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New Ideas for a Do-Something Congress No. 4: “Expand Access to Telehealth Services in Medicare”

Posted on February 14, 2019 by The Progressive Policy Institute

America’s massive health care industry faces three major challenges: how to cover everyone, reduce costs, and increase productivity. Telehealth – the use of technology to help treat patients remotely – may help address all three. Telehealth reduces the need for expensive real estate and enables providers to better leverage their current medical personnel to provide improved care to more people.

Despite its enormous potential, however, telehealth has hit legal snags over basic questions: who can practice it, what services can be delivered, and how it should be reimbursed. As is the case with any innovation, policymakers are looking to find the right balance between encouraging new technologies and protecting consumers – or, in this case, the health of patients.

Telehealth policy has come a long way in recent years, with major advances in the kinds of services that are delivered. Yet a simple change in Medicare policy could take the next step to increase access and encourage adoption of telehealth services. Currently, there are strict rules around where the patient and provider must be located at the time of service – these are known as “originating site” requirements – and patients are not allowed to be treated in their homes except in very special circumstances. To expand access to telehealth, Congress could add the patient’s home as an originating site and allow Medicare beneficiaries in both urban and rural settings to access telehealth services in their homes.

THE CHALLENGE: LEGAL BARRIERS LIMIT THE POTENTIAL FOR TELEHEALTH TO INCREASE ACCESS TO PATIENT CARE.

Under Medicare, telehealth is defined as “the use of electronic information and telecommunications technologies to support long-distance clinical health care” (1). Each program in Medicare – traditional Medicare, Medicare Advantage, and Medicare demonstration projects – has unique rules limiting when and how telehealth can be used. Because Medicare Advantage has different rules governing telehealth, this brief is specifically focused on the roughly 39 million seniors enrolled in traditional fee-for-service Medicare (2).

In traditional, fee-for-service Medicare, the Social Security Act defines how telehealth services may be covered. As amended in 1997, the law limits telehealth to services that are furnished to beneficiaries in certain types of geographic areas: either a rural health professional shortage area (HPSA) or a county outside of a Metropolitan Statistical Area (MSA). Besides being in a qualifying rural area, the originating site – or where the patient is located – is required to be at a physician office, hospital, rural health center, skilled nursing facility, federally qualified health center, community mental health center, or a hospital-based dialysis facility. In those facilities, patients can receive care remotely from 10 types of distant site clinicians qualified to deliver telehealth services. In other words, traditional Medicare beneficiaries, except in special circumstances, cannot receive telehealth services in their homes.

Though the Centers for Medicare and Medicaid Services (CMS) cannot authorize new originating sites without Congress, it does have the authority to decide which telehealth services are payable under the Medicare Physician Fee Schedule. In 2019, that schedule includes roughly 100 billing codes covering consultations, psychiatric care, smoking cessation, end-stage renal disease management, nutrition counseling, new and existing patient evaluation and management services, and post-nursing facility care. It’s clear that many of these services – particularly psychiatric care and smoking cessation – should not require the patient to drive into a qualifying medical facility and could be effectively delivered in the home.

More beneficiaries could benefit from increased access to telehealth.

To modernize telehealth delivery, Congress directed CMS under the 21st Century Cures Act and the Bipartisan Budget Act of 2018 to start relaxing some telehealth rules in 2019. Thanks to this legislation, beneficiaries under traditional Medicare now have access to a range of telehealth services that fall outside the parameters listed above, including at home. These include:

Allowing Accountable Care Organizations (ACOs) to furnish telehealth services in the beneficiary’s home regardless of geographic location
Permitting ACOs to use teledermatology and teleophthalmology services provided through asynchronous store-and-forward telehealth* technologies
Expanding coverage of telestroke services – a service where emergency department clinicians can consult with stroke specialists in distant locations – to all geographic areas
Providing individuals with end-stage renal (ESRD) disease monthly ESRD-related clinical assessments via telehealth at home after first receiving a face-to-face appointment

Despite these advances, there are still many instances where Medicare beneficiaries
could benefit from telehealth from home but are not permitted to do so under current rules.

It is no surprise that telehealth utilization in traditional Medicare remains low. Though utilization increased between 2014 and 2016, only 90,000 traditional Medicare beneficiaries used 275,199 telehealth services in 2016. This represents roughly a quarter of 1 percent (0.25 percent) of the more than 35 million fee-for-service Medicare beneficiaries included in CMS’s telehealth analysis. Interestingly, growth was highest among the oldest group – those beneficiaries over 85. The data show that 85.4 percent of the traditional Medicare beneficiaries using telehealth services had at least one mental health diagnosis – and that psychotherapy was one of the most used telehealth services. The data also show that telehealth use is higher in states with large rural areas or HPSA. This, no doubt, reflects the legal requirement that patients must be in such areas to receive telehealth services (3).

By adding the patient’s home as an originating site in traditional Medicare, patients in urban or other underserved areas could also benefit from using telehealth services in their homes. Roughly 80 percent of seniors have one chronic disease and 68 percent have two or more (4). Telehealth can help patients better manage their conditions in the convenience of their own home. According to a 2017 GAO report, a Veterans Health Administration’s (VHA’s) program – that provided home-based telehealth services to veterans with chronic conditions – resulted in a 40 percent reduction in hospitalizations (5).

Telehealth could reduce costs.

In addition to expanding access to high-quality medical services to people in underserved areas, telehealth may also save money. This is crucial because, as Medicare’s Trustees warn year after year, the nation’s health-care program for seniors faces serious financial challenges that threaten its ability to meet its obligations to future beneficiaries. Though it used to have budget surpluses, now, each year, the hospital insurance (HI) fund, which covers Medicare Part A, runs a chronic deficit (6).

Virtual visits are cheaper than in-person care, on average, in the commercial insurance market. In the commercial market, telehealth visits cost roughly $100 less per visit than in-person visits. Generally, virtual consultations are priced at $40–50, while office visits check in at $136–$176 (7). In Medicare, however, online visits are priced the same as in-person visits and usually involve a facility fee to cover the patient’s visit to a medical facility. Savings could be realized from serving patients in home and eliminating redundant facility fees (8).

THE GOAL: EXPAND ACCESS TO TELEHEALTH SERVICES AS A WAY TO IMPROVE ACCESS AND POTENTIALLY REDUCE MEDICARE COSTS

Commercial plans generally permit telehealth originating sites in both rural and urban areas, though they vary with coverage of services provided while the patient is at home. While expanding the coverage of telehealth services in Medicare may increase costs initially, those extra costs could be justified by both the expanded access and the better outcomes telehealth services could deliver. Moreover, in the long run, helping patients manage chronic conditions, avoid hospitalizations, and reduced facility fees will save money.

