Thursday, May 14, 2015

Remember When Adults Used to Govern Via OBRA, COBRA and TEFRA?

'If you know how to charm the COBRA,
you can get a lot done in Congress'
Of course you don't. Unless you are like ancient nowadays.

Consider this your history lesson for today if you are under the age of say, 40.

The first time one of these species called an 'omnibus reconciliation bill' (OBRA to begin with) was used to address the American fiscal situation in earnest was 1980.  If you are now turning 40 years of age, you would have been all of 5 years old back then so there is no way you could have appreciated what was going on back then when adults used to run Congress, the US Senate and the White House.

Believe it or not, there used to be a time when Harry Reid was a nondescript junior senator from Searchlight, Nevada who had very little impact on much of anything in the US Senate. As were almost all of the remaining US Senators who are still serving in the Senate today who were elected prior to 1988. (Leahy, Hatch, Cochran, Grassley, McConnell, Shelby, Mikulski, McCain)

Senators and Congressional Representatives back then actually cared about things such as the budget, the budget deficits and the national debt. They were not always successful in addressing them but to solve them, you have to at least first 'care' about them, yes?

You might be seeing more about the 'budget reconciliation' process emanating out of Washington in the coming months so we thought you might want to know what it is before the press distorts its relevance and importance as they always seem to do with weighty important issues that affect all of us.

'Budget Reconciliation' came out of the 1974 Budget and Impoundment Control Act passed under President Nixon as a way to bring some semblance of sanity to the even-then chaotic congressional and presidential budget process.

Imagine what it was like before then. 435 Members of Congress plus 100 prima-donna 'POTUSes-in-Waiting' US Senators and a President all haggling over the spending priorities for the coming fiscal year of the US federal government....without a common budget process or order to follow?

It would have been like everyone in a large family in the kitchen at the same time throwing all sorts of expensive stuff into the communal stew, with everyone wanting 'someone else' to pay for it, of course.

After this bill was passed, the hope was that Congress and the US Senate would act like adults and set forth spending priorities each year for the nation and suggest the 'ways and means' to pay for it. (which is why the oldest committee in the US House is called the 'Ways and Means Committee' by the way)

The bill followed the Constitution to a T in the sense that it called for a concurrent budget resolution to originate in the US House and then be passed by the US Senate...and that is it. No signature by the President to pass it into law. No possible veto.

It did call upon the executive branch to present a budget each year, mainly because it was the funnel where all federal agencies could make their budget requests known to the elected leaders in the White House and on Capitol Hill and then the President would submit it to Congress in total.

Where, more times than not, it would be declared 'DOA' or 'Dead on Arrival' by whichever opposition party was controlling either the House or the Senate or both at the time.

So far, so good. At least Congress would have a general budget target to shoot at and, in reality, agree with 95% of the time which meant they could spend the rest of the year fighting over that last 5%.

Once Congress passed the budget resolution, instructions were to be sent to Authorization and Appropriations Chairmen that outlined the overall amount of money their committees would have to spend in the upcoming fiscal year on federal programs that came under their jurisdiction and oversight. (The key instructions were the amounts sent to Appropriations Chairs since that is where the real money is spent and allocated each year. Authorization Committees just oversee and monitor programs for all intents and purposes)

That is where the fun begins. Or at least used to before Majority Leader Harry Reid essentially shut down the entire annual budget process for the previous 6 years. No budget resolution; no budget reconciliation process; no budget control in essence.

With the Supreme Court considering the healthcare subsides this summer and the fact that now with Republican control of the Senate and House again where they have already passed a budget resolution, you need to understand how budget reconciliation might play out this summer and fall.

Here's a very helpful and informative article by our friend James Capretta, 'Remember Reconciliation?'  which points out the simple truth that under budget reconciliation rules, as long as it involves the raising of revenues or changes in spending, both of which affect the raising or lowering of deficit projections, a simple majority of 51 is necessary to pass the bill as opposed to the 60 needed to shut off debate in the Senate via cloture.

Read it so you will at least understand the basic outlines of how budget reconciliation used to work in the days of OBRA I, 1980 and then II,III (Omnibus Reconciliation Act) and on up to about OBRA X; COBRA 1985 (Consolidated Omnibus Reconciliation Act) and later, TEFRA (Tax Equity and Fiscal Responsibility Act of 1982 which, according to many people wound up being neither)

The great thing about OBRAs is that they actually allow our elected Congresspeople and Senators to act like the statesmen they all say they want to go to Washington to be and we all want them to be for the good of the nation. It might be complicated but under OBRA rules, the very programs that are causing our deficit nightmares, entitlement programs, especially Medicare, Medicaid and to some extent, Social Security, can be dealt with in huge bills under the cover of night when everyone is exhausted.

It is the only way any elected official in Washington will ever be able to tackle these monstrous spending programs and get a grip on them through reforms and outright spending reductions in certain programs.

We, for example, proposed $177 billion in Medicare/Medicaid spending reductions from the proposed spending baseline in the FY 1993 Budget Alternative on the House Republican Budget Committee out of a total of $500 billion in 5-year savings.

When the 1997 Balanced Budget Act finally passed, $135 billion of those savings remained in the final form that passed Congress and was ultimately signed by President Bill Clinton.

Guess what? There is not one person you can talk to this week who could tell you what reductions were represented by $1 of that $135 billion in flattened spending in either Medicare or Medicaid over the 5 years from 1998-2002. In the grand scope of things, those spending reductions/reforms just did not amount to any onerous or dangerous cuts to essential entitlement programs as many on the left would have everyone believe.

Budget Reconciliation is a budget tool you should be looking forward to and supporting this year. Tell your elected representatives and senators they should learn to use it too.

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