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The GOP plan, expected to be voted on Friday, promises more than $6 billion in spending cuts from the budget that President Barack Obama offered in February, relying on stiff cuts to domestic agency accounts, food stamps and the Medicaid health care program for the poor and disabled. But while leaving Social Security alone, the measure calls for transforming Medicare from a program in which the government directly pays medical bills into a voucher-like system that subsidizes purchases of private insurance plans. People 55 and over would remain in the current system, but younger workers would receive subsidies that would steadily lose value over time.
Virtually every budget expert in Washington agrees that projected Medicare cost increases are unsustainable, but the GOP initiative attacked by Democrats as ending Medicare's guarantee as we know it has launched a major-league Washington imbroglio. The primary author of the GOP plan is unfazed by the Democratic attacks. "The biggest threat to Medicare is the status quo and the people defending it," House Budget Committee Chairman Paul Ryan, R-Wis., told The Associated Press on Thursday.
Democrats countered with official estimates showing the GOP plan would provide vouchers whose value would steadily erode. "They end the Medicare guarantee," said top Budget Committee Democrat Chris Van Hollen of Maryland. "They force seniors to leave the Medicare program and go into the private insurance market where costs continue to rise day in and day out." The House began debate on the measure Thursday with a vote on it and several competing alternatives most importantly a Democratic substitute raising taxes on the wealthy and a plan by GOP conservatives to cut far more harshly scheduled for Friday.
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While the CBO confirms that the deal saves close to the $38 billion originally claimed as being cut from the budget $37.7 billion precisely its analysis shows that those savings do not come from what many Americans would consider actual budget cuts. In explaining how the funds are handled by the government, House Speaker John Boehner (R-Ohio) presented an analogy in a commentary published in Politico on Thursday. Think of it this way, said Boehner. You have $100 in your wallet that you were going to use to buy new clothes. You havent spent it yet, because you havent found shirts you like or decided you didnt need them. Then someone comes along and takes away your $100. Now you cant spend it not on clothes or anything else you were considering, Boehner wrote. The moneys gone your budgets been cut.
The $37.7 billion budget compromise that the CBO analyzed relates to Congress budgetary authority, which is the amount of money Congress says may be spent by a particular federal agency for a particular program. Technically, this is how Congress spends money, by authorizing the various parts of the executive branch to draw a certain amount of money or budgetary authority from the Treasury Department. The various executive branch agencies then withdraw the money according to the terms of the programs Congress has chosen to authorize. In other words, Congress authorizes the executive branch to write checks with federal funds. Such budgetary authority is therefore actually spending authority.
By cancelling this spending authority, Congress claims to be saving money because it assumes that executive branch agencies would otherwise spend the money, as they did in previous years. However, this may not always be the case, as CBOs analysis reveals. The CBO says that while Congress did, in fact, cut $37.7 billion in budgetary authority from fiscal year 2010 levels (for the remainder of FY2011), that canceled spending authority results in $20-25 billion less not $37.7 billion in actual federal spending, what the CBO calls outlays.
CBO estimates that enactment of H.R. 1473 would produce federal outlays over the 2011-2021 period that are between $20 billion and $25 billion lower than the amount of outlays that would be expected from having 2011 appropriations set at the same level as 2010 appropriations, the CBO wrote. The difference comes from the fact that Congress cut the spending authority for many mandatory programs that the CBO thinks would never have actually been used. In other words, Congress took money off the table that the CBO thinks would have merely stayed there any way. Many of the reductions in budget authority for mandatory programs would have little or no effect on outlays in 2011 or future years, said the CBO.
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Are you all aware that there are enough votes in the House of Representatives to pass the budget with $33 billion in cuts but that Boehner doesn't want democratic votes? He wants a uninanimous GOP vote. Now how ridiculous is that?