White House Details The Reach Of Automatic Spending Cuts

Topics: Health Costs, Hospitals, Medicare, Medicaid, Politics

Sep 15, 2012

In a report issued Friday, the Obama administration outlined the budget accounts which would be touched by sequestration’s automatic spending reductions. Although Medicare benefits are exempt, a 2 percent cut would be imposed on Medicare provider payments.

Kaiser Health News: Automatic Budget Cuts Will Reduce Medicare Payments To Providers By $11 Billion
Medicare providers would see reductions of about $11 billion beginning in January as part of series of automatic spending cuts set to begin next year unless Congress acts to halt them, according to estimates released Friday by the White House Office of Management and Budget. The numbers came in a report that details how federal agencies would implement roughly $110 billion in mandatory, across-the-board budget cuts agreed to by Congress and President Barack Obama last August as a way to end a bitterly partisan dispute over raising the debt ceiling. Lawmakers in both chambers, as well as Obama, want to avoid the automatic cuts that would trim federal spending by $2.1 trillion over the next 10 years, called sequestration (Carey, 9/14).

Kaiser Health News also has a copy of the full report.

USA Today: White House Warns Of Massive Defense, Domestic Cuts
The cuts are threatened under terms of last year’s deficit reduction law, which trimmed $1.1 trillion from federal spending over 10 years and mandated another $1.2 trillion — without saying how to do it. A bipartisan committee tasked with that challenge failed. Now Congress has four months remaining to avoid the automatic cuts. If it fails — and as of now, Obama and Republicans are at loggerheads, with the election less than eight weeks away — defense spending would be cut by 9.4%, non-defense spending by 8.2%, most entitlement programs by 7.6% and Medicare providers by 2% (Wolf, 9/14).

Politico: White House: Sequester ‘Deeply Destructive’ To Defense
The report confirms in painstaking detail which budget accounts are subject to cuts — down to the congressional visitors center — and which are exempt. And it is likely to add new urgency to efforts to stop the cuts from taking effect. “No amount of planning can mitigate the effect of these cuts. Sequestration is a blunt and indiscriminate instrument. It is not the responsible way for our nation to achieve deficit reduction,” the Office of Management and Budget wrote. “The report leaves no question that the sequestration would be deeply destructive to national security, domestic investments and core government functions” (Wright and Allen, 9/14).

The Washington Post: White House: Dire Cuts For Military, Domestic Programs As U.S. Steps Toward Fiscal Cliff
The report tracks the level of cuts for 1,200 separate budget line items, taking account of rules Congress agreed to last summer that shield certain priorities, including food stamps and Medicaid benefits. Salaries for military personnel are also exempt, as are Medicare benefits, though Medicare providers would take a 2 percent hit (Helderman, 9/14).

The Wall Street Journal: Federal Budget Cuts Detailed
The White House ticked through the federal budget line by line in the report, showing how a roughly 9% reduction in spending on military and other programs would affect government operations. There would also be a 2% cut in payments to Medicare providers, equal to $11 billion a year, the report says. … The White House and Democrats want any deal to include more tax revenue, while many Republicans want to block the cuts to military programs and make more reductions on social programs like food stamps (Paletta, 9/14).

The New York Times: White House Details Potential Effects If Automatic Budget Cuts Go Through
Lawmakers still hope that Congress and the White House can come up with a way to avoid the cuts, but nothing will happen before the November elections, whose outcome will have some effect on what any future agreement would look like. For now, the two parties remain at odds, with each seeking to blame the other for the automatic cuts about to come. Under the terms of those cuts, most military programs face a 9.4 percent reduction, while most domestic programs would be sliced by 8.2 percent. Medicare would be trimmed by 2 percent, while other social programs — excluding Social Security — would be sliced by as much as 10 percent (Weisman, 9/14).

The Los Angeles Times: White House Warns Of ‘Deeply Destructive’ Budget Cuts
Still, the report puts a finer point on what is coming if Congress doesn’t act. Medicare payments to providers would be cut by 2%, or $11 billion, next year. More than $540 million would be cut from food stamps. Financial aid for college would be cut by $140 million. The National Institutes of Health would take a $2.5-billion cut. The report says embassy security, construction and maintenance would be cut by $129 million. Social security, military personnel, Veteran’s Administration and Medicaid are exempt from cuts (Hennessey, 9/14).

