Wait for a CBO Reality Check on Budget Reconciliation

Voting on the budget reconciliation bill without having a cost estimate from the Congressional Budget Office, which House Democrats are thinking about doing, would be irresponsible.

Of course, the legislation itself is irresponsible. But to vote without first examining the CBO score doubles down on irresponsibility.

Much of the bill’s contents has been in flux. The complexities of the various taxes and spending interplay like 3-D chess on steroids. The predictable inflationary effects and more will hit every American household.

Democrats should know before going into the vote just how much and the many ways their partisan package will pick their constituents’ pocketbooks.

Consider the prescription drug price controls. The House version of the tax-and-spendthrift bill apparently contains government price-setting authority over certain medicines, a 95% inflation penalty and a set $35 price for insulin. Many are destructive measures from H.R. 3.

Even more gut-punching, government drug price-fixing will go beyond Medicare and Medicaid. It will extend into the commercial market.

That is, the government will dictate to private drug companies and private health care providers and insurers the prices of particular medicines. There’s no other term for this than socialism.

Such government assault on property rights as the budget reconciliation bill foments leads one direction — higher costs, heavier taxation, less efficient markets. Read: spiking inflation, the cruel, hidden tax that hits everyone.

How do we know the partisan reconciliation bill will spur inflation? Bureau of Labor Statistics data show that from 1998 to 2018, average earnings grew about 70%. Over that period, the price of new cars and home furnishings edged down slightly, wireless phone service prices decreased about 50%, computer software costs slid about 70% and TV prices dropped almost 100%.

Guess what happened to the prices of child care, college tuition and hospital services. Those prices became less affordable, increasing roughly 150%, 180% and 225%, respectively.

Government intervenes far less in the parts of the economy where costs decreased over time. But government intervention is extensive in child care, higher education and health care.

These facts beg the question: What is $2 trillion spend-and-tax legislation that’s focused heavily on funding and regulating social services, education, health care and “green” energy going to do to their costs?

Answer: It will most certainly inflate costs markedly and remove market-based elements — such as consumer choice and competition — that would constrain costs, improve quality and increase the value of those goods and services.

If the budget reconciliation bill is enacted, the past several months of rapidly rising inflation are merely prologue. Inflation stands at a 30-year high. We’ve seen seven straight months of inflation above 4% — five of those months over 5% — and October surpassing 6%. Hold onto your wallets.

So, congressional Democrats ought to know beforehand what CBO estimates the effects of such socialistic policies to be. And any congressional Democrats who haven’t lost touch with real-world economics and who understand how innovation, private capital investment and private enterprise far surpass government at allocating resources should vote “no.”

That’s an easy decision when rationality prevails. Government has no business dictating prices for any products or trying to manage the economy, especially where innovations that are under patent or exclusivity are concerned. Unfortunately for America, irrationality rules in Washington these days.

Failed Math of “Build Back Broker”

If you thought budget reconciliation — a falsely advertised $3.5 trillion but actually more like $5 trillion price tag tax-and-spend-a-thon — looked like a steamroller in July, look again. Its tires are spinning in a bog of its own sponsors’ making.

It’s actually a bloated, extremist, hubristic poison package that pleases no one. And that’s the currently slimmed-down $1.85 trillion version.

The error is faulty arithmetic accompanied by political miscalculation.

First the math. Most rational people understood that in a 50-50 Senate it wouldn't be easy to get all 50 Democratic senators on board with an exorbitant, expensive, partisan package. But stalwart Sens. Joe Manchin and Kyrsten Sinema have kept their heads and their principles.

And the nearly half the House Democratic Caucus that belongs to the loony-left Progressive Caucus failed to grasp the reality of a skinny 220-212 majority. That’s math that matters.

The zealots driving the partisan budget reconciliation train apparently have been operating on a faulty set of assumptions. They seem to have thought all corners of the Democratic party — the 96-member Progressive Caucus and the 19 Blue Dogs — would hold hands, sing Kum Ba Yah and jump off the cliff to pass the measure.

Joe Biden is still waiting . . . and he isn’t pleased with the delay. He burned jet fuel to Europe, leaving behind an agreement in principle — it is still being turned into legislative language while nitwits keep trying to lard up the “agreement” and the price tag with items on the cutting room floor.

Speaker Pelosi has kept the infighting contained these past three months, for the most part, at least publicly. But tempers are flaring, patience wearing thin, and many wearing the Biden-Pelosi-Schumer jersey feel deflated like the Florida Gators in the final two minutes of the first half of the Georgia game.

Senate Finance Chairman Ron Wyden keeps working to insert wealth-transferring, business-destroying, novel tax schemes — crafting them on the fly, they’re untested, and no committee hearings have vetted them.

Wyden and Biden still want unrealized capital gains — not realized assets — taxed at death. Bernie Sanders and others seek to revive the step-up-in-basis repeal — treating unsold assets as if the'd been sold upon death. That would subject inheritors to paying taxes on those unrealized capital gains under a punitive tax scheme being referred to as “mark to market.”

The House Ways & Means Committee opted for changed tax treatment of grantor retained annuity trusts, or GRATS, and changes to business valuation rules that would ignore discounts from partial ownership or lack of control of an asset in determining its value — i.e., something tantamount to confiscatory taxation. That could come on top of the tax hikes in the “agreement.”

