Health and Human Services Department (HHS) Secretary Kathleen Sebelius

Last week, the Centers for Medicare and Medicaid Services (CMS) announced that average premiums in Medicare Advantage (MA) for 2012 have fallen by 7 percent, and enrollment has increased by about 10 percent. This is great news for the program, which allows seniors to receive Medicare benefits through a private plan of their choice. But in a serious twist of logic, Department of Health and Human Services (HHS) Secretary Kathleen Sebelius credited Obamacare with MA’s success: “Now this is just one of the ways the Affordable Care Act is making stronger and more sustainable Medicare for years to come.”

Make no mistake about it: These claims from the White House are little more than a cheap political ruse. First of all, as Heritage research shows, Medicare Advantage was offering higher-quality care and better outcomes than traditional fee-for-service Medicare well before Obamacare became law. A previous Heritage blog explains, “The advantages of (MA) stem from the competition it allows among private health plans. Private plans are able to produce more efficient, better quality health care for beneficiaries.”

Second, those in the White House use this year’s lower premiums to discount conservatives’ warnings that Obamacare’s cuts to Medicare Advantage would threaten the program by increasing premiums, reducing benefits, and lowering enrollment. The catch is, these cuts haven’t kicked in yet. Obviously, you cannot cut a program by $145 billion and expect there to be no consequences. Medicare’s own chief actuary estimated that by 2017, MA enrollment will decline by 50 percent as a result. Writing for Heritage, Jim Capretta and Robert Book show the impact to seniors by region, which shows:

Phased in between 2012 and 2017, the MA cuts will substantially restrict the ability of Medicare beneficiaries to choose the health plans that best meet their needs and will result in substantial reductions in coverage for many millions of seniors and disabled Americans.

The fact that premiums fell this year in no way disputes that this will be the future of Medicare Advantage under Obamacare, since the health law’s payment reductions won’t even be fully enacted until years down the road. Indeed, cuts were scheduled to begin this year, but the White House eased their blow in an election year. As part of a temporary demonstration program, Obamacare had allocated approximately $7 billion in funding for bonuses for the highest-performing MA plans. HHS used the funds to award bonuses to hundreds of plans, which, as health policy expert Robert Laszewski describes, led to “a ‘Lake Wobegon’ moment,” effectively cancelling out the impact of lower payments:

They took $6.7 billion intended to be paid as bonuses to the highest quality plans under the new health law and instead declared just about all of them “above average” or better and infused those billions among almost all Medicare Advantage contractors, further improving their bottom lines.

Once the Obamacare cuts to Medicare Advantage are actually implemented and fully phased in by 2017, their damaging effects will be obvious. For now, the Administration’s claims that it somehow saved or strengthened Medicare Advantage are laughable; as Laszewski puts it, the left has done little more than “take credit for a popular program [they] really want to kill.”

Syrian mourners gather around the bodies of people allegedly killed by Syrian government forces during a funeral procession in Maarat al-Noman, Idlib province, Syria, February 7, 2012. UPI

You can tell how serious the situation in Syria is getting by looking at the recent actions taken by its neighbors.

Earlier this week, the Gulf Cooperation Council—a regional intergovernmental grouping consisting of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates—released a condemning proclamation against the Assad Regime and recalled their ambassadors from Damascus.

Yesterday, Turkish Prime Minister Recep Tayyip Erdo?an stated that Turkey is preparing a new initiativewith countries that oppose the current Syrian regime. Although the announcement was vague, the message was serious. Turkey has already provided sanctuary to Syrian army defectors and thousands of Syrian refugees. Erdo?an has also dispatched his foreign secretary to Washington for urgent talks.

It was announced yesterday that the European Union is working on a new round of sanctions against Syria. According to EU diplomats, the sanctions will include freezing the assets of Syria’s central bank and banning the import and export of phosphates, precious metals, and diamonds. There is also talk of the EU banning commercial aircraft between EU member states and Syria. The aim is to have these sanctions ready for agreement by the next the regularly scheduled European foreign ministers meeting on February 27.

With the sense of urgency shown by many of Syria’s regional neighbors, EU decision makers needs to realize that international crises do not fit neatly into bureaucratic timetables. Foreign ministers should be meeting in Brussels tomorrow. February 27 is a long time to wait for people fighting for their lives in Homs.

