Four Big Problems with the Obama Administration’s Climate Change Regulations

A few years ago, cap-and-trade legislation to reduce greenhouse gas emissions failed to reach President Barack Obama’s desk because constituents gave their Members an earful that cap and trade would amount to a massive energy tax. When the bill died in Congress, President Obama said that there was more than “one way of skinning a cat,” and here it is.[1]

The Obama Administration has finalized its climate regulations known as the Clean Power Plan. There are plenty of details to uncover in the 1,560-page regulation,[2] the 755-page federal implementation plan,[3] and the 343-page regulatory impact analysis.[4] To summarize, unelected bureaucrats at the Environmental Protection Agency (EPA) are poised to do what America’s elected representatives refused: impose higher energy costs on American families and businesses for meaningless climate benefits.

The following are four early observations that should cause Members of Congress, state politicians, and the general public concern.

1. Higher Energy Prices, Lost Jobs, Weaker Economy

When running for office in 2008, President Obama famously remarked, “Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket.”[5] Although that plan ultimately failed to become law, the White House tasked the EPA with creating the regulatory equivalent, placing strict greenhouse gas emissions limits on new power plants and drastic cuts on existing plants. The plan includes greenhouse gas emission reduction targets for each state except for Vermont, Alaska, and Hawaii in hopes of reducing overall power plant emissions to 32 percent below 2005 levels by 2030.

The regulations will drastically shift the energy economy away from coal, which provides approximately 40 percent of America’s electricity.[6] Restricting the use of that affordable, reliable energy supply will raise electricity rates, and those higher prices will reverberate through the economy. Businesses will pass higher costs onto consumers, but if a company must absorb the higher costs, it will invest less and expand less. The combination of reduced production and consumption will result in fewer jobs and a weaker economy.[7]

Despite candidate Barack Obama’s admission that cap and trade will raise prices, the Administration is attempting to spin the regulations as a win for the economy. Proponents of the Clean Power Plan argue that as energy prices increase, families and businesses will invest in more energy-efficient products and innovative technologies that will save them money in the long run. Arguing that increasing energy prices with regulations will save money by forcing energy-efficient product purchases is equivalent to cutting employees’ salaries and telling them that they will save money by shopping at Target. Just as the option to save money at Target existed before the pay cut, families and businesses already have an incentive to purchase energy-efficient products. When the government mandates efficiency, it removes that choice and makes consumers worse off.

2. No Climate Benefit, Exaggerated Environmental Benefits

The climate impact of the Clean Power Plan will be meaningless. According to climatologist Paul Knappenberger, “Even if we implement the Clean Power Plan to perfection, the amount of climate change averted over the course of this century amounts to about 0.02 C. This is so small as to be scientifically undetectable and environmentally insignificant.”[8] Climatologist James Hansen, who wants the Administration to do much more to combat climate change, has stated that “the actions are practically worthless.”[9]

The monetized climate benefits the Administration is touting are equally worthless. The EPA says the rule will provide $34 billion to $54 billion in annual environmental benefits after 2030. Yet these numbers are misleading for two reasons.

Social Cost of Carbon. First, the Administration uses “the social cost of carbon” to calculate the climate benefit. The EPA is using three statistical models, known as integrated assessment models, to estimate the value of the social cost of carbon, which is defined as the economic damage that one ton of carbon dioxide emitted today will cause over the next 300 years. The EPA uses the average of the three models to estimate the social cost imposed by climate change—$40 in 2015 and $56 in 2030. However, the models arbitrarily derive a value for the social cost of carbon.[10] Subjecting the models to reasonable inputs for climate sensitivity and discount rates dramatically lowers the figure for the social cost of carbon.

People generally prefer benefits earlier instead of later and costs later instead of earlier. Hence, it is necessary to normalize costs and benefits to a common time. For example, if a 7 percent discount rate makes people indifferent to a benefit now versus a benefit later (e.g., $100 today versus $107 a year from now), then 7 percent is the appropriate discount rate to use. The Administration’s own analysis shows how sensitive the social cost of carbon is to the discount rate.[11] When changed from a 3 percent discount rate to a 5 percent discount rate, the EPA’s $20 billion in projected climate benefits decreases to $6.4 billion—less than the EPA’s egregiously low projection of $8.4 billion in compliance costs.

Co-benefits. The second problem is the EPA’s use of co-benefits in inflating the benefits. The EPA exaggerates the environmental benefits by including the estimated benefits from reducing particulates (co-benefits) that are already covered by existing regulations and federal health requirements. Of those benefits, $20 billion come from direct climate benefits, and $14 billion to $34 billion are air quality co-benefits. Co-benefits sound positive. Who would not want additional health and environmental benefits from regulations?

The problem is that these benefits are double-counted over and over again with each regulation the federal government imposes. In some instances the co-benefits have accounted for more than 99 percent of the EPA’s estimated environmental benefits. The agency even overestimates the co-benefits by using questionable assumptions about causality and simplistic methods to calculate the benefits.[12]

3. Overly Prescriptive EPA Picks Winners and Losers

The EPA has been arguing that the plan will provide the states with plenty of flexibility and options in meeting its goal. It proposed that states use a combination of “building blocks” to achieve emissions reductions, including improving the efficiency of existing coal-fired power plants, switching from coal-fired power plants to natural gas–fired power plants, and using less carbon-intensive generating power, such as renewable energy or nuclear power. The proposed plan contained a fourth building block, demand-side energy-efficiency measures, but the EPA excluded that building block in calculating the state emission reduction targets. However, states can still implement energy-efficiency measures as a compliance option. The EPA would also allow states to impose a carbon tax or participate in regional cap-and-trade programs.[13]

All of these options present a Sophie’s choice of economic pain, reduced choice, and regulatory engineering of America’s energy economy. Although the EPA does not explicitly direct the states which path to take, the federal government is clearly nudging them to choose expanded renewables and energy efficiency. If a state chooses to produce more renewable power or implement more stringent energy-efficient mandates for homes and businesses, it will receive extra credits toward meeting its emissions targets.

Coal is an obvious loser, but the final regulation also changed language that would have been beneficial for nuclear and natural gas. In the draft proposal, states would have received credit for prolonging the life of an existing nuclear reactor that was at risk of closing. In the final regulation, that is no longer the case. The White House also ignored the importance and increased use of natural gas, a reversal from highlighting the importance of natural gas in shifting away from coal.[14]

Rather than simply setting reduction targets, the Administration continues to favor its preferred energy sources while driving other sources out of production.

4. Federally Imposed Cap-and-Trade

States will have one year to develop and submit their compliance plans or to develop regional plans with other states, although the EPA will grant extension waivers as long as two years. If states choose not to submit a plan, as several state legislators, attorneys general, and governors have suggested, the EPA would impose its federal implementation plan. The 755-page proposed plan is cap and trade, and the EPA is considering two options.[15]

The EPA could set a cap on power plant emissions in a state and allow utilities to trade emissions permits with one another.[16] Alternatively, the EPA could implement a cap-and-trade plan that requires an average emissions rate for the state’s power sector. Environment & Energy Publishing explains,

A rate-based standard with trading could technically allow emissions to grow, as long as generators only emit a certain amount of carbon per megawatt-hour of power produced. A state with a rate around the same level as a natural gas plant could theoretically keep building more and more natural gas plants and stay in compliance.[17]

The EPA will decide on a final plan in the summer of 2016.

Congress and States Need to Take the Power Back

The threat of a federally imposed cap-and-trade plan should not scare states into concocting their own plans. Instead, Members of Congress and state governments should fight the regulation, rather than settling for a slightly more palatable version that will cause significant economic harm while producing no discernable climate or environmental benefits.

—Nicolas D. Loris is Herbert and Joyce Morgan Fellow in the Thomas A. Roe Institute for Economic Policy Studies, of the Institute for Economic Freedom and Opportunity, at The Heritage Foundation.

Via: Heritage Foundation

Continue Reading.....

Four Big Problems with the Obama Administration’s Climate Change Regulations

A few years ago, cap-and-trade legislation to reduce greenhouse gas emissions failed to reach President Barack Obama’s desk because constituents gave their Members an earful that cap and trade would amount to a massive energy tax. When the bill died in Congress, President Obama said that there was more than “one way of skinning a cat,” and here it is.[1]

The Obama Administration has finalized its climate regulations known as the Clean Power Plan. There are plenty of details to uncover in the 1,560-page regulation,[2] the 755-page federal implementation plan,[3] and the 343-page regulatory impact analysis.[4] To summarize, unelected bureaucrats at the Environmental Protection Agency (EPA) are poised to do what America’s elected representatives refused: impose higher energy costs on American families and businesses for meaningless climate benefits.

The following are four early observations that should cause Members of Congress, state politicians, and the general public concern.

