Next US fiscal battle: Cuts in social spending
Washington - The US "fiscal cliff" compromise contains no measures to cut spending - it only raises revenue without addressing the other side of the deficit problem.
In the tug-of-war over the coming months, the question will focus less on how much to cut, but rather on exactly where the red lines should be drawn - and the most contentious issue is cuts in spending on social programmes.
Republicans want definite savings, in part through radical reform. For Democrats, social programmes have been sacrosanct, a line theyhave refused to cross. Especially for the Democratic left wing, it’s a question of principle - similar to the Republicans’ sworn opposition to any increase in taxes.
Experts agree on one thing: President Barack Obama will not be able to avoid compromise on social programmes, despite the difficult challenge of convincing his own left-leaning Democratic Party.
At the core of the conflict are three programmes - social security, Medicare and Medicaid - which cover old age and disability pensions, and medical care for the elderly and poor. Obama has repeatedly indicated that he is willing to compromise but has not put forth any concrete proposals.
While Obama in general wants pensions to be protected, he has noted that he sees a 10-year, 100-billion-dollar savings potential in medical coverage. He envisions savings through reduced payments to hospitals and other medical providers, as part of an overall reduction in US medical spending.
To accomplish savings in the medical field, it will be difficult to avoid hurting seniors, the disabled and the poor - perhaps through putting a limit on increases in social security payments or through higher contributions by wealthier seniors into the Medicare system. But that will likely not be enough to satisfy Republicans, who control the House of Representatives.
Social security and Medicare are paid through contributions from employees and employers alike, but will be running short in coming decades as the number of retirees grows