Commentary Magazine


Topic: Medicare

Paul Ryan’s Extraordinary Budget

Today Paul Ryan, chairman of the House Budget Committee, released his budget. (For the full budget, see here; and for a summary, see Ryan’s Wall Street Journal op-ed here). About this remarkable document, I want to say two things.

The first is that Ryan’s budget does what Americans generally, and the pundit class in particular, says politicians don’t do. It tackles head on the issue of entitlements. It offers a real path to re-limiting government (over the next 10 years it cuts more than $5 trillion dollars from President Obama’s budget). It makes the “hard choices” that elected officials often avoid.

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A Model for Medicare Reform

House Budget Committee Chairman Paul Ryan held a hearing today with Richard Foster, the chief actuary for the Centers for Medicare and Medicaid Services. During the hearing, this important exchange took place:

CHAIRMAN RYAN: As you may know, I’ve been working across the aisle with a member of the Oregon delegation from the Senate on a premium support plan that uses competitive bidding to help determine the contribution. Competitive bidding we’ve seen has worked well in Medicare Part D and Medicare Advantage. I’d like to get your thoughts on choice and competition as it relates to these previous successful reform plans. Given what we’ve seen in these aspects of Medicare, do you believe that competitive bidding is a process that can be successfully applied Medicare-wide?

CMS CHIEF ACTUARY FOSTER: Yes, I think it can. Obviously, it would represent a large change from the status quo, but I think it could work. We’ve seen the signs of this – you mentioned the Part D prescription drug program, for example, where the different drug plans compete against each other on the quality of their benefit package and the premium level. And we’ve seen – every year since Part D started – a migration of beneficiaries to more efficient plans with lower premiums. So that can help. We’ve also seen for durable medical equipment that competitive bidding, in this particular area of Fee-For-Service Medicare, reduced prices that we had to pay by 40 percent.

RYAN: By forty percent?

FOSTER: Forty percent, that’s right.

RYAN: Those are the kinds of cost savings we’re going to have to achieve if want to make good on the promise of the Medicare guarantee.

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The Establishment, Compromise and Conservatives

Among conservatives today, there’s a phrase that has become an all-purpose term of derision: “the establishment.” The purpose of the charge is to call into question the bona fides of self-proclaimed conservatives and Republicans. The choice is supposed to be between “true” conservatives and “establishment” ones.

I wonder, though, how many conservatives who rail against the establishment these days realize they are appropriating language from the 1960s, when the New Left attacked the authority structures in society and presented themselves as “anti-establishment.” Back in those days, it was conservatism which saw its role to protect society from the radical tendencies of those on the left and defend the beneficial social effects of an establishment. Yet today, even so quintessential an establishment figure as Newt Gingrich explains opposition to his candidacy chiefly in terms of opposition by the “Washington establishment” rising up to block “bold change.”

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Did Obama Win the Battle and the War Against Entitlement Reform?

In late January, I noted that Senate Democrats were furious with a member of their own party, Ron Wyden, for attempting to negotiate bipartisan Medicare reform with Paul Ryan. The Democrats expressed frustration that Wyden was taking an election issue off the table for them, by getting Ryan to agree to leave traditional Medicare as an option in future reforms and by putting a bipartisan stamp on what could be a controversial plan.

The Democrats thought they had Ryan beat–but they didn’t want him to retreat just yet. An article in The Hill today buttresses the Democrats’ interpretation of the dustup over Ryan’s “roadmap,” though the issue may have spooked Ryan’s fellow Republicans more than Ryan himself:

Ryan, chairman of the House Budget Committee, was bloodied in the first round after his proposal to revamp Medicare became a campaign poster for Democrats.

Obama, who skirted major proposals to reform Medicare and Social Security in his own budget last year, invited Ryan to a speech and then ripped him from the stage, saying the proposal would “end Medicare as we know it.”

Ryan’s plan soon became a campaign theme that Democrats credited with handing them a special election victory in upstate New York.

One year later, Ryan is showing he can adjust after taking a punch, which would be a good thing, as the president is going to present his fiscal 2013 budget next Monday.

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Did Romney Eliminate Kosher Nursing Home Food as Governor?

