An Inept Congress Can't Tackle Entitlements

As Congress lurches today toward what at best will be another short-term “solution” to the debt ceiling and government shutdown debacle, there is a reason to believe that it will never effectively tackle entitlements. 

What we need and what we want are two different things.  And this inept Congress – which in the eleventh hour of its most recent manufactured crisis is still posturing over Obamacare – has no idea how to balance the two. 

Source: US House Website

We need our entitlements – that’s why they exist.  But we also don’t want to pay for them.

Take the Affordable Care Act – in the crosshairs of so many politicians – as an example.  Next to no one wants it all repealed.  Coverage for pre-existing conditions, a guarantee that insurance won’t be cancelled even after an illness hits, and tax credits to lower the cost of health insurance are all needed and immensely popular.

But these things cost money.  When Congress passed the Affordable Care Act in 2010, it included provisions to help pay for them.

These included a 2.3% excise tax on medical devices, which would raise about $3 billion per year. Wheelchairs and eyeglasses, which are sold directly to consumers, are exempt from the tax.  It only covers devices, such as MRIs, that are sold to providers.

This tax is not a big deal.  But a bipartisan group of elected officials from both the House and the Senate want to repeal or delay it, because medical device manufacturers are opposed to it.  That may not happen today, but it could as part of a new round of budget negotiations.

We can shake our heads at the inordinate power of the medical device industry lobbyists, but let’s not kid ourselves.  They are not the only ones who don’t want to pay up.

Medicare spending is a huge entitlement. It will cost the government around $586 billion this year, a number that will grow to over $1 trillion per year in the next decade.  This growth rate is probably not sustainable at the current rate of Medicare taxation.

But we all need and like Medicare – for good reason.  It offers a health insurance lifeline to seniors and people with chronic conditions.

No one wants Medicare benefits reduced, even though a modest reduction in benefits, worth less than $10 per month, coupled with a modest increase in Medicare taxes, also worth less than $10 per month, could make Medicare fully solvent for generations to come. 

Don’t believe it?  Then stop listening to politicians and pundits.  Take a look at the 2013 Medicare Trust Fund Trustees report.  That report noted that it would take only a tiny tax increase – of roughly one half of one percent each to employers and employees – to fund Medicare as we know it for the next 75 years.

How many members of Congress are willing even to discuss raising the Medicare tax by one half of one percent to protect an entitlement program that over 50 million Americans need?

Or consider defense spending.  Congress put two wars on credit cards, leading to the huge deficits of the past decade and a significant run-up in our national debt.  Those wars were popular at the time they began, and enjoyed broad-based, bi-partisan support.

Now we scoff at the politicians who voted to go to war and won’t vote to raise the debt ceiling to pay off those bills, because they are pretending that deficits appear by magic and not as a result of Congressional spending votes.

And now the veterans of those wars are coming home.  Half need medical attention; one in five have PTSD.  Hundreds of thousands have sought care from the VA; and almost as many are being treated in community-based systems.

We clearly think that veterans are entitled to this care, both inside the VA system and outside it.  But do we think it comes free of charge?

We’ll have to increase taxes to pay for it.  Or we can pretend that further sequesters will do no harm to veterans and their care.

If you’re paying attention to this Congress, then you can come to only one conclusion.  Pretense will win.

And in the case of the entitlements we need, but don’t want to pay for, this Congress will prove again that it is incapable of real leadership, of meaningful compromise, and of balancing what we need with what we want.

It's a disaster.

Paul Gionfriddo via email: gionfriddopaul@gmail.com.  Twitter: @pgionfriddo.  Facebook: www.facebook.com/paul.gionfriddo.  LinkedIn:  www.linkedin.com/in/paulgionfriddo/