Addicted to Spending
Pennsylvania is the only state in the nation to experience both a federal government shutdown and a state budget stalemate. Both have the same root cause: Democrats being addicted to profligate spending.
The state budget stalemate stretched into its fourth month as lawmakers remained at loggerheads over the top-line spend number in the 2025-26 fiscal year budget. The crisis was triggered last February by Governor Josh Shapiro who proposed a state budget designed to spend some $5 billion more than the commonwealth is reasonably expected to receive in revenue.
State House Democrats, who control the lower chamber by one vote, delighted in that proposal and subsequently passed a budget along the lines proposed by the governor. State Senate Republicans, however, pointed out the fiscal folly in that budget and the Democrats’ plans to virtually empty out the state’s “rainy day” fund to paper over the deficit.
But what happens next year, and the year after when there is no “rainy day” fund left to tap? Senate Republicans passed their own budget which aligned spending more closely with revenue, hence the stalemate.
When the state fails to pass a budget by the July 1st deadline there is little immediate impact. State employees continue to be paid and state services continue to be delivered. However, after a few months the disrupted flow of state and federal pass-through dollars to counties, school districts and nonprofits begins to cause financial pain.
At the federal level the partial federal government shutdown can again be blamed on Democrat addiction to overspending. House Republicans passed a “clean” continuing resolution – continue spending at previously approved levels for eight weeks – to allow time for various issues to be resolved. Democrats, caving to their Leftwing base that was spoiling for a fight, are demanding temporary health care subsidies enacted to help offset the impact of the Covid-19 pandemic, be included in the CR. Republicans have thus far refused requiring the government be reopened before the health care subsidy debate can resume, hence the stalemate.
The health care subsidy issue is further complicated by the fact open enrollment on the Obamacare exchange is now underway with those insured facing significant premium increases – by some estimates as high as 18%. Those increases will be larger if the “temporary” additional Covid-era subsidies expire at the end of the year.
Ronald Reagan once observed that the closest thing to eternal life on Earth is a government program. That appears to be the case with the Covid-era health care subsidies. They were short-term assistance put into place to deal with a crisis epidemic – an epidemic that no longer exists.
Sally C. Pipes, President & CEO and noted health care expert at the Pacific Research Institute, recently wrote a piece explaining that the expiration of those subsidies impacts just 3.3% of the looming Obamacare premium increases. The bottom line is that the so-called Affordable Care Act (the official name of Obamacare) is not now, nor has it ever been affordable.
Pipes writes: “The overwhelming majority of the rate hikes result in other factors, including the basic structure of Obamacare.” She adds: “The cost of complying with the health law’s insurance market regulations has forced insurers to hike premiums steadily for over a decade. The enhanced tax credits have merely hidden that reality from consumers – and shifted more of the cost to taxpayers.”
“The Congressional Budget Office estimates that making the enhanced subsidies permanent would cost the federal government $350 billion over the next decade,” Pipes explains, “Democrats are insisting that Republicans throw hundreds of billions of dollars in taxpayer money into a broken system that, by its very nature, is destined to keep premiums rising.”
The reason congressional Democrats are so insistent in making the “temporary” Covid-era subsidies permanent is so that they can continue to perpetrate the myth that the Affordable Care Act has made health care more affordable when in fact is has made health care less affordable.
This of course comes as no surprise to those of us who opposed passage of the ACA. It also is yet another lesson in the inability of government to tinker in the free market without making a bad situation even worse. ACA was also a step in the Left’s desire to have universal government-run health care. Rather than being a showcase for socialized health care it has instead become a bright red warning flag as to what that would bring.
The debate that needs to take place is not over further subsidies, but on how to get the government out of health care so the free market can impose natural restraints on costs. That is not a debate congressional Democrats are willing to have preferring to inflict the pain caused by the longest federal government shutdown in history.
(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly American Radio Journal and Lincoln Radio Journal. His e-mail address is lhenry@lincolninstitute.org.)
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