President's Budget

Here I repost Friday's post about he harm of short term deficit reduction in the absence of longer term policy attempts to address these issues.

The President's budget does not contain broad tax reform or long range entitlement reform proposals that were recommended by the Debt Commission, and his OMB director says that those are separate discussions. It does reduce the deficit by $1.1 Trillion over the next decade, it just doesn't address the long range drivers of our structural deficit (and neither do Republicans appear ready). This is disappointing. Here is a round up of comments on the budget from Kaiser Health News. Update: Ezra Klein with lots of links. Update 2: here is the actual budget.

The budget does offer a 2 year doc fix, meaning it identifies cuts to Medicare and Medicaid to forestall planned payment cuts to physician fees over the same time, basically arguing that not cutting physician payments is a higher priority. The cuts come mostly from reduced subsidies by Medicare to teaching hospitals ($60 Billion) for Graduate Medical Education, reduced payments to hospitals to compensate for when patients don't pay co-pays and deductibles ($23 Billion), and slow of the growth of home health updates ($9 Billion. This is the most responsible dealing with the so-called 'Doc Fix debacle' since 1997. A completely redone payment approach is needed. Also, if such cuts are followed through on next year year, it will give credence to the ability to see through reductions in planned Medicare spending. Even though these acts are politically hard, they are nothing compared to what it will take for a long range balanced budget.

Hopefully, the bipartisan discussions in the Senate on tax reform and a broader consideration of the debt commission proposals will take root, but I had hoped the President would wade in more clearly on what he wants in the way of long range entitlement and tax reform. If we don't get around to this fundamental discussion, we are headed for our fourth straight election in which one side is looking for a large victory by simply arguing I am not as bad as the other guy.

Update, 9:00pm: word of a secret deal in the works....a grand deal is what it will take but it seems far fetched. I hope I am wrong.