House Democrats scramble to ensure adequate deficit reduction in health bill

By Lori Montgomery
Washington Post Staff Writer
Wednesday, March 17, 2010

Congressional Democrats rushing to push President Obama's health-care initiative to final passage this week hit a new snag Tuesday, as the final piece of the package was held up by concerns that it would do too little to reduce the nation's budget deficit.

While Senior Democrats downplayed the significance of the delay, saying they were still hoping to unveil the package Wednesday and clear the way for a vote as soon as Saturday, House Speaker Nancy Pelosi (D-Calif.) alluded to the latest hurdle for the legislation in an afternoon news conference. She said Democrats were still waiting for congressional budget analysts to determine whether the package -- which contains an array of amendments to the health-care bill aimed at winning over wavering House Democrats -- would meet the party's deficit-reduction goals.

"It is very important to us that this legislation be fiscally sound -- that is, save $100 billion in the first 10 years and $1 trillion in the second 10 years. That is our goal," Pelosi said. "We want to come as close to that as possible. In fact, we insist that we will. . . . The numbers have to add up to drastic deficit reduction as we go forward."

Democrats hoped to receive the Congressional Budget Office report on the legislation's budgetary impact late Tuesday night. Because Democrats are using special budget rules, known as reconciliation, to protect the package from a Republican filibuster, the measure must reduce the deficit by at least $2 billion over the next five years and avoid increasing the deficit in any year thereafter. Under normal circumstances, that rule would require the bill simply to contain enough revenue-raising provisions to offset new spending. But, like so much else in the health-care debate, this time it is more complicated.

Instead of being measured against current law, the deficit-reduction potential of the "fixes" package will be measured against the Senate bill, which must be passed by the House before the Senate can approve the fixes. The Senate bill would trim $118 billion from the deficit over the next decade and hundreds of billions of dollars in the following 10 years. For the fixes package to comply with reconciliation rules, it must also promise significant long-term deficit reduction, aides said.

But virtually everything House Democrats want to achieve in their package costs money. For example, Obama and House leaders have promised to increase government subsidies to help lower-income people purchase insurance, to fully close the coverage gap known as the doughnut hole in the Medicare prescription drug program, and to extend to all states the deal cut with Nebraska Sen. Ben Nelson (D), under which the federal government would pay for a proposed expansion of Medicaid.

Meanwhile, House leaders want to dramatically scale back one of the most powerful deficit-reduction tools in the Senate bill: a 40 percent excise tax on high-cost insurance policies. Obama has proposed to delay implementation of the tax until 2018 and to limit the number of policies that would be subject to the tax.

Obama and House Democrats have proposed to pay for their changes by raising Medicare taxes on the wealthy. They were hoping to reduce deficits further by incorporating Obama's plan to overhaul the federal student loan program to cut out private lenders.

Those changes are unlikely to match the long-term savings proposed in the Senate bill, aides and lawmakers said, leaving House leaders scrambling to come up with additional sources of cash. Failure to comply with the reconciliation rules would imperil the package in the Senate and could cause big problems in the House, where the votes of many fiscally conservative Democrats hinge on the ability of health-care legislation to rein in soaring budget deficits.

Staff writer Paul Kane contributed to this report.

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