Revenge Of The Mayberry Machiavelli

by Jonathan Chait | March 2, 2010

In 2003, Ron Suskind wrote a famous article about the Bush administration's lack of interest in, or knowledge of, domestic policy. The article centered on the influence of Karl Rove and his staff:

"There were no actual policy white papers on domestic issues. There were, truth be told, only a couple of people in the West Wing who worried at all about policy substance and analysis, and they were even more overworked than the stereotypical nonstop, twenty-hour-a-day White House staff. Every modern presidency moves on the fly, but on social policy and related issues, the lack of even basic policy knowledge, and the only casual interest in knowing more, was somewhat breathtaking: discussions by fairly senior people who meant Medicaid but were talking Medicare; near-instant shifts from discussing any actual policy pros and cons to discussing political communications, media strategy, et cetera. Even quite junior staff would sometimes hear quite senior staff pooh-pooh any need to dig deeper for pertinent information on a given issue." ...
DiIulio defines the Mayberry Machiavellis as political staff, Karl Rove and his people, "who consistently talked and acted as if the height of political sophistication consisted in reducing every issue to its simplest black-and-white terms for public consumption, then steering legislative initiatives or policy proposals as far right as possible. These folks have their predecessors in previous administrations (left and right, Democrat and Republican), but in the Bush administration, they were particularly unfettered."...
Weekly meetings of the Domestic Policy Council "were breathtaking," DiIulio told me. As for the head of the DPC, Margaret La Montagne, a longtime friend of Karl Rove who guided education policy in Texas, DiIulio is blunt: "What she knows about domestic policy could fit in a thimble."
When DiIulio would raise objections to killing programs—like the Earned Income Tax Credit, a tax credit for the poorest Americans, hailed by policy analysts on both sides of the aisle, that contributed to the success of welfare reform—he found he was often arguing with libertarians who didn’t know the basic functions of major federal programs. As a senior White House adviser and admirer of DiIulio’s recently said to me, "You have to understand, this administration is further to the right than much of the public understands. The view of many people [in the White House] is that the best government can do is simply do no harm, that it never is an agent for positive change. If that’s your position, why bother to understand what programs actually do?"

I thought of that article when I read a recent salvo against me by Pete Wehner, the former Karl Rove aide. I probably spend more time ridiculing Wehner than my readers would like, but I do it because he's so emblematic of the pathologies of the contemporary Republican Party. Wehner has posted an attack on me that perfectly exemplifies the tendencies recounted by Diullio. The subject is whether the budgetary accounting for President Obama's health care plan is honest. Wehner presents two reasons to cite his claim that it's not. First, he argues:

The so-called “doc fix” — which would restore reimbursements for doctors who treat Medicare patients — is most certainly a hidden cost. It was originally in the House bill but was stripped out in the summer and treated as a separate bill precisely because keeping it in the original health-care legislation would (rightly) balloon the total cost. By stripping the “doc fix” provision out, it allowed ObamaCare to be scored at a much lower figure. The more honest way to proceed would have been to add the cost of “doc fix” to ObamaCare, since the costs will be paid by the federal government.

The reality here is totally clear. The "doc fix" has been a running problem in budgetary policy for more than a decade. Basically, the law calls for physician reimbursements under Medicare to undergo draconian cuts, which Congress cancels out annually. Since the law assumes cuts that will not happen, this represents a hidden cost in the federal budget. Paul Ryan tried to argue that this is a hidden cost on Obama's health care plan. But it clearly is not. It is a cost that the government will have to pay regardless of whether or not Obama's plan goes into effect. Obama is not claiming that his plan covers every future liability in the federal budget. He is only claiming that his plan would cover the cost of those new liabilities that his plan creates. It's true that, in one early version of the House plan, Democrats decided to include revenue to cover the cost of the "doc fix." They did this because it solved one more problem and pleased the influential physicians' lobby. That they stripped it out does not in any way mean that the cost of overriding those cuts is part of health care reform.

Wehner continues:

Second, no one with any knowledge of this situation — not even Jonathan Chait — believes that future Congresses will effect over half a trillion dollars of in cuts to Medicare. Yet the Democrats’ health-care bill relies for its claim of cutting the deficit beyond 2020 on — you guessed it — those huge Medicare cuts.

