Category Archives: Fiscal Freedom

By Emeka Nwosu

I must confess that I have been following with keen interest the raging national debate on the issue of restructuring the Nigerian federation. For those who are conversant with the political history of this country, the on-going discourse is nothing new or novel.

All the constitutional conferences that were held in London and Ibadan in the 1950s in the run-up to independence in 1960 were meant to work out an acceptable political structure for the emergent nation. At the end of it all, the nationalist leaders including Dr. Nnamdi Azikiwe, Alhaji Ahmadu Bello and Chief Obafemi Awolowo settled for a federal system of government.

It is not by sheer happenstance that these leaders agreed on a federal structure for the country. In the light of reason and experience arising from successful experiments elsewhere like the United States, Canada, India, Switzerland, Malaysia, Brazil etc. it was agreed that federalism was best suited for a diverse, heterogeneous, disaggregated and complex society like Nigeria.

The federalist principle was adopted by our founding fathers not because it was a perfect model of governance. Rather, the choice was dictated by the need to promote unity in diversity. It is a system of governance that permits a plural society to forge a nation from its diversity without stifling or muzzling the interests of the co-habiting groups in the federation. Under this model, the federating units have the powers to chart their independent paths of development, moving at their own pace while subscribing to a common central authority.

The system encourages healthy rivalries and competitive development amongst the component units of the federation. This was evident in the First Republic when the Northern, Western and Eastern Regions engaged each other in a healthy competition for infrastructural provisions.

Federalism as it is known in the classical political science parlance is the system of governance that ensures that power is shared among the component units of a federation in a manner that guarantees the units autonomy to pursue their political, economic and social aspirations at their own pace. Under this arrangement, it is the federating units that sustain the center from the resources generated from within their territories.

The agreed fiscal contributions to the centre are mainly to maintain common services like national defence and security, foreign affairs, immigration, customs, census, citizenship, currency etc. which are under the exclusive control of the central government.

A former Vice Chancellor of the University of Ibadan and respected historian, Professor Tekena Tamuno, in his work, Nigerian Federalism in Historical Perspective, defined federalism as that form of government where the component units of a political organization participate in sharing powers and functions in a cooperative manner though the combined forces of ethnic pluralism and cultural diversity, among others, tend to pull their people apart.

The incursion of the military into the political arena in 1966 and their subsequent prolonged domination of power led to a huge distortion of the federal structure that was delicately woven by the nationalist leaders. The command and control system of the military which they transposed to the political arena effectively ensured the stifling of the federating units; to the effect that they were turned into almost vassal states and conquered territories.

The resources belonging to the Regions were forcefully hijacked by the military with scant regard for the feelings of the people in whose domains these resources reside. Within this period, States and Local Government Areas (LGAs) were arbitrarily created with more in the North than in the South, thereby creating and deepening the structural imbalance in the federation.

The Regions which were supposed to hold the balance in the federation became politically and fiscally emasculated to the extent that they were no more than mere appendages of the centre with no powers and control whatsoever over their God-given resources. This has led to a situation where the federating units go to Abuja every month end with a begging bowl to collect financial allocation. Nigeria appears to be the only known federation in the whole universe where this kind of strange fiscal arrangement takes place.

This situation is further compounded by the fact that the Federal Government overloads itself with too many responsibilities as evident in the items contained in the Exclusive Legislative List of the 1999 Constitution (as amended). The list contains 68 items, many of which have no business being under the control of the centre. For instance, we have the following items like labour relations, drugs, mineral resources, insurance, meteorology, railways, stamp duties, museums and monuments, marriages, weights and measures etc. in the Exclusive Legislative List.

It is such tinkering by the military that has turned Nigeria into a unitary system in reality. These actions, however, never went unchallenged. Strong criticisms and pressures have always been mounted by some sections of the populace who saw in all the actions of the military a wilful subversion of the visions of the founding fathers of the Nigerian federation. In response to these pressures, some half-hearted attempts were made by the military through the engineering of constituent assemblies and constitutional conferences which did little or nothing to return Nigeria to the path of true federalism.

With the return to civil democratic rule in 1999, there were heightened expectations among the populace that things might get better. But this was a misplaced optimism as nothing has changed from the lopsided and inequitable federal structure inherited from the military. The ensuing crisis of expectations has resulted into social frustrations, mounting agitations and complaints of ethnic marginalization.

It is against this background that the current national clamour for restructuring and separatist campaigns can be understood and greatly appreciated. Such agitations are not out of place in a federal arrangement like ours. And as Kunle Amuwo and Georges Herault noted in their work, Federalism and Political Restructuring in Nigeria, political restructuring is intended to lay an institutional foundation for a more just and a more equitable sharing of the political space by multi-national groups cohabiting in a federal polity.

Since the renewed national conversation on the restructuring of the polity commenced a few months ago, a lot of people, groups and civil society organizations have continued to make their interventions. The views being canvassed on the matter are as divergent as they can be depending on where the propagators stand on the nation`s geo-political prism.

One thing that is clear, however, is the existence of near unanimous national consensus on the need for the restructuring of the federation to ensure political balance and fiscal equity.

To avoid any impending implosion, deliberate efforts must be taken now to work out amongst the various nationalities in Nigeria an acceptable federal structure that will guarantee greater fiscal freedom and regional autonomy to the federating units. Such divisive policies like quota system, federal character and indigene-settler dichotomy which for years have blighted our federal practice should be discarded.

Going forward, it behoves on the Buhari administration to set up a Commission of Eminent Persons including constitutional and legal experts and other professionals drawn from the six geo-political zones of the country to study the reports and recommendations of previous constitutional conferences with a view to coming up with a new draft constitution for the consideration of an elected Peoples Assembly, equipped with constituent powers.

The reports to be considered should include but not limited to the Willinks Commission on the Fears of the Minorities of 1957, Aburi conference of 1967, Abacha`s 1994/95 National Conference, Clement David Ebri Constitutional Reports of 2002, Obasanjo`s Political Reform Conference of 2005 and the 2014 National Confab of President Jonathan. These reports contain far-reaching recommendations that can give us a balanced and equitable federation.

The work of the Commission is to synthesize these reports and work out a draft constitution which will be considered and approved by a Constituent Assembly and finally subjected to a national referendum. It is believed that if these measures are taken, the ghost of restructuring and episodic eruptions of separatist agitations would be finally laid to rest. The time to act is now.

Nwosu is former Political Editor of the Daily Times

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Restructuring And Quest For Balanced Federation - Leadership Newspapers

Quietly, a fight has bubbled up in the ranks of House Republicans, which could derail the centerpiece of President Donald Trumps congressional agenda.

The battle is really about tax reform, but its stage is the fiscal year 2018 budget resolution, which passed out of committee this week with unanimous Republican support.

Behind it all is a clash between Republican leadership and a group of archconservatives who see this moment months before any major tax bill is likely to come before the full House as their best chance to force deep cuts to both tax rates and social welfare spending.

