“Deem and Pass” and TARP
The leaders of the House of Representatives plan to address health care through a “deem and pass” strategy. Professor Michael McConnell believes this strategy violates the Constitution. But put that aside for now. Ms. Pelosi has chosen “deem and pass” because, as she said, “people don’t have to vote on the Senate bill.” The “people” in question are House Democrats whose votes are essential to passing the bill. These members fear voters would penalize them for voting for the Senate bill. As the Washington Post put it, “deem and pass” would “enable House Democrats not to be on record directly as supporting the Senate measure.” A House Democrat running in a tough election will be able to deny voting for the Senate bill if it passes into law. We would then have an odd situation in which a bill became law even though only a minority of House members are willing to take responsibility for having supported it. It would be, as it were, a mystery how the bill became law.
This all reminds me of the TARP legislation. In my recent policy analysis of how Congress performed badly in the TARP case, I found that members of both of chambers were concerned mostly with avoiding responsibility for voting for the bailouts. In the tough cases, and probably many others, Congress does what it can to avoid being held accountable.
Many people inside DC will look at “deem and pass” through the lens of political hardball. If Pelosi can pull it off, she will be praised as tough and shrewd, a risk taker who gets her way by any means necessary.
But there is a larger problem here. The willingness and capacity of Congress to shirk responsibility for its acts suggests deep institutional decline and corruption. That decline implicates more than Congress itself. How can representative democracy work if voters cannot hold their representatives accountable?
Questions for Thoughtful ObamaCare Supporters, Part III
I’ve already posted two series of such queries. But every day brings new questions to mind. So here are a few more:
- What does it say that pharmaceutical-industry lobbyists are meeting with House Democrats to write this legislation behind closed doors? Or that the pharmaceutical industry is preparing to spend millions of dollars on advertisements in support of the legislation?
- Does it trouble you that a former federal judge writes, “Under Article I, Section 7, passage of one bill cannot be deemed to be enactment of another“?
- Does it trouble you that Speaker Pelosi says of the proposed “deeming” strategy, “I like it because people don’t have to vote on the Senate bill“? (Emphasis added.)
- What does it say that left-of-center The Washington Post editorializes that the Democrats’ endgame seems “dodgy” and “threatens to turn into something unseemly and, more important, contrary to Democrats’ promises of transparency and time for deliberation”?
- What does it say about the feasibility of the Obama health plan that Speaker Pelosi is drawn to the “deeming” strategy, which she once opposed in a court of law?
If the House Enacts the Senate Health Care Bill without Voting on It…
…are we under any obligation to obey it? The answer may be no.
Democrats are considering a scheme that would “deem” the Senate health care bill to have passed the House if a separate event occurs (specifically: House passage of a budget reconciliation bill). That strategy has been named after its contriver, House Rules Committee chair Louise Slaughter (D-NY). House Speaker Nancy Pelosi (D-CA) says of this scheme: “I like it because people don’t have to vote on the Senate bill” (emphasis added).
Not so fast, says former federal circuit court judge Michael McConnell in The Wall Street Journal:
Under Article I, Section 7, passage of one bill cannot be deemed to be enactment of another.
The Slaughter solution attempts to allow the House to pass the Senate bill, plus a bill amending it, with a single vote. The senators would then vote only on the amendatory bill. But this means that no single bill will have passed both houses in the same form. As the Supreme Court wrote in Clinton v. City of New York (1998), a bill containing the “exact text” must be approved by one house; the other house must approve “precisely the same text.”
Democrats have already hidden 60 percent of the cost of the Senate bill, effected an obscenely partisan change in Massachusetts law to keep the bill moving, pledged more than a billion taxpayer dollars to buy votes for the bill, and packed the bill with an unconstitutional individual mandate and provisions that violate the First Amendment. It’s almost as if, to paraphrase comedian Lewis Black, Democrats spent a whole year, umm, desecrating the Constitution and at the last minute went, “Oh! Missed a spot!”
And these people want us to put our trust in government.
Filed under: Cato Publications; General; Government and Politics; Health Care
The Senate Bill Would Increase Health Spending
Ezra Klein quotes the Congressional Budget Office’s latest cost estimate of the Senate health care bill when he writes:
“CBO expects that the legislation would generate a reduction in the federal budgetary commitment to health care during the decade following 2019,” which is to say that this bill will cover 30 million people but the cost controls will, within a decade or so, leave us spending less on health care than if we’d done nothing. That’s a pretty good deal. But it’s not a very well-understood deal.
Indeed, because that’s not what the CBO said.
First, the CBO said the “federal budgetary commitment to health care” would rise by $210 billion between 2010 and 2019 under the Senate bill. Then, after 2019, it would fall from that higher level. And it could fall quite a bit before returning to its current level.
