Now if we Could Just Combine Them…

Financially, The United States of America is heading the way of Greece, Britain and France. Rebellion and fiscal implosion are possible (likely?), and a dedicated third party is almost definite, if we don’t balance the budget by 2013. Unfortunately, few Members of Congress are willing to take the political risks necessary to balance the budget at all, never mind by 2013.

Fortunately, at least some Republicans are willing to take a stab at eventual balance of the budget. Rep. Paul Ryan (R-WI) has his Roadmap, but I do not consider it all that serious since it adds debt for over 50 years before balancing the budget. We can’t afford that. What we can perhaps afford is the Ryan-Rivlin proposal which, as Veronique de Rugy shows here, significantly diminishes the cost of health care over the next 40 years and saves hundreds of billions annually while doing so.

Unfortunately, it’s not enough to worry about the long-term debt if we can’t get past the short-term. This is where the decent, though not nearly expansive enough, Spending Reduction Act kicks in. Proposed this week in The Washington Examiner by Senator Jim Demint (R-SC), the House’s Republican Study Committee (RSC) Chairman Jim Jordan (R-OH) and the RSC’s Budget and Spending Taskforce leader Scott Garrett (R-NJ), it aims to cut $2.5 trillion in discretionary spending over the next decade.

However, no plan to balance the budget is complete without looking at national defense and budgetary fraud, and this is where Senator Tom Coburn (R-OK) enters the field of play. First with his various attempts to combat $100 billion in Medicare and Medicaid fraud (see one example from the last Congress here), and secondly with his detailed memorandum last year, Coburn is a one-man wrecking machine in the Senate.

If even half of the potential savings in these efforts are realized, the federal budget would drop by over $200 billion right away. Add in the medium-term and long-term impacts of defense and health reforms and we might actually have a balanced budget before Indiana governor Mitch Daniels hits his second term. (Of course, with Chris Christie as his vice president, maybe it will happen even faster. One can only hope.)

Comparing Bush Spending to Clinton Spending

Yesterday, Jed Lewison of Daily Kos put up a post comparing Clinton’s eight years of spending to Bush’s eight years of spending. The post- which cited the very reputable Tax Policy Center for its budget claims- showed just how badly Bush spent compared to Clinton. According to Lewison, Clinton saved over $100 billion in his final budget, Fiscal Year 2001.

I found the post interesting- not the least because Lewison cited the TPC, a partnership of the Urban Institute and the Brookings Institution- but also because TPC’s (and, thus, Lewison’s) claims are in direct contrast to what the Treasury itself shows in the 2000-2001 Fiscal Year, which is an increase in the federal debt of over $100 billion. I decided to contact Lewison about his claims. Below are the questions I sent, and his responses:

1. According to the Treasury, the debt increased from 9/30/2000 to 9/30/2001. What are the differences between the numbers you used and the numbers from the Treasury?

2. How much of the Bush debt you cited can be attributed to the growth in entitlements started pre-Clinton and pre-Bush years (i.e. not including the Medicare Drug Bill, etc. that added to the debt) and that obviously grew during both presidencies?

Lewison’s response:

1) The increase in total debt is basically an increase in the Social Security Trust Fund (i.e., intragovernmental debt, money that the government owes itself, which accounts for a bit over a third of all debt). I’m not an expert on all the accounting rules, but if you look at the non-intragovernmental debt, it decreased. But how Social Security is accounted for is a separate issue from the overall fiscal well being of the Federal government under Bush and Clinton.

2) Outside of new programs like the Medicare drug plan, the rate of growth in entitlements should be a wash; since they are proscribed by law, both administrations would have experienced growth in them. The underlying demographics would have had to have been huge to explain the difference in overall spending growth rates.

Regarding #1, Clinton almost balanced the annual budget, but never took care of the long-term entitlement issues America was (and still is) expected to face. So while he (and his Republican Congresses) should get credit for almost balancing the budget, they should also get blame for not touching the Third Rail of politics that is Social Security. I think Lewison is mostly right on this one, though I disagree with his last sentence. (Note: the 2000-2001 recession cut into the revenues in FY2001, which Clinton could not have accounted for in his FY2001 budget, since the recession started one month after the start of FY2001.)

