The link between the proposed tax cuts and possible cuts to Medicare is more complicated than Schumer described.
Schumer’s staff said the Senate Republicans’ budget proposal, unveiled Sept. 29, would increase the deficit by $1.5 trillion over the next decade. The Medicare and Medicaid cuts Schumer cited come from relatively hard-to-find numbers released by the Senate Budget Committee, which wrote the proposal.
Schumer’s office compared the most recent “baseline” spending amounts from the nonpartisan Congressional Budget Office and the amounts proposed in the Senate budget document.
For Medicare, Schumer’s office calculated spending would top $8.5 trillion over the next 10 years, if no changes are made from the status quo. The GOP budget, by contrast, projects Medicare spending over the same period to be $8.1 trillion, for a difference of almost $473 billion.
For the category that includes Medicaid, CBO produced a baseline spending level of $6.6 trillion over 10 years. In the GOP budget, the equivalent amount is $5.3 trillion, a difference of $1.3 trillion.
The Senate Budget Committee did not quibble with Schumer’s Medicare number. However, it said this is not a “cut” since Medicare spending will still rise over the next 10 years — by about 82 percent instead of 99 percent.
The committee said this slowdown is justified because the CBO says Medicare’s Hospital Insurance Trust Fund, which covers beneficiaries’ stays at hospitals and other facilities, will run out by 2025. Making smaller cuts all along would prolong the trust fund’s life and prevent bigger cuts later, the committee argues.
As for Medicaid, the committee said the budget resolution does not reallocate savings from Medicaid to achieve tax relief. Instead, it projects economic growth spurred by the separately proposed tax overhaul will average 2.6 percent annually. The committee argues that widespread benefits from the tax overhaul will leave more money in Americans’ pockets and reduce the need for Medicaid enrollment.
We should start by noting that the budget and tax proposals are works in progress and could change before being enacted.
The Senate Budget Committee has a point that Medicare spending will still be going up, just not as fast as it would under the status quo. It also has a point that more modest cuts sooner could stave off bigger cuts later.
But we don’t find it unreasonable for Schumer to call cumulative reductions to Medicare and Medicaid spending in the hundreds of billions of dollars “cuts.” The reductions are in the Senate budget document. And an independent analysis by the Urban Institute-Brookings Institution Tax Policy Center backs up the notion that the GOP’s cuts are tilted toward richer Americans.
That said, he’s glossed over some nuance.
The tax proposal is advancing on a different track than the Senate Republicans’ budget plan, and both are at an early stage. So Schumer’s direct linkage of specific tax cuts and Medicare-Medicaid cuts is exaggerated — and keyed to a hot-button issue for voters.
The tax proposal promises to partially offset cuts by repealing other tax breaks, with the rest simply adding to the deficit. And the Senate budget resolution allows the deficit to increase by $1.5 trillion. This means it would be at least as accurate to say that the tax cuts would be paid for by added deficits, as by cuts to Medicare and Medicaid.
Medicare and Medicaid cuts aren’t as inevitable as Schumer suggests. The way things look now, the tax cuts would be easier to pass than the spending cuts.
Passage of the budget would tee up a 51-vote Senate threshold for the tax proposal — easier than the regular 60-vote threshold for Senate business. While the spending cuts could also be passed within that 51-vote bill, indications from GOP leaders are that this 51-vote measure would be reserved for taxes, not spending, said Patrick Newton, a spokesman for the Committee for a Responsible Federal Budget, a group that is generally considered hawkish on deficits.
And if spending cuts to Medicare and Medicaid need to go through the regular 60-vote process, they would be highly unlikely to pass in the current Congress, Newton said.
The tax proposal includes significant tax cuts, and the Senate Republicans’ budget proposal reduces projected spending for Medicare and Medicaid by hundreds of billions of dollars over 10 years. However, Schumer has overstated a link between the proposals. In addition, his use of the word “gutting” implies that Medicare and Medicaid reductions are a drastic reshaping and are likelier to occur than they actually are.
We rate his statement Half True.
“The Republicans are proposing to pay for their giant tax cut to the rich by gutting Medicare and Medicaid.”
— Sen. Charles Schumer, D-N.Y., on Wednesday, Oct. 4, 2017 in a Senate floor speech