Health Care Reform And History

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JONATHAN CHAIT MARCH 19, 2010

Health Care Reform And History

In many ways, the health care debate is a repeat over Bill Clinton's 1993 budget. The administration hailed it as a worthwhile step in restoring progressivity to the tax code and reducing the budget deficit. The opposition featured the same basic combination of apoplexy on the right and cynicism in the center.

Start with the right-wingers. Lawrence Kudlow wrote a couple weeks ago:

More spending. More tax hikes on investors, businesses, and individuals. New government boards to control prices, ration care, and redistribute income. ...

if Obamacare does pass, a future rollback will be very difficult, and American health care and economic prosperity will be put in grave jeopardy.

In 1993, Kudlow wrote:

There’s no question that President Clinton’s across-the-board tax increases on labor, capital and energy will throw a wet blanket over the recovery and depress the economy’s long run potential to grow.

Kudlow was expressing the dominant mood on the right. The Wall Street Journal published a series of editorials under the heading "The Class Warfare Economy," featuring a picture of a guillotine. When Clinton's plan passed the House of Representatives, the Journal published an editorial headlined "The Fate Of The World."

On the right, it was universally assumed that Clinton's spending cuts were phony, his tax hikes on the rich would reduce revenues, and the claim of deficit reduction would fail to materialize. The political center and among the mainstream media did not adapt the apocalyptic tone of the conservative, of course. Instead the prevailing attitude was cynicism that the budget numbers would really add up. You had reports like this, from CNN:

For all Bill Clinton's talk about no gimmicks, he quickly adapted to this smoke-and-mirrors world. His February budget proposal -- billed as a $500 billion deficit reduction package -- took credit for $45 billion in savings already ordered by previous legislation. Clinton's plan also included enough funny math and dubious assumptions that the real bottom line, according to the Congressional Budget Office (CBO) -- the designated scorekeeper in matters fiscal -- would have been deficit reduction of just $355 billion over five years. Remarkably, the House so far has rejected much of Clinton's proposed new spending, trimming many programs and derailing a few of his other favorites, such as research on magnetic levitation trains. The Senate has made similar cuts. As a result, both houses have produced budgets more likely to come closer to that $500 billion target. Even so, the goal of deficit reduction keeps moving away like Tantalus's grapes.

The New York Times was running headlines like "Critics See Some Smoke and Mirrors in Clinton's Economic Plan." ("Questions have already been raised over the exact size of the deficit reductions Clinton's plan will produce.") Another Times article suggested:

The budget documents published today show that while the deficit would be cut by $39 billion next year and $54 billion in 1995, Government spending, now more than $1 trillion a year, would be reduced by only $5 billion next year and $6 billion in 1995. All the rest of the deficit reduction in those years would be accomplished by tax increases. Only in the last two years of Mr. Clinton's term would spending cuts begin to bite.

The specifics of the accusations were strikingly similar. The deficit targets were too modest. The Democrats were postponing the real pain. They were employing tricks and rosy scenarios. In retrospect, Clinton's deficit reduction has won over all but its most partisan critics. Obviously, the economic boom disproved the supply-side claims that the upper-bracket tax hikes would dampen economic growth. And over the next five years, federal outlays decreased by more than 2 percent of GDP, defying predictions that spending restraint would be illusory. While it's impossible to prove how much of the improvement was driven by economic growth, budget experts credit the measure with important contributions to the decline of the deficit during the 1990s. Allen Schick, in his book "The Federal Budget: Politics, Policy, Process," concludes:

Liquidating the deficit ranks as one of the supreme budgetary accomplishments in American history...

economic good times alone do not account for the budget's unexpected turnaround....

Although the surplus would not have emerged in the 1990's without a cooperative economy, it also would not have occurred if budget makers had repeated the policy mistakes of the 1980's.

With health care reform, the charges are repeated over and over again. The answer, in sum, is that the accusations of phony savings are almost entirely bunk. Once stripped of transparently fake accusations, such as claiming health care reform is hiding the cost of physician reimbursements that would happen even if there was no health care reform, the even debatable quibbles with the Congressional Budget office score are minimal. Moreover, the conservatives have totally ignored the long-term cost saving potential of the multiple delivery-system reforms that will attempt to force medical providers to adopt efficient practices. CBO has declined to credit these reforms with saving money because they're new approaches, and CBO takes a very cautious approach toward scoring reforms that lack a proven record of success. But to assume that all will completely fail is wildly pessimistic. In short, the right-wing critics have taken a "heads I win, tails you lose" approach to the CBO score. They pick apart the things that CBO scores as reducing the deficit, and take for granted the accuracy of CBO's extreme caution toward delivery system reforms.

Like in 1993, the sheer single-mindedness of the conservative echo chamber has dragged the center of the debate rightward. In the face of monotonous complaints about phony numbers, moderates have been defensive about the cost-saving potential of Obamacare. The CBO numbers may not be entirely correct but they're reasonable, we say. They should have done more, but at least they've done something. Hey, maybe the delivery reforms might help some.

I believe that, over time, considered opinion will view the fiscal responsibility of Obamacare quite favorably. The hysteria of the right and the disappointment of the liberals and moderates will fade, and what's left will be a bill that not only establishes a right to medical care but, over time, begins to arrest the unsustainable rate of medical inflation. By the standards of what out political system can accomplish -- with its multiple veto points, supermajorities, weak party discipline and powerful special interests -- this will be remembered as a seminal achievement.

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posted in: jonathan chait, cnn, the new york times, bill clinton, lawrence kudlow, house of representatives, senate

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