Seventh Grade Civics

Alan Zendell, March 14, 2017

I am frequently amazed at how little the average American understands about the way our government works. Admittedly, thirty-seven years as a federal employee gave me a leg up, but what was everyone else doing in seventh grade civics? Here’s what they missed when they were sneaking cigarettes in the rest rooms instead of paying attention.

Our government, as provided by the Constitution, is divided into three branches. The Congress, which consists of the Senate and the House of Representatives, makes our federal laws, the most important of which specify how much money the government can spend each year. The Judiciary is charged with determining whether those laws are constitutional when someone challenges them. And the Executive Branch assures the laws Congress passes are carried out. That’s it, except for incidentals like declaring war. Only Congress can do that, legally, but the President can make the issue moot by ordering military actions without Congress’ approval.

The President can lobby for things he wants done and make budget proposals, but the only power he has in that regard derives from political pressure and skillful use of his bully pulpit. When Donald or Hillary or Bernie said, “When I’m president I’m going to…”, they usually meant, “I’m going to try to convince Congress to do it”. Presidents can’t cut taxes, grant universal health care, declare that colleges will no longer charge tuition, or hire contractors to fix bridges and highways.

Every president in recent memory promised to cut spending as soon as he took office. One actually did, though he was foiled by the Law of Unintended Consequences, which takes precedence regardless of which party is in power. In 1981, President Reagan ordered a 15% cut in administrative costs across all executive departments, something he could do legally, because all the department heads reported directly to him. Everyone applauded him for keeping his promise, except the people who had to carry out the order.

It was reality check time. In those days, my corner of the world was Medicare administrative costs, but the same issues applied across government. The problem was that over 90% of administrative costs were locked in. Most of them were allocated to fund the contractors that ran the program day-to-day, with the remainder going to pay for the federal employees charged with overseeing them.

The only way to reduce latter was to institute a hiring freeze. Wholesale firing or laying off of government employees is a nonstarter, as President Trump is about find out, and infrastructure costs (buildings, government vehicles, general overhead) were already committed. We did the only thing we could do – pass the cuts on to the contractors, but they had the same problem. If they reduced staff, they wouldn’t be able to process medical claims, and personnel and building costs made up almost all of their budgets. The cuts had to come from “discretionary” spending, which was almost entirely devoted to audit activities. In the end, most estimates found that firing the auditors cost Medicare about $40 for every administrative dollar saved, because no one was keeping the foxes out of the hen house. Nice try, Ronnie. Better luck next time.

My seventh grade civics class didn’t mention the Congressional Budget Office (CBO) because it didn’t exist until 1975. It was created to be a nonpartisan group of economists, policy experts, and researchers that would be an objective referee in all matters of legislative budgets. Interestingly, the current director of the CBO was appointed by a Republican congress, key among which was current Health and Human Services Secretary Tom Price, then the chairman of the House Budget Committee. That same Tom Price is now accusing the CBO of complete incompetence in scoring the administration’s new health care legislation, the American Health Care Act (AHCA).

Trump’s people act as if they were blindsided by the CBO’s findings although everyone involved in the creation of the AHCA knew in advance that it would deprive tens of millions of Americans of health insurance. Was their plan all along to discredit the CBO the same way they have demonized the media (and everyone else who disagreed with them)?

This is a classic case of very large square pegs not fitting in very small round holes. It doesn’t work. There’s no way to provide affordable health care for everyone without a huge increase in cost. The CBO estimated that the AHCA would reduce costs by $338 billion. It’s impossible to cut expenses that much and keep the President’s promise. No amount of smoke and mirrors will change that.

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