The 27 countries that form the EU make it Syria’s number one trading partner in the world. In 2010, EU–Syria trade volume increased by 33 percent and had a total value of €7.18 billion. Therefore, meaningful EU trade sanctions could have a real impact on the Syrian regime. The EU has already banned oil imports from Syria into the EU.

Freezing the assets of Syria’s central bank and banning the import and export phosphates, precious metals, and diamonds is a further step in the right direction. As difficult as it will be for all 27 EU members to establish a common position, EU leaders should go ahead with banning commercial air traffic when they agree to the next round of sanctions. As stated in research by The Heritage Foundation recently, the EU and the U.S. need to work closely together on any future economic sanctions.

Beyond the institution of the EU, European countries can also do more on a bilateral basis. The United Kingdom and France have done the right thing by recalling their ambassadors from Damascus. The British have also gone as far as meeting with members of the Syrian opposition. This sends a clear message to the regime, and the U.K.’s example should be followed by others in Europe.

If the Europeans play their cards right, they could help the rest of the world place tremendous pressure on the regime before it is too late.

A new National Labor Relations Board regulation that expedites elections for union representation will likely lead to dramatically higher rates of unionization, a new study has found.

A majority of workplace union elections are decided by five or fewer votes, according to a Bloomberg Government analysis. What’s more, “cutting the time between a request for an election and the ballot increases the chances union supporters will prevail,” according to the study. “Unions win 87 percent of elections held 11 to 15 days after a request, a rate that falls to 58 percent when the vote takes place after 36 to 40 days, according to the researchers.”

The 11 to 15 day timeframe is very close to what the new NLRB rule is expected to achieve. According to Heritage labor policy expert James Sherk, the “snap elections” rule will trim the time between an election request and the election itself to 10 to 21 days, a significant drop from the current average of 31 days.

“If a broader set of elections were to occur more quickly,” wrote Bloomberg analysts Jason Arvelo and Ian Hathaway, “the likely outcome would be more organizing drives, a higher success rate for unions and ultimately more union membership.”

Unions often plan organizing drives before they actually request a workplace election, while employers, who may not be aware of the effort, are forced to make their case only during the period between an election request and the actual election. Hence, shortening that period of time is more prohibitive to an employer’s ability to make the case against unionization than a union’s ability to lobby for it.

As Sherk explained:

Some organizers rely on aggressive sales tactics, such as “SPIN selling.” In SPIN (Situation, Problem, Implication, and Need-payoff) selling, organizers lead employees through the four emotional states to persuade them that a union will solve their problems at work—whether or not a union could actually help—and to secure a signed union-authorization card. Unions also train organizers to avoid the potential downsides to unionization, such as strikes and dues increases.

Employees will hear the other side of the story only from management. Employers, not union organizers, will explain that unions often do not achieve their promised wage increases, but they always take up to 2 percent of workers’ wages in dues. Employers will also point out patterns of union corruption and clauses in union constitutions that levy stiff fines against workers who stray from union rules. Employers are free to tell workers what the union organizers do not.

Workers deserve to hear from both sides and have time for reflection. They should have the right to consider whether union representation will truly benefit them. The government should not push workers into unions, much less deny them the time to consider the downsides. The NLRB’s proposed rule undermines employees’ ability to make an informed choice.

Yesterday’s decision by the Ninth Circuit striking down California’s Proposition 8, which amended the California constitution to define marriage as a legal institution involving one man and one woman, has reignited the public debate about judicial activism.

When courts weigh in on such controversial and political topics, it is necessary to stop to consider a larger question: What is the proper role of the courts?

Explaining the appropriate interplay between the branches of government and the proper methods of interpretation that judges should employ when determining whether a law is constitutional, Heritage’s Robert Alt answers the question in the latest addition to Heritage’s Understanding America series.

The Founders sought to protect liberty by separating powers in the federal government. By giving each its own authorities to exercise and defend, the branches check each other and ultimately prevent each other from usurping power. It is the duty of the courts to interpret the law at issue in the case before them. In Marbury v. Madison, the Supreme Court established judicial review, the authority to declare a law void if it is contrary to the Constitution. However, Alt notes that

the Marbury Court did not claim that the courts possessed the exclusive or supreme authority to interpret the constitutionality of laws. The other branches of government are also legitimately responsible for interpreting the Constitution.

