- The Washington Times - Tuesday, January 31, 2006

Near the end of an all-night session less than a week before Christmas, the House of Representatives at 6:07 in the morning narrowly passed (212-206) a budget-reconciliation bill, which the Congressional Budget Office (CBO) has estimated will save $38.8 billion from projected mandatory spending over five years. Two days later, after Republican Sens. Mike DeWine of Ohio, Gordon Smith of Oregon, Lincoln Chafee of Rhode Island and Susan Collins and Olympia Snowe of Maine joined a unanimous Democratic caucus in rejecting a nearly identical measure in the Senate, Vice President Dick Cheney was needed to cast a tie-breaking vote. Today, the House considers the ever-so-slightly modified version passed by the Senate.

A bit of perspective is in order. The $38.8 billion package, which would be the first reconciliation plan to slow the growth of entitlement spending in nearly a decade, actually includes $7.4 billion in spectrum-auction receipts and $3.6 billion in increased premiums paid by firms to the government-owned Pension Benefit Guarantee Corp. So, the actual savings in mandatory entitlement outlays over five years is really less than $28 billion. Moreover, five-year savings for Medicare spending, whose annual outlays increased from $26.5 billion in 1979 to $269 billion in 2004, will total a relatively minuscule $6.4 billion (or $1.3 billion per year). Given that CBO projects that annual Medicare spending will still rise by more than 60 percent over five years, these truly are minor savings.

The same is true for Medicaid, the health-care program for the poor. Mandatory federal Medicaid outlays have increased from $12.4 billion in 1979 to $176 billion in 2004. The cumulative five-year Medicaid savings (2006-10) will be less than $5 billion. Thus, instead of spending a CBO-projected $1.105 trillion on Medicaid from 2006 through 2010 (an average of $221 billion per year, peaking at $257 billion in 2010), the federal government would be spending $1.1 trillion on Medicaid (an average of $220 billion per year and more than $254 billion in 2010).

Keeping in mind that not a single Democrat in either the House or the Senate could summon the courage and good sense in December to support these very modest savings in the Medicaid program, consider yet another way of looking at Medicaid: Over a six-year period from 2004 (when Medicaid spending was $176 billion) to 2010 (when Medicaid spending would still exceed $254 billion after the reconciliation savings), the increase alone (at least $78 billion) would exceed total federal spending on Medicaid during Bill Clinton’s first year as president ($76 billion in 1993).

The reconciliation measure the House considers today is so modest that it would reduce total federal spending in 2010 from a CBO-projected baseline level of $3.105 trillion to $3.093 trillion, which would still be more than 25 percent higher (i.e., $621 billion higher) than last year’s federal budget of $2.472 trillion.

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