President Bush, Budget Leaders To Propose Limits on Spending on Medicare, Other Entitlement Programs

White House officials and congressional budget leaders last week indicated that President Bush in his budget request to Congress "will try to impose firm, enforceable limits on the growth of federal benefit programs" while continuing to "give priority to military operations and domestic security over social welfare programs," the New York Times reports.

Bush's proposal -- the Spending Control Act -- also would "make it more difficult" for lawmakers to pass legislation increasing the "long-term unfunded obligations" of benefit programs such as Medicare, Civil Service retirement and disability, veteran disability and health benefits for retired federal employees, the Times reports. Medicaid could be added to that list after the government develops a reliable way to measure the program's long-term costs. Entitlement programs and other forms of mandatory spending last year accounted for 54% of the federal budget, and the Congressional Budget Office estimates that under current law, such spending will reach 58% of the budget by 2014.

The president's budget proposal also is expected to include a flat budget for the National Science Foundation; a small increase in NIH's budget of less than 2%, "which would not be enough to keep pace with the rising costs of biomedical research"; and the elimination of the Commerce Department's $142 million Advanced Technology Program, which is meant to speed development of high-risk technologies in medicine and other fields, the Times reports. According to the Times, Bush originally intended to give NIH's budget a "small cut," but an appeal from HHS Secretary Tommy Thompson convinced the president to instead request a small increase.

Bush's proposal -- which he intends to submit in early February -- is similar to a bill drafted by House Budget Committee Chair Jim Nussle (R-Iowa), who said the goal of his legislation was to establish more "discipline and enforcement" of spending restraints.

Senate Budget Committee Chair Judd Gregg (R-N.H.) said he and other fiscal conservatives want to put into place "enforcement mechanisms" to "put the brakes on the growth of entitlements," adding, "The White House also wants to address entitlement spending." Gregg also noted that he intends to revisit the new Medicare law, which he voted against last year, calling the bill "the largest intergenerational tax increase in the history of this country."

Gregg said, "It was supposed to cost $400 billion over 10 years, but new estimates show the costs could be 50% higher. Before we start the program in an aggressive way in 2006, we have to be sure. Since it was sold as a $400 billion program, that's what we should keep it at" (Pear, New York Times, 1/9).

In related news, the Minneapolis Star-Tribune on Sunday looked at how Social Security reform is "at the top of the agenda" for the White House, even though the program's problems will be easy to solve "stacked up against the financial difficulties already beginning to plague the Medicare system."

Medicare trustees say that while Bush has warned that Social Security will need to be funded by general tax funds in 2018, Medicare's hospital fund already passed that plateau in 2004. Bush has said that his new Medicare law will hold down costs, but a 2004 actuaries report -- signed by three Cabinet secretaries, including Thompson -- concluded that the program's long-term liabilities had increased by more than one-third, or $17 trillion, in a single year.

The trustees report states, "Medicare's financial difficulties come sooner -- and are much more severe -- than those confronting Social Security" (Westphal, Minneapolis Star-Tribune, 1/9).

President Bush's "reason for ignoring the far more pressing problem of Medicare while he pursues Social Security privatization is especially tortured," a New York Times editorial states. The editorial continues that the "mismatch between revenues and Medicare benefits for doctors' care and prescription drugs" over the next 75 years "is 3.5 to six times as much as the shortfall in Social Security, according to the Center on Budget and Policy Priorities," and "the Medicare hospital trust fund mismatch is two to three times as big."

Bush "said that his administration had already taken on Medicare by pushing through the $500 billion-plus prescription drug benefit," which he claims will save beneficiaries money by "paying for medicine that would prevent the need for expensive heart surgery," according to the Times. But his "thinking is wishful to the point of being magical," the Times states, adding, "Medicare is not going to fix itself any more than tax cuts will pay for themselves" (New York Times, 1/10).