Commentary Magazine


Topic: entitlement reform

Obama Budget: Dems Still Status Quo Party

While Democrats have spent the last few months trying in vain to engender a public outcry about income inequality, the greatest challenge facing the country remains the same: a long-term budget and debt crisis fueled by the rising cost of entitlements that can’t be fixed with token spending cuts or higher taxes on the rich. But the 2015 budget that President Obama will propose this year will ignore it. Instead of building on the discussions that he has had with Republicans in recent years in which he has at least contemplated a form of entitlement reform, there will be no mention of indexing cost-of-living increases for Social Security recipients or any other measure intended to check the growth of expenditures by the government. Instead, the president is proposing $56 billion more in federal spending on pet projects.

This means nothing in terms of what the legislative branch will actually wind up passing—if indeed both the House and the Senate are actually able to pass a budget before the current Congress is adjourned and replaced by a new one next January—since the Republican majority in the House will not even consider the president’s proposal. What he will be giving the country is not so much an economic blueprint as a political manifesto of Democratic beliefs. As such, it is a useful guide to how Democrats will run in November’s midterm elections. Though liberals are fond of chiding the GOP for being a prisoner of the Tea Party rather than a party of ideas, the Obama budget makes it clear that the Democrats intend to face the people in the fall as a brain-dead status quo party that is addicted to taxes and spending. This may please a liberal base that is flexing its muscles after the victories of ideologues such as Elizabeth Warren and Bill de Blasio. But it’s hard to imagine how they think they can hold the Senate or avoid losing more seats in the House running to the hard left in the wake of the ObamaCare disaster that has soured the public on the big-government paradigm.

Read More

While Democrats have spent the last few months trying in vain to engender a public outcry about income inequality, the greatest challenge facing the country remains the same: a long-term budget and debt crisis fueled by the rising cost of entitlements that can’t be fixed with token spending cuts or higher taxes on the rich. But the 2015 budget that President Obama will propose this year will ignore it. Instead of building on the discussions that he has had with Republicans in recent years in which he has at least contemplated a form of entitlement reform, there will be no mention of indexing cost-of-living increases for Social Security recipients or any other measure intended to check the growth of expenditures by the government. Instead, the president is proposing $56 billion more in federal spending on pet projects.

This means nothing in terms of what the legislative branch will actually wind up passing—if indeed both the House and the Senate are actually able to pass a budget before the current Congress is adjourned and replaced by a new one next January—since the Republican majority in the House will not even consider the president’s proposal. What he will be giving the country is not so much an economic blueprint as a political manifesto of Democratic beliefs. As such, it is a useful guide to how Democrats will run in November’s midterm elections. Though liberals are fond of chiding the GOP for being a prisoner of the Tea Party rather than a party of ideas, the Obama budget makes it clear that the Democrats intend to face the people in the fall as a brain-dead status quo party that is addicted to taxes and spending. This may please a liberal base that is flexing its muscles after the victories of ideologues such as Elizabeth Warren and Bill de Blasio. But it’s hard to imagine how they think they can hold the Senate or avoid losing more seats in the House running to the hard left in the wake of the ObamaCare disaster that has soured the public on the big-government paradigm.

While the president has charted a hard-left approach, the White House is still pretending that he is a moderate facing off against right-wing extremists. That was the spin today coming from the president’s spokesman who claimed it was the GOP’s fault that entitlement reform was absent from the budget. The administration line is that since Republicans still oppose raising taxes, Obama feels empowered to drop his willingness to confront entitlements. But this is a lame excuse that won’t be believed even by his most loyal supporters.

By proposing a budget that refuses to contemplate any fix for the crisis that threatens to ultimately bankrupt the government, the president is seeking to enable Democrats to run to the left this year by defending entitlements and accusing Republicans of planning to throw grandmothers in wheelchairs over the cliff. He seems to believe that Americans are so addicted to government benefits and so fearful of any talk of reform that Democrats can blithely ignore fiscal reality and win big.

But if this strategy sounds familiar, it should. This was the same approach Democrats tried in 2010 when they blasted the GOP as radicals who wanted to take away Social Security and Medicare from senior citizens and further impoverish the poor. Just as in that midterm vote, Democrats are ignoring the specter of ObamaCare and hewing to their belief that only wingnut Tea Partiers care about the debt. In 2010 voters showed Democrats you didn’t have to be a fringe right-winger to care about restraining the growth of government. But since worries about the impact of the president’s signature health-care legislation are, if anything, even greater in 2014 than they were then, the president’s strategy may turn out to be a colossal mistake.

The growing number of ObamaCare losers who are being hurt by the new law may well outnumber those who benefit from it. Moreover, most of the swing seats that are up for grabs this year are in states where the president’s big-government manifesto will not only fall flat but also be a handicap to Democratic candidates. The liberal base never liked the idea of cutting spending no matter what tax increases the GOP might have proposed. All they want to hear from the president is a rigorous defense of more “investment”—government lingo for spending money plucked from the wallets of taxpayers on various federal projects and Obama boondoggles—and no reform of entitlements. That’s what the president has given them. But embattled Democrats in danger of losing this November will not thank him for drawing such a stark distinction between the parties on this seminal issue. Running on the status quo is always a political loser.

Read Less

Ideologues Shouldn’t Torpedo Budget Truce

The first reviews are in on the budget deal agreed to by Republican House Budget Committee Chair Paul Ryan and Democratic Senate Budget Committee Chair Patty Murray, and people on both the left and the right have found plenty not to like about it. This is no grand bargain or long-term settlement of the great divide over how to achieve fiscal sanity.  It neither reins in spending nor does it provide for what Ryan has always said was most needed for the government to get its fiscal house in order: fundamental entitlement reform. That’s more than enough reason for many conservatives and Tea Partiers to reject it out of hand as an inadequate compromise that merely keeps feeding the government leviathan that they rightly believe needs to be cut back rather than maintained.

But, if, like the those on the left who will vote against it because it makes some cuts and doesn’t give them their wish list items like an expansion of unemployment benefits, conservatives manage to torpedo Ryan’s efforts, they will be making a huge mistake. After a three-year standoff between the parties on the budget, it was time for a truce. The modest deal restores certainty to the economy and eliminates some of the most painful sequester cuts, including those involving defense. Though it falls far short of anything that might be called reform, it does establish a principle that is necessary to it: any discretionary spending increases are offset by mandatory spending cuts. That is a step toward fiscal sanity that should be taken.

Read More

The first reviews are in on the budget deal agreed to by Republican House Budget Committee Chair Paul Ryan and Democratic Senate Budget Committee Chair Patty Murray, and people on both the left and the right have found plenty not to like about it. This is no grand bargain or long-term settlement of the great divide over how to achieve fiscal sanity.  It neither reins in spending nor does it provide for what Ryan has always said was most needed for the government to get its fiscal house in order: fundamental entitlement reform. That’s more than enough reason for many conservatives and Tea Partiers to reject it out of hand as an inadequate compromise that merely keeps feeding the government leviathan that they rightly believe needs to be cut back rather than maintained.

But, if, like the those on the left who will vote against it because it makes some cuts and doesn’t give them their wish list items like an expansion of unemployment benefits, conservatives manage to torpedo Ryan’s efforts, they will be making a huge mistake. After a three-year standoff between the parties on the budget, it was time for a truce. The modest deal restores certainty to the economy and eliminates some of the most painful sequester cuts, including those involving defense. Though it falls far short of anything that might be called reform, it does establish a principle that is necessary to it: any discretionary spending increases are offset by mandatory spending cuts. That is a step toward fiscal sanity that should be taken.

Those on the right who are dismayed about the abandonment of the sequester have a point. Only by insisting on mandatory and draconian across-the-board cuts have Republicans been able to make any kind of an impact on the fiscal debate. But as useful as the sequester has been, it is too imprecise an instrument to become a permanent part of the process. As our Max Boot has repeatedly pointed out, the cuts that have been imposed on defense are damaging national security and must, sooner or later, be eliminated.

Many on the right are also denouncing Ryan’s deal not just because it doesn’t give them what they want on taxes and spending but because they don’t see the need to compromise at this moment. They see President Obama’s poll numbers falling and think the time is right to push hard again for the kind of reform that is needed, not an agreement that merely kicks the can down the road. But this is the same kind of faulty thinking from groups like Heritage Action and Freedom Works that led conservatives to shut down the government as part of a vain effort to defund ObamaCare. Apparently they’ve learned nothing from that debacle.

This is exactly the wrong time for the GOP to go back to a scenario where they can be depicted as impeding efforts to keep the government working. Doing so would distract the country from the ongoing worries about the devastating impact of ObamaCare on individuals and the economy.

Tactics aside, the deal is necessary because it reflects the reality of divided government that both President Obama and the Tea Party have been butting heads over ever since the 2010 midterms. Under the current circumstances there is simply no way for either the Republicans in charge of the House of Representatives or the Democrats running the White House and the Senate to get their way. The accord reached between Ryan and Murray is simply an acknowledgement of this fact and an effort to keep the nation on an even keel until we can have another election to try and resolve this mess next November.

