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The Incredible Shrinking President

- September 19, 2011

Despite Urging The Deficit Committee 
To Go Big, Obama’s Proposal Will Go Small

UNDER PRESSURE AND WITH POLL NUMBERS SLIPPING, PRESIDENT OBAMA IS PUTTING PARTY BEFORE COUNTRY WHEN IT COMES TO DEBT REDUCTION

Obama Will Pull Back From The Debt Reduction Measures He Proposed Just Months Ago. “President Barack Obama will shield Social Security from cuts in his new deficit-reduction plan, the white house said Thursday, pulling back on a key concession from his failed ‘grand bargain’ negotiations with House Speaker John Boehner.” (Carrie Budoff Brown, “Obama To Shield Social Security,” Politico, 9/16/11)

  • “The Shift Away From Social Security Will Allow Him To Avoid A Clash With His Democratic Base.” “The shift away from Social Security will allow him to avoid a clash with his Democratic base over the popular retirement program at a time when he needs its support more than ever, both to push for his $447 billion jobs program and to buck up his lagging poll numbers.” (Carrie Budoff Brown, “Obama To Shield Social Security,” Politico, 9/16/11)

Despite Believing That His Proposals Would Have Saved Social Security, Obama Will Not Propose Any Changes To Social Security. “The Democratic president upset many core supporters in July when he considered changing how the popular pension funds are linked to inflation during acrimonious negotiations with Republicans over raising the U.S. debt ceiling. Obama saw the change as a way to ensure the federal program remains viable for future generations, but liberals felt he was giving up too much ground to Republicans.” (Laura MacInnis and Thomas Ferraro, “Obama Backs Away From Social Security In Deficits Plan,” Reuters, 9/15/11)

For Political Reasons, The White House Worries That Including Measures On Social Security And Medicare Could “Overshadow The President’s Focus On Jobs.” “The Social Security and Medicare provisions that Mr. Obama was willing to agree to with Mr. Boehner drew criticism from members of Mr. Obama's own party, who oppose the policies. White House officials worry that including them in his plan now could overshadow the president's focus on jobs.” (Carol Lee and Laura Meckler, “Obama Plan Won’t Include Changes To Social Security,” The New York Times, 9/15/11)

  • Democrats Fear Proposing Entitlement Reforms “Could Undercut Democratic Arguments Against The GOP On These Points In 2012.” “Democrats also fear he will be forced to concede even more in later negotiations. They argue that by proposing controversial changes to entitlement programs, Mr. Obama could undercut Democratic arguments against the GOP on these points in 2012.” (Carol Lee and Laura Meckler, “Obama Plan Won’t Include Changes To Social Security,” The New York Times, 9/15/11)

Not The First Time He’s Put Party Before Country – Obama Has 
Shrunk From Reforming Entitlements Before

March 2011: Obama Avoided Social Security Reform Because His Political Team Said The Debate Could Be "Disastrous To His 2012 Reelection Hopes." 'Treasury Secretary Timothy Geithner, National Economic Council Director Gene Sperling and Sperling's deputy, Jason Furman -- leading figures in the president's economic team -- are pressing Obama to cut Social Security benefits if necessary, say sources familiar with their positions. But Obama's political team, led by David Axelrod, David Plouffe and Jim Messina, are urging the president to understand that backing benefit cuts could prove disastrous to his 2012 reelection hopes, sources say." (Alexander Bolton, "Social Secu rity Reform Splits White House Political, Economic Teams," The Hill3/15/11)

February 2011: President Obama’s FY2012 Budget “Declined To Propose Major Changes To Social Security, Medicare Or Medicaid.” “Even as the administration said it wants to reduce the deficit by more than $1 trillion over the next 10 years, it declined to propose major changes to Social Security, Medicare or Medicaid, which combined account for more than 40 percent of federal spending.” (Perry Bacon Jr., “In Third Year, Obama Proposes A More Modest Course,” The Washington Post, 2/14/11)

  • “Contrary To The Advice Of Obama's Fiscal Commission, His Budget Map Punts Entitlement Reform To Future Negotiations As Far As Two Years Out.”(Gail Russell Chaddock, “Why The Budget Deficit Is So Hard For Congress To Shrink,” The Christian Science Monitor, 2/22/11)

OBAMA WILL DODGE THE TOUGH CHOICES AGAIN DESPITE HIS CLEAR STATEMENTS IN THE PAST ON THE NEED FOR REFORM

2009: Obama Said The Economic Recovery Was “Impossible To Separate” From The Need To Reform Social Security And Medicare. “But he framed the economic recovery efforts more broadly, saying it is impossible to separate the country's financial ills from the long-term need to rein in health-care costs, stabilize Social Security and prevent the Medicare program from bankrupting the government.  ‘This, by the way, is where there are going to be very difficult choices and issues of sacrifice and responsibility and duty,’ he said.” (Michael D. Shear, “Obama Pledges Entitlement Reform,” The Washington Post1/16/09)

