Fact Checking The Sunday Shows - May 1, 2011

May 02, 2011 10:03 am ET

Hours before President Obama announced U.S. Special Forces had killed Osama bin Laden, more pedestrian and partisan news ruled the Sunday morning airwaves. On Fox, Rep. Michele Bachmann (R-MN) falsely blamed $4 trillion of debt on President Obama and then incorrectly claimed that failing to raise the debt ceiling wouldn't be a big deal. On ABC, Rep. Paul Ryan (R-WI) tried to defend his budget by claiming people don't like it because there is "misinformation" swirling around and not because it dismantles the social safety net. Elsewhere on Sunday, Gov. Bob McDonnell (R-VA) and Sen. John Barrasso (R-WY) each claimed that the U.S. needs a Balanced Budget Amendment to the Constitution, an idea rejected by experts on both sides of the aisle. And on NBC, Sen. Marco Rubio (R-FL) dishonestly claimed that the Ryan Budget would increase funding to Medicare, while criticizing the Affordable Care Act for cutting Medicare, a claim which is also untrue.

Fox News Sunday

CLAIM: Rep. Bachmann Insisted That We Can Pay Interest On The Debt Without Raising The Debt Ceiling And No Harm Will Come To The Economy

REP. MICHELE BACHMANN: Who's advocating defaulting? I'm not. No one is advocating defaulting. That's why Senator Pat Toomey and Representative  Tom McClintock have a bill that would direct the Treasury Secretary to first pay off all obligations and after that prioritize spending.

CHRIS WALLACE (host): But you just heard the Deputy Treasury Secretary say that's default by another name.

BACHMANN: That's his opinion. My opinion is, we could go with a Toomey-McClintock plan, we could pay off our debts first and prioritize— what a shock to the ruling class in Washington, D.C. They don't have all the money they want to spend. We never did have that ability to be able to spend all that money.

WALLACE: Don't you worry what our creditors would say, what the financial markets would say, if we don't raise the debt ceiling and we have to start doing that? As I say, everyone from Ben Bernanke to your own Speaker, John Boehner, say it would be a financial disaster.

BACHMANN: Well I don't know if you've heard what I said. I am not calling for default.

WALLACE: But if you don't raise the debt ceiling, that's what's going to happen.

BACHMANN: But that's not true. Because what we would do is again, we would prioritize spending. Just because Congress has authorized spending for various programs doesn't mean that we have to fulfill that spending.

FACT: Economists Say That Even If We Did Not Default, Failing To Raise The Debt Limit Would Indeed Cause An Economic Catastrophe

Plans To Avoid Default Without Raising Debt Ceiling Sound Good But Would Undermine Economy. From the Washington Post's Ezra Klein: "In short, [Rep. Michele Bachmann's] plan is that we don't raise the debt ceiling, but we use the revenue still coming in to pay off creditors first and whatever we think most important second. That way, we 'don't violate our credit rating' and 'prioritize our spending.' Makes perfect sense. At least, it makes perfect sense unless you, like me, had spent the previous few days talking to economists, investors and economic policymakers about what could happen if we start playing games with the debt ceiling. Their answers were across-the-board apocalyptic. If the U.S. government is so incapable of solving its political problems that it can't come to an agreement on the debt ceiling, they said, that's basically the end of the United States as the world's reserve currency. We won't be considered safe enough to serve as the investment of last resort. We would lose the most important advantage our economy has in the global financial system - and we'd probably lose it forever. Skyrocketing interest rates would slow our economy and, in real terms, make it even harder to pay back our debt, which would in turn send interest rates going even higher. It's an economic death spiral we associate with third-world countries, not with the United States." [Washington Post4/20/11, emphasis added]

Zandi: High Investor Confidence In Long-Term Value Of U.S. Debt Is "Cornerstone" Of Global Economy. As reported by Ezra Klein of the Washington Post: "'The cornerstone of the global financial system is that the United States will make good on its debt payments,' says Mark Zandi, chief economist at Moody's Analytics. 'If we don't, we've just knocked out the cornerstone, and the system will collapse into turmoil.' Throughout the financial crisis, America's great advantage was its status as the single safest investment in the world. That makes it easier for us to borrow money to ease a downturn. It makes it easier for our central bank to buy bonds to keep interest rates low. It gives us tools and flexibility that, say, Greece simply doesn't have. But all of that is based on the market's perception that our debt is, indeed, a safe investment, that we will pay it back, that we won't inflate our way out of the fiscal holes we dig, that our political system will make tough decisions when necessary." [Washington Post, 4/19/11, emphasis added]

