supported a package that included higher taxes.

Many elements of the commission plan may resurface over the next two years. House Republican leaders hint they will include the majority of the panel’s suggestions in their official budget plan next spring. There could be compromises over Social Security and corporate tax reform.

Yet the biggest stumbling block remains healthcare, which accounts for three-quarters of the U.S. government’s long-term budget woes. A presentation from Medicare’s chief actuary persuaded many panel members that Obama’s recently-passed reform law does less than estimated to reduce future government outlays. Despite this and the legacy of successive administrations’ overgenerous commitments on health spending, the panel danced around the issue in its recommendations.

Democrats in Congress have little desire to revisit the issue anytime soon. Republicans, on the other hand, want to make it a central issue of the 2012 White House campaign so that a positive electoral outcome, if they achieve one, would be a mandate for their plan — whatever it turns out to be. Though Obama’s commission provides useful direction, the endgame for healthcare spending could be more significant for America’s fiscal future.

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