Former President Bill Clinton said Wednesday that a controversial GOP plan to dramatically overhaul Medicare clearly was a factor in the Democrats’ victory Tuesday in a House special election in a heavily Republican Western New York district. But he cautioned both parties not to use the outcome as an excuse to put off seeking ways to contain rapidly mounting government health care costs as part of a long-term debt reduction plan.
Democratic Erie County Clerk Kathy Hochul scored an upset against Republican State Assemblywoman Jane Corwin in a three-way race that many political experts viewed as a referendum on a Republican plan designed by House Budget Committee Chairman Paul Ryan, R-Wis., to convert Medicare to a subsidized voucher program. That proposal, formally approved by the full House as part of a long term budget, has generated political problems for Republicans in many districts throughout the country. Polls have shown the public is skeptical or outright opposed to gradually ending Medicare as it is currently constituted.
Speaking at a Peter G. Peterson Foundation Fiscal Summit in Washington, Clinton blasted the Ryan proposal, saying it was wrong “in principle” and would saddle future seniors with inadequate health care coverage that would discourage them from seeking medical treatment, even in life-threatening situations. “Medical costs will continue to go up, and older people will use less health care and die” or spend more of their saving, he said.
“I don’t think the Democrats or Republicans ought to conclude from the New York results that no change can bemade in Medicare.”
But Clinton, who presided over adoption of four balanced budgets during his two terms as president during the 1990s, insisted that lawmakers could still find plenty of opportunities to reduce spending on Medicare for seniors and Medicaid for the poor as part of a comprehensive budget plan. “I don’t think the Democrats or Republicans ought to conclude from the New York results that no change can be made in Medicare” and other entitlement programs.
He added that “There is a real hunger among Americans” for us to do things,” but that the biggest cuts in health care and other domestic programs should be delayed for at least a year as the president’s fiscal commission recommended until the economy has improved more. “Most of this stuff should bite next year because the economy is too weak,” he said.
…”The existing Medicare system is a fiscal fantasy that can no longer be sustained and will eventually crash the system.”
Ryan, the Republicans most prominent spokesman on the budget and economy, followed Clinton on stage and defended his Medicare plan stressing that it wouldn’t affect people 55 and older and that it represents a sensible way to move away from a financially unsustainable fee-for-service program that is driving up the national debt. He complained about TV ads by Democrats and seniors’ advocates that he claims distorted his proposal for providing premium support for vouchers to purchase health care in the private market. Ryan compared the existing Medicare system to a “fiscal fantasy” that no can longer be sustained and will eventually “crash the system.”
“So the question is, what are the kinds of reforms we’re putting in place to get at the root cause of health inflation [and] to inject competition into the system so we can stretch our dollar farther, and then subsidize people more who need it more and not those who need it less.”
“So what we’re saying is protect those with low-income by supplementing and covering their out of pocket costs,” he added. “And we’re also saying as people get sicker, increase their payments, stabilize their premiums. And as people get wealthier, don’t subsidize them as much.”
The second annual Peterson Foundation Fiscal Summit opened as a bipartisan House and Senate group headed by Vice President Joseph Biden reported substantial progress in negotiating a deal to cut spending and raise the debt ceiling to avert the threat of the Treasury defaulting on debt for the first time in U.S. history. Biden and Treasury Secretary Timothy Geithner have both said the group of six Democratic and Republican lawmakers appear on track to reach agreement on more than $1 trillion in spending cuts in the short term, with an eye to a total of $4 trillion in deficit reduction in the coming decade or so. A spending deal is essential to persuading Republicans to join with Democrats to raise the debt ceiling, which is currently at an historic $14.3 trillion level.
“A year ago, Americans were still arguing whether there was a debt crisis; today more and more Americans are openingtheir eyes, their ears and their minds to the fiscal threat.”
“We meet at a very pivotal and hopeful moment,” Pete Peterson, a former Wall Street financier and Commerce Secretary, said in opening the day-long conference. Peterson noted that a year ago, many Americans were still arguing whether there was a debt crisis, while today “more and more Americans are opening their eyes and their ears and their minds” to the fiscal threat.
Clinton, the keynote speaker, is the only former president who presided over consecutive budget surpluses in the post World War II era. Here are several major points he made during a conversation with Gwen Ifill of PBS’s Washington Week.
On bipartisan support for a budget deal“I think we can have bipartisan cooperation. The Democrats are going to have to be willing to give up maybe some short term political gain by whipping up fears on some of these things if it’s a reasonable Social Security proposal, a reasonable Medicare proposal. We’ve got to deal with these things. You can’t have health care devour the economy. “
On the debt“This debt problem is already constraining our options as a country. It constrains our ability o develop a more diversified economic strategy by undermining our ability to get investment capital as opposed to consumption capital and by undermining our ability to enforce our trade laws which, discourages us from doing new trade agreements. . . . If we defaulted on the debt once for a few days, it might not be calamitous.” The global markets, he said, would likely still have faith that the United States would be able to pay its bills. The calamity would come only “if people thought we weren’t going to pay our bills anymore and they would stop buying our debt.”
(A Clinton spokesman later sought to clarify the former president’s comments on default, saying he “inadvertently misspoke” in suggesting a short-term default by the U.S. might not be so harmful. Clinton spokesman Matt McKenna said Clinton “did not in any way mean to suggest that a default would not be highly damaging for the economy even for a very short period of time.”)
On corporate taxes(Clinton believes the corporate tax rate and the mortgage interest deduction should be lowered. He suggests imposing a VAT tax or a tax on pollution. Individual tax rates should return to levels when he was president. He said people like him should pay higher taxes. )
“One of the really impressive accomplishments of the Bowles-Simpson commission was pointing out just how much money there was out there in the so-called tax expenditures. I would favor returning individual rates to where they were when I was president and maybe even across the board, certainly for high income people. Then I think you ought to do something on tax expenditures.”
“On corporate taxes I have a little different take. I raised corporate tax rates and I think it was important because the percentage of the federal pie covered by corporate taxation went way down in the 12 years before I was president. It is very important to be internationally competitive so our rates are fairly high compared to all of our competitors, but our loopholes are fairly high. If you can actually lower rates and still raise the same amount of money and that would make us a little more competitive and be more competitive and then everyone would have to pay something.”
In addition to his foundation, Peter G. Peterson funds The Fiscal Times, an independent news and opinion organization.