WashACE Blog

Budget and Health Care - Joined at the Hip

And sooner or later, the grind may force us to consider hip replacement surgery, which may or not be covered, depending on our age, health status, or choice of a public option plan.

As the Senate takes up Harry Reid's health care legislation, the old nagging questions persist. Without apparent irony, the Washington Post carries this headline: In health care reform, no deficit cure. Not exactly, in vino, veritas, besides, I expect there's more vino than veritas in Senate chambers. Really, no deficit cure? From the WaPo:

"The hope that health-care reform would take care of our budget problem has evaporated," said Isabel Sawhill, a fiscal expert at the Brookings Institution.

Many budget experts also worry that lawmakers may not have the stomach to keep the new taxes and spending cuts intended to pay for the package. Republicans are already planning to offer an amendment to strike more than $400 billion in proposed Medicare cuts from the package, a move that would blow a huge hole in financing for the bill.

In merging bills drafted in committee, meanwhile, Reid significantly watered down two of the most important cost-containment provisions: a tax on high-cost health insurance policies that was opposed by labor unions and an independent commission that had been designed to automatically and methodically restrain Medicare spending. Senior White House officials have called those provisions critical, but House leaders are adamantly opposed to both.

Did anyone really believe that this thing would not only pay for itself but also cut the deficit? I doubt it.

While the Senate fusses with the bill, state governments are reckoning the costs and effects on their unbalanced budgets. Here's Tennessee Gov. Phil Bredeson, saying what most governors must be thinking.

A couple of polls show most of the public would prefer lawmakers move on to economic recovery and jettison the health care debate. Gallup reports 49 percent want their member of Congress to oppose the legislation, while 44 percent lean toward it. 

That's closer than I would have thought. Still, it's hard to see the numbers improving for the reformers.

Former and would-be Oregon Gov. John Kitzhaber thinks Congress has made a mistake by emphasizing access over costs. Here's the NPR coverage. 

"I don't believe that what's going to come out of Congress is going to have any impact on the medical cost inflation, which is what's really crushing individuals and businesses, and really putting the country at economic risk," he says.

There's much to dislike in Kitzhaber's plan - rationing, for example - but he's right to focus on costs.

The Massachusetts model, still touted in policy circles, tends not to be so highly regarded in the Bay State, where Rasmussen Reports that more voters consider it a failure than a success

In 2006, Massachusetts implemented its own statewide version of health care reform and 32% of the state’s voters consider that reform a success. The latest Rasmussen Reports telephone survey of the Bay State finds that 36% consider the plan a failure and another 32% are not sure. 

Smart, incremental reforms still make a great deal more sense than big government takeovers.

A Sampling of Writing on the Climate Change Scandal

I spent part of the holiday weekend working on a column on what some folks are calling Climategate, the release of thousands of emails and other documents revealing a pattern of bad behavior at the Climate Research Unit at the University of East Anglia, England. (Having taken a vow to resist the "gate" suffix for political mischief and misdeeds, I'll just call it the climate change scandal.) As the holiday weekend wore on, the commentary and analysis piled up, along with great links to the leaked information.

The coverage in local papers has been limited, so I thought I'd put some of the best of what I'd read up here.

In the Wall Street Journal, Kim Strassel writes that the scandal has sunk any remaining prospects for Senate passage of a cap-and-trade bill.

One of the best headlines appears over a good WSJ editorial: Rigging a 'Climate' Consensus

Megan McCardle's Atlantic article points up the real problem with the climate science emails. She cites a perceptive assessment by CBS news reporter Declan McCullagh, widely viewed as having done the best MSM reporting on the scandal. This is from McCardle's post:

The emails seem to describe a model which frequently breaks, and being constantly "tweaked" with manual interventions of dubious quality in order to make them fit the historical data.  These stories suggest that the model, and the past manual interventions, are so poorly documented that CRU cannot now replicate its own past findings.

