Tag Archives: Warren Buffett

Bernie Sanders’ Single-Payer Plan Provides Benefits for Billionaires

On Wednesday, socialist Sen. Bernie Sanders plans to introduce the latest version of his single-payer health-care program. If past practice holds, Sanders will call his plan “Medicare for All.” But if he wants to follow Medicare as his model, then the Sanders plan could easily earn another moniker: Benefits for Billionaires.

An analysis released by the Congressional Budget Office (CBO) in August demonstrates how Medicare currently provides significant financial benefits to seniors at all income levels, including the wealthy. Specifically, the CBO paper analyzed lifetime Medicare taxes paid, and lifetime benefits received, by individuals born in the 1950s who live to age 65.

The non-partisan budget office found that at every income level, seniors received more in Medicare benefits than they paid in Medicare taxes. Men in the highest income quintile—the top 20 percent of income—received a net lifetime benefit from Medicare of nearly $50,000, even after taking into account the Medicare taxes and premiums they paid. Women received an even greater net benefit between taxes paid and benefits received at all income levels, reflecting both longer life expectancy (i.e., more benefits paid out) and shorter working histories (fewer taxes paid in).

The CBO analysis confirms prior work by the Urban Institute—no right-wing think tank—that Medicare pays out more in benefits than it receives in taxes at virtually all income levels. For instance, according to Urban’s most recent study, a high-earning male turning 65 in 2020 will pay in an average of $123,000 in Medicare taxes, but receive an average of $222,000 in benefits.

Melinda Gates Doesn’t Need Government Health Care

Some may quibble with the work by CBO and Urban Institute for containing an important oversight. In analyzing only Medicare benefits and Medicare taxes paid, the two papers omit the portion of Medicare’s financing that comes from general revenues—including the income taxes paid primarily by the wealthy. While it’s difficult to draw a precise link between Medicare’s general revenue funding and any one person’s income tax payments, it’s possible that—particularly for one-percenters—income taxes paid will offset the net cost of their Medicare benefits.

But regardless of those important details, the larger point still holds. Even if her taxes do outweigh the Medicare benefits received, why does Melinda Gates need the estimated $300,000 in health care benefits paid to the average high-income woman born in the 1950s? Does that government spending serve a useful purpose?

Moreover, if Medicare provides a net benefit to the average senior at virtually every income bracket, how does the program as currently constructed represent either 1) social insurance or 2) a sustainable fiscal model? Under an insurance model, some individuals “win” by receiving greater net benefits, while some individuals “lose” by not fully receiving back the money they paid in. But given that multiple analyses have demonstrated that virtually every cohort of seniors currently benefits from Medicare, then the program’s only true “losers” are the future generations of Americans who will fund today’s profligate spending.

We Don’t Have Money to Subsidize the Rich

Yes, Medicare currently does include some means testing for wealthy beneficiaries, in both the Part B (physician) and Part D (prescription drug) portions of the program. But common sense should dictate first that wealthy individuals not only should be able to opt-out of Medicare if they so choose—because, strange as it sounds, the federal government currently forbids individuals from renouncing their Medicare benefits—wealthy seniors should not receive a taxpayer subsidy at all. Whether in Medicare or Sanders’ socialist utopia, the idea that Warren Buffett or Bill Gates warrant taxpayer subsidies defies credulity.

Despite this common-sense logic, liberals continue to support providing taxpayer-funded benefits for billionaires. In 2011, then-Rep. Henry Waxman (D-CA) said “if [then-Speaker John] Boehner wants to have the wealthy contribute more to deficit reduction, he should look to the tax code.” Perhaps Waxman views keeping wealthy seniors in Medicare as a form of punishment for the rich. After all, nearly nine in ten seniors have some form of supplemental insurance, and a form of “insurance” one must insure against may not be considered an unalloyed pleasure.

