Mark Schmitt

Medicare Post-Mortem Part I -- The Process

A commentor noted recently that I haven't delivered on the promise I made a couple weeks ago of some more detailed posts on economic policy, wondering whether it was just a teaser to keep people reading. Frankly, I don't think I have enough readers to get away with teasing them. It was really more of a way to remind myself and give myself a push to expand on some of the ideas that plainly need a lot more thought and research, such as the Grand
Bargain.
>Instead, I've been writing mostly about the minutiae of congressional politics. That's partly because I know something about it, but more because what's happened over the last few weeks, particularly on the Medicare bill, is an incredibly big deal, not only for its political implications such as its effect on Bush's reelection or the future of congressional government, but also for the future of social insurance and economic security. I've written about it a number of times, and I'll let it go, after a two-part post-mortem, with suggestions for the future.
The Democratic recriminations and accusations are well represented by E.J.
Dionne's typically superb column and David von Drehle's bird's-eye view of the circular firing squad (is that a mixed metaphor? Probably not.) The basic conclusion is that theRepublicans are disciplined, and the Democrats are not. True enough, as far as it goes. Breaux and Baucus should never have let themselves be used as bipartisan cover while their own party's elected leader was excluded, Kennedy – in retrospect -- shouldn't have let a bill get out of the Senate, Daschle should have knocked some heads together. (That's the von Drehle story in a nutshell.)

But there's a little more to it than that. The assumption seems to be that the Democrats underestimated the ideological cohesion of the Republicans. I don't think that's quite what it was. My view is that if the Democrats made one tactical mistake, it was in thinking they were dealing with ideological cohesion, when in fact they were dealing with something far more elusive and insidious: A party that derives its discipline and power from the fact that most of its members can be persuaded to sell out what they claim are their "convictions" at a moment's notice. (See Robert Novak for the very gory details.)

Take Senator Kennedy's judgment, for example. Most of the major press analysis concludes that Kennedy was naive in thinking that, by supporting a moderate bill in the Senate, he would increase the likelihood that a moderate bill would come back from conference. I don't know what's in Ted Kennedy's head, but I doubt he's that naive. (He's only been in the Senate since 1962!) I think he calculated that there were three possibilities: (a) the conference report might be acceptable, or (b), more likely, the Republicans would not be able to resolve their own differences or (c) the final bill would be so far to the right that he could lead a successful fight against it, hopefully without a filibuster. Any of the three options would at least do no harm, and, in the case of the latter two, the Democrats could not be blamed for blocking prescription drug coverage since they had supported a Senate bill.

In fact, Kennedy war right, and option (b) is what happend. The House Republicans were not able to resolve their own differences. The bill was defeated in the House. Only the astonishing move of the three-hour vote undid the defeat. And then it became clear that the Republicans' one and only objective was to push a bill through a pinhole that had the AARP and a few Democrats on one side, and Ted Kennedy on the other. And they managed to do it. Which is a tribute to something -- hard work, a mindless devotion to victory -- anything other than ideological cohesion.

With that being the only goal, it's unlikely that the resulting policy would be any good. And it's not. The drug coverage is more like a modest discount plan than real insurance that protects people from catastrophic costs. Nothing about the bill seems predictable: premiums, deductibles and coverage seems likely to vary based on the decisions of the private insurers participating in the program. The Health Savings Accounts not only create yet another tax-free vehicle for the well-off, they have the potential to destroy the private health insurance system by luring healthy people into very high-deductible policies. The private competition for Medicare, while not inherently offensive to me, requires massive subsidies to the private sector.

So far, the best readable analysis of the bill is still that of Brookings Institution economist Henry Aaron.

I'm confident that, for all the obvious reasons, there will be a backlash.
But I'm not ready to look forward to the backlash. First, unless Democrats are very aggressive about it, the
backlash may not come until 2006, when seniors find out that they're
premiums are not really $35, and that if they have above-average prescription costs of $4500, they still have to pay more than 70% of that amount. Or the backlash may even be postponed until the later years, when the premiums and deductibles skyrocket. Second, the usual result of a backlash is that politicians scurry away for another decade or so, as they did after the Catastrophic Care debacle of 1988 and the rejection of the Clinton plan in 1994. Third, the backlash may be against the better parts of the bill, such as the means-testing of Part B premiums, and not the worst. Fourth, this kind of backlash sometimes just feeds the perception that government can't do anything right, which is the Republican line, after all. So by creating horrible, flawed expensive government programs they feed the belief that government is horrible and expensive, which is exactly the problem they told you about!

