{"id":291,"date":"2013-03-21T07:48:22","date_gmt":"2013-03-21T11:48:22","guid":{"rendered":"http:\/\/www.dougsbriefcase.com\/blog\/?p=291"},"modified":"2013-03-21T09:36:10","modified_gmt":"2013-03-21T13:36:10","slug":"budget-wars-can-they-bridge-the-health-care-gap032113","status":"publish","type":"post","link":"https:\/\/www.dougsbriefcase.com\/blog\/budget-wars-can-they-bridge-the-health-care-gap032113\/","title":{"rendered":"Budget Wars: Can They Bridge the Health Care Gap?"},"content":{"rendered":"

Bud\u00adget debates make good polit\u00adi\u00adcal the\u00adater. Each par\u00adty forces record\u00aded votes designed to score polit\u00adi\u00adcal points and embar\u00adrass mem\u00adbers of the oppos\u00ading par\u00adty. The House had fun yes\u00adter\u00adday with some amend\u00adments before adopt\u00ading the Repub\u00adli\u00adcan pro\u00adpos\u00adal writ\u00adten by Paul Ryan (R\u2011WI<\/span>). The Sen\u00adate began debate on its pro\u00adpos\u00adal last evening and is brac\u00ading for Friday\u2019s \u201cvote-a-rama\u201d \u2013 a day of record\u00aded votes on dozens of polit\u00adi\u00adcal\u00adly-barbed amend\u00adments advanced by mem\u00adbers of both parties.<\/p>\n

In this post, I\u2019m going to try to look past the the\u00adatrics and, doing my best to be impar\u00adtial, make a few high-lev\u00adel obser\u00adva\u00adtions about the Sen\u00adate Demo\u00adc\u00adra\u00adt\u00adic and House Repub\u00adli\u00adcan pro\u00adpos\u00adals. To do that, I\u2019m going to use this chart (click to enlarge):<\/p>\n

 \"Chart<\/a><\/p>\n

The chart presents rev\u00adenues, out\u00adlays and deficits under four sep\u00ada\u00adrate headings:<\/p>\n

40-year average.<\/h1>\n

The blue bars rep\u00adre\u00adsent the aver\u00adage rev\u00adenues, out\u00adlays and deficits between 1972 and 2011. CBO<\/span> pre\u00adsent\u00aded these aver\u00adage num\u00adbers last year. They rep\u00adre\u00adsent the lev\u00adel of fed\u00ader\u00adal tax\u00ades and spend\u00ading that we have been accus\u00adtomed to for most or all of our lives. Both bud\u00adgets would change this well-estab\u00adlished fis\u00adcal pat\u00adtern, but in very dif\u00adfer\u00adent ways.<\/p>\n

CBO<\/span> \u201cbaseline\u201d<\/a> average for the next 10 years.<\/h1>\n

Where\u00adas the first bar in each clus\u00adter looked back over the past four decades, the next three look for\u00adward. The sec\u00adond bar rep\u00adre\u00adsents what CBO<\/span> expects to hap\u00adpen over the next decade (2014\u20132023), assum\u00ading the Pres\u00adi\u00addent and Con\u00adgress make no changes to exist\u00ading law \u2013 no tax hikes or cuts; no increas\u00ades or decreas\u00ades in enti\u00adtle\u00adment spend\u00ading. It\u2019s what fis\u00adcal pol\u00adi\u00adcy would look like if the gov\u00adern\u00adment went on auto-pilot, con\u00adtin\u00adu\u00ading to col\u00adlect tax\u00ades, spend and bor\u00adrow mon\u00adey accord\u00ading to laws already in place. This, too, is a pret\u00adty sharp depar\u00adture from what we\u2019ve been used to over the past four decades.<\/p>\n

Senate Democratic proposal <\/a>for the next 10 years.<\/h1>\n

The green bars (no, that\u2019s not a state\u00adment on the envi\u00adron\u00adment) rep\u00adre\u00adsent the res\u00ado\u00adlu\u00adtion that the Sen\u00adate began debate on last evening. It is expect\u00aded to pass the Sen\u00adate lat\u00ader this week.<\/p>\n

House Republican proposal <\/a>for the next 10 years.<\/h1>\n

The bar on the far right (no pun intend\u00aded) in each clus\u00adter rep\u00adre\u00adsents the House GOP<\/span> pro\u00adpos\u00adal that passed ear\u00adli\u00ader yesterday.<\/p>\n