Republicans are unified in their goal to cut taxes, but they are locked in an intraparty struggle of how deeply to cut rates and whether to offset those cuts at all with increased taxation elsewhere. GOP leaders have proposed a tax reform blueprint that would include such an increase to offset lost revenue from rate cuts and keep the budget deficit from growing.

The conservative members of the House Freedom Caucus say that proposal is dead on arrival, and they are pushing House Speaker Paul Ryan to adopt an alternative: one that relies on draconian welfare spending cuts and incredibly optimistic economic growth projections in order to avoid swelling the deficit. Ryan has resisted their efforts, particularly their proposed spending cuts.

Rather than stage that fight this fall, when the White House and conservative leaders will undoubtedly ramp up the pressure to pass a tax bill, the Freedom Caucus members have chosen to make their tax stand over the budget resolution a nonbinding government spending guideline that both chambers have to pass if they want to circumvent the threat of a Democratic filibuster in the Senate on tax reform.

GOP leaders are refusing to back down from a resolution that Freedom Caucus members warn would force a vote on a smaller batch of tax and spending cuts in the fall. But without the Freedom Caucus on board, the resolution will fail a floor vote which is why caucus members have identified the budget resolution as their best leverage to get what they want on tax reform, Freedom Caucus member Rep. Mark Sanford (R-SC) said.

And so the budget resolution has become a proxy war, while President Trumps attention is still on health care in the Senate.

It is the same game of chicken, with the same key players that nearly killed the House health care bill in March. If neither faction blinks, Republicans, in control of the House, Senate, and White House will be stuck in a stalemate: No budget resolution means no tax reform.

For now, at least, Freedom Caucus members are saying theyre willing to take that chance.

At the beginning of this year, thinking only Senate Democrats with the power of a filibuster would stop them from repealing Obamacare and cutting taxes, Republican leadership devised a plan to bypass Democrats altogether: They would tie their major agenda items to the budget through budget reconciliation, a bill that can impact spending, revenue, or the debt ceiling, with only a party line vote in the Senate.

Its a process President Bill Clinton used to pass welfare reform in 1996 and President George W. Bush used to pass tax cuts in 2001 and 2003. Its how President Barack Obama saw several budgetary amendments to the Affordable Care Act through. Republicans also attempted to use budget reconciliation to try to pass an Obamacare repeal bill in the Senate.

Budget reconciliation requires passing a budget resolution, forcing Republicans to thread the needle between members competing spending priorities and the larger contingents of tax cutters, deficit hawks, and defense hawks. This is hard, and because budget resolutions dont actually fund the government or go to the presidents desk, and spending bills can be done without them, its a step thats often skipped.

But this year Republicans have tied their hands. The budget resolution unlocks a path to tax reform, and depending on how the instructions for budget reconciliation are written in, it can also dictate how Republican actually implement tax cuts.

In budget reconciliation, each committee is instructed how much savings they must produce in order to pass a reconciliation bill.

Committees can only find these savings through mandatory spending which most notably covers programs like Medicare, Medicaid, and welfare programs like cash assistance and food stamps. But there are some limitations: Trump has repeatedly promised Medicare wouldnt be touched under his presidency, and per reconciliation rules, Social Security funding cannot be cut.

If these reconciliation instructions are written strictly in the budget resolution, the level of required mandatory savings could influence how Republicans can approach tax reform specifically how they pay for their tax cuts.

In any scenario, Republicans are relying on projections of increased economic growth from tax cuts to offset the revenue losses from those cuts. But under most projections, growth alone wont be enough to offset the full losses from the deepest cuts Republicans have discussed, including a drop in the corporate rate from 35 percent to 15 percent.

Ryan and the tax-focused Ways and Means Committee Chair Rep. Kevin Brady (R-TX) are adamant about executing a revenue neutral tax plan. To do that, they have floated implementing a border adjustment tax, which would tax foreign imports and exempt exports, raising money because the US currently imports more than it exports. Some analysts have projected that plan would be revenue-neutral after economic growth is factored in.

Theres a problem, though: So many Republican lawmakers and major conservative donors hate the border adjustment idea that it appears to have no chance of passing the House.

You are adding a whole new tax and revenue stream on the economy and not getting rid of another one that is always dangerous because it is just one more tax that could go up over time, Rep. Jim Jordan (R-OH), a founding member of the Freedom Caucus, said of the BAT. From a purely philosophical standpoint, I think this is problematic.

Theres no need for revenue neutrality with tax reform, Jordan and the Freedom Caucus argue, in an attempt to make the case that these corporate tax rates would lead to what looks like extremely unrealistic GDP growth. But its unlikely Republicans will be able to convince members to vote for tax reform that removes the BAT without an alternative; the possibility of blowing out the deficit wont gain much traction with a Republican conference thats campaigned on doing the opposite.

The Freedom Caucuss alternative is to make up the difference with deep cuts to welfare programs. Meadows said his caucus has identified upward of $500 billion in mandatory savings options Republicans could exercise. Most other House Republicans, though, seem unlikely to go along with those cuts.

The Freedom Caucus knows that even without the BAT, if the party leadership is determined to be revenue-neutral, conservatives might be pressured into accepting a higher corporate tax rate to offset revenue losses, which they believe would reduce the economic growth generated by the bill.

Thats why caucus members are fighting for more dramatic mandatory spending cuts in the budget resolution a welfare reform package that they say could in part pay for tax cuts.

With Medicare and Social Security off the table, the Freedom Caucus wants to put Medicaid, cash assistance, and food stamp programs on the chopping block. Currently the budget resolution has written in $203 billion in mandatory savings cuts overall. The Freedom Caucus wants something closer to $400 billion.

There are a lot of other dynamics at play here as well.

House Republicans, with overwhelming consensus, want to hike defense spending to $621.5 billion, which would bust the defense budget caps in the Senate set at $549 billion. Authorizing that level of spending requires negotiating with Democrats, which would almost certainly increase to non-defense discretionary spending from the $511 billion the House has proposed.

House leadership has floated avoiding Democrats altogether by putting the additional defense funding in the Overseas Contingency Operations fund, which covers unplanned military expenses outside of the budgets baseline. The proposed budget resolution already calls for $75 billion in OCO. For defense hawks in the House, like Armed Services Committee Chair Mac Thornberry (R-TX), its better to have the money than not have the money, but more than $100 billion in OCO is not ideal.

House conservatives, anticipating this negotiation with Democrats, are only heightening their call for more mandatory savings.

Maybe we as the Freedom Caucus can live with a higher budget number if in fact we do real welfare reform on the tax bill work requirements, time limits on able-bodied adults [are] part of that package, Jordan said of a proposal to tie tax reform to welfare reform.

Because budget reconciliation instructions denote specific savings requirements for each committee, the Freedom Caucus is pushing for higher savings assigned to committees with purview over welfare programs, like the Agriculture Committee, which oversees food stamps.

Thats a difficult ask for committees that have their own spending priorities.

