Don’t Believe the Media: The Deficit Is Not Looking Good

Friday, August 29th, 2014 and is filed under Blog, Economy

No one is surprised but it’s always like a blast of cold air to hear a new total for the United States deficit. This year’s CBO forecast reported a federal deficit of $506 billion and spending is projected to be around $3.5 trillion.

Something’s got to give.  While news reports are calling the federal deficit “relatively modest,” it’s hardly a number to scoff at. The number is down from last year’s $680 billion but there’s a lot of work to do – and the best place to start shoveling is in America’s huge pile of entitlements.

Total mandatory spending for 2014 was $2.54 trillion, which included social security, Medicare, Medicaid, other healthcare expenses and net interest. The idea of cutting entitlements isn’t fun – but it’s necessary to create a sustainable future for the country.

Unfortunately, while President Obama is in office, things don’t look to be changing and Medicaid will account for the largest increase in spending this year, with Social Security coming in second.

On the Left, Rep. Chris Van Hollen, ranking Member of the Budget Committee, blamed Republicans for a protecting “special interests and the very wealthy.”

Republicans blame out of control spending, of which entitlements are a major part. Unfortunately, the gridlock will ensue until at least 2015.  And if we’re to believe CBO, things are looking scary. They write in their report:

“Later in the coming decade, if current laws governing federal taxes and spending generally remain unchanged, revenues would grow only slightly faster than the economy and spending would increase more rapidly.”

If you feel like taking this up with anyone at the Budget Committee, here’s the list.

Four Years Since Takeover of Financial Services

Monday, July 21st, 2014 and is filed under Blog, Economy

In many respects, Dodd-Frank is the forgotten leviathan of the Obama administration – one that is dragging down the economy just as much as Obamacare, even though it hasn’t received the same scrutiny or provoked as much outrage.

The 2300-page bill, which turns four years old today, contains hundreds of new mandates and rules that distort the credit, financial, and housing markets, impose onerous and time-consuming burdens on small businesses, and limit consumer choice.  The regulations are so complex that many of them have not been formally drafted, causing thousands of businesses to halt their expansions and new hiring until the government provides them with some clarity.  It is nothing short of a wholesale takeover of the financial services and banking industries, much like Obamacare is to the healthcare industry.  As House Financial Services Committee Chairman Jeb Hensarling (R-TX) recently said, Dodd-Frank is “more appropriate for a Soviet-style command-and-control economy than a system of free enterprise.”

There are a number of serious problems with this bill.  Here are some of the worst aspects:

  • Too Big to Fail: – Title I of the bill created a new permanent bailout regime, the Financial Stability Oversight Council.  This institution would vitiate the bankruptcy process and allow the government to take over any entity that it deems vital to the rest of the economy.  In other words, it consummates “too big to fail” as a permanent policy, the very policy this bill was supposed to fix.
  • Volcker Rule – The Volcker rule ostensibly prohibits regular banks from investing their own money by engaging in bond trading.  It also prohibits banks from holding more than a 3% stake in private equity funds.  Just this part of the bill is 300 pages long!  It will take hundreds of new Keynesian jobs just to enforce, interpret, and comply with the rule.
  • CFPB – The bill created the Consumer Financial Protection Bureau (CFBP), which will limit the choices of consumers in financial markets, making it harder and more expensive to obtain credit.  This unaccountable agency will operate autonomously within the Federal Reserve and will not be subjected to congressional appropriations or oversight.  It is essentially the “death panel” of the financial sector, with control over bank accounts, mortgages, and student loans.
  • Derivatives Trades – Some key restrictions on derivatives trades only apply to banks with assets above $10 billion.  This has created a perverse incentive for banks to limit their expansion, and by extension, creation of jobs, for the purpose of staying below the limit.
  • Debit Card Fees – The new limitations on bank charges for processing debit card submissions from retailers has caused an increase in user fees for customers, most notably, for opening checking accounts.  It has also prompted banks to eliminate debit card rewards programs.
  • Freddie/Fannie – Dodd-Frank did nothing to privatize or even reform these two behemoths that are responsible for the housing crisis and the recession.

