Nancy Pelosi's claim that the GOP would raid Medicare for tax cuts

at 06:00 AM ET, 01/10/2013


(Jacquelyn Martin/AP)

“We already have an Affordable Care Act. We found savings of over $700 billion by slowing the increase and the rate of reimbursement to certain providers. We used that $700 billion to increase benefits to seniors and the Republicans took the same money and used it for a tax cut at the high end and said that we were cutting benefits, which we weren’t.”

— House Democratic Leader Nancy Pelosi (Calif.), on CBS’s “Face the Nation,” Jan. 6, 2013

We are reluctant to re-litigate the rhetoric of the 2012 presidential campaign, but this comment by Rep. Nancy Pelosi about the House GOP budget jumped out at us.

We had frequently written during the campaign about the misleading claim by Mitt Romney that President Obama had gutted more than $700 billion from Medicare to fund Obamacare. And yet here was Pelosi claiming Republicans had used the “same money” to fund a tax cut, compared to Democrats, who she said had used the $700 billion to “increase benefits to seniors.”

To alter a common expression, what’s good for the gander is good for the goose. Is Pelosi playing the same kind of rhetorical games?

The Facts

First of all, the $700 billion figure comes from the difference over 10 years (2013-2022) between anticipated Medicare spending (what is known as “the baseline”) and the changes that the Obama health-care law makes to reduce spending. Thus it is not really money in bank — and the Medicare actuary has raised concerns about whether the cuts to providers were sustainable. The Obama health-care law also raised Medicare payroll taxes by $318 billion over the new 10-year time frame, but only a third of that money is credited to the trust fund; the rest goes to general revenues.

Pelosi is correct that the House Republican budget plan crafted by Romney’s running mate, Rep. Paul Ryan (R-Wis.), retained virtually all of the Medicare “cuts” contained in the health-care law. But then we get into a philosophical dispute about what happens next.

Ryan, who is chairman of the House Budget Committee, says he devotes the Medicare savings to extending Medicare solvency (as does Obama). But his budget also includes cuts in tax rates that he says would be funded through the elimination of deductions, tax loopholes and the like.

During the campaign, budget analysts cast serious doubt on whether eliminating such tax provisions would raise enough money to fund the rate cuts. So Pelosi assumes that the GOP budget numbers don’t add up, and thus Ryan is funding tax cuts with Medicare cuts.

This line was an especially effective attack by President Bill Clinton during his budget wars in the mid-1990s with then-Speaker Newt Gingrich (R-Ga.), which is why it rang a bell. (The Fact Checker covered the Clinton-Gingrich conflict in an earlier life.) But the Ryan budget is merely a blueprint; no detailed legislation has been crafted. The vagueness of a budget blueprint allows opponents to make many assumptions about it, but there is no one-for-one match that one can find in the document.

Moreover, Pelosi also asserts that Democrats used “that $700 billion to increase benefits to seniors,” referring to the elimination of a gap in Medicare prescription-drug coverage known as the “donut hole,” and some other benefits. But the Congressional Budget Office says that such changes amount to just $48 billion over 10 years.

The Medicare savings in the health-care law, however, in theory, do extend the solvency of the trust fund for hospital insurance, but that is not the same thing as a benefit increase.

The Pinocchio Test

We realize that politicians often must speak in short hand on television, but Pelosi went too far here. In the GOP budget, there is no direct line between the tax cuts and Medicare cut. Pelosi could have offered the opinion that Ryan’s tax cuts were accompanied by cuts in programs for the less fortunate, but she was wrong to put a price tag on it.

Moreover, she made it appear as if all of the Medicare savings in the health-care law was used to bolster benefits for seniors. That is not correct either. The increased benefits are just a small portion of that amount. Moreover, under the concept of the unified budget, money that is collected by the federal government for whatever purpose (such as Medicare payroll taxes) is spent on whatever bills are coming due at that time.

During the campaign, Democrats had vehemently complained about the GOP’s claims about this $700 billion figure. There is no reason to play the same game.

Two Pinocchios





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    About the Blogger

    Glenn Kessler has covered foreign policy, economic policy, the White House, Congress, politics, airline safety and Wall Street.

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