For example, Rep. Mike Conaway (R-TX), who chairs the Agriculture Committee, has a farm bill to think about to cover rural, low-income, and farming constituents. He and Budget Committee Chair Rep. Diane Black (R-TN) have made assurances that he would push for reforms including renewed work requirements for the food stamp programs, but not necessarily through the reconciliation bill.

Leadership say members can sign on to either $203 billion in savings overall or zero, one Republican aide close to the Budget Committee said and thats not enough to bring the archconservatives on board.

But for now, the Freedom Caucus isnt buying this binary choice without their votes, this resolution will fail on the House floor, and with it any hope for tax reform.

The question is, who will give in to the pressure first?

Theres no wiggle room for a failed budget resolution and no faction of the party will want to come out against the president.

The battle ultimately comes down to the same two political dynamics that almost choked the health bill earlier this year: an era of extreme partisanship, in which congressional Democrats and Republicans are unlikely to work together, and a Republican Party that is polarized between its own moderates and conservatives.

Despite an ambitious agenda to repeal Obamacare, rein in government spending, and slash taxes, congressional Republicans have yet to enact a single piece of major legislation.

Thats left the White House desperate for some big policy wins fast. This game of chicken between House leadership and Freedom Caucus members is a big gamble. The lower chambers far-right contingent might have been able to successfully extract key concessions from Trump on health care but its not certain they can do it again.

The White House is much more involved in the business of cutting taxes than it has been on health care policy. And the reality from this fight over the budget resolution is that if it continues and is exacerbated by the Senate it could keep Trump from yet another win.

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The coming Republican civil war over the budget resolution, explained - Vox

The Fiscal Times

Here We Go Again: GOP Infighting Battles Loom Over Budget The Fiscal Times The budget, which passed the House Budget Committee on a party-line vote Wednesday, is already facing objections from Freedom Caucus members who believe it doesn't do enough to cut federal spending, particularly in the area of entitlements. House Budget Committee proposes boosting defense spending, reshaping welfare programsCNBC The coming Republican civil war over the budget resolution, explainedVox House Republican budget slashes billions in spending, paving path to tax cutsCNN The Hill -Politico -RealClearPolitics -House Budget Committee all 324 news articles »

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Here We Go Again: GOP Infighting Battles Loom Over Budget - The Fiscal Times

After years of hysterical warnings about budget deficits under former President Barack Obama, Republican congressional leaders suddenly seem to have shed their concern for the deficit. In The Atlantic, Russell Berman questions whether deficits still matter to Republicans under President Donald Trump.

While this changing approach to budget deficits is certainly hypocritical, it continues a consistent pattern of selectively using fiscal hysteria as a weapon to attack programs for low- and middle-income Americans. A recent article by this author for Harvard Law and Policy Review defines fiscal hysteria as exaggerating the impacts of deficits and debt, thereby underestimating the extent to which the United States can afford to solve problems facing the American people. While fiscal hysteria does not actually lead to sustainable fiscal policysince it tends to be deployed selectively for political gainit does lead to policies that enrich those at the top at the expense of everyone else.

The upcoming debate over the budget resolution for fiscal year 2018 will test whether hypocritical fiscal hysteria works to sell an unpopular agenda to lawmakers, the media, and the public. While this budget will likely include false claims that a looming fiscal crisis forces Congress to cut programs for working families, another motivation for passing this budget appears to be tax cuts for the wealthiest Americans.

The empty rhetoric of hypocritical fiscal hysteria can be debunked by exposing the reality of the policy agenda behind that rhetoric. But even when fiscal hysteria is expressed consistently instead of hypocritically, it still exaggerates fiscal problems in ways that enable those who would use fiscal hysteria hypocritically as a political weapon. Instead of indulging fiscal hysteria, the federal budget should be assessed with a clear-eyed understanding of the underlying fiscal strength of the United States.

The House Republican budget warned of a looming fiscal crisis when Obama was president, but now Speaker of the House Paul Ryan (R-WI) will not even commit to preventing further increases in the budget deficit as a result of passing his partys agenda. After years of insisting on balanced budgets, the congressional majority made no attempt to balance the budget in the budget resolution they ultimately passed for FY 2017, which laid the procedural groundwork for repeal of the Affordable Care Act (ACA). Instead, the budget adopts the spending and revenue levels projected under current lawthe same projections that were supposed to lead to a fiscal crisis under President Obama.

In 2015, when Obama was president, the Republican-controlled Congress passed a budget resolution that created a fiscal rule against legislation that increases deficits. But the FY 2017 budget resolution waives that rule for ACA repeal. Sen. Rand Paul (R-KY) voted against the FY 2017 budget resolution due to its deficits, but it still passed with the support of every other Republican senator.

Tax cuts for the wealthy areby farthe biggest budget busters on the agenda. According to the nonpartisan Tax Policy Center, the tax plans proposed by President Trump and House Republican leaders would both cost several trillion dollars over a 10-year period and disproportionately benefit the highest-earning 1 percent of Americans. The House Republican plan is particularly skewed towards the wealthy, with the top 1 percent receiving an eye-popping 99.6 percent of the benefit once it is fully implemented in 2025.

While Congress may not care about budget deficits when it comes to cutting taxes for the wealthy, this does not mean that fiscal hysteria is gone forever. After Congress finishes debating whether to take health insurance from tens of millions of Americans, expect fiscal hysteria to come roaring back as Congress looks to cut the budgets of everything else, such as Social Security, student loans, nutrition assistance, and affordable housing.

The first version of the FY 2017 House Republican budgetwritten before the final version that was only passed to repeal the ACAadvocated trillions of dollars in spending cuts. The budget did not raise any new revenue from the wealthy or corporations, and 62 percent of its cuts hit programs for low- and moderate-income Americans. This budget advocated turning Medicare into a voucher program and making especially large cuts to Medicaid and nutrition assistance.

Fiscal hysteria was the tool to sell these unpopular cuts to the American people. The phrase fiscal crisis appears several times in the House Budget Committees paper advocating these cuts. The paper whips up fear of a fiscal crisis because the policies it advocates are extremely unpopular. A 2012 survey found that only 19 percent of the public supported similar cuts in an earlier budget authored by Rep. Ryan. In 2011, President Trump said the Ryan budget was political suicide for the Republican Party.

House Republican leaders appear poised to revive their plans for massive program cuts in an upcoming budget resolution for FY 2018. The only way to sell these cuts to the American people will be to use fiscal hysteria to claim that massive cuts are the only way to avoid a crisis.

The FY 2018 budget resolution should be evaluated based on the actual policies it is enablingand who benefits and suffers from those policiesrather than taking the rhetoric that will be used to sell the budget at face value. Even though the FY 2018 budget resolution will likely be full of fiscal hysteria when it comes to cutting programs for working families, it appears that this budget will also pave the way for deficit-increasing tax cuts for the wealthy. To pass a tax bill along party lines with 50 votes in the Senateinstead of the typical 60 vote thresholdCongress must first pass a budget resolution with reconciliation instructions for that tax bill.

