Revised: House Republican Budget Contains
Large Cuts in Medicare, Medicaid, and Other Domestic Programs
- March 13 - Following is a revised version of a statement released
yesterday by the Center on Budget and Policy Priorities on House
that House Budget Committee Chairman Jim Nussle unveiled today
contains deep and widespread cuts in basic domestic programs such
as Medicare, Medicaid, veterans programs, student loans, school
lunches, child care, food stamps, cash assistance for the elderly
and disabled poor, and many other programs. (See the appendix
for an explanation of the calculations used in the paper.) The
budget would require Congressional committees to cut "mandatory"
programs by $470 billion over the next ten years. If enacted,
these would represent the deepest cuts in such programs in U.S.
The cuts are
reminiscent of those proposed by former House Speaker Newt Gingrich
in 1995 and included in the Contract with America budget legislation
that President Clinton vetoed that year. While Chairman Nussle
did not provide the specific amounts by which each program would
be cut, his budget assumes cuts of a given percentage in all mandatory
programs except Social Security and military retirement, and provides
a figure to each Congressional committee that specifies how much
that committee must cut mandatory programs in its jurisdiction.
For example, the House Ways and Means Committee, which has jurisdiction
over Medicare and various other, much smaller programs, would
have to cut programs within its jurisdiction by $262 billion over
ten years. The House Energy and Commerce Committee, which oversees
Medicaid, would have to produce cuts of $111 billion,
If the committees
cut all programs within their jurisdictions by the same percentage,
the cuts would include: -- $214 billion in Medicare reductions
over ten years (the budget also provides $400 billion for a Medicare
prescription drug benefit); -- $93 billion in Medicaid, the basic
health insurance program for low-income families, children, and
elderly and disabled people; -- $15 billion in veterans programs;
-- $12 billion in food stamps; and -- $7 billion in farm programs.
Deep cuts in
Medicare and Medicaid would be unavoidable, as the Ways and Means
Committee and the Energy and Commerce Committee would have no
other way to come up with the reductions they would be required
to make. The Nussle budget also would cut "discretionary" or non-entitlement
programs (other than defense spending) well below the President's
request. Non-defense discretionary programs would be cut $200
billion over ten years below the Congressional Budget Office baseline,
which equals the 2003 levels for these programs, adjusted for
inflation. These cuts could affect a wide variety of programs
from education programs to environmental protection programs to
programs for poor children.
deep cuts in domestic programs, the budget makes room for most
of the President's large tax-cut package, including $1.4 trillion
in tax cuts. The tax cuts in the President's "growth" package
alone, all of which are included in the Nussle budget, would cost
$725 billion over ten years and would, according to the Tax Policy
Center, result in tax reductions averaging $90,000 each in 2003
for those Americans who have incomes of more than $1 million.
turns out to be alive," Center director Robert Greenstein commented.
"It is a centerpiece of the Nussle budget, with deep budget cuts
that could harshly affect the poor, the vulnerable, and many middle-class
Americans, alongside lavish tax cuts for the nation's richest
individuals. With this budget, we would be marching down the path
toward a new Gilded Age."
budget serves one very useful purpose." Greenstein added. "It
shows that these large tax cuts aren't free, and that at bottom,
the issue is one of national priorities. This ought to trigger
a national debate. Are tax cuts averaging $90,000 a year for millionaires
so high a priority that we should cut health care programs, increase
the ranks of the uninsured, reduce the cost or limit the availability
of student loans, and increase hardship among the disabled, poor
children, and others to free up room for massive tax cuts?"
selected budget cuts in the House Budget Committee's plan
resolution presented by Chairman Nussle to the House Budget Committee
on March 12, 2003, assumes cuts in almost all entitlement programs.
The Chairman indicated that he assumed entitlement programs would
be reduced proportionally; he said this was the basis on which
the figures for each budget "function"" and each "reconciliation
target"" were derived.
the Chairman distributed a table showing the "reconciliation targets"
for each committee -- i.e., the amounts by which each committee
is required to reduce entitlement programs, relative to current
law. He also distributed a table showing the resulting level of
"mandatory" spending in each budget function. These tables show
-- A $15 billion,
ten-year reduction in veterans benefits (such as compensation,
pensions, and education benefits). The reconciliation table shows
that the Veterans Affairs Committee is required to cut programs
within its jurisdiction by $15.1 billion.
-- A $214 billion,
ten-year reduction in Medicare payments. In this case, the text
of the budget resolution includes a special provision "reserving"
$400 billion over ten years to pay for a prescription drug benefit,
the amount requested by the President. The table of mandatory
spending shows a total, ten-year level of spending in Function
570 (Medicare) that is $186 billion above the amount CBO says
will be spent under current law. Because the net increase is $186
billion, the function total must consist of $400 billion in increases
for prescription drugs and $214 billion in decreases for Medicare
the total, ten-year level for mandatory spending in Function 570
is $215 billion below the President's level, as estimated by CBO,
consistent with the conclusion that the budget plan calls for
Medicare cuts of that magnitude, outside of a prescription drug
benefit. Moreover, the reconciliation table shows the Ways and
Means Committee is reduce entitlements $262 billion over ten years.
Because Social Security is off budget for purposes of budget resolutions,
Medicare is by far the largest remaining program under the that
Committee's jurisdiction; it would be implausible for the Ways
and Means Committee to cut entitlements under its jurisdiction
by $262 billion unless a substantial portion of that amount was
derived from reductions in Medicare.
-- A $12 billion,
ten-year reduction in Food Stamp benefits and a $7 billion reduction
in farm programs. The reconciliation table shows that the Agriculture
Committee is required to cut programs within its jurisdiction
by $19 billion. At the same time, the table of mandatory spending
shows a total, ten-year level of spending in Function 350 (the
budget function devoted to farm programs such as price supports
and crop insurance) that is $7 billion below the amount CBO says
will be spent under current law; payments to farmers must be cut
by $7 billion. The Agriculture Committee therefore must cut entitlement
programs outside of Function 350 by the remaining $12 billion.
But the Agriculture Committee has jurisdiction over only one major
program outside of function 350 -- Food Stamps, which is in Function
600 (Income Security). Thus, a $12 billion cut must be assumed
in Food Stamps.
-- A $93 billion,
ten-year reduction in Medicaid. The table of mandatory spending
shows a total, ten-year level of spending in Function 550 (Health)
that is $101 billion below the amount CBO says will be spent under
current law; that is, payments for health entitlements other than
Medicare(1) must be cut $101 billion. The health function contains
a number of entitlements: Medicaid, the State Children's Health
Insurance Program, health insurance subsidies for federal employees,
etc. Medicaid constitutes about 93 percent of the entitlement
spending in this function, and so its proportionate share of the
$101 billion cut is $93 billion.
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