RED GEORGE
JULY 3RD 2003
The Economist
Meet America's most profligate president since the Vietnam war
MOST people only have to see the word Medicare and they turn the page.
Please resist, just this once. There are few better ways of
understanding America's emerging Republican establishment than studying
the two Medicare bills that are currently working their way through
Congress.
These bills point to two conclusions that are worth pondering by people
who don't give a fig about co-payments. The first is that the
Republicans are mighty shrewd when it comes to short-term political
manoeuvring. The second is that they are almost completely indifferent
to the basic principles of sound finance.
Start with the politics. Ever since Lyndon Johnson introduced Medicare
in 1965 as one of the edifices of his "Great Society", Democrats have
been taunting the Republicans as hard-hearted bastards who don't give a
damn about the elderly. What better way to shut the Democrats up than a
new $400 billion drugs benefit? Congress still has to reconcile the
Senate and the House versions of the bills, a procedure that could take
until the autumn. But few people doubt that the law will eventually
pass--and that Mr Bush will enthusiastically sign it. This will also
reinforce the Republicans' claim that they are better at getting things
done than Democrats (who, in Republican lore, ran Congress for decades
without doing anything about drug prices).
Nice Bill Frist, the do-gooding doctor who replaced Trent Lott as
Senate majority leader, will be able to boast that he has passed a
major Medicare reform within a year of taking up the job. Mr Bush will
be able to go into the next election armed with yet more proof that he
is both a "compassionate conservative" and a "reformer with results"--a
man who has not only toppled the Taliban and Saddam Hussein but also
reformed education and Medicare. Republicans are already bragging that
Mr Bush's embrace of Medicare reform is the same as Bill Clinton's
embrace of welfare reform back in 1996--a manoeuvre that magically
transforms a liability into a strength.
There is, however, one tiny difference. Welfare reform was an
admirable policy that led to a sharp reduction in welfare rolls.
Medicare reform is lousy policy. The Republicans have given up any
pretence of using the new drug benefit as a catalyst for structural
reform. They are doing nothing to control costs or to target government
spending on people who really need it. They are merely creating a vast
new entitlement programme--a programme that will put further strain on
the federal budget at just the moment when the baby boomers start to
retire.
This might be tolerable if the Medicare boondoggle were an isolated
incident. But it is par for the course for this profligate president.
Every year Mr Bush has either produced or endorsed some vast new
government scheme: first education reform, then the farm bill, now the
prescription-drug benefit. And every year he has missed his chance to
cut federal pork or veto bloated bills.
As Veronique de Rugy of the Cato Institute points out, federal spending
has increased at a hellish 13.5% in the first three years of the Bush
administration ("he is governing like a Frenchman"). Federal spending
has risen from 18.4% of national income in 2000 to 19.9% today. Combine
this profligacy with huge tax cuts, and you have a recipe for deficits
as far ahead as the eye can see.
Why has the self-proclaimed party of small government turned itself
into the party of unlimited spending? Republicans invariably bring up
two excuses--the war on terrorism and the need to prime the pump during
a recession; and then they talk vaguely about Ronald Reagan (who
sacrificed budget discipline in order to build up America's defences).
None of this makes much sense. The war on terrorism accounts for only
around half the increase in spending. The prescription-drug entitlement
will continue to drain the budget long after the current recession has
faded. As for Mr Reagan, closer inspection only makes the comparison
less favourable for Mr Bush. The Gipper cut non-defence spending
sharply in his first two years in office, and he vetoed 22 spending
bills in his first three years in office. Mr Bush has yet to veto one.
RONALD REAGAN WOULDN'T
The real reasons for the profligacy are more depressing. Mr Bush seems
to have no real problem with big government; it is just big Democratic
government he can't take. One-party rule, which was supposed to make
structural reform easier, also looks ever less savoury. Without a
Congress that will check their excesses, the Republicans, even under
the saintly Dr Frist, have reverted to type: rewarding their business
clients, doling out tax cuts and ignoring the fiscal consequences.
This opportunism may win Mr Bush re-election next year, but sooner or
later it will catch up with his party at the polls. The Republicans are
in danger of destroying their reputation for managing the
economy--something that matters enormously to the "Daddy Party" (which
sells itself as being strong on defence and money matters). The
Democrats can point out that Bill Clinton was not only better at
balancing the budget than Mr Bush. He was better at keeping spending
under control, increasing total government spending by a mere 3.5 % in
his first three years in office and reducing discretionary spending by
8.8%.
The Republican Party's conservative wing stands to lose the most from
this. Some conservatives credit Mr Bush with an ingenious plan to
starve the government beast: the huge tax cuts will eventually force
huge spending cuts. But this is rather like praising an alcoholic for
his ingenious scheme to quit the bottle by drinking himself into
bankruptcy. There is no better way to stymie the right's long-term
agenda than building up the bureaucracy (government being a knife that
only cuts leftwards). And there is no better way to discredit tax cuts
than to associate them with ballooning deficits. For the moment Mr Bush is still the conservatives' darling. Will they still love him a decade from now?
