Congress


Kicking the Can on Solving the Debt Crisis

I have a new column up at Kaiser Health News about the president's failure to seriously address the debt crisis in the newly-released 2012 budget proposal:

It's like the president and his team woke up after the November 2010 mid-term election with a bad case of political amnesia. What deficit? What debt commission?

This isn't what the president promised when he ran in 2008, nor is it what he told voters as recently as one year ago. Over and over, he has promised not to "kick the can" down the road, as he says his predecessors did before him. Instead, he would provide real leadership to tackle the looming threat posed by out-of-control borrowing and debt accumulation. That was supposedly the reason for appointing the Bowles-Simpson National Commission On Fiscal Responsibility and Reform in the first place, to lay the predicate for engaging in a bipartisan effort to narrow medium and long-term budget deficits and reduce the risk of a debt-induced crisis.

But now, all of that kind of thinking is out the window. If the president won't show leadership on the budget, there's zero chance congressional Democrats will. Some moderate Democrats in the Senate may make some noise about going farther than the president. But when push comes to shove, the rank and file Democrats in both chambers are far more likely to take a pass, too. Why would they take on large political risks when the president of their own party won't and is likely to pull the rug out from under them if they do?

So, realistically, the Obama "punt," as House Budget Committee Chairman Rep. Paul Ryan, R-Wis., has aptly described it, means the odds of a serious deficit reduction effort before the next presidential election are now low and falling.

Read the full column here.

posted by James C. Capretta | 1:12 pm
Tags: federal budget, fiscal commission, Congress
File As: Health Care

Fixing Medicare

Five Steps to Reform

Simply repealing Obamacare won’t solve all the nation’s health care woes, which is of course why the rallying cry has been “repeal and replace.” One of the most difficult problems facing policymakers is how to fix Medicare, which has become a crushingly expensive entitlement.

Fortunately, there are some good ideas for reforming Medicare, as explained in a short paper that I recently wrote with Robert Moffit of the Heritage Foundation:

In the 21st century, a renewed Medicare should be firmly based on patient choice and market competition. Such reform could be achieved through the creation of a new system of “premium support,” where the government makes a direct and generous contribution to the health plan of an enrollee’s choice, and health plans and providers compete directly for beneficiaries’ health care dollars. Premium support would give future Medicare patients control over the flow of Medicare dollars and decisions, guarantee personal choice of health plans, and let them secure the best value for the money. This is the kind of consumer choice model that federal workers and retirees in the Federal Employees Health Benefits Program (FEHBP) enjoy. It is a popular and successful approach because it emphasizes personal choice among plans, and government oversight ensures consumer protection and transparency.

The full paper is available in HTML here, or as a PDF here.

posted by James C. Capretta | 2:30 pm
Tags: Congress, Medicare, health savings accounts
File As: Health Care

More Advice for the New Congress

I will have several posts here today and tomorrow to catch up on a raft of things I’ve recently written in print and online. For starters, in the latest issue of National Affairs, I offer advice to the new Congress on a broad range of questions. A couple of brief examples:

Republicans will have to show voters that it is the need to revive the economy — not a blind desire to slash spending — that underlies their agenda. Fostering growth requires, for instance, smart regulation that keeps the marketplace fair and open without suffocating the private sector; a tax code that minimizes burdens on productive work; a commitment to free trade and open global markets; and a sound monetary policy that assures predictability and long-term stability (rather than short-term remedies that only perpetuate debilitating cycles of boom and bust). Above all, fostering growth requires a government that lives within its means.

Republicans must also be honest with voters about what this will involve, and must clearly understand the limits of their own power. This time, easy budget proposals like slashing earmarks and trimming bureaucracy will only go so far. Our fiscal problems demand much broader reform — in particular, a vast simplification of America’s tax code and a fundamental restructuring of major entitlement programs. Social Security must be made to conform with demographic reality; health-care costs must be constrained by the discipline of a consumer-directed marketplace. In short, policymakers need to rebuild the most important pillars of America’s social contract....

