CBO Report Predicting Reduced 10-Year Surplus May Hinder Medicare Reform, Rx Drug Benefit
The Congressional Budget Office yesterday reported that the federal budget surplus over the next 10 years has "plunged" 71% from last year's estimate -- dropping from $5.6 trillion to $1.6 trillion -- which may endanger proposals to reform Medicare and add a prescription drug benefit to the program, the AP/Minneapolis Star Tribune reports. The CBO also predicted a $21 billion deficit in fiscal year 2002 and a $14 billion shortfall in FY 2003, which begins Oct. 1, after four years of surpluses. Last year, the CBO predicted a $313 billion surplus in FY 2002 and a $359 billion surplus in FY 2003 (AP/Minneapolis Star-Tribune, 1/24). The CBO report "assumes no changes in policy, with spending growing at the rate of inflation" (Kessler, Washington Post, 1/24). The CBO attributed $1.28 trillion of the $4 trillion decrease in the 10-year estimate to President Bush's 10-year, $1.35 trillion tax cut; $562 billion to increased interest on the national debt; $550 billion to increased spending; $929 billion to the recession that began last March; and $660 billion to "technical changes in the forecast" (Caruso, CongressDaily, 1/23). Although the CBO attributed "most of the blame" for the estimated FY 2002 deficit to the recession, the agency said that the tax cut represented the "single largest cause of the sharp decline" in the 10-year estimate. Democrats "seized" on the CBO report to "make their case" that Bush's tax cut had "severely limited the nation's ability" to address the "long-term costs" of Medicare and add a prescription drug benefit to the program (Stevenson/Bumiller, New York Times, 1/24).
The Bush administration yesterday released a separate budget report that predicted a $106 billion deficit in FY 2002 and an $80 billion shortfall in FY 2003, estimates that account for policy proposals not included in the CBO forecast. White House Office of Management and Budget Director Mitch Daniels said that the federal government would face deficits for the rest of Bush's term in office and would "emerge back" into surpluses for the rest of the decade. The OMB, which accounted for policy proposals such as a 10-year, $190 billion prescription drug benefit that Bush has proposed, estimated a $1 trillion surplus over the next 10 years (Washington Post, 1/23). Bush plans to "call for outright cuts" in some domestic programs and "hold overall increases in spending outside of national security to very low levels" in his FY 2003 budget proposal, which he will deliver to Congress Feb. 4.
Bush plans to "doubl[e] spending" on homeland security to more than $25 billion in FY 2003 (New York Times, 1/24). Dr. D.A. Henderson, director of the HHS Office of Public Health Preparedness, said the Bush administration would use part of the $25 billion to improve the nation's preparedness for a bioterrorist attack. Henderson, who expects a bioterrorist attack "sooner rather than later," has proposed a plan to improve the nation's response, "focusing on preparation that went lacking for years" at the state and local levels. Henderson hopes to:
- Establish six new regional laboratories around the nation to analyze "potential bioterrorist material."
- Help cities develop plans to vaccinate and distribute antibiotics to large numbers of residents in the event of bioterrorist attack.
- Develop "round-the-clock reporting systems" to allow hospital emergency rooms and state health departments to coordinate in the event of a bioterrorist attack.
- Help hospitals improve preparedness for a bioterrorist attack.
- Develop improved public information in the event of a bioterrorist attack (AP/Baltimore Sun, 1/24).
HHS Secretary Tommy Thompson also announced Tuesday that Bush's FY 2003 budget proposal will include $191.5 million to improve the National Health Service Corps, which supports doctors and clinicians who serve in rural and urban areas that do not have adequate access to care. This amount is a $44 million increase over last year. The NHSC will use the additional funds to provide scholarships and loan assistance for about 1,800 physicians, dentists and other clinicians to practice in underserved area. In addition, Thompson said that Bush's budget will include $15 million, a 50% increase over last year, to expand the Nursing Education Loan Repayment Program to support 800 new nursing education loan agreements (HHS release, 1/22).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.