Freedom Line Blog

Well, not yet.  But this week Congressional Budget Office (CBO) Director Doug Elmendorf issued a sobering report on the state of the nation’s finances.

The largest problem by far?  Entitlements … those “popular” little nuggets of government largesse that everyone enjoys receiving but no one (maybe some liberals) enjoys paying for out of their paycheck.  For example, Medicare and Medicaid are projected to grow by 80% over the next 25 years, while Social Security will only grow 20%.

As Elmendorf notes, the nation simply can’t continue to run up the national debt, currently at almost $12 trillion.  He alludes to possible crises down the road: a drastic drop in the dollar, an increase in interest rates and massive tax hikes.

His conclusion:

[F]iscal policy is on an unsustainable path to an extent that cannot be solved by minor tinkering. The country faces a fundamental disconnect between the services the people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services. That fundamental disconnect will have to be addressed in some way if the budget is to be placed on a sustainable course.

CFIF has written about and commented on the crushing blow that forced expansion of Medicaid, as called for in the health care reform bills making their way through Congress, will have on state budgets.

But don’t take our word for it.  Here is what Democrat Governors are saying about the issue, as compiled by the Senate Republican Communications Center:

Dem Health Care Angst Beyond The Beltway

Democrat Governors Say Their States Can’t Shoulder Burden Of New Democrat Health Care Mandates

GOV. TED STRICKLAND (D-OH): “The States, With Our Financial Challenges Right Now, Are Not In A Position To Accept Additional Medicaid Responsibilities.” “Still, Strickland warned on a recent visit to Washington that ‘the states, with our financial challenges right now, are not in a position to accept additional Medicaid responsibilities.’ Strickland said that he wants ‘a health-care package that is inclusive and provides for all citizens,’ but he added that if Medicaid is expanded, he hopes to ‘see the federal government assume the greater portion of the costs, if not the total costs.’” (“Expansion Of Medicaid Could Impose Costs On Ohio,” Columbus Dispatch, 10/7/09)

GOV. JOHN LYNCH (D-NH): Did Not Sign A Letter Supporting Health Care Reform Because It Failed To “Address Concerns Regarding Potential Cost Shifting To The States.” “Last week, Democratic governors sent a letter to congressional leaders proclaiming that ‘the status quo is no longer an option’ and urging passage of a healthcare bill this year. Six Democratic governors did not sign the letter for various reasons. In the case of New Hampshire Gov. John Lynch, he did not sign because the letter failed to ‘address concerns regarding potential cost shifting to the states,’ said Colin Manning, a spokesman for the governor. ‘And this concern has been shared by a number of governors that Gov. Lynch has spoken to across the country,’ Manning said.” (“Obama Finds Support Outside Party And Washington For Healthcare Plan,” Los Angeles Times, 10/7/09)

GOV. PHIL BREDESEN (D-TN): “My Guess Is That Most Other States Would Face A Similarly Painful Situation If These Costs Are Passed Down.” “In his letter to Sen. Bob Corker (R-Tenn.), Bredesen also urged the senator and his fellow lawmakers to temper down their proposed changes to the low-income healthcare entitlement — an expansion Corker later described as an ‘unfunded mandate’ that could overburden states at a time when many are struggling to manage the recession. ‘My guess is that most other states would face a similarly painful situation if these costs are passed down,’ Corker explained in his own statement on Tuesday.” (“Tenn. Gov Bredesen: Medicaid Expansion Could Cost State Millions,” The Hill’s “Briefing Room” Blog, 10/6/09)

Govs. Mike Beebe (D-AR), Jay Nixon (D-MO), Bev Perdue (D-NC), John Lynch (D-NH) And Dave Freudenthal (D-WY) Held Out From Signing A Letter On Health Care Reform With Other Democrat Governors. “It’s a standard letter addressed to Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, Speaker Pelosi and Minority Leader Boehner, telling them states ‘will only achieve the health care security and stability they need if we succeed in working together with the Congress and the President to achieve health care reform.’ But missing from the signatures at the bottom are six governors: Mike Beebe (AR), Jay Nixon (MO), Bev Perdue (NC), John Lynch (NH), Dave Freudenthal (WY) and Brad Henry (OK).” (“Six Dem Governors Hold Out On Health Care Letter,” TPMDC, 10/5/09)

