A Brief Television Exchange on Focusing on Medicare vs. Unemployment

by Reihan Salam

Moments ago, I appeared on a panel on CNN’s OutFront. Channeling Jim Tankersley, I suggested that the president was changing the subject from the persistence of high levels of unemployment and the plight of the long-term unemployed and shifting to attacking Paul Ryan for proposing a Medicare global budget that grows at GDP + 0.5%, which happens to be the growth rate that IPAB is charged with maintaining under the president’s health law. One of my fellow panelists, an erudite centrist, said that I was wrong to claim that the president was changing the subject — it is the Republicans who changed the subject, and the president was merely following their lead.

[An important point! GDP + 0.5% is the growth rate the president called for in his February budget proposal. The growth rate under PPACA is GDP + 1%, which was also the growth rate under the Wyden-Ryan proposal. The White House seems to have determined that GDP + 0.5% is sustainable, and the House Budget Committee seems to have embraced that assumption. The essential point, that the president and Ryan are on the same page in terms of the global budget, stands.]

This is an interesting view, and I was unfortunately not given an opportunity to respond. I am more inclined to take a somewhat different view. As chairman of the House Budget Committee, Rep. Ryan is obligated to discuss Medicare as it represents a fairly significant share of federal spending in any given year, and Medicare expenditures are expected to increase considerably in the coming years. It is not obvious to me that Ryan’s decision to talk about structural reform of Medicare represents a changing of the subject as such, given that he is charged with addressing federal expenditures. Moreover, Ryan and his allies have been focusing on Medicare reform for the fairly straightforward reason that President Obama and his allies devoted much of the first two years of the Obama presidency to passing an ambitious overhaul of the U.S. health system, including the creation of a Medicare global budget. During the debate over the president’s health law, there was considerable debate over whether the president’s global budget was too aggressive. Many Republicans attacked the president’s Medicare cuts. Many Democrats, in turn, attacked Republicans for being hypocritical, as the GOP is the self-styled party of small government and spending discipline, etc. Now Ryan has embraced the idea of a global budget and he has even embraced the growth rate embraced by the president, though of course he has a very different vision of how the Medicare program should be structured to realize these (relative) cost savings.

So who changed the subject? Recently, Noam Scheiber, a senior editor at The New Republic, published a fascinating book called The Escape Artists. Early in the book, Scheiber has an illuminating passage:

There was a strain of messianism in Barack Obama, a determination to change the course of history. And it was this determination that explained his reluctance to abandon his presidential vision. Recessions would come and go, even recessions as painful as this one. But the big achievements—like health care and climate change—were the accomplishments that posterity would recall. “I always admired the president’s courage for recognizing that fifty years from now people would remember that all Americans had health care,” Larry Summers later said in an interview. “And even if pursuing health care affected the pace of the recovery, which was unlikely in my view, people wouldn’t remember how fast the recovery from this recession was.” It was a formulation Obama himself was fond of. “I am absolutely certain that generations from now, we will be able to look back and tell our children that this was the moment when we began to provide care for the sick,” he said in St. Paul, Minnesota, the week he clinched the Democratic nomination. “[T]his was the moment when the rise of the oceans began to slow and our planet began to heal.”

Later on, he notes that there were many people concerned that the president had changed the subject from unemployment to the health system too quickly. And many of these people were on the president’s economic team: 

The economists moped through meetings on health care like children forced to sit through a performance of avant-garde ballet. Like Biden, Romer worried that the issue would distract from the economy. Others, like Geithner, brooded that expanding coverage to the uninsured would balloon the deficit at a time when the recession was already plumping it up. “He kept narrowing the playground,” said an administration wonk. “You couldn’t deficit-spend; the whole thing had to be paid for. Then you had to bring down the [overall spending] number.” Only Orszag was enthusiastic, believing that health care reform would save money over time.

Still, the man with the most important vote was unmoved. Obama told his aides that if he couldn’t reform health care, another generation would pass before a president tried again. Even waiting a year or two was out of the question. “The president’s view was, yes, we had to deal with the economic emergency at hand,” said a White House aide. “But if we didn’t move on health care in the first few years, we’d probably never be able to get it done.”

Not long before the administration jumped full force into health care, [Christina] Romer issued one of the blunter appeals for postponing the undertaking. “I know this isn’t what you wanted to do when you came into office,” she told the president, “but this is the hand you were dealt. Saving the economy is enough of an accomplishment.” Before the president could say anything, Emanuel interjected: “If you look at what people accomplish in their first year, it’s most of what they accomplish. If you want to do this, now is the time,” he said.

It’s striking to think of how different the Obama administration and the broader political environment might have taken shape had the president heeded Romer’s advice. Romer is perhaps best known for having advocated a much larger fiscal stimulus measure than the one the president eventually backed. Indeed, her high end estimate was never even presented to the president, as Scheiber has reported. 

Had the president not pursued his health system overhaul, or rather had he pursued it later on or in some other form, would Rep. Ryan have advanced his ambitious Medicare reform when he did and would it have been as widely embraced among right-of-center policymakers and Republican legislators? Did the decision to reject Romer’s advice represent the ur-changing of the subject?

To be charitable to my interlocutor, we could put this somewhat differently: perhaps Republicans have been excessively fixated on deficits and debt rather than unemployment in their rhetoric, and this is why the president has been forced to respond accordingly my making an affirmative case for his approach to the budget. This doesn’t strike me as quite right. The president doesn’t seem to have invested much effort in getting, say, Senate Democrats to rally around a proper budget proposal. But there’s clearly some truth to the notion that Republicans have devoted somewhat more time to long-run deficits and debt and somewhat less to the brutal economic aftershocks of the crisis.

Yet does this not reflect the president’s decision to markedly alter the long-run fiscal trajectory through his health system overhaul? Perhaps a much larger stimulus would have generated this same alarm or fixation on long-term deficits and debt even in the absence of the creation of a new health entitlement. I’m skeptical. Had the president spent his political capital on a much larger stimulus and had he tabled the creation of a new health entitlement, I suspect Republicans would have focused far more narrowly on offering a distinctive narrative regarding the response to the crisis itself. It is easy to imagine them focusing on short-term spending. But would they have embraced sweeping entitlement reforms? 

That is, the president’s “strain of messianism” did more than alter the course of the Obama presidency. It shaped the Republican response.  

I’m traveling to Los Angeles, so I might be out of pocket for a bit while in mid-air.