Tag: paul ryan

Biennial Budgeting: Baloney Budget Reform

I don’t recall ever agreeing with the left-liberal Center on Budget and Policy Priorities (CBPP), but their new paper on the drawbacks of the federal government switching to biennial budgeting is a good read. Congressional Republicans, including House Budget Committee chairman Paul Ryan (R-WI) and Senate Budget Committee ranking member Jeff Sessions (R-AL), are the chief proponents of switching to a biennial budget cycle. By providing (qualified) support to the CBPP paper, I’m hoping to demonstrate to would-be GOP naysayers that criticism of biennial budgeting isn’t confined to one area of the ideological spectrum.

I don’t agree with everything in the paper and I don’t share some of the authors’ concerns, but here are three solid points that the paper makes:

  • In 1940, 44 states practiced biennial budgeting. Currently, only nineteen do. In addition, larger states typically have an annual budget cycle. The authors correctly ask, “if large state governments find that biennial budgeting is not the best approach given the responsibilities they shoulder, is it likely to prove appropriate for an entity with the far more extensive domestic and international responsibilities of the U.S. government?”
  • The authors call the claims made by proponents that biennial budgeting will free up more time for oversight “overstated.” Authorizing committees can conduct oversight anytime they want. The appropriation committees conduct oversight when they review agency budget requests each year. What’s the benefit of having oversight conducted by the appropriations committees every two years?  (For the record, I think the value of congressional oversight is overstated for public choice reasons, but I’ll play along for today.)
  • The authors explain what I consider to be the fatal flaw with biennial budgeting:

The desire of many lawmakers to rein in such supplemental appropriations and reassert meaningful control over all annually appropriated funds — and the practice the Obama Administration has followed of including war funding within the regular defense appropriations bill, which has improved budget transparency — would become much harder to fulfill if biennial budgeting were implemented. It is not possible for Congress effectively to plan ahead for unexpected needs in the second year of a biennium. Large supplemental appropriations to meet such needs outside of the two-year budget plan would almost certainly become a regular part of the budget process and could further erode budget controls and accountability.

(Note: A recent paper from Cato adjunct scholar Veronique de Rugy explains that supplemental appropriations are already a problem.)

As a former budget official in a state that uses biennial budgeting, I just don’t understand what congressional Republicans think they’re going to accomplish. The cynic in me thinks that at least part of the support stems from the unwillingness of most Republicans to get specific on what they’d eliminate from the federal budget. Like the Balanced Budget Amendment, I think a lot of Republicans are simply using biennial budgeting as political cover.

Strike Three for PolitiFact

The annual unveiling of its “Lie of the Year” award garners PolitiFact more attention than anything else. Hopefully, it will garner so much attention that people will recognize this award, which is supposed to improve political discourse, instead degrades it.

PolitiFact’s past three Lies of the Year have been about health care.  Not one of them was a lie.

A lie is when a speaker says something that he knows or believes to be false, for the purpose of deceiving others. None of these supposed Lies of the Year even met the threshold test of being false.  The first two (“death panels” and “ObamaCare is a government takeover”) were actually, demonstrably true.

The third and latest Lie of the Year—that “Republicans voted to end Medicare”—is arguably true: its veracity depends on what your definition of “Medicare” is. To seniors, Medicare means “the government helps me pay for health care.” The House Republicans’ budget (a.k.a., the Ryan plan) would not end such federal assistance, and would arguably improve access to quality health care. To the Left, “Medicare” means the particular way the federal government helps seniors access health care: a single-payer system.  The Ryan plan would end that single-payer system. My leftist friends are right and PolitiFact is wrong: from a certain and valid perspective, this claim is true.

Moreover, even if these three statements were false, the speakers believed them to be true. Therefore, they cannot be lies. Every single Lie of the Year award has gotten that basic fact wrong.

In the process, this award degrades political discourse by implicitly launching—an encouraging others to launch—ad hominem assaults on people who hold legitimate differences of opinion. PolitiFact should find a better way to attract readers.

I have been writing about the flaws in PolitiFact’s business model for some time:

I’m glad to see my friends on the Left have taken notice, though I regret the way it happened.

McConnell’s Cave-In and Boehner’s Opportunity

Senate Minority Leader Mitch McConnell has offered the president a way to raise the debt ceiling by $2.5 trillion without having to cut spending. The WaPo reports that “McConnell’s strategy makes no provision for spending cuts to be enacted.”

This appears to be an epic cave-in and completely at odds with McConnell’s own pronouncements in recent months that major budget reforms must be tied to any debt-limit increase.

House Republicans should obviously reject McConnell’s surrender, and they should do what they should have done months ago. They should put together a package of $2 trillion in real spending cuts taken straight from the Obama fiscal commission report and pass it through the House tied to a debt-limit increase of $2 trillion. Then they shouldn’t budge unless the White House and/or the Senate produce their own $2 trillion packages of real spending cuts, which could be the basis of negotiating a final spending-cut deal.

