Daily Editors' Notes

Best is yet to come? Don't tell that to providers

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John O'Connor
John O'Connor
When he gave his acceptance speech Tuesday night, President Obama told the nation that “the best is yet to come.” Many long-term care operators may not be in full agreement.

In fact, thanks to the fiscal cliff, the statement might best be described as wishful thinking.

So what's the deal with this fiscal cliff we've been hearing about? Basically, it's a one-two punch of expiring Bush-era tax cuts and major across-the-board spending cuts. Next year alone, they could surpass $800 billion. And unless Congress and the president act soon, they begin in January.

What makes the fiscal cliff even more annoying is that was — and remains — completely avoidable. While Congress and the White House have had plenty of time in recent years to address the government's spiraling debt and a wacky tax code, both sides stuck to their talking points instead.

As things now stand, fiscal cliff provisions include the following:

-  $55 billion in cuts to domestic programs, including a 2% cut to Medicare providers.

-  A sharp cut in reimbursements for doctors participating in Medicare.

- The expiration of Obama's temporary 2% cut in payroll taxes.

- A variety of smaller taxes cuts for both businesses and individuals collectively known as tax "extenders."

- The expiration of Bush-era tax cuts on income, investments, married couples and families with children and inheritances.

We're now hearing politicians of both stripes say they might be willing to compromise. But it would have to be under those always hard-to-find right conditions. For example, “when pigs fly” might be a possible right condition. Here's another candidate: “Over my dead body.”

That's not to say compromise can't happen. But rest assured it will take place only after all other options have been exhausted. So what's going to happen? There are three likely scenarios:

1.     The economy perks up so much between now and January that the fiscal cliff becomes a moot issue.

2.     Lawmakers come together in a bipartisan spirit to make the service cuts and tax increases necessary to avoid a cliff kick-in.

3.     At the last minute, Congress pushes back the cliff's implementation date.

As a practical matter, you can pretty much forget about options 1 and 2. As far as the first goes, there is no way the economy will turn around that fast. Regarding the second, it's a long-shot at best. And in case you haven't noticed, recent Congressional primary elections have not been particularly kind to politicians found fraternizing with the enemy.

The third option makes sense because it is the way Congress usually deals with hard problems that can be temporarily postponed.

The good news here is that the automatic payment cuts that are scheduled to take effect may be pushed back. The bad news is that the pain will likely get worse when the next day of reckoning arrives.

But I guess we can always hope for the best.

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Daily Editors' Notes

McKnight's Daily Editor's Notes features commentary on the latest in long-term care news. Entries are written by Editorial Director John O'Connor on Monday and Friday; Staff Writer Tim Mullaney on Tuesday, Editor James M. Berklan on Wednesday and Senior Editor Elizabeth Newman on Thursday.

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