National Review: “Eliminating the Cadillac tax is one tax cut that Republicans should resist”

November 8th, 2015

At National Review, Kevin D. Williamson aptly explains a lot of my current thinking on the recent revelation that both Harry Reid and Nancy Pelosi are trying to repeal the Cadillac Tax.

First, when the ACA was being debated, the Cadillac Tax was needed to make the CBO score it budget neutral–this was all a myth, but was essential to the President’s unkeepable promise that the law would not add any money to the deficit (much like his other unkeepable promises that the price of insurance would go down, and that people could keep their plans if they liked them–sensing a pattern?).

The Cadillac tax was never going to be long-lived. It was a lie from the beginning, a part of the great fiction that allowed Democrats to claim that Barack Obama’s signature health-insurance initiative would add “not one dime” to the deficit, as the president repeatedly insisted. But the tax was and is bitterly opposed by important Democratic constituencies: the AFL-CIO and the American Federation of Teachers, the members of which enjoy very generous health-care programs (the teachers at your direct expense, suckers) and don’t much like paying taxes despite their endless nattering about the need to make sure everybody pays his “fair share.”

Second, no one actually expected it to go into effect–let the law get over the first few years, and by then everyone would love it so much, that repealing a tax that primarily harms unions would be an easy sell. Alas, the advocates of the law who insisted the tax would remain have been proven wrong:

When the Affordable Care Act was being debated, many on the right, myself included, argued that the optimistic projections of the Congressional Budget Office were wildly unrealistic, inasmuch as it was not at all likely that the unpopular revenue-raising provisions of the law, such as the Cadillac tax, would be enacted or that, if enacted, they’d survive long. Our criticism of the CBO estimates was echoed by . . . the CBO, which expressed the same reservations for the same reason: All the political pressure is on higher spending and lower taxes, but the architecture of Obamacare requires the opposite if it is to perform as advertised. Defenders of the proposal, such as Ezra Klein, argued that, the sum of historical evidence notwithstanding, Congress is capable of sticking to the ACA despite the inevitable pressure to knuckle under to the unions and other Democratic special-interest groups. Nancy Pelosi and Harry Reid — and Herself — all confirm it now: We were right, they were wrong.

Third, Speaker Ryan should ask the CBO to rescore the ACA as it is actually being implemented, and not the phantom scoring from 2010. Sen. Olympia Snowe referred to the process as a “fiscal masquerade.”

Speaker of the House Paul Ryan, who is a numbers guy, should have the CBO rescore Obamacare as it is actually being implemented, incorporating not only the proposed Cadillac-tax repeal but also the effects of enrollment numbers that are lower than projected — current expectations are that 2016 will see about half the enrollments originally estimated. The result will be not billions but hundreds of billions of dollars in additional deficits.

This may be impossible. In June 2014, the CBO announced that they had given up trying to score Obamacare because it was too difficult.

Congressional budget scorekeepers said they can no longer measure the fiscal impact of many provisions of ObamaCare because the task is impossible.

In a little-noticed footnote from April, the Congressional Budget Office (CBO) said it will continue to assess the effects of the law’s exchange subsidies and the Medicaid expansion, while not tracking others.

“The provisions that expand insurance coverage established entirely new programs or components of programs that can be isolated and reassessed,” the office wrote.

“In contrast, other provisions of the Affordable Care Act significantly modified existing federal programs and made changes to the Internal Revenue Code.

“Isolating the incremental effects of those provisions on previously existing programs and revenues four years after enactment of the Affordable Care Act is not possible.”

In Bitter Pill, Steven Brill offered this assessment of the impact of myriad delays on the law:

With that change, and others, I now counted nearly $ 100 billion in negative changes by executive fiat since the CBO had scored the law as being deficit neutral. And that didn’t include the $ 200 billion in costs put aside when the Democrats had scrapped the doc fix, but promised to put it into another law. Two months later, the CBO would announce that it was no longer going to score changes in the rules and schedules related to Obamacare because there were so many and they were so interrelated with other revenue and expense drivers.

Finally, Republicans should resist the siren calling of repealing this unpopular tax, without any requirement to reform the underlying law.

For now, eliminating the Cadillac tax is one tax cut that Republicans should resist. The teachers’ unions and the AFL-CIO put these clowns in office and inflicted Obamaare on the country, and we should make them pay for it. As Ed Koch famously said: The people have spoken, and now they must be punished.

I am working on an article explaining that the quickest way to repeal the Affordable Care Act is to enforce the entire law. All of it. Get rid of all of the illegal waivers, extensions, and transitional relief. The insurance companies would rush to the table, and the law would be scuttled in a manner of months. Stay tuned.