Lewison is a bit more inaccurate in his second point. The rate of entitlements can’t be a wash, as they continue to annually increase as a percentage of the national budget. This in no way excuses Bush and the Republicans for their spending spree(s), nor the Democrats who were in charge for two fiscal years during the Bush presidency, but it does clarify things a bit, I think.

Lewison’s post does point out that a Democratic president spent much better than a Republican president, and rightly so. He did, however, miss that that Bush was opposed by most Republicans on TARP (which Democrats mostly supported, as well as much of the Republican leadership), and while he acknowledged the drop in revenues from the recession at one point in the post, he neglected to do the final math. Using Lewison’s numbers:

• The FY2009 deficit was $1.4 trillion;

• the stimulus accounted for $200 billion of that deficit;

• and the recession accounted for $400 billion losses in revenue for FY2009.

So, while the deficit was an atrocious $800 billion, what Bush was directly responsible for in FY2009 deficit was not nearly as bad as Lewison would like to think. It certainly was not as bad as the FY2010 or proposed FY2011 budgets under President Obama (who, admittedly, has to deal with a terrible recession and seven decades of entitlements and many years of war he is not responsible for).

Overall, as I have been saying for some time, both parties need to grow up. The Debt-Paying Generation is here, as a previous post pointed out, and unless we get a batch of politicians willing to reform how much we spend on Medicare, Medicaid, Social Security and defense, the situation is only going to get worse. (And no, the new health care law won’t help prevent that financial worsening.)

Full disclosure: I informed Lewison I would likely be using his comments in a post. I am not pulling a bait-and-switch by asking him for his thoughts without disclosing I would use them.

The Debt-Paying Generation Has Arrived

In the near future, The Heritage Foundation’s Bill Beach and I will officially introduce the soon-to-be-important term “The Debt-Paying Generation,” (DPG) a term that all Americans should become familiar with. It is the financial future of America, and not a pretty one at that.

What is the DPG? It is those Americans who are presently between 5 and 30, and will be hardest hit from childhood through death by the debt irresponsibility in Washington. According to calculations broken down from Census Bureau data, the DPG is approximately 35% of the total American population, and currently stands at 108,670,000. Given expected life spans- nearly 80 years old on average, and having increased an average of three years since 1990- it is not impossible to believe that the DPG will be the longest-lived generation in American history.

Why is this age group being named the “Debt-Paying Generation?” Well, primarily because this generation will almost certainly have to pay down most of our national debt through higher taxes, which almost certainly will relegate them to the status of being  the first generation of Americans to live a worse life than its immediate predecessors. Additionally, to rub salt in the wound, the big three entitlement programs—Social Security, Medicare, and Medicaid—will have to be cut and, thus, will pay less to the Debt Paying Generation than the Boomers.

In short, to summarize an upcoming Heritage Foundation paper on the subject, a huge population of Americans will be financially burdened, and their quality of lives diminished, because of errors and dereliction of duty by Members of Congress and presidents in both parties. (Full disclosure: I worked for two months at Heritage on said paper.)

When I interviewed Rep. Michele Bachmann (R-MN) for this site, I asked her about the DPG. She expounded upon how much debt is being added by the Democrats, and how it is demoralizing to young people. According to Bachmann,

I will tell you, anywhere I go to speak, I ask that question. “Do you believe you live better than your parents?” Almost everyone in the audience puts their hand up. I ask them, “do you think your children will live better than you financially?” Virtually no one puts their hands up. I doubt in the last 234 years, if you ask that question of any generation, that they would think that their children would not be better off than they are; I just don’t think that you would have gotten that response. That’s really what is frightening today, because we’ve always been a country that’s been about forward- looking people, and growth. And this is one of the first times when Americans look into the future, and they see diminished way of life, and they see decline.

It is not only Democrats, of course, who are at fault. Republicans voted in unpaid-for Medicare legislation; tax cuts that added to the debt, according to the Congressional Budget Office; and launched a War on Terror that, according to the Congressional Research Service, had cost over $900 billion as of September 2009. Additionally, few Republicans are willing to address our overall defense spending, which increased between 2001 and 2008 by over 90%, not including inflation. However, the real problem is the unwillingness of both parties to address our growing entitlements which, according to the International Monetary Fund (IMF), need to be cut by 12% of GDP by 2015 in order to keep the debt manageable. (This equals just over $400 billion in annual cuts at the federal level, in 2012 dollars.) In absence of this courage, of course, tax hikes (or “revenues,” in the election-year language of Democrats) will be necessary, and the level of taxation will just devastate the DPG.

