Senate Budget to Focus on Politics as Well as Budget-Balancing

Senate Republicans will unveil their version of a U.S. government spending plan Wednesday that will diverge from their House counterparts’ proposal.

The House put forth a plan Tuesday that would curtail government spending and balance the budget in nine years by partially privatizing Medicare and by making deep cuts to Medicaid and food stamps. The proposal would cut $5.5 trillion in spending over that period.

The Senate will avoid the House’s plan on Medicare, according to a Senate aide familiar with the plan. With the federal deficit easing and entitlement cuts unpopular with voters, Republicans worry that such an approach would damage them politically in 2016.

In the Senate, where 24 of the 54 Republican seats are up for re-election, party leaders want to spare members from casting difficult votes on proposals that have no chance of becoming law while President Barack Obama is in office.

“Let’s face it, these solutions will not be popular,” Senator Ron Johnson, a Wisconsin Republican whose seat is up in 2016, said regarding cuts to entitlement programs. “President Obama is not even close to being on board.”

It’s a retreat for a party that made reducing government spending its overarching mission since Republicans took the House majority in 2011. The party took Senate control in January.

Education, Infrastructure

Obama said Tuesday the House approach fails to invest in education, infrastructure and other priorities. He made clear he would veto cuts in entitlement programs.

The House plan would enact “large tax cuts for the wealthy and big corporations” while reducing education aid, medical research, housing vouchers and energy aid, according to a White House statement.

Stan Collender, executive vice president of Qorvis MSL Group, a communications strategy firm in Washington, said Republicans in Congress “don’t really care about passing a budget this year” because of political concerns.

The spending reductions it would take to balance the budget are “far more than most Republicans are willing to do,” Collender said.

Republicans’ main goal may instead be to pass a unified budget plan. Such an agreement between the two chambers would permit the Senate to pass revisions to Obamacare later this year with a simple majority and no need for Democratic votes.

The proposal by House Budget Committee Tom Price of Georgia assumes $2 trillion in savings from a full repeal of Obama’s health-care law -- a measure the president has said he would veto.

Losing Medicaid

The Center on Budget and Policy Priorities said 14 million people would lose their Medicaid coverage or be unable to gain future coverage under Price’s plan. A repeal of Obamacare would probably cause tens of millions of people to become uninsured, according to the Democratic-leaning Washington group.

It’s unclear whether Republicans can reach a consensus among themselves amid divisions between party members seeking more military spending and others looking to maintain hard-fought spending cuts.

Representative Jeff Denham, a California Republican, told Bloomberg reporters and editors Wednesday that the House will “come together on a budget,” although “getting the Senate to agree to that I think will be a big challenge.”

Both Houses

“There is an expectation that now that Republicans have won the Senate that we can actually work together and get some things done,” he said. “This will be a very big test in seeing if a very complex issue can get done through both houses, especially when you need Democrat support in the Senate.”

Price’s budget would cut Medicare by $148 billion through 2025. Starting in 2024, Medicare beneficiaries would choose from a range of options, including standard Medicare and private coverage. The government would issue fixed payments directly to the plan.

The budget would cut $913 billion from Medicaid, the health-care system for the poor, over the same period by issuing block grants to states. They would manage their own programs, either by cutting benefits or generating revenue to fund any shortfalls.

Food Stamps

Food stamps, the federal nutrition program, would be turned over to states to administer beginning in 2021.

“These reductions are hardly Draconian,” said Price’s budget proposal. “It protects key priorities while eliminating waste.”

Many Senate Republicans don’t want to cut entitlement programs such as Medicare and Medicaid. About 60 Tea Party-aligned House Republicans insist on addressing such programs, which are major sources of the federal deficit.

The House plan would use an accounting maneuver in an attempt to satisfy defense hawks who want to ease military spending cuts scheduled to take effect in October. About 70 House Republicans said in a letter they will block a budget plan that doesn’t increase defense spending.

Price’s proposal would budget about $94 billion for a special war-funding account that isn’t subject to the spending limit -- the Overseas Contingency Operations account, which funds military activities in Iraq and Afghanistan.

Budget ‘Gimmick’

In February 2012, the website of Senate Budget Committee Republicans called a similar idea by Democrats a “gimmick.”

Another potential challenge for Republicans is that their budget doesn’t say how they would replace revenue from the Obamacare taxes they propose to repeal.

The House plan would provide the government with $41.7 trillion in revenue over the next decade, about $77 billion less than what the government would collect if Congress did nothing.

The military “slush fund and revenue baseline are pretty blatant gimmicks,” Ed Lorenzen, senior adviser at the Committee for a Responsible Federal Budget, said in an e-mail. The military fund “pretends to comply with caps and doesn’t require offsets for increased spending,” he said.

Republicans say they are searching for ways to offset some of the $94 billion. Representative Vicky Hartzler of Missouri, a Republican, said about $20 billion may come from a deficit-neutral reserve fund while about $73.5 billion of it wouldn’t be offset.

Automatic Cuts

The stage is set for a clash over automatic spending cuts set to take effect in October.

The limits were enacted as part of the 2011 Budget Control Act, intended to cut $1.2 trillion in spending through 2021. Congress voted to ease the spending reductions for the past two fiscal years, and the question is whether lawmakers will do the same for 2016.

Many Republicans consider the 2011 law one of their most significant achievements and they will fight hard to preserve it.

Obama has called for an end to the automatic cuts. His budget plan offered a $38 billion increase for national security programs over current budget caps, and $37 billion more for domestic programs.

(Corrects 24th paragraph to show Enzi wasn’t committee chairman in 2012.)
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