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House Republicans' "Cut, Cap and Gut" Proposal Attacks Medicare and Undermines Fiscal Policy

Strategic Insights

— 1 min read

Rep. David Price (D-NC) warned that the House Republican proposal to cap federal spending at 18% of GDP and require a balanced budget amendment to the Constitution would be disastrous, making it impossible to maintain Medicare in its present form and erecting impossibly high barriers to removing abusive tax loopholes. This proposal is a retread of the policies that would end Medicare as we know it, and it's even worse. By holding an increase in the debt limit hostage to passage of a radical GOP Constitutional Amendment, it would require even deeper cuts after ending Medicare as we know it.

Key Takeaways:

  • The House Republican proposal would cap federal spending at 18% of GDP, which is the lowest level since 1966, and would necessitate across-the-board cuts in domestic programs, including education, research, infrastructure, and Medicare.
  • The bill would require a 2/3 vote for any measure that raises revenue, making it easier for future Congresses to cut Medicare than to close tax loopholes for oil companies or millionaires.
  • The proposal would turn a blind eye to basic economics and undermine the tools that have produced meaningful deficit reduction and boosted economic growth, particularly in economic downturns.
  • The bill would be disastrous for Medicare, education, infrastructure, and research funding, and would undermine the fundamental relationship between the people and government.
  • The best cure for a budget deficit is a growing economy, but this bill requires deep spending cuts starting in October that could stall the recovery and put more Americans out of work.

Statistics:

  • The last time federal spending was 18% or less of GDP was 1966.
  • The budget surpluses achieved during the 1990s were the result of a concerted effort to balance the budget through a comprehensive approach, with revenues, entitlements, military spending, and domestic spending all on the table.
  • The national debt grew by over $400 billion during the George W. Bush administration through trillions in tax cuts and two wars and a privatized prescription drug plan, none of which were paid for.
  • The recessions hit in 2008 left the country deep in a fiscal hole, and the ability to take effective countermeasures was dangerously compromised.

Sources:

  • Remarks of Rep. David Price (D-NC) in the House of Representatives [for the record]

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