In 1995 and ’96, the appropriations process became the most high-profile arena in which the newly elected Republican Congress — led by House Speaker Newt Gingrich — wrestled with President Bill Clinton over matters of policy. Like the incoming class of 2010, the congressional class of 1994 was determined to reverse spending trends on a host of domestic programs, particularly those long favored by Democrats (especially in the departments of Labor, Health and Human Services, and Education). The resulting budget fight — which culminated in a government shutdown of about three weeks — did not work out well for Republicans.... Republicans coming to Washington in 2011 will certainly want to avoid these mistakes. They will therefore need to develop a shrewd tactical plan for appropriations — one that avoids the traps into which the Gingrich Congress fell, allows Republicans to halt further growth in the budget, and enables them to identify and seize opportunities to make major, targeted spending cuts....

The full essay is available here.

posted by James C. Capretta | 1:53 pm
Tags: Congress, Republicans, federal budget
File As: Health Care

Advice for the New Congress

With the 112th Congress convening for the first time tomorrow, I’ve offered some advice in the New York Times Room for Debate series to the leadership of the House of Representatives on what they should focus on in the months ahead:

The lengthy lame duck session of the 111th Congress so dominated the news last month that it is easy to forget what happened in early November. In the president’s words, the mid-term election was a “shellacking,” with Republicans picking up more than 60 seats in the House and six in the Senate.

Republican candidates won because they campaigned hard on restraining government spending. That struck a chord with an electorate that has become alarmed at the rapid run-up of debt over the past two years.

Republican veterans know that spending restraint is easier said than done. In the abstract, cutting back on government always has appeal. The political problems occur when the cuts become specific to certain programs and agencies.

The Tea Party movement should help Republicans stay true to their word. Never before was there such a strong grassroots movement of voters pushing House and Senate members to carry out real cuts in government spending.

The power of this new movement was on display in the failure of the lame-duck Congress to pass the “omnibus” appropriations bill. For many voters, that bill symbolized all that is wrong with current spending practices. Senate Democrats waited until the very last minute to unveil their plan, and when they did it was business-as-usual earmarking and steady growth in government spending. The demise of the “omnibus” would seem to mark the end of an era.

Of course, Republicans will only control the House in the 112th Congress. They won’t be able to unilaterally impose their will. And when they begin to announce specific cuts, they will come under fierce attack from defenders of the status quo. It’s inevitable that some of the cuts they would like to make won’t survive that process.

That’s why Congressional Republicans would be wise to reach out to conservative and moderate Democrats right away on budget matters. After November, many of those Democrats do not want to be seen by their constituents as big spenders. Drawing them in may require some additional early compromise. But it will be worth it if Republicans are able to build a durable center-right coalition capable of withstanding the political heat that always accompanies efforts to cut the size of government.

The original post is available here.

posted by James C. Capretta | 7:41 pm
Tags: federal budget, Tea Party, Congress, Republicans
File As: Health Care

What Desperate Democrats Do

It’s been a bad stretch for the Democratic majority in Congress.

Their polling numbers have been going from bad to worse. The White House press secretary has openly speculated that House Democrats could lose their majority in November. Nasty disputes between Democratic congressional leaders and the White House staff have broken out in the press. One of the most senior House Democrats is now under an ethics-investigation cloud. And, worst of all, the public now sees the Obama agenda clearly and recognizes that it is far too liberal, government-heavy, and anti-business to be compatible with a vibrant American economy. That spells near-certain doom for many House and Senate Democrats seeking reelection and who are viewed by their constituents as accomplices in the administration’s pursuit of massive new spending, onerous taxation, and clumsy regulation.

All is apparently not lost, however — or so the optimists among them now surmise. Yes, these are desperate times; then what’s needed are desperate measures! What do Democrats do when they are cornered and desperate? Why, attack Republicans on Social Security, of course!

Never mind that Democrats have now controlled Congress for nearly four years and have controlled both the White House and Congress for half of that time. They don’t want to talk about their record, probably wisely. Their signature initiative — a massively expensive government takeover of American health care — remains highly unpopular, so much so that most Democratic candidates are now tiptoeing around the subject and almost never bringing it up themselves. Their so-called “stimulus” plan has done little to nothing to generate job growth, even as unemployment has hovered around 10 percent for months on end. And the Obama budget would run up $10 trillion in deficits through 2020 at a time when the American public has come to realize that excessive government spending and debt pose very real threats to their long-term economic security.

