Obama’s Budget Revives Benefits as Divisive Issue

In the midterm races already taking shape, Democrats who back Mr. Obama’s budget proposals to trim future benefits as part of a long-term deficit-reduction compromise could be attacked from the left and the right.

Liberal groups and some union activists are threatening to recruit candidates to challenge these Democrats in their primaries. At the same time, the head of the House Republicans’ campaign committee gleefully signaled last week that he would use Mr. Obama’s “shocking attack on seniors” against Democrats in general-election races — though Republican Congressional leaders demanded the concessions from Mr. Obama. And while party leaders rebuked the campaign committee chief, Representative Greg Walden of Oregon, individual Republican candidates and “super PACs” would be free to wage their own attacks.

For now, at least, the political warnings to Democrats are coming mostly from the left of their own party.

“You cannot be a good Democrat and cut Social Security,” said Arshad Hasan, the executive director of Democracy for America, a liberal grass-roots group, which staged a small protest outside the White House last week even before Mr. Obama released his annual budget on Wednesday.

“People would be looking to punish them,” said Robert Borosage, a co-founder of the Campaign for America’s Future, another liberal group, “and they would be looking for primary challengers.”

Even if Democratic incumbents do not draw a primary challenger, liberal activists say, they might face a shortage of volunteers motivated enough to do the hard work of campaigning — just as Democrats did in the 2010 midterms, which resulted in big Republican gains.

Looking further ahead, to 2016, some on the left have already begun talking about encouraging a liberal Democrat — the freshman Senator Elizabeth Warren of Massachusetts is the name most bandied — to take up the “don’t touch Social Security or Medicare” banner as part of a liberal bid for the party’s nomination to succeed Mr. Obama, even against Hillary Rodham Clinton or Vice President Joseph R. Biden Jr.

Such talk was stoked when Ms. Warren, within hours of the release of the president’s budget on Wednesday, sent supporters an e-mail sounding an alarm: “Our Social Security system is critical to protecting middle-class families, and we cannot allow it to be dismantled inch by inch.”

She was not available for an interview, aides said on Friday.

“If the major candidates running for the Democratic nomination hedge on important issues like Social Security, they will leave open a tremendous amount of space for an insurgent,” said Adam Green, a co-founder of the Progressive Change Campaign Committee, a group often critical of Mr. Obama.

But, Mr. Green acknowledged, “I wouldn’t say anybody’s laying the groundwork yet.”

At a minimum, Mr. Borosage said, all Democratic candidates in 2014 or 2016 “will be forced to take a stand.”

That prospect could complicate the campaign strategies of establishment favorites. Mr. Biden is inevitably tied to Mr. Obama’s policies. And Mrs. Clinton, as a senator, was a fiscal moderate who extolled her husband’s budget-balancing record of compromise. President Bill Clinton negotiated Medicare savings with Congressional Republicans, and their 1997 deal nearly included the same proposal trimming Social Security cost-of-living increases that Mr. Obama has put in his budget to entice Republicans to compromise in turn.

Ideological litmus tests have lately been more divisive for Republicans than for Democrats, over taxes and social issues like abortion, same-sex marriage and immigration. But the agitation on the left to defend Social Security and Medicare, the two programs that Democrats consider perhaps their party’s greatest legacy, did not begin last week with Mr. Obama’s new budget.

It had been building since mid-2011, when the president, in private negotiations with Speaker John A. Boehner, tentatively agreed to the new formula for calculating cost-of-living adjustments in Social Security; economists recommend the formula as more accurate, but it would mean smaller increases for Social Security beneficiaries. Even so, Democrats in Congress and the White House agree that the party would have supported Mr. Obama back then if a compromise deal had come to a vote.

But the 2011 talks, just like a second round of negotiations in December, collapsed after Mr. Boehner declined to agree to Mr. Obama’s counterdemands: new taxes on the wealthy and on some corporations, and job-creating investments in infrastructure projects, research and education.