Unfortunately, I do not see the political will in Congress necessary to make the changes the IMF recommended. From the Beach/Siggins essay:

The IMF recommendations would consist of Congress eliminating, in 2012 dollars:

• 57% of defense; or, if Congress keeps the full defense budget,
• Over twice the interest payments for next year; or, for a third option,
• Over 30% more than the president’s entire proposed Medicaid budget.

Each of these would have to happen every year until 2015. Of course, Congress could simply eliminate the entire discretionary budget; all of Social Security; and two-thirds of the interest payments for FY 2011  (well, except that not paying the debt’s interest would be to default on the debt itself) to reach the same total cuts this year, and leave the budget in other years untouched.

Medicare and Medicaid are necessarily the biggest concern of budget hawks, especially those who look decades into America’s financial future. Not far behind, however is Social Security. I recently conducted an interview with James Agresti, the founder of Just Facts, a New Jersey-based think tank, about Social Security and its impact on the National Debt. James- who regularly updates the burden of the national debt on Americans on his website- informed me that the Social Security Administration (SSA) may be misrepresenting the solvency of Social Security. According to James,

[I]n 2001, the Social Security Administration projected the trust fund balance would reach $2.54 trillion by the end of 2007. It actually reached $2.24 trillion- 13 percent lower than projected. Yet, if you compare the projections from the 2001 report and the 2008 report, they’re more optimistic in the 2008 report than in the 2001 report. So the financial condition of the Social Security program is worse than they projected…but yet they are saying it’s going to be better in the future. So in 2001 they were saying, [with] expected annual deficit in 2075, we’d have to increase Social Security taxes by about 49 percent to cover that deficit. In 2008, they said we’ll only have to increase taxes by 32 percent.

On April 15, The Center for American Progress noted that in President Obama’s proposed Fiscal Year 2011 budget, Social Security, Medicare and Medicaid add up to 41.5% of the federal budget. That is expected to grow astronomically over the next 70 years, under current budget proposals and with Congress’ current intestinal fortitude. Unfortunately, it won’t be these politicians who suffer- it will be their kids and grandchildren. To paraphrase a columnist from the Center for American Progress in The Washington Post some weeks ago, we need a generation of politicians who don’t care about being re-elected, and will thus make the tough choices. Hopefully, the American people vote in such politicians this fall, and in 2012, to prevent America from having its own Greek Tragedy, riots and all.

An Indication of Seriousness, or More D.C. Manipulation?

H/T to Hot Air for linking to the deficit reduction plan by Republicans on the House Budget Committee. The plan would, according to Republican estimates, cut $1.3 trillion over ten years.

This is nowhere close to enough to even be a solid dent in the national debt (it averages out to $130 billion in annual savings- which is less than 1/10 of the deficit for this year alone), but at least it’s a start. The plan also, as Ed Morrissey pointed out, takes care of some of the major issues with Freddie Mac and Fannie Mae, which are sucking tens of billions of dollars annually from the American taxpayer, and continue to be damaging to the economy and the possibility of an economic recovery.

Of course, Social Security, Medicare, defense cuts, Medicaid and subsidies to private companies (outside of TARP and the stimulus) are not addressed. This is disappointing, and may show a lack of reform seriousness on the part of Republicans. However, this plan is a start. Considering that House Democrats can’t even pass a budget, this is a great public relations step for Republicans, and a small bit of hope for those of us who want to see a functioning America 10 years.

The Republican press release can be seen here, and the specific cuts are outlined below, as posted by Morrissey:

