Promises to Restrict Future Spending Are Worthless
It appears likely that congressional Republicans are eventually going to accept a tax increase in exchange for real spending cuts smaller spending increases in the future. If and when that happens, Speaker Boehner should surround himself with Santa Claus, the Easter Bunny, and the Tooth Fairy at the press conference on the deal.
I could spend days explaining my pessimism, but I’ll just point to two pertinent examples of Congress being unable to control itself. First, we have the so‐called Medicare “doc fix,” which was adeptly explained by Reason’s Peter Suderman earlier this week. In 1997, Congress created a formula (“sustainable growth rate”) to constrain physician reimbursements. But shortly after the formula started to do what it was intended to, Congress got cold feet:
The next year, when the formula called for another reimbursement cut, Congress passed an override. And each year since, Congress has followed the same pattern. The SGR calls for a reimbursement cut. Congress either freezes payments or gives physicians a small increase for a short period of time. Sometimes the overrides last for a few months. More often they last for about a year. But a permanent fix never arrives. And each time the formula calls for a bigger cut—because with each override, Medicare’s physician payment levels grow further and further from the trendline called for by the formula. If the doc fix is allowed to occur this year, physicians face a 26.5 percent cut in Medicare fees. At the same time, the long‐term cost of a permanent fix grows each year. Last year’s one‐year fix cost $18.5 billion. This year’s is expected to cost about $25 billion. Estimates put the cost between $244 and $370 billion over a decade. The ever‐rising cost means that with each override the chances of a permanent fix grow even harder.
The second example – a federal aid package for states affected by Hurricane Sandy – hasn’t actually happened, but it will. Indeed, the White House just requested $60.4 billion for Sandy relief. The Obama administration has no honest interest in spending cuts, so it’s not much of a surprise that it would submit a bill that isn’t offset by spending cuts (real or imagined) elsewhere. But shouldn’t House Republicans be counted on to push for offsets, especially at a time when they keep telling the world that deficit reduction requires spending cuts? Well, according to the The Hill, that’s probably not going to happen:
Passage of a Hurricane Sandy supplemental spending bill this month appears more likely following a meeting on Thursday between Speaker John Boehner (R‐Ohio) and Gov. Chris Christie (R-N.J.). Sen. Robert Menendez (D-N.J.) said on Thursday that Boehner indicated to Christie that offsets, or dollar‐for‐dollar spending cuts, are not going to be a big issue. “The governor did say that the Speaker … has said that while some in his conference may raise offsets, that is not where he believes the majority of his conference will be on this issue. That is critically important for us,” Menendez told reporters…
“Speaker Boehner is deeply concerned by the devastation resulting from this terrible storm. When we get the request from the Obama administration, we will get to work immediately,” Boehner spokesman Michael Steel said in response. Last month, Rep. Pete King (R-N.Y.) told The Hill that Boehner told him he supports moving a bill without offsets.
What about those budget caps that were agreed to as part of the 2011 deal to raise the debt ceiling? It’s hard to imagine that a bill that large wouldn’t breach the caps.
Anyhow, even if Sandy aid doesn’t do it, some future war, natural disaster, or economic downturn will create an excuse for Congress to spend more money than some past deal said it was allowed to. The only real way to make spending cuts stick – or at least give it a good chance – is to actually terminate agencies and programs. Unfortunately, that’s not on the agenda of either party.
