The Budgetary Fix We're In

WASHINGTON -- The capital's dysfunction has its unfortunate exceptions. Gridlock yields to interests powerful enough to trump habits of obstruction. The result is compromise of a peculiarly distasteful variety -- bipartisanship in the form of can-kicking, budgetary obfuscation and unaffordable generosity to those with the best-connected lobbyists.

One such example was on display last week as lawmakers neared agreement on the so-called "doc fix," the perennial problem created by an overambitious Clinton-era attempt to rein in Medicare spending.

A second is looming in the form of another perennial debate on "tax extenders," the near-automatic process by which hundreds of billions of dollars in tax breaks, some of them supposedly temporary, are renewed at the behest of the businesses who rely on them.

The Medicare issue stems from the move in 1997 to adopt a "sustainable growth rate" for Medicare reimbursements to physicians. The notion was to save money -- or at least, to slow down the system's exploding costs -- by decreeing that total spending could not exceed specified amounts.

You can guess what happened next. When the cuts triggered by the sustainable growth rate turned out to be unsustainable, Congress responded by averting them. Lawmakers understand: There is no voter so furious as one whose Medicare, or her Medicare-accepting doctor, is about to be messed with.

Beginning in 2003, the "doc fix" became a ritual as predictable as the cherry blossoms. Indeed, with the underlying formula unchanged, the magnitude of threatened cuts has become larger, and more unimaginable (24 percent in 2014), with each passing year.

This year could have been different. Medicare costs have dramatically slowed, significantly reducing the price -- more important in Washington, the officially scored price -- of a permanent fix. The Congressional Budget Office estimated in February that the cost would be $115 billion over 10 years, nearly a third of the estimate just two years earlier.

So the responsible approach, instead of applying a 17th Band-Aid to a broken system, would have been to ditch the sustainable growth rate, replace it with something more realistic, and pay for the difference with smaller-scale tweaks.

Lawmakers flirted with such a long-term fix but doubled down on irresponsibility. They not only applied a one-year patch, they used budgetary prestidigitation to make some of the cost disappear, by crediting themselves now with savings a decade away. Money saved -- in theory -- more than 10 years down the road gets used to pay for real costs today. Voila! Problem solved.

Next up, tax extenders, the grab bag of corporate tax breaks too popular to repeal but too costly to build into the permanent cost of the tax code. This is spending by another name, and a lot of it: $47 billion for a one-year extension, according to the Joint Committee on Taxation, $693 billion for the entire decade.

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