Now go back and read http://www.siccness.net/vb/showthread.php?s=&threadid=67391
JULY 3RD 2003
The Economist
Meet America's most profligate president since the Vietnam war
MOST people only have to see the word Medicare and they turn the page.
Please resist, just this once. There are few better ways of
understanding America's emerging Republican establishment than studying
the two Medicare bills that are currently working their way through
Congress.
These bills point to two conclusions that are worth pondering by people
who don't give a fig about co-payments. The first is that the
Republicans are mighty shrewd when it comes to short-term political
manoeuvring. The second is that they are almost completely indifferent
to the basic principles of sound finance.
Start with the politics. Ever since Lyndon Johnson introduced Medicare
in 1965 as one of the edifices of his "Great Society", Democrats have
been taunting the Republicans as hard-hearted bastards who don't give a
damn about the elderly. What better way to shut the Democrats up than a
new $400 billion drugs benefit? Congress still has to reconcile the
Senate and the House versions of the bills, a procedure that could take
until the autumn. But few people doubt that the law will eventually
pass--and that Mr Bush will enthusiastically sign it. This will also
reinforce the Republicans' claim that they are better at getting things
done than Democrats (who, in Republican lore, ran Congress for decades
without doing anything about drug prices).
Nice Bill Frist, the do-gooding doctor who replaced Trent Lott as
Senate majority leader, will be able to boast that he has passed a
major Medicare reform within a year of taking up the job. Mr Bush will
be able to go into the next election armed with yet more proof that he
is both a "compassionate conservative" and a "reformer with results"--a
man who has not only toppled the Taliban and Saddam Hussein but also
reformed education and Medicare. Republicans are already bragging that
Mr Bush's embrace of Medicare reform is the same as Bill Clinton's
embrace of welfare reform back in 1996--a manoeuvre that magically
transforms a liability into a strength.
There is, however, one tiny difference. Welfare reform was an
admirable policy that led to a sharp reduction in welfare rolls.
Medicare reform is lousy policy. The Republicans have given up any
pretence of using the new drug benefit as a catalyst for structural
reform. They are doing nothing to control costs or to target government
spending on people who really need it. They are merely creating a vast
new entitlement programme--a programme that will put further strain on
the federal budget at just the moment when the baby boomers start to
retire.
This might be tolerable if the Medicare boondoggle were an isolated
incident. But it is par for the course for this profligate president.
Every year Mr Bush has either produced or endorsed some vast new
government scheme: first education reform, then the farm bill, now the
prescription-drug benefit. And every year he has missed his chance to
cut federal pork or veto bloated bills.
As Veronique de Rugy of the Cato Institute points out, federal spending
has increased at a hellish 13.5% in the first three years of the Bush
administration ("he is governing like a Frenchman"). Federal spending
has risen from 18.4% of national income in 2000 to 19.9% today. Combine
this profligacy with huge tax cuts, and you have a recipe for deficits
as far ahead as the eye can see.
Why has the self-proclaimed party of small government turned itself
into the party of unlimited spending? Republicans invariably bring up
two excuses--the war on terrorism and the need to prime the pump during
a recession; and then they talk vaguely about Ronald Reagan (who
sacrificed budget discipline in order to build up America's defences).
None of this makes much sense. The war on terrorism accounts for only
around half the increase in spending. The prescription-drug entitlement
will continue to drain the budget long after the current recession has
faded. As for Mr Reagan, closer inspection only makes the comparison
less favourable for Mr Bush. The Gipper cut non-defence spending
sharply in his first two years in office, and he vetoed 22 spending
bills in his first three years in office. Mr Bush has yet to veto one.
RONALD REAGAN WOULDN'T
The real reasons for the profligacy are more depressing. Mr Bush seems
to have no real problem with big government; it is just big Democratic
government he can't take. One-party rule, which was supposed to make
structural reform easier, also looks ever less savoury. Without a
Congress that will check their excesses, the Republicans, even under
the saintly Dr Frist, have reverted to type: rewarding their business
clients, doling out tax cuts and ignoring the fiscal consequences.
This opportunism may win Mr Bush re-election next year, but sooner or
later it will catch up with his party at the polls. The Republicans are
in danger of destroying their reputation for managing the
economy--something that matters enormously to the "Daddy Party" (which
sells itself as being strong on defence and money matters). The
Democrats can point out that Bill Clinton was not only better at
balancing the budget than Mr Bush. He was better at keeping spending
under control, increasing total government spending by a mere 3.5 % in
his first three years in office and reducing discretionary spending by
8.8%.
The Republican Party's conservative wing stands to lose the most from
this. Some conservatives credit Mr Bush with an ingenious plan to
starve the government beast: the huge tax cuts will eventually force
huge spending cuts. But this is rather like praising an alcoholic for
his ingenious scheme to quit the bottle by drinking himself into
bankruptcy. There is no better way to stymie the right's long-term
agenda than building up the bureaucracy (government being a knife that
only cuts leftwards). And there is no better way to discredit tax cuts
than to associate them with ballooning deficits. For the moment Mr Bush is still the conservatives' darling. Will they still love him a decade from now?
Now go back and read http://www.siccness.net/vb/showthread.php?s=&threadid=67391