For example, one program focused on providing acute care at home for older, vulnerable patients with one of nine conditions – exacerbations of congestive heart failure, chronic obstructive pulmonary disease, community-acquired pneumonia, cellulitis, deep venous thrombosis, pulmonary embolism, complicated urinary tract infection or urosepsis, nausea and vomiting, and dehydration – found a 38 percent reduction in mortality for patients treated at home. Appropriately titled “Hospital at Home” outpatients had comparable or better clinical outcomes and saved an average of 19 percent relative to similar hospital inpatients. Among the important components of this program were “telehealth nurses,” who monitored patients’ vital signs remotely via telehealth units installed in patients’ homes (9).

There is an ongoing debate between advocates of telehealth who argue that expanding services increases access to care and other policymakers who caution that telehealth may not act as a substitution for in-person services and instead increase unnecessary utilization without improving outcomes. Because telehealth has been limited to-date, the data are mixed. However, there is clear potential to improve access and convenience, and, over time, that could improve outcomes.

THE PLAN: EXPAND ACCESS TO TELEHEALTH BY ALLOWING REIMBURSEMENT UNDER TRADITIONAL MEDICARE FOR APPROVED TELEHEALTH SERVICES DELIVERED TO PATIENTS’ HOME

Rather than slowly increasing the sites and services allowed under telehealth, Congress should allow CMS to authorize a patient’s home as an originating site so clinicians can deliver medically necessary services via telehealth to patients’ homes.

There’s a precedent for abolishing originating site rules. In 2016, the Department of Defense (DoD) announced that a patient’s home would qualify as an originating site as long as the provider worked at a military treatment facility. Additionally, California has recently proposed abolishing originating site rules in its Medicaid program, saying telehealth originating sites can include, but are not limited to, “a hospital, medical office, community clinic, or the patient’s home.” By expanding the definition of “originating site,” California is moving to allow clinicians to provide more telehealth services. These changes are too recent to have garnered data, but it is clear that other agencies are looking to expand access to telehealth.

Congress should follow suit. Lawmakers could significantly expand access to services by amending the Social Security Act clause that governs originating site rules and expanding the definition to include the patient’s home as a qualifying originating site.

Telehealth has come a long way since it was first authorized under Medicare in 1997. But the laws governing telehealth from 20 years ago are outdated. It’s time to allow Medicare recipients to get telehealth services in their home.

* When health-care providers review patient medical information like lab reports, imaging studies, videos, and other records at another location and at a time that is convenient for them. The service is not delivered in real time.

[gview file=”[gview file=”https://www.progressivepolicy.org/wp-content/uploads/2019/02/PPI_NewIdeas_Telehealth_FINAL.pdf”]

ENDNOTES

1) Health Resources and Services Administration Federal Office of Rural Health Policy. Available from: https://www.hrsa.gov/ruralhealth/telehealth/

2) Medicare Enrollment Dashboard, “Hospital/Medical Enrollment,” Centers for Medicare and Medicaid Services, October 2018. https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Dashboard/Medicare-Enrollment/Enrollment%20Dashboard.html.

3) “Information on Medicare Telehealth,” Centers for Medicare & Medicaid Services, 2018.
https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Information-on-Medicare-Telehealth-Report.pdf.

4) “By the Numbers: The Impact of Chronic Disease on Aging Americans,” CVS Health, January 2017.
https://cvshealth.com/thought-leadership/by-the-numbers-the-impact-of-chronic-disease-on-aging-americans.

5) “Information on Medicare Telehealth,” Centers for Medicare & Medicaid Services, 2018.
https://www.cms.gov/About-CMS/Agency-Information/OMH/Downloads/Information-on-Medicare-Telehealth-Report.pdf.

6) “OASDI and HI Annual Income Rates, Cost Rates, and Balances,” Social Security Administration, 2018. https://www.ssa.gov/oact/tr/2018/lr6g2.html.

7) Daniel H. Yamamoto, “Assessment of the Feasibility and Cost of Replacing In-Person Care with Acute Care Telehealth Services,” Red Quill Consulting, December 2014.
https://www.connectwithcare.org/wp-content/uploads/2014/12/Medicare-Acute-Care-Telehealth-Feasibility.pdf.

8) Ibid.

9) Lesley Cryer, Scott B. Shannon, Melanie Van Amsterdam, and Bruce Leff, “Costs For ‘Hospital At Home’ Patients Were 19 Percent Lower, With Equal Or Better Outcomes Compared To Similar Inpatients,” Health Affairs 31, no. 6 (2012): 1237-1243, https://content.healthaffairs.org/content/31/6/1237.full.

A Strong First Year for PPI’s Center for Funding America’s Future

Posted on December 27, 2018September 18, 2024 by The Progressive Policy Institute

As the Progressive Policy Institute’s Center for Funding America’s Future wraps up its first year, we want to thank everyone who followed and supported our work. Below you’ll find a compilation of our contributions to the public discourse in 2018.

Through op-eds, blog posts, media interviews, research reports, engagement with elected officials, and public forums organized in key battleground states, the Center drew much-needed attention to America’s interconnected problems of deteriorating public investment and soaring federal budget deficits. We fought back against Republican efforts to make these problems worse and challenged Democrats to counter them by offering a new progressivism that invests in our country without leaving the bill for future generations.

We concluded the year with a public forum in Iowa to kick off the 2020 presidential debate over fiscal issues in the nation’s first caucus state – and this is only the beginning. Now that we’ve made the case for a fiscally responsible public investment agenda that fosters robust and inclusive economic growth, we’re ready to offer concrete proposals for making it a reality.

In 2019, PPI will publish a series of specific policy recommendations to renew public investments in the foundation of our economy, modernize federal health and retirement programs to reflect an aging society, and enact pro-growth tax reform that raises the revenue necessary to support both of these critical government functions. We’re excited for the year ahead and hope you’ll continue to follow our work in 2019 and beyond.

