Friday, January 14, 2005
Although the recent South Asian tsunami disaster has rightfully dominated the news recently, the Bush administration has started moving towards enacting its primary policy objectives as well. Foremost among these objectives is reforming Social Security, perhaps the most sacred program to emerge out of the New Deal, and if successful, the greatest Conservative legislative achievement in decades. It is particularly notable then that the administration is supporting another major reform at the same time - an act which appears politically puzzling, given that it may distract from the plan to revamp Social Security. This other reform is the attempt to cap punitive damages for non-physical injuries in medical malpractice cases to $250,000.
At first glance, the two proposals seem wholly unrelated. One program seeks to borrow trillions of dollars in the hopes that amateur individual investors will invest this borrowed money wisely enough to repay the debt, and to generate a surplus large enough to benefit both the investors and the federal government. The other program seeks to lower the cost of insurance premiums by essentially asking the families of victims of medical malpractice to subsidize the insurance industry by limiting the payouts they can receive. Upon closer inspection though, the two programs are linked by something more than their irresponsible approach to governance.
Among the narratives which the Bush administration has promulgated about itself is the recent re-election mandate theory, in which the Republican party claims a mandate to reshape America's domestic politics, despite the fact that voters to whom domestic issues such as healthcare and the economy were paramount voted overwhelmingly for John Kerry. The attempt to sail a controversial legislative agenda through Congress will test this mandate narrative.
Republicans are feeling more uneasy today than what one might have expected after winning even larger majorities in both houses of Congress in the past election. Some of that unease comes from a redefinition of ideology that the Neocons have thrust upon the party. Right now though, things are not looking good for the Neocons. With no WMDs in Iraq, a war that has lost the support of the majority of the voters, and a mission in Iraq that is suddenly faced with the prospect of serious restructuring once a massive, unexpected, and Presidentially authorized review is completed. Indeed, saber-rattling can already be heard from the camp which the Neocons had once smirkingly dubbed the Paleocons; among these Conservative-flavored Conservatives are old warhorses like former Speaker of the House and architect of the current Republican Congressional majority Newt Gingrich, former Bob Dole running-mate Jack Kemp, and billionaire financier and one-time Presidential office-seeker Steve Forbes.
When George W. Bush first ran in 2000, he sought to distance himself from the curmudgeonly, old, and unpopular perception of Republicans, and instead sought to reposition himself as a warm, religious Conservative, who appreciated value in economics and values in private life. Calling himself a "compassionate Conservative", the Governor of Texas tried to sell America on the idea that big, across-the-board tax cuts were good for whatever ailed you, and since they would cure any ill, from a too-large government surplus, to a deficit-stricken, recessional economy, there would soon be no need for the traditional entitlement programs like Social Security and Medicare. These new programs would eventually be reconstituted into something more appropriate for a government that would generate income primarily through taxing consumption.
Putting aside political rancor (but only for the moment), there's a serious timing problem with trying to change fundamental rules for any large system. My father would always joke that whenever the British consider switching over to driving on the right side of the road, they always stall when the only acceptable compromise between proponents and opponents of the plan is to implement it gradually, starting only with the trucks. That's where the Bush team is at right now. The equation for making sense of Conservative economics, as best as I understand it, is that a tax on consumption alone would be cheap and efficient to administer, would encourage untaxed savings and investment, and would exempt certain kinds of consumption, like healthcare, from taxation, so that all families could meet their basic needs. The main problem is that a tax on consumption, if applied to current economic realities, would result in a lot less tax revenue than the federal government currently collects. Even if we grant the assumption that if we reformed our tax and entitlement policies, the economy would expand at a faster rate, so tax revenue would eventually grow as well, you're still left with a gap of trillions of dollars that would need to be financed (read: borrowed) in order to make the changeover.
