Robert Ball, the former commissioner of Social Security under Kennedy, Johnson, and Nixon, takes issue with the claim that Social Security balance requires benefit cuts. Why? Times have changed.

In the Oct. 19 editorial " Mr. Giuliani's No-Tax Pledge," The Post stated: "It's no more responsible for Republicans to rule out tax increases [to strengthen Social Security] than it is for Democrats to insist on no benefit cuts." The Post praised, as a "bipartisan blend," President Ronald Reagan's acceptance of a 1983 fix that included both.

I take exception. It's the essence of responsibility, in my view, to insist on no benefit cuts.

In 1983, I served on the National Commission on Social Security Reform (better known as the Greenspan Commission) and represented House Speaker Tip O'Neill in negotiations with the White House. What was right in 1983 -- a balanced package of benefit cuts and tax increases as part, roughly half, of the final agreement -- would be wrong today.

Another example of medical inefficiency (the foundation of the long-term fiscal problem). The Washington Post on the study showing that children's cold medication is ineffective:

For years, Joshua Sharfstein shuddered whenever he walked down a drugstore aisle lined with cough and cold products for babies and toddlers.

"It never ceased to aggravate me," said Sharfstein, a pediatrician and father of two young boys. "Kids with colds were getting these medicines that had never been shown to be either effective or safe."

So when Sharfstein became Baltimore's health commissioner, he launched a campaign that led an expert panel of the Food and Drug Administration to conclude last week that the products should not be used in children younger than 6, shocking many parents and setting up a possible clash between the FDA and the pharmaceutical industry, which is vowing to continue selling the products.

The case has also raised many questions: How could the products remain on the market for so long without proof they work? Why didn't the FDA act sooner? Why didn't the medical establishment warn parents? Are there other medications in a similar situation?

The House got a little closer to the veto-proof 2/3rds majority today, but in the end conservatives basically blocked the bill once again. The vote was 265-142 (roll call).

SCHIP supporters made a bunch of concessions around program eligibility. What gives? I guess these hyper-conservatives just don't want to spend more money on kids in particular, because we all know they'll throw away hundreds of billions for wars that are going nowhere.

That was quick- the House will vote on a tweaked SCHIP bill today. The Washington Post:

Just one week after failing to override President Bush's veto, House Democrats will put a new version of their $35 billion expansion of the State Children's Health Insurance Program to a vote today, hoping that minor changes will win enough Republicans to beat Bush this round.

The new version will underscore that illegal immigrants will not have access to the expanded program. It will ease adults off the program in one year, rather than the two in the vetoed version. And it establishes a firmer eligibility cap at 300 percent of the federal poverty line, just more than $60,000 for a family of four.

The move took Republican leaders by surprise. Bush administration officials yesterday voiced conciliation, suggesting the president could accept legislation that would expand the program by about $20 billion over five years, far bigger than the $5 billion expansion that Bush initially proposed. At the same time, Health and Human Services Secretary Mike Leavitt has been meeting with House and Senate Republicans, urging them to hold the line against an even larger bill. And Bush continues to oppose the tobacco tax increase that Democrats want to fund the measure.

Jonathan Chait of the New Republic has a good article on the uptick in entitlement "sky is falling" rhetoric.

And there's a couple new fiscal policy blogs worth going to: the Tax Policy Center's TaxVox and FacingUp.org's new blog. One of the coolest thing about blogging is that it facilitates dialogue; hopefully we've got some interesting conversations to look forward to.

A good article today on the declining value of funding for the Low Income Home Energy Assistance Progam (LIHEAP). Given that gas prices are so volatile, wouldn't it make more sense just to make LIHEAP an entitlement program?

About 30 million low-income American households who will need help paying heating bills this winter from a U.S. government program will be left in the cold because of a lack of funding for the program.

The poor, already digging deep to pay for expensive gasoline, also will face much higher heating fuel costs, especially if oil prices stay near record levels.

Consumer groups and state energy officials have sounded the alarm, saying a federal program to help poor families pay heating bills will have nowhere near the money needed to cover those expected to seek assistance.

White House Spokesperson, Dana Perino: "We won this round on SCHIP."