This is how our government is supposed to work. But over time, the Supreme Court has grabbed power by declaring that its decisions are the supreme law of the land. Regretfully, the other two branches have willingly acquiesced to such claims of judicial supremacy.

The federal courts have not only seized power; they have also changed how judges approach one of their fundamental duties: the interpretation of laws. The proper role of a judge is a modest one. Alt outlines the appropriate method of interpretation:

In determining whether a contested law is consistent with the Constitution, judges act within their proper judicial power when they give effect to the original public meaning of the words of the law and the Constitution.

This philosophy means that that judges abiding by their constitutional duties will, at times, uphold laws that some may consider bad policy and strike down laws that may be considered good policy.

Yet in recent decades, some judges have chosen to engage in judicial activism by deciding cases according to their own policy preferences rather than applying the law impartially according to its original public meaning. They have justified their decisions through such free-wheeling, unbounded, “I do what I want” theories as “living constitutionalism” and the selective imposition of foreign law when the outcome they desired did not comport with the law’s original public meaning.

The courts, led by activist judges, have increasingly intervened on questions properly decided by the other branches or the states, thus undermining the ability of the American people to engage in true democratic debate within federal and state legislatures. It is not surprising, then, that the public increasingly brings its grievances directly to the courts rather than through the elected branches of government. But the solution lies in the hands of the people, who should demand that candidates for office—particularly the President, who appoints federal judges, and Senators, who confirm federal judges—appoint and confirm only those judges who will rule based upon the words and original public meaning of the Constitution.

Conservatives are often ridiculed for criticizing activist judges who fail to respect the Constitution. We are told that it is not conservative originalists (labeled ignorant and extremist) but rather enlightened liberal judges—with their nuanced understanding of constitutional penumbras—who truly respect the spirit of the Constitution.

Conservatives, however, have good reason to be skeptical of the left’s “respect’’ for the Constitution. Just last week, for example, Supreme Court Justice Ruth Bader Ginsburg told an Egyptian TV station that she would not recommend the U.S. Constitution as model for Egypt’s new government.

The problem, you see, is that the U.S. Constitution is “a rather old constitution.” Ginsburg suggested that Egyptians should look instead to the Constitution of South Africa or perhaps the European Convention on Human Rights. All these are “much more recent than the U.S. Constitution.”

Ginsburg’s comments echo those by Washington University professor David Law, who published a study with Mila Versteeg on the U.S. Constitution’s declining influence worldwide. In an interview, Law unfavorably compared the Constitution to “Windows 3.1”—outdated and unattractive in a world of sleek and sexy modern constitutions. Such obsession with the age of the Constitution is both absurd and irrelevant.

For one, the Constitution is still among the shortest and most elegantly written constitutions in the world. By contrast, South Africa’s constitution is well over 100 pages long, filled with tables, schedules, and such stirring passages as detailed provisions for a Financial and Fiscal Commission: “A. National legislation referred to in subsection (1) must provide for the participation of – a. the Premiers in the compilation of a list envisaged in subsection (1) (b); and b. organized local government in the compilation of a list envisaged in subsection (1) (c).” And you thought the U.S. Constitution was hard to read.

Equally ridiculous is the claim that the Constitution is too antiquated to apply to the modern world. The principles of the Constitution, although first articulated centuries ago, are not tied to the material conditions of a bygone age. They rest on that most solid and enduring of all foundations: human nature. The Constitution itself contains no policy prescriptions. Rather, it is a short, elegantly written document that create a framework for a free people to confront the political questions of their times.

Of course, the real reason progressives swoon over South Africa’s constitution is that it goes far beyond merely establishing a framework for government and guarantees progressive policies—for example, by requiring legislation that prevents pollution and ecological degradation. In other words, the left’s real discontent with the U.S. Constitution is that it does not require Americans to adopt a progressive government and expansive welfare state that provides for every “right” social scientists can justify.

Americans should be very wary of those who would seek to upend the Constitution from the firm grounding in human nature that has allowed it to endure for more than two centuries and would transform it into an instrument devoted to policies of passing whimsy.