During the weekend, the New York Post reported that Mitt Romney vetoed a bill to help fund kosher food at Massachusetts nursing homes in 2003. Newt Gingrich, who happens to be courting Jewish and elderly voters in Florida, immediately jumped on the story – and got it very, very wrong in the process:

“[Romney] eliminated serving kosher food for elderly Jewish residents under Medicare,” Gingrich said. “I did not know this, it just came out yesterday. The more we dig in, I understand why George Soros in Europe yesterday said it makes no difference if it’s Romney or Obama, we can live with either one.”

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Democrats Irate at Problem-Solving Wyden

The last time a high-profile Democrat worked toward a bipartisan compromise on an important issue, instead of joining his party in using that issue as an opportunistic campaign ploy, he was run out of the party and had to register as an independent. It was Joe Lieberman’s principled support for the troops in the face of a party-wide Democratic flip-flop on the issue that earned him the title of “the last honest man.”

Now Democrats are witnessing a rerun of the episode on Medicare. Democratic leaders are furious at Oregon Senator Ron Wyden for working with Paul Ryan on a bipartisan Medicare fix–angry enough to go on-the-record with Politico about it. Their argument is they had planned to run more ads where they dress up as Paul Ryan and push a wheelchair-bound retiree off a cliff. Thanks to Wyden, however, their violent costumed fantasies may have to be taken off the table–or at least off-camera:

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ObamaCare Continues to Unravel

According to the AP, two of the central promises of President Barack Obama’s health-care overhaul law are unlikely to be fulfilled, Medicare’s independent economic expert told Congress today.

The landmark legislation probably won’t hold costs down, and it won’t let everybody keep their current health insurance if they like it, Chief Actuary Richard Foster told the House Budget Committee. (Foster’s office is responsible for independent long-range cost estimates.)

Mr. Foster was asked by Republican Tom McClintock for a simple true or false response on two of the main assertions made by supporters of the law: that it will bring down unsustainable medical costs and it will let people keep their current health insurance if they like it.

On the costs issue, “I would say false, more so than true,” Foster responded. As for people getting to keep their coverage, “not true in all cases.”

Foster also sided with those who argue that moving toward a defined contribution model is much more likely to keep health-care costs down than the kind of centralized, top-down price controls that are in ObamaCare.

Finally, in an exchange with Representative John Campbell of California, Foster blew up the claim that the Patient Protection and Affordable Care Act’s Medicare provisions could both reduce the deficit and extend the solvency of Medicare, as President Obama has claimed. Mr. Foster pointed out the obvious: this isn’t possible unless you double-count the savings.

“Is it legitimate to say,” Campbell asked, “that you can add a dozen years to the solvency of Medicare or that you can reduce the deficit, but it is not correct to say both simultaneously?”

“Both will happen as a result of the same one set of savings, under Medicare,” Foster said. “But it takes two sets of money to make it happen. It happens directly for the budget deficit, from the Medicare savings, and then when we need the money to extend the Hospital Insurance Trust Fund, we have a promissory note — it’s an IOU, not a worthless IOU, but it is an IOU — and Treasury has to pay that money back. But they have to get it from somewhere. That’s the missing link.”

Unraveling the false claims of ObamaCare continues apace.

After the Happy Talk: A $1.5 Trillion Deficit

According to a new report by the Congressional Budget Office (CBO), the federal budget deficit is on course to reach nearly $1.5 trillion this year, the biggest budget gap in history and one of the largest as a share of the economy since World War II. This year’s deficit would be the highest on record and would equal about 9.8 percent of the economy, the CBO said, slightly smaller than the 2009 budget gap, which at $1.4 trillion amounted to nearly 10 percent of the gross domestic product. The CBO forecast is on track to remain well above $1 trillion in 2012, the fourth year in a row. As a result, “debt held by the public will probably jump from 40 percent of GDP at the end of fiscal year 2008 to nearly 70 percent at the end of fiscal year 2011.”

These numbers are alarming. And today’s report highlights just how irresponsible President Obama is by not seriously addressing our exploding debt, which means addressing our entitlement crisis, which means (above all) reforming Medicare.

Long after last night’s State of the Union happy talk is forgotten, these fiscal realities will still be with us. The president has a moral obligation to confront this problem rather than deny it, to deal with the world as it is rather than as he wishes it to be.