Congratulations on winning. What exactly did you win?

Well, here's President Bush, on vetoing SCHIP:

And that's why when I tell you I'm going to sprint to the finish, and finish this job strong, that's one way to ensure that I am relevant. That's one way to ensure that I'm in the process. And I intend to use the veto.

Wait- I thought the SCHIP debate was about a difference in "philosophy" and the role of government. But of course, it's really about Bush "winning" and retaining power. Pretty sad that 4 million kids have to be denied health care for such an awfully cynical reason.

The Washington Post reports that a retooled SCHIP bill will be back on the floor in two weeks.

The House failed to overturn the President's veto of SCHIP, 273-156 (roll call).

This was closer than the last SCHIP vote in the House (265-159), so your efforts did make a difference.

This fight isn't over. Speaker Pelosi has publicly promised that Congress will keep sending SCHIP bills to the President until its enacted. Keep an eye on the BudgetBlog for the latest on what Congress will do next on SCHIP.

Tomorrow, the House will vote on whether to override the President's veto of the SCHIP funding bill. This vote will most likely set the fate of the bill. The Senate is likely to vote to override the veto anyway. So it may be your last chance to make an impact this time around. Don't forget to contact your legislator!

And Robert Pear of the New York Times brings a little clarity to the income limit debates.

Do you work for a living? Not one of the superrich? Have a trouble paying your health insurance bills? Well, this is what the far right thinks of you.

The President gave a major talk on the budget yesterday (White House-edited transcript). This excerpt struck me:

And a second belief I have is that you can spend your money better than the government can. (Applause.) We have needs -- we have needs in Washington. We got to fund a military; we got to fund help for the poor. But I do believe that the government has got to understand that the more money you have in your pocket, the better off our economy can be, and that the more money you have in your pocket, the more likely it is that you'll be able to realize hopes and dreams for your family because you set the priorities with your money. And that's just a fundamental difference of opinion.

Depends on what money you're talking about. If it's money for health care, Bush does not trust you to spend wisely. He wants you to set up a special health savings account (HSA) because he thinks you'll waste the money the government would give you. Or he'll give you a tax break to help you buy insurance on your own, which will be expensive and probably limit how much coverage you can get.

But remember, it's all for the better. You have to feel pain when you buy health care. Otherwise you'll spend too much.

He's not even talking about dirty lazy poor people here, who we all know can't spend money responsibly. HSAs and tax breaks are for the middle class. Does he really believe that hard working people are so irresponsible or greedy?

This is the oft-unspoken logic of the "public choice" theorists who take up residence in the president's brain. Government programs must be pared back because they encourage all kinds of reckless and expensive behavior. Only the discipline of the competitive market can ensure efficiency. "You can spend your money better than the government can."

The populism of the right is a thin shell. It disguises its inner cynicism.

Good New York Times op-ed on SCHIP:

To hear the Bush administration tell it, expanding the State Children's Health Insurance Program would entice hordes of families to drop their private coverage and put their children on the public dole. As the Health and Human Services secretary, Michael Leavitt, argued in a recent television appearance, states that cover middle-income children as well as the poor are essentially telling people to "cancel your private insurance and we'll have the government pay for it."

There are several things wrong with that claim.

First, nobody who enrolls in S-chip would be living on government handouts. The families would all be paying appropriate premiums and co-payments. It is also highly unlikely that a lot of people would drop private coverage to enroll in S-chip. States already monitor such substitution and take a number of steps to deter it.

At the behest of Committee Chair Rep. Henry Waxman (D-CA), the House Committee on Oversight and Government Reform has produced a report on the wildly successful cost-reducing cost-inflating results of the private provision of the Medicare drug program (Medicare Pard D)

• The administrative expenses, sales costs, and profits of the privatized Part D program are almost six times higher than the administrative expenses of traditional Medicare.



• The rebates negotiated from drug manufacturers by the private Part D insurers will reduce Medicare drug spending by 8.1% in 2007. In contrast, the Medicaid program receives rebates from drug manufacturers that reduce drug spending by 26%, over three times as much.