It’s no wonder such an odious law was conceived by two of the most corrupt members of Congress – Barney Frank and Chris Dodd – who were largely responsible for the housing crisis and ensuing freezing of the credit market.  Sadly, three Republicans joined with Democrats to give opponents of free enterprise 60 votes in the Senate to pass the bill.  And with energy to repeal even Obamacare is gradually waning, it’s becoming harder to rally Republicans against this un-American law.

While we are all focused on the more imminent threats of open borders, Obamacare, and our weak national defense, it’s important to remember that Dodd-Frank, rather than preventing a financial crisis, will serve as the foundation for the next financial meltdown.  Any Republican candidate for president must unequivocally pursue full repeal of Dodd-Frank.

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CBO Report Shows Why National Debt is not Just a Number

Tuesday, July 15th, 2014 and is filed under Blog, Debt, Economy

Earlier today, the Congressional Budget Office released its updated long-term budget projection, and there is not a lot of black ink in that report.  CBO estimates that, despite receiving record revenue gobbled up from the private economy, the Treasury will continue to run enormous deficits over the next 25 years.  By 2039, the public share of the debt is projected to rise from 74% of GDP to 106%.

In light of this new report, it’s worthwhile to go back a tally Obama’s debt tab from the past 5 years and explore what it means for our future.

At present, the gross federal debt stands at $17.589 trillion, which is more than 103% of our GDP.  That is an increase of almost $7 trillion since President Obama was inaugurated five and a half years ago.  To put that in perspective, it took from the presidency of George Washington until 2004 to accumulate $7 trillion in debt.  Concurrently, Obama accumulated roughly $2.9 trillion in foreign-held debt over a little more than 5 years – from $3.071 trillion to $5.96 trillion.

More importantly, roughly 90%, or $6.2 trillion, of that $7 trillion increase is comprised of the public debt, not the so-called intra-governmental debt from Social Security (the money we ‘owe ourselves’).  It took from 1789 until the final months of the Bush administration for us to accumulate $6.2 trillion in public debt, which now stands at $12.6 trillion, roughly 74% of the economy.  It is this number that is projected to rise to 106% over the next 25 years, according to the CBO.  And remember, this president still has another two and half years to radically transform America.

So what does all of this mean?  Who cares about some banal numbers on a federal balance sheet?

Contrary to the perception of many policy-makers, the national debt is not some abstract problem that will only affect future generations once investors no longer trust the security of federal treasures.  As CBO explains (page 10), this is an immediate and near-term problem:

  • The large amount of federal borrowing would draw money away from private investment in productive capital in the long term, because the portion of people’s savings used to buy government securities would not be available to finance private investment. The result would be a smaller stock of capital and lower output and income than would otherwise be the case, all else being equal. (Despite those reductions, the continued growth of productivity would make output and income per person, adjusted for inflation, higher in the future than they are now.)

  • Federal spending on interest payments would rise, thus requiring higher taxes, lower spending for benefits and services, or both to achieve any chosen targets for budget deficits and debt.

  • The large amount of debt would restrict policymakers’ ability to use tax and spending policies to respond to unexpected challenges, such as economic downturns or financial crises. As a result, those challenges would tend to have larger negative effects on the economy and on people’s well-being than they would otherwise. The large amount of debt could also compromise national security by constraining defense spending in times of international crisis or by limiting the country’s ability to prepare for such a crisis.

Much like over-burdensome regulations, high levels of debt serve as a hidden tax on the economy by sucking out private investments through an inefficient allocation of capital diverted towards growing dependency and perpetuating political careers.  Also, the relatively-low annual payments for interest on the debt, hovering around $230 billion a year, are only a temporary reprieve due to historically low interest rates.  According to Investors’ Business Daily, “if Washington had to pay the average interest now that it paid in 2000 (6.4%), it would be paying $500 billion more each year to stay afloat.”

