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“Principles Of Hostage Taking 101”: The Debt Ceiling Is A Hostage John Boehner Absolutely Can’t Afford To Shoot

Speaker of the House John Boehner’s never-ending quest to placate the tea party resulted in the GOP approving a bill on Friday that would fund the government through mid-December, while “defunding” Obamacare. (Never mind that, as U.S. News’ Carrie Wofford has pointed out, “defunding” Obamacare in this manner doesn’t actually work.) If, as expected, the Senate strips the defund provision and kicks the bill back to the House, Boehner will have to find yet another way of keeping his radicals at bay.

The next hostage, then, is likely the debt ceiling. Technically, the U.S. has already reached its statutory borrowing limit, but the Treasury Department has been using extraordinary measures to delay the reckoning, a tactic that will no longer work come mid-October. And already, the GOP has drawn up a wish-list of policy concessions it hopes to extract in return for raising the debt ceiling, running the gamut from changes to the Dodd-Frank financial reform law and means-testing of Medicare to approval of the controversial Keystone XL oil pipeline. If defunding Obamacare doesn’t happen now, expect that to be added to the list.

But President Obama, it seems, has learned his lesson from previous debt ceiling standoffs, and this time is refusing to play ball. He even called Boehner on Friday night to reiterate that he does not plan to negotiate over whether the U.S. government will actually pay its bills (which remember, is all raising the debt ceiling ensures).

Why is Obama right to offer the GOP nothing when it comes to raising the debt ceiling? Well, the debt ceiling is a hostage which the GOP is simply not willing to shoot. As former GOP Sen. Judd Gregg, N.H., explained in an op-ed in The Hill today:

You cannot in politics take a hostage you cannot shoot. That is what the debt ceiling is. At some point, the debt ceiling will have to be increased not because it is a good idea but because it is the only idea.

Defaulting on the nation’s obligations, which is the alternative to not increasing the debt ceiling, is not an option either substantively or politically.

A default would lead to some level of chaos in the debt markets, which would lead to a significant contraction in economic activity, which would lead to job losses, which would lead to higher spending by the federal government and lower tax revenues, which would lead to more debt.

Two years ago, when the very same debate over raising the debt ceiling was occurring, House Budget Committee Chairman Paul Ryan, R-Wis. – who would go on to be his party’s vice-presidential nominee in 2012 – confirmed that taking the debt ceiling hostage is impossible. “You can’t not raise the debt ceiling. Default is the unworkable solution,” he said. He then attempted to justify the GOP’s move anyway, but the word salad that resulted shows just how untenable their plan really is.

The economic damage that would result from actually allowing the country to default on its financial obligations – be they payments to foreign debtors, Social Security recipients or government vendors – would be catastrophic, not to mention the mess that would occur in markets around the world when the absolute certainty that is U.S. payment of its debt disappears overnight. According to the Government Accountability Office, the last debt ceiling debacle, which didn’t result in a default, cost taxpayers $1.3 billion in fiscal year 2011 alone. That would seem like chump change compared to the costs of an actual default.

Now, it may be that the GOP leadership lets the tea party get its way by shutting down the government over Obamacare, rather than risking a debt default. But Republicans who remember the Clinton-era shutdowns are not ready for a sequel. So Boehner is left in the unenviable position of making his wild faction a promise on which he can’t possibly deliver. It remains to be seen how he’ll get out of it, but Obama is certainly under no obligation to help.

 

By: Pat Garofola, U. S. News and World Report, September 23, 2013

September 24, 2013 Posted by | Debt Ceiling, Government Shut Down | , , , , , , , | Leave a comment

“Pilfering The Federal Treasury”: Mitt Romney’s Medicaid Shell Game

Mitt Romney is lambasting federal aid in his campaign for the presidency, including derisive comments against those who receive government assistance. But he pulled all the stops to pursue federal aid as governor of Massachusetts, even hiring “revenue maximization” contractors to scour federal programs for every possible penny — and using financial schemes to maximize and then divert the aid from his needy constituents.

In his first budget proposal, Romney promised balancing the budget without tapping reserves, and “without the use of fiscal gimmicks.” However, buried in the details, he suggested tapping reserves such as taking $4 million from the Catastrophic Illness in Children Relief Fund, and he included fiscal gimmicks to maximize and divert federal aid into his general state coffers.

