Last Wednesday at the World Business Forum (where I was a “featured blogger” and where I “tweeted” for the first time) President Bill Clinton was asked during his post-speech conversation a very interesting question, which went something like this: “What was one of your toughest decisions as President–i.e., as the chief decision-maker for the country?” His answer: Unpopular decisions are hard, but the very hardest decisions are those which have a sense of urgency and yet where the right answer isn’t obvious–and during his presidency, one of his toughest decisions was to raise taxes in 1993 for the purpose of deficit reduction. As he put it, it was hard for him to know how much he “needed” to bring the deficit down–and by that I take it that it was hard for him to know if the longer-term economic gain would be worth the shorter-term political pain. It was probably also the case that the uncertainty surrounding the potential economic gains from deficit reduction was greater than the uncertainty about the political cost of advocating tax increases. At the same time, President Clinton understood at that time that the potential economic payoff to politically-difficult fiscal discipline could be monumental. As I “tweeted” from the Forum:
One of Clinton’s hardest decisions: 1993 budget deal- how much would he need to bring deficit down for good of economy?…
Clinton: Was hard decision because he couldn’t be SURE it would work out well (deficit reduction)… But it DID!
It indeed worked out “well” because it was no coincidence that the deficit was eliminated and economic growth was so strong (see pages 79-92 in President Clinton’s final economic report, which I drafted as his Senior Economist for tax and budget policy in 2000-01), and it was indeed “monumental” because little did we know at the time how rare balancing the budget (or running surpluses) would turn out to be despite at the time running surpluses “as far as the eye could see.”
I think what makes for a “tough choice” are characteristics such as these:
- obvious losers, not-so-obvious winners;
- losers are those who aren’t used to losing (and are able to put up a fight, i.e., “lobby”);
- winners are broad and diffuse (citizenry as a whole) or otherwise lack political influence (such as younger generations who can’t yet vote);
- a choice that would represent a big change from the status quo;
- a choice with highly uncertain (and hence un-scorable?) but potentially large and profound and sustainable benefits, and more certain (and hence scorable) but smaller, more superficial and largely temporary/transitory costs.
And along these lines, the choices policymakers will have to soon make about health care reform are “tough choices,” too. Concord Coalition board members Bob Kerrey, Pete Peterson, and Warren Rudman, in an open letter to Senate Majority Leader Harry Reid last Friday, wrote (emphasis added):
In the coming days, you have the unenviable task of combining the Senate Finance Committee’s health care reform bill with the bill that emerged from the Health, Education, Labor and Pensions Committee. Aware of the difficulty and the competing pressures you face, we have identified in the attached memorandum key areas where we believe the potential of the legislation to produce fiscal gains can be strengthened. We hope our views will help guide your work — consistent with fiscal responsibility and sustainability.
In making these suggestions, we are reminded of the words of the late Paul Tsongas, a former Senate colleague from Massachusetts who inspired the founding of The Concord Coalition. In 1992, Senator Tsongas warned:
America faces great economic peril as our standard of living is threatened by current economic policies. Once the world’s greatest economic power, we are selling off our national patrimony as we sink ever deeper into national debt….This nation’s will is not being called upon on the home front because of a fear that our people are not ready for an honest and forceful response to these threats. I strongly disagree….The purposeful avoidance of difficult issues caused serious erosion to our society. The icon of indulgence that we worshiped during the past decade has proven to be a false god.
Those same words could be spoken today. The only difference between then and now is that 17 years have elapsed and the circumstances we face are worse — particularly with regard to health care costs...
The choice to get health care spending on a more sustainable track is a tough choice, for all of the reasons in my list above. It’s tough because it requires far more than cutting out the “waste, fraud and abuse” that no one would oppose cutting. It’s tough because getting a more efficient marketplace requires that what politicians refer to as the “affordability” of health care (in terms of out-of-pocket household expenses) goes down instead of up–at least in the short term–so that the prices that consumers face more accurately reflect the true “affordability” of that care. It’s tough because many of the well-defined “losers” are the most well-known and successful lobbyists. And it’s tough because this would represent a huge change to the way our country purchases health care.
But it’s still a real choice, not an illusion. And although not easy or without political cost, the potential payoff to making the tough, fiscally-responsible choice could be huge–just as it worked out for President Clinton, according to President Clinton himself, looking back with the benefit of hindsight…and no regrets.