The Tar Pit

Monday, February 14, 2005

Prescription for Bloat: Bush threatens veto
to protect runaway spending

Attempting to stifle criticism of his budget busting new prescription drug entitlement, President Bush waved his never-used veto pen on Friday:

Because we acted, Medicare now covers preventive medicine, including screenings for heart disease and diabetes, and a "Welcome to Medicare" physical. Instead of waiting to get sick or facing costly treatments, seniors can now identify problems early and manage them before they grow worse. By reducing major surgeries and longtime hospital stays, preventive medicine will save money, and, more importantly, it will extend the lives of our seniors.

Because we acted, Medicare will also cover prescription drugs. Under the old system, Medicare would pay $28,000 for ulcer surgery, but not the $500 a year for the prescription drugs that eliminated the cause of most ulcers. That system didn't make any sense. It made no sense for our seniors; it made no sense for American taxpayers.

Because prescription drugs are expensive, many seniors face the terrible choice between buying groceries and buying medicine. We left those days behind with the Medicare Modernization Act. Low-income seniors can get up to $600 to buy medicine this year. Next January, every senior in Medicare will have the option of a prescription drug benefit. And so that all seniors can get the care they need, low-income seniors will get extra assistance and will pay a reduced premium or no premiums at all on prescription drugs.

Because we acted, seniors in Medicare will have more control over their health care. Seniors will be able to choose a health plan that meets their needs and health plans will compete for their business, which will lower costs throughout the program. The system probably sounds familiar to some here -- (laughter) -- after all, it's what we offer federal employees. If choosing your health plan is good enough for the federal employees, it's good enough for America's seniors, as well.

Putting these reforms in action will be challenging. But with the leadership of Secretary Leavitt and Administrator McClellan, I know you're up to the task. We all know the alternative to reform: a Medicare system that offers outdated benefits and imposes needless costs. For decades we promised America's seniors that we can do better, and we finally did. Now we must keep our word. I signed Medicare reform proudly and any attempt to limit the choices of our seniors and to take away their prescription drug coverage under Medicare will meet my veto.

What is this "we," Kimosabe? Republicans were typically supposed to be for smaller or slower-growing government, fewer entitlements, and against forced transfers of wealth. The President's prescription drug handout runs against all three principles. How is it possible to dismantle the New Deal and the Great Society by offering up a Great New Deal?

Not surprisingly, where there are votes to be bought with taxpayer dollars, biddings wars and demagoguery abound. Following the President's lead, we read this from the Senate Minority Leader:

"This is an attempt by the president to stop the bipartisan groundswell for drug reimportation and price negotiation," said Senate Minority Leader Harry Reid, Nevada Democrat. "The only individuals threatening to take away seniors' benefits through reductions and caps are Republicans, and the president does not need to threaten a veto to stop them."


Yesterday, Mr. Reid accused the president of giving unfair advantages to health maintenance organizations (HMOs) and the pharmaceutical industry when he signed the Medicare reform bill in 2003.

"Make no mistake, the president's blanket veto threat is designed to protect only special interests, the big drug companies and HMOs his flawed bill gave billions to in the new law," he said.

The President's veto threat is designed to protect expanded government and enormous spending, his allegedly austere 2006 Busget Request notwithstanding. Stephen Slivinski, director of budget studies at the Cato Institute takes a contrary view of the best use of the veto pen:

In fact, in the first few pages of the budget document, the president outlines 37 new or expanded initiatives on which to spend taxpayer money. Here's the bottomline: the new Bush budget actually proposes an overall 3.6 percent increase in all spending for 2006. Non-entitlement spending, including defense, will increase by 2 percent.

Unfortunately, Mr. Bush may have started the budget bidding too high. Once Congress gets its hands on the budget, all proposed cuts go out the window. Indeed, the president's proposals are usually seen as spending floors, not ceilings. Congress ratchets up the spending almost from the minute the president's budget reaches Capitol Hill. Over the past four years, Congress appropriated $187 billion more than Mr. Bush proposed in defense and domestic spending. By refusing to veto a single bill in his first term, Mr. Bush did nothing to stop this budget ratchet.

Because he refused to battle the budget ratchet in his first term, the president is going to have to push even harder to keep his spending cuts intact. The only way this will work is if he threatens to veto any budget bill that is more expensive than what he proposed.

Hat tip: Window on the Arab World, and More!

President Bush established a legacy in his first term as a big spender. His current budget battle is not just with Congress, but with his own record.

We read from Kate Schuler, of the Congressional Quarterly:

The Medicare prescription drug law, slated to go into effect Jan. 1, 2006, represents the biggest expansion of the program in its 40-year history. The administration estimates Medicare outlays of $345.5 billion in fiscal 2006, compared with an estimate of $295.4 billion for 2005.

That $50.1 billion dollar increase in Medicare spending represents an alarming 17% growth rate, but it's only the start:

The looming problems were easily foreseeable, said Joyce, the public policy professor. The White House and Congress vowed last year to keep the 10-year cost of a prescription drug bill to $400 billion. But to do it, the 2004 law did not come fully into effect until 2006. Hence, legislation once priced below $400 billion over 10 years now will cost at least $724 billion over a decade, simply because the law would then be fully in effect.

