The High Price of ‘Defunding’

Published Sep 23, 2013. By Shawn Zeller.

House Republicans pushed forward last week with their plan to “defund” the 2010 health care law, but defunding the program is not the same as repealing, which is what they really want to do. The House has voted more than 40 times to repeal all or part of the law, but the Senate won’t go along.

“It’s not a standard term in federal budgetology,” says Stan Collender, a budget expert and national director of financial communications at the Washington PR firm Qorvis. “Congress either provides funding or it doesn’t, so they’re using the term for PR spin and it’s not technically correct.”Republicans oppose the law in large part because they fear it will eventually drain the budget. But budget experts say the irony is that defunding it — that is, denying appropriations to implement it — probably won’t save any money, nor will it take away funds that Congress has already spent.

More than budget terms such as “rescission,” “impounding” or “zeroing out,” “defunding” resonates with voters concerned with government waste.

It’s not the first time it has entered the political lexicon. In the 1970s, President Richard Nixonvowed to defund the Office of Economic Opportunity, the agency that oversaw the anti-poverty programs launched by his predecessor, Lyndon B. Johnson. When Congress wouldn’t agree, Nixon impounded the money, citing executive authority to refuse to spend appropriated funds, only to be slapped down by Congress, which overrode his veto of the 1974 law that established today’s budget process.

More recently, House Republicans have sought to defund the Endangered Species Act and foreign aid. Former Republican Rep. Ron Paul of Texas teamed with liberal Democrats in trying to defund the Iraq War. Horse lovers persuaded Congress in 2005 to temporarily defund Agriculture Department inspections of horse slaughterhouses, making it impossible for them to operate. Opponents of the Yucca Mountain nuclear waste repository say they’ve successfully defunded it by denying the appropriations necessary to start using it.

Defunding something essentially amounts to denying appropriations for some activity that Congress has previously authorized, which happens with every spending bill Congress enacts, Collender says.

The health care law defunding provision, included in the continuing resolution to pay for government programs after Sept. 30, would bar government agencies from spending money to implement the law. The provision sounds clear. It says that “no federal funds shall be made available to carry out any provisions of the Patient Protection and Affordable Care Act,” adding that the government will not pay any “benefits under any provision” of the law. It also says that if agencies haven’t yet spent money Congress appropriated previously to carry out the law, they are to pay that money back. Still, it leaves plenty of unanswered questions, including what the federal obligation will be to states and individuals who follow the law’s requirements going forward.

The provision sounds thrifty, but it would not reduce the deficit, since it would also make it more difficult, if not impossible, to collect the new taxes prescribed in the law. “If it was ultimately successful in completely stopping the implementation, then they would be shrinking federal budget outlays, but that’s very different from shrinking the deficit,” says Joshua B. Gordon, director of federal policy at the Concord Coalition.

The Congressional Budget Office declined to provide an official accounting for the health care overhaul blockage in the bill the House passed Sept. 20. But the CBO previously found that the 2010 law, if fully implemented, would bring in more new revenue than the government would spend. So, Gordon says, the defunding campaign would raise the deficit.

Under the defunding provision, the IRS would not be allowed to spend money to collect the new taxes that the 2010 law imposes, while the Treasury Department couldn’t pay the states to expand their Medicaid programs or provide subsidies to lower-income taxpayers who need to buy insurance because of the law’s individual mandate.

There hasn’t been a lot of quibbling on Capitol Hill about the details of how the House’s defunding plan would work, since it is such a long shot to be enacted. Many Republicans in Congress are now saying they’d rather just delay the law’s key provisions for a year, which might be simpler to administer.