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The White House's new Obamacare point man used to think Paul Ryan's budgets spent too much

Sean Spicer Holds Daily Press Briefing At White House Alex Wong/Getty Images

Several paragraphs into a revealing Washington Post dispatch on internal White House discord was a surprising tidbit about the Trump administration’s approach to Obamacare. Rather than having Health and Human Services Secretary Tom Price lead the effort, the administration has apparently put Office of Management and Budget Director Mick Mulvaney in charge.

“With Health and Human Services Secretary Tom Price on the road with Vice President Pence, a decision was made: Mick Mulvaney, director of the Office of Management and Budget, would become the point person, though officials insisted Price had not been sidelined,” reporters Philip Rucker, Robert Costa, and Ashley Parker wrote. “On Friday, Mulvaney convened a meeting at the Eisenhower Executive Office Building with top administration officials and senior staff of House and Senate leaders to hammer out the final details of the proposal to replace the Affordable Care Act.”

This is odd, to say the least. Price, a physician, wrote legislation repealing Obamacare that passed last Congress before being vetoed by then-President Obama. He also authored the most detailed replacement plan of any leading member of Congress. And, crucially, he is close to House Speaker Paul Ryan, having succeeded him as chair of the House Budget Committee and proceeded to put out very similar budgets to those that made Ryan famous. If anyone was well-positioned to lead the administration’s repeal-and-replace effort, it was Price.

The fact that Mulvaney has apparently taken lead instead is revealing, and suggests that the Trump administration could be open to more severe Medicaid cuts than it’s previously indicated. Mulvaney is to the right of Ryan and Price, a founding member of the House Freedom Caucus, which has served as an arch-conservative thorn in the side of Republican leadership. He is, if possible, more serious than they are about cracking down on entitlements such as Social Security and Medicare, and shares none of President Trump’s reverence for those programs. He even has taken a hard line against expanding defense spending.

Who’s up and who’s down in the Trump administration tends to shift frequently, so one shouldn’t make too many predictions based on a single official’s views. But Mulvaney’s apparent rise signals that the administration is serious about enacting deep budget cuts that could have a devastating impact on anti-poverty programs.

Mick Mulvaney makes Paul Ryan look like a profligate spendthrift

Mulvaney, like many White House budget directors before him, came to the job from Congress, where he had served since 2011. He defeated Democrat John Spratt, the incumbent House Budget chair who had served in Congress for decades, in the 2010 wave election.

Like many Tea Party Congress members elected that year, Mulvaney took a hard line on tax and spending matters. He repeatedly told reporters he didn't see the big deal about increasing the debt ceiling, and voted against the deal to raise the ceiling reached between the White House and then-Speaker John Boehner in August 2011. “We all agree that we need to drastically cut spending,” he explained in a statement. “I simply thought that this was an opportunity to cut more. That's why I voted no tonight.”

His preferred solution, the Cut, Cap, and Balance Act, which most House and Senate Republicans backed that summer, was “one of the most ideologically extreme pieces of major budget legislation to come before Congress in years, if not decades,” according to the Center on Budget and Policy Priorities’ Robert Greenstein. It would have predicated an increase in the debt ceiling on Congress's adoption of spending cuts as least as large as those in the Ryan budget, and its passage of a balanced-budget constitutional amendment that banned spending from exceeding 18 percent of GDP and requiring a two-third vote of each house to raise taxes.

For context, right now federal government spending is about 20.7 percent of GDP. Reducing that to 18 percent would entail cutting $509 billion in spending annually. You could eliminate all federal funding for education, transportation, veterans, environmental protection, law enforcement, and science and still not come close to hitting that number.

"The only budget that comes close to meeting the requirements of these constitutional amendments is the Republican Study Committee budget, which eliminates 70 percent of non-defense discretionary funding by 2021, contains deeper Medicare cuts than the Ryan budget, cuts Medicaid, food stamps, and Supplemental Security Income for the elderly and disabled poor in half by the end of the decade, and raises the Social Security retirement age to 70," Greenstein continues.

Unsurprisingly, Mulvaney was a member of the Republican Study Committee as a Congress member, and voted for the RSC’s budgets in 2011, 2012, 2013, 2014, and 2015. He led the opposition to Ryan’s fiscal deal with Democrats in 2013, and he rejected Price’s budget in 2015, on the grounds that it was insufficiently conservative. He was particularly angered that it raised defense spending using the war spending account (which is exempt from spending caps imposed under the 2011 Budget Control Act) without paying for it with decreased spending elsewhere. That prompted some concern from defense hawks during his nomination, and led John McCain (whom Mulvaney attacked by name in a 2015 op-ed on the topic) to vote against him.

Mulvaney has also made clear, above and beyond his votes for RSC budgets, that he wants to target entitlement programs such as Social Security, Medicare, and Medicaid. He denounced Social Security as a “Ponzi scheme” on MSNBC in 2011, and told a town hall that "Medicare as it exists today is finished."