A Moment for Political Courage

According to media accounts, in his State of the Union address, President Obama is going to avoid dealing with our entitlement crisis. The question is: will Republicans?

That is setting up to be the key debate of the next several months.

There is one line of argument, articulated by Ramesh Ponnuru, that insists that for House Republicans to take on entitlement reform would be noble but politically suicidal. The reasoning is that (a) for the next two years, reform is impossible unless and until President Obama takes the lead on it; (b) Republicans have no mandate for reform even if they wanted to; and (c) every time they have tried to reform entitlements in the past (George W. Bush on Social Security and Newt Gingrich on Medicare), they have paid a high political price.

The more responsible approach would be to champion cuts in discretionary spending and continue to insist on the repeal of ObamaCare. That would be entirely enough, this argument goes; to do more will require a Republican president willing to educate the nation on the entitlement crisis and to do something about it.

The counterargument is that we are in a new and different moment when it comes to entitlement reform. Due to the financial crisis of 2008 and the spending habits of President Obama and the 111th Congress, what was a serious problem has become an acute one. In the past, the deficit and debt were manageable; now, every serious person who has studied this matter concedes, the situation is unsustainable. The public understands this in one way or another; and if they’re not yet ready to take on entitlement reforms, they are certainly educable in a way that has never been the case before. Read More

Taking Responsibility for Inherited Problems, and Other GOP Dilemmas

According to Senator Jim DeMint, even if a balanced-budget amendment were attached to a vote to raise the debt limit, he’d vote against it — and he encourages freshmen Republicans not to vote for raising the debt limit either. His argument is that since he/they didn’t create the debt problem to begin with, they shouldn’t be the people who vote to raise the ceiling. DeMint goes on to say that it’s important for the GOP to show its “strong commitment to cut spending and debt.”

I think it makes great sense to use the vote on the debt ceiling to try to extract some substantial cuts in federal spending. But what Senator DeMint is arguing for is something else. He believes that Republicans should oppose raising the debt limit regardless of the concessions they might win.

It is quite extraordinary, really. Senator DeMint is essentially urging Republicans to cast a vote that would lead to a federal default. This would have catastrophic economic consequences, since the United States depends on other nations buying our debt. Now, I understand that if you’re in the minority party in Congress, you can vote against raising the debt ceiling, as that vote won’t influence the eventually outcome. But Republicans now control one branch of Congress by a wide margin, so GOP votes are necessary to raise the debt ceiling. Symbolic votes are not an option. What Senator DeMint is counseling, then, is terribly unwise. And if the GOP were to be perceived as causing a default by the federal government, it would be extremely politically injurious.

In terms of DeMint’s argument that since he and incoming Republicans aren’t responsible for our fiscal problem they have no obligation to increase the debt-ceiling limit, it’s worth pointing out that all incoming lawmakers inherit problems not of their own making. Freshmen Members of Congress aren’t responsible for the entitlement crisis or the war in Afghanistan; Governor Chris Christie is not responsible for the pension agreements and unfunded liabilities that have created a financial nightmare in his state. No matter; they still have the duty to deal with these problems in a responsible way. Read More

Morning Commentary

It looks like President Obama has finally found some backbone in his diplomatic spat with Hugo Chavez. The Venezuelan president rejected the U.S.’s choice for ambassador to Caracas and dared Obama to cut diplomatic ties with the country. Today Obama responded by kicking the Venezuelan ambassador out of the U.S.

Americans are still displaying a lack of confidence in both political parties, according to a new poll released by CNN/Opinion Research Corporation. While pundits from all parts of the political spectrum have lauded President Obama’s successes during the lame-duck session of Congress, a plurality of Americans remains skeptical about the president’s ability to push his policies, according to the survey. And even though a majority of the public agrees that GOP control of the House will benefit the country, that optimism isn’t necessarily due to increased trust in the Republican Party. Only a quarter believe that the Republicans will do a better job running Congress than the Democrats.

The U.S. State Department has come out strongly against the Palestinian Authority’s newest effort to push through a UN Security Council resolution condemning Israeli settlement construction, suggesting that the Palestinians may be alienating the best friend they’ve had in the White House for years. However, State Department officials still haven’t commented specifically on whether the U.S. would veto the resolution.