  • Just By Coming Close To Default, Congress Would Rattle Investor Confidence In Loaning To U.S. As reported by Ezra Klein of the Washington Post: "By taking the debt ceiling hostage in a bid to address the deficit, Congress could provoke the exact calamity it's seeking to prevent. What we worry about when we worry about the deficit is that the market will lose confidence in our ability to pay back our debts and begin charging more to buy Treasuries. There's no quicker way to undercut the market's confidence in the U.S. government than for it walk up to the abyss of default. The likeliest disaster here will not be caused by Congress refusing to raise the debt ceiling. And, Geithner says, Congress will raise the debt ceiling. Eventually. But there'll be a lot of partisan posturing between now and then. In 2006, then-Senator Barack Obama lodged a protest vote against an increase in the debt ceiling - a vote he's since called 'a mistake.' Our economy, however, is weaker than it was then, our deficits are more worrying and the markets are more fragile. So the normal congressional bickering could prove especially dangerous." [Washington Post4/19/11, emphasis added]

Even Without Default, Delay In Debt Ceiling Hike Could Harm Economic Recovery. As reported by the Fiscal Times: "The government will bump up against the $14.3 trillion annual debt ceiling sometime around mid-May. The Treasury Department has a number of accounting and borrowing strategies that can postpone running out of cash for several additional months. And that has many of the business economists who monitor events in Washington fretting that the fragile economic recovery -estimates for economic growth in the just concluded first quarter are being ratcheted down to as low as 1.5 percent - could be aborted if Republican leaders in Congress and the White House engage in three months of brinkmanship before reaching an accord." [Fiscal Times, 4/19/11, emphasis added]

  • Bipartisan Policy Center Analyst: Failure To Raise Debt Limit Will Cause Interest Rate Hikes That "Would Cause A Double Dip" Recession. As reported by the Fiscal Times:

A sell-off of government bonds along the lines already pursued by PIMCO, whose founder, Bill Gross, said he exited the U.S. Treasury market earlier this year, would depress bond prices and raise rates, which go up when bond prices go down. "Bond traders are a spooky bunch," said Steve Bell, a budget analyst at the Bipartisan Policy Center who spent years on Capitol Hill as well as 10 years trading bonds for the now defunct Salomon Brothers.

"If they start playing games with the debt ceiling like passing a number of short-term extensions, you'll see people exiting the market despite their desire for safety."

He estimated failure to increase the debt ceiling could raise long-term rates by 1 ½ to 2 percentage points over the next six months. "Housing is flat on its back now," Bell said. "Could you imagine what would happen if small and medium-sized businesses had to pay 2 to 3 percentage points more, or credit card debt or the rate you pay for your car went up. It seeps into every type of economic activity. It would cause a double dip." [Fiscal Times, 4/19/11, emphasis added]

FACT: The Budget Resolution Republicans Just Passed Would Also Require Increasing The Debt Limit

Republican "Path To Prosperity" Budget Would Require Raising Debt Limit By Nearly $9 Trillion Over 10 Years. As reported by The Hill: "Senate Democrats are hammering home the message Friday that House Republicans have already voted for a budget that requires a raising of the nation's debt ceiling, and say the GOP should stop playing games with the debt limit. The House Republican 2012 budget resolution passed April 15 does not balance the budget until about 2040 and will increase the national debt massively - although by much less than President Obama's budget or his new revised budget framework unveiled last week. Under the GOP resolution, the debt limit would have to be raised every year, from $14.3 trillion today to $23 trillion in 2021. This is necessary despite the fact the budget would reduce deficits by $4 trillion over 10 years while cutting nearly $6 trillion in spending." [The Hill, 4/22/11, emphasis added]

CLAIM: Rep. Bachmann Implied That President Obama Has Increased The Debt By $4 Trillion

REP. MICHELE BACHMANN: If you look at the off-the-charts increases in spending from 2008 until today, we've accumulated 4 trillion in debt just in the time that President Obama has been in office. We just can't do that.

FACT: While Bachmann Often Misleads On Debt Numbers, President Obama Is Actually Responsible For $2.5 Trillion In Additional Debt

Read about Rep. Bachmann's repeated attempts to blame President Bush's FY 2009 deficit on President Obama here and here. In fact, since President Obama inherited a $1.2 trillion deficit for 2009 from President Bush, and the debt has grown by just over $3.6 trillion since President Obama was sworn in, even by Rep. Bachmann's logic the current administration is responsible for only $2.5 trillion in debt. However, the Republican logic on debt ignores the bottom line: the policies that are driving our debt today came from the Bush White House.

Debt Has Increased By $3.656 Trillion Since Inauguration Day 2009. As of May 1, 2011, the national debt stands at $14.282 trillion. That is an increase of $3.656 trillion over the $10.626 trillion in debt already recorded when President Obama was sworn in on January 20, 2009. [TreasuryDirect.gov, accessed 5/1/11]

Before Obama Took Office, The FY 2009 Deficit Was Projected At $1.2 Trillion. As reported by the Washington Times: "The Congressional Budget Office announced a projected fiscal 2009 deficit of $1.2 trillion even if Congress doesn't enact any new programs. [...] About the only person who was silent on the deficit projection was Mr. Bush, who took office facing a surplus but who saw spending balloon and the country notch the highest deficits on record." [Washington Times1/8/09, emphasis added]

Conservative Cato Institute: Assertion That Obama Exploded Deficits "Is Largely Untrue" Because Most 2009 Spending Was Done By Bush Administration. From the Cato Institute's Cato-At-Liberty blog: "In addition to being theoretically misguided, critics sometimes blame Obama for things that are not his fault. Listening to a talk radio program yesterday, the host asserted that Obama tripled the budget deficit in his first year. This assertion is understandable, since the deficit jumped from about $450 billion in 2008 to $1.4 trillion in 2009. [...] But there is one rather important detail that makes a big difference. The chart is based on the assumption that the current administration should be blamed for the 2009 fiscal year. While this makes sense to a casual observer, it is largely untrue. The 2009  fiscal year began October 1, 2008, nearly four months before Obama took office. The budget for the entire fiscal year was largely set in place while Bush was in the White House. So is [sic] we update the chart to show the Bush fiscal years in green, we can see that Obama is partly right in claiming that he inherited a mess (though Obama actually deserves a small share of the blame for Bush's last deficit since earlier this year he pushed through both an "omnibus" spending bill and the so-called stimulus bill that increased FY2009 spending)." [Cato-At-Liberty.org, 11/19/09, emphasis added]

When President Bush Took Office, The National Debt Was $5.727 TRILLION. As reported by CBS News: "But what Mr. Bush didn't mention, and what he almost never mentions, is the National Debt. With good reason. On the day he took office, the National Debt stood at this unfathomable number: $5,727.776.738,304.64 In fiscal shorthand, that's $5.7 trillion dollars. Trillion with a 'T.'" [CBSNews.com, 6/16/07]

  • Before President Bush Took Office, There Was A Projected Surplus Of $128 Billion. As reported by CNN: "President Bush inherited abudgetsurplus of $128 billion when he took office in 2001 but has since posted a budget deficit every year." [CNN.com, 7/28/08]

The Bush Tax Cuts Are The Primary Driver Of Federal Budget Deficits Over The Next Decade. Below is a chart from CBPP showing the deficit impacts of war spending, financial recovery spending, the recession itself, and the Bush tax cuts:

[CBPP.org, 6/28/10]

This Week

CLAIM: Rep. Ryan Claimed That People Are Only Angry About Republican Budget Proposal Because Of "The Anxiety Of The Times" And "Misinformation"

CHRISTIANE AMANPOUR (host): Though the crowds we saw in Wisconsin were mostly friendly, some of his town meetings have been contentious. [clip of Rep. Ryan town hall]

REP. PAUL RYAN: It's a sign of the times, I think. It's a sign of the anxiety of the times, it's also a sign of the misinformation that's been perpetrated out there.

FACT: National Polling On Republican Proposals Shows Huge Majorities Of American Voters Dislike GOP's Ideas

Republican Budget Reduces Top Tax Rate To 25 Percent. From the Center for American Progress:

There's a nice symmetry to the House Republican budgeteers' idea of cutting the top tax rate for the very wealthy to 25 percent. The spending side of their budget would go a long way to giving us Herbert Hoover's economy, so why not have their tax rate on the rich match Hoover's? In fact, we haven't had a top rate that low since Hoover lost his re-election bid to Franklin Roosevelt in 1932.

Of course, for those today with the very highest incomes, most of their income is taxed as capital gains, which for most of our history has gotten a special low rate. The rate now is 15 percent. It was 12.5 percent under Hoover. Rep. Paul Ryan (R-WI), the chief architect of the House plan, thinks it ought to be zero. [Center for American Progress, 4/13/11]

The GOP Budget Turns Medicare Into A Voucher System. From "The Path to Prosperity":

Save Medicare for current and future generations while making no changes for those in and near retirement. For younger workers, when they reach eligibility, Medicare will provide a Medicare payment and a list of guaranteed coverage options from which recipients can choose a plan that best suits their needs. These future Medicare beneficiaries will be able to choose a plan the same way members of Congress do. Medicare will provide additional assistance for lower-income beneficiaries and those with greater health risks. [The Path To Prosperity, 4/5/11, emphasis added]

Washington Post/ABC Poll: Over 80 Percent Of Voters Dislike Republican Medicare Vouchers Proposal When Details Of CBO Analysis Are Laid Out. As Ezra Klein of the Washington Post explained: "You know what's not popular? Reforming Medicare such that beneficiaries 'receive a check or voucher from the government each year for a fixed amount they can use to shop for their own private health insurance policy.' According to a new Washington Post-ABC News poll, 65 percent of Americans oppose the idea -- about the same number who dismissed it in 1995. And if they're told that the cost of private insurance for seniors is projected to outpace the cost of Medicare insurance for seniors -- which is exactly what CBO projects -- more than 80 percent of Americans oppose the plan." [Washington Post, 4/20/11, emphasis added]