Neocons and Paleocons react to this assumption, and its consequences, in very different ways. To an old-school conservative, the watchword is caution, and the approach is piecemeal. These conservatives seek to cut and restructure taxes in step with cuts in spending and deficit reduction. In fact, Bill Clinton's successful co-opting of Conservative policies was palatable to both parties particularly because cuts in capital-gains taxes were accompanied by deficit-slashing and a commitment to balanced budgets (despite a very large number of military deployments abroad). The idea of borrowing trillions of dollars to enact an economic policy which only works in theory so far is abhorrent to the prudent, fiscally sensible conservative, particularly when it comes at a time of deep national debt.
The Neocon is rarely constrained by such reality checks. Flush with electoral riches, but with the day of reckoning for Iraq still off in the future, Neocons have successfully ignored reality for the time being, and are looking to make one more big bet. As their foreign policy has demonstrated, Neocons prefer the bold, dramatic, throw-the-cards-in-the-air approach to change, rather than the pragmatic, step-by-step approach long favored by their conservative forebears. But the Neocons can't do it alone. Even though the Neocons wield great power in the executive branch of government, they are dependent on Paleocons in the legislature.
It is here that the connection between the medical malpractice and Social Security reforms lies. Medical malpractice reform is either a first step in, or a stalking horse for tort reform, depending on your perspective, and tort reform itself is a key part of the Conservative vision of protecting the haves from the have-nots. To Conservatives, the haves are the haves because they are deserving of it. They have worked hard - at least at some point along the genealogical line - and profited. The have-nots are to blame for their lack. After all, we live in American, a land of opportunity, where anyone willing to work hard can make it. But I digress. The point is that Bush knows that reforming Social Security to include personal investment accounts is going to cost a lot of money today, and most old-school conservatives will not like that one bit. In order to bring them over to his side, Bush must promise them something they want very badly, and tort reform is very high on their wish list - perhaps high enough that they would be willing to borrow over a trillion dollars in order to secure it.
The challenge to Paleocons is significant. In four years of governing, the Republicans have accomplished little of lasting impact on the domestic front. Nearly all of their achievements, from the loosening of environmental standards to opening the federal purse to religious evangelists, have come through expansive uses of executive power. The election of a Democrat to the White House could result in an immediate reversal of many of these policies. In order to truly bring the country onto more Conservative ground, legislative achievements are necessary. Unfortunately for Republicans, the country as a whole does not agree with conservative economic policies, nor is it receptive to conservative social policies of an extreme sort, such as reversal of affirmative action or abortion rights. In fact, it appears that the only 'value' that conservatives share with America as a whole is greed. As long as the promise is tax cuts or lower costs, and as long as the victims are presented as overprivileged or hated (e.g. trial lawyers), Americans can't wait for the checks to arrive.
The problem is that the checks do have to arrive. If you're a conservative who honestly believes that consumption taxes, smaller government, larger savings and private investment will be better, in the long run, for everyone, you're stuck with an awful choice. You must be willing to do that which is most contrary to all of your beliefs - borrow an ungodly amount of money - in order to reformulate Social Security. By doing so, you essentially bet that the ticking time bomb of a trillion dollars of new debt will be disarmed by the benefits of your program. That's a tough pill to swallow. In order to sweeten the deal, Bush is offering a plan to cut down on tort costs and pave the way for a cap on all damages in tort. Though tort reform is only a marginally ideological position, in the sense that there is little about the concept of tort reform that corresponds with the conservative hallmarks of flatter taxes, self-reliance and limited government, tort reform is a wildly valuable political plum that is worth untold fortunes to corporations and to the legislators that can deliver it. Put simply, Bush is telling the Paleocons the same thing he has so effectively told the country: just vote for me, and your check will also be in the mail.
Will paleocons take this deal with the devil? I suspect that they will. After a half-century of Democratic dominance of the legislature, Republicans finally have a shot to do things their way. Paleocons do not share the President's rosy assessment of the war in Iraq, and they are well aware that someone will have to pay electorally for that failure. With an election looming in '06, conservative lawmakers need to have legislative achievements to hang their hats on. Moreover, in his last two years, it will be nearly impossible for President Bush to effectuate major legislative changes, and given the state of foreign policy, by '08 the Conservative window may slam closed if a Democrat is able to capitalize on the foreign policy failures of the current administration. This may be the only chance in ten years for conservatives in Congress to make a fundamental, lasting change to American social and economic policies. It's almost tragic that it will cost them over a trillion dollars, and perhaps also their souls.
