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Democrats, Bush Should Take ‘Yes’ for Answer, Start Entitlement Talks

It’s time for the Bush administration and Democratic Congressional leaders to stop talking about talking about entitlement reform — and actually start talking about reform itself. [IMGCAP(1)]

There’s agreement on both sides that beginning soon, the costs of Social Security, Medicare and Medicaid benefits for the baby boom generation will put unsustainable burdens on taxpayers and the economy — and that something must be done about it.

Top administration officials including Treasury Secretary Henry Paulson, Office of Management and Budget Director Rob Portman and White House Chief of Staff Josh Bolten all have told Congressional Democrats they want to hold talks on entitlement reform “without preconditions.”

A half-dozen specific proposals have been made for bipartisan negotiations on the problem. In fact, a meeting between Senate Majority Leader Harry Reid (D-Nev.) and President Bush was scheduled for Jan. 17 to begin work on a plan hatched by Sens. Kent Conrad (D-N.D.) and Judd Gregg (R-N.H.).

But the meeting was postponed when House Democrats “got skittish,” one insider said. And then Vice President Cheney made statements on “Fox News Sunday” on Jan. 14 that Democrats took to mean the administration was ruling out tax increases as part of the solution, and the meeting wasn’t rescheduled.

On top of that, Bush — who said back in 2005 that he was “open” to raising the income cap on payroll taxes — said in an interview with ABC on Jan. 30 that “I’ve got a veto that will prevent [Democrats] from raising taxes.” That only confirmed to Democrats that the administration does have preconditions.

This whole situation reminds me of a major turning point during the Cuban Missile Crisis of 1962. On the brink of World War III, President John F. Kennedy got two conflicting messages from Soviet leader Nikita Khrushchev —one private and conciliatory, one public and hostile. Kennedy decided to take “yes” for an answer, leading to a stand-down.

Democrats ought to take the “everything’s on the table” messages they’re getting — and keep getting, in public and private — from Paulson, Portman, Bolten and Bush as a “yes” and get on with actual talks about what everyone agrees is an impending crisis that can only be dealt with on a bipartisan basis.

Democrats do feel they’ve conceded upfront — Conrad told me in an interview that “it is going to take more savings on the spending side than on the revenue side” to solve the problem — but that the administration is refusing to concede in advance that “revenue” has to be increased.

At the same time, while Bush resists raising taxes, Democrats are just as hostile to his proposal for private investment accounts in Social Security. That’s even more of a “precondition” on the Democratic side.

Besides distrust and ideology, talks may be complicated by disagreements about the scope and order of talks — and perhaps the shape of the table.

In the House, Ways and Means Chairman Charlie Rangel (D-N.Y.) is said to be enthusiastic about broad-gauge entitlement reforms, but Budget Chairman John Spratt (D-S.C.) wants to start with shorter-term budget issues.

In the Senate, Conrad thinks that Medicare, Medicaid, Social Security and health care reform all have to be considered as part of the negotiations even though Social Security reform is conceptually the easiest.

“To me, it just doesn’t work” to do Social Security first, Conrad told me. “You can’t give people a sense of urgency because the system doesn’t go broke until 2017 or 2018 and, frankly, if economic growth continues to be strong, 80 percent of the problem goes away.”

It’s true that Medicare and Medicare represent five times the fiscal burden of Social Security. On the other hand, if negotiators could agree on a Social Security compromise this year, it could set the stage for more difficult agreements later.

Sens. Lindsey Graham (R-S.C.) and Joe Lieberman (ID-Conn.) are preparing a Social Security proposal that includes middle-ground answers to that “third rail” controversy — some additional revenues, a private savings system operating on top of (not in place of) guaranteed Social Security benefits, and reducing benefits for future retirees by indexing based on longevity and income.

It’s significant that the seniors’ lobby, AARP, has declared that it understands Social Security can’t be secured without some reduction in future benefits. That’s a major new concession that Congress should take advantage of this year.

In 2006, Bush proposed establishment of a bipartisan entitlement commission — an idea Democrats rejected. Now, Sens. George Voinovich (R-Ohio), Pete Domenici (R-N.M.) and Dianne Feinstein (D-Calif.) and Rep. Frank Wolf (R-Va.) are back with commission proposals, but Gregg and Conrad prefer direct talks between Congress and the administration.

So there is still some need for talks about talks, but the main thing is to get on with real talks. Sen. Reid, call the White House.

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