Regardless, Medicare faces its own financial reckoning, and sooner rather than later. In 2009—the last trustees’ report before Obamacare introduced fiscal gimmicks and double-counting into Medicare—the program’s actuaries concluded Medicare’s Hospital Insurance Trust Fund would become functionally insolvent this year. Given that bleak outlook, neither Medicare nor the American people can afford Sanders’ ill-conceived scheme to provide taxpayer-funded health benefits to wealthy 1-percenters.

This post was originally published at The Federalist.

Democrats’ Hypocrisy on the Trump Budget

As expected, the Left had a harsh reaction to President Trump’s first budget on its release Tuesday. Bernie Sanders called the proposed Medicaid reductions “just cruel,” the head of one liberal think-tank dubbed the budget as a whole “radical,” and on and on.

But if liberals object to these “draconian cuts,” there’s one potential solution: Look in the mirror.

Liberals’ supposed outrage over reductions to entitlements largely serving poor people would look slightly less disingenuous if they hadn’t made the same hyperbolic comments about reducing entitlement spending on middle-class and wealthy retirees. If the Left believes the budget reduces spending from anti-poverty programs too deeply, that in part stems from the president’s (flawed) conclusion that Social Security and Medicare reforms are too politically toxic to propose.

And exactly who might be to blame for creating that toxic environment?

Democrats Are Using The ‘Mediscare’ Playbook

Democrats have spent the past several political cycles running election campaigns straight out of the “Mediscare” playbook. In case anyone has forgotten, political ads have portrayed Republicans as literally throwing granny off a cliff.

This rhetoric about Republican attempts to “privatize” Medicare came despite several inconvenient truths:

  1. The “voucher” system Democrats attack for Medicare is based upon the same bidding system included in Obamacare;
  2. The Congressional Budget Office concluded one version of premium support would, by utilizing the forces of competition, actually save money for both seniors and the federal government; and
  3. Democrats—in Nancy Pelosi’s own words—“took half a trillion dollars out of Medicare” to pay for Obamacare.

Given the constant attacks from Democrats against entitlement reform, however, Donald Trump made the political decision during last year’s campaign to oppose any changes to Medicare or Social Security. He reiterated that decision in this week’s budget, by proposing no direct reductions either to Medicare or the Social Security retirement program. Office of Management and Budget Director Mick Mulvaney said the president told him, “I promised people on the campaign trail I would not touch their retirement and I would not touch Medicare.”

That’s an incorrect and faulty assumption, of course, as both programs rapidly spiral toward insolvency. The Medicare hospital insurance trust fund has incurred a collective $132.2 billion in deficits the past eight years. Only the double-counting created by Obamacare continues to keep the Medicare trust fund afloat. The idea that President Trump should not “touch” seniors’ retirement or health care is based on the fallacious premise that they exist beyond the coming decade; on the present trajectory, they do not, at least not in their current form.

Should Bill Gates Get Taxpayer-Funded Healthcare?

That said, the president’s reticence to “touch” Social Security and Medicare comes no doubt from Democrats’ reluctance to support any reductions in entitlement spending, even to the wealthiest Americans. When Republicans first proposed additional means testing for Medicare back in 2011, then-Rep. Henry Waxman (D-CA) opposed it, saying that “if [then-House Speaker John] Boehner wants to have the wealthy contribute more to deficit reduction, he should look to the tax code.”

In other words, liberals like Henry Waxman, and others like him, wish to defend “benefits for billionaires”—the right of people like Bill Gates and Warren Buffett to receive taxpayer-funded health and retirement benefits. Admittedly, Congress passed some additional entitlement means testing as part of a Medicare bill two years ago. But the notion that taxpayers should spend any taxpayer funds on health or retirement payments to “one-percenters” would likely strike most as absurd—yet that’s exactly what current law does.

As the old saying goes, to govern is to choose. If Democrats are so violently opposed to the supposedly “cruel” savings proposals in the president’s budget, then why don’t they put alternative entitlement reforms on the table? From eliminating Medicare and Social Security payments to the highest earners, to a premium support proposal that would save seniors money, there are potential opportunities out there—if liberals can stand to tone down the “Mediscare” demagoguery. It just might yield the reforms that our country needs, to prevent future generations from drowning in a sea of debt.

