The repeal of the estate tax in 2010 followed by the reversion to a $1 million exemption amount has led many policy makers to seek changes to current law. The House-passed legislation (H.R. 4154) would permanently retain the estate and gift taxes at the parameters in place for 2009. In its August 2009 report Budget Options, Volume 2, CBO discussed a number of other options for modifying estate and gift taxes, including permanently extending the law in effect in 2009 (but unlike H.R. 4154, adjusting the exemption amounts for the estate and GST taxes for inflation) and permanently repealing the estate tax. The brief discusses those options, as well as an option to replace the estate tax with an inheritance tax. Adopting one of those options for modifying estate and gift taxes would reduce federal revenues by amounts ranging from $234 billion to more than $500 billion over the 2010-2019 period, according to estimates by the staff of the Joint Committee on Taxation.
Tuesday, December 22, 2009
Policy Options for Changing the Taxation of Wealth Transfers
CBO on Health Care Reform
The legislation would establish an Independent Payment Advisory Board, which would be required, under certain circumstances, to recommend changes to the Medicare program to limit the rate of growth in that program’s spending. Those recommendations would go into effect automatically unless blocked by subsequent legislative action. In its original estimate, CBO wrote that: “Such recommendations would be required if the Chief Actuary for the Medicare program projected that the program’s spending per beneficiary would grow more rapidly than a measure of inflation (the average of the growth rates of the consumer price index for medical services and the overall index for all urban consumers).” That statement is correct for fiscal years 2015 through 2019. After 2019, however, the threshold for Medicare spending growth that would trigger recommendations for spending reductions would be higher—specifically, the rate of increase in gross domestic product (GDP) per capita plus 1 percentage point.
With this corrected reading, savings from changes to the Medicare program (along with other changes to direct spending that are not associated directly with expanded insurance coverage) would increase at a rate that is between 10 percent and 15 percent per year during the 2020–2029 period, compared with a growth rate of nearly 15 percent reported in the initial estimate. The long-run budgetary effects of the other broad categories of the legislation are unchanged from the initial estimate. All told, CBO expects that the legislation, if enacted, would reduce federal budget deficits over the decade after 2019 relative to those projected under current law—with a total effect during that decade that is in a broad range between one-quarter percent and one-half percent of GDP. In comparison, the extrapolations in the initial estimate implied a reduction in deficits in the 2020–2029 period that would be in a broad range around one-half percent of GDP. The imprecision of these calculations reflects the even greater degree of uncertainty that attends to them, compared with CBO’s 10-year budget estimates. The expected reduction in deficits would represent a small share of the total deficits that would be likely to arise in that decade under current policies.
Based on this extrapolation, CBO expects that Medicare spending under the legislation would increase at an average annual rate of roughly 6 percent during the next two decades—well below the roughly 8 percent annual growth rate of the past two decades (excluding the effect of establishing the Medicare prescription drug benefit). Adjusting for inflation, Medicare spending per beneficiary under the legislation would increase at an average annual rate of roughly 2 percent during the next two decades—well below the roughly 4 percent annual growth rate of the past two decades. It is unclear whether such a reduction in the growth rate could be achieved, and if so, whether it would be accomplished through greater efficiencies in the delivery of health care or would reduce access to care or diminish the quality of care.
quote for the day...
The Senate Finance Committee overwhelmingly voted to approve Federal Reserve Board Chairman Ben Bernanke for another 4-year term. This is a remarkable event since it is hard to imagine how Bernanke could have performed worse in his last 4-year term. By Bernanke's own assessment, his policies brought the economy to the brink of another Great Depression. This sort of performance in any other job would get you fired in a second, but for the most important economic policymaker in the country it gets you high praise and another 4-year term. --Dean Baker
What you say in front of the children
Brian Leiter digs into the moral responsibility of intellectuals in response to Nagels nonsense on Intelligent Design.
Political philosopher Chris Bertram (Bristol) jumps in:
We live in a highly politicized world and a highly mediatized one, and one where almost any remark is liable to be reproduced and circulated for bad purposes on the internet. Philosophers often discuss topics in terms, and using examples, that could sound really bad if turned into a sound bite. Should we therefore cease debating cannibalism, the morality of torture, the fundamental equality (or not) of human beings, whether old people should be left to suffer and die because younger and fitter people would use the resources better, euthanasia and abortion? The latter two examples are expecially pertinent because there is a well-known philosopher, of similar rank to Nagel, whose remarks have been seized upon by "culture wars"" lobbyists. Back in 2004, I posted at CT , deploring a review published in PPA that attacked ``left libertarians'' on the grounds that, by endorsing the idea of self-ownership, '' they may well give up more than they bargain for in the public relations battle for the hearts and minds of those in the murky center of American politics.''
a note to talking heads... America with and without health care reform...
Rather than "Debate" talking heads and political leaders who long ago decide they didn't want a debate on health care reform...
Why don't you just put this chart up and say nothing during your 2 min retort... you can do this from home you don't even have to come into the office...