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At first glance, the two proposals seem wholly unrelated. One program seeks to borrow trillions of dollars in the hopes that amateur individual investors will invest this borrowed money wisely enough to repay the debt, and to generate a surplus large enough to benefit both the investors and the federal government. The other program seeks to lower the cost of insurance premiums by essentially asking the families of victims of medical malpractice to subsidize the insurance industry by limiting the payouts they can receive. Upon closer inspection though, the two programs are linked by something more than their irresponsible approach to governance.
Among the narratives which the Bush administration has promulgated about itself is the recent re-election mandate theory, in which the Republican party claims a mandate to reshape America's domestic politics, despite the fact that voters to whom domestic issues such as healthcare and the economy were paramount voted overwhelmingly for John Kerry. The attempt to sail a controversial legislative agenda through Congress will test this mandate narrative.
Republicans are feeling more uneasy today than what one might have expected after winning even larger majorities in both houses of Congress in the past election. Some of that unease comes from a redefinition of ideology that the Neocons have thrust upon the party. Right now though, things are not looking good for the Neocons. With no WMDs in Iraq, a war that has lost the support of the majority of the voters, and a mission in Iraq that is suddenly faced with the prospect of serious restructuring once a massive, unexpected, and Presidentially authorized review is completed. Indeed, saber-rattling can already be heard from the camp which the Neocons had once smirkingly dubbed the Paleocons; among these Conservative-flavored Conservatives are old warhorses like former Speaker of the House and architect of the current Republican Congressional majority Newt Gingrich, former Bob Dole running-mate Jack Kemp, and billionaire financier and one-time Presidential office-seeker Steve Forbes.
When George W. Bush first ran in 2000, he sought to distance himself from the curmudgeonly, old, and unpopular perception of Republicans, and instead sought to reposition himself as a warm, religious Conservative, who appreciated value in economics and values in private life. Calling himself a "compassionate Conservative", the Governor of Texas tried to sell America on the idea that big, across-the-board tax cuts were good for whatever ailed you, and since they would cure any ill, from a too-large government surplus, to a deficit-stricken, recessional economy, there would soon be no need for the traditional entitlement programs like Social Security and Medicare. These new programs would eventually be reconstituted into something more appropriate for a government that would generate income primarily through taxing consumption.
Putting aside political rancor (but only for the moment), there's a serious timing problem with trying to change fundamental rules for any large system. My father would always joke that whenever the British consider switching over to driving on the right side of the road, they always stall when the only acceptable compromise between proponents and opponents of the plan is to implement it gradually, starting only with the trucks. That's where the Bush team is at right now. The equation for making sense of Conservative economics, as best as I understand it, is that a tax on consumption alone would be cheap and efficient to administer, would encourage untaxed savings and investment, and would exempt certain kinds of consumption, like healthcare, from taxation, so that all families could meet their basic needs. The main problem is that a tax on consumption, if applied to current economic realities, would result in a lot less tax revenue than the federal government currently collects. Even if we grant the assumption that if we reformed our tax and entitlement policies, the economy would expand at a faster rate, so tax revenue would eventually grow as well, you're still left with a gap of trillions of dollars that would need to be financed (read: borrowed) in order to make the changeover.
Neocons and Paleocons react to this assumption, and its consequences, in very different ways. To an old-school conservative, the watchword is caution, and the approach is piecemeal. These conservatives seek to cut and restructure taxes in step with cuts in spending and deficit reduction. In fact, Bill Clinton's successful co-opting of Conservative policies was palatable to both parties particularly because cuts in capital-gains taxes were accompanied by deficit-slashing and a commitment to balanced budgets (despite a very large number of military deployments abroad). The idea of borrowing trillions of dollars to enact an economic policy which only works in theory so far is abhorrent to the prudent, fiscally sensible conservative, particularly when it comes at a time of deep national debt.
