Archive

Posts Tagged ‘entitlement’
March 19th, 2015 at 6:11 pm
AEI Scholar: House GOP Budget Needs Work

James Pethokoukis of AEI argues that the new House GOP budget puts too much emphasis on cutting the deficit and not enough on increasing economic growth.

“Indeed, the entire thrust of the budget seems to be that the federal debt is America’s biggest problem,” he writes. “But where’s the evidence? Low interest rates are hardly signaling investor alarm. And not only is the federal debt issued in U.S. dollars, our currency is the world’s reserve. The U.S. is not Greece. The big economic danger here isn’t a debt-driven financial crisis. It’s chronic slow growth from having to sharply raise taxes if we don’t restructure entitlements in a way that promotes saving and work.”

Of course, House budget writers do intend to reform entitlement spending drivers like Medicare and Medicaid – and eventually, one hopes, Social Security. So from at least this standpoint Pethokoukis and the House Budget Committee seem to be in agreement that structural fixes are needed to get entitlement spending on a sustainable trajectory.

What seems to divide them, however, is the motivation for doing so. For the budget drafters it may be containing and reducing an exploding deficit. For Pethokoukis and others, it’s kick-starting the economy to generate more wealth up-and-down the income ladder.

One of these two motivations will ultimately decide what conservative entitlement reform looks like. It will be interesting to see which prevails in the run-up to 2016.

February 23rd, 2013 at 7:02 pm
Florida Joins Dark Side on Medicaid Expansion

With all due respect to Newsmax CEO Christopher Ruddy, and as a fan of his website I mean that sincerely, I couldn’t disagree more with his defense of Florida Governor Rick Scott’s decision to accept ObamaCare’s Medicaid expansion.

Like other Republican governors who’ve flipped on the issue, Scott announced last week that even though he remains philosophically opposed to ObamaCare, he would accept at least the law’s Medicaid expansion for the next three years because federal taxpayers – not the state – would pick up the entire price tag.  Like many of the other capitulators, Scott claims that because the Supreme Court ruled ObamaCare constitutional, it doesn’t make financial sense for Florida residents to pay for ObamaCare through fees and penalties while other Medicaid-expanding states reap a windfall.

Ruddy defends Scott’s about-face with two arguments I don’t find compelling.

The first:

Scott has also made it clear that he has not agreed to continue the Medicaid expansion beyond three years, when federal funding will drop to 90 percent, and Florida could opt out at that point.

Let’s get real.  Once a state accepts more federal dollars and grows a politically sensitive program like Medicaid, the trend is to grow, not cut back.

Moreover, Scott’s calculation betrays a canny reading of the political calendar.  He’s up for reelection in November 2014, but will get credit for expanding Medicaid at no cost to state taxpayers in January of that year.  If successful in his bid, Scott can continue to enjoy favorable press until January 2017 when the federal largesse starts receding and Floridians start feeling the cost of all that “free” healthcare.  But by the time that happens Scott will be wrapping up his second term, and handing off that political football to a predecessor.

Which brings us to Ruddy’s other unpersuasive argument:

So governors like Scott and [Arizona’s Jan] Brewer have to put aside their personal views and accept the reality of the situation.

Since when do conviction conservatives want one of their own – as the Tea Party-backed Rick Scott claimed to be in 2010 – to “put aside their personal views” in favor of growing government?

The “reality of the situation” with ObamaCare’s Medicaid expansion is that it’s completely voluntary.  Any governor that accepts its terms is intentionally saddling his or her state’s future taxpayers with a costly new entitlement that will be impossible to scale back through the political process.

After all, if politicians like Scott can’t weather the storm of saying no to entitlement increases when they don’t even exist, how does it pass the laugh test to think he’ll have the political courage to scale back when the feds re-impose reality?

To be fair, Ruddy isn’t alone trying to defend the indefensible.  Charles Krauthammer is singing a similar tune.  But again, with all due respect, it’s just not true that you can claim to be a fiscal conservative and then capitulate on something as basic as a budget-busting expansion of Medicaid.

