The Council for Citizens Against Government Waste and our coalition partners at www.spendingrevolt.com are holding an online Town Hall for Indiana taxpayers at 7:00 p.m.-8:00 p.m. on Sunday, September 5, which will be streamed live at www.SpendingRevolt.com/townhall<http://www.SpendingRevolt.com/townhall.  We are excited to have Indiana State Treasurer Richard Mourdock live during the Town Hall to answer questions about spending and taxes.  The emcee is Abdul Hakim-Shabazz from WXNT Newstalk 1430, who is the host of one of the most politically influential talk radio shows in the state.

Since the event will be streamed live from the front yard of a local small business owner at 4151 N. Pennsylvania Street in Indianapolis, taxpayers can simply log on from their homes and participate.  Members from the spendingrevolt.com groups have been sponsoring events across the nation to draw attention to the unsustainable levels of government spending.  That includes publicizing the online petition on the spendingrevolt.com website, attending news conferences and other events as the spendingrevolt bus travels around the country, and participating in the online Town Halls.  The Indianapolis Town Hall is the first in a series that will be held in key states around the country.

We encourage everyone to go online on Sunday evening to participate in this important grassroots event.  We want to send a strong message to our elected officials that we are holding them accountable for the use of our tax dollars.  Look for more opportunities to express your concerns over what is happening to your money by checking in regularly at www.spendingrevolt.com.

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According to a Census Bureau report released on Tuesday, federal domestic spending increased by a record 16 percent to $3.2 trillion in 2009. The dramatic increase in spending is largely due to a boost in aid to the unemployed and the massive $862 billion economic “stimulus” package.

Unfortunately, the increase in government spending has done little to save the sinking economy, as the unemployment rate hangs near 10 percent and millions of Americans are still struggling to find work. Rather than readjust its strategy for economic recovery, the Obama administration has stubbornly stayed the course, continuing to dig taxpayers into an even deeper hole.

Not surprisingly, government bureaucrats and contractors reaped most of the benefits from the “stimulus” package. According to an August 31, 2010 Washington Post article:

Overall, the largest chunk of federal spending – about 46 percent of the $3.2 trillion – went to Medicare, Medicaid and Social Security, entitlement programs that are projected to swell as the population ages.

Pay for federal employees accounted for nearly $300 billion of the spending and nearly half of that went to the Defense Department payroll.

The spending was a boon to the Washington area, the seat of government and home to many of its contractors.

Among the states, per capita spending averaged more than $10,000. But Virginia got almost $20,000 per resident, second only to Alaska. Maryland was the fourth highest at more than $16,000 for each resident, behind Hawaii.

The District was in a class by itself. The Census Bureau calculated the per capita spending at more than $83,000. But that figure was greatly skewed by the concentration of federal agencies in the city.

Virginia was pushed to the forefront of federal spending by the high number of defense contractors and service members living in the state. It saw $67 billion in military spending, a large chunk of the $155 billion the federal government spent in the state in 2009. Only California, New York and Florida got more money overall.

Much of the federal money went to private contractors. In Fairfax County, for instance, almost $40 billion of the $46 billion the federal government spent in the county went to contractors.

In Maryland, federal spending in fiscal 2009 rose 15 percent, to $92 billion. Maryland’s ranking reflects in part a large number of residents who are federal employees. Montgomery County, for example, got $28 billion in federal funds, including $4.6 billion in salaries, almost $3 billion in retirement checks and $17.5 billion in government contracts for various vendors.

The reality of our fiscal crisis is even worse than the Census Bureau suggests. The reported $3.2 trillion figure does not include interest paid on foreign debt, nor does it include foreign aid, which traditionally accounts for about 1 percent of the federal budget.

We have a national debt that tops a whopping $13 trillion, an out-of-control spending regime that shows no sign of slowing, and alarm bells sounding from every direction. When will lawmakers realize enough is enough?

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Taxpayers have been beaten and battered the last two years.  The only remotely bright spot has been the collapse of the Energy bill that could have meant catastrophic tax increases.  Now it looks like Senate Majority Leader Harry Reid (D-Nevada) may try to pass something during the lame duck session.  According to The Hill:

Senate Majority Leader Harry Reid (D-Nev.) said Tuesday a nationwide renewable-electricity standard, or RES, is “absolutely” in the mix as he tries to salvage energy legislation this year — possibly in a lame-duck session.

