Zika: Conservatives should be prepared to hold the line

Since last week, the House and Senate have been engaged in formal conference committee negotiations over the chambers’ respective Zika response and MilCon-VA packages. Reports indicate the the final compromise product could come this week, and the House already has a vote scheduled.

To recap: The House bill (H.R. 5243) contained $622 million in fully-offset fund transfers to combat Zika, while the Senate bill (H.R. 2577) contained $1.1 billion, none of which was offset, and which included their FY17 Military Construction and Veterans Affairs appropriations bill. The chambers went to conference using H.R. 2577 as the vehicle, and the House, as part of H.Res.751, included the combined text of their Zika response, MilCon-VA bill (H.R. 4974), and the Zika Vector Control Act (H.R. 897). As such, the conference agreement will likely produce compromise legislation covering both Zika and MilCon-VA.

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New budget plan doesn’t address the underlying disagreement

House leaders, trying to break the impasse stalling the chamber’s budget and appropriations process, are putting forward a new plan designed to get conservative support for a budget that sets FY17 discretionary spending at $1.070 trillion, the cap created by last fall’s budget deal.

The plan would combine the traditional congressional budget resolution with formal legislative bill text that would achieve $30 billion in savings in the first two years and $170 billion over ten.  It would not be a strictly congressional resolution as budgets are, but rather a bill that could theoretically be signed into law.  A “leadership source” explained the plan to Politico, saying:

“[T]he budget then couldn’t take effect without the mandatory savings, which target Medicaid and Obamacare, also being enacted. Such a move would allow conservatives to claim they voted for a budget with less spending than prescribed by the Obama-Boehner deal. But members of the conference’s right flank were cool to the proposal. They noted it was unlikely the package would be passed by the Senate or signed into law by Obama.”

That fact that this new proposal is intended to gain the support of conservatives for the $1.070 trillion budget number without providing a way of actually achieving the goals they have laid out, invites the question: Why is this plan being put forward? If this is simply an exercise to get conservatives on record supporting a budget (any budget, even one with ancillary provisions) at 1070 in order to weaken their resolve to oppose efforts later this month to move appropriations bills written to the 1070 level, then it is a poor exercise and a waste of time.

House Republicans have serious policy differences on how to move forward with this year’s budget and appropriations process. Those differences can’t be papered over or avoided with proposals that don’t address the fundamental disagreements in question.

This proposed plan does nothing to address that fundamental disagreement.

What’s more, all budget resolutions contain “illustrative policy options” to achieve its underlying assumptions. Adding specific bill text to achieve some of those savings (though in this instance, representing less than 2.5% of the proposed savings contained in the budget), and having members vote on those specific savings, can rightfully be seen as a positive step; however, contrary to some talking points, sidecar legislation spelling out specific cuts is not revolutionary. Back in 2012, the House passed follow-up legislation to its budget laying out $310 billion in specific deficit reductions. That legislation was not coupled with a meaningful strategy to enact those cuts, and thus was not taken up in the Senate and died a quiet death. This plan appears likely to meet the same fate.

To be clear, the cuts that are reportedly included in the bill are generally worthwhile and while this bill certainly has merits in isolation, it does not in any way change or address the fundamental issue at hand. Conservatives in the House have made their demands clear: they will not vote for $1.070 trillion in discretionary spending, including appropriations written to that level, unless $30 billion in cuts are enacted.

Unless there is a strategy and path forward to getting this new plan through the Senate and signed into law by the President, conservatives in the House should continue to oppose the “1070” budget level and make clear that this plan doesn’t bind them to supporting appropriations going forward. In fact,they should continue to oppose those appropriations bills unless and until the bill’s cuts get signed into law.

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Budget Resolution Claims and Responses

The House is currently discussing a potential path forward on an FY17 budget resolution.  As Heritage Action explained last month, there are four criteria necessary for conservatives to support a congressional budget resolution:

  1. Balance within the budget window without accounting gimmicks;
  2. Remove Obamacare tax revenue, as the law should repealed in 2017, and as last year’s reconciliation exercise proved the GOP remains committed to repealing the entire law, including all of its tax increases;
  3. Explicitly reaffirm the GOP’s commitment to bold entitlement reform, especially Medicare premium support; and
  4. Abide by the topline FY17 budget levels contained in last year’s Republican budget.

As things stand right now, there is an effort to convince conservatives to vote for an FY17 budget that calls for $1.070 trillion in discretionary spending, which is $30 billion above the levels set by the Budget Control Act of 2011.  The “unenforceable nature of budget resolution promises” should cause those conservatives to reject the type of deals currently being discussed.