Sarah Wheaton contributed reporting.

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Deficit-cutting panel looking at benefits, taxes (AP)

By DAVID ESPO and ANDREW TAYLOR, Associated Press David Espo And Andrew Taylor, Associated Press – Thu Oct 27, 5:55 pm ET

WASHINGTON – Rival deficit-cutting plans advanced by Republicans and Democrats on Congress' secretive supercommittee would both mean smaller-than-expected cost of living benefit increases for veterans and federal retirees as well as Social Security recipients and bump up taxes for some individuals and families, according to officials familiar with the recommendations.

In all, the changes would reduce deficits by an estimated $200 billion over a decade, a fraction of the committee's minimum goal of $1.2 trillion in savings.

A final decision by the panel on legislation to reduce deficits is still a few weeks off, and given the political difficulties involved, there is no certainty that the six Republicans and six Democrats will be able to agree.

The two sides exchanged initial offers earlier this week, and each side swiftly found fault with the others' proposal in the privacy of the committee's rooms as well as in public.

House Speaker John Boehner, R-Ohio, noting published reports that Democrats are seeking $3 trillion in higher taxes, said, "This is the same number that was in the president's budget, the same number that — that they — I don't know that they found any Democrats in the House and Senate to vote for."

"I don't think it's a reasonable number," he said. Boehner also chided Democrats for recommending $50 billion in savings from Medicaid over the next decade, well below what Republicans are seeking.

"Let's understand over the next 10 years, we're going to spend $10 trillion on Medicaid. I just think there's a lot more room there to help find common ground," he said.

At the same time, Boehner emphasized, "I am committed to getting to an outcome" that clears the committee and Congress. The speaker negotiated privately with President Barack Obama over the summer in deficit-reduction talks that failed to produce an agreement.

At a news conference of her own, House Democratic leader Nancy Pelosi of California said she wanted a compromise that was "big, bold and balanced," a phrase that Democrats use to convey an insistence on higher tax revenue.

She pointedly declined to embrace what Democrats had presented to the supercommittee. She called it "Sen. Baucus' package," a reference to the Montana Democrat and chairman of the Senate Finance Committee. That ran directly counter to his aides' statements earlier in the week that he was speaking for a majority of Democrats on the panel — and tacit confirmation that at least two of the party's members had not signed on as supporters.

Ironically, while the Republican and Democratic panel members remain far apart, one of the relatively few items in common was a potentially controversial recommendation to change the calculation for annual cost-of-living increases in federal programs as well as the yearly adjustments in income tax brackets.

According to the nonpartisan Congressional Budget Office, the recommended change "produces lower estimates of inflation than the traditional" measurement of the Consumer Price Index. Since December 2000 the difference on average has amounted to 0.3 percentage points, according to the agency.

A decision to base annual cost of living increases on the new calculation would lower Social Security costs by $108 billion over a decade, and the impact on benefits for federal civilian and military pension programs and veterans' benefits would save an additional $23 billion, according to calculations made in February 2010.

Congressional experts said the list of federal programs that would be affected is extensive, and included Medicare, Medicaid, food stamps and more, but the absence of a written description by either side in the deficit negotiations makes a complete listing impossible.

Officials in both parties said their plans would affect income tax brackets, which currently are adjusted annually to make sure that inflation alone does not expose more earnings to taxation.

By slowing the rate of the adjustment, more income would be taxed than is currently forecast, a change that Congress' Joint Tax Committee recently estimated would produce $59.6 billion in revenue to the Treasury over a decade.

Just as changes to Social Security and benefit programs are politically problematic for Democrats, tax increases are difficult for Republicans.

Americans for Tax Reform, an organization led by anti-tax advocate Grover Norquist, earlier this year said slowing the pace at which tax brackets are adjusted for inflation "would most certainly be a tax hike."

There was one caveat, though.

"This idea can of course be part of a discussion of comprehensive and revenue-neutral tax reform, but stand-alone it is a tax hike."