• private insurers receive rebates from the drug manufacturers on purchases paid out-of-pocket by beneficiaries. In 2007, the Part D insurers are expected to receive $1.0 billion in drug rebates from transactions in which beneficiaries in coverage gaps pay 100% of the drug costs.



• In 2007, 59% of prescriptions filled by Medicare Part D will be filled with generic drugs. This level of use of generic drugs compares favorably with Medicaid, which fills 54% of prescriptions with generic drugs. It does not compare favorably with the experience of the Department of Veterans Affairs, which fills 68% of prescriptions with generic drugs.

Note: Title is snark directed at David Broder's piece pimping the free market as a cure-all.

No less than Paul Krugman is noticing a growing call for "entitlement reform."

But now casual talk about the need to "fix" Social Security is creeping back into the discourse. Folks, Social Security is in pretty good shape; it's not clear that there even is a long-run shortfall, and if there is it's a much less pressing problem than many others. The only reason we hear so much about Social Security is that there are powerful political forces that want to kill it, for ideological reasons.

I once hoped President Bush had forever poisoned the well on this non-issue (excepting health care costs, which are a big deal). But no- the President still has allies throughout the press corp and Congress in his campaign to cut benefits and raise taxes needlessly.

Now hold on, you might say. Name some names! Who's talking all this mess about entitlement programs? Here's a list of them:

• Robert Samuelson
• The Washington Post Editorial Board
• Sens. Kent Conrad and Judd Gregg
• GAO Chief David Walker
• The Concord Coalition
• The Committee For A Responsible Federal Budget
• Tom Friedman
• USA Today

Now, not all these guys have the exact same take on our long-term fiscal problems. But they all agree that Social Security urgently needs "fixing," like our dear President did not so long ago. And they all characterize the problem as a "fiscal" or an "entitlement" problem, when it's most likely only a health care problem. Intentionally or not, these people are making nice with President Bush on one of his most disagreeable causes, and they need to stop.

Tomorrow, people across the country will be taking concerted action on SCHIP. The activities include:

• A national vigil in Upper Senate Park from 5:00 to 7:00 PM, and more than 260 vigils across the country.
• Ads being run just about everywhere. You can watch one of the national ads on YouTube.
• And national organizations, including OMB Watch, are urging everyone to call their congressional representatives.

The House will vote on the SCHIP bill on Wednesday. If you haven't taken action already, now's the time.

David Broder's Sunday column was infuriating. He essentially endorses health care plans that are friendly to business.

But that's not the worst part. He says he endorses them because they're the only way to reduce costs.

Converting to such a system would be controversial. Insurers and some of the players in the health system would probably object. But the growing sense in business that only a mass marketplace of individuals can apply the competitive pressure needed to discipline the forces of medical inflation is moving the country in that direction.

But if the only way to reduce medical inflation is to turn the system into a market, then why do all developed countries rely primarily on the power of government to hold down prices? And why have they been so successful at it?

Then there's this distortion of liberal policy proposals:

The report, bearing the imprint of Alain Enthoven, the eminent Stanford health guru, and Joseph Minarik, the CED's director of research, devotes page after page to discounting a wide variety of what it terms "Band-Aid" approaches. They range from Newt Gingrich's favorite -- the introduction of high-tech computers to medical practices -- to the Bush administration's "consumer-directed health plans with medical savings accounts" to the liberal Democratic solution of "Medicare for all" or single-payer plans.

Let's leave aside an analysis of the problem. What burns me up the most about this column is its basic unfairness. It's not fair to say that market pressures are the only solution. It's not fair to call the liberal alternative "Medicare for all" when the most common liberal proposal is opening up Medicare as a choice for the uninsured.

I think Mr. Broder wants to live in a world where the right and left are wrong, and the center is the only reasonable way forward. But that world is a thing of the past, if it ever truly existed. He now must conjure up a reality to his liking by breaking the rules, i.e. distorting positions and narrowing the available policy options.

You'd think a centrist would play by the rules, but you'd be wrong.

President Bush says he's open to more money for SCHIP than his paltry initial request, according to The Hill.

