Lawmakers May ‘Raid’ Medicare Part A Trust Fund
A recent economic slowdown, as well as the 11-year, $1.35 trillion tax cut that Congress passed in May, has begun "draining" revenue from the U.S. Treasury and may force the federal government to "dip" into the Medicare Part A trust fund this fall to cover expenses -- "breaking a congressional promise not to do so," the Philadelphia Inquirer reports. According to the Inquirer, the tax cut and additional spending for agriculture and defense will reduce the FY 2001 budget surplus to about $7 billion, excluding surpluses in Social Security and Medicare. The economy also has yielded less tax revenue than expected, which "could easily leave Treasury funds below that $7 billion cushion," budget experts said. Robert Bixby, executive director of the Concord Coalition, said, "The prospect is pretty substantial that we might be into the Medicare surplus this year and next, and even more so in 2003. The margin for error is so thin that it could easily tip into the lockbox" (Moritsugu, Philadelphia Inquirer, 7/6). Last February, the House passed a measure, on a 407-2 vote, that would prevent lawmakers from spending Social Security and Medicare surpluses for other initiatives, except "reducing the national debt or improving the programs themselves." The lockbox, a promise by lawmakers to "figuratively" lock up the surpluses "where they cannot be touched," has "no economic significance," but has "enormous political significance," the Inquirer reports.
Neither political party "wants to be held responsible" for "raiding [the] trust funds to pay for other things," Stan Collender, chief federal budget analyst at the public relations firm Fleishman-Hillard, said (Philadelphia Inquirer, 7/6). However, with lawmakers beginning to "chafe at the financial strictures," a "raid" on the Medicare surplus "seems increasingly likely," the Christian Science Monitor/Nando Times reports (Russell Chaddock, Christian Science Monitor/Nando Times, 7/5). "Which party is blamed for doing that will suffer substantial political consequences because of the perception they will be hurting Medicare," Collender said (Philadelphia Inquirer, 7/6). Senate Budget Committee Chair Kent Conrad (D-N.D.) said that President Bush's tax cut, which will reduce FY 2001 revenue by $74 billion, will force the government to "dip into Medicare's surplus by $17 billion" (Wall Street Journal, 7/6). "This administration, after advocating a tax cut that was too large ... has put us right back in the bad old days of raiding every trust fund in sight," he said, adding, "We're on the brink of raiding the Medicare trust fund this year. This is fiscal mismanagement on a grand scale." Republicans "fire back" that Democratic spending plans represent the "only threat" to the surplus. "The biggest threats to Social Security and Medicare are the calls for higher spending we've heard from (Democratic) senators," House Budget Committee Chair Jim Nussle (R-Iowa) said (Philadelphia Inquirer, 7/6).