His strategies are akin to tax schemes using offshore bank accounts — but instead of avoiding federal taxes, seeking to pilfer the federal treasury. The Wall Street Journal labeled such financing mechanisms “Medicaid Money Laundering” and a “swindle.”

Medicaid is a matching grant program. If a state with a 50 percent match rate like Massachusetts spends $50 on qualifying services, the federal government will provide an additional $50 so there is $100 total for Medicaid services. The federal match payment is much higher in some states, such as Mississippi where its almost 75 percent.

Unfortunately, some states concocted budget shell games, often with private consultants, providing an illusion of state spending to claim federal matching funds, when no state spending has occurred. As governor of New Hampshire, Judd Gregg developed such a practice labeled “Mediscam.” Gregg taxed hospitals serving the poor, routed the money into an “uncompensated care fund” which he sent right back to the hospitals, and used the round-trip of money to claim federal matching funds. Then, the swindle gets worse, because he routed the federal Medicaid funds into his general coffers rather than for Medicaid services.

Romney’s schemes were similar to Gregg’s. Buried in his 2004 budget, Romney proposed maximizing federal aid by taxing hospitals, shifting the resulting tax payments in and out of an uncompensated care fund, back to hospitals as adjustment payments, and diverting resulting federal Medicaid funds to state general revenue. He also proposed using taxes on nursing homes and pharmacies in his efforts to maximize and divert federal aid.

In such strategies, health care facilities serving the poor are used to claim federal funds to help the poor. But the health care facilities and the poor may get nothing, as the state diverts the federal aid to general coffers — and revenue maximization contractors reap millions in contingency fees. Romney used such private companies to help carryout his strategies.

After a US General Accounting Office report responding to concerns of Republican Senator Charles Grassley, the Romney administration vigorously defended using contingency-fee revenue maximization consultants and revenue practices – that the GAO labeled illusory. The GAO responded that “hospitals should benefit from increased federal reimbursements and Massachusetts’s arrangement appeared to result in lower payments to hospitals, despite increased claims for federal reimbursement.” The Romney administration even defended double (if not quadruple) billing practices “of allowing multiple agencies to bill Medicaid” for “services for the same beneficiary.” The GAO concluded that the Romney administration “did not provide convincing evidence that the [Medicaid] services provided by the four state agencies were unique,” and the Bush administration agreed with the GAO’s conclusions.

The Bush administration implemented regulations trying to reduce such practices, and the Obama administration continues efforts to improve fiscal integrity in the Medicaid program. However, Romney would virtually end federal oversight by block-granting federal Medicaid funds to states.

It’s not hard to imagine how a governor — one that employs complex shell games to find loopholes in federal rules in order to maximize and divert federal aid — would use the federal funds if handed to the state without any federal oversight. The answer to state misuse of federal aid is not to give those states even more discretion to do whatever they wish – but to simplify the claiming process, reduce loopholes allowing the revenue schemes, and improve oversight to ensure Medicaid funds are used as intended.

Romney has undergone dramatic and hard to follow shifts in his apparent views of government aid. Romney2004 proposed cutting healthcare while simultaneously proposing illusory schemes to maximize and divert federal Medicaid funds. Romney2006 changed course with the first nearly universal healthcare plan. Now Romney2012 is turning back to cuts, denouncing federal aid he once schemed to maximize and divert, condemning those who need government aid, and seeking repeal of national health care reform that is nearly identical to the plan he signed into law. And now he proposes giving all the federal money from the Medicaid program to states without federal control.

Romney2004 would have a field day with Romney2012’s plan.

 

By: Daniel L. Hatcher, Law Professor, University of Baltimore, Published in The Boston Globe, October 12, 2012

October 15, 2012 Posted by | Election 2012 | , , , , , , , , | Leave a comment

Remember The Health-Care Reform Debate?: How The Landscape Has Changed

As a participant in the great health-care wars of 2010, it’s been — I don’t know: Amusing? Depressing? Annoying? Vindicating? — to watch Rep. Paul Ryan’s budget run over every principle or concern that Republicans considered so life-or-death a mere 400 days ago. A partial list:

Big changes need to be bipartisan changes. “The only bipartisanship we’ve seen on [the health-care] bill is in opposition to it,” said Eric Cantor, now the House majority leader. “When the stakes are this high – reforming 20 percent of the U.S. economy – there must be constructive conversations and negotiations from Republicans and Democrats in both houses of Congress,” wroteformer representative Tom Davis. The Ryan budget, which is unquestionably a more ambitious document than the Affordable Care Act, passed the House with no Democratic votes and four Republicans voting no. The only thing bipartisan was the opposition, etc. This appears to have given no Republicans anywhere any pause.