1. Higher Energy Prices, Lost Jobs, Weaker Economy

When running for office in 2008, President Obama famously remarked, “Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket.”[5] Although that plan ultimately failed to become law, the White House tasked the EPA with creating the regulatory equivalent, placing strict greenhouse gas emissions limits on new power plants and drastic cuts on existing plants. The plan includes greenhouse gas emission reduction targets for each state except for Vermont, Alaska, and Hawaii in hopes of reducing overall power plant emissions to 32 percent below 2005 levels by 2030.

The regulations will drastically shift the energy economy away from coal, which provides approximately 40 percent of America’s electricity.[6] Restricting the use of that affordable, reliable energy supply will raise electricity rates, and those higher prices will reverberate through the economy. Businesses will pass higher costs onto consumers, but if a company must absorb the higher costs, it will invest less and expand less. The combination of reduced production and consumption will result in fewer jobs and a weaker economy.[7]

Despite candidate Barack Obama’s admission that cap and trade will raise prices, the Administration is attempting to spin the regulations as a win for the economy. Proponents of the Clean Power Plan argue that as energy prices increase, families and businesses will invest in more energy-efficient products and innovative technologies that will save them money in the long run. Arguing that increasing energy prices with regulations will save money by forcing energy-efficient product purchases is equivalent to cutting employees’ salaries and telling them that they will save money by shopping at Target. Just as the option to save money at Target existed before the pay cut, families and businesses already have an incentive to purchase energy-efficient products. When the government mandates efficiency, it removes that choice and makes consumers worse off.

2. No Climate Benefit, Exaggerated Environmental Benefits

The climate impact of the Clean Power Plan will be meaningless. According to climatologist Paul Knappenberger, “Even if we implement the Clean Power Plan to perfection, the amount of climate change averted over the course of this century amounts to about 0.02 C. This is so small as to be scientifically undetectable and environmentally insignificant.”[8] Climatologist James Hansen, who wants the Administration to do much more to combat climate change, has stated that “the actions are practically worthless.”[9]

The monetized climate benefits the Administration is touting are equally worthless. The EPA says the rule will provide $34 billion to $54 billion in annual environmental benefits after 2030. Yet these numbers are misleading for two reasons.

Social Cost of Carbon. First, the Administration uses “the social cost of carbon” to calculate the climate benefit. The EPA is using three statistical models, known as integrated assessment models, to estimate the value of the social cost of carbon, which is defined as the economic damage that one ton of carbon dioxide emitted today will cause over the next 300 years. The EPA uses the average of the three models to estimate the social cost imposed by climate change—$40 in 2015 and $56 in 2030. However, the models arbitrarily derive a value for the social cost of carbon.[10] Subjecting the models to reasonable inputs for climate sensitivity and discount rates dramatically lowers the figure for the social cost of carbon.

People generally prefer benefits earlier instead of later and costs later instead of earlier. Hence, it is necessary to normalize costs and benefits to a common time. For example, if a 7 percent discount rate makes people indifferent to a benefit now versus a benefit later (e.g., $100 today versus $107 a year from now), then 7 percent is the appropriate discount rate to use. The Administration’s own analysis shows how sensitive the social cost of carbon is to the discount rate.[11] When changed from a 3 percent discount rate to a 5 percent discount rate, the EPA’s $20 billion in projected climate benefits decreases to $6.4 billion—less than the EPA’s egregiously low projection of $8.4 billion in compliance costs.

Co-benefits. The second problem is the EPA’s use of co-benefits in inflating the benefits. The EPA exaggerates the environmental benefits by including the estimated benefits from reducing particulates (co-benefits) that are already covered by existing regulations and federal health requirements. Of those benefits, $20 billion come from direct climate benefits, and $14 billion to $34 billion are air quality co-benefits. Co-benefits sound positive. Who would not want additional health and environmental benefits from regulations?

The problem is that these benefits are double-counted over and over again with each regulation the federal government imposes. In some instances the co-benefits have accounted for more than 99 percent of the EPA’s estimated environmental benefits. The agency even overestimates the co-benefits by using questionable assumptions about causality and simplistic methods to calculate the benefits.[12]

3. Overly Prescriptive EPA Picks Winners and Losers

The EPA has been arguing that the plan will provide the states with plenty of flexibility and options in meeting its goal. It proposed that states use a combination of “building blocks” to achieve emissions reductions, including improving the efficiency of existing coal-fired power plants, switching from coal-fired power plants to natural gas–fired power plants, and using less carbon-intensive generating power, such as renewable energy or nuclear power. The proposed plan contained a fourth building block, demand-side energy-efficiency measures, but the EPA excluded that building block in calculating the state emission reduction targets. However, states can still implement energy-efficiency measures as a compliance option. The EPA would also allow states to impose a carbon tax or participate in regional cap-and-trade programs.[13]

All of these options present a Sophie’s choice of economic pain, reduced choice, and regulatory engineering of America’s energy economy. Although the EPA does not explicitly direct the states which path to take, the federal government is clearly nudging them to choose expanded renewables and energy efficiency. If a state chooses to produce more renewable power or implement more stringent energy-efficient mandates for homes and businesses, it will receive extra credits toward meeting its emissions targets.

