Thursday, April 14, 2011

Why the President’s Failsafe Proposal Fails, Part II

As a follow-up to my missive from last night regarding the President’s “fail-safe” deficit mechanism, there’s one question the White House should be answering: If the President is so interested in budgetary “fail-safes” as a way to reduce the federal deficit, why doesn’t he abide by the Medicare “fail-safe” that’s already in law – a “fail-safe” he has completely ignored?

In case you weren’t aware, Medicare is ALREADY subject to a “fail-safe” mechanism designed to ensure the program will be sustainable in the long term.  The Medicare Modernization Act included provisions requiring the Medicare trustees to determine when the program is relying too heavily on general revenues (as opposed to the Medicare payroll tax) for its funding needs, thus crowding out other important government priorities such as defense, education, etc.  A section on pages 52-55 of last August’s trustees report made such a determination of “excess general revenue Medicare funding” for the fifth straight year.  Therefore, under the procedures outlined within the MMA, the President must within 15 days of submitting his budget propose to Congress legislation remedying the funding warning – to make the program more financially sustainable for current taxpayers and future generations alike.  This provision was codified in statute, meaning the President is required to submit a legislative proposal (which the leaders of both parties will formally introduce at his request).  In his three budget submissions thus far, the President has ignored this statutory requirement under the Medicare “fail-safe” to propose legislation remedying the program’s funding shortfalls.

The White House hasn’t talked about the Medicare funding warning mechanism much – and not just because health “reform” engaged in fiscal double-counting by diverting savings from Medicare to establish new entitlements.  On the one occasion when an Administration document did discuss the Medicare “fail-safe” – the Analytical Perspectives to the President’s April 2009 budget – the Administration claimed that “in accordance with the recommendations clause of the Constitution, the President considers this requirement to be advisory and not binding.”  This wording is particularly ironic, as it echoes the signing statement issued by President Bush at the time the Medicare Modernization Act was enacted in 2003.*

Medicare is already running cash flow deficits in the tens of billions of dollars, and according to the Congressional Budget Office, its Hospital Insurance Trust Fund will be insolvent in nine short years.  The Medicare trustees report notes that the program needs major fiscal reform NOW – not after the President’s re-election campaign, when the White House’s deficit reduction plan would finally take effect.  Instead the White House continues to rely on a presidential signing statement to duck the tough questions regarding Medicare reform, breaking his campaign promises in the process.  Since the President has for years failed to lead on Medicare reform despite a legal “fail-safe” requiring him to do so, why should anyone believe his newfound conversion to targets and “fail-safes” now?


* It should be noted that President Bush, unlike President Obama, followed the statutory requirements and submitted Medicare reform legislation as required in February 2008 – meaning his concerns over entitlement spending, and desire to propose solutions regarding same, outweighed any concerns about constitutional prerogatives.  (The proposals were introduced by request in both chambers as bill H.R. 5480/S. 2662 of the 110th Congress.)  President Obama apparently feels no such compunction to put comprehensive entitlement reform ahead of any separation-of-powers concerns, or for that matter the political benefit he may perceive from avoiding the issue until after the next election.