This post was originally published at The Federalist.

Why House Republicans Are Re-Writing Their Obamacare “Replacement”

On Friday, Politico reported that Republicans were considering ways to amend their Obamacare “replacement” legislation, by placing income limits on the bill’s new refundable tax credit for health insurance. The Politico story implied the income cap sought to prevent wealthy individuals like Warren Buffett from obtaining federal subsidies for health insurance, but in reality House staff are re-writing their legislation to correct a major flaw in its structure.

Based on my conversations with multiple sources close to the effort, the Congressional Budget Office (CBO) had indicated to congressional staff that the prior House framework could see at least 10 million, and potentially up to 20 million, individuals losing employer-sponsored health insurance. Further, CBO stated that that House framework, even after including a refundable tax credit for health insurance, would not cover many more people than repealing Obamacare outright.

By comparison, Obamacare led to about 7 million plan cancellation notices in the fall of 2013. While those cancellations caused a major political firestorm, the framework the House released prior to the recess could cause a loss of employer coverage of several times that number. What’s more, that framework as described looks for all intents and purposes like a legislative orphan appealing to no one—neither moderates nor conservatives—within the Republican party:

  • A significant erosion of up to 10-20 million individuals with employer-provided health coverage;
  • A new entitlement—the refundable tax credits—that by and large wouldn’t expand coverage, but instead cause individuals currently in employer plans to switch to the credits;
  • More federal spending via the refundable tax credits;
  • A tax increase—a cap on the current exclusion for employer-provided health coverage—to pay for the new spending on the credits; and
  • An increase in the uninsured (compared to Obamacare) of at least 15 million—nearly as much as repealing the law outright.

Details of the bill are changing constantly, and no doubt House leadership will claim these figures pertain to prior drafts of the legislation. But even if those numbers reflect outdated drafts, the combination of major re-writes to the bill and the lack of a CBO score at any point in the process thus far should cause significant pause on Capitol Hill. Members are being asked to vote on legislation before knowing its full effects, or even how it will look in its final version.

Coverage Quicksand

According to CBO, the combination of a cap on the exclusion for employer-provided health insurance, coupled with an age-rated tax credit for insurance, created a dynamic where expanding health insurance coverage was all but impossible.

An age-rated credit provides much greater incentive for firms to drop coverage, because all workers, not just low-income ones, can qualify for the credit. Moreover, because an age-rated credit provides the same subsidy to all individuals, regardless of income, low-income enrollees—the only individuals who have enrolled on exchanges in significant numbers—would have much less financial incentive to purchase insurance than they do under Obamacare, hence the lower coverage numbers overall.

On their bill, House Republicans put themselves in coverage quicksand. The more they thrashed to get out of the quicksand—by increasing the subsidies or adjusting the cap on the employer exclusion, or both—the deeper they sank, by increasing the erosion of employer-sponsored insurance.

Means-Tested Credit

Moving to a means-tested credit would create the same disincentives to work—individuals taking fewer shifts, or working fewer hours, for fear of losing their subsidies—as Obamacare itself. Here’s what Speaker Ryan’s Better Way document, released last summer, said about the current law:

Obamacare penalizes work. The law’s employer mandate and definition of a ‘full-time’ employee play a significant role in reduced hours, wages, and jobs. Even more critically, Obamacare’s subsidies themselves are riddled with cliffs and phase-outs, and the law includes a direct tax on work. Taken as a whole, CBO found that the law’s policies discourage work in such a way that it will be as if 2 million full-time jobs vanish from the economy by 2025. Our plan would repeal those taxes and work disincentives and implement a flat, simple form of assistance that would grow the economy and ensure work pays.

If House Republicans have turned on a dime, and re-embraced means-tested credits after criticizing them for several years, their plan will have at least some of the same work disincentives as Obamacare. Moreover, a means-tested credit also creates administrative complexities—reconciling payments made based on estimated income with actual income at the end of the year—that make it tougher to implement, as the Obamacare experience has demonstrated.

