And Here Come the Entitlement Cuts

Reporting on Politics and Policy.
Feb. 17 2011 10:39 AM

And Here Come the Entitlement Cuts

They feinted on Monday, they hinted on Tuesday, they are finally starting to get specific on Thursday. Yes, Republicans in Congress are going to tackle entitlements. Brian Beutler:

In the current spending bill, they're proposing to slash the administrative funds that federal employees use to run the program. Democrats warn this will lead to furloughs and other service interruptions that could delay checks and prevent new retirees from enrolling.


Republicans' first line of attack is changing federal regulations that prevent states from reducing the number of residents signed up for Medicaid or from creating new barriers to enrollment. "It's the general consensus that we need to give the states much greater flexibility in terms of their caring for their Medicaid population," Rep. Tom Price (R-Ga.) told Mother Jones . "There's going to be a lot of work done on it in the next number of months." And the House GOP has already put the issue on its agenda for next month. Rep. Fred Upton (R-Mich.), chairman of the House energy and commerce committee, told reporters that he would be inviting governors to testify on March 1 about the fiscal impact of Medicaid on their states.

At the hearing in March, Upton explained, a handful of governors would testify about federal rules tied to stimulus money they received to prop up Medicaid. Governors have been howling in protest about the regulations—known as "Maintenance of Effort" rules—which restrict their ability to scale back benefits and pare down the rolls. Though the stimulus funding dry up in July, states still can't change Medicaid eligibility rules due to provisions in federal health reform. Medicaid already consumes an average of 21 percent of state spending, with spending growth continuing to rise—and a massive expansion of the program up ahead under federal health reform.

The Medicare block grant concept was one of many that Democrats tried to batter Republicans with in 2010, in what turned out to be a failed offensive against Paul Ryan's roadmap. But that was a failure during an election that was destined to go poorly for Democrats. Some liberals are trying to convince me that the ratatat-tat of Republican entitlement cuts, or plans for cuts, are exactly what they want from Republicans. It's what happened in 1995 -- John Kasich produced a budget that cut $1 trillion, and Democrats got to be the "save Medicare" party again.

But the economics of the time were so completely different. The GDP growth rate when Republicans took over Congress was 4.5 percent, and it wasn't goosed by stimulus spending. Unemployment that month (January 1995) was 5.6 percent, and it stayed there through the year. And it was possible for both parties to come up with budgets that achieved balance within 10 years without brutal cuts . So I don't see where the room to move is for Democrats.

David Weigel is a reporter for Bloomberg Politics



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