I\u2019ve done two things in this chart that I hope make it eas\u00adi\u00ader to under\u00adstand. First, I\u2019ve expressed the tax and spend\u00ading plans as per\u00adcent\u00adages of gross domes\u00adtic prod\u00aduct (GDP<\/span>), which is the total out\u00adput of the Amer\u00adi\u00adcan econ\u00ado\u00admy. That elim\u00adi\u00adnates hav\u00ading to account for the fact that a 1971 dol\u00adlar is worth a heck\u00adu\u00adva lot more than a dol\u00adlar is worth today or will be worth 10 years from now. More impor\u00adtant\u00adly, it enables me to say that the Democ\u00adrats want fed\u00ader\u00adal spend\u00ading to aver\u00adage 21.7 per\u00adcent of GDP<\/span> over the next decade; that\u2019s a lot eas\u00adi\u00ader to read than the $46,362,049,000,000 that their bud\u00adget pro\u00adpos\u00ades to spend.<\/p>\n

Sec\u00adond, I\u2019ve looked at \u201caver\u00adage\u201d spend\u00ading, because that\u2019s lots sim\u00adpler than look\u00ading at sev\u00ader\u00adal lines that change from year to year. Hope\u00adful\u00adly, this sim\u00adpli\u00adfies the pre\u00adsen\u00adta\u00adtion with\u00adout oversimplification.<\/p>\n

Here are a few observations:<\/p>\n

Brace for higher taxes.<\/h1>\n

The bud\u00adget process is just begin\u00adning and there are such sig\u00adnif\u00adi\u00adcant dif\u00adfer\u00adences between the House and Sen\u00adate plans that many observers believe an agree\u00adment to be impos\u00adsi\u00adble. If talks col\u00adlapse and tax pol\u00adi\u00adcy remains unchanged, the fed\u00ader\u00adal gov\u00adern\u00adment will col\u00adlect tax\u00ades amount\u00ading to 18.9 per\u00adcent of eco\u00adnom\u00adic out\u00adput over the next 10 years. That\u2019s 1 per\u00adcent of GDP<\/span> high\u00ader than over the past 40 years. Think 1 per\u00adcent of GDP<\/span> isn\u2019t much? Think again. The gov\u00adern\u00adment will col\u00adlect $2.1 tril\u00adlion more in tax\u00ades over the next 10 years than if they stuck with the his\u00adtor\u00adi\u00adcal rev\u00adenue rate. That\u2019s real mon\u00adey and you\u2019ll feel the difference.<\/p>\n

Both parties have climbed on the higher tax bandwagon.<\/h1>\n

The gen\u00ader\u00adal per\u00adcep\u00adtion is that Repub\u00adli\u00adcans want to cut tax\u00ades and Democ\u00adrats want to raise them. These charts demon\u00adstrate that isn\u2019t quite the case. The Demo\u00adc\u00adra\u00adt\u00adic bud\u00adget does call for high\u00ader tax\u00ades. Under their mea\u00adsure, fed\u00ader\u00adal rev\u00adenues would aver\u00adage 19.3 per\u00adcent of GDP<\/span>, 0.4 per\u00adcent more than under cur\u00adrent law and 1.4 per\u00adcent more than the 40-year aver\u00adage. But Repub\u00adli\u00adcans aren\u2019t tax slack\u00aders. Their pro\u00adject\u00aded rev\u00adenue is just a tick below the CBO<\/span> base\u00adline of 18.9 per\u00adcent. That rep\u00adre\u00adsents a big change for the par\u00adty. More on that below.<\/p>\n

Both budgets reduce the deficit.<\/h1>\n

The Demo\u00adc\u00adra\u00adt\u00adic bud\u00adget would reduce the aver\u00adage deficit to 2.4 per\u00adcent of GDP<\/span>, sig\u00adnif\u00adi\u00adcant\u00adly low\u00ader than both the his\u00adtor\u00adi\u00adcal aver\u00adage and the CBO<\/span> base\u00adline for the next 10 years. Repub\u00adli\u00adcans go them one bet\u00adter, elim\u00adi\u00adnat\u00ading the deficit entire\u00adly in 2023.<\/p>\n

The two sides aren\u2019t in the same area code on spending.<\/h1>\n

While the pub\u00adlic debate often fix\u00adates on tax\u00ades, the most dra\u00admat\u00adic dif\u00adfer\u00adence between the two par\u00adties is in spend\u00ading. The Demo\u00adc\u00adra\u00adt\u00adic bud\u00adget would spend, on aver\u00adage, 21.7 per\u00adcent of GDP<\/span>, rough\u00adly split\u00adting the dif\u00adfer\u00adence between the his\u00adtor\u00adi\u00adcal aver\u00adage (21.0 per\u00adcent) and the CBO<\/span> base\u00adline pro\u00adjec\u00adtion (22.1 per\u00adcent). The GOP<\/span> bud\u00adget would cut sub\u00adstan\u00adtial\u00adly below both. The gap between the two pro\u00adpos\u00adals is enor\u00admous, with the House bud\u00adget propos\u00ading to spend about $5 tril\u00adlion less than the Sen\u00adate bud\u00adget. That dwarfs the dif\u00adfer\u00adences between the two sides on tax\u00ades, where less than $1 tril\u00adlion sep\u00ada\u00adrates the two sides. Not that $1 tril\u00adlion isn\u2019t a lot of mon\u00adey; it\u2019s an aver\u00adage of $100 bil\u00adlion per year. But the dif\u00adfer\u00adence on the spend\u00ading side is about 5 times as great.<\/p>\n