A new Washington Post–ABC News poll finds that “the sharpest edges of President Obama’s counterterrorism policy, including the use of drone aircraft to kill suspected terrorists abroad and keeping open the military prison at Guantanamo Bay, Cuba, have broad public support, including from the left wing of the Democratic Party.”

These findings come as no surprise. For well over a year now, there have been disturbing signs that the Administration’s counterterrorism seemed more structured to win popular support for his reelection bid than it did with defeating transnational terrorist groups aimed at attacking the United States. While the President’s policies might be intended to give a boost to his campaign for a second term, they are bound to make us less safe.

What has kept America safe over the last decade are the policies put in to place before the President came into office. “Progress against al-Qaeda’s attempts to attack the U.S. was the result of taking the offensive in the war on terrorism,” a Heritage analysis of the President’s counterterrorism plans concluded. “The successes that President Obama has trumpeted resulted from a decade of effort to disrupt terrorist sanctuaries, attrit the cadre of terrorist leaders, preempt planning and operations, disaggregate networks, thwart terrorist travel and communications, and disrupt fundraising and recruiting.”

On the other hand, what the President has proposed over the last year will no doubt put the nation more at risk. For example, the Administration has also created opportunities for al-Qaeda to physically re-establish itself in the Afghanistan–Pakistan theater. The premature drawdown in Afghanistan will allow the Taliban to re-establish space for al-Qaeda to rebuild its sanctuaries in the country.

Perhaps even more important, the Administration’s policies ignore what al-Qaeda has been doing on a global scale. Describing al-Qaeda simply as a “terrorist group” does not explain why the organization trained thousands of mujahidin during the 1990s and spread them throughout the Muslim world, why al-Qaeda has worked since then to co-opt or gain control of jihadist insurgent groups around the globe, and what al-Qaeda is doing in Pakistan, Yemen, Somalia, the Sahel, and dozens of other places around the world.

U.S. focus on its own safety has, in fact, led the U.S. to ignore a very real problem—that al-Qaeda is not merely concerned with attacking the homeland but has a global insurgency intent on taking over areas of the world. While covert strikes can be a successful tactic for hunting down the leaders of terrorist groups, attrition is counterproductive when combating an insurgency. The prospect of “body counts” as the proper metric for measuring success should give Americans pause about the strategy pursued by the Administration.

Additionally, without persistent presence and engagement of threatened governments and civilian populations, the U.S. will lack the real-time actionable intelligence necessary for effective targeting of terrorists and the successful suppression of insurgencies.

Finally, the President’s strategy pays insufficient attention to state-sponsored terrorism, which will increasingly be a major force to be reckoned with. Iran is one of the most prominent and aggressive state sponsors of terrorism, and its protégés—both Hamas and Hezbollah—represent potentially grave threats. In addition, transnational criminal cartels in Mexico are increasingly taking on the character of terrorist networks.

What this poll really reflects is that Americans are pleased that at least 44 Islamist plots aimed at the U.S. since 9/11 have been thwarted. What the poll does not get too is why we have been successful and how Obama’s policies could well see this string come to a tragic end.

As someone who grew up in inner-city Atlanta, I understand there are times when people need whatever help they can find. The social safety net—in conjunction with generosity from neighborhood groups, churches, charities, and private companies—can help lift Americans out of poverty and toward the path of self-reliance and individual prosperity. However, that “net” should never turn into a “hammock”—and that is what this President and his policies are allowing.

What we see today with our vast social safety net is a growing and frightening dependency on the federal government, which is increasingly replacing our important local and private charitable efforts. The Heritage Foundation’s newly released 2012 Index of Dependency on Government show some stark details about a nation of reliance and how it’s devastating our nation’s fiscal future.

This annual study by The Heritage Foundation analyzes federal assistance programs for everything from housing, health care, and food stamps to college tuition and retirement assistance. And there are some alarming numbers indeed.

• An estimated one in five Americans now receives aid from the federal government. That translates into more than 67.3 million Americans who rely on federal dollars for their way of life.
• Additionally, the amount the average American receives in federal benefits jumped to $32,748 in 2010; this surpassed the average working American’s disposable personal income of $32,446.
• At the same time, the federal taxpayer base continues to shrink, with nearly half of the U.S. population not paying any federal income taxes.

