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The Republicans and Medicare: Do They Believe What They’re Saying?

August 28th, 2009 . by economistmom

rnc-question-on-health-care

(Republican National Committee survey question–reproduced from Brad DeLong’s website.)

Bruce Bartlett puzzles over what he sees as the bizarre behavior of the Republican Party regarding health care reform:

Once upon a time, the Republican Party opposed open-ended entitlement programs like Medicare as a matter of principle, often paying a heavy political price for doing so. But those days are gone. Today, the GOP not only doesn’t oppose entitlements, it has become their defender. This is perhaps the biggest reversal in American politics since the Democrats went from being the party of Southern racists for 150 years to being the party of civil rights in the 1960s…

Said Reagan, “Behind it [Medicare] will come other federal programs that will invade every area of freedom as we have known it in this country until one day, as [Socialist Party leader] Norman Thomas said, we will awake to find that we have socialism.”

The “slippery slope” argument has been a staple of conservatives’ thinking for decades–they claim that every government program is the first step on the road to socialism. And, as economist F.A. Hayek argued in his 1944 book, The Road to Serfdom, that inevitably leads to totalitarianism.

This argument continues to be made today in the health care debate, even though it is transparently false. The nations of Europe have governments much larger than ours and long had national health insurance without suffering the sort of tyranny that was certain to have come about by now if Hayek was even remotely correct…

After taking control of Congress in 1995, Republicans made a serious effort to cut Medicare, which went nowhere when Bill Clinton rejected the effort. To their credit, however, they persisted in their efforts to control entitlements and were able to actually abolish a federal entitlement program, welfare, the following year.

But in 2003, George W. Bush reversed the longstanding Republican opposition to Medicare–most Republicans in Congress voted against it in 1965–and supported a vast expansion of the program even though its trustees were forecasting an imminent and rapid deterioration of its finances.

Bush desperately wanted to get reelected in 2004 and was willing to throw every Republican principle under the bus to achieve it…

The final step in the Republicans’ transformation into the party of Medicare came this year. In their desperation to defeat Obama’s health reform, they shamelessly frightened the elderly with false claims that the legislation would have them all euthanized. Republicans also repeatedly emphasize the fact that much of the financing for Obama’s plan would come from cuts in Medicare–payback for the Democrats’ attacks on them back in 1995.

Turnabout is fair play, but Republicans are digging themselves into a hole by portraying themselves as Medicare’s eternal defenders. In an article in the Washington Post on Aug. 24, Republican National Committee Chairman Michael Steele said that Medicare must be protected at all cost. If health reform is to be done, he said, it will have to be done without reducing Medicare by even a single penny…

In my opinion, Republicans would have been better off holding Obama’s feet to the fire on his promise to reduce long-term health spending–bend the curve, as he puts it–and make Democrats do the heavy lifting on getting Medicare under control. It could have been a win-win for both parties.

I think Democrats want universal coverage badly and are willing to pay a lot to get it. Republicans could have used this desire to get Democratic cover for fundamental Medicare reform. But that would have required Republicans to think strategically and negotiate with Democrats in good faith…

Bruce attributes this odd attitude of the GOP toward Medicare to political cleverness–what Republicans see as a politically savvy way to turn seniors against (Obama’s) health reform–not that Bruce thinks it’s clever.  Brad DeLong explains it a little more plainly as he points out Andrew Samwick’s puzzling over this same (odd) GOP behavior: Brad’s simple explanation is that “the Republican Party’s leading politicians are all now bats— insane.”

I just question whether the Republicans feel good about what they’re saying and how they’re contributing to the health reform debate, given what they think their party stands for.  I don’t know the answer; I’m not a Republican.  I’m just a fiscally-conservative Democrat, and I’m just asking.

9 Responses to “The Republicans and Medicare: Do They Believe What They’re Saying?”

  1. comment number 1 by: Bruce Bartlett

    I actually gave some thought to the right adjective to use to describe what Republicans think they are doing. I originally said it was cynical but that didn’t seem quite right. Clever isn’t quite right either. What it is is penny-wise/pound-foolish. Republicans benefit in the short run by hurting the Democrats, but may suffer in the long run if they are the ones ultimately forced to fix Medicare, which will necessarily involve a lot of political pain.

  2. comment number 2 by: Brooks

    Even in the land of politics over principle, this Republican absurdity stands out.

    If I put on my Devil’s Advocate thinking hat and squeeze my head real hard to try to find some ideological consistency, here’s the best I can do (at least at the moment), and it’s a bit of a stretch: A class and merit perspective. The question, as they are presenting it (and I think is plausible), is whether or not we should make Medicare beneficiaries sacrifice so we can offer health insurance to the currently uninsured. Medicare beneficiaries span all income/wealth levels, are less able to work, and all “deserve” it, or at least are not getting it based on economic need, whereas the uninsured, although probably containing a significant segment of young, healthy people who could afford insurance, are probably mostly people who are working class and poor (the latter already eligible for Medicaid, but forgoing it knowingly or otherwise), which some would view as their not “deserving” free insurance (because if they worked harder and smarter and earned more they could just buy it or get a job providing it), and some would say providing them free insurance removes economic incentive for them to work harder.