• Cancel Unused TARP Funds. Prohibit the Treasury Secretary from entering into new commitments under the Troubled Asset Relief Program [TARP]. Ending TARP would prevent up to $396 billion in additional disbursements; CBO estimates savings of $16 billion. H.R. 3140 introduced by Rep. Tom Price of Georgia.
• Cancel Unspent ‘Stimulus’ Funds. Rescind all unobligated budget authority authorized under the “stimulus” bill and dedicate to deficit reduction. Saves up to $266 billion. H.R. 3140 introduced by Rep. Tom Price of Georgia.
• Cut and Cap Discretionary Spending. Return non-defense discretionary spending to pre-Obama (fiscal year 2008) baseline levels. Saves up to $925 billion. Legislation introduced by Reps. Ryan and Hensarling (H.R. 3964) and Rep. Jim Jordan of Ohio (H.R 3298) include caps on discretionary spending.
• Reduce Government Employment. Hire one person for every two who leaves civilian government service until the workforce is reduced to pre-Obama levels (exempting the Departments of Defense, Homeland Security, and Veterans Affairs). Saves an estimated $35 billion. H.R. 5348 introduced by Rep. Cynthia Lummis of Wyoming.
• Freeze Government Pay. Freeze Federal civilian pay for 1 year. Saves an estimated $30 billion.
• Adopt the Legislative Line-Item Veto. Enact a constitutional line-item veto law. The President’s FY 2011 budget included terminations, reductions, and savings that would achieve $23 billion in one year. While Congress may not accept all these savings, the Line Item Veto can help reduce spending. H.R. 1294 introduced by Rep. Paul Ryan of Wisconsin.
• Reform and Bring Transparency to Fannie Mae and Freddie Mac. Reform these companies by ending conservatorship, shrinking their portfolios, establishing minimum capital standards, reducing conforming loan limits, and bringing transparency to taxpayer exposure. According to CBO, the cost to taxpayers of putting government in control of Fannie and Freddie is $373 billion through 2020. Saves an estimated $30 billion. H.R. 4889 introduced by Rep. Jeb Hensarling of Texas. H.R. 4653 introduced by Rep. Scott Garrett of New Jersey.
• Create a Sunset Commission. Establish a commission to conduct systematic reviews of Federal programs and agencies, and make recommendations for those that should be terminated; and provide for automatic sunset of programs unless expressly reauthorized by the Congress. H.R. 393 introduced by Rep. Kevin Brady of Texas.

Can Americans Make the Tough Choices?

The Center for American Progress, which bills itself as the liberal Heritage Foundation, has a really good pie chart of how the federal budget is split among the various areas it funds. I recommend taking a look, so you can see exactly where this massively oversized budget is going.

CAP also has a quick take- they call it an analysis, though it is far short of that- on where the money goes. In actuality, it discusses where Americans would cut the budget. Their findings, as correlated by the numerous sources the “analysis” cites, show Americans are mostly abstract about cutting the budget. According to CAP:

But, the American public’s disdain for “government spending” only holds up in the abstract. The public is much less willing to pull out the hatchet when asked about specific parts of the federal budget. That same Economist poll gave respondents a list of budget areas and asked them which ones should be cut. Only one area garnered majority support for reductions— foreign aid. And foreign aid makes up less than 2 percent of the federal budget even using the most expansive definition. Even eliminating it completely would have little discernible impact on the federal bottom line.

There was not even one other area aside from foreign aid where support for cuts cracked 30 percent, let alone 50, including everything from science and technology to aid to the poor. Support for cuts to two of the biggest budget items—Social Security and Medicare—didn’t even make it out of the single digits. And lest one think this one poll was an anomaly, recent polls from Quinnipiac and Democracy Corps confirm the overall message: people support the abstract idea of spending reductions, but don’t like actually cutting specific programs.

Americans need to make tough choices over the next several years to begin the long process of balancing the federal budget and eliminating our national public debt. CAP’s piece does a credible job of showing that, unfortunately, this may very well not happen. In particular, two segments of Americans deserve blame. First, young-and-middle-aged people don’t want higher taxes for entitlements they won’t receive. Secondly, old people don’t want to lose entitlement benefits for which they have been taxed; and middle-class America. Unfortunately, unless the sacrifices are made, our national debt will swallow this country whole. Hopefully, Americans will realize this and prepare themselves for the tough but necessary path to prosperity.

(For the record, I am one of the young people who doesn’t want to be taxed. I am all for cutting entitlements over time, slowly phasing people out of certain, among other ideas to balance the budget and lessen the debt. This is not fair to older people, but I think it’s the only viable option to kick-start the process. Otherwise, we’ll have to raise taxes, and that will devastate the economy. I have many other ideas, including ones I will address at a later time, but for the sake of this post I will stop with what I have above.)

Why This Bill Needs To Crash & Burn

With the House health care vote tomorrow likely to go in favor of Democrats, Republicans and conservatives are doubling down on their pressure on Democrats. We cannot let up until the final vote is cast. The vote is expected to happen tomorrow afternoon, so please call offices and spread around as much as you can just why we should oppose this latest boondoggle. I have gathered information from a variety of sources, and hopefully they can be of assistance.

