Conservatives Need To Decide If Stigma And Ostracism Are Legitimate Moral Tools

One thing I wanted to discuss in my column for The Week, but didn’t have the room for, was the whole “define bigotry” question. Damon LinkerConor FriedersdorfRod Dreher, and Brandon Ambrosino all argued recently that simply thinking homosexuality is immoral or opposing same sex marriage doesn’t clear the threshold. I.E. to be a bigot, you have to behave in a hateful or spiteful manner towards gay people.

The point of my column was that conservatives are making a sudden and disingenuous attempt to back out of an established social charter. That charter was anti-discrimination law, and in recent decades it certainly seemed like everyone on both sides of the political divide agreed that the reach and framework of the law was appropriate for dealing with discrimination in the workplace and the market. Everyone also seemed to agree that the law’s protection should’t be limited to race, but should be extended to other groups that have faced oppression in American society. So calls for “religious liberty” amount to conservatives saying, “Oh, wait! No, we don’t think its reach and framework are appropriate after all!”

I think the dispute over who is and isn’t a bigot has the same basic problem. If you look at how Americans have used the word “bigot” — especially as it concerns race — I think it’s pretty obvious we haven’t been using it to refer solely to interpersonal behavior. For instance, imagine trying to argue that men like Strom Thurmond or George Wallace — men who leveraged all the political power at their disposal to preserve segregation and Jim Crow — were not bigots because they were perfectly nice and gentlemanly to the black people they met on the street or who worked in their offices. (I have no idea if Thurmond and Wallace were actual nice in that manner. But suppose for the sake of argument.) I don’t think anyone would be willing to go there.*

So the qualifications for being a bigot are not limited to interpersonal behavior. They also include holding to particular worldviews and sticking up for particular social orders. In which case, conservatives’ current attempts to redefine bigotry are, again, opportunistic efforts to duck out of an established social agreement as soon as their own oxe started getting gored.

But there’s also a deeper point here. Go back and consider Rod Dreher’s post specifically. It’s poignant because it discusses people Dreher knows — a successful lawyer and two New York City reporters — who effectively “live in the closet” when it comes to their SSM opposition, and who know they’d face ostracism from their social circles and stigmatization as bigots if they spoke up publicly.**

My initial reaction to this was essentially Andrew Sullivan’s — let me get you the world’s tiniest violin. But! Stepping back, I think any decent and gracious person has to admit there’s something a bit ugly about this. Human beings remain little more than upright apes, and what Dreher’s describing is a textbook case of the lower, lizard-brain functions by which we socially signal, define the borders of the tribe, and expel pollutants from our shared communal life. It’s the kind of thing self-presumed enlightened liberals would decry in other contexts.

But here’s the deeper point: the fact is human beings are social and emotional creatures rather than rational ones. And that means this kind of social policing, as ugly as it may be, is also critical to how our culture advances morally. In fact, given the importance conservatives place on communal moral order and decentralized social organization, you’d think they’d be the first to acknowledge this fact. Does anyone really think racism, for instance, was driven underground by civil and reasoned public discourse? Of course not. Racism was driven underground by collective social efforts to stigmatize and ostracize people who held to it. And it worked really well!

So I think we have two distinct questions to answer here:

1) Is the worldview under discussion actually morally objectionable? This is the “is opposing gay marriage as bad as supporting segregation” question.

2) Regardless of how you answer 1), are social stigma and ostracism appropriate tools for dealing with immoral worldviews?

And the two questions really do need to be disaggregated, because we’re all going to disagree on what constitutes an immoral worldview. I think opposing SSM is as bad as supporting segregation, and I think the belief that homosexuality is immoral is on par with the belief that black people are inferior to white people. I’m sorry, but I do. Dreher does not. And that kind of disagreement is going to crop up again and again across all sorts of different subjects. Which is just life in a free and pluralistic democracy. The question is: what kind of social charter do we all hash out to deal with those disagreements? That’s where 2) comes in, and there really is no right answer.

But we do have to own the consequences of our answer. If we conclude stigma/ostracism are not legitimate tools, then that means we’re going to have to accept the presence of people whose views we abhor at our gatherings and parties and workplaces and churches and dinners and so forth. Conversely, if we conclude stigma/ostracism are legitimate tools, then we have to be prepared for the day when we’re on the receiving ends of those weapons. You never know which way the winds of culture will shift.

Which seems to really be conservatives’ basic problem here. They’re just stunned by the speed with which American society has embraced homosexuality’s moral legitimacy, and by the resulting speed with which ostracism and stigma have been turned against them.

But given how American society dealt with racism and misogyny, for example, it really does seem like we’d all concluded that ostracism and stigma were legitimate tools. Which makes the complaints by Dreher, Friedersdorf, Linker, Ambrosino, et al  opponents of same sex marriage who are upset they’re being tarred as bigots look incredibly unprincipled and opportunistic. (UPDATE: My earlier version of this sentence was sloppy. Friedersdorf, Linker, and Ambrosino are all supporters of SSM, though they’ve argued against naming its opponents bigots. I should’ve made that clear.)