Avoiding compromise and setting off another cataclysmic fight over the budget or the debt ceiling (the latter is not part of this deal, leaving both parties free to set off another confrontation sometime in 2014 if they wish) satisfies the conservative impulse to draw a line in the sand over an ever-expanding government. But, as Ryan has said, Congress must deal with the world as it is rather than merely operate on the basis of how they’d like it to be. The only hope of getting closer to real entitlement reform is for the GOP to win the 2014 midterms. Some on the right are still laboring under the delusion that staging another shutdown or threatening a default is the right way to make their case to the country. But only someone utterly insensitive to the mood of the country would think that is either good politics or good public policy. If they go back to those tactics, Republicans will be forfeiting any chance of winning back the Senate in the coming year.

There’s little doubt that Republicans worried about primary challenges from the right or thinking about running for president in 2016 will be inclined to eschew any such compromise. But passing this budget will give their party a shot at winning in the midterms and take the wind out of the Democratic effort to paint them as irresponsible. Compromise is often the coward’s way out and leads to more trouble. But in this case, it is simply good sense. Though the cuts it imposes are no more than a rounding error, Republicans will do well to take what they can rather than to seek the impossible and thus render more progress less likely.

A truce is something you embrace when it will enable you to go back into the fray better prepared to prevail. Ryan is smart enough to know this, even if some of his colleagues don’t. It’s time for the GOP to keep its powder dry and come back to the table when they’ve got the votes and the seats to pass the kind of reform budget that Ryan and the rest of his party would prefer.

Read Less

The Democratic Moment Won’t Last

With days to go before the artificial deadline set for the national debt ceiling to expire, there’s little doubt that Democrats believe the political pendulum has swung in their direction. Polls show them to be the beneficiaries of the disgust felt over the government shutdown and the general dysfunction evident in Washington. But they are just as encouraged by what they not reasonably conclude is division in the ranks of their foes. Republicans still seem split between those who are working to find a way out of the dead end that advocates of the shutdown have steered them into and those who are still insisting that what is needed is more determination to stick to their principles on the debt and ObamaCare while waiting for the Democrats to blink even if it is more likely that hell will freeze over first. President Obama spent the last two years daring the Republicans to shut down the government in the hope that it would be a political disaster for the GOP. Now that he seems to have been proven right, Democrats believe a moment has arrived in which they may not only rout the Tea Party but perhaps alter the dynamic of budget negotiations that have seemed to run against their big government beliefs for the past few years.

That’s what motivated Senator Harry Reid to refuse to accept what might have been considered a Republican surrender offer over the weekend. Rather than accept a so-called clean bill that would reopen the government and lift the current debt ceiling with no conditions as they had been calling for over the last month, Democrats raised the ante in the talks about finding a way out of the current impasse. Now they are demanding a relatively quick end to sequester budget cuts and are refusing even to accept a permanent repeal of the ObamaCare medical device tax, a face-saving measure that would allow the Republicans to act as if they had not been completely defeated.

Reid and the president are hoping Republicans are sufficiently spooked by the prospect of a default to surrender on those humiliating terms. But as strong as their position seems to be today, Democrats are still very much in danger of overplaying their hand. That’s not just because if the nation does slide into economic difficulties as a result of the expiration of the current debt ceiling and the shutdown the administration and its allies will be blamed along with the GOP. But by moving the discussion from what is perceived to be an unreasonable Republican demand to shut down the government if ObamaCare isn’t defunded to one about expanding debt and spending, Democrats are shifting the struggle back onto strong ground for their opponents.

Read More

With days to go before the artificial deadline set for the national debt ceiling to expire, there’s little doubt that Democrats believe the political pendulum has swung in their direction. Polls show them to be the beneficiaries of the disgust felt over the government shutdown and the general dysfunction evident in Washington. But they are just as encouraged by what they not reasonably conclude is division in the ranks of their foes. Republicans still seem split between those who are working to find a way out of the dead end that advocates of the shutdown have steered them into and those who are still insisting that what is needed is more determination to stick to their principles on the debt and ObamaCare while waiting for the Democrats to blink even if it is more likely that hell will freeze over first. President Obama spent the last two years daring the Republicans to shut down the government in the hope that it would be a political disaster for the GOP. Now that he seems to have been proven right, Democrats believe a moment has arrived in which they may not only rout the Tea Party but perhaps alter the dynamic of budget negotiations that have seemed to run against their big government beliefs for the past few years.

That’s what motivated Senator Harry Reid to refuse to accept what might have been considered a Republican surrender offer over the weekend. Rather than accept a so-called clean bill that would reopen the government and lift the current debt ceiling with no conditions as they had been calling for over the last month, Democrats raised the ante in the talks about finding a way out of the current impasse. Now they are demanding a relatively quick end to sequester budget cuts and are refusing even to accept a permanent repeal of the ObamaCare medical device tax, a face-saving measure that would allow the Republicans to act as if they had not been completely defeated.

Reid and the president are hoping Republicans are sufficiently spooked by the prospect of a default to surrender on those humiliating terms. But as strong as their position seems to be today, Democrats are still very much in danger of overplaying their hand. That’s not just because if the nation does slide into economic difficulties as a result of the expiration of the current debt ceiling and the shutdown the administration and its allies will be blamed along with the GOP. But by moving the discussion from what is perceived to be an unreasonable Republican demand to shut down the government if ObamaCare isn’t defunded to one about expanding debt and spending, Democrats are shifting the struggle back onto strong ground for their opponents.

The Republican stand on funding the government is widely seen as being driven by an ideological position on ObamaCare even if the other side is no less ideological in their insistence on preserving the president’s signature health care legislation despite its disastrous rollout and the deleterious impact it will have on the economy. That places them at a real disadvantage so long as the question is finding a way to reopen the government and ensure that the government doesn’t default.

But once the discussion turns, as Reid’s attempt to do away with sequester cuts indicates, to whether Congress will allow the government to go back to the free spending ways that actually got the country into this mess, the Democratic advantage disappears. While the sequester is not the smartest way to cut government spending and has done some damage, especially to national defense, it is not unpopular because the American people have understandably come to the conclusion that it is only by such draconian means that the nation’s spending addiction can be brought under control.

Once we stop arguing about whether the government will continue to operate or whether the national debt will be paid, the question becomes one of whether Washington is capable of reforming the entitlement spending that is sinking the nation in a sea of red ink and reducing the size of government to one that can be paid without increasing the debt. And that is where the Republicans have not only the stronger argument but also the ability to rally a majority to their side.

The question for the Republican Party isn’t really so much whether Senator Ted Cruz and the Tea Party will cause it to crash and burn and loose the 2014 midterms, as it is whether it can keep the national discussion focused on taxes and spending. If, fueled by their belief that the GOP is a rudderless and sinking ship, Obama and Reid choose to try and roll back the sequester cuts and refloat the liberal agenda in the coming weeks and months, what they will be doing is actually reviving the Republicans rather than placing a stake in their hearts. The Democratic moment we are currently experiencing is real but that irresistible liberal temptation is an almost sure guarantee that it will pass.

Read Less

No Way Around Entitlement Reform

Should the federal government’s balance sheet be treated the way a family approaches household finances? That’s the question at the heart of the renewed debate over Paul Ryan’s budget, President Obama’s spending, and the idea of balancing the federal budget. Conservatives argue that keeping a balanced budget is a basic expression of fiscal responsibility, and they point out that states have balanced budget requirements. Whether this makes it more or less compelling for the federal government to have a balanced budget requirement is up for debate, and the New York Times offers an in-depth survey of economists and experts on what the president derides as balancing the budget for its own sake.

Republicans seem to think that balancing the budget is a good political message to get behind, but they should be wary of how reasonable the other side comes out in stories like today’s Times piece, and they should also take into consideration the sometimes perverse unintended consequences of some efforts to force a balanced budget. Here is how the Times summarizes the two views:

Read More

Should the federal government’s balance sheet be treated the way a family approaches household finances? That’s the question at the heart of the renewed debate over Paul Ryan’s budget, President Obama’s spending, and the idea of balancing the federal budget. Conservatives argue that keeping a balanced budget is a basic expression of fiscal responsibility, and they point out that states have balanced budget requirements. Whether this makes it more or less compelling for the federal government to have a balanced budget requirement is up for debate, and the New York Times offers an in-depth survey of economists and experts on what the president derides as balancing the budget for its own sake.

Republicans seem to think that balancing the budget is a good political message to get behind, but they should be wary of how reasonable the other side comes out in stories like today’s Times piece, and they should also take into consideration the sometimes perverse unintended consequences of some efforts to force a balanced budget. Here is how the Times summarizes the two views:

As sensible as a balanced budget might sound — much like a balanced checkbook for a family — countries are generally able to run modest deficits for years on end while still keeping debt stable as a share of economic output. One year’s deficit is effectively paid off by later economic growth, especially if a government is investing in public goods like roads and schools….

“It is important to reduce the debt, and balancing gets you there faster,” said Douglas Holtz-Eakin, a former director of the Congressional Budget Office and a prominent Republican economist. “That’s paramount.”

