Does committed funding — as in the Social Security and Medicare payroll taxes — protect programs from cuts ? It is often argued (sometimes here) that the committed funding makes it harder to cut Social Security OASDI pensions. Certainly recipients stress the (perceived) fact that they just want their money back and that it isn’t like welfare.
How could we manage an experiment to test this hypothesis ? It seems to me that the best approach would be to have two similar programs with the same name some of which had committed funding and two of which didn’t. Quick pop quiz: of Medicare plans A, B and D, which is funded how (answer after the jump).
Now lets see how this affects public opinion. Is it true that cuts to the programs without committed funding are considered more legitimate than cuts to the program with committed funding ? Has policy shifted so that only one set of programs is cut ? Which set ?
I think it is clear that this is a perfect experiment testing the relevance of completely committed funding compared to funding or partial funding from general revenues. In particular, I think that anyone who argues that the payroll tax cut (under which the Treasury just sends bonds to the SSA OASDI trust fund instead of selling the bonds to it) tends to undermine social security must bet his or her reputation on the results of the experiment (after the jump)
OK I know angry bear readers are even better informed that Daily Show viewers so most of you probably knew that plan A (hospital insurance) has committed funding and that plan B (office care) and D (pharmaceuticals) don’t.
Also you probably know that the PPACA had Medicare plan A specific cuts (payments based on the assumption (OK lie) that labor productivity increases as fast in health care as in the economy as a whole). In contrast, not specifically funded plan D was expanded (the doughnut hole was closed).
IIRC the fact that a program with committed funding was specifically cut while one with uncommitted funding was expanded had no role whatsoever in criticism of the bill.
I don’t think that there could be stronger evidence against the committed funding is guaranteed funding hypothesis.
Finally, look, angry comments just encourage me. My aim is to get lots and lots of comments. I don’t care if half of them are indignant. Also I think it is good for the blog if there are debates between angry bears (including angry debates).
update: Two danmed typos corrected.
update2: Two more typos corrected.