Ryan Ellis

Will Obama's 529 Plan Tax Hike Also Hit Disabled Kids?

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Posted by Ryan Ellis on Friday, January 23rd, 2015, 11:37 AM PERMALINK


On top of everything else, it appears that President Obama’s 529 plan tax hike might also fall on–of all things–disabled children and the parents who save for them.

In the most embarrassing of all possible starts to 2015, President Obama’s administration appears to be in full retreat on their proposal to tax middle class college savings plans (known as “529 accounts“).  The final death blow to this reckless and politically suicidal assault on the American Dream came out yesterday when it was revealed by the Wall Street Journal that the Obamas made a $240,000 contribution to the 529 plans of their daughters back in 2007.  There’s nothing wrong with that, of course, but it is a tad hypocritical for Obama to want to deny the middle class their opportunity to save for their own children’s education, be the contributions ever so modest. Even the New York Times, of all outlets, is turning tail.

It can get even worse.

Back in December 2014, a little more than one month ago, President Obama signed into law the “Achieving a Better Life Experience (ABLE) Act,” which sailed through Congress.  It creates a brand new kind of 529 plan.  Traditional 529 plans are all about saving for college.  An ABLE account will be about saving for kids who will likely never get a “normal” college experience, or anything close to it.  Qualified expenses include things like disability education, housing, transportation, employment support, health and wellness, financial/administrative/legal costs, and even funeral fees.

Like other 529 plans, ABLE account contributions are made after-tax.  The money grows tax-free.  Provided the contributions and earnings are used for qualified disability expenses, withdrawals are tax-free.  They very much resemble Roth IRAs, except the savings intention here is disability costs and not retirement.

The Administration’s plan calls for all earnings distributions on 529 plans to be subject to ordinary income taxation, at rates as high as 39.6 percent.  Will this include the new type of 529 plan signed into law by President Obama just a month ago, the ABLE account?

If the Obama tax hike plan sweeps in ABLE accounts, they may never actually achieve liftoff.  Conventional 529 plans would “dry up” and die off, according to Joe Hurley of the 529 portal website savingforcollege.com. “States that are not able to retain sufficient assets in their 529 plans will have a difficult time keeping their plans open,” Hurley added.

Since ABLE accounts are only a little over a month old, none have actually been established yet by 529 sponsors (i.e., states).  If the tax treatment were to change, there would be no market for ABLE accounts and no incentive to invest resources in rolling them out for parents of disabled kids.

Even if ABLE accounts are excluded from the rest of the president’s tax hike plans for 529s, it would still kill them off.  Since ABLE accounts will only be offered in conjunction with the larger 529 accounts, the death of the latter necessarily means the stillbirth of the former.  It’s like shooting the horse and expecting the cowboy to keep riding.

Was all this done on purpose?  Did anyone in the Obama Administration raise their hand and say “wait, didn’t we just sign a 529 expansion–for disabled children–just before Christmas?”

Who knows?  My guess is “no.”  Considering how ill-conceived and botched this entire fiasco has been, crediting officials with thinking this deeply about the topic is a bridge too far.

Assuming that this 529 plan tax hike (including de facto ABLE account preemptive repeal) remains in the president’s budget, it will be fully fleshed out in the Treasury Department’s post-budget “Blue Book,” where all stupid tax ideas slouch toward Bethlehem, waiting to be born.  Only then will we find out for sure if some technocratic nimrods at the White House accidentally decided to tax the tax-free savings accounts of disabled children, or whether they were even more reality-addled and did it on purpose.

But can someone in the press please ask them between now and then?

Photo Credit: 
Joe Crimmings

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ATR Supports H.R. 310, the Taxpayer Transparency Act


Posted by Ryan Ellis on Thursday, January 22nd, 2015, 4:40 PM PERMALINK


Americans for Tax Reform supports the Taxpayer Transparency Act (H.R.310) and urges members of Congress to support this bill. The Taxpayer Transparency Act makes sure that the government is held accountable for spending taxpayer dollars for political purposes. This will foster increased transparency and government accountability, especially for government spending that promotes unpopular and broken laws.

