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“Crying About The Deficit Is A GOP Tool”: Can We Stop Pretending That Republicans Care About The Deficit Now?

Congress is about to pass a package that will keep the government operating through next September. And in order to sweeten the deal for conservative Republicans who would rather not spend money to have the government operate, they’ll also be voting on a $680 billion package of tax cuts. These bills contain both things Republicans want (like allowing oil exports, extending a research and development tax break for businesses, and delaying the “Cadillac Tax” in the Affordable Care Act) and things Democrats want (like extending the child tax credit and the Earned Income Tax Credit).

But whether you’re happy with the overall balance of line items in the bill, one thing’s for sure: it will increase the deficit rather substantially.

While there are some Republicans complaining about that, what they’re really mad about is the things they didn’t get, like banning Planned Parenthood from getting Medicaid reimbursements. In short, what mattered for both sides was the substantive details, and to some degree the politics (i.e. Republicans not wanting to suffer the fallout from another shutdown crisis).

Let’s be honest: despite all their talk about what we’re handing to the next generation and how government should balance its books just like a family does, when it comes down to actually making choices, Republicans are no more concerned about deficits than Democrats are. Crying about the deficit is a tool they use to constrain policies they don’t like. When it comes to the policies they do like, how much the government will have to borrow to fund them is barely an afterthought. So can we stop pretending they actually care about deficits?

There’s no denying that Republicans have wielded the fear of deficits and debt with extraordinary effect. They often convince the public that deficits are a serious problem that needs addressing, because most voters have only the vaguest understanding of how the government operates, and words like “debt” become a stand-in for “the economy.” And they have allies among those sometimes referred to as the Very Serious People in Washington, who gravely intone that government can’t do things like mitigate the effects of a recession if doing so will add to the debt. But when Republicans actually have to make choices, there’s a simple calculus at work: the programs they don’t support anyway, like food stamps or Medicaid, should be cut because we just can’t afford them. But the programs they do support, like military spending, not to mention tax cuts that will increase the deficit? Well, we just have to do those things, because they’re necessary.

Consider that the biggest Democratic policy initiative in recent years was the Affordable Care Act, which was completely paid for through taxes and budget cuts within Medicare. The ACA not only didn’t increase the deficit, it decreased it. The biggest Republican policy initiatives in recent years, on the other hand, were the Bush tax cuts and the Iraq War. The former cost somewhere between $2 trillion and $3 trillion (see here and here), while the latter cost around $2 trillion. There was no attempt to pay for either one, meaning the cost was just added to the deficit.

And why wasn’t there an attempt to pay for them? The simple answer is that when Republicans have something they want to do, they do it. Trying to pay for what you want to do just complicates things (as the authors of the ACA could testify). When George W. Bush took office, they wanted to cut taxes, particularly on the wealthy, so they did. They wanted to invade Iraq, so they did. If any Republican said, “It would be nice to do this, but it’s going to increase the deficit, so we shouldn’t,” they would have been laughed out of the room. And all those Republicans who today say that they don’t think Bush was a real conservative because he didn’t curtail spending? If you don’t remember them loudly objecting at the time, that’s because they didn’t.

The main reason Republicans are free to set aside concerns about the deficit right now is that it has dropped so dramatically over Barack Obama’s presidency, so it’s much harder to argue that it’s an urgent problem. The deficit peaked at $1.4 trillion in 2009, Obama’s first year in office, when the country was still in the depths of the Great Recession. By 2014 it had fallen to $484 billion, a decline of two-thirds. It went from 9.8 percent of GDP in 2009 down to 2.8 percent of GDP in 2014.

There are multiple reasons why, including sequestration, the improving economy, and the tax increases Obama negotiated. But if you want to grant presidents credit or blame for what happens with the deficit on their watch, in the last forty years, Presidents Obama and Clinton reduced the deficit as a proportion of GDP, President Carter kept it almost exactly where it was, and Presidents Bush the Younger, Bush the Elder, and Reagan increased the deficit. Notice a pattern?

And all the Republicans running for president have tax plans that would send the deficit into the stratosphere. They wave away the consequences by saying that they’ll come up with some package of (yet unspecified) budget cuts, or even better, that despite all historical evidence, this time cutting taxes will lead to such an explosion of economic growth that the deficit will actually fall (this is known as a belief in the “Tax Fairy”). But the truth is that they just want to cut taxes, and if one of them becomes president, that’s what he’ll do. And nobody on the Republican side will care what it does to the deficit.


By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line Blog, The Washington Post, December 17, 2015

December 18, 2015 Posted by | Deficits, GOP, Gross Demostic Product, Tax Cuts | , , , , , , , , | 2 Comments

“GOP Opposition Is More About The Man”: The Obamacare Idea Conservatives Should Be Cheering But Aren’t

Obamacare hate is a full-time occupation on the right. But a story from Monday’s New York Times is a reminder that some pieces of the law should have conservatives celebrating, for the same reason they are leaving liberals like me a little queasy.