December 5th, 2012 at 8:40 am
Text of Paul Ryan’s Speech to Jack Kemp Foundation

Greta Van Susteren has the transcript of Rep. Paul Ryan’s keynote address to the Jack Kemp Foundation last night.  For fans of Kemp and his notion of The American Idea (i.e. broad-based economic growth, equal opportunity, and cultural renewal), Ryan’s speech is an inspiring formulation of Kemp’s program for the 21st century.  An excerpt:

Americans are a compassionate people. And there’s a consensus in this country about our obligations to the most vulnerable. Those obligations are beyond dispute. The real debate is how best we can meet them. It’s whether they are better met by private groups or by government – by voluntary action or by government action.

And I would add that it’s about finding the most cost-effective way to meet those obligations so that they are financially sustainable.  This is critically important for at least three reasons.  First, it means that promises made to today’s beneficiaries can be kept.  Second, it means that tomorrow’s taxpayers won’t be left with the short end of the stick, being made to pay more than they receive in benefits.  And third, it frees up money; both in the federal budget for other worthy spending, and as a greater share of income retained by taxpayers.  Long-term federal entitlements are the real social contracts in our nation, and Americans owe it to ourselves – through our elected representatives – to reform the entitlement system to ensure its stability and fundamental fairness.

October 19th, 2012 at 7:06 pm
Obama Has Spent 56% More than Taxes Brought In

Larry Kudlow: “…reporter Jeffrey H. Anderson uses a Treasury Department study to chronicle the 7-Eleven presidency. In fiscal year 2012, ending September 30, the government spent nearly $11 for every $7 of revenues taken in. The exact figures are $2.5 trillion in tax revenues and $3.5 trillion in spending. In other words, it spent 44 percent more than it had coming in. Previous fiscal years look even worse: The government spent 56 percent more than revenues in fiscal year 2011 and 60 percent more in fiscal year 2010.

“All in all, according to Mr. Anderson, the government under the Obama administration received $6.8 trillion in taxes and spent $10.7 trillion — 56 percent more than it had available.”

Repeat after me: The government doesn’t have a revenue problem.  It has a spending problem.

September 23rd, 2011 at 2:07 pm
Free Trade, Worker Aid Bills Show Policy Differences

Bloomberg News reports the latest ultimatum from House Speaker John Boehner (R-OH) to President Barack Obama:

“We await the president’s submission of the three trade agreements sitting on his desk so the House can consider them in tandem” with the aid and preference programs, Boehner, an Ohio Republican, said in a statement yesterday. “If the president submits these agreements promptly, I’m confident that all four bills can be signed into law by mid-October.”

Apart from Rep. Paul Ryan’s budget resolution and the president’s deficit reduction proposal, there may be no better example of how different is each party’s idea of sound economic policy.

Boehner wants Obama to release three trade treaties negotiated by the Bush Administration so that Americans and their counterparts in Columbia, South Korea and Panama can start enjoying the benefits of free trade.

For his part, Obama wants to force Republicans into funding another round of unemployment benefits, this time for workers displaced by the yet-to-be-ratified agreements.  That’s right: the president wants to spend money on people who may never be fired.

First of all, it’s fallacious to assume that businesses operating at historically low worker levels will fire employees; especially since increased trade opportunities are more likely to lead to hiring increases.  Moreover, Obama fails to recognize the cost of not enacting the three free trade agreements.  For instance, the U.S. Chamber of Commerce estimates that failure to ratify the agreements will cost 380,000 jobs due to missed business opportunities.

At the heart of this dispute is the focus of each party.  Boehner and the Republicans want to spur economic growth.  Obama and the Democrats want to lock-in the growth of the entitlement state.

Boehner is right to demand action on both free trade and worker aid at the same time.  If Obama cries foul, it’s only because his childish attempt to spend more and get less was called out.

August 3rd, 2011 at 7:50 pm
Ryan, Republicans Debating an Empty Oval Office

There are few things more annoying than trying to compete against someone who won’t play the game.