It would require utilities to provide 15 percent of their power from renewables by 2021, although about a fourth of the requirement could be met with energy-efficiency programs.

This is the last thing that taxpayers need.  The only potential good news is that cap and tax won’t be a part of the package.  Also, according to The Hill:

One issue that apparently won’t creep back onto the agenda is legislation to impose a cap on greenhouse gas emissions. “It doesn’t appear so at this stage,” Reid said when asked whether a cap-and-trade plan could be revived. “It doesn’t have the traction that a lot of us wish it had.”

The only way to ensure that taxpayers aren’t on the hook is to not pass anything at all.  We have all seen the shenanigans that takes place when a bill is passed.

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Now that Republicans can sniff the possibility of controlling the House they are starting to put forth their policy ideas that look, surprise, identical to how they looked when they lost the House in 2006.  According to Minority Whip Rep. Eric Cantor (R-Va.), one of the policy objectives that is currently on the table is bringing back pork-barrel earmarks.

According to an August 23, 2010 article in the Politico,

“House Minority Whip Eric Cantor (R-Va.) said a House GOP majority will focus on aggressive oversight of the Obama administration, will work to defund the agencies responsible for implementing health care and will push a “zero tolerance” ethics policy. He also said Republicans may roll back their ban on earmarks, as long as the spending items have ‘merit.’”

It looks like House Republicans took a one year moratorium on earmarks to show voters an image that they were fiscally restrained without actually sticking to it.  With leadership like this, it won’t be surprising if we saw Republicans lose control of the House as quickly as they win it.

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Throughout the summer and early fall of each year, Citizens Against Government Waste (CAGW) releases its analysis of the Senate and House versions of appropriations bills.  These versions offer a glimpse into what will likely be included in the final appropriation bills.  Thus far CAGW has sifted through 11 of the bills, and is working to produce a document highlighting the most egregious projects.

Fiscal year (FY) 2011 is likely to be an unusual year for earmarks, as the House has enacted reforms to limit parochial projects.  On March 10, 2010, House Democrats announced a ban on earmarks directed to for-profit companies, and House Republicans followed suit with a moratorium on all earmarks, with only a handful of Republican members disobeying.  These reforms contributed to a dramatic decline in earmarks in the House bills; dollar totals for earmarks in the eight House appropriations bills approved by subcommittees prior to the August recess decreased by 29 percent, from a total of $2,762,800 in FY 2010 to $1,961,290,000 in the same bills in FY 2011.  Projects declined by 47.8 percent, from 4,677 in FY 2010 to 2,442 in FY 2011.

Unfortunately, as is usually the case in Washington, all good news comes with a catch.  The Senate refused to institute similar reforms, and the lone comparable bill to FY 2010 approved by a Senate appropriations subcommittee, the Transportation and Housing and Urban Development (THUD) bill included a 29.4 percent increase in spending, from $1,700,000,000 in FY 2010 to $2,200,000,000 in FY 2011.  In this single bill, the Senate nearly canceled out the progress made by the House.  When lumped together, the nine bills add up to a 6.8 percent decrease in dollar amount, from $4,462,800,000 in FY 2010 to $4,161,290,000 in FY 2011.

What follows is a sneak peak of the forthcoming report containing the worst of the worst from the FY 2011 appropriation bills thus far.  First up is the House.  In the FY 2011 Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act appropriation bill, House appropriator David Price (D-N.C.) and Reps. G.K. Butterfield (D-N.C.), Bob Etheridge (D-N.C.), and Brad Miller (D-N.C.) requested $349,000 for swine and other animal waste management research at North Carolina State University.  Congressman Price’s website notes that “better research in livestock waste management would improve public health, benefit the environment, and assist farmers.

In the FY 2011 Commerce, Justice, and Science (CJS) Appropriations Act, House appropriator David Price (D-N.C.) and Reps. G.K. Butterfield (D-N.C.), Larry Kissell (D-N.C.), Brad Miller (D-N.C.), John Spratt (D-S.C.), and Melvin Watt (D-N.C.) requested $1,000,000 for the Textile Clothing Technology Corporation in Cary, for textile research programs.  The corporation offers products like the Textile Game, a $600 board game of supply chain management and pipeline performance.  In 2007, the U.S. textile industry’s exports totaled $12.1 billion.  Also in the House CJS bill, House appropriator Sam Farr (D-Calif.) requested $500,000 for bluefin tuna tagging and research at the Monterey Bay Aquarium.  According to the aquarium’s site, it was voted the number one aquarium in the U.S. and the third best family attraction in the country, and draws 1,947,600 visitors annually at a price of $29.95 per adult.  The aquarium could eliminate the burden on federal taxpayers by increasing ticket prices by 26 cents.