That is a big problem.  The IPCC report, which is the most widely relied upon in policy circles, uses this model to estimate the costs of global warming.  If those costs are unreliable, then any cost-benefit analysis is totally worthless.

The IPCC report she refers to is the United Nations Intergovernmental Panel on Climate Change assessments. As McCullagh writes:

That report, in turn, is what the Environmental Protection Agency acknowledged it "relies on most heavily" when concluding that carbon dioxide emissions endanger public health and should be regulated.

Then we discover that the raw data has been dumped, making replication impossible.

What's it all mean? IChristopher Brooker, in an op-ed for the Daily Telegraph, calls it "the greatest scientific scandal of our age," with science taking a back seat to ideology.

What is tragically evident from the Harry Read Me file is the picture it gives of the CRU scientists hopelessly at sea with the complex computer programmes they had devised to contort their data in the approved direction, more than once expressing their own desperation at how difficult it was to get the desired results.

Michael Barone frames the question appropriately.

The more interesting question going forward is whether European and American governmental, academic and corporate elites, having embraced global warming alarmism with religious fervor, will be shaken by the scandalous CRU e-mails. They should be.

My column is scheduled to run Wednesday.

Thanksgiving Break

With the recession, budget woes, and joblessness, there's a lot of stress and a lot to fret about. Thanksgiving reminds us there's much more to be thankful for, including the men and women who dedicate themselves to keeping us free and safe.

I thought you might enjoy this musical meditation.

Happy Thanksgiving. I'll be back Friday, er, Monday.

Budget Urgency, Taxes, and Related Downers

It's the day before Thanksgiving, so I'll spend little time on the depressing themes associated with the state budget. Surely, everyone must be hoping for a dramatic bounce on Black Friday, though analysts don't expect larger crowds to mean more robust sales - more people spending less. Let's hope the bleak forecasts are mistaken. Regardless, the budget hole won't be fixed by holiday shopping, a reality budget writers are forced to confront quickly.The Spokesman Review has joined the chorus urging the governor and legislators to act swiftly. 

Gov. Chris Gregoire needs to put together a supplemental budget soon. She should move fast on any cuts she can make without legislative approval. The Legislature might be tempted to wait for the next revenue forecast, on Feb. 18, before getting serious about cuts. But dithering is costly, because cuts made in March or beyond won’t bring in the same savings as cuts made sooner.

The editorial acknowledges talk of tax hikes, but warns of their negative effect on a fragile economy.

Hat tip to Jason Mercier at the Washington Policy Blog and to TVW for posting the governor's budget video. It's a grim presentation of the choices she'll be making in the budget she intends to release December 8.

The Evergreen Freedom Foundation's Amber Gunn takes to Crosscut to urge lawmakers to call a special session and revisit the Priorities of Government. Neither is likely this year, but give her credit for identifying alternatives.

Peter Callaghan uses his column to discuss more likely prospects for the session.

...Democrats think some of the burden must be borne by higher taxes. They will look at eliminating tax loopholes (or "tax incentives," if you get one). They will look at so-called sin taxes on booze and cigarettes.

But each loophole is loved by someone with a well-paid lobbyist. And sin taxes don't raise as much money as some imagine.

Like it or not, Democrats will have to consider the big three: sales, property, and business and occupation taxes.

There may also be discussion of the "millionaire's tax" discussed last session. Here's how that's working out in Maryland.

While the Maryland comptroller’s analysis makes no conclusions about the reasons behind the sharp drop in millionaires — though everyone acknowledges that the recession played a big role — it does note that 542 millionaires who filed returns in Maryland in 2007 did not do so last year.

Folks still have choices...and some chose to leave.

Tread Softly When Examining Tax Exemptions

And not just because the bees may sting. SeattlePI.com uses the honey bee tax exemption to highlight the governor's call to review all such incentives.

Almost all of these business tax breaks are scheduled to expire at some point in the future. Gregoire says considering the dire budget situation they should all be re-examined.

