The Efficacy Of A Republican Hostage Strategy
Matt Yglesias offered a helpful reminder this morning about leverage.
Details on the appropriations deal are still hard to come by, but you don’t need the details to know that substantial short-term cuts in domestic discretionary spending will hurt the poor while harming macroeconomic performance. The problem with not agreeing to the deal, of course, is that a government shutdown would also hurt the poor while harming macroeconomic performance.
If you genuinely don’t care about the interests of poor people and stand to benefit electorally from weak economic growth, this gives you a very strong hand to play as a hostage taker. And John Boehner is willing to play that hand.
Right. A hostage strategy works well when the hostage taker makes it clear that killing the hostage is a perfectly viable option.
In this case, President Obama knew he was facing an unpleasant choice: accept spending cuts, which would hurt working families and undermine the economy, or allow Republicans to shut down the government, which would hurt working families and undermine the economy. As much as I really don’t like the agreement reached last night, I’m not unsympathetic to the dilemma.
But it’s worth appreciating the dynamic itself. The moment it was clear that the White House and congressional Democrats were determined to avert a shutdown, and congressional Republicans saw a shutdown as a reasonable, if not attractive, option — one that their base would celebrate — the rules of the game were already written to guarantee a discouraging result.
By some measures, Dems entered the process with the better hand. Democrats not only had the White House and the Senate majority, but polls showed the American mainstream opposed to the GOP agenda. But they also made clear that they were ready to make concessions — because they were determined to save that hostage, and Republicans didn’t much care either way.
Or as Greg Sargent put it this morning, “Republicans knew full well that the White House wouldn’t allow a government shutdown, allowing them to continue to move the spending-cut goalposts in the knowledge that Dems would follow — again ensuring that the debate unfolded on the GOP’s turf.”
The variable here would, ideally, be electoral considerations — Republicans wouldn’t kill the hostage because they’d be afraid of a voter backlash, creating a built-in incentive for the GOP to act responsibly. In theory, this gives Dems at least some leverage, too — “If you shut down the government, we’ll blame you and you’ll lose in 2012.”
So why doesn’t that work more? Probably because Republicans know that news organizations feel obligated to blame “both sides” at all times for everything, enough so that the GOP is willing to take its chances. Besides, even if they are blame, GOP officials can count on the party, the Koch Brothers, and Karl Rove to run a bunch of attack ads that will help them stay in office in anyway.
The Democrats Have A Plan For Controlling Health-Care Costs, Paul Ryan Doesn’t
There’s increasingly an understanding that the mixture of cuts and taxes in Paul Ryan’s budget aren’t quite fair, and the underlying assumptions it uses don’t quite work. But it’s left people hungry for a budget that does work, and annoyed that Democrats haven’t provided one. “If Democrats don’t like his budget ideas, they should propose their own,” writes Fareed Zakaria. “The Democrats and Obama now have to offer a response,” warned Andrew Sullivan. “As of this evening, the Democratic policy plan consists of yelling ‘You suck!’” complained Megan McArdle.
I’ve made similar comments. And I think those comments are mostly right. Democrats need to step up on taxes, on defense and non-defense discretionary, on Social Security, and on energy. But there’s one huge, glaring exception: controlling health-care costs. There, the reality is that Democrats have a plan and Ryan doesn’t. But the perception, at this point, is just the opposite.
At the heart of Ryan’s budget are policies tying the federal government’s contribution to Medicare and Medicaid to the rate of inflation — which is far, far slower than costs in the health-care sector typically grow. He achieves those caps through cost shifting. For Medicaid, the states have to figure out how to save the money, and for Medicare, seniors will now be purchasing their own insurance plans and, in their new role as consumers, have to figure out how to save the money. It won’t work, and because it won’t work, Ryan’s savings will not materialize.
Even Ryan’s fans agree you can’t hold health-care costs down to inflation. But even if you grant that Ryan’s target is too low, his vision for reforming Medicare would like miss a more reasonabke target, too. Consider the program Ryan names as a model. He said his budget converts Medicare into “the same kind of health-care program that members of Congress enjoy.” The system he’s referring to is the Federal Employee’s Health Benefits Program, and cost growth there has not only massively outpaced inflation in recent years, but actually outpaced Medicare, too. Ryan’s numbers are so fantastic that Alice Rivlin, who originally had her name on this proposal, now opposes it.