Sadly, Americans are used to navigating opportunities and challenges based upon instant gratification or imminent danger.  Warning voters about the threat of our national debt to the future of their grandchildren is not enough.  Conservatives need to make the case that the current level of debt is a mitigating factor to current economic growth and that it will continue to diminish their wages and job opportunities.

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New Highway Stop-Gap Bill a Consummate Washington Budget Gimmick

Wednesday, July 9th, 2014 and is filed under Blog, Debt, Economy

After years of controlling most of our transportation policy from Washington, there is no longer enough money in the Highway Trust Fund (HTF), to cover the cost of construction projects for the remainder of the year.  Naturally, instead of looking for policy changes to solve the problem, such as returning transportation authority to the states, repealing Davis-Bacon wage mandates, and cutting mass transit funding, the politicians in both parties are reverting to their comfort zone.  They are doubling down on our failed federal transportation system by either proposing new taxes or increasing spending to cover the projected $16 billion annual shortfall in the trust fund.

With the August 1st deadline looming, when the DOT is expected to cut back on federal funding for projects, the House and Senate are now working on two short-term patches.  Short-term fixes would be palpable if they were used to make structural policy changes in the long-run.  However, as is the case with most reauthorizations, both parties are looking for immediate notional spending offsets so they can plan a long-term package that either increases taxes or spending on a failed system.

The House proposal, HR 5021, sponsored by Rep. Dave Camp (R-MI), would plug the shortfall in the HTF through May 2015 by using a combination of notional and superfluous offsets that have been trotted out as an accounting gimmick for many reauthorization bills in recent years.  The projected $10.9 billion cost would be “offset” by extending custom fees for another year in 2024 – 10 years from now.  Additionally, the bill would “save money” by extending a “pension smoothing” provision for taxpayer-backed pension insurance for another few years.

The pension smoothing provision is one of the most laughable budget gimmicks, yet it has been trotted out as a savior every time Congress wants to increase spending.  This plan allows corporations to cut the level of payments into the retirement funds backed by the taxpayer-funded Pension Benefit Guaranty Corporation (PBGC).  By allowing companies to contribute less to pensions, they are entitled to less tax deductions, and in turn, incur a higher tax liability.  That tortured labyrinth of projected new revenue, estimated at $6.4 billion over 10 years, is what will be used to offset the new highway spending.

Not only is this intangible 10-year offset for a 10-month expenditure reflective of the most absurd budget tricks in Washington – it is also bad policy.

Typically, when interest rates decline to the levels we have seen in recent years, companies must contribute more to their pension funds to ensure that the principle compounds enough for them to meet their overall obligation to retirees.  If we lower the threshold for minimum contributions, taxpayers will likely be on the hook to bail out underfunded pensions in the coming years.

Alternatively, if companies are able to fill in the pension gaps in the coming years to compensate for the short-term underpayments, it will create a rubber-band effect on federal revenue.  They will be entitled to increases in tax deduction commensurate with their added pension contributions, thereby voiding out the potential revenue increase being used as an offset in this bill.  Garbage in, garbage out.

If Congress is committed to kicking the can down the road with a short-term extension, they should just be honest with the taxpayers and drop the phony offsets from the bill.

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What will the GOP do about the Latest Cap and Trade Scheme?

Tuesday, June 3rd, 2014 and is filed under Blog, Economy, Taxes

It is has been noted in recent years that a good percentage of Americans do not pay income taxes.  However, we must remember that all Americans incur the cost of the hidden tax of regulations.  According to the Competitive Enterprise Institute (CEI), burdensome regulations drain $1.86 trillion from the private economy every year.  The tab is $15,000 per family, more than many families pay in federal income taxes.

The cost of the regulatory state is paid for in the form of higher costs for food, energy, transportation, and healthcare.  It is also actualized in the form of lower wages and less job opportunities.

As CEI notes, just last year the administration finalized another 3,659 regulations. It’s no surprise that five years into the most tepid economic recovery in recent years, the economy is actually contracting again.

