Budget-buster in the making
The day after the Congressional Budget Office (CBO) gave its qualified blessing to the version of health reform produced by Senate Majority Leader Harry Reid, a Quinnipiac University poll of a national cross-section of voters reported its latest results.
This poll may not be as famous as some others, but I know the care and professionalism of the people who run it, and one question was particularly interesting to me.
It read: “President Obama has pledged that health insurance reform will not add to our federal budget deficit over the next decade. Do you think that President Obama will be able to keep his promise or do you think that any health care plan that Congress passes and President Obama signs will add to the federal budget deficit?”
The answer: Less than one-fifth of voters—19 percent of the sample—think he will keep his word. Nine out of 10 Republicans and eight out of 10 independents said that whatever passes will add to the torrent of red ink. By a margin of 4-3, even Democrats agreed this is likely.
That fear contributed directly to the fact that, by a 16-point margin, the majority in this poll said they oppose the legislation now moving through Congress.
I have been writing for months that the acid test for this effort lies less in the publicized fight over the public option or the issue of abortion coverage than in the plausibility of its claim to be fiscally responsible.
This is obviously turning out to be the case. While the CBO said that both the House-passed bill and the one Reid has drafted meet Obama’s test by being budget-neutral, every expert I have talked to says that the public has it right. These bills, as they stand, are budget-busters.
Here, for example, is what Robert Bixby, executive director of the Concord Coalition, a bipartisan group of budget watchdogs, told me.
“The Senate bill is better than the House version, but there’s not much reform in this bill. As of now, it’s basically a big entitlement expansion, plus tax increases.”
Here’s another expert, Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget:
“While this bill does a better job than the House version at reducing the deficit and controlling costs, it still doesn’t do enough. Given the political system’s aversion to tax increases and spending cuts, I worry about what the final bill will look like.”
These are nonpartisan sources, but Republican budget experts such as former CBO head Douglas Holtz-Eakin amplify the point with specific examples and biting language. Holtz-Eakin cites a long list of Democratic-sponsored “budget gimmicks” that made it possible for CBO to estimate that Reid’s bill would reduce federal deficits by $130 billion between now and 2019.
Perhaps the biggest of those maneuvers was Reid’s decision to postpone the start of subsidies to help the uninsured buy policies from mid-2013 to January 2014—long after taxes and fees levied by the bill would have begun.
Even with that change, there is plenty in the CBO report to suggest that the promised budget savings may not materialize. If you read deep enough, you will find that under the Senate bill, “federal outlays for health care would increase during the 2010-2019 period”—not decline. The gross increase would be almost $1 trillion—$848 billion, to be exact, mainly to subsidize the uninsured. The net increase would be $160 billion.
But this depends on two big gambles. Will future Congresses actually impose the assumed $420 billion in cuts to Medicare, Medicaid and other federal health programs? They never have.
And will this Congress enact the excise tax on high-premium insurance policies (the so-called Cadillac plans) included in Reid’s bill? Obama has never endorsed them, and House Democrats—reacting to union pressure—turned them down in favor of a surtax on millionaires’ income.
The challenge to Congress—and to Obama—remains the same: Make the promised savings real and don’t pass along unfunded programs to our children and grandchildren.
David Broder is a columnist for The Washington Post. Readers may write to him via e-mail at firstname.lastname@example.org.
Last updated: 11:54 am Thursday, December 13, 2012