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Budget

What We Hope to See From the Extensions Conference Committee

January 25, 2012

At the end of last year, lawmakers enacted a temporary two-month extension of several policies set to expire, including the temporary payroll tax holiday, expanded unemployment insurance, the doc fix, and various health provisions. Encouragingly, the $33 billion cost of the extensions was fully offset over a ten-year period and a Conference Committee was appointed to determine how any further extensions would be treated.

The 12 Principles of Fiscal Responsibility for the 2012 Campaign

December 15, 2011
  1. Make Deficit Reduction a Top Priority.
  2. Propose Specific Fiscal Targets.
  3. Recommend Specific Policies to Achieve the Targets.
  4. Do No Harm.
  5. Use Honest Numbers and Avoid Budget Gimmicks.
  6. Do Not Perpetuate Budget Myths.
  7. Do Not Attack Someone Else's Plan Without Putting Forward an Alternative.
  8. Refrain From Pledges That Take Policies Off the Table.
  9. Propose Specific Solutions for Social Sec

Dealing with Expiring Provisions in a Fiscally Responsible Manner

December 12, 2011

At the end of this month, over 80 tax and spending policies are set to expire. How lawmakers deal with any extensions of these policies has important implications for the federal budget and could represent either a step forward for fiscal sustainability or else a step backward.

How to Pay For the Payroll Tax Cut

  • By
  • Marc Goldwein,
  • New America Foundation
December 12, 2011 |

It's become a Christmas tradition for Congress to end the year by extending all the policies which expire at year's end. There is the Alternative Minimum Tax, which has to be "patched" every year so that it reaches only four million taxpayers instead of thirty million. There is the looming 27% cut in Medicare payments to doctors which policymakers will need to protect with a "Doc Fix." And on top of that, this year, we're dealing with the expiration of a payroll tax holiday and extended unemployment benefits meant to help boost a weak economy.

Follow-Up: Poverty, Inequality, Mobility, Oh My!

November 23, 2011

On November 22nd, the Asset Building Program hosted a panel of experts to discuss how Americans are faring in the years since the Great Recession according to different measures. (Video from the event is available here.) Speakers from Wider Opportunities for Women, the Half in Ten Campaign, Center on Budget and Policy Priorities, and Pew’s Economic Mobility Project joined moderator, Rachel Black, for a discussion of current data and indicators, who’s falling short according to these measures and by how much, and policy ideas for  making progress.

Going Big Means Don't Stop Until You Get Enough

November 16, 2011

The Committee for a Responsible Federal Budget – along with many other lawmakers, business leaders, former government officials, and policy experts – has called on the Joint Select Committee on Deficit Reduction (“Super Committee”) to go beyond its current mandate of finding $1.5 trillion in savings to recommend two to three times as much in order to stabilize the federal debt and reduce it as a share of the economy.

Supercommitteepalooza! or, Disagreements With People We Respect: CRFB/CBPP Edition

November 17, 2011
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The folks downstairs at the Committee for a Responsible Federal Budget clued us in last week to an ongoing debate they've been having with the Center on Budget and Policy Priorities. The central piece of the debate is CRFB board member Erskine Bowles's recommendations to the Supercommittee, which included about $600 billion in reduced Medicare and Medicaid spending. The posts are interesting throughout, and as the deadline approaches, we felt it was important to check in on the federal budget side of health policy.

Here's the debate, with a our commentary:

The initial post: Bowles Plan Offers Path to Compromise

The most important aspect of Bowles' plan, from our perspective, is the method proposed by the Fiscal Commission for fixing the Sustainable Growth Rate (the ironically unsustainable Medicare reimbursement cuts that Congress pushes back each year). In order to pay for a long-term "doc fix" (which would bring down spending on physician fees by cutting rates of reimbursement), the commission recommended that Medicare "develop an improved physician payment formula that encourages care coordination across multiple providers and settings, and pays doctors based on quality instead of quantity of services."