In the FY 2011 Interior, Environment, and Related Agencies Appropriations Act, Rep. Tammy Baldwin (D-Wisc.) requested $2,000,000 for the Ice Age National Scenic Trail.  This trail, which totals 1,200 miles and includes public land and state and county parks, charges camping, parking and registration fees, all of which could be raised to cover the $2 million earmark.  Also in the bill, Dels. Gregorio Sablan (D-MP) and Madeleine Bordallo (D-Guam) requested $500,000 for the Mariana Trench Marine National Monument Visitor’s Center.  Located in the south Pacific near Guam and the Mariana Islands, the Mariana Trench is the deepest place on earth.

In the FY 2011 Labor, Health and Human Services, and Education Appropriations (Labor/HHS) Act, Rep. Baron Hill (D-Ind.) requested $2,000,000 for the Center on Congress at Indiana University. The center aims to improve the public’s understanding of Congress, including “public perceptions of Congress, the role of Congress…and the impact of Congress on people’s everyday lives.”

In the FY 2011 House THUD, Reps. Shelley Berkley (D-Nev.) and Dina Titus (D-Nev.) requested $750,000 for the construction of a solar power array at the Three Square Food Bank in Las Vegas.  According to the organization’s website, $1 can provide three individual meals.  Instead of funding a solar power array, the money could be used to provide 2,250,000 meals

Although its output in terms of number of bills produced was smaller than the House, the Senate managed to produce several egregious earmarks.  In the Senate version of the FY 2011 CJS bill, $8,040,000 was added by 10 Senators for fish and shellfish related projects in six states, including $3,000,000 by Senate CJS Appropriations Subcommittee Chairman Barbara Mikulski (D-Md.) and Sen. Benjamin Cardin (D-Md.) for Chesapeake Bay oyster restoration and $400,000 by Senate appropriator Susan Collins (R-Maine) for community based lobster research in Portland.  Also, $900,000 was added for two projects to benefit the shrimp industry, including $500,000 by Senate Appropriations Committee Ranking Member Thad Cochran (R-Miss.) for shrimp industry fishing effort research continuation and $400,000 by Sen. Bill Nelson (D-Fla.) for shrimp industry fishing research.

In the 2011 Senate Labor/HHS Act, Senate Labor/HHS Appropriations Subcommittee Chairman Tom Harkin (D-Iowa) requested $6,000,000 to continue the Iowa Department of Education Harkin Grant program.  Since 2005, $32,633,000 has been earmarked for this narcissistic program.  Also in the Labor/HHS bill, $4,850,000 was added by 13 senators for 18 museum and library projects in six states, including $300,000 by Senate Labor/HHS Appropriations Subcommittee Chairman Tom Harkin (D-Iowa) to automate the circulation system in the Cedar Rapids Library and $100,000 by Senate Appropriations Committee Ranking Member Thad Cochran (R-Miss.) for the Tennessee-Tombigbee Waterway Transportation Museum in Columbus.

The full Pork Alerts can be found on CAGW’s website.

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The original article by David Williams can also be seen here:

Wastewatcher, August, 2010

To say that the Internet has grown over the past 15 years is an understatement.  According to Internet World Stats, there were 16 million users in 1995 compared to 1.9 billion users in June, 2010, an increase of 11,775 percent.   In addition, the Internet is much faster as a result of the deployment of broadband, and its uses have also expanded exponentially.

Broadband access, which is generally defined as Internet access with a high data rate, as compared to using a modem, is almost considered a “right” by some government officials.

The American Recovery and Reinvestment Act, or “Stimulus Bill,” included $7.2 billion in broadband investment money.  This was the Obama administration’s effort to make sure that every household had access to broadband Internet service.

The funding was divided into two pots of money: $4.7 billion for the National Telecommunications Information Administration (NTIA) to issue grants under a new Broadband Technology Opportunities Program and $2.5 billion for broadband deployment through the Rural Utilities Service (RUS).

NTIA’s prior experience in broadband grants consisted of the Technology Opportunities Program, which spent $233 million from 1994-2004 until it was terminated.  That is only 5 percent of the amount now being provided to NTIA, which has to spend it all by September 30, 2010.

