Saturday, November 24, 2012

Barack Obama, Extreme Socialist?

Imagine what would happen if some politicians proposed a new federal tax of 1.45% on every worker's wages or salary, to be deducted from every worker's paycheck, in order to fund a government-run health insurance program for old people. Imagine the outrage, the cries of "socialism" and "government overreach" that would ensue.  Imagine the injustice of it: That the youngest and healthiest of workers would be required to pay a tax that funds a generous defined benefit plan for seniors.

Even worse, imagine the horror if every employer was also required to pay a 1.45% tax, above and beyond what the employee pays, on the wages and salary of each of its employees.  Would such a crushing burden on "small businesses" and "job creators" be tolerated?  Surely not.  For if this new tax were enacted, it would be prima facie evidence that the United States had finally descended into full blown socialism. The American people would never permit it.

But of course, it was permitted, way back in 1965, with the creation of Medicare.  Medicare is the last of the major New Deal ("Great Society," if you're a stickler) social insurance programs instituted and run by the federal government.  Its older companion program, Social Security, is also funded by a payroll tax that's even larger than Medicare's. Together the two taxes consume (including the employer part) a whopping 15% of an employee's wages! Even today, some small number of the staunchest libertarians and the most conservative of conservatives vehemently decry these programs, and dream of eliminating them. But they are in a distinct minority; the vast majority of seniors, including conservative Fox-watching seniors, want their Social Security and Medicare to be left alone.

The programs have been so successful, and in effect for so long, and are so overwhelmingly popular, that hardly anybody today acknowledges how strongly socialistic they are.  You often hear seniors justify Medicare by saying, "I paid into it," so it isn't socialism.  This misunderstanding is useful if incorrect: workers who believe they've earned the benefit are more likely to defend the program.  But whenever you're tempted rationalize in this manner, just imagine the howls of socialism that would erupt from the political right if such programs were proposed today.

And the right would be, um, right. Consider the socialistic characteristics of Medicare and Social Security:  (1) They are a collective provisioning of social insurance in a country that imagines rugged and responsible individualism to be one of its defining virtues; (2) they are mandatory, and hence coercive and anti-freedom, not to mention "un-American," whatever that means; (3) they are "pay as you go" (albeit with some pre-funding) programs where current workers pay for the benefits enjoyed by current seniors; (4) they are defined benefit programs where the benefits are not connected to an economic return on the premiums (taxes) paid;  (5) they rest upon the government's authority to confiscate wages (that is, to tax); (6) they involve a substantial amount of redistribution; (7) they are administered by that most illegitimate (in the troubled right-wing imagination) of entities: the government itself. And, finally, (8) they exemplify the reviled "nanny state" that provides comfort and security to people who won't, or can't, take the measures required to provide for themselves.  No doubt about it: that's socialism.

And if you persist in believing that with Medicare you're merely (and therefore, rightfully) getting out what you paid in, you should know that the amount a worker pays in Medicare taxes over a lifetime doesn't even come close to covering the Medicare benefits he receives.  Medicare recipients thus receive a huge subsidy, courtesy of their socialist government.

Of course, this is a kind of socialism that we generally like.  After all, seniors are such a high risk and high cost group that, left to their own devices, most simply couldn't afford to purchase insurance in the private market. Being old, after all, is a "preexisting condition". Before Social Security and Medicare, a large fraction of the elderly lived their final years in abject poverty.  No longer.  As a nation, we decided long ago that we don't prefer our seniors to be profoundly, hopelessly poor. And anyway, we all hope to be seniors one day. What goes around comes around. Happily, the "safety net" works: in the depths of the national economic downturn following the 2008 financial crisis, seniors as a whole did substantially better than the struggling populace at large, thanks to Social Security, which keeps the checks coming in good times and in bad, and regardless of how the stock market performs.  Whether we knew it or not, we are socialists. Good for us.

Which brings us, then, to Obama and "Obamacare" (formally known as The Affordable Care Act, or ACA).  As a socialistic program, the ACA is actually quite tepid, particularly alongside the New Deal stalwarts we've been discussing. After all, it retains and is in fact built upon the existing private insurance market, which, unfortunately, is one of the reasons health care in the U.S. is so inefficient and costly. A socialistic program worthy of the name would institute a national single-payer system ("Medicare for all") or, at a bare minimum, a "government option" that competes in the private market. Obamacare does neither.  Perhaps, with FDR and Lyndon Johnson long dead, we've forgotten how to be real socialists, and Obamacare is all we could manage.  In any case, persons who claim that Obamacare is an unprecedented government takeover of health care simply don't know what they are talking about. All the hysteria notwithstanding, Obamacare is in essence just a requirement that everybody have insurance, with some rules and mechanisms governing how that is to be accomplished. Hardly a government "takeover" by any stretch.

