During a press conference Wednesday, President Barack Obama reminded Congress, and the country, that it was time to “seize this moment” and to “seize it soon.” This spring, the Treasury Department warned that if Congress does not raise the debt ceiling by August 2nd, the United States could default on its debt. The so-called “Gang of Six” – a bipartisan group of Senators –convened to concoct a comprehensive plan for deficit reduction.
The group is now down a man but talks continued in an effort to meet a self-imposed July 1 deadline. Sen. Dick Durbin emerged as a leader of the pack early on. The senior senator from Illinois joined Eight Forty-Eight’s Alison Cuddy Thursday to discuss the group’s progress.
Durbin has not been coy about the import of the group’s task. He has communicated that everything is on the table during negotiations—including entitlements. Cuddy began by asking the senator what changes he would accept on programs like Social Security, Medicare or Medicaid.
The senator recognized that Social Security is only solvent for about 25 years before it “falls off the edge of the table.” But many Americans were forced to reshape their retirement plans in the last few years—the stock market tumbled, savings shrunk and many lost private pension plans as companies filed for bankruptcy—making Social Security, Durbin argued, more important than ever.
“Turns out, the only solid thing left, is Social Security and people need to count on it,” Durbin said.
He would like to work on a plan that buys the program 75 years of solvency—and he said he thought it might be possible if Congress revisits it every 10 years. Ensuring 75-year solvency, he said, will give young people and retirees peace of mind that their Social Security will be there when they’re ready to claim it.
But the hurdles facing Medicare and Medicaid are a separate ballgame, according to Durbin.
“If the challenges of Social Security can be quantified in mathematical terms, it’s simple math,” Durbin said. “When you get into Medicare, you’re in advanced calculus.”
The senator pointed to Medicare’s many moving parts and levers with varying degrees of effectiveness. But to be serious about the deficit of the United States of America, Durbin said, a basic concession must be made—health care costs, which continue to rise faster than inflation, must be confronted. Durbin also pointed to the country’s changing demographics—9,000 Americans reach the age of 65 every day. Those numbers, he argued, must be part of the equation.
In response to the premise, Cuddy asked Durbin if it was a fair trade to cut benefits under Medicaid to satiate Republicans’ appetite for reduced spending in exchange for tax concessions from the GOP.
“The idea of cutting benefits under Medicaid at this point, in order to get the wealthiest Americans to pay more in taxes, is an awful bargain,” Durbin said.
Durbin added that well-off Americans should be willing to help; to sacrifice some in order to avoid serious cuts to Medicaid and Medicare. Medicaid, he emphasized, represents not only care for aging parents, grandparents and the disabled, but also the healthcare of one-third of the children in America.
Protecting their interests is part of the reason Durbin joined the “Gang of Six” in the first place; why, he said, a person from the left side of the spectrum decided to sit with “flinty-eyed conservatives.”
At the gang’s initial meeting, Durbin stated his purpose to the group: “I got two things I want to preserve: The safety net in America and the progressivity of our tax code so that middle-income families who are falling behind have a tax code that gives them a fighting chance,” he recounted.
He told Cuddy that from his vantage point, the current conversation does not address those priorities—many Americans remain vulnerable to the deficit shockwave in the long-term. And their well-being, he said, cannot be sacrificed.
But the reality of politics in Washington, Durbin resigned, is that Republicans control the House of Representatives with a commanding majority. The Democrats have a nominal control of the U.S. Senate with 53 votes—but to meet the required 60, a degree of Republican support is needed.
Nonetheless, Durbin said there is general agreement among Senate Democrats that the party should ask for more in terms of tax revenue.
“We want to close down some of the rotten subsidies that are going on—whether they’re for oil companies, or thoroughbred horses, or corporate jets, or ways for companies to move jobs overseas with the help of the tax code—it’s time to put an end to that stuff,” Durbin said.
But he fears that even if the August 2 deadline is avoided, and a short-term, bipartisan deficit plan is adopted, another threat still looms.
“We still face the real situation that 30 bond traders in New York City can decide that the future of the American economy is in doubt and start raising questions about interest rates; that could happen,” Durbin warned.