For those who say that House tea party members won’t vote for a debt increase, I’d say that $2 trillion in spending cuts looks a lot better than the alternative of having Democrats and liberal Republicans doing an end-run around them with McConnell’s no-cut plan.

For those who say that House members are scared of voting for specific spending cuts, I’d say that they’ve already done it by passing the Paul Ryan budget plan. I’d also say that you can’t claim to be the party of spending cuts without voting for spending cuts.

Obama’s Fiscal Commission handed Republicans ready-made spending cuts on a silver platter—Republicans will never get better political cover for insisting on spending cuts than now.

Ryan Plan Would Reduce Medicare & Medicaid Fraud

That’s the theme of my article in the current issue of National Review:

The budget blueprint crafted by Paul Ryan, passed by the House of Representatives, and voted down by the Senate would essentially give Medicare enrollees a voucher to purchase private coverage, and would change the federal government’s contribution to each state’s Medicaid program from an unlimited “matching” grant to a fixed “block” grant. These reforms deserve to come back from defeat, because the only alternatives for saving Medicare or Medicaid would either dramatically raise tax rates or have the government ration care to the elderly and disabled. What may be less widely appreciated, however, is that the Ryan proposal is our only hope of reducing the crushing levels of fraud in Medicare and Medicaid.

The three most salient characteristics of Medicare and Medicaid fraud are: It’s brazen, it’s ubiquitous, and it’s other people’s money, so nobody cares…

The full article is now available at the Cato website.

Misunderstanding Nozick, Again

Someone called Stephen Metcalf writes at Slate of his horror at finding in “an otherwise quite groovy loft” in New York’s SoHo “not one but two copies of something called The Libertarian Reader.” Given that he manages to lump not just Paul Ryan and South Park but Sarah Palin into the libertarian basket, you can appreciate his dismay.

Metcalf puts Robert Nozick at the center of his argument, understandably enough. My colleague Tom Palmer says that academic critics almost always cite one chapter of one book, Nozick’s Anarchy, State, and Utopia, and declare that they have grappled with libertarian ideas. Still, it’s a good book and worth grappling with, and it did have an impact, as Metcalf notes:

I like to think that when Nozick published Anarchy, the levee broke, the polite Fabian consensus collapsed, and hence, in rapid succession: Hayek won the Nobel Prize in economics in 1974, followed by Milton Friedman in ‘75 [1976], the same year Thatcher became Leader of the Opposition, followed by the California and Massachusetts tax revolts, culminating in the election of Reagan, and … well, where it stops, nobody knows.

I’ll leave it to my more learned colleagues to analyze how successfully Metcalf actually deals with Nozick’s arguments. I just want to note one thing here. Like many other critics of libertarianism, Metcalf triumphantly announces:

How could a thinker as brilliant as Nozick stay a party to this? The answer is: He didn’t. “The libertarian position I once propounded,” Nozick wrote in an essay published in the late ’80s, “now seems to me seriously inadequate.”

Yes, yes, yes. It gets repeated a lot: “Even Nozick renounced libertarianism.” If it were true, it’s not clear what it would mean. Libertarianism is true, or not, whether or not Paul Krugman or Russell Kirk believes it, and whether or not Robert Nozick believes it. The idea stands or falls on its own. But as it happens, Nozick did “stay a party” to the libertarian idea. Shortly before his death in 2002, young writer Julian Sanchez (now a Cato colleague) interviewed him and had this exchange:

JS: In The Examined Life, you reported that you had come to see the libertarian position that you’d advanced in Anarchy, State and Utopia as “seriously inadequate.” But there are several places in Invariances where you seem to suggest that you consider the view advanced there, broadly speaking, at least, a libertarian one. Would you now, again, self-apply the L-word?

RN: Yes. But I never stopped self-applying. What I was really saying in The Examined Life was that I was no longer as hardcore a libertarian as I had been before. But the rumors of my deviation (or apostasy!) from libertarianism were much exaggerated. I think this book makes clear the extent to which I still am within the general framework of libertarianism, especially the ethics chapter and its section on the “Core Principle of Ethics.”

So Nozick did not “disavow” libertarianism. Indeed, Tom Palmer adds a point that

David Schmidtz told at a forum about Schmidtz’s book from Cambridge University Press, Robert Nozick, held October 21, 2002 at the Cato Institute. According to David, Nozick told him that his alleged “apostasy” was mainly about rejecting the idea that to have a right is necessarily to have the right to alienate it, a thesis that he had reconsidered, on the basis of which reconsideration he concluded that some rights had to be inalienable. That represents, not a movement away from libertarianism, but a shift toward the mainstream of libertarian thought.

Metcalf’s criticisms of libertarianism will have to stand on their own, as will libertarianism itself. He doesn’t have Nozick on his side. As for Metcalf’s final complaint that advocates of a more expansive state have been “hectored into silence” by the vast libertarian power structure, well, I am, if not hectored, at least stunned into silence.

P.S. Matt Welch notes that if Metcalf doesn’t have Nozick on his side, at least he has Ann Coulter.

