deficit


CBO’s Long-Term Budget Projections

The Outlook Is Even Worse Than It Looks

Last month, the Congressional Budget Office released its annual update to its long-term budget projections, and as I explain in a post on the Health Affairs blog, the unsustainable debt and deficits forecasted by the CBO are due to the familiar causes of growing entitlement spending, especially in health care.

The cause of the soaring deficits and debt is familiar:  rapid increases in entitlement spending (on top of the five decade run-up that has already occurred), driven by the aging of the population, rapidly rising health care costs, and spending associated with expanded health entitlements under the Patient Protection and Affordable Care Act (PPACA).  CBO expects that 54 percent of the federal spending increase on the major entitlements over the next twenty-five years will be attributable to the aging of the U.S. population.

Twenty-eight percent of the increase will be due to “excess cost growth” in health care – meaning cost escalation per capita in excess of GDP growth per capita.  The rest of the spending increase is due to the expansion of Medicaid and the new premium credits enacted in the PPACA.  When looking at just the health care entitlements, 40 percent of the federal spending increase is due to excess cost growth, 35 percent from population aging, and 26 percent from the PPACA program expansions.

You can read the rest of the post here.

posted by James C. Capretta | 12:41 pm
Tags: entitlements, debt, deficit
File As: Health Care

The Democrats’ Budget Blame Game

I have a new column up at National Review Online rebutting the Democratic Party’s recent efforts to cast themselves as the party of fiscal restraint:

The numbers speak for themselves. At the end of 2008, the federal government’s cumulative debt stood at $5.8 trillion. In 2009, the federal government ran its first-ever trillion-dollar deficit. And then did it again in 2010 and 2011. Over those three years, the government borrowed an additional $4.2 trillion. This year will be no better. The Congressional Budget Office expects another trillion-dollar deficit. During Obama’s four-year term, the federal government will have added nearly $5.5 trillion to the government’s cumulative debt total — nearly as much as was accumulated from 1789 to 2008!

You can read the rest of the article here.

posted by James C. Capretta | 2:08 pm
Tags: deficit, President Obama, Democratic party
File As: Health Care

The Repeal Windfall

As November approaches, Obamacare’s defenders are quite plainly desperate. They see public opinion solidly against them, and a devastating election fast approaching. Their latest gambit to protect what was jammed through Congress in March is to claim that repeal would be so costly to the federal budget that it would be impossible to pass, even with overwhelming popular support. That’s the spin some on the left put on a recent letter from the Congressional Budget Office (CBO) to Senator Mike Crapo.

But unfortunately for these advocates, that’s not what the CBO letter says. CBO’s message to Senator Crapo actually just states what is already obvious: If an effort were made to repeal just the Medicare cuts in the new law, it would, on paper, increase Medicare spending, and thus the federal budget deficit, by about $450 billion over ten years. Moreover, enacting a real “doc fix” to avoid deep and unrealistic cuts in Medicare physician fees will cost another $300 billion or so over the coming decade.

What this communication from CBO actually confirms, however, is that, contrary to White House assertions, Obamacare is a budget buster of the highest order. The claim that it would reduce the budget deficit over the coming decade has always rested on a series of gimmicks, implausible assumptions, and sleights-of-hand that have been exposed repeatedly over the past year, most especially by Congressman Paul Ryan in the presence of President Obama. Among the most egregious deceptions is the double- counting of cuts in Medicare’s reimbursement rates for hospitals and other providers of care — cuts so deep that they would push Medicare’s rates below those paid by Medicaid by the end of the decade. Even if these cuts were realistic — which they aren’t — they can’t both be used to pay for a new entitlement and to improve Medicare’s solvency, as the White House claims. The same money simply can’t be spent twice. Moreover, this money is almost certainly never going to materialize anyway because, as Medicare’s chief actuary has warned repeatedly, they would seriously reduce access to care for seniors by driving hospitals and physicians out of the program. It is all but inevitable, therefore, that Congress will step in at some point to reverse the “cuts,” and probably sooner rather than later. When that happens, it will only confirm what’s already abundantly clear — that these unsustainable payment reductions should never have been allowed to grease the way for a permanent and massively expensive entitlement program.

