Let's Just Mothball the Whole Dang Thing....

Of course, I am referring to the impending government shutdown if lawmakers in Washington cannot come up with a compromise continuing resolution (hereafter, CR) to maintain government operations beyond the end of the 2013 Fiscal Year (September 30, 2013).  Seems like we have been here before both in the recent past and nearly 20 years ago when Bill Clinton was president.  It did not go well for the majority party in Congress after the two shutdowns in 1995 and there is little indication it will go well for them this time, if it happens.  But, as Ezra Klein points out, the GOP has a collective action problem.  On the one hand it may be disastrous for the GOP if the government actually shuts down for any length of time.  On the other hand, most Republicans represent safe conservative districts (for a variety of reasons I won't go into here) so taking a staunch, fiscally conservative stance will win them brownie points with their core constituents back home and, perhaps, stave off the all too frequent 'tea-party' primary challenges emerging from the hard right these days.

The question before the House is a simple one:  What level of funding should the government operate at for fiscal 2014?  Had Congress done its job and actually worked out a budget deal over the past year, we wouldn't be having this discussion.  Yet, here we are on the verge of another needless crisis created by those who want to score political points on both the right and the left.  In reality, the issue is not whether to fund the government.  A clean CR that maintains the current level of funding, including the sequester cuts implemented in March, could probably pass with about 150 Republican votes and the rest coming from Democrats.  Of course, that would be deadly for Speaker John Boehner so he has to offer a CR that does all of that and includes the tea party pipe dream of defunding Obamacare.  So...that CR likely passes the House on a strict party line vote and goes to the Senate, which will strip the defunding of Obamacare from the CR, leaving us no closer to averting a government shutdown.

In yet another effort to repeal Obamacare, the Republican Study Committee released a new proposal that will completely repeal the Affordable Care Act and replace it with the American Health Care Reform Act.  The proposal includes the following main points:

• Fully repeals President Obama's health care law, eliminating billions in taxes and thousands of pages of unworkable regulations and mandates that are driving up health care costs. 


• Spurs competition to lower health care costs by allowing Americans to purchase health insurance across state lines and enabling small businesses to pool together and get the same buying power as large corporations.


• Reforms medical malpractice laws in a commonsense way that limits trial lawyer fees and non-economic damages while maintaining strong protections for patients.


• Provides tax reform that allows families and individuals to deduct health care costs, just like companies, leveling the playing field and providing all Americans with a standard deduction for health insurance.


• Expands access to Health Savings Accounts (HSAs), increasing the amount of pre-tax dollars individuals can deposit into portable savings accounts to be used for health care expenses.


• Safeguards individuals with pre-existing conditions from being discriminated against purchasing health insurance by bolstering state-based high risk pools and extending HIPAA guaranteed availability protections.


• Protects the unborn by ensuring no federal funding of abortions.

While many of these proposals are laudable and worthy of implementation they still will not address the biggest problem...the affordability of health insurance by lower middle income Americans who do not receive it from their employers yet are above the Federal Poverty Line (FPL) of $11,490 for a single individual and $23,550 for a family of four.  A single individual working for minimum wage would earn $15,080 per year, thus not qualifying for Medicaid if he/she worked for a company that did not provide health insurance coverage.  That is $1256.67 per month before taxes.  For 2013, the standard deduction and exemption for a single totals $10,000.  Add to that the $7500 in this proposal and our hypothetical individual would pay NO federal income tax.  They would, however, pay the FICA tax of 7.8% on $7580 of income.  That amounts to $49.27 per month for the feds.  In MS, such an individual would receive an $8400 deduction and pay tax on $6680.  The rate is 3% on the first $5000 ($150) and 4% on the additional $1680 ($67.20) for a total MS tax liability of $217.20, or $18.10 a month.  That leaves a net income of $1256.67-$67.37 or about $1189 a month to pay for shelter, food, clothing, transportation, and health insurance.  I doubt one could do that in low cost MS let alone more expensive places such as NY or CA.

So, while the Republican Study Committee proposal has some good aspects until it finds a way to deal with the affordability issue for the working poor it probably will go about as far as the CR that defunds Obamacare.  Which is likely a place filled with mothballs.