Below are some commonly made claims and straightforward conservative responses:

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Washington Post Flip-Flops on Major Budget Gimmick, Congress Should Act

The Washington Post editorial board has long considered itself the “adult in the room” on fiscal matters, all but endorsing the Simpson-Bowles plan and other trendy fiscal proposals, as well allying itself with respectable centrist groups like the Committee for a Responsible Federal Budget (CRFB) in calling out Congress for engaging in a number of budget gimmicks to hide its spending appetite.

However, a major recent flip-flop from the paper’s editorial writers should turn heads and spark action in Congress.

The issue at hand is a budget gimmick used by states regarding Medicaid provider taxes. In truth, this gimmick could more accurately be referred to as straight-up fraud (were the federal government not complicit in it).

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WHAT THEY’RE SAYING about H.R. 2: The Senate can and should do better

Conservative and nonpartisan voices say Congress should scrap the H.R. 2 ‘doc fix’ deal…

Senator Ben Sasse:

“Unfortunately, the House bill is a missed opportunity to fix Medicare and arguably makes our long-term problems worse. This is exactly why Congress has dismal approval ratings. Lets use this opportunity to secure the program for seniors and for their grandchildren. Congress should scrap this deal and work on a new solution.”

Senator Jeff Sessions:

“This is what brings this Congress in disrepute. The same day we assert that we want to have a balanced budget…we’re now considering pass an unpaid-for increase in spending that would add $170 billion to the debt…

“Let’s all work together to lay out a plan that would pay for this expense. We can do that. “

Heritage Foundation’s Bob Moffit:

“This “deal” will increase the deficit by $141 billion over the next 10 years. Then it will become even more unaffordable…

“In addition to guaranteeing taxpayers hundreds of billions more in future indebtedness, the House bill carries huge opportunity costs. America needed robust, bipartisan structural Medicare changes—reforms that would significantly improve the program and secure serious long-term program savings…

“The bill is now with the Upper Chamber. Senators can and should do better.”

Jim Capretta in National Review:

“For starters, despite claims made by supporters of the emerging bill, it is highly unlikely that the legislation will reduce long-term Medicare spending…

“Proponents of the law counter that the new spending shouldn’t be counted in this assessment because the SGR-mandated spending cuts were never going to happen anyway, and thus undoing them is just matching law with reality. But that’s not really accurate…

Congress has been dealing annually with “doc fix” legislation for more than a decade now, and many physicians are beyond impatient with the legislative process. That’s understandable. But in trying to appease them, it looks as if Congress is going to approve a plan that is more business as usual than its supporters would like to admit.”

Yuval Levin in National Review:

“[U]ltimately, I’d vote against it. I don’t think the annual SGR patches constitute a terrible crisis, but I think the fiscal trajectory of the Medicare program does. This bill seems premised on the opposite assumptions.

Joe Antos of the American Enterprise Institute:

Bounce the ‘dox fix’ – but don’t increase the deficit

“Last year, the permanent “doc fix” failed because Congress was unable to agree on how to pay for it.  This year, Congress wants to cover only part of the cost with Medicare savings.  That would be a serious mistake. …

“The bottom line is clear.  By not finding offsets for the entire cost of the doc fix-CHIP proposal, Congress is opening the door to even greater deficit spending in the future…

“If we cannot reform the entire Medicare physician payment system, we should at least find other savings in the program to avoid adding greater burdens on taxpayers and their children.”

Avik Roy of the Manhattan Institute:

“Senate, you’re our only hope: The authors of the “doc fix” bill call it “entitlement reform.” But how does spending hundreds of billions more on Medicare get to be called “reform?”

“… The only way to salvage the situation is to persuade the Senate to beef up the Medigap and means-testing changes, so as to ensure that the bill would indeed reduce the deficit, relative to current law, in its second decade.

“In 2006, Republicans lost their majorities in both the House and the Senate, in large part because they no longer stood for reducing the size and scope of government. If the “doc fix” becomes part of a deficit-busting pattern, it’s hard not to envision a similar fate for this Congress.”

Committee for a Responsible Federal Budget:

Despite official estimates tabbing the Medicare Sustainable Growth Rate (SGR) formula replacement bill at a cost of $141 billion this decade and implying it would add upwards of $500 billion to the debt over 20 years, lawmakers have taken to fuzzy math – or simply ignoring math altogether – in order to pretend that the bill is fiscally responsible…CBO uses current law as its standard and only evaluated the bill relative to a freeze because it was asked to. You cannot (against all evidence) assume fiscal irresponsibility in order to justify being irresponsible.