Obamacare’s Moment of Truth

On Thursday, Sen. Rand Paul sparked a Twitter meme, searching through the Capitol for copies of House Republicans’ current version of “replace” legislation. While Paul raised a valid point about the need for a transparent process, he might have been better served to search for a CBO score of the legislation, for that will show where the rubber meets the road on the bill’s fiscal effects.

House leadership has yet to release any budgetary scores of their legislation, yet apparently plan on marking up the bill this week—before a CBO score becomes available. Given the ways in which several drafts have prompted CBO to warn about a massive erosion of employer-sponsored health coverage, the phrase Caveat emptor applies. Members who vote for a bill without knowing its full fiscal effects, yet will be held politically responsible for said effects, do so entirely at their own risk.

This post was originally published at The Federalist.

One Easy Way to Start Reforming Entitlements

During his election campaign and the subsequent presidential transition, Donald Trump expressed a high degree of discomfort with reducing Medicare benefits. His position ignores the significant financial peril Medicare faces—a whopping $132.2 billion in deficits for the Part A (Hospital Insurance) trust fund over the past eight years.

That said, there is one easy way in which the new administration could advance the cause of entitlement reform: allow individuals—including wealthy individuals, like, say, Donald Trump—to opt out of Medicare.

Under current Social Security Administration (SSA) practice dating back to at least 1993, individuals who apply for Social Security benefits are automatically enrolled in Medicare Part A (hospital coverage). While Medicare Part B (physician coverage) requires a separate application process and monthly premium payment, Part A is effectively mandatory for all Social Security recipients. Individuals who do not wish to enroll can do so only by not applying for Social Security benefits. Put another way, the federal government holds individuals’ Social Security benefits hostage as leverage to forcibly enroll them in Medicare Part A.

If you think the government holding benefits hostage to forcibly enroll seniors—even wealthy ones—in taxpayer-funded Medicare sounds more than a little absurd, you wouldn’t be the first one. Several years ago, several conservatives—including former House Majority Leader Dick Armey—filed a lawsuit in federal court, Hall v. Sebelius, seeking to overturn the SSA guidance. The plaintiffs wanted to keep their previous private coverage, and did not wish to lose the benefits of that coverage by being forcibly enrolled in Medicare Part A.

We Have A Roadmap To Remedy This Problem

Unfortunately, both a federal district court and the Court of Appeals for the District of Columbia agreed with the federal government. The majority opinions held that the underlying statute distinguished being “entitled” to Medicare Part A benefits from “enrolling” in Part B, meaning the government was within its rights to deny the plaintiffs an opportunity to opt out of Part A.

However, a dissent at the Court of Appeals by Judge Karen LeCraft Henderson can provide a roadmap for the Trump Administration to remedy the absurd scenario of individuals being forcibly enrolled in a taxpayer-funded program. Judge Henderson held that the Social Security Administration had no statutory authority to prohibit (via its Program Operations Manual System, or POMS) individuals from disclaiming their Medicare Part A benefits. While the law “entitles” individuals to benefits, it does not give SSA authority to force them to claim said benefits. SSA published guidance in its program manual exceeding its statutory grant—without even giving the public the opportunity for notice-and-comment before establishing its policy.

It’s Time To End The SSA’s Kafka-esque Policies

During the Cold War, East German authorities referred to the barriers surrounding West Berlin as the “Anti-Fascist Protective Wall”—implying that the Berlin Wall stood not to keep East Berliners in East Germany, but West Berliners out. One can’t help but notice a similar irony in the Medicare opt-out policies developed by the Social Security Administration. After all, if Medicare is so good, why must SSA hold individuals’ Social Security benefits hostage to keep them enrolled in the program?

The Trump Administration can easily put an end to the Social Security Administration’s Kafka-esque policies—and take one small step towards reforming entitlements—by instructing the new Commissioner of Social Security to work with the Centers for Medicare and Medicaid Services to develop a means for individuals to opt out of the Medicare Part A benefit. The savings from such a policy would likely be modest, but why should the federal government force the expenditure of taxpayer dollars on benefits that the beneficiaries themselves do not wish to receive?