Read Our Major Reports

Ending America’s Public Investment Drought
Ben Ritz and Brendan McDermott (12/19)

Defunding America’s Future: The Squeeze on Public Investment in the United States
Ben Ritz (10/15)

Watch Our Public Forums

Ending America’s Public Investment Drought – Des Moines, IA (12/19)
Former U.S. Secretary of Agriculture and Iowa Governor Tom Vilsack
Former Iowa Lieutenant Governor Patty Judge
Iowa Rep. Chris Hall, Ranking Member on the House Appropriations Committee
Ben Ritz, Director of PPI’s Center for Funding America’s Future
Moderated by PPI President Will Marshall

Defunding America’s Future – Philadelphia, PA (11/19)
U.S. Rep. Madeline Dean (D-PA)
Dr. Robert Inman, Professor of Finance at the Wharton School
Ben Ritz, Director of PPI’s Center for Funding America’s Future
Moderated by David Thornburgh, CEO of Committee of Seventy

Check Out Our Op-Eds and Media Coverage

DC Think Tank Urging Iowans to Ask Presidential Candidates About Infrastructure
O. Kay Henderson, Radio Iowa (12/22)

A Fitting End for Disgraceful House Republicans
Ben Ritz, Forbes (12/22)

Social Security, Public Projects and Rural America with Tom Vilsack (Radio)
Michael Libbie, Insight on the Business Hour on News/Talk 1540 KXEL (12/20)

American Children are Getting a Raw Deal Under GOP Leadership
Brodi Fontenot, The Hill (12/20)

Top Democrats Host Policy Roundtable (TV)
ABC 5, Des Moines (12/19)

Trump Once Again Shows Contempt for Young Americans
Ben Ritz, Forbes (12/6)

Welcome to Post-Thrift America
Andrew Yarrow, RealClearPolicy (12/04)

Victorious Democrats Should Thank Young Voters by Funding America’s Future
Ben Ritz, Forbes (11/8)

Reality Check 10.17.18 (Radio)
Charles Ellison, WURD Radio Philadelphia (10/17)

Defend or Defund Our Future? (Radio)
Chase Hagaman, Facing the Future on NH News Radio WKXL (10/16)

Time to Get DC’s Finances Under Control
Paul Weinstein, RealClearPolicy (10/17)

The Deficit Is Heading to $1 Trillion. How Worried Should We Be?
Michael Rainey, The Fiscal Times (9/24)

Democrats Must Bridge the Generational Divide to Prevent Climate and Budget Crises
Paul Bledsoe and Ben Ritz, The Hill (7/18)

How Trump and Republicans are Damning Social Security and Medicare
Ben Ritz, NY Daily News (6/14)

Making Social Security’s Retirement Age Work for Workers
Andy Rotherham, The Hill (6/8)

Medicare is Running Out of Money. Democrats Want to Expand It
W. James Antle III, Washington Examiner (6/7)

The Deficit Debate
David Leonhardt, The New York Times (4/20)

The Parallel Universe of Trump’s Budget, Explained
Sam Petulla and Gregory Krieg, CNN (2/13)

Welcome to a New Era of Federal Spending
Sam Petulla, CNN (2/10)

12 of the Most Important Things in Congress’s Massive Spending Deal
Heather Long and Jeff Stein, The Washington Post (2/8)

Find More Analysis on the PPI Blog

Republicans Double Down on Deepening Deficits (9/13)

CBO Report Shows That We Really Can’t Afford All These Tax Cuts (8/9)

New Projections Make Clear We Can’t Afford the Trump Agenda (6/27)

Before Expanding Medicare, We Have to Pay for Current Beneficiaries (6/7)

Trustees Reports Highlight Challenges Facing Medicare and Social Security (6/6)

CBO Analysis Exposes Trump’s Faulty Fiscal Policy (5/30)

Are Democrats Really the Party of Fiscal Responsibility? Part 2 (4/19)

A Tax Day Review of Trump’s “Tax Cuts” (4/17)

Are Democrats Really the Party of Fiscal Responsibility? Yes, But… (4/16)

PPI Analysis of CBO’s 2018 Budget and Economic Outlook (4/10)

House GOP’s Balanced Budget Amendment is a Sham (4/10)

Even After Budget Deal, Discretionary Spending Remains Low (3/14)

New Analysis Highlights Dire Fiscal Situation (3/5)

Six Charts That Reveal the Absurdity of the Trump Budget (2/14)

See Our Press Releases

PPI Kicks Off 2020 Economic Debate with Iowa Fiscal Forum (12/19)

New Report: Washington is Crippling America’s Economic Future (10/15)

Social Security & Medicare Trustees Reports: A Reality Check for Expansion Advocates & Tax Cutters Alike (6/5)

New CBO Report Highlights the Cost of Trump’s First Year (4/9)

Statement on the Passing of Peter G. Peterson (3/20)

PPI Launches Center for Funding America’s Future (2/12)

Don’t Help GOP Budget Busters (2/8)

Ritz for Forbes, “Victorious Democrats Should Thank Young Voters By Funding America’s Future”

Posted on November 8, 2018 by The Progressive Policy Institute

On Tuesday, Democrats won control of the U.S. House of Representatives and state legislatures across the country thanks to record-breaking turnout among young voters. Now it is time for newly elected Democrats to stand up for the interests of their constituents by supporting an economic agenda that funds America’s future.

The reckless policies of the current administration, and many of its predecessors, have slashed critical public investments that most benefit young Americans while simultaneously burying them and future generations under a mountain of debt. In a recent report, the Progressive Policy Institute documents these trends and explores how these reckless policies could drain America’s economic strength and seriously harm young Americans for decades if no action is taken to change course.

Continue reading at Forbes.

Ben Ritz Discusses New PPI Report on Two Radio Interviews

Posted on October 18, 2018September 18, 2024 by The Progressive Policy Institute

Director of PPI’s Center for Funding America’s Future, Ben Ritz, participated in two radio interviews this week to discuss his new report, Defunding America’s Future: The Squeeze on Public Investment in the United States. The report explains how short-sighted fiscal policy is undermining critical investments in education, infrastructure and scientific research that are integral to the long-term health of our economy. Read the full report here.

The first interview was on Facing the Future with host Chase Hagaman, which airs on New Hampshire’s WKXL radio station. Listen to the WKXL interview here.

The second interview was on Reality Check with host Charles Ellison, which airs on Philadelphia’s WURD radio station. Listen to the WURD interview here.

New Report: Washington Is Crippling America’s Economic Future

Posted on October 15, 2018September 18, 2024 by The Progressive Policy Institute

Public investment spending could fall to lowest level in modern history by 2026

WASHINGTON — Young Americans are having their future mortgaged by Washington lawmakers who are slashing critical public investments in future generations while simultaneously burying these generations under a mountain of debt, according to a new report published today by the Center for Funding America’s Future (CFAF) at the Progressive Policy Institute.

The comprehensive report documents these trends and explores how the reckless policies of the current administration and its predecessors will drain America’s economic strength and seriously harm young Americans for decades to come if no action is taken to change course.

“America’s current fiscal trajectory is on a dangerous path,” said Ben Ritz, director of the CFAF and author of the report. “By 2029, the national debt as a percent of gross domestic product is projected to surpass the all-time high it reached at the end of World War II, if current policies remain in place. Meanwhile, annual interest payments would explode from $316 billion today to nearly $1 trillion in 2028. That’s $1 trillion every year we could be using to build bridges and railroads, find a cure for cancer, train a next-generation workforce, strengthen our armed forces, or cut taxes for middle-class workers. Instead, it will be spent servicing past debts.”