Naturally, the Obama administration is planning to rub salt on the wounds of the American economy by implementing Cap and Trade style regulations that will shutter American manufacturing.  The EPA has released a 645-page plan forcing all power plants to reduce “greenhouse gas emissions” by 30 percent below 2005 levels by 2030.  Much like Obama’s administrative Dream Act, this devastating version of Cap and Trade never passed Congress.

So after creating a permanent part-time economy and driving up the cost of healthcare with Obamacare, this administration seeks to crush the average family with higher energy costs, which in turn, jack up the cost of most other vital goods and services.

In recent months, a slew of Republicans have introduced policy proposals attempting to appeal to middle class families.  There is no better way to advocate reducing government than by promising to reduce the regulatory state.  Along with repeal of Obamacare and opposing open borders (which hurts workers and taxpayers), the crushing burden of energy regulations must play prominent in any general election campaign.

On the surface, this is an issue for which all Republicans can unite and fight with a coherent message.  After all, the Chamber of Commerce is actually on the right side of the issue.  But there are two important observations that cannot be overlooked.

It’s easy for the Chamber and establishment Republicans to act outraged over the regulatory state when the EPA announces crushing regulations.  But what these people fail to see is that they are responsible for growing government and interjecting it into every aspect of the economy – to the point that they now feel that can control entire industries, such as energy, healthcare, and financial services.  People like Thad Cochran can’t have it both ways.  They can’t embrace the federal hand that subsidizes private enterprise and then complain about the hand that regulates them into submission. It is years’ worth of bipartisan work from the Chamber and pay-for-play Republicans to expand the role of government that has allowed the bureaucracies to grow large and brazen enough to regulate anything that moves.

The other point to consider is that although all establishment Republicans claim to be outraged over the latest Cap and Trade scheme, what are they going to do about it?  Remember, even if Republicans win control of the Senate, it will not change the balance of power.  They will not have control over the executive agencies, and Obama will be as truculent as ever in ruling by administrative fiat during the lame duck of his presidency.  Republicans already have control of the purse-string in the House – the last recourse to check against abuse of executive power – yet they sabotaged our only attempt to use it.

At some point, Republicans need to look beyond the next election to solving the constitutional crisis that is upon us.

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Abolish the Economic Development Administration

Wednesday, May 28th, 2014 and is filed under Blog, Debt, Economy

As the season of appropriations begins in earnest, Congress will take up the Commerce, Justice, and Science (CJS) appropriations bill.  This bill (HR 4660), which funds the Departments of Commerce and Justice, as well as NASA and other related agencies, provides $51.202 billion in discretionary budget authority.

Obviously, from a conservative perspective, the entire Department of Commerce is a waste of money and should not exist.  But at the very least, we should cut back on failed programs.  Instead, this bill actually provides $3.8 billion in extra spending relative to last year’s House bill.  The Heritage Foundation has already detailed $2.6 billion in additional spending cuts that should be included in the bill.

A number of conservative members will be offering amendments to cut spending.  One of the most important amendments that has been proposed so far is Rep. Mike Pompeo’s (R-KS) amendment to abolish the Economic Development Administration (EDA).  The EDA is a failed Great Society program that serves as a stimulus/pork slush fund for special interest communities under the guise of assistance to economically distressed areas of the country.  It’s nothing more than a fund for corporate welfare and a way of picking winners and losers in the market.  It has been as successful in creating jobs as Obama’s stimulus.  Senator DeMint wrote a great piece on the EDA two years ago analyzing its history of failed promises.

Anyone who claims to oppose earmarks and stimulus must oppose the EDA.  This bill appropriates $248 million for the EDA, a slight increase from last year’s enacted level.  Call your members and ask them to support the Pompeo amendment to end the EDA.  If we can’t close down this failed agency, we will certainly never eliminate any major agency or full department.

