June 2, 1997

This Year's Budget Agreement Debunks Clinton's 1996 Charges

Just as daylight transforms the night's sounds and shadows from sinister to serene, so too does the recent budget agreement with the President unmask the White House's 1996 "Medi-scare" campaign. While President Clinton charged Congress with "extreme cuts" in Medicare contained in the Balanced Budget Act (BBA), the congressional proposal Clinton so forcefully attacked actually contained slightly more Medicare spending than does the budget agreement Clinton recently reached with Congress. This glaring inconsistency over essentially identical levels of Medicare spending demonstrates both the hypocrisy and the falsity of the Administration's 1996 "Medi-Scare" ploy.

Clinton's Rhetoric of 1996 Unmasked by Today's Reality

• Then the President demagogued and excoriated $1,252.2 billion in Medicare spending:

"You remember that budget I vetoed last year because it had excessive cuts in Medicare..." [Campaign rally, Green Bay, Wisconsin, 9/2/96]

• Now he extols spending $1,248.1 billion -- $4.1 billion less:

"America needs a balanced budget that is in balance with our values, that protects Medicare...That is exactly what this budget does...It keeps our fundamental commitments to our parents, preserving and protecting Medicare..." [White House, 5/16/97]

• Over the FY 1998-2002 period, the excoriated BBA contained $1,252.2 billion in Medicare spending; over the same time period, this year's budget agreement between Clinton and Congress will spend $1,248.1 billion.
• The 1995 BBA spent more on Medicare -- $4.1 billion more -- than the 1997 joint budget agreement over the same period.

This Comparison is More Than Fair

• This comparison is more than fair. In fact, it should be prejudiced against the BBA because it takes the last five years of what was a seven-year proposal and compares it to the current five-year agreement.
• This is not a trivial point: Because entitlement reform takes time to occur, larger savings take place over time in a "wedge effect" as shown in the 10-year effect of the current budget agreement below.

Medicare Savings in 1997 Joint Agreement

(in billions of dollars)

1998	1999	2000	2001	2002	2003	2004	2005	2006	2007
6.5	16.8	22.7	29.0	40.0	50.0	60.0	65.0	70.0	74.0

The FY 1998-2002 period is deeper into the "savings wedge" (i.e., beginning in the third year) for the 1995 BBA, and so the BBA should have a relatively larger savings share than the bipartisan agreement because over the passing years, policy changes take effect and compounding occurs. Yet, despite this, the BBA would have spent $4.1 billion more than the bipartisan agreement will.

• If the seven-year savings figures are compared, BBA (as measured on the 12/95 CBO baseline) and the bipartisan agreement (as currently estimated by CBO) both save $225 billion from what otherwise would have been spent.

Shedding Light on the Dark Rhetoric of 1996

How could the same numbers tell such different tales? The answer is they don't and never did. Clearly, the White House demagogued the Medicare issue for political purposes. Yes, estimated Medicare spending has fallen -- thus improving the federal budget picture. However, the bottom line remains that the level of spending provided by the BBA is the same provided by the current budget agreement and that both are adequate for Medicare's beneficiaries.

Spending under the 1995 BBA and the 1997 budget agreement are both sufficient to meet the test that Clinton laid down for adequate Medicare funding -- twice the rate of inflation -- when he was pushing his government takeover of the nation's health care system.

"Today... Medicare [is] going up at three times the rate of inflation. We propose to let it go up to two times the rate of inflation. That is not a Medicare ...cut... So only in Washington do people believe that no one can get on twice the rate of inflation. So when you hear all this business about cuts, let me caution you that is not what is going on."

[ President Clinton, AARP Presidential Forum, 10/5/93]

• Under the 1997 agreement, spending per beneficiary will increase from $5,480 in 1997 to $6,911 in 2002.
• Under the 1997 agreement, spending will increase 34 percent from 1998 to 2002 from $209 billion to $280 billion.
• Under the 1997 agreement, spending will grow 6 percent on an annual average basis -- twice the rate of projected inflation -- the same amount Clinton declared to be his goal:

"I think we can live with twice the rate of inflation. Yes, I do... I don't know anybody who has really looked at this thing closely who doesn't think we can get it. Now, there may be people who try to stop us from getting it, but if we can't get a government health care program down to the point were it can run on twice the rate of inflation, we're in deep trouble. I believe we can...."

[President Clinton, AARP Presidential Forum, 10/5/93]

In short, there were no more Medicare "cuts" in 1995 under the BBA than there are today under the 1997 agreement.

• Medicare spending under the current budget agreement will increase from 1998 to 2002 and increases in each and every year -- just as it did in the 1995 BBA.
• Medicare spending under the current budget agreement will grow at twice the rate of inflation -- just as it did in the 1995 BBA.
• The only change to Medicare spending from the 1995 BBA to the current budget agreement has been the Administration's rhetoric.

See table on page 4 providing data for chart on page one. [All data from the Congressional Budget Office (CBO), the Senate Budget Committee, and the House Budget Committee.]

Medicare Spending Proposals, Then and Now

	1995	1997	Comparison:
	Balanced Budget Act	Budget Agreement Spending	1995 to 1997
1998	218.2	220.8	-2.6
1999	230.2	233.1	-2.9
2000	248.3	253.3	-5.0
2001	266.7	261.0	5.7
2002	288.8	279.9	8.9
1998-2002	1252.2	1248.1	4.1