Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, August 18, 1994 TAG: 9408190063
SECTION: EDITORIAL PAGE: A13 EDITION: METRO
SOURCE: RAY L. GARLAND
DATELINE: LENGTH: Long
One writer described Dole's problem in this cogent paragraph: "For two generations, Republicans have fought big government the way a starved wolf hunts a herd of deer, hanging back out of harm's way and waiting for an old buck to stumble. Seldom have they troubled to think through a coherent answer to the central problem of welfare-state politics: Which social programs should the state support and which should it not?"
That says it all and explains why the GOP has had such difficulty keeping its head above water since the arrival of Franklin Roosevelt's New Deal 62 years ago. We might see this in the fact that in all that time Republicans have controlled the House of Representatives exactly four years! And if polls be gospel, the public neither likes Clintoncare nor the way Republicans have responded to it.
In the period 1952-76, Republicans squawked a lot about the growth of big government. But their hymns to fiscal responsibility caused them to end up as unwitting paymasters of Democratic programs. By cutting tax rates and indexing tax brackets for inflation, Ronald Reagan dramatically changed the equation. To general tax increases, Republicans would just say no, damn the deficit, let the welfare state be slowed by a tide of red ink.
No doubt, Republicans would have liked to do more to control spending. But the political price of attacking popular programs was too high. Nor was there any incentive for Democrats to help them out. Thus, the national debt rose from $998 billion when Reagan took office to $2.8 trillion when he left.
In a sense, half of Reaganomics worked. Despite some needed tax decreases, federal revenues rose from $517 billion in Carter's last full year to $908 billion at the end of Reagan's term. But total outlays went from $591 billion to $1,063 trillion. Even with significant tax increases in 1990 and again in 1993, the fiscal year ending Sept. 30 will see a $223 billion deficit.
The Bipartisan Commission on Entitlement and Tax Reform chaired by Democratic Sen. Robert Kerrey, by a 30-1 vote, adopted an interim report saying Congress must act now to prevent such entitlements as Social Security and Medicare from consuming the entire federal budget by 2012.
This is no fantasy. When Medicare was enacted in 1965, actuaries predicted costs of no more than $12 billion in 1990. Actual outlays in 1990 were $107 billion. They are estimated at $178 billion in the new fiscal year.
There was good reason why those initial estimates were so far off. For one thing, until 1983, Medicare essentially paid the bills doctors and hospitals submitted. This joy ride ended with the imposition of cost controls. Consumer Reports says Medicare now pays about 59 percent of what private insurers pay for the same service, and four-fifths of those enrolled have purchased private insurance to cover assorted gaps.
All this was the proper answer to Mrs. Clinton's taunt. But no Republican leader had the courage to give it. And who can blame them? A lot of GOP candidates have been beaten the past 12 years for saying less.
While many of the predictions critics made of Medicare in 1965 have come true, it was still a necessary program. Those over 65 consume almost 10 times as much medical care as those between 20 and 40. In fact, more than a quarter of all Medicare spending goes to treat people in the final year of life. An insurance pool that must cover young and old alike will see the young heavily subsidize the old. A properly structured Medicare would have a fairly high deductible, but cover 100 percent of all costs beyond it. It would also have premiums reflecting real costs for those able to bear them.
But the experience with Medicare is providing guidance as to what is likely to happen if the Clintons get their way on national health: costs rising faster than projected and a widening gap between fees paid and the actual cost of good service. Under the present system, such gaps can be papered over by making some pay more. But if everybody is in the same boat, the main source of savings will be cutting quality of care.
That other pillar of Democratic power, Social Security, turned 59 this month. Congress celebrated by making it an independent agency along the lines of the Federal Reserve. With Social Security now running a substantial surplus that may become a gusher, the one thing Congress dared not do was make it a true trust fund with a mandate to invest those funds to secure future beneficiaries. They couldn't do it because they're counting on the money masking the true deficit, just as George Bush did.
Nor would it be entirely practical to give political appointees control over what could be the largest horde of wealth in history. While estimates may be exaggerated, Social Security expects to show on its books a surplus of $5.6 trillion before the great drawdown begins 30 years from now. The bad news is that even assuming this horde existed in the form of real assets, it would be exhausted by the year 2036. The truly terrible news is that it is likely to be holding only treasury notes representing money spent years before, which can be redeemed only by confiscatory taxation.
The most interesting thing that happened in the health debate occurred when the board of The American Association of Retired Persons endorsed the Mitchell and Gephardt versions of Clintoncare. I don't know that it expected hosannas of gratitude from the members, but what it got was a chorus of boos. Maybe there's hope.
Ray L. Garland is a Roanoke Times & World-News columnist.
by CNB