The simple answer: it shouldn’t. Perhaps Bernie Sanders or Elizabeth Warren view forcible enrollment in Medicare as “punishment” for wealthy seniors. But at a time when our nation faces nearly $20 trillion in debt, individuals of significant means—whether Bill Gates, Donald Trump, or even Hillary Clinton—shouldn’t be forced to accept taxpayer-funded benefits. The Trump Administration eliminating this government absurdity would represent a victory for fiscal responsibility—and sheer common sense.

This post was originally published at The Federalist.

What About the OTHER Buffett Rule…?

This afternoon, Democrats will engage in yet another politically motivated show vote, voting to raise taxes on job creators in the name of “fairness.” Their ostensible motivation for doing so comes from a campaign engineered by Warren Buffett, hence the Buffett Rule moniker.

But even as Democrats invoke Warren Buffett’s name in promoting this afternoon’s tax increase, it’s also worth recalling that in March 2010, Mr. Buffett conducted an interview for CNBC where — asked about the health legislation that was then in the process of being rammed through Congress — he said the bill “really doesn’t attack the cost situation that much” and that “I don’t believe in insuring more people until you attack the cost aspect of this.”

In other words, there is not just a Buffett Rule on taxes — there’s a Buffett Rule on health care too, and it’s this: Obamacare’s coverage expansions should not start until the law is proven to have lowered health care spending levels. But the real question is, why won’t Democrats accept this Buffett Rule as well? After all, if President Obama is so confident the 2,700-page overhaul will be effective in lowering premiums by $2,500 per family as promised, why doesn’t he believe this condition will be easily met? Conversely, if the President does NOT believe the law will be effective in slowing the growth of health spending, and will instead result in skyrocketing costs to federal taxpayers, what’s the point of even voting on today’s tax increase, seeing as how new spending on Obamacare will quickly overwhelm the $47 billion in supposed savings from this tax hike?

So this observer looks forward to Democrats embracing both Buffett Rules, and calling for Obamacare’s new spending on coverage expansions to be delayed unless and until the law has been proven to lower costs by $2,500 per family, as candidate Obama promised. Because if Democrats wish to outsource their legislative agenda to Warren Buffett, they should be willing to outsource ALL of their agenda to him, and not just the bits and pieces they agree with — after all, “fairness” requires it.

Pelosi Sides with George Soros Over Low-Income Seniors

The Hill reported that, at her press conference earlier this week, House Democrat Leader Pelosi rejected many of the pay-fors in the House-passed payroll tax measure: “We’re not going to give to the middle class with one hand and take from them with another by saying, ‘You’re going to get the tax cut, but seniors are going to have to pay more for Medicare, or whatever.’”

Where to begin with this statement?  For one, the House-passed Medicare proposals have NOTHING to do with making the middle class “pay more for Medicare.”  The ONLY increase in beneficiary cost-sharing in the House-passed bill makes wealthy seniors like George Soros and Warren Buffett pay more for their Medicare benefits.  And it’s such a “radical” proposal that it comes straight from the mind of…Barack Obama, who included it in his September deficit submission to Congress.

Meanwhile, the Hill continued that the former Speaker “Pelosi offered several alternatives for offsetting the tax package, including a provision to… allow Medicare to negotiate prescription drug prices on behalf of millions of seniors in the program…”  However, the Congressional Budget Office has consistently indicated that the only way to achieve savings through drug “negotiation” is by restricting access to therapies for seniors.  To use but one example, in April 2007 CBO concluded that drug “negotiation is likely to be effective only if it is accompanied by some source of pressure on drug manufacturers to secure price concessions.  The authority to establish a formulary, set prices administratively, or take other regulatory actions against firms failing to offer price reductions could give the Secretary the ability to obtain significant discounts in negotiations with drug manufacturers.”

To sum up:  Nancy Pelosi would rather cut access to seniors’ prescription drugs through new government-imposed restrictions than to force George Soros to pay more for his taxpayer-subsidized health care.  And Democrats say they stand with the middle-class how…?

