Dems' spend now, cut later plan for jobless is familiar, not serious
This week, we saw a classic example of how Congress operates, especially when it comes to reducing spending: Spend now, plan to reduce spending later — much later, unless it’s politically unpopular — then don’t cut spending at all.
The topic of debate in Congress for the past week has been about extending unemployment benefits to help 1.3 million Americans whose benefits ended in late December but who are still unable to find a job.
The first plan debated was for a three-month extension costing $6.4 billion, but that would have meant another fight on the same issue in March. The new plan being debated is to extend benefits for 11 months.
Democrats favor simply extending benefits and adding the $26 billion to the deficit and the $16 trillion national debt debt. Republicans would support the benefits extension but want the additional benefits paid for with spending reductions, rather than adding to the debt.
The proposal offered earlier this week by Senate Majority Leader Harry Reid, D-Nevada, is classic Washington. To satisfy Republicans, Reid said the extended benefits would be paid for by a one-year continuation of proposed reductions in Medicare spending in 2024. That’s Reid’s fiscally responsible plan — pay for spending this year with a one-year extension of promised spending cuts 10 years from now.
Who believes that?
Reid’s idea sounds a lot like what has become known as the “doc fix,” a prime example of what can happen when Congress promises future spending reductions.
As part of the Balanced Budget Act of 1997, Congress created a program called the Medicare Sustainable Growth Rate (SGR), intended to help keep costs of health care coverage from rising faster than the rate of inflation. For a few years, reimbursements to doctors were reduced following the SGR formula. But soon, doctors objected and lobbying by the American Medical Association effectively ended the program by pressuring Congress to vote each year to cancel the planned reduction to doctors treating Medicare patients.
It can be argued that reducing payments to doctors treating Medicare patients is not a good way to slow the growth of health care spending, but that’s not the point in this case. The “doc fix” story, with annual votes to stop the scheduled spending cuts, shows how easily Congress can ignore or reverese past promises to reduce spending.
Reid’s suggestion to spend money now for extending unemployment benefits and pay for that with reduced spending 10 years from now can’t be taken seriously.
The Republicans’ approch to pay for the additional spending is reasonable. If extending unemployment benefits for most of the year is a priority — and there are humane as well as economic reasons for doing so — then there should be some other spending somewhere in the just-passed $1.1 trillion spending plan for 2014 that can be trimmed to cover the extended unemployment benefits.
Reid’s idea to pay for spending in 2014 with a promise of reduced spending in 2024 is not serious, and everybody knows it.
