Back to the future? Washington proposes sharp cuts for Indian Health Service

WASHINGTON — April 18 marked 100 days since the Republicans won control of the U.S. House of Representatives.

The milestone coincides with an alarming trend: The nation’s debt limit has been breached at $31 trillion. The Treasury Department has said it is taking “extraordinary measures” to continue paying bills, but funds will run short this summer.

Speaker of the House Kevin McCarthy went to Wall Street April 17 with a simple message: Not to worry. Congress will do its job and will pass legislation that will lift the debt ceiling – as long as both the Democratic-run Senate and the White House agree to substantial cuts in federal spending.

This is where it gets complicated. It’s not clear that Republicans are on the same page. There are a variety of sharply different perspectives on the budget, on energy and climate, and on social issues such as abortion rights. That’s just the House Republicans, one-third of a divided government. So how do they get consensus in the House before sending any measure to the Democrats in the Senate and White House?

There is no clear path leading to a resolution that would raise the debt ceiling and end a fiscal crisis. In fact, McCarthy’s plan could hit tribal communities and programs hard.

It’s easy to dismiss this chapter as a partisan political debate, one far removed from the day-to-day life for people living in tribal communities. But that is not the case. The stakes are huge. The United States has never defaulted on its debt (something that smaller countries do all the time) and as a result the dollar is the world’s primary currency and the cost of borrowing is extraordinarily low.

That could all change in the next few weeks; Let’s think about the math.

It’s important to remember that American Indians and Alaska Native programs represent a tiny fraction, far less than one percent of the overall budget.

The federal budget has three pots. Appropriations or discretionary spending; Entitlements or mandatory spending; and, interest on the debt. All of the proposed cuts would come from the discretionary pot – a pot that only accounts for about 30 percent of federal spending.

McCarthy is suggesting rolling back those discretionary funds to fiscal 2022 levels, cancel any unspent COVID-19 funds and cap future spending at no more than one percentage point a year over the next decade.

His proposal amounts to at least a $327 million cut for the Indian Health Service. And that’s just a start. On top of that there will be cuts to new spending for behavioral health, urban programs, and the House proposal would add new work requirements for Medicaid funding. A similar story at the Bureau of Indian Affairs and for virtually all of the programs that serve American Indians and Alaska Natives.

The plan to cancel any unspent COVID-19 (including the Inflation Reduction Act) could be several billion dollars on top of that. Tribes and other eligible parties are going through a process to collect these funds – meaning tribal government funds are now being spent to plan and organize activities over grants that won’t happen. (It’s hard to be precise because the grants are in process. Some $20 billion was allocated for tribal governments.)

Across the board the return to a fiscal year 2022 budget will result in layoffs – and a significant restructuring of the federal government’s ability to provide services in Indian Country.

Interior Secretary Deb Haaland, Laguna Pueblo, testified April 19 before the House Natural Resource Committee. A contentious hearing was expected. The hearing memo says the Biden administration has “funneled staggering amounts of money to the Department of the Interior but has yet to implement any kind of oversight on how these taxpayer dollars are being spent.”

This is the framework for the testimony, from the hearing memo: “Respect for Congressional Oversight – During the 118th Congress, the House Committee on Natural Resources continues to focus on rebalancing the scales of Congressional oversight in order to ensure that taxpayers are protected from government waste, fraud, and abuse.”

The memo accuses the Interior Department of a “relentless war on American energy and mineral security, with recent actions including the Boundary Waters mineral withdrawal and ending lease sales in parts of Alaska.”

The committee also says the president’s budget is tilted toward clean energy in Bureau of Indian Affairs programs. “The FY 2024 budget request for the BIA includes a $12 million increase for the Minerals and Mining Projects Program and specifically mentions continued focus on clean energy programs, instead of supporting tribal self-determination through an all-of- the-above energy approach.” Translation: Where’s the money for fossil fuels?

And for the House one percent proposal? That would mean significant cuts every year going forward – partly because the population is growing and partly because of inflation.

The Indian Health Service will be hit particularly hard because it’s funded through direct appropriations. Medicare, Medicaid and Veterans’ health programs have mandatory funding, if the patient is eligible, the money is there. That puts the IHS at risk from draconian, across the board budget cuts.

The Kaiser Family Foundation said only 12 percent of all federal health spending – or $231 billion is discretionary. “Discretionary health spending includes nearly all spending on veterans’ hospital and medical care, estimated to provide services to more than 7 million veteran patients in FY 2022; spending on agencies such as the CDC, NIH, FDA and HRSA; global health spending; and certain other health programs and services,” Kaiser said.

Of course all of this is just McCarthy’s proposal. House Republicans have yet to pass the legislation, and if that happens, the measure would have to go to the Senate where Democrats have the majority.

McCarthy said the cuts the House Republicans want to make are not “draconian.” He pledged not to touch the Medicare and Social Security programs important to older Americans that other Republicans want to cut.

“A speech isn’t a plan, but it did showcase House Republicans’ priorities,” said Andrew Bates, the White House’s deputy press secretary. Senate Majority Leader Chuck Schumer said it’s McCarthy who “continues to bumble our country toward a catastrophic default” and that “President Biden and I are happy to meet with the speaker when he has something to talk about,” he said.

There is a rich irony here. One part of the budget that is outside of the political debate is interest on the debt, currently about $475 million. That cost is set by markets when the federal government sells bonds to pay for its operations.

If the federal government defaults – even for a second – that cost will go up. The “cost” of money now is about 2.1 percent, not quite a record low, but close.

The Center for Budget and Policy Priorities says this is a debate that should not be routine.

“The debt ceiling conflicts with the legally binding requirement that the government pay all its bills, on time and in full — for example, payments to doctors and hospitals that serve Medicare patients, contractors who supply the Defense Department, and college students who receive Pell Grants to help with their tuition,” wrote Richard Koogan, a senior fellow. “To end this conflict of laws, Congress should raise, suspend, or — best yet — abolish the debt ceiling well before the Treasury runs dry and should not engage in reckless brinksmanship by insisting on attaching other controversial measures.”

The debate going on in Washington will most certainly increase that cost.

And to put this into perspective. The cost of that debt makes all of the federal programs that serve American Indians and Alaska Natives less than a rounding error.

The Associated Press contributed to this story.