Instead of tackling these problems, President Trump and the Republican-controlled Congress are making them worse, Ritz argues. While virtually every other developed country is paying down their debts post-recession, they enacted $2 trillion in tax cuts and abandoned spending caps that Republicans demanded be imposed at a time when most economists believed it was far more perilous to cut spending than it is today.

As America racks up debt thanks to irresponsible fiscal policies, public investments are being starved. According to the report, federal spending on public investments in education, infrastructure, and scientific research was just over $300 billion in 2017 – less than 1.5 percent of GDP. Between 1965 and 1980, total federal spending on public investments regularly equaled about 2.5 percent of GDP (roughly $470 billion in 2017). If current policies continue, public investment spending is projected to fall to its lowest level in modern history as a share of the economy by 2026.

The unaffordable tax cuts enacted over the past year can and should be reversed, writes Ritz, but even if federal taxes were immediately raised to their highest level since WWII and remained there indefinitely, deficits and debt would still be growing significantly faster than the economy. It is critical that policymakers also control the costs of Medicare, Medicaid, and Social Security, which are growing on autopilot faster than the economy due to America’s aging population.

By abandoning any pretense of fiscal responsibility, today’s policymakers are placing fiscal handcuffs on the elected officials of future taxpayers. By 2048, the report estimates Congress will have the authority to appropriate just 18 cents out of every dollar spent by the federal government, compared to 66 cents in 1968. This erosion of fiscal freedom robs future elected officials of their ability to respond to the changing policy priorities of their constituents and address unforeseen national emergencies, such as natural disasters and economic recessions.

Republicans’ fiscal mismanagement gives Democrats a unique opportunity to offer the electorate a compelling alternative: a new progressivism that invests in our country without leaving the bill to young Americans. But instead of holding Republicans accountable, some Democrats seem determined to outdo them. Many on the left now propose tens of trillions of dollars in new social spending on top of the unfunded promises the federal government already has made, without offering credible ways to pay for either.

Fixing our fiscal policy won’t be easy, but it is necessary. Ritz argues that the next Congress and President must modernize federal health and retirement programs to reflect an aging society and enact pro-growth tax reform that raises the necessary to renew public investments in the foundation of our economy. Only then can policymakers ensure America has a bright economic future.

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New Projections Make Clear We Can’t Afford the Trump Agenda

Posted on June 27, 2018September 18, 2024 by The Progressive Policy Institute

Yesterday, the non-partisan Congressional Budget Office published their first long-term budget outlook since the passage of last year’s tax cuts and February’s spending increases. In contrast to April’s budget and economic outlook, which made budget projections only for the next decade, the long-term budget outlook offers budget projections over the next 30 years – and it shows a significantly worse picture. The projections should dissuade policymakers who want to extend or double down on the unaffordable policies enacted by the Trump administration and Congress over the past year.

Over the next 30 years, CBO projects the that our national debt relative to the size of the economy will nearly double – from 78 percent of gross domestic product today to 152 percent of GDP in 2048. This would be well over the all-time high reached at the end of World War II, when our national debt topped out at 106 percent of GDP.

But there’s a big difference between our fiscal situations in 1946 and today. Back then, our debt was the result of temporary borrowing to respond to a national emergency. After the war ended, the federal government ran balanced or near-balanced budgets almost every year for the next three decades. That, combined with a post-war boom in economic growth, resulted in the national debt plummeting to just 23 percent of GDP in 1974. Our current and future debts, however, are caused not by temporary borrowing but by a structural mismatch between revenue and spending that will only grow worse as time goes on. And with potential economic growth projected to be just half of what it was in the aftermath of WW2, this structural mismatch is one that will be virtually impossible to grow our way out of.

The main problem is the unsustainable growth of social insurance programs that provide health care and retirement benefits. As our population ages, CBO projects that annual spending on these programs will increase by 5.4 percent of GDP over the next 30 years – four fifths of which is attributable to growth in just two programs: Social Security and Medicare. Because federal revenue will grow more slowly than spending on these programs, the government must borrow more and more money each year to help finance them – and that comes with a higher cost of debt service.

In 2018, the federal government will spend about $316 billion on interest payments (equivalent to 1.6 percent of GDP). By 2048, CBO projects that interest on the debt would consume 6.3 percent of GDP under current law – nearly five times today’s levels. In contrast, CBO projects that discretionary spending (the portion of the federal budget appropriated annually by Congress) will shrink from 6.3 percent of GDP in 2018 to 5.5 percent of GDP in 2048, which means that interest on the debt will eventually cost more than all discretionary spending combined.

To put these figures in perspective, discretionary spending – which is divided evenly between defense and non-defense programs – has never fallen below 6 percent of GDP since the end of WW2. CBO warns that could change as soon as 2021. The crowding out of discretionary spending has significant ramifications for our ability to invest in the future, as discretionary spending funds critical public investments such as education, infrastructure, and scientific research. These investments help to spur innovation and productivity which are essential to long-term economic growth and future prosperity. Meanwhile, CBO estimates that allowing our irresponsible fiscal policy to continue could reduce the size of our economy by $2500 per person come 2048.

As concerning as these projections are, they could be even worse if the policies enacted over the past year are allowed to remain in place. In December, Washington Republicans rammed through a package of tax cuts that will cost almost $2 trillion before much of them are scheduled to expire by the end of the next decade. A bipartisan budget deal just two months later then paved the way for nearly $300 billion in additional spending over the next two years, but these elevated spending levels are assumed by CBO to expire after 2019. Although these laws will result in debt levels that are significantly higher in the near term, neither has a substantial impact on the long-term budget outlook after 2041 because most of their policies won’t be in effect for over the latter two thirds of the projection period.

But extending current policies – or making them permanent – would dramatically worsen our fiscal situation. The Committee for a Responsible Federal Budget estimates that doing so would result in the national debt surpassing its post-WW2 record by 2029 (echoing PPI’s estimates from earlier this year). And by 2048, CRFB projects the national debt would be almost double the size of the economy. Simply put, we cannot afford to maintain the policies put in place during the first year of the Trump administration, let alone double down on them as many Congressional Republicans have proposed.

Instead, policymakers need to heed CBO’s warning and reverse course immediately. If they permanently increase revenue by 11 percent, cut spending by 10 percent, or adopt some combination of the two beginning in 2019, policymakers could stabilize our debt at current levels for the foreseeable future. If they wait another 10 years to act, however, the size of the policy changes needed to stabilize the debt at today’s levels would increase by half. That translates into an additional cost of over $600 (in 2019 dollars) per person per year. With unemployment at historically low levels, there is little justification for continuing to rack up massive debts today at the expense of taxpayers tomorrow.