The Neocon is rarely constrained by such reality checks. Flush with electoral riches, but with the day of reckoning for Iraq still off in the future, Neocons have successfully ignored reality for the time being, and are looking to make one more big bet. As their foreign policy has demonstrated, Neocons prefer the bold, dramatic, throw-the-cards-in-the-air approach to change, rather than the pragmatic, step-by-step approach long favored by their conservative forebears. But the Neocons can't do it alone. Even though the Neocons wield great power in the executive branch of government, they are dependent on Paleocons in the legislature.
It is here that the connection between the medical malpractice and Social Security reforms lies. Medical malpractice reform is either a first step in, or a stalking horse for tort reform, depending on your perspective, and tort reform itself is a key part of the Conservative vision of protecting the haves from the have-nots. To Conservatives, the haves are the haves because they are deserving of it. They have worked hard - at least at some point along the genealogical line - and profited. The have-nots are to blame for their lack. After all, we live in American, a land of opportunity, where anyone willing to work hard can make it. But I digress. The point is that Bush knows that reforming Social Security to include personal investment accounts is going to cost a lot of money today, and most old-school conservatives will not like that one bit. In order to bring them over to his side, Bush must promise them something they want very badly, and tort reform is very high on their wish list - perhaps high enough that they would be willing to borrow over a trillion dollars in order to secure it.
The challenge to Paleocons is significant. In four years of governing, the Republicans have accomplished little of lasting impact on the domestic front. Nearly all of their achievements, from the loosening of environmental standards to opening the federal purse to religious evangelists, have come through expansive uses of executive power. The election of a Democrat to the White House could result in an immediate reversal of many of these policies. In order to truly bring the country onto more Conservative ground, legislative achievements are necessary. Unfortunately for Republicans, the country as a whole does not agree with conservative economic policies, nor is it receptive to conservative social policies of an extreme sort, such as reversal of affirmative action or abortion rights. In fact, it appears that the only 'value' that conservatives share with America as a whole is greed. As long as the promise is tax cuts or lower costs, and as long as the victims are presented as overprivileged or hated (e.g. trial lawyers), Americans can't wait for the checks to arrive.
The problem is that the checks do have to arrive. If you're a conservative who honestly believes that consumption taxes, smaller government, larger savings and private investment will be better, in the long run, for everyone, you're stuck with an awful choice. You must be willing to do that which is most contrary to all of your beliefs - borrow an ungodly amount of money - in order to reformulate Social Security. By doing so, you essentially bet that the ticking time bomb of a trillion dollars of new debt will be disarmed by the benefits of your program. That's a tough pill to swallow. In order to sweeten the deal, Bush is offering a plan to cut down on tort costs and pave the way for a cap on all damages in tort. Though tort reform is only a marginally ideological position, in the sense that there is little about the concept of tort reform that corresponds with the conservative hallmarks of flatter taxes, self-reliance and limited government, tort reform is a wildly valuable political plum that is worth untold fortunes to corporations and to the legislators that can deliver it. Put simply, Bush is telling the Paleocons the same thing he has so effectively told the country: just vote for me, and your check will also be in the mail.
Will paleocons take this deal with the devil? I suspect that they will. After a half-century of Democratic dominance of the legislature, Republicans finally have a shot to do things their way. Paleocons do not share the President's rosy assessment of the war in Iraq, and they are well aware that someone will have to pay electorally for that failure. With an election looming in '06, conservative lawmakers need to have legislative achievements to hang their hats on. Moreover, in his last two years, it will be nearly impossible for President Bush to effectuate major legislative changes, and given the state of foreign policy, by '08 the Conservative window may slam closed if a Democrat is able to capitalize on the foreign policy failures of the current administration. This may be the only chance in ten years for conservatives in Congress to make a fundamental, lasting change to American social and economic policies. It's almost tragic that it will cost them over a trillion dollars, and perhaps also their souls.
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