2009 Budget Seeks Spending Freeze
Friday, February 1, 2008
President Bush's $3 trillion budget for fiscal 2009, scheduled for release Monday, will seek a virtual freeze on domestic spending programs while cutting billions of dollars from federal health programs to reach his goal of balancing the budget by 2012, White House and congressional officials said yesterday.
Some programs would be favored. Homeland Security Secretary Michael Chertoff announced yesterday that Bush will seek a 19 percent increase in funding for border security and border enforcement, including $2 billion for border fencing, vehicle barriers and detection technologies, as well as $442.4 million more to hire, train and equip 2,200 new Border Patrol agents.
But such increases would have to come out of other programs to hold discretionary spending by Congress just below $1 trillion for 2009. Senate aides said a freeze on domestic discretionary programs would mean deep cuts to grants for education and law enforcement to states and localities. First-responder grants would be cut nearly in half, the aides said.
The biggest savings would be found in federal health-care entitlements, said a White House official, speaking on the condition of anonymity because the budget has not been released. The growth of such programs would be trimmed by $208 billion over five years, with 82 percent of that, or $170 billion, coming from Medicare.
The Medicare savings would come largely from freezes in payments to doctors, hospitals and other care providers, as well as efforts to better align Medicare payments to the cost of service, the White House aide said. Citing $34 trillion in long-term unfunded liabilities for Medicare alone, the aide said, "We've got a long-term challenge out there that is completely unsustainable."
The cuts in the president's 2009 budget would keep Medicare growing, but by slowing the trajectory, the proposals would reduce those costs by a third, he said.
They are, however, far deeper than the nearly $65 billion in savings proposed by Bush last year and ignored by Congress. In an election year, still-deeper cuts are not likely to be enacted.
"The President is proposing to once again slash health care coverage for seniors and low-income working Americans. The President's cuts are exactly the wrong medicine when the cost of health care and the number of uninsured continue to rise and families are feeling economically insecure," House Speaker Nancy Pelosi (D-Calif.) said in a statement yesterday.
She suggested that Bush target cuts to Medicare managed-care plans, known as Medicare Advantage, which are currently reimbursed at a higher rate than the government-provided fee-for-service program. Democratic efforts to cut Medicare Advantage funds last year drew veto threats from the White House.
Even with such cuts, the president's budget envisions a big jump in the budget deficit, from $163 billion in 2007 to about $400 billion in 2008 and 2009. Much of that increase will be the result of a slowing economy and a stimulus package expected to cost about $150 billion. The deficit forecast in 2009 also accounts for $70 billion in war costs in Iraq and Afghanistan, a partial payment, as well as about $65 billion to hold off the growth of the alternative minimum tax.
Bush's budget still will project balance by 2012, but beyond 2009, the budget will not include any funds for the wars or to fix the AMT, which was enacted in 1969 to ensure that the rich pay income taxes but now would cover tens of millions of middle-class families.