Ritz for NY Daily News, “How Trump and Republicans are damning Social Security and Medicare”

Posted on June 14, 2018 by The Progressive Policy Institute

When the Social Security and Medicare trustees warned last week that both programs are on tenuous financial footing, Treasury Secretary Steve Mnuchin said: “The administration’s economic agenda — tax cuts, regulatory reform and improved trade agreements — will generate the long-term growth needed to help secure these programs and lead them to a more stable path.” He couldn’t be more wrong.

As more and more baby boomers retire, Social Security and Medicare will require additional revenue just to fund the same level of benefits enjoyed by previous generations. Yet instead of raising more revenue to help fund these programs, the Trump administration and Congressional Republicans recklessly pursued a package of tax cuts that the non-partisan Congressional Budget Office projects will reduce revenue by $2 trillion over the next decade. This law put Social Security and Medicare on a decidedly less stable path.

Continue reading at the New York Daily News.

Rotherham for The Hill, “Making Social Security’s retirement age work for workers”

Posted on June 8, 2018 by The Progressive Policy Institute

A new report from the Social Security trustees warns that the program is in deep trouble. The retirement and social insurance program is already spending more on benefits than it raises in dedicated revenue, due in large part to a decline in birth rates and a decreasing ratio of workers to retirees. By 2034, beneficiaries face the prospect of a sudden 21 percent benefit cut when trust fund savings from the program’s prior surpluses are exhausted.

It’s a real problem, but a solvable one. Despite a lot of posturing and politics, Congress can shore up Social Security’s finances by reducing benefits, raising the retirement age for when workers can collect benefits, raising the Social Security payroll tax rate, or raising the income level at which workers stop paying said taxes — $128,400 this year based on a formula in law. Making such changes would generate sufficient revenue to keep Social Security on firm footing.

Some of these ideas are more popular than others. Raising the payroll tax income limits would help preserve the progressivity of Social Security, but that idea, in practice a tax increase, is politically challenging and insufficient to solve the program’s shortfall by itself.

Continue reading at The Hill.

Before Expanding Medicare, We Have to Pay for Current Beneficiaries

Posted on June 7, 2018September 18, 2024 by The Progressive Policy Institute

It’s no secret that the American health care system is far from perfect. The United States spends a higher percentage of our gross domestic product on health care than any other country despite having comparable outcomes. And although the Affordable Care Act successfully reduced the percentage of uninsured Americans by almost half between 2010 and 2016, 8.8 percent still had no coverage according to the most recent Census estimate – one of the highest rates of any OECD country. Moreover, Republican sabotage of the ACA has threatened to dramatically increase costs and reverse much of these coverage gains.

Many Democrats have embraced “Medicare for All” as their preferred mechanism for addressing these problems. Medicare is already one of the largest health insurers in the United States, covering about one sixth of the population, including most Americans over the age of 65, as well as a select few other groups, such as individuals with disabilities. Expanding Medicare to cover the rest of the population has a natural appeal given the program’s overwhelming popularity with both beneficiaries and the general public. But this week’s report from the program’s trustees warns of serious financial challenges that threaten Medicare’s ability to meet its obligations to current beneficiaries. The program cannot be expanded unless these problems are resolved and benefits can be sustainably financed.

Medicare consists of two financing mechanisms: Hospital Insurance (HI) and Supplemental Medical Insurance (SMI) trust funds. The HI trust fund pays for Medicare Part A, which covers hospital services, nursing facilities, home health assistance, and hospice care. HI is primarily funded by premiums and a payroll tax of 1.45 percent paid by both workers and their employers (or 2.9 percent in the case of self-employed workers who are required to pay both taxes). In years when these revenue sources exceed spending, the Treasury Department credits the HI trust fund for the balance. In subsequent years when spending exceeds revenue, Medicare can then draw upon these surpluses to make up the shortfall.

Although HI used to have regular annual budget surpluses up until 2004, it is now running chronic cash deficits. The trustees report projects that the trust fund will be exhausted by 2026, at which point Medicare would only have enough revenue to meet 91 percent of its Part A obligations. The HI trust fund’s exhaustion date is typically the metric most commonly cited in the media when discussing Medicare’s financial health, but in reality it’s only the tip of the iceberg: the challenges facing HI pale in comparison to those facing SMI.

Unlike HI, SMI – which covers both Medicare Part B (outpatient services and medical equipment) and Part D (prescription drugs) – only receives about one quarter of its revenues from dedicated sources. The remainder is automatically funded by general revenues, which ensures that SMI can never become insolvent but also obscures the true cost to both voters and policymakers. This structure is particularly problematic because Medicare is the fastest growing program in the federal budget: as the total size of SMI grows, it threatens to crowd out other public priorities that compete for the same pool of resources even if the proportion of the program funded by general revenues remains the same.

When taken together, Medicare’s dedicated revenue sources only cover about half of its spending. In that context, it makes sense that many voters would feel they get a better deal out of Medicare than other forms of insurance – they’re only seeing half the cost. Additionally, there are far more workers paying taxes into Medicare than there are beneficiaries. The Medicare model works for providing subsidized care to targeted subsets of the population, but if it were extended to cover the whole population, suddenly there would be fewer taxpayers than beneficiaries and no way to defray the cost.

One alternative that several moderate Democrats have suggested is to offer consumers an option to buy into Medicare voluntarily instead of automatically enrolling the entire population. This “public option” approach would preserve the private health insurance market but allow a public plan to compete. If the public plan is able to deliver more efficient health services or achieve lower prices through the use of Medicare’s rate-setting system, it could eventually grow to dominate the market through consumer choice and develop into a de facto single-payer system.

Before policymakers go this route, however, they need to ensure that any public option is self-financed through premiums (as many of the current proposals recommend). To the extent coverage is subsidized by the government, it must be limited to the same subsidies consumers receive from programs such as those in the Affordable Care Act to purchase private insurance. Should the public option be subsidized by general revenues the same way as SMI, it would become increasingly unsustainable as market share grows – an outcome would be bad for taxpayers and beneficiaries alike.

Trustees Reports Highlight Challenges Facing Medicare and Social Security

Posted on June 6, 2018September 18, 2024 by The Progressive Policy Institute

The new reports released yesterday by the trustees for Social Security and Medicare warn that both programs face a growing gap between scheduled benefits and the dedicated revenue sources that finance them. If nothing is done to address the shortfalls in these programs, they will pose a grave threat to both the beneficiaries who depend on Social Security and Medicare and the other critical public investments that will increasingly have to compete with these programs for limited resources.