The Huffington Post reported recently that the number of uninsured Americans has soared to “over 50 million.” But is that really the case? At the Weekly Standard, Jeffrey H. Anderson notes that the numbers come from a recent report published by the Census Bureau, which even the bureau has admitted was largely inaccurate: “The Census report also admits within its own pages that recognition of its inaccuracy led to ‘a research project to evaluate why CPS ASEC estimates of the number of people with Medicaid are lower than counts of the number of people enrolled in the program from CMS’ — in other words, to evaluate why the CPS ASEC lists millions of Americans as being uninsured while the Centers for Medicare and Medicaid Services (CMS), which runs Medicaid and keeps the official tally of enrollees, says that these people are on Medicaid.”

Islamists are apparently still having trouble getting over that Danish Mohammed cartoon from six years ago. Five terror suspects were arrested in Denmark and Sweden yesterday for plotting to attack the Jyllands-Posten newspaper headquarters, which published the cartoon in 2005.

With the rest of the world unwilling to combat the growing problem of Somali pirates, the transitional federal government of Somalia has finally taken the problem into its own hands by creating a paramilitary force to fight piracy. Sources say that the militia is being funded by donors in Muslim countries, including the United Arab Emirates.

Ron Radosh joins the growing ranks of writers criticizing New Yorker editor David Remnick’s hostile rant against Israel last week. Radosh also highlights the insidious anti-Israel sentiment among today’s liberal Jewish intellectuals: “Today’s New York intellectuals are a pale imitation of their ancestors. The original group had a fidelity to the truth, and to bold assertions  they believed to be true, regardless of whom they offended. Today’s group, of which Remnick is most typical, runs to join their fellow leftist herd of no longer independent minds in Britain, assuring them of their loyalty to the influential [among] journalists and opinion makers, and if they are Jewish, making their assurance known by joining in the stampede to dissociate themselves from defense of Israel.” Jonathan Tobin discussed Remnick’s Israel problem in CONTENTIONS on Sunday.

Call It Cynicism Squared

Peter Wehner referred earlier this week to President Obama’s “cynical maneuvering” in arguing, prior to the passage of ObamaCare, that the penalty to enforce the individual mandate was not a “tax” — only to have his lawyers argue, after passage, that it was constitutional precisely because it was a “tax.”

There was another bit of cynical maneuvering regarding another ObamaCare provision, also relating to its characterization as a “tax.” Judge Hudson’s opinion in Virginia v. Sebelius sheds light on the common denominator of both maneuvers.

In ruling that the individual-mandate penalty is not a “tax,” Judge Hudson noted the “unequivocal denials by the Executive and Legislative branches that the [legislation] was a tax.” He referenced the Christmas Eve maneuver in the Senate:

Earlier versions of the bill in both the House of Representatives and the Senate used the more politically toxic term “tax” … Each of these earlier versions specifically employed the word “tax” as opposed to “penalty” for the sanction for noncompliance.

In the final version of the [bill] enacted by the Senate on December 24, 2009, the term “penalty” was substituted for “tax” … This shift in terminology during the final hours preceding an extremely close floor vote undermines the contention that the terms “penalty” and “tax” are synonymous.” [Opinion at pp. 33-34]

As I have previously noted, the day before the House vote on ObamaCare, the name of the new “Medicare Tax” on investment income was changed to a “Medicare Contribution.” But the “contribution” had nothing to do with Medicare, since none of the revenue went to the Medicare Trust Fund but instead was designated for the general fund, to be spent for non-Medicare purposes. Like the Christmas Eve maneuver, however, the change avoided the politically toxic term “tax.”

The common goal of these maneuvers was to avoid a political problem for President Obama. He had rejected, in absolute terms, on national television, the idea that the enforcement mechanism for the individual mandate was a tax; when its name was changed to a “penalty,” it was neither an inadvertent nor insignificant change. Likewise, changing the “Medicare Tax” to a “contribution” solved the problem of imposing a substantial new tax on investment income when there was already a plan to increase the tax substantially later by having the Bush tax rates expire.

The solution in both situations was to change the name so that neither the “penalty” nor the “contribution” was a “tax.” The “Medicare Contribution” label reached a new high in legislative cynicism. Is there a name for passing a “Medicare Contribution” in which both words in the name are disingenuous?