Democrats don’t just have a proposal that offers a more plausible vision of cost control than Ryan does. They have an honest-to-goodness law. The Affordable Care Act sets more achievable targets, and offers a host of more plausible ways to reach them, than anything in Ryan’s budget. “If this is a competition betweenRyan and the Affordable Care Act on realistic approaches to curbing the growth of spending,” says Robert Reischauer, who ran the Congressional Budget Office from 1989 to 1995 and now directs the Urban Institute, “the Affordable Care Act gets five points and Ryan gets zero.”
The Affordable Care Act holds Medicare’s cost growth to GDP plus one percentage point, which makes a lot more sense. It’s the target Ryan’s Medicare plan originally used, back when it was called Ryan-Rivlin. But the target is not really the important part. The important part is how you achieve the target. And the Affordable Care Act actually includes reforms and new processes for future reforms that would help Medicare — and the rest of the medical system — get to where the costs can be saved, rather than just shifted.
The Affordable Care Act’s central hope is that Medicare can lead the health-care system to pay for value, cut down on overtreatment, and cut out treatments that simply don’t work. The law develops Accountable Care Organizations, in which Medicare pays one provider to coordinate all of your care successfully, rather than paying many doctors and providers to add to your care no matter the cost or outcome, as is the current practice. It also begins experimenting with bundled payments, in which Medicare pays one lump-sum for all care related to the successful treatment of a condition rather than paying for every piece of care separately. To help these reforms succeed, and to help all doctors make more cost-effective treatment decisions, the law accelerates research on which drugs and treatments are most effective, and creates and funds the Patient-Centered Outcomes Research Institute to disseminate the data.
If those initiatives work, they head over to the Independent Payment Advisory Board (IPAB), which can implement cost-controlling reforms across Medicare without congressional approval — an effort to make continuous reform the default for Medicare, even if Congress is gridlocked or focused on other matters. And if they don’t work, then it’s up to the Center for Medicare and Medicaid Innovation, a funded body that will be continually testing payment and practice reforms, to keep searching and experimenting, and when it hits on successful ideas, handing them to the IPAB to implement throughout the system.
The law also goes after bad and wasted care: It cuts payments to hospitals with high rates of re-admission, as that tends to signal care isn’t being delivered well, or isn’t being follow up on effectively. It cuts payments to hospitals for care related to infections caught in the hospitals. It develops new plans to help Medicare base its purchasing decisions on value, and new programs to help Medicaid move patients with chronic illnesses into systems that rely on the sort of maintenance-based care that’s been shown to successfully lower costs and improve outcomes.
I could go on, but instead, I’ll just link to the Kaiser Family Foundation’s excellent primer (pdf) on everything the law does. The bottom line is this: The Affordable Care Act is actually doing the hard work of reforming the health-care system that’s needed to make cost control possible. Ryan’s budget just makes seniors pay more for their Medicare and choose their own plans — worthy ideas, you can argue, but ideas that have been tried many times before, and that have never cut costs in the way Ryan’s budget suggests they will.
That’s why, when the Congressional Budget Office looked at Ryan’s plan, they said it would make Medicare more expensive for seniors, not less. The reason the deficit goes down is because seniors are paying 70 percent of the cost of their insurance out-of-pocket rather than 30 percent. But that’s not sustainable: We’ve just taken the government’s medical-costs problem and pushed it onto families.
No one who knows health-care policy will tell you that the Affordable Care Act does everything we need to do in exactly the way we need it done. That’s why Resichauer gave it a five, not a 10. But it does a lot of what we need to do and it sets up systems to help us continue doing what’s needed in the future.
Ryan’s proposal, by contrast, does almost none of what we need to do. It appeals to people who have an ideological take on health-care reform and believe we can make Medicare cheaper by handing it over to private insurers and telling seniors to act like consumers. It’s a plan that suggests health-care costs are about insurance, as opposed to about health care. There’s precious little evidence of that, and when added to the fact that Ryan’s targets are so low that even his allies can’t defend them, the reality is that his savings are largely an illusion.
The Affordable Care Act has taken a lot of hits. It’s not popular, and though very few of the political actors confidently attacking or advocating it can explain the many things it’s doing to try and control costs, people have very strong opinions on whether it will succeed at controlling costs. But the irony of everyone demanding Democrats come up with a vision for addressing the drivers of our deficit in the years to come is that, on the central driver of costs and the central element of Ryan’s budget, Democrats actually have something better than a vision. They have a law, and for all its flaws, their law actually makes some sense. Republicans don’t have a law, and their vision, at this point, doesn’t make any sense at all.
