The 2012 election dealt a blow to the country, not just because it guaranteed the same failed economic policies of the last four years, but because it also means that any push to repeal ObamaCare in Congress is a non-starter. Despite that, there will still be ways to significantly diminish the impact of the law.
While the decision last year to uphold the individual mandate was certainly disappointing, the Supreme Court did provide lattitude for states to refuse to implement expensive insurance exchanges and even more costly Medicare expansion. This was a silver-lining in an otherwise terrible decision that set a very troubling precendent for future expansions of government.
In a new whitepaper, “50 Vetoes: How States Can Stop the Obama Health Care Law,” Michael Cannon, director of Health Policy Studies at the Cato Institute, explains that this gives states the chance to effectively veto these provisions and thus save taxpayers and business money.
“To date, 34 states, accounting for roughly two-thirds of the U.S. population, have refused to create Exchanges,” writes Cannon in the summary of the whitepaper. “Under the statute, this shields employers in those states from a $2,000 per worker tax that will apply in states that are creating Exchanges (e.g., California, Colorado, New York).”
“Those 34 states have exempted at least 8 million residents from taxes as high as $2,085 on families of four earning as little as $24,000,” he continues. “They have also reduced federal deficits by hundreds of billions of dollars.”
The budget battle is taking shape. On one hand you have a budget proposal from House Republicans that takes steps to deal with entitlement reform and balance nation’s finances in 10 years and on the other you have Senate Democrats pushing for nearly $1 trillion tax hike and a perpetually unbalanced budget:
The first budget from Senate Democrats in four years includes nearly $1 trillion in new taxes but would not balance the budget.
The blueprint unveiled by Senate Budget Committee Chairwoman Patty Murray (D-Wash.) on Tuesday to her Democratic colleagues would also turn off the next nine years of the sequester and replace those spending cuts with a 50-50 mix of tax increases and spending cuts.
The budget would dedicate $100 billion to economic stimulus in the form of infrastructure spending and job training.
While Rep. Ryan’s imperfect, but respectable budget would trim $4.6 trillion from budget deficits over the next decade, Sen. Murray’s proposal would only trim $1.85 trillion over that same timeframe. Sen. Murray’s budget would raise tax revenue by closing tax loopholes. That would be good, broad-based tax policy, provided that the increased revenues are used to lower overall tax rates.
House Republicans have begun the roll out their new budget, which, like their previous budgets, aims to reduce the national debt and tackle entitlement reform. House Budget Committee Chairman Paul Ryan (R-WI) previewed his budget plan this weekend on Fox News Sunday and this morning in the Wall Street Journal:
America’s national debt is over $16 trillion. Yet Washington can’t figure out how to cut $85 billion—or just 2% of the federal budget—without resorting to arbitrary, across-the-board cuts. Clearly, the budget process is broken. In four of the past five years, the president has missed his budget deadline. Senate Democrats haven’t passed a budget in over 1,400 days. By refusing to tackle the drivers of the nation’s debt—or simply to write a budget—Washington lurches from crisis to crisis.
House Republicans have a plan to change course. On Tuesday, we’re introducing a budget that balances in 10 years—without raising taxes. How do we do it? We stop spending money the government doesn’t have. Historically, Americans have paid a little less than one-fifth of their income in taxes to the federal government each year. But the government has spent more.
So our budget matches spending with income. Under our proposal, the government spends no more than it collects in revenue—or 19.1% of gross domestic product each year. As a result, we’ll spend $4.6 trillion less over the next decade.
During his first presidential campaign in 2008, Barack Obama unloaded on then-President George W. Bush for his excessive spending. Obama said that running up $4 trillion in debt in eight years, as Bush did, was “irresponsible” and “unpatriotic.” Obama made the deficit into a big part of his messaging during this campaign, telling Americans that they would see a net-spending cut in his first term.
It’s no secret that Obama has been terrible on spending, despite his tough talk and promises, but the price tag on his presidency has hit another sobering figure. According to CBS News via The Weekly Standard, $6 trillion has been added to the national debt on Obama’s watch:
Since President Barack Obama took office in January 2009, more than $6 trillion dollars has been added to the national debt.
“Without fanfare, the Bureau of Public Debt at the Treasury Department quietly posted its daily debt report showing the total public debt of the U.S. government topped $16.687 trillion. (To be exact: $16,687,289,180,215.37),” reports Mark Knoller of CBS.
“On January 20, 2009, the day Mr. Obama took office, the debt stood at $10.626 trillion. The latest posting reflects an increase of over $6 trillion.”
Just a friendly reminder that the Senate, which is controlled by Democrats, hasn’t passed in 1,400 days. The last time they took it upon themselves to perform the government’s most basic function was April 29, 2009.