The Department of Commerce Office of Inspector General examined NTIA’s $1 billion Public Safety Interoperable Communications (PSIC) program, which had a three-year funding time frame.  The OIG found that the PSIC grantees are unlikely to finish their projects on time; the release of funds was delayed by six to 12 months as state spending plans also had to be considered; and the environmental impact studies, while necessary, further delayed the awarding of projects.

The RUS Broadband Access Program was established by Congress as part of the 2002 Farm Bill.  Its primary goal is to provide loans to help bring Internet broadband service to unserved rural communities, which are generally defined as communities with populations of less than 20,000.

According to a February 12, 2009 Washington Post article about the RUS broadband program, “Since it began 6 years ago, $1.8 billion in loans have been distributed.  Of the 68 projects funded, 21 are nearly complete and about half have not begun.  An Agriculture spokesman could not confirm whether the rural utilities service program has completed any projects.”  On top of this lack of progress, the broadband access program faces management and agenda problems, which are evident given the more than $30 million in broadband loans that have gone into default.

The first problem with the agenda is that the broadband program has lost its focus on serving rural America.  According to a September 2005 audit by the U.S. Department of Agriculture’s (USDA) inspector general, “RUS has not exclusively served those rural communities most requiring Federal assistance to obtain access to broadband technologies.

Because RUS’ definition of ‘rural area’ is too broad to distinguish usefully between suburban and rural communities, the agency has issued over $103.4 million in grants and loans (nearly 12 percent of $895 million in total program funds) to communities near metropolitan areas… Though the law does not explicitly forbid issuing loans to communities with preexisting service, we question whether the Broadband Loan Program should be providing funds for competition in many of the communities served, while other communities go entirely without service.”

Second, instead of allowing the free market to flourish, the RUS has been subsidizing private companies to provide broadband in neighborhoods that already have service.  The IG report noted “one of the more highly publicized cases, [where] RUS issued loans to a company providing broadband access to affluent suburban communities a few miles outside of Houston, Texas…the subdivisions’ proximity to urban areas also made broadband services available to them through means other than the pilot loan program….We concluded that, in this case, the Government’s loan was not being used to extend service to rural areas that would not otherwise receive access to broadband, but instead to subsidize a company that would have provided the same service without the loan.”

An August, 2010 report by the Government Accountability Office (GAO) noted that there has been lax oversight with the broadband money.  According to GAO, “ To meet the Recovery Act’s September 30, 2010, deadline for obligating broadband funds, NTIA and RUS must award approximately $4.8 billion—or more than twice the amount they awarded during the first round—in less time than they had for the first round. As the end of the Recovery Act’s obligation deadline draws near, the agencies may face increased pressure to approve awards.  NTIA and RUS also lack detailed data on the availability of broadband service throughout the country, making it difficult to determine whether a proposed service area is unserved or underserved, as defined in the program funding notices.

The GAO added that “To address these challenges, NTIA and RUS have streamlined their application review processes by, for example, eliminating joint reviews and reducing the number of steps in the due-diligence review process, and NTIA began using Census tract data to verify the presence of service.”

The GAO report confirmed CAGW’s fears that the program was susceptible to problems such as slipping deadlines and a chaotic award system.   Any decisions on how to make the Internet a better tool should be left in the hands of private industry rather than the government.

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The article by Sean Kennedy can also be accessed here:

Wastewatcher, August, 2010

In recent years, Congress has been unable to complete the appropriations process by the start of the new fiscal year (FY), which occurs on October 1.  Unfortunately, this year will not be an exception.

However, there is positive news to report, as the ban on earmarks directed to for-profit companies announced by House Democrats on March 10, 2010 and the moratorium on all earmarks by House Republicans the next day has had a noticeable effect on the appropriations process.  In the eight House appropriations bills approved by subcommittees prior to the August recess, Citizens Against Government Waste found that dollar totals for earmarks decreased by 29 percent, from a total of $2,762,800 in FY 2010 to $1,961,290,000 in the same bills in FY 2011.  Projects declined by 47.8 percent, from 4,677 in FY 2010 to 2,442 in FY 2011.

The three largest reductions in cost included 47.9 percent in the Homeland Security bill, 43.6 percent in the Transportation and Housing and Urban Development (THUD) bill, and 42.7 percent in the Energy and Water bill.  The only House bill to increase in cost thus far was the Labor and Health and Human Services bill, which jumped 18.6 percent.  CAGW’s Pork Alerts detail egregious earmarks found in each of the FY 2011 appropriations bills.