The Left’s Ornery Adolescents

Why are those Americans who are most distrustful of the U.S. government, and so eager to undermine it, the same ones who are most desperate to give it control over their own lives? Michael Moore has made a big P.R. show of his pledge to pay Julian Assange’s bail. “WikiLeaks, God bless them, will save lives as a result of their actions,” he writes, and puts the U.S. government on notice: “You simply can’t be trusted.” Moore offers advice to those of us who see something wrong with Assange. “[A]ll I ask is that you not be naive about how the government works when it decides to go after its prey.” Right. Instead, you should be naïve about how government works when it decides to take control of your health care, regulate your business, and spend your earnings. Moore, you may have forgotten, calls for the U.S. government to provide “free, universal health care for life” for “every resident of the United States” and demands that “pharmaceutical companies … be strictly regulated like a public utility.” That’s the old anti–Big Brother spirit.

When men like Michael Moore are not calling for the government to be undermined and defied, they’re petitioning for it to chauffeur them to the movies, cook their meals, and tuck them into bed. One news cycle finds HBO’s Bill Maher telling America not to allow the government to inject “a disease into your arm” in the form of a vaccine and that “I don’t trust the government, especially with my health.” The next, he’s calling for “Medicare for all” and lamenting the absence of a fully government-run health-care system that would operate like the U.S. postal service.

At the Nation, progressive totem Tom Hayden penned an article titled “WikiLeaks vs. The Empire,” defending Assange on the grounds that “the closed doors of power need to be open to public review” and noting that “the American people might revolt if we knew the secrets being kept from us.” Oh, and about that secretive and untrustworthy “Empire”? Hayden wants to put it in charge of the health care of all Americans, naturally.

This paradoxical political posturing resembles nothing so much as middle-class adolescent rebellion. Troubled kids protest their parents’ dangerous values, their authoritarianism, their materialism, and the moral hypocrisy that keeps the whole farcical delusion afloat. But most of all, they protest the piddling allowance on which no self-respecting 13-year-old old can be expected to keep himself in the latest combat-based video games, faddish clothes, and instantly gratifying gadgetry.

The troubled kids of the left distrust the extraordinary powers wielded by their leaders in the name of safety and well-being — but it’s also a real bummer that the government won’t assert more power to keep us safe and well.

Obama’s Not-So-Very-Good Week

David Brooks is not only an outstanding columnist; he’s also a friend. And so I want to register a friendly dissent with his column today.

As Rick noted, David argues that Barack Obama ran for president as a “network liberal” — defined as  one who believes progress is achieved by leaders savvy enough to build coalitions. (Brooks contrasts this with “cluster liberals/cluster conservatives,” meaning those who believe that victory is achieved through “maximum unity” and that “partisan might” should be “bluntly applied.”) But in office, Brooks writes, “Obama, like George W. Bush before him, narrowed his networks.”

That is, I think, an unfair reading of the Bush presidency.

One of the first significant legislative undertakings of President Bush, for example, was No Child Left Behind, which was the result of substantial bipartisan cooperation. President Obama has, until now, shown no such inclination to work with Republicans. In the first term, Bush also worked with Democrats on Medicare prescription drugs. Both the Afghanistan and Iraq war resolutions had substantial to overwhelming bipartisan support; so did the Patriot Act. Even on the 2001 tax cuts, Bush worked with Democrats and took into account their input. (Then House Democratic leader Richard Gephardt said a corporate tax cut was a non-starter with his caucus; he suggested instead sending out rebate checks to low- and moderate-income households. In response Bush, against his better judgment, instructed the White House staff to replace the corporate rate cut with Gephardt’s rebates. For more, see Karl Rove’s Courage and Consequence, chapter 19.)

At comparable points in their presidency, then, George W. Bush was much more of a “network conservative” than Obama has been a “network liberal.” Read More

Three Months, Three Speeches

Mike Pence’s speech yesterday to the Detroit Economic Club was his third major address on national issues in three months. Combined with his speech at Hillsdale College in September and his speech in Iowa in October, Pence has been setting forth proposals that might engage an electorate that wants something more than “hope and change.”