Medicare Reform: Throwing Wasserman-Schultz ‘to the Wolves’

On CBS’s Face the Nation, Democratic National Committee chair Rep. Debbie Wasserman-Schultz (FL) said this of the House Republicans’ Medicare reform plan:

Republicans have a plan to end Medicare as we know it. What they would do is they would take the people who are younger than 55 years old today and tell them ‘You know what? You’re on your own. Go and find private health insurance in the healthcare insurance market, we’re going to throw you to the wolves and allow insurance companies to deny you coverage and drop you for pre-existing conditions. We’re going to give you X amount of dollars and you figure it out.

That ‘s the version of Wasserman-Shultz’s quote that the Washington Post’s Glenn Kessler sent me.  Kessler also told me that the DNC cited me as a source for Wasserman-Shultz’s claims:

Michael Cannon: The Ryan Plan Would Provide More Subsidies To Seniors With Pre-Existing Conditions But Wouldn’t Guarantee Coverage. Michael Cannon, the Director of Health Policy Studies at Cato said during congressional testimony on the Ryan plan, “Thank you for the opportunity, Congressman. I think that lots of – all seniors under the chairman’s proposal, as I understand it, will be able to obtain health insurance coverage. And that’s the – that is because the payment they receive from the federal government to purchase that coverage will be adjusted for income so that lower-income people will get larger vouchers if you will. He doesn’t call them that, I’ll use the V word. And they’ll also be risk-adjusted so that people with severe illnesses will get larger vouchers and be able to purchase insurance coverage that will cover a lot of people who have a pre-existing condition. [HEARING OF THE HEALTH CARE, DISTRICT OF COLUMBIA, CENSUS AND THE NATIONAL ARCHIVES SUBCOMMITTEE OF THE HOUSE OVERSIGHT AND GOVERNMENT REFORM COMMITTEE, 4/5/11]

The Actual Amount More Seniors With Pre-Existing Conditions Would Receive Had Not Been Set Out In The Ryan Budget. Michael Cannon, the Director of Health Policy Studies at Cato said during congressional testimony on the Ryan plan, “That would be a result of the rules, the specific risk-adjustment rule that haven’t been spelled out in his budget. But you would have sick people getting a lot more money.” [HEARING OF THE HEALTH CARE, DISTRICT OF COLUMBIA, CENSUS AND THE NATIONAL ARCHIVES SUBCOMMITTEE OF THE HOUSE OVERSIGHT AND GOVERNMENT REFORM COMMITTEE, 4/5/11]

Empasis in original.

Kessler judged Wasserman-Shultz’s claim to be “bogus.”  FactCheck.org said it was “simply wrong.”

Kessler quoted me in his fact-check, but I think he left out the most important parts.  So here’s my entire email response to Kessler:

This is some high-octane idiocy.

Ryan’s plan says that insurance companies could not turn away seniors.  I’m not sure whether that means only (A) that insurers must issue a policy to all applicants (i.e., guaranteed issue) or whether Ryan’s plan would go further and (B) prevent insurers from charging sick enrollees more (i.e., price controls).  I hope Ryan would not include such price controls, but I see hints that that’s where he’s leaning.  If so, then the Ryan plan would include the very government guarantee that the DNC is complaining isn’t there.   It’d be a lousy guarantee, but it’d be there.

Regardless, the DNC’s attacks are still bunk.

If insurers can charge sick Medicare enrollees whatever they want, and Medicare gives sick enrollees enough money to cover those higher premiums, who needs price controls?  High premiums aren’t scary if you have the money to pay them.  A fair question would be whether the vouchers would be large enough.  The best evidence available (from the Dartmouth Atlas) suggests that one third of spending in traditional Medicare is pure waste.  That is a huge margin of safety: it means that the vouchers could be one-third less than what a Medicare enrollee would otherwise spend without reducing access to necessary care.  The quotes they took from me completely undercut their attacks on the Ryan plan.  I hope they keep quoting me.

Experts widely acknowledge that traditional Medicare exposes seniors to unnecessary and even harmful services.  And Medicare is rapidly consuming more and more of every American’s paycheck.  I can’t imagine anything more irresponsible than defending Medicare as we know it.

NY-26 Post Mortem

Today POLITICO Arena asks:

Reacting to yesterday’s NY-26 election results, Paul Ryan this morning said, “I saw the ads. I saw burning people’s Medicare cards. If you can scare seniors into thinking that their current benefits are being affected, that’s going to have an effect. And that is exactly what took place here.” Do Republicans have a messaging problem on Medicare?

My response:

Some Republicans have a messaging problem – that partially explains the NY-26 result. Others, like Paul Ryan, are telling it straight, for which they should be commended.

Medicare “as we know it” will soon end, as every honest analyst has recognized. If Democrats continue to demagogue the issue, we have a character problem on our hands. And if enough voters fall for that flim-flam, we have a national problem of lethal proportions. Hard reality doesn’t play politics.