Ryan Struggles to Match ‘Hot Rhetoric’ Against Obama With Entitlement Cuts

Weeks after Republicans assailed President Barack Obama for not taking the lead on overhauling entitlement programs, House Budget Committee Chairman Paul Ryan is likely to avoid laying out detailed cuts to Social Security in preparing his first budget plan.

Ryan’s draft budget, likely to be released April 5, is focused instead on specific spending cuts in areas such as education, agriculture and Medicaid, according to two people who said they were briefed on the Wisconsin Republican’s plan by committee staff. The panel is still debating what to do about Medicare.

The reluctance to specify reductions to Social Security and Medicare, primary drivers of the U.S. debt, reflects growing anxiety among Republicans as party leaders try to square their criticism of Obama with polls showing public opposition to taking benefits away from future retirees.

“Politics plays into this,” said Representative Scott Garrett, a New Jersey Republican and vice chairman of Ryan’s Budget Committee. “Is he going to come out with a plan where he wants to go, or is he coming out with a plan of where he is being allowed to go” by the party leadership. “We need to start taking some of these tough calls now.”

Republican aides stress the debate within the party over entitlements isn’t finished and is likely to continue through this week. Ryan spokesman Conor Sweeney declined to comment, saying it’s premature to confirm the contents of the budget.

Immediate Results

Social Security and the Medicare insurance program for the elderly will account for 36 percent of federal spending in 2020, the White House budget office says. Medicaid, which is jointly funded with the states, will make up 10 percent.

To be sure, trimming Medicaid, an insurance plan for lower- income people, could produce the immediate results that many House freshmen and Tea Party conservatives are demanding.

Still, Ryan, 41, is under pressure to present a plan balancing the budget within the next decade, and his blueprint may not go far enough for lawmakers elected on a pledge to redirect the U.S. long-term fiscal path.

Representative Joe Walsh, a freshman from Illinois, is among a bloc of Republicans who have been at odds with their leaders over a series of short-term spending bills, a showdown that’s likely to intensify with debates over a 2012 budget bill and an increase in the $14 trillion federal debt ceiling looming.

‘Tough Choices’

“There’s some tough choices that need to be made,” and “it’s not just playing around with Medicaid,” said Walsh, who was among 54 Republicans voting against the most recent temporary spending bill.

Walsh is a member of the Republican Study Committee, which is drawing up an alternative budget that he says will “provide that healthy push” on reform of entitlements, or programs directed at certain segments of the population.

“This is a dialogue still being had, and I’m hoping that we can still influence that dialogue,” he said.

Ryan’s job is complicated by Republican “hot rhetoric” criticizing Obama, said Robert Bixby, executive director of the Concord Coalition, a budget watchdog group. Party leaders attacked the president after he offered no guidelines for revamping Social Security and Medicare in his 2012 budget.

“Our budget will lead where the president has failed, and it will include real entitlement reforms,” House Speaker John Boehner said in a Feb. 15 statement with Republican House leaders. Boehner said Republicans “will not punt” on entitlements. In an interview with The Wall Street Journal earlier this year, Boehner reiterated his commitment to offering a budget curbing Social Security and Medicare.

Pumping Up Expectations

Normally, a congressional budget resolution is required to contain only numerical targets for programs, without detailed policy directives, Bixby said. The Republicans will have to go beyond that on entitlements, he said.

“They’ve pumped up expectations quite a bit,” Bixby said. “Ryan’s got a very difficult job, and part of that job is unrealistic rhetoric,” he said. “Turning that into a reality is now proving to be very difficult. It won’t be enough to say ‘here’s our numerical goal.’”

Yet one person familiar with the House budget panel’s deliberations said there’s a reluctance to be specific on Medicare or Social Security because many of the needed changes, such as increasing the age for eligibility, can’t be enacted unless the president agrees.

No Funding Crisis

White House officials have rejected the idea of making major changes to Social Security part of the debt debate, saying the system isn’t facing an immediate funding crisis.

While the Social Security trust fund will last until 2037, according to the annual trustee’s report, its disability insurance program will run dry in four to seven years, becoming the first major federal benefit program to run out of cash.

Targeting Medicaid is politically easier, said Ron Pollack, executive director of Families USA, a health-care advocacy group. The program serves predominantly lower-income, minority voters who don’t belong to the Republican base, and elderly individuals in long-term-care facilities who often don’t vote, he said. Many Medicare and Social Security recipients helped propel the party to victory last year.

Cutting Medicaid also draws less public opposition, with 59 percent of voters opposed, compared with 70 percent or more who oppose reductions in Social Security and Medicare, according to a Feb. 21-28 Quinnipiac University poll. It also plays into the Republican plan to dismantle Obama’s health-care law, because Medicaid expansion is a main feature.

Ryan, Rivlin Plan

In 2014, states will be required to broaden their Medicaid programs to cover more low-income adults, an obligation that has drawn opposition from a number of Republican governors.

Last year, Ryan released a block-grant proposal along with Democrat Alice Rivlin, President Bill Clinton’s former budget director, that cut $180 billion from the program over 10 years. Washington Representative Cathy McMorris Rodgers, the House’s fifth-ranking Republican, is working on a proposal she says will give states more flexibility.

Starting in 2012, capping Medicaid growth at inflation plus 1 percent could save more than $1 trillion over a decade, said Brian Riedl, a budget analyst at the Heritage Foundation in Washington, which advocates limited government.

“Medicaid is a good place to start because it can provide savings relatively quickly compared to many Social Security and Medicare reforms,” said Riedl. “It would likely go down as one of the biggest budget savers ever.”

Ryan’s Roadmap

Ryan last year also released a report called “the Roadmap for America’s Future” that called for private accounts to be added to Social Security, benefit cuts for people under age 55 and increasing the retirement age.

For Medicare, new beneficiaries in 2021 would be put on a voucher program providing a fixed sum each year to buy private coverage, according to the roadmap.

Many Republicans argued in the last election that Obama’s health-care overhaul would amount to cutting Medicare benefits, since cost savings from the program are intended to fund the law. Republicans took the elderly vote by a 21-percentage-point margin in the 2010 elections in which they won control of the House, compared with an even spread in the 2008 elections.

That makes it “very politically difficult” now for them to support any plan to scale back benefits, said David Wasserman, House editor for the nonpartisan Cook Political Report in Washington.

To contact the reporter on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net.

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

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