Government accountability and transparency are nonpartisan ideals and requiring the government to disclose that their advertisements are being paid for by the taxpayers will let Americans know that they are the ones footing the bill.
 

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Obamas Make Jumbo 529 Contribution While Pushing Repeal for Everyone Else

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Posted by Ryan Ellis on Thursday, January 22nd, 2015, 1:46 PM PERMALINK


President Obama proposed this week to tax the earnings on new contributions to “Section 529″ college savings plans. These plans work like Roth IRAs for college–you put in after-tax money, the money grows tax-free, and withdrawals are tax-free if used to pay for tuition and fees.

Obama wants the earnings on these plans to face ordinary income tax, at rates as high as 39.6 percent federally. 529 expert Joe Hurley correctly predicts that taxing 529 plans this way will result in their effective repeal, as new contributions in will “dry up” overnight.

The tsunami of popular outrage against the Obama proposal can be explained by seeing that this tax increase is really an assault on the American Dream.

But just your American Dream–not the Obamas’.

You see, back in 2007, Barack and Michelle Obama made a stunning $240,000 contribution to the 529 plans of their two daughters. There’s a special provision in 529 tax rules that allow for a “jumbo” contribution in exchange for not gifting any more money to your kids for the next five years. The Obamas (wisely) took advantage of this–you can see the actual tax form reporting here.

This is odd, considering some of the nasty things the White House has said about 529 plans in recent days. Administration officials have called 529 plans “inefficient,” that 80% of the benefits accrue to those making more than $250,000 per year, and that 529 plans should effectively be repealed in order to plus up an education tax credit. Obama Administration mouthpiece Slate went so far as to call de facto 529 repeal “a great idea.

In fact, the College Savings Foundation–which knows a thing or two about the 529 industry–says that 70% of families which own a 529 plan make less than $150,000 per year, and almost 95% of families make less than $250,000 per year (note that this is the Obama Administration’s preferred dividing line to mark off the “middle class”). The average account balance in these 12 million 529 plans is just under $21,000.

So which one is it?  Are 529 plans an evil distortion in the tax code? If so, why did the Obamas plow nearly a quarter of a million dollars in them back in 2007? And why does Obama want to effectively repeal 529s (there would be no reason to contribute without the tax-free growth) for middle class families today?

The Obamas have already gotten their full tax advantage from 529 plans. Under his plan, they would get to keep all the tax-free growth their quarter-million dollar contribution will yield. But they want to deny that to others not so fortunate, to middle class families struggling to save for college.

If that sounds familiar, it should. Back in 2009, President Obama tried to kill school scholarships for some 1,700 low income elementary school students in the District of Columbia. This was at the same time as he sent his daughters–the ones who benefit from the Obamas’ 529 plan contributions–to the uber-pricey Sidwell Friends School in town. All this was done to appease the teachers’ unions, who largely dictate education policy to Democrats.

The story is the same–only the best for the Obama clan and his friends, but everyone else can eat cake.

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Justin Sloan

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Obama Tax Hike on College Savings Plans Breaks Middle Class Tax Pledge

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Posted by Ryan Ellis, John Kartch on Tuesday, January 20th, 2015, 11:56 AM PERMALINK


Tonight, in his State of the Union address, President Obama will propose a series of tax increases on the American people. One of these tax increases is indisputably an income tax hike on middle class families with children. 

Under Obama’s plan, earnings in “Section 529” (named for its location in the Internal Revenue Code) college savings plans will face full income taxation upon withdrawal.

Under current law, earnings growth in 529 plans is tax-free if account distributions are used to pay for college tuition and fees. The Obama plan will tax earnings in these accounts even if they are used to pay for college tuition and fees.

These accounts are commonly used by middle class families. There are about 12 million 529 accounts open today, and they have an average account balance of approximately $21,000. Most 529 plans permit monthly contributions as low as $25 per month.

