Background: the ‘doc fix’ is one of those things that happens in Dizzy City with alarming regularity. Basically, it was set up in order to control Medicare costs by linking Medicare subsidies to doctors to annual growth; if costs rose too high, Medicare payments to doctors would shrink. Nice feedback loop – only thing is, the first year it was supposed to come into effect (2002) the medical lobby started screaming, and it turns out that the medical lobby has a lot of money for lobbying. So since then the government has been ‘fixing’ the ‘problem’ on a year by year basis so that Medicare payments to doctors would not be reduced (this cost the government $30 billion last year, by the way). And if you’re wondering why they simply don’t fix the numbers permanently, or let the cuts go in fully… well. It turns out that the CBO is required to assume that Congress is NOT going to extend the ‘doc fix’ until it actually does, which means that the budget (when we have one) can actually get away with not taking that $30 billion into account when it comes to calculating expenditures. Thirty billion here, thirty billion there: add it all up and pretty soon we’re talking about real money.

With me so far? Good. So let’s kill the ‘doc fix.’

The reason for arguing that we do this now is largely because we’ve already shot two hostages: there’s no real reason not to keep going. Biting the bullet on salvaging what tax cuts we could, and letting the sequester’s defense cuts take effect, seems to have worked out fairly well so far:

By making all of the tax cuts permanent but only avoiding the sequester for two months, the president traded away most of his leverage in return for only half of the revenue he had been seeking — and no clear way to force Republicans to the table for more.

“It’s playing out exactly as we warned them it would,” a senior Senate Democratic leadership aide said.

It’s not as if Republicans were shy about making that argument at the time: GOP leaders immediately said that the deal effectively set in stone revenue for the president’s second term.

(H/T: Instapundit) Yesss. This, indeed, happened. And I miscounted, above: we’ve actually shot three hostages. The third was the Alternative Minimum Tax extensions, or ‘AMT fix;’ that was actually a roughly similar situation (Congress had been putting off permanently adjusting the AMT tax for inflation, largely because they didn’t want to give up the $86 to $119 billion’s worth of budgetry tricks of THAT). So just embracing the pain seems to be a viable strategy; of course, the argument then becomes what to replace it with. Heritage argues for a reasonable, multi-stage set of policy changes that will allow doctors to transition smoothly to a more transparent, flexible, and market-based approach to Medicare costs: I favor a more dramatic, not to say brutal approach… but then, I’m a wild-eyed online agitator, so Heritage’s approach is probably best. The point is, we can and should take this opportunity to actually repair some of this stuff. I mean, it’s not like Congress can get much less popular than it already is…

Moe Lane (crosspost)