    The above is not my view. Just my attempt to play Devil’s Advocate. Whew! I’m tired. That was hard.

  3. comment number 3 by: Bruce Bartlett

    A slightly better argument might be that the Medicare cuts Obama has endorsed are the low-hanging fruit, the easiest cuts to make. If that money is used to pay for another program then it will be much harder to get more savings out of Medicare for deficit reduction. A new entitlement should be financed with a dedicated tax as Social Security is and Medicare to a large extent. Len Burman and others have said a VAT is ideal for this purpose and I agree. If people won’t pay the tax, then maybe the program isn’t worth enacting.

  4. comment number 4 by: Brooks

    Bruce,

    That argument — that we should indeed cut projected Medicare spending, but to reduce our fiscal imbalance rather than to offset incremental spending — certainly would be a responsible and rational position as well as consistent with true fiscal conservatism, but of course it’s not the argument Steele is making.

    I see merit in your argument for requiring that the offset be a dedicated tax rather than the politically easiest reductions in projected spending (combined with the politically easiest tax increases — on “the rich”), not only because (relating back to my prior paragraph) those sacrifices are inevitable anyway due to our already existing projected long-term fiscal imbalance, but also because, as you suggest, it would make it politically harder to add a new, expensive entitlement (and thereby exacerbate our long-term fiscal imbalance). But I think the ideal form of revenue offset (leaving aside the important choice of offsetting on the spending vs. revenue side) would be a revenue source that was inherently linked to the cost growth of healthcare: reduction or elimination of tax deductibility of employer-provided health insurance. In addition to having the added benefit of a change in incentives conducive to cost containment (by removing a subsidy), such an offset would be more likely to keep pace with the growing cost of the added entitlement than would a dedicated tax at some rate that may or may not end up providing “solvency” over the long term, and if not, lead to supplemental funding from general fund revenues and/or a shift in taxation from the general fund taxes to this dedicated tax (essentially the same thing, but via cutting the former tax and increasing the latter), the latter of which would provide the pretense of “self-funding” while actually increasing overall deficits. (One of these two routes seems to be where Medicare is headed as far as I can tell). One way or another, revenues are more fungible than design of the tax structure (with dedicated taxes) would indicate.

    But pulling back and taking a broader view, I don’t think any new, expensive entitlement should be added outside of the context of a plan to keep the long-term debt-to-GDP curve within targeted, responsible levels. Perhaps the SAFE Commission or something like it could provide that appropriate and extremely important context for choosing among trade-offs in a rational manner. Advocates of expansion of federal coverage to 40+ million more people are entitled to the view that we have a moral obligation to do so, but they can only do so rationally if they acknowledge that it means even greater sacrifice by many people at some point (on top of the eventual sacrifices we already face due to the long-term fiscal imbalance) and conclude that helping the uninsured is worth inflicting greater pain on another large group of people.

  5. comment number 5 by: Jim Glass

    Well, yes — but it’s equally bizarre for Democrats, the creators and champions of senior entitlements, who have relentlessly used them as a club to beat Republicans for decades, to now complain that Republicans are insufficiently eager to cut them back.

    (Not to mention “bats-insate” for their insufficent eagerness — is it just me, or does DeLong seem to have lost the knack for measured understatement?)

    The Democrats have the White House, 60% of the Senate and 60% of the House. The Republicans seem hardly relevant. Three months ago the Democrats themselves were emphasing this by going on about their Permanent Democratic Majority and how they’d ushered in a new “America the Liberal”.

    For them now to go on so about how Republicans have lost their bearings, seems sort of like … an attempt to change the subject from the story of “who’s not getting the job done”.

    For Republicans to defend entitlements is a dangerous game (I’ve expanded on that elsewhere), it certainly works against their purported long-term policy objectives and so could cost them in the end.

    OTOH, politically it is a fair and effective ploy that the Democrats have used countless times (”turnabout is fair play”) … and “The duty of the oppostiion party is to oppose”, as Disraeli notably said on an occasion when he led the opposition to a policy he personally supported.

    Moreover, this dynamic of “caving to senior entitlements” clearly is not a Republican or Democratic or US thing — it is a universal political dynamic in all developed democracies. As is clearly shown in the S&P projections of the future finances of all these countries, no matter who is running them, that I’ve linked to too many times to do it again.

    It’s a systematic constitutional failing of all modern democratic politics everywhere — the elected politicians have no stakeholding or accountability in the future, so they sell off the future for the next election.