Coal is an obvious loser, but the final regulation also changed language that would have been beneficial for nuclear and natural gas. In the draft proposal, states would have received credit for prolonging the life of an existing nuclear reactor that was at risk of closing. In the final regulation, that is no longer the case. The White House also ignored the importance and increased use of natural gas, a reversal from highlighting the importance of natural gas in shifting away from coal.[14]

Rather than simply setting reduction targets, the Administration continues to favor its preferred energy sources while driving other sources out of production.

4. Federally Imposed Cap-and-Trade

States will have one year to develop and submit their compliance plans or to develop regional plans with other states, although the EPA will grant extension waivers as long as two years. If states choose not to submit a plan, as several state legislators, attorneys general, and governors have suggested, the EPA would impose its federal implementation plan. The 755-page proposed plan is cap and trade, and the EPA is considering two options.[15]

The EPA could set a cap on power plant emissions in a state and allow utilities to trade emissions permits with one another.[16] Alternatively, the EPA could implement a cap-and-trade plan that requires an average emissions rate for the state’s power sector. Environment & Energy Publishing explains,

A rate-based standard with trading could technically allow emissions to grow, as long as generators only emit a certain amount of carbon per megawatt-hour of power produced. A state with a rate around the same level as a natural gas plant could theoretically keep building more and more natural gas plants and stay in compliance.[17]

The EPA will decide on a final plan in the summer of 2016.

Congress and States Need to Take the Power Back

The threat of a federally imposed cap-and-trade plan should not scare states into concocting their own plans. Instead, Members of Congress and state governments should fight the regulation, rather than settling for a slightly more palatable version that will cause significant economic harm while producing no discernable climate or environmental benefits.

—Nicolas D. Loris is Herbert and Joyce Morgan Fellow in the Thomas A. Roe Institute for Economic Policy Studies, of the Institute for Economic Freedom and Opportunity, at The Heritage Foundation.

Via: Heritage Foundation

Continue Reading.....

Obamacare: An Alarming Checkup

OK, Obamacare. Up on the table. It’s time for your annual physical.

Three years old, eh? Well, with any luck, you’ll leave here with a clean bill of uh-oh. I can see one problem already. Have you seen these tax hikes?

Let’s see — five, 10, 15, 18 tax hikes in all. That hardly seems wise, considering the fragile health of the economy, but there they are.

There’s the tax on individuals who don’t purchase health insurance. That will cost $55 billion over the next decade. I also see a 40 percent excise tax on “Cadillac” health plans costing more than $10,200 for individuals and $27,500 for families. It’ll be $111 billion for that between 2018 and 2022. Several smaller ones, such as limiting the amount people can set aside in their flexible spending accounts: $4.5 billion there from 2011 to 2022.

It all adds up, Obamacare. It’s not healthy.

Hate to tell you this, but it gets worse. See this? That’s the number of people who are going to lose their current health insurance because of you. Not thousands, but 7 million, according to the Congressional Budget Office. This isn’t guesswork; it’s already happening.

Take Universal Orlando, which recentlyannounced that it won’t continue to cover its part-time workers. Why? Not because they’re coldhearted, but because they can’t afford it. Your prohibition of annual benefit limits beginning next year is making Universal’s health plans too expensive. The word is, this will affect about 500 Universal employees.

Or consider the American Veterinary Medical Association in Illinois. “[M]edical coverage will end for some 17,500 association members and thousands of their dependents at year’s end,” the group says in a news release. There are many more to come, from other employers. Ouch.

Wait. Obamacare, didn’t you say that nobody who liked his current plan would lose it? Yes. You promised it, in fact — repeatedly. I’d better note that in your chart.

You may be getting uncomfortable, but we’re not done yet. Over here, there’s another serious problem: You’re hurting hiring — and right at a time when the economy could use all the help it can get to reduce unemployment.

You don’t believe it? Look at the “Beige Book,” a report that the Federal Reserve publishes eight times a year detailing the economic activity in the Fed’s 12 regions. According to its most recent report: “Employers in several districts cited the unknown effects of the Affordable Care Act as reasons for planned layoffs and reluctance to hire more staff.”