Unlike most programs in the federal budget, which are funded from the same pool of general revenues, Social Security and Medicare were designed with dedicated revenue sources intended to finance their benefits (primarily payroll taxes for Social Security and a combination of taxes, premiums, and fees for Medicare). But in 2017, Medicare required $307 billion in general revenue funding to meet its obligations, while Social Security required another $41 billion – a combined gap which equaled roughly two percent of gross domestic product.

In less than 20 years, that gap will double to more than four percent of GDP as the baby boomers move into retirement and the ratio of workers to beneficiaries falls. This growth places an enormous burden on the rest of the federal budget by increasing existing deficits and creating competition with all the other federal programs, from defense to education, that require general revenue funding. For comparison, discretionary spending – the part of the budget that includes all federal spending appropriated annually by Congress, including everything from the military to infrastructure funding – totaled just 6.3 percent of GDP in 2017 and is set to fall in future years.

Under current law, Social Security and Medicare are allowed to spend more than they collect in dedicated revenue, but only up to a point. In years when dedicated revenue exceeds spending, the Treasury Department credits one of four trust funds for the balance: the Old Age and Survivors Insurance (OASI) and Disability Insurance (DI) trust funds for Social Security, and the Hospital Insurance (HI) and Supplemental Medical Insurance (SMI) trust funds for Medicare. In subsequent years when spending exceeds revenue, Social Security and Medicare can then use transfers from general revenue to draw upon these established surpluses and make up their annual shortfall.

Once the fund balances are exhausted, however, benefits are automatically reduced to what is payable with incoming revenue (except for SMI, which by design is partially funded with general revenues and can never be exhausted). The trustees projected the following trust fund exhaustions in their reports:

HI will be exhausted in 2026, at which point benefits would be reduced by 9 percent;
DI will be exhausted in 2032, at which point benefits would be reduced by 4 percent;
OASI will be exhausted in 2034, at which point benefits would be reduced by 23 percent; and
If OASI and DI were combined, they would be exhausted in 2034, at which point benefits would be reduced by 21 percent – a cut that would gradually increase to 26 percent as the gap between revenues and scheduled benefits continues to grow.

Waiting until the last minute to address these shortfalls would be catastrophic for a number of reasons. First, it creates the prospect of sudden and draconian benefit cuts for seniors and individuals with disabilities. Uncertainty about the future of Social Security and Medicare undermines the ability of all Americans to plan for their retirement accordingly and risks jeopardizing public support for the program. In fact, recent polls have found a majority of Americans both young and old already lack confidence in the ability of Social Security and Medicare to pay future benefits as scheduled. Restoring long-term solvency to these programs would help restore public confidence in them as well.

The alternative to sudden benefit cuts, that future workers will be asked to bear the entire cost of poor decisions made by previous generations, is hardly better. The Social Security trustees note in their report that if action were delayed until 2034, policymakers would need to immediately and permanently increase revenue by an amount equal to a one-third increase in the payroll tax rate to prevent sudden benefit cuts in Social Security alone. Combined with the even-larger tax increases necessary to fully fund Medicare, this would be an enormous tax burden to place entirely on the shoulders of tomorrow’s workers. The longer policymakers wait to begin phasing in changes, the harder it will be to have older generations contribute to the solution and defray the burden.

Finally, the competition for limited resources created by growing general revenue subsidies threatens to crowd out other important progressive priorities. General revenue is already insufficient to cover current spending levels – a reality that pre-dated last year’s tax legislation. Because the trust funds aren’t invested as external savings, the government must borrow from private investors to repay the trust fund surpluses as they’re drawn down (replacing this intragovernmental debt with more economically significant debt held by the public). This debt comes with added interest costs, further increasing the pressure on the federal budget.

In the coming years before trust fund exhaustion, funding that could be used for public investments in our future such as infrastructure, education, and scientific research will be increasingly consumed by growing subsidies for social insurance programs and interest costs. Even worse would be a scenario in which policymakers use the existence of the trust funds as an excuse to delay action on correcting the imbalances between dedicated revenues and spending, only to abandon the system and provide unlimited infusions of general revenues when the trust funds’ exhaustion would otherwise force hard choices.

We can do better. Our elected officials should table costly policy proposals that threaten to make the problem worse and instead work towards phasing in pragmatic reforms to strengthen and secure the future of these important programs.

Social Security & Medicare Trustees Reports: A Reality Check for Expansion Advocates & Tax Cutters Alike

Posted on June 5, 2018 by The Progressive Policy Institute

WASHINGTON — Ben Ritz, director of the Center for Funding America’s Future at the Progressive Policy Institute (PPI), today released the following statement after the annual Social Security and Medicare Trustees reports were released:

“The annual reports from the Social Security and Medicare trustees should serve as a reality check for politicians who support costly expansions of these programs. As they have consistently done for several years, the trustees again warn that current program revenues are insufficient to sustainably finance promised benefits – an imbalance that must be addressed by policymakers before considering changes that could make the problem even worse and crowd out resources needed for other important public investments.

“Last year, Social Security spent $41 billion more on benefits than it collected in dedicated revenue. Over the next 25 years, the gap between dedicated revenue and promised benefits will grow to 1.26 percent of gross domestic product as the baby boomers move into retirement and the ratio of workers to retirees continues its decline. If nothing is done to address this growing shortfall, beneficiaries face the prospect of a sudden and permanent 21-percent benefit cut beginning in 2034 (the year in which the combined Social Security trust funds, which are credited with surpluses from previous years in which program revenue exceeded spending, are exhausted).

“The challenges facing Medicare are even more alarming. The gap between spending and dedicated program revenue ($307 billion in 2017) is projected to double as a share of the economy in the next 25 years, from 1.58 percent of GDP in 2017 to 3.16 percent of GDP in 2042. If these gaps are left unaddressed, Medicare and Social Security will consume an ever-greater share of general revenue, leaving less money available to fund critical public investments in our future – including key progressive priorities such as infrastructure, education, and scientific research.

“Policymakers could strengthen Medicare and Social Security while protecting public investments for the foreseeable future by modernizing their benefit structures and adopting modest revenue increases. Unfortunately, President Trump and Congressional Republicans made bipartisan action even less likely than it already was when they passed their egregious $2 trillion tax cut last year. Although the financial challenges facing Social Security and Medicare predate the tax bill and exceed it in size, Republicans cannot expect Democrats to make changes to programs that benefit the middle class just so the GOP can squander the savings on more tax giveaways for the wealthy.

“Nevertheless, Republican recklessness doesn’t give Democrats an excuse to ignore the very real problems facing Social Security and Medicare. Democrats have a moral obligation to not only reverse the Trump tax cuts but also to secure the future of our social insurance programs in a way that is equitable to both current beneficiaries and young workers. Elected officials in both parties should take their lead from the trustees instead of Trump by eschewing expensive tax cuts and broad-based benefit expansions, instead pursuing pragmatic reforms that ensure benefits are adequate and sustainable for all.”

