Budget Bravery

Tuesday, February 7, 2006

OF ALL THE enormous budgetary problems facing the country, the most daunting is the impending explosion in the growth of Medicare, the health care program for the elderly. So President Bush deserves credit for at least proposing to take modest steps to restrain Medicare's growth in the fiscal 2007 budget released yesterday.

As part of a proposed $65 billion in cuts in entitlement programs over the next five years, Mr. Bush wants to cut $36 billion in projected Medicare spending, mostly by expanding a requirement for better-off seniors to pay higher premiums and by reining in the growth of payments to hospitals, nursing homes and home health agencies. The proposed changes would have even more effect in the second five years, amounting to a total of $105 billion in projected cuts through 2016.

Those are sensible, if limited, steps. Something's got to give in entitlement spending -- or, to be more precise, someone's got to give it. We'd rather see the cuts come at the expense of seniors who can afford higher premiums than poor children who can't; hence our concerns about the Medicaid cuts just passed by Congress.

Mr. Bush's proposed cuts would take just a sliver out of Medicare spending; during the five years in which Mr. Bush wants to cut $36 billion from Medicare, total Medicare spending is set to top $2 trillion. But don't hold your breath waiting for even these to happen. There is an eternal sunshine of the spotless budgetary mind aspect to this discussion: To imagine that these cuts will be made requires wiping out all recollection of the past when it comes both to this administration and Congress.

Having presided over the biggest expansion in the history of the Medicare program with the addition of the prescription drug benefit, the administration is more than a little late to the cause of restraining the growth in Medicare costs. Moreover, its track record in proposing politically unpopular cuts is not promising: initial bravery followed by -- well, followed by nothing.

Consider last year's budget exercise, in which the administration boldly -- and again, belatedly, after signing a porky farm spending bill -- called for cutting about $4 billion in farm subsidies over the next five years. Congress, predictably, balked, and ended up approving just $1 billion in cuts. The administration has now re-proposed many of the same cuts it abandoned last year. Forgive us if we don't take it too seriously this time around.

On Medicare, is Congress prepared to defy powerful lobbies to go along with its proposals? Not if history is any guide. And the administration's other big area of purported savings -- $16.7 billion in pension reform, mostly by increasing employers' premiums -- may be similarly politically unpalatable.

There are many other, distressingly familiar points to make about the Bush budget: the folly and unfairness of pressing to extend tax cuts in this fiscal environment and to expand tax-preferred savings vehicles that benefit the wealthy; the dishonesty of once again excluding known costs for things such as paying for the war in Iraq after 2007 and giving middle-income taxpayers relief from the alternative minimum tax; and the increasingly cruel squeeze on programs for low-income Americans. We'll discuss these in the days to come. For now, though, we'll succumb to the triumph of editorial hope over experience and give the president marks for trying on Medicare -- at least for the moment.

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