Indeed, contrary to latest spin from the left, not only would repeal not bust the budget, it would in fact produce a budgetary windfall of such enormous size that it could pay for a sensible reform of American health care and for deficit reduction too.

The centerpiece of Obamacare is the largest expansion of entitlement spending in a generation. CBO estimates that the new law will add 35 million people to the federal government’s health entitlement rolls by decade’s end — and that’s almost certainly a lowball estimate. Gross federal spending for this added entitlement burden, plus various other spending provisions in the bill, is expected to reach $233 billion in 2019 alone, and then grow at a rate of about 7 percent annually every year thereafter. That means Obamacare’s spending will total at least $3.4 trillion over its second decade, on top of the $1.1 trillion it will cost between now and 2019. And it’s likely to be much more than that when more realistic assumptions about employer dumping of coverage are factored into the estimates.

So that’s at least $4.5 trillion in federal spending that would be avoided over the next twenty years if Congress moved ahead with repeal. Even in Washington that’s a lot of money. So much in fact that it should be more than enough to gut Obamacare’s most egregious tax hikes and spending “offsets” while still paying for a sensible reform of American health care that actually cuts costs and covers more people. And even after enacting this kind of “replacement” program, there should still be something left over to put a real dent in the massive deficits projected to occur under the Obama budget plan.

A couple of weeks ago, the left’s message gurus put out the word to Democratic candidates to abandon talk of the supposed cost-cutting that would occur under Obamacare.

They now understand that the public has not, and will not, buy the argument that a government takeover of American health care will somehow lower costs. Americans have long understood that Obamacare is a massive new spending commitment, piled on top of the unaffordable ones already on the federal books. That’s a recipe for financial disaster, not deficit cutting. The solution is repeal coupled with a reform that puts consumers, not the government, in charge of controlling costs. That’s the way to fix health care—and the budget too. And, yes, it can be done.

posted by James C. Capretta | 6:47 pm
Tags: actuary, budget, doc fix, repeal, deficit
File As: Health Care

The Obama Budget Plan: Taxes and Rationing

Suddenly, the Obama administration and Democratic congressional leaders seem to want health care news stories to fall off of the front page.

This week, House Energy and Commerce Chairman Henry Waxman abruptly cancelled a high-profile hearing he had called just days earlier to berate corporate CEOs who dared to tell their investors that the health-care bill would raise their costs. It seems to have dawned on Congressman Waxman and his staff that his transparent effort to intimidate anyone who tells the truth about the legislation could actually backfire on him and turn into a PR disaster.

The Democratic contention that the bill actually lowers costs for American business is not supported by any rigorous analysis that would justify use in auditable corporate accounting methods. The Business Roundtable study that many Obamacare advocates like to cite as proof of the bill’s savings provides no such proof at all. The prediction of cost savings in the study from the mostly minor provisions in the legislation aimed at “delivery system reform” are highly speculative at best. Indeed, the study itself notes the potential for much higher costs and cites many cost-cutting provisions that are not in the new health law.

What is certain is that the new health law reduced the value to America’s corporations of federal support for retiree drug-benefit coverage. That means it will cost these companies more to provide such coverage in the future. There’s no disputing that. Indeed, there’s no disputing that the companies had an obligation to acknowledge this cost in their financial statements. One way or another, some Americans will be forced to pay higher costs because of this provision, in the form of reduced prescription-drug benefits for retirees or reduced value for the shareholders of the firms in question.

Perhaps Congressman Waxman realized the tables might actually get turned on him this time. A hearing in which Democratic congressmen lectured private-sector CEOs — CEOs who employ tens of thousands of people — for following the law and telling the truth would only make an out-of-touch Democratic Congress look even more disconnected from reality.

Democrats are also contemplating (though no decisions have been made) shelving consideration of the congressional budget resolution to avoid having to debate levels of taxation, federal spending, deficits, and debt before the midterm election. The budget resolution is the annual blueprint that sets parameters for considering budget-related legislation during the rest of a congressional session.