This middle class income tax increase is a clear violation of President Obama's “firm pledge” against “any form of tax increase” on any family making less than $250,000. This promise to the American people is documented below:

Speaking in Dover, New Hampshire on Sept. 12, 2008, candidate Obama said:

“I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.” [Video]

During a nationally televised Vice-Presidential debate in St. Louis on Oct. 3, 2008, candidate Joe Biden said:

“No one making less than $250,000 under Barack Obama’s plan will see one single penny of their tax raised whether it’s their capital gains tax, their income tax, investment tax, any tax.” [Transcript]

In an address to a joint session of Congress on Feb. 24, 2009, President Obama restated the promise in forceful terms:

“If your family earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat: not one single dime.” [Transcript] [Video]

"Rather than raise taxes on middle class families trying to save for their children’s education, Obama should abolish the seven tax increases in Obamacare that directly hit middle-income Americans,” said Grover Norquist, president of Americans for Tax Reform.

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Obama Calls for $320 Billion in New Taxes

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Posted by Ryan Ellis on Saturday, January 17th, 2015, 10:59 PM PERMALINK


On Saturday night the White House leaked the major tax hike details of the president's upcoming budget. The common theme is higher taxes on savings and investment, totaling $320 billion over the next ten years.

"Democrats are demanding, yet again, tax increases on America. This never ends. When it comes to tax hikes Democrats are like a teenage boy on a prom date: they keep asking the same question different ways but always to the same point," said Grover Norquist, president of Americans for Tax Reform.

Here are the major tax increases in the President's upcoming budget:

​1. Capital Gains Rate Hike: raises capital gains and dividends tax rate from 23.8% today (20% plus 3.8% Obamacare surtax) to 28% (including the Obamacare surtax).

The capital gains tax has not been that high since President Clinton signed a rate cut in 1997.  

It would represent a massive hike in the rate since Obama took office. When he was sworn in, the rate was 15%. He proposes to nearly double it to 28% in the twilight of his administration.

2. Stealth increase in the death tax rate from 40% to nearly 60%.

Under current law, when you inherit an asset your basis in the asset is the higher of the fair market value at the time of death or the descendent's original basis. Almost always, the fair market value is higher.

Under the Obama proposal, when you inherit an asset your basis will simply be the descendent's original basis.

Example: Dad buys a house for $10,000.  He dies and leaves it to you. The fair market value on the date of death is $100,000. You sell it for $120,000. Under current law, you have a capital gain of $20,000 (sales price of $120,000 less step up in basis of $100,000). Under the Obama plan, you have a capital gain of $110,000 (sales price of $120,000 less original basis of $10,000).

There are exemptions for most households, but this misses the larger point: the whole reason we have step up in basis is because we have a death tax. If you are going to hold an estate liable for tax, you can't then hold the estate liable for tax again when the inheritor sells it. This adds yet another redundant layer of tax on savings and investment. It's a huge tax hike on family farms and small businesses.  

It's like a second death tax (the first one has a top tax rate of 40% and a standard deduction of $5.3 million/$10.6 million for surviving spouses). Conceivably, an accumulated capital gain could face a 40% death tax levy and then a 28% capital gains tax on what is left. Do the math, and that's an integrated federal tax of just under 60% on inherited capital gains.

3. "Bank Tax"

A new 7 basis point (0.07%) tax on the liabilities (not assets) of the 100 or so U.S. firms with assets over $50 billion. This will obviously be passed along to these firms' customers and employees, since businesses don't pay taxes--people do.

4. Tax Increase on Families Saving for College

Under current law, 529 plans work like Roth IRAs: you put money in, and the money grows tax-free for college. Distributions are tax-free provided they are to pay for college.

Under the Obama plan, earnings growth in a 529 plan would no longer be tax-free. Instead, earnings would face taxation upon withdrawal, even if the withdrawal is to pay for college. This was the law prior to 2001.

5. Tax Increases in Retirement Plans and a New Employer Mandate

There would be a new cap in the amount one could accumulate in the aggregate in all IRA and 401(k) type accounts of $3.4 million. After that, you can't save any more new dollars. The idea is that this is enough to secure a $210,000 annual distribution in retirement, which the government apparently deems "enough" for a retiree.