He said a balanced budget is a goal everyone could understand. “It gives Congress a way to say no,” he said. “Transparency and political buy-in are important, and people understand balanced budgets. It has a lot of virtues.”

Having a balanced budget is one thing; how you get there is quite another. And this is what makes the conservative position more of a challenge than would first appear. There are two ways, essentially, of bringing the government’s budget into balance under current conditions, and they both contain pitfalls conservative politicians should be aware of. One way is via a balanced budget amendment. This has been part of the House GOP’s agenda for the last few years, and the argument for it basically echoes what Holtz-Eakin told the Times above: it forces the government’s hand.

But just as conservatives often lecture liberals on the unintended consequences of economic policy, they should take as a warning signal the unintended consequences of state balanced budget amendments. In New Jersey, for example–though this practice is not confined to the Garden State–the state government has to work with debt limitations and balanced budget requirements, and simply utilized accounting tricks that are becoming increasingly popular to get around them. As the Mercatus Center points out:

While the New Jersey Constitution’s debt limitation clause restricts borrowing by requiring voter approval, the New Jersey Supreme Court has permitted broad exceptions to this rule, allowing the state to issue debt through independent authorities and to use debt to balance the state’s operating budget.

In at least 33 states, independent authority debt has become more common in recent years as a source of financing capital projects, emerging as a “particularly blatant evasion” of debt limitation clauses contained in state constitutions.

That doesn’t preclude the possibility that a balanced budget amendment can be designed to be airtight–but that brings up another obstacle. An airtight balanced budget requirement could enable the growth of entitlements and other popular spending by telling the government that they absolutely must raise taxes to meet budget demands. Such an outcome would be the worst of both worlds.

But that brings us to the other way to balance the budget: the old-fashioned way, by simply spending responsibly. The challenge here is twofold: first, it does not have the enforcement mechanism the amendment would (hopefully) have. And second, the Senate is controlled by the Democrats and President Obama still has no plans to dramatically cut spending. Entitlement reform is necessary, but it’s also easy to demagogue. As President Obama has made all too clear, if the Republicans want to reform entitlements, they have to control Congress and the White House; they won’t have any help from Democrats who are always thinking about the next election.

It is not, as the media and Democrats love to pretend, ideological extremism or Randian heartlessness to want the government to spend within its means and keep a balanced budget. But conservatives are going to have to win the public’s support for entitlement reform to get there. The debate over the balanced budget may prove to be a detour, not a shortcut.

Read Less

Denier Label a Way to Avoid Debt Debate

The administration and its media allies are ramping up the pressure on Republicans determined not to vote for another hike in the debt ceiling without a meaningful agreement from the White House about entitlement reform and cutting spending. The president is refusing even to talk to the GOP about any deal in order to gain their assent for expanding the government’s ability to keep running up the debt and trying to paint them as insensitive misers who want sick children to suffer. In response, some conservatives have argued that the apocalyptic talk about the impact of a failure to reach an agreement about the debt ceiling is absurd hyperbole since what would follow would not be a default in any real sense. But now some of his allies in the media are going one step further by branding those who have said such an eventuality can be managed without the government failing to meet its obligations as “debt deniers.”

The term denier is a loaded one in contemporary political discourse. In common usage these days, deniers aren’t merely people who say something that others believe is not true. They are troglodyte reactionary haters who don’t accept the scientific community orthodoxy about global warming or, even worse, claim the Holocaust never happened or that 9/11 was an U.S. government or Israeli plot. Yet “Default Deniers” is the headline Politico placed on an article devoted to examining the views of people Like Pennsylvania Senator Pat Toomey or Utah Representative Jason Chaffetz. Conservatives were allowed to defend their thesis about the consequences of not raising the debt limit in the article even though the thrust of the piece was aimed at portraying Toomey, Chaffetz and those who agree with them as extremists determined to ruin the country for the sake of their ideology. But the use of this sort of language about their views is about an effort to avoid discussion about the merits of the arguments on this issue and to cast aspersions about the motives of those who oppose the president’s desire for a blank check to keep spending.

Read More

The administration and its media allies are ramping up the pressure on Republicans determined not to vote for another hike in the debt ceiling without a meaningful agreement from the White House about entitlement reform and cutting spending. The president is refusing even to talk to the GOP about any deal in order to gain their assent for expanding the government’s ability to keep running up the debt and trying to paint them as insensitive misers who want sick children to suffer. In response, some conservatives have argued that the apocalyptic talk about the impact of a failure to reach an agreement about the debt ceiling is absurd hyperbole since what would follow would not be a default in any real sense. But now some of his allies in the media are going one step further by branding those who have said such an eventuality can be managed without the government failing to meet its obligations as “debt deniers.”

The term denier is a loaded one in contemporary political discourse. In common usage these days, deniers aren’t merely people who say something that others believe is not true. They are troglodyte reactionary haters who don’t accept the scientific community orthodoxy about global warming or, even worse, claim the Holocaust never happened or that 9/11 was an U.S. government or Israeli plot. Yet “Default Deniers” is the headline Politico placed on an article devoted to examining the views of people Like Pennsylvania Senator Pat Toomey or Utah Representative Jason Chaffetz. Conservatives were allowed to defend their thesis about the consequences of not raising the debt limit in the article even though the thrust of the piece was aimed at portraying Toomey, Chaffetz and those who agree with them as extremists determined to ruin the country for the sake of their ideology. But the use of this sort of language about their views is about an effort to avoid discussion about the merits of the arguments on this issue and to cast aspersions about the motives of those who oppose the president’s desire for a blank check to keep spending.

The views of those who see a halt to the routine raising of the debt ceiling are debatable. Their strongest argument is that even if it were not raised, the government would still have plenty of money to pay many off its bills but would have to prioritize which of its obligations would be satisfied first. That would mean debt payments and Social Security checks could still go out. Proposed legislation that would set those priorities would ensure that there would be no default even after the ceiling was reached.

However, critics are right to note that such a path would still upset the markets and the uncertainty might trigger a number of unforeseen circumstances that could adversely impact the economy. As even Toomey concedes, forcing the government to operate without an increased debt limit isn’t desirable. That’s why many conservatives worry that playing the debt ceiling card is a political error that can only hurt the GOP and help President Obama without doing the country much good.

Yet the attempt to brand those Republicans as extremists or to use the “denier” label on them is merely one more effort to avoid having a debate about government spending. Contrary to the president’s assertion that raising the ceiling is just a matter of Congress paying its bills, this is about an effort to end Washington’s practice of unchecked spending. Though it is politically perilous, it is the only method in sight to call the president to account for refusing to negotiate real spending cuts.

Rather than come down off his high horse and deal with the country’s chronic spending problems, the president has sought to demonize the other side in this discussion. But if you call your opponents deniers or even terrorists, as many liberals have labeled conservatives who want to stop the spending orgy do, you don’t have to talk with them or even discuss the issue. While the outcome of a default is uncertain and possibly dangerous, refusing to talk about the issue is a formula for fiscal catastrophe in the long run.

Read Less

An Administration That Won’t Face Reality

President Obama isn’t likely to have much trouble getting the Senate to confirm Jack Lew as his new treasury secretary. Though Senator Jeff Sessions has vowed to try and stop Lew, there is nothing in the nominee’s long record of service to Democratic presidents that would disqualify him for the office. Given the fight that is brewing over the nominations of Chuck Hagel and John Brennan for the Department of Defense and the CIA, there is little appetite on the Hill for any further effort to deny the president his choice to run an important department.

But even though Lew will probably be easily confirmed, his nomination is one more signal that there may be no way to avoid more bitter and counter-productive confrontations with Congress over the budget. Lew is well known to be a hard-core progressive who, during the negotiations with Republicans over the debt ceiling and the fiscal cliff, made it clear that he opposes any true reform of entitlement spending. Having run to the left and won re-election, President Obama is entitled to try and govern from the left. Lew’s selection illustrates that this is his intention. But though he may have a mandate to govern, that doesn’t give him the power to alter reality. If he isn’t prepared to start thinking about cutting spending, then no amount of rhetorical excess will prevent this country from going further down the road to insolvency.

Read More

President Obama isn’t likely to have much trouble getting the Senate to confirm Jack Lew as his new treasury secretary. Though Senator Jeff Sessions has vowed to try and stop Lew, there is nothing in the nominee’s long record of service to Democratic presidents that would disqualify him for the office. Given the fight that is brewing over the nominations of Chuck Hagel and John Brennan for the Department of Defense and the CIA, there is little appetite on the Hill for any further effort to deny the president his choice to run an important department.

But even though Lew will probably be easily confirmed, his nomination is one more signal that there may be no way to avoid more bitter and counter-productive confrontations with Congress over the budget. Lew is well known to be a hard-core progressive who, during the negotiations with Republicans over the debt ceiling and the fiscal cliff, made it clear that he opposes any true reform of entitlement spending. Having run to the left and won re-election, President Obama is entitled to try and govern from the left. Lew’s selection illustrates that this is his intention. But though he may have a mandate to govern, that doesn’t give him the power to alter reality. If he isn’t prepared to start thinking about cutting spending, then no amount of rhetorical excess will prevent this country from going further down the road to insolvency.