An objective review will demonstrate that many of the so-called exemptions are mainstream tax policies, common to most states. And, as this report makes clear, many of the incentives more than pay for themselves by stimulating new investment and job creation.

Swift Action on the Budget Urged

While I've neither time nor inclination to post on everything written about the state budget in the half-week since Arun Raha dropped the hammer on revenue projections for the balance of the biennium, some stuff should be mentioned. The News Tribune says "to tax or not to tax is not the question." And here I'd just posed that question. The TNT's editorial makes several good points and should be read in full. The conclusion is precisely right:

The test of any proposal should be how well it positions the state and its citizens to recover.

On balance, as I have written here, tax hikes to preserve government-as-usual will not position Washington well for the recovery. A similar point is made in Don Brunell's column.

Raising taxes won't make consumers more confident, it won't create jobs, and it won't encourage employers to expand and hire.

We need to stimulate the private sector to lead us back to recovery. Only by increasing employment, stimulating investments and restoring consumer confidence will we find solid ground in these shaky times.

The Seattle Times editorial board supports swift, decisive action to close the gap.

[Gregoire] has done the right thing, but often slowly. This year she curbed state hiring, equipment purchases and travel.

Exactly what she should do now we do not know. A private corporation would lay people off. The state is not a private corporation, but revenues and expenses have a similar meaning.

The Times picked up Sen. Joe Zarelli's call for a special session. As the governor has rejected the appeal, the Times urges her to act on her own to pull spending down. Fine, I guess, but her ability to rewrite the budget unilaterally is appropriately circumscribed.

And for those who think the solution to the current mess is tax reform, the news from across the country is gloomy. This Wall Street Journal story points out that tax collections fell last quarter in 44 states.

The steepest decline was in volatile corporate-income taxes, which fell 19.4% across the 44 states surveyed by the Rockefeller institute. Personal-income taxes fell 11.4%, while sales taxes fell 8.2%. Roughly 80% of states' total tax collection comes from sales and personal-income taxes.

Given the circumstances, job creation and economic growth should matter much more than tax reform.

Shopfloor » Among the Many Things Wrong with the Senate Health Care Bill

After Saturday’s procedural vote in the Senate, health care legislation will finally move forward to a full floor debate and transparent amendment process.  With that in mind, it is important to analyze some of the most troubling aspects of the Senate health care legislation, particularly the increase in the payroll tax that many are calling the “Medicare AMT (Alternative Minimum Tax).”  Putting aside for a moment the other problems with increasing the payroll tax, the current proposal is not indexed for inflation.  This means it will hit an increasing number of middle class families each year, just like the Alternative Minimum Tax does today.

via www.shopfloor.org

How many things need to be wrong with it before Congress turns to smart, incremental health care reform?

Olympian Reports Governor's Budget Will Be Released Early

Brad Shannon writes that the Office of Financial Management says that the governor will release her budget early, possibly December 7 or December 8. 

Getting the bad news of budget cuts out of the way early to leave more time to build support for tax hike?

Hacked E-Mail Is New Fodder for Climate Dispute - NYTimes.com

Hundreds of private e-mail messages and documents hacked from a computer server at a British university are causing a stir among global warming skeptics, who say they show that climate scientists conspired to overstate the case for a human influence on climate change.

via www.nytimes.com

So much for settled science.

Governor Won't Support "All Cuts" Budget?

According to Publicola, Gov. Gregoire last night said she would not support an "all cuts" budget.

The most interesting thing that happened at last night’s annual 36^th District Election Analysis party at Hale’s Ales—hosted by state Rep. Reuven Carlyle (D-36) because the usual host, Sen. Jeanne Kohl-Welles (D-36), was ill—was when Gov. Christine Gregoire (looking at a $2.6 billion deficit) said she would not support an “all-cuts budget” in 2010—a sharp turnaround from last year...

I haven't seen that reported anywhere else. If accurate, that's a considerably stronger position than just leaving the door open to new taxes.

Anyone seen confirmation of the story?