On the supposed deficit neutrality of the Senate health-care bill:
Let me take a hack at this. The bill calls for cutting half a trillion out of Medicare. If you do that, you can either put the money away, squirrel it in a hole, in the Al Gore lockbox, and save it for the future cost of Medicare, and that would extend the life of Medicare by ten years.
Or you can take the same half a trillion, put it in the Treasury, and have the Treasury use it to offset the trillion-dollar extra cost of the new entitlement of insuring the uninsured. . . .
If you do the latter, you end up with a good number on the deficit, a surplus of $130 billion. (Well, that [supposed surplus] involves a lot of shenanigans as well, [but let's] exclude all of the other shenanigans.) However, the money is then already spent and you can’t squirrel it away in Medicare, so you aren’t extending it ten years.
So when you hear Harry Reid stand up there say: We have extended Medicare by a decade and achieved deficit neutrality, he’s either obtuse or cynical. I suspect a modicum of both: You can [only] do one or the other. . . . You can’t claim that you’re going to extend Medicare and be deficit neutral.
The reason this is damaging is because if you do actually have to cut a half trillion [from Medicare] and you spend it immediately — as we are going to spend it on … a new entitlement, insuring the uninsured — then a potential saving in Medicare in the future is taken away and Medicare will go over a cliff.
It bends the curve upwards and not downwards. It takes half a trillion in savings that you need in the future to keep Medicare alive, and you’re spending it now on a new entitlement. And that’s why it damages the deficit outlook and it is a threat ultimately to Medicare and the budget.
On how 2010 will play out for the Democrats:
Oh, yes. What a difference a year makes. A year ago after the Obama victory and the sweep in the House and Senate, we were hearing about the great realignment, the death of conservatism, [how] the Republicans were in the wilderness, how this is going to be a generational thing.
It lasted not a generation but maybe eight or nine months. And what you see here is the tip of the iceberg. You’ve got a Democrat in [Alabama] in a seat that has been Democratic since 1866 switching. He knows what is happening now.
The centrists in the Democratic party are being squeezed out. They are having to walk the plank on cap-and-trade, on health care, which is extremely unpopular, on the stimulus, and standing with the administration that has taken over the auto industry. . . . They’re actions [that] are extremely unpopular.
And the wind is changing. The problem is this: The Democrats over-read the mandate in the election of ‘08. They assumed it was for great change of American social policy and making America into a kind of European social democracy — radical changes in health care, energy, and in education.
That was not what happened in ‘08. It was rejection of the Bush administration, a weariness of war, and the rejection of an administration at a time of economic collapse. It was nothing more. They [the Democrats] overreached. They have tried to push a centrist country to the left, and [therefore] they’re going to lose a lot of seats in the November election.