Some Good, Some Bad For States In Obama's Deficit Plan

Posted By Dylan Scott | September 20, 2011

President Barack Obama revealed on Monday morning his proposal to eliminate $4 trillion of U.S. debt over the next decade. His call for $1.5 trillion in new revenues garnered the most headlines, but the plan also contained savings from Medicare and Medicaid -- although they weren't as significant as once expected. Obama's outline accounted for $320 billion in savings from those two programs, $248 billion from Medicare and $72 billion from Medicaid, the New York Times reports.

Michael Bird, Federal Affairs Counsel for the National Conference of State Legislatures (NCSL), tells Governing that the president's proposition amounted to a "mixed bag." Bird says that most of these solutions had been on the table during the debt ceiling negotiations over the summer. One of NCSL's top goals is preventing cost shifts and unfunded mandates, he says, which this preliminary plan seems to avoid.

But Bird notes that some of the NCSL's other priorities, such as relief from Medicaid's maintenance of effort requirements under the Affordable Care Act and established triggers for federal aid in the event of another economic downturn, remain unaddressed.

"We're willing to acknowledge that we need to cede some savings in these programs, although there's nothing specific here. We know we have to have skin in the game," Bird says.

Obama's proposal includes $1.2 trillion in discretionary spending cuts, which have yet to be detailed. One program will stay untouched, the president said, is Social Security. Changes to its eligibility age were debated behind the scenes, the Washington Post reported Sept. 14, but didn't make it into the final plan. The president acknowledged the need to address the entitlement program's long-term solvency, but declined to elaborate.

The president's speech came at a time when a congressional super committee has been tasked to carve out at least $1.2 trillion before Thanksgiving. If the committee doesn't come up with a plan by the deadline, this will trigger across-the-board cuts.

Dylan Scott

Dylan Scott is a GOVERNING staff writer.

E-mail: dscott@governing.com
Twitter: @dylanlscott

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