Geithner’s fuzzy math on entitlement ‘spending cuts’
“We've laid out a detailed plan of spending cuts. $600 billion in spending in mandatory programs over 10 years. They phase in gradually, they build over time. They are good policy. They make a lot of sense.”
— Treasury Secretary Timothy F. Geithner, on NBC’s “Meet the Press,” Dec. 2, 2012
“We've laid out a very comprehensive detailed framework of how we do it and in what stages with $600 billion of spending cuts spread over 10 years in entitlement programs.”
— Geithner, on CNN’s “State of the Union,” Dec. 2
The debate over the “fiscal cliff’ is largely about numbers — and clearly, $600 billion was the Treasury secretary’s talking point of the day on the Sunday talk shows.
Eager to rebut Republican claims that the administration was not serious about reining in entitlement programs such as Medicare and Medicaid, Geithner insisted the administration did have “a detailed plan of spending cuts,” totaling $600 billion, in what he described as “mandatory programs” or “entitlement programs.”
But his language is a bit slippery. Let’s explore what’s going on.
President Obama’s opening bid in the battle of wills with Republicans is essentially his fiscal year 2013 budget, so it’s fairly easy to get the details by looking at Table S-9 of the White House budget. Every policy change is detailed there across 20 pages of numbers, though a few items have already been enacted.
The shorthand used on the Sunday television shows was that Obama has proposed a $1.6 trillion tax increase (technically, $1.561 trillion.)
But that’s a net number, because Obama has also proposed $359 billion in tax cuts. The gross tax increase in the budget actually is more than $1.9 trillion.
Geithner’s “$600 billion” is a gross number — before additional spending, such as improving roads and bridges. Still, the administration position is that it is seeking a total of $1.6 trillion in tax increases and $600 billion in total “mandatory” cuts, even after offsets.
But a good chunk of this “mandatory” money is not what would be considered entitlement spending — or at least aimed at health-care entitlements. The most up-to-date summary is in the administration’s mid-session review, in which Table S-3 shows $326 billion in health-care savings and $254 billion in “other mandatory savings.” (We had explored how Democrats sometimes mistout the health-care savings in a previous column.)
The “mandatory” side of the budget means the changes are permanent and not subject to annual congressional appropriations. That’s why Geithner could call them “mandatory programs,” though at one point he also called them “entitlement programs.” But they are not “spending cuts” in the traditional sense.
What are some of these “mandatory savings?” The administration lists them in the original 2013 budget, and they include:
■$61.3 billion from “impose a financial crisis responsibility fee”
■$43.7 billion from “implement Internal Revenue Service program integrity cap”
■$27.4 billion from “increase employee contribution” to federal retirement programs.
■$44 billion from “adjust payment timing”
In fact, some $100 billion of these “cuts”come from Geithner’s department. But are these cuts in the Treasury Department? No, the numbers represent additional fees and better IRS enforcement — not what an ordinary person would consider a spending cut. (We realize that Republicans and Democrats may count these as cuts, looking through the prism of the federal budget, but it still not the same thing as an entitlement cut.)
The $44 billion from adjusting the timing in payments is especially dubious — a one-time savings that takes place in 2022, the last year of the budget window. Presumably, those dollars are just transferred to the next 10-year budget window.
Another White House 2013 budget document, titled “Cuts, Consolidations and Savings,” makes the distinctions even sharper.
Over 10 years, its shows just $79 billion in cuts in mandatory programs, plus some $340 billion in “savings” (mostly reductions in payments to Medicare providers) for a total of $419 billion in “mandatory cuts, consolidations and savings.” For some reason, it did not list the $100 billion in Treasury savings as part of the mandatory cuts.
In an interesting coincidence with Geithner’s remarks on Sunday, House Republicans in their counteroffer Monday said they would see $600 billion in reductions over 10 years from health-care entitlement programs — and $300 billion in other “mandatory” savings. So if you are keeping score, Republicans are seeking 50 percent more in savings on the mandatory side.
The Pinocchio Test
Geithner is mixing up apples and oranges. He suggests that he is talking about spending cuts in entitlement programs, when in fact a huge chunk is in other areas — and is not spending cuts.
Rather than the $600 billion figure, the Treasury secretary should have specified a precise figure for reductions in health-care entitlements and then explained that the administration was seeking additional savings through fees and other initiatives. His language on the Sunday shows , especially on CNN, was too cute by half.
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