Yesterday Pence proposed a program he labeled “S.T.A.R.T.” — Sound monetary policy, Tax relief and reform, Access to American energy, Regulatory reform, and Trade — with a lengthy discussion of each topic. The section on taxes was a 1,500-word discussion that read in part:

In an upcoming study written by the legendary Dr. Art Laffer, Wayne Winegarden and John Childs, they found the cost of compliance with today’s tax code to be over $540 billion annually and that individuals and businesses spend 7.6 billion hours on their taxes. … The Laffer study predicts that by simplifying the tax code and cutting complexity costs in half, our economy would grow $1.3 trillion more over ten years than if we maintain the status quo. …

There is one system that [provides the necessary revenue without discouraging economic growth and imposing undue compliance burdens] … a flat tax. …

Individuals would pay taxes on their wages or salary after receiving a basic income exemption and an exemption for any dependents, including children and elderly family members and others who you care for in your home. Imagine how easy this would be for people. Gross income minus a generous standard deduction minus any dependent exemptions and you’ve got your taxable income. Apply the rate and your taxes are done.  Everyone pays the same rate, and the more money you make, the more you pay. It’s fair, simple and effective.

We’ve heard this proposal before, and figures like $540 billion of compliance costs, 7.6 billion hours on taxes, and $1.3 trillion in projected economic growth deserve the same skepticism that properly greets projections of savings from eliminating “fraud, waste, and abuse” (or from enacting ObamaCare). The estimates are only as good as the assumptions underlying them — many of which are inherently speculative and none of which can be forecast accurately for 10 years (or even a few years). But Pence made the case that the time for a flat tax may be approaching:

A flat tax is in use in more than twenty countries around the world, and they have been proposed and supported by various legislators and economists in America over the past 30 years, such as Robert Hall and Alvin Rabushka, Dick Armey, Steve Forbes, Art Laffer, Jack Kemp and Richard Gephardt. We don’t think about it, but we already use flat taxes in America as taxes for Social Security, Medicare taxes, sales and property taxes. …

If you look back at history, the Kennedy, Reagan and 2001/2003 tax reforms were all followed by strong economic growth.  The flat tax goes beyond these tax cuts and provides not just lower taxes but a greatly simplified system.

It is not clear that Pence wants to run for president; some think he plans to run for governor of Indiana (one of the other lessons of “hope and change” is that executive experience is at least as important for the presidency as the ability to give a good speech). He may simply want his ideas in the arena (a commentator who has written frequently about him describes him as fundamentally a man of ideas).

But we should know soon: the presidential race will start in roughly two months, if Barack Obama’s February 2007 presidential announcement is any indication of the lead time that now governs such a race.

Another Good Entitlement-Reform Plan

James Capretta explains why the entitlement-reform proposal put forth by Rep. Paul Ryan and former Fed vice-chairman Alice Rivlin is so important:

In Medicare, the Ryan-Rivlin proposal would be transformative. It picks up on a key feature of Rep. Ryan’s “Roadmap” budget plan, which is that new enrollees in Medicare after 2020 would receive their entitlement in the form of a fixed contribution from the federal government rather than today’s defined benefit program structure. …

For Medicaid, Ryan and Rivlin propose moving toward a fixed block grant payment from the federal government to the states. The block grant payments would be indexed to grow with the size of the Medicaid population as well as per capita GDP growth plus one percentage point. …

Beyond Medicare and Medicaid, the plan would also impose limits on noneconomic and punitive damages in medical liability cases as well as repeal the ill-advised long-term care program (called the “CLASS Act”) that was created in the recently passed health care law.

The Congressional Budget Office (CBO) has already issued a preliminary assessment of the budgetary implications of Ryan-Rivlin, and the results are impressive. Over the next decade, Ryan-Rivlin would cut federal deficit spending by $280 billion, and by 2030, federal spending on the major health entitlement programs would be about 1.75 percent of GDP below a reasonable baseline projection.

But Capretta is right that the importance of the plan is more political — the emergence of a responsible Democratic voice willing to work with the GOP’s guru on entitlements (Ryan) in a productive way. This will diffuse to a degree the alarmist rhetoric coming from the Dem side of the aisle. Moreover, it recognizes that we need to pursue “an across-the-board move toward more fixed federal financial support for coverage.”

In conversations I have had over the past week, Republicans on the Hill seem to recognize that there are important elements in both the debt commission plan and the Ryan-Rivlin plan. Neither is perfect, but parts of both represent some key concessions by the Democrats involved in formulating each. A flatter tax code, a lower corporate tax rate, and market-based entitlement reforms? Some would sign on the dotted line, warts and all. The Democrats? Well, by launching an assault on the debt commission, they risk appearing unserious about deficit control and real fiscal reform.

