BUDGET ALERT: December 13, 2007

CBO Director Sees Unsustainable Increase in Healthcare Costs

Today, Congressional Budget Office Director Peter Orszag warned the House Budget Committee that "under any plausible scenario, the federal budget is on an unsustainable path." He told the Committee that "the rate at which health care costs grow relative to national income--rather than the aging of the population--will be the most important determinant of future spending," and projected that without "potentially painful actions to slow the rise of health care costs" Medicare and Medicaid measured as a share of GDP will rise from 4 percent today to 12 percent in 2050. (CBO Testimony)

In other budget news:

Negotiations continue on an omnibus appropriations measure, with numerous reports that Democrats may be yielding to the President's demand that overall discretionary spending not exceed his February 2007 budget request.

President Bush vetoed the revised State Children's Health Insurance (SCHIP) bill yesterday, which aimed to expand coverage from 6 million to 10 million children. Negotiators are currently discussing a simple extension of the current SCHIP program, together with Medicare provisions including a provision to block a scheduled 10% cut in physician payments.

Senate Republicans successfully filibustered an energy bill that would have established tax incentives for hybrids and alternative fuels, paid for by rolling back oil and gas industry tax preferences. A vote this morning to shut down the filibuster fell one vote short of the 60 votes required to invoke cloture (a procedure used to bring debate to an end and allow a vote to occur). Efforts will now likely focus on passing a stripped down bill containing the ramped up fuel efficiency standards, but without tax provisions.

The logjam on a one-year patch for the Alternative Minimum Tax continues, as the House yesterday passed legislation that continues to include offsetting revenue raisers opposed by Senate Republicans and the White House.