Speaker Ryan and other congressional leaders claim that they support a revenue-neutral tax reform that repeals tax breaks to pay for lower tax rates, but their other statements make clear that this is a nearly meaningless commitment. These lawmakers are using egregious budget gimmicks to falsely claim that their massive tax cuts are revenue neutral.

One major gimmick in the House Republican tax plan is the so-called current policy baseline, which they are using to claim that cutting taxes by more than $400 billion over 10 years is still revenue neutral. This current policy baseline assumes that lawmakers will permanently extend tax breaks scheduled to expire under current law, which reduces the overall level of revenues that a tax plan would need to raise to be considered revenue neutral under this new baseline. By comparison, House Republican leaders are currently considering reconciliation instructions to cut programs for working families by $200 billion over 10 years, which is less than half the amount that the current policy budget gimmick will enable in tax cuts.

The FY 2018 budget resolution could pave the way for much larger cuts to programs for working families, but these will be used to cut taxes for the wealthy rather than to reduce deficits. Rather than including a reconciliation instruction for revenue-neutral tax reform, the reconciliation instruction could instead say deficit-neutral tax reform. While a revenue-neutral reconciliation instruction means that tax cuts must be financed by other provisions that increase tax revenuessuch as closing tax loopholesdeficit-neutral means that spending cuts could be used to finance tax cuts. A deficit-neutral reconciliation instruction opens the door to potentially unlimited spending cuts to pay for tax cuts.

In January 2017, Howard Gleckman of the Tax Policy Center speculated that Congress will eventually give up on the hard choices of tax reform, and instead simply pass tax cuts. Indeed, Rep. Mark Meadows (R-NC), chairman of the ultraconservative House Freedom Caucus, is pushing for deficit-increasing tax cuts.

There appears to be increasing support within the Trump administration and among congressional Republicans for using a particularly egregious budget gimmick to pass tax cuts that are technically temporary but last for 20 years or more. The rules for reconciliation prohibit increasing deficits in years that are outside the period covered by the budget resolution. The gimmick is to sunset the entire package after the budget resolution ends, and then after passing the tax cuts, push to make them permanent to prevent a tax increase when they expire as scheduled.

Congress passed tax cuts under former President George W. Bush using the same budget gimmick, but this would be even more egregious. While the Bush tax cuts were originally scheduled to expire after 10 yearswhich is currently the normal period for a budget resolutionSen. Pat Toomey (R-PA) and others advocate lengthening the budget resolution to cover a longer period such as 20 years to make the temporary nature of their tax cuts even more of a fiction.

And in the end, Congress may even ignore its own budget to pass tax cuts for the wealthy. The House of Representatives did this in an attempt to repeal the estate tax in 2015. First, the House passed a budget that called for maintaining federal revenues at the same levels as current law. The report for this budget stressed that it was a balanced budgetan accomplishment which it grandly described as a vision of governing, and of America itself. But this vision was immediately discarded when the House passed estate tax repeal legislation that cost $269 billion over 10 years, thus reducing revenues below the levels in the House budget resolution.

Speaker Ryan is a master at co-opting anti-deficit rhetoric to advance his agenda without being held accountable for the fiscal reality of the policies he supports. When George W. Bush was president, Rep. Ryan voted for tax cuts in 2001 and 2003, wars in Iraq and Afghanistan, and a Medicare prescription drug benefit. Lawmakers did not pay for any of these policies. During the Bush administration, large budget surpluses turned into deficits. Despite this history, the conventional wisdom has been that Speaker Ryan is a budget hawk, and that was how the Ryan budget was marketed to the American people.

Even when fiscal hysteria is expressed consistently and sincerely, it exaggerates the nations fiscal challenges in ways that play into the hands of President Trump and his allies in Congress. As economist Jared Bernstein says, Deficit hysteria often promulgated by those who are happy to cut taxes without making up the revenue loss has become a stalking horse for shrinking government under the guise of fiscal rectitude. Fiscal hysteria obscures the fact that the United States can support and expand its commitments and investments in working families, if lawmakers choose to do so.

Despite claims to the contrary during the Obama administration, the United States is not broke. Investors would not accept the current low interest rates on U.S. Treasury bonds if they were at all concerned about a looming fiscal crisis.

The United States has more than enough economic capacity to support existing programs such as Social Security and make new investments to strengthen and grow the middle class. In 2015, the Center for American Progress proposed a budget that would expand Social Security, invest $1 trillion in infrastructure, provide paid family leave, and support affordable college for all students. The plan did all this and more while significantly reducing the national debt as a share of the economy over the long term, primarily by ensuring that the wealthiest Americans pay their fair share of taxes and building on the successful work of the ACA to control health care costs.

According to the International Monetary Fund, the United States currently has the fifth-lowest tax burden among 35 advanced economies. This includes federal, state, and local taxes. Even if the federal government stabilized the debt as a share of the economy over the long term using only tax increases, the United States would still have the sixth-lowest tax burden among advanced economies. There is no fiscal imperative that forces lawmakers to dramatically scale back Social Security, Medicare, Medicaid, or other programs for low- and middle-income Americans.

The FY 2018 budget resolution will not be about deficit reduction, despite the likely rhetoric about a looming fiscal crisis. That rhetoric will only be used to justify cuts to programs that the authors of the budget resolution want to cut anyway. Hypocritical fiscal hysteria will not stand in the way of tax cuts for the wealthy.

If the authors of the FY 2018 congressional budget resolution claim that a fiscal crisis compels them to propose massive cuts to programs that provide health care, disability benefits, and nutrition assistance to working families, then they should be asked whether this alleged fiscal crisis also requires any new revenues from the wealthiest Americans or the largest corporations. If lawmakers really believe that there is a looming fiscal crisis, then why are tax cuts for the wealthy and corporations even on the table? Instead of repeating the empty rhetoric of the budget resolution, the focus should be on the actual policies it enables using reconciliationand any budget gimmicks that smooth the way for those policies.

At the core of the budget debateand tax reformis the question of who wins and who loses. Fiscal hysteria avoids that debate with false claims about a looming debt crisis, and it obscures an agenda that takes resources away from low- and middle-income Americans and gives them to those at the top.

Politicians use fiscal hysteria because it works. Until fiscal hysteria stops working, it will continue to help the rich get richer at everyone elses expense.

Harry Steinis the director of fiscal policy at the Center for American Progress.

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How Paul Ryan's Hypocritical Fiscal Hysteria Threatens Working Families - Center For American Progress

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Its all over now except the shouting about Obamacare repeal and replace, but thats not the half of it.

The stand by Senators Lee and Moran was much bigger than putting the latest iteration of McConnell-Care out of its misery. The move rang the bell loud and clear that the Imperial City has become fiscally ungovernable.

That means there is a chamber of horrors coming. With it, an endless political and fiscal crisis that will dominate Washington for years to come. Its cause is deep and structural.

The founders, in fact, were small government de-centralists and non-interventionists. Thats why they agreed to Madisons contraption of redundant checks and balances.

Aside from ruthlessly ambitious Alexander Hamilton, the founders wanted a national government that was hobbled by levels of hurdles and vetoes. They wanted a government that could act sparingly and only after thorough deliberation and consensus building.

And that made sense. After all, most believed that the 10th amendment was the cornerstone of the Constitution. Neither Washington or Jefferson envisioned the political and fiscal burdens of running an empire.

It is our true policy to steer clear of permanent alliance with any portion of the foreign world. That was George Washingtons Farewell Address to us.

The inaugural pledge of Thomas Jefferson was no less clear in stating, Peace, commerce, and honest friendship with all nations-entangling alliances with none.

So when Woodrow Wilson embarked the nation on the route of Empire in April 1917 and FDR launched the domestic interventionism of the New Deal in March 1933, the die was cast. It was only a matter of time before the disconnect between a robust Big Government and the structural infirmities of Madisons republican contraption resulted in a deadly impasse.

The Fed has now backed itself into a corner and is out of dry powder. Even its Keynesian managers are determined to normalize and shrink a hideously bloated balance sheet. The current account has no basis in sustainable or sound finance.

The time of fiscal reckoning has come. With the financial sedative of monetization on hold, bond vigilantes will soon awaken from their 30 year slumber.

First up is the imminent debt ceiling crisis. Republicans will never reach agreement on a bill to raise the debt ceiling by at least the $2 trillion that would be needed to get through November 2018. Thats because the Freedom Caucus conservatives would never agree to a clean debt ceiling bill. By agreeing to such a measure, they would betray the fundamental reason they went to Washington.

The Washington Post reported that sentiment exactly this morning in comments from Freedom Caucus Chairman Mark Meadows:

Meadows said that he recently attended a meeting of eight of the most conservative Senate and House lawmakers about how to handle the debt ceiling and that not once did they consider the idea of backing Mnuchins proposal for a clean debt-ceiling increase.

The end game is quite clear. After several false starts, the Trump White House will be forced to turn to Democrats for votes to raise the debt ceiling but it will come at a price.

Not only would Trump be forced to bailout Obamacare with subsidies to insurance companies to keep rates out of double digits and coverage on state exchanges from collapsing, but it would also mean setting aside his vaguely outlined domestic agenda.

That would include dropping the sweeping domestic spending cuts contained in the Administrations budget and settling for a modest tax plan constrained by revenue neutrality.

Even if Trump were to agree to a quid pro quo with Democrats to get votes for a debt ceiling increase, it would soon be surpassed by a far bigger consequence. It would be the complete implosion of any functioning Republican majorities on Capitol Hill.

Thats because a White House deal with the Dems on the debt ceiling would amount to giving the GOP rank and file release from party discipline ragged as it already is on fiscal matters going forward. White House complicity in Obamacares rescue would be considered an unforgivable betrayal.

The Donald has almost no real friends in the Imperial City among the ranks of the seasoned political pros who run the Congressional GOP. After a debt-ceiling-for-Obamacare-bailout deal with the Dems, he would have no friends at all. The President would then be completely beholden to political enemies.

The nave notions about bipartisanship and working with Democrats held by the White House inner circle of economic advisors will then come into play. As far as we can tell, both Secretary Mnuchin and chief economic advisor Gary Cohn (and son-in-law Jared Kushner) are lifelong Democrats. They are individuals who have no fiscal policy principles whatsoever except doing whatever is necessary to keep the stock market rising.

They would likely lead the Donald into a fatal debt deal with the Dems based on the doctrine that the credit of the U.S. must be preserved at all hazards. By doing so, the Wall Street/Washington establishments fifth column in the White House will bring about the final defenestration of what is left of Trumps presidency.

The astute leader of the Freedom Caucus made the devastating political cost of such a maneuver crystal clear. In recent commentary on the impending crisis, referring to Mnuchins campaign for a clean debt ceiling bill, he explained there is no such thing as 50/50 GOP/Dem coalition to pass a debt ceiling bill.

The minute the White House starts making concessions, the GOP bench will jump off the ship in droves. It will then become an overwhelmingly Democrat vote show:

Hes certainly in the minority in the administration, said Rep. Mark Meadows (R-N.C.), chairman of the House Freedom Caucus. The problem is, yes, you could get a clean debt-ceiling, but it would be 180 Democrats in the House with 40 or 50 Republicans, and thats not a good way to start.

Before Trump is forced into a surrender, there will be the same vote count maneuvering in GOP caucuses of both Houses. Similar to what preceded the GOP collapse of their seven-year crusade against Obamacare, such maneuvering may even lead to one or more small increases in borrowing authority.

The more likely case, however, is that the Treasurys cash which now stands at $168 billion will run-out before they get to a stop-gap debt ceiling increase. That would cause the Treasury to unleash the nuclear tool of spending prioritization and allocation of incoming revenues to the highest uses (debt service, social security payments and military payroll).

Again, the Washington Post story hit exactly what is coming:

One former Treasury official, speaking on the condition of anonymity to discuss sensitive agency deliberations, said officials are now brushing up on options in the crazy drawer.

In past administrations, Treasury officials have designed plans to prioritize payments to government bondholders so that if the government runs short on cash it could avoid defaulting on U.S. debt.

Such a scenario would be very difficult to manage because some bills would either be delayed or not paid making it necessary to prevent an actual default. Prioritizing payments could lead to a spike in interest rates and a stock market crash, analysts have said.

Thats an understatement, if there ever was one. Prioritization and unpaid bills piling up in the Federal agency drawers will cause a thundering shock in both Washington and Wall Street.

Congress would ring with stories about unpaid contractors, delayed grant distributions, furloughed Federal employers, closed national parks, and endless more.

If theres any lesson from the 2008 crisis, its that entitled elites and robo-machines on Wall Street do not cater to a Congress thats not doing their bidding. That became clear when the stock market dropped by upwards of 800 Dow points during the fifteen minute interval when the first TARP vote was being tallied (and voted down).

The non-compliance with Wall Street demands for protecting the credit of the U.S. at all costs and the sight of political disarray in Washington will come as a shock. It will cause panic on Wall Street and an even greater headache for the Donald.

Thats because Trump has trumpeted the 18% rise of the stock market averages since Nov. 8 as an endorsement of his Presidency. Instead, he shouldve punctured the bubble on Day One by demanding Yellens resignation and blaming the crash on the Fed and its enablers.

Having taken the easy strategy of embracing the stock market bubble, Trump will soon face a double whammy of unfair blame. He soon will be blamed for the debt ceiling crisis that he inherited; and nailed for causing the third major stock market crash of this century. Even though it was fostered by a rogue central bank that he has not addressed, let alone subdued.

The WaPo story provides the growing atmospherics, but the real countdown is in the Treasury numbers. Last year the Treasury collected only $595 billion between July 14 and the end of the fiscal year on Sept. 30.

Last years collections during the back 78 days of the fiscal year amounted to $7.6 billion per calendar day. This figure might reach $8 billion per day this year based on the 4.4% year-to-date lift in total tax collections.

