Republicans, Citing Past Democratic Promises, Question Democrats' Credibility on Wall Street Reform

Republicans are beginning to attack the financial regulatory reform bill by attacking the Democrats pitching it as simply not believable.

“Just think about some of the things Americans have been told,” Senate Minority Leader Mitch McConnell, R-Kentucky, said on Thursday. “As a senator, the current President railed against deficits and debt. He said America has a debt problem and that it was a failure of leadership not to address it. Yet last year his administration released a budget that doubles the debt in five years and triples it in 10. The debt has increased over $2 trillion since he took office. And in February, the federal government ran the largest monthly deficit in history.”

“There’s a lot of skepticism” among the American people about what Washington is promising these days, a senior GOP leadership aide tells ABC News.

The most recent exhibit in this prosecution in the court of public opinion: analyses of the new health care reform law from the Medicare Actuaries at the Department of Health and Human Services. The studies, issued Thursday night, conclude that the law will mean 34 million Americans currently uninsured will be covered.

But the report by Richard Foster, chief actuary for the Centers for Medicare and Medicaid Services, forecasts a rocky and uncertain path to that end.

Increased demand for services from so many new patients is expected to tax “existing providers resources and could lead to price increases, cost-shifting, and/or changes in providers’ willingness to treat patients with low-reimbursement health coverage.” And provisions in the law meant to get federal health spending into the black would be “outweighed by the increased costs” until beyond 2020.

Among the new revenue streams under the new law, Foster projects the IRS will collect $120 billion in “penalties paid by individuals who choose to remain uninsured and employers who opt not to offer coverage.”

“Overall national health expenditures under the health reform act would increase by a total of $311 billion (0.9 percent) during calendar years 2010-2019,” Foster writes. He raises concern that the funding for a national high-risk pool would run out by 2011, “resulting in substantial premium increases to the program” that “would limit further participation.”

You can read Foster’s memo on the financial impact of the new law HERE . (The Washington Post’s Ezra Klein has a more glass-is-half-full view of Foster’s report, which you can read HERE .)

Foster’s report, the GOP aide says, is “a third-party validator” of Republican claims that the president’s promises about health care reform are simply not true. He added the third-party validator for Democratic claims about the stimulus bill are the monthly statistics from the Bureau of Labor Statistics showing that unemployment remains at 9.7%, though the Obama administration had said at one point that by now the stimulus would mean unemployment was below 8%.

White House officials did not respond to a request for comment, but Obama administration officials have said in the past that earlier 8% estimate was from before anyone knew just how bad the 4th quarter of 2008 was.

“They also said only 10% of the jobs created by the stimulus would be government jobs,” the GOP aide said. “That’s obviously not the case – it’s much higher.”

The aide said Republicans had a lot of material when it comes to “the things Democrats have been saying when they promise and pitch these big bills.”

And now, with financial regulatory reform, Democrats are addressing “another huge segment of the economy.” That’s why McConnell has been saying “show us in the bill where it says ‘there’s no bailout,’” the aide says. “Show us the iron-clad guarantee that there will be no pay offs to creditors.”

The Senate Democratic bill establishes a $50 billion fund – paid for by big banks – that would be used to liquidate a company’s assets in the event that the company is teetering near collapse and threatens the economy.

The law states that the “orderly liquidation” is written to “provide the necessary authority to liquidate failing financial companies that pose a significant risk to the financial stability of the United States in a manner that mitigates such risk and minimizes moral hazard.”

The section that says it will be exercised “with the strong presumption” that creditors and shareholders will bear the losses. But that’s not saying that the losses will unquestionably be borne by the shareholders and creditors, as opposed to taxpayers.

- Jake Tapper and Brian Hartman

Join the Discussion
blog comments powered by Disqus
You Might Also Like...