Romney Urges Only ‘Essential’ Spending in Plan to Tame Debt
Romney Calls for Only ‘Essential’ Spending
CJ Gunther/EPA
Former Massachusetts governor and Republican presidential candidate Mitt Romney speaks during a town hall meeting in Exeter, New Hampshire, on November 3, 2011.
Former Massachusetts governor and Republican presidential candidate Mitt Romney speaks during a town hall meeting in Exeter, New Hampshire, on November 3, 2011. Photographer: CJ Gunther/EPA
Republican presidential candidate Mitt Romney proposed limiting government spending to only “essential” programs and overhauling entitlement programs in a debt-reduction plan that would slash $500 billion from the federal budget by 2016.
The plan as outlined by the former Massachusetts governor would gradually raise the retirement age for Social Security and slow the growth in benefits for higher-income retirees. Current recipients or those near retirement age wouldn’t see any changes in Social Security or Medicare, he said.
For Medicare, the government health-care plan for the elderly, Romney proposes giving seniors the option of using the existing program or buying other health-care coverage. The government would offer payments of a fixed amount to help pay for the insurance people choose. Beneficiaries could keep the savings from lower-cost plans and would have to pay more for expensive plans.
“Now is the time to level with the American people about what it will take to cut spending and balance the budget,” Romney said today in a speech in Washington at an event sponsored by Americans for Prosperity, a Tea Party-aligned fiscally conservative group. “I’ll put us on a path to a balanced budget.”
Ryan’s Plan
The Medicare plan is similar to that proposed by House Budget Committee Chairman Paul Ryan, a Wisconsin Republican, in that it would offer payments for seniors to get coverage from the private market. The difference is that Romney would keep the traditional Medicare program operating.
Romney said his plan would inject competition into the industry and prompt insurers to lower costs.
He also offered details yesterday at the Exeter Town Hall in New Hampshire, the state that conducts the nation’s first primary on Jan. 10.
As he has before, Romney pledged to repeal the health-care overhaul President Barack Obama guided into law last year. Romney estimates that would save $95 billion.
His plan includes deep cuts in an array of programs, such as federal subsidies for public broadcasting and the arts and eliminating funding for Amtrak. “I like Amtrak,” he said today. “But I’m not willing to borrow $1.6 billion a year” to pay for it.
He also called for ending foreign aid to countries, including China, “that can take care of themselves” and those that oppose U.S. interests.
Foreign aid makes up about 1 percent of the annual federal budget.
‘Declining America’
“The consequences of a weak America, a declining America, an America so deep in debt that we can’t pay our way -- those consequences are severe,” Romney said in New Hampshire. “We have a moral responsibility not to spend more than we take in.”
In an op-ed posted shortly before his speech yesterday on the website of USA Today, Romney proposed more reductions, including ending federal funding for family planning programs “benefiting abortion groups like Planned Parenthood.”
Planned Parenthood affiliates received $363 million in government grants or contracts in the 2009 fiscal year, according to the organization’s 2008-2009 annual report.
James Kvaal, the Obama campaign’s policy director, said in a written memo today, “Romney apparently operates under the false assumption that we can just cut our way to prosperity.” The plan is a “reckless approach to budgeting that will take a heavy toll on middle-class security.”
Medicaid
Romney would turn over Medicaid, the government health-care plan for the poor, to the states and would cap spending with increases tied to the consumer price index plus one percent.
Medical costs grow faster than inflation. Inflation is projected to grow at 1 percent to 2 percent a year, and Medicaid is projected to grow in a normal year at 7 percent to 8 percent, said Peter Harbage, a health-care consultant in Washington who has worked for Democrats and Republicans.
“Romney’s program will mean reducing benefits, reducing the number of beneficiaries, or some combination of both,” Harbarge said.
Romney also proposed slashing federal employment by 10 percent through attrition and tying government workers’ compensation and benefits to those received by employees in the private sector.
GDP Share
All told, Romney said, his plan would reduce federal spending as a share of the gross domestic product from last year’s level of 24.3 percent to 20 percent or below by 2016. And he said today he would then cap it at 20 percent.
Romney is highlighting his fiscal policy proposals as the second-time presidential candidate -- leading or near the top of polls on the Republican race nationally and in early-voting New Hampshire -- is being assailed by party rivals for a too-timid approach to repairing the economy.
Texas Governor Rick Perry, who last week rolled out a plan to create an optional 20 percent flat tax and slash spending to 18 percent of gross domestic product, is portraying Romney as an apologist for the status quo.
‘Wrecking Ball’
Perry’s communications director, Ray Sullivan, said in a statement that Romney was offering “more of the same,” while Perry’s plan “takes a wrecking ball to the Washington establishment.”
Romney’s spending-reduction target -- similar to the one proposed earlier this year by Ryan -- would lead to steep cuts in popular programs.
Federal spending is projected to rise to 25.3 percent of GDP this year, according to an estimate released Feb. 14 by the White House Office and Management and Budget. Fiscal policy groups said earlier this year that similar proposals by congressional Republicans could mean substantial cuts in such programs as Medicare and Medicaid.
“It’s not going to be popular in every corner for us to rein in the excesses of the government,” Romney said in New Hampshire. “People have vested interests in getting as much money as they can from taxpayers.”
To contact the reporters on this story: Julie Hirschfeld Davis in Washington at jdavis159@bloomberg.net; Catherine Dodge in Washington at cdodge1@bloomberg.net
To contact the editor responsible for this story: Don Frederick at dfrederick1@bloomberg.net
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