Wehner is repeating another of those articles of faith that have circulated among Republicans during the health care debate: Medicare cuts never stick. Everybody knows it, says Wehner, which means that everybody in his Republican cocoon believes it. First of all, if this was true, it would render impossible any effort to restrain entitlement costs. If Congress can't stop future Congresses from reducing Medicare costs, then why cut Medicare? It's hopeless.

Second of all, while I can't yet disprove a prediction about future events, there is a pretty clear history of Congress making cuts to Medicare that do in fact stick. I hope that Wehner would concede that James Horney and Paul van de Water would qualify having "any knowledge of this situation." (Check their resumes.) Here's what they write in an extensive paper for the Center on Budget and Policy Priorities:

Second, the history of health legislation in recent decades demonstrates that, despite some critics’ charges, Congress has repeatedly adopted measures to produce considerable savings in Medicare and has let them take effect. For example, Congress took such action as part of major deficit-reduction packages in 1990 and 1993 and as part of more modest deficit-reduction packages in 1997 and 2005. Virtually all of the cuts that it enacted in 1990, 1993, and 2005 went into effect. After Medicare spending slowed dramatically after 1997 — in 1999, it was for the first time lower than it had been the year before — and the budget was balanced in 1998, Congress did ameliorate some of the Medicare cuts that it had enacted in 1997. But, even in those special circumstances, it allowed four-fifths of the 1997 cuts (other than those described in the next paragraph) to take effect.

One might wonder if Obama's Medicare cuts are bigger than the sorts of cuts that have been enacted in the past. The answer is no -- as a share of total Medicare spending, they're half the size of the 1997 cuts that took effect. Wehner continues, before concluding in a flourish of insults:

“doc fix” is itself a good example of why Medicare cuts on the scale we are talking about will never happen. “Doc fix” refers to a provision of the 1997 Balanced Budget Act. It called on cuts in reimbursements to physicians treating Medicare patients. The reality, though, is that those cuts have been rescinded year after year after year. The supposed cost savings haven’t materialized — and neither will massive cuts in Medicare. But defenders of ObamaCare need to pretend they will, in order to argue that their plan will reduce the deficit.

Again, I don't want this to devolve into an "I'm rubber, you're glue" situation, but Wehner clearly has no idea what he's talking about here. In his defense, he's repeating another wives tale that's circulated among Republicans. I'll again quote Horner and Van de Water:

In arguing that Medicare cuts never “stick,” critics point in particular to Congress’ repeated refusal to let the reductions in physician reimbursement rates under Medicare’s so-called “sustainable growth rate” (SGR) mechanism, which it enacted in 1997, take full effect. The SGR cuts, however, represented a badly designed measure that was not intended to produce large savings (the projected SGR savings represented less than five percent of total Medicare savings in the 1997 bill), but turned into a blunt instrument that would have produced cuts far in excess of what was anticipated and would have had harsh and indefensible effects. (Moreover, even though Congress did not allow the full cuts required under the SGR formula to take effect, it has still cut the physician reimbursement rate substantially — at its current level, the reimbursement rate in 2010 will be 17 percent below the rate for 2001, adjusted for inflation.) The SGR mechanism has little in common with most of the other provisions that Congress has enacted over the years to produce savings in Medicare and that have, in fact, taken effect. This distinction is important because most of the Medicare savings provisions in the House and Senate health reform bills are similar in nature to the types of Medicare provisions that Congress has enacted in the past that have taken effect — and they differ markedly from the blunt-instrument design of the SGR cut.

The paper explains this in much greater detail. In summary, Wehner's historical example is totally incorrect in every way. Obama's Medicare cuts do not resemble SGR. SGR was not intended to save a lot of money. Contrary to Wehner's assertion that "the supposed cost savings haven’t materialized," SGR has wound up saving more than it was projected to save.

I can hardly claim innocence on the count of using personal insults. I do it all the time. The difference between me and Wehner on this score is that I also have some knowledge of domestic policy. I'm no Peter Orszag, but I try to read up and pay some attention to arguments coming from policy wonks that I disagree with. Wehner lives in a world of Republican spin, and no actual expertise can penetrate it.

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