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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

Conversation with an Undecided Friend



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Recently, I had a conversation with one of my best friends who is, believe it or not, an undecided voter. We had a wide-ranging conversation in which we discussed various different issues and how a Romney or Obama administration might actually govern over the next four years. This is extremely hard to do, as unexpected events can force dramatic shifts, e.g., the 9/11 terror attacks led President George W. Bush to radically revise his approach to foreign policy, the depth of the post-crisis recession led President Obama to scale back his deficit reduction ambitions, etc. So those of us who are thinking through the possible outcomes of this election should acknowledge that we are dealing with an enormously complex and unpredictable system. By necessity, we are working from crude heuristics that might not survive contact with reality, and of course the partisans among us, myself very much included, suffer from motivated cognition and other biases. Though I can’t imagine I’ll persuade anyone of anything, here is roughly how I explained my position to my undecided friend.

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As should be clear from my writing in this space, I don’t actually think that a Romney or Obama administration will be able to achieve all of their various stated goals, as these goals strike me as unrealistic and often contradictory.

For example, I’ve written that I don’t find either major party presidential ticket’s approach to addressing tax reform particularly convincing. Romney’s critics might insist that while President Obama might be understating the need for a tax increase on middle-income households in light of his spending commitments, the Obama campaign is somewhat closer to a realistic revenue target than the Romney campaign. Romney’s defenders might reply that their candidate has at least done a better job of making the case for long-term structural reform of entitlement programs. 

Though I am far more sympathetic to the Romney-Ryan vision for tax and entitlement reform broadly understood, the GOP ticket would have been on firmer ground had it been willing to go easier on the Affordable Care Act’s planned reductions in the growth rate of Medicare expenditures. For example, the campaign might have said that it aimed to achieve significant near-term savings in the Medicare program, e.g., phasing in competitive bidding on a budget on a timetable that would impact some current seniors. That this would be a difficult political task should go without saying, despite the fact that I believe that competitive bidding on a budget could be implemented without any deleterious effect on current Medicare beneficiaries.

Are GOP attacks on ACA’s Medicare provisions indefensible? I’m not inclined to think so for at least two reasons. The first is that I believe that competitive bidding on a budget is a better approach for restraining cost growth in Medicare than the more centralized approach favored by the Obama administration, for the reasons Daniel Kessler has outlined. But the Romney-Ryan approach to Medicare in the near-term will grow the base from which Medicare’s growth will have to be restrained, which is a bigger deal than many of Romney’s defenders acknowledge. The second is that Republicans are operating under significant political constraints, and as a conservative, I recognize that attacking ACA’s Medicare provisions might have been the only way to defend against attacks on Medicare competitive bidding. I wouldn’t expect a true swing voter to feel the same way.  

The Democrats are also operating under significant political constraints. In particular, they depend on the votes of a large number of tax-sensitive upper-middle-income households. It is easy to imagine some Democratic wonks accepting that extremely high increases in effective marginal tax rates for high-earners are undesirable, yet they are hemmed in by the fact that college-educated voters earning between $100,000 and $200,000 are an important swing constituency in a number of important swing states. Moreover, the Democratic base is skeptical of large-scale reforms of programs like Medicare, Medicaid, and Social Security, among others. To some extent, this reflects ideological conviction. As political scientist John Hudak has observed, however, Democratic views on Medicaid in particular and coverage expansion in general seem to reflect the demographic characteristics of the Democratic base. This (understandably) encourages risk-aversion on Medicaid, just as Republicans have had to be responsive to the risk-aversion of their older base on Medicare by opposing aggressive near-term Medicare spending restraint.   

My mental model is that both President Obama and Mitt Romney are strongly inclined to punt on painful tax and entitlement reforms, for defensible reasons and less-defensible reasons. The defensible reason is that a sharp turn to fiscal consolidation could jeopardize the recovery, particularly if the global economy remains relatively weak. This is why I’m skeptical that fiscal deficits under a Romney presidency will be dramatically lower than they would be under a second Obama term, at least in the first two years. The less-defensible reason is that passing the buck is always attractive to incumbent elected officeholders. 

