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Taxpayers Tab


Taxpayer's Tab Issue #23

June 12, 2014





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Health Care Fraud: A $272 Billion Malady

Medicare and Medicaid Targets for ThievesEarlier this week, Policy Analyst Michael Tasselmyer noted how the rapidly growing size and complexity of federal health care funding is making programs like Medicare and Medicaid more attractive targets for thieves. Tasselmyer's blog post highlights an article recently published in The Economist detailing the many ways that health care funding is abused.

The Department of Health and Human Services has anti-fraud measures in place now, which helped recover $4 billion in bogus payments last year (a record high). However, taxpayers are still losing almost $272 billion to fraudulent payments as complicated regulations make it difficult for agencies to recognize them. Check out the full post on Government Bytes and let us know what you think!

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Most Expensive Bill of the Week

The Bill: S. 2292, the Bank on Students Emergency Loan Refinancing Act

Cost Per Year: $16.9 billion ($50.6 billion over three years)

Senator Elizabeth Warren (D-MA)According to the White House, 71 percent of students who earn a bachelor’s degree graduate with outstanding loan debt, averaging over $29,000 and totaling over $1 trillion among all borrowers. President Obama signed an executive memorandum earlier this week directing the Secretaries of the Treasury and the Department of Education to propose new regulations to ease some of that burden. The regulations would allow borrowers to cap their federal loan repayments at 10 percent of their income, a move that the President said makes “progress” but “not enough.” He also made an appearance on social networking and blogging site Tumblr to discuss, among other issues, how to address student loan debt. While he touted his own proposal during the live blog (without noting its potential cost to taxpayers), the President also voiced support for a measure introduced by Senator Elizabeth Warren (D-MA)*, known as the Bank on Students Emergency Loan Refinancing Act.

Senator Warren’s proposal, which would at least be implemented through the legislative process rather than executive fiat, would allow those who borrowed federal student loans at higher interest rates (6.8 percent) to refinance their loans at new, lower rates available to students now, after Congress passed legislation last year tying them to the 10-year Treasury note. In addition, it would give the government authority to take on loans issued by private lenders – assuming the borrower meets certain debt-to-income ratio requirements – in order to refinance those debts as well. In other words, graduates would be able to refinance their private student loans into new federal direct loans at a fixed interest rate.

The Congressional Budget Office (CBO) prepared an estimate for Senator Warren’s bill that highlights how costly it could be for the government to refinance and assume so much new debt. Roughly half ($460 billion) of all outstanding student loan debt would be eligible for refinancing under the bill’s provisions. Reducing interest rates on those loans would make them more costly for the government to assume, because doing so reduces interest payment income that it could otherwise use to finance them. Those new costs could total $55.6 billion in the first year plus an additional $20 million in average annual administrative expenses. CBO expects $60 billion worth of private loans to be refinanced through the program; because these loans would bring in new interest income, though, the agency expects their cost to be offset for a $5 billion savings. On net, the bill would increase spending by $50.6 billion over three years. To finance the bill’s significant costs, Senator Warren would impose new taxes on Americans earning over $1 million that the Joint Committee on Taxation estimates will generate $72.5 billion in revenue.

In January 2009, when President Obama took office, the balance in the Federal Direct Student Loan program was about $120 billion. At the beginning of this fiscal year, that had increased to $737 billion, and as of May had grown 14 percent more to $841 billion. The savings estimate for student loan refinancing relies on government accounting methods that do not use “fair-value”, or market, interest rates. As currently calculated, CBO estimated all federal student loan programs could yield a net savings of as much as $135 billion over ten years. The CBO itself has stated that this method is not comprehensive and can drastically alter the way loan programs appear in the budget. A fair-value approach from the same report, however, shows that they could cost taxpayers $88 billion in that same time. So, although the CBO estimates S. 2292 will significantly increase federal spending, the actual long-term cost could be even higher depending on how the interest rates and payments on private loans are treated in the budget.

Last year, during similar debate on student loans and debt, NTUF summarized many of the measures introduced in Congress in The Taxpayer’s Tab. capitol_dome_tinytaxtabhaticonalpha.png

* NTUF does not have a BillTally report for Senator Warren because she is a freshman Senator.

The Bottom Line: The Bank on Students Emergency Loan Refinancing Act would allow the federal government to refinance public and private student loans at lower interest rates, and institute a new tax on high-income earners. S. 2292 could cost as much as $50.6 billion over three years.


