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Republican McCarthy Says U.S. Budget Will Tackle Entitlement Program Cuts

U.S. Representative Kevin McCarthy, third-ranking Republican in the House, places politicians in two camps, “thermometers” and “thermostats.” He says President Barack Obama is playing “thermometer” to Republicans.

“He’s letting everything take its course, and he’s just standing out, telling you what the temperature is after everybody already knows it,” McCarthy, of California, said during a Bloomberg Breakfast with reporters in Washington yesterday.

The Republican leadership, McCarthy said, “takes the temperature of the room, but tells you where you need to get to, and it may be uncomfortable.’

His party plans to heat things up soon: McCarthy said House Republicans will introduce a spending plan in April that will address cuts in entitlement programs representing 40 percent of the federal budget

“We will be different than the president,” he said. “We will address entitlements.”

He offered no specifics on how his party would overhaul Medicare, Medicaid or Social Security, stopping short of supporting a plan proposed by House Budget Chairman Paul Ryan that would transform Medicare into a voucher system.

The momentum to cut spending is on the side of Republicans, he said, arguing that Democrats blinked by agreeing to temporary budget cuts.

Stopgap Measure

He called the House vote this week for temporary budget cuts a “bigger victory than anyone could imagine,” with 104 Democrats siding with Republicans. “More voted with us than against it, of the Democrats,” he said.

Obama yesterday signed the budget bill funding the government until March 18. The bill will prevent a government shutdown while lawmakers negotiate over Republican demands to further cut federal spending this year.

The Senate voted 91-9 to send Obama the measure, which passed the House this week 335-91. Current government spending authority would expire March 4 without this bill.

The House last month approved a Republican plan to cut $61 billion from 2011 government spending, which would mean reductions of 10 percent or more in hundreds of programs. Democrats and reports by Goldman Sachs Group Inc. and Moody’s Analytics chief economist Mark Zandi say those cuts would harm economic recovery.

The Republican proposal would reduce economic growth by 1.5 to 2 percentage points during the second and third quarters of this year, according to the report released by Goldman Sachs last week.

“I don’t believe the $61 billion is going to be a short- term hit on jobs,” said McCarthy. “You’re going to say the $61 billion is going to shut down America? We just spent $1 trillion with interest in the stimulus.”

Budget Bill

Commenting on unrest in the Middle East, McCarthy said he would give Obama a grade of “C” for his handling of the turmoil.

“He should put a clear position of where America stands and where America is going,” he said. “It’s almost that the policy keeps changing with each inroad, with each country.”

Libyan forces loyal to leader Muammar Qaddafi counterattacked rebels yesterday. Western powers are debating how to stop the attacks as two U.S. Navy ships head toward Libya.

McCarthy wouldn’t say whether he would send military or financial support to the country.

“There are ways to do it without troops,” he said. “There are ways to have a no-fly zone. There are ways to give people an opportunity.”

Presidential Race

McCarthy said there wasn’t a clear frontrunner for the Republican nomination in the 2012 presidential race.

“You had a clearing of the deck per se after McCain,” said McCarthy, referring to the party’s 2008 nominee, Arizona Senator John McCain. “Who really is sitting there that’s next in line?”

No Republican candidate has formally declared for the 2012 race. Four years ago, when no incumbent was in the contest, a total of 17 Republicans and Democrats had signaled their candidacies or set up exploratory committees by the end of January 2007, including Obama.

“Is there any hidden fact about who’s going to run probably?” said McCarthy, who mentioned former Minnesota Governor Tim Pawlenty, former House Speaker Newt Gingrich, Mississippi Governor Haley Barbour and Indiana Governor Mitch Daniels as potential candidates. “By announcing, does that change anything they’re doing?”

Longer Primary

He said a longer primary campaign would be “beneficial” for the party because it would let candidates build stronger campaign organizations and air potential issues.

“It’s not pretty, but I think it will be better for us in the long term to carry it out,” he said.

The Republican majority in the House can set the agenda for the presidential race, said McCarthy.

“Everything we do in the next year can lay up for what the debate for the presidency will be about,” he said. “We make it about job creation, about the budget and spending, then you have to debate that.”

To contact the reporter on this story: Lisa Lerer in Washington at llerer@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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