Bloomberg News

Walker Says Entitlements Should Be Cut to Reduce Deficit

February 23, 2013

Wisconsin Governor Scott Walker said Congress should reduce the budget deficit by paring back spending on Social Security and Medicare instead of relying on across-the-board spending cuts scheduled to begin on March 1.

“Long-term, there’s got to be some sort of entitlement reform,” Walker, 45, said in an interview on Bloomberg Television’s “Political Capital With Al Hunt,” airing this weekend. “You’ve still got to start tackling some of these entitlement reforms now.”

President Barack Obama and Congressional leaders are locked in a disagreement over the U.S. budget deficit. If Congress doesn’t act, federal spending will be reduced by $85 billion in the final seven months of this fiscal year and by $1.2 trillion over the next nine years. Half of the cuts would come from defense and half from domestic spending. The reductions were designed to be so unpalatable that lawmakers would come up with a way to replace them.

The federal government shouldn’t raise taxes again because that could exert a drag on the still-recovering U.S. economy, said Walker, who won election in 2010, when his party gained the majority in the U.S. House. In January, Congress passed legislation allowing levies on top earners’ income, as well as workers’ payroll taxes, to increase as scheduled.

“Anything that takes more money out of the economy could have a negative impact on revenues,” Walker said. “I get long- term why that’s part of the discussion, but in the short term, we’re still having a fragile recovery.”

Entitlement Programs

The governor said entitlement programs, such as Medicare and Social Security, are expanding the federal budget deficit. Cutting entitlements won’t hurt the economy, he said.

“I don’t think that has a negative impact on the economy,” he said. “Politically, it may be a challenge for some folks in this town, but it’s something that has to be done.”

Republicans in Congress need to spend more time discussing issues that are important to voters, rather than whether to increase the nation’s borrowing limit or the mandatory budget cuts, known as sequestration, Walker said. They should discuss how to spur the economy by cutting taxes and easing regulations, he said.

“We talk a lot about frugality,” he said. “We don’t talk enough about growth.”

Medicaid Expansion

While Republican governors of states including Florida, Ohio and Michigan have opted to expand Medicaid for the poor under Obama’s health-care plan, Walker declined to do so.

He decided to turn down the federal money, which would cover the cost for the first three years, in favor of changing the state’s health-care program so that more residents will buy subsidized insurance. He said it will reduce the number of uninsured residents of his state by 225,000, a slightly smaller drop than would be achieved by expanding Medicaid.

“Medicaid should be for what it was designed for, which is covering people living in poverty, but it shouldn’t be a permanent entitlement,” he said. “It shouldn’t be something where we permanently have people dependent on the government.”

Walker took issue with Republican strategist Karl Rove’s plans to back Republican primary candidates who have a greater chance of winning in the general election.

Republicans should focus on finding candidates who offer a “positive” alternative to Democratic policies, he said.

“The big idea that I’m trying to push to my Republican friends across the country is to stop being focused on the other side and what’s wrong with them, but being optimistic, being relevant, and ultimately being courageous and being willing to act on it,” he said.

To contact the reporters on this story: William Selway in Washington at wselway@bloomberg.net;

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net


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