Under that math, Washington has now spent $2.6 trillion through the end of May, or about $11 billion per calendar day. So call the cash burn rate $3 billion per day, and compute the inception of crisis as follows.

That makes 50-60 days of cash left, at most. Then comes the first great fiscal temblor of the new era.

The first round of prioritization and allocation will only be the precursor. It will come when Senator Schumer stands with a hapless Donald Trump in the Rose Garden announcing that the debt ceiling will be increased enough to get through the November 2018 election. Perhaps the Wall Street robo-machines will then be reprogrammed, finally.

At that point there will be no dip to buy. The political and fiscal crisis will become a permanent disaster in the Imperial City and the dip on Wall Street will become an extended cavern.

As all school boys know, the original Waterloo decisively changed the course of history.

So will this one.

Regards, David Stockman forThe Daily Reckoning

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The Imperial City's Fiscal Waterloo - Daily Reckoning

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In President Trump's America, anti-immigration animus is fast becoming the main organizing principle of the Grand Old Party. Not fiscal responsibility. Not the free market. Anti-immigrant fever.

For proof, look no further than the recent antics of two prominent Republicans: Rep. Mark Meadows (R-N.C.) and Sen. Tom Cotton (R-Ark.), both of whom have worked with the White House and floated plans to sacrifice traditional conservative economic principles to promote a harsh immigration agenda.

Meadows told Breitbart News, the organ of immigration hawks, last week that he was prepared to shut down the government again in September if Congress' spending bill failed to fund the Great Wall of Trump. "There is nothing more critical that has to be funded than the funding for the border wall," he declared.

It's stunning for Meadows to lobby for this money. He's an anti-spending warrior who helped found the House Freedom Caucus in 2015 for the express purpose of fighting rising government spending. He led the coup to depose House Speaker John Boehner two years ago after Boehner failed to cut half a billion dollars for Planned Parenthood from a bill to fund the government.

Yet here is Meadows now insisting that the border wall that will cost upwards of $20 billion needs to be funded fully. Why? He cites two reasons: President Trump made a promise to his base, and it is essential for national security. But a limited government conservative of all people should understand that if a lawmaker's campaign promises were a sufficient justification to fund government programs, America would have gone Greece's way many times over by now (not just when the bill for America's massive unfunded entitlement state comes due!). As for the security rationale, it's not just bogus but backwards.

The Bipartisan Policy Institute's Theresa Cardinal Brown points out that a physical barrier, no matter how tall or strong or beautiful, will not deter drug cartels given that America boasts a $100 billion drug market and that's just the annual number for the top four drugs. Cartels will find ways to go "over, under, around, or through any border infrastructure," she insists, by using drones, ultra-light planes, catapults, tunnels, submarines and, most importantly, human mules.

Mules are typically desperate foreign workers who, finding it difficult to get into the U.S., sign up with cartels to carry drugs in their body cavities in exchange for free passage to America. The more difficult America makes it for these workers to cross the border on their own, the more they will choose the cartel option. This will cause the drug and human trafficking business to become even more tightly entwined, breeding more criminality and lawlessness at the border. And all for the low, low price of $20 billion.

So why build the wall? The real purpose, clearly, is the symbolism it offers the GOP's restrictionist base. However, if the austerity hawks of the party of limited government become champions of expensive and empty exercises in government spending, what leg will their party have to stand on when liberals start building bullet trains to nowhere to earn brownie points with their supporters? Clearly, Meadows doesn't care.

But fiscal responsibility is not the only GOP principle that the anti-immigration fever is burning. Sen. Cotton, a rising star of the party, unveiled the Reforming American Immigration for Strong Employment (RAISE) Act last week. This legislation also disses the party's commitment to markets and competition everything that Republicans have long credited for making America great.

The Cotton bill would slash legal immigration in half by 2027 because he feels it's the government's duty to protect American workers from too much labor competition. So much for limiting the size and scope of government!

And the claim that a smaller workforce means more plentiful and higher-paying jobs for native workers is laughable on its face. Women's participation in the labor market doubled in the latter half of the 20th century, massively expanding the American workforce. By Cotton's logic, that should have produced rampant unemployment among American men and cratered male wages. But America's long bouts of full employment, including the one it is experiencing right now when we are in an alleged age of "mass immigration," offer ample proof against that thesis. That's because women didn't steal men's jobs, they created their own opportunities as America's dynamic market economy deployed their talents and skills to deliver new goods and services to consumers.

The same is true for foreign workers. Studies have repeatedly shown that even a sudden and large influx of poor foreign laborers has no big long-term negative impact on native wages. Even the short-term affect is often mild to negligible. Indeed, after the Mariel boatlift crisis in 1980, when Fidel Castro allowed 125,000 Cubans to flee to Florida, the wages of low-skilled Florida workers, with the possible exception of high-school dropouts, actually went up.

If expanding the workforce doesn't diminish American wages or job prospects, shrinking it, as the RAISE Act would, won't boost them either. Indeed, the Center for Global Development's Michael Clemens has found that the termination of the Barcero guest worker program with Mexico in 1964 shrank the seasonal agricultural labor force by up to 20 percent. However, the wages of American workers in affected states went up not one bit.

What is Sen. Cotton's response to all this evidence? "Only an intellectual could believe something so stupid."

He's not just throwing pointy-headed intellectuals under the bus. Or even immigrants. He, along with other anti-immigration zealots in his party, is throwing away the bedrock fiscal and economic principles that have guided his party for at least the last three decades.

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Does fiscal conservatism end at the border wall? - The Week - The Week Magazine

The House Budget Committee on Tuesday unveiled a spending proposal that would boost defense funding but dramatically reshape social welfare programs such as Medicare and food stamps.

The fiscal 2018 budget which the committee said would result in a $9 billion surplus after a decade reflected compromise between defense hawks and fiscal conservatives, but risked alienating moderate Republicans loathe to embark on the politically perilous process of reforming popular entitlement programs.

In fact, the budget ran into its first roadblock even before it was officially released Tuesday. The proposal assumes $204 billion in deficit reduction over a decade from the passage of the House bill to repeal and replace the Affordable Care Act. But the bill appeared to die in the Senate on Monday evening after Republican Sens. Mike Lee of Utah and Jerry Moran of Kansas came out against it.

The collapse of the health-care bill could place even more pressure on GOP lawmakers to pass a budget not just to keep the government running, but also because Republicans plan to use the process to push through what is arguably their top agenda item: tax reform.

"The budget resolution is no longer a theoretical outline with little chance of implementation," Budget Committee Chairwoman Diane Black said. "It is the major governing document of the 115th Congress, and it is the concrete fulfillment of our promise to the American people."

The proposal calls for $621 billion in defense spending in fiscal 2018, including money for President Donald Trump's signature border wall. That is more than the White House had requested, but it is still below the $668 billion that the conservative Republican Study Committee would like. The budget also outlines $203 billion in spending reductions to social safety net programs an amount that GOP Rep. Charlie Dent of Pennsylvania, head of the moderate Tuesday Group, has signaled is too steep.