But none of the analyses answer the question, what should opponents have done as the Medicare fraud rolled near? That's a hard one to answer. Yes, I'm furious at Baucus and Breaux. They shouldn't have supported the bill, but that goes for Wyden, Feinstein, and several others as well. And they definitely should not have allowed the Republicans to include them while excluding the other Democrats who had been named to the Finance Committee. Even the most off-the-reservation Republican, like Lincoln Chafee of Rhode Island, would walk out the door if a Democrat said to him, "we'll include you in our meetings, but we're keeping Frist out." But at the same time, I have to give them a certain amount of credit, along with Kenneday: they were elected to try to make policy and find ways to get things done. I can fault them for their judgment on the final result, but not for entering the discussion in the first place.

I do believe the Republican Party will ultimately pay a very high and ugly price, not just for Medicare, but for selling themselves out, for refusing to actually take a stand and negotiate in good faith from that position. Such discipline, in pursuit of nothing, has a cost, and I don't want to see Democrats pay the same cost by becoming that kind of party.

In the second part of this post-mortem, I'll take up the question of the opponent's message, and what it means for other economic and social policies.

One more quick item on Medicare

I think new hits to this site have come to a dead stop since I started writing about the Medicare bill and the end of the congressional session. But it's important, and I've got just a few more points.

from Reason online

Sen. Judd Gregg (R-N.H.), one of the few Republicans who placed principle above politics by voting against the bill, called it "the largest tax increase that one generation has put on another generation in the history of the country."

No, Senator, I think it is probably number three. The largest tax increase that one generation has put on another would be the tax bill you voted for in 2001. The second largest would be the tax bill you voted for in 2003.

The Medicare bill is a total scam

I'm working on a thorough post-mortem on the Medicare bill, coming later, but in the meantime, I found this tidbit in the Fort Lauderdale Sun-Sentinel. (Gotta read what the seniors read...) The article points out various ways that the program will change over time, including that premiums are likely to rise from $35 a month in 2006 to $58 a month in 2013, and the deductible will rise from $250 to $445. And then this:

CBO Director Douglas Holtz-Eakin said there is not even an assurance that the initial monthly premium for the drug benefit will be $35. That number could change by 2006 depending on the many "moving pieces" on which the formula is based, he said.

So even those calculators that show that a senior with drug costs of $4,500 will pay "only" $3,500 in 2006 may not be accurate.

Why are we hearing about the "First Tee" program only now?

In an earlier post today, I was reminiscing about my experience with the disastrous crime bill of 1994, which the Republicans savaged on the grounds that it contained a million dollars for "Midnight Basketball" and other crime prevention programs. I was thinking about that while I happened to be reading a report put out last week by the Democrats on the House Appropriations Committee demonstrating the astonishing increase in the number and cost of earmarked projects in congressional appropriations bills.

According to this very well-done report, in the Fiscal Year 2003 bill funding the Departments of Labor, HHS and Education (which in congressional parlance is called the "Labor-H bill," and by tradition, never included earmarks), House Majority Leader Tom DeLay inserted a requirement that the Department of Education spend $1 million of funds intended for education improvement to support a program of the World Golf Foundation called "First Tee."

The mission of First Tee, according to its homepage, is "to impact the lives of young people around the world by creating affordable and accessible golf facilities primarily to serve those who have not previously had exposure to the game and its positive values." A little more research at the web site of the World Golf Foundation finds that the program basically funds the building of golf courses: "The First Tee golf facilities will depend on the needs of a given community. The fundamental concept is to use the available space to create a quality playing area and a true golf experience through a variety of hole lengths, shapes, and strategies." A little more research reveals that the program has also received $5 million from the no-women-allowed Augusta National Golf Club.

And, as the report notes, this money is coming out of the very federal education programs, such as No Child Left Behind, that are so grossly underfunded. The report points out that there are 31 schools in DeLay's own district designated as failing.

