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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Heritage Action Opposes Shaheen-Portman Energy Efficiency Bill

Washington – The Shaheen-Portman energy efficiency legislation may be voted on at the end of the Senate vote-a-rama. This is an inappropriate program of federal mandates and subsidies that is duplicative of existing federal and state efforts.

The free market is the best mechanism for decreasing costs and increasing efficiency in energy production.  The Shaheen-Portman legislation would have the federal government overstep its appropriate role.

Heritage Action opposes this legislation as laid out in our May 02, 2014 key vote. A vote on this legislation will be included in our scorecard.

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Fast Facts: Medicare Doc Fix

The Medicare “Doc Fix”

Status: Congress periodically overrides a 1997 law that attempts to contain the cost of Medicare payments to doctors.  Congress prevents the cuts from going into effect with legislation, called the “doc fix.”  This year, Medicare payments to physicians will be reduced 21 percent if no doc fix passes by March 31st.

Background: When a physician treats a patient on Medicare, the government pays for the services he performs.  In 1997, Congress became concerned with the growing cost of these payments to physicians.  In response, lawmakers included in the Balanced Budget Act a restriction on growth in Medicare payments to doctors.  This cap is called the “Sustainable Growth Rate” (SGR).  The increase in payments could not be larger than the overall growth of the economy.

Since 2003, Congress has passed 17 bills stopping these payment cuts from going into effect.  If Medicare payments are cut too much, physicians may stop accepting Medicare patients.  This creates a major incentive for Congress not to allow the cuts to go into effect.  However imperfect, the SGR acts as a needed brake on exploding Medicare costs.  When it overrides the SGR, Congress normally offsets the cost with spending reductions in other areas.  The bipartisan Committee for a Responsible Federal Budget states that “since 2004, 98 percent of doc fixes have been paid for. And although these doc fixes have cost about $175 billion, the pay-fors have generated roughly $165 billion worth of savings.”

Bipartisan Irresponsibility:  According to Politico, the bill in the House being negotiated between John Boehner and Nancy Pelosi would include roughly $200 billion in increased entitlement spending, with only $70 billion offset with spending entitlement cuts elsewhere.  The bill would eliminate the SGR and replace it with a new payment system.  Another program, CHIP, is also reauthorized for two more years at “the elevated payment rates approved under Obamacare.”  CHIP provides health insurance for children and families with incomes above the poverty line.                                                                             

The deal would be only partially paid for with “structural” changes to Medicare spending.  The specifics of the plan are unclear.  However, reforms are likely to include a reduction in Medicare benefits for the wealthy (an approach known as “means-testing”) and a reform of Medicare supplemental insurance offerings (known as Medigap).  Both reforms are of uncertain size and impact.  What is known is that the up-front savings of the plan are minimal.  Historical patterns of Congressional policymaking suggest that a spending-now, cuts-later approach is ineffective at reducing spending.

House Republicans are trading the repeal of a massive leverage point with a long history of reducing government spending for limited structural reforms.  The extension of CHIP is a major priority of the Left, despite the fact that the program is largely irrelevant within the context of the current healthcare safety net, which currently includes Obamacare and an enhanced Medicaid program.

Long-Term Solutions: Reform is needed to ensure seniors have access to care as well as ensure that Medicare operates in a fiscally sustainable way.  The Heritage Foundation argues that “[a]ny permanent Medicare “doc fix” must be financed with permanent Medicare savings.”  The changes to the SGR must also balance in size and scope with structural changes to Medicare.  A large change to the SGR with only small changes to Medicare is fiscally irresponsible.

While the House proposal does contain reforms, the changes it suggests are hugely disproportionate to the changes it makes to the SGR.  The elimination of the SGR should be paired with major changes to Medicare.  After all, beyond the program’s 10-year costs, SGR actually has a long-term structural impact of $2.3 trillion. The proposal’s $200 billion price tag, bipartisan backing and the fact that the House plan’s savings only begin at the end of the 10-year budget window indicate strongly that its changes to Medicare are minor.

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Fast Facts: Reauthorizing No Child Left Behind (H.R. 5)

Reauthorizing No Child Left Behind: the Student Success Act (H.R. 5)

Status: The Student Success Act (H.R. 5) is a 620-page bill that would reauthorize No Child Left Behind. H.R. 5 was removed from consideration in the House of Representatives due to opposition from conservatives.  NCLB is the primary law that authorizes federal K-12 education programs.  It expired in 2007. Since then, Congress funded NCLB in spite of the fact that it is unauthorized.  H.R. 5 could be put back on the schedule at any time.  Below are the highlights from the Committee Report, frequently cited by the bill’s supporters on the House Committee on Education and the Workforce.

Testing Mandates: H.R. 5 maintains the central mandate of NCLB.  It requires states to develop a single, statewide academic assessment to evaluate the performance of local schools. Per an amendment added by Rep. Goodlatte, a local school district would be permitted to design its own assessment if the state approves of it. However, the local school district must still design its assessment in a way that reports data that are comparable among all local school districts within the state, reducing the likelihood that a school district would take up the option.

States must test all students each year in grades 3-8 and once again in high school—the same testing frequency in No Child Left Behind.  The Committee Report proudly states that “H.R. 5 maintains current requirements for states to develop and implement assessments in reading, mathematics, and science.”

