Published for National Review’s ‘The Corner’, February 21, 2013
Andrew, many thanks for the characteristically thoughtful and generous post. A couple of brief points in response.
First, in writing that the starting principle of means testing the entitlements should be “give less to the wealthy rather than take more from them” I meant only to say that the means testing itself (in the case of Medicare, as noted) should take the form of reduced benefits rather than of higher premiums. Almost all proposals for means testing Medicare (from both parties) involve imposing even higher premiums on the wealthy. This is largely because Medicare is a defined-benefit system which makes it difficult to alter the benefit for differently situated people. This would be much easier if Medicare were (as it should be for many other reasons) a premium-support system, and indeed the Ryan premium-support proposal does envision a means-tested benefit. In today’s Medicare system, though, means testing usually amounts to higher premiums, which basically just turns Medicare into an inefficiency machine—taking more money from certain people and then giving it back to them in the form of a poorly designed benefit. Adjusting the age of eligibility is one of the few ways you can modulate the benefit itself in today’s Medicare, which is why I proposed doing so on a sliding scale on the basis of lifetime earnings.
Second, the message sent by such reforms is to my mind a key part of the appeal of greater means testing. Of the (few) politically plausible entitlement compromises at this point, it is the one that best qualifies as an incremental step in the direction of the sort of reformed entitlement system that conservatives envision, because it begins to move away from the myth of universal earned benefits and address the entitlement programs as what they really: massive transfer programs that serve an important purpose but need to serve it more effectively and at a lower cost. Medicare and Social Security have of course always been massive transfer programs moving money from the young to the old. They are not savings programs, and their “trust funds” do not actually put money aside to be spent on benefits. As older Americans have grown wealthier over the years, moreover, Social Security and Medicare have also become particularly perverse transfer programs because they now generally move money from a less wealthy cohort of people (younger workers) to a more wealthy one (retired people). In fact, because workers with lower incomes generally only pay the payroll tax and not the income tax, the only federal taxes that these workers pay go to fund benefits for people who are on the whole wealthier than they are. That’s perverse social policy and it’s also of course unsustainable fiscal policy. The more we come to see these programs as part of the safety net, rather than imagining they are earned universal benefits, the better equipped we will be to think rationally about how to reform them.
Full post here
Published for National Review’s ‘The Corner’, February 20, 2013
Sequestration is certainly not a smart way to manage federal spending. Some programs are more important than others, some programs are better able to sustain spending reductions than others, and any cuts should be prioritized accordingly. The sequester doesn’t do that. It was proposed by the White House and accepted by Congress precisely to avoid a debate about specific prioritization and just pass the debt ceiling deal in 2011. They hoped the “supercommittee” might agree on some kind of prioritization (and perhaps especially on entitlement reforms that could add up over time). But that didn’t happen, and here we are. This was the only way the parties could agree on to implement modest cuts.
Now that we’re facing these cuts, there’s a concerted effort, particularly by the administration, to suggest that they are not modest at all—indeed that they are so severe that our economy (if not our very society) simply cannot sustain them.
Published for National Review’s ‘The Corner’, February 19, 2013
Every time one of the warnings voiced by Obamacare’s critics before the law was enacted has come true, the law’s most eager champions (i.e. the political press) have seemed deeply surprised. It’s almost as if they just weren’t listening, isn’t it?
The last few days have offered two great examples. In this morning’s New York Times
we are treated to the spectacle
of a health reporter discovering the existence of economics:
Federal and state officials and consumer advocates have grown worried that companies with relatively young, healthy employees may opt out of the regular health insurance market to avoid the minimum coverage standards in President Obama’s sweeping law, a move that could drive up costs for workers at other companies.
Published for National Review’s ‘The Corner’, February 19, 2013
Recent days have seen a spate of enlightening and encouraging writings about the direction that Republican domestic policy ought to take. They all share a crucial insight in common: that conservatives need to more carefully distinguish the means from the ends of their agenda to better apply their timeless principles and enduring goals to today’s and tomorrow’s policy challenges.
In a superb essay in the latest issue of Commentary, Peter Wehner and Michael Gerson consider how Republicans have found themselves in their current predicament and suggest a path back to majority status that involves a combination of policy proposals and refinements of tone and emphasis. Both their diagnosis and their cure are well worth your while.