Unfortunately, the Senate failed to agree on any earmark reform, rejecting an amendment offered by Sen. Jim DeMint (R-S.C.) on March 16, 2010, that would have imposed a one-year ban on earmarks.  The THUD bill is the only one comparable to FY 2010 approved by a Senate appropriations subcommittee thus far, and it included a 29.4 percent increase in spending, from $1,700,000,000 in FY 2010 to $2,200,000,000 in FY 2011.  In this single bill, the Senate nearly canceled out the progress made by the House.  When lumped together, the nine bills add up to a 6.8 percent decrease in dollar amount, from $4,462,800,000 in FY 2010 to $4,161,290,000 in FY 2011.

Although only the House has taken positive steps thus far, the true test will come in conference.  The Senate has long been home to Congress’s biggest porkers.  Consequently, the final appropriations bills may not reflect the encouraging trends in the House.  Furthermore, CAGW has highlighted efforts by members of Congress to circumvent their own rules; this behavior is likely to increase in frequency when conferees meet.

With massive deficits projected to continue far into the future, members of Congress should be especially cognizant of the consequence of their actions.  Bringing the final bills closer to the House totals to date would contribute positively to the earmark reform movement and show taxpayers that Congress is serious about cutting wasteful spending.

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Wastewatcher, August, 2010

President Obama needs to pass a bill, but a powerful chairwoman of a Senate committee, who is in danger of not being reelected, adds a controversial and expensive provision that puts passage in jeopardy.  Conventional wisdom says that the White House cuts a deal.  And, unfortunately, that is exactly what happened at the end of July, when the White House told the Senate Agriculture Committee Chairwoman Blanche Lincoln (D-Ark) that they would still help her obtain $1.5 billion in farm disaster aid if she promised to remove language funding the program from a small business bill.

Sen. Lincoln took the deal.  The bill didn’t pass, but that did not matter much because Sen. Lincoln got an assurance from White House Chief of Staff Rahm Emanuel that the United States Department of Agriculture (USDA) would fund her priority “administratively.”

Unfortunately for Sen. Lincoln, but fortunately for taxpayers, it does not appear that it is even possible to fund this $1.5 billion project administratively.  According to Congress Daily, House Agriculture Committee Chairman Collin Peterson (D-Minn.) has been quoted saying that he does not believe that the USDA has the ability to provide the aid that Sen. Lincoln is seeking.  This is probably not the first time that a false promise was made in politics, but what makes this situation particularly troubling for the taxpayers is the fact that Sen. Lincoln and the White House were willing to bypass Congress’s spending power to find the funding in the first place in order to try and save her job.  An August 25, 2010 New York Times editorial aptly called this fiasco the “Save-the-Senator Program.”

Congress has the power of the purse, and such authority cannot be bypassed.  Under Article 1 [section 9, clause 7] of the U.S. Constitution, “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”  This means that federal agencies may not spend money for their operations and programs that Congress has not appropriated or specifically authorized, so tapping the taxpayers for $1.5 billion to fund a program “administratively” is not constitutional.

While Sen. Lincoln may want to help some of her constituents, it appears that her priority to fund disaster agriculture assistance cuts off other constituents that have been waiting for payment from the USDA on a separate issue.  According an August 22, 2010 article in The Washington Post, “Black lawmakers note that the administration and Congress have yet to come up with $1.2 billion owed black farmers under the settlement of a major discrimination lawsuit.”

Not surprisingly, the issue is all about political patronage.  The largest likely recipient of this new farm aid would be in Sen. Lincoln’s state.  According to a report by the Environmental Working Group, Ratio Farms, of Helena, Ark., would receive $787,199.

Sometimes things are exactly as they appear.  In this instance, the White House tried to induce embattled Sen. Lincoln to act the way they wanted on a bill, but with authority they did not possess.  Sen. Lincoln and the Obama administration should be ashamed of trying to bypass the constitutional process to score political points.

Fortunately for taxpayers, it looks like trampling the U.S. Constitution has made reelection prospects for Sen. Lincoln even dimmer.  A Reuters/Ipsos poll had Sen. Lincoln trailing her opponent by 19 points in early July.  In contrast, an August 20, 2010 Rasmussen poll showed Sen. Lincoln trailing her opponent by 38 points.

