Andrew E. Busch
July 1, 2009
It was famously said of France’s Bourbon royalty that they “forgot nothing and learned nothing.” This meant, of course, that they were petty and vengeful, and obstinately refused to be instructed by past mistakes. This week, the Obama administration and House Democrats seemed determined to sign on to the Bourbon style.
On one hand—forgetting nothing—House Democrats continued to engage in petty backbiting with the CIA, when they found out the agency was engaged, as shocking as it might seem, in an effort to find and kill top al Qaeda operatives. On another front, it became clear that Attorney General Eric Holder was considering launching an investigation into treatment of terrorist detainees. While one should not rule out the propriety of such an investigation if there is reason to believe that some detainees received treatment outside the bounds of the Bush Justice Department’s guidelines, it is easy to see how it might become a highly-politicized sop to the anti- anti-terrorism wing of the Democratic Party; indeed, it is not far-fetched to imagine that that might be its purpose.
On the other hand—learning nothing—Democrats in Congress and the White House pressed forward with a big-government health care “reform” that will cost an immense amount of money, even before the inevitable cost overruns. The bill unveiled by House Democrats would cost an estimated $1 to $1.5 trillion, and would include a “public option” that will “compete” with private insurance, as if private companies can compete in the long run with an entity that will be backstopped by the IRS and the Treasury Department’s printing presses. What such a program will really cost is impossible to say.
Needless to say, this is not the first time that enthused liberals have had an opportunity to impose their visions on the nation. There is a record which the President and Congress could consult for wisdom, but which seems to have slipped down the Orwellian memory hole. Given that record, any disasters which follow cannot be excused on account of ignorance. The New Deal offers a number of lessons relevant to the program for economic recovery, but it is the Great Society that may be more germane to health care legislation. The lessons which it offers include the following:
Whatever you think it costs, it will probably actually cost more—much more. In 1964, Lyndon Johnson promised that the average American would pay no more than $1 a month in taxes for Medicare. The initial promise of the program was also that beneficiaries would pay fully half of the cost through premiums. Today, no one with a job better than manning a lemonade stand pays $1 a month, or even its equivalent in inflation-adjusted dollars. The massive increase in the payroll taxes extracted from working Americans has not been matched by equivalent premium increases, meaning that taxpayers now foot more than three-fourths of the bill.
Whenever government injects a large subsidy into a good or service, the price of that good or service will go up. As Milton Friedman showed years ago, the rise of health care costs has closely tracked the rising share of GDP devoted to government spending on health care. Whatever the President’s rhetoric, when government spending on health care rockets up again, health care costs will rise accordingly—unless restricted artificially. This means more regulation, more regimentation, and ultimately rationing from Washington. Every year, thousands of doctors flee Medicare and Medicaid because they can no longer abide the strings and payment schedules that accompany the government check. Will Obamacare be any better?
Once it is enacted, there is no turning back. Medicare and Medicaid are facing fiscal ruin within the next decade—or, to put it another way, the nation is facing fiscal ruin on their account—yet the picture of impending doom is not enough to inspire serious action to trim the programs. (Social Security is in the same situation, though is farther removed from the hour of doom.) All of the political pressure runs in the other direction, to the extent that in the most recent (Republican) administration the biggest change made to Medicare was to add a costly prescription drug program. Once a bigger health “reform” is enacted, the dynamic will be the same. No matter how costly or inefficient it is, no matter how viciously it crowds out other pressing priorities domestic or foreign, indeed no matter how ultimately detrimental it becomes to the health care of the majority of Americans, the program will be untouchable—beyond easy democratic control.
Both the New Deal and Great Society testify to the fact that large spending programs, once put on automatic pilot in this way, cannot indefinitely be paid for by the “rich” alone. The tax revolt of the late 1970s came about because the growing costs of the entitlement state could not be borne without a bracing dose of bracket creep combined with one payroll tax increase after another. The idea that a multi-trillion dollar health care scheme can be carried on the backs of small business and a few rich folks strains credibility.
Finally, though the Great Society has provided Democrats with an electoral floor, it was hardly the ticket to political dominance that many had hoped. To the contrary, the very next presidential election saw the breakup of the New Deal coalition and the start of a Republican run in which the GOP won seven of the next ten presidential elections. This was partly due to completely unrelated events, particularly Vietnam. It was also due to the fact that voters came to understand that the costs of the liberal program—in spending, taxes, debt, and arrogant, centralized government—were far greater than they had been led to believe. Not least, a large number of voters came to conclude that those costs included a repudiation of the country’s deepest founding principles. It is not difficult to predict that passage of Obamacare will also be a mixed bag politically for Democrats, who will be able to brag that only three or five percent are uninsured instead of 12 or 15 percent, but who will own the taxes, job losses, bureaucratic snafus, and rationing boards that are sure to come.
So far, the economic and political warning signs thrown up by reflection on the last great wave of liberal policymaking have been thoroughly ignored by Obama and his copartisans, who remain mired in their quasi-religious devotion to government-guaranteed health care. At the moment, they seem only to care about how to get it done rather than about whether it is prudent to do it, or prudent to do it their way. If things do not go well, don’t hold your breath waiting for an investigation.
Andrew E. Busch is an Adjunct Fellow of the Ashbrook Center, Professor of Government at Claremont McKenna College, and Ann and Herbert W. Vaughan Visiting Fellow at the James Madison Program in American Ideals and Institutions at Princeton University.