Polls matter. In March 2010, John Boehner was very, very upset that Democrats were working to pass a health-care law that a slight plurality opposed in polls. “President Obama made clear he is willing to say and do anything to defy the will of the people and force his job-killing health care plan through Congress,” he thundered. Last week, Speaker Boehner and the Republicans passed Ryan’s budget. How do its elements poll? Much, much worsethan the Affordable Care Act.

The Affordable Care Act’s Medicare cuts will devastate hospitals! Last fall, Ryan’s health-policy guru was saying,“The official Medicare actuaries have determined that approximately 15 percent of hospitals will be driven out of business in less than ten years if these cuts go through and called the cuts ‘clearly unworkable and almost certain to be overridden by Congress.’” Now those same cuts are in Ryan’s budget. C’est la vie, I guess (that’s French for “only Democratic cuts hurt hospitals”).

The Affordable Care Act’s savings don’t begin quickly enough! When the tax on expensive employer-provided insurance plans was pushed back to 2018, conservatives were outraged. “The odds are high that the excise tax will never actually happen,” wrote David Brooks. “There is no reason to think that the Congress of 2018 will be any braver than the Congress of today.” It was a fair argument: Cost savings that begin in the future are less certain than cost savings that begin now. So when does, say, Ryan’s voucherization of Medicare begin? Not 2012. And no, it’s not 2018. It’s 2022.

There’s no reform in the Affordable Care Act. “It would take Sherlock Holmes armed with the latest GPS technology and a pack of bloodhounds to find ‘reform’ in the $2.5 trillion version of the health-care bill we are supposed to vote on in the next few days,” then-Sen. Judd Gregg wrote. But apparently Holmes got his iPhone out, because now the Affordable Care Act is chock-full of reforms. In fact, it’s the model Republicans are following. “It’s exactly like Obamacare,” Sen. John Cornyn saidof the Ryan plan. “It is. It’s exactly like it.” And he meant that as a compliment!

The Congressional Budget Office will score anything you tell it to. “Garbage in, garbage out,” Sen. John McCain said. “Can you really rely on the numbers that the Congressional Budget Office comes out with?” asked Fox’s Steve Doocy. Now, of course, Republicans are touting CBO’s estimates of Ryan’s savings.

First, “do no harm.” That was former Republican National Committee Chairman Michael Steele’s big applause line. “Republicans want reform that should, first, do no harm, especially to our seniors,” he wrote in The Washington Post. Cantor said the Affordable Care Act would “cut Medicare for our seniors and increase premiums for many Virginians.” Say what you will about Ryan’s budget, but going from paying 25-30 percent of your Medicare costs to 70 percent cuts your Medicare while increasing your premiums. Steele also said that “we need to protect Medicare and not cut it in the name of ‘health-insurance reform.’ ” Instead, it’s getting cut in the name of tax cuts. To be fair, Ramesh Ponnuru saw this one coming, so I can’t say conservatives were denying it at the time.

I’m sure I’ve forgotten a couple, but that’s what the comment section is for. The natural next question is whether Democrats have been similarly hypocritical in their opposition to Ryan’s plan. So far as I can tell, we’ve not seen it: Democrats think the plan puts too much of a burden on the backs of seniors and the poor — two things they worried about constantly during the Affordable Care Act — and cuts too many taxes for the rich. They also note that the Congressional Budget Office says privatizing Medicare will make it more expensive — the same finding that led to liberal advocacy for a public option. But if I’m missing something here, I imagine it, too, will come up in comments.

By: Ezra Klein, The Washington Post, April 21, 2011

April 22, 2011 Posted by | Affordable Care Act, Congress, Conservatives, Deficits, Democrats, Economy, GOP, Government, Health Care, Health Care Costs, Health Reform, Medicare, Politics, President Obama, Public Option, Rep Paul Ryan, Republicans, Right Wing, Seniors, Single Payer | , , , , , , , , , , , , , | Leave a comment

   

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