GOP Talk of Slowing Entitlement Spending Surprises Analysts

Christine Hall | July 7, 2008 | 8:29pm EDT
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(CLARIFICATION: Clarifies to show that entitlement spending would increase more slowly.)

( - Weeks after the Republican-led House passed legislation to create a new Medicare prescription bill, a key member of the Senate GOP leadership is sending a conflicting signal - that entitlement program spending might have to be slowed in order to deal with the mounting budget deficit.

Oklahoma Republican Sen. Don Nickles, who will chair the Budget Committee when the 108th Congress convenes in January, recently told the Associated Press that "everything should be on the table in looking at how you handle" projected budget deficits. He went on to mention slowing the growth of spending for entitlement programs and, to stimulate the economy, passing more tax cuts.

"One thing that was surprising about [Nickles' comments] is right before the election, Republicans in the House voted for a huge increase in entitlement spending, which was the addition of a prescription drug benefit to Medicare," said John Goodman, president of the National Center for Policy Analysis (NCPA).

The legislation did not pass in the Senate. Still, besides Nickles, "Republicans so far have signaled not only an unwillingness to cut entitlement spending, they've signaled that they intend to add to entitlement spending," Goodman said.

Congress does not set annual spending levels for Social Security, Medicare, Medicaid and welfare. Rather, the level of spending increases automatically depending on how many Americans qualify for benefits.

A new Congressional Budget Office (CBO) report commissioned by Sen. George Voinovich (R-Ohio) stated that if President Bush's tax cut was extended and federal spending continued over the next decade at today's level of gross domestic product, the budget would run a unified deficit of $1.5 trillion and an on-budget deficit of $4 trillion.

Social Security and Medicare programs are currently piling up surpluses, and Social Security is considered off budget. When they are counted along with everything else in a unified budget, the overall deficit is much lower. However, the Social Security and Medicare surpluses will be required to meet the future retirement needs of millions of Baby Boomers.

Gayle Osterberg, a spokeswoman for Nickles, said, "his point was just that Congress needs to take responsibility for the entire budget picture, not just a tiny piece.

"Republicans and Democrats need to be working together and looking at these programs [like] Social Security and Medicare to make sure we are eliminating waste in the system ... and making certain that the programs are healthy for tomorrow," said Osterberg.

"It's important to note that the federal budget spends $2 trillion every year and discretionary spending is about 1/3 of that," said Osterberg.

Wendell Primus, director of income security for the liberal Center on Budget and Policy Priorities, praised Nickles for offering up suggestions for cost savings but said tax increases are a better option for bridging the gap in federal programs.

"If he really wants to have tax cuts, he's going to have tax cuts; he's got to find the savings in the entitlement programs to do that," said Primus. "I would dearly like to see Republicans lay out a spending cut agenda that their tax cutting agenda could afford. Then the American public could decide if those tax cuts are needed.

"We've got to slow down the growth in health spending," Primus continued. "But at the same time we've got to make sure that more Americans have access to health insurance; and ... I think Social Security benefits ... may have to be trimmed a bit.

But "our revenue take, as a percentage of GDP, is pretty low," said Primus. "All this tax cut fever has got to come to an end. There's only one place to get revenues."

Goodman hopes Nickles will suggest Medicaid and welfare cuts.

"I hope what it means is that he wants to consider block granting Medicaid to the states," said Goodman. "That's the program where costs are out of control."

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