Regarding the Congressional Budget Office score and other budget concerns:

Rep. Paul Ryan (R-WI) pointed was on Fox yesterday morning, and he pointed out some flaws in the CBO’s score of the House bill. They include accusations that the bill double-counts Medicare cuts, double-counts taxes, and doesn’t include the Doc Fix which, according to CBO in a report released after the bill’s score, would raise the deficit:

You asked about the total budgetary impact of enacting the reconciliation proposal (the amendment to H.R. 4872), the Senate-passed health bill (H.R. 3590), and the Medicare Physicians Payment Reform Act of 2009 (H.R. 3961). CBO estimates that enacting all three pieces of legislation would add $59 billion to budget deficits over the 2010–2019 period.

Under current law, Medicare’s payment rates for physicians’ services will be reduced by about 21 percent in April 2010 and by an average of about 2 percent per year for the rest of the decade. H.R. 3961 would increase those payment rates by 1.2 percent in 2010 and would restructure the sustainable growth rate mechanism beginning in 2011. Those changes would result in significantly higher payment rates for physicians than those that would result under current law. CBO estimates that enacting H.R. 3961, by itself, would cost about $208 billion over the 2010–2019 period. (That estimate reflects the enactment of two short-term extension acts, which lowered the cost in 2010 by about $2 billion compared with CBO’s estimate of November 4, 2009.)…

CBO estimates that enacting H.R. 3961 together with those two bills would add $59 billion to budget deficits over the 2010–2019 period. That amount is about $10 billion less than the figure that would result from summing the effects of enacting the bills separately. The $10 billion difference occurs primarily because H.R. 3590 and the reconciliation proposal would modify how the government’s payments to Medicare Advantage plans are set.

Secondly, the CBO score assumes the following:

CBO has not extrapolated estimates further into the future because the uncertainties surrounding them are magnified even more. However, in view of the projected net savings during the decade following the 10-year budget window, CBO anticipates that the reconciliation proposal would probably continue to reduce budget deficits relative to those under current law in subsequent decades, assuming that all of its provisions would continue to be fully implemented.

What are some of these provisions? They include hundreds of billions of dollars in Medicare cuts that Democrats will immediately move into covering the “Donut Hole.” So, as Ryan noted, the numbers are both double-counted and, furthermore, should we really believe Democrats are going to cut Medicare?

Secondly, the CBO never says the bill will save $1.3 trillion in the second decade, despite what Speaker Pelosi (D-CA) and President Obama are claiming. If you read the letter sent to Pelosi, the CBO says the savings might, if things go really, really well, end up being equal to, or less than, a one-half of one percent of GDP in savings. Unless Democrats are expecting a $130 trillion GDP for America, their numbers are wrong.

Last, but certainly not least, according to The Washington Examiner’s Byrok York, the bill includes the CLASS Act, which is a long-term care program that the CBO accounts for in its analysis. The problem? The CLASS Act is unaffordable in the long run, but the CBO only counts the intake of money, not the expenditures. Furthermore, it includes the Democrats’ student loan modifications, which is where much of the savings for the bill will come from. (Both of these points are explained in some detail here.) So, to summarize, the bill takes in a lot of money, but does not spend much of it for years. These and other budgetary concerns are analyzed quite well here, and by the Senate Budget Committee’s minority staff here.

I need to clarify, by the way, that I am not criticizing the CBO. They analyze what they are given by politicians, and so their numbers are sometimes necessarily incorrect. Blame the politicians- on both sides, yes, but in this case, the Democrats- for gaming the system so dishonestly. Furthermore, the CBO letter is a preliminary letter, which means its analysis is necessarily vague and has many suppositions. As Daniel Foster notes at The Corner, the final one is supposed to be out this weekend.