Despite that difference, the two budgets are generally in the same ballpark in many areas of spending.<\/h1>\n

Nei\u00adther side wants to touch Social Secu\u00adri\u00adty and, despite philo\u00adsoph\u00adi\u00adcal dif\u00adfer\u00adences on Medicare, they\u2019re not all that far apart. Democ\u00adrats pro\u00adpose to spend $6.74 tril\u00adlion on the pro\u00adgram, Repub\u00adli\u00adcans $6.56 tril\u00adlion, a fig\u00adure rough\u00adly 2.6 per\u00adcent less. Both sides would drop defense and domes\u00adtic dis\u00adcre\u00adtionary spend\u00ading below his\u00adtoric lev\u00adels, although Repub\u00adli\u00adcans advo\u00adcate much deep\u00ader cuts in domes\u00adtic spend\u00ading. I don\u2019t want to paper over the dif\u00adfer\u00adences here. Clear\u00adly, Repub\u00adli\u00adcans want a much more aus\u00adtere gov\u00adern\u00adment than do Democ\u00adrats and that aus\u00adter\u00adi\u00adty is reflect\u00aded vir\u00adtu\u00adal\u00adly across the board in spend\u00ading. But these dif\u00adfer\u00adences would seem to me to be bridge\u00adable were it not for the health law.<\/p>\n

Health care is the biggest bone of contention between the two budget proposals.<\/h1>\n

If the two sides are going to reach agree\u00adment on the bud\u00adget, they are going to have to find some out\u00adside-the-box accord on the new health law. No sin\u00adgle dif\u00adfer\u00adence between the two bud\u00adgets is quite that big \u2013 not tax\u00ades, not oth\u00ader enti\u00adtle\u00adment spend\u00ading (includ\u00ading Medicare), not nation\u00adal secu\u00adri\u00adty or even domes\u00adtic dis\u00adcre\u00adtionary spend\u00ading. This is all the more sur\u00adpris\u00ading since House Repub\u00adli\u00adcans have agreed to adopt sev\u00ader\u00adal impor\u00adtant fea\u00adtures of a law that they have long vowed to repeal. They pret\u00adty much accept its new tax\u00ades and its $700 bil\u00adlion in Medicare cuts that Mitt Rom\u00adney (and Paul Ryan) cam\u00adpaigned against last fall. But they don\u2019t accept the spend\u00ading and that is prodi\u00adgious. By assum\u00ading repeal of the health law\u2019s spend\u00ading pro\u00advi\u00adsions, the GOP<\/span> bud\u00adget saves almost $2 tril\u00adlion \u2014 $1.25 tril\u00adlion from elim\u00adi\u00adnat\u00ading health insur\u00adance sub\u00adsi\u00addies, $635 bil\u00adlion from nix\u00ading the Med\u00adic\u00adaid expan\u00adsion and anoth\u00ader $23 bil\u00adlion in relat\u00aded sav\u00adings. That\u2019s a lot of sav\u00adings and some\u00adthing to which most Con\u00adgres\u00adsion\u00adal Democ\u00adrats and the Pres\u00adi\u00addent are unal\u00adter\u00adably opposed.<\/p>\n

This post is too long (I promise future posts will be briefer) and too short \u2013 it deals in very high-lev\u00adel gen\u00ader\u00adal\u00adi\u00adties and gloss\u00ades over a whole lot of detail in the process. Its pur\u00adpose is to lay out some gen\u00ader\u00adal thoughts on the bud\u00adget and to show how health care may well prove to be the issue that stymies any grand agreement.<\/p>\n

Those are my gen\u00ader\u00adal thoughts. What are yours?<\/em><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Wash\u00ading\u00adton is in the mid\u00addle of bud\u00adget week. The House passed its bud\u00adget res\u00ado\u00adlu\u00adtion yes\u00adter\u00adday. It is light-years apart from the one that the Sen\u00adate is debat\u00ading today and hopes to pass by week\u2019s end. While the two par\u00adties are far apart on tax\u00ades, they\u2019re not quite as far apart as I\u2019d thought, as you can see from the chart. Con\u00adtin\u00adue read\u00ading \u2192<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":300,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","wp_typography_post_enhancements_disabled":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"nfd_image_url":"","nfd_onboarding_generated":"","footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[18,17,16,19,15],"tags":[31,33,27,32,36,30,1183,28,29,34],"class_list":["post-291","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-entitlements","category-health-care","category-politics","category-public-policy","tag-cbo","tag-deficit","tag-federal-budget","tag-gdp","tag-health-care-law","tag-house","tag-medicare","tag-paul-ryan","tag-senate","tag-social-security"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t