Then there’s the faulty math and political miscalculation of the spend-a-thon and a $1 trillion bipartisan infrastructure bill the tax-and-spenders have held hostage to budget reconciliation. For all its green garbage, at least the lower-priced infrastructure bill would put about a fifth of its monies into roads and bridges. The reconciliation bill would pour about a quarter of its funds into ideological climate crap. And the infrastructure bill wouldn’t make radical changes to our tax structure.

Many Washington politicians think the American people agree with policy proposals that feed inflation — itself a hidden tax —, raise taxes directly or indirectly on everybody, destabilize the United States at a time when China, Russia and North Korea are rattling sabers and put at grave risk our ability to meet current obligations such as Medicare.

The outcome remains an open question. As that baseball immortal Yogi Berra said, "It ain't over till it's over.” But the up side for those who love property rights is that the Biden-Bernie-“Build Back Broker” episode is leaving some indelible memories on the minds of many, many Americans who’d bear the brunt of this Leftist licentiousness.

Lessons from Messing with Medicare

In 1989, a powerful Washington politician messed with Medicare. Grandma and Grandpa weren’t happy. The guy who was untouchable in the marble halls of the Longworth Building was within seniors’ reach back in the district.

Ways & Means Chairman Dan Rostenkowski faced some 250 angry senior citizens. They demanded Rosty undo the harm he and his tax-and-spend buddies had inflicted on their Medicare and them. He got a reality check.

“Progressive” Caucus members today feel untouchable, on the verge of a shut-out policy win for the socialist Left. President Biden pushes the Leftist agenda of Bernie Sanders and Elizabeth Warren. They’re gunning for government price controls, which will hammer seniors.

Budget reconciliation contains gut-punching taxes and spending and socialist policies. They’ll bring a day of reckoning for reckless pols in about a year. Rosty’s retreat should be a warning; it won’t be heeded.

Repeating political hubris, the partisan budget reconciliation package harms Medicare’s most popular parts. It targets the Part D drug benefit’s and Medicare Advantage’s keys to success — private parties in Part D negotiating drug prices and coverage and similarly designed MA, where private entities compete for seniors’ enrollment and offer coverage more like what beneficiaries had during their working years.

These fast-growing, consumer-pleasing Medicare programs will be wrecked. This in total disregard to CBO crediting health care savings that prescription coverage achieves.

Budget reconciliation will dumb down modernized Medicare to resemble conventional Medicare — one size fits some.

Current law prohibits HHS from interfering in Part D drug maker-health plan-pharmacy negotiations. Medicare law also blocks HHS from setting a drug formulary or pricing. Instead, private parties, having equal footing, duke it out without government’s thumb on the scales or arbitrarily choosing which medicines are covered or setting their price.

Other government price control measures from H.R. 3 look likely to be in the reconciliation package, e.g., reference pricing pegged to drug prices foreign government-run health systems set and a 95% tax on the most innovative medicines.

Medicare Advantage faces a tax on its success. MA plans attract more and more seniors, offer attractive benefits, lower out-of-pocket costs, deliver quality care, higher value and better medical outcomes. They do this by care coordination and taking up-front responsibility for their beneficiaries.

Nevertheless, Speaker Pelosi and Leader Schumer plan to pay for expensive new benefits in conventional Medicare by pilfering from MA. MA plans will lose around $300 billion over 10 years while enrollees in Parts A and B gain some level of vision, dental and hearing coverage.

Translation: Seniors will be left worse off. Overall Medicare spending likely goes up because of utilization of the new benefits and uncoordinated care in Parts A and B, while innovation, quality and clinical outcomes suffer in Parts C and D. Congressional Democrats are hanging the 40% of Medicare enrollees — 26 million seniors and counting — in MA out to dry.

Seniors have a property right in Medicare. They qualify through 40 quarters of work and paying Medicare taxes. Here come pols changing the rules on them after the fact, diminishing their due benefits.

Let’s talk reality check and radicals’ reckoning.

A recent Morning Consult survey finds overwhelming seniors’ satisfaction with Part D drug coverage and little support for government price controls:

• 92% satisfied with Medicare coverage generally

• 87% satisfied with Part D coverage

• 85% say their Part D plan provides good value

• 84% consider their Part D premiums affordable

• 83% consider having a choice of competing Part D plans important

• 76% say total out-of-pocket costs are reasonable

• 75% report their Part D plan covers all their prescribed medicines

• Only 30% favor piercing the noninterference safeguard

Another Morning Consult survey of MA enrollees finds 98% satisfaction with MA’s coverage. A warning to present-day Rosties: 93% regard a politician’s protecting MA important to getting their vote; 77% of MA seniors “strongly oppose the federal government reducing the amount of money paid to Medicare Advantage” (i.e., just what Democrats are doing).

Simultaneously, President Biden’s numbers are sinking faster than an anchor. Quinnipiac’s latest poll finds Biden underwater, 38% approval vs. 53% disapproval. Only 44% consider Biden honest; only 42% view his administration as competent.

With his party holding narrow majorities in Congress, he and the radical Left (which far outnumber moderate House Democrats) are overreaching.

Washington has a short collective memory. Politics runs in waves — fortune ebbs and flows. There are no permanent victories, no permanent defeats.

That’s why it’s prudent to keep first principles — property rights, the rule of law, fairness, equality — as guiding lights when your party holds power. Rosty lost sight of that. So have Biden and his fellow travelers. Removing HHS noninterference in Medicare drug negotiations and robbing Medicare Advantage may well come back to bite them.