More bureaucracy and cost for Americans:

According to The Washington Examiner, the bill to be voted on would increase the number of IRS employees by over 16,000. So let me get this straight- we need more IRS employees? Well, I suppose they were doing such a good job with Geithner, Rangel, Daschle and the rest…

It gets worse, however. According to Americans for Tax Reform, the following occur in the bill:

• The number of new tax increases in the healthcare bill: 19
• The number of tax increases that unquestionably violate President Obama’s “firm pledge” not to raise “any form” of taxes on families making less than $250,000:  7
• The tax increase over the first decade if the healthcare bill becomes law: $497 billion
• The top federal tax rate on wages and self-employment earnings under this bill: 43.4%
• The annual tax hike for every man, woman, and child in America: $165
• The top federal tax rate on early distributions from HSAs under this bill: 59.6%

Next, according to Republican Representative Kevin Brady (R-TX) (H/T to the Examiner):

In addition to more complicated tax returns, families and small businesses will be forced to reveal further tax information to the IRS, provide proof of ‘government approved’ health care and submit detailed sales information to comply with new excise taxes.

Thirdly, there are a number of tax increases in the bill. Hundreds of billions of dollars worth, in fact, and they would hit those making less than $250,000 in some cases. Once again, the president is violating his pledge to not hit lower-income Americans. For some reason, Democrats continue to want to reduce the budget by increasing taxes. Or, to put it another way, they believe that hurting the economic growth of America is the way to go.

Fun Fact: Caterpillar will have its costs increased by $100 million in the first year of ObamaCare.

Special Deals- Remember, President Obama doesn’t care about the process

Senator Tom Coburn (R-OK) made a Profile In Courage statement Thursday that should send chills down the backs of every Democrat who changes from a “No” vote to a “Yes” vote in the House tomorrow. He threatened to- brace yourselves- hold them accountable, as well as those Democrats who accept deals for their “Yes” votes. Check out the video of Coburn’s statement here.

Unfortunately, some Democrats haven’t paid attention, it seems. Fox News reports a number of states getting special deals, including North Dakota, where last year’s “Yes” vote Earl Pomeroy is from. However, Pomeroy has a tough race this year, and is rumored to be concerned about the abortion elements of the House vote. Is he being bribed with the North Dakota assistance? Considering his is the only state with a loophole regarding the nationalization of the student loan industry (the bank in North Dakota is the only state-run bank in the nation), and he was named Chairman of the Social Security Subcommittee after the Rangel dust-up…I’d say it’s possible. (Full disclosure: my uncle is Pomeroy’s Chief of Staff, which is why I am saying it’s possible, not definite. My uncle wouldn’t work for a bought-and-paid-for Congressman, as my uncle is an honest guy.) The exemption may be pulled, however, as Democratic North Dakota Senator Kent Conrad is asking for it to be eliminated to avoid controversy.

Other deals noted by Fox include:

• Retains $300 million in extra Medicaid aid for Louisiana, which had helped win support for the Senate health bill from Sen. Mary Landrieu, D-La. The state is still struggling to recover from Hurricane Katrina.
• Keeps $100 million included in the Senate bill that is expected to go for a public hospital in Connecticut sought by Dodd, who is retiring.
• Preserves language won by Baucus permitting many of the 2,900 residents of Libby, Mont., to qualify for Medicare benefits. Some of them have asbestos-related diseases from a now-shuttered mine.
• Provides an additional $8.5 billion over the next decade for 11 states and the District of Columbia to help them pay for the more generous Medicaid assistance they have been providing low-income residents. These states are Arizona, Delaware, Hawaii, Maine, Massachusetts, Minnesota, New York, Pennsylvania, Vermont, Washington and Wisconsin.
• Maintains a Senate-approved provision giving extra money for hospitals and doctors in North and South Dakota, Montana and Wyoming.

Another possible deal is noted by the House Republican Conference on their website, where water regulation changes are being accused of acting as a quid-pro-quo. Is it true? We cannot be certain, but the water legislation comes dangerously close to two California Democrats’ support for the bill.

I guess I don’t understand- Americans are against the bill, against the process…and still Democrats can’t get the message?

In Short:

When it comes down to it, this bill is including the deals typically denigrated by Americans as normal in Congress; it raises the deficit significantly, at an estimated cost of over two trillion dollars; raises taxes on Americans; and continues the over-regulation of American health care. These and other reasons are why we need to keep pushing this over the next 22 hours, convincing our fellow Americans to tell their Democratic representatives to vote against the bill. Here is a partial list of people to call, and here is a lengthier one.

Coburn Gets A Good Start

Senator Tom Coburn (R-OK) is one of the most intelligent congressional Republicans on health care. During the crock “summit” a few weeks ago, he hammered the fact that one-third of America’s health care costs are wasted, and that anti-fraud (10% of Medicare’s costs) and tort reform ($54 billion dollars over ten years, according to the Congressional Budget Office) efforts are good places to start reforming the system. Today Yahoo! News has published a column by Coburn, where he lays out some specific failures of the Senate bill.

