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Farragut Square Group Says Obama Reelection Signals Big Deals On Fiscal Cliff, Debt Reduction And Medicare/Medicaid Reform In Second Term

FSG Forecasts Five Major Policy Breakthroughs Coming in the Next Obama Term.

WASHINGTON, Nov. 7, 2012 /PRNewswire-USNewswire/ -- "2012 was a 'status quo' election, but status quo does not mean stalemate for the president's second term.  We expect a grand tax and budget deal in 2013 that includes major reforms to health care entitlements such as Medicare & Medicaid," said Brian Fortune, President of the Farragut Square Group, a national health policy research firm.

"President Obama's second term could look much like Presidents Reagan & Clinton's second terms where they faced a Congress controlled in part by the opposition party, but still managed to strike historic deals on tax reform and a balanced budget."

Farragut sees five possible major policy deals in the president's second term:

  1. No Fiscal Cliff in January. With the election over, look for Congress & the White House to move quickly to delay the scheduled sequestration spending cuts — and temporarily extend all of the Bush tax rates and the payroll tax as they did immediately after the 2010 election.
  2. No ObamaCare Repeal. The president's veto pen will stop any ACA repeal effort.  However, last year's SCOTUS decision means Obama needs the governors to agree to his proposed Medicaid expansion.  With 30 of the 50 Governorship now in Republican hands, he will have to give states more power over Medicaid to get his health plan enacted.
  3. Big Budget Deal in 2013. Partisan politics and the president's reelection got in the way of the last budget deal.  However, with the election over, both sides will come together to pass a big debt reduction deal to avoid an economic disaster. 
  4. Medicare & Medicaid Reform. The 2012 elections showed entitlement reform is not the political third rail it once was. Democrats and Republicans both recognize entitlement reform is necessary and will agree to meaningful reforms.
  5. Tax Reform. Congressional Republicans won't give the president the hike in the top tax rate he wants, but both sides should be able to work a deal that eliminates or caps tax deductions in exchange for lower rates and more revenue.

Farragut Square Group is a leading health policy research firm that serves many of the top investment funds in the U.S.

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