Posted by Matt Lewis, 10:55:41 AM



The Cure For the Common Robert Samuelson Column

CBO Director Peter Orszag spoke at a conference on evidence-based medical reform and the long term fiscal challenge yesterday. The entire conference had interesting speakers, particularly Prof. Elliott Fisher. Very interesting stuff.

After Sen. Jon Kyl (R-AZ) agreed to withdraw an amendment to cut the estate tax, Senate Finance Committee chair Max Baucus (D-MT) promised a committee mark-up of Kyl's amendment next spring.

Kyl's amendment would have exempted all estates under $5 million (up from the current $2 million exemption), taxed those between $5 million and $25 million at 15 percent, and taxed those over $25 million at 30 percent. A very similar amendment failed to get cloture by a margin of three votes last year. With a net gain of seven Democratic members of the Senate since then and PAYGO rules now in place, it is not immediately apparent that the Kyl amendment has any realistic hopes of passage.

But the Senate must act before 2010, when the estate tax is scheduled for repeal under current law, or it will be restored in 2011 -- for estates worth more than $1 million at a 55 percent rate, the 2001 levels. This means that a reduction in the estate tax rate schedule to go into effect in 2011 will need to comply with PAYGO, while the 2001 levels would not.

...

During the course of the Finance Committee's mark-up of the farm bill tax title, Sen. Kyl made a brilliant observation. Baucus proposed a PAYGO-pay-for that would clarify a standard that federal courts follow in penalizing companies taking advantage of tax shelters that don't result in a real economic benefit to the corporation but merely provide a tax savings -- the long-standing "economic substance doctrine." Smelling a rat, Kyl remarked:

I think the whole point of this is to raise revenue.

When reminded that he serves on the Senate Finance Committee, Kyl looked stricken with shame and practically asked for his money back.

There seems to be some confusion in the press over how many votes will be needed to override President Bush's veto of the SCHIP bill.

It's pretty much basic arithmetic. There are 435 members in the House. You need a 2/3rds majority of all voting members to overide a veto. So at most, 290 members will have to vote to override. That's all we know for sure.

265 members voted for the SCHIP bill the President vetoed. But 11 members didn't vote. So that means that 18 members would have to switch their votes to override the bill. Or let's say all 11 members who didn't vote decide to support it. Then 14 members will have to switch their votes. But If all of them vote against an override, that'd bring the total of members who have to switch back up to 25.

Not all members who voted against it were Republicans- 8 were Democrats. That's a big chunk of the 14-25 members who have to switch their votes to override it.

Another, albeit unlikely, situation is that the nay-voting members just don't show up to the override vote. If you assume nothing else changes, something like 25 nay-voters would have to not vote to get an override. That's probably not going to happen, but the more nay-voters who decide to not show up, the more the number of yay-voters needed for override declines.

So far, Rep. Dan Boren (R-OK) has said he'll switch his vote to override it, and Rep. Bobby Jindal (R-LA), who didn't vote, said he would vote for the override.

It may be an uphill battle, but we've got 2 weeks to change a few votes in a big House. Seems pretty doable to me.

You wouldn't believe it from the deft strokes of his veto pen, but President Bush is the very same president who signed into law the massive Medicare prescription drug benefit.

Let's compare that bill with the recently vetoed SCHIP bill:

(click to enlarge)

This week's Samuelson Watch is outsourced to Matthew Yglesias:

But as usual, Samuelson is getting the scope of his analysis all wrong. The vast majority of the growth in spending on "Social Security, Medicare and Medicaid" comes from Medicare and Medicaid. And that growth is mostly driven by rising health care costs rather than by aging.

Population aging, meanwhile, insofar as it's a problem isn't merely a challenge for federal entitlement spending. Insofar as a lower ratio of productive workers to retired consumers is a problem for Social Security, it's also a problem for everything else since the basic shape of the issue is that society can only consume as much as gets produced.

Read Robert Samuelson's Washington Post column here.

It hasn't been reported yet, but we're hearing that Bush has vetoed the SCHIP bill.

Update: Here's the AP story.

Update: The House may vote to override the veto on October 17th.

Posted by Matt Lewis, 10:19:30 AM

Tuesday, October 02, 2007

Monday, October 01, 2007