[Congressional Record Volume 140, Number 6 (Tuesday, February 1, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: February 1, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
THE BIG BUDGET LIE
Mr. DOLE. Mr. President, on the op-ed pages of last Sunday's
Washington Post, our colleague from New Mexico, Senator Pete Domenici,
turned the spotlight on the important principle of truth-in-budgeting
as it relates to the Clinton health care plan. In my view, this opinion
piece by the ranking Republican member on the Senate Budget Committee
is a valuable addition to the upcoming debates over health care and the
budget, and I ask unanimous consent that Senator Domenici's op-ed from
the January 30, 1994 edition of the Washington Post be included in the
Record.
There being no objection, the article was ordered to be printed in
the Record, as follows:
[From the Washington Post, Jan. 30, 1994]
The Big Budget Lie--How Can the Administration Leave the Health Care
Plan Off the Budget?
(By Pete V. Domenici)
On Feb. 7, President Clinton is scheduled to submit his
first real budget. What is in that budget will be, in one
important way, less interesting than what is left out: the
full budget impact of the president's sweeping proposals for
reforming the country's health care system.
How the health care plan is reflected in the federal budget
is more than an academic question. The administration's
insistence that the plan's mandated premiums and benefits not
be displayed as federal taxes and spending is ample testimony
to the large political and practical consequences.
Excluding the reforms from the budget will not only obscure
the health care debate for the American people, it will also
establish a dangerous precedent: the enactment of major new
federal programs with no apparent impact on taxes, spending
or the debt. Indeed, the decision could determine whether the
federal budget continues to be a meaningful document at all.
Governing and budgeting are inextricably linked. A budget
determines how much of the private economy will be extracted
for funding public purposes, and how those funds will be
allocated among many competing objectives. It is not only a
policy document, but a historical record book documenting the
successes or failures in achieving the hopes and dreams that
it embodies. As the president stressed in his State of the
Union message, his health reform plan would be a signal
change in American social policy. Excluding it from the
budget process would be an extraordinary violation of well-
established budget principles that have served both
Democratic and Republican presidents and congresses over the
years.
The first principle is that the budget should be
comprehensive, including all federal fiscal activities. This
principle, referred to as the unified federal budget, was
established and affirmed with President Johnson's Commission
on Budget Concepts in 1967.
Even in 1985 and 1989, when the Social Security trust funds
and the Postal Service program were moved ``off-budget'' to
avoid their calculation in the Gramm-Rudman sequester
process, the federal budget presentation showed their
receipts and payments in aggregate budget figures. That
accounting practice continues to this day.
By this measure, there can be no question that the Clinton
health care plan is a federal program and so should be part
of the unified budget.
All essential ingredients of the president's plan would be
established by federal statute. The roles, responsibilities
and characteristics of the regional health alliances that
administer the program would be determined by the federal
government. Universal health coverage would be compelled by
the federal government. By federal law, every legal resident
of the United States would be required to participate in the
program. The program would go into effect in every state even
without the state's consent.
A new National Health Board would be created to oversee and
regulate the entire system. It would establish requirements
for states plans and approve state health plans. It would
establish a ``national budget for health care spending.'' The
National Health Board would issue federal regulations
governing benefits, procedures, reimbursements and cost-
sharing requirements for qualified health plans, among other
things.
If this isn't a federal spending program, what is?
And yet, Clinton administration proposes to exclude from
the federal budget roughly $1.4 trillion in health care
spending over the next five years (as estimated by a recent
Lewin-VHI study) that would be subject to federal control.
Over $100 billion of this spending would be from firms that
do not now insure their workers. When expenditures of this
magnitude are excluded, how seriously will anyone take
federal budget controls in the future?
The second well-established principle of federal budgeting,
again from President Johnson's commission, is that
collections arising from the sovereign power or the
government, involving regulations or compulsion, should be
reported as receipts.
The Clinton health care plan would require the regional
health alliances to administer the collection of compulsory
social insurance premiums and use those proceeds to finance
the purchase of medical care. Employer payments are
compulsory; no one can choose not to participate. The
employer's payment to the regional alliance is determined by
a formula based on the ``class of family enrollment'' in the
firm. A limit would be set on the employer's premium payments
not to exceed 7.9 percent of total wages. The alliances would
also be given the authority to borrow money from the
Treasury, should benefits and receipts not match at certain
times. (The image of ``private'' savings and loan
associations with federal guarantees haunts my budgetary
memory!) But none of these transactions would be reflected on
the federal books, presumably on the argument that the
alliances are ``not federal entities.''
It is true that most employers currently provide health
insurance to their employees and, if the plan works as the
administration hopes, they will save somewhat less than $1
billion as a group over the next five years. But even if
those savings are realized on average, the companies and
their employees will lose the control over costs and benefit
choices that they now have under current private employer-
employee voluntary agreements or independently negotiated
business-labor contracts. Except for very large firms, and
then with some limitations, responsibility for determining
benefits and monitoring costs and quality, would be
transferred to the health alliances.
As for employers who do not now provide health insurance to
their workers, they would have to make payments of more than
$100 billion over the next five years to these ``non-federal
alliances.'' Those employers will not be persuaded that these
are not new federal payroll taxes--nor should the public be.
The basic tenet underlying the budgetary principles that
the administration's health plan would violate is that unless
the budget includes all sources of federal revenues and all
types of federally controlled spending--and any gap between
the two--there is no way of measuring the overall impact of
federal activity on the economy. For that reason, when the
Social Security and unemployment programs were created in
1935, the mandatory employer and employee ``contributions''
that financed them were correctly counted as federal
receipts. Thus, the budget identifies for all who want to
know how much the federal government is extracting from the
economy and allocating to those two major social programs.
More recently, Congress bailed out health benefit funds for
certain coal miners in part by mandating that coal companies
pay premiums to two new privately managed funds. Although the
mechanism employed was defined as a private, multi-employer
benefit plan, because this is actually a federal program
compelled by the government's sovereign power it is included
in the federal budget. President Clinton's health care
financing mechanism is virtually identical. The fact that
employer premiums flow to a regional health alliance and not
the U.S. Treasury is no justification for removing them from
the federal books.
As a very simple practical matter, imagine what would
happen if the Clinton health care plan were ``off-budget.''
Congress could raise the 7.9 percent cap on the employer
payroll tax and never show it as a tax increase--in fact, it
would be recorded as a spending cut because it would reduce
the ``on-budget'' federal subsidy payments to the alliances.
Further, Congress could include new health benefits in the
mandated standard insurance plan and those new costs would be
excluded from the budget. Private resources extracted for
public purposes need to be accounted! If that principle is
violated, even for the politically popular objective of
reforming the nation's health care system, the costs will not
only be measured in dollars but in the ability to govern
effectively.
____________________