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Gop Struggles To Reconcile Cuts In Taxes, Medicare Key Senators On Finance Committee Balk At Republican Plan

Wed., Sept. 27, 1995

As the pivotal Senate Finance Committee began drafting a Republican bill to scale back federal medical aid to the poor and the elderly, dissension appeared amid the GOP ranks over the party’s ambitious gambit.

To a rising chorus of Democrat protest, GOP lawmakers on the Senate Finance Committee began work Tuesday on a single mammoth bill to combine rollbacks in Medicaid and Medicare with a cutback in tax breaks for the working poor and an already-approved decision to slice federal welfare spending.

Three Republicans on the committee, on which their party holds just an 11-9 edge, publicly questioned the wisdom of cutting $245 billion in taxes while making deep cuts in health programs in a bid to balance the budget over seven years.

Another Republican, Sen. John Chafee of Rhode Island, signaled opposition to the plan to end the federal guarantee of Medicaid for pregnant women and children.

Sen. Alfonse D’Amato of New York - who along with Orrin Hatch of Utah and Alan Simpson of Wyoming showed signs of breaking with party leadership - said the Democrats’ argument that the Republicans were cutting Medicare to pay for tax cuts “resonates, and senior citizens are concerned. … It’s difficult to make the case that we are doing this to strengthen Medicare.”

While he remains a supporter of the tax package, D’Amato said he would have preferred overhauling Medicare and Medicaid without mixing in “this business of tax cuts.”

“I don’t think we’re going to get $245 billion in tax cuts,” said Hatch. “I don’t know anyone who believes that.”

With Republicans advancing on a much broader legislative front than thought possible even a few weeks ago, congressional Democrats announced a series of new protests Tuesday, and a moderate Washington think tank issued a study showing low-income families would bear the brunt of the Republican program.

But neither Democratic lawmakers nor President Clinton appeared ready to advance a detailed alternative to the GOP tax-and-spending proposal, leaving Republicans with the political advantage for now.

“The Republicans are in a dangerous game, especially with Medicare. But they still have the momentum. They’re still seen as the party of change,” said Karlyn K. Bowman, a senior analyst and expert on polls with the generally conservative American Enterprise Institute.

GOP leaders have steadfastly portrayed their drive to reduce Medicare spending by $270 billion, or 14 percent, over seven years as an effort to save the program from bankruptcy. But together with a proposed Medicaid reduction of $182 billion, the cutback is critical to the Republicans’ making good on their twin promises of balancing the budget and providing tax cuts.

The Republican budget drive hit two bumps Tuesday. Hospital lobbyists threatened to oppose the Senate version of the measure after last-minute changes boosted the amount hospitals stand to lose by billions of dollars. And House leaders were forced to put off the law-writing process, originally scheduled to begin later this morning, for at least a day while awaiting detailed savings estimates.

But neither setback appeared serious, and GOP leaders were close to extending the time they have to work out details of their program. The leaders were closing in on an agreement with the Clinton administration on how to keep the government operating for six weeks beyond the sure-to-be-missed Oct. 1 deadline for a completed budget.

Despite possible acrimony with the House, Senate Republican doubts about a tax cut also are unlikely to derail the GOP effort.

The Senate version of the Medicare cutback proposal received a boost Tuesday when the Congressional Budget Office, Congress’s chief numbers’ cruncher, tentatively concluded the measure would actually hit the Republicans’ $270 billion savings target. Democrats and others had questioned whether the plan could achieve the savings GOP leaders claimed.

But it was clear Tuesday that Republicans had had to scramble to make the numbers add up. Among other things, they announced they would trim certain Medicare reimbursements to hospitals by 2.5 percentage points a year rather than the 2 percentage points, as they had said Friday. Hospital officials said the half percentage point change would cost them $10 billion.

A study released Tuesday concluded that roughly $4 out of every $10 in savings that Republicans are seeking would come from reductions in cash assistance and services to poor and low-income families.

“The major burden for balancing the budget is being placed on those who can least afford it,” said Isabel Sawhill, a former Clinton administration official and now a fellow at the Urban Institute, a moderate think tank.

GOP officials countered that federal deficit spending imposes a greater burden on the poor in the form of slow economic growth. “It’s fair,” Senate Majority Whip Trent Lott of Mississippi said of the GOP budget plan.

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