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Setting the Record Straight on the House Republican Budget


Location: Unknown

Rather than contribute to a productive discussion about how to reduce the deficit, pay down our national debt, and preserve our nation's safety net programs such as Medicare, some outside groups have instead decided to spread falsehoods about the House Republican budget proposal. It is unfortunate that, rather than try to be a part of the solution, these groups are hoping to scare the residents of the Hudson Valley.

It is important that our constituents know the truth about the House Republican budget, the Path to Prosperity, and to clear up the misinformation that you may have heard.

Fiction: The House Republican budget ends Medicare.

Fact: Nothing could be further from the truth. The House Republican budget actually preserves Medicare for future generations. Unfortunately, this blatant falsehood is still being perpetuated, even despite the non-partisan assigning it a "Pants on Fire" rating. Under the Republican budget, the current Medicare system is preserved for those who are 55 and older.

This is worth repeating. Under the Republican budget, for those aged 55 and older, the current Medicare system stays in place.

The same cannot be said for President Obama's budget. What many people may not realize is that, last Congress, with the passage of the Affordable Care Act (ACA), signed into law by President Obama, Congressional Democrats voted to end Medicare as we know it. The ACA cut Medicare by $575 Billion, and it included, for the first time ever, an arbitrary cap on how much the government can spend on the program. To enforce this cap, the ACA created an unelected 15-Member board called the Independent Payment Advisory Board (IPAB) who will have the ability to enact cuts to Medicare without Congressional--or Presidential--approval. The Obama Administration's own chief actuary of the Medicare program said in a report that this could "[jeopardize] access to care for beneficiaries." To reiterate, the chief actuary is referring to current Medicare beneficiaries.

As part of our budget, House Republicans have proposed to repeal this de facto rationing board.

Fiction: House Republicans want to turn Medicare into a voucher system.

Fact: Some are claiming that the Republican budget would give seniors a check, or voucher, and then use that to purchase an insurance plan on the open market. This claim is also untrue. Republicans have instead proposed to transition the Medicare program, over a 10-year period, to a premium support system for those aged 54 and younger.

The Federal Government already runs premium support health insurance systems for current Federal employees, as well as for seniors currently enrolled in Medicare Part D (the current prescription drug plan). Under this system, seniors will be able to choose, each year, from a variety of health insurance plans that best suit their needs. If they don't like the plan they are in, seniors will have the opportunity to change it. This type of arrangement has worked very well for the Medicare prescription drug program, which has a satisfaction rate of almost 90%, has provided robust prescription drug coverage for our seniors, and has cost the Federal Government approximately 40% less than originally projected.

Additionally, as part of this plan, seniors who are poorer, sicker, or older will receive substantially more support than they currently receive. And those with pre-existing conditions will receive guaranteed insurance coverage.

As the Washington Post wrote in an editorial, a premium support "concept is hardly beyond the pale -- as past support for it, in some form, from Democrats such as budget expert Alice Rivlin and former Senator John Breaux suggests."

The reason that the Republican budget does phase in these changes is that, if no changes are made to the program, Medicare as we know it will not exist in the coming decades. According to the Medicare Trustees 2010 report, "Without corrective legislation, therefore, the assets of the [Medicare Hospital Insurance] trust fund would be exhausted within the next 7 to 19 years." The Medicare Trustees acknowledge that this insolvency will result in diminished benefits for seniors. To preserve Medicare for future generations, this budget proposes providing a Medicare payment and a list of Medicare-approved coverage options from which recipients can choose a plan that best suits their needs.

Fiction: The House Republican budget cuts taxes for the rich/cuts taxes for corporations that did not pay any taxes/preserves tax breaks for oil and gas companies.

Fact: The House Republican budget proposes to reform the tax code in a way that is flatter, fairer, simpler, and more competitive. It does not, however, reduce tax revenues below what they currently are--it is a revenue-neutral reform.

The tax reform plan proposed by the budget is very similar to that proposed by President Obama's own Commission on Fiscal Responsibility and Reform, led by former chief of staff to Bill Clinton, Erskine Bowles, and Senator Alan Simpson. This type of reform seeks to get the government out of the politically-driven business of picking tax winners and losers, and promote economic growth.

Nowhere in the budget are tax subsidies for oil and gas companies mentioned. In fact, under a simpler, fairer system, these are exactly the type of subsidies that would be eliminated to ensure that all U.S. businesses face a more equitable tax code.

Fiction: The Republican budget does not reduce the deficit.

Fact: Again, this is false.

When Congress considers a budget resolution, the Congressional Budget Office (CBO) which is Congress's official "scorekeeper" for keeping track of spending, taxes, deficits, and debt, produces a "budget baseline." This baseline projection is an estimate of how many dollars Federal Government is expected to spend, collect in taxes, and borrow by issuing new debt under current law. When the House Republican budget is compared to the "CBO baseline," it reduces the deficit by $1.6 Trillion over 10 years.

A more accurate comparison, however, is how the House Republican budget compares to the budget proposed by President Obama earlier this year. When the two budgets are compared side-by-side, the House Republican budget would reduce the 10-year deficit by $4.38 Trillion.

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