Budgetary Belt-Tightening

Wednesday, December 14, 2005

HOUSE AND SENATE budget negotiators are struggling to reach an agreement melding the very different budget blueprints approved by each house. Though neither offers much to cheer about, the Senate's version is by far the fairer. It would cut $35 billion in projected entitlement spending over the next five years, compared with $50 billion in the House version. But the differences between the two bills are bigger than those numbers suggest. The Senate would make the cuts without digging into programs for low-income people.

The House measure would cut $5 billion over five years from federal funding for child support enforcement efforts. The Congressional Budget Office estimates that $24 billion in child support payments will go uncollected as a result. How does that make sense?

Likewise, the House bill would reduce the food stamp rolls by an average of 255,000 people a month by 2008, cutting off many low-income working families with children whose large housing, child-care or other expenses put their disposable income below the poverty line, as well as legal immigrants who have been in the United States five to seven years. This is simply cruel; we hope, as initial reports suggest, that the conferees are prepared to drop this provision.

In another example of shortsightedness, the House would require a greater percentage of parents receiving welfare payments to participate in work programs and to work longer hours -- but wouldn't add enough money for states even to maintain the current number of child-care slots, never mind expand them, as would be needed to make such a provision work. The liberal Center on Budget and Policy Priorities estimates that 330,000 fewer children in low-income working families would get child-care help in 2010 than in 2004.

By contrast, the Senate made its cuts by targeting those who could sustain them. For example, both houses would cut the prices Medicaid pays for prescription drugs. But the Senate, by increasing the rebates that drug companies pay to Medicaid, would save $8.2 billion over five years compared with the House's $2.2 billion. Similarly, the Senate would repeal the $10 billion "stabilization fund" put in the Medicare prescription drug bill to, in effect, bribe health insurers to participate in a program for regional plans. It's a choice between cutting profits of pharmaceutical companies and eliminating a slush fund for insurers, on the one hand, and demanding higher co-payments and premiums from low-income Medicaid recipients on the other: not a tough call.

Both measures, though, underscore the lack of congressional will to take on powerful constituencies. Neither version goes far enough in making the student loan program more efficient -- something that would require angering lenders. Neither manages to take more than a nibble out of farm subsidy programs.

And no one should be fooled into thinking that either bill reflects real spending discipline. Many of the "cuts" aren't cuts at all but revenue that the government expects to bring in from selling the broadcast spectrum, raising student loan costs for borrowers or drilling in the Arctic National Wildlife Refuge, if that provision survives. Other costs -- for example, increasing Medicare reimbursement rates to physicians -- are made to disappear by assuming that lawmakers who vote to provide more money to doctors this year will get tough down the road -- an assumption based more in fantasy than history. There are hard choices ahead, and there's little indication from these budget bills that lawmakers are prepared to make them.


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