Especially silly is the notion that (as conservative legend has it) President Obama is uniquely, unprecedentedly, exquisitely socialist, and that the ACA is part of his extreme socialist agenda, which was predictable (and predicted) by his socialist upbringing with his socialist (if not Communist!) influences; that his particular and vile brand of socialism is destined to ruin the country in ways we could not have imagined before this Kenyan socialist imposter somehow took control of, and began to wreck, our government and our way of life. Silly, indeed, because as we have already noted, Obamacare is pretty thin socialistic gruel; as a country we've done much better several times already. Silly also because the goal of universal health care has been a recurrent topic in national politics going back at least to Harry Truman (in fact, to Theodore Roosevelt).  Remember "Hillarycare" in the early 1990s? That was two decades ago.

More recently, health reform featured prominently in the 2008 presidential campaign, with Barack Obama and Hillary Clinton both articulating, and debating, very extensive reform proposals, out in the open, for everybody to observe.  The public well knew what they were voting for. Why should anybody be surprised that the newly elected president followed through on his campaign promise to tackle health reform? The only surprise is that the Republican opposition refused to be honest partners in designing a plan.

Ah, the Republicans: so confused, so conflicted, seemingly unable to take yes for an answer. What today's end-of-the-world doomsayers somehow overlook is that, far from being a far-left socialistic enterprise, Obamacare almost exclusively consists of principles and proposals originally advanced by Republicans. It is, in truth, a Republican program. Indeed, the scorned individual mandate was first proposed at the right-wing Heritage Foundation (a conservative think tank) in the late 1980s. The individual mandate was first introduced into actual legislation in the early 1990s by a large gaggle of leading Republican politicians (Dole, Bond, Hatch, Danforth, Kassebam, Stevens, Domenici, Warner, and others) as part of the Republican alternative to Hillarycare. Newt Gingrich argued in favor of some kind of individual mandate until fairly recently. Chuck Grassley was convinced that an individual mandate was necessary before he suddenly realized, after Obama embraced it, that the mandate was unconstitutional.  A recurring theme, that: Republicans are opposed to whatever Obama is for, regardless of any positions they previously held. Can't anybody stand on consistent principle?

Mitt Romney, the party's most recent standard bearer, has argued that the very successful Massachusetts health reform plan, upon which Obamacare was based, was a fine model for the country. He was right, of course, even if he subsequently disavowed that position as a political necessity to survive and prosper in the 2012 Republican primaries. Obamacare is practically identical to Romney's Massachusetts plan. Indeed, the same MIT economist that designed the Massachusetts plan led the design of Obamacare.

Finally, let's dispense with the candard that we can't afford Obamacare on budgetary grounds. According to authoritative CBO scoring, the ACA actually reduces budget deficits by over $100 billion over its first decade, and even more in its second decade.  It also extends the solvency of the Medicare trust fund by around seven years.  It's a delicious irony that one of the difficulties confronting politicians favoring repeal is that they would have to come up with savings elsewhere to compensate for the budgetary impact of eliminating Obamacare.

As should now be clear, the hysterical Obama narrative churning on the right is more than a little bizarre, with no basis in observable reality, particularly with respect to anything Obama has actually done or proposed while in office. And gosh, he has been president for almost four years now; shouldn't we be judging him on his record? At what point might we expect him to actually start doing his dastardly deeds? Or are conspiracy theories and pop psychology sufficient grounds for condemnation?  Keep such questions in mind next time you're inclined to entertain the fable of Obama-the-extreme-socialist of "2016" fame, who somehow pulled one over on the country. It's only a myth, and a fatuous one at that.

So explain to me, one more time, how Obama is a flaming socialist of proportions heretofore unknown in the country's history, exposed by D'Souza, but nevertheless elected, and reelected, by an oblivious voting public, as a final ruinous stroke of national suicide.  I still don't get it.  Between you and me, I suspect you don't get it either.

Final thought: In a just-published piece in The American Conservative, Bruce Bartlett writes that "the final line for me to cross in complete alienation from the right was my recognition that Obama is not a leftist. In fact, he’s barely a liberal—and only because the political spectrum has moved so far to the right that moderate Republicans from the past are now considered hardcore leftists by right-wing standards today. Viewed in historical context, I see Obama as actually being on the center-right."

