The Substantive Precedent in the Health Care Bill
By Arnold Kling
The controversy of the moment is the procedural precedent in the health care bill. No comment on that.
What troubles me is the substantive precedent of using future cuts in Medicare benefits as a funding source. This is really weird, if you think about it.
Imagine that your crazy uncle Fred had bought a dozen cars on credit. As a result, he faces car payments far in excess of what he can afford. He comes to you and says he has a plan that in a couple of years will reduce his car payments by a few thousand dollars. “Now I have the money for a down payment on a boat!” he exclaims, as he runs off to the boat dealer.
The equivalent is for Congress to treat future cuts in Medicare as if they were a newfound source of wealth to be tapped. Once they adopt this precedent, they can increase spending on whatever they want, in unlimited amounts, while claiming deficit neutrality. Future Medicare spending is so high that you can always come up with cuts, as long as they deferred.
CBO’s Doug Elmendorf discusses the use of promised future cuts in budget scoring, and it is evident that he is queasy about it. I think it sets a very dangerous precedent. Even if health care reform passes, I hope that Congress does something to close this loophole in its budget scoring procedures. If I were the Republicans, I would introduce a bill that bans the use of promised future cuts as a financing mechanism.