H.R. 5 repeals the requirement that schools “make adequate yearly progress;” however, schools whose students don’t make enough progress are subject to “a school improvement system implemented by school districts that includes interventions in poor performing Title I schools.”

H.R. 5 continues the NCLB practice of forcing states to assess student progress primarily on improvements in reading and math test scores, a practice which in the eyes of many observers has led to the neglect of other important curriculum areas, such as civics and history.  High-stakes testing has led to “teaching to the test” from DC, a practice which privileges exhaustive test preparation over learning.

Current Levels of Spending: H.R. 5 maintains current levels of funding for NCLB.  While claiming to “eliminate” 69 programs, it largely consolidates them into one large new grant: the “local academic flexible grant.”  However, dozens of grant programs remain.  In fact, the local academic flexible grant comprises only 10% of the funding for NCLB.  Furthermore, the grant’s structure is the same as others in the bill, specifying the “application process, authorized activities, reporting requirements, and federal matching requirement…”  The grant requires detailed reporting, and assurances that the state will comply with federal mandates.

Evidence for the lack of genuine program eliminations comes from the lack of any real taxpayer savings.  Spending remains constant.  From the Committee Report: “The bill updates overall authorization levels for each of the fiscal years 2016-2021 to reflect the funding amounts provided by Congress for ESEA programs in FY 2015.”  In other words, the bill keeps funding at the same level that Congress provided last year.

Opt-Out Provisions: H.R. 5 lacks an opt-out provision for states, an approach known as A-PLUS, that would allow states to opt-out of the programs that fall under NCLB and allocate federal education dollars within broad parameters rather than in accordance with federal mandates.  Instead, the bill contains language that allows states not to participate in programs in exchange for losing the entirety of their federal funding (that taxpayers were already forced to send to Washington).  Because participation in federal education programs has always been “voluntary” (at the cost of losing billions in funding) these provisions don’t change anything about current law.

Common Core: The bill contains language prohibiting the Secretary of Education from forcing states to adopt Common Core, but opting out of Common Core must be done by individual states. H.R. 5 does not (and cannot) accomplish the rollback of Common Core, and according to the Heritage Foundation, prohibitions on the federal government getting involved in curriculum already exist in three federal laws—laws that have been ignored.

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Why America needs the Transportation Empowerment Act

The Transportation Empowerment Act would empower states by allowing them to keep and control their gasoline tax revenues, set their infrastructure priorities, control their transportation decisions, and partner with the private sector to meet local needs.

Currently, American motorists and truckers pay a federal gas tax of 18.4 cents per gallon at the pump; the money is funneled into the federal Highway Trust Fund (HTF) and funneled back to the states via complex congressional formulas, and billions are diverted each year to programs that do not improve congestion.  The current system increases the cost of projects — Davis-Bacon, for example, increases the cost of construction projects by ten percent — and subjects what should be local decisions to the whims of Washington bureaucrats or influential lobbyists.

Put another way, the federal government serves as little more than an expensive pass through for the remainder of transportation funding – one could compare it to a skimming scheme that enriches and empowers folks in Washington to the detriment of those in state capitals across the country.  The states and private sector have proven more efficient users of taxpayer money, while the federal government through the Highway Trust Fund has wasted an unjustifiable amount of money through inefficiency, burdensome regulations, and distracting politicization—not to mention paying for the pet projects of lawmakers and special interests.

Not only is this legislation necessary if lawmakers want to improve the efficiency and effectiveness of transportation spending, but it is also timely.  The original purpose of the HTF was to construct the interstate highway system, which was considered complete in the early 1990s.  But since then, Congresses—lobbied by special interests—have broadened its mission to cover “transit, environmental mitigation, ferry boats, bicycle paths, and nature trails,” which do not benefit those who pay for the program.  The Heritage Foundation also notes:

“The combination of overspending, inflation, increased vehicle fuel efficiency, and effects of the recession on gasoline consumption in recent years have caused funding shortfalls in the HTF. Rather than address its overspending problem, Congress chose to shore up the HTF with tens of billions of dollars in general fund cash transfers—an imprudent and unsustainable quick fix that worsens federal deficits.” 

This is an unsustainable course of action, which is why Congress is considering yet another bailout of the Highway Trust Fund.  What’s more, the Congressional Budget Office estimates another $167 billion in bailouts will be necessary over the next decade.  As a result, many states are “responding to the fiscal uncertainties in Washington,” transportation export Ken Orski recently noted:

“Surveys by the American Road and Builders Association (ARTBA), the National Council of State Legislatures and AASHTO and  have documented transportation-related revenue initiatives in 27 states.

“In turning to long-term credit to finance costly construction projects, states are following in the footsteps of  the private sector. All of the nation’s privately owned infrastructure— railroads, pipelines, telecommunications networks, power plants and refineries— are funded with loaned capital.” 

The Transportation Empowerment Act would allow each state to keep this so-called “federal money — which represents just one-quarter of all highway and transit spending — in their states and use them in ways they deem appropriate.  It would also provide states relief from federal regulations, allowing the money to go further so that they could put local priorities first and fund projects that provide congestion relief, capacity expansion, and enhanced mobility.

Heritage Action supports the Transportation Empowerment Act.

 

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