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Revenues the Real Stumbling Block in Grand Bargain Negotiations

Politico’s David Rogers has more on the state of the Biden grand bargain negotiations. To hear him tell it, the stumbling blocks are $1.1 trillion in cuts to appropriations, and the demand from the White House for revenue to be part of the grand bargain mix.

Even after concessions made last month, the White House and Republicans in Congress are more than $1.1 trillion apart over how much to devote to domestic appropriations over the next 10 years, according to a POLITICO analysis of new numbers collected from the administration and the House GOP […]

On the domestic side of the ledger — the big target for the GOP — the equivalent House Republican target is about $1.1 trillion less than that of the White House, requiring a further cut of close to 26 percent. Republicans clearly hope to use the debt ceiling talks now to force further concessions along these lines, but the gap is so huge that it will require the Senate GOP to assert itself more if there is to be a deal […]

Thus far, appropriations have not been a major subject in the Biden talks. But coming out of Tuesday’s more than two-hour session — held in the Senate offices of Majority Leader Harry Reid (D-Nev.) — both the vice president and House Majority Leader Eric Cantor (R-Va.) expressed new confidence that the talks could yet produce a deficit-reduction package in excess of $1 trillion. “We’re making progress,” the vice president said. “We’re confident if we keep on this pace we can get to a relatively large number.

Biden repeated his desire for revenues to be part of the equation as well, but Republicans show no give on this point, just as Democrats have been shy too of surrendering what they see as their political advantage on the issue of Medicare.

“The tone remains positive. We stress again that nothing is agreed to until everything’s agreed to,” said Maryland Rep. Chris Van Hollen, the ranking Democrat on the House Budget Committee. But asked if the two sides could find common ground on Medicare, he was cautious: “I’ll have to see. I’m not sure.”

The numbers that Rogers uses are pretty revealing – Republicans are cutting everywhere and anywhere. They raided an advanced vehicle technology program to pay for disaster relief aid. But the real issue here will be getting revenue increases as part of the deal. The White House may be able to steamroll Democrats into some Medicare cuts. But without getting revenues they have no cover at all. Fortunately, Republicans are adamantly opposed.

Again, gridlock is our friend. Still, the debt limit must be increased, and because of the insistent focus on this over the past several years, Republicans have the public thinking that a higher debt would be worse than default. What’s more, after the debacle in NY-26, Republicans need a deal to get out from under the mess they’ve created for themselves.

That’s why I really see Medicaid as the program most threatened. If revenues and Medicare go off the table, Medicaid is a substitute that Republicans can use to say they’re getting serious about entitlements – and Democrats the same, actually. It’s kind of a safety valve for a deal. I don’t know if it will be full block-granting, or just loosening maintenance of effort requirements to give more flexibility to the states (aka allow them to drop more people from the rolls). But that would seem to be the alternative plan where everyone wins but the poor.

It would be good to explain at this point that the public actually likes Medicaid a great deal, and that the cuts proposed by the House GOP would hurt seniors perhaps the most. You can call this the “Your Mother-in-Law Will Have to Move Out of the Nursing Home and In With You Act,” because that’s what Medicaid pays for, in large part.

About 60 percent of Americans want Congress to keep Medicaid in its current form with the federal government guaranteeing coverage and setting minimum benefits for states to follow, according to the survey by the Kaiser Family Foundation. Just over half said they didn’t want to see funds cut. (KHN is an editorially-independent program of the foundation.)

Opinions varied along party lines, with 79 percent of Democrats and 39 percent of Republicans saying they preferred to keep the Medicaid structure “as is.”

House Republicans in April voted to convert Medicaid from an open-ended program in which the federal government pays about 60 percent of the cost of services, into a federal block grant. Each state would get a fixed sum of money and states would have the freedom to decide who to cover and what services to provide — an effort Republicans said would cut federal spending by $1 trillion over the next decade.

You of course notice that Democrats and Republicans are “$1.1 trillion apart,” and that the proposed savings to Medicaid is right around that, yes?

Let’s just hope that Grover Norquist has a lot of power over the House GOP, and that he’ll just veto any revenue increases out of hand. That will take a grand bargain off the table.

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David Dayen

David Dayen

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