Government Bytes


Don't Be Fooled By Obama's New Debt Deal

by Brandon Greife / /

Who knew “The Who” would be such prescient political philosophers? Asthe media swoons over Obama’s offer to cut Medicare spending and reign in thecost of Social Security (he’s soooo bipartisan!), I can’t help but be remindedof The Who’s “Won’t Get Fooled Again.”

“Change it had to come

We knew it all along

We were liberated from the fall, that’s all

But the world looks just the same

And history ain’t changed

‘Cause the banners, they all flown in the last war

…We don’t get fooled again!”

You’ll have to pardon their syntax, I think rock legends areallowed a little leeway when it comes to grammar, but those lyrics pretty muchsum up exactly how I’m feeling about Obama’s newfound willingness to addressentitlements: I won't get fooled again!

According to the WashingtonPost,

“Obama plans to argue that a rareconsensus has emerged about the size and scope of the nation’s budget problemsand that policymakers should seize the moment to take dramatic action.

As part of his pitch, Obama is proposingsignificant reductions in Medicare spending and for the first time is offeringto tackle the rising cost of Social Security. The move marks a major shift forthe White House and could present a direct challenge to Democratic lawmakerswho have vowed to protect health and retirement benefits from the assault ongovernment spending.”

First, let’s understand this “dramatic action” is probablymore accurately described as “teensy weensy action.” According to theWashington Post story, the White House is now “seeking a plan that would slashmore than $4 trillion in annual budget deficits over the next decade.” Thatsounds big, but not compared to the $46 trillion the Congressional BudgetOffice expects the federal government to spend over the next ten years.

Second, when it comes to Washington, never take the futurefor granted. As Senator DeMint told the WashingtonTimes, “We agree we need immediate spending cuts, caps and entitlementreform, but that’s exactly what Washington did in the 90s when we were $5trillion in debt. Now Gramm-Rudman is ignored, the entitlement reforms nevermaterialized, and debt has exploded to over $14 trillion. Americans won’t befooled again; they know none of these grand promises will ever happen unless weforce Washington to do it with a balanced-budget amendment.”

In fact, recent history is littered with the carcasses offailed budget deals, in which spending reductions, and even entitlementreforms, are offered up in return for higher taxes. Inevitably, the result hasbeen the same – the spending cuts never materialize, Congress loses its stomachfor politically difficult reform, and the taxes stay the same.

Given that it is apparently big news that Obama has shown awillingness to cut Medicare, let’s take a glance back into history to searchfor parallels. Fortunately, it is not very difficult. Nearly every budget dealfor the last 30 years has involved some tweaks to Medicare and Medicaid as away to score big, but illusory, savings. 

One of the most (in)famous was a 1990s deal betweenPresident Bill Clinton and Republican Congress called the Balanced Budget Act. Partof the compromise is the now infamous “doc fix” - an attempt to control thegrowth in Medicare spending. Except it never materialized. The law tied physicianpay to increases in the economy, but since health care spending grew twice asfast as gross domestic product, the provision meant doctors faced huge pay cuts.This led to an annual ritual of complaining by the American MedicalAssociation, Congress voiding the mandated cuts, and enormous growth in thesize of the annual “doc fix” that must be dealt with.

The Obama cuts will be no different. He’s reportedlyconsidering further reduction in payments to providers, cuts to supportphysician-training programs, and changes to Medicare’s prescription drugbenefit. But when the politics become tough and when the lobbyists get crankingyou can bet Washington will fold like a cheap suit.

The fact is, none of his proposed reforms can be guaranteed totake place beyond 2012 because there is no way to bind future Congresses; unlessthat is we pass a balanced budget amendment.

Until I see that, I, Like The Who, won’t be fooled again.