This is not Coburn’s best work- he did better in his two Huffington Post pieces, and as I said above was a great conservative representative in the summit. He does, however, name the number one issue with American health care and health insurance: cost. Since cost is directly related to access, lowering cost would increases access. Unfortunately, as Coburn points out, the Senate/House/garbage bill increases coverage (access) to health insurance without lowering cost, and in fact increases cost. Thus, we will have a failure on multiple levels if the Senate bill passes the House.

I think Coburn missed a couple of key points in his column, though this is not entirely his fault- he covered a great deal, and it’s not as if he could tackle everything in a 600 or 800-word opinion piece. The key things he did not address were: why he as a conservative opposes cutting Medicare, when Medicare is a single-payer health care system; why he thinks tort reform is such a big deal, when the CBO director said it would save only .5% in our health care costs (he addresses this in my first link above, though I think he overstates the case); and how lowering health care costs would lower the cost of insurance, something liberals seem not to understand.

When it comes down to it, major health care reform is simple and- surprisingly- probably bipartisan. We have to lower costs, increase patient choice and awareness of costs, lessen government control and incentivize consumer wisdom. I believe the following would do this:

1. Tort reform. It would lower health care costs, which in turn lowers health insurance rates and helps improve the quality of care in America. It would not lower costs as much as Coburn says it would (with respect, of course, to his experience as a doctor), but it would help more than the CBO says it would, since less defensive medicine lowers costs of tests/procedures; allows doctors to worry less about being sued and more about doing their work well; and allows better health because fewer invasive tests will be done unnecessarily.

2. Modify the employer exclusion tax. This would treat individual insurance the same as employer insurance is treated, thus incentivizing insurance policy holders to have their own insurance. Since there would be more direct control and knowledge of insurance, people would watch what they spend more, and when jobs are lost insurance would not necessarily be. It also would give consumers more money, since their individual insurance would now have the same tax treatment as employer-based insurance. Lastly, it would lower the costs on businesses, allowing them to grow.

3. Change our Medicare payment reform system in the style of the Dartmouth Atlas Program. It would lower costs, increase the quality of care and put something of a brake on the overutilization of resources America currently has.

4. Get rid of the insurance monopoly exemption. This will kick in market competition for both the numbers of insurance providers and the prices they charge.

5. Allow the purchase of insurance across state lines, for the same reasons as number four above.

6. Put government efforts towards going after waste, fraud and abuse in Medicare and private health care insurers and providers. Even if we only cut out half of the waste/fraud/abuse in Medicare, that is $30 billion saved every year. That’s $300 in ten years.

7. By doing the above, we would put effort towards a culture that does not insure for every little paper cut, but instead treats insurance as it should be looked upon- as a backup in case of catastrophic illness or unfortunate circumstances.

I know Coburn didn’t have the room to attack all of these angles, especially since he had to go after the House/Senate/garbage bill in-depth. I do think, however, that Democrats, all of whom allegedly hate insurance companies; want to increase competition; insist on lowering costs and increasing coverage; and want a better Medicare system, could easily support the above ideas, with the exception of tort reform. This is mostly because trial lawyers are absurdly influential in Democratic circles, but also because there is a legitimate argument against the lawsuit limitations referenced by the CBO- after all, in some cases, half a million dollars won’t be enough to pay for a doctor’s mistake.

Oh, and this answers one of my concerns with Coburn’s piece- if we institute tort reform, payment reform and combat Medicare fraud/waste/abuse, we will save many tens of billions of dollars a year in Medicare costs. THIS is where cuts should be made, not arbitrarily, as Democrats want. Though I dislike Medicare, government has forced two generations of Americans to pay into the system, and the older ones deserve to get something out of it.

