April 25, 2014

Washington Budget Report: September 10, 2013

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Congress Must Move Quickly on Budget, Debt Limit

Congress returned from recess Monday confronted by rapidly approaching fiscal deadlines. The Senate and House will both be in session only eight more days before the fiscal year ends Sept. 30. Lawmakers will need to quickly approve a spending plan for the new fiscal year and take action on the debt limit.

With overall spending targets in the House and Senate $91 billion apart and no appropriations bills signed into law, Congress has little choice but to pass a continuing resolution or face a government shutdown.

While a continuing resolution is clearly preferable, sequestration has made adopting one more difficult because Congress must decide whether to set it at pre- or post-sequester levels. In a recent blog post, Concord Coalition analyst Ben Ritz points out that the challenges posed by the sequester will only get worse as time goes on.

“With sequestration cutting deeper into discretionary spending in the coming years -- in addition to the reductions imposed by the Budget Control Act of 2011 -- Congress will find these low levels of discretionary spending increasingly difficult to maintain,” Ritz says. “It would be wiser to replace the sequester with comprehensive fiscal reforms, including measures to slow the growth of entitlement programs -- a key driver of future deficits.”

He also points out that a government shutdown would be less likely to trigger panic in global financial markets than failing to raise the debt ceiling -- a failure which he says would be “fiscal and economic suicide.”

Syrian Situation Highlights Sequester Concerns

As Congress considers authorizing military action in Syria, many lawmakers and analysts have turned their attention to the possible impact on the defense budget.

The cost of a limited strike in Syria would likely be small relative to the $680 billion that the United States spent on defense last year. Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, has said efforts to prevent the use or proliferation of chemical weapons in Syria could average $1 billion per month.

However, Congress may find it politically difficult to justify a new military expenditure for Syria while cutting other defense and domestic discretionary spending across the board.

“Going to the public and saying, ‘We're authorizing military action, and by the way we're cutting the military budget or we're going to shut down the government,' is a very inconsistent message,” says Concord Coalition Executive Director Robert L. Bixby.

The situation with Syria, he hopes, can stimulate a more realistic discussion about the defense budget and serve as a reminder that all the discretionary programs, including defense, are being squeezed by sequester.

Why We Need Public Engagement on Fiscal Reform

The latest budget struggles in Washington are a reminder of the need for public engagement in the nation’s fiscal challenges.

“For 21 years, staff members of the nonpartisan Concord Coalition have crisscrossed the nation discussing the causes and consequences of federal deficits, the challenges facing America’s entitlement programs, and ways to build a solid foundation for economic growth,” writes Paul Hansen in a guest column in the Missoulian (Montana). “We find that most Americans get it; they realize we cannot continue to pile up huge amounts of debt.”

While recent cuts have put annual domestic spending on a path to historically low levels, some lawmakers are overly focused on still more cuts in the same part of the budget. Often those reductions are in programs that are already relatively small.

“Real deficit reduction requires doing things with big-ticket items, such as reforming the tax code and social benefit programs: Medicare, Medicaid and Social Security,” says Hansen, Western regional director for The Concord Coalition.

He warns that “no enterprise as great as the United States should operate without a budget” and says politicians threatening to hold the country hostage over the debt limit until their demands are met “is risky for our economy and costly for taxpayers.”

GAO Study Raises Questions on Doctors’ Financial Interests

Doctors who have financial interests in radiation therapy centers are much more likely to prescribe radiation treatments for prostate cancer, according to a new Government Accountability Office (GAO) study.

This is the latest in a series of GAO studies that show doctors prescribe certain treatments more frequently when they have financial interests in medical facilities that offer those treatments.

Radiation therapy is a common treatment for prostate cancer although the study says alternative remedies may be equally effective and less expensive for patients and Medicare.

Federal law generally prohibits doctors from having financial interests in the treatments they prescribe for Medicare beneficiaries. But there are exemptions, including for radiation therapy. GAO investigators concluded that many patients who received radiation therapy did not know their doctors had such financial interests in the medical centers providing the treatment.

The current fee-for-service payment system for Medicare simply reimburses doctors for the amount of services they provide. This makes it easier for doctors who have a financial stake in certain medical technologies to prescribe costly and potentially unnecessary treatments.