(Bloomberg) — House Republicans are proposing to cut $5.5 trillion in U.S. government spending and balance the budget in nine years by cutting Medicaid and food stamps and partially privatizing Medicare.
The House plan released Tuesday, straight from Rep. Paul Ryan's budgets of the past, is sure to run into opposition among Republicans who control the Senate. Almost half the Senate Republicans are up for re-election next year, and few senators are eager to run on a budget that would cut benefits for senior citizens.
"Our budget will balance," House Speaker John Boehner told reporters at a news conference in Washington. "It's also about growing our economy, growing jobs and building economic strength for our future."
The Senate won't make specific cuts to Medicare in its proposal due Wednesday, said an aide familiar with the plan — evidence of the deep splits inside the Republican Party over how to govern in budget-strapped times.
"What you're asking me is, yeah, hey, Republicans, why don't you go on a kamikaze mission here and why don't you lead and give your political opponents all this ammunition to just slaughter you in the next election?" Sen. Ron Johnson, a Wisconsin Republican whose seat is up in 2016, told Bloomberg reporters and editors last week.
Tea Party
The stakes of the budget negotiations — which pit Tea Party House Republicans seeking deep entitlement cuts against many of their fellow Republicans — aren't merely financial.
The proposal by House Budget Committee Tom Price of Georgia assumes $2 trillion in savings from a full repeal of the Patient Protection and Affordable Care Act (PPACA). A budget agreement between the two chambers would permit the Senate to pass revisions to PPACA later this year with a simple majority and no need for Democratic votes.
The Supreme Court is set to rule by late June on a challenge to the PPACA health-care subsidies in states that didn't create their own insurance exchanges. If the court bars the subsidies, Republicans want to change the law by using the simple-majority tool.
Tuesday's proposal by Price is similar to a previous Medicare plan by his predecessor, Ryan of Wisconsin, that sought to turn Medicare into a "voucher program," or a program that would encourage enrollees to use a combination of their own money and a fixed amount of government money to buy coverage from a menu of public and private Medicare plans.
Cutting Medicare
Price's budget would cut Medicare by $148 billion through 2025. Starting in 2024, Medicare beneficiaries would choose from a range of options, including traditional Medicare and private coverage. The government would issue fixed payments directly to the plan.
The budget would cut $913 billion from Medicaid, the health-care system for the poor, over the same time period by issuing block grants to states. They would manage their own programs, either by cutting benefits or generating their own revenue to fund any shortfalls.
Food stamps, the federal nutrition program, would be turned over to states to administer beginning in 2021.
"These reductions are hardly Draconian," said Price's budget proposal. "It protects key priorities while eliminating waste."
While the plan seeks to balance the budget by cutting $5.5 trillion, the plan's instructions for specific spending-reduction legislation would add up to about $5 billion over 10 years, far short of the amount sought by 2025.
Floor, ceiling
Those cuts are a "floor, not a ceiling," Price told reporters Tuesday.
Many Senate Republicans don't want to cut entitlement programs such as Medicare and Medicaid. About 60 Tea Party-aligned House Republicans insist on addressing such programs, which are the main sources of the federal deficit.
"This group is still furious with their leadership over what they consider to be a sell-out" by Republicans on funding for the Department of Homeland Security, said Stan Collender, executive vice president of Qorvis MSL Group, a communications strategy firm in Washington.
Republican leaders this month abandoned an attempt to roll back Obama's orders easing deportations for undocumented immigrants by including it in a Homeland Security funding bill.