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Most Friended

The Bill: S. 2363, the Bipartisan Sportsmen’s Act of 2014

Cost Per Year: $12 million ($60 million over five years)

Number of Cosponsors: 38 Senators

Senator Kay Hagan (D-NC) According to the Congressional Sportsmen’s Caucus (CSC), Americans spent a total of $90 billion on hunting, fishing, shooting, and other outdoor sports in 2011. Over 37 million people over the age of 16 hunted or fished that year, representing a constituency nearly as large as the population of California.

Co-chair of the CSC, Senator Kay Hagan (D-NC) first sponsored omnibus legislation in February that combined several hunting and fishing-related bills already under consideration in the Senate. The Bipartisan Sportsmen’s Act was first introduced in February, but Senator Hagan submitted a more recent version in May with minor technical corrections to the language. "In North Carolina, hunting, fishing and shooting are a way of life. … I'm proud that [this] bill protects these activities for future generations while ensuring that outdoor recreation can continue to support jobs and local economies across our state,” she said on the bill’s introduction.

Among the provisions that the bill includes:

  • Permits states to sell federal duck stamps electronically, with proceeds from sales used to fund water fowl conservation projects.
  • Regulatory changes that allow states to access federal funding for shooting ranges over a longer period of time.
  • Language that requires more federal land be made open to hunting and fishing activities.
  • Authority for the government to regulate film crews of five or fewer participating in commercial filming activities on federal land.

Many of the titles included in S. 2363 are regulatory in nature, clarifying or modifying existing laws without requiring any additional federal funding. However, the bill would reauthorize and increase funding for the National Fish and Wildlife Foundation (NFWF) through 2019. NFWF was established in 1984 for the purpose of protecting vulnerable natural resources; according to the organization’s 2013 annual report, they spent about $197 million on conservation projects, from both private and public contributions. NTUF scored the stand-alone reauthorization bill, S. 51, as a $12 million per year cost, or $60 million over five years, which would also apply to S. 2363.

Cosponsors include 17 Democratic and 21 Republican Senators. One additional Senator who is an Independent also supports the bill. Of the members of the CSC, 30 of 60 members are cosponsors. capitol_dome_tinytaxtabhaticonalpha.png

The Bottom Line: The Bipartisan Sportsmen’s Act modifies and reauthorizes several laws related to hunting, fishing, and conservation and would increase spending by $12 million per year.


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The Wildcard

The Bill: H.R. 4648, the Renewable Energy Jobs Act

Cost Per Year: $10 million ($50 million over five years)

Congressman Raul Ruiz (D-CA)Last week, the Environmental Protection Agency (EPA) unveiled a new 645-page regulatory measure aimed at reducing carbon emissions from U.S. power plants by 30 percent over the next 15 years, primarily through enhanced state and federal partnerships. The economic impact of the rules is disputed by economists: the EPA claims the climate and health benefits from the regulations could be worth up to $93 billion, while the U.S. Chamber of Commerce reported that they could cost Americans $50 billion and 224,000 jobs per year.

Either way, the analyses show that the government’s focus on environmental issues, and climate change initiatives like clean and renewable energy in particular, will have a significant impact on the U.S. economy going forward. In anticipation of those changes in the labor market, Congressman Raul Ruiz (D-CA)* introduced the Renewable Jobs Act last month. H.R. 4648 would authorize a new pilot program that gives grants to state and local governments to fund training programs specifically for jobs in the renewable energy industry. The program would rely on public-private partnerships with energy businesses to provide workers with subsidized on-the-job training and education. Rep. Ruiz said in a press release that “[t]he renewable energy sector employs hundreds of thousands of people [in California] and across the country and as the industry continues to grow, our workforce must have the skills to grow with it.”

There are currently dozens of government incentives for renewable and efficient energy programs, with the aim of encouraging further development of these technologies. The Obama Administration offered about $51 billion in funding for green energy development in 2009 through the American Recovery and Reinvestment Act (the so-called “stimulus”); however, those investments did not always pan out. Critics of government investment in green energy development point to companies like Solyndra and Abound Solar, which went bankrupt in spite of receiving hundreds of millions of dollars in taxpayer-funded subsidies.

The Renewable Jobs Act authorizes $10 million per year to fund the pilot program it creates. It does not include any spending offsets. capitol_dome_tinytaxtabhaticonalpha.png

* NTUF does not have a BillTally report for Congressman Ruiz because he is a freshman Representative.

The Bottom Line: The Renewable Jobs Act would create public-private partnerships to fund on-the-job training for positions in the renewable energy industry. H.R. 4648 would cost $50 million over five years.