Lew’s hard-line liberalism is exactly what qualifies him to sit in Obama’s new cabinet of yes-men. That he has the trust of the president after serving him faithfully as White House chief of staff is to his credit, but that doesn’t change the fact that an administration economic team that is dedicated to defending the status quo is exactly what the country doesn’t need as we sink further into a period of fiscal crisis.

Mr. Obama seems to think that he can avoid the usual second term blues that afflict most presidents by creating a team with a hard ideological edge that won’t lose focus or lack the energy to fight for the things he believes. That’s an interesting working theory for how to be the first president to avoid a miserable second term since Theodore Roosevelt. But he and Jack Lew seem to think that he can alter the basic laws of economics the way King Canute sought to alter the laws of nature at the seashore.

By replacing Tim Geithner—a man who for all of his flaws had a grasp of what was good or bad for the nation’s economy—with a left-wing ideologue, Obama is telling us that he thinks his second term will be one in which his political beliefs can contradict the basic fact that the United States cannot tax its way out of its spending problem. While the liberal press continues to portray the president’s conservative opponents as extremists, it is clearer than ever that the real radicals are in the White House and now at the Treasury.

Read Less

Obama’s Crisis Demagoguery

There may be a last-minute compromise reached today in the negotiations over the fiscal cliff, but not if President Obama has anything to say about it. Even as Vice President Joe Biden and Senate Minority Leader Mitch McConnell were believed to have led the effort to have the structure of a deal in place for the two houses of Congress to vote on later today, the president emerged to make a statement that seemed geared to scuttling the negotiations.

In a campaign-style event, the president spoke of a possible accord between the two parties that would avert the immediate effects of the fiscal cliff being reached. But the bulk of his remarks were devoted to goading the Republicans into backing away from any deal. Not only did he gratuitously insult the GOP about their stands on the budget to the great amusement of the hand-picked audience of supporters, he also made it clear that the tax increases in any compromise would just be the start of what he hoped to accomplish. Even worse, he implied that spending cuts, especially the entitlement reform that is necessary for any long-term solution to the nation’s problems, are not really on the table as far as he is concerned.

Given the tone of his comments and the timing, Republicans should be forgiven for suspecting that his real purpose was to send the country over the cliff in the belief that only the GOP would be blamed for the disaster.

Read More

There may be a last-minute compromise reached today in the negotiations over the fiscal cliff, but not if President Obama has anything to say about it. Even as Vice President Joe Biden and Senate Minority Leader Mitch McConnell were believed to have led the effort to have the structure of a deal in place for the two houses of Congress to vote on later today, the president emerged to make a statement that seemed geared to scuttling the negotiations.

In a campaign-style event, the president spoke of a possible accord between the two parties that would avert the immediate effects of the fiscal cliff being reached. But the bulk of his remarks were devoted to goading the Republicans into backing away from any deal. Not only did he gratuitously insult the GOP about their stands on the budget to the great amusement of the hand-picked audience of supporters, he also made it clear that the tax increases in any compromise would just be the start of what he hoped to accomplish. Even worse, he implied that spending cuts, especially the entitlement reform that is necessary for any long-term solution to the nation’s problems, are not really on the table as far as he is concerned.

Given the tone of his comments and the timing, Republicans should be forgiven for suspecting that his real purpose was to send the country over the cliff in the belief that only the GOP would be blamed for the disaster.

The president obviously thinks the very last moment before a fiscal catastrophe that would raise taxes on all Americans and impose devastating cuts in defense is a good time to mock the idea of spending cuts and to threaten further taxes. The only possible motivation for this is to convince suspicious Republicans that any give in their position will not be met even part of the way by the Democrats. In other words, if even now the president is unprepared to contemplate entitlement reform, then it is difficult to make the argument that they should do the responsible thing and compromise.

Through last year’s debt ceiling crisis as well as the fiscal cliff talks, the president has always behaved as if he thought he had nothing to lose by engaging in class warfare demagoguery. Since going over the cliff means raising more taxes and feeding the government beast that he seems uninterested in restraining as well as cutting defense spending, why shouldn’t he try to incite the GOP to refuse to agree to a deal?

But for him to behave in this manner on the very eve of the crisis while leaders of both parties are struggling to construct a makeshift measure that will get the nation past midnight is telling.

This is not just the confident manner of a re-elected president, but the contempt of a man who believes he doesn’t have to listen to anyone but himself. This may presage future fights over taxes in which he thinks he will continue to have the whip hand over the GOP. But the law of unintended consequences may eventually catch up with him. Though his soak-the-rich rhetoric resonates with many Americans, they also understand that entitlement reform is in the best interests of the nation and that raising taxes on millionaires won’t balance the budget. Few outside the hard left really believe, as Obama seemed to say today, that America only has a tax problem, not a spending problem.

If in the coming months and years these irresponsible tactics catch up with the president, we may look back on his behavior today and see it as the turning point in the debate. The Greeks had a word for the kind of behavior President Obama demonstrated today: hubris. His second term may well be blighted by it.

Read Less

Democrats Can’t Avoid Fiscal Cliff Blame

For the past few days, the focus of coverage of the budget negotiations has been on the House Republicans who torpedoed Speaker John Boehner’s Plan B proposal. The hardliners determined to fight any tax increases, including those on millionaires, have helped create a situation where the deadline may well expire before Congress and the president can agree on a deal that will avoid an across-the-board tax increase as well as devastating spending cuts. Though their argument that the country’s problem is about spending, not taxes, is right, allowing the country to go over the fiscal cliff is irresponsible and will cost the GOP dearly in terms of public support. But now that the House has failed to advance Boehner’s compromise measure, it is up to the Senate to act and that means the media needs to turn its attention from the intransigence of a minority of House Republicans to the equally unproductive behavior of the majority of Democrats in the upper house.

For all of the country’s justified concern about the inability of the Republicans to make a deal, the fact remains that the Democratic-controlled Senate is even more of an obstacle to an accord. For Majority Leader Harry Reid and his party to act to avoid the fiscal cliff, he will have to do something that he has failed to do in the last three years: pass a budget plan of any kind. The Democrats have sat back and enjoyed the brickbats thrown at the GOP for their dysfunctional behavior, but have done nothing themselves to make a deal other than to play the role of cheerleaders for the White House’s class warfare rhetoric. With only days left for action to avoid the automatic enactment of measures that could potentially devastate an already weak economy, it’s time to for Reid and his caucus to put forward a bill that could actually pass. If not, their reliance on public opinion only blaming Republicans for the impending debacle may ultimately wind up a colossal misjudgment.

Read More

For the past few days, the focus of coverage of the budget negotiations has been on the House Republicans who torpedoed Speaker John Boehner’s Plan B proposal. The hardliners determined to fight any tax increases, including those on millionaires, have helped create a situation where the deadline may well expire before Congress and the president can agree on a deal that will avoid an across-the-board tax increase as well as devastating spending cuts. Though their argument that the country’s problem is about spending, not taxes, is right, allowing the country to go over the fiscal cliff is irresponsible and will cost the GOP dearly in terms of public support. But now that the House has failed to advance Boehner’s compromise measure, it is up to the Senate to act and that means the media needs to turn its attention from the intransigence of a minority of House Republicans to the equally unproductive behavior of the majority of Democrats in the upper house.

For all of the country’s justified concern about the inability of the Republicans to make a deal, the fact remains that the Democratic-controlled Senate is even more of an obstacle to an accord. For Majority Leader Harry Reid and his party to act to avoid the fiscal cliff, he will have to do something that he has failed to do in the last three years: pass a budget plan of any kind. The Democrats have sat back and enjoyed the brickbats thrown at the GOP for their dysfunctional behavior, but have done nothing themselves to make a deal other than to play the role of cheerleaders for the White House’s class warfare rhetoric. With only days left for action to avoid the automatic enactment of measures that could potentially devastate an already weak economy, it’s time to for Reid and his caucus to put forward a bill that could actually pass. If not, their reliance on public opinion only blaming Republicans for the impending debacle may ultimately wind up a colossal misjudgment.

Wyoming Senator John Barrasso isn’t the only Republican who thinks that the Democrats, and in particular President Obama, are quite eager for the nation to go over the fiscal cliff. As he said yesterday on Fox News Sunday, doing so would accomplish two things that Democrats have longed to do: create a massive tax increase and cut defense, all the while letting Republicans take the blame. That was the president’s strategy last year during the debt ceiling negotiations during which he hoped to duplicate President Clinton’s success in shifting the culpability for the 1995 government shutdown to Newt Gingrich and his House majority. But the collapse of Boehner’s stratagem actually puts the onus on the Senate and the Democrats in a way it has not been throughout this crisis.

With no one paying much attention to the family squabble among House Republicans, the time has finally arrived when the Senate and its Democratic leaders are bound to start getting more coverage. If Reid does not pass something this week and pass on to the House a bill that will at least give the nation a short respite from the consequences of the fiscal cliff, then it will be impossible for anyone to pretend that what will follow is only a GOP problem. If so, then perhaps we are arriving at the moment when the assumptions about the budget standoff could turn out to be unfounded.