There is no sign that Mulvaney has changed any of these views over time. Just this past September, he asked on Facebook, “Do we really need government funded research at all?” During his confirmation hearings, he was confronted with President Trump's statements on the need to protect Social Security and Medicare for trust, and reiterated his disagreement. When Lindsey Graham asked if wealthier seniors should receive government health care subsidies, Mulvaney commented that he thought "Medicare benefits could and should be means-tested." He refused to denounce his earlier characterization of Medicare as a Ponzi scheme.

Mulvaney’s views are becoming Trump administration policy

Seniors Rally In Support Medicare, Social Programs In Chicago
A 2011 protest against entitlement cuts.
Scott Olson/Getty Images

Early indications of the Trump administration’s budget reflect many of these ideas. While Social Security and Medicare are untouched, the increase in defense spending is modest, prompting fury from McCain and others, and non-defense discretionary spending at agencies like the Environmental Protection Agency and State Department, as well as "social safety net programs" will reportedly be hard hit.

That aligns with the RSC budget, which envisions $1.6 trillion in cuts to Medicaid and the Children's Health Insurance Program over 10 years, and $2.2 trillion in cuts to other mandatory programs such as food stamps and the earned income tax credit. The Hill's Alexander Bolton specifically reported that the Trump administration was using the RSC budget as a guideline, along with the even more brutal Heritage Foundation budget.

What about health care? Mulvaney told talk show host Hugh Hewitt that the administration is on board with Ryan’s current approach of wanting to replace Obamacare at the same time it’s repealed. He was also clear that he’s on board with the plan to use reconciliation to pass legislation with just 50 votes in the Senate. “You can repeal all the taxes. You can repeal all the subsidies,” he said. “You can create new tax credits, because all of this deals with spending.”

The “tax credit” line there is significant. The RSC has its own health care plan, as does the Freedom Caucus. Both rely on tax deductions rather than tax credits. That drastically reduces the level of benefit to low-income people. While both plans would allow workers to deduct health insurance expenses against payroll taxes (which many poor people pay even if they don't pay income taxes), they still only get 7.65 cents back to pay for health care for every dollar they earn. As the Center on Budget and Policy Priorities' Edwin Park explains, a single poor adult making $10,000 a year would only get $574 in benefit, nowhere near enough to buy a health plan.

Mulvaney’s statement suggests he’s made his peace with Ryan’s support for refundable tax credits, which would at least provide $2,000 to $4,000 per person in assistance to buy health insurance. For poorer, and older, people, Ryan’s approach would provide much less help than Obamacare currently does. But at least it does more than the RSC’s tax deduction.

Where Mulvaney’s background in the RSC and Freedom Caucus might matter more is when it comes to Medicaid. As a presidential candidate, Trump promised to never cut Medicaid, but he’s since come out with a plan to block-grant it, turning it over to the states and slashing its funding considerably. It seems clear that this program is exempt from his pledges to never cut entitlements. “Clearly, you can help fix and solve Medicaid as part of this larger Obamacare replacement, right, that the two things are tied together,” Mulvaney told Hewitt. “So if we get Obamacare replacement right, it might also allow us to fix Medicaid.”

How would Mulvaney “fix” Medicaid? Well, for starters, both Ryan’s leaked plan and the RSC plan fully repeal the Affordable Care Act’s expansion of Medicaid. That would take away insurance from 11 million people, right off the bat. The House GOP's plan also puts a "per capita cap" on Medicaid, so funding per beneficiary can't rise faster than inflation plus 1 percent. That's much slower than Medicaid spending generally grows, due to the rising cost of health care and the aging population (many people on Medicaid are low-income or disabled seniors). CBPP's Park estimates that the House plan would cut Medicaid spending overall by about $560 billion over 10 years.

Maybe Mulvaney will embrace that plan. Or maybe he’ll go further. Recall that the latest RSC budget includes $1.6 trillion in 10-year cuts to Medicaid and other non-Medicare, non-Obamacare health programs. That’s a truly massive slashing that will almost certainly require millions if not tens of millions of people to leave the Medicaid rolls. The Urban Institute concluded that milder cuts to Medicaid in Ryan’s 2013 budget would’ve kicked 14 million to 20 million people off the program. It stands to reason that the RSC cuts would do even more.

And with Mulvaney reportedly leading the White House’s effort on health care, Medicaid policy could shift in that direction. Tom Price’s budget included huge cuts to Medicaid, but smaller ones than in the budgets Mulvaney helped craft and voted for. If Mulvaney’s congressional record is any indication, he could push Paul Ryan and House Republicans to enact larger cuts to Medicaid.

Influence in the Trump White House is often a fleeting commodity, and we don’t know how long Mulvaney’s tenure as administration point person on health care will last. But his record suggests he might be the single most conservative member of the administration on budget issues. That’s bad news for the tens of millions of people who rely on Medicaid.

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