Is this a vision of President Obama’s doctrine of fairness and economic equality? Our democratic government is at risk when there are more Americans who are wedded to the federal government— either by subsistence or employment check—than federal taxpayers to pay for the rampant spending.

What do you think will happen when producers realize they are working for the entitlement class or the state, instead of their own families and the American dream? Eventually, they will stop producing. As Margaret Thatcher said, the government will “run out of other people’s money.”

I fear the future does not hold much hope for reversing this trend. With the impending retirement of 77 million baby boomers and the continued liberal march toward government involvement in all parts of life, the trend in the number of Americans dependent on Washington seems to have only one direction: up.

But I have hope. The essence of the American spirit does not want to be obliged to government for our daily routine. Americans want to fight for their independence and be successful providers for themselves and their families.

We in Congress need to do our part to aid the struggle for more personal responsibility. We need to reduce government spending levels so we are taking less from America’s producers of economic growth. We need to take a long, hard look at these assistance programs, eliminating duplicative efforts and directing aid first to the neediest of our population.

We also have to embolden charities, local groups, and private-sector initiatives to empower individuals through programs that require more “skin in the game.” Far too often, these good Samaritans are pushed aside by government zeal to provide inferior and bureaucratized services. And finally, we need to reform entitlement programs like Medicare and Social Security so that they are viable for future generations without bankrupting our country.

Your independence is a precious gift, protected by the Constitution and enshrined in the Bill of Rights. Fight for it. I know I will.

U.S. Representative Allen West (R – FL) represents Florida’s 22nd District in Congress.

The views expressed by guest bloggers on the Foundry do not necessarily reflect the views of the Heritage Foundation.

Over the course of the campaign, President Obama repeatedly promised: “If you like your current insurance, you can keep your current insurance”—despite any reforms his Administration would implement. This claim is far from true, as Amy B. Monahan and Daniel Schwarcz illustrate in their 2011 study “Will Employers Undermine Health Care Reform by Dumping Sick Employees?” published in the Virginia Law Review. Schwarcz presented the study on Capitol Hill last week.

Obamacare mandates that employers provide health insurance for their employees or pay a fine. With the increasing cost of health insurance, which Obamacare does nothing to assuage, employers will find it increasingly more expensive to cover employees. That, along with the other incentives in the law, will likely encourage employers to dump coverage or find other ways to avoid additional costs.

Monahan and Schwarcz discuss one way this will occur. Since high-risk, unhealthy employees are more expensive to cover, they explain that the new health care law will incentivize employers to find ways to avoid insuring these individuals. The new federally imposed exchanges create a way out for employers to avoid covering high-risk workers while also avoiding the penalty by offering a level of coverage that is simply unattractive to those with higher-cost needs. In this way, employers could “game the system” by providing coverage that is attractive to low-risk, healthy employees but not to those with more costly needs.

As Monahan and Schwarcz write that “employers will, for the first time, have both an incentive and the ability to design their plans to discourage enrollment by high-risk employees. By doing so, employers can benefit themselves and their employees while individual purchasers and the federal government suffer the consequences.”

As Americans outside the Beltway know, there’s no such thing as a free lunch. Many other individuals will receive coverage through the exchanges, including low-income individuals receiving government subsidies. Although many high-risk employees opting in to the exchanges instead of their employers’ plans won’t be eligible to receive subsidies, with more high-risk people entering the exchange insurance pool, the cost of the insurance within the exchanges will increase. Consequently, costs—in terms of government spending on subsidies as well as premiums for everyone else purchasing insurance through the exchanges—will also increase.

Thus, Americans will not be able to keep their current coverage, and they will also experience even higher costs than before Obamacare was implemented. The Monahan and Schwarcz study gives us more reason to believe that the original estimates of the health care law likely understated its true cost.

Thousands are dead in Syria, with more blood spilled each day. Iran is within arm’s reach of a nuclear weapon, threatening Israel’s very existence. And in Egypt, 19 Americans are banned from leaving the country, making them veritable hostages in an unfriendly land. All indications are that the Middle East is crumbling, and President Barack Obama’s foreign policy is collapsing right along with it.