The House proposal mirrors the White House budget in imposing new work requirements for programs like food stamps. But it goes beyond the administration's blueprint by also outlining changes to Medicare one of the programs that Trump vowed on the campaign trail not to touch. Among the reforms detailed in the budget are limiting Medicare benefits for wealthy seniors and allowing more private insurers to compete for coverage.

Although the House budget does not address Social Security retirement, it does call for changes to the disability insurance program, such as barring recipients from also collecting unemployment benefits.

"Mandatory spending must be addressed in this budget resolution and in budget resolutions to come," the document says.

The study committee plans to propose additional cuts to mandatory spending programs later this week. The group supports a bill introduced last year by Rep. Sam Johnson of Texas that would raise the age of eligibility for Social Security. Study Committee Chairman Rep. Mark Walker of North Carolina said his group plans to support the House budget but hoped that its proposals would become a blueprint for the future.

"Are we on a sustainable path?" he asked. "The truth is that overwhelmingly, both Republicans and Democrats would answer the same way. No we are not."

The House estimated that, if implemented, its budget would boost economic growth to an average of 2.6 percent annually over the next decade short of the Trump administration's often-criticized goal of 3 percent. Still, officials in both cases point to tax reform as the key to jump starting growth.

The budget proposal provides some broad guidance for how lawmakers should proceed, but substantial divisions remain within the GOP even over the framework.

The budget directs tax cuts to be deficit neutral, meaning that they could be offset by higher revenue elsewhere or spending reductions. House GOP leadership has previously said tax reform should be paid for only through higher revenues. Some conservative groups, such as the House Freedom Caucus, have argued that tax cuts should not have to be offset at all because they will spur economic growth.

"This budget cannot dictate to the [tax-writing] Ways and Means Committee how tax reform should be done," the document states.

The proposal also supports shifting the tax code to a "territorial" system, in which the individuals and businesses would only have to pay taxes on income earned in America. The United States is one of the only developed nations that taxes income earned in other countries as well.

One topic the budget does not appear to address is the federal borrowing limit. Lawmakers will have to vote to raise the debt ceiling by late summer or early fall or risk an unprecedented default. Some Republicans have called for the measure to be combined with vote over the budget. However, Treasury Secretary Steven Mnuchin has repeatedly called on Congress to pass a "clean" bill to lift the cap with no strings attached.

The House budget committee will mark up its proposal on Wednesday.

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House Budget Committee proposes boosting defense spending, reshaping welfare programs - CNBC

By David Morgan

WASHINGTON (Reuters) - Republicans in Congress unveiled a fiscal 2018 budget plan as a first step to major U.S. tax reform on Tuesday, only to face the same divisions between conservatives and moderates that helped killed their efforts to replace Obamacare.

The $4 trillion spending blueprint, released by the House of Representatives budget committee, could become a new flashpoint for Republican in-fighting because it links future tax cuts for businesses and individuals with $203 billion in mandatory spending cuts that would reduce benefits for the poor.

The Republican push to repeal and replace the Affordable Care Act, widely known as Obamacare, collapsed in the Senate late on Monday after a tug-of-war between party moderates who wanted to preserve healthcare benefits for lower-income Americans and conservatives who wanted to scale them back.

On Tuesday, House Republicans disagreed over the budget proposal in terms that could foreshadow a replay of the Senate healthcare debacle when lawmakers turn to tax reform.

Representative Mark Meadows, chairman of the conservative House Freedom Caucus, said the budget measure would not get enough conservative votes to pass the House without bigger cuts to programs that the government is required to fund by law.

"It's still short of what it needs," Meadows told reporters.

On the other side, Representative Charlie Dent, a leader of the moderate Tuesday Group, called for an agreement with Democrats to establish higher spending levels for discretionary programs.

"If we move too much in the mandatory area, then it will make tax reform that much more difficult to get. It's that basic," Dent told Reuters.

House and Senate approval for a fiscal 2018 budget agreement would unlock a vital legislative tool called reconciliation that allows Republicans to pass tax legislation in the Senate with a simple majority.

But the Senate's inability to pass healthcare legislation even with reconciliation raised questions about how useful the strategy really is.

One corporate lobbyist said some Senate Republicans privately question the reconciliation approach backed by House leaders, saying it appears to be "poisoning the well" in the Senate by alienating Democrats who might otherwise support tax legislation.

Republicans have only a 52-48 Senate majority and can afford to lose no more than two votes on Republican-only legislation, with Vice President Mike Pence providing the tie-breaking vote.

DEMOCRATS' DELIGHT

Democrats were delighted by the Republicans' failure on healthcare and called for bipartisan discussions.

"Using a partisan approach for the major issues of our time -- healthcare and tax reform is a prescription for trouble," Senator Ron Wyden, top Democrat on the Senate Finance Committee, said at a tax reform hearing on Tuesday.

Senator Orrin Hatch, the panel's Republican chairman, acknowledged that Republicans would also have difficulty passing tax reform legislation, even using reconciliation.

"It's going to be difficult to do. Hopefully, we can get that done," Hatch told reporters.

The Senate is under no obligation to accept the House budget language that would ultimately tie tax reform to mandatory spending cuts in the same piece of legislation.

Senator John Thune, chairman of the Senate Republican conference, said senators will decide whether to add the same language to their own budget resolution.

After six months in power, President Donald Trump has yet to score a major legislative victory, though financial markets have rallied since his election on expectations of pro-business measures, including tax reform and infrastructure spending.

Pence, speaking to a gathering of retailers in Washington on Tuesday, reiterated that Trump plans to slash the corporate income tax rate to 15 percent from 35 percent.

But the failure of the healthcare bill in the Senate created uncertainty in financial markets, with the dollar hitting its lowest level against the euro in more than a year on Tuesday.

"The healthcare bill not coming through raises some continued concerns about the ability of Washington to push through favorable fiscal policies," said Lisa Kopp, head of traditional investments at U.S. Bank Wealth Management.

The S&P 500 stock market index has gained about 15 percent since Trump's Nov. 8 election, while the benchmark Dow Jones industrial average has posted one record high after another on optimism of a Trump tax reform and other pro-business policies.

The budget committee will hold a hearing on the budget resolution on Wednesday. Representative Diane Black, the panel's chair, said the measure has the votes to reach the House floor.

(Additional repporting by Amanda Becker and Ginger Gibson in Washington and Tanya Agrawal in New York; Editing by Kevin Drawbaugh, Kieran Murray and Leslie Adler)

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After healthcare failure, Republicans face similar divisions on tax reform - Metro US

Cutting the costs of hospitals will be crucial to future state fiscal management.

The old business adage warns there is no such thing as a free lunch. The same applies when it comes to health policy: the notion we can make Australia's 'free' health system sustainable by funding public hospitals on an 'efficient' activity-basis is a myth.

Under the Gillard government's 2011 'National Partnership' funding formula, the states agreed to a national system of activity-based funding that pays public hospitals for each service delivered at the so-called 'national efficient price'. This is a pricebased on average costs across public hospitals nationally.

