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Obama, GOP look to rein in benefits

Medicare, Medicaid, Social Security targets

In his book “No Apology,” Mitt Romney promotes increasing the retirement age. In his book “No Apology,” Mitt Romney promotes increasing the retirement age. (Joanne Rathe/ Globe Staff)
By Matt Viser
Globe Staff / April 11, 2011

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WASHINGTON — President Obama will call this week for new curbs on Medicare and Medicaid spending, an aide said yesterday, while a top House Republican predicted that a bipartisan deal on reducing Social Security costs is possible this summer.

“You’re going to have to look at Medicare and Medicaid and see what kind of savings you can get,’’ Obama adviser David Plouffe said yesterday on NBC’s “Meet the Press.’’ The program was one of several on which he announced Obama’s planned speech Wednesday detailing proposed cuts — “with a scalpel, not a machete’’ — in the long-term deficit.

Meanwhile, Representative Paul Ryan, a Wisconsin Republican and chairman of the House Budget Committee, also speaking on “Meet the Press,’’ was optimistic about entitlement cuts elsewhere, saying: “Social Security reform, hopefully, is an area where we might have a shot at a bipartisan agreement this summer.’’

The comments reflect how the political environment surrounding once-sacred social benefits for the elderly and the poor is rapidly shifting, giving hope to deficit watchdogs who anticipate that the upcoming campaign season promises to feature the most robust debate in recent memory on major social programs.

In a significant shift, nearly all the leading GOP figures pondering a run for president, including Mitt Romney, have spoken favorably of raising the Social Security retirement age — a proposal that has long been considered politically risky.

“Deficit denial is dead,’’ said Alan Simpson, a former Republican senator from Wyoming who cochaired a commission that recommended broad changes to entitlements. “People with rare, uncommon degrees of common sense are going to step forward and maybe, maybe, the politicians will get off their knees where they worship the god of reelection.’’

Obama has largely rejected the major overhauls proposed by House Republicans that would sharply limit spending on Medicare, which is the government health insurance program for the elderly, and make dramatic cuts to Medicaid, which pays for health care for the poor.

Obama does not see Social Security as a major source of deficit trouble in the future, Plouffe said in a separate appearance on ABC’s “This Week,’’ but added, “if there’s a way to strengthen Social Security that doesn’t hurt retirees and beneficiaries in the short term, and doesn’t slash benefits in the long term, he’s willing to work with Congress on this.’’ Plouffe gave few specifics on the president’s upcoming deficit reduction plan, although he did say Obama would like it to include higher taxes for higher-income taxpayers.

The current Social Security retirement age is 65 for those born before 1938, rising incrementally to 67 for those born in 1960 or later. The deficit commission cochaired by Simpson recommended that the retirement age increase to 68 by 2050, and to 69 by 2075. They included exceptions for certain occupations from which older retirement would cause undue burdens.

Raising the retirement age, even by just a couple of years, is an idea that remains unpopular nationally, according to polls. A Harris Poll in February found that only 37 percent were in favor of increasing the age of eligibility. Sixty-nine percent of Republicans would rather see Social Security taxes increase over benefits being cut and the retirement age increased to 69, according to a Public Policy Polling survey conducted in January.

That is one reason candidates have been loathe to bring the issue up on the presidential stage. Not since Steve Forbes ran for the Republican nomination in 1996 and 2000 has a candidate made changes to entitlements — including Social Security — a major plank in the platform, said David John, a senior research fellow at the Heritage Foundation.

“Candidates have talked about the need to fix Social Security, but they have rarely given any detail,’’ John said. “It has always been a secondary issue.’’

The new willingness of most of the potential GOP presidential field to tinker with Social Security is a key barometer of the shifting mood.

“Ultimately this is where the debate for them is going to be,’’ said Jon McHenry, a Republican consultant and pollster based in Alexandria, Va.

Romney is supportive of raising the retirement age, as well as allowing workers to direct a portion of their paycheck into individual investment accounts — rather than shipping it to the government to pay benefits for current retirees.

“Increasing the retirement age by even one or two years would help get the system closer to sustainability,’’ Romney writes in his book “No Apology,’’ as he outlines several options he thinks could put Social Security on sounder financial footing. “Most people I know in their ’60s want to keep working; they’re simply happier when they do.’’

Romney also said he was “intrigued’’ by a proposal — championed by Bob Pozen, a wealthy Boston financier who is a Democrat but served as a top economic aide to Romney — that would tie Social Security inflation increases to the consumer prices, rather than the higher wage index. Because wages generally rise faster than consumer prices, the model would have the effect of lowering future retirement benefits for the wealthy.

Romney declined requests for an interview.

“The size of our budget problems so threatens to overwhelm us as a nation that candidates need to speak in more than sound bites about the much larger non-discretionary side of the budget,’’ said Eric Fehrnstrom, a spokesman for Romney. “That’s why Mitt Romney felt it was important to devote an entire chapter of his book to the steps he would take to control debt and out-of-control entitlements.’’

He’s not the only one.

“The retirement age has to be raised [and] the benefits will have to be adjusted downward,’’ former Arkansas governor Mike Huckabee writes in his book “A Simple Government.’’

Mississippi governor Haley Barbour, Indiana governor Mitch Daniels, former Minnesota governor Tim Pawlenty, and former Pennsylvania senator Rick Santorum have also spoken favorably of raising the retirement age.

Many candidates have also discussed changes to Medicaid and Medicare. Barbour, for example, backs a House proposal that would convert Medicaid into a block grant program, cutting federal funding but giving states more authority to administer health care to the poor.

In his book, Romney also outlines several proposals for Medicaid, including allowing recipients to opt out and be given a voucher to purchase private insurance instead. On Medicare, Romney suggests moving away from a fee-for-service system to a global payment system that would reimburse health care providers by a fixed amount for each patient with a specific condition.

While many of the plans outlined by the presidential hopefuls lack firm details that will come later in the campaign, Simpson said the political shift is clear.

“It makes me feel good that there are Republican people with good knowledge,’’ Simpson said. “I feel good about that. Stay away from the social issues. Stay away from abortion and gay marriage. Get on with the action. What the hell? Here we have a Republican Party and a republic. Well, you won’t have a republic if you go broke.’’

Matt Viser can be reached at maviser@globe.com.

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