First look toward Homs, Syria — ground zero in the 11-month-old uprising against the brutal government of Bashar al-Assad, which is unleashing death upon its people minute by minute and hour by hour. The United Nations estimates that Assad’s regime has killed more than 5,000 anti-government protesters in the last 11 months, with 200 killed on Friday night alone. The Arab League has stationed observers in country, whose mission was to oversee compliance with a peace plan. That failed.

The Obama Administration rushed to the United Nations Security Council and attempted to pass a resolution calling for Assad to step aside. Predictably, China and Russia laid down a veto. On Monday, the United States finally closed the doors to its embassy in Damascus and withdrew the diplomatic staff over continuing security concerns. Meanwhile, intelligence experts are examining the risk of terrorists gaining control of Syria’s weapons stockpiles should the Assad regime fall.

To the east in Iran, the regime’s full-steam-ahead pursuit of nuclear weapons is reaching a crescendo, with Defense Secretary Leon Panetta recently remarking that the country could build a bomb within one year and have the means for delivering it one or two years later.

Finally, in Egypt, officials there published a list of 43 people, including 19 Americans, accused of interfering in Egypt’s internal politics. They are not allowed to leave the country and could soon be brought to trial on claims that they illegally funded political groups in Egypt’s parliamentary elections. Heritage’s James Phillips explains that “they have become hostages in a much larger struggle: the struggle for freedom in Egypt against an unholy alliance between Egypt’s transitional military government and the Islamist political parties who will soon assume power.”

President Obama and members of his Cabinet tried to reach Egyptian leaders on the matter, but in the words of Lorne Craner, head of the pro-democracy organization IRI, “things are getting worse . . . We are all scratching our heads over here. I did two tours at State and one at the [National Security Council]. If the president called someone, something gets worked out.” But as was the case under President Jimmy Carter, the White House appears helpless while Americans are held captive.

None of these crises occurs in a vacuum — except for the vacuum of a cogent U.S. strategy for dealing with these ever-worsening conditions. Since President Obama took office, he has pursued a diplomatic strategy of charm and restraint: attempting to broker peace between Israel and Palestine, engaging with Syria and Iran, and withdrawing from Iraq. Now we are seeing the results.

The international rogue that is Iran continues to rise, along with its threat to the world. Thousands are dead in Syria under a brutal dictator while the international community is serving up effete condemnations. America’s ally Israel appears ready to take matters into its own hands in order to ensure its survival, while prospects for peace with Palestine remain dim. U.S. citizens are trapped in Egypt as anti-Western Islamists seek to consolidate their power. And Iraq’s once-peaceful prospects have been marred by one terrorist attack after another after America’s military forces departed.  Obama has failed at every turn to safeguard U.S. interests in the region or take effective proactive initiatives to deal with threat of rising extremism and spiraling violence that could lead to regional conflict.

There are actions the United States can and should take. Phillips explains that in Syria,  “the best assistance that the United States can give to ease the suffering of Syrians is to help speed the fall of the Assad regime.” And it can do it by working with European allies, Turkey, and Arab states to escalate sanctions, provide humanitarian relief to refugees, and provide diplomatic and economic support for the Syrian opposition — while holding back from military intervention.

To address Israel and Iran, Phillips and James Carafano advise that the United States must have a clear and unambiguous policy that it will protect itself and its interests.

As for Egypt, Phillips writes that America should “freeze U.S. foreign aid to Cairo and give Egypt’s new leaders an ultimatum: free the American hostages or permanently lose U.S. foreign aid and any American help in refinancing Egypt’s burdensome national debt.”

More broadly, President Obama must fundamentally change course toward the Middle East. His policy of engagement has not worked, and the world is seeing the results. The Middle East is crumbling, and an ineffectual and inert Obama Administration is leading from behind with a foreign policy that has entirely failed to cope with the rapidly devolving conditions along the Mediterranean’s southeastern shores and beyond, with consequences reaching around the world.

