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Entitlement Reform



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On those rare occasions when I find myself not immediately agreeing with something Ramesh writes or says, I set out to discover why I am wrong and he is right, and usually I find the reason pretty quickly. But on the subject of his op-ed in today’s New York Times—the question of whether House Republicans should propose to take on entitlement reforms—I am still unpersuaded.

Ramesh argues that Republicans should stay away from proposing reforms to Medicare and Social Security unless President Obama proposes some reforms of those programs first. “Reform is impossible this year or next unless President Obama takes the lead on it,” he writes. “What’s more, Republicans have no mandate for reform, and a failed attempt will only set back the cause.”

Ramesh does not deny that we have to reform our entitlements to avoid a fiscal catastrophe; and I suspect he also agrees with the substance of the reforms that some conservatives in Congress (most notably Paul Ryan) have proposed. In fact, he writes that Republicans should pursue such reforms when it comes to Medicaid (transforming Medicaid into a defined-benefit system funded by federal block grants to the states), but not Medicare or Social Security. Reforms of those programs are surely essential, he writes, but the Republican House should not put them on the table, as the political costs would be too high. Instead, he writes, “reformers should blame Mr. Obama for the lack of progress and work to make entitlements a litmus-test issue in the Republican presidential primaries. The goal should be to nominate someone willing to make a strong case for reducing entitlement growth as part of a larger strategy to restore American prosperity.”

Given that goal, with which I very much agree, I think a strategy of taking no action and blaming Obama for inaction would be a little peculiar. Rather, House Republicans should themselves begin the work of making a strong case for reducing entitlement growth as part of a larger strategy to restore American prosperity. The 2012 House budget resolution, which will be proposed this spring, would be the ideal place to do that.

The budget resolution is a framework for authorization and appropriations bills, and it allows the Congress not only to establish specific spending guidelines for the year but also to lay out longer-term priorities and goals, and to sketch out a vision of how to contend with the country’s fiscal challenges. There was no budget resolution last year—the Democratic leaders of the 111th Congress, for the first time since the current budget process began in the 70s, chose not to produce one. But the year before, in the course of the FY 2010 budget debate in the spring of 2009, House Republicans proposed a budget resolution as an alternative to the Democratic majority’s budget, and in that alternative (which you can read here) they laid out some significant entitlement reforms, especially Medicare reforms. They proposed to leave benefits as they are now for people who are 55 or older—and so are either already retired or near retirement. For younger people, the structure of Medicare would be transformed into a defined contribution program which, rather than directly paying for services in an open-ended way, would give each senior a generous premium-support benefit (with additional help those who are oldest, sickest, and poorest) which they would use to purchase private health insurance of their choice. This would work like today’s prescription drug benefit, which has come in under budget and which is very popular with seniors. They also proposed some very modest Social Security reforms, which were not to take effect for decades. (Even the more ambitious reforms in Paul Ryan’s Roadmap are fairly modest—optional individual accounts, some means-testing of benefits, indexing benefits to prices rather than wages, and slowly raising the retirement age.)

137 Republicans voted for that resolution in 2009—including every member of the leadership and just about every Republican who was in Congress then and has returned in the 112th. But Ramesh proposes that Republicans now backtrack, and not include even such modest reforms in the first budget resolution they propose as a House majority.

I understand, of course, that the case he makes is a tactical one—it’s about how to maximize the ability of congressional Republicans to get things done in this congress, to make progress on the most important debates of the day, and to make further gains (hopefully also winning the Senate and the White House) in 2012. But I don’t think those tactical considerations in fact lead to the conclusion that Republicans should abandon entitlement reform.

The dynamics of a divided Congress (which we haven’t really seen since the mid-80s) mean that very little of what Republicans pass in the House will actually be enacted as-is into law. Rather than negotiate with themselves, they need to pass legislation that they believe would make for good policy and politics, and then negotiate with the Senate and the President. I don’t think it’s simply the case, as Ramesh suggests, that Republicans should only take risks for legislation they expect will be signed into law. That would argue for a do-nothing House. Rather, they should take risks for legislation that will define the Republican policy agenda, define the negotiations that must take place between Republicans and Democrats in the course of this congress, define the most important policy debates of the day, and define the party in the minds of voters in the years to come.

Moreover, they should take risks to pass legislation that will define the Republican presidential primary race in 2012. As Ramesh says, the next Republican nominee will have to present a real entitlement-reform agenda. The Republican House should make sure of that by setting the bar for such an agenda, rather than setting an example of excessive timidity on the subject. They should set that bar through their budget resolution—which will serve as a kind of vision document for the Republican agenda. Passing that resolution will not mean enacting entitlement reforms—the resolution does not become law, and surely the Senate Democrats will pass a very different budget anyway. But it will at least mean putting down a marker and committing Republicans to real entitlement reform.

Without such reform, there is simply no way to address the government’s fiscal problems. It is impossible to cut discretionary spending enough to balance the budget in the long term (and as the Democrats will find, it is also impossible to raise taxes enough to do so). The basic structure of our welfare state, and especially our Great Society health-care entitlements, is going to have to be changed. It can be changed in a way that keeps a robust safety net in place and does not disrupt people’s lives or plans yet still restrains the growth of government and makes these programs sustainable—and indeed, that uses them to bring our larger health-care cost problem under control rather than exacerbating that problem. But such gradual, sensible reforms are only going to be possible for a little while longer. If we let too much time pass, the fiscal situation of these programs will leave no alternative but harsh austerity. Entitlement reform must happen soon, and Republicans need to make it clear to voters that they have a set of well-developed, smart, achievable ideas for making it happen—that they have a vision of limited and effective government that will allow for economic growth, social mobility, and a safety net.

Are voters ready to hear that? I’m not sure. There is no question that putting such reforms on the table carries risks. But there has never been a better time to do so (because the crisis and the spending binge of the past few years has persuaded a sizeable portion of the public that something must be done to change the course we are on), and there may never be a better one (because we are nearing the point when a modest gradual solution will no longer suffice). Republicans have to prepare voters to hear that message in the 2012 election, and running away from that task after winning a large House majority does not seem to me like the best way to do so. Given the available options, proposing a general outline of entitlement reforms in the budget resolution does seem to me like the best way to do so.



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