Former CBO Chief: Congress Never Meant to Limit Obamacare Subsidies
A Supreme Court ruling expected this summer will determine whether the federal government can subsidize the insurance costs of individuals in states that did not establish their own health care exchanges under the Affordable Care Act.
Douglas Elmendorf was the director of the Congressional Budget Office when Congress debated the bill, and on Tuesday he provided some ammunition to backers of the law who insist that that Congress did not intend to prevent payments of subsidies to consumers in states using the federal exchange.
Related: How Obamacare Could Be Squeezing Consumer Spending
In an interview with CNBC’s John Harwood at the Peter G. Peterson Foundation’s 2015 Fiscal Summit*, Elmendorf said that before the ACA passed, the CBO analyzed the bill for members of Congress, many of whom were powerfully opposed to it. At the time, he said, there was a common understanding on Capitol Hill that the subsidies would be available to states regardless of the status of their exchanges.
“That analysis was subject to a lot of very intense scrutiny and a lot of questions,” he said. “My colleagues and I can remember no occasion on which anybody asked why we were expecting subsidies to be paid in all states regardless of whether they established exchanges or not. And if people had not had this common understanding…then I’m sure we would have had a lot of questions about that.”
Pressed by Harwood, Elmendorf added, “My colleagues and I talked to a lot of people, with a lot of questions about nearly every aspect of the analysis that we did…and we could not remember anybody asking us any questions about what would happen in the federal exchange different from what would happen in the state exchanges.”
Even so, the language of the law states that the subsidies would apply to exchanges “established by the State” and the Supreme Court will decide how literally those words must be interpreted.
*Pete Peterson also funds The Fiscal Times.
Number of the Day: $132,900
The cap on Social Security payroll taxes will rise to $132,900 next year, an increase of 3.5 percent. (Earnings up to that level are subject to the Social Security tax.) The increase will affect about 11.6 million workers, Politico reports. Beneficiaries are also getting a boost, with a 2.8 percent cost-of-living increase coming in 2019.
Photo of the Day: Kanye West at the White House
This is 2018: Kanye West visited President Trump at the White House Thursday and made a rambling 10-minute statement that aired on TV news networks. West’s lunch with the president was supposed to focus on clemency, crime in his hometown of Chicago and economic investment in urban areas, but his Oval Office rant veered into the bizarre. And since this is the world we live in, we’ll also point out that West apparently became “the first person to ever publicly say 'mother-f***er' in the Oval Office.”
Trump called Kanye’s monologue “pretty impressive.”
“That was bonkers,” MSNBC’s Ali Velshi said afterward.
Again, this is 2018.
Chart of the Day: GDP Growth Before and After the Tax Bill
President Trump and the rest of the GOP are celebrating the recent burst in economic growth in the wake of the tax cuts, with the president claiming that it’s unprecedented and defies what the experts were predicting just a year ago. But Rex Nutting of MarketWatch points out that elevated growth rates over a few quarters have been seen plenty of times in recent years, and the extra growth generated by the Republican tax cuts was predicted by most economists, including those at the Congressional Budget Office, whose revised projections are shown below.
Are States Ready for the Next Downturn?
The Great Recession hit state budgets hard, but nearly half are now prepared to weather the next modest downturn. Moody’s Analytics says that 23 states have enough reserves to meet budget shortfalls in a moderate economic contraction, up from just 16 last year, Bloomberg reports. Another 10 states are close. The map below shows which states are within 1 percent of their funding needs for their rainy day funds (in green) and which states are falling short.
Chart of the Day: Evolving Price of the F-35
The 2019 National Defense Authorization Act signed in August included 77 F-35 Lightning II jets for the Defense Department, but Congress decided to bump up that number in the defense spending bill finalized this week, for a total of 93 in the next fiscal year – 16 more than requested by the Pentagon. Here’s a look from Forbes at the evolving per unit cost of the stealth jet, which is expected to eventually fall to roughly $80 million when full-rate production begins in the next few years.