But a national efficient price is a contradiction in terms. Its impact on the unit-cost of care is biased by less efficient hospitals and distorted by therestrictive workforce practices that are legion in all public hospitals.

Nevertheless, the focus on efficiency is understandable. In all jurisdictions, health consumes around a third of state budgets, and public hospitals account for around two-thirds oftotal health spending. Since the start of Medicare in 1984, the unfulfillable promise of 'free', universal public hospital care has imposed increasingly onerous burdens on over-stretched state finances.

This activity-based funding first introduced in Victoria in 1993 was developed as a panacea for the inherent, unsolvable problem posed by a 'free' hospital system: an ever-growing disparity between public hospital capacity and the demand for 'free' services.

To the extent that activity-based funding encourages hospitals to increase productivity and attain at least average levels of efficiency, it can help reduce treatment waiting times and lower the overall cost of hospital services to governments.

However, it cannot eliminate the rationing of access to services by waiting lists, emergency queues, hospital bed cuts, and budget caps. These remain integral features of all state health systems and are essential to containing the potentially unlimited cost of 'free' hospital care.

Activity-based funding spurs hospitals to treat more patients. Higher service volumes could potentially further increase the total cost of hospital services even if funded at supposedly efficient prices and thereby increase the need to contain costs by further rationing access to services.

The Australian Institute of Health and Welfare has declined to publish figures for spending growth due to lack of year-to-year consistency in the data for recurrent real public hospital expenditure growth over the past five years. This means the cost impact of activity-based fundingis unknown and unprovable.

But even if reliable expenditure growth figures were available, any apparent success of the new activity-based funding system on the overall cost of hospital services is confounded by 'known unknowns': the impact on hospital expenditure of concurrent rationing necessitated by activity-based funding increasing throughput of patients.

Notwithstandingthat, thebottom line is that activity-based funding is no answer for the unaffordable cost of 'free' public hospital care in an ageing Australia.

The Abbott government recognised this when it scrapped the unaffordable Gillard funding deal in the 2014 budget, avoiding the$26 billion increase of federal hospital funding from 2013-14's $14 billion to $40 billion in 2024-25.

That has since been reversed by the Turnbull government, which temporarily restored the Abbott 'cuts' to hospital funding but only until 2020.

With this deadline looming, it is time to confront the undeniable: the fundamental unsustainability of a 'free' hospital system.

Instead of the usual cap-in-hand approach to the federal government seeking a non-existent money tree to fund health servicesstates need to fix their problems in health from first principles.

The reality is that states do not have sufficient sources of revenue from the current division of tax powers under the federation to ever hope to pay for their health and many other responsibilities.

A realistic path towards a state income tax therefore needs to be on the table in the forthcoming COAG negotiations over health, which need to be concluded by September 2018.

A state income tax would kill two birds with one stone.

Winningfiscal freedom wouldrelease states from some of their obligations under Medicare. That's because they would no longer be forced to provide public hospital services for 'free' as a condition for receiving federal health funding.

This would allow states to introduce policies that will ultimately control the demand for, and cost of, public hospital services. Policies such aspatient cost-sharing in the form of a compulsory co-payment for public hospital treatment.

This may seem radical or political poison after Labor's successful Mediscare campaign during the 2016 election, but bold reform in health to end 30 years of financially disastrous federal meddling in state health systems is the only way state governments can save themselves from Medicare.

David Gadiel is a Senior Fellow and Jeremy Sammut is Director of the Health Innovations Program at The Centre for Independent Studies. Their report is Medi-Mess: Rational Federalism and Patient-Cost Sharing for Public Hospital Sustainability in Australia.

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Fiscally fixing health and Medicare means state income taxes | afr.com - The Australian Financial Review

President Donald Trump. Darren McCollester/Getty Images

In June 2017,Operation 45(a nonprofit dedicated to transparency and accountability from the Trump administration), MIT Ph.D. candidate Ryan Shapiro, and BuzzFeed Investigative Reporter Jason Leopold fileda Freedom of Information Act (FOIA) requestlawsuitagainst the Federal Bureau of Investigation (FBI) to release its files on President Donald Trump. A press release announcing the lawsuit states, The records requested, which cover a period from June 14, 1946, through June 15, 2015, will shed new light on already known investigations linking Trump to organized crime and will provide new information about Trumps engagements with the bureau.

The Freedom of Information Act is one of the most underappreciatedelements of the entire American experiment, Ryan Shapiro said in an interview with the Observer. The notion that the governments records are the property of the people, and all we need to do to get them isto ask is radically democratic.

The group initially filed the request in March 2017, but they never received a response from the FBI. The project noted the FBI has improperly withheld responsive records on the grounds that confirming the existence or nonexistence of records would infringe Mr. Trumps privacy interests. They argued the fallacy of this excuse and cited that the public interest in these records outweighs any embarrassment Trump may face.

Several of the files that the group seeks relate to the FBIs investigations into Trumps ties with organized crime syndicates, which Pulitzer Prize winning journalist David Cay Johnston has been working for years to try to uncover. Johnstonwrote for Politico in April 2016, In all, Ive covered Donald Trump off and on for 27 years, and in that time Ive encountered multiple threads linking Trump to organized crime. Some of Trumps unsavory connections have been followed by investigators and substantiated in court; some havent. And some of those links have continued until recent years, though when confronted with evidence of such associations, Trump has often claimed a faulty memory. In anApril 27phone call to respond to my questions for this story, Trump told me he did not recall many of the events recounted in this article and they were a long time ago. He also said that I had sometimes been fair, sometimes not in writing about him, adding, If I dont like what you write, Ill sue you. Johnston outlined how Trump relied on New York City mob connections in the 1980s to build Trump Tower and casinos in Atlantic City. He also relied on several colleagues and acquaintances with organized crime connections.

Despite the gravity of the FBIs files, its unclear if and when the public will receive access to themeven with a pendinglawsuit.The Freedom of Information Act has been a vital tool for journalists, but its power is diminishing.Several journalists have complained about the Obama and Trump administrations failure or refusal to adhere to the Freedom of Information Act in a timely fashion. IBTimes investigative reporter David Sirotatweetedin March 2017, Federal and state agencies put up so many obstacles to open records requests that theyre turning FOIA into the Freedom FROM Information Act. He addedon July 13, Two years ago, I filed a FOIA for TPP-related documents from the U.S. Trade Reps office. They still havent responded.

The Obama administration set a record for withholding FOIA requests. The Wall Street Journalreportedin 2015, FOIA request backlogs have more than doubled since President Obama took office. The feds received 714,231 FOIA requests in fiscal 2014, and nearly 160,000 werent processed within the legal time limit, up 67 percent from fiscal 2013. So far, there is no indication that the Trump administration will improve these delays, rejections and refusals to comply with the Freedom of Information Act.

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Lawsuit Filed After FBI Denies FOIA Because It Would Embarrass ... - Observer