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VOL. 39 | NO. 11 | Friday, March 13, 2015

Senate, House GOP differ on savings approach to Medicare

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WASHINGTON (AP) — Senate Republicans are matching President Barack Obama's proposals to cut Medicare by more than $400 billion over the coming decade, though they're not embracing his specific cuts to health care providers like hospitals and drug companies.

The Senate budget marker comes as the House Budget Committee began debate on a 10-year plan that boosts the military, makes deep cuts in social programs and targets Obama's laws on health care and financial regulations. A party line vote is expected Wednesday evening.

Slated for release Wednesday afternoon, the GOP senators' companion measure contains greater cost cuts to Medicare — $431 billion over the coming decade, which matches Obama's savings if not his policies — but doesn't call for the dramatic transformation of the program for future beneficiaries embraced by House Republicans.

"Deficits will soon shoot up dramatically if Washington doesn't start making more common-sense choices today," said Senate Majority Leader Mitch McConnell, R-Ky. "The reality is, our country still has many tough fiscal challenges to confront."

The House plan reprises deep cuts to social programs such as Medicaid, food stamps and student loans as well as a controversial plan that would transform Medicare into a voucher-like program for seniors who subscribe in 2024 or later. They would receive a subsidy to purchase health insurance on the private market.

To meet their promise to balance the budget within a decade, Republicans propose cutting $5.5 trillion from a federal budget that's on track to total $50 trillion over that period. More than $2 trillion would come from repealing coverage provided by Obama's health care law.

"A balanced budget means a healthier economy where folks can have more confidence and certainty in the future," said House Budget Committee Chairman Tom Price, R-Ga. "It means we avoid an out-of-control growth in the nation's debt, in interest payments on that debt which by themselves will swallow critical spending priorities."

The latest House budget plan opened to mixed reviews from GOP defense hawks and was roundly criticized by Democrats.

"Let's just be honest and say we're adding this much money to the deficit," said Rep. Raul Labrador, R-Idaho, referring to an ongoing effort by GOP leaders to fix the flawed Medicare payment formula without fully paying for it.

The House plan also would account for almost $1 trillion in higher tax revenue over a decade by assuming the expiration of popular tax breaks — known collectively in Washington-speak as tax "extenders" — such as for research and development. Republicans also promise to eliminate $1 trillion or so in so-called "Obamacare" taxes such as a looming tax on high-end "Cadillac" health coverage but assume unspecified tax increases to make up for the revenue loss.

"It claims to repeal (the health care law) but relies on its revenues and savings; it doesn't account for the costs of the almost $1 trillion in business tax cuts that Republicans have called for; and it plays a shameless shell game with our defense spending," said Rep. Chris Van Hollen of Maryland, top Democrat on the Budget Committee.

The nonbinding measure sets broad goals on spending cuts and taxes but requires follow-up legislation. Republicans have consistently voted for its cuts in the abstract but haven't in many cases even drafted bills that would implement its most controversial cuts, much less try to pass them.

While promising balance by 2024, the GOP plan is likely to increase spending next year as Republicans prevent cuts in Medicare payments to doctors and work their way around tight Pentagon spending limits.

The blueprint by Price would add about $15 billion to Obama's request for overseas operations and would allow $21 billion more if matched by offsetting spending cuts. That didn't sit well with defense hawks, who say it doesn't guarantee enough money for the Pentagon, whose core budget essentially faces a freeze for the third year in a row with the return of automatic budget cuts known as sequestration.

"Sequestration threatens our military's readiness. It threatens the size of our warfighting forces, the capabilities of our air and naval fleets, and ultimately, the lives of our men and women in uniform," Defense Secretary Ash Carter told the House Armed Services Committee on Wednesday.

"This is a very serious issue. We can't address it through funny money in the budget. There needs to be an increase in the baseline number and I hope the Budget Committee hears that message," said Rep. Michael Turner, R-Ohio. "Obviously they're going to have difficulty trying to put together the votes for a budget that underfunds defense."

Senate Republicans, aides said, won't follow the House's example and add to Obama's $58 billion request for military operations and diplomatic efforts in the overseas war on terrorism as a way to skirt tight budget limits on the Pentagon.

Price is also replicating Rep. Paul Ryan's approach to cutting Medicaid and food stamps by proposing to transform them from federal programs into wholly state-run programs that receive lump sum funding from the government. Ryan, R-Wis., was the previous Budget Committee chairman.

Cuts to Medicaid would exceed $800 billion, said Van Hollen, who noted that more than half of Medicaid funds pay for nursing home care for the elderly poor.

Senate Republicans will propose greater flexibility for states to run Medicaid but not the lump sum approach of the House.

"If this budget actually got close to reality, I think that they're going to have a lot of Republicans ultimately run away from it," Van Hollen told reporters Tuesday.

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