Bush Defends Tax Cut, Refutes Democrats’ Claim That Plan Has ‘Imperiled’ Medicare

President Bush on Aug. 21 "defended" his 10-year, $1.35 trillion tax cut amid criticism from Democrats that the plan has "imperiled" the Medicare Part A and Social Security trust funds, the AP/Richmond Times Dispatch reports (AP/Richmond Times-Dispatch, 8/22). The White House Office of Management and Budget today will release the Mid-Session Review, which contains revised budget estimates showing a $158 billion surplus for FY 2001, down from the $281 billion estimated earlier this year (Goldstein, Washington Post, 8/22). Excluding Social Security, the projections will likely show that "all but about $1 billion of ... the general revenue surplus -- is gone," the AP/Times-Dispatch reports (AP/Richmond Times-Dispatch, 8/22). The Congressional Budget Office next week will release an FY 2001 budget estimate that is expected to "take a more pessimistic view" of FY 2002 than the OMB's figures (Godfrey, Washington Times, 8/22).

GOP Defense
Bush yesterday "swore" that "every dime that comes into Medicare will be spent on Medicare," adding, "We're going to make sure additional spending doesn't cut into essential programs like Social Security and Medicare" (AP/Richmond Times-Dispatch, 8/22). White House spokesperson Karen Hughes "insist[ed]" that the "Medicare trust fund is fully funded" (Sammon, Washington Times, 8/22). However, Bush will use funds in Medicare Part A, which funds hospital, home health, skilled nursing facility and hospice care, to cover a deficit in Medicare Part B, which funds doctors' bills and other outpatient expenses. Although Democrats "insist" that the government should not use Part A funds to cover other costs, the Bush administration "argues" that "it is appropriate" to use the Part A funds to "offset" costs in Part B and to establish a future Medicare prescription drug benefit (Brownstein, Los Angeles Times, 8/22).

'Symbolic' Debate?
The Wall Street Journal calls the debate over the Medicare Part A and Social Security trust funds "largely symbolic," pointing out that spending a "few billion dollars" of the trust funds has "little or no immediate impact on either program's financial health" (McKinnon, Wall Street Journal, 8/22). Sen. Charles Grassley (R-Iowa) said that the Medicare Part A and Social Security trust funds "will be treated the same regardless of whether there is a general government surplus or deficit" (Washington Times, 8/22). However, the Journal reports that the issue could "carry political weight" with voters. In addition, many lawmakers are "uncomfortable" spending surplus Medicare funds, and "if they decide to hold [the funds] in reserve that would further limit funds for new programs" and place a prescription drug benefit under Medicare "in doubt" (Wall Street Journal, 8/22). The Mid-Session Review and the OMB press release are available online.