“Affordable Care Act.” That’s you.

There’s more. It’s a good thing you’re sitting down. It turns out you’re making it more difficult to access Medicare services.

You can be as skeptical as you want, but this is right from the Congressional Budget Office and Medicare’s own trustees. They’ve shown what you don’t want to admit: You’re raiding Medicare to pay for other new programs.

Payment rates for Medicare Advantage: down $156 billion over the next decade. Home health services: down $66 billion. Hospice services: down $17 billion. The biggest one is hospital services, which you cut by $260 billion. What’s that? No, the cuts do not target medical institutions or organizations suspected of waste, fraud or abuse. Nice try.

Finally, I see that insurance premiums are going to skyrocket under you. It’s those coverage mandates you put in place; they’re the culprit. According to a congressional report by the House Energy and Commerce Committee, some premiums are set to rise in every state. Yes, every state, and not by small amounts. In many states, they’re primed to go up by more than 50 percent; in others, by more than 100 percent. It’s all as a result of changes you’ve introduced.

This despite your claim that your law would “cut the cost of a typical family’s premium by up to $2,500 a year.” That sure isn’t working out, is it?

You can pay the receptionist on your way out. No, I’m afraid we don’t accept that insurance plan anymore.

-Ed Feulner is president of the Heritage Foundation (heritage.org).

First appeared in The Washington Times.

Via: Heritage Foundation

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Social Security: $39 Billion Deficit in 2014, Insolvent by 2035

Abstract

Social Security ran a $39 billion deficit in 2014, closing out five years of consecutive cash-flow deficits as the program’s revenues from the payroll tax and the taxation of benefits are falling short of benefit payments. Absent reform, Social Security benefits will be cut across the board by 23 percent in 2035. Action should be taken today to protect Social Security’s most vulnerable beneficiaries from such drastic cuts without burdening younger generations with massive tax increases or unsustainable debt. Lawmakers should immediately replace the current cost-of-living adjustment with the more accurate chained consumer price index; raise the early and full retirement ages gradually and predictably; phase in a universal, flat benefit; focus Social Security benefits on those who need them most; and enable more Americans to save their money in private retirement accounts.

Social Security’s main program, also known as Old-Age and Survivors Insurance (OASI), ran a $39 billion deficit in 2014, closing out five years of consecutive cash-flow deficits as the program’s unfunded obligations continue to grow.[1] According to the 2015 annual Trustees’ Report, the 75-year unfunded obligation of the Social Security OASI Trust Fund is $9.43 trillion, a $70 billion increase from last year’s unfunded obligation of $9.36 trillion.[2] After including federal debt obligations recorded as assets to the Social Security trust fund of $2.73 trillion, Social Security’s total 75-year unfunded obligation is nearly $12.2 trillion.

The Social Security OASI program is projected to reach insolvency in 2035. This means that the program is expected to have only enough revenue from payroll taxes, interest on the Trust Fund balance, and repayment of borrowed Trust Fund dollars to pay out scheduled benefits until 2035. This is one year later than projected in last year’s report.[3]

If no action is taken to improve Social Security’s solvency before its Trust Fund runs dry, benefits will either be delayed or reduced across the board by 23 percent. Congress should avoid indiscriminate benefit cuts which would harm the most vulnerable beneficiaries the most by adopting commonsense reforms that modernize the outdated Social Security program.

Social Security Is Already Adding to the Deficit

While Social Security’s OASI program is considered to be solvent on paper through 2035, Social Security’s cash-flow deficit is already adding to the federal budget deficit.

Since 2010, the OASI program has taken in less money from payroll tax revenues and the taxation of benefits than it pays out in benefits, generating cash-flow deficits. The 2014 cash-flow deficit was $39 billion. Over the next 10 years, the OASI program’s cumulative cash-flow deficit will amount to $840 billion, according to the trustees’ intermediate assumptions. For as long as the federal government is running deficits in excess of Social Security’s cash-flow deficits, we can assume that this $840 billion shortfall will be matched dollar for dollar by an increase in the public debt.

Social Security’s cash-flow deficits add to the public debt because, in order to pay full Social Security benefits, the Treasury Department has to raise cash in excess of what it receives from the payroll tax and the taxation of benefits. Cash-flow deficits mean that the Treasury can no longer pay all Social Security benefits from the program’s tax income alone. Instead, Treasury must produce additional cash from taxes or borrowing. With annual federal deficits in excess of Social Security’s cash-flow deficit, the OASI program is already adding to the deficit.