Romney has proposed a Medicaid overhaul that will prove very difficult to sustain politically if the labor market remains weak. It seems more likely to me that a Romney administration would take a more generous approach to Medicaid early on while promising significant savings in the out-years. That is, Medicaid block grants might start out relatively large with the understanding that they would shrink in the future — when President Romney will be out of office. I’ve described the model of Medicaid block grants that I would see as a significant improvement over the status quo, and I am cautiously optimistic that a Romney administration might pursue something along similar lines. 

One of the sharper contrasts between the two campaigns is over the Affordable Care Act. I opposed the Affordable Care Act and I would like to see it repealed and replaced with a plan that facilitates a significant amount of coverage expansion at a sustainable cost. Earlier this month, I talked through one alternative reform strategy and I’ve been supportive of Sen. McCain’s call for an overhaul of the tax treatment of medical insurance. The problem that some of Romney’s critics have raised is that while there might be a consensus on the political right about repealing ACA, there isn’t a clear consensus on replacing it, as evidenced by the Romney campaign’s reluctance to release a detailed and explicit health reform proposal, though of course the campaign has articulated broad principles.

Though I am sympathetic to what I take to be Romney’s vision for health reform — fix the tax treatment, empower states, etc. — I think it suffers from a number of gaps, e.g., there hasn’t been much clarity regarding the role of high-risk pools and how much the federal government might contribute to them, etc. A well-designed system of high-risk pools could prove expensive, or at least expensive enough that it would crowd out other popular spending measures. This reluctance to specify the details strikes me as understandable given the larger political climate and the fact that any health reform settlement will depend on the composition of the next Congress. Yet this reinforces the point that one has to instinctively trust Romney or Obama, and more to the point their respective governing coalitions, on important questions like this one. 

My strong suspicion is that a Romney administration would have a difficult time repealing the Affordable Care Act outright, particularly if the Senate remains in Democratic hands. This will seriously constrain Romney’s ability to overhaul the U.S. health system, yet it might create the conditions for a more durable settlement, perhaps along the lines of Eugene Steuerle’s vision for reforming health reform. 

The Obama administration will also have to reform health reform, as I believe the four-tranche universal health system it creates is less sustainable than is commonly understood. In a guest post, Bryan Dowd of the University of Minnesota previewed how President Obama might proceed by drawing on a recent essay written by several of his former advisors. Because I find this approach significantly less attractive than the approach I suspect a Romney administration would pursue, the choice on this front is fairly clear. 

There are many, many other issues that are very important: the universe of issues, including the regulation of abortion, racial preferences in college admissions and contracting, voting laws, the role of state governments, campaign finance regulation, etc., that will be impacted by judicial appointments (these are issues where my views align closely with the conservative legal movement); foreign policy, in which my views are in some respects more hawkish than Romney-Ryan (e.g., I think we were wrong to leave Iraq as quickly as we did and I wouldn’t rule out a direct U.S. role in Syria) and more dovish (e.g., I am more amenable to cuts in defense expenditures); monetary policy (where my views are not well-aligned with the Romney-Ryan ticket or the Obama-Biden ticket); and copyright and patent reform, where both parties are terrible.

The issues I care about most are probably (1) the structure of public service delivery, an issue that is arguably most salient at the state and local level; (2) regulation; and (3) criminal justice reform, including sentencing reform and increased investment in crime prevention. My strong inclination is to favor limiting the collective bargaining rights of public employees and facilitating innovation in public service delivery. This is an area where I believe the two major parties are far apart, for reasons that are fairly obvious to close observers of U.S. politics. Regulation is another issue where I think the parties are fairly far apart. Republicans tend to be more mindful of the downsides while Democrats tend to be more optimistic. On criminal justice reform, I think that there are reasons for optimism on both sides of the aisle, but my sense is that leadership will have to come at the state rather than the federal level.  

I write all of this in part to illustrate that there are many assumptions — contested assumptions — that go into how we align ourselves politically. 



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