House Passes Republican Budget Bill; ‘Gang of Six’ Releases New Proposal

On Tuesday, the House voted 234-190 to approve a GOP-sponsored budget and debt-limit bill (HR 2560), known as the "cut, cap and balance" measure, despite a veto threat from the White House, the AP/San Francisco Chronicle reports (Espo, AP/San Francisco Chronicle, 7/19).

Nine Republicans voted against the bill, while five members of the Democratic Blue Dog Coalition voted in favor of it (Brady, Roll Call, 7/19).

Background on 'Cut, Cap and Balance' Bill

Under the bill, which House Republican leaders unveiled on Friday without input from the Senate, caps would be placed on discretionary and mandatory spending as a percentage of the gross domestic product.

The bill also would raise the debt ceiling by $2.4 trillion, but only if Congress approves a constitutional amendment requiring the federal government to balance its budget. The plan eschews revenue-raising tax increases.

On Monday, the White House Office of Management and Budget issued a statement of administration policy warning that President Obama would veto the bill, noting that it would "lead to severe cuts in Medicare," among other negative effects. The bill is considered to be largely symbolic because it is unlikely to pass in the Democratic-controlled Senate (California Healthline, 7/19).

'Gang of Six' Releases Budget Plan

Meanwhile, the bipartisan group of senators known as the "Gang of Six" released a summary of a budget plan that seeks to cut the deficit by $3.7 trillion over 10 years.

One day after he released his own budget plan, Sen. Tom Coburn (R-Okla.) rejoined the Gang of Six on Tuesday before the group unveiled its plan. Coburn left the group in May after facing resistance to his efforts to cut entitlement spending and the refusal of Democrats to drop calls for tax increases (Haberkorn/DoBias, Politico, 7/19).

Coburn's plan -- called the "Back in Black" plan -- would cut the deficit by $9 trillion over 10 years. It proposes a series of GOP-favored spending cuts to federal agencies and entitlement programs, including Medicaid and Medicare, and a variety of revenue-generating tax loophole closures that Democrats favor (California Healthline, 7/19).

The Gang of Six proposal would cut more than $200 billion from federal health spending. Proposed health-related spending changes include:

• Overhauling the Medicare physician payment formula;
• Eliminating a long-term care insurance program created by the federal health reform law, known as the CLASS Act;
• Making spending cuts to Medicare and Medicaid; and
• Enacting medical malpractice reform.

It still is unclear what exact spending cuts would be made to Medicare and Medicaid, Politico reports (Haberkorn/DoBias, Politico, 7/19).

The plan evokes recommendations made by President Obama's bipartisan National Commission on Fiscal Responsibility and Reform, including the Medicare physician payment fix and medical malpractice reforms. The plan also uses recommendations from NCFRR for linking overall health spending targets to the GDP.

In addition, the plan would make congressional committees responsible for determining the specifics of entitlement changes, meaning such changes also could match recommendations by the fiscal commission. Under the plan, lawmakers might choose to restructure Medicare deductibles, have higher-income Medicare beneficiaries pay more for care or put more Medicaid beneficiaries in managed-care programs, according to CQ Today (Kenen, CQ Today, 7/19).

Reaction to Gang of Six Plan

President Obama on Tuesday praised the proposal as "a very significant step" in budget negotiations that shows "the potential for bipartisan consensus" (Budoff Brown/Epstein, Politico, 7/19).

However, Senate leaders have not endorsed the plan. Senate Majority Leader Harry Reid (D-Nev.) said he must concentrate on the Senate calendar and the upcoming Aug. 2 deadline for raising the debt ceiling. Senate Minority Leader Mitch McConnell (R-Ky.) said he does not yet have an opinion because he still is reviewing the proposal.

Meanwhile, some Republicans have asked for more details on how the proposal cuts the deficit by $3.7 trillion and said they want more significant changes to Medicare and Medicaid (Budoff Brown/Epstein, Politico, 7/19).

House GOP Dig In in Opposition to McConnell-Reid Plan

In other budget news, more than 60 House Republicans have signed a letter to House Speaker John Boehner (R-Ohio) urging the House GOP leadership to oppose a bipartisan budget and debt-limit proposal that is being developed in the Senate. Reid and McConnell are working together to develop a version of a GOP proposal -- which McConnell unveiled early last week -- in hopes of attracting broader bipartisan support (Cohen, CQ Today, 7/19).

Under the plan, which McConnell described as a "last-choice option" to break the ongoing stalemate, the Obama administration would seek Congress' approval to raise the debt ceiling by $2.5 trillion over three installments in the next 18 months, which would take effect through legislative maneuvering. The proposed spending cuts would be debated in Congress under normal appropriations procedures, without any guarantee that lawmakers would ever vote on them (California Healthline, 7/15).

In their letter -- which was written by Rep. Joe Walsh (R-Ill.) and is expected to be delivered to Boehner on Thursday -- the 60 House Republicans expressed concern that the McConnell-Reid plan would diminish Congress' role in dealing with the budget and debt-limit issues (Cohen, CQ Today, 7/19).