Since 2010, the OASI program has taken in less money from payroll tax revenues and the taxation of benefits than it pays out in benefits, generating cash-flow deficits. The 2014 cash-flow deficit was $39 billion. Over the next 10 years, the OASI program’s cumulative cash-flow deficit will amount to $840 billion, according to the trustees’ intermediate assumptions. For as long as the federal government is running deficits in excess of Social Security’s cash-flow deficits, we can assume that this $840 billion shortfall will be matched dollar for dollar by an increase in the public debt.

Social Security’s cash-flow deficits add to the public debt because, in order to pay full Social Security benefits, the Treasury Department has to raise cash in excess of what it receives from the payroll tax and the taxation of benefits. Cash-flow deficits mean that the Treasury can no longer pay all Social Security benefits from the program’s tax income alone. Instead, Treasury must produce additional cash from taxes or borrowing. With annual federal deficits in excess of Social Security’s cash-flow deficit, the OASI program is already adding to the deficit.

What About the Trust Fund?

In the past, when Social Security ran cash-flow surpluses, the federal government spent those surpluses on other federal spending, and in return, the Treasury credited Social Security’s Trust Fund with special-issue government securities. Although this $2.73 trillion in securities is not counted in the total amount of debt held by the public, it represents real debt that will have to be repaid over the coming decades, unless Congress changes current law.[4]

The Social Security Trust Fund represents legitimate repayments plus interest, but this distinction has no bearing on the federal budget’s bottom line. Congress spent all the excess revenues when Social Security was running surpluses, and now repaying those revenues is adding to deficits. As Chart 1 shows, shortfalls in Social Security’s programs represent a considerable portion of current and future deficits.

 

Nevertheless, Congress may change current law at any time, including by eliminating the Social Security Trust Fund. Funds earmarked for OASI through its Trust Fund do not represent accrued property rights, even though these funds come from taxing workers’ wages. Congress’s authority to modify the Social Security program was affirmed in the 1960 Supreme Court decision in Flemming v. Nestor, wherein the Court held that individuals do not have a “property right” to their Social Security benefits, regardless of how many years they paid payroll taxes.[5]

Via: Heritage Foundation

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50 Years of Dysfunction: The Failures of Medicare and Medicaid

Fifty years ago, on July 30, 1965, President Lyndon B. Johnson signed legislation creating the nation’s two largest federal health entitlements, Medicare and Medicaid.

Medicare was created as a social insurance program for seniors and those with disabilities. It is financed primarily by payroll taxes collected during a recipients working life, and secondarily by personal and business income taxes.

Medicaid was designed as a welfare program to provide health care services to vulnerable low income groups. Medicaid is jointly financed by federal and state governments.

>>> On Thursday, the Heritage Foundation and the American Enterprise Institute are hosting an event with leading experts to reflect on the past 50 years and look ahead to the next. Details here.

Unfortunately at the age of 50, both Medicare and Medicaid continue to suffer from problems inherent to their structure and organization.

For example both programs:

• Limit choice
• Are overly bureaucratic and slow to change
• Suffer from crucial gaps in coverage and inefficient pricing
• Are plagued with losses through waste, fraud and abuse

Medicare is the largest purchaser of health care in the nation, covering roughly 55 million persons.

The Congressional Budget Office (CBO) estimates Medicare’s total annual cost at $615 billion in 2015 and it is scheduled to exceed $1 trillion by 2023.

In other words, over the next 75 years American seniors are expecting tens of trillions of dollars of Medicare benefits that are not paid for. Today, working taxpayers, mostly through business and personal income taxes, fund an estimated 86 percent of the program’s annual cost.

For Medicaid, the Centers for Medicaid and Medicare Services (CMS) Office of the Actuary estimates that Medicaid’s total (federal and state combined) spending is expected to reach $529 billion in 2015, with 68.9 million enrollees.

Fifty years later, in their July 22, 2015 memo to Senate Budget Committee staff Medicare’s Office of the Actuary reports that Medicare’s debt – the program’s long-term unfunded liability- ranges from $27.9 to $36.8 trillion.

Whether it’s the lower or higher debt number, this year’s estimates are worse than last year’s by more than a $1 trillion.

For Medicaid, cost and enrollment is expected to continue to grow, in particular due to the expansion of the program under the Affordable Care Act.

By 2023, total Medicaid spending is projected to climb to $835 billion and enrollment will near 80 million.

The President’s answer is to cut Medicare payments to medical professionals and institutions.