The story is about Obamacare’s “Cadillac Tax,” which isn’t really a tax so much as a convoluted attempt to undo an existing tax break. To simplify things a bit, the government today doesn’t treat employer health insurance as taxable income. That makes a dollar of insurance worth more than a dollar of wages, giving both employers and employees incentive to load up on insurance.

Most economists think that contributes to rising health care costs, since people with more insurance tend to spend more on medical care. The Cadillac tax would limit the value of the tax break, effectively reducing that incentive and, in theory, reducing health care costs for everybody over the long run. (The mechanism is complicated; read here if you want an explanation of how it works.)

In an ideal world, insurers and employers would respond to the Cadillac tax by finding more efficient ways to pay for care, so that workers would end up with the same access to and quality of medicine. They’d just pay a little less for it. One way to accomplish this would be to switch employees over to a smartly managed care insurance plan—think Kaiser Permanente, where the physicians and nurses coordinate with each other, focusing on the most effective treatments and long-term health of the patient.

In the real world, alas, employers frequently find it easier just to shift costs over to their employees. They change their plan benefits, so that workers pay more for each prescription, hospital visit, and the like. The Times story, by Reed Abelson, suggests employers are doing just that.

It’s difficult to pinpoint how much the Cadillac Tax is responsible for these shifts, given that employers were looking for ways to shift costs long before Obamacare came long. The tax doesn’t start to phase in until 2018. And the Congressional Budget Office, in its most recent revision of projections on Obamacare, said that it now expects fewer plans to hit the tax threshold when it first takes effect. Still, employers are certainly talking about the tax. (I’ve heard the same chatter.) If employers are reducing their coverage in response, then—as Matthew Yglesias notes—it’s working precisely as the economists predicted it would.

That doesn’t mean the change is popular. People don’t like to hear that they’ll have to pay more the next time they go to the doctor. Unions are particularly wary of the change, since many of their members fought hard for the generous financial protection that the Cadillac Tax will curb. But the real danger is for the chronically ill, who run up huge medical bills year after year—and for whom higher out-of-pocket expenses can be a real hardship. The Times article focuses on one such person—a woman with cystic fibrosis who said she had to drop out of school and take a second job, in order to pay the bills from her higher deductibles.

Liberals who support or at least tolerate the Cadillac Tax do so because the economists have convinced us it might truly reduce costs in the long run. We also know that other parts of Obamacare, like tax credits for purchasing insurance and guarantees of coverage for people with pre-existing conditions, will help the sick and the poor far more than the Cadillac tax will hurt them.Conservatives can’t stand this kind of spending and regulation, of course. But they should have no such hostility to the Cadillac tax.

On the contrary, writers like James Capretta and Robert Moffit have long called for reducing or eliminating the tax breaks for employer sponsored insurance. They subscribe to the same economic logic that compelled Obamacare’s architects to include the provision in the first place—that, without the favorable tax treatment, employers and insurers will be more thrifty. The only difference is that conservatives think the tax incentives are even more central to the cost issue than liberals do. And, unlike liberals, conservatives don’t seem particularly troubled by the implications for the chronically ill. Either that, or conservatives do a remarkably good job of disguising their anxiety.

The Cadillac Tax will not work as quickly or smoothly as conservatives would prefer. And that’s fair grounds for criticism. But surely the concept deserves a kind word or two somewhere on the right—unless, perhaps, opposition to Obamacare is less about what’s in the law and more about who signed it.


By: Jonathan Cohn, The New Republic, May 28, 2013

May 31, 2013 Posted by | Affordable Care Act | , , , , , , , | 1 Comment

In Search of Plan “C” for Health Care Reform?….Stick With Plan “A”


The Washington Post has an editorial this morning that doesn’t exactly oppose the President’s health reform proposals, but gives the President a rap on the knuckles for not being more aggressive controlling costs. They are particularly aggrieved that the President proposes to delay the implementation of the “Cadillac tax” on high-cost health plans to 2018.

     “Count us among the worriers. The tax is key for two reasons. It would raise revenue needed to pay subsidies to the currently uninsured; Mr. Obama chose the politically easier option of extending the Medicare tax to unearned income of the wealthy, thus making it more difficult down the road to prevent Medicare from going bankrupt. And, by discouraging expensive plans, such a tax would be the single most effective tool to reduce the cost growth that threatens the nation’s well-being”.

 This editorial is one of the more exasperating documents to appear during health reform.

I happen to favor the “Cadillac tax,” though I wish it were more explicitly limited to affluent taxpayers. This is a sensitive issue. Workers have made wage concessions to expand or to preserve generous health benefits that might be affected by the new policy. I see nothing inherently wrong with giving unions and firms more time to adjust collective bargaining agreements in light of new tax policies.

