Tag Archives: Medicaid

Long before there was a Tea Party or Coffee Party or the Beer Party or … there was a group that was concerned about our national debt and deficit: the Concord Coalition.

Formed in the early 1990s, the Concord Coalition has consistently worked proactively to educate and to seek institutional changes in how the U.S. and its citizens manage debt.

Great credit goes to the truly bipartisan effort of the Concord Coalition http://www.concordcoalition.org/ in the late 1990s for supporting policies that not only brought a halt in the growth of our national debt but even put our debt on a reverse course, producing a $1 trillion surplus by 2000.

Below is the Concord Coalition’s view of the Republican’s recently released “Pledge To America”.

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Last week, House Republicans offered a “Pledge To America” outlining their fiscal priorities and reform ideas. As with most such campaign manifestos, it is long on base-pleasing rhetoric and short on troublesome details.

The document correctly warns about the dire fiscal outlook and the potential dangers of escalating deficits and debt. Conspicuously missing from the Pledge, however, is any plan to bring deficits down to a sustainable level or even to improve upon the deficit projections in the President’s budget. It is worth noting that such a plan has also been missing from Congressional Democrats this year because Congress has failed to pass a budget resolution.

The net effect of the Pledge policies would do very little, if anything, to rein in our long-term structural budget deficits and may well lead to deficits even higher than under the President’s budget.

Not only would the Republicans cut taxes by more than the President, but they would spend more on defense and repeal cost-saving provisions in this year’s health care reform legislation. In theory, lower spending on non-defense discretionary programs would offset some of this. But savings from discretionary programs, which must be enacted on an annual basis, are far less certain than savings from entitlement reforms or tax increases, which operate on autopilot. Moreover, non-security discretionary spending is not where the major spending growth is projected to occur.

Other Pledge proposals, such as ending the Troubled Asset Relief Program (TARP) and canceling unspent stimulus funds, would have virtually no effect on projected deficits. For the most part, these policies have already played out.

Most significantly, the Pledge does not include recommendations to deal with the biggest spending item — projected increases in Medicare, Medicaid and Social Security. All that is pledged in this regard is to “make the decisions that are necessary to protect our entitlement programs for today’s seniors and future generations.”

That much could be said by AARP or the Democratic National Committee. The issue is not whether such decisions must be made but what those decisions should be. The Pledge leaves us guessing.

On the plus side, the Pledge calls for a “full accounting of Social Security, Medicare and Medicaid” along with “benchmarks,” regular reviews and no expansion of unfunded liabilities.”

However, no mention is made of automatic triggers to enforce these benchmarks nor is there an acknowledgment that preventing new unfunded liabilities would still leave us with the unsustainable liabilities we already have. Simply maintaining the status quo is not enough.

Similarly, the pledge to “repeal and replace” the new health care reform legislation leaves open the question of how, and to what extent, health care costs would be brought down. The greatest fiscal risk is that the legislation’s popular insurance reforms will be maintained while its unpopular provisions to pay for them will be dropped. That would leave us with the worst of all possible worlds -– expanded coverage with no discernable means of paying for it.

Unfortunately, with its promises to “ensure access for patients with pre-existing conditions,” “eliminate annual and lifetime spending caps,” and “prevent insurers from dropping your coverage just because you get sick,” the Pledge leaves the impression that these things can be accomplished at no cost and with no mandate to expand the risk pool and prevent an expensive “death spiral” of adverse selection.

What’s missing is any acknowledgement that expanded coverage is going to cost more and someone is going to have to pay for it. It is true, as pointed out in the Pledge, that the new health care law “does little to address the nation’s growing fiscal crisis,” but the law does offset the cost of expanded coverage with a combination of spending cuts and tax increases. Some of those offsets may ultimately fall short, and Republicans may want to enact a different approach to health care reform, but simply repealing the new law would not improve the deficit projections.

Because details are omitted, it is impossible to project with any precision what the deficit would look like if the Pledge policies were followed. It is possible, however, to make certain observations based on official projections. The most telling of these observations is that extending all of the expiring 2001 and 2003 tax cuts would add $4.8 trillion to the deficit over 10 years. Extending the numerous other tax cuts scheduled to expire, sometimes referred to as “the extenders,” would add another $2.8 trillion. That $7.6 trillion addition to the “baseline” deficit of $6.2 trillion would bring cumulative deficits to nearly $14 trillion.

Even assuming that the Republican estimate of roughly $1 trillion in savings from lower discretionary spending could be achieved, deficits would still remain at unsustainable levels. This is not a “path to a balanced budget” or a plan to “pay down the debt” as claimed in the Pledge.

The Pledge To America makes it clear that House Republicans favor low taxes and limited government. That is a consistent and perfectly sound policy. What the Pledge lacks, however, is any indication that House Republicans are prepared to do what is necessary to achieve this goal. Without more detail about the hard choices, it is a pledge to equivocate.

READ THE ORIGINAL ARTICLE: A Dubious Pledge by the Concord Coalition