Crimes Against Liberty (25 page)

INTERFERING WITH THE CBO

As a further indication of Obama’s disregard for constitutional restraints, he initiated a meeting with the Congressional Budget Office during the thick of the legislative process on ObamaCare. This was a gross infringement on the independence of the CBO, which is responsible for “scoring” the fiscal soundness of legislative proposals. Having grown accustomed to throwing his weight around Washington, Obama apparently didn’t even realize his meeting with the CBO was improper; he revealed to NBC
Today Show
host Meredith Vieira he had “just met with the Congressional Budget Office today” and discussed their scoring of the very healthcare proposals he was trying to shove through Congress. The CBO’s scoring process, of course, should not involve advocacy, but impartial analysis of the data.

HotAir
blogger Ed Morrissey contacted two sources in Washington to inquire whether presidents normally confer with the CBO on budget scoring, and they both told him it was a “highly unusual” move that they didn’t remember
ever
having occurred. Obama had actually invited CBO director Doug Elmendorf to the White House to meet with him and his key budget and health advisers and some outside experts, according to a blog entry by Elmendorf, who revealed that in addition to discussing scoring items he “discussed various policy options that could produce budgetary savings in the long run.” As Morrissey noted, “CBO doesn’t create policy. It’s supposed to be a scorekeeper and allow Congress to create policy. This feels like an attempt to either intimidate or co-opt the CBO, neither of which would be a good thing. The entire meeting seems highly inappropriate.”
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COOKING THE BOOKS ON OBAMACARE

Only three weeks after ObamaCare was shoved through Congress, an amazing 58 percent of American voters supported full repeal of the measure. Just imagine what the numbers would have been had they been fully apprised of the extent to which Obama and his Democratic allies distorted the numbers in order to rig a passing grade from the CBO. With this administration’s vintage audacity, White House budget director Peter Orszag not only denied the CBO numbers were skewed in favor of the administration, he argued the CBO numbers actually understated the
savings
from the bill. Citing no specific facts, he based his argument on two generalities: 1) “On major pieces of legislation,” the CBO’s projections historically have been “too conservative rather than too optimistic”; 2) the CBO’s scoring “largely does not take into account this evolution toward paying for quality,” which “in this decade will begin to pay off.”
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On Orszag’s first point, we know the government has historically underestimated the cost of health-related legislation by a country mile. In 1965 the government projected Medicare Part A would cost $9 billion by 1990, but its actual costs came to $67 billion. Its 1987 estimates for Medicaid’s special hospital subsidy was $100 million, but its actual costs by 1992 were $11 billion—100 times more than projected!
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But if you want to revert to generalities, try this one: most Americans believe government programs almost always cost more than expected, if for no other reason than that government seems to employ a static model in its projections. Pollsters Scott Rasmussen and Doug Schoen reported that 81 percent of voters believe it’s likely ObamaCare will cost more than projected.
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Former CBO director Douglas Holtz-Eakin contended the CBO’s scoring greatly understated the costs simply due to the incomplete information that the organization received. “The budget office is required to take legislation at face value and not second-guess the plausibility of what it is handed. So fantasy in, fantasy out.” He said the CBO reported, based on the information provided to it by Congress, that ObamaCare would reduce federal deficits by $138 billion over the next ten years. But if we remove “the gimmicks and budgetary games” and recalculate, he argued, we’ll discover ObamaCare “will raise, not lower, federal deficits, by $562 billion.”
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Holtz-Eakin cited the gimmick in the bill’s front-loading revenues and backloading spending: the taxes and fees begin immediately, but many of the expenditures are deferred “so that the first 10 years of revenue would be used to pay for only 6 years of spending.” In addition, he said, some costs are omitted entirely. In order to operate some of the bill’s new programs, Congress would have “to vote for $114 billion in additional annual spending.” This amount presumably was left out of the calculation because it is technically not required spending, but “discretionary spending.” Yet the program can’t function without it. By speciously categorizing it as discretionary spending, Democrats distorted the figures.

Within about a month of the bill’s passage, Holtz-Eakin was vindicated on this point when the CBO, responding to an inquiry from Congressman Jerry Lewis, confirmed an additional $115 billion in discretionary spending. This trickery can be laid directly at the feet of Barack Obama and his Democrats for forcing this bill through Congress too fast—on purpose and in violation of their pledge for transparency. FOX News reported that CBO simply didn’t have enough time to respond to the inquiry before the bill was passed. Risibly, Obama threatened to veto any additional spending in the ObamaCare bill unless this $115 billion was offset elsewhere—as if he didn’t know about this huge expense before signing the bill.”
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This was by no means the only sleight of hand Democrats employed in calculating ObamaCare’s costs. There is also the matter of $70 billion in premiums that are expected to be collected during the first ten years for the payment of benefits that will mostly materialize after the first ten years—a complete sham. Another trick was to manipulate revenues by making corporations deposit $8 billion in higher estimated tax payments in 2014, “thereby meeting fiscal targets for the first five years.” But because the corporations’ actual taxes will remain the same, the money will have to be refunded the following year, so dollars are simply being shifted from 2015 to 2014. This is outright fraud which, if being perpetrated by anyone other than Congress, would be subject to investigation.

Another deceitful item is the estimated $53 billion in higher Social Security taxes resulting from an expected increase in wages as employers “shift from paying for health insurance to pay higher wages.” But even if that comes to fruition, notes Holtz-Eakin, the higher wages will result in increased Social Security benefits down the road when they retire, which means the extra estimated Social Security revenues will not help pay for ObamaCare at all without robbing the same amount from future Social Security. Congressional manipulators also rolled into the bill the nationalization of student loans, which has nothing to do with healthcare but is projected to generate $19 billion in deficit reduction, which CBO was obliged to consider.

