Think Tank West

By Alan Reynolds

• The “reconciliation bill” is not a “health bill” but an anti-health bill.  It relies heavily on price controls, taxes and fines to punish doctors, hospitals and formerly innovative companies the produce prescription drugs and medical devices.  If we treated farmers, food companies and grocery stores the way Congress threatens to treat the health industries would anybody expect food to become better or cheaper?
• The 3.8% tax on both labor and investment income is not a “Medicare tax.”  It’s surtax on income that goes into the slush fund, not the Medicare trust.
• The bill could not possibly cost “only” $940 billion unless it contained a sunset provision — repealing the law after 2019.  

In fact, new spending is negligible for four years.  At that point the government would start luring sixteen million more people into Medicaid’s leaky gravy train, and start handing out subsidies to families earning up to $88,000.  Spending then jumps from $54 billion in 2014 to $216 billion in 2019.   That’s just the beginning.

To be unduly optimistic (more so than the CBO), assume that the new entitlement schemes only increased by 7% a year.   At that rate spending would double every ten years — to $432 billion a year in 2029, $864 billion a year in 2039, and more than $1.72 trillion by 2049.  That $1.72 trillion is a conservative projection of extra spending in one year, not ten.  How could that possibly not add to future deficits?

Could anyone really imagine that the bill’s new taxes and fines could possibly grow by 7% a year?   On the contrary, most of the claimed revenues are either a timing fraud (such as treating $70 billion for long-term care premiums as newly found treasure) or self-defeating.

The hypothetical tax on Cadillac plans (suspiciously postponed until 2018), for example,  is designed to discourage such plans from being offered by employers or wanted by employees — that is, it’s designed to yield less and less over time.

Moreover, the accumulating penalties on reporting joint incomes above $250,000 — a 39.6% tax, a 3.8 % income surtax, a 0.9% Medicare surtax, rapid phasing-out of deductions and exemptions — would greatly discourage any activity that would push income above $250,000.   Most obviously, no sensible family whose income is normally below that pain threshold would be so foolish as to sell enough assets to let capital gains to push them over the line.

(If even half of the punitive tax plans are enacted, I plan to launch a “249 Club” whose members pledge to never again report more than $249,000).

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By Michael F. Cannon

In a recent oped, I explain that the Democrats’ health care legislation:

would set in motion political forces that would make additional spending inevitable. It would create new constituencies for government spending, hook existing constituencies on even more government spending, and promise implausible cuts in existing subsidies to constituencies that are highly organized and vocal.For example, the Obama plan assumes that Congress will cut future subsidies to private insurers, hospitals, doctors, home health agencies, and others who provide health care to the elderly. Yet those constituencies form a nearly unstoppable political force; Obama adviser Tom Daschle calls it the “patient-provider pincer movement.” They will come back to Congress, year after year, until Congress reinstates their subsidies.

Keith Hennessey provides an example that demonstrates how this is a deliberate strategy to hide the true cost of the legislation:

The reconciliation bill would therefore create a new Medicaid (not Medicare) “primary care doctor payment cliff,” beginning after 2014.  Just as Congress is under unbearable pressure now from doctors to prevent Medicare payments to doctors from being cut, the reconciliation bill would create exactly the same thing in Medicaid, beginning January 1, 2015.

If you assume Congress will not allow that newly created Medicaid funding cliff to bite beginning in 2015, they will spend an additional $29 B in the first decade, beginning in 2015.

This is an intentional gimmick designed to reduce by $29 B the scored cost of the reconciliation bill.

Does any serious student of Congress believe this legislation would cost only $1.2 trillion?  Or would reduce the deficit?

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By Michael F. Cannon

At National Review’s The Corner, Daniel Foster quotes Rep. Alcee Hastings (D-FL) on how Congress gets things done:

There ain’t no rules here, we’re trying to accomplish something…All this talk about rules…When the deal goes down…we make ‘em up as we go along.

A clip on YouTube provides part of the quote:

Hastings provides a helpful reminder that a constitution, rules of legislative procedure, and budgetary rules are not enough to ensure the rule of law.  Those who seek amass power — and even those who seek to disperse it — will nevertheless be tempted to treat government like a game of Calvinball:

The debate over the Obama health plan is a case in point.  Press reports indicate that House Democrats will not “deem” the Obama health plan to have passed the House, but will instead hold an actual vote on it.  That’s good news.  But it hardly washes clean the sins of those who wrote and shepherded the Obama health plan through Congress.  As I document elsewhere, it took more than the usual amount of underhandedness to bring ObamaCare this far.

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By Michael F. Cannon

My oped at FoxNews.com explains just how well Democrats have hidden the full cost of the Obama health plan:

To hear Democrats tell it, the CBO projects the legislation would cost a mere $940 billion over the next 10 years….the actual cost of the bill is nearly $3 trillion….

Yet this legislation would set in motion political forces that would make additional spending inevitable. It would create new constituencies for government spending, hook existing constituencies on even more government spending, and promise implausible cuts in existing subsidies to constituencies that are highly organized and vocal…

When Congress inevitably fails to implement the Obama plan’s spending cuts, and expands its subsidies to more and more people, the cost of this legislation will grow beyond $3 trillion.

The CBO did an admirable job of projecting the cost of this legislation as written. But the text of the legislation does not reflect the reality it would create.

Giving the Obama health plan the effect of law will not make those costs disappear.

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By Michael F. Cannon

The sun has now set and risen again a total of 275 times since it first shone down on the Obama health plan.  Barring some unforseen snag, the House of Representatives will hold the final vote on that legislation around 6pm EDT today.

It will do so without ever laying eyes on a complete cost estimate.  By design, the official Congressional Budget Office cost estimates are incomplete, omitting one category of costs that likely totals $1.5 trillion, and fraudulently concealing other costs.

The most incredible part is that the media have shown zero interest in exposing the largest category of hidden costs: the private-sector mandates, which likely total $1.5 trillion.  But perhaps the media will report on such costs in the future.  The surest way would be for Congress to require the CBO to include them in its official cost estimates.

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By Michael F. Cannon

In The New York Times, former Congressional Budget Office director Douglas Holtz-Eakin strips away the budget gimmicks that Democrats use to hide the cost of the Obama health plan:

Removing the unrealistic annual Medicare savings ($463 billion) and the stolen annual revenues from Social Security and long-term care insurance ($123 billion), and adding in the annual spending that so far is not accounted for ($114 billion) quickly generates additional deficits of $562 billion in the first 10 years. And the nation would be on the hook for two more entitlement programs rapidly expanding as far as the eye can see.

The bottom line is that Congress would spend a lot more; steal funds from education, Social Security and long-term care to cover the gap; and promise that future Congresses will make up for it by taxing more and spending less.

What could possibly go wrong? Best line: the CBO “is required to take written legislation at face value and not second-guess the plausibility of what it is handed. So fantasy in, fantasy out.” (The Congressional Budget Fantasy Office has a nice ring to it.)

Holtz-Eakin is currently president of the American Action Forum.

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