For years the conservative movement has correctly highlighted the budgetary and moral hazards posed by entitlement spending. The very nature of any spending that is by design uncontrollable should trouble any citizen who is not an out-and-out statist.
However, more than two-thirds of federal spending is now on auto-pilot. All of the budgetary brinksmanship the last few years between the Republican House and the Democrat-controlled Senate and White House was essentially a prolonged quarrel over just one-third of federal spending.
While the yearly budget process involves extended wrangling over roughly $1 trillion, more than twice that amount is spent without a single vote. Who in the world would run a business where two-thirds of its spending occurs without any accountability or examination? What banker would consider loaning money to a business operating deeply in the red while claiming that more than two thirds of its spending simply cannot be cut?
It should be more a product of common sense than any particular ideology or partisan affiliation to conclude that programs like Medicare and Social Security must be reformed and modernized to ensure their survival for future generations. To their credit, House Republicans have tried.
They’ve passed budget after budget calling for serious entitlement reform. The Democratic party, on the other hand, has been inflexibly opposed to any serious reform. In fact their strategically unwise and politically arrogant decision to force Obamacare on the American people in 2010 as a one-party exercise only exacerbated an already serious long-term spending problem.
Their party’s article of faith seems to be that the yearly reports by the Medicare and Social Security Trustees warning of their respective programs’ eventual bankruptcy may be ignored with impunity. When the math is inescapably clear, their only proposed solution is to demand tax increases: new revenues to feed increased spending.
The result of this standoff is that no serious structural reform of any existing major entitlement program has been enacted since welfare reform passed in 1996. It is deplorable that trillions of dollars are added to our national debt with so little prospect of real reform.
This week, for the first time in nearly 20 years, a small but encouraging sign may be materializing in Congress. Every few months Congress has to vote to suspend a mandated cut in Medicare payments to physicians, deceptively called the Sustainable Growth Rate (SGR) by the wonks and the “doc fix” by the wags. Without it, seniors would lose access to many doctors who would simply stop accepting new Medicare patients.
In the last 11 years there have been 17 votes on the hated ‘doc fix.’ The periodic doc fix votes feed an industry of lobbyists and consultants and perpetuate an air of unreality in budget impact calculations.
After the last doc fix, a bipartisan group of House leaders and members began discussions to permanently replace the SGR with a more stable physician payment system that promotes a higher quality of care for seniors while controlling costs in a more predictable manner. While exact details and language have yet to be released, there are indications the deal contains minor, yet substantive restructuring of the Medicare program, including means testing. Maybe it really is springtime after all.
Some of my conservative friends have raised concerns that the SGR deal is only partially “paid for” in the space of a near-term 10-year budget window and thus adds to the deficit. However, I would ask them to consider a couple of crucial facts about the plan that I believe may eclipse their initial concerns.
First, Congress, for the first time since welfare reform, is considering real, structural entitlement reforms to Medicare. This has long been a conservative goal. And while the savings in the first 10 years may not accrue as fast as some would like because they must be phased in, they blossom in the subsequent 10-year window — possibly to the tune of more than $230 billion, according to economist and former Congressional Budget Office head Doug Holtz-Eakin.
Second, Democrats have dropped their demand for tax increases in exchange for this entitlement reform. I wouldn’t claim to know their motivations, but it represents a major concession and a significant step toward entitlement modernization. This, too, is a win for conservatives.
Americans need greater scrutiny of the trillions spent on entitlement programs. We need to see Congress taking more votes and demanding more accountability over the two-thirds of federal spending that is on auto pilot with little scrutiny.
If what has been reported about the current SGR deal is borne out by the text of the bill, I would consider the deal to be a win for the conservative movement and for all Americans.
Mr. Hanna is President of Let Freedom Ring.