Daily Updates

September 24, 2013

GOP offers smaller budget cuts on debt measure

WASHINGTON — House Republicans are far less ambitious this week in their demands for spending cuts to erase new debt issued to pay the government’s bills than they were during a budget battle two years ago.

The list of cuts under consideration now tallies up to a fraction of the almost $1 trillion in additional borrowing that would be permitted under a GOP proposal for enabling the government to pay its bills through December of next year.

Two years ago, House Speaker John Boehner, R-Ohio, insisted on spending cuts totaling $2.1 trillion over a decade as the price to meet President Barack Obama’s demand for a like-sized increase in the government’s borrowing cap, also known as the debt ceiling.

Those cuts involved tighter “caps” on agency operating budgets as well as the automatic, across-the-board cuts known as sequestration triggered by the failure of a deficit “supercommittee” to reach a deal.

The problem now is that there isn’t a roster of big, politically palatable cuts ready to go. Instead, Republicans have put together a grab bag of smaller savings ideas, like higher pension contributions for federal workers, higher premiums for upper-income Medicare beneficiaries, caps on medical malpractice verdicts and reduced payments to hospitals that treat more poor people than average.

A leading set of proposals comes from a House GOP leadership office and was circulating on Washington’s K Street lobbying corridor on Monday. It includes a plan to increase pension contributions of federal civilian workers by up to 5 percentage points and lowering the federal match accordingly, which could help defray the deficit by up to $84 billion over a decade. Another, to block immigrants in the country illegally from claiming the child tax credit would save just $7 billion over the same period. Eliminating the Social Services Block Grant, a flexible funding stream for states to help with day care, Meals on Wheels, and drug treatment facilities, would save less than $2 billion a year.

Taken together, these proposals and others could cut spending by perhaps $200 billion over the coming decade. While GOP aides say details aren’t set, House leaders are looking at an increase in the current $16.7 trillion debt ceiling sufficient to cover the government’s bills until the beginning of 2015. According to calculations by the Bipartisan Policy Center think tank in Washington, that would require raising the borrowing cap by almost $1 trillion.

Boehner insists that any increase in the borrowing cap be matched by budget cuts and other reforms to produce savings of an equal amount, though not on a dollar-for-dollar basis over 10 years like in 2011. It’s a somewhat nebulous standard because of the difficulty in quantifying how much any given “reform” is worth.

Obama says he won’t negotiate concessions as the price for authority to continue borrowing to cover bills already incurred and promises already made and has demanded a “clean” debt limit increase with no conditions attached.

The looming debt limit showdown is separate from the “defund Obamacare” fight occupying the Senate this week in the face of Oct. 1 deadline for completing a temporary spending bill and a averting a partial government shutdown.

GOP lawmakers and aides say the debt ceiling measure will be paired with a one-year delay in requiring people to buy health insurance under Obama’s Affordable Care Act or face federal fines. They also plan to attach to it a tax reform package lowering rates and closing loopholes, an increase in offshore oil leases and approval of the Keystone XL pipeline.

Boehner views tax reform and the Keystone pipeline as economy boosters that will produce new government revenues exceeding any debt limit increase. A boost in growth domestic product (GDP) of just one-tenth of 1 percentage point, for example, would increase the government revenues by more than $300 billion over a decade according to the Congressional Budget Office.

“While we’re still working on the details, the proposal will comply with the Boehner rule in terms of reducing the deficit,” said Boehner spokesman Michael Steel.

Still, the proposals pale in comparison to ideas in the non-binding GOP budget plan passed earlier this year, which promised a balanced budget in 10 years that was possible only with severe cuts to Medicaid, food stamps and domestic programs like health research, housing, education and others. The GOP budget promised $4.6 trillion in cuts over a decade but didn’t give a lot of specifics about how deeply many programs would have to be cut.

Other proposals listed in the GOP leadership’s list of options, include:

—Eliminating the authority of the government to charge a bailout fee to big banks under the Dodd-Frank financial oversight law. The fee could only be charged it there’s a major bank failure. The document claims $23 billion in savings.

—Increase Medicare “means testing” to permit higher premiums for Medicare beneficiaries, raising $56 billion.

—Cap “pain and suffering” damages in medical malpractice lawsuits to $250,000 and cap punitive damages at the greater of $250,000 or twice the economic damages in such suits.

—Reduce a gimmick in which states levy taxes on health care providers as a way to game the Medicaid system and receive higher federal payments at a savings of $11 billion.

 

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