State of the Union Warning: Watch Out for Medicare Cuts and Job Killing Trade Agreement

Obama’s 2013 State of the Union Address: Tragedy Has Many Faces

By Jack Rasmus
February 13, 2013

Tonight, February 12, 2013, President Obama delivered his State of the Union address. He concluded with an emotional appeal for gun control, repeating a call for Congress to at least put the matter of gun control to a vote after referencing the Newtown, Ct., tragic massacre of 26 children and other recent acts of gun violence in the US. It was an emotional high point of his address, and a very moving moment.

But there was another reference in his speech that also addressed life and death matters, potentially impacting not 26 but hundreds of thousands of those other of America’s most vulnerable—our senior population.

Earlier in his address, Obama declared “the biggest cause of the nation’s long term debt” was “medical for the aged”, in other words, Medicare. Saying this, Obama repeated his remarks of January 1, 2013, when he publicly declared on TV, while supporting the agreement in Congress to raise token taxes on the wealthiest 1%, that Medicare was the biggest contributing source to the deficit and debt.

Reference to Medicare as the main cause of deficit and debt is of course blatantly false. As this writer has documented elsewhere in detail in several articles, the main causes of the $10 trillion additional run-up in deficits and debt since 2001 have been the Bush tax cuts ($3.4 trillion of the total), excess inflationary war spending ($2.1 trillion), tax cuts for the rich and corporations and other stimulus spending since 2008 ($3 trillion), and loss of tax revenue due to 5 years of more than 20 million still unemployed.

Obama’s fixation on Medicare as the prime target for deficit cutting is therefore disturbing. All the more so since he’s been calling for massive Medicare cuts for the past two years. To recall, last November he proposed $340 billion in Medicare cuts. And in July 2011 proposed $700 billion as part of a ‘grand bargain’. Massive cuts to Medicare have been on his mind for some time. But even more disturbing in his February 12 address was his statement that he agreed with and supported the Simpson-Bowles Deficit Commission’s 2010 proposals for cutting Medicare.

If you don’t know what Simpson-Bowles proposed back in November 2010 for reducing Medicare, allow me to enlighten you. Simpson-Bowles proposed a new $550 annual deductible for Part A (hospital) and Part B (physician) Medicare coverage. In addition to that $550, they also proposed that seniors now pay a 20% copay for Part A coverage as well as the present 20% copay for Part B coverage. Those seniors who can afford it, currently purchase additional supplemental private insurance to cover the 20% Part B copay. That typically costs from $150 to $300 a month. Presumably, the additional 20% copay for Part A would cost about the same additional $150 to $300 a month. So to keep their current part A hospital coverage they now have, seniors would have to pay out of pocket another $150 to $300 a month—in addition to the new $550 deductible for Part A & B.

The Simpson-Bowles proposal for Medicare means seniors will pay an additional $195 to $345 a month out of pocket for the same level of Part A and Part B coverage they now have.

The new $550 deductible means another $45 a month taken out of their monthly social security retirement checks, in addition to the current roughly $105 a month taken out for Part B coverage. That’s a major hit to monthly retirement checks from social security, which today averages only a mere $1100 a month. Plus the $150-$300 directly out of pocket for supplemental Part A insurance.

In short, that’s Simpson-Bowles. That’s what Obama called for. And that’s a financial disaster for tens of millions on Social Security-Medicare.

The other tragedy in Obama’s SOTU address was jobs. The proposals raised were rehashed old programs, like his September 2011 ‘jobs’ bill; more subsidies and tax breaks for multinational corporations and manufacturers; a token infrastructure spending proposal with no details; and a pre-school education proposal that was strangely offered as the first step toward a ‘job retraining’ bill.

The President also called for an Immigration bill, much needed no doubt. But that bill is currently being drafted in part by business interests, multinational tech companies in particular. As part of the immigration deal, multinational tech companies will be allowed to double the quota of jobs given to foreign skilled engineers from their offshore subsidiaries, raising the annual total of jobs under the H1-B visa program from current 65,000 to 130,000. So jobs will be created by the immigration bill, but not for American college youth, who are now being crushed under a mountain of student debt with little guarantee of a high paying job upon graduation. (And instead of expunging that debt in whole or part, as has been done for the banks these past five years, the President merely exhorted colleges and universities to stop raising annual tuition by double digit rates).

But the real jobs tragedy was President Obama’s proposal to conclude the nearly completed ‘Transpacific Partnership Program’—a euphemism for a pacific wide Free Trade on Steroids treaty that will dwarf the job loss impact of NAFTA since 1994 and preferred trade rights given to China since 2000. Those two major trade deals cost, at minimum, 5 million lost jobs. TPP will cost magnitudes more in terms of job loss. And that’s not all. Obama further called for replicating TPP Free Trade with a similar treaty with the European Union, a ‘TransAtlantic Partnership Program’, or TAP.

In summary, the State of the Union address last night, February 12, was proof, once again, that everything changes but nothing changes with the two parties in Washington. There is still no serious job creation program, only more free trade job destruction proposals and still more subsidies to multinationals and manufacturers. Meanwhile, if you’re long term unemployed and older than five years old, forget about job retraining. And if you’re a senior, expect to foot much of the deficit cutting bill through higher out of pocket payments for Medicare and thus fewer dollars in your social security retirement checks. And if you’re a student, expect to have to continue to pile on more debt in exchange for low paying service jobs when they graduate.

Dr. Jack Rasmus is the author of the 2012 book, “Obama’s Economy: Recovery for the Few”, published by Palgrave-Macmillan and Pluto press. His website is: http://www.kyklosproductions.com; his blog is: jackrasmus.com; and he can be reached on twitter at #drjackrasmus.

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