A Prescription for Trouble
Andrew E. Busch
November 1, 2003
While commentators continue to press the analogy of Iraq to Vietnam—an analogy which is, in most respects, dubious at best—a more useful George W. Bush-Lyndon B. Johnson analogy is waiting in the wings. The proposed Medicare prescription drug program, if passed, will be the biggest new domestic spending program to be enacted since Johnson’s presidency, even in the unlikely event that it does not exceed its $400/10 year estimated price tag. Is compassionate conservatism becoming Great Society lite?
After lingering in conference committee for months, the prescription drug program is headed for congressional debate largely because the Bush White House began putting the screws to negotiators to cut a deal. While President Bush did campaign on such a program (originally closer to $300 billion) in 2000, there are several things that might have happened differently had the President been more concerned with policy than with politics.
First, the President might have concluded that circumstances had changed since 2000. Recession and war have eliminated the vast projected surpluses which were counted upon to finance the program. It would have been eminently reasonable for Bush to have simply said that this was the wrong time for a major expansion of domestic government. This option, however, was deemed by Republican pollsters to be non-viable.
Second, Bush could have used prescription drugs as leverage to obtain limitations in other areas of domestic spending. It would have made considerable policy sense (and perhaps even political sense, too) for Bush to have forced AARP and congressional Democrats to identify which $400 billion of domestic spending they were willing to forego to pay for prescription drugs. It seems that no such effort was made. This inattention to the aggregate cost of domestic spending is part and parcel of the administration’s approach to the budget over the last three years, another reason the surpluses evaporated.
Third, Bush might have scaled back his initial proposal by limiting the benefits to people who actually need it. Most studies indicate that two-thirds to three-fourths of seniors already have some form of prescription drug coverage. Some sort of means test might have been in order—and was indeed floated in Congress—but went nowhere with presidential support.
Fourth, the President might have used prescription drugs as leverage to gain fundamental reforms in the Medicare program. The House bill leaned slightly in that direction, but all but token reforms were stripped from the final version. Instead, we are on the verge of adding a $400 billion minimum burden to a program that was already only a decade away from insolvency. As captain of a sinking ship, the President stopped bailing water and simply opened up the hatches. There is now little prospect of rescuing Medicare by means short of a massive payroll tax increase ten years from now, unless Republicans score such a large presidential and congressional victory in 2004 that they can impose major changes even without holding anything to offer Democrats. Don’t hold your breath.
This problem illuminates a greater problem facing Bush and Republicans. Bush is often paired with Ronald Reagan as two presidents whose economic plans were built around tax cuts. Many Republicans would like to believe that Bush’s tax cuts will have a similar effect of restraining the growth of government through the mechanism of, as liberals like to call it, “starving government of revenue.” (A $2,000,000,000,000 a year starvation diet?) But this only occurred in the 1980s because Reagan made a concerted effort to argue for, and expend political capital on behalf of, spending limits. If the size of the deficit is any indication, now would be a perfect time for Bush to insist on some spending restraint as the second step of a limited government strategy. There is no sign whatsoever that this is about to happen.
Two consequences are likely. The economic risks are great. Bush is right that short-term deficits are not a problem. However, long-term deficits driven by new programs like prescription drugs and the dramatic increases in existing programs could be a problem. And if spending restraint is taken off the table by an unwilling administration, pressures will grow for truly gigantic tax increases down the road. Lyndon Johnson, too, refused to trim domestic spending when war imposed unexpected burdens, and the economic disaster that resulted took years to undo.
Politically, the risks are great, too—if not for Bush, who faces his last election next year, but for Republicans in the long run. Not only will they face the electoral costs of whatever economic problems develop, but they will face deep coalitional fissures. Many Republicans will wonder, if they are not wondering already, what good it does to control Congress and the presidency if a $400 billion entitlement program, with no reform to show for it, is the result. More broadly, whatever the short-term electoral calculus, it is never a winning proposition for Republicans to add to the degree to which Americans are dependent on federal largesse. To the contrary, it should be the goal of Republicans to pursue policies that make Americans as self-reliant as possible. Needless to say, the prescription drug plan (for that matter, virtually any conceivable prescription drug plan) does not meet that test.
Despite the massive price tag of the prescription drug program, despite the Republican surrender on most reform issues, despite the lack of complementary spending restraint, liberal Democrats are already threatening to filibuster in the Senate. Ted Kennedy has even gone so far as to say the program is “dead” because it allows a pilot program of private competition in a handful of cities. For once, conservatives should hope Kennedy is right. We could only be so lucky.
Andrew E. Busch is an Associate Professor of Political Science at the University of Denver and an Adjunct Fellow of the Ashbrook Center.