But “the most amazing bit of unrealistic accounting,” says Holtz-Eakin, is the projected savings of $463 billion from Medicare spending, which will be used to finance insurance subsidies. But Medicare has no extra funds at all to donate to the cause: it “is already bleeding red ink.” The upshot: “Removing the unrealistic annual Medicare savings ($463 billion) and the stolen annual revenues from Social Security and long-term care insurance ($123 billion), and adding in the annual spending that so far is not accounted for ($114 billion) will generate additional deficits of $562 billion in the first 10 years. And the nation would be on the hook for two more entitlement programs rapidly expanding as far as the eye can see.” (Holtz-Eakin’s $562 billion figure is derived by subtracting the CBO’s calculation of $138 billion in reduced deficits from the $700 billion of increased deficits from Medicare [$463 billion], Social Security and long-term care [$123 billion], and annual spending not accounted for [$114 billion].)

The bottom line: “Congress would spend a lot more; steal funds from education, Social Security and long-term care to cover the gap; and promise that future Congresses will make up for it by taxing more and spending less.”
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Paul Ryan, ranking Republican on the House Budget Committee, asked the CBO to recalculate ObamaCare’s impact on the budget based on more realistic assumptions:

• Assume that the House will reduce ObamaCare’s scheduled 21 percent cut in Medicare’s reimbursements to physicians. This is the so-called “doc fix,” which Speaker Pelosi had promised to implement.

• Assume that the so-called Cadillac tax—the proposal to tax individuals’ higher-premium health insurance plans—will never be implemented. Under ObamaCare this new tax was delayed until 2018 because of union pressure. If Congress removes it entirely—and if they didn’t have the courage to implement it now, why would they in the future?—it will add further to the deficit.

• Assume that Medicare cuts projected to be made by an independent payment advisory board will never actually be made (because that’s what history shows).

With these assumptions, Ryan explained ObamaCare would “
increase
Federal deficits by at least $59 billion, but more likely $260 billion over the next 10 years” instead of reducing them by $138 billion, as the CBO’s scoring indicates based on the Democrats’ unrealistic assumptions.

Ryan also asked the CBO to recalculate the ten years following 2019 based on different assumptions that he submitted. He summarized the CBO’s ominous response this way:

Removing these assumptions reveals a stark reality. If these assumed savings are never realized—as is the likely scenario—CBO projects that rather than reducing the deficit in the years beyond 2019 the deficit would increase over the decade following 2019 “in a broad range around one-quarter percent of GDP.” Using the majority’s own methodology, this amounts to a second-decade deficit of $600 billion .
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EXECUTIVE SALARIES

Obama, ever the consummate class warrior, delighted in demonizing corporate executives and in imposing limits on their salaries, as we’ve seen. This issue first arose when populist Democrats went ballistic after AIG publicly revealed a small percentage of its bailout money went toward executive bonuses. Senator Charles Schumer intoned, “They should voluntarily return [the money]. If they don’t, we plan to tax virtually all of it.” The Democrat-controlled House quickly passed a bill to tax 90 percent of the bonuses, a bill critics rightly protested would be a Bill of Attainder, forbidden by the Constitution because it targeted a single group of people and would confiscate their property without due process. As offensive as their disregard for the Constitution was, equally egregious was the Democrats’ power-drunk effort to retroactively veto corporate actions that were not only legal at the time, but that had been
expressly authorized
by the stimulus bill passed the previous month.
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If these bonuses were such an affront to democracy, one wonders why Democrats didn’t penalize themselves for authorizing them in the first place?

The Senate threatened to follow suit with the retroactive penalty tax, but ended up shelving the bill after Obama wisely expressed doubts about the bill’s constitutionality during an interview on CBS’s
60 Minutes
. Senate majority leader Harry Reid warned the Senate could still act on the bill, however. “The issue is not over and that’s an understatement. We’re going to keep an eye on this [and look for] a window to do something,” said Reid.
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In March 2010, Democratic senators Jim Webb and Barbara Boxer offered a slightly different proposal through an amendment to a jobs bill, which would impose a one-time, 50 percent tax on 2009 bonuses in excess of $400,000 paid to employees of thirteen companies that received more than $5 billion in TARP monies. That bill was also shelved because Republicans would not consent to a vote on the jobs bill. Webb vowed to reintroduce his bonus tax proposal by amendment to another bill when feasible.
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Obama’s method is clear, as is his goal: to exert the greatest degree of government control possible over the private sector, thereby reducing CEOs to submissive government clients, dependent on Obama’s goodwill for everything, right down to their own salaries. He first imposed government control, by fiat, of executive compensation at taxpayer-owned companies. But it wasn’t long before he extended the government’s control over compensation to private companies that had received bailout money. Obama’s “pay czar” Kenneth R. Feinberg met for weeks in the fall with executives of the country’s largest firms, including AIG, Citigroup, Bank of America, General Motors, and Chrysler, to exercise his “sole discretion” to set the compensation for the top twenty-five employees of each of these “bailout” companies. One unaccountable federal bureaucrat was micromanaging this decision, yet he reportedly didn’t even provide the executives with a clear sense of how he planned to evaluate their compensation.

The companies were adamant that they needed to pay competitive salaries to acquire talented employees who could produce sufficient profits for shareholders.
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But their concerns fell on deaf ears as Fienberg announced pay cuts of up to 90 percent for 175 top executives at seven major banks and automakers that received TARP money, and he tied more compensation to long-term stock awards. Feinberg claimed there was a better way than large cash salaries to ensure long-term corporate growth. He said he hoped this “methodology we developed to determine compensation . . . might be voluntarily adopted elsewhere.”
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