Another TPP lie exposed: How Medicare is getting stiffed in Obama's massive trade deal

The administration has undermined the public trust in its campaign to pass TPP yet again

Published May 19, 2015 10:00AM (EDT)

                    (Reuters/Jonathan Ernst)
(Reuters/Jonathan Ernst)

In their bid to sell a skeptical Democratic Party on a free trade agenda, the Obama Administration has insisted that no U.S. laws would change as a result. “Our trade agreements would not weaken our ability to implement the law now or in the future,” Treasury Department spokeswoman Whitney Smith told Bloomberg. Top White House officials contended to Politico that the “fast-track” trade bill “expressly forbids changing U.S. law.” As I said last week, this is only partially true, at best. In fact, the companion bill to fast track itself does include a change to U.S. law, paying for assistance for workers who lose their jobs from trade deals -- by cutting medical assistance to the elderly.

The Senate will consider two companion trade bills this week. There’s the fast-track bill, which would allow any president over the next six years to negotiate trade agreements and get an expedited Congressional vote, without amendments or filibusters. And there’s also trade adjustment assistance (TAA), a bill that provides federal funds for workers displaced by free trade agreements. Workers receive job training and placement services, relocation expenses, income support, and help with health insurance premiums.

There’s substantial disagreement on whether TAA actually helps workers get new jobs, but Democrats strongly support the program. Even pro-trade Democrats made renewing TAA a condition of passing fast track, and the two bills will move together in the Senate this week. But even though supporters constantly talk up the economic benefits of trade, they nevertheless offset the $2.9 billion in TAA funding by cutting other spending. Supposedly, trade increases jobs and therefore federal revenue, leaving enough money available to pay for TAA. But in Congress’ eyes, some other priority has to pony up that cash nonetheless.

That priority happens to be Medicare. TAA is partially financed through $700 million in Medicare cuts. Sequestration expires in fiscal year 2024, but the TAA bill expands it by piling those cuts onto the back end. Most of the other $2.2 billion gets financed through customs user fees.

Let’s keep some perspective: these cuts are very small. Medicare spent $492 billion in fiscal year 2013, so you’re talking about a bit more than 1/1000th of the cost. But it’s true that this continues a very dangerous precedent: When anyone in Congress wants to pay for something, they just push sequestration out a bit more or expand it a hair, chipping away at social services and essentially robbing Peter to pay Paul. This has happened twice before; once to pay for the Ryan-Murray budget, and once to pay for reversing pension cuts for veterans. Sequestration was only supposed to last until 2021; after TAA, the date would be pushed out to 2024 and counting.

As National Committee to Preserve Social Security and Medicare President and CEO Max Richtman told the National Journal, “Apparently using Medicare as a piggy bank to pay for everything under the sun has become the new legislative norm for Congress.” The signature single-payer health care program for seniors has become a Congressional slush fund.

The other problem here is that it fundamentally breaks that promise -- already, before any vote on the Trans-Pacific Partnership or any other fast-tracked agreement -- that no laws will change in this new era of corporate-friendly “free trade.” This continues a troubling trend, identified by Paul Krugman, about not being able to trust the White House’s categorical denials about the consequences of their trade agenda. They said the investor-state dispute settlement process couldn’t weaken regulatory priorities; that’s not true. They said Dodd-Frank would be protected in any trade deals; that’s not true either. To quote Krugman, “The Administration is in effect saying trust us, then repeatedly bobbling questions about the deal in a way that undermines that very trust.” The Medicare cuts represent another drop in that bucket.

These cuts have been part of the TAA bill for a while: The American Hospital Association and American Medical Association formally opposed the bill on those grounds back in April. But progressive groups have added to that alarm in recent days. Democracy for America called it a “brand new attack on Medicare,” and urged supporters to contact Senators to stop it.

Every hit on the credibility of the free trade agenda makes it less likely that the bill will pass the House. Republicans claim they are gaining momentum in picking up votes, but all public whip counts show the tally coming up short. Adding Medicare cuts into the mix makes voting for fast track an even heavier lift for the House Democrats likely needed to get the bill the required votes. Republicans have repeatedly torched Democrats for Medicare cuts in campaign ads. They cannot relish giving another opening for that attack.

The situation really shows that trade supporters don’t have any belief that their system will work for everyday Americans. If free trade is such an economic benefit for the United States, then re-allocating some of that benefit so workers on the wrong side can recoup a sliver of their losses still allows everyone to come out ahead. But they feel compelled to pay for that assistance, perhaps because they aren’t confident that the benefits of trade will ever get past corporate executives and into the hands of American workers or consumers. If pro-free traders can’t be trusted on this point – the entire rationale for enacting their program – what can they be trusted on?

By David Dayen

David Dayen is a journalist who writes about economics and finance. He is the author of "Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud," winner of the Studs and Ida Terkel Prize, and coauthor of the book "Fat Cat: The Steve Mnuchin Story." He is an investigative fellow with In These Times and contributes to the Intercept, the New Republic and the Los Angeles Times. His work has also appeared in the Nation, the American Prospect, Vice, the Huffington Post and more. He has been a guest on MSNBC, CNN, Bloomberg, Al Jazeera, CNBC, NPR and Pacifica Radio. He lives in Los Angeles.

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Related Topics ------------------------------------------

Barack Obama Medicare Paul Krugman Tpp Trade Agreements Trans-pacific Partnership