Romney proposal makes Medicare voucher-like system (AP)

WASHINGTON ? Mitt Romney on Friday unveiled a plan to fundamentally re-shape Medicare, tackling one of the 2012 presidential contest's most delicate issues before a skeptical crowd of tea party activists.

To cut costs, the Republican presidential hopeful and former Massachusetts governor would introduce vouchers, or "premium supports," to future recipients of the popular health insurance program for the elderly. Romney addressed the lightning-rod issue during a fiscal policy speech before an afternoon gathering of conservative activists at the Washington Convention Center, where the tea party-allied group Americans for Prosperity is holding a two-day event.

Romney has struggled to win tea party support, and his plan is a nod of sorts to those who want to slash behemoth government programs. In other areas he may not go as far as some conservative activists would like, but Romney says he would cut federal spending by $500 billion in his first term as president.

Few cuts will be more contentious than his plans for Medicare.

Romney's plan is similar to the controversial proposal released by Wisconsin Rep. Paul Ryan earlier in the year. He hasn't finalized many details, but the federal government would no longer pay for all Medicare patients' health-care costs under a Romney system. Instead, it would offer future recipients a set amount of money to be used for a private insurance plan or a version of the traditional program.

"The federal government will help seniors pay for the option they choose, with a level of support that ensures all can obtain the coverage they need," Romney said.

A senior Romney adviser noted earlier in the day that, "In that respect, it's exactly the same exact thing as a Ryan plan." "The idea instead is to set the Medicare payment to provide each senior with money that they can go out use to go and buy a plan," the adviser said.

A host of unrelated cuts would trim as much as a half trillion dollars over four years, he said.

Romney would strip federal subsidies of $1.6 billion from Amtrak, which could threaten the survival of the popular rail network. He would force $600 million from the National Endowment for the Arts, the Endowment for the Humanities and the Corporation for Public Broadcasting. And he would trim foreign aid by $100 million.

Romney told a New Hampshire audience Thursday night that unless the U.S. takes drastic action, it is headed for a fiscal crisis equal to that in Greece. And he said the fight to cut spending will affect both America's national security and its moral standing in the world.

"We have a moral responsibility not to spend more than we take in," Romney said.

Among his priorities is a plan to repeal President Barack Obama's health care overhaul, which Romney says would save $95 billion. The savings to taxpayers, however, would be far less. While politically difficult, a full repeal would also undo spending cuts and tax increases elsewhere, ultimately slicing the federal budget deficit by $16 billion, according to the nonpartisan Congressional Budget Office.

Romney's proposals may please some conservatives, but it stops well short of a plan released last month by Texas Rep. Ron Paul, who says he would cut $1 trillion in federal spending in his first year in office. Paul, who is also seeking the GOP presidential nomination, wants to eliminate the Energy, Housing and Urban Development, Commerce, Interior and Education departments.

Romney's speech comes as congressional leaders struggle to craft a bipartisan plan cut the federal deficit by $1.2 trillion. That debate includes the popular entitlement programs Medicare and Social Security, so it's possible the next president could inherit a dramatically changed system.

Among the changes to Social Security Romney favors are the retirement age for younger workers and limiting increases for wealthier recipients. And on Medicare, he says the government would subsidize premiums for seniors to purchase their own plans.

"There would be a premium support level that governor Romney I think would describe as generous and appropriate that hasn't been determined yet," a Romney adviser said Friday.

Romney acknowledged that there would be opposition.

"Now's the time to level with the American people," he said. "This is not going to be easy. It's going to require tough choices."

Source: http://us.rd.yahoo.com/dailynews/rss/gop/*http%3A//news.yahoo.com/s/ap/20111104/ap_on_el_pr/us_romney_spending

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