Second, the “federal budgetary commitment to health care” is a concept that includes federal spending on health care and the tax revenue that the federal government forgoes due to health-care-related tax breaks, the largest being the exclusion for employer-sponsored insurance premiums. If Congress creates a new $1 trillion health care entitlement and finances it with deficit spending or an income-tax hike, the “federal budgetary commitment to health care” rises by $1 trillion. But if Congress funds it by eliminating $1 trillion of health-care-related tax breaks, the “federal budgetary commitment to health care” would be unchanged, even though Congress just increased government spending by $1 trillion. That’s what the Senate bill’s tax on high-cost health plans does: by revoking part of the tax break for employer-sponsored insurance, it makes the projected growth in the “federal budgetary commitment to health care” appear smaller than the actual growth of government.
Third, the usual caveats about the Senate bill’s Medicare cuts, which the CBO says are questionable and Medicare’s chief actuary calls “doubtful” and “unrealistic,” apply. If those spending cuts don’t materialize, the “federal budgetary commitment to health care” will be higher than the CBO projects.
Fourth, Medicare’s chief actuary also contradicts Klein’s claim that the Senate bill would “leave us spending less on health care than if we’d done nothing.” The actuary estimated that national health expenditures would rise by $234 billion under the Senate bill.
And really, Klein’s claim is a little silly. Even President Obama admits, “You can’t structure a bill where suddenly 30 million people have coverage and it costs nothing.”
Questions for Thoughtful ObamaCare Supporters
What does it say that the American polity has consistently rejected a wholesale government takeover of health care for 100 years?
What does it say that public opinion has been consistently against the Democrats’ health care takeover since July 2009?
What does it say that Democrats are having this much difficulty enacting their health care legislation despite unified Democratic rule? Despite large supermajorities in both chambers of Congress, including a once-filibuster-proof Senate majority (see more below)? Despite an opportunistic change in Massachusetts law that provided that crucial 60th vote at a crucial moment? Despite a popular and charismatic president?
What does it say that 38 House Democrats voted against the president’s health plan?
What does it say that Massachusetts voters elected, to fill the term of Ted Kennedy, a Republican who ran against the health care legislation that Kennedy helped to shape?
What does it say that the only thing bipartisan about that legislation is the opposition to it?
What does it say that 39 senators voted to declare that legislation’s centerpiece unconstitutional?
What does it say that health care researchers — a fairly left-wing lot — think the Senate bill is unconstitutional?
What does it say that the demands of pro-life and pro-choice House Democrats, each of which hold enough votes to determine the fate of this legislation, are irreconcilable?
What does it say that House Democrats are actually contemplating a legislative strategy that would deem the Senate bill to have passed the House — without the House ever actually voting on it?
Given that ours is a system of government where ambition is made to counteract ambition, what does it mean that the only way to pass this legislation is for the House to trust that the Senate will keep the House’s interests at heart?
ObamaCare 3.0: Higher Implicit Taxes, Quicker Death Spiral
In a recent paper, I showed that the health care legislation passed by the House and Senate would impose punitive implicit tax rates on low- and middle-income workers. Those bills would also result in higher health insurance premiums over time because they would create large financial incentives for healthy people to drop coverage and only purchase it when they become sick.
The health care proposal that President Obama released yesterday essentially splits the difference on most areas of disagreement between the two bills. But a preliminary analysis shows that ObamaCare 3.0 would make these perverse incentives even worse. Families of four earning $22,000 under the Senate bill (100 percent of the federal poverty level) or $30,000 under the House bill or the Obama plan (133 percent FPL) would face the following effective marginal tax rates as they climb the economic ladder:
- Senate bill – Average: 62 percent. High: 73 percent.
- House bill - Average: 74 percent. High: 82 percent.
- Obama plan – Average: 72 percent. High: 90 percent.
In other words, over broad ranges of income, families of four would see their take-home pay rise by an average of 28 cents of each additional dollar earned. In some cases, it would rise as little as 10 cents for each additional dollar earned. Using smaller changes in income reveals the Obama plan would create EMTRs as large as 200 percent or higher. That is, earning more money would leave many families worse off financially.
In addition, by requiring insurers to cover all applicants without regard to illness, each of these health plans would remove any penalty on waiting until you are sick to purchase coverage. Therefore — even after accounting for all relevant taxes, subsidies, and penalties — these plans would create large financial incentives for healthy people to drop out of the market, which would cause premiums to rise for those who remain. That would in turn encourage more healthy people to drop out, which would cause premiums to rise further, and so on. Those perverse incentives are much worse under the Obama plan than under the House or Senate bills. Here are the maximum financial incentives to drop coverage that each plan would create for families of four:
- Senate bill: $8,000
- House bill: $7,800
- Obama plan: $9,900
By increasing the financial incentives to drop coverage, the Obama plan would cause private insurance markets to unravel even faster than the House and Senate bills would.
Meet the New Plan, Same as the Old Plan
Or it may even be worse.
This morning, President Obama released his latest health care blueprint, which he hopes will breathe life into his moribund effort to overhaul one-sixth of the U.S. economy. The new blueprint is almost exactly the same as the House and Senate health care bills that the public have opposed since July. It mostly just splits the difference between the two.
One new element, however, is the president’s proposal to impose a new type of government price control on health insurance premiums. I explain here how those price controls are a veiled form of government rationing that helped sink the Clinton health plan.
