Breaking Down President Bush's $3T Budget
Monday, February 05, 2007SUSIE GHARIB: President Bush unveiled his budget today, a $2.9 trillion plan for next year, including billions of dollars for the wars in Iraq and Afghanistan. The president allocated more than a fifth of the total budget to the Pentagon, giving the agency more than $620 billion. About $140 billion of that will go to fighting in Iraq and Afghanistan. The White House also projects a decline in the deficit over the next three years, predicting a $61 billion surplus by the year 2012. The administration hopes to bring the budget in line by cutting spending on discretionary programs and entitlement programs like Medicare and Medicaid. Washington bureau chief Darren Gersh reports.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The president likes to call himself "the decider" and in his new budget, he has decided to make the biggest cut in healthcare. The president's budget director Rob Portman says the goal is to set entitlement spending on a more sustainable path.
ROBERT PORTMAN, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET: Balance is not coming at the expense of our nation's commitment to seniors and low- income Americans, quite the opposite. We must begin the reform of these programs now in order to protect those commitments.
GERSH: Over the next five years, the president's budget proposes $66 billion from Medicare and $25 billion from Medicaid. Almost $40 billion of that comes from freezing or reducing reimbursement rates for hospitals, skilled nursing facilities and other providers. Another $4.5 billion would be trimmed from payments to oxygen suppliers, clinical labs and wheelchair providers. Hospitals say they already lose more than 5 percent on an average Medicare patient and cannot afford to take another hit. Chip Kahn represents for-profit hospitals on Capitol Hill.
CHIP KAHN, PRESIDENT, FEDERATION OF AMERICAN HOSPITALS: I think the president's budget is really misguided and at the end of the day, it's going to harm the very people that depend on hospitals in this country, the seniors.
GERSH: The president's budget was literally delivered into the hands of congressional Democrats this morning and they made it clear they have a very different diagnosis for health care spending.
UNIDENTIFIED MALE: We'll give the president a fair hearing on his budget.
GERSH: Topping the list of priorities for Democrats, a $40 billion expansion of the state children's health insurance program. California Congressman Pete Stark believes it's possible to raise that $40 billion by reducing payments to managed care companies that cover Medicare beneficiaries. He is the new chairman of the powerful Ways and Means health subcommittee. Stark says he'll also look for cuts in many of the same places the president does, but he disagrees with how the administration's budget spends that money.
REP. PETE STARK (D) CALIFORNIA: So I wouldn't have any trouble with going through and making Medicare more efficient, if we would use the savings to expand benefits or help children or help expand Medicaid.
GERSH: Even if hospitals and other health care providers end up getting less than they expected from Medicare, it will still be one of the fastest growing programs in the Federal budget, rising around 7 percent a year. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.
GHARIB: The president's budget also backs new legislation to require brokerage houses to report the cost basis of stock sales to the IRS. The Treasury says that could ensure more accurate payment of capital gains taxes and could raise a billion dollars over the next five years. The idea is to eliminate the so-called tax gap, the difference between what Americans owe the government and what they actually pay.