Their grandstanding about taxing rich people has allowed Democrats to avoid any real discussion about reform of the entitlements that are sinking the country. Neither the White House nor the Senate has put forward a coherent plan or a proposal worth voting on that addresses this issue, without which any talk of a long-term solution to the problem is impossible.

Republicans may have hit bottom last week when they sandbagged Boehner and effectively undermined any chance that he could force a more favorable compromise out of Obama. But Democrats are foolish to believe that no blame will ever attach to them just because the GOP has failed. Public cynicism about Congress and the political system is, at its heart, a bipartisan consensus about the governing class, not just anger about Tea Party intransigence. Unless Reid and the Senate Democrats do something this week to put the ball back into the House’s court, they, too, will shoulder plenty of the responsibility for what follows.

Read Less

The Difference Between a Concession and a Confession

One of the arguments some intelligent conservatives are making is that if Republicans agree to increase rates on the top earners in America, it will do irreparable damage to the GOP. The basic case goes like this:

If Obama succeeds and ends up getting a confession from Republicans that tax cuts are the problem, tax cuts are the cause, what happens to the next Republican who campaigns on tax cuts? Not going to have a prayer.

Now it may well be that raising tax rates will do significant damage to the Republican Party. It may be substantively unwise. And I’m certainly sympathetic to Republicans not wanting to play a role in something they think is bad policy.

But here’s where I think this analysis is wrong.

Read More

One of the arguments some intelligent conservatives are making is that if Republicans agree to increase rates on the top earners in America, it will do irreparable damage to the GOP. The basic case goes like this:

If Obama succeeds and ends up getting a confession from Republicans that tax cuts are the problem, tax cuts are the cause, what happens to the next Republican who campaigns on tax cuts? Not going to have a prayer.

Now it may well be that raising tax rates will do significant damage to the Republican Party. It may be substantively unwise. And I’m certainly sympathetic to Republicans not wanting to play a role in something they think is bad policy.

But here’s where I think this analysis is wrong.

If Republicans agreed to raise the rates on the top income earners in America, it would not be a “confession” that tax cuts are the problem. It would be a concession–one done in order to (a) keep something worse from happening (e.g., higher taxes on everyone, not just the top 2 percent of income earners; and/or the economic damage caused by going over the fiscal cliff) or (b) extracting something better in return (for example, entitlement reforms).

Whether the concession is worthwhile depends on the details of a deal. But conservatives should bear in mind that even a politician as principled as Ronald Reagan agreed to tax increases as part of broader deals. Indeed, Reagan agreed to what at the time was the largest tax increase in American history (the TEFRA tax).

It’s true that Reagan came to regret that decision. But the reason is that he never got the spending cuts he asked for in exchange for the tax increase he reluctantly agreed to. If he had, Reagan would have defended his decision on the grounds that the tax increases, which as a general matter he strongly opposed, were worth what he was able to get in return (spending cuts). And even though Reagan had agreed to tax increases in 1982, he and his party were still able to champion tax cuts in 1984. 

My guess is at the end of the day, Speaker Boehner will (wisely) not agree to raise the top rates, given how obstinate and unreasonable President Obama has shown himself to be. But even if Boehner does agree to an increase in the top rates, it will be a concession, not a confession.

Ronald Reagan agreed to tax increases and in the process didn’t ruin the GOP brand, and neither would John Boehner. 

Read Less

Thoughts on the Anti-Tax Pledge

With negotiations over how to avoid going over the “fiscal cliff” intensifying, there’s a lot of attention on Grover Norquist and his “Taxpayer Protection Pledge,” in which lawmakers who sign it pledge to taxpayers that they will (a) oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses; and (b) oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.

On the pledge, I have several thoughts.

1. Mr. Norquist has basically been a force for good, since he raises the price of tax increases and allows Republicans to get more in return for them. That said, I have never liked the idea of politicians signing pledges beyond their oath to support and defend the Constitution. It locks a person into a position that may seem reasonable at the time but eventually becomes unwise. I support lower tax rates, but they are not a talisman. And whether or not one should agree to higher taxes depends on what one is able to get in return.

Read More

With negotiations over how to avoid going over the “fiscal cliff” intensifying, there’s a lot of attention on Grover Norquist and his “Taxpayer Protection Pledge,” in which lawmakers who sign it pledge to taxpayers that they will (a) oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses; and (b) oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.

On the pledge, I have several thoughts.

1. Mr. Norquist has basically been a force for good, since he raises the price of tax increases and allows Republicans to get more in return for them. That said, I have never liked the idea of politicians signing pledges beyond their oath to support and defend the Constitution. It locks a person into a position that may seem reasonable at the time but eventually becomes unwise. I support lower tax rates, but they are not a talisman. And whether or not one should agree to higher taxes depends on what one is able to get in return.

What taxes are we talking about? How much are the increases? For how long? And in exchange for what? Genuine spending cuts and/or structural reforms in entitlement programs? Those things may not be achievable; but to say in advance that taxes should never, under any scenario, be increased is to elevate a prudential judgment to a sacred principle. And that is the kind of dogmatism that is antithetical to genuine conservatism.

2. I’m sympathetic to the qualities we should look for in a representative and which Edmund Burke referred to in his speech to the electors of Bristol: “his unbiased opinion, his mature judgment, his enlightened conscience.” In addition, in a letter to Samuel Span in 1778, Burke—in taking up the issue of a union between Britain and Ireland—made this observation: “It is a settled rule with me, to make the most of my actual situation; and not to refuse to do a proper thing, because there is something else more proper, which I am not able to do.” What Burke is arguing for, I think, is a certain independence of judgment and prudence in politicians. 

It seems to me that pledges run somewhat counter to both. Politicians should offer their vision and agenda and ask for the public’s trust to carry those things out in a reasonable, if imperfect, way. If they fail, voters have a recourse, which is called an election.

3. What about Members of the House and Senate who signed a pledge not to raise taxes but have now changed their mind? That isn’t an easy judgment to make, since violating a pledge is a serious matter. But if one believes doing so really advances the common good, then he needs to be straightforward with the public and admit to having been mistaken in signing the pledge in the first place, rather than engage in contortions in an effort to justify his decision. And then it is up to the public to decide what the consequences ought to be.

My own view is that one should take public officials in the totality of their acts and that reneging on an unwise commitment isn’t by itself disqualifying. For example, if Ronald Reagan had signed the “Taxpayer Protection Pledge” (he didn’t) and raised taxes during his presidency (he did), I don’t believe it would have warranted a primary challenge. And whatever one thinks of Reagan’s decisions to raise taxes—and he regretted some more than others—he remains a monumental conservative figure.

I happen to believe that in our present circumstances, tangible steps toward structurally reforming entitlements are a higher priority than not increasing revenues. I wouldn’t be inclined to do the latter without getting firm guarantees on the former; and even then, it would be less than ideal. But we ought to make the most of our actual situation and not refuse to do a proper thing, because there is something else more proper, which we are not able to do. 

Read Less

Confident Obama Counting on GOP Panic

There’s no doubt that a president who has just been re-elected has a lot more leverage in a negotiation than the House Republican leadership. But if President Obama is feeling confident that he can have his way in any deal that prevents the country from heading over the fiscal cliff, it’s not just because of his victory over Mitt Romney earlier this month. The spectacle of House Republicans starting to snipe at each other and tax activist Grover Norquist is evidence that the campaign to pressure Congress into backing tax increases being orchestrated by the White House appears to be working.

While the pushback against Norquist’s heavy-handed attempts to bludgeon Republicans into obedience is understandable, both the anti-tax purists and those more amenable to compromise are playing right into Obama’s hands. Rather than the debate centering on whether tax increases will hurt the economy and the need for Democrats to put entitlement spending on the table in any deal to prevent the country from heading over the fiscal cliff, right now the debate seems to center on a growing civil war within GOP ranks. Rather than sticking with House Speaker Boehner and strengthening his hand in negotiations, many Republicans are allowing themselves to be panicked into a stand that would effectively allow the president’s plans for tax increases to go forward without any commitments about reforming the tax code or entitlement spending. If the trend continues and a critical mass of Boehner’s caucus breaks, the result will not just be a tactical defeat on a point where Obama may have the country’s support, but a rout that will enable the president to avoid any commitment to significant spending cuts.

Read More

There’s no doubt that a president who has just been re-elected has a lot more leverage in a negotiation than the House Republican leadership. But if President Obama is feeling confident that he can have his way in any deal that prevents the country from heading over the fiscal cliff, it’s not just because of his victory over Mitt Romney earlier this month. The spectacle of House Republicans starting to snipe at each other and tax activist Grover Norquist is evidence that the campaign to pressure Congress into backing tax increases being orchestrated by the White House appears to be working.

