POLICY FEBRUARY 8, 2013
In Columbus, Lansing, and Phoenix, Republican governors are making headlines by embracing part of Obamacare. In Washington, Republican lawmakers are making headlines by seeking a new fiscal deal that avoids Pentagon cuts. What do these developments have to do with one another? Everything. They are products of the same, emerging divide in the Republican Party—one that pits conservative ideologues who preach anti-government extremism against some similarly conservative officials who actually have to govern.
The two sides might not admit that such a sharp divide exists. But it’s easy to see if you’ve been following either story. In Washington, the source of controversy is the budget “sequestration,” the automatic spending cuts set to take effect on March 1. Roughly half of the cuts would affect defense spending, starting with $50 billion this year and adding up to about a half trillion dollars over the next decade. Republicans are desperate to find an alternative, but that would require making a deal with President Obama and the Democrats.
The question, for Republicans, is what concessions they’re willing to make. Obama and the Democrats have said any deal must include new revenue. The ideologues say no way: If a deal ends up raising taxes, even through reform, then Republicans should reject it, even if that means allowing the defense cuts to take place.
Among those making that case recently were the editors of the Wall Street Journal editorial page, who on Thursday ran an article called “The Unscary Sequester.” 1 The defense cuts were not ideal, the editors conceded, but “at least high priorities such as troop deployments are exempt from the cuts. And there is waste in the Pentagon.” This is also the position that House Speaker John Boehner has adopted, at least publicly. “I don’t think anyone wants to see it,” Boehner said, “but we got to get real about cutting spending. If this is the only way we can cut spending, this is what we gotta do.”
Some of Boehner’s Republican colleagues have a rather different view. “We’ve tried to replace sequester with other things, but it seems now that a large portion of our conference is [resigned] to the fact that sequestration is OK,” Pat Rooney, a Republican from Florida, said in an interview with Politico. “It’s not. It’s dangerous, a huge mistake, a threat to our liberty … and I think that we should consider any and all options that don’t include hollowing out our military.” Rooney has plenty of company, and not only in the House. In a press conference Wednesday, three high-profile Republican Senators—Lindsey Graham, Jim Inhofre, and John McCain—spoke out against the defense cuts and called for finding alternatives. “We got into this mess together,” Graham said, “and we’re going to have to get out together.”
The issue in the state capitals is Medicaid, the government health insurance for low-income people. The states administer it, while the federal government provides the majority of the funding. Obamacare calls upon states to expand the program, so that it covers all people in low-income households. (Today, only certain categories of people, like children and pregnant women, automatically qualify.) But Obamacare does not require states to take this step. And while the law entices states to participate by calling on the federal government to pay nearly the entire cost of the expansion, conservatives have been urging Republican governors to reject the expansion—because, they say, it would reinforce Obamacare, increase the size of government, and leave states on the hook for whatever costs the federal government doesn’t cover. “The states should expore better ways of providing catastrophic health insurance for those without coverage,” Andrew Wilson, a resident fellow at the Show-Me Institute, wrote in the Weekly Standard. “And they should be smart enough to know that the offer of free money usually means a one-way ticket to financial ruin.”
Governors in fifteen states, most of them solidly Republican, have heeded this advice and indicated they will oppose a Medicaid expansion. Among the first was Rick Perry, governor of Texas, who said he didn’t want Texas to become “a mere appendage of the federal government when it comes to health care.” But in just the last month, three Republican governors have broken ranks and said they ant their states to participate in the Medicaid expansion. 2 Two of them, Jan Brewer of Arizona and John Kasich of Ohio, have impeccable conservative credentials. The third, Rick Snyder of Michigan, is more ideologically heterodox but has frequently pleased conservatives, most memorably when he signed a right-to-work law—driving a stake into the heart of organized labor, right in its home state. All of them cited the same rationale: They don’t like Obamacare, they said, but their states would be foolish to reject the expansion and infusion of federal money that comes with it.
That “takes $13 billion of Ohioans’ federal tax dollars out of our state and gives it to other states,” Kasich said, “where it will go to work helping to rev up some other state’s economy instead of Ohio’s.” Brewer said “Saying ‘no’ to this plan would not save these federal dollars from being spent or direct them to deficit reduction.” Concluded Snyder: “This makes sense for the physical and fiscal health of Michigan.”
These decisions have provoked condemnation from the highest perches of the conservative movement. The editors of National Review said Kasich’s decision “fails the test of leadership.” The Journal editors called the Republican governors “Obamacare flippers,” singling out Brewer for endorsing the “rip off” of American taxpayers. Americans for Prosperity has called on Arizonans to protest Brewer’s decision. But Brewer, Kasich, and the rest haven’t lost their nerve—or their conservative convictions. They’ve simply encountered reality: Tea Party slogans sound great until they interfere with other governing priorities, disturb their constituents, or invite a political backlash.
All of the Republicans lawmakers speaking out against the sequester cuts are veterans or represent communities that benefit heavily from defense dollars. Not surprisingly, they are spooked by the prospect of one-month furloughs for up to 800,000 civilian employees, a one-third reduction in Naval operations for the West Pacific, and substantial reductions in training at stateside Army bases—all potential consequences of the sequester cuts, according to the administration. The calculus with Medicaid is even clearer. By expanding Medicaid as Obamacare envisions, Ohio over the next decade would draw down more than $50 billion from the federal government, while putting up just $4 billion of its own, according to projections from the Kaiser Family Foundation; Arizona would get more than $10 billion from Washington, while spending less than a half billion of its own. And that’s before taking into account the money the states would save in reduced subsidies for uncompensated care—not to mention the fact that, as a result of the expansion, each state would be providing health insurance to hundreds of thousands of low-income residents, most of them working people.
Republican lawmakers know about the impact of these dollars because they’re hearing about it—from voters and, perhaps more critically, from lobbyists. Capitol Hill has been overrun with lobbyists from defense contractors, while the governors have been under virtual siege from various health care groups. A particularly influential group on the Medicaid expansion has been the hospitals. They have told state officials—truthfully—that they are counting on the Medicaid expansion to offset, at least in part, coming reductions in Medicare reimbursement. That was the essential bargain of Obamacare: The health care industry would tolerate and adapt to lower payments, ideally in ways that would make them more efficient, but to cope with those cuts they’d also have a lot more paying customers.
Nobody has a great sense of whether the Republican lawmakers decrying defense cuts will find enough votes to block or, at least, blunt the cuts. At the moment, they’d probably have to form a coalition with Democrats, though that would mean making other concessions. As for the three governors, they don’t have the power to expand Medicaid on their own. They need their legislatures to act. And that could prove difficult, because the state houses, like the U.S. Congress, have over-representation of rural districts. The governors breaking ranks are in states that lean Demoratic or are trending that way, but, as in Washington, they must contend with conservative lawmakers who can afford to ignore statewide opinion. That’s produced the strangest of spectacles: Republican governors lobbying fellow party members to embrace Obamacare, or at least tolerate the part that benefits them. 3
The fight over sequesters and Medicare stands in significant contrast to the fight playing out among the political strategists engaged in a high-profile fight over the party’s future. That debate is largely about messaging—the question of whether the GOP can nominate candidates who don’t make gaffes about rape or otherwise come across as kooks. It largely avoids questions of policy, other than immigration. But ultimately it’s the differences over policy—which translate to actual dollars, and actual lives—that could signal a real change in the Republican Party. The “fever” that has driven American politics to the right, and to dysfunction, may not have broken yet. But it might be starting to subside.