In addition, all employers with more than 10 workers and who do not have a 401(k) type plan would be mandated to set up payroll deduction Traditional IRAs for their employees. Also, part-time workers would have to be covered under retirement plans if they have been working someplace long enough. These two things are a new kind of employer mandate from Obama.

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ATR Supports H.R. 647, the ABLE Act

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Posted by Ryan Ellis on Tuesday, December 2nd, 2014, 6:32 PM PERMALINK


On Wednesday, the U.S. House of Representatives will consider H.R. 647, the ABLE (Achieving a Better Life Experience) Act of 2014. ATR is supportive of this legislation and urges Members to vote for it.

H.R. 647 is a net tax cut.

At its heart, the ABLE Act creates a brand new tax-advantaged savings account vehicle. A new form of 529 college savings plan is authorized under tax law. They would work much like existing 529 plans: money goes in after tax, and grows tax free for the intended purpose of the account.

The difference is that ABLE accounts, unlike 529 plans, are not intended for college savings. Rather, ABLE accounts would be used to help pay for the disability expenses of those classified as disabled before age 26. Qualified expenses include: education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses.

The balance in an ABLE account cannot exceed $100,000 for practical purposes. Annual contributions are limited to the gift tax limit.  As a result, these accounts are a modest aid to the target population of the bill, and are not intended as a significant wealth accumulation vehicle.

Put simply, an ABLE account is to a child with a disability what a 529 plan is to a child who has college in his future. Not only is an ABLE account a good way to increase tax-free savings for families (always a good thing), it's a compassionate way for families with special needs children to save for the needs of the most vulnerable.

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ATR Statement on Tax Extenders Package

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Posted by Ryan Ellis on Tuesday, December 2nd, 2014, 2:01 PM PERMALINK


This week, the U.S. House of Representatives will consider a one-year "tax extenders" package. The U.S. Senate will soon follow suit. This bill would move the expiration date of some 55 tax relief provisions from December 31, 2013 to December 31, 2014.

This $45 billion tax hike avoidance package contains both good and bad tax policy.  

On the positive side of the ledger is a host of cost recovery provisions. Headlining these is a 50 percent partial expensing rule which allows businesses to write off half the cost of new investments in the year of purchase, with the remaining basis subject to multi-year depreciation. There's also a research and experimentation tax credit which firms can use to recoup these costs. Small businesses can expense most to all of their business fixed investment.  There's also accelerated depreciation for restaurants, lease holders, Indian tribes, and others.  Put together, these cost recovery provisions are a majority of the value of the extenders package.

All of these represent an important down payment toward a vital tax policy goal for conservatives--full business expensing of all business inputs. Under any consumption base/cash flow tax model (which has universal support on the Right), all business costs would be deducted in the year of purchase.  Losing the extenders package's large steps toward this vision would be a big setback for the cause of fundamental tax reform.

There are also a dozen "personal" extenders which affect families.  These include the ability to deduct state and local sales taxes, tuition and fees, and teacher classroom expenses.  Families will not have to pay taxes on forgiven mortgage debt in the event of a foreclosure on their home. Retirees will be able to shift IRA dollars directly to churches and other charities.  These, too, are important to consider as tax filing season gears up after the holidays.

Finally, there are two extenders which prevent double taxation of income earned abroad by U.S. companies--a "look-through" for controlled foreign corporations, and an active financing exemption from double taxation by the IRS.  These are important placeholders as tax reform contemplates moving toward a territorial tax system and away from our antiquated worldwide tax regime.

On the negative side of the ledger are a few crony capitalist tax provisions which should not exist in an ideal tax code.  Topping the billing here is the wind production tax credit, which is both a wasteful K Street giveaway and a sop to the big green lobby of the Left.  It is regrettable that Wind "PTC" is part of this extenders package.

Nevertheless, the good clearly outweighs the bad here.  Members of Congress and senators are encouraged to vote for this one-year tax extenders package.  Next year, they should come back to work ready to make the best parts of the tax extenders permanent, and then proceed to tax reform.