Under Obamacare, the Medicare Trustees warn,

“By 2040, approximately half of hospitals, 70 percent of skilled nursing facilities and 90 percent of home health agencies would have negative total facility margins, ” adding that this creates the “possibility of access and quality of care issues for Medicare beneficiaries.”

For Medicaid, access and quality of care is already a top concern.

A recent CDC study found that only 68.9 percent of physicians would accept new Medicaid patients.

For the next 50 years, Congress could initiate transformative changes through a defined contribution ( “premium support”) financing in both programs, giving patients direct control over the flow of health care dollars and compelling health plans and providers to compete for patients’ dollars on a level playing field.

Intense competition among health plans and providers would stimulate innovation in benefit design and care delivery, improve patient outcomes and enhance patient satisfaction, and save serious money for both seniors and taxpayers alike.

Via: The Daily Signal

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Cartoon: Planned Parenthood and Taxpayer Funding

Heritage Foundation President Jim DeMint wrote this week about why Planned Parenthood needs to stop receiving taxpayer dollars:

A video released last week by the Center for Medical Progress shocked the nation by showing an executive of Planned Parenthood sipping wine and casually talking about the going rate for the organs of aborted infants.

Yesterday morning, another undercover video compounded outrage toward Planned Parenthood’s activities. It once again raises the question of whether Planned Parenthood could be profiting off the sale of fetal tissue, as well as altering abortion procedures to preserve organs for sale.

Toward the end of the video, a Planned Parenthood executive jokes: “It’s been years since I talked about compensation, so let me just figure out what others are getting, and if this is in the ballpark, it’s fine, and if it’s still low, then we can bump it up. I want a Lamborghini.”

This should demonstrate to all Americans—even if they consider themselves “pro-choice”—that taxpayers should have nothing to do with this grim business.

Only yesterday, however, when asked whether the Obama administration would consider ending federal funding to Planned Parenthood, White House Press Secretary Josh Earnest gave a one-second answer: “No.” As noted by The Washington Free Beacon, Earnest thought Donald Trump’s latest activities were worth several minutes of discussion, evidently a far more important topic to the administration than whether an organization supported by taxpayers and applauded by President Obama has been trafficking baby organs.

Just as the killer Kermit Gosnell’s “house of horrors” abortion clinic was carefully ignored by the media until public outrage compelled news coverage, we’ve seen only the barest attention paid to the Planned Parenthood revelations. The headlines that do get published are carefully sanitized to reflect Planned Parenthood’s talking points—and to gloss over the children being dehumanized into mere livers, hearts and lungs.

But blaming news outlets and press secretaries for being hostage to their own ideologies will get us only so far. A story of this enormity couldn’t remain under wraps despite their best efforts (and worst journalism). Ultimately, it is our elected leaders who must answer for the continued activities of Planned Parenthood—and the support they receive from our tax dollars every year.

And answer they should: Planned Parenthood received over $528 millionfrom taxpayers during their last reporting year.

One day all Americans will look back on the charnel industry of abortion with the same disgust and shame as we do other historical atrocities. Until then, Congress has an obligation to eliminate federal taxpayer funding for this industry’s largest representative, Planned Parenthood, an organization that performs 1 out of every 3 abortions in the United States.

Speaker of the House John Boehner has promised an investigation of Planned Parenthood’s alleged organ harvesting practices, and Sen. Rand Paul—a doctor himself—has vowed to fight federal funding for the institution. These are steps in the right direction.

For over two thousand years, since the Greek physician Hippocrates founded the science of Western medicine, doctors took an oath never to administer poison to destroy an unborn child. The least Congress can do is to keep our money from those who make such tragedy a business: defund Planned Parenthood now.

Via: The Daily Signal

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The Iran Nuclear Negotiations: U.S. Concession After U.S. Concession

Abstract

The Obama Administration is negotiating a bad deal in the Iran nuclear negotiations. It has violated every rule of good negotiating practice, making concession after concession on both major and minor issues. With each abandoned redline—whether enrichment, ballistic missiles, verification, or sanctions relief—the Administration has resorted to twisted logic and intellectually disingenuous explanations to justify its concessions. A good deal would deny Iran a nuclear weapons capability, prevent Iran from building a nuclear weapon in a short amount of time, extend the breakout time, be verifiable, include phased relief of sanctions and guaranteed snap-back provisions. The Administration’s proposed deal fails on all counts.

Delivered July 7, 2015

Good afternoon. It’s always great to be back at Heritage. Let me begin by thanking the organizers for the invitation to speak on the very important and timely topic of the Iran nuclear negotiations.

