Wednesday, July 27, 2011

The latest on the chaos in Washington

As the clock ticks down to a possible U.S. default—and downgrading of government securities—Washington still has not found a way to move forward on resolving the debt limit. It is no longer a fight between Republicans and Democrats, or Congress and the White House, or between the Senate and House of Representatives, but within each party and each chamber.

Senate Majority Leader Reid and House Speaker Boehner have produced bills that would reduce discretionary spending and create a process to address entitlement spending and tax reform, but neither appears to have the votes in Congress to get it through their own respective chambers, never mind a single bill that both the House and Senate could agree on and send to President Obama for his signature. Speaker Boehner is having difficulty in winning over “Tea Party” conservatives within his own conference; Majority Leader Reid would have to get 60 votes to overcome an expected filibuster by some Republican Senators. The White House has said that it supports the Reid bill and has threatened to veto Boehner’s bill if it reached the president’s desk—but the President also continues to call for a self-proclaimed “balanced” compromise that can pass both chambers.

Although there continue to be some GOP politicians who do not think that it would be a disaster if the debt ceiling isn’t increased, this is not the position of Speaker Boehner, Senator Reid, Senator Minority Leader McConnell, or President Obama—or the credit rating agencies that will decide if U.S securities will be downgraded. And, as I have written before in this blog, the arithmetic of the federal budget shows definitively that the federal government will not have enough cash on hand to meet all of its legally mandated obligations if no deal is reached to increase the debt ceiling. Suspension of Medicare and Medicaid payments and/or a shut-down of critical health and safety agencies, like the FDA and CDC, is a growing possibility with each day that there is no solution and as we approach the August 2 date when the government won’t have enough cash to pay its bills.

Here is the latest on what is on the table. Both the Reid and Boehner bills attempt to reduce federal discretionary spending by $1.2 trillion over the next decade, although Reid includes savings from winding down the wars in Iraq and Afghanistan and Boehner would not. (Although the Ryan budget resolution passed earlier by the House includes the same savings from ending both wars.) The Reid bill includes defense cuts, the Boehner bill does not. Both would mandate across-the-board cuts as a fall back to enforce the discretionary program savings if both chambers didn’t agree on legislation to achieve them.

Both create a special joint committee of current members of Congress to recommend changes in Medicare, Medicaid, Social Security and tax policy to achieve another $1.8 trillion in deficit reduction, which would be voted up or down by Congress (with no amendments or filibusters) using a fast-track “base closing” model. The major difference is that Speaker Boehner would require that Congress vote a second time on increasing the debt ceiling in 2012 and could disapprove an increase at that point (resulting in another potential default scenario) if Congress didn’t agree to the additional $1.8 trillion in tax and entitlement savings; Majority Leader Reid would authorize an increase in the debt ceiling with no additional votes to authorize through 2012. The White House has stated that it likely would veto anything that would require a second vote on the debt ceiling in 2012, arguing that this would further de-stabilize the market.

Because neither the Boehner and Reid proposals include Medicare and Medicaid cuts at this time (punting the issue to the special joint committee), Medicare GME/IME payments, imaging pay cuts, lab co-pays, advancing the age of eligibility, and other savings that had been under consideration earlier are not now on the table. Neither is a permanent solution to the Medicare SGR doc pay cuts sought by organized medicine. All of these—and other potential entitlement savings—likely would be among the items that would be considered later by the special joint committee for a “fast track” vote by Congress.

Despite the differences in the Reid and Boehner bills, there have enough things in common to see a way to a bipartisan, bi-chamber solution, if they can resolve the issue of Congress having to vote again on the debt ceiling in 2012, the biggest sticking point, and can get their own conferences to agree. Speaker Boehner almost certainly will need the help of House Democrats since there is as many as several dozen Tea Party Republicans who have pledged to vote against any increase in the debt, and Reid will need Republican votes to overcome a filibuster. If they can’t or won’t come to a solution in the next few days that the White House will also accept, we could see chaos starting next week as the government ends up in an unprecedented situation of trying to decide what bills it can afford to pay, coupled with a potential downgrading of U.S. securities, potentially leading to higher interest rates (and ironically, an increase in the deficit because the U.S. Treasurer would have to pay more interest on its debt) and instability in domestic and world markets.

Today’s question: What is your reaction to the chaos in Washington, and what do you think it could mean for health care?


Steve Lucas said...

Washington has become the home to a group of politicians who would make any number of the countries we criticize proud. We have a release from the national petroleum reserve so as to lower gas prices during the summer driving season.

Yesterday we saw our Congress badgering the heads of the rating agencies for specifics on what would prevent a downgrade of our debt, in effect, so they can borrow more money. The message is very clear; tell us what to do since we cannot govern.

We have a large number of politicians who feel that since we can make our interest payments on our debt, we have no obligations to fund any social programs. The whole concept that some social programs have been paid for by specific contributions of workers during their working careers is lost on them in a push to eliminate government spending.

I personally do not see how we can avoid a downgrade and the resulting increase in interest rates. The political maneuvering that has taken place during this fiasco shows the world we are unable to govern and deal with national issues as they should be dealt with, in a pointed decisive manner. The result will be our debt situation will worsen as larger amounts of revenue are diverted to debt service.

The losers in this will be social programs, leading the way will be medical spending. It becomes much easier to simply cut spending that to promote a NICE type solution since with NICE there are political consequences with every decision. Already people are questioning how someone can take more from Medicare than they pay in, this is why it is called insurance.

Doctors will be squeezed as they are viewed as a high income group with the ability to share the burden. Patients will be squeezed as they will pay more, or be unable to find a service provider.

We have a growing political sentiment in this country that everyone should die destitute. This then justifies increasing taxes and fees and in some cases forces people into government programs, thus justifying increased taxes and fees.

While the Tea Party may be strident in its approach, we need to look at government spending, quit putting up phantom numbers of savings on programs not enacted, and get down to the hard business of governing.

Everyone will be mad, but politicians need to understand that was part of the job. People need to understand government cannot provide everything you want, and the rich guy is not going to pay for long.

Steve Lucas

American Journal of Medicine said...

Congress is looking less effective and more out of touch with Main Street Americans every day.

ryanjo said...

These squabbling and ineffective politicians are the very people that the leadership of the ACP & AMA are supporting to reform our healthcare system. Imagine the future several years into the rollout of the ACA, when the same circus of despair is played out as funding of the now government co-opted medical system is held hostage to such small-minded men & women.

I don't envy you, Bob, having to deal with these individuals in Washington every day. The rest of the country is recoiling in disgust at the present spectacle.

So remind me again, why are we inviting the government deeper into the practice of medicine? Oh, that's right, to save resources and improve quality. Right...

Lie down with dogs, get up with fleas.