GOP Springs a ‘Surprise’ Over Trump’s Defense Spending Plan

Plus: Obamacare, 9 years later

GOP Springs a ‘Surprise’ Over Trump’s $750 Billion Defense Spending Plan

President Trump’s 2020 budget called for boosting defense spending to $750 billion, largely by using what fiscal hawks decried as a gimmick: relying on an off-the-books account meant for war funding. The Senate Republican budget resolution released last week went a different way, calling for the restoration of spending caps that would cut some $126 billion in both defense and non-defense spending compared to this year.

That “surprise” raises questions about whether Trump’s desired increase in defense spending will happen, The Hill’s Niv Ellis writes:

“The expectation among congressional staff was that the GOP would adopt [Trump’s $750 billion] figure, without the gimmicks, and Democrats would push for an equal increase in nondefense spending.” Instead, the resolution released by Senate Budget Committee Chairman Mike Enzi (R-WY) “seemed to rebuke Trump’s decision to stash $96 billion in new defense spending in an account known as the Overseas Contingency Operation (OCO) fund. Instead of adding to OCO, as Trump suggested, Enzi drew down the funds in the account and phased them out altogether after two years.”

Enzi’s budget left room for a deal that would lift defense spending to Trump’s desired level as long as the costs are offset. Budget watchdogs praised the proposal, with the Committee for a Responsible Federal Budget saying it “adopts a more achievable fiscal goal, bringing a much-needed dose of realism and fiscal responsibility to the budget process.”

What happens next: Lawmakers must reach agreement on spending levels for next year, and the real negotiations are just getting going. Without a deal, caps set under the 2011 Budget Control Act would take effect once again, resulting in an automatic 10 percent reduction (the $126 billion cut) in discretionary spending for 2020. Enzi may be open to that, but others in the GOP will want to keep military spending at higher levels and Democrats will want any defense increases to be matched by increased in non-defense outlays.

But with Democrats struggling to propose their own budget as moderate and progressive factions within the party each push their priorities, the Senate GOP resolution “has left the question wide open on where the final numbers will end up,” Ellis writes. “[E]ven if the GOP backs down on Trump’s $750 billion figure, Democrats say nondefense spending has to increase at least $20 billion just to keep programs running, a result of new costs pushed onto the budget this year,” including the census and a veterans program that used to get funding elsewhere.

The bottom line: Things could get messy again. “Even after congressional leaders agree to new spending caps,” Ellis says, “they will still have to contend with Trump and his request for $8.6 billion to fund his border wall.”

Quote of the Day

“I would be surprised if the elevated level of investment continues much longer. Maybe another year, maximum two years. Then, I think we’re going to subside to a more normal level of employment and unemployment.”

– Edmund Phelps, a Nobel-winning economist and professor at Columbia University, as quoted by CNBC, on how long the stimulus from the Trump/GOP tax cuts will last.

Obamacare Enrollment Edges Lower to 11.4 Million

About 11.4 million people signed up for Affordable Care Act plans in 2019, down from 11.8 million in 2018 and a high of 12.7 million in 2016, according to data released Monday by the Trump administration. The average premium also fell for the first time.

Larry Levitt of the Kaiser Family Foundation notes that signups in states using the federal exchange have declined since 2016 while those is states running their own marketplaces have held steady, with one possible explanation for the difference being a reduction in federal outreach under the Trump administration. “The ACA insurance marketplace is stable,” Levitt writes. “But, reversing enrollment declines would likely require undoing outreach reductions and increasing subsidies, and that would cost money.”

Americans Still Divided Over Obamacare as Health Reform Turns 9

President Obama signed the Patient Protection and Affordable Care Act into law on March 23, 2010, and nine years later Americans still have mixed feeling about the landmark effort to overhaul the U.S. health care system.

According to a recent poll by the market research firm YouGov, 51 percent of Americans currently support the law, nicknamed Obamacare, with 28 percent saying they “strongly approve” and another 23 percent saying they “somewhat approve.” About 37 percent somewhat or strongly disapprove, while another 23 percent say they don’t know.

The partisan divide on the issue is unmistakable. Democrats are far more positive, providing an 83 percent overall approval rating, while Republicans are far more negative, with just 22 percent approving of the bill — and 75 percent saying they strongly or somewhat disapprove.

President Trump vowed to repeal the Affordable Care Act and replace it with something far better, and the GOP’s years-long effort to undermine if not eliminate the legislation has had an effect on public perception. YouGov’s Linley Sanders says that according to the poll, 13 percent of Americans think Obamacare has already been repealed.

Ezekiel Emanuel: Obamacare Has Saved Over $2 Trillion So Far

Ezekiel Emanuel, an oncologist and one of the architects of the Affordable Care Act in the Obama administration, says that while much of the debate around Obamacare is focused on coverage, one of the law’s most important features is cost control. And by Emanuel’s calculation, the ACA’s cost-control effects have been quite significant, reducing health care spending by more than $2 trillion between 2010 and 2017.

Writing at STAT, Emanuel says that a 2010 report from the Office of the Actuary of the Department of Health and Human Services estimated that total U.S. health care spending in 2017 would be $4.14 trillion, or about 20 percent of GDP. Last December, the same office said that total U.S. health care spending in 2017 was $3.5 trillion, more than $600 billion less than projected, and a bit less than 18 percent of GDP. Adding the savings across the years, Emanuel says that “cumulatively from 2010 to 2017 the ACA reduced health care spending a total of $2.3 trillion.”

Here are some of the datapoints Emanuel cites:

  • Spending on Medicare “was 10 percent ($70 billion) less” than the 2010 projection.
  • Spending on Medicaid and the Children’s Health Insurance Program (CHIP) “was a whopping $250 billion below expectations (partially — but only partially — due to the failure of some states to expand the program).”
  • Employer-sponsored health insurance was projected to cost $1.21 trillion in 2017, “but it came in at $1.04 trillion, a difference of $170 billion for that year.”
  • Premiums for employer-sponsored health insurance were lower by about $1,000 per person.
  • Overall, health care spending in 2017 “was $2,000 less per person than it was projected to be.”

Emanuel says that recognizing these cost savings is difficult because “no one experiences the difference between projections and reality.” He also admits that in a system as complicated as health care, it’s not easy to determine exactly why prices move one way or another. But he argues that Obamacare was designed to bend the cost curve, and the lower-than-projected health care spending in 2017 suggests that it has done just that.

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