Ben Ritz is available for comment.

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Science-based Regulation and Innovation: The Silicone Example

Posted on May 29, 2018 by The Progressive Policy Institute

In recent years, innovation has become synonymous with digital companies such as Apple, Google and Amazon.The Internet, the smartphone, and the cloud have transformed daily life and the way we do business, and artificial intelligence and machine learning will continue the process.

Nevertheless, overall productivity growth remains sluggish. The reason is simple: The digital sector of the economy, where innovation today is focused, is still far smaller than the physical sector. Even today, we spend much more time interacting with the physical world than with the digital world. The chairs we sit on, the food we eat, the cars we ride in, are all made of physical materials, not intangible bits and bytes. According to recent research, digital industries such as communications, entertainment, and finance comprise only 30 percent of the economy, while physical industries such as manufacturing and construction comprise 70 percent.

Are Democrats Really the Party of Fiscal Responsibility? (Part 2)

Posted on April 19, 2018September 18, 2024 by The Progressive Policy Institute

Earlier this week, we published a blog exploring the relationship between budget deficits and unemployment under both Democratic and Republican presidents over the last 40 years. Our analysis found that deficits under Democratic presidents rose and fell with unemployment (which is what should happen when adhering to responsible counter-cyclical fiscal policy), while deficits under Republican presidents did not. Moreover, we found that deficits under Democratic presidents were consistently lower than those under Republican presidents facing comparable economic circumstances. Below is a chart depicting the data upon which our analysis was based:

Following the blog’s publication, a lively discussion ensued on Twitter over how much credit a president deserves for the fiscal situation on their watch. Marc Goldwein of the Committee for a Responsible Federal Budget and Brian Riedl of the Manhattan Institute rightly pointed out that Congress plays a major role in crafting federal fiscal policy and should be taken into consideration when adjudicating fiscal records by party.

As a result, we decided to make a second chart that focused on partisan control of Congress instead of the White House. The underlying data is the same as the chart above, with the exception of projections for 2019 and 2020, which were removed because nobody knows what the composition of Congress will look like after this year’s midterm elections. (We considered doing a third chart that combines the partisan composition of both the presidency and Congress, but there weren’t enough data points for every possible permutation to draw any reasonable conclusions.)

The chart above shows that, under comparable economic circumstances, deficits under divided Congresses have generally been slightly lower than deficits under unified Congresses. The chart also shows that deficits under unified Congresses have been roughly identical in level regardless of which party is in control. But there is one key way in which the partisan control of a unified Congress matters: when at least one chamber of Congress was controlled by Democrats, budget deficits have historically had a modest correlation with unemployment. When Republicans were in full control of Congress, however, deficits have had little to no relationship with the unemployment rate.

This finding appears to reinforce our conclusion from the previous blog: under Democratic governance, budget deficits have been consistent with responsible counter-cyclical fiscal policy. Under Republican governance, they have not.

There are many possible rationales for why Democrats appear to have a better budgetary track record than Republicans. Goldwein hypothesized that “Republican Congresses make Democratic presidents their best (fiscal selves) while they enable Republican presidents to be their worst fiscal selves.” David Leonhardt of the New York Times, whose column last the weekend inspired PPI’s first analysis, suggested that although this phenomenon may have some effect, there have also been instances (specifically in the early years of the Clinton administration) in which Democrats pursued responsible fiscal policy of their own volition that cannot be explained by this “external pressure” theory.

Regardless of the reason, there is relatively strong evidence that the federal budget over the past 40 years has been more responsibly managed under Democrats than Republicans – at least in the short term. Riedl noted that our analysis ignores the impact of policy changes implemented under a president (or Congress) that are inexpensive in the short term while costing more in later years. A cursory review of the record suggests to us that Democrats would likely still come out ahead under this metric over the past 40 years, but for now it remains a very real blind spot we hope to address at some point in the future when we have more time to compile and analyze the data.

Another good point Riedl made is that the biggest contributor to long-term budget deficits is the rising cost of social insurance programs that were created by Democratic administrations more than 40 years ago. These programs, the largest of which are Social Security and Medicare, are growing roughly twice as fast as the economy as more and more baby boomers move into retirement and begin collecting benefits. Other categories of federal spending, meanwhile, are projected to shrink relative to the size of the economy.

Although Democrats have generally been the more fiscally responsible party since the Carter administration, they still need to present voters with a credible plan for making their social insurance legacy from earlier years more fiscally sustainable. Doing so would cement their recent superiority on the issue of responsible fiscal stewardship and save young voters – a key component of the Democratic Party’s base – from being buried under a mountain of debt.

PPI Analysis of CBO’s 2018 Budget and Economic Outlook

Posted on April 10, 2018September 18, 2024 by The Progressive Policy Institute

The latest report published yesterday by the non-partisan Congressional Budget Office shows the United States faces a rapidly deteriorating fiscal situation. Beginning in 2020, the federal government will spend over $1 trillion more than it raises in revenue every single year in perpetuity. The government has to borrow money to finance these soaring deficits and that additional borrowing threatens to take our national debt to unprecedented heights.

Based on CBO’s projections, PPI estimates that by 2029, the national debt relative to the size of the economy (as measured by gross domestic product) will surpass the record-high level reached just after World War II. This estimate would be six years earlier than the one in CBO’s 2016 and 2017 budget projections, where it was estimated that the national debt wouldn’t surpass its previous record until 2035, and 13 years earlier than the estimate from CBO’s 2015 budget projections.

PPI’s analysis assumes recently enacted fiscal policies, including December’s Trump-Republican tax cut and February’s bipartisan budget deal, remain in place even though they are scheduled to expire under the law as currently written. This approach differs from CBO’s baseline estimates, which assume that policies scheduled to expire under current law will do so despite the fact that many lawmakers have made clear they intended for these policies to be made permanent.

According to CBO, the federal government will need to borrow $2.7 trillion more over the next decade just to cover the cost of legislation enacted by Donald Trump and the Republican-controlled Congress since June. But if these policies are extended, as PPI assumes they would be, CBO says it would add another $2.6 trillion to the gap between federal revenue and spending over the next 10 years.

Tax Cuts Are the Primary Cause of New Deficits, But Spending is the Long-Term Challenge

As the chart below illustrates, the vast majority of the difference between CBO’s 2017 baseline and today’s current policy projections is attributable to lower revenue estimates. Thanks to the budget-busting tax cuts passed by Congressional Republicans and signed by Donald Trump last year, federal revenue as a percent of total economic output will be lower over the next five years than it was for almost every year of the Reagan administration. These tax cuts clearly will not pay for themselves despite promises to the contrary by their supporters.

