Clinton and GOP Strike Budget Deal

May 2, 1997

-- After months of negotiations, the Administration and Congressional leaders have reached a budget agreement that would balance the federal budget by the year 2002. No written information on the details of the agreement have been released to date. However, initial reports on the agreement indicate $15 billion in cuts to the Medicaid program and over $65 billion in cuts to discretionary spending programs coupled with $85 billion in tax cuts.

Earlier intelligence regarding budget negotiations suggested much larger cuts in Medicaid and discretionary spending programs, including a limit on the federal Medicaid payment per beneficiary that would devastate health care access for people living with HIV/AIDS -- per capita cap. Despite the fact that Medicaid and discretionary spending cuts have been reduced, we are still concerned that the Medicaid cuts will have serious implications for programs vital to people living with HIV/AIDS. The Disproportionate Share Hospital (DSH) program will be the most likely target for Medicaid cost savings under the current budget agreement. The DSH program provides funding to hospitals that have large numbers of uninsured and Medicaid patients. The DSH program is a critical lifeline to safety net hospitals, providing important access to care for people living with HIV/AIDS.

We have also heard that the Medicare program will be targeted for over $100 billion in cuts under the budget agreement. Because more people living with HIV/AIDS are relying on Medicare for access to care, these cuts could have serious implications for our community.

AIDS Action representatives and other members of the AIDS advocacy community met with representatives of the Administration earlier this week to discuss the budget proposal. We were unanimous in our opposition to large Medicaid cuts and restructuring the program by capping federal Medicaid spending per beneficiary.

Discretionary Spending

Cuts of over $65 billion in discretionary spending will likely affect AIDS program funding for FY98 and even more dramatically in the remaining four years covered under the resolution. The discretionary spending cap for FY 98 will have a direct impact on the ability of Labor/HHS and VA/HUD appropriators to adequately fund AIDS programs -- Ryan White, HOPWA, etc.

Budget Process/Timeline

The budget agreement is on a legislative fast track. Negotiators from Congress and the Administration have hammered out the total amount that will be cut under the agreement. The negotiations will determine a binding number of total program cuts, however, they will not determine how those cuts will be achieved. It is the intention of the leadership to develop a budget resolution based on the agreement without going through a committee process. The budget resolution will most likely be brought to a vote in the Senate first. Majority leader Lott said the budget resolution could be voted on in the Senate by May 19th. Once a Budget Resolution has been voted on, the authorizing and appropriations committees will develop the policies to implement the budget cuts.

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