If anything, those price controls make the president’s new plan even more bureaucratic and government-heavy. The Senate bill would take an ill-advised stab at cost-control by imposing a tax on the highest-cost health plans. That president proposes to pare back that excise tax and instead have a panel of federal bureaucrats cap the growth in health insurance premiums for all health plans. Those new government powers could make it even harder for people to obtain the coverage and care that they need.
ObamaCare Could Become Law at Any Time
The American people don’t want President Obama’s health care plan (see below). Massachusetts voters don’t want it.
The White House knows that the people don’t want it. In Ohio last week, President Obama said:
the process has been less than pretty. When you deal with 535 members of Congress, it’s going to be a somewhat ugly process…when you put it all together, it starts looking like just this monstrosity. And it makes people fearful. And it makes people afraid. And they start thinking, you know what, this looks like something that is going to cost me tax dollars and I already have insurance so why should I support this.
Yet Democrats still want ObamaCare to become law, and they are very close to making it happen. If Speaker Nancy Pelosi bribes enough House members to reach that magic number of 218 votes, she could hold the vote with as little as 24 hours’ notice. And ObamaCare would become law. Done and done. Comments from David Axelrod and other administration officials this weekend indicate that they haven’t given up on the Senate bill, and suggest that they are likely pressuring House Democrats to support it.
On ABC News’ This Week, Axelrod said, “People will never know what’s in that bill until we pass it.” He was right, though not in the sense that he meant it. As bad as the American people think this legislation is, they won’t really know until Nancy Pelosi bribes her way to 218 votes.
How ObamaCare Would Keep the Poor Poor
Suppose you’re a family of four at or near the federal poverty level. Under current law, if you earn an additional dollar, you get to keep around 60-70 cents.
Under the House and Senate health care bills, however, you would get to keep maybe 38 cents. Or 26 cents. Or maybe just 18 cents.
The following graph (from my recent study, “Obama’s Prescription for Low-Wage Workers: High Implicit Taxes, Higher Premiums”) shows that under the House and Senate bills, the combination of (1) a mandate tax and (2) subsidies that disappear as income rises would impose implicit tax rates on poor families that reach as high as 82 percent over broad ranges of income.
This graph actually smooths out some rather bumpy implicit tax rates that spike as high as 174 percent.
In the 1980s and 1990s, the public saw that too-generous government subsidies can actually trap people in a cycle of poverty and dependence. President Obama and his congressional allies seem not to have learned that lesson.
Reid Won’t Even Tell His Base What He’s Asking Them to Swallow
Here’s my answer to today’s “Big Question” on The Hill‘s Congress Blog:
Now that the “public option” is dead, both the Left and the Right should be able to agree: the Senate bill is nothing but a $450 billion bailout of the private insurance companies.
In fact, the bailout may be several multiples of that figure.
That $450 billion just represents checks that the Treasury would write to private insurance companies. The Reid bill would also force nearly every U.S. citizen to fork over cash to the private insurance companies — no matter how lousy a deal they offer. A recent CBO memo reveals that Reid has been meticulously working behind closed doors to conceal the full cost of his private-insurer bailout.
The Left and the Right should insist that Reid produce a complete CBO score that reveals the full cost of his bill’s private-insurer bailout — in particular, the cost of the individual and employer mandates.
Left-wing Democrats will follow their own consciences when deciding how to vote. But they should force Reid to be honest about what he’s asking them to swallow.
Joe Lieberman, Mass Murderer?
So insinuates the Washington Post‘s Ezra Klein, who writes that, because Sen. Joe Lieberman (I-CT) does not support the health care legislation forwarded by Senate Democrats, Lieberman “seems willing to cause the deaths of hundreds of thousands of people in order to settle an old electoral score.”
In a subsequent post, Klein relies on the Institute of Medicine’s methodology — which has been used to estimate that 22,000 Americans die each year from lack of insurance — to conclude that the Senate bill would save 150,000 lives over 10 years. He further claims that “Medicare saved lives.” (In fairness, Klein writes that he’s not accusing opponents of murder. When he writes of Lieberman’s willingness to cause hundreds of thousands of deaths, maybe he’s thinking of mass negligent homicide. Or something.)
On Twitter, Klein writes, “People are oddly resistant to talking about the impact of [health care reform] on lives. Do they think insurance has no connection to mortality?”
Indeed, health insurance does have a connection to mortality. But I’m pretty sure Klein doesn’t know what it is, mostly because people with more expertise and fewer axes to grind don’t know what it is.
Thursday Links
- A few questions for Ben Bernanke: “Perhaps the most important question Bernanke should answer is: how will he re-build and maintain an independent Fed?”
- Before considering Bernanke’s role in containing the financial crisis, Congress should investigate the role of Fed policy in allowing the housing bubble to grow.
- Prepare to pay more: Today, an average insurance policy can cost about $2,985 for an individual or $6,328 for a family. Under the Senate bill, those premiums will increase to $5,800 for an individual worker and $15,200 for a family plan by 2016.
- Why the White House “jobs summit” is unnecessary.
- Made on Earth: How global economic integration renders trade policy obsolete.
- Podcast: “ObamaCare the Budget Buster.” More, here.
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