Filed under: Agriculture, Pork, Scandal, Spending Revolt.com, Waste, Wastewatcher | No Comments »

Original article by David Williams can be seen here:

Wastewatcher, August, 2010

Fed up with excessive government spending, the Council for Citizens Against Government Waste (CCAGW), Americans for Prosperity, the 60 Plus Association, Concerned Women for America, and AmericaSpeakOn.org have joined forces to create a new website, www.spendingrevolt.com and go on a multi-state bus tour to educate and activate taxpayers.  The wake-up tour is intended to arm Americans with facts and figures about government spending so they can change their spending habits in Washington.  The bus measures 70 feet long and has space for people to write “personal messages” to their elected officials.

The tour started on July 23 in Las Vegas and Reno, Nevada, the backyard of Senate Majority Leader Harry Reid (D-Nev.) and then headed to San Francisco, California, which includes the district of House Speaker Nancy Pelosi (D-Calif.).

I was glad to represent CCAGW and jumped on the bus in San Francisco on August 2.  I rode the bus for four days from northern California south to San Diego.  The following is a summary of the trip:

August 2, 2010 – The day started out in the belly of the beast – San Francisco (Speaker Nancy Pelosi’s district).  City Hall was not exactly packed, but for a city known for its liberal politics we did not expect a huge turnout.

The bus then headed to conservative Walnut Creek, California, across the bay from San Francisco.  The weather was 20 degrees warmer and the city was as different as the weather.  We met with some local residents and candidates next to a 12-foot inflatable ATM machine.  After an hour of political banter we headed to Danville, California to meet with the East Bay Tea Party.  After a short presentation about the bus we went outside and people signed the bus.

August 3, 2010 – The day started out in Sacramento with a phone-in radio interview on KION in Salinas.  The host asked if the bus was going to stop by Salinas.  We had not planned on it but we did anyway because the whole point of the trip is to go where people want to see the spending revolt bus.  Before Salinas we had a press conference at the foot of the State Capitol in Sacramento.

The event started at 11:00 am with California State Senator George Runner (R-17), several assemblymen, and Jon Coupal, President of the Howard Jarvis Taxpayers Association.  After a few quick remarks by the bus crew, the politicians and other citizens signed the bus.

After the press conference, we headed to Salinas to meet talk show host Mark Carbonara and some other folks, including a mayoral candidate.  The day ended with a drive to Modesto to get ready for another long day.

August 4, 2010 – 4:45 am was our wake up call because the local radio station, AM 840, wanted to do live interviews about the bus from 6:00 am to 7:30 am.  Local realtor, Jeff Eichel, allowed the bus to park in front of his business so people could sign the petitions.  There was a steady stream of people but we had to leave at 7:30 am sharp to make the 11:00 am appointment.  This was difficult because so many people came out to sign the bus.

We headed down to Bakersfield and had a quick event before we stopped in Los Angeles for the night.

August 5, 2010 -   We visited Bell, California, a small gritty industrial town just outside of Los Angeles.  Bell has been in the news because the city administrator was being paid $787,000 annually, the Police Chief was on the dole for $457,000, which included 20 weeks paid vacation!  City Council members were also raking in $100,000 while the median income of Bell (population 38,000) was $28,000.  Not knowing how we would be received, we did not stay very long.

All in all, the response to the bus tour has been very positive.  Although many people feel helpless they do understand the need to be informed.
After I got off the bus in San Diego, to speak at the annual meeting of the American Legislative Exchange Council, the bus headed to Palm Springs, California and Arizona.

Future stops for the bus include Ohio, Indiana, Missouri, Arkansas, Tennessee, Florida, South Carolina, North Carolina, and Virginia.

Filed under: Appropriations, Deficit, Spending Revolt.com, Waste, Wastewatcher | No Comments »

Original article by Leslie Paige can be seen here:

Wastewatcher, August, 2010

The new summer blockbuster “Inception” features spectacular special effect sequences of towering edifices exploding, crumbling, and otherwise disintegrating in a film that addresses the fine line between reality and a dream state.  Right before the film’s protagonists emerge from medically-induced dream states, they experience instability, turbulence, and ultimately the total collapse of their immediate physical environments.  These sequences, which are awesome to behold on the big screen, are reminiscent of what is happening now in the real world with regard to the fiscal projections made about President Obama’s healthcare bill, only a lot less entertaining.