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Earmark Ban Essential for Taxpayers in New Congress

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Posted by Ryan Ellis on Wednesday, November 26th, 2014, 12:38 PM PERMALINK


Congress will soon wrap up its business for the year and go home for Christmas.  Soon after returning, the budget and appropriations cycle will dominate life on Capitol Hill.

Americans for Tax Reform remains committed in the new Congress to preserving the House ban on spending earmarks.  Getting a culture of corruption and influence peddling out of the legislative process has been a keystone achievement of the Republican majority.

Earmarks have an obvious character.  They are spending programs tucked into appropriation or authorization bills by Members of Congress in order to "bring home the bacon."  ATR has had a long history of not agreeing that tariff or tax revenue measures are germane to the otherwise essential earmark ban.

We would agree with others, too, that legal settlements made by the United States government and approved through legislation are neither part of the letter nor the spirit of the earmark ban.  These legal settlements have saved taxpayers millions of dollars in litigation costs and denied windfalls to the trial lawyer bar. They ultimately result in less government spending, not more.  They do not benefit particular Members of Congress like wasteful pork barrel earmarks do.

The earmark ban is too important to be bogged down in unintended consequences and mission creep.  ATR looks forward to working with Congress to keep the earmark ban strong for many years to come.

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Corporate Inversion Regs: Is the Cure Worse Than the Disease?

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Posted by Ryan Ellis on Tuesday, October 21st, 2014, 3:04 PM PERMALINK


Fallout continues to happen from the Treasury Department's September regulation announcement on corporate inversions.  It's now becoming increasingly clear that this regulation can be added to the list of jobs-killing initiatives from the Obama Administration.  It joins a Hall of Shame which includes Obamacare, EPA regulations, Dodd-Frank, and many others.

Financial experts at the time were shocked at the size and scope of the regulations.  Reuters went so far as to report that $12.3 billion in shareholder wealth was wiped out by the announcement of the regulations alone.  How much more will each of us lose from our 401(k) plans and IRAs once this regulation actually goes into effect?

The surprise was warranted, since up until that point the Obama Administration and Treasury had been downplaying what could be done in this area absent Congressional action.  Treasury Secretary Jack Lew said that Treasury "did not have the authority."  President Obama remarked that "we can't solve the entire problem administratively."  Most definitively, IRS Commissioner John Koskinen said "we've done, I think, all we can within the statute."

This reckless and extreme regulation has had serious consequences for U.S. companies and jobs. Since the announcement, a half-dozen international business deals have been scuttled.  What does that mean?  It means that the international profits of these companies--which have already faced taxation abroad--will continue to encounter double taxation from the IRS should the companies dare to bring that money back to the United States.

That's untenable.  Predictably, action has shifted from corporate inversions to outright foreign takeovers of American companies.  Even former Bill Clinton economic advisor Laura Tyson has said of this phenomenon, "the proposed anti-inversion measures would also make it more likely that U.S. companies are the target, rather than the acquirer, in cross-border M&A deals."

So great.  Rather than letting U.S. companies simply pay tax on their foreign earnings once and only once, the Obama Administration would rather these companies be gobbled up entirely by their foreign competitors.  What's going to happen to all the jobs at those companies then?  They will quite literally be shipped overseas.

The real solution here is to simply end the double taxation of overseas corporate earnings.  Let companies pay taxes over there, and then be done with it.  That would make them more likely to bring earnings back to the United States, since they won't face a double taxation situation.

Until we solve our broken tax system, especially with regard to large multinational U.S. companies, the type of clown show we're seeing on corporate inversions is doomed to continue.

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The Conservative Argument for a Permanent Medicare Doc Fix

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Posted by Ryan Ellis on Thursday, September 11th, 2014, 12:38 PM PERMALINK


Whether it's in the lame duck after Election Day or early next year, Congress is once again going to have to address the so-called "doc fix" or "SGR" issue within Medicare.  It's going to be a top fiscal and healthcare issue, so it's worth exploring in some depth.

