Are you uncorking the champagne to toast Washington for not going over the fiscal cliff? I didn’t think so . . . me neither.
How could anyone toast a Congress that took the country (again) to the brink of economic chaos? Who waited until the 11th hour (literally) to clear a bill that prevents huge tax increases on just about everyone and huge cuts in just about everything? That wasn’t able to assure Medicare patients and their physicians that there wouldn’t be a 27 percent cut in payments the very next day? That waited until 11 p.m. on January 1 to come to an agreement, even though it has known for more than a decade that the Bush tax cuts would expire after 10 years, has known for more than a year that across-the-board budget sequestration cuts would automatically go into effect and that Medicare physician payments would be cut by nearly 30 percent on the first of the year, and that has known since at least 2002 that the Medicare SGR formula is fundamentally unworkable and need to go? That in the end, could only agree to prevent the SGR cuts for another year, but with no plan or timetable to advance a permanent solution? (Read what ACP had to say about the fiscal cliff deal and the lack of an SGR solution).
Sure, there is (some) good in the fiscal cliff deal, some that is bad, and a lot that is ugly, really ugly, especially when it comes to the sad state of policy discourse and decision-making in the United States. Let’s run it down.
The good: Congress didn’t take us into another recession by allowing the country to go over the fiscal cliff. Medicare payments to doctors won’t be cut by nearly 30 percent. Most Americans won’t see their federal income taxes go up, except for higher income individuals and families. Defense and domestic programs won’t be cut across-the-board—yet. Congress rejected a proposal to cancel an increase in Medicaid payments to primary care physicians (went into effect yesterday) to offset the cost of preventing the Medicare physician payment cut.
The bad: The one-year extension of current Medicare rates to physicians was a repeat of the same old, enact a temporary patch now to stop the immediate cut and put off until later a permanent solution, failed approach to the Medicare SGR Congress has taken every year since 2003. This was the best they could do? Even though ACP offered Congress an achievable and realistic framework to repeal the SGR and move to better payment framework? Even though organized medicine collectively offered Congress a similar set of payment reform principles? Also bad: Congress also couldn’t come to an agreement on an alternative to across-the-board budget sequestration cuts, deciding instead only to postpone them until March 1.
The ugly: Congress did nothing to address the rising costs of health care, except for further ratcheting down Medicare payments to hospitals, ambulances, Medicare Advantage plans, and physicians who provide imaging services. The plan it passed does not make a meaningful contribution to reducing the federal budget deficit, although it will bring in somewhat more tax revenue (from higher income persons) than if the Bush tax cuts were renewed in their entirety. Congress and President Obama again missed an opportunity to agree on a Grand Bargain to increase revenue, reform the tax code, and reduce spending on entitlement programs, although they reportedly weren’t that far apart on the numbers.
The really, really ugly: The political process—and the flawed outcome it produced—was so embarrassing and unworthy of a great country that it led National Journal writer Ron Fournier to ask “Can we fire Washington over the fiscal cliff fiasco?” He writes that “the ‘fiscal cliff’ process was secretive and sloppy, and the nation’s so-called leadership lacked the political courage to address our root problems: joblessness and debt. Instead, the White House and congressional leaders set the stage for another maddening confrontation two months from now, when the nation’s credit will be held hostage again to Washington’s incompetence.” It was so ugly that the Speaker of the House of Representative, John Boehner, reportedly gave the finger and issued the F-bomb to Senate Majority Leader Harry Reid!
And that is the really, really ugly thing to think about. Less than two months from now, the across-the-board sequestration cuts go into effect, unless Congress and the President can agree on an alternative. Just two months from now, Congress will need to enact legislation to authorize the Treasury department to borrow more money to honor existing obligations (the debt ceiling), and Republicans already are saying that they will demand more spending cuts in exchange while President Obama says he won’t negotiate with them on it, not this time, not again. Remember, it was the debt ceiling debacle of the summer of 2011 that led to the failed “Super Committee” and the across-the-board sequestration cuts that were delayed for two months, but not canceled, by the new law. The consequences of defaulting on the country’s debt obligations would be far more serious and detrimental to the U.S. economy than going over the fiscal cliff. And that’s not all: a temporary measure to fund the federal government expires at the end of March, leading to the prospect of another tussle over spending and the possibility of a government shut-down.
Good bye and good riddance to the 112th Congress, arguably the worst since members of Congress were caning each other before the Civil War!
Personally, I have been involved in observing and influencing government for more than three decades now, and I have never seen Washington so polarized, never seen supposedly responsible people in Congress being willing to gamble (again and again) with the country’s economic health to make an ideological point, never seen so many who think compromise is a dirty word, and never seen a Congress so unable to pass legislation until the clock has run out and the wolf is at the door.
The deal that was passed was better than the alternative of going over the cliff, but the politics that has produced it was so divided and so dysfunctional and so ugly that maybe the best we can hope is that it can’t get any worse—or can it?
Today’s question: What do you think of the fiscal cliff legislation and what it says about our country’s capacity to govern?