Their reticence is understandable. President Obama is presiding over the largest expansion of the federal government in a generation, even though the federal government is already rushing headlong toward a debt crisis. The government is expected to run a budget deficit in excess of $1 trillion in 2010, after running a deficit of $1.4 trillion in 2009. And that’s just the beginning of an endless sea of red ink. The Congressional Budget Office expects the Obama administration’s latest budget plan would push the nation’s debt to more than $20 trillion in 2020, up from $5.8 trillion in 2008. No wonder congressional Democrats want to change the subject.

But no one should be fooled into thinking the administration and its allies in Congress will never again revisit the budget and health care. They will — largely because the president will have no choice. He is presiding over a spending and borrowing binge unlike anything ever experienced in the nation’s post-war history. And it can’t go on much longer before it will precipitate an economic crisis of one sort or another.

So the president and his team will come back to the budget, just not before the midterm election. That’s the whole point of standing up the debt commission. To every question about runaway deficits and debt, they have a ready answer to divert the press.

But, as Charles Krauthammer noted recently, there are signs aplenty of what the administration will push for when they do come back to the budget gap, probably just after the midterm election. It’s no accident that the debt commission will make its recommendations known only after the November elections. That way Democratic candidates can run for office by suggesting the commission will solve our budget problems without ever having to specify any tax or spending cut.

When, however, the administration does make a push for closing the budget deficit, its plan will start with the mother of all tax increases, probably a value-added tax (VAT). When the problem is as big as it is today, Democrats will see no use in nickel-and-diming it. With a VAT, they would get a large new revenue stream, not collected directly from voters, and one that they could expand endlessly as they further enlarged the government.

But an Obama-style budget fix almost certainly wouldn’t end there. To get a tax increase, he and his advisors surely realize they will need to look like they are cutting some spending too. And, contrary to some perceptions, liberals are definitely willing to cut some entitlement spending; it’s just that they insist it be done in only one way: with price controls on payments to medical providers.

Look at the recently enacted health bill. It includes large cuts in Medicare’s payments to hospitals, nursing homes, and others. These cuts aren’t calibrated based on quality or efficiency. They are across-the-board cuts hitting every service provider. And the bill also stands up a new independent board that is charged with essentially enforcing a cap on overall Medicare spending beginning in 2015. But the only changes in Medicare the board can recommend to stay within the cap are more reductions in provider-payment rates. The board can’t touch the Medicare benefit, much less propose a Ryan-style move toward more choice and market competition. No, the only option is more and deeper price controls.

So, it is entirely predictable where Democrats will turn when they need show their willingness to cut entitlement spending. They will push to broaden the reach of Medicare’s price controls to parts of the health system currently beyond their reach, including prescription drugs and the federally-subsidized insurance arrangements enacted as part of the new health law. It will be one more step toward their ultimate goal, which is a fully government-run health system, with all that entails — including waiting lists and restricted access to care.

posted by James C. Capretta | 4:14 pm
Tags: Debt Commission, debt, deficit, Henry Waxman
File As: Health Care

Tax Collecting for Obama’s Welfare State

Now that the health-care bill has been signed into law, President Obama wants to “pivot” to other pressing issues. But, truth be told, the biggest issue the country now faces is still, in large part, about health care.

The federal government is running massive budget deficits and is expected to continue to do so indefinitely. The Congressional Budget Office (CBO) projects the Obama budget plan would produce $10 trillion in deficits over the period 2011 to 2020. At the end of the decade, the government’s debt would top $20 trillion, or 90 percent of the nation’s GDP. By comparison, from 1789 to 2008, the country accumulated only $5.8 trillion of public debt.