While the pushback against Norquist’s heavy-handed attempts to bludgeon Republicans into obedience is understandable, both the anti-tax purists and those more amenable to compromise are playing right into Obama’s hands. Rather than the debate centering on whether tax increases will hurt the economy and the need for Democrats to put entitlement spending on the table in any deal to prevent the country from heading over the fiscal cliff, right now the debate seems to center on a growing civil war within GOP ranks. Rather than sticking with House Speaker Boehner and strengthening his hand in negotiations, many Republicans are allowing themselves to be panicked into a stand that would effectively allow the president’s plans for tax increases to go forward without any commitments about reforming the tax code or entitlement spending. If the trend continues and a critical mass of Boehner’s caucus breaks, the result will not just be a tactical defeat on a point where Obama may have the country’s support, but a rout that will enable the president to avoid any commitment to significant spending cuts.

The president was happy to mention the fact that Oklahoma Republican Tom Cole publicly called yesterday for a quick deal with the White House that would allow some taxes to go up while getting nothing about tax reform or entitlements. Cole isn’t alone; many other Republicans are reading poll numbers that show most Americans support measures that would soak the rich, and think that they are better off ditching their principles than standing firm and getting blamed for the failure to get an agreement.

The danger of Republicans getting the lion’s share of the blame for the country heading over the fiscal cliff is real. It may be that such a view is based on a skewed view of the standoff in which the president’s intransigence and ideological fervor for tax hikes is ignored while Tea Partiers are spoken of as extremists. The president seems eager for just such a debacle since he believes it would hurt his opponents and give him even more support in the next round of budget talks.

But what is starting to look like a rush to the lifeboats by many in the GOP caucus is not only counter-productive; it isn’t necessary.

The rush to a quick agreement would get the GOP off the hook for the crisis. But if they fold quickly rather than allowing Boehner to get them the best deal possible, they will regret it. A bargain may eventually have to be accepted that would allow increased federal revenues. But it is sheer cowardice on the part of Republicans to concede defeat before Democrats have even had to put a rudimentary offer on a more rational tax code or entitlement cuts on the table.

Democrats are right to note that elections have consequences, but that doesn’t mean Republicans need to simply give up. The GOP majority won re-election by pledging to stop the growth of the government and tax increases. That doesn’t mean that they must go to their graves vowing fealty to Norquist’s pledges if a reasonable alternative can be reached that would achieve their long-range goal of changing the system. But to quit the fight now just because some are feeling the pressure being exerted by the mainstream media and the Democrats would doom any hopes for reform over the next two years.

There is no guarantee that if they do stand their ground Obama will listen to reason and compromise on his demands. But if the panic spreads, then House Republicans might as well not even show up in January since the Democrats will have already beaten back their attempt to address the problems they were sent to Washington to fix.

Read Less

Democrats Divided on Averting Fiscal Cliff

As President Obama reaches out to progressive activists to get their temperature on budget compromises, Politico reports that the Democratic Party may have an even more difficult time unifying their members around a deal than the GOP:

Yet getting a deal that raises tax rates for the wealthy may not be so easy for the party, and not just because of inevitable GOP resistance.

Senate Majority Leader Harry Reid (D-Nev.) will have to find 60 votes to extend just the middle-income tax rates — far from a given when a swath of the Senate’s moderate Democrats are up for reelection in 2014.

Reid and the White House will also need to navigate a hardening Democratic divide on entitlements. Progressives don’t want any deep cuts that Republicans will insist on for a deal. But a Third Way poll of 800 Obama voters set for release Tuesday found that efforts to fix Medicare and Social Security enjoy broader support than liberals suggest. 

Even if Speaker John Boehner (R-Ohio) were to risk his job by backing a tax-rate increase, there are Democrats who think a $250,000 income threshold is too low. So finding 218 House members to pass a bill that would extend the lower tax brackets isn’t exactly a cakewalk. Want Boehner to raise taxes? Republicans privately say the entitlement changes would have to be unimaginably sweeping.

Read More

As President Obama reaches out to progressive activists to get their temperature on budget compromises, Politico reports that the Democratic Party may have an even more difficult time unifying their members around a deal than the GOP:

Yet getting a deal that raises tax rates for the wealthy may not be so easy for the party, and not just because of inevitable GOP resistance.

Senate Majority Leader Harry Reid (D-Nev.) will have to find 60 votes to extend just the middle-income tax rates — far from a given when a swath of the Senate’s moderate Democrats are up for reelection in 2014.

Reid and the White House will also need to navigate a hardening Democratic divide on entitlements. Progressives don’t want any deep cuts that Republicans will insist on for a deal. But a Third Way poll of 800 Obama voters set for release Tuesday found that efforts to fix Medicare and Social Security enjoy broader support than liberals suggest. 

Even if Speaker John Boehner (R-Ohio) were to risk his job by backing a tax-rate increase, there are Democrats who think a $250,000 income threshold is too low. So finding 218 House members to pass a bill that would extend the lower tax brackets isn’t exactly a cakewalk. Want Boehner to raise taxes? Republicans privately say the entitlement changes would have to be unimaginably sweeping.

This may be the best position liberal Democrats will be in for a long time. Not only do they believe they have a tax-raising mandate from the presidential election, they also know that Republicans have a decent chance to take back the Senate in 2014. That could make the more strident among them less willing to compromise. And some liberals, like Paul Krugman, argue that Democrats may have more leverage if they just go over the fiscal cliff, allowing tax rates to rise across the board. On this, they risk overreaching, like they did on health care. As Politico notes, public support for reforming entitlements is higher than liberal Democrats acknowledge, putting Senate Democrats up for reelection (many of them in swing states or Republican-leaning states) at odds with liberal Democrats in the House.

Read Less

The Party of Status Quo

The Washington Post editorial board argues that Joe Biden’s comments on Social Security the other day were far more disturbing than his “chains” gaffe:

On the same trip to southern Virginia, Mr. Biden wandered into the Coffee Break Cafe in Stuart. According to the White House pool report, when a diner there said, “I’m glad you all are not talking about doing anything with Social Security,” Mr. Biden responded: “Hey, by the way, let’s talk about Social Security. Number one, I guarantee you, flat guarantee you, there will be no changes in Social Security. I flat guarantee you.”

Why is this so depressing? Because, as Mr. Biden knows, Social Security is going broke. If “no changes” are made, then by 2033 the program will not be able to pay benefits as promised.

The Post pressed the White House on whether Biden’s comments reflected official policy, and were given the brush-off:

In response to our inquiry, White House officials said that Mr. Biden’s “flat guarantee” was not meant to convey a change in administration position, which they said is best understood from Mr. Obama’s 2011 State of the Union address, which called for “a bipartisan solution to strengthen Social Security for future generations.”

That speech was hardly a profile in courage: Mr. Obama opposed “slashing” benefits for future retirees. But that presumably (if tacitly) left room for trimming benefits. The president went further in failed negotiations with House Speaker John Boehner last summer, putting on the table changes in the way Social Security cost-of-living adjustments are calculated.

Read More

The Washington Post editorial board argues that Joe Biden’s comments on Social Security the other day were far more disturbing than his “chains” gaffe:

On the same trip to southern Virginia, Mr. Biden wandered into the Coffee Break Cafe in Stuart. According to the White House pool report, when a diner there said, “I’m glad you all are not talking about doing anything with Social Security,” Mr. Biden responded: “Hey, by the way, let’s talk about Social Security. Number one, I guarantee you, flat guarantee you, there will be no changes in Social Security. I flat guarantee you.”

Why is this so depressing? Because, as Mr. Biden knows, Social Security is going broke. If “no changes” are made, then by 2033 the program will not be able to pay benefits as promised.

The Post pressed the White House on whether Biden’s comments reflected official policy, and were given the brush-off:

In response to our inquiry, White House officials said that Mr. Biden’s “flat guarantee” was not meant to convey a change in administration position, which they said is best understood from Mr. Obama’s 2011 State of the Union address, which called for “a bipartisan solution to strengthen Social Security for future generations.”

That speech was hardly a profile in courage: Mr. Obama opposed “slashing” benefits for future retirees. But that presumably (if tacitly) left room for trimming benefits. The president went further in failed negotiations with House Speaker John Boehner last summer, putting on the table changes in the way Social Security cost-of-living adjustments are calculated.

Why won’t the White House get into specifics? For the same reason Senate Democrats have declined to take up a budget plan, and President Obama has declined to offer a proposal to keep Medicare solvent and reduce the deficit. Because of the political risk involved. It’s much easier to attack the Republican plans than to offer new solutions. The Obama campaign prefers to propagate the myth that Republicans are callously trying to target the poor and the elderly with their plans, rather than acknowledge that reform is hard — and that any solution will require tradeoffs.

The Obama campaign also wants to have it both ways; attacking Romney and Ryan for their “radical” proposals, while simultaneously mocking the idea that Ryan’s reforms are bold or courageous.

Of course the Ryan plan took courage. If it didn’t, Obama would have proposed his own detailed response a long time ago. Instead, during the White House press briefing today, Jay Carney refused to specify when, if ever, the president would give more details on his plan to keep Medicare afloat.

When the media wonders why Romney’s VP choice hasn’t resulted in an elevated debate, the answer is clear. The country can’t begin the serious conversation that Obama claims he wants until he puts more details on the table.