  • Washington Post/ABC Poll: 72 Percent Of Voters Support Higher Taxes On The Wealthy To Address The Debt. Question 17(d) of the 4/17 ABC/Washington Post poll asked voters if they would support "Raising taxes on Americans with incomes over 250-thousand dollars a year" as a means of reducing the national debt. 72 percent responded they would either strongly (54 percent) or somewhat (18 percent) support such a plan. [Washington Post/ABC Poll, 4/14-7/11]

McClatchy/Marist Poll: 80 Percent Of Voters Oppose Cuts To Medicare. From McClatchy: "Americans clearly don't want the government to cut Medicare, the government health program for the elderly, or Medicaid, the program for the poor. Republicans in the House of Representatives voted last week to drastically restructure and reduce those programs, while Obama calls for trimming their costs but leaving them essentially intact. Voters oppose cuts to those programs by 80-18 percent [according to the latest McClatchy-Marist poll]. Even among conservatives, only 29 percent supported cuts, and 68 percent opposed them." [McClatchy, 4/18/11]

  • McClatchy/Marist Poll: "Voters By A Margin Of 2-To-1 Support Raising Taxes On Incomes Above $250,000." From McClatchy: "On tackling the deficit, voters by a margin of 2-to-1 support raising taxes on incomes above $250,000, with 64 percent in favor and 33 percent opposed. Independents supported higher taxes on the wealthy by 63-34 percent; Democrats by 83-15 percent; and Republicans opposed by 43-54 percent. Support for higher taxes rose by 5 percentage points after Obama called for that as one element of his deficit-reduction strategy last week. Opposition dropped by 6 points. The poll was conducted before and after the speech." [McClatchy, 4/18/11]

CLAIM: Rep. Ryan Claimed Republican Budget Doesn't Hurt Safety Net Programs But Merely Makes Them "Sustainable"

REP. PAUL RYAN: First of all, spending increases in this budget. Spending on the safety net increases, but it increases at a more sustainable rate.

FACT: Republican "Path To Prosperity" Exacts 2/3 Of Its Cuts From Safety Net Programs That Serve Neediest Americans

Debt Commission Chairmen: Ryan's Budget Cuts To "Safety Net Programs" Would "Disproportionately" Affect "Disadvantaged Populations." In a statement calling Rep. Ryan's budget proposal "a positive step," the leaders of the president's National Commission on Fiscal Responsibility and Reform — former Sen. Alan Simpson and former White House Chief of Staff Erskine Bowles — wrote: "The plan largely exempts defense spending from reductions and would not apply any of the savings from eliminating or reducing tax expenditures as part of tax reform to deficit reduction. As a result, the Chairman's plan relies on much larger reductions in domestic discretionary spending than does the Commission proposal, while also calling for savings in some safety net programs - cuts which would place a disproportionately adverse effect on certain disadvantaged populations." [Simpson-Bowles Statement, 4/5/11, via The Hill]

CBPP: Two-Thirds Of Ryan's Spending Cuts Would Come From Programs Targeted At Low-Income Americans. According to the Center on Budget and Policy Priorities: "House Budget Committee Chairman Paul Ryan's budget plan would get about two-thirds of its more than $4 trillion in budget cuts over 10 years from programs that serve people of limited means, which violates basic principles of fairness and stands a core principle of President Obama's fiscal commission on its head. The plan of Erskine Bowles and Alan Simpson, who co-chaired President Obama's National Commission on Fiscal Responsibility and Reform, established, as a basic principle, that deficit reduction should not increase poverty or inequality or hurt the disadvantaged. The Ryan plan, which the chairman unveiled in a news conference, speech, and Wall Street Journal op-ed today, charts a different course, turning its biggest cannons on these people." [CBPP.org, 4/5/11, emphasis added]

CLICK HERE for a much more detailed analysis of how the Republican plan would impact the disadvantaged.

Meet the Press

CLAIM: Gov. McDonnell Claimed That He Balanced Virginia's Budget Through Spending Cuts Alone

GOV. BOB MCDONNELL: We've been growing at 9 to 16 percent over the last six months. And I'll tell you the reason that I think we're there, is we made those really tough decisions last year, David. We cut— balanced a $6 billion deficit without raising taxes, mostly through spending cuts. And it included education and it included health care. And yeah, there was some short-term pain, but, you know, we ran a surplus within five months. We're going to have a big surplus this year. And so now we're, we're coming back. And here's why: Governors have a balanced budget amendment. We can't make excuses.

FACT: Gov. McDonnell Used Billions Of Federal Dollars From The Recovery Act To Balance The State's Budget

Commonwealth Institute: State Used $2.5 Billion From ARRA To Close Budget Hole. According to the Commonwealth Institute: "With the start of a new fiscal year and Governor McDonnell set to address the General Assembly's budget committees on Aug. 19, the focus turns to the current condition of Virginia's budget. Yet, one key element has almost gone almost unnoticed: the role of the federal American Recovery and Reinvestment Act of 2009 (ARRA) ARRA has already helped Virginia maintain crucial services for its citizens as the state struggles to dig out of the worst recession in a generation, and will provide more funding to help close the state's budget shortfall in 2010-2012. In total, Virginia will receive more than $2.5 billion in ARRA funds. This funding has helped Virginia respond to large concurrent drops in General Fund revenue and increases in demand for social services for the past three fiscal years.  Because Virginia, unlike the federal government, must balance its budget, the ARRA funding has helped the state avert spending cuts and saved jobs rather than worsening the recession." [Commonwealth Institute, August 2010]

CLAIM: Sen. Rubio Claimed That "The Ryan Plan Doesn't Cut Medicare" But The Affordable Care Act Does

SEN. MARCO RUBIO: The Ryan plan doesn't cut Medicare, it actually increases funding in it. And the only people in this town that voted to cut Medicare in this town are the people who supported Obamacare.

FACT: Non-Partisan Congressional Budget Office Says GOP Plan Would "Sharply Lower" Spending On Medicare And Other Entitlements

CBO: Under Ryan's Plan, "Federal Spending On Medicare, Medicaid, And CHIP Would Be Sharply Lower." According to the Congressional Budget Office: "Under the proposal, federal spending on Medicare, Medicaid, and CHIP would be sharply lower-about 5½ percent of GDP in 2022, rising to about 6 percent in 2030 and 2040, and falling back to about 5 percent in 2050." [CBO.gov, 4/5/11]

CBPP: CBO Report Shows GOP Plan Would Make Additional Medicare Cuts. According to the Center on Budget and Policy Priorities: "CBO's report, prepared at Chairman Ryan's request, also reveals that, as explained below, his plan envisions additional Medicare cuts that were not disclosed in the documents that the chairman released on Tuesday; and his Medicare 'premium support' and Medicaid block grant proposals differ substantially from - and have much deeper cuts than - the 'Ryan-Rivlin' plan of last fall, which itself was rejected as too severe by the Bowles-Simpson fiscal commission." [CBPP.org, 4/7/11, emphasis added]

FACT: The Affordable Care Act Strengthens And Preserves Medicare Without Cutting Benefits

FactCheck.org: Cost Saving Provisions "Not A Slashing Of The Current Medicare Budget Or Benefits." According to FactCheck.org: "Whatever you want to call them, it's a $500 billion reduction in the growth of future spending over 10 years, not a slashing of the current Medicare budget or benefits. It's true that those who get their coverage through Medicare Advantage's private plans (about 22 percent of Medicare enrollees) would see fewer add-on benefits; the bill aims to reduce the heftier payments made by the government to Medicare Advantage plans, compared with regular fee-for-service Medicare. The Democrats' bill also boosts certain benefits: It makes preventive care free and closes the 'doughnut hole,' a current gap in prescription drug coverage for seniors." [FactCheck.org, 3/19/10]

New England Journal of Medicine: The Affordable Care Act Phases Out "Substantial Overpayments" To Medicare Advantage Plans. From the New England Journal of Medicine:

A phased elimination of the substantial overpayments to Medicare Advantage plans, which now enroll nearly 25% of Medicare beneficiaries, will produce an estimated $132 billion in savings over 10 years.

[...]

The ACA also produces nearly $200 billion in savings by assuming that providers can improve their productivity as firms in other industries have done. On the basis of this presumed improvement, the law reduces Medicare's annual "market basket" updates for most types of providers - a provision that has generated controversy. [New England Journal of Medicine7/8/10]

Cuts Would Only Affect Medicare Advantage Plans. As reported by Kaiser Health News:

The new health law will cut $136 billion in spending on the Advantage program by 2019, which currently pays private plans to administer Medicare benefits and pays them about 14 percent more than the per-patient cost of the traditional Medicare program. Plans use that subsidy to lure members with lower premium costs or extra benefits not normally paid for by Medicare, such as vision care or better prescription drug coverage. Some Democrats and analysts have argued the higher rates are wasteful. 

Even experts who support the change concede that the impact of the cuts could be evident. Robert Berenson, a scholar at the Urban Institute and former Medicare official, said some Advantage plan members will notice skimpier benefits, "but the Republicans have really exaggerated that this will wipe out the Advantage plans." 

