[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.

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