During the often acrimonious debate over the PPACA (Patient Protection and Affordable Care Act), better known as Obamacare, the Congressional Budget Office (CBO) was required to weigh in on various provisions of the bill.  Unfortunately, CBO is constrained to scoring and delivering opinions about the language it has in hand, and during much of the debate, the legislation featured gaping holes in many sections.  As former Comptroller General David Walker said on March 19, 2010, “…they have handcuffs on and are in a straitjacket.  They are required by law to make certain assumptions that don’t pass a straight-face test.  They’re required by law to assume that Congress is going to do everything they say they’re going to do despite the fact that there’s clear and compelling evidence that they never have and they probably never will in certain regards.  For example, you know, cutting provider reimbursements dramatically.  Well, all right, don’t hold your breath.”

So, as House Speaker Nancy Pelosi (D-Calif.) predicted, Congress had to pass the bill for everyone to find out what was in it.   The fiscal assumptions underpinning the PPACA started to crumble almost immediately after the bill’s enactment.

On April 22, 2010, Medicare Actuary Richard S. Foster revealed that PPACA will increase federal health spending by $311 billion over the next decade and likely much more.

In early August, President Obama and administration spokespersons made a lot of media hay out of the release of the Medicare Trustees’ most recent report on the financial health of the program, claiming that the PPACA will extend the life of Medicare by another 12 years (which isn’t really much to crow about in the first place).  However, in an unprecedented move, Foster issued a separate memorandum, which he mellifluously dubbed “Projected Medicare Expenditures under an Illustrative Scenario with Alternative Payment Updates to Medicare Providers.”

First and foremost, Foster stated, “The Trustees Report is necessarily based on current law; as a result of questions regarding the operations of certain Medicare provisions, however, the projections shown in the report do not represent the ‘best estimate’ of actual future Medicare expenditures.  The purpose of this memorandum is to present an alternative scenario to help illustrate and quantify the potential magnitude of the cost understatement under current law.”

The actuary drew taxpayers’ attention to one of the pivotal spokes in the administration’s reform scenario; the so-called “doc fix.”  A reduction in payments to doctors was supposed to have provided $330 billion over 10 years to offset the costs of PPACA.  The original provision enabling the annual downward adjustments to doctors’ fees was enacted in 1997 as part of the Balanced Budget Act, but starting in 2003, Congress has pushed the politically unpalatable cuts off to the next fiscal year, and they have never been adopted.

The “doc fix” for this year has been punted to December 1, 2010.  The Medicare actuary states the obvious in his report, which is that “Multiple consecutive years of large negative updates are extremely unlikely to occur.  In fact, Congress has overridden all of the scheduled reductions from 2003 through November 2010.  Moreover, the scheduled −23.0 percent update for December 2010 is four times the size of most of those previously avoided.  Despite their improbability, the negative physician updates are scheduled to occur under current law and are therefore included in the Part B estimates shown in the 2010 Medicare Trustees Report.”

The actuary went on to debunk another of the assumptions contained in the Trustees’ report.  Before the passage of the bill, Medicare providers were scheduled to receive annual payment increases based on economy-wide price indices.  The new healthcare law calls for those price increases to be reduced every year for the next 10 years, as an incentive to Medicare providers to ratchet up productivity and squeeze out systemic waste and inefficiencies, an excellent goal considering that Medicare loses at least $60 billion annually to waste, fraud, and abuse.

Unfortunately, the actuary pointed out that, historically, productivity gains in the healthcare sector have been much lower than in other sectors of the economy because of the labor intensive nature of the work.  And when attempts were made to implement cuts to inpatient Medicare services payments between 1998 and 2002, Congress stepped in to waive the reductions.  Even so, nearly two-thirds of hospitals are losing money on Medicare inpatient services today.  The actuary concludes that the reductions are certain to lead to access problems for Medicare patients.  It is highly unlikely that Congress will stand by and allow such a scenario to unfold; political pressure would force them to take action to pay providers more and staunch their exodus from the program.  Another pillar of Obamacare falls apart.

Almost from its inception, the promises and prognostications made by supporters of Obamacare ignored or misrepresented reality.   When President Obama and his congressional allies talked incessantly about bending the costs curve down, claimed costs would be offset, and blindly repeated the mantra that the budget-busting bill would not add to the country’s deficit, critics said “in your dreams.”  Now the critics are right and it is more like “in your nightmares.”

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