More Budgetary Gimmicks From The Obama Administration

I have written before, such as here, that one reason I cannot support any tax increases to reduce the deficit or national debt is the fact that our political class will promise  spending cuts while delivering tax increases.   The tax increases would definitely happen; the promised spending cuts never will. 

Megan McArdle reports that President Obama’s new proposed budget relies heavily on a similar trick regarding Medicare reimbursement and the “Doc Fix.”  Here’s the deal. 

In one of many historical central planning failures, Congress cooked up a formula in 1997 called the “Sustainable Growth Rate.”  It is used to establish the amount Medicare reimburses doctors for treatment.  As Medicare costs continued to increase faster than the overall economy grew, the formula began to require Medicare reimbursements to decrease. 

That’s a problem, because doctors will drop Medicare patients if they don’t get paid enough to make it worth their time (and private patients or their insurers already give an effective subsidy to Medicare patients, since Medicare reimbursements are already lower than market rates).  So for years Congress has acted to prevent the scheduled reimbursement rate cuts from taking place. 

President Obama’s budget likewise cannot propose letting the Doc Fix expire, since it would cause Medicare patients to throw Obama out of office before they get thrown of their doctors’ offices.  And he is desperately trying to look like a deficit hawk while actually being an inveterate tax and spender. 

So what to do?  More of the same budgetary smoke and mirrors that got ObamaCare jammed through Congress.

Obama’s budget proposes spending enough for the Doc Fix for the next 2 years, and paying for it through promised spending cuts over the next 10 years.  Even assuming that the promised spending cuts actually happen — and I doubt they would — how the hell do they expect to pay for the Doc Fix in years 3 through 10?  They have no idea.  And by continuing to spend Billions on green energy supports, excessive union compensation and benefits, hybrid car subsidies, light rail boondoggles, and so on in the meantime, Obama would make things far worse when the bill comes due.

Any legislation that requires budget gimmicks to hide its true economic impact is not just bad legislation.  It is morally abhorrent.  Politicians work for us, and those that forget that need to be given their walking papers.

Published in: on February 15, 2011 at 6:54 pm  Leave a Comment  

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