Marsha Gold, a health policy analyst for the private research group Mathematica, said, "Over time, there will be less rich benefits or higher premiums, but it's going to be gradual," noting that the largest cuts do not begin until 2015. [Kaiser Health News, 4/6/10]

Medicare Advantage Costs Taxpayers 14% More Than Traditional Medicare. As reported by PolitiFact.com:

Let's back-up for a minute and explain Medicare Advantage: There are two basic ways most people get Medicare coverage. They enroll in traditional Medicare and a prescription drug plan through the government and maybe buy a supplemental policy to cover most out-of-pocket costs. Or they enroll in Medicare Advantage programs (they include drug plans), which are run by private insurers. Medicare Advantage programs typically have more generous benefits such as dental and vision coverage. Some plans even pay the patient's monthly Medicare premium, which can amount to about $100.

The Medicare Advantage program was intended to bring more efficiency from the private sector to the Medicare program, but it hasn't worked as planned. A June 2009 analysis from the Medicare Payment Advisory Commission said that the Advantage programs costs taxpayers on average of 14 percent more than the traditional Medicare plan. President Barack Obama has said repeatedly that the Medicare Advantage plan wastes public money that could be put to better use. [PolitiFact.com, 9/20/10]

Changes To Medicare Advantage Come With Extra Benefits For All Medicare Enrollees. FactCheck.org reported: "The CBO has estimated that the move would change the value of the extra benefits Medicare Advantage participants get, but they would not receive fewer benefits than the rest of seniors who aren't on the Advantage plans. The bill does add some extras for Medicare beneficiaries, eliminating copays and deductibles for preventive services, for example." [FactCheck.org, 12/2/09, emphasis added]

Health Care Reform "Will Keep Paying Medical Bills For Seniors." According to PolitiFact.com: "The government-run Medicare program will keep paying medical bills for seniors, but it will begin implementing cost controls on health care providers, mostly through penalties and incentives. The legislation would reduce payments for hospital-acquired infections or preventable hospital admissions. For Medicare Advantage, the federal government intends to reduce extra payments, taking away subsidies to private insurance companies. Insurers will likely cut benefits in order to not lose profits. The bill does not address the 'doctor's fix,' an expected proposal that Congress usually passes to prevent doctors' Medicare payments from severe cuts." [PolitiFact.com, 3/18/10, emphasis in original]

CLAIM: Sen. Rubio Claimed The Republican Budget "Saves Medicare, Doesn't Impact Current Seniors, And Doesn't Hurt Economic Growth"

SEN. MARCO RUBIO: As far as the Ryan plan is concerned. I will support any plan that saves Medicare, doesn't impact current seniors, and doesn't hurt economic growth. The Ryan plan does that... [Meet the Press, 5/1/11]

CLAIM: Rep. Ryan Claimed That The Republican Medicare Plan Protects Current Seniors, Implied It Only Hurts Future Seniors

REP. PAUL RYAN: There're TV, radio and phone calls that are running trying to scare seniors. The Democratic National Committee is running phone calls to seniors in my district, TV ads, saying we're hurting current seniors, when in fact that's not the case. [...] [Rep. Ryan town hall clip:] "How many of you are 55 years of age or older? This budget does not affect your Medicare benefits." [This Week, 5/1/11]

FACT: Republicans' Medicare Plan WOULD Negatively Impact Current Seniors

Because Current Seniors Will Have Option Of Enrolling In GOP's System, Private Insurers Will Be Able To Pick Off Healthiest Seniors - Leaving Neediest Group With Fewer Doctors, Higher Costs. From the Wonk Room: "In 2022, newly-eligible beneficiaries [sic] would have to enroll in a private plan, but existing beneficiaries (those who are over 55 today) would also have the option of leaving traditional Medicare. As Ryan's budget put it, 'While there would be no disruptions in the current Medicare fee-for-service program for those currently enrolled or becoming eligible in the next ten years, all seniors would have the choice to opt into the new Medicare program once it begins in 2022. No senior would be forced to stay in the old program.' That opens up the possibilities of private plans trying to lure away the healthiest beneficiaries (as is currently the case in Medicare Advantage) and of health care providers abandoning traditional Medicare patients for the higher reimbursement rates of private insurers. For chronically ill seniors who are more likely to remain in fee-for-service Medicare this means two things: higher costs (as the healthier beneficiaries exit the risk pool) and fewer doctors." [Wonk Room, 4/15/11, emphasis added]

Centrist Think Tank: Despite Ryan's Claim, "Current Beneficiaries Are Not Protected In The Ryan Budget." According to a report from Third Way by David B. Kendall, Senior Fellow for Health and Fiscal Policy and Ryan McConaghy, Director of the Economic Program:

Despite promises to the contrary, current beneficiaries are not protected in the Ryan budget. Under the Republican proposal, traditional Medicare would quickly become second-class medicine. It would "wither on the vine," as then-House Speaker Newt Gingrich described a similar GOP effort in 1995.

The traditional Medicare plan, which covers three-fourths of today's beneficiaries, relies on its huge size to keep costs down. Doctors and hospitals are not required to participate in it, but they have little choice if they wish to treat any seniors, who are the nation's biggest health care consumers.

