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Biden’s Virus Relief Plan Threatens to Trigger Medicare Cuts

Posted on Friday, February 26, 2021
by Outside Contributor

President Joe Biden’s $1.9 trillion coronavirus relief package would trigger cuts to Medicare and other programs early next year unless Republicans agree to a waiver — a hurdle that could give the GOP leverage over Democrats’ slim majorities.

The Congressional Budget Office said in a letter Thursday to House Minority Leader Kevin McCarthy that Medicare would face a $36 billion cut, and as much as $90 billion in other programs would be slashed.

The spending cliff is entirely of the Democrats’ making. Under the 2010 Pay-As-You-Go law passed by Democrats and signed by then-President Barack Obama, spending increases and tax cuts that add to the deficit — like Biden’s plan — trigger automatic cuts the following calendar year. It takes 60 votes in the Senate to declare the new outlays an emergency and avoid the cuts, which means Democrats would need 10 Republicans.

Democrats are already plotting ways to turn off the Paygo trigger, according to a Senate Democratic aide who said the most likely scenario would be to attach a waiver to a future must-pass spending bill. That would effectively dare Republicans to shut down the government or go along.

Fiscal Responsibility

Under the Paygo law, Medicare cuts are capped at 4% of that program’s outlays, and most other entitlements like Social Security and Medicaid are exempt. Spending on other programs — including some popular farm subsidies long supported by Republicans — would be at risk of being completely eliminated.

According to the CBO, there actually aren’t enough mandatory programs subject to the Paygo sequester to fully offset the deficit impact of Biden’s $1.9 trillion virus-relief bill. That means it would be impossible to fully implement the cuts required by the Paygo law, the CBO said.

Progressives are pushing to repeal the Paygo restriction altogether, which was championed by moderate Blue Dog Democrats in 2010 to demonstrate their fiscal responsibility. But since then, it has been waived repeatedly by large bipartisan majorities for trillions in spending increases and tax cuts — including for the 2017 GOP tax overhaul.

In that case, the Senate voted 91-8 then to prevent the tax cuts from triggering the Paygo law, with Senator Susan Collins, a Maine Republican, leading efforts to pass the waiver.

Zach Moller, a former Senate Budget Committee aide and now the deputy director of the economic program at Third Way, a centrist think tank, said that while the potential Paygo spending cliff is a real concern and Republicans could try to use it to their advantage, it shouldn’t be a priority for Democrats right now.

“They’ve got to save the economy first before they worry too much about statutory Paygo,” he said.


Moller said Republicans could face political blowback if a Paygo waiver is attached to a must-pass spending bill and Republicans threaten to shut down the government to enforce cuts to Medicare and crop supports. But he said he’s not sure what Republicans would ultimately do.

“Nothing explodes until it explodes,” he said of the Paygo law’s sequester, which has never been deployed. Pointing to other statutory spending constraints now routinely used as leverage, he said, “we never thought the debt limit was going to be a hostage-taking issue.”

There is at least one workaround that wouldn’t require Republican support. Democrats could include instructions in next year’s budget to postpone the cuts for another year. That could go through the budget reconciliation process that only needs 50 votes in the Senate.

However, that temporary solution would have to be passed year after year and would be at risk if Democrats lose their congressional majorities.

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3 years ago

The Democrats are pushing this Covid spending bill, which has actually very little to do with Covid relief itself, through via budget reconciliation. So all they need in the Senate is 51 votes. Harris is the 51st vote to break any tie in the Democrats favor. Besides, when was the last time the Republicans in the Senate took a really hard stand on anything in a unified fashion?

So while technically there are some valid points in this article, the reality is at the end of the day the Democrats are going to get their massive, pork-laden spending bill through Congress and we will continue to de-value the dollar at an accelerated pace while racking up trillions in new debt we can’t afford to pay back. The days of the U.S. dollar as the world’s reserve currency are numbered.

3 years ago

Jobama is a dumb@$$ who has screwed the American taxpayer for years. The people dumber than Jobama are the ones who continue to vote for him——————————-unless those elections are rigged too !!!!!!

3 years ago

No wonder this country is a mess. The dems thing it’s funny to over spend. They have NO common sense and spend with no budget. They are just idiots and every republican can expect to be replaced if you do not fight this! You were elected to represent conservative republicans, Not democrats. Get out of my party if you want to be a spend thrift7 democrat.

3 years ago

Whatever, the Democrat/socialists must save Medicare. If not, how are they going to pay for all the illegals that will need aid. The politicians just dig into that big black hole for more money. Or they could do away with Medicare and call it a single pay healthcare system. Simple.

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