What is this issue?  Back in 1997, Congress adopted a Medicare cost savings formula called the "sustainable growth rate," or SGR.  The idea was for Medicare reimbursements to no longer outpace the growth of the economy.  SGR, though, was never put in place in any meaningful way.

After a one year stint living under SGR, in 2003 Congress decided to "temporarily" delay the provider cuts.  This would be the first of 17 times Congress did so, most recently in March 2014.  The total amount of "extra" Medicare spending as a result of these "patches" (popularly known as "doc fixes") is just under $170 billion.

It's pretty clear that when Congress delays something from happening 17 times that it's not going to happen.

What's the conservative argument for keeping SGR?  It comes down to a budgetary one. Every time Congress does a doc fix patch, it's scored as spending new money.  This despite the fact that all Congress did was preserve the old funding formula and stop a new (and never-used) one from coming into place.

What that means is that it appears that simply removing the never-gonna-happen SGR from the books increases government spending.  According to the latest CBO estimate, a permanent doc fix (i.e., repeal of SGR) would "cost" $131 billion over the next ten years.  Conservatives are against increasing the size of government, so opposition to SGR repeal is a natural instinct.

However, this instinct is incorrect for five key reasons:

1. The idea that repealing SGR increases government spending is derived from a faulty baseline assumption.  The Congressional Budget Office (CBO) has to assume by law that SGR will be applied in full force, permanently, going forward.  Common sense and history tells us this is a bad assumption from which to make budget policy.

Congress has delayed the onset of SGR 17 times over more than a decade.  It is blindingly obvious to everyone who pays attention to this in Washington that Congress will continue to not impose SGR cuts.  To pretend that it will, and then demand spending cuts to "pay for" repealing it, is cognitive dissonance of the highest order.  It is reminiscent of Democrat calls to "pay for" extension of the Bush tax cuts, even though all that Congress was doing was keeping tax law current.

Under a reality-based baseline, or what CBO might call an alternative fiscal scenario closer to reality, the actual score of repealing SGR should be $0.  That's because SGR has never really been put in place, Congress has delayed it consistently, and it never will be put in place again. So getting rid of it is simply not a budgetary event.  In fact, we know that roughly a decade of patches have "cost" more than simply repealing it is projected to cost now.  The question is merely whether you want to do this once a year, or do it once and for all.

Of course, if Congress wants to cut spending to feel better about an SGR repeal, that's a welcome development--spending cuts are always a good thing for conservatives.  But strictly speaking, and using a correct baseline, they are not necessary in this case.

2. Medicare's own actuaries think SGR is phony and hides the true unfunded liability of Medicare.  SGR is an assumed cut to Medicare spending which will actually never happen.  But just like CBO needs to assume it will, so did the Medicare actuaries--until this year.

For the first time ever, the Medicare actuaries admitted that SGR was a sham, and that giving credit to its phony cuts does a disservice to the public.  Including SGR cuts in long-range Medicare spending is to make long-range Medicare spending look pretty good by comparison. Here's what the actuaries had to say:

In addition, a further exception to current law is being made this year with regard to the sustainable growth rate (SGR) formula for physician fee schedule payment under Part B. Current law requires CMS to implement a reduction in Medicare payment rates for physician services of almost 21 percent in April 2015. However, it is a virtual certainty that lawmakers will override this reduction as they have every year beginning with 2003. For this reason, the income, expenditures, and assets for Part B shown throughout the report reflect a projected baseline, which includes an override of the provisions of the SGR and an assumed annual increase in the physician fee schedule equal to the average SGR override over the 10-year period ending with March 31, 2015. Since 2008, legislation overriding physician fee reductions has included provisions offsetting the 10-year cost of the overrides, but the division of those offsetsbetween Medicare savings and savings in other parts of the budget has varied. Because it is difficult to predict the extent to which policy makers will finance future overrides with other Medicare savings, the projected Medicare baseline does not include any offsets, which may result in overstating program costs.