In short, if we’re going to change our minds and say those social tools actually aren’t acceptable, that’s fine — but in that case we all owe George Wallace a big fat apology.

Who wants to go first?

*I’d add that the problem with Michael Joseph Stern’s graceless and vindictive response to Ross Douthat was that he collapsed the bigotry/hatred distinction from the opposite direction. Conservatives are insisting bigotry cannot be present unless personal hatred is also present. Stern insisted that if bigotry is present, then personal hatred must also be present.

**Dreher also brings up the Mormon theater director in California who was driven out of a gig in 2008 when coworkers discovered he’d donated to the Prop 8 campaign. I left it out above because it deals with actual workplace retaliation as opposed to mere social stigma, and as such I think it’s genuinely troubling. There’s probably a strong case that anti-discrimination law should be extended to political and ideological beliefs. My understanding is some states already do so, with the expected carve-outs for firms and institutions with explicitly ideological missions.

The Official Jeff Spross Plan To Fix Obamacare

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So it looks like Healthcare.gov is working — or at least working much better than it was before. Hopefully, this means we can soon set aside our collective national freakout over a really serious substantive threat to Obamacare, and go back to freaking out over the purely optical threats. Those would be “rate shock” and the failure of Obama’s “if you like your plan you can keep it promise” to pan out. Unlike the website’s travails, they’re purely political problems, and actually result from Obamacare operating the way it was designed to. They’re exceedingly unlikely to threaten the macroeconomic stability of the insurance markets, or the soundness of any part of the law’s policy design. Their costs are dwarfed by the benefits going to poor people receiving subsidies and covered by the Medicaid expansion.

But rate shock and the plan cancelations also happen to affect a population that’s upper-middle-class and relatively politically active, so our political system actually cares about their troubles in a way it doesn’t for the truly poor and unfortunate. So we treat inconveniences heaped on the former group as major political scandals, and massive alleviations of suffering for the latter group as non-events. Which is shameful and morally perverse, if you ask me.

However! With that bit of throat-clearing out of the way, let me say I’m sympathetic to complaints that Obamacare’s restrictions on health coverage design hamper consumer choice, and hold back innovation in the packaging and delivery of care. Those restrictions also contribute to rising premiums (not much, but somewhat) because expanded coverage comes with expanded costs. And they’re causing the cancellation of a lot of pre-Obamacare insurance plans.

I don’t obsessively fetishize choice and innovation they way reformist conservatives do. But they’re good values to promote, and shouldn’t be undermined unless it’s necessary to pursue some more foundational moral obligation. I don’t think it’s necessary here. And hey, if we can fix rate shock and plan cancellations while we’re at it, why not?

So, without further ado, here it is:

The Official Jeff Spross Plan To Fix Obamacare

1) Remove all but the gold rating from the exchanges.

Right now insurance plans have to meet one of four ratings to be sold on the exchanges. Bronze plans offer the stingiest and least comprehensive coverage; then it goes up to Silver, Gold, and finally Platinum with the most generous coverage. Catastrophic plans can also be sold under certain conditions. Those four “metal ratings” all include a package of essential health benefits (EHB) — ensuring everyone gets at least a minimum level of reliable coverage. They also require various deductibles and cost-sharing.

My recommendation: clear out the EHB requirements and everything except the gold plans. Then change the law so that as long as an insurer sells a gold plan on the exchange, they can sell any other plan they cook up as well.

That would address conservative complaints regarding choice, innovation, and plan cancellations. But it would also still serve the liberal goal of protecting consumers from “junk insurance.” Gold plans would function as a seal of approval: you can take your chances with the other plans if you like, but the government has checked these out, and they’re solid.

Furthermore — if I understand the economics correctly — requiring all insurers to sell at least a gold plan before they can sell anything else should cut down on any risks of adverse selection.

Practically speaking, this wouldn’t bring back the plans that have already been canceled due to Obamacare’s new rules. But it would satiate conservatives’ principled objections, and would open up the possibility for insurers to resurrect similar plans in the next year or two.

2) Simplify the subsidies.

Right now the subsidies customers can get on the exchanges are calculated to cover the premiums they’d pay for a silver plan. The subsidies are adjusted for income — the more you make, the less of your premium is covered — and they phase out completely if you make over 400 percent of the poverty line. Separate subsidies, also adjusted for income, are provided for out-of-pocket costs.

First off, obviously, my plan would peg the subsidies to the gold plans. The division between premium subsidies and out-of-pocket subsidies is also silly, so I’d just have one lump sum that covers everything. Next, there should be no adjusting for income. Everyone should get the full cost of their premium and out-of-pocket expenses covered, regardless of how much they make. