Democrats Threaten to Allow Medicare Cuts to Save Obamacare

(Bloomberg) -- House Democrats are threatening to allow automatic spending cuts triggered by the Republican tax bill to take effect next year unless Speaker Paul Ryan ends an attempt to cripple Obamacare.

Under a 2010 law known as PAYGO, the $1.5 trillion reduction in government revenue caused by the Republican tax cut legislation would trigger years of across-the-board cuts to programs including Medicare starting next year. Ryan and Senate Majority Leader Mitch McConnell have vowed the cuts won’t be imposed, but they would need Democratic votes to waive the law.

Part of the price the Democrats want to extract is keeping the Obamacare mandate that individuals buy health insurance, which would be eliminated in the Republican tax bill heading toward final passage next week.

“Should you enact a tax bill by the end of the year that adds $1.5 trillion to the deficit and, as a result, triggers PAYGO cuts next month, any effort to mitigate those cuts must also remove these other catalysts of uncertainty,” the Democrats’ letter to Ryan said Friday. “At a minimum, that must include rejecting the elimination of the individual mandate as well as the use of reconciliation procedures next year for Medicare benefit cuts in order to fill the fiscal gap left by your tax bill.”

The letter was signed by 189 Democrats, including House Minority Leader Nancy Pelosi, her top deputy Steny Hoyer and the ranking members of the Ways and Means, Energy and Commerce and Budget committees.

Senate Democrats so far haven’t joined in making similar threats. They have more leverage than House Democrats because the narrow Republican majority in the chamber means at least eight votes from the minority party are needed to take action on most bills.

Whether House Democrats can extract concessions depends on whether Ryan can muster support for a PAYGO waiver from Republican conservatives, who may favor across-the-board spending cuts.

One strategy for Ryan and McConnell could be to raise the ante by attaching the waiver to a bill preventing a government shutdown.

©2017 Bloomberg L.P.