Given all this, why are we only hearing about this now?? This bill passed a year ago -- in fact, right before the election! In a single million-dollar ripoff, it says everything that needs to be said about the current majority. (Oh, did I forget to mention that the organization also hands out the "Shell Oil/George Bush Volunteer Award"?) It's got government waste, insider dealing, discriminatory clubs, giveaways to people who don't need it, the fraud that is No Child Left Behind. And it's not hard to understand.

For anyone who lived through the savaging of Midnight Basketball and other crime-prevention programs, it's very frustrating that something like this could go unmentioned for a year. But it's never too late.

"Watching the Worm Turn"

via Daniel Drezner, I came across this very well-written post by Pejman Yousefzadeh, who I have the impression is a conservative blogger (although who's to really say -- in the blogosphere, we all create our own composite ideologies) Pejmanesque: INSOMNIA FOR POLITICAL GEEKS He stayed up all night to watch the House's scandalous three-hour vote on the Medicare bill, and while watching, started re-reading John Barry's good but way-too-long book, The Ambition and the Power about former House speaker Jim Wright and the meltdown of the Democratic majority in the House in the late 1980s. He finds a particular parallel in the legendary long vote in 1987, in which the Democrats first had to declare the House adjourned and a second "legislative day" begun in order to change a budget bill that was going to lose, and then, like today's Republicans, had to keep a vote open longer than the usual 15 minutes (though not three hours) to persuade some of their own to change their votes. As Yousefzadeh says, "in the process, I watched the worm turn." That is, the arrogance of power that eventually brought down the Democrats has now thoroughly infected the Republicans.

What he doesn't acknowledge was that this exercise of raw power in the 1980s was in the service of some pretty decent policy. The budget bill Wright pushed through created the federal nursing home standards, the COBRA program that allows people to extend their health insurance after leaving a job, and was one of several serious attempts to deal with the Reagan-created deficits. The current Medicare bill, on the other hand, throws almost a third of its benefits at companies in a bid to induce them to do things that would otherwise not be profitable (so much for the free market), provides a ridiculous form of insurance that really does no more than provide two different kinds of discounts but no real security, asks for sacrifices from everyone except pharmaceutical companies, and creates yet another uncontrolled stream of spending which will be much higher in the future, similar to the tax cuts.

But back to the process: You can get away with this behavior for a while, but eventually it will destroy a political party. I wasn't in Washington in 1987, but my political outlook is very much shaped by the end of that episode. In 1994, I had helped to get some very good provisions into the crime bill of that year -- $775 million in new, guaranteed funds for after-school programs, at a time when there was almost no money at any level for after-school. (The change since then is partly to the credit of my colleagues at The After-School Corporation.) We had a good coalition of Democrats and Republicans in the Senate, and not just moderate New England Republicans either. At the end of this period, I remember getting into an argument with a member of Gephardt's staff in the majority leader's office. If they didn't make a certain change, I said, we would lose our Republican support. "Since when do we give a shit what Republicans think?," was her response. And a week later the crime bill was almost killed, a month later her boss became the minority leader, which he has been ever since. That's the price of that attitude, and every Democrat understands that now.

Unfortunately, the worm turned a long time ago. As I wrote in an earlier post, it's now many years, and many degrees of anti-democratic behavior, past the point that "we're just treating them the way they treated us" is an excuse.

The Clark Scenario, revisited

The pieces are starting to fall into place for my earlier scenario about how General Clark could actually use New Hampshire to get his campaign moving, and may not have to wait for South Carolina:

-- Gephardt seems to have regained his advantage in Iowa, which means Dean may not "run the table" of the first two contests. (The Des Moines Register poll, which gives Gephardt a 5 point advantage, is the reliable poll in Iowa, because they are the closest to figuring out who will actually participate in the caucuses. The Daily Kos defends a Surveys USA poll, even though it is based on automated telephone calls, on the grounds that "the last SUSA Iowa poll was a harbinger of Gep's Summer and Fall surge in Iowa." But all that means is that there were some other polls that showed Gephardt ahead also, not that the poll was confirmed by any actual caucus results, which are determined by the very complicated question of who is going to show up.)