So that original $400 billion estimate was really an eight year total, which was revised upward to $530 billion two months after the prescription drug entitlement was passed in late 2004. $530 over eight years averages out to about $66 billion a year on an entitlement program that didn't exist when President Bush took office. Now we learn that in years nine and ten the program will spend at least another $194 billion combined (and some estimates are as high as $1.2 trillion over 10 years), or at least $97 billion a year by 2015. That's a big jump in cost from the initial $66 billion average, and the retirement of the massive Baby Boom generation would only just be beginning, with greater demands on Bush's new entitlement to follow.

Despite the fact that the Democrats are weaker at the federal level than they've been since before the Great Depression The American Mind takes this important insight: angry Democratic party on the path of its own marginalization is not good for Republicans or conservatives. Democrats negatively spin Republican ideas, but even their worst accusations contain a kernal of truth. This week, when we found the Medicare prescription drug plan is already balooning in cost it was Democrats making the loudest noise.

Who can blame the Democrats? Republicans beat them up with the big spenders stick for decades. Turnabout may not always be fair play, but it's a political inevitability.

Fortunately some sense of fiscal responsibility isn't completely extinct in the GOP:

Feb. 13 (Bloomberg) -- U.S. Senate Budget Committee Chairman Judd Gregg said he will try to modify a law that expands prescription-drug coverage under Medicare starting in 2006 to trim the cost, estimated at $720 billion over 10 years.

That position puts him at odds with Senate Republican leaders, who said there is no need to make changes now, and President George W. Bush, who on Feb. 11 threatened to veto any effort to alter the law.

"I do feel there needs to be some changes in the Medicare drug benefit in order to make it affordable," Gregg, a New Hampshire Republican, said today on ABC's "This Week'' program. "There has to be spending restraint in that program."

Gregg, one of nine Republicans who voted against the Medicare law in 2003, said the benefit's cost should be limited to the Congressional Budget Office's estimate of $400 billion over 10 years starting in 2004. The White House budget office last year said it would cost $511 billion starting in 2004 and last week estimated that the price over the first 10 years the law is fully in effect would be about $720 billion. Over 75 years, Greg said, the drug benefit will cost $8.6 trillion.

While Gregg's vote against the entitlement lends him a lot of credibility, that $8.6 trillion is the only current bid in the President's prescription drug vote-buying plan, and assumes the entitlement will stay on budget without the Democrats upping the ante. That assumption isn't likely to hold up, Les Jones writes:

lots of government programs go over-budget, but prescription drug plans seem to be the worst. For previous examples, see the UK and the state of Tennessee.

In fact, as I detailed at The Tar Pit, the Bush Administration's initial 10 year prescription drug entitlement estimate wasn't $720 billion, $530 billion, or $400 billion, it was $153 billion. That's still too much for a program that has no business existing, but it's also an illustration of the relentlessness of the budgetary bloat of entitlements, and this bloat has the protection of the President's veto pen.

The Agitator wonders:

Still waiting for the condemnation from limited government conservatives. If those three words even belong together anymore.

On the same theme is OKIE on the LAM:

...what we have to face personally, as communities and as a nation is what could very quickly be a health care crisis beyond the imagination of this generation. Never before have we, as a group, been told "NO" to what we really want or need. On an individual basis, sure, but not as a generation. Cheap, and in states like CA, free education? No problem. Tons of available credit? Ditto. HUD, Fanny Mae, low-interest housing loans and even lower re-fi's? Sure. Employer provided health care for white collar, and union or government jobs? Definitely!

But what about now? What happens when we lose that job, start a business to participate in the "Ownership Society", have, or want to, finally retire? Medicare, Medicaid, supplemental insurance, private insurance if we're wealthy and if it's allowed? How much should we spend on ourselves in our final two months of life, two weeks or two days? Statistically, more is spent on health care measures those last few months or weeks before death, except for sudden death, than in one's entire life. Where does society's financial responsibility to the individual end, and to what extent is the individual responsible for him or her self?

Republicans calling for self-reliance? Isn't that so,.. 1994?

Not entirely:

Bush's veto threat will not stop them from trying, said Rep. Gil Gutknecht (R-Minn.), who is among those seeking repeal of the drug benefit.

"In many respects, that kind of language is like waving a red flag in front of the bull," Gutknecht said. "On issues like prescription drugs and the budget, the bulls are running."

While that's encouraging, it also signals trouble on another front for the Bush Agenda. From a little further down at the link for Gutknecht's comes this:

A fight over Medicare "would torpedo any chances to do Social Security," said John Rother, the top lobbyist for the AARP, the seniors organization. "No good outcome could come from that kind of debate."

The AARP helped Bush win hard-fought passage of the Medicare prescription benefit, but it opposes his plan for private accounts under Social Security.

So the prescription drug entitlement, like every other government handout, has developed a politically powerful constituency to keep spending high and growing while holding budgetary solvency hostage to their special interests. However, unlike previous entitlement schemes, Republicans won't be able to cite Roosevelt or Johnson as the author of this component of future runaway budgets; that legacy of fiscal irresponsibility will belong to President George W. Bush.