    The fact that it is universal, in all countries no matter who is governing them, shows that it’s not really the fault of “a party” anywhere, not of the Republicans here — not even the Democrats here who created all these *unfunded* entitlements. It’s the way politics works.

    One can say “we should stand up against it” but it’s like standing up against the movement of the ocean. How many budget mavens have been saying it in how many countries for how many decades? Yet here we all are with nothing at all changed to show for it.

    And nothing at all will change until the tide turns, the debt tsunami hits land, and politicians have to start meeting these promises on a “cough up the cash flow” basis.

    Five years ago Krugman wrote in a column The Fiscal Train Wreck that a then-projected $3 trillion deficit over ten years was “a looming threat to the federal government’s solvency …

    “… the conclusion is inescapable. Without the Bush tax cuts, it would have been difficult to cope with the fiscal implications of an aging population. With those tax cuts, the task is simply impossible.

    “The accident — the fiscal train wreck — is already under way.”

    Today he responded to Prof. Hamilton’s concern about the coming $9 trillion saying it’s not so bad, he’s “sanguine” about it — and specifically compared 2019-2029 to 1950-1960, when the debt as a % of GDP declined because the economy grew faster than debt. Hey, c’mon, that can happen again, right? So what’s to worry?

    That’s the politics of the debt, right there. Republican, Democrat, nothing’s going to change until the tide comes in and these people have to start paying for it.

  6. comment number 6 by: B Davis

    Turnabout is fair play, but Republicans are digging themselves into a hole by portraying themselves as Medicare’s eternal defenders. In an article in the Washington Post on Aug. 24, Republican National Committee Chairman Michael Steele said that Medicare must be protected at all cost. If health reform is to be done, he said, it will have to be done without reducing Medicare by even a single penny…

    If I put on my Devil’s Advocate thinking hat and squeeze my head real hard to try to find some ideological consistency, here’s the best I can do (at least at the moment), and it’s a bit of a stretch: A class and merit perspective. The question, as they are presenting it (and I think is plausible), is whether or not we should make Medicare beneficiaries sacrifice so we can offer health insurance to the currently uninsured.

    I’ve long found our current two-tier system a bit questionable. At the age of 65, each U.S. citizen moves from a world in which they can lose their insurance for any reason (job loss, preexisting condition, etc.) to a world in which their insurance is free (other than their prior contributions) and guaranteed. I’ve wondered before what I person could do if they had or developed a condition which would likely shorten their lives and they decided to retire before 65. If they retire due to a preexisting condition, I assume that it will be very difficult and/or expensive to continue their insurance. The only way that they can continue their insurance at its current rates is to keep working, likely full-time. Of course, it they lose their jobs at that point, they’ll face the problem regardless.

    It certainly makes sense that the elderly be given top priority in health care since they face the most serious illnesses and are least able to care for themselves. But it does seem as though they should be asked to “share” the government’s paid medical care to some degree. If might help if politicians could make clear that nobody will be asked to sacrifice any required treatment. But efforts will be made to determine the treatments that work AND are the most cost-effective. And, of course, efforts will be made to eliminate any waste or fraud. The idea that we cannot save “a single penny” from a system that costs twice as much as it does the rest of the world simply does not make sense.

  7. comment number 7 by: Brooks

    Jim,

    Re: Well, yes — but it’s equally bizarre for Democrats, the creators and champions of senior entitlements, who have relentlessly used them as a club to beat Republicans for decades, to now complain that Republicans are insufficiently eager to cut them back.

    But, at least at the rhetorical level (even if disingenuous on the part of those who know better), the Democratic argument is that the only reductions in projected Medicare spending that they are advocating are painless — just elimination of “waste”, not something that would adversely affect the health care of seniors. Again, I think it’s a misleading claim, but my point is just that the rhetoric is not quite as inconsistent with ideology as is the Republican argument expressed by Steele.

    That said, there is no question that politicians of both parties are opportunists who have no problem with hypocrisy if it benefits them politically and personally. As I’ve said for many years, both parties constantly accuse each other of hypocrisy, and their both right.

  8. comment number 8 by: Brooks

    That should be “they’re both right”

  9. comment number 9 by: AMTbuff

    In the 2005 Social Security debate, seniors and near-retirees correctly feared reduction of benefits. Democrats played on their fears, successfully taking the position that nothing needed to change, at least for a long time.

    Now Republicans are doing the same thing to the Democrats, pretending that Medicare is sustainable and nobody needs to face a benefit cut. It’s just as dishonest, and it will be just as successful.

    I’d vote for a candidate who promised massive benefit cuts, but that candidate would lose.

    Nothing much will change until the government hits the wall where it cannot borrow any longer and must print money. Then things will really get interesting.