Via Think Progress
Healthcare Reform
New York Times Editorial on the senate bill:
There is a lot to like in the bill. The Congressional Budget Office estimates that it would cover more than 30 million of the uninsured and would, by 2019, result in 94 percent of all citizens and legal residents below Medicare age having health insurance. That is a big improvement from the current 83 percent.
It also estimates that the bill would reduce deficits over the next decade by $132 billion and even more in the following decade. Despite all the exaggerated Republican rhetoric that the bill will lead to fiscal disaster, it has been carefully and responsibly drafted so that it is fully paid for without busting future budgets.
Important elements of the bill have been strengthened during the struggle. An independent board and other new entities would be given greater powers than previously planned to test and implement cost-saving measures free of political lobbying. Tax credits to help small businesses buy coverage have been expanded.
Insurance companies will be deterred from jacking up premiums just before the reforms take effect, prohibited from imposing lifetime limits on benefits and annual limits will be tightly restricted. Insurers will also be required to spend more on medical care and less on administrative costs and profits than they currently do.
The two big concessions that were made in the Senate were unfortunate, but not fatal. The original bill would have created a new public plan to compete with private ones. That was replaced with a likely weaker alternative: a couple of private plans that would be supervised by an obscure government agency that administers heath benefits for federal employees. The reform package should include a public plan, but the absence of one is not a good reason to vote against the bill.
The Senate flirted briefly with a proposal to allow people ages 55 to 64 to buy into the Medicare program to create competition to private plans on new insurance exchanges. The buy-in idea was intriguing, but it was never vetted carefully enough to analyze how it would work in conjunction with other reforms. Its elimination does not make the bill worth opposing.
In another concession, the Senate bill would allow states to ban the coverage of abortions by health plans sold on the new exchanges. Those exchanges will allow people who buy health insurance to choose from an array of private plans, with subsidies provided to help low- and middle-income people pay the premiums.
This amounts to deplorable interference by state governments into decisions that should be made by a woman and her doctor — and abortion rights groups are right to object. The implacable Republican opposition to reform, and obstruction from a handful of Democrats, have made this bill less effective and less fair than it might have been. Still, the United States Senate has a chance this week to get past the bickering and haggling that have robbed it of Americans’ trust and pass a historic piece of legislation.
Rep. Parker Griffith joins Republican Party
In substantive terms, I'm not particularly surprised that Rep. Parker Griffith, a freshman Democrat from Alabama, is joining the Republicans. Barack Obama got 37 percent in Griffith's district, and Griffith himself voted against the budget, the stimulus, cap and trade, financial regulation, heath-care reform, and talked about voting against making Nancy Pelosi speaker. When you've got a guy from a Republican district who votes like a Republican and is facing an election where Republicans are likely to win back marginal seats, it's not that difficult to predict what's about to happen.But the optics of these things are bad for Democrats, and it's more evidence that 2010 is going to be a Republican year. More specifically for health-care reform, Griffith is a radiation oncologist, and the GOP is going to use his switch to whip up a doctors-against-health-care story. That might work, but only because the media isn't always that bright. Last night, the American Medical Association -- which is the largest doctor's association -- endorsed the Senate bill. The most recent major poll I've seen of doctors was released by the Robert Woods Johnson Foundation in September, and it showed that doctors not only support health-care reform, but they also support its more liberal ideas, like the public option and Medicare buy-in.
Say what you will about Griffith, but a freshman congressman from Alabama who's terrified about his reelection is not really a representative sample of the medical community.
If you are like me and don't like some of the backroom deals in ObamaCare...
Thank Republicans who refused to join fiscal conservatives to push through the most bang for your buck health care reform and decided to lie, stall, and do anything to get in the way. Watching 45,000 Americans die every year is unacceptable...this bill is a first step. Now, the first step after passing health care reform is to reform the health care system.
Senate Democrats defend backroom deals
Senate Democrats defend backroom deals
The final vote on whether to pass the bill takes place on Thursday at 7pm, when Democrats will need all of their 58 and the two independent votes to reach the 60 required to pass the 100-seat Senate.
Although the bill’s passage is not yet guaranteed, all of the pieces are in place for Democrats to pass the bill after Mr Reid secured the support of the last wavering centrist, Ben Nelson of Nebraska.
“There are 100 senators here and I don’t know that there’s a senator that doesn’t have something in this bill that isn’t important to them,” Mr Reid told reporters amid mounting criticism of the sweetheart deals needed to win 60 votes. “That’s what legislating is all about; it’s the art of compromise.”
Mr Nelson wanted tougher restrictions on abortion funding in the bill, but after days of wrangling, agreed to support the bill in return for the federal government permanently funding Nebraska’s bill for Medicaid, the insurance plan for the poor, worth about $45m in its first 10 years.
Mary Landrieu of Louisiana also won about $300m in support for Medicaid for her state, and Vermont and Massachusetts will also receive additional funding.
Bernie Sanders, the independent from Vermont and the most liberal of senators, obtained $10bn for community health centres after failing to get a government-backed public health insurance scheme in the bill.
