Budget-balancing Without The 'Cuts'

ON THE POLITICAL SCENE

April 29, 1995|By Karen Hosler | Karen Hosler,Washington Bureau of The Sun

WASHINGTON -- Republican lawmakers got their first good look this week at how much it's going to hurt to balance the budget by 2002 -- and some suddenly felt weak in the knees.

Nearly one-third of the savings -- about $250 billion to $300 billion -- would be squeezed out of Medicare, the highly popular health care program for the elderly, perhaps the nation's most politically potent voter group.

The rest of what's needed to eliminate the deficit could poke huge holes in the government's 60-year-old social safety net, and force the shutdown of domestic programs throughout the government, particularly in the departments of Energy, Commerce, Transportation and Housing and Urban Development.

"There's a lot of queasiness. . . . I'm queasy, too," said Sen. Pete V. Domenici, a New Mexico Republican and chairman of the Senate Budget Committee, who abruptly canceled a voting session scheduled for next week after his members got a look at those details. "It was just too much strain to do it under the gun."

A key element in the Republican strategy for selling their budget-balancing program is to avoid use of the word "cut."

In the case of Medicare and some other popular programs, the Republicans say they're not cutting at all, only slowing the rate of growth that would otherwise take place under current law. For example, Medicare spending would increase by about 5 percent a year, instead of a projected 11 percent.

Overall, the federal budget is growing so rapidly that Republicans figure they can wring out $1 trillion in savings over seven years, and still allow spending to increase.

"We simply must limit annual spending increases to about 3 percent between now and 2002," House Speaker Newt Gingrich said in his televised address earlier this month, which launched the GOP effort to prepare the nation for the budget-balancing effort.

But with Republicans looking for ways to pay for a package of tax cuts that could cost nearly $400 billion over seven years -- and at the same time spare the Pentagon and Social Security

from spending cuts -- the funds for

many programs will have to be reduced. Some federal programs will be wiped out entirely.

"This is a tough budget, the toughest budget we've had since World War II," said Sen. Phil Gramm, a Texas Republican who has been in the forefront of many past, and mostly unsuccessful, drives to curb federal spending. "When you reduce the growth of spending from 8 percent a year to 2 percent a year, there will be some difficult choices that government is not used to making."

Slashing expenses for Medicare would probably mean a major change for millions of older Americans. Higher premiums, deductibles and co-payments for medical services would likely be combined with new options designed to encourage seniors to give up the practice of visiting any doctor they choose and submit instead to some form of managed care.

Most members of Congress expect the Medicare changes to be the most controversial feature of the GOP's ambitious budget plan.

In the face of polls showing that Americans do not want the budget balanced at the expense of Medicare recipients, Republican congressional leaders say what they are really doing is preventing Medicare from going broke and preserving it for future generations.

Mr. Gingrich told a lobbying group for the elderly yesterday that the Republican Medicare reforms are directed entirely at saving the program, and he challenged President Clinton to support the effort.

"We believe there is no excuse to ignore the problem of Medicare, a program that will spend more than it takes in next year, and will be completely unable to pay benefits in seven years," the Georgia Republican wrote in a letter to the president.

Mr. Clinton, who wanted to shave $116 billion from Medicare over five years as part of his unsuccessful health care reform bill last year, has said he does not believe the program should be cut this year simply to reduce the deficit.

"I do not believe we should reduce the deficit by arbitrary cuts in Medicare, which will just shift massive amounts of cost to the private sector," he said in February.

Mr. Gingrich is still smarting from political blows Democrats landed when the GOP-led House tried to use savings from the school lunch program to help finance tax cuts, and he wants to pre-empt a similar assault on the Medicare cuts.

"We don't want anybody on the left to play the school lunch game with us and try to demagogue the budget debate," the speaker said.

Meantime, the other three-fourths of the proposed budget savings lurk like the hidden portion of an iceberg, with less obvious but still enormous political dangers.

Federal benefit programs such as Medicaid, aid to mothers and children, disability payments, unemployment insurance, veterans aid and student loans would no longer be automatically available for all those who are eligible. Instead, a growing population would have to compete for a share of a shrinking pot.

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