In yesterday’s New York Times
, Ramesh laid out
the case for modernizing the right’s understanding of the country’s key economic challenges, and showed how enduring economic principles applied to new problems would result in new policy proposals and priorities rather than the same ones that worked in the 1980s. I long ago set up a keyboard shortcut on my computer for “I agree with Ramesh.” It saves a lot of time. But I think this op-ed is a particularly helpful encapsulation of the case for applying to new problems a set of ideas and ideals that have helped the country address some old problems but that conservatives have not sufficiently put to use because we have not sufficiently grappled with how America’s global position, cultural predicaments, tax policies, monetary policies, and economic arrangements have changed since the last major revolution in conservative policy thinking. I very much concur with his four specific examples of what a new reform agenda could involve—pro-family tax reform, consumer-driven health reform, monetary policy targeted to stable NGDP growth, and patent reform. (The list led me to conclude that National Affairs
needs to publish an essay on intellectual-property reform, since we have published extensive and detailed discussions of what the other three could look like, e.g. here
, and here
, and of course Ramesh himself has written a great deal
about them before too.)
Published for The Corner at National Review Online, January 6, 2012
The New York Times’ Fox Butterfield is famous for repeatedly reporting with astonishment that crime rates went down as the prison population went up without giving much heed to the possibility that the two trends might be correlated rather than (as the paper’s house ideology insists) contradictory. Here’s a good instance.
Well, he now seems to have some competition in the “incredulous about cause and effect” department at the Times. In today’s paper, Times business reporter Reed Abelson notes with barely masked bewilderment that insurance premiums are rising sharply as Obamacare’s insurance regulations begin to take effect. The opening paragraph is just perfect:
Health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers, even though one of the biggest objectives of the Obama administration’s health care law was to stem the rapid rise in insurance costs for consumers.
Huh, how did that happen? What a very strange coincidence. The article mentions in passing that some people think this might have something to do with Obamacare’s basically outlawing actual insurance and replacing it with an economically incoherent substitute, but since that obviously can’t be the reason it doesn’t get much attention. More prominent is the reassuring assertion that things would have been worse if not for Obamacare, as “policy experts say the law has probably kept at least some rates lower than they otherwise would have been.” Probably at least some, yes, that’s good to hear. The article also notes with surprise that businesses that now have to have their prices approved by regulators have adopted a peculiar practice by which they first propose higher prices than they expect to end up with and then work down toward their costs. Also, sources say that supply and demand may be related in ways that influence prices, but this remains unconfirmed.
I have a feeling Abelson is going to have a very surprising year.
Published for National Review’s ‘The Corner’, December 12, 2012
The idea of raising Medicare’s retirement age by two years has been surprisingly prominent in recent weeks—it appears to be one of the Republicans’ key proposals in the fiscal-cliff talks, and liberal policy wonks have launched a huge opposition effort.
I would vote in favor of raising the age, but I would not make it a central tenet of a Medicare-reform agenda. I don’t think it’s as important as some have been suggesting, or that it would be worth a whole lot in negotiations. Raising the age would meet one of the criteria for a worthwhile reform: it would save money. CBO estimates that it would save about $125 billion over ten years, most of it in the out years. In no single year in the coming decade would it save more than about $35 billion on net—an amount equal to about three days of federal spending. That’s not nothing, and every little bit counts. But that’s almost all you get from an increase in the Medicare eligibility age. And a portion of those costs (even beyond what CBO tries to estimate) would of course be shifted to other government programs—particularly in the case of 65 and 66 year olds who were eligible for Medicaid or for Obamacare’s state-exchange subsidies in states where those existed after 2014. Conservatives often (and rightly) complain about cost shifting created by federal programs in other contexts and should not ignore it here: Medicare is not an island apart from the larger federal budget. An increase in the age, moreover, would not be quite a structural reform of the program. It would delay entry into an otherwise unreformed Medicare system that disfigures our larger health-care system. It might encourage some seniors to work longer, which would yield some benefits, but it would not meaningfully improve the design of Medicare, and it’s not clear to me how it would enable other more meaningful reforms to follow.
Published for The Weekly Standard, December 10, 2012
Despite the outcome, Republican presidential nominee Mitt Romney did many things right during the course of this year’s campaign. Perhaps most notably, polls suggest that he was able to convince a plurality of Americans that the GOP’s plan for smaller government was better for promoting long-term economic growth than the president’s statist approach. But there was one line of attack Romney was never able to overcome, and which may well have cost him the working-class voters he needed to win: The Obama campaign effectively drove home the notion that Romney, and Republicans more generally, care more about the rich than the middle class.