Fewer doctors would participate in the traditional Medicare plan if there were an alternative. The traditional plan pays physicians about 20% less than private health insurance plans. Today, that is essentially a discount for the large volume of Medicare patients. Under the Ryan budget, it would become a reason for doctors to leave the traditional plan.

By 2030, only 55% of Medicare beneficiaries would still be eligible for traditional Medicare according CBO. Actual enrollment would be less than half of Medicare beneficiaries because many seniors would continue to enroll in private health care coverage under Medicare Advantage. By 2040, traditional Medicare would have only about 20% of Medicare beneficiaries. [ThirdWay.org, 4/14/11, internal citations removed for clarity]

FACT: Republican Medicare Plan Would Impose Higher Costs, Promote Rationing Of Health Care, For Future Seniors

CEPR: Ryan's Budget Would Force Seniors To Spend Much Of Their Income On Health Insurance. According to Center for Economic Policy Research co-director Dean Baker:

Representative Ryan would replace the current Medicare program with a voucher for people who turn age 65 in 2022 and later. This voucher would be worth $8,000 in for someone turning age 65 in that year. It would rise in step with the consumer price index and also as people age. (Health care expenses are higher for people age 75 than age 65.)

According to the CBO analysis the benefit would cover 32 percent of the cost of a health insurance package equivalent to the current Medicare benefit. This means that the beneficiary would pay 68 percent of the cost of this package. Using the CBO assumption of 2.5 percent annual inflation, the voucher would have grown to $9,750 by 2030. This means that a Medicare type plan for someone age 65 would be $30,460 under Representative Ryan's plan, leaving seniors with a bill of $20,700. (This does not count various out of pocket medical expenditures not covered by Medicare.)

According to the Social Security trustees, the benefit for a medium wage earner who first starts collecting benefits at age 65 in 2030 would be $32,200. (This adjusts the benefit projected by the Social Security trustees [$19,652 in 2010 dollars] for the 2.5 percent annual inflation rate assumed by CBO.) For close to 70 percent of seniors, Social Security is more than half of their retirement income. Most seniors will get a benefit that is less than the medium earners benefit described here since their average earnings are less than that of a medium earner and they start collecting Social Security benefits before age 65. [CEPR.org, 4/6/11, emphasis added, all parentheses original, internal citations removed for clarity]

CBO: Under The GOP Budget, "Most Elderly People Would Pay More For Their Health Care Than They Would Pay Under The Current Medicare System." According to the Congressional Budget Office: "Under the proposal, most elderly people would pay more for their health care than they would pay under the current Medicare system. For a typical 65-year-old with average health spending enrolled in a plan with benefits similar to those currently provided by Medicare, CBO estimated the beneficiary's spending on premiums and out-of-pocket expenditures as a share of a benchmark: what total health care spending would be if a private insurer covered the beneficiary. By 2030, the beneficiary's spending would be 68 percent of that benchmark under the proposal, 25 percent under the extended-baseline scenario, and 30 percent under the alternative fiscal scenario." [CBO.gov, 4/5/11]

In 2022, A Typical 65-Year-Old Would Be Paying Approximately Double Compared To Current Levels. The Center on Budget and Policy Priorities prepared a graphic comparing health care spending for a typical 65-year-old under the current system to the same spending under the Republican budget:

[CBPP.org, 4/7/11]

CBPP: The GOP Budget "Would Effectively Result In More Rationing On The Basis Of Income." According to the Center on Budget and Policy Priorities:

Many future Medicare beneficiaries with modest incomes, such as elderly widows who must live on $15,000 or $20,000 a year, also would likely be hit by the plan's Medicare provisions; the Medicare voucher (or defined contribution) they would receive would fall farther and farther behind health care costs - and purchase less and less coverage - with each passing year. Aggravating this problem, Ryan has said that his plan calls for repeal of a key measure of the health reform law that is designed to moderate Medicare costs - the Independent Payment Advisory Board. In other words, his plan would scrap mechanisms to slow growth in the costs of health care services that Medicare beneficiaries need, even as it cuts back the portion of those costs that Medicare would cover.

Affluent Medicare beneficiaries surely would respond to shrinking Medicare coverage over time by buying more supplemental coverage. Those who could not afford to do so, however, would get less health care. This is another way that the Ryan health care changes would make ours more of a two-tier health care system and would effectively result in more rationing on the basis of income. [CBPP.org, 4/6/11]

Politico: GOP Budget "Will Control Costs By Requiring Seniors To Ration Themselves." From Politico Pulse: "The Ryan plan to privatize Medicare will control costs by requiring seniors to ration themselves, said Michael Tanner with the Cato Institute. 'Rationing is going to go on within the Medicare system. It's a fact of life' given financial constraints, he said. 'The question's going to be, is that decision going to be made by government and imposed top down under the current system? Ryan wants to shift that responsibility to individuals and from the bottom up.'" [Politico, 4/7/11]