If the top Medicare experts, whose job it is to accurately portray the health of the program, are willing to completely discount and ignore SGR, it's not worth the paper it's printed on and should be scrapped.

In addition to this, the Center for Medicare Services (CMS) has announced that it is ignoring looming SGR cuts when setting Medicare Advantage rates (the freer-market alternative to traditional Medicare).

In both these cases, the people who pay the closest attention to Medicare recognized the history of Congressional action to defer cuts, as well as the disruption it causes if one set policy based on formula, and then adjusted suddenly when Congress overrides that formula.

3. SGR smooths the path for bad policy outcomes, including and especially Obamacare.  SGR is one of many elements that conservatives can blame for saddling the country with the broken government healthcare regime we have today.

First, the existence of SGR made the solvency and sustainability of Medicare look stronger than it actually was.  That allowed for the Obama Administration and allies on Capitol Hill to justify the creation of Obamacare (paid for in large part by Medicare cuts, incidentally) because of this rosy long-term cost scenario for government in general.  The trillions of dollars in higher Medicare spending over this century than was assumed by policymakers might have given pause to a stray congressman here or senator there.

Second, SGR has historically been a magnet for other healthcare spending, known as healthcare "extenders." No one ever bothers to scrutinize these extenders, and it's likely they've cost more than the sum total of "doc fix" patches to date.  The Wall Street Journal calls one such extender "payola" included at the request of liberal Senator Chuck Schumer (D-N.Y.)

4. SGR and the resulting "doc fixes" get in the way of conservative health reforms on Capitol Hill.  It bears repeating that Congress has delayed the onset of SGR 17 times in 11 years. Every time they do so, it's a Chinese firedrill​ of the highest order.

The healthcare staff of many members and committees have to be deployed for drafting, scoring, hearings, interminable meetings and conference calls, etc.  It's a "timesuck" of epic proportions for these staffers and members.

That would be all well and good except that these are the very same conservative staffers and members who free market health reformers are counting on to do proactive improvements/repeal of Obamacare, Medicare, Medicaid, the Veterans' Administration, etc. There's only so much time on the Congressional calendar.  By necessity, Congress doesn't get to to work on these reforms because their key personnel are busy rolling the doc fix rock up the hill for the eighteenth or nineteenth time.

If you're a conservative interested in repealing Obamacare, reforming Medicare, or block granting Medicaid to the states, removing the SGR kabuki theater from the Congressional agenda is absolutely essential.  Put bluntly, we will never, ever get to do all the cool entitlement reforms we want to do if "doc fix" is on the Congressional agenda ahead of them every year.  Clear it out.

5. SGR and annual doc fixes give occasion to campaign finance shakedown operations. Another widely known fact in Washington is that Congress loves doing the annual doc fix because it gives their fundraisers an opportunity to hit up doctors and others for campaign cash.  If SGR went away as a threat, so goes the theory, the potential SGR victims might be less willing to write checks.  It doesn't take much of a Google search to see that the impeding threat of SGR is very good for fundraiser commissions.

Conservatives should be repulsed by this effect.  It's part of the corrupt, crony capitalist shell game in Washington, and it needs to stop.  Congress sets up a fake crisis which everyone knows won't happen.  

"Except, it might, Mr. Lobbyist, this year," says the senator.  "Totally different subject, Mr. Lobbyist--did you know about my cocktail reception at Johnnie's Half Shell tonight?  You'll be there?  Great, I look forward to seeing you.  Let's see what we can do about this doc fix nonsense, huh?"

On and on it goes.  A small part of draining the swamp in the Beltway is getting rid of the phony SGR threat.  Don't forget that SGR provides a vehicle for all sorts of other bad policies to become law.

There are conservatives of good will on both sides of this issue.  Some of the smartest healthcare and fiscal minds in the conservative movement think that keeping SGR, or having to cut spending dollar for dollar to repeal it, is a no-brainer.  Their arguments are serious and substantive.

But there's another side to the coin, and that's what's been presented here.  There's a good conservative case to be made that SGR needs to go, and as soon as possible.

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