Especially perverse is the Post’s criticism of proposals to raise Medicare taxes on the wealthy. Viewed outside the context of health reform, this provision provides one needed corrective to the regressive tax cuts enacted during the Bush years. The idea that it is simple political expediency to raise taxes on capital income of the wealthy comes as a great surprise to anyone who has followed American tax policy over (say) the past 30 years. Three other issues are especially irksome in the Post’s editorial.

 First, President Obama proposes many features designed to reduce the level and growth of medical spending. He has gotten little political credit for these complex and controversial measures, but they are there.

Insurance exchanges will reduce administrative and marketing costs in the markets for individual and small-group coverage. This idea enjoys wide Democratic and Republican support. The President would reduce significant overpayments to Medicare advantage plans. He supports bundled payment models and other innovations designed to improve quality and cost-effectiveness of care. He supports greater use of comparative effectiveness research to provide an evidence-base for improved resource allocation decisions.

Over considerable opposition from within his own party, the President supports an Independent Medicare Advisory Board modeled after the commission that recommends military base closings. The Congressional Budget Office gave the President little credit for this in the scoring numbers. Yet this change could have a potentially revolutionary impact on Medicare policy–which is exactly why so many pharmaceutical and medical device manufacturers, many medical specialties, and many elected politicians are unhappy with this measure.

Some of these measures are buried in the fine print. Others were included despite deep opposition from self-avowed fiscal conservatives whose concern for the federal budget precisely stops at the boundaries of their own states or their own favored constituencies. (The most powerful cost-control measure, a strong public option, was brought down by Republicans, insurers, and virtually the entire supply-side of the medical economy, but that is another story.)

 These obvious realities underscore the second reason why the Post’s argument is so irksome. Although the House and Senate bills include many specific elements favored by (for example) officials in the last Bush administration, Republicans have made a basic strategic decision to filibuster and to vote in lockstep against the signature policy initiative of the Obama Presidency.

As a result, President Obama needed to corral every single Democratic vote to pass the signature measure of his presidency. The President was willing to deal on tort reform and other difficult matters. Although the gang of six talked interminably, no Republicans were willing to deal.

Proposed piecemeal, the cost-control measures already contained in the President’s proposal would command little public or interest-group support. These measures would command little enthusiasm from a Congress freed from the fiscal constraints required to pass a comprehensive bill that simultaneously provides critical benefits to millions of people.

The Post seems oblivious to the fact that defeat of the President’s comprehensive reform would damage any future cost-control effort. Interest groups that oppose specific measures–certainly including the “Cadillac tax” –would cite this defeat in discouraging politicians from supporting similar efforts. They would cite the success of crudely demagogic “death panel” rhetoric to deter serious measures to improve the quality and economy of Medicare services.

Progressive politicians desperate to help millions of uninsured people would learn from this episode that the smart move is to propose a politically attractive package of benefits without offsetting spending reductions or taxes to pay for it. I would hardly blame them.

Then there is the third reason. The Post writes: “We think that it is not asking too much, given the dire fiscal straits, for Washington to show that it can swallow distasteful medicine while, and not after, it passes out the candy.”

 No candy is being distributed here. The bill whose survival is at stake is not some pork-barrel agriculture or weapons bill. After decades of failure, this bill would provide critical protection for 50 million uninsured people. It would help millions of others facing medical bankruptcy because they are underinsured or because they have serious illnesses leading them to exceed lifetime insurance caps that would be immediately ended under the President’s proposal.

This very morning, our local Catholic church presented an appeal from a family whose infant son was diagnosed with Hemophagocytic Lymphohistiocytosis, a rare and deadly disease. As the costs of his care approach $1 million, the family has established a website appealing for help. They have no plan B. There is no plan B for states, either, which desperately need this bill to avoid even more dire fiscal difficulties than are projected for the federal government.

The President has spent the past year, and has risked much of his presidency, to address these critical needs. After this bill is passed, he and the Congress should pursue further serious cost-containment efforts. The current bill provides the best platform to do this.

There is a moral urgency to passing this bill. The President, House and Senate leaders might have done more to cut costs if they had even secured one or two moderate Republican votes. They had to cut some messy deals to get this done. There were good reasons to do so. Against heavy odds and several decades of failed efforts, President Obama and his allies are close to getting this done. By fetishing a single imperfect aspect of the President’s proposal, the Post mischaracterizes the policy dilemma. The Post also misses the magnitude of what is at stake.

By: Harold Pollack- the Helen Ross Professor of Social Service Administration at the University of Chicago and a Special Correspondent for The Treatment-The New Republic, March 7, 2010

March 7, 2010 Posted by | Health Reform | , , , , , , , , | Leave a comment


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