Both Republicans and Democrats included tax reform in their presentations inside the supercommittee, and the issue has great political appeal.

But the two sides differ dramatically on the details. Democrats called for tax reform that would generate an additional $1 trillion in revenue over a decade, while Republicans said they envisioned no increase.

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Casualties mount in NJ employee benefits battle (AP)

By ANGELA DELLI SANTI, Associated Press Angela Delli Santi, Associated Press – Sat Jun 18, 12:30 pm ET

TRENTON, N.J. – The struggle to legislate higher pension and health benefits contributions for 500,000 public workers in New Jersey is shaking up the political status quo: Organized labor is attacking its traditional Democratic allies and pro-union Democrats are pitted against colleagues who plan to vote to limit collective bargaining.

The in-fighting, which shows no sign of letting up as the worker benefits bill moves through the Legislature, has diminished the unions' clout over the legislative process and driven a wedge through the state Democratic Party.

Among the discord, Republican Gov. Chris Christie appears to be the winner. Christie promised in his 2009 campaign to rein in public employee benefits as a way to help stabilize runaway property taxes. And his budget-slashing ways and "shared sacrifice" mantra have earned him the adoration of fiscal conservatives across the country.

"What you're seeing is reality settling in because if you're not going to raise taxes there's really no other way to do this," said Jennifer Duffy, senior editor of The Cook Political Report, a nonpartisan newsletter. "This is something Chris Christie has been talking about for a long time. It's a win for him whether Democrats like it or not."

Christie announced last week that an agreement on the bill had been struck with Democrats who control the Legislature and Republican minority leaders, who are generally in lock step with the governor's agenda. The deal requires sharply higher pension and health insurance contributions from teachers, police and firefighters and other public workers. It also limits collective bargaining over health care, which the unions and some Democrats staunchly oppose.

Labor went ahead with a scheduled protest Thursday, drawing 3,500 union workers to the state Capitol as the bill was heard for the first time by a Senate committee. After a contentious hearing, during which two dozen demonstrators were removed from the room and cited for disorderly conduct, the measure passed 9-4. Democrats were split 4-4.

Bob Master, political director of the Communications Workers of America, with 55,000 state and local members, called out Democrats who support the bill during his testimony.

"Real Democrats, not Chris Christie Democrats, would have put together their own plan and fight for it — a plan that addresses taxpayers' needs while respecting the fundamental rights of workers," he said to rousing applause. "Real Democrats would kill this bill because workers' rights are human rights."

Assemblyman John Wisniewski, who heads the Democratic State Committee, predicted limited long-term fallout.

"Ultimately, the party will be fine," Wisniewski said.

Similarly, Senate President Stephen Sweeney, an ironworker and a Democrat who is sponsoring the bill, said he didn't fear union retribution.

"If they want to put a Republican Legislature here, if they want to knock me out and put my opponent in my seat, they're going to do what they think is right," Sweeney said. "I'm not going to be here to be told what to do."

The effort to limit public employees' collective bargaining rights has gained support in other states. The GOP-led effort in Wisconsin calls for public workers to pay more for health and pension benefits beginning in late August unless a lawsuit by a coalition of unions is successful. The Massachusetts House passed a bill in late April stripping public-sector unions of the right to bargain over health care.

"No Legislature is more Democratic than Massachusetts," Duffy said. "If you can do it in Massachusetts, you can do it anywhere. Obviously, the unions went crazy."

No matter how angry the unions become with Sweeney or other Democrats who support the bill, they won't be able to exact much revenge in November, said Patrick Murray, a political scientist at Monmouth University. The primaries are over and the vast majority of districts are safe seats for the incumbent, he said.

The unions, particularly the cash-flush teachers union, have seen their influence erode with this governor after they refused to take a one-year pay freeze.

"With every loss the teachers' union suffers, they seem to compound it by attacking dissident Democrats," Murray said. "The traditional union-supporting wing of the party is put in a tough position. The public is starting to turn against the unions."

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