-- There's no floor underneath John Kerry. There was never really any logic to his candidacy other than "he's electable because he served in Vietnam, and has a face for Mount Rushmore" and he hasn't found anything more than that yet. At 17%, he's got a lot of ground to make up in New Hampshire before he's even got a lock on second place. It shouldn't be impossible for Clark, having now figured out what goes into being a presidential candidate, to put together the campaign that reaches independents who vote Democratic, plus Democrats unpersuaded by Dean, to get past Kerry, or a close enough third that it will still be the big story of the day.

But in the circles I move in, I'm amazed by how quickly really negative attitudes about Clark have taken hold, almost as much as about Lieberman. He's the "candidate of the military-industrial complex" one person told me. "I'm afraid he's another Arianna," another said, meaning Arianna Huffington's switch from Gingrich-right to Beatty-left. (I don't know Clark, but I do know Arianna Huffington, and I think I can say with confidence that he's no Arianna, and not merely because there can only be one Arianna!)

There's a lot to be said about this, but the one point that liberals ought to remember when they buy into some story about Clark is that everything negative you read about him has been generated by the Bush White House. Period. Even if it's in the New Yorker. He's the only candidate Karl Rove has to bring down now, and he is doing it, using the military as necessary. Not that Clark's perfect, not that he hasn't said some awkward things and taken some surprising positions. But if people keep perspective, and separate out the real reasons to worry about his candidacy from the dirt coming from the White House, he remains a very interesting voice, with some good skills, a career of public service, and a persuasive clarity about what's gone wrong in this country, in both domestic and foreign policy, that doesn't come across as purely negative.

I Think I Saw a Vice-Presidential Candidate

I watched a little bit of the Senate debate on the Medicare bill -- hard to take. What the hell is Ron Wyden, who used to run the Oregon Gray Panthers, doing voting for this bill? What is the actual logic behind the argument, "it's a flawed bill but let's enact it so we can improve it?" Is there an example of something like this that's been enacted and then significantly improved? Wouldn't it be just as easy to improve it and then pass it?

Leaving all that aside, I watched several very good speeches in opposition (though not John Kerry's -- he showed not the slightest interest in the text he was reading), but the one that jumped out at me was Senator Bill Nelson from Florida. He's not someone I've paid any attention to, but watching him, I realized he's a great choice for a Democratic vice-presidential candidate. Not only is he from Florida, but he's from the more Republican area near Orlando and ran well ahead of Gore in the Republican areas of Florida in his 2000 Senate race. He's an Army veteran, flew in the Space Shuttle Columbia (I hate the Space Shuttle, but it does represent the kind of vision and ambition that Democrats need), went to Afghanistan as a member of the Armed Services committee. He's only been in the Senate since 2000, but his political resume is as long as anyone in the presidential race, including Dick Gephardt and Joe Lieberman, going back to 1972, when he was elected to the state legislature, then several terms in Congress, a failed run for governor, and a few years as state insurance commissioner during the cleanup from Hurricane Andrew. He seems to be a solid, consumer-oriented moderate Democrat.

According to the Almanac of American Politics, he's "a straight-arrow who doesn't drink, smoke or swear," with a "folksy" manner. But he's been very solid in voting against the Bush tax cuts and now against the Medicare bill; he voted for the war resolution but that's not a deal-breaker for me. Could be a very interesting match for Dean in particular, but any of the other candidates as well. Imagine the Republican calculus if Democrats could take Florida off the table early!

The Petroleum Party and the Ethanol Party Cut a Deal

In general, I'm not one to blame Senator Daschle for the disasters of the last three years -- he's been dealt bad hands, even with his one vote majority for eighteen months, and played them well. He can't do more than he has the votes to do.

So I can deal with the fact that Tom Daschle has decided not to support a filibuster of the Medicare bill, while nonetheless vociferously opposing it. I've argued before that that's probably the wisest path politically for Democrats, even if they could mount an effective filibuster, although it will come at a very high cost in terms of policy.