Although Republican tax cuts account for most of the difference in projections, increased spending from the February’s bipartisan budget deal also contributes to the worsening deficit. The impact of this increased spending, however, is somewhat masked in the chart above by other changes in CBO’s estimates not directly related to the effects of legislation. The upshot is that current policy spending projections over the next decade are largely the same as CBO’s baseline estimates from last year.

Current spending levels are relatively reasonable in the short term. Until 2020, projected federal spending as a percentage of GDP will actually be below where it was for most of the Reagan administration. But in the medium- and long-term, out-of-control spending growth will become increasingly problematic. By 2028, spending as a share of GDP is projected to reach the level it was in 2010 at the height of post-financial crisis stimulus.

Unlike in 2010, future deficits will not be a temporary spike in borrowing to stabilize a collapsing economy. Rather, these deficits will be driven by the rapid growth of mandatory spending programs (those which have spending determined by formula, instead of annual appropriations by lawmakers). The largest of these programs, Social Security and Medicare, provide benefits primarily to older Americans and will grow roughly twice as fast as the economy over the next decade as more and more baby boomers retire. Medicaid, a social insurance program which serves many lower- and middle-income Americans of all ages, is also projected to grow over the next decade albeit at a slower rate.

Growing Deficits Threaten to Crowd Out Critical Public Services

The longer policymakers put off the difficult decisions about how to make major social insurance programs financially sustainable, the more debt must be incurred to finance the deficit. That debt comes at an enormous cost: by 2026, all incoming revenue will be consumed by mandatory spending programs and rising interest payments to service our debt burden. This unsustainable trend puts enormous pressure on the discretionary programs that Congress appropriates funding for annually.

Discretionary spending consists of two categories: defense and non-defense (domestic) discretionary spending. Both were increased significantly in the February budget deal, but nevertheless would shrink relative to GDP under current policy. The trend is particularly concerning for domestic discretionary spending, as it includes critical public investments such as infrastructure and scientific research that provide long-term economic benefits. Under current policy, this category of spending is soon likely to fall to its lowest level in modern history.

Other mandatory programs outside of Medicare, Medicaid, and Social Security are also feeling the pressure. Many Republicans are now seeking draconian cuts to programs that serve low-income populations, such as the Temporary Assistance for Needy Families (TANF) and Supplemental Nutrition Assistance Programs (food stamps), even though this category of spending is also projected to grow significantly slower than the economy. It is ill-advised to cut programs that serve our most vulnerable when they contribute little to our country’s long-term fiscal challenges.

By 2026, interest on the debt will be more expensive than these other mandatory programs, defense, or domestic discretionary programs. Moreover, as the above chart shows, the growth in interest costs over the next decade is almost twice as big as the decrease in all these categories of spending combined. Solving our fiscal challenges would thus free up resources for these valuable public services and save future generations from being buried under a mountain of debt.

The takeaway for policymakers is clear: in the short term, they should “repeal and replace” the disastrous tax cut package enacted by Republicans last year. But in the medium-to-long term, leaders in both parties must come together and address the growth of spending on major social insurance programs. Only a combination of the two can provide the United States with a bright and prosperous fiscal future.

House GOP’s Balanced Budget Amendment Proposal is a Sham

Posted on April 10, 2018September 18, 2024 by The Progressive Policy Institute

On Thursday, House Republicans will vote on a constitutional amendment proposed by Rep. Bob Goodlatte (R-VA) that would require the federal government to balance its budget every year. The vote, which is virtually guaranteed to fall short of the two-thirds super majority necessary for passage, is nothing more than a cynical ploy to give the party of debt and deficits a veneer of fiscal responsibility while they make no serious effort to earn it. Anyone who is truly concerned about soaring deficits should ignore this distraction and focus on the real record of the Republican-controlled Congress.

In December, the same House Republicans who now ostensibly want to reduce budget deficits championed a partisan tax cut that instead grew the gap between revenue and spending by $1.9 trillion over 10 years. In February, they voted to increase deficit spending by roughly $400 billion over two years. As if more than $2 trillion of additional deficits over two months wasn’t enough, Republicans are hoping to pile on even more borrowing later this year with yet another round of tax cuts. On our current path, deficits over the next decade could total $15 trillion.

Closing this gap through spending cuts alone, as most Republicans would presumably seek to do, would require lawmakers to immediately and permanently cut more than one-quarter of all non-interest spending. If they sought to exempt defense spending or entitlement programs such as Social Security, the cuts to non-exempt programs would need to be even deeper. Simply mandating the budget be balanced doesn’t liberate policymakers from the painful trade-offs required to make it happen.

Should Congress and the president fail to adopt the policy changes necessary to comply with the balanced budget amendment of their own volition, there is no enforcement mechanism in the Goodlatte proposal to compel them. Ill-equipped courts would inevitably be asked to determine national economic policy that should be crafted by the legislative and executive branches.

The Republican crusade for this poorly crafted amendment is particularly dubious considering that most economic experts, including those who are sincerely and deeply committed to promoting fiscal responsibility, don’t believe in the necessity of a balanced budget. Small deficits can be sustainable as long as the debt burden that finances them is growing slower than the economy. For this reason, most informed deficit hawks believe the goal should be to stabilize and reduce the debt as a percentage of gross domestic product rather than to balance the budget.

In fact, requiring a balanced budget in every year could be quite harmful if it prevents the government from using temporary borrowing to stabilize the economy during a downturn. The Goodlatte proposal would only allow spending to exceed revenue in a given year if supported by a three-fifths super majority in both the House and the Senate. When economic output falls, this onerous requirements would make it incredibly difficult for the federal government to maintain even pre-recession spending levels, let alone provide the kind of economic stimulus necessary to prevent a recession from turning into a deep depression.

The sole reason House Republicans are pushing this half-baked proposal now is to give themselves a fig leaf to cover their shameful legislative record. When Congress returned to Washington yesterday, the Congressional Budget Office greeted them with updated projections showing federal budget deficits that were trillions of dollars higher than those projected last year. Republicans hope their constituents will ignore the real damage they’ve done to our nation’s finances if they merely affirm their support for balancing the budget in principle.

Democrats and deficit hawks shouldn’t let the GOP off the hook so easily. They should repudiate this meaningless show vote and demand Congressional Republicans either put up or shut up. Making our fiscal policy sustainable requires real solutions; the proposed balanced budget amendment is nothing more than a sham to avoid them.

This post has been updated to reflect that the version of the amendment being voted on is different than the version Rep. Goodlatte posted on his website last week. That version, which can still be found here, would have also required a three-fifths super majority in both chambers to raise additional revenue and an even larger two-thirds super majority to authorize spending more than one fifth of economic output.