Washington Post Editorial:

“[S]uccumbing to [H.R. 2] would set back the cause of long-term fiscal reform. To repeat, the sustainable growth rate has not quite worked as intended, but at least its failure never turned into a source of higher deficits. Instead, both parties should treat this as a chance to impose more structural changes, over and above the $37 billion worth contemplated. The Committee for a Responsible Federal Budget has identified $215 billion worth of medical program savings that could help pay for a long-term doc fix without altering eligibility or other fundamentals in either Medicare and Medicaid.

“For all the polarization and partisanship of a dysfunctional Congress, Republicans and Democrats have proven many times that they are still capable of agreeing to spend more on entitlements and pay for it through borrowing. They should miss this opportunity to prove that yet again.”

National Review Editorial:

“The SGR has been denounced as a mere budget gimmick, which in a sense it is, but it is one that has been nonetheless effective: Congress has shown no willingness to actually reduce physicians’ Medicare payments, but it has been surprisingly rigorous about offsetting those doc-fix expenses with other spending reductions. …

“The worst outcome — abandoning those spending restraints while doing little or nothing to mitigate the fiscal impact of doing so — is, unfortunately, what is currently under consideration. If presented with that option, conservatives should put their foot down — on the neck of this profligate, deficit-swelling deal.”

Conservative Review Editorial:

“So sure, the SGR is a failure, as is always the case when price controls stand in for genuine, market-based reforms. But that does not mean Congress should eliminate it without any sincere plan to manage Medicare’s untenable trajectory. Cosmetic trimming and deficit spending simply do not suffice. If the GOP-controlled Congress would like to do something about the tradition of the “doc fix,” it should begin by addressing long overdue structural changes. …

“And in the meantime, Republicans, pay for what you say you are going to pay for, and don’t deceive the taxpayers who sent you to Washington to restore fiscal sanity.”

Washington Examiner Editorial:

“The doc-fix drama is not the thing that needs to be cured, but rather Medicare’s rising and unsustainable costs.

“As a symptom, the recurring annoyance of the doc-fix is actually a good thing. It forces Congress to confront the issue repeatedly. The hope is that someday — with the right Congress and president in place — this confrontation will lead to much-needed Medicare reforms that come with support from a medical establishment eager for a permanent doc-fix. This strategy threatens to make that possibility less likely. There exists a danger that if this deal removes the repeated annoyance of the doc-fix, Congress will lose its best short-term incentive to reform the program for the long term.”

Michael Cannon of the Cato Institute:

“[T]his bill is yet another example of the dessert-first-spinach-later approach to fiscal stewardship that is business as usual in Congress…

“For all its faults, and despite the fact that it has become (in health-policy circles, anyway) a punch line, the SGR forces Congress to confront runaway Medicare spending year after year. If this bill passes, it will be easier for Congress to ignore runaway Medicare spending — and that spending will begin to run away even faster. Reformers might be better off leaving the SGR in place and preserving the leverage it creates until political realities have changed — that is, until there is a president who will support broader Medicare reform.”

John Graham of the National Center for Policy Analysis (NCPA):

“Late last month, an overwhelming bipartisan majority in the House of Representatives approved the Medicare Reauthorization and CHIP Extension Act (MACRA), a fiscally irresponsible approach to increasing the amount the federal government spends on Medicare’s physicians’ services. Medicare’s Physician Fee Schedule is tied to an inflation formula that is inadequate to pay physicians enough to keep seeing Medicare patients. While Congress has had to increase this amount every year, those increases have always been funded by offsets from other federal spending.

“This is the first time politicians of both parties have ignored this rule, increasing Medicare’s physicians’ payments perpetually and not paying for it.”

Philip Klein in the Washington Examiner:

“The existing Medicare payment formula that passed nearly 20 years ago is an ugly piece of legislating, but it has acted as a cudgel to reduce spending. This bill would remove that cudgel without making enough longer-term changes to Medicare to make it worthwhile.”

Jay Cost in The Weekly Standard:

“Much of professional Washington greeted [the House passage of H.R. 2] with a cheer—a sign that comity in the capital is still possible.

“Professional Washington is wrong. While the BBA was a clunky attempt to amend Medicare, the program remains in need of reform—and the permanent doc fix illustrates that neither party is prepared to do what needs to be done.”

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