But I can't tolerate the fact that Daschle is actively supporting the energy bill. I don't know the details of that bill as well as I do Medicare, but it's all pretty obvious: $24 billion in new tax breaks for industries that don't need them, another $72 billion in spending for the same (for a simple, no-comment breakdown of the giveaways, see this chart from Taxpayers for Common Sense), the elimination of the Public Utility Holding Company Act, the overriding of legal process for victims of MTBE. Where's the good?

For Daschle, there is only one explanation: He is a Democrat, but he also belongs to the Ethanol Party. The Ethanol Party believes that their states' economies depend on even more subsidized corn than they are already feeding to overweight children in the form of high-fructose corn syrup. For years, Congress was dominated by the Petroleum Party. Now it is joined by the Ethanol Party. Competitors in theory, they find common ground in Washington, and both can benefit when they vote together. Neither can function in a real competitive marketplace; both products depend on heavy government subsidy for their viability. Both depend on great American myths -- the wildcatter, the family farmer -- that have no relation to the distant corporations whose lobbyists have bought these benefits.

Every Senator has to vote his or her state's interests, at least as the state sees it. Senator Harkin is a charter member of the Ethanol Party; there's nothing to be done about that. But Daschle is the elected leader of the Democratic Party. There are times when he has to choose between the two, and this is one of them.

How do blogs rank so high on Google?

I'm a big fan of the system I use to create this weblog: TypePad, an easier-to-use version of Movable Type, which is obviously superb but just beyond my skills. One of TypePad's cool features is that it will show you both the statistics for your site -- number of hits, and what article(s) the viewers read -- and also, in some cases, just where they came from. That is, it might show that the hit came via some other blog that referred here, or from Yahoo or from Google. If the hit's from Google, I can actually see what it was that the person searched for that led them here. So today, for example, I noticed a few hits from Google, and out of curiosity found that two of them were from people searching on the phrase "How does Bush Get Away With It?" The first two results from that search -- an obvious question -- are to this weblog! It's not surprising that this post ranks high, since it includes almost the exact phrase, but why is this one second? It includes some of the words in the phrase -- "Bush," "Does," and "Get" -- but these are not unusual words. Then the third Google hit on this phrase is from Brad deLong: "Why Does the Bush Administration Lie All the Time?"

I find this odd. I don't think anyone else linked to the second post, so it shouldn't rank high on Google for that reason, and it was far from the search phrase. Although a person asking the question as posed to Google might well be interested in it as well as the other results. It seems that Google must somehow over-rank weblogs, compared to other publications or sites that might have a similar phrase. I'm not complaining, though: it's one of the things that makes it remarkable easy to pick up a readership, albeit still very small, without a lot of effort.

David Broder doesn't read this blog

But if he did, he might be a day or two ahead of himself

GOP: Masters Of the Grand Finale (washingtonpost.com) November 21

As this is written, Democrats are debating among themselves whether to go along with the Medicare bill; they already have conceded defeat on the energy legislation. If they allow Bush his Medicare victory, they will once again look feckless. If they try to stop Medicare with a filibuster, they will be labeled as obstructionists.

It is not a comfortable place for them to be. And it is certainly no accident that the Republicans -- smart devils that they are -- have put them there.

Over the weekend, I wrote,

So the calculus for Democrats is deadly. If they block the bill, they're blamed for it's failure (which was the set-up all along), and there can't be a backlash against a bill that never passes. All seniors will hear is that they might have had prescription benefits but for those bad Democrats. On the other hand, if Democrats help pass the bill, they are collaborators and can't stand apart when the backlash hits. The third option, which seems to be Daschle's approach, is to stand aside, criticize the bill sharply, let the Republicans pass it with a few Democratic votes, and be able to say "we told you so" when it's an unpopular disaster.

Assuming the Republicans can reach a deal among themselves, the third option is probably the only politically sound choice. But it's a $400 billion choice (at least), and the backlash may mean that it is another dozen years or more before anyone will be willing to pick up the cause of real change in Medicare.

This administration is good at one thing: Creating ugly choices between bad policies.

This isn't the first time this has happened with Broder:

http://markschmitt.typepad.com/decembrist/2003/10/mccain_and_iowa.html

If it happens again, I don't care if he's the dean of the Washington press corps and probably doesn't even use the internet -- he's getting a letter from the Decembrist's legal team!