There can be no doubt that answering that charge, by proving it wrong, will be essential to the GOP’s electoral future. That cannot mean adopting policies that Republicans don’t believe are right, but it must mean taking every opportunity to apply conservative principles for the benefit of working families, and showing voters why conservative ideas are better for everyone, emphatically including the middle class.
And yet, mere weeks after the election, we find congressional Republicans once again at risk of falling into the Democrats’ trap. The so-called fiscal cliff that is now riveting Washington’s attention involves the automatic application of the spending cuts agreed to in last year’s debt-ceiling talks combined with the expiration of several tax policies, which promises to increase the tax bills of many Americans. The two most significant tax increases result from the expiration of the Bush tax cuts (which would raise everyone’s income taxes) and the expiration of the payroll-tax holiday enacted in 2010 and renewed last year (which would raise everyone’s payroll taxes).
Full post here
Published for National Review’s ‘The Corner’, December 4, 2012
The seemingly endless series of budget showdowns that have characterized the last two years has a lot of people frustrated, and understandably so. But I think it’s a mistake to attribute that pattern to a failure to seriously bargain, as many critics suggest. It is in fact the only plausible outcome of bargaining given our increasingly problematic fiscal situation. A lasting bargain — a middle-ground deal that provides a solution that endures for many years, of the sort reached in the 80s and 90s — is not really going to be possible in this situation. And the frustration about this has to do with a failure to grasp just what our situation is, and just how different the goals of the two parties are at this point.
It is true, as the self-declared sober moderates among the talking heads remind us, that there is a kind of middle ground between what the two parties are asking for. That instinct is in fact where the so-called “Bowles proposal” that John Boehner offered the president on Monday came from. At a November 1, 2011, hearing of the supercommittee (you can find the transcript archived here, the text quoted below starts on page 50), Erskine Bowles asked for some time to present an idea. Here’s what he said:
Chairman HENSARLING: I would note, prior to Senator Simpson’s departure, he did mention, Mr. Bowles, that you had something you might want to present. Without objection, I would certainly yield you a couple of minutes if I understand you have something else you wish to present to this committee.
Full post here
Published for Ethics and Public Policy Center, November 29, 2012
As soon as the presidential election was over and the exit polling results began to pour in, some on the right (and many outside it) started arguing that the Republican party needed to change its tune on immigration. To avoid being left behind by the country’s changing demographics, the argument goes, the GOP must vastly improve its appeal to Hispanic voters, and the way to do this is to hop on the bandwagon of “comprehensive immigration reform,” which means a path to citizenship for the estimated 11 million immigrants now in our country illegally, greater openness to more legal immigration, and the promise of better border security in the future, all in one grand bill.
Advocates of this approach insist that it is what Hispanic voters want, and therefore what must be done to win them. But Republicans should be careful to avoid the lure of that argument. It is based on an overreading of exit polls, it proposes a cynical transactional relationship between policy and politics that is unbecoming of a serious political party, and like most “comprehensive” policy programs it manages simultaneously to offer too much and too little. America certainly needs immigration reform, but it doesn’t need another comprehensive liberal makeover.
Full post here
Published for the Wall Street Journal, November 19, 2012
Champions of ObamaCare want Americans to believe that the president’s re-election ended the battle over the law. It did no such thing. The Patient Protection and Affordable Care Act won’t be fully repealed while Barack Obama is in office, but the administration is heavily dependent on the states for its implementation.
Republicans will hold 30 governorships starting in January, and at last week’s meeting of the Republican Governors Association they made it clear that they remain highly critical of the health law. Some Republican governors—including incoming RGA Chairman Bobby Jindal of Louisiana, Ohio’s John Kasich, Wisconsin’s Scott Walker and Maine’s Paul LePage—have already said they won’t do the federal government’s bidding. Several Democratic governors, including Missouri’s Jay Nixon and West Virginia’s Earl Ray Tomblin, have also expressed serious concerns.
Talk of the law’s inevitability is intended to pressure these governors into implementing it on the administration’s behalf. But states still have two key choices to make that together will put them in the driver’s seat: whether to create state health-insurance exchanges, and whether to expand Medicaid. They should say “no” to both.
Full post here