Senate Democrats Defend Benefits for Billionaires

Amidst the ongoing discussion about the need to reform entitlements, this morning’s New York Times article on the payroll tax conference included these two interesting paragraphs:

“The largest sticking point may be Medicare.  The House-passed yearlong extension would increase premiums for high-income beneficiaries and increase the number of people who would have to pay extra.  About 5 percent of beneficiaries now pay higher premiums based on income.  The proportion would eventually rise to 25 percent under the House bill and under a separate deficit-reduction plan proposed in September by Mr. Obama.

Senate Democrats want no part of that.  They say the White House proposal came as part of a broad deficit-reduction plan that included tax increases on the wealthy.  If Republicans will not make concessions on revenues, the Democrats are not going to give Republican Congressional leaders what they want most: a concession on entitlements to defang Democratic charges in the coming campaign that the Republican Party plans to dismantle the health care program for the elderly.”

In other words:

  1. Senate Democrats will NOT reduce subsidized health benefits for billionaires like Warren Buffett and Bill Gates unless Republicans agree to a massive tax increase – at a time when long-term unemployment remains at record highs.
  2. Democrats do not want to deviate from prime electoral strategy – a “Mediscare” campaign designed to distract from the fact that their policies have failed to create the jobs that were promisedeven when it comes to reducing entitlement payments to billionaires.

Medicare faces a significant – and imminent – financial crisis.  The program is now running bigger deficits than Greece, and the President’s own Chief of Staff admitted that the program “will run out of money in five years if we don’t do something.”   This morning’s New York Times article only re-emphasizes a key difference between the parties: Democrats itching for a massive tax increase are unwilling to raise Medicare premiums on millionaires and billionaires to help improve Medicare’s solvency – because they would rather gain politically than fix the problem.

Administration Defends Subsidies for Warren Buffett, Holds Out for Tax Hikes

Earlier this afternoon the White House released its Statement of Administration Policy regarding the House payroll tax bill being considered today.  Among other points, the SAP claims that the bill “giv[es] a free pass to the wealthiest and to big corporations by protecting their loopholes and subsidies.”

There are several problems with this highly questionable statement.  First, the House bill CUTS SUBSIDIES TO THE WEALTHY, by reducing taxpayer funding of wealthy beneficiaries’ Medicare premiums.  Second, a very similar version of this proposal was previously included in the President’s September deficit submission.  Republicans might logically assume therefore that the President thinks these subsidies for wealthy beneficiaries are unnecessary, and would support their reduction along the lines he previously outlined.  But apparently not.

There appear to be only three possible explanations for the White House’s new assertion that the payroll tax bill does not crack down on “loopholes” for the rich:

  • No one in the Administration has actually read the bill;
  • The Administration – in another shift from its September proposal – now believes that subsidizing Warren Buffett’s Medicare benefits is NOT a loophole, and wants to defend Medicare subsidies for millionaires and billionaires; or
  • Even though Republicans have offered to reduce subsidies for wealthy individuals in a manner the President previously said he supports, the Administration is adamantly holding out for tax increases – at a time when the economy remains in a deep economic slump.

The first two options are certainly possible, given past instances of not reading legislation and broken promises on health care.  But if it’s the latter, some would find it a bit rich that the Administration would lecture Republicans about “scoring political points” – when the same Administration is now rejecting its own proposal to reduce subsidies on millionaires and billionaires to pursue its ideological fixation on destructive tax increases.

Or, to put it another way, that’s not math.  That’s class warfare.

House Democrats’ Absurd Double Standards on Benefits for Billionaires

On Friday evening, Democrats on the House Energy and Commerce Committee sent out an analysis of the health provisions of the House Republican payroll tax proposal in an e-mail.  Of particular note is the following sentence: “Increases and other changes made to the premium structure of Medicare raise fundamental and difficult issues for the program and certainly should never be considered in the context of addressing short term issues.”  This sentence obliquely refers to the proposals for additional means-testing included in the House Republican payroll tax bill – which come directly from the deficit reduction proposal the President submitted to the Joint Committee earlier this fall.