  • Obama: “What We Have Done Is Kicked This Can Down The Road. We Are Now At The End Of The Road And Are Not In A Position To Kick It Any Further.” (Michael D. Shear, “Obama Pledges Entitlement Reform,” The Washington Post1/16/09)

2009: The President Believed That A Failure To Control The Deficit Would “Make It Harder For The Economy To Grow.” “Obama wants to reduce the deficit because he’s concerned that over time, federal borrowing will make it harder for the U.S. economy to grow and create jobs, said the official, speaking on the condition of anonymity.”  (Hans Nichols, “Obama Plans To Reduce Budget Deficit To $533 Billion By 2013,” Bloomberg, 2/21/09)

2009: Obama Recognized That If We Failed To Control Our Debt It Could Lead To A Double-Dip Recession. OBAMA: “It is important though to recognize if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession.” (Fox News, “Interview With Major Garrett,” 11/18/09)

2010: President Obama Acknowledged That If We Do Nothing About Social Security Then Younger Workers Will See Their Benefits Cut. OBAMA: “And if we did nothing, then somewhere around 2040 what would happen would be a lot of the young people who would start collecting Social Security around then would find that they only got 75 cents on every dollar that they thought they were going to get. Everybody with me so far?” (President Barack Obama, Remarks at a Town Hall Meeting and a Question-and-Answer Session in Henderson, Nevada,” 2/19/10)

2010: President Obama Said He Was “Committed” To A “Serious Conversation” About Social Security. OBAMA: “And so the question is, at what point can we have a serious conversation about Medicare and its long-term liability, or a serious question about—a serious conversation about Social Security, or a serious conversation about budget and debt in which we're not simply trying to position ourselves politically? That's what I'm committed to doing. We won't agree all the time in getting it done, but I'm committed to doing it.” (President Barack Obama, Remarks to the House Republican Conference and a Question-and-Answer Session in Baltimore, Maryland, 1/29/10)

INSTEAD, OBAMA IS PITCHING A “GIANT TAX BILL” FOR BUSINESSES THAT WILL SMOTHER THE ECONOMY IN ORDER TO PAY FOR ANOTHER “STIMULUS”

The Wall Street Journal: Obama’s Tax Hikes Would Mean That In 2013 Business Owners Are “Going To Get Hit With One Giant Tax Bill.” “To pay for all this, White House budget director Jack Lew also proposed $467 billion in new taxes that would begin a mere 16 months from now. The tax list includes limiting deductions for those earning more than $200,000 ($250,000 for couples), limiting tax breaks for oil and gas companies, and a tax increase on carried interest earned by private equity firms. These tax increases would not be temporary. What this means is that millions of small-business owners had better enjoy the next 16 months, because come January 2013 they are going to get hit with a giant tax bill.” (Editorial, “The 2013 Tax Cliff,” The Wall Street Journal, 9/14/11)

  • The White House’s Belief That Its Economic Proposals Will Offset The Negative Effects Of The Coming Tax Cliff “Requires Its Own Leap Of Faith.” “The White House's economic logic seems to be that its new spending and temporary tax cuts will so fire up investment and hiring in the next 16 months that the economy will be growing much faster in 2013 and could thus absorb a leap off the tax cliff. But this requires its own leap of faith.” (Editorial, “The 2013 Tax Cliff,” The Wall Street Journal, 9/14/11)
  • Businesses Are Not Going To Hire If They Are Facing Unknown Costs In 16 Months. “All of this assumes that American business owners aren't smart enough to look beyond the next few months. They can surely see the new burdens they'll face in 2013, and they aren't about to load up on new employees or take new large risks if they aren't sure what their costs will be in 16 months.” (Editorial, “The 2013 Tax Cliff,” The Wall Street Journal, 9/14/11)

“Even Some Company Officials Among The President’s Invited Guests At The Joint Address Expressed Concerns About How The Government Could Pay For Such A Large Package.” (Motoko Rich, “Employers Say Jobs Plan Won’t Lead To Hiring Spur,” The New York Times, 9/9/11)

  • David Catalano, Co-Founder Of Modea: Higher Taxes To Pay For The American Jobs Act “Directly Impedes My Ability To Grow The Agency.” “David Catalano, who helped found Modea, a digital advertising company in Blacksburg, Va., said that he was wary of the president’s pledge to ask the ‘wealthiest Americans and biggest corporations to pay their fair share.’ His company was organized as an S Corporation, in which profits are passed through to shareholders, so it would face higher taxes under the president’s proposal, he said. He added: ‘My partner and I have reinvested 100 percent of the profits that our agency has made over the last five years back into the company. If the government takes a bigger share of that from me, it directly impedes my ability to grow the agency.’” (Motoko Rich, “Employers Say Jobs Plan Won’t Lead To Hiring Spur,” The New York Times, 9/9/11)

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