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House Rams Through Another Corporate Welfare Bill

Wednesday, May 7th, 2014 and is filed under Blog, Economy

We already have the Ex-Im bank, which ostensibly subsidizes foreign countries – often unfriendly ones – to purchase products sold by specific domestic companies.  But even as conservatives seek to abolish it, the House is sneaking through reauthorization of its sister agency – Overseas Private Investment Corporation (OPIC) – under suspension.  OPIC is in some sense the rear-view image of Ex-Im in that it subsidizes domestic companies to invest in foreign countries.

Once again, they are using a shell bill and the suspension calendar to pass an unpopular program.  The “Electrify Africa Act of 2014,” which is part of a general foreign aid package to Africa and enjoys broad support, is being used to ensconce a three-year reauthorization of OPIC.   It is not enough that the government engages in venture socialism to pick winners and losers domestically; this program subsidizes corporate interests overseas.  The Washington Examiner’s Tim Carney has a great roundup on OPIC:

If you’ve ever visited Istanbul and stayed at the Ritz-Carlton, however, you’ve enjoyed the benefits of OPIC.

“This luxury hotel, set in the heart of the city and overlooking the Bosphorus, beautifully blends modern sophistication with historic Ottoman touches, found everywhere from the spa’s traditional hammam to the exceptional accommodations,” the hotel’s website reads. “[T]he graceful lobby is adorned in Turkish carpets, antique furniture and an oversized oil painting from contemporary artist Timur Kerim Incedayi.”

OPIC extended $50 million in financing in 2000 to subsidize the hotel.

More recent OPIC projects include $250 million in taxpayer-backed financing for Sun Edison to install a solar farm in South Africa, and $150 million in OPIC insurance for Citibank to open branches in Pakistan, Jordan and Egypt.

Citibank is America’s third-largest bank, with total assets of $1.8 trillion, yet it can’t line up insurance without taxpayer backing?

It has become a regular occurrence for GOP leaders to use the suspension calendar, which is designed for “non-controversial votes,” to stealthily pass big government legislation.   Ironically, as part of the GOP Pledge to America in 2010, Republicans pledged to tamp down suspension votes in Congress (page 34):

The number of House legislative days devoted to action on noncontroversial and often insignificant “suspension” bills is up significantly in this Congress by comparison with the past several Congresses, wasting time and taxpayer resources.  Of the bills considered under the suspension procedure – requiring 2/3 vote for passage – so far during this Congress,
more than half were bills naming federal buildings, recognizing individuals or groups (like sports teams) for achievements, or supporting the designation of particular days, months, or weeks.

Well, in some ways it’s better to use the suspension calendar for “insignificant” bills rather than use it to sneak through bad bills.  They already passed the feminist museum bill through suspension today.

Welcome to the world of the GOP establishment – one which includes corporate welfare, amnesty, debt, and “fixing” Obamacare.  This is only the beginning.  And if we continue to let them lie their way through primaries, they won’t need to use the suspension calendar to pass bad bills anymore.

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Will Paul Ryan Fight for his Budget?

Wednesday, April 2nd, 2014 and is filed under Blog, Debt, Economy, Taxes

Congressman Paul Ryan (R-WI) released his budget proposal for FY 2015 yesterday, and as expected, it is quite similar to the budget blueprints from previous years.  Let me first say that this budget would be superior to the status quo a million times over.  Medicaid and Food Stamps would be block granted to the states and Medicare would be subject to at least some optional free market reforms at the end of the budget frame.  Fannie Mae and Freddie Mac would be eliminated.  And most importantly, it defunds the Obamacare programs.

If Republicans would only fight for this budget during the debt ceiling fisticuffs, many conservatives would be more than satisfied.

But that is the point.  Given the fact that Republican have no intention to fight for even some major components of this budget when the deadline looms in September, why put out a half-baked proposal?  If this is just designed to be a messaging document that is tossed in the trash at the end of the fiscal year, why not place our ideal proposal on paper?

Ultimately, Ryan accepts the entire fiscal cliff ($618 billion) and Obamacare tax increases (roughly $1 trillion), working off the [optimistic] CBO 10-year revenue projections of $40.6 trillion.  Yet, even with the optimistic revenue projections and tax increases, the budget still runs deficits because not enough government programs are phased out or reformed, especially in the Department of Education and some of the other bloated bureaucracies.