Read Less

Party of Reform and the Kick-the-Can Party

The New York Times editorial that Jonathan referenced this morning is really quite an amazing document, a window into the utter policy bankruptcy of modern-day liberalism. It’s a classic example of the somebody-somewhere argument. Any change in entitlements or federal government largesse to states and cities, this argument holds, will mean that somebody somewhere will be hurt by the change and that therefore everything must stay the same, even though the world has not stayed the same.

To give just one example, the Times writes, “Mr. Ryan plans to take away their new sewage treatment plant, the asphalt for their streets, and the replacements for retiring police officers and firefighters.” Why any of that is a federal responsibility I know not, but anyway, do we need as many, say, firemen as we have had in the past? The number of house fires has fallen by half during the last 35 years, thanks to better building codes, smoke alarms, the decline of smoking, etc. Firemen these days spend much of their time responding not to fires but to accidents and medical emergencies to which the police and EMS also respond. That’s make-work. Firemen are heroes, for sure, but fire departments are not WPA projects. They exist to fight fires, not employ firemen. Budgetary discipline forces governments to look for ways to do the job at lower cost. Is there any fat in government? Is there any water in the Pacific Ocean?  The federal government has 47 different job-training programs run by 9 different agencies. But the New York Times and the choir to which it preaches want none of it changed.

Read More

The New York Times editorial that Jonathan referenced this morning is really quite an amazing document, a window into the utter policy bankruptcy of modern-day liberalism. It’s a classic example of the somebody-somewhere argument. Any change in entitlements or federal government largesse to states and cities, this argument holds, will mean that somebody somewhere will be hurt by the change and that therefore everything must stay the same, even though the world has not stayed the same.

To give just one example, the Times writes, “Mr. Ryan plans to take away their new sewage treatment plant, the asphalt for their streets, and the replacements for retiring police officers and firefighters.” Why any of that is a federal responsibility I know not, but anyway, do we need as many, say, firemen as we have had in the past? The number of house fires has fallen by half during the last 35 years, thanks to better building codes, smoke alarms, the decline of smoking, etc. Firemen these days spend much of their time responding not to fires but to accidents and medical emergencies to which the police and EMS also respond. That’s make-work. Firemen are heroes, for sure, but fire departments are not WPA projects. They exist to fight fires, not employ firemen. Budgetary discipline forces governments to look for ways to do the job at lower cost. Is there any fat in government? Is there any water in the Pacific Ocean?  The federal government has 47 different job-training programs run by 9 different agencies. But the New York Times and the choir to which it preaches want none of it changed.

The blind defense of the status quo that so characterizes the left these days (and, indeed, has since Lyndon Johnson left the White House more than 40 years ago) has led us to the edge of a fiscal crisis of almost unimaginable proportions. Our main entitlement programs, Medicaid, Medicare, and Social Security, are all operating in deficit, and those deficits will only get worse as the baby boomers retire and live substantially longer than their parents did, requiring more Medicare and more Social Security. The national debt is higher than it has been, relative to GDP, since the end of World War II. We have already lost our AAA credit rating and there are ever-mounting deficits as far as the eye can see under Obama’s proposed budget (unanimously rejected by Congress).

The people seem to understand that we need to change our fiscal ways to avoid disaster and have rewarded those who have advocated it and brought it about (see the 2010 congressional elections, the Scott Walker recall election, the popularity of Mitch Daniels in Indiana, Chris Christie in deep-blue New Jersey, etc.).

Paul Ryan has produced a plan to change our fiscal course. It balances cuts in federal spending with reforms that will mitigate the pain of these reforms. It take spending only back to what it was in 2008, not 1928, as the Times essentially argues. Mitt Romney chose the author of the plan and the leading Republican voice for budgetary matters as his running mate. Thus the Republican Party is now, inescapably, the party of budgetary and entitlement reform. It will win or lose on that issue November 6.

What is the liberal plan to address the impending crisis? Well, there isn’t one. When George Bush put forth a plan to reform Social Security in 2005, the Democratic alternative consisted, in its entirety, of the word “No!” They managed to block it. Social Security was still running surpluses in 2005. It is not now.

The liberal alternative to the Ryan reform plan, to the extent that there is one, is to demagogue all reform proposals, kick the can down the road and hope, like Dickens’s classic deficit financier, Wilkins Micawber, that something will turn up.

It won’t, and the sooner we begin what will be, to be sure, a painful process, the less painful it will be. Perhaps it’s wishful thinking on my part, but I think the people are way ahead of the chattering classes on this.

Read Less

The Ryan Test: Demagoguery Versus Ideas

As John wrote earlier today, liberals are convinced that Mitt Romney’s choice of Paul Ryan to be his running mate offers them a golden opportunity to savage the Republicans about the Wisconsin congressman’s budget plans. Predictably, the New York Times delivered one of the first such salvos in its editorial posted hours after Romney announced his pick in which it slammed Ryan as “callous” and claimed his attempt to control the nation’s out-of-control entitlements would leave the poor and the elderly sicker while also harming the unemployed and students. Not considering it advisable to even make a pretense of noting the GOP veep candidate’s strengths, the Times thought it advisable to go for the jugular first and worry about nuance later. We can expect the rest of the liberal mainstream media to do no less in the days and weeks that will follow.

However, it must be noted that the expectation by liberals that they can get away with such blatant demagoguery is not entirely without foundation. The pick of Ryan should energize the Republican base and will lend intellectual heft to a Romney campaign that has often seemed intent on merely waiting for the voters to fire Barack Obama rather than putting forward its own vision. But we know that “Mediscare” tactics employed by the Democrats have worked sometimes. And, as Times political blogger and statistical analyst Nate Silver pointed out on Wednesday, Ryan brings no obvious or immediate tactical political advantages to the Republicans. If Romney’s choice does anything it is to provide a test for the electorate. Are they prepared to listen to reasoned arguments articulated by Ryan about the need for entitlement reform, or will they succumb to simplistic liberal cant about pushing grandma over the cliff? As much as conservatives want to believe the American public is not so foolish or shortsighted as to simply accept the left’s defense of the status quo, we won’t know the answer to that question until November.

Read More

As John wrote earlier today, liberals are convinced that Mitt Romney’s choice of Paul Ryan to be his running mate offers them a golden opportunity to savage the Republicans about the Wisconsin congressman’s budget plans. Predictably, the New York Times delivered one of the first such salvos in its editorial posted hours after Romney announced his pick in which it slammed Ryan as “callous” and claimed his attempt to control the nation’s out-of-control entitlements would leave the poor and the elderly sicker while also harming the unemployed and students. Not considering it advisable to even make a pretense of noting the GOP veep candidate’s strengths, the Times thought it advisable to go for the jugular first and worry about nuance later. We can expect the rest of the liberal mainstream media to do no less in the days and weeks that will follow.

However, it must be noted that the expectation by liberals that they can get away with such blatant demagoguery is not entirely without foundation. The pick of Ryan should energize the Republican base and will lend intellectual heft to a Romney campaign that has often seemed intent on merely waiting for the voters to fire Barack Obama rather than putting forward its own vision. But we know that “Mediscare” tactics employed by the Democrats have worked sometimes. And, as Times political blogger and statistical analyst Nate Silver pointed out on Wednesday, Ryan brings no obvious or immediate tactical political advantages to the Republicans. If Romney’s choice does anything it is to provide a test for the electorate. Are they prepared to listen to reasoned arguments articulated by Ryan about the need for entitlement reform, or will they succumb to simplistic liberal cant about pushing grandma over the cliff? As much as conservatives want to believe the American public is not so foolish or shortsighted as to simply accept the left’s defense of the status quo, we won’t know the answer to that question until November.

The assumption on the part of many observers that Ryan’s elevation is the result of Romney’s understanding that his campaign needed a turnaround in the same manner as many of the companies he built at Bain Capital may not be true. It may be that Romney came to the conclusion that Ryan was the best qualified candidate of all those on his short list and saw in him a kindred soul who could govern effectively with him. If so, I think he was right. Ryan is, as Romney described him, the intellectual leader of his party, and a willingness by the GOP standard-bearer to make an ideas maven his running mate speaks well for his judgment. But there should be no misunderstanding about the fact that a lot of the blind optimism about the election one heard from Republicans in recent months was unjustified. Romney did need to shake up the race and he has done so.

President Obama’s electoral liabilities are well-known. He has presided over a poor economy and his major accomplishments — the enactment of a massive stimulus spending bill and his signature health care plan — are deeply unpopular. But his historic status as the first African-American president and the darling of the liberal media gives him advantages that are just as important. Without them, he would, as a president who faces the people with a higher unemployment rate than he inherited and with negative job approval ratings, be facing an epic defeat this fall rather than possessing a slim lead in the polls.

All of which means Romney’s decision to directly challenge the president by presenting conservative ideas that provide a strong contrast to the Democrat’s grim defense of the liberal status quo is a good idea. Romney can’t win by being passive. But it must be admitted that there is no guarantee that the liberals’ bet that scare tactics will prevail over the demand for rational reform will not prevail.

