Some interests may benefit from gridlock over debt deal

Automatic cuts aren’t spread around evenly

By Alan Fram
Associated Press / August 19, 2011

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WASHINGTON - Gridlock, as much as it is derided, might be the best outcome for the elderly, health care providers, and poor people in this fall’s fight over further deficit cuts.

A new congressional supercommittee, split between Democrats and Republicans, has until Thanksgiving to propose $1.5 trillion in additional budget savings over 10 years. Every federal program and tax is a potential bull’s-eye for the panel.

If it doesn’t produce such a package, or if Congress doesn’t pass its plan by Christmas, up to $1.2 trillion in cuts would be automatically unleashed on hundreds of programs. It’s meant to be a scary prospect, but it does not threaten everyone.

Some programs have been exempted from the automatic cuts: Social Security, the Medicaid health program for the poor, Medicare health benefits for the elderly, veterans’ pensions, and many programs for people with low incomes.

Now lobbyists are calculating whether programs they fight for would fare better under an unpredictable package from the supercommittee or in the round of automatic cuts that would be triggered if its mission fails.

“That’s a question a lot of people are asking,’’ said David Certner, legislative policy director for AARP, the country’s largest senior citizens’ organization.

The uncertainty is one of the new wrinkles for lobbyists and their clients in the deal that resolved this summer’s debt ceiling battle between President Obama and Congress. The two sides ended up agreeing to extend the government’s borrowing authority and to start trimming its ever-growing debt, now at about $14 trillion.

Lobbyists also must gauge how to get their voices heard above the din as virtually every interest group in Washington tries influencing the supercommittee’s dozen members. They have only a brief time to make their case. Buffeting the effort is a wide variety of forces: a limp economy, ping-ponging financial markets, and building pressure to ease unemployment.

In addition, the start of 2012 presidential and congressional election campaigns will encourage the two parties to highlight their differences.

Military and civil servants’ pay, child nutrition, public housing rental assistance, and some transportation aid are among the other programs protected from the automatic cuts. But many interest groups have some programs exempted from the automatic cuts and others that are not, leaving them uncertain whether they might fare better from a bill the supercommittee could produce.

“It’s sort of like that old show, ‘Let’s Make a Deal,’ ’’ said Joel Packer of the Committee for Education Funding. “Door number two we know is really bad. Door number one, when I open it, am I going to get shot?’’

Nursing homes and assisted living facilities illustrate the unpredictable terrain ahead.

Their trade group, the American Health Care Association, said over 60 percent of its members’ revenues came from Medicaid, which would be exempted from automatic cuts. But the trade group says its members would be hurt by another aspect of the automatic slashes - a 2 percent cut in Medicare payments to nursing homes and other health care providers.

For an industry that claims harm from other recent reductions in Medicare and state Medicaid spending, that Medicare cut would cost each nursing home an average $50,000 a year, the equivalent of two direct-care workers, the association says. It wants the supercommittee to ease that burden, and it already has nursing home officials contacting local members of Congress.

The American Hospital Association has similar concerns. Rick Pollack, the group’s executive vice president, said hospitals on average get nearly half their income from Medicare and Medicaid combined.

The association wants the supercommittee to look at curbing Medicare, such as by gradually raising the program’s eligibility age, rather than focus strictly on cutting reimbursements to providers.

It has scheduled meetings between local hospital officials and lawmakers.

The automatic cuts were purposely designed to be so distasteful that they would spur supercommittee members to reach a compromise.

Chief among the spending being held hostage is for the Defense Department, which would bear half the $109 billion in annual automatic cuts. The centrist Bipartisan Policy Center has estimated that defense programs would be trimmed by about 10 percent annually from projected levels, and domestic programs by about 7.5 percent.

If the automatic cuts are triggered, they will not take effect until 2013.