It’s the Debt Deal, Stupid!

by Michele Martin on August 9, 2011

At about 9:30 on the evening of November 3, 1992, I was standing at the corner of Markham and Center in Little Rock. Thousands were gathered on a cool Arkansas fall evening for election night. In a few minutes, national networks would call Bill Clinton the winner of the 1992 presidential campaign. To the north of me in an alley between the Camelot Hotel and the old Arkansas Statehouse, George Stephanopoulos, Mr. Clinton’s communications director, was on a cell phone getting the latest reports and making plans for the Clinton acceptance speech. Eight stories above me in the campaign headquarters, the “war room” shown in the documentary film by the same name, Clinton campaign director James Carville and his team were monitoring the networks too. For them, a hard-fought campaign was culminating in the streets below.

On a white board in the “war room,” Carville had scrawled three phrases to keep focus on the three key issues of the campaign:

  1. Change vs. more of the Same
  2. IT’s the economy, stupid!
  3. Don’t forget about health care!

It’s Still The Economy and Health Care – With No Easy Answers

Almost twenty years later we continue to grapple with the economy and health care. Most would agree some form of spending cuts are required. There’s less agreement about generating revenue from closing tax loopholes. “If the administration wants to substantially lower the corporate-tax rate, then it must take on its most expensive provisions. And if it wants to achieve reform, it must take on all those who benefit from the current system.”  (The trouble with tax reform in The Economist)

As I write this post, we’ve seen two precipitous daily declines in the stock market following the debt deal agreed to by Congress and the administration last week. Although perhaps not the single cause of the market drop, most seem to believe the failure of leaders to address the fundamental issue of debt in a meaningful way was a factor in the drop.

And, What About Services?

In this uncertain climate, Medicaid-funded home and community-based services, not to mention primary funding for centers, are in jeopardy, as is funding for almost all social programs. And, if leaders don’t find some way to agree, across-the-board cuts become automatic on November 23 of this year.

Some of the earliest analysis about the effect of the debt deal on home and community-based services has come from the aging community. Sandy Markwood, CEO of the National Association of Area Agencies on Aging (n4a), said in a statement on the debt ceiling deal, “Although we appreciate the debt ceiling deal spares the entitlement programs from cuts for the time being, it includes provisions that could potentially alter the nature of entitlement programs like Medicare, Medicaid and Social Security for years to come.”

Markwood continued, “the deal takes an unbalanced approach in addressing deficit reduction by not including a single cent of new revenue, putting off the tough decisions, and focusing more than $900 billion over 10 years in immediate cuts on discretionary programs.” The cuts, she says, place a disproportionate burden on low-income frail older Americans, who can least afford it. The same is certainly true for those with disabilities.

Debt Deal a “Game Changer”

The Central Massachusetts Agency on Aging published the Debt Ceiling Deal: The Good, the Bad and the Ugly in its Senior Connection blog. The author wrote, “The bill caps discretionary spending over 10 years, driving $900 billion in deficit reduction.” The blog author added that final FY 2012 spending levels and what a second round of up to 1.5 trillion of deficit reduction would look like will not be known for months, but “It is apparent the size and scope of this deal is a game changer.”

Medicaid Waivers Vulnerable

the deal will reduce the amount of federal funding available for community programs, despite the fact that the population is aging and demand is increasing. More people will face waiting lists for home-based and other federally funded community-level services. home and community-based services waivers are particularly vulnerable, putting many at higher risk of institutionalization. This could “turn back the clock on national efforts to rebalance Medicaid.”

CMS Tells States How They Can Cut Services

Cuts may not just come at the federal level. In an oddly coincidental move, the Centers for Medicare and Medicaid Services (CMS) issued a Dear State Medicaid Director letter on Friday, August 5 That explained how states can cut Medicaid home and community based services without violating maintenance of effort requirements. The letter stated:

States continue to have opportunities to make adjustments to services within their HCBS waivers that are not related to eligibility and thus do not implicate MOE. States also have flexibility to modify their HCBS when a waiver authorizing such services expires.

Disability rights activists cried foul. Rahnee Patrick, an ADAPT Organizer from Chicago stated, "While the Secretary gave rousing speeches and was applauded by our community, her staff were crafting guidance to states on cutting our services. This is reprehensible." Patrick was quoted in an e-mailpress release from the ADAPT advocacy group issued by organizer Bruce Darling. ADAPT will seek to meet with the Secretary.  "We intend to take our concerns directly to the Secretary, one way or another," said Darling.

What’s Your Perspective? What’s Your Plan?

Advocates will surely be working hard to prevent cuts. Despite this, some cuts, possibly dramatic, are likely in the future. How are you reading the national situation? What about in your State? And, are you making contingency plans? Why not share a capsule version? Just use the comment section below.

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