The Cure for The Common Republican-A Pedagogical Argument Against Healthcare Reform

Republican resistance to healthcare reform (or, more appropriately, a federal takeover of the healthcare industry) has been, and continues to be strategically ambiguous, if not just plain quirky.  Their latest tactic, as reported by Bloomberg, is “telling House Democrats they can’t rely on the Senate to approve the [desired] changes [in the healthcare bill], which congressional leaders are trying to navigate through a process called budget reconciliation.”  By painting their constituents in the senate as untrustworthy, Republicans hope to … convince house democrats to give up healthcare reform altogether?  Maybe?  The problem with such political tactics is a lack of vision; Republican leadership has failed to effectively communicate what should be its central message–that any healthcare reform legislation that expands federal control of the healthcare industry, be it through regulations, subsidies, or social programs, is bad policy and will, inevitably, increase costs and stifle innovation.  It’s a simple, empirically backed argument that speaks truth to the common sense of even the most uneducated american.  Of course, taking such a position to its logical extreme would require opposition to not only healthcare reform, but Medicare as it now stands.  And, like Social Security, many Republicans see Medicare as politically untouchable.  Why?  Who knows.  The last true dismantling of a federal social program, in the form of the 1996 Welfare Reform Act, worked wonders.  The same could, and should be done for Medicare.  De-regulation–now that’s a strategy.

Control Freak-Why Bureaucracy Bites

Anytime you give a government agency the power to ‘approve’ and confer ‘benefits’ upon the individual members of an otherwise private industry, you’re asking for trouble.  The obvious reason is found in humankind’s disposition to scandal and laziness.  But an additional caveat exists in the inability of bureaucracies to fully anticipate or identify innovation, both within the industry itself, and in the ability on the part of individual members to manipulate and circumvent bureaucratic standards.  Even a bureaucracy comprised of the most intelligent, sincere, and dedicated individuals can’t predict the future.  Such is the argument against Medicare, the Food and Drug Administration, and The Department of Education, among many other federal agencies.  An article written in this morning’s Bloomberg identifies both problems in detailing recent exploitation by for-profit businesses of the tax benefits conferred on non-profit universities.  So, what’s the solution?  It’s simple.  Get rid of the red tape, cut the bureaucracy, and let the market manage itself.

Greece-ing the Skids Toward Dependency

On my drive from work, I was listening to a snippet of NPR where they were discussing the current economic apocalypse in Greece that Glenn Beck warned in his CPAC speech would occur here.  There have been riots in the streets as the Greek government desperately seeks to find ways of ameliorating their budgetary boondoggle.  They are of course frustrated by a plethora of failings and attempted fixes as reported by The Globe and Mail:

Greece will need to cut spending – by 10 per cent of GDP over 10 years – while raising revenue and cracking down on its untaxed black-market economy, which counts for as much as a third of all financial activity in the country. This combination could provoke further unrest, and may foretell similar tensions in Italy and Portugal.

If Greece’s crisis and accompanying political unrest were an isolated case, it might be more manageable, but this week the turmoil seemed to spread across the belly of Europe.

On Tuesday, Spain’s cities were shut down by unionized workers protesting its left-wing government’s plan to raise the retirement age to 67 and cut spending in order to deal with its own serious fiscal situation.

Spain has debt of 54 per cent of GDP and a deficit of more than 11 per cent, plus unemployment levels that approach 20 per cent and a housing-market collapse.

 

What struck me during the NPR report was their emphasis on the retirement age being raised while benefits are to head in the opposite direction in Greece; and at the same time, the story according to The Globe and Mail is that Greece is going to be taking similar steps.  

Riots are occurring in the streets because the government is controlling the retirement benefits of the citizenry.  Scary.

I was listening to the February 23^rd edition of Mark Levin (I do the free podcast a day later while I run, God bless him for making his show free and available) where he talked about being at the mercy of the government.  As these people in Europe see themselves: at the mercy of their government.  “Please sir, can I have some more?”  Where is the dignity and the honor?  I work in a place where I see the day to day sufferings of people who find themselves dependent on a government that only knows of their existence based on a number in a database.  Is this what we want?  To have to go to the government, to Social Security, to your Congress-persons’ offices, to Medicare, and beg for money to exist? 

Tocqueville once lamented about the coming age of rational control.  We look at a leviathan to take away the “pain of thinking” and the “agony of living” as Dr. Mansfield once recounted.  What needs to be explained to people, is that a dependency on government does nothing of the sort!  The people dependent on government might have purged the “pain of thinking” from their lives, but they continue to live in agony as their life is no longer at the will of him or her self or even Providence, but of boards, panels and case workers… How long after Health Care gets passed (should we be so unfortunate) before we are rioting in the streets because we have found ourselves in government bondage? 

-rj

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