If anyone can provide a positive and well thought out answer to the deluge of fear mongering we will be subjected to in the coming months it is Ryan. It should also be remembered that just two years ago, the strength of the ideas of the Tea Party helped the GOP win a landslide in the 2010 midterms. The president and his backers may believe his presence on the ticket combined with an all-out assault to demonize Romney and Ryan will overwhelm the calls for an end to the endless cycle of taxing and spending. The battle has been joined and it will be up to the American people to determine which of these strategies is the one that will triumph.

Read Less

Getting People to Ask the Magic Question

As Jonathan noted yesterday, the left doesn’t want to admit that the entitlement system built up since the New Deal is collapsing under unrelenting and ineluctable fiscal and demographic pressures. But there is another reason that the medical part of the system is in such a mess: the utter lack of market forces to bring down prices and inspire innovation and efficiency.

The New York Times has an article this morning on the wildly varying prices for standard medical procedures, such as an appendectomy:

Hospital charges are all over the map: according to the report published Monday in the Archives of Internal Medicine, fees for a routine appendectomy in California can range from $1,500 to — in one extreme case — $182,955. Researchers found wide variations in charges even among appendectomy patients treated at the same hospital.

“We expected to see variations of two or three times the amount, but this is ridiculous,” said Dr. Renee Y. Hsia, the study’s lead author and an assistant professor of emergency medicine at the University of California, San Francisco. “There’s no rhyme or reason for how patients are charged or how hospitals come up with charges. There’s no other industry where you get charged 100 times the same amount, or 121 times, for the same product,” she said. Though she is an emergency room doctor herself, Dr. Hsia said, she has no idea what the hospital charges for various procedures. When patients ask her, she has to tell them she doesn’t know.

Read More

As Jonathan noted yesterday, the left doesn’t want to admit that the entitlement system built up since the New Deal is collapsing under unrelenting and ineluctable fiscal and demographic pressures. But there is another reason that the medical part of the system is in such a mess: the utter lack of market forces to bring down prices and inspire innovation and efficiency.

The New York Times has an article this morning on the wildly varying prices for standard medical procedures, such as an appendectomy:

Hospital charges are all over the map: according to the report published Monday in the Archives of Internal Medicine, fees for a routine appendectomy in California can range from $1,500 to — in one extreme case — $182,955. Researchers found wide variations in charges even among appendectomy patients treated at the same hospital.

“We expected to see variations of two or three times the amount, but this is ridiculous,” said Dr. Renee Y. Hsia, the study’s lead author and an assistant professor of emergency medicine at the University of California, San Francisco. “There’s no rhyme or reason for how patients are charged or how hospitals come up with charges. There’s no other industry where you get charged 100 times the same amount, or 121 times, for the same product,” she said. Though she is an emergency room doctor herself, Dr. Hsia said, she has no idea what the hospital charges for various procedures. When patients ask her, she has to tell them she doesn’t know.

The reason this is possible, of course, is that hardly anyone pays directly for medical care, especially emergency care. You go to the doctor or emergency room and do what you’re told and someone—insurance, the government, etc.—pays the bill. Because they don’t care what the answer is, no one ever asks the magic question: “How much is this going to cost?”

To be sure, someone arriving at the hospital with the acute abdominal pain of appendicitis is in a poor position to bargain, even if he has to care what the treatment is going to cost. But there are ways to bring price rationality to medicine even if the highly competitive pressures that force, say, all laptop computers to hover around the same price points, can never be fully in operation. There is a website, healthcarebluebook.com, that bills itself as “Your free guide to fair health care pricing.” It lists the “fair price” for various medical procedures by zip code. For the 85 percent of medicine that is non-emergency, this allows “customers” to get a sense of what the market would be if there were one.

It would be easy to get people to always ask the magic question for routine health care. It’s called the medical savings account, where people draw against a sum of money in an account to cover routine doctor visits and such. What they don’t spend in a year goes, tax-free, into their retirement account. “Do I really need this test, doctor?” would suddenly be heard in every medical office. The left has always fiercely resisted this idea, precisely because it would bring market forces to bear and bring down costs, reducing pressure to develop a single-payer system.

For the big-ticket items, such as an appendectomy, requiring doctors and hospitals to publish a schedule of prices for routine procedures without complications (which occur far more rarely in real life than they do in medical shows on television) would be a big step in the right direction. Suddenly they would have to justify their prices as reporters would ask why hospital X is charging three times as much as hospital Y, three miles away, for the same procedure. Those prices would begin to converge, and towards the lower end of the range. That, in turn, would force hospitals and other medical providers to search for ways to cut costs through increased efficiency and innovation.

There are trillions of dollars in excess costs in the medical system today that could be squeezed out by the simple application of market forces through the frequent use of the magic question. Democrats don’t want that question asked. Republicans should insist on it.

 

Read Less

Dems Still in Denial on Entitlements Doom

The political class may lack the will to deal with impending doom of the two largest entitlements in the federal budget, but that doesn’t mean that the clock isn’t ticking until the moment when both Medicare and Social Security will run out of money. The annual reports of the trustees of these two federal programs were released this afternoon, and the verdict is just a bit darker than last year’s report. According to the figures, the Social Security trust fund will be exhausted in 2033, three full years earlier than last year’s estimate. The news about Medicare was no worse than 12 months ago but was already bad enough. It will collapse in 2024.

These alarming pieces of news ought to be greeted with dismay and resolve to deal with the entitlements problem that is leading the country to insolvency. But one end of the political spectrum believes things are just fine:

Representative Nancy Pelosi of California, the Democratic leader, said that “Despite the repeated efforts of Republicans to privatize Social Security and end the Medicare guarantee, these vital initiatives remain strong.” She argued that the trustees’ report “demonstrates that health care reform has strengthened Medicare by extending its solvency.”

This complacence would be shocking if it were not rooted in a basic tenet of liberal ideology. Despite the nonsense she uttered about the strength of the programs, Pelosi and other liberals understand that no government program no matter how financially ruinous will ever truly run out of money so long as the government retains the power to confiscate as much of the income of the public as the federal leviathan needs. The essential difference between the parties about how to deal with this problem is not so much about the existence of the problem but whether the solution should be found in the pockets of the taxpayers.

Read More

The political class may lack the will to deal with impending doom of the two largest entitlements in the federal budget, but that doesn’t mean that the clock isn’t ticking until the moment when both Medicare and Social Security will run out of money. The annual reports of the trustees of these two federal programs were released this afternoon, and the verdict is just a bit darker than last year’s report. According to the figures, the Social Security trust fund will be exhausted in 2033, three full years earlier than last year’s estimate. The news about Medicare was no worse than 12 months ago but was already bad enough. It will collapse in 2024.

These alarming pieces of news ought to be greeted with dismay and resolve to deal with the entitlements problem that is leading the country to insolvency. But one end of the political spectrum believes things are just fine:

Representative Nancy Pelosi of California, the Democratic leader, said that “Despite the repeated efforts of Republicans to privatize Social Security and end the Medicare guarantee, these vital initiatives remain strong.” She argued that the trustees’ report “demonstrates that health care reform has strengthened Medicare by extending its solvency.”

This complacence would be shocking if it were not rooted in a basic tenet of liberal ideology. Despite the nonsense she uttered about the strength of the programs, Pelosi and other liberals understand that no government program no matter how financially ruinous will ever truly run out of money so long as the government retains the power to confiscate as much of the income of the public as the federal leviathan needs. The essential difference between the parties about how to deal with this problem is not so much about the existence of the problem but whether the solution should be found in the pockets of the taxpayers.

Less extreme was the response of Treasury Secretary Timothy Geithner, who acknowledged the danger but reassured himself — and the Democratic base — that the funds are adequate “for years to come.” But that’s just a polite way of saying that the government won’t go bust on his watch, even if it is inevitable that it will implode on someone else’s.

But the more pessimistic assessment of Social Security’s prospects is directly related to the poor record of the administration on the economy because:

The trustees cited slower growth in average earnings of workers, lower earnings from interest on the trust fund’s holdings of federal debt, and the persistence of unemployment during the slow recovery from the recent recession.

Nevertheless, Geithner threw down a challenge to Republicans intent on fundamental reform of the system by saying the administration would oppose any effort to institute changes that would “destroy” the system or save “tax cuts for the wealthy.” But this sort of class warfare sloganeering is a thin façade for a policy of doing nothing to stop the exponential growth of expenditures in order to stir fear among the elderly and play to the liberal base.

Contrary to Pelosi’s policy of denial and Geithner’s determination to kick the can down the road, the trustees’ reports make reform plans like those of Rep. Paul Ryan even more important. Rather than being an issue with which the Democrats can demagogue the GOP, the latest reports about Social Security and Medicare can serve to build a broader constituency for a common sense approach that will discard liberal cant and address the fundamental problem. Though the Democrats believe the voters are too fearful or too stupid to understand the facts, their attempts to obfuscate the clear responsibility of Washington to deal with this crisis may run aground on the sea of red ink that is too large for even the trustees of these funds to ignore.

Read Less