As you can see, this year’s budget proposal is essentially the same as the FY 2014 document.  It’s just that entitlement spending will grow every year, engendering a $1.2 trillion increase in this year’s budget.  Even in the near term, this budget actually spends more, increasing spending in 2015 to $3.664 trillion ($166 billion more than what as projected in last year’s budget).

FY 2015

Outlays $42,636

Revenue $40,630

FY 2014

Outlays: $41.466 trillion

Revenues: $40.241 trillion

Hence, although the budget comes close to balancing in 10 years from now, much of that is achieved by accepting the current tax baseline.  Republicans should be able to show how the budget balances within a conservative framework of the tax code.  Granted that this budget would easily balance if we implement Medicare premium support before 2014, but that is the point.  If we plan to leave traditional fee-for-service Medicare in place and make premium support optional, why not begin the free market option earlier?

Moreover, there is a difference between balancing a budget and limiting government.  Balancing a budget is all about accounting.  You can coalesce enough small cuts across many programs and come up with a big number, without ever eliminating many of the 2228 federal government assistance programs.  I’m not sure how many of them would be abolished under this budget, although as mentioned earlier, solid reforms are imposed on Medicaid and Food Stamps.

Even as it relates to cutting raw dollars and cents, spending would increase, on average, 3.5 percent a year until 2024.  In other words, the federal government will still grow faster than the private economy.

Overall, this would be a great start if Republicans planned to fight for this document throughout the appropriations season.  They should announce upfront that they have no plans to pass a CR or omnibus bill this year and force Democrats to go to conference on each of the 12 appropriations bills through regular order.  That way, we can fight Obamacare in the HHS bill without fear of the Democrats holding the rest of government hostage.  Yet, that demand has not been made.  And sadly, we know from past experience that Ryan will be the first one to ditch his own budget when the going gets tough in September.

One other important point: if Ryan gets his way on amnesty, all of the supposed savings from welfare reform will be rendered null and void.

Cross-posted at RedState.com

The “Cowardly” Senate Leaders Employ Another Budget Gimmick

Tuesday, April 1st, 2014 and is filed under Blog, Debt, Economy, Obamacare

Here is exhibit A of why we don’t trust current Senate leadership to do the right thing if they were to win back the majority; they refuse to block new spending when in the minority.

Last week, House leadership decided to pass the “doc fix” bill (H.R. 4302) by voice vote.  This bill reimburses healthcare providers for the scheduled 24 percent cut in payments for services rendered to Medicare patients.  The bill extends the payments through next March.  It also continues some new programs created under Obamacare.

They used a hodgepodge of tenuous offsets spread out mainly over the next 5-10 years to compensate for an immediate expense that will undoubtedly reoccur every year under the 10-year budget frame.  Hence, once again, Republicans have agreed to increase spending without any structural reforms or concessions from Democrats on other policies (the original House bill paid for the extension by repealing the individual mandate).

Yesterday, Senator Harry Reid brought the bill to the Senate floor, but Senator Jeff Sessions raised a budget point of order.  As Ranking Member of the Budget Committee, Sessions has been a stalwart at challenging new spending bills for violating Senate PAYGO rules.  This is one of the few tools at the disposal of the minority party used to block bad legislation since the majority party needs 60 votes to overrule the point of order.

In this case, the $15.8 billion cost would be incurred immediately and the offsets include some budget gimmicks to ensure that CBO would score it as deficit neutral by the year 2024.  One would expect the party leadership to rally behind their point man on budget issues in order to stop the majority from increasing spending.  Yet, Senators McConnell and Cornyn led 14 other Republicans in opposing Sessions, thereby giving Reid the 60 votes needed to send the bill to the President’s desk.

