Saturday, October 31, 2015

Speaker Boehner Cleaned Out the Barn; Where are the Road Apples?

Speaker of the House John Boehner promised to “Clean out the Barn” before turning the gavel over to his successor. He wanted to lift the government’s borrowing cap and pass a spending bill. The Ex-Im Bank went through separately. The Speaker succeeded. A compromise budget bill was reached last Monday with the borrowing cap extended to March 2017 with the limit and the sequestration partially lifted for the next two fiscal years. Neither requires a 144 page bill, negotiated in the proverbial “smoked filled room” by a few officials of each party, introduced Monday, passed by the House on Wednesday and agreed to by the Senate after 3:00am Friday morning. Once again, the members of Congress did not know what they were voting for. As Then Speaker Nancy Pelosi said of ObamaCare: “But we have to pass the bill so you can find out what is in it.” 144 pages in the darkness of night is a green light for lobbyists. Speaker Boehner once promised that House members would have 72 hours to review a bill before voting. Not this time, which tells us that there are road apples in it. 35 Republican Senators and 167 Congressmen voted against it. They didn’t know what was in it. Speaker Boehner and Senate Majority Leader McConnell did not follow the Hastert Rule. Here’s what we know: $40 billion for defense and $40 billion for social programs, with $50 billion in Year 1 and an additional $30 billion in Year 2. An additional $32 billion goes into an Overseas Fund for the State Department and the Pentagon. The costs are “paid for” on paper through a few revenue increases and the usual accounting gimmicks in these deals. For example, one payment to the government is moved up by a month. The bill contains cuts in farmer crop insurance subsidies, but never underestimate the political power of the Farm Belt. These cuts are expected shortly to be addressed by Congress, which means they will be restored. The Bill repeals an ObamaCare provision scheduled to go into effect in 2017. Employers with over 200 employees had been required to automatically enroll all workers into health insurance plans. The repeal is estimated to save $7 billion. Projected 52% premium increases for 15 million beneficiaries in Medicare B will be reduced to only 15%, which is covered by a “loan” from general revenue and an additional $3 fee on upper income seniors. We now learn that $1.5 billion has been transferred from, that is cut, from the Crime Victims Compensation Fund, and an additional $746 million from the Justice department’s Asset Forfeiture Fund. The Social Security Disability Fund is running out of money. Benefits would have been cut by 20% next year for 10.8 million beneficiaries. Money was “borrowed” from the general fund to plug the gap. Eligibility rules were also tightened somewhat. Congress expects to raise $7 billion by selling 58 million barrels of oil from the Strategic petroleum reserve at a time when crude oil prices are plunging. Congress is pursuing the time proven maxim of “Buy high, Sell low.” It also expects to raise money by auctioning broadband spectrum. Premiums for companies participating in the Pension Benefit Guaranty Fund will see their premiums increase. $30 billion is projected in Medicare savings. Patient rates will be equalized for hospital and out-patient care. The “file and suspend” loophole in society will be prospectively plugged. A spouse can claim the spouse’s own social security benefits, or one-half of the other spouse’s benefits. Under “file and suspend” the other spouse could file at 65 and then delay, “suspend” benefits until 70, watching them grow 8% annually. The other spouse could immediately file for half the benefits of the one who suspended payments to 70. That benefit is eliminated. (It’s not as confusing as it sounds) One non-financial provision is a sop to Speaker Boehner. The rotunda outside his office will be named the “Freedom Foyer” and contain his favorite busts of Winston Churchill, Vaclav Havel, and Lajos Kossuth. The Churchill Bust is a dig at President Obama. These are the ones we know about. It still doesn’t add up to 144 pages. Where are the road apples?

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