The Latest Republican Plan to Cut, Cap, and End Medicare

Posted on by Karina

Republicans have already voted not once, but twice, for the Ryan Republican budget that ends Medicare in order to give tax breaks to big oil and companies that ship jobs overseas—but now they’re bringing an even more extreme budget bill to the floor this week as our economy, and the economic security of millions of Americans, hangs in jeopardy.

The Republican bill (the so-called “Cut, Cap, and Balance Act”) is really a bill to Cut, Cap, and End Medicare. Not only does their legislation end Medicare while extending tax breaks to big oil, it also holds the debt limit increase hostage to passing a ‘Balanced Budget’ amendment to the Constitution. The Democratic Staff of the House Budget Committee Democratic summarize:

The Republicans’ newly introduced “Cut, Cap, and Balance Act of 2011” (H.R. 2560) is yet another attempt to enact the policies they approved with their budget resolution this spring – to end the Medicare guarantee while continuing tax breaks for special interests and the wealthy. It requires immediate and steep spending cuts starting this October that will put more Americans out of work while the country is still recovering from the worst recession since the Great Depression. It caps total spending – including mandatory spending programs, such as unemployment benefits, that are designed to grow when the economy is bad – for fiscal years 2013-2021 at lower percentages of the economy (Gross Domestic Product, or GDP). More immediately, it requires passage of a specific type of a so-called “balanced budget” constitutional amendment by both the House and the Senate before the debt limit can be increased. This new hurdle makes it even harder for Congress to increase the debt limit by August 2, which it must do to avoid fiscal calamity and higher interest costs for consumers and the government alike.

Read their full summary»

Brian Beutler of TPM translates what the language about a constitutional amendment and percentage of GDP really means:

The version of the BBA Republicans are pushing now goes much further. It would impose supermajority requirements — two-thirds of both the House and Senate — to raise taxes. That means it’s really a formula for slashing spending at an epic clip, and, invariably, to devastating key safety net programs like Social Security, Medicare, and Medicaid. It just doesn’t say so explicitly.

And to meet a spending cap frozen at 18 percent of GDP, the government would have to shrink itself to the size it was in 1966, one year after the creation of Medicare, when life expectancy was lower, health care was cheaper, and the country was younger, and smaller in just about every way.

President Obama is opposed to the latest Republican scheme to end Medicare, issuing a Statement of Administration Policy this afternoon with a veto threat:

The Administration strongly opposes H.R. 2560, the “Cut, Cap and Balance Act of 2011.” Neither setting arbitrary spending levels nor amending the Constitution is necessary to restore fiscal responsibility. Increasing the Federal debt limit, which is needed to avoid a Federal government default on its obligations and a severe blow to the economy, should not be conditioned on taking these actions. Instead of pursuing an empty political statement and unrealistic policy goals, it is necessary to move beyond politics as usual and find bipartisan common ground.

The bill would undercut the Federal Government’s ability to meet its core commitments to seniors, middle-class families and the most vulnerable, while reducing our ability to invest in our future. H. R. 2560 would set unrealistic spending caps that could result in significant cuts to education, research and development, and other programs critical to growing our economy and winning the future. It could also lead to severe cuts in Medicare and Social Security, which are growing to accommodate the retirement of the baby boomers, and put at risk the retirement security for tens of millions of Americans.

Furthermore, H. R. 2560 could require even deeper cuts, since it conditions an increase in the Federal debt limit on Congressional passage of a Balanced Budget Amendment. H. R. 2560 sets out a false and unacceptable choice between the Federal Government defaulting on its obligations now or, alternatively, passing a Balanced Budget Amendment that, in the years ahead, will likely leave the Nation unable to meet its core commitment of ensuring dignity in retirement.

The President has proposed a comprehensive and balanced framework that ensures we live within our means and reduces the deficit by $4 trillion, while supporting economic growth and long-term job creation, protecting critical investments, and meeting the commitments made to provide economic security to Americans no matter their circumstances. H.R. 2560 is inconsistent with this responsible framework to restore fiscal responsibility and is not an appropriate method of reducing the Nation’s deficits and debt. The Administration is committed to working with the Congress on a bipartisan basis to achieve real solutions.

If the President were presented this bill for signature, he would veto it.

As the countdown to August 2nd continues, Republicans remain steadfastly focused on furthering their own ideological agenda instead of ensuring the economic security seniors, small businesses, and middle class families. As David Rogers writes in Politico today, their bill is so extreme that even “much of the deficit-reduction legislation signed by Reagan would not qualify”:

Turning right with a vengeance, Republicans will bring to the House floor Tuesday a newly revised debt-ceiling bill that is remarkable for its total absence of compromise at this late date, two weeks before the threat of default…

…much of the deficit-reduction legislation signed by [President Ronald] Reagan would not qualify under the new tea-party-driven standards. And even the famed Reagan-Tip O’Neill Social Security compromise — which raised payroll taxes — passed the House in 1983 well short of the 290 votes that would be required under the constitutional amendments being promoted by the GOP…

…in a blistering statement, Robert Greenstein, head of the Center on Budget and Policy Priorities, said the bill “stands out as one of the most ideologically extreme pieces of major budget legislation to come before Congress in years, if not decades.”…

Budget resolutions are nonbinding and intended to set goals for Congress. This bill goes much further: writing those targets into law and reverting to the same tactics used in the government shutdown crisis but with far higher risks to the American economy…

One would hope that if they won’t listen to us, Republicans might listen to fellow Republicans on why they should be working to avoid an unprecedented default crisis, not passing draconian legislation pushing us closer to default:

Howard H. Baker, former Republican Senator from Tennessee and Senate Majority Leader (1981-1985), and Nancy Kassenbaum Baker, former Republican Senator from Kansas

The prospect of default on the sovereign credit of the United States of America is so frightening, so significant, so sinister and so far-reaching in its impact that we can’t fail to deal with this issue…

…the question is not really the debt limit but, rather, the fundamental commitment to honor our obligations. It’s about recognizing that the last thing a tenuous and fragile recovery needs is another earthquake, a wave of fear in the private sector that further inhibits job creation.

To do so, we need to reduce spending, enhance revenue, and reform our tax code and entitlement benefits — not default on our commitment to pay the obligations we have incurred. [Washington Post, 7/17]

Doug Holtz-Eakin, former Congressional Budget Office Director in President George W. Bush Administration and former chief economic policy adviser to Sen. John McCain

“Interest rates will spread throughout the economy…Every mortgage will be more expensive, every car loan will be more expensive, every time you go to buy something on your credit card or at a major department store, those lines of credit will be more expensive… We cannot run the risk of leaving $1.5 trillion in bills unpaid.” [FOX News, 7/18]

Jerome Powell, Bipartisan Policy Center and former Treasury official in President George HW Bush Administration
“Paradoxically, not raising the debt limit could make the deficit worse …

“So we service the debt and then we don’t service 50 percent of our remaining obligations, [such as education, social safety net and other programs] and that 50 percent is what the public sees…This gigantic cut in government spending is going to be a major negative shock to the economy, and it could push the economy back into recession.” [Roll Call, 7/18]

President Obama and Democrats are committed to enacting a responsible plan to grow the economy, create jobs, lower the deficit, protect Social Security and Medicare benefits and avoid an unprecedented default crisis–we will not Cut, Cap, and End Medicare.

The House Rules Committee will be meeting today at 5pm EST on the legislation–you can watch it live here»

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