By: Ezra Klein, The Washington Post, April 8, 2011
No More Fence Straddling: Even Moderates Should Condemn Paul Ryan’s Budget
Political moderates and on-the-fencers have had it easy up to now on budget issues. They could condemn “both sides” and insist on the need for “courage” in tackling the deficit.
Thanks to Rep. Paul Ryan’s budget and the Republicans’ maximalist stance in negotiations to avert a government shutdown, the days of straddling are over.
Ryan’s truly outrageous proposal, built on heaping sacrifice onto the poor, slashing scholarship aid to college students and bestowing benefits on the rich, ought to force middle-of-the-roaders to take sides. No one who is even remotely moderate can possibly support what Ryan has in mind.
And please, let’s dispense with the idea that Ryan is courageous in offering his design. There is nothing courageous about asking for give-backs from the least advantaged and least powerful in our society. It takes no guts to demand a lot from groups that have little to give and tend to vote against your party anyway.
And there is nothing daring about a conservative Republican delivering yet more benefits to the wealthiest people in our society, the sort who privately finance the big ad campaigns to elect conservatives to Congress.
Ryan gives the game away by including the repeal of financial reform in his “budget” plan. What does this have to do with fiscal balance? Welcome to the Wall Street Protection Act of 2011.
Oh, yes, and this budget has nothing to do with deficit reduction. Ryan would hack away at expenditures for the poor. The Center on Budget and Policy Priorities estimates he gets about two-thirds of his $4.3 trillion in actual cuts from programs for low- income Americans. Note that this $4.3 trillion almost exactly matches the $4.2 trillion he proposes in tax cuts over a decade. Welcome to the Bah Humbug Act of 2011.
But you’d expect a progressive to feel this way. What’s striking is that Ryan is pushing moderates to stand up for a government that will have enough money to perform the functions now seen as basic in the 21st century. These notably include helping those who can’t afford health insurance to get decent medical care, a goal Ryan would have the government abandon, slowly but surely.
Erskine Bowles and Alan Simpson, the co-chairs of the deficit commission and the heroes of the budget-cutting center, put out a statement saying some nice things about the idea of the Ryan budget. They called it “serious, honest, straightforward,” even though there is much about its accounting that is none of those.
But then they got to the real point, declaring themselves “concerned that it falls short of the balanced, comprehensive approach” needed for bipartisan accord because it “largely exempts defense spending from reductions and would not apply any of the savings from eliminating or reducing tax expenditures as part of tax reform to deficit reduction.”
Ryan, they argued, “relies on much larger reductions in domestic discretionary spending than does the commission proposal, while also calling for savings in some safety-net programs — cuts which would place a disproportionately adverse effect on certain disadvantaged populations.”
This is much like what I said, with an added layer of diplomacy. When even deficit hawks begin choking, however politely, on a proposal whose main motivation is ideological, you know there is an opening for a coalition between moderates and progressives on behalf of sane, decent government.
The Republican approach to shutdown talks should reinforce this possibility. Democrats have nearly given away the store to avoid a crackup, yet Republican leaders, under pressure from their right wing, have continued to ask for more and more and more. My word, even President Obama has finally gotten impatient.
However the shutdown saga ends, the negotiating styles of the two sides ought to tell moderates that they can no longer pretend that the two ends of our politics are equally “extreme.” No, conservatives are the ones who’ve been radicalized. The Ryan budget is definitive evidence of this.
It is conservatives who would transform our government from a very modestly compassionate instrument into a machine dedicated to expanding existing privileges while doing as little as possible for the marginalized and the aspiring — those who, with a little help from government, might find it a bit easier to reach for better lives.
Moderation involves a balance between government and the private sector, between risk and security, between our respect for incentives and our desire for greater fairness. The war against moderation has begun. Will moderates join the battle?
By: E. J. Dionne, Opinion Writer, The Washington Post, April 6, 2011
The Budget Battles: Republicans Maneuver Toward A Shutdown
The House Republicans on Tuesday made it clear to anyone who had missed it that they are not interested in a deal on the current federal budget. In a meeting at the White House, they rejected a deal to get through the next six months. President Obama, silent for too long on this fight, emerged from the meeting to say that he would tolerate no more ideological gamesmanship. But the Republicans, if anything, only increased their demands, and a government shutdown seemed likely to begin on Friday.