The economic risks associated with such massive amounts of governmental borrowing are very real and very high. At some point, current lenders to the U.S. government will have their fill of Treasury securities, which will mean the cost of financing expansive government is sure to increase over time. CBO expects the annual cost of servicing the interest on the nation’s debt will reach $0.9 trillion in 2020 under the Obama budget plan, up from about $0.2 trillion this year. But it could very well go much higher than that, as a recent white paper from analysts at the International Monetary Fund (IMF) demonstrates. According to that projection, U.S. debt could top 100 percent of the GDP by 2020 if, as the IMF analysts expect, the large run-up in governmental debt pushes interest rates up faster than either CBO or the administration now forecasts.

Further, this rise in federal borrowing will be occurring just as the baby boomers are entering their retirement years. Between 2010 and 2030, the population age 65 and older is expected to increase from 41 million to 71 million people. As these boomers sign up for Social Security and Medicare, costs for the programs will soar. Now is the time to get our fiscal house in order, before the entitlement tidal wave hits full force.

So what’s the president’s plan for heading off the wrenching debt crisis he has made more probable with his the expensive new spending programs he has forced through Congress? Instead of addressing it himself, the president has handed the problem off to a “bipartisan” commission.

Conveniently, the debt commission — headed by former Clinton White House chief of staff Erskine Bowles and former Republican Senator Alan Simpson — will make its recommendations after the November congressional elections.

The chutzpah here is something to behold. Having passed the largest entitlement expansion in half a century, in the most partisan manner imaginable, the president now wants Republicans to provide political cover to Democrats as they search for ways to finance the welfare state of their dreams.

Moreover, it is clear that Democrats have no intention of actually tackling the core problem in the federal budget, which is rapidly rising entitlement costs, especially for health care. They say their health-care bill has already addressed the problem. In the words of House Speaker Nancy Pelosi, “health reform is entitlement reform.”

In theory, it’s possible that Democrats could have passed a health bill that actually made durable reforms in the health entitlement programs that would have improved the medium and long-term budget outlook. But that’s not what they passed. No, new law makes the health entitlement much worse by adding tens of millions of people to Medicaid and a new insurance-subsidy program offered to persons getting insurance in the so-called “exchanges.” CBO expects the cost of these entitlement expansions to reach $216 billion in 2019. Further, the cost would escalate every year thereafter at a very rapid rate, just as Medicare and Medicaid have for more than four decades.

The Democrats respond by saying they also slowed the cost growth in Medicare. But, for starters, their cuts in Medicare do not cover the full cost of their entitlement expansions. That’s why they also raised taxes — by more than a half trillion dollars over ten years. Under the legislation President Obama just signed, federal health entitlement spending goes up, not down. Moreover, the cuts they do impose in Medicare do not in any way constitute “reform” of the program. For the most part, the big savings comes from paying less to hospitals, clinics, nursing homes, and others for the services they provide. In other words, it’s a price-control system.

These kinds of cuts have been passed by Congress many times before. They have never worked to permanently slow the pace of rising costs because they don’t do anything to make the delivery of health services any more efficient than it is today. Over time, arbitrary price controls imposed by the government always drive out willing suppliers of services and lead to access problems. That’s not entitlement reform. It’s government-enforced rationing of care.

To slow the pace of rising costs without harming the quality of American medicine will require restructuring the tax code and entitlement programs to promote a vibrant marketplace in the health sector, with strong price competition and consumer choice. That’s the vision Congressman Paul Ryan has laid out. And it’s both genuine health reform and entitlement reform too.

If the president and his allies were truly open to revisiting their “historic” health bill and replacing what has passed with a market-based reform program, that would be one thing. But does anyone really believe that’s a serious possibility at this point? The Democrats think they have scored a strategic victory by writing health-care legislation entirely according to their partisan vision. It is inconceivable they would backtrack willingly now.

But partisanship on health care has consequences too. It means bipartisanship on the budget will be all but impossible. The president has succeeded in enlarging the welfare state. Unless he is willing to roll it back now, it will be entirely his responsibility to collect the taxes to pay for it.

posted by James C. Capretta | 9:13 pm
Tags: CBO, entitlements, debt, deficit, debt commission
File As: Health Care

Obamacare Will Break the Bank, Not Cut the Deficit

The White House and its congressional allies are trying to suggest that the latest Congressional Budget Office (CBO) cost estimate proves that their health-care plan is fiscally responsible.