There’s a good reason why House Democrats might want to be circumspect about criticizing the means-testing proposal – because their position results in what can most charitably be described as feats of tautological jujitsu:

  • Congress SHOULD raise taxes on “the rich” to pay for a short-term payroll tax extension – but SHOULD NOT take away taxpayer subsidies for wealthy Medicare beneficiaries to pay for a short-term “doc fix” extension;
  • Congress SHOULD pass the tax increases the President proposed in his September submission to the Joint Committee right away – but SHOULD “CERTAINLY” NOT pass proposals to reduce wealthy beneficiaries’ Medicare subsidies included by the President in the same September proposal without months or years more study;
  • Choosing not to subsidize the health benefits of billionaires like George Soros is a “difficult” decision, but raising taxes by trillions of dollars is easy; and
  • Taking away wealthy Medicare beneficiaries’ subsidies “raise[s] fundamental…issues for the program,” but raising taxes on job creators in the middle of a sluggish economy raises no concerns, fundamental or otherwise, about the impact on stubbornly high unemployment.

It’s clear that Medicare is in the midst of a fiscal crisis – the program is projected to suffer a record deficit of nearly $40 billion this fiscal year, a greater deficit than that faced by Greece.  Even President Obama has admitted that “if you look at the numbers, then Medicare in particular will run out of money and we will not be able to sustain that program no matter how much taxes go up. I mean, it’s not an option for us to just sit by and do nothing.”  Yet House Democrats have articulated a philosophical position on which they are apparently willing to fight:  The holy right of people like Warren Buffett and Bill Gates to have their health benefits subsidized by federal taxpayers.

Democrats Defend (Medicare) Benefits for Billionaires

The latest version of Democrats’ payroll tax proposal includes two provisions designed to reduce federal welfare subsidies paid to millionaires and billionaires from the unemployment insurance and food stamp programs.  But it’s worth emphasizing that the new bill does NOT impose additional means-testing on Medicare (or Social Security, for that matter).

If ever there was a program in desperate need of reform NOW, it’s Medicare:

  • The Congressional Budget Office projects that Medicare Part A will spend nearly $40 billion more than it takes in this fiscal year, and run a further deficit of nearly $30 billion next year.
  • At a time when Europe faces major sovereign debt woes, Medicare is now running a bigger fiscal deficit than Greece.
  • The President’s Chief of Staff, Bill Daley, said in July that the program “will run out of money in five years if we don’t do something.”
  • And the President himself acknowledged that “if you look at the numbers, then Medicare in particular will run out of money and we will not be able to sustain that program no matter how much taxes go up.  I mean, it’s not an option for us to just sit by and do nothing.”

The President’s most recent deficit submission proposed additional means-testing for wealthy beneficiaries.  One would think that a party breathlessly waiting to raise taxes on “the 1%” would be chomping at the bit to take Medicare subsidies away from people like Bill Gates and Warren Buffett.  Yet what have Democrats done on this Medicare reform?  Nothing.  And why do they want to do nothing?  In a word, politics:

  • One House Member objected to any agreement between the President and Republicans on fundamental entitlement reform, because reforming entitlements now would “cancel out any bludgeoning that Democrats might give the Republicans over Medicare and Medicaid.”
  • The Washington Post’s liberal Plum Line reported in July that Senate Democrats don’t want to pass Medicare reform because it would be “giving away the biggest [political] advantage” Democrats have had “in some time.”
  • In a story last week, Rep. Steve Israel, Chair of the Democratic Congressional Campaign Committee, “declined to say whether a [deficit] agreement to cut entitlements might have hindered his political strategy.”  In other words, Democrats WANTED the supercommittee to fail – so that they could resume their “Mediscare” political attack ads against Republicans.

The latest payroll tax proposal only re-emphasizes one key difference between the parties: Democrats itching for a massive tax increase are unwilling to raise Medicare premiums on millionaires and billionaires to help improve Medicare’s solvency – because they would rather gain politically than fix the problem.