Senator Tom Coburn was right to call this a “cowardly” vote, suggesting that this is the reason he is leaving the Senate:

“If you vote for this bill that’s on the floor today, you’re part of the problem. You’re not part of the solution,” Coburn said. “It’s a sham, it’s a lie. The pay-fors aren’t true. It’s nothing but gimmicks. It’s corruptible. There’s no integrity in what we’re getting ready to vote on.”

Coburn said the “doc fix” is just the latest in a series of decisions Congress has made to avoid short-term pain. He and other fiscal conservatives railed against a fix this year to rising flood insurance rates — a law that’s celebrated by senators from coastal states.

“Just like we did on the flood insurance bill. It got a little hot in the kitchen, instead of actually cooking the omelet, we threw the eggs in the trash can and ran out of the room. And that’s exactly what’s going to happen here,” he said.

Once again, we must ask the salient question: will our predicament improve if we allow the same cowards to lead the GOP majority?

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House Leadership Makes Another End-Run Around Conservatives

Friday, March 28th, 2014 and is filed under Blog, Economy

Once again, House GOP leaders have shown why it is important for us to elect enough stalwarts to replace the entire leadership team.

Every Republican complains about spending.  One establishment Republican is even running an ad promising to “castrate” D.C. spending.   Yet few of them are committed to blocking a new spending increase, much less roll back existing programs.  Today, House leaders brought a bill to the floor that will increase spending.  They didn’t have enough votes to pass it, so they decided to ram it through by voice vote.

Every year, due to the lack of free-market healthcare for seniors, Congress must supplement payments to doctors who treat Medicare patients.  Government intervention into the healthcare market has precipitated such inflationary pressure in the healthcare sector that the government reimbursement rate, known as the SGR formula, is insufficient to cover the costs of Medicare payments.  In order to rectify the situation, instead of passing free-market Medicare reform, Congress passes a temporary fix (doc fix) every year to reimburse doctors for the underpayments, which are roughly 24 percent of their payments.

After failing to adopt the annual temporary “doc fix” last December, the House passed a bill two weeks ago that will permanently boost payments and pay for the increased spending by tying it to a long-term delay of the individual mandate in Obamacare.  H.R. 4015, the SGR Repeal and Medicare Provider Payment Modernization Act, passed the House with 12 Democrats joining every Republican in the chamber.  This bill actually used a legitimate offset to end this charade of temporary fixes until we can finally impose free market structural reforms on the single-payer Medicare system.

After Senate Democrats balked at the proposal, Republicans decided to give in and pass a temporary extension.  They used a hodgepodge of tenuous offsets spread out mainly over the next 5-10 years to compensate for an immediate expense that will undoubtedly reoccur every year under the 10-year budget frame.  When they sensed that they lacked the votes to pass the bill, House leaders made an end-run around Congress:

The bipartisan power move to hold a voice vote allowed members to avoid a tough roll call, which would have forced them either to vote for a bill they do not support or allow doctors who treat Medicare patients to take a pay cut, incensing powerful outside interests.

The tactic flies in the face of Speaker John A. Boehner’s pledge to be a transparent and rule-abiding Congress, members and aides said. […]

The move incensed members of both parties, who said that democracy was in effect subverted to avoid putting members in a politically tough situation.

“It erodes our confidence in our own system, and there will be discussion about this, I’m quite sure about that,” said Rep. Steve King, R-Iowa.

“I don’t like it, I don’t like the idea that they’re going to do surprise votes for voice vote which turns out to be the equivalent of unanimous consent, because if anybody had called a vote on this thing, I think they knew it wasn’t going to pass,” King continued. “A lot of members, for a long time, are going to have to post somebody here to sit on edge waiting to call for a recorded vote because of this maneuver, this tactic here today.” [Roll Call]

This is part of a disturbing pattern of leadership using over-hyped deadlines as leverage to pass bad legislation.  In this case, the doc fix deadline was set at April 1.

Remember, this pattern will not change with Republicans in charge of the Senate, unless we change leadership in both chambers.  They have shown that when they are up against a Washington deadline – be it a debt ceiling, budget bill, or any number of program reauthorizations – they will press the panic button and give into Democrat demands.

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