But, in fact, the latest CBO projections confirm — again — that the president’s health plan would pile another unfinanced entitlement program on top of the unaffordable ones already on the federal books.

According to CBO, the new entitlement spending in the plan would cost $216 billion by 2019, and then increase by 8 percent every year thereafter. In other words, the president’s plan would stand up another health entitlement program that will grow much faster than the nation’s economy or revenue base. The changes the Democrats would make to the Senate-passed bill would make the entitlement program even more expensive.

Over a full ten years of implementation, the cost of the new entitlement spending would reach $2.5 trillion, at least, not the $1 trillion advertised by the White House.

The president and his congressional allies have suggested that the offsets they are pushing will more than cover this massive spending increase. But even a modest amount of scrutiny reveals these supposed offsets are nothing more than gimmicks and implausible assumptions.

For starters, as I mentioned yesterday, the plan doesn’t count $371 billion in spending for physician fees under the Medicare program. The president and congressional Democrats want to spend this money, for sure. They just don’t want it counted against the health bill. That’s because they want to reserve all of the Medicare cuts in the bill as offsets for another entitlement instead of using them to pay for the problem that everyone knows needs fixing. The president says he shouldn’t have to pay for the “doc fix.” But why not? Never before did Congress move to add the cost of a permanent fix to the national debt. But that is exactly what the president now wants to do. When the cost of the “doc fix” is properly included in the accounting, all of the claimed deficit reduction from the president’s health plan vanishes.

Then there’s the “Cadillac” tax on high-cost insurance plans. Because of union pressure, the president pushed the tax back to 2018, well past the point when he will have left office. But once in place, the threshold used to determine “high-cost” will rise only with the Consumer Price Index, beginning in 2020. That means a very large segment of the middle class would get hit with the tax as the years passed. The president has shown that he is unwilling to actually collect this tax on his own watch. But he wants us to believe that we can count on a huge revenue jump over the long run because his successors will have more stomach for it than he does.

Similarly, in jury-rigging “long-term deficit reduction,” the latest plan would first increase the premium assistance subsidies paid to low- and moderate-wage families above the levels in the Senate-passed bill, but then index their value to something below the growth in premiums to give the appearance of deficit reduction in the decade after 2019. There’s no “bending of the cost-curve” here. It’s sleight of hand that, if actually implemented, would force millions of low-income families to pay ever-higher premiums every year. The Democrats don’t want to talk about that. They just want to pretend they have been serious with fiscal discipline.

The other gimmicks remain in the plan as well: The double-counting of premiums for long-term care insurance programs as an offset for the health entitlement spending. The assumption that Congress will allow Medicare reimbursement rates to fall so low that one in five hospitals and nursing homes might be forced to stop taking Medicare patients. And the expectation that somehow Congress can hand out generous new subsidies to those getting insurance through the exchanges, even though many tens of millions of others with the same resources would get no additional help for their job-based coverage.

The bottom line here has been clear for months. The bill being pushed by the president would take what’s already a very bleak budget outlook and make it much, much worse.

posted by James C. Capretta | 5:46 pm
Tags: CBO, Obamacare, deficit
File As: Health Care

The Obama Budget: Spend, Entitle, Borrow

I have a post over on NRO's Corner about President Obama's proposed budget, going through some of the numbers. Here's a snippet:

According to CBO, the Obama budget plan would run up much larger budget deficits and pile up even more debt than the administration reported in February.
 
Over the period 2010 to 2020, CBO expects the Obama budget would run a cumulative deficit of $11.3 trillion — $1.2 trillion more than the administration predicted. By 2020, total federal debt would reach an astonishing $20.3 trillion — up from $5.8 trillion at the end of 2008.
 
