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Saturday, May 19, 2007
Talk of minor spending cuts provokes wails
The Atlanta Journal-Constitution
The Georgia legislative debate over PeachCare, and the congressional debate over whether to nearly quadruple spending for programs like it, demonstrate the profound difficulty fiscal conservatives have in containing government’s spending and growth.
Ronald Reagan was right. And those in Georgia who advocate a constitutional lid on spending are right, too. Without controls and without tax cuts, politicians will never have the discipline to contain spending.
In Georgia, the Senate has passed a proposed constitutional amendment that would limit spending to population growth plus the rate of inflation, with considerable built-in flexibility. A similar resolution is pending in the House. It’s offered by Reps. Tom Graves (R-Ranger), Martin Scott (R-Rossville), John Lunsford (R-McDonough), Mike Coan (R-Lawrenceville), Jeff Lewis (R-White) and others. In Congress, where tax cuts once represented a limited check on government’s growth, Democrats have embraced a $2.9 trillion budget blueprint. It increases domestic spending by $23 billion, but projects a surplus by 2012. How? By assuming that the Bush tax cuts on income, dividends and capital gains will expire in 2011.
In Georgia, unless spending caps are in the state constitution, no containment is possible. The PeachCare debate, and the way Georgia dealt with a newly created program that had spent out of control, is illustrative of how difficult it is to make even minor spending adjustments.
PeachCare is not an entitlement. It was created by Congress in 1996 to cover uninsured children in families too well off for Medicaid.
States are reasonably free to decide who should be covered. Georgia is one of 15 states with the most generous eligibility standards, providing subsidized coverage for a family of three with income of up to $40,349 in 2007. Most states — 26 in 2006 — cut off eligibility at twice the federal poverty level, or $34,340. Nine states are lower. Most states, including Georgia, subtract some earnings and expenses from total income to determine eligibility.
Georgia, like Florida, North Carolina and most other Southeastern states, started by setting eligibility at up to twice the federal poverty level. But in 2000, with money flowing, eligibility was raised to 235 percent.
The program is now up for renewal in Congress. In the first 10 years, the feds spent $40 billion on a roughly 70-30 federal-state basis. In the renewal, Democrats are proposing $75 billion over five years, more than double the administration’s request.
This session’s effort to deal with the impending shortfall in PeachCare, and to deal squarely with taxpayers, tells Georgians a great deal about what we can expect here from the party of Reagan. Gov. Sonny Perdue made an impassioned appeal to Congress for more money, though Congress responded by including it in legislation tied to a withdrawal date from Iraq, which the President vetoed.
In the House, Speaker Glenn Richardson (R-Hiram) put forth a bill to deal with the problem longer term. It would have brought eligibility back to 200 percent but grandfather in children already covered, and allowed the board of the Department of Community Health to make adjustments between 185 and 225 percent. It would, too, have required beneficiaries to make small payments for vision and dental coverage. Nothing outlandish.
“This is one small step, one small step, toward reining in a good program and keeping this for the poorest of the poor,” Richardson said.
When all of the proposed changes were factored in, the savings to taxpayers amounted to a projected $2.1 million. Million, not billion. For this, opponents predicted Armageddon.
In the Senate, however, eligibility was expanded to 250 percent of the federal poverty level, with a requirement that they pay premiums of 1.5 percent of household income. Premiums now range up to 1.7. While it may have been intended to be break-even, financial analysis done after the session revealed that the cost to Georgia taxpayers for included provisions would increase by $67,612,086.
So the cost of a program that is less than 10 years old, that’s not an entitlement, that has been drawn little or no analysis of how it works, comes up for examination. One problem, three solutions, and a dire prediction that the sky will fall. Not a promising start that the new bunch will be any more successful in containing the growth of government than the old.
• Jim Wooten is the associate editorial page editor. His column appears Sundays, Tuesdays and Fridays.
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