The White House, which is insisting the reform bill must pass in almost any form, also defended the horse-trading.
David Axelrod, a senior White House adviser, had earlier said that provisions benefiting specific states, such as Nebraska, were a natural part of the legislative process.
“Every senator uses whatever leverage they have to help their states,” Mr Axelrod told on Sunday. “That’s the way it has been. That’s the way it will always be.”
Tempers are fraying on Capitol Hill as the bill moves towards the Thursday night vote, with Republicans threatening to continue using stalling tactics.
But in a boost for Democrats, the American Medical Association, the US’s largest physician group, on Monday endorsed the Senate bill.
“All Americans deserve affordable, high-quality health coverage so they can get the medical care they need — and this bill advances many of our priority issues for achieving the vision of a health system that works for patients and physicians,” said Cecil Wilson, the AMA’s president-elect.
US healthcare debate enters final stages
Financial Times:
Making legislation, like making sausages, is not a pretty process to watch.
That has become clear in Washington in the past few days as Democrats have hustled to push a sweeping healthcare reform bill through the Senate before Christmas, and Republicans have vowed to do everything they can to stop it.
With middle-of-the-night votes in snowstorms and a schedule that will see some senators and many staffers miss holiday flights home, tempers are running high on Capitol Hill this week.
“This [Senate] is about as polarised as I can remember,” Democrat Ron Wyden of Oregon, who has served since 1996, told the Politico website.
Democrats are on the brink of passing healthcare reform after clearing a key hurdle in the early hours of Monday morning, when they voted 60-40 along party lines to close debate on a bill that will extend coverage to 31m uninsured Americans.
“The United States Senate knocked down a filibuster aimed at blocking a final vote on healthcare reform, and scored a big victory for the American people,” Barack Obama, the president who had vowed to bring a more bipartisan spirit to Washington, said after the vote.
He added: “By standing up to the special interests – who’ve prevented reform for decades and who are furiously lobbying against it now – the Senate has moved us closer to reform that makes a tremendous difference for families, for seniors, for businesses, and for the country as a whole.”
The Senate is essentially playing a waiting game. Procedural votes will take place on Tuesday morning, when a simple majority will vote to approve the healthcare package, and then at 1pm on Wednesday, according to rules that stipulate there must be 30 hours available for debating between votes.
The final vote on whether to pass the bill will take place on Thursday at 7pm, when Democrats will need all of their 58 and the two independent votes to reach the 60 required to pass the 100-seat Senate.
This requires almost military discipline from Democratic leaders, who even had to wheel out Robert Byrd, the ailing 92-year-old senator from West Virginia in a blizzard on Saturday.
Republicans, incensed at what they call a government takeover of healthcare have criticised these “dead of night” manoeuvres, but the debate became nastier when Tom Coburn of Oklahoma on Sunday said: “What the American people should pray is that somebody can’t make the vote.”
"Health-reform debate pushes Congress further toward a parliamentary system"
Tempers are apparently fraying a bit in the Senate chambers, with Democrats and Republicans growing increasingly angry and resentful at each other.
That’s probably a good thing. Maybe it will strip away some of that self-serving baloney about the collegial Senate and esteemed colleagues and the Senate being the world’s greatest deliberative body. Because if it was ever true, it’s not anymore and perhaps never will be again.
For better or worse, the Republicans have forced that change. The modern GOP has adopted a strictly parliamentary approach to important legislation, voting as a bloc and sternly enforcing party discipline to a degree unknown in recent American history. In the House, for example, Republicans voted 176-1 against health-insurance reform. In the Senate, the final vote will be 40-0 against reform. There can be no deliberation or give and take in such an approach; there’s no negotiation or compromise. It is pure power politics, and events of the last few weeks may have finally enlightened congressional Democrats about what that really means.
If so, that enlightenment has been a long time coming. Back in 1993, no Republican in either the House or Senate voted to support a tax-increase package that President Clinton said was needed to cut the deficit and restore fiscal confidence. Republican congressional leaders predicted economic calamity as a result of the tax hike on the wealthiest 1 percent of Americans. Newt Gingrich, to cite just one example, claimed the bill would lead to a recession and increase the deficit.
Instead, the economy took off and the federal budget was balanced a few years later.
Later, House Speaker Dennis Hastert tried to institutionalize that trend. He had a personal rule against allowing a bill to come to the floor unless it had majority support from within the GOP caucus. In other words, a bill that might pass easily thanks to a coalition of GOP and Democratic votes would not be given a chance to pass unless it first drew a majority of Republicans. The GOP caucus in effect became a Congress inside the Congress.
In the Senate, Republicans have forced the same change on their Democratic colleagues. By refusing to negotiate, the GOP in effect took itself out of play in the health-reform debate and forced the Democratic caucus to negotiate only with itself. They succeeded in drawing a stark line between the two parties on the issue, which some will no doubt count as a success. However, the final package is also more liberal than it would have been had conservatives been willing to compromise.
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