Balanced budget plan with deep health and retirement program cuts worries some in GOP

Posted March 05, 2013, at 7:34 a.m.

WASHINGTON — Anxiety is rising among House Republicans about a strategy of appeasement toward fiscal hard-liners that could require them to embrace not only the sequester, but sharp new cuts to federal health and retirement programs.

Letting the sequester hit was just the first step in a pact forged in January between conservative leaders and Speaker John A. Boehner, R-Ohio, to keep the government open and the nation out of default. Now comes step two: adopting a budget plan that would wipe out deficits entirely by 2023.

The strategy runs counter to warnings from prominent Republicans such as Louisiana Gov. Bobby Jindal against becoming “the party of austerity.” Just as GOP lawmakers are tacitly endorsing sequester cuts to the Pentagon, long a sacred cow, they fear the balanced-budget goal will force them to abandon a campaign pledge not to reduce Medicare benefits for those who are now age 55 and older.

“I know a number of people who have real concerns about where this is going,” said Rep. Peter T. King, R-N.Y., who said Medicare cuts targeting people as old as 58 are under discussion.

“One of the last presidents to balance the budget was Herbert Hoover,” King added darkly, referring to the penny-pinching Republican blamed for deepening the Great Depression.

GOP leaders say the strategy has been necessary to persuade their right wing to postpone a fight over the debt ceiling until later this summer, and to support a bill on the floor this week to fund the government through the end of September. The payoff, they say, will be a budget framework that holds the promise of paying down the national debt without higher taxes.

“There’s plenty of political peril associated with this. Whether we as a conference have the stomach to look at Medicare and Social Security spending will be the make-or-break part of the deal,” said Rep. Tom Cole, R-Okla., a senior member of the Budget Committee. “But I think setting an ambitious goal was wise. If we can’t do it, the country can’t do it.”

Budget Committee Chairman Paul Ryan, R-Wis., plans to present the new budget framework next week and put it to a vote in the House before the Easter break. In a brief interview, he said the year-end “fiscal cliff” deal made balancing the budget easier than it would have been last year, when he offered a plan that wouldn’t balance until nearly 2040. Independent analysts estimate that Ryan would have to cut about $100 billion more in 2023 to balance spending and revenue.

“My first reaction [to the balanced-budget pledge] was the same as everybody else’s: God, what the hell is he going to do? I thought last year’s budget was crazy and appalling,” said Robert Greenstein, president of the left-leaning Center on Budget and Policy Priorities. “But this year’s budget doesn’t have to be all that different.”

Still, Democrats are salivating over the framework. Just as the pain of the sequester starts affecting schools, parks and airports, Democrats say, Republicans will be promoting a vision of extreme austerity that voters rejected in the 2012 presidential campaign — which featured Ryan as the GOP vice presidential nominee.

“They are going to be doubling down on a budget that slashes investment in education and infrastructure, violates important commitments to our seniors and the middle class, and keeps tax breaks for the wealthiest people in the country,” said Rep. Chris Van Hollen (Md.), the ranking Democrat on the Budget Committee. “Doubling down on that is not just a mistake for the country, but also bad politics.”

Democrats are working on their own 10-year budget framework, which would replace the sequester in part with higher taxes on the wealthy, according to the new Senate Budget Committee chairman, Patty Murray (Wash.). For three years, Senate Democrats have not offered a budget. Now, Murray is urging them to embrace the fight against an “extreme, economically irresponsible” Republican vision.

President Barack Obama plans to wait until the House acts to offer his budget plan, which is now more than four weeks late. Administration officials have not provided a release date or explained the unusual delay, although the White House has been working closely with Murray and Van Hollen.

Ryan declined to discuss policy changes under consideration, including accelerating reforms that would end Medicare’s guarantee of open-ended coverage. Last year’s GOP budget delayed Medicare changes until 2023. And it made no explicit cuts to Social Security benefits, which Republican leaders have since argued should be reduced through a less-generous measure of inflation.

But Ryan has embraced the balanced-budget goal, telling reporters in January that it marked “a very defining moment for this session of Congress and our caucus in getting a down payment on the debt crisis and averting it.”

Indeed, at a January retreat in Williamsburg, Va., Ryan helped broker an agreement with Boehner on behalf of four conservative leaders: Reps. Tom Price (Ga.), Jeb Hensarling (Texas), Jim Jordan (Ohio) and Steve Scalise (La.). In consultation with Club for Growth President Chris Chocola, the former and current chairmen of the conservative Republican Study Committee had been plotting a strategy for handling a series of fiscal deadlines at the beginning of 2013 in hopes of “getting conservative solutions,” Price said.

Their offer to House leaders, Scalise said: “Start with the sequester, to implement real cuts. But then go a step further and lay out a vision by presenting a budget that balances in 10 years.”

Neither Boehner nor House Majority Leader Eric Cantor, R-Va., had previously championed a balanced budget. In 2010, Boehner did not include it among the planks of a detailed campaign platform that helped win control of the House. In 2011, Cantor told reporters that a balanced budget was impossible “without severely impacting the benefits that current seniors and retirees are getting now.”

But as they gathered in Williamsburg, GOP leaders were on the ropes. Boehner had been weakened during the fiscal cliff fight, and his splintered troops had been forced to swallow the first major tax increase in two decades. With a new debt-limit deadline looming in just a few weeks, House leaders were eager to unite the conference and avoid another politically damaging crisis.

Plus, the goal had become more realistic. So, after a discussion with the rank and file, the deal was struck. On Jan. 18, the four RSC leaders issued a statement: “As part of agreement, the House will work to put the country on the path to a balanced budget in 10 years. House leadership also agreed to stand by the $974 billion discretionary number that is part of the sequestration process.”

Concerns soon bubbled up about the severity of cuts needed to meet the 10-year goal. Back at the Capitol, Rep. Charlie Dent (Pa.) rose during a meeting of GOP lawmakers to say he wasn’t sure he could support a balanced budget.

“During the campaign last year, I, too, talked about protecting those who are retired or near-retired. I, too, talked about holding everybody harmless [from Medicare cuts] up until the year 2023,” Dent explained later. “I realize, as time marches on, it’s going to be harder and harder to maintain those commitments. But how do you go from a 28-year balanced budget to a 10-year balanced budget?”

There are other red flags. Republican aides said Ryan is certain to keep about $700 billion in Medicare cuts enacted as part of Obama’s health initiative, reductions that he and GOP presidential nominee Mitt Romney excoriated on the campaign trail. And Ryan has said he will keep the nearly $700 billion in tax increases approved Jan. 1.

“After all these lectures that revenue isn’t part of the solution, it turns out revenue is a big part of their solution,” Van Hollen said.

If the House approves his budget plan, Ryan has said it would set the stage for negotiations with Senate Democrats over the debt limit, which will once again demand lawmakers’ attention in August.

“We are going to have to negotiate on top of [the sequester] for a new debt-ceiling increase . . . and we’re going to have to come out of that with a plan to get spending under control,” Ryan said. “I mean, we’re very serious about this.”

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