Continuing this charade of blaming Republicans for the sequester, President Barack Obama told the National Governors Association that Washington “has to do some governing” if it hopes to avoid the sequester on March 1st:
“There are always going to be some areas where we have genuine disagreement … but there are more areas where we can do a lot more cooperating than we have seen in the past couple years,” Obama told a meeting of the National Governors Association at the White House.
“At some point, we’ve got to do some governing. And, certainly, we can’t keep careening from manufactured crisis to manufactured crisis.”
Turning to sequestration, Obama turned his appeal to Republicans, who the administration wants to see agree to revenue-raising measures.
“These cuts do not have to happen,” he said. “Congress can turn them off anytime with just a little bit of compromise.”
As we’ve explained before, the sequester — $85 billion in spending cuts set to take effect at the beginning of the month — doesn’t really represent deep spending cuts. In fact, the sequester doesn’t actually cut real spending at all. It merely cuts the rate of growth in the budget over the next 10 years. We’re still poised to have over $9.4 trillion in budget deficits in that same timeframe.
During an appearence last week on CNN, Sen. Rand Paul (R-KY) dismissed the blame and panic coming from the White House over the looming sequester. Sen. Paul told Wolf Biltzer that President Obama ultimately signed the sequester into law, despite his blame shifting to the GOP, and explained that the cuts aren’t even real reductions.
But while he’s been critical of President Obama, Sen. Paul has some strong words for his own party, telling a group of conservatives in New York last night that Republican leaders have been too quick to surrender on battles with the White House:
Speaking to a meeting of influential conservatives here Monday night, Kentucky Senator Rand Paul criticized his fellow Republicans in Congress for lacking a unified leadership on the upcoming sequestration.
“We announce our surrender before we get started on every battle,” Paul said. “That literally is our problem.”
Sen. Paul urged his colleagues to get behind his alternative to the sequester, a proposal that would cut spending by $85.75 billion annually by enacting a number of cost-saving measures, including a moratorium on the hiring of new federal workers, bringing their pay in line with the private-sector, and requiring competitive bidding for government contracts.
Moody’s Investor Service, one of the three major credit rating services, took a move last week that is sure to send some shockwaves across Europe. Moody’s lowered the United Kingdom’s credit rating due to the debt that will continue to weigh on the country:
Moody’s lowered the U.K.’s domestic and foreign-currency bond rating one notch to Aa1 and changed its outlook to stable. It is the first of the three major ratings firms to do so, though both Standard & Poor’s Ratings Services and Fitch Ratings have the U.K. on negative outlooks.
The move by Moody’s is a psychological blow to the United Kingdom, which is fiercely proud of its historical position on the world stage and keenly attuned to signs of its diminishment. It is also a political blow to Prime Minister David Cameron and his chancellor of the exchequer, George Osborne, who has long justified his painful government spending cuts on the grounds that he is maintaining the U.K.’s triple-A rating.
“We expect the country’s debt will continue to grow in coming years,” said Bart Oosterveld, managing director in charge of Moody’s sovereign ratings group, in an interview. “In our central scenario, we don’t expect the country’s debt burden to stabilize until 2016.”
Cameron had enacted a series of austerity measures, which were met with protests and derision from opponents, aimed at curtailing the United Kingdom’s sizable welfare state. Unfortunately, these measures weren’t enough to keep the country’s credit rating in tact.
This chart is a bit old, but in it, Veronique de Rugy shows the difference in spending with and without the sequester. While President Obama and even House Republicans are saying that these spending cuts will hurt the economy, military readiness, and emergency responders, you can see that the sequester ultimately does nothing to cut spending because rates of spending, including defense and domestic spending are still going to rise over the next several years:
The blame game in Washington over the sequester, which only cuts the rate of future spending increases, may be going strong as we approach March 1st, but we’re still going to have deficits and added debt that will be put on the backs of taxpayers.
President Barack Obama has been trying to distance himself from spending cuts that are set to take effect on March 1st — cuts, by that way, that were his idea. The message of late is fear-mongering, telling Americans that these cuts, which are merely cuts in the rate of spending increases, would hurt military readiness and emergency responders.
On CNN earlier this week, Sen. Rand Paul discussed Obama’s message on the sequester and the budget realities that face Washington, even if these spending cuts take place as planned at the beginning of next month.
“He signed it into law, and now he’s going to tell us that, oh, it’s all our fault?” Sen. Paul told Wolf Bitzler, noting that he didn’t vote for the bill because the cuts weren’t deep enough. “The sequester cuts the rate of growth of the spending, but the sequester doesn’t even really begin to cut spending, which we have to do or we are going to get a credit downgrade, another credit downgrade.”
Sen. Paul, who has proposed billions in spending cuts, noted that the sequester is “pittance” that, as noted above, is only a “slowdown in the rate of growth.”
“There are no real cuts happening over 10 years,” Sen. Paul explained. “Over 10 years, the budget will still grow $7 trillion to $8 trillion. He added $6 trillion to the debt in his first term. He’s on course to add another $4 trillion to $6 trillion in his second term.”