At the very least, the Ryan-Rivlin and debt commission plans will jump-start a key debate. If Republicans want to prove they are sober and mature lawmakers, they will start crafting proposals that extract the best from both plans.

I’m Crazy Ponzi-Man, Now Gimme That Money

In a letter to the New York Times, CPA John Carrick succinctly summarizes a governmental scheme that would send private citizens to jail if they did the same thing:

Social Security is in effect a giant Ponzi scheme. Today’s contributions are used to pay beneficiaries who contributed yesterday, and the surplus of current contributions is “lent” to the federal government and used for general spending.

The Ponzi scheme underlying the Medicare system is even more blatant. Consider the new “Medicare Contribution,” enacted as part of ObamaCare in the name of “fairness,” which extended the 3.8 percent Medicare tax to the investment income of those making more than $200,000 ($250,000 in the case of a couple). The legislation dispensed with the interim step of sending the money to the Medicare Trust Fund, to then be “lent” to the general fund and spent on non-Medicare programs. Instead, the money from the new “contribution” will go straight to the general fund; Medicare will not even get a government IOU to hold in “trust.” Privately run Ponzi schemes are generally less brazen.

Later this month, Democrats will attempt to increase the “fairness” of the most progressive income-tax system in the world (under which about half of American households pay no tax at all and the top 1 percent pay of earners pay about 40 percent of the total) by increasing taxes on the “rich” to help finance the trillion-dollar deficits Obama has made the new norm. The plan is to withdraw hundreds of billions more dollars from the private economy while assuring citizens that the economic consequences will be felt only by the targeted few. The public seems to understand that the economic effect will be somewhat broader.

It is a shame that there isn’t more money in the Social Security and Medicare trust funds to “borrow.” That is such a simpler system — and there is no pesky criminal law to prevent it, since only private Ponzi schemes are banned. But the federal government has exhausted its current Ponzi possibilities and now seems more like Adam Sandler in a tax-fairness costume.

Pence Raises His Profile

We had the Mitch Daniels flutter. Then it was the John Thune ripple (if you missed it, don’t worry — most of the country did). Now we are seeing some signs that Mike Pence is seriously considering a 2102 presidential run — and that movement conservatives are seriously looking him over. In my e-mail in-box I have word that “U.S. Congressman Mike Pence will give a major economic speech to members of the Detroit Economic Club on Monday, November 29th.”

There is this profile:

Pence identifies himself as a fiscal and social conservative and has the voting record to prove it. Elected in 2000, when compassionate conservatism was trendy, he has never been afraid to play the Grinch, voting against big-spending initiatives such as No Child Left Behind, Medicare Part D, and TARP. Pence has displayed the same kind of consistency on social issues, establishing a solidly pro-life record over the last decade.

That will likely pass muster with the Tea Party crowd. And unlike Daniels, who has already alarmed social conservatives, value voters are rather comfortable with him:

“When I travel around the country,” says Gary Bauer, president of the social-conservative organization American Values, “conservative audiences seem to feel that they would love to see someone new emerge who had the sort of Reaganesque qualities that are so effective in American politics. I can imagine easily a scenario where Mike Pence could get traction and end up emerging as the candidate.”

The conventional wisdom is that a House member can’t win the presidency. I don’t buy that — the conventional wisdom also told us that Hillary Clinton would win and that a newly elected senator with no executive or foreign policy experience couldn’t be elected. As I’ve said several times, forget the election rulebook.

In a crowded field with no clear-cut front-runner, a candidate with a solid conservative record can, if he picks his spots, “break out” of the pack. A debate, a YouTube moment, or a face-off with the president can elevate a candidate like Pence. The greatest challenge he faces, I would argue, is to differentiate himself from the other, traditional Republicans (e.g., Mitt Romney, John Thune, Mitch Daniels). Why him and not one of them?