In today’s Wall Street Journal, House Budget Chairman Paul Ryan (R-WI) expresses the frustration of many conservatives who want a real debate about the purposes of government and our ability as a nation to fund them.  Ryan rightly chides President Obama for failing to engage in specifics about how to focus policymakers’ attention on the debt, not just its ceiling.

It is mystifying to me that the president continues to shut out Ryan’s “Path to Prosperity” proposal as a middle ground between bankrupting Medicare and Medicaid and eliminating them altogether.

One would think The One could see a Clintonian moment when presented.  But rather than see Ryan’s willingness to preserve the social safety net for what it is – a path to a long-term bipartisan solution – the president can’t see past his own partisan nose.

Yet instead of laying out his own vision, President Obama continues to offer speeches instead of specifics.  Lots of us want a debate about the ends of government, and how we structure our economy to pay for it.  If the leader of the Democratic Party won’t engage in a serious debate about it, maybe the Democrats should get someone who will.

March 1st, 2011 at 7:29 pm
Higher Ed Sector Bracing for Cuts in Funding, Eventually Enrollment

A sobering bit of news for college administrators about to go on spring break:

“The current prolonged recession means that we can no longer expect new revenue to pay for increasing attainment in higher education,” said Jane V. Wellman, Executive Director of the Delta Cost Project, which does a study every year on the cost of higher education. “In the next decade, we are going to be lucky to hold onto the resources we have. That means that all institutions – from the Ivies to the community colleges –are going to have to develop investment strategies that support goals for attainment. That will require new habits: looking at spending, and promoting the values of efficiency and cost effectiveness as co-partners to the never-ending search for new revenues.”

At first, one might be tempted to think that higher education needs to take a financial haircut just like the rest of the economy.  While that is undoubtedly true, the consequences will be enormous.

Federal higher education loans like Stafford and Grad Plus (and their state counterparts) are used like entitlements, though you’d never hear a recipient saying so.  Though only 1 in 4 Americans eventually graduate with a college degree, nearly everyone qualifies for the loans to finance one.

Because the cost of attendance continues to grow at several times the rate of inflation, grads and non-grads are piling up huge debt loads; prompting some to call the looming student loan crisis our next financial disaster.

The coming cuts in state and federal budgets for higher education financing will significantly decrease the subsidies available to students.  That means fewer students going to college, leaving enrollments peopled with those able to count on private financing.

Since passage of the 1944 GI Bill an essential part of the American dream has been having the opportunity to go to college by removing cost as a consideration.  The same bill did the same thing to spur home ownership via the VA-backed mortgage.  We all know how slippery that slope turned out to be.

Austerity is coming to America.  Hopefully, we can adjust to reduced expectations.

December 4th, 2010 at 12:52 am
Obama Debt Commission Teeing Up Reform of Great Society?

Yuval Levin notices an interesting trend in the various plans coming out of the Obama Debt Commission.  When the proposals are added together there seems to be a consensus building towards overhauling federal healthcare entitlement spending.  If done correctly, it could be a moment for conservatives to inject market principles like choice and opportunity into the system.

There is growing agreement in American politics that the challenge of our time is cleaning up the horrible mess created by the Great Society—the mess that is our approach to domestic discretionary spending but above all the mess that is our health-care entitlement system. That is the essence of our debt and deficit problems.

The question is whether we can deal with that mess by keeping the basic structure of the Great Society entitlements while trimming significantly elsewhere and massively raising taxes, or whether we must deal with it by fundamentally reforming those Great Society entitlements while trimming significantly elsewhere and spreading the tax burden more widely but less heavily to encourage growth and innovation. The latter is fairly obviously the answer to that question—given demographic and economic realities, and given the kind of country the American public wants to live in—but it will take a little time before that really sinks in. It is a very good thing, though, that the question is now being asked.

Reforming (or rather, transforming) the Great Society into a fiscally sustainable, free market-guided, consumer-driven system would be the kind of bipartisan project worthy of the era President Barack Obama and his congressional counterparts find themselves.  Solving that puzzle would establish the president’s sought for legacy while enacting the kind of policy changes the Rep. Paul Ryan (R-WI) and other conservative intellectuals champion.

H/T: National Review Online