December’s Ryan-Murray budget deal was a bad deal for a number of reasons. One of the primary reasons was that it set discretionary spending limit for Fiscal Year 2014 ($1.012 trillion) a full $45 billion above the level that would have been required by sequestration ($967 billion). While the budget number represents a spending limit, meaning Congress can (and should) spend well below that number in upcoming appropriations, there are policy provisions the House should be demanding in negotiations right now as part of any omnibus package of appropriations bills regardless of the ultimate top-line number.
Today, as part of the Ryan-Murray budget deal, the House will be voting on the “Pathway to SGR Reform Act of 2013,” which extends a number of expiring Medicare provisions, but its main purpose is to prevent the 24% reimbursement cut for physicians serving Medicare patients scheduled to occur next year.
These so-called “doc fixes” have been commonplace in Congress since 2003, when the provider cuts from the Balanced Budget Act of1997 first prompted Congress to act to prevent payment cuts for doctors (for more on the Sustainable Growth Rate, aka the SGR, see this Backgrounder from the Heritage Foundation). However, these temporary measures are usually fully paid for using legitimate savings elsewhere in the Medicare program.
Unfortunately, today’s doc fix bill does not continue the trend of fully offset SGR patches.
Increases spending in the short term
The deal increases spending in the next two years by $63 billion above current law. Current law allows for discretionary spending to be $967 billion in FY14 and $995 billion in FY15. This bill raises that by $45 billion in FY14 (to $1.012 trillion) and $18 billion in FY15 ($1.014 trillion).
Increases deficits in the short term
While the agreement increases spending $45 billion in the first year and $18 billion in the second year, it only contains $6.5 billion worth of deficit-reducing offsets during those two years ($3.1 billion in FY14 and $3.4 billion in FY15). Because the policies on the front end are the most predictable and least likely to be overturned, these are the years that really matter. Unfortunately, only 10% of the new spending in these early years is offset in real time.
The savings are severely back loaded
While the agreement purports to produce $23 billion in deficit reduction in the first ten years, it does so by relying heavily on savings in 2022 and 2023, a full 9 and 10 years into the budget window. In fact, the bill’s savings do not fully catch up with its front loaded spending increases until 2023. During this time, we will have had one, possibly two more presidents, and we will have had four different elected congresses with little-to-no ownership of this current deal. The cuts in this bill are so back loaded that a full 55 percent of the cuts ($47 billion out of $85 billion) occur in just the last two years.
The back loaded savings are highly dubious