Sunday, January 09, 2005

Applying Brakes to Benefits Gets Wide G.O.P. Backing

The New York Times
January 9, 2005
Applying Brakes to Benefits Gets Wide G.O.P. Backing

WASHINGTON, Jan. 8 - In his budget request to Congress, President Bush will try to impose firm, enforceable limits on the growth of federal benefit programs, and the chairmen of the Senate and House Budget Committees say they strongly supported that effort.

Administration officials and Congressional aides said Mr. Bush would also seek cuts in housing assistance for low-income families, freezes or slight increases in most domestic programs, and larger increases for domestic security. The spending plan for 2006, like the appropriations enacted for this year, would give priority to military operations and domestic security over social welfare programs.

The new chairman of the Senate Budget Committee, Judd Gregg, Republican of New Hampshire, said he and other fiscal conservatives wanted to establish "enforcement mechanisms" to "put the brakes on the growth of entitlements," which pay benefits to millions of Americans according to formulas set by law.

"The White House also wants to address entitlement spending," Mr. Gregg said in an interview.

Mr. Bush plans to submit his budget to Congress early next month. Officials at the affected agencies said he would propose a virtual freeze for the National Science Foundation and a very small increase for the National Institutes of Health.

Agency officials throughout the government spoke on condition of anonymity because the White House wants to control the way details of the president's budget are released.

A legislative proposal drafted by the White House would make it more difficult for Congress to pass legislation increasing the "long-term unfunded obligations" of benefit programs like Social Security, Medicare, Civil Service retirement and disability, veterans disability compensation, and health benefits for retired federal employees.

A White House document describing the proposal says that Medicaid, the health program for low-income people, can be added to the list as soon as federal officials devise a reliable way to estimate its long-term costs. Medicaid spending has shot up 63 percent in the last five years, so that federal and state outlays together now total more than $300 billion a year.

The president's proposal, the Spending Control Act, closely resembles a bill drafted by Representative Jim Nussle, Republican of Iowa and the chairman of the House Budget Committee, who said his goal was to establish more "discipline and enforcement" of restraints on spending.

In the interview, Mr. Gregg said he wanted to take a close look at the new Medicare law, signed by Mr. Bush in 2003. The law offers prescription drug coverage to all 41 million elderly and disabled beneficiaries.

"It was supposed to cost $400 billion over 10 years, but new estimates show the costs could be 50 percent higher," Mr. Gregg said. "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."

While Mr. Bush and most Republicans in Congress supported the Medicare bill, Mr. Gregg voted against it, calling it fiscally irresponsible. "This bill is the largest intergenerational tax increase in the history of this country," Mr. Gregg said in an impassioned speech on the Senate floor in November 2003. The bill, he said, is "not paid for," does nothing to control costs and will require "a massive tax increase" on workers and Americans who have yet to be born.

Democrats have denounced the law, saying it helps insurance companies and drug companies more than elderly people. But until now, Republicans generally expressed no desire to re-examine the law, saying it should be given a chance to work.

In his speech in 2003, Mr. Gregg said the drug benefit should have been limited to Medicare beneficiaries with low incomes or high drug costs that could wipe out their assets. He also criticized a section of the bill under which the government would pay billions of dollars in subsidies to encourage employers to continue providing drug benefits to retirees.

The federal budget deficit hit a record of $413 billion in 2004. At a White House economic conference last month, Mr. Bush said, "We're going to submit a tough budget."

In 2004, federal revenues were 5.6 percent lower than in 2001. But federal spending was 23 percent higher, and total debt held by the public - the amount borrowed to pay for past deficits - was 29 percent higher.

The White House says that revenues declined because of the 2001 recession and tax cuts intended to stimulate the economy, while spending increased because of domestic security and the wars in Iraq and Afghanistan.

Still, entitlement programs and other mandatory spending account for a growing share of the budget, 49 percent in 1994 and 54 percent last year, and under current law the Congressional Budget Office says they will reach 58 percent by 2014. Officials at the affected agencies gave these details of work on the president's budget:

¶For the current fiscal year, Congress cut the budget of the National Science Foundation by about 2 percent, to $5.47 billion, and the White House Office of Management and Budget initially proposed a further cut of about 5 percent for 2006. But the agency appealed, with support from allies like Senator Christopher S. Bond, Republican of Missouri, and the White House decided to propose a flat budget, instead of cuts.

¶The White House budget office initially sought a small cut at the National Institutes of Health, which received an appropriation of $28.4 billion for the current fiscal year. But after an appeal by Tommy G. Thompson, the secretary of health and human services, the White House agreed to propose a small increase, less than 2 percent, which would not be enough to keep pace with the rising costs of biomedical research.

¶The administration intends to propose cuts in housing vouchers, which provide families with rental assistance averaging $6,800 a year, and the White House budget office is also seeking cuts in the community development block grant.

¶Mr. Bush will try again to end the Advanced Technology Program in the Commerce Department, which is spending $142 million this year to speed development of high-risk technologies in medicine, manufacturing, engineering, computer science and other fields. President Bill Clinton liked the program, but the conservative Heritage Foundation calls it "corporate welfare at its worst."

As chairman of the Budget Committee, Mr. Gregg said, he will also scrutinize farm programs.

"Agricultural entitlements are crying out to be reformed," Mr. Gregg said. "Farmers are being paid a huge amount not to produce certain crops. Then they get paid a lot to produce other crops. It's a little beyond the obscene."