The Hill: White House Details Automatic Budget Cuts, Calls Them ‘Blunt, Indiscriminate’
The assessments made in the sequestration analysis are strictly “preliminary” and based on fiscal year 2012 spending levels, the White House said. “The Administration continues to urge Congress to avoid … sequestration through the enactment of bipartisan balanced deficit reduction legislation,” the report states (Muñoz, 9/14).

The Washington Times: White House Details ‘Destructive’ Spending Cuts
With excruciating detail, the White House on Friday laid out exactly where it will have to cut $109 billion from federal spending in January, including $11.1 billion from Medicare and $54.7 billion from defense spending. … These are among the findings in a new 394-page report by the White House that was delivered Friday to Congress, detailing line by line what will happen next year if Washington fails to act to head off about $100 billion in military and domestic spending cuts scheduled to begin Jan. 2. Also facing slashes are the National Institutes of Health, which would see a $2.5 billion cut, and the Centers for Disease Control and Prevention, which would have to trim $464 million, according to the 394-page report (Dinan, 9/14).

Reuters: Automatic U.S. Spending Cuts Destructive: Administration
In submitting the details of the automatic spending cuts, the White House used the occasion to attack Republicans in Congress for offering only “unbalanced solutions” that it said were not “realistic, fair or responsible ways” to avoid the $109 billion meat-axe approach. This was in response to months of Republican claims that they had approved an alternative in the House of Representatives that the Democratic Senate has ignored (Felsenthal and Shalal-Esa, 9/14).

Marketwatch: Budget Sequester Would Be Devastating: White House
Automatic spending cuts set to begin in January would have a “devastating” effect on both defense and domestic programs, the White House’s Office of Management and Budget said in a report on Friday (Schroeder, 9/14).

Bloomberg: Obama Warns Congress of ‘Devastating’ Cuts in Report
An Obama administration report cataloguing the impact of $1.2 trillion in looming spending cuts illustrates the stakes as lawmakers debate what to do about the U.S. deficit less than two months before the election. The White House budget office said the cuts, known as sequestration and set to start in January, would undermine economic investment and cause “severe harm”to initiatives including food-safety inspections, air-traffic control and support for schools (Faler and Runningen, 9/15).

National Journal: White House Unveils Sequestration Plan
Two programs established in the 2010 Affordable Care Act would be protected from cuts — funding for an insurance pool for “high-risk” patients who were denied coverage due to a preexisting condition and a that aims to get consumer insurance exchanges off the ground (O’Donnell, Sorcher and McCarthy, 9/14).

UPI: OMB: Cuts Would Be ‘Deeply Destructive’
The across-the-board cuts are mandated by the Sequestration Transparency Act, part of a deal worked out to end last year’s U.S. debt-ceiling crisis. A congressional Joint Select Committee on Deficit Reduction, known as the supercommittee, was required to identify about $1.2 trillion in cuts to reduce the federal deficit. If it failed, then Congress could increase the debt ceiling but $1.2 trillion — but that would trigger the sequestrations at the center of Friday’s report by the White House Office of Management and Budget (9/14).

National Journal: Sequester Benefits Neither Party, Congressional Insiders Say
Congress is not expected to make any serious maneuvers to offset looming cuts to the defense sector before the fall elections, making the issue a political football heading into November. So which party has the political advantage? Neither, according to the muddled results from National Journal’s latest Congressional Insiders poll (Goldmacher and Bell, 9/14).

This is part of Kaiser Health News’ Daily Report – a summary of health policy coverage from more than 300 news organizations. The full summary of the day’s news can be found here and you can sign up for e-mail subscriptions to the Daily Report here. In addition, our staff of reporters and correspondents file original stories each day, which you can find on our home page.

English: Medicare and Medicaid as % GDP Explan...

English: Medicare and Medicaid as % GDP Explanation: Eventually, Medicare and Medicaid spending absorbs all federal tax revenue, which has averaged around 19% of GDP for the past 30 years. Category:Health economics (Photo credit: Wikipedia)


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