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After it returns from Spring Break next week, Congress may face two big fiscal reality checks. It will have to decide whether to temporarily extend scores of expiring tax provisions and what to do about permanently adjusting the formula Medicare uses to pay physicians (the “doc fix”). Combined, these two measures would add about $65 billion to the deficit next year alone. The question is: Will Congress pay for them, either with offsetting spending cuts or tax increases?
If you don’t want to bother to read the rest of this blog, I’ll save you the trouble. The answer is “no.”
But, like a good murder mystery, the fun isn’t figuring out whodunit, but in the sorting through the clues. So bear with me while I take a quick forensic look at the fiscal corpse.
As it happens, Congress has addressed each of these issues, pretty much one-year-at a time, since the George W. Bush Administration (and in some cases as far back as the 1980s). And the outcome is always the same: After much wringing of hands the tax cuts are extended for a year or so, and the Medicare docs are protected from a huge (and growing) pay cut for a few months or (at most) a year at a time.
Congress doesn’t finance those brief extensions of the expiring tax provisions at all. It has paid for short term delays in pay cuts for Medicare docs, through sometimes with questionable savings. And lawmakers have never been willing to find the money to finance a sensible permanent change in the physician payment formula.
Too often, lawmakers have operated as if under some sort of cosmic dispensation: They think they can spend money or cut taxes without having to borrow the money to pay for these goodies.
They perform this bit of budgetary prestidigitation even as they tie themselves in knots over other fiscal choices, such as whether to cover the cost of extending temporary unemployment benefits. Somehow it is a moral imperative to finance an extension of unemployment insurance for the long-term jobless. But when it comes to paying for business tax breaks, not so much.
An aide to new Senate Finance Committee Chair Ron Wyden (D-OR) told reporters the other day that his panel could consider the tax extenders as soon as early April. Remember that most of these provisions expired last Dec. 31.
Wyden says he’d like a quick, relatively brief extension that would allow Congress to focus on broader tax reform. Republicans seem more reluctant to act quickly, perhaps because they prefer to await the result of November’s congressional elections, when they expect to do well. But little has been said by either party about paying for an extension.
The doc fix is another matter. Lawmakers seem to have agreed on a new Medicare payment formula for physicians. But when it comes to paying the bill, estimated at $10 billion for 2015 and $140 billion over the decade, they are in full gamesmanship mode.
Most recently. House Republicans proposed financing the doc fix by effectively delaying the Affordable Care Act individual mandate until 2019. This would reduce the cost of expanding Medicaid and subsidizing private insurance. But it would also increase the number of uninsured by 13 million people and raise premiums for those who do buy insurance by as much as 20 percent.
Just guessing here, but this is probably a non-starter with Democrats.
This is in interesting contrast with Dave Camp’s tax reform. Camp did pay for cutting tax rates and repealing the Alternative Minimum Tax, at least for the next 10 years. And when his fellow lawmakers saw the ugly details, they left the poor guy standing alone in political no-man’s land. Similarly, President Obama’s budget would have paid to extend some expiring tax provisions (and let others quietly die). But it too has sunk into a black hole.
Exactly how will the debate over the doc fix and the extenders play out over the next few months? Who knows?
But I do know this: Next time lawmakers wring their hands over the deficit and the national debt, and cry crocodile tears about the burden on our children, pay no attention to what they say. Just remember what they did with the extenders and the doc fix.
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