What subsidy cliff? Jared Bernstein and Dean Baker defend the Affordable Care Act

I spent my last post peering over the edge at various points of the Affordable Care Act's subsidy cliff -- the income cutoff beyond which shoppers for health insurance are ineligible for subsidies.  I was prompted by a New York Times article spotlighting  who stand to lose most by this cutoff: middle aged and older, with incomes just over the line. In brief: if you're 27 and single, premium subsidies fade out gradually. If you earn one dollar more than the subsidizable limit, it may cost you $100 per year. If you're 55 and looking to cover a family of four, however, that extra dollar may cost you almost $9000 in subsidies.

While I had a couple of quibbles with the Times article, I thought it was fair.  The subsidy cliff is a real design flaw. A pair of 55 year-olds covering a 23 year-old son or daughter in New Jersey with an income of $79k shouldn't have to pay $1300/month for rather crappy insurance, which is what they would pay in Essex County, NJ.

I was somewhat taken aback, then, to discover that the fiery Dean Baker and the more mild-mannered Jared Bernstein both took rather furious issue with the Times article (by Katie Thomas, Reed Abelson, and Jo Craven McGinty). Baker's rhetoric is harsher than Bernstein's, but I think he does have a point. Bernstein's rebuttal strikes me as more of a reflex partisan pushback.* Take his opening salvo:

Here comes Obama's new centrist budget...much like his old centrist budget

To progressives, President Obama's inclusion of chained-CPI in his 2014 budget looks like another case of Obama moving the goalposts on his opponents' behalf. Yesterday, Jared Bernstein offered this forlorn hope:

–No chained CPI!  No $100 billion more in NDD (non-discretionary spending) cuts!  These were both Obama offers to Rep Boehner in a grand bargainy sort of deal during the fiscal cliff squabble in December.  Neither should be on the table in the budget.  To put them there would be to meet the R’s way too far on their side of the field for no good reason.

I think I understand the strategy that says “don’t worry, progressives…we won’t enact either of these measures unless we get significant revenues.  And that’s unlikely.”

Tru dat.  But my game theory says keep your offers off the table until you’ve got their offers.  The problem doing it the other way is that you’re allowing the negotiations to start where you want them to end.  There’s the risk that the bargaining starts with with the stuff you’ve put on the table and goes down from there.  So the R’s say, “OK, we’re willing to nudge on revenues, but we’re going to need more cuts—beyond what you’ve already given us in the budget.”

 You could tell when you read that that Bernstein knew that Obama was going to do it.

If, however, the political goal is to make it look like Obama is moving far further in Republicans' direction than he has actually moved -- in effect leveraging their caricature of him as someone unwilling to reform Medicare and Social Security -- then he is getting a lot of rhetorical bang for the buck. " “Now THIS is a real budget. … THAT’S a real budget … exciting … a place to start.”

A "real budget" indeed: Pretty much the same as Obama's last budget, with the exception of chained-CPI, which everyone knows Obama put on the table last December. More subtle than Scarborough's displayed ignorance is Jackie Calmes' rhetorical merger of old proposed entitlement cuts with new (formally) proposed entitlement cuts:

Progressive consensus and debt ceiling scenarios

Jared Bernstein has a post that crystallizes an emerging consensus on the left regarding our current budget battles:

• Medium-term deficit reduction (10-year horizon, per Simpson-Bowles etc.) is 2/3 done
  
• The last third requires hard bargaining but isn't brain surgery. Cf. Obama in Monday's presser:
  

  The consensus is we need about $4 trillion to stabilize our debt and our deficit, which means we need about $1.5 trillion more. The package that I offered to Speaker Boehner before we -- before the new year would achieve that. We were actually fairly close in terms of arriving at that number.

  
  So -- so if the goal is to make sure that we are being responsible about our debt and our deficit, if that’s the conversation we’re having, I’m happy to have that conversation. And by closing some additional loopholes through tax reform -- which Speaker Boehner has acknowledged can raise money in a sensible way -- and by doing some additional cuts, including making sure that we are reducing our health care spending, which is the main driver of our deficits, we can arrive at a package to get this thing done.

•  The key to our fiscal future is healthcare cost control. The best course on that front is watchful waiting to see how ACA reforms shake out (coupled, I would add on the basis of Obama's 2013 budget and December negotiations with Boehner, with moderate, incremental trims to provider payments and benefits to the wealthy).

Here's Bernstein's sum-up:

Crumbling country watch

Browsing a weeks-old National Law Jouirnal, I came across one more sharp snapshot of desperately needed infrastructure upgrades gone a-begging:

Federal court officials in Nashville, Tenn., have waited more than 10 years for their turn to build a new federal courthouse.

Rep. Jim Cooper (D-Tenn.) has had the courthouse on his agenda since he arrived in Congress in 2002, and he's still stressing patience to the city and judges who are stuck in the current 58-year-old building. "We're near the top of the list, so that day will come," he said.

But it may not be coming any day soon. The budget crunch in Washington means that the Nashville project, and a dozen like it across the country, likely will have to wait years longer.