GOV. DAVE FREUDENTHAL (D-WY):“Freudenthal Said Expanding Medicaid May Be A Quick Way To Get Coverage For The Uninsured, But It’s Far From The Most Cost- Effective Or Efficient.He added that any health-reform plans must include steps to hold down costs. ‘That’s why I think you find governors interested in cost savings, reform and wellness activities,’ Freudenthal said. … ‘You know, you only have so much money, and this is the basic math: If you have 47 million people who don’t have coverage in the country, and your goal is to get coverage for those people, you can’t come to us and say that it’s not going to cost society anything.’” (“Medicaid Expansion May Be Budget Buster,” Wyoming Tribune Eagle, 7/27/09)

GOV. BEV PERDUE (D-NC): “The Absolute Deal Breaker For Me As Governor Is A Federal Plan That Shifts Costs To The States.” “We are all hungry for a solution, but the absolute deal breaker for me as governor is a federal plan that shifts costs to the states.” (“Perdue: Don’t Give States The Bill,” [Raleigh, NC] News & Observer, 7/21/09)

GOV. ED RENDELL (D-PA): “I Don’t Think It’s An Accounting Trick, I Think It’s An Unfunded Mandate … We Just Don’t Have The Wherewithal To Absorb That Without Some New Revenue Source …” (CNBC’s “Squawk Box,” 9/3/09)

GOV. BILL RICHARDSON (D-NM):  “We Can’t Afford That, And That’s Not Acceptable.” (“Govs Resist Added Federal Expenses From Congress,” The Associated Press, 7/19/09)

GOV. CHRISTINE GREGOIRE (D-WA): “As A Governor, My Concern Is That If We Try To Cost-Shift To The States We’re Not Going To Be In A Position To Pick Up The Tab.” (“Governors Fear Medicaid Costs In Health Plan,” The New York Times, 7/20/09)

GOV. BILL RITTER (D-CO): “Our Only Point Was That A Significant Medicaid Expansion Should Not Operate As An Unfunded Mandate For The States.” (“Ritter Fears Federal Expenses May Hit Colorado,” The Denver Post, 7/20/09)

GOV. BRIAN SCHWEITZER (D-MT): “The Governors Are Concerned About Unfunded Mandates, Another Situation Where The Federal Government Says You Must Do X And You Must Pay For It. Well if they want to reform health care, they should figure out what the rules are and how they are going to pay for it.” (“Many Governors Against Health Care Bill, Label It Unfunded Mandate,” Fox News, 7/19/09)

GOV. JOE MANCHIN (D-WV): “They Thought The Best Way, The Federal Government Thought The Best Way Is By Expanding Medicaid To Make That Happen. But We Have Said, ‘Under No Conditions Can We Take Unfunded Mandates.’ You can’t raise the eligibility of Medicaid 133% and put a $100 billion back on the states to pick up.” (“Governor Manchin Joins Counterparts In Mississippi,” [West Virginia] Metro News, 7/20/09)

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Last week, CFIF ran a commentary piece discussing the budget-busting effects that an expansion of Medicaid, as called for in the health care reform bills making their way through Congress, will have on state budgets.

With many state budgets deep in the red and governors scrambling to find more places to cut due to the economic downturn, we warned:

The principal (but far from only) problem for the states [with health care reform] is forced expansion of Medicaid, a shared expense with the federal government, but already coming apart at the seams in many states, which must, on average, pay about 43 percent of Medicaid costs.”

Shailagh Murray of The Washington Post has a piece today with the sub-title “Governors Fear For Their Budgets” that addresses the issue, and which reads in part:

Whether Medicaid can absorb a huge influx of beneficiaries is a matter of grave concern to many governors, who have cut low-income health benefits — along with school funding, prison construction, state jobs and just about everything else — to cope with the most severe economic downturn in decades.”

The issue is getting some attention in Congress, particularly by Majority Leader Harry Reid who cut a sweetheart deal with Senate Finance Committee Chairman Max Baucus to, as Murray notes, “ensure that the federal government would pay the full cost of expanding Medicaid in Reid’s state, Nevada.” 

Some governors, notably Rick Perry (R-TX), Phil Bredesen (D-TN) and Mitch Daniels (R-IN), are already speaking out on this issue.  Is yours?