I have been speaking and writing on this subject for more than two years and have watched our negotiating position evolve in one direction. This has not been a matter of compromise—the give and take of diplomatic negotiations. This is a matter of concession after concession on both the major and minor issues being negotiated.

Since the Joint Plan of Action (JPOA) was announced in November 2013, the outcome was clear: Iran would be recognized and accepted as a nuclear weapons threshold state. Of course, Iran’s ballistic missile force—the largest in the region—would not be limited in any way. These were explicit concessions acknowledged by the White House, but explained away in the most convoluted fashion.

No longer would Iran be compelled to abandon its enrichment program. It would only be constrained so as to extend the breakout time for the mullahs to build the bomb that they could then deliver by ballistic missile. And even these constraints would be removed after the agreement expires.

In the subsequent rounds of nuclear talks, other concessions on key issues have been signaled in the media by Secretary John Kerry and other named and anonymous Administration officials, most often through friendly reporters.

You are likely familiar with most of these:

• Relegating what the International Atomic Energy Agency (IAEA) calls possible military activities to an implementation detail. No longer would Iran have to come clean on these activities before an agreement goes into effect. Remember, Mr. Yukiya Amano, head of the IAEA, described these 12 weaponization activities as “alarming.”
• Abandoning the demand for unfettered, anywhere, anytime inspections once considered essential for effective verification. Instead, there will be managed access and a dispute resolution mechanism that will allow Iran to delay inspections of suspect sites and permit Russia and China to obstruct action in the Security Council.
• The phasing of sanctions relief and the so-called snap-back provisions that the Administration emphasized as a guard against Iranian cheating have been shown to be more words than substance. The President has talked about a huge signing bonus of up to $150 billion, and Moscow has been very direct: There will be no automatic reimposition of sanctions.

I could go on, but let me just say that the only real barrier to an agreement is the yet to be determined willingness of Iran to take yes for an answer.

Yes, the Iranians will agree to certain conditions, such as not building buildings that they have never intended to build. Instead of no enrichment, Iran will be limited to operating 5 or 6 thousand centrifuges under the agreement, but they will also be allowed to maintain in storage thousands of other machines that could be brought on line relatively quickly. And R&D and designing ever more advanced centrifuges will go on.

Yes, it is better that these centrifuges are not going to be connected during the tenure of the agreement, but that doesn’t make this a good deal. In fact, this is unquestionably a bad deal. And this important distinction sometimes gets lost in the rhetoric.

Everyone wants a negotiated outcome, including—and perhaps more than anyone—Israel’s leaders. Polls cited by the Administration show that a large majority of Americans want a diplomatic outcome. Of course they do. But the next question is would the same majority support a bad deal. The answer is likely a resounding NO.

So what are the metrics to judge the outcome—to judge whether this is a good or bad deal. I think they are straightforward. Here are five:

1. Does the agreement deny Iran a nuclear weapons capability—the longstanding declared goal of the United States and the international community?
2. Does the agreement, once the constraints expire, prevent Iran from building a nuclear weapon in a short amount of time?
3. Does the agreement extend the breakout time in a meaningful way?
4. Is the agreement effectively verifiable?
5. And is there a meaningful phased relief of sanctions and are there guaranteed snap-back provisions?

The answer to each of these questions is NO—a reality that is becoming apparent across party lines.

So how did we get into this mess? The answer is clear:

• The Administration has violated every rule of good negotiating practice—the basic tenets of negotiating 101.
• Instead of increasing pressure on Tehran through more sanctions, they relieved sanctions to, in their words, keep Iran at the table, but it was these very sanctions that brought them to the table.
• Instead of making clear to Iran that Iran needed an agreement more than we, the Administration has demonstrated just the opposite: that it is desperate for an agreement—a desperation that Iran’s negotiators have exploited to the fullest, as seen today with Iran’s last minute insistence on ending the arms embargo.
• Instead of insisting that a deadline actually means a deadline, the Administration has allowed Iran to squeeze further concessions each time the latest deadline approaches and passes.
• Most important, instead of holding the line on those key issues that would determine whether the agreement is good or bad—whether it advances our security interests or undermines them—the Administration made concession after concession.

Let me conclude by saying that one didn’t need to be prescient to know even two years ago how this would turn out. The Administration still clings to its talking points: that it will not accept a bad deal, that it will walk away if Iran doesn’t meet its demands, and of course that no one yet knows how this will turn out because nothing is agreed until all is agreed.

Via: Heritage.org

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