The challenge, I would argue, for the GOP is to find a Tea Party–friendly figure who is still capable of expanding the base and capturing key independent voters. There aren’t many contenders who fit that bill — Chris Christie and Paul Ryan may be the most widely discussed among GOP activists and serious conservative wonks. But Pence, if he runs a smart race and can break through the clutter, might make it into that category. We’ll find out in the next few months how serious — and effective — he is convincing both Tea Party activists and mainstream Republicans that he can fuse the two wings of the GOP.

Flotsam and Jetsam

“Soul-searching” at the White House? Not so much. “‘There isn’t going to be a reset button. That’s not their style,’ said a Democratic strategist who works with the White House on several issues. ‘They don’t like pivots, and they also believe they’re right.’”

Nancy Pelosi is the right leader to show the country that the Dems “get it”? Not so much, according to Heath Shuler: “Shuler believes that his party didn’t get the message on Election Day when voters kicked Democrats out of majority control of the House if his caucus keeps Pelosi at the top of their leadership team. ‘I hope that with so many members that we need to go in a different direction, that we have to be able to recruit or get back those members of Congress that lost, and I just don’t see that path happening if she’s at the top of the Democrats,’ Shuler said.” He says he’ll run against Pelosi, but maybe he’s in the wrong party.

Would Russ Feingold be a formidable primary challenger to Barack Obama? Not so much, says Mara Liasson: “There’d have to be a real anti-war movement in the country for Russ Feingold to try to capture and lead. But there’s not even that.”

Have the Obami learned anything about their Middle East policy failures? Not so much. The U.S. is goading Bibi to offer a 90-day freeze (why should this freeze produce a different result than the last one?), but the PA is already grousing. “Earlier on Sunday, Chief Palestinian negotiator Saeb Erekat expressed strong reservations about the U.S. proposal, because it would only apply to the West Bank and not east Jerusalem, the Palestinians’ hoped-for capital.”

Is Obama still the media’s darling? Not so much. “The Democratic president left for Asia just three days after his party suffered big defeats in mid-term elections at the hands of voters worried over the sputtering U.S. economy and unemployment stuck near 10 percent for more than a year. The trip was intended to counteract that frustration with a stress on opening new markets for American goods and improving the jobs picture, so the timing was especially tough. ‘The coverage has been quite negative. The dominant narrative is an embattled president representing a weakened nation,’ said William Galston, a senior fellow in governance studies at the Brookings Institution in Washington. ‘All in all, not the kind of trip a president who has just suffered an electoral rebuff needs,’ he said.”

So the Obama team is going to be more transparent and connect more successfully with the American people? Not so much. “From the administration’s stance on a presidential commission’s controversial recommendations for Social Security and Medicare cuts, to Republican demands that Obama veto any bills containing earmarks, Axelrod offered few specifics on administration plans during interviews on NBC’s ‘Meet the Press’ and ‘Fox News Sunday.’” So why bother going on? It’s hard to solve the alleged “communication” problem if you don’t have anything to communicate.

Iran wants to negotiate about its nuclear program? Not so much. “They have yet to agree on venue, a length for the talks or even the subject. Iran says it is willing to talk about everything but its uranium enrichment program; the other countries – the United States, Britain, France, Russia, China and Germany – want to talk mostly about the entire nuclear program.”

The Entitlement Crisis

On Meet the Press, Sen. Jim DeMint – widely admired by conservatives and the Tea Party for his passionate advocacy for limited government – spent a good deal of time condemning earmarks. That’s a fine idea, but it would barely begin to right our fiscal imbalance. When asked about cuts in Social Security, however, DeMint was emphatic:

Well, no, we’re not talking about cuts in Social Security. If we can just cut the administrative waste, we can cut hundreds of billions of dollars a year at the federal level. So before we start cutting–I mean, we need to keep our promises to seniors, David, and cutting benefits to seniors is not on the table. …

We don’t have to cut benefits for seniors, and we don’t need to cut Medicare like, like the Democrats did in this big Obamacare bill. We can restore sanity in Washington without cutting any benefits to seniors.

DeMint has been a relentless critic of big government and has rung the alarm bell on the size of our debt and the deficit. Yet on the overwhelming fiscal threat of our time – the entitlement crisis – DeMint not only doesn’t have anything constructive to say; he actually is arguing against any cuts for Social Security and Medicare. (Bear in mind that entitlements, excluding net interest, account for 56 percent of all federal spending and 14 percent of GDP — up from 10 percent of GDP three years ago.) Read More