No, in the heavy campaign season between now and November 2, congressional Democrats don’t want to talk about what they have done with the voters’ trust since 2006. They want to shift the focus off of themselves by resorting to a tried-and-true scare tactic. If they can’t get voters to affirmatively support them for office, perhaps they can still get their votes by scaring the heck out of them about what the other guys might do.

Specifically, top Democrats, from House Speaker Nancy Pelosi on down, have apparently decided that their ace in the hole is a concerted attack on Rep. Paul Ryan’s plan to save the country from economic collapse. We are told that House Democrats plan to hold a hearing on the Social Security component of the Ryan blueprint sometime this fall, and the expectation is that Democrats will also make it the focus of a coordinated campaign ad attack as the election approaches.

Though not surprising, the shameless irresponsibility of these planned attacks is still something to behold. Rome burns, and those who are the notional stewards of the nation’s finances continue to play the same political games they have always played – indeed, the very games that have brought us to the precipice in the first place.

Every credible economist views runaway federal entitlement spending as the most serious threat to the nation’s long-term prosperity. The Congressional Budget Office (CBO) recently reported that spending on Social Security, Medicare, Medicaid, and Obamacare’s new entitlement commitments will rise from 10.3 percent of GDP in 2010 to 15.9 percent in 2035, a jump of 5.6 percent of GDP — and that assumes that the unrealistic Medicare cuts in Obamacare continue in perpetuity. A more realistic projection shows spending on these programs rising to 17.1 percent of GDP in 25 years. Beyond 2035, the situation will only get worse.

For the record, the Ryan Roadmap is a comprehensive plan to actually fix the problem — permanently. It would rework the federal government’s main retirement and health programs and tax laws to ensure spending commitments can actually be met now and in the future without pushing tax rates or debt to catastrophic levels. Moreover, the reforms reward work, promote economic growth, and empower consumers and markets. Among its many provisions, in the Social Security section, the Ryan plan would very gradually phase in voluntary personal accounts for workers under the age of 55. No one currently in the program or about to retire would have their benefits changed based on the introduction of the accounts, which in any event would be very small for the foreseeable future. Once instituted, the personal accounts would be entirely voluntary. Enrollees would still get a defined benefit from Social Security, but they would also get an annuity from an investment that they own and that is no longer subject to the unpredictable whims of political control. The balances in the accounts would grow at least at the rate of inflation. Workers would be offered more control over their own money, making it easier to also implement the modifications needed to keep program spending in line with revenue.

Where is the Obama-Pelosi plan to head off fiscal disaster? It doesn’t exist, of course. Obamacare did nothing to solve the problem of rising health-entitlement costs. In fact, it made the problem much worse by bringing tens of millions of people into new, open-ended entitlement programs. And there is no plan to keep Social Security solvent, even though the program is already running cash deficits.

The only Democratic “plan” — such as it is — is the appointment by the president of the so-called “debt commission.” But this is a transparent political ploy in its own right. It is aimed first at providing cover for Democrats between now and November. To every question from a reporter on runaway spending and the hemorrhaging of debt that has occurred under President Obama, the Democrats can simply say they are waiting for the commission to make its recommendations — conveniently scheduled by the president for December 1. Moreover, the Democrats are hoping to use the commission to maneuver Republicans into giving them cover for massive tax hikes to temporarily paper over the explosive costs of the Obama welfare state.

Republicans would be fools to go along with this game. Sooner or later, the fight must be joined, and it almost certainly will in 2012, in any event. Voters need to see as clearly as possible the choice that is before them. We can either stay on the road we are on, with crushing taxes and wholesale middle-class dependency on government. Or we can return to a uniquely American formulation, one which protects the vulnerable but also relies on individual responsibility and initiative. Congressman Ryan has done everyone a favor by laying down a blueprint for responsible American self-government that can produce wealth and prosperity in this century just as it did in the last. With the choices clear, Republicans have nothing to fear from this fight.

[Cross-posted at The Corner]

posted by James C. Capretta | 10:38 am
Tags: Paul Ryan, CBO, Congress, federal spending