Quick Hits:

• Yesterday, in a 2–1 decision, the 9th Circuit Court of Appeals ruled against Proposition 8, the California ballot measure that defined marriage in the California constitution as between one man and one woman. Read our analysis on The Foundry.
• Student loan debt is pushing more Americans toward bankruptcy — both students and parents. Nearly one-quarter of bankruptcy attorneys say the number of potential student loan clients has risen 50 to 100 percent.
• A suspected U.S. drone attack on an insurgent hideout in Pakistan’s northwest tribal region killed ten people on Wednesday, making it the fourth such attack in Pakistan this year.
• President Obama may have said “no” to the Keystone XL pipeline — and the thousands of jobs that went along with it — but a House committee is working to reverse that decision with its passage of a bill to make the pipeline a reality.
• Americans’ dependence on government is at an all-time high. Read more about it in the 2012 Index of Dependence on Government, just released today, on The Foundry.

Yesterday, Senate Finance Committee chairman Max Baucus (D–MT) released a modified chairman’s mark on the Highway Investment, Job Creation and Economic Growth Act of 2012 (S. 1813). When combined with the other section of the bill, this draft transportation reauthorization bill would authorize the program for two years after the latest temporary extension, which expires in March.

This bill does contain needed reforms, including ending earmarks and letting states decide how to spend “enhancement” dedicated dollars. However, it makes the mistake of not capturing these savings to drive spending down, instead spending them to the tune of $109 billion, leaving a gaping hole of $13 billion in the Highway Trust Fund (HTF).

One of the more egregious tasks left to Baucus was to fill the gaping hole in the HTF. He does this through a variety of mechanisms. Some are undesirable and harmful tax increases, others close tax loopholes, and others simply help plug the hole by any means possible. And of course, no bill would be complete without unrelated provisions.

The tax increases complicate the tax system and place an undue burden on today’s sluggish economy. While loophole closing is defensibly a step in the right direction, it amounts to only piecemeal tax reform. Any revenue raised from closing loopholes should go to rate reduction as part of incremental tax reform. But using it to lock in more spending, especially wasteful spending, is bad news.

The biggest revenue-raising provision limits the distribution for inherited Individual Retirement Accounts (IRAs). Currently, when an IRA is inherited, it must be withdrawn—and taxed—over the anticipated lifespan of the person inheriting the account, and the account can continue to grow. So, for example, grandparents could bequeath remaining funds in an IRA to their grandson. Say he is only five years old, and they want him to spend it on college tuition. Today, the inherited IRA would be taxed over the lifetime of the beneficiary—i.e., the grandson.

But the provision in the bill, as Heritage expert David John notes, would require the fund to be distributed and taxed within five years. No matter how smart junior is, he won’t be ready for college at the ripe old age of 10. The tax could be high enough, in some circumstances, to drain much of the account and diminishing its potential to grow. So much for the grandparents’ dream of financing junior’s college. Tax policy should be structured to encourage savings and investment transfers between generations, but this proposal would punish both.

Also included is a provision to transfer revenue from imported tariffs on certain passenger motor vehicles from the General Fund to the HTF. This may help plug the hole in the HTF, but it would not drive spending down. And, though the Congressional Budget Office has not yet provided an estimate, the provision would likely drive the deficit up. The Senate Budget Committee claims that the proposal would result in $2.6 billion in transfers. In addition, this provision could establish a bad precedent where lawmakers would see tariff revenue as a pot of money to be tapped into to cover new transportation spending.

Beyond its revenue-raising grab, this chairman’s mark slips in items only tangentially related to transportation. Take, for example, the amendment offered by Senators John Kerry (D–MA) and Robert Menendez (D–NJ), which relieves investors in private activity bonds of paying the Alternative Minimum Tax (AMT). Keeping the onerous AMT at bay is helpful, but Congress should attend to full AMT reform by raising the AMT threshold permanently and indexing it to inflation—in a proper tax bill.

The federal transportation program has become bloated and wasteful in recent decades, with some 35 percent of trust fund revenue spent on decidedly non-road programs. Nature trails, road museums, bicycle paths, and historic preservations projects are just a few examples. These programs draw on the cash-strapped trust fund at the expense of actual road maintenance and construction projects. Motorist taxpayers inevitably draw the short straw, receiving less and less road improvement for their money.

Lawmakers should instead build on the positive reforms of the bill and focus on true transportation priorities of increased mobility and safety and traffic congestion relief. At the same time, they should bring spending down, eliminating the need to hike taxes or otherwise bail out this program. Taxpayers—and motorists—will benefit