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Minimum Wage Won’t Save Dems in 2014

Democrats have had a generally miserable 2013, but they think they have the answer to how to make 2014 end on a better note for them. Some on the left may still be holding onto the forlorn hope that ObamaCare will somehow magically be transformed from the millstone around their necks to a popular initiative like Social Security or Medicare. But they are thinking clearly about the political impact of the health-care fiasco. Rather than just bang their heads against that wall, Democrats are looking to change the subject. So rather than try to sell skeptical Americans on the dubious idea of increasing the government’s involvement in health care is a good idea, they appear to be set on convincing the electorate that the key issue facing the country isn’t the looming ObamaCare disaster but the notion of inequality.

As the New York Times reported in a front-page feature yesterday, Democrats seem to think provoking a debate about raising the minimum wage is the magic bullet that will slay Republican candidates in a year in which the GOP is generally favored to make midterm gains in Congress if not take back the Senate in November. The minimum wage proposal doesn’t stand alone, as it is part of an effort by the White House to pivot back to the start of 2013 when the president unveiled a laundry list of liberal ideas in his State of the Union speech. The minimum wage was part of a package that was supposed to be the core of the reelected Obama’s second-term program in which income inequality would, along with climate change, gun control, and an expansion of entitlements, herald a sharp left turn in American politics. But while the president is hoping for a mulligan on a 2013 which was marked by scandals at home and foreign-policy disasters like Egypt and Syria abroad, life is rarely that simple. Though the minimum wage seems like a political winner to his strategists, the problem is that while the bully pulpit of the presidency can help set the country’s political agenda, mere strategy can’t divert voters from the impact of problems that affect the lives of large numbers of citizens. Though a pivot left will please the president’s base, it is no match for the havoc that ObamaCare will have on the nation over the course of 2014.

Republicans, however, should not underestimate the appeal of inequality rhetoric. Though raising the minimum wage is economic snake oil that will do far more harm to business and employment than it will help poor workers, such efforts do speak directly to values that most Americans support. Voters like such laws because they sound as if they speak to fairness and the idea of soaking the wealthy even if the impact will hurt those seeking work at the bottom of the pay scale. As the Times rightly notes, polls consistently show broad support for minimum wage increases and the GOP must be wary of being drawn into a fight over the issue.

But a genuine pivot left requires more than the transitory rhetorical advantages that might be gained from the discussion of minimum wages. Americans like giving the poor a break, but they are far more concerned with the impact of higher taxes, out-of-control government spending, and, most of all, the impact of government interference on the cost and quality of their health care.

The Democrats aren’t mistaken to think they can trick the Republicans to force them to defend economic positions that are fiscally wise but unpopular, such as opposing the minimum wage increase or not extending unemployment benefits. Their mistake lies in misunderstanding the far-reaching impact of the president’s signature health-care plan will have on vast numbers of voters.

At its heart, the talk about income inequality is rooted in a belief that the fuss about ObamaCare is only temporary and more about website glitches and embarrassing presidential sound bites (“If you like your health insurance, you can keep it”) than about the law itself. Liberal strategists are in denial not only about what has already happened on the issue but also what is about to unfold in the coming year. As Lanhee Chen wrote yesterday for Bloomberg News, Democrats are going to like the feedback about the Affordable Care Act in 2014 even less than they did in 2013. The president and his team front-loaded the measure to allow its more popular elements to go into effect before the 2012 election with the less savory elements held back until he was safely reelected. But as bad as things look now in terms of approval for a law that has always been opposed by most Americans, it’s about to get worse:

First, some of ObamaCare’s least popular provisions go into effect in 2014. This includes a new $60 billion tax on health insurers, which will be levied relative to premiums collected and directly passed on to consumers. And, of course, ObamaCare’s requirement that individuals secure health insurance coverage (or pay a tax penalty) kicks in during the coming year as well.

Second, millions of Americans who buy their coverage on the individual market or get it through small employers will be shocked by just how much their premiums go up in 2014. The young and healthy will be especially susceptible to this rate shock, and this in turn will further drive them away from purchasing coverage in future years. Given skyrocketing premiums, the economic incentives for many of these “young invincibles” are aligned against buying coverage in the coming years. But these are also the people that the ACA most needs to be enrolled through its health insurance exchanges to offset the comparatively higher risk and costs associated with insuring the sick and old. These dynamics may lead to even higher premiums in the coming years.

Third, not only will millions of Americans on the individual and small group markets who like their plans be unable to keep them in 2014, but many will experience what it’s like to be unable to continue seeing the doctors they know and trust. As health insurers face pressure to keep costs down while providing the richer package of benefits that ObamaCare mandates, many are limiting their networks of doctors and other health-care providers. A cancer survivor’s opinion article in the Wall Street Journal illustrated the horrible situation that ObamaCare will place some Americans in: Being forced to choose between doctors that have been critical to their care or, in some cases, not having access to any of their existing health-care providers.

Finally, ObamaCare’s Medicare cuts will continue to hurt senior citizens. For the 14 million people enrolled in the Medicare Advantage program, the ACA’s $200 billion in cuts over the next 10 years will accelerate in 2014 and have tangible impacts on beneficiaries. Insurers predict that seniors in Medicare Advantage plans will see higher premiums, increased cost-sharing for primary and specialist visits, and limits on the doctors they can see. Although the ACA is not solely responsible for the headwinds the Medicare Advantage program faces, it will (and should) shoulder most of the blame.

When combined, these four elements set the stage for a political tsunami that will drown any effort to distract the public with talk about inequality. Democrats have assumed that once it was implemented, ObamaCare would be as popular as Social Security and Medicare. But they are only just starting to grasp the fact that unlike those programs that spread the wealth with few, if any, voters being worse off for their passage, the misnamed Affordable Care Act creates a vast population of Americans who are going to be hurt by the law. In 2014, their number will grow, not shrink. The first year of the president’s second term ended with ObamaCare as the top political story of the year. The likelihood that it will remain so in 2014 spells big political trouble for Democrats whose fate will be determined more by this fiasco than any fights they can pick about the minimum wage.


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