Health Insurance, Other Tax Credits Would Limit Savings President Bush Has Proposed in Fiscal Year 2006 Budget Plan
Mandatory savings proposals included in the fiscal year 2006 budget plan proposed by President Bush would cost $16 billion over 10 years, rather than save $70 billion, in large part because of refundable health insurance and earned income and child tax credits that "mostly do not materialize" between FY 2006 and FY 2010, according to a Congressional Budget Office analysis released on Friday, CongressDaily reports. According to the analysis, the mandatory savings proposals would reduce the federal budget deficit by $26 billion between FY 2006 and FY 2010, rather than by $38.7 billion as Bush has said.
The analysis also found that savings from Medicaid and SCHIP would total about $27 billion over the next 10 years -- rather than $45 billion as Bush has said -- and $9 billion between FY 2006 and FY 2010.
The analysis also estimated the federal budget deficit at $395 billion, or 3.2% of gross domestic product, for FY 2005, compared with $412 billion, or 3.6% of GDP, for FY 2004. Over the next decade, the federal budget deficit would increase to $2.6 trillion under the Bush budget plan, compared with $1 billion under current CBO estimates, according to the analysis (Cohn, CongressDaily, 3/4).
NPR's "Weekend Edition Saturday" included an interview with Diane Rowland, executive director of the Kaiser Commission on Medicaid and the Uninsured, about proposed reductions in Medicaid funds in the Bush budget plan (Lyden, "Weekend Edition Saturday," NPR, 3/5). The complete segment is available online in RealPlayer.
In related news, Bush and Republican lawmakers "are being forced to temper their anti-tax ambitions" as "a growing number say it would be unwise to reduce the amount of money the government is taking in" with the increased costs of Medicare, Social Security and the war in Iraq, the Washington Post reports. According to the Post, the "shift ... reflects a trend playing out around the country," as governors also face "large deficits and rising costs, especially for Medicaid."
The Government Accountability Office estimates a $28 trillion deficit for Medicare in the next 75 years, with the new prescription drug benefit responsible for more than 25% of the deficit.
The Post reports that "for the first time in years," some Republicans have begun to call for increased taxes. Chairs of the Senate Budget and Finance committees last week said that lawmakers might wait to extend tax cuts enacted by Bush because they do not expire until the end of the decade (VandeHei, Washington Post, 3/7).