The $1.9 trillion COVID relief bill is about 9% related to COVID-19. CNBC reports that the COVID relief bill likely will trigger a $36 billion cut to Medicare. It will also likely cause higher fees with student loans. Can you say, Hi, I’m from the government… I’m here to help?
There’s a CNBC article saying:
“The cuts may automatically increase fees on federal student loans, for example, according to the Office of Management and Budget (OMB).”
“Some doctors and hospitals may opt not to accept Medicare due to lower cost reimbursements from the federal government, according to budget experts. Providers may also try to pass extra costs to consumers.”
Mirrors and magic
The PAYGO (Pay As You Go) Budget rule requires that tax cuts and mandatory spending increases must be “offset” by tax hikes and cuts to mandatory spending in order to prevent massive deficits.
The PAYGO rule works this way. A determination of budget deficit comes at the end of the year. Then it averages out in a five or ten -year window. Next, the averages result is offset canceling the deficit by pulling back in other areas of the budget each year. The goal is to have the deficit impact of the budget be zero dollars.
The Congressional Budget Office memo says this “pandemic aid measure” raises the federal deficit by $1.9 trillion over a decade.
Congress is creating another mandatory offset that includes a reduction in Medicare funding by 4%, or $36 billion but it works so well it that we are already $28 trillion in debt… excluding the covid bill.
Caps and experts
The cuts to Medicare cap at 4%, but other programs don’t have limits. The only programs exempt from cuts are Social Security, Medicare, and Food Stamps. This means sometimes the spending priorities can get slashed. For example, PAYGO rules triggered an automatic 5.7% increase in loan fees this year, according to the OMB.
There are “experts” who say it’s unlikely the impact of the bill will remain. Yes, automatic cuts can be waived by lawmakers. That will require Republican support. Maybe the administration gets it and maybe not. The bill still has to be paid. You can pay me now or pay me later but the bill will be paid.
You have to be able to pay for the things that you’re promising.
It’s a balance the Democrats continue to remain silent about. When the music stops it is going to be ugly but “someone” voted to continue this financial irresponsibility.
