Clinton Won’t Talk Medicare Cuts Without GOP Budget

The White House kicked the Medicare issue back to the Republican leaders of Congress on Monday, saying that President Clinton will refuse to discuss any cuts in the giant program until the GOP passes a budget plan.

Answering a challenge last week from House Speaker Newt Gingrich (R-Ga.) to save the Medicare trust fund from bankruptcy, White House Chief of Staff Leon E. Panetta told Congress that it should make the first move.

In effect, both Clinton and Gingrich have agreed that Medicare is heading toward a crisis--but each wants the other to accept the political burden of fixing the problem.

“We have presented our budget. We have presented our proposal for a solution,” Panetta told reporters at the White House. “What we have not seen is their budget.”

He accused Gingrich and other Republicans in Congress of planning to cut Medicare spending merely to pay for proposed tax cuts.

“They basically promised that they could balance the budget by the year 2002, that they could provide tax cuts . . . totaling about $359 billion,” he said.

“They basically know that they can’t deliver on those first two promises without significant cuts in Medicare.

“We know what we’re not for,” he added.

“We’re not for . . . $300 billion in Medicare cuts to pay for almost $359 billion in tax cuts for the wealthy. We’re not for balancing the budget on the backs of the elderly.”

Last week, Gingrich said that Republicans will propose a major overhaul of Medicare and challenged Clinton to recommend a plan to fix the medical insurance system by May 15.

The House Speaker and Senate Majority Leader Bob Dole (R-Kan.) are expected to announce more details of their approach today.

House and Senate GOP leaders met Monday with Republican National Committee Chairman Haley Barbour to discuss the politically sensitive insurance plan, which covers 32 million Americans over the age of 65.

“Congress really confronts what I would call a political gut check,” said Sen. Judd Gregg (R-N.H.). “Are we going to try to save the Medicare system and balance the budget, despite the political demagoguery that will surely result?”

In an effort to build public support for change, Republicans have begun a concerted campaign to draw public attention to the threat of insolvency in the Medicare trust fund.

“Failure to take action is tantamount to letting Medicare go broke,” said Ari Fleischer, a spokesman for the House Ways and Means Committee, which plans hearings on the issue this week.

House Republicans seeking to balance the budget had proposed cutting Medicare by as much as $300 billion over seven years.

But Gingrich, recognizing the potential unpopularity of that approach, said last week that he would use any Medicare cuts to strengthen the health insurance plan.

In fact, any cuts in Medicare spending would still reduce the deficit, by reducing federal outlays.

But Gingrich and his allies appear to have seized on the argument that cuts are necessary to save Medicare from bankruptcy as a more palatable rationale.

By the same token, Panetta’s charge that the GOP would use Medicare cuts to “pay for” tax reduction is more rhetorical than real, since the money all comes from the same budget--and since Medicare spending would still need to be brought under control if there were no tax cut.

The Medicare trust fund, which helps pay for hospital bills, will begin spending more money than it collects in taxes next year and will go bankrupt in 2002, according to the trustees’ report issued last month.

Medicare spending is growing at the rate of 10% a year, and it would take about $300 billion to restore the fund to long-range solvency.

At current rates of spending, Medicare outlays would total about $1.4 trillion over the next seven years. Trimming the growth rate to 7% would hold spending to an estimated $1.1 trillion, a saving of $300 billion, enough to restore solvency.

The $300 billion to restore solvency could come from any combination of increased revenues or reduced spending.