SOME NOTES AND REFERENCES

1. Medicare lifetime benefits far exceed lifetime taxes paid. For example, see the tables in this document.  Typical is: "Two-earner couple both earning an average wage" who turn 65 in 2010, where lifetime Medicare taxes are $149,000 and lifetime benefits are $351,000.  All amounts are in 2011 dollars. See also this article.

2. The individual mandate originated at Heritage in the late 1980s.  Even Fox News says so.

3. Republicans were the first advocates of the individual mandate. In 1993 Republican senator John Chafee, along with 19 Republican co-sponsors in the senate, introduced the Health Equity and Access Reform Today Act of 1993 (HEART), which proposed an individual mandate along with health insurance vouchers for low-income individuals.  Co-sponsors included Bob Dole, Chuck Grassley, Orrin Hatch, Richard Lugar, Alan Simpson, and Arlen Specter.  See this and this.


4. Newt Gingrich was a long-time advocate of the individual mandate. Newt Gingrich frequently spoke in favor of the individual mandate for a decade or more, until May of 2011, when he realized he needed to jettison that position if he wanted to compete in the 2012 Republican presidential primaries.  For example, Gingrich said: "I think you have got to require everybody to either have insurance or post a bond." See this in Forbes.  And next are some examples straight from the horse's ass's mouth. The first is from 2005:

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This is from May 2009, as health care reform efforts were getting started in Congress.  Gingrich praised the openness of the process, and argued for the individual mandate:

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5. Chuck Grassley was convinced the individual mandate was necessary.  He even said there's a "bipartisan consensus" on the matter.

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He supported it, that is, until he realized the mandate was unconstitutional.  When did he realize that?  Why, after Obama came out in favor it.  Funny how that works.  Of course we now know, courtesy of the Supreme Court, that the individual mandate is indeed constitutional. Grassley was right before he was wrong.
 
6. Mitt Romney was also in favor of the individual mandate, and said his Massachusetts plan was a model for the nation.  But what a tangled, twisted knot in which he tied himself in order to disavow that position in the Republican primaries.

7. Mitt's early endorsement is understandable, because the Massachusetts plan has been quite successfulThe program has achieved near-universal coverage, and has broad public support. Very impressive.

8. And indeed, Obamacare is modeled on the Massachusetts plan.  MIT health care economist Jonathan Gruber was a principal architect of both plans. In this interview, Gruber was asked how the Romney and Obama plans differ.  His answer: "They are the same bleeping bill! More seriously, the core of the ACA [Affordable Care Act] is exactly the same as what we did here in Massachusetts, which I like to call a 'three-legged stool': end discrimination in insurance markets, mandate insurance coverage, and subsidize that coverage for the poor. The federal law is then more ambitious because, unlike in Mass., it takes on cost control." 

9. Obamacare will decrease federal budget deficits. This according to the nonpartisan Congressional Budget Office, which is the authority for scoring budgetary impacts of federal legislation.  Scoring details have varied a little over time with changing circumstances (such as the effect of the Supreme Court decision), but in broad strokes has remained relatively unchanged. In March of 2011, the CBO esitmated that the ACA would result in a net reduction of federal budget deficits of $210 billion over the period 2012-2021. While acknowledging the difficulty of longer term projections, the CBO nevertheless estimated that the ACA will "reduce federal budget deficits during the 2022–2031 period by an amount that is in a broad range around one-half percent of GDP", and that in future decades the ACA "will probably continue to decrease budget deficits relative to those that would have occurred under prior law."

10. And repeal of Obamacare would increase federal budget deficits.  Which is unsuprising in light of the CBO's scoring of the ACA. The House has voted numerous times to repeal Obamacare, and the CBO has weighed in on these repeal efforts. Here's one example. In July of 2012, the CBO estimated that repeal of the ACA would increase federal budget deficits by $109 billion over 10 years.  This represents a quandary for Republican budget hawks, who would have to find ways to offset the adverse budget effect of Obamacare repeal.

11. Obamacare extends Medicare trust fund solvency.  From about 2016, without Obamacare, to around 2024 with it.  So says Medicare's trustees, although you probably don't want to slog through their report.  Instead, read Ezra Klein's explanation of how this works.

 Copyright (C) 2012 James Michael Brennan, All Rights Reserved

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