The president likes to say he inherited a mess. He did in fact enter office during a deep recession that sent deficits soaring on a temporary basis. But his policies have unquestionably made an already difficult medium- and long-term budget outlook much, much worse. The problem is that President Obama is a world-class spender. He wants to pile massive new commitments on top of a bloated and unreformed government. He is willing to raise taxes to pay for some of his wish list, but far from all of it. For the rest, he plans to run up the nation’s debt with reckless abandon.
 
CBO’s numbers tell the story....

You can read the entire post here.

posted by James C. Capretta | 2:51 pm
Tags: budget, deficit, debt, CBO
File As: Health Care

Obama’s Very Weak Hand

When all else fails, try bipartisanship

Over on National Review Online, I have a new piece about the president’s agenda, the national debt, and the political moment. An excerpt:

After Scott Brown’s stunning victory in the Massachusetts special election last month, it is now clear that the coalition President Obama was counting on to pass his health-care bill and follow-on legislation is in absolute tatters. The strain of the effort to ram health care through despite intense public opposition has taken a very heavy toll. Independent voters remain outraged at the arrogance of it all, and have swung decisively toward GOP candidates in recent contests. Congressional Democrats now know they are in peril, and are behaving accordingly. They are in no mood to take any more tough votes on behalf of a president’s agenda that their constituents have plainly rejected. Indeed, in the current environment, it’s hard to see how the House could pass the same health-care bill that it passed just last November.

This puts the president in a terrible bind, especially given the difficult budgetary choices now confronting him. His 2011 budget submission to Congress shows deficits rising to $1 trillion by the end of the decade and continuing thereafter. From 1789 through 2008, the U.S. government borrowed $5.8 trillion. If the Obama budget were adopted in full, government borrowing would exceed $18 trillion by the end of the decade. Debt accumulation at such a pace would almost certainly precipitate an economic crisis.

In their heart of hearts, most Democrats think the solution to the nation’s budget problem is a massive tax increase; if they had succeeded on health care, some might have been willing to use that momentum to propose one. But in the current environment, with so much distaste for out-of-control government, the White House and congressional Democrats know full well that it would be complete political suicide for them to push a tax increase at this stage.

Which brings us back to the president’s renewed interest in having Republicans share in, as he put it, “the burdens of governing.”

Unfortunately for him, he is now holding a very weak hand as he heads into discussions with his adversaries. His health-care program is so unpopular that Democrats themselves are walking away from it. He promised voters he wouldn’t raise taxes on the middle class, and his Democratic allies want to expand government, not contain or shrink it. So, unless he changes course, he is stuck with presiding over an unprecedented borrowing binge that threatens to cripple his administration.

The whole article can be found here.

posted by James C. Capretta | 2:46 pm
Tags: budget, deficit, bipartisanship, President Obama
File As: Health Care

Health Care and the Deficit

The House Budget Committee held a hearing yesterday on "Perspectives on Long-Term Deficits." I was invited to testify. Here is how I concluded my written testimony:

The nation’s long-term budget outlook is bleak in large part because our healthcare entitlement commitments far exceed the revenues available to pay for them. By 2019, the House and Senate-passed health-care bills would add at least another $200 billion per year to those commitments, and unleash pressures for even more spending down the road. Meanwhile, the offsets used to pay this spending would be much less likely to occur, and the cost control provisions are not nearly robust enough to make a difference.

Congress would be well-advised to take a step back and rethink this entire approach. Instead of passing an expensive health-care bill that uses $1 trillion in offsets to pay for more spending, it would be better to craft a sensible, consensus long-term budget plan which has as one of its core elements an affordable, bipartisan health-care program, one that truly does the job on costs and expands coverage as well.

Here's a video of the hearing (my testimony begins at 33:22):

[Video permalink]

posted by James C. Capretta | 5:27 pm
Tags: deficit, debt, entitlements, Obamacare
File As: Health Care

On Deficits and Doctors

Late last week, Senate Budget Committee Chairman Kent Conrad told his fellow Democratic colleagues that he wouldn’t play along with their transparent scheme to offload $247 billion — the amount needed to pay for the so-called Medicare “doc fix” over ten years — from Obamacare onto another piece of budget-busting legislation. For that bit of independent thinking, Senator Conrad is getting his own, personal meeting today with the president of the United States in the Oval Office.

