<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By Josh Barro</p> <p>Jonathan Chait <a href="http://nymag.com/daily/intelligencer/2012/12/why-republicans-cant-propose-spending-cuts.html">looks at</a> why Republicans are being cagey about what exact spending cuts they want as part of the fiscal-cliff deal. His conclusion (that the Republican Party doesn't actually have big spending cuts that it wants) isn't quite right:</p> <p style="padding-left: 30px">When the only cuts on the table would inflict real harm on people with modest incomes and save small amounts of money, that is a sign that there’s just not much money to save. It’s not just that Republicans disagree with this; they don’t seem to understand it. The absence of a Republican spending proposal is not just a negotiating tactic but a howling void where a specific grasp of the role of government ought to be. And negotiating around that void is extremely hard to do. The spending cuts aren't there because they can’t be found.</p> <p>There are big spending cuts that Republicans want that would put big dents in the federal budget. For example, they would like to repeal all of the coverage-expansion components of Obamacare, which would reduce spending by nearly $1.7 trillion over 10 years. And as Chait notes, they would also like deep cuts to Medicaid; the latest version of Paul Ryan’s budget cut the program by about $800 billion over 10 years, in addition to the savings from repealing Obamacare.</p> <p>The Republicans' main problem in this negotiation is that they know President Barack Obama will not agree to cut in the area they want to cut: aid to the poor. The signal Obama has sent is that he is willing to make a deal that cuts old-age entitlements, meaning Medicare and Social Security, and Republicans are internally conflicted over those programs.</p> <p>Republicans have spent a lot of time over the last few years railing against the president for cutting Medicare and scrambling to get to his left on the issue, at least with regard to benefits for people over age 55.  If Republicans ask for near-term Medicare cuts, that will mean reversing a position that is popular with a core constituency (old white people) and giving up a cudgel that they feel they have used effectively to beat up the president since 2009.</p> <p>But that doesn't mean that Republicans are actually unwilling to meaningfully cut Medicare in the near term, as Chait suggests. Republicans' attachment to Medicare is far more political than ideological. I think they would be happy to take a Medicare-cutting deal if they could get Obama to take the blame for it and therefore avoid alienating seniors. (It's also worth noting that, despite Republican rhetoric, both of Paul Ryan's last two budgets spent less on Medicare over the next 10 years than President Obama wanted to spend.)</p> <p>There are also lots of Medicare-cutting options besides the two we've heard most about in the last few weeks: an increase in the retirement age and more means-testing. But Medicare reform is too complex to address as part of a fiscal-cliff deal. <a href="http://www.bloomberg.com/video/president-obama-the-bloomberg-exclusive-interview-l6aFIA~eSCiwhXVAC~viMg.html">The framework</a> Obama laid out in his interview with Bloomberg TV last week -- an agreement upfront on the size of mandatory spending cuts, with details to be filled in later -- should allow for exploring more possibilities and give both parties lots of time to try to fling blame around.</p> <p>So, unlike Chait, I think reporters are right to describe the spending-cuts dance as "a kind of negotiating problem, based on each side’s desire for the other to stick its neck out first." Both parties are in favor of some sort of Medicare cuts, and that means we will get a Medicare-cutting deal sooner or later. But Republicans are dreaming if they think dancing long enough will allow them to stick Obama with all the blame for any of the cuts that ensue.</p> <p>(Josh Barro is lead writer for the Ticker. <a href="mailto:jbarro1@bloomberg.net">E-mail</a> him and <a href="https://twitter.com/#%21/jbarro">follow</a> him on Twitter.)</p> <p>Read more breaking commentary from Bloomberg View at <a href="http://www.bloomberg.com/view/the-ticker/">the Ticker</a>.</p> </body> </html>