Wednesday, March 12, 2014

House Republicans Should Call McAuliffe's Bluff

Bringing his Washington experience of budget brinksmanship to Richmond, Governor McAuliffe has made his position clear; the General Assembly must expand a welfare program, Medicaid, or he will not sign the budget leading to an inevitable state government shutdown. In effect telling Republicans either expand Medicaid or I will blame you for a shutdown. Hardly the Virginia way of Governing.

Medicaid was designed to be a program for the poor, but, like all Federal programs it has expanded beyond its original intentions. To increase their power government never misses and opportunity to increase a programs constituency. The more people that become dependent on it the harder it will be to cut/eliminate the program in the future.

The Feds make an offer we can't refuse. If we expand Medicaid they will pick up 90 percent of the cost. However, once we take the money we are locked in for all eternity, and before we can spend money on roads or schools we first have to pay our share of medicaid.

In the late 1990's the share of the state budget that was earmarked for Medicaid was around 15 percent, today Medicaid takes up more than 22 percent of Virginia's budget. Because of the increasing cost of healthcare, even without expanding the pool of people available for Medicaid the cost still rises, with the expansion we are looking at a budget buster.

The other thing, what is to stop the Feds from saying to future Virginia Governors and Legislators, we are broke, the Chinese are not happy bankrolling all this debt, so we are going to ask you to fork over more money. Say 15 percent or 20 percent. Sounds reasonable right? To pay the bill future Virginians would have to pay Maryland style taxes, which hurts our growth, and limits the economic opportunities for Virginians.

In this battle McAuliffe thinks he has the upper hand. Well, he doesn't, it is a bluff. And speaking of a mandate, as I recall McAuliffe failed to break 50 percent of the vote in his election, despite greatly outspending his opponent by a margin of 10-1 in the final month of the campaign. Furthermore, Virginians are not clamoring for the expansion of medicaid. A weak hand indeed.

If Republicans can make the case that expansion places Virginia's economic future in peril(which it does), and McAuliffe is being unreasonable in not signing a clean budget, they can come out ahead. In effect they will cement a reputation for fiscal sanity, while McAuliffe simply looks like a petulant child.

McAuliffe has gone out on a limb on this and I think he will have to back down. If he loses on this one the blow to his reputation could ruin his Governorship.

So call Terry's bluff Virginia! He is placing all his chips on a losing hand.

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