CLAIM: Sen. Barrasso Claimed The U.S. Needs A Balanced Budget Amendment To The Constitution

SEN. JOHN BARRASSO: Our state has a balanced budget. We have to live within our means in the state of Wyoming. I was in the state senate. This country needs a Balanced Budget Amendment to the Constitution, we need to live within our means. [State of the Union, 5/1/11]

CLAIM: Gov. McDonnell Claimed The U.S. Needs A Balanced Budget Amendment To The Constitution

GOV. BOB MCDONNELL: Governors have a Balanced Budget Amendment, we can't make excuses, we can't form committees, we can't kick the can down the road, we can't do sort term CRs, we can't increase the debt limit willy nilly, and I think that's what Congress and the President need to do. [Meet the Press, 5/1/11]

FACT: A Balanced Budget Amendment Could Worsen Recessions, Make It Harder To Balance The Budget, And Reduce "Congressional Authority" Over Budgetary Matters

A Balanced Budget Amendment Would "Make Economic Recessions Worse" By Forcing Spending Cuts During Downturns. According to Former Reagan domestic policy advisor Bruce Bartlett: "A BBA would force the federal government to make economic recessions worse. Since federal revenues fall and spending rises automatically in economic downturns, it would force spending cuts and tax increases at precisely the point when the economy is reeling, potentially turning a modest downturn into a depression." [Fiscal Times, 8/27/10]

A Balanced Budget Amendment Would Not Allow The United States To Respond To "Shocks." According to Economist Charles L. Schultze:

The combination of market adjustments and appropriate Federal Reserve policy can ensure that the absence of budget deficits, and indeed running a budget surplus of moderate size, will be consistent in the long run with the maintenance of high employment. In the short run, however, even the best run monetary policy cannot be expected to offset perfectly the aggregate demand consequences of substantial demand shocks. In particular, the mean lags of the effects of monetary policy changes on aggregate demand are long, and both the lag profile and the magnitude of those effects are variable and uncertain. Given the inherent difficulties in forecasting the appearance of shocks and in pinning down the time profile and magnitude of responses to monetary policy, the monetary authorities will be neither willing nor able to provide full offsets.

By prohibiting even temporary budget deficits, the constitutional amendment, if enforced, would lead to a situation in which the automatic stabilizing features of the federal budget would be replaced by a procyclical pattern in which any initial falloff in aggregate demand would be reinforced by immediate federal spending cuts (or, less likely, given the structure of the amendment, tax increases).  [National Tax Journal, "The Balanced Budget Amendment: Needed? Effective? Efficient?", September 1995]

Supermajority Vote To Increase Taxes Makes It Harder To Balance Budget. In an op-ed in US News and World Report, former Rep. Boehner staffer Scott Galupo wrote: "The amendment's additional requirement of a supermajority vote - two-thirds of both the House and Senate - to increase taxes gives the game away: If you're serious about balancing the budget, why would you make it much harder for Congress to balance the budget?" [US News and World Report, 8/10/10, emphasis added]

  • House Version Of Balanced Budget Amendment Requires 2/3 Majorities In House And Senate To Raise Taxes. Section 4 of H.J.Res. 2 reads: "Section 4. No bill to increase Federal taxes shall become law unless approved by two-thirds of the duly chosen and sworn Members of each House of Congress by a rollcall vote." [H.J.2, 1/5/11]

A Balanced Budget Amendment Would Be Self-Defeating, Causing A Loss Of "Congressional Authority." According to the CBO:

The adoption and implementation of a balanced budget rule or an expenditure limitation would result in loss of Congressional authority in two ways. First, these proposals, by their very nature, seek to reduce Congressional flexibility in budget-making. As previously stated, many critics of the present budget process see flexibility, particularly in determining fiscal policy, as the cause of many of America's economic problems. Others see fiscal policy as a central function of government, whatever are the imperfections in implementing it.

Second, a stringent budget rule would, in all probability, shift the responsibility for economic policy from the Congress to the Federal Reserve, the courts, and/or the President, or all three. As discussed in Chapter V, under a balanced budget rule, fiscal policy would largely be removed as a tool of discretionary economic policy, with increasing reliance placed on monetary policy. As such, Congressional authority over economic policy would decline while that of the Federal Reserve would increase. Under these circumstances, the Congress might choose to exert greater control over the Federal Reserve." [CBO, September 1982]

Law Could Put Congressional Budgetary Power In Hands Of Court. According to a CBO report on a Balanced Budget Amendment from 1982: "The courts would gain budgetary power because they might be asked eventually to enforce the prohibition against a possibly reluctant Congress. Several proposals, for example, include provisions stating who can sue whom in what court to enforce the proposed act." [Congressional Budget Office, September 1982]

For much more on the impacts of a balanced budget amendment to the Constitution, read our full fact check.

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