This recommendation is critical. Moving away from the current fee-for-service system is among the most important ways to change how doctors make decisions; at a bare minimum, the Supercommittee should recommend changing reimbursements to reflect the value of primary care instead of encouraging the overcapacity of specialists we have right now.

CRFB didn't specifically mention it, but another critical Medicare fix that the Fiscal Commission recommended is removing the hospital exemption from IPAB recommendations. Given that hospitals make up a huge amount of our total medical spending and are the setting for a huge amount of unnecessary treatment, it's crucial that IPAB have the authority to recommend changes that improve hospitals' incentives to treat patients efficiently.

Related to the initial post: Actually, Raising the Medicare Age Is Also A Good Idea

CRFB's discussion of raising the Medicare age from 65 to 67 is the primary inspiration for this post's second title: we just can't find any good reason to support it.  (If you're really interested in why, we recommend The Incidental Economist's podcast on the subject.)

The thing is, we agree with CRFB on the facts surrounding the issue. Raising the Medicare age would decrease federal health spending somewhat. (The CBO numbers they mention are higher than the ones cited by Carroll and Frakt in the podcast, but not unreasonably so.) On the other hand, they also acknowledge that the shift would increase costs in the private market beyond the savings to the government (because Medicare pays lower reimbursement rates than private insurance). We at New Health Dialogue are concerned with the high total level of spending on health care, rather than simply the level of federal spending on health care. Unnecessarily increasing total medical spending therefore seems like a high cost to pay for a slight reduction in the federal budget which would probably be shortlived, since many of those 65-67 year olds would need help getting insurance, probably through the exchanges specificed in the ACA.

CBPP's initial response: Bowles “Compromise” Proposal to the Right of Boehner Offer to Obama in July

We have to point out a framing problem in CBPP's analysis: not all Medicare and Medicaid cuts are created equal. Some cuts (like those generated by raising the Medicare age) are simply shifting costs from the federal budget to beneficiaries. Those can be fairly labeled as "cuts," and they do increase the burden of health care spending on the elderly. Some of the $600 billion in lower Medicare/Medicaid spending, though, is intended to come from eliminating overtreatment and waste in the medical system. We're well aware that "eliminating waste, fraud, and abuse" is usually what politicians say they'll do to pay for things that they have no intention of actually paying for. However, the Dartmouth Atlas and other analyses have demonstrated that health care really does have a huge amount of wasteful care. Deciding to give patients only the medical care they need, rather than whatever local practice patterns dictate, deserves to be called what it is: responsible management of taxpayer dollars (and of the health system more generally). Demagoguing against such cuts because they reduce health entitlement spending ignores the possibility of making the health system work better, and stands in the way of real progress.

Letter to Senator Baucus

October 29, 2011

October 29, 2011

Dear Senator Baucus,

On behalf of the Committee for a Responsible Federal Budget, I want to thank you for your work on the Joint Select Committee on Deficit Reduction, and the recent proposal you introduced into the discussions. Without having seen all the details, this appears to us to be a serious and credible proposal to reduce the deficit and help put the debt on a more sustainable path.

Erskine Bowles and Alan Simpson Testimony Before Joint Select Committee on Deficit Reduction

  • By Erskine Bowles and Sen. Alan Simpson
November 1, 2011

Chairman Hensarling, Chairwoman Murray, members of the Committee, thank you for inviting us here today to discuss the recommendations of the National Commission on Fiscal Responsibility and Reform, and thank you for your continued hard work to improve our nation’s fiscal situation. We know, a little too well, how difficult your job is.

The Cure

  • By
  • Phillip Longman,
  • New America Foundation
October 28, 2011 |

While the partisan gap in Washington is wider than it’s been at any time in living memory, the two parties do have one remarkable agenda in common. Both have proposed cuts in Medicare so drastic that they would have been politically suicidal a decade ago and may still be. Yet neither party is backing off.

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