That the Republicans are not interested simply in reducing the deficit was made clear when the House Budget Committee chairman, Paul Ryan, released his budget plan for 2012 on the same day as the talks to finish the 2011 budget were falling apart. It was less a budget-balancing effort than a press release for the 2012 elections. Similarly, the party’s refusal to accept Mr. Obama’s overly generous budget offer for this year makes clear that its leaders prefer a shutdown to abandoning their ideological crusade to abolish their least favorite government programs.
If their goal was to reduce spending, they would have accepted the Democrats’ offer to cut $33 billion out of the budget for the next six months — the same amount as Republican leaders had originally requested before Tea Party members forced them to double it earlier this year. As the president noted, that offer constitutes the largest cut to domestic discretionary spending in history.
But Speaker John Boehner and his negotiating team have continually moved the end zone. They spurned the specific cuts proposed by the Democrats because they did not end the programs reviled by the Republicans, including education improvements, health care reform and infrastructure rebuilding. They now want a total of $40 billion, a target that just emerged on Tuesday.
After meeting with the Republicans, Mr. Obama suggested with some bitterness that they were still trying to score political points, demanding victories on abortion or gutting environmental regulation to keep the government open. He made it clear that that was not acceptable, and neither are demands to cut 60,000 Head Start teaching positions, or medical research, or other items that are vital to many Americans and the fragile economic recovery.
There will still be a few more meetings before the shutdown deadline, but leaders on both sides say they are more pessimistic about reaching agreement. The public may need to rely on the pain of an actual shutdown to bring radical House lawmakers back to reality.
By: Editorial, The New York Times, April 5, 2011
The Budget Battles: Prosperity for Whom?
If the House Republican budget blueprint released on Tuesday is the “path to prosperity” that its title claims, it is hard to imagine what ruin would look like.
The plan would condemn millions to the ranks of the uninsured, raise health costs for seniors and renege on the obligation to keep poor children fed. It envisions lower taxes for the wealthy than even George W. Bush imagined: a permanent extension for his tax cuts, plus large permanent estate-tax cuts, a new business tax cut and a lower top income tax rate for the richest taxpayers.
Compared to current projections, spending on government programs would be cut by $4.3 trillion over 10 years, while tax revenues would go down by $4.2 trillion. So spending would be eviscerated, mainly to make room for continued tax cuts.
The deficit would be smaller, but at an unacceptable cost. Health care would be hardest hit, followed by nonsecurity discretionary spending — the sliver of the budget that encompasses annually appropriated programs. Those include education, scientific research, environmental preservation, investor protection, disease control, food safety, federal law enforcement and other areas that bear directly on the quality of Americans’ daily lives. The proposed cuts in such programs are $923 billion deeper than President Obama called for in his 2012 budget, which pushed the edge of what is politically possible.
Another big cut — $715 billion over 10 years — comes from mandatory spending other than Social Security and the big health care programs, a category that includes food stamps and federal retirement.
The blueprint does not call for any specific changes to Social Security, but, without explanation, it assumes a reduction of $1 trillion over 10 years in the program’s surplus. That would weaken the program by hastening the insolvency of Social Security.
When he unveiled this plan, Paul Ryan, a Republican of Wisconsin and the chairman of the House Budget Committee, declared, “This isn’t a budget. This is a cause.”
There is much truth in that. The blueprint is not a serious deficit reduction exercise for many reasons, the most important of which is that serious deficit reduction requires everything to be on the table, including tax increases. The plan released at the end of last year by the Obama deficit commission was one-third tax increases and two-thirds spending cuts. President Obama’s budget calls for a mix of tax cuts and tax increases, among the latter, letting high-end Bush tax cuts expire at the end of 2012. The Republican plan calls only for tax simplification. It would get rid of loopholes and reduce rates in a way that would not raise overall revenues but would invariably cut the tax bill of wealthy taxpayers for whom lower rates are more valuable than assorted loopholes.
The deficit is a serious problem, but the Ryan plan is not a serious answer. With its tax cuts above all, and spending cuts no matter the consequences, it is a recipe for more loud talk about the deficit but no real action.
By: Editorial, The New York Times, April 5, 2011
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