Why would the president drop everything to have a last minute, one-on-one meeting with a single Democratic Senator? Because he will do anything to get a bill done this year, and Democratic strategists have told him that running the “doc fix” as a standalone measure is key to passing a governmental takeover of American health-care, which is their goal. They may be right.

Some kind of “doc fix” provision has been enacted every year since 2002 to override the current Medicare physician-payment rule, known as the “sustainable growth rate,” or SGR, formula. Ironically, the SGR is a prime example of how the kind of health-care central planning at the heart of Obamacare will inevitably run amok. Medicare administrators have been trying for two decades to use bureaucratically-devised payment schemes like the SGR to keep total physician spending in line with overall growth of the economy. But Medicare’s payment regulations can only control prices, not volume. So as use of services has gone up, the SGR formula has called for large, annual reductions in the per service fees Medicare pays to physicians. In recent years, Congress has regularly overridden the SGR formula on an ad hoc basis to avoid the 10 to 20 percent cuts in payment rates that would otherwise have occurred. Under current law, application of the SGR formula would result in a 21 percent reduction in physician fees in 2010.

Everyone knows that won’t happen because neither party supports such deep cuts in physician fees. The only question is how it will get fixed.

House Democrats, sensing an opportunity, offered to include a full SGR repeal in their health-care plan if the American Medical Association (AMA) were to endorse the bill. Tens of thousands of U.S. physicians are adamantly opposed to government-run health-care and would never have agreed to compromise their principles for short-term financial gain. But the AMA bureaucracy is another matter entirely. They worked overtime to get their leadership to accede to the deal.

Then came the president’s September speech to a joint session of Congress, during which he pledged to hold the line on the health-care plan at “only” $900 billion over a decade. The House bill overshoots that mark by about $300 billion at last count, and that’s before Democratic leaders engage in a round of aggressive vote-buying.

And, so, faced with a budget constraint, enterprising Democrats settled on a solution. Instead of one budget-busting bill, why not two? The plan now is to try to pass a full SGR repeal, at a cost of $247 billion over a decade, separate from the health-care bill, thus allowing more spending all around.

The only problem is that even some Senate Democrats find this scheme too shameless by half to support. Senator Evan Bayh said last week that he agreed with Senator Conrad that a physician-fee fix should not add to the nation’s already skyrocketing debt.

Indeed, despite the setting, there’s no reason today’s meeting should have changed Senator Conrad’s mind. The facts are on his side.

On Friday, the Treasury Department announced that the federal government ran a $1.42 trillion budget deficit in 2009, or about 10 percent of GDP. That’s the largest nominal budget deficit in history, and the largest as a percentage of GDP since World War II. From 1789 to 2008, the federal government borrowed about $5.8 trillion. In just two years, 2009 and 2010, the government will borrow nearly $3 trillion more. Further, the Congressional Budget Office (CBO) expects the federal government’s debt to exceed $14 trillion by 2019, and that’s before the full force of the baby boom retirement has hit the government’s books. The Obama administration’s budget plan would make this very daunting budgetary outlook much worse.

In this environment, the last thing our nation needs is another piece of legislation — after all of the bailouts and buyouts of 2009 — to dump $250 billion more onto the pile of debt that will be passed on to the next generation of taxpayers. Doctors’ fees in 2010 will not get cut. That’s a certainty. It only costs about $11 billion to fix the problem next year.

Indeed, this really shouldn’t be a close call for any politician claiming to be a fiscal conservative. The Democratic plan would add $250 billion to the federal budget deficit over a decade, thus allowing an even more expansive entitlement in Obamacare. That should be enough to draw unified Republican opposition. And if Senator Conrad and a few of his colleagues don’t buckle, there should be more than enough votes to defeat this blatant attempt to force taxpayers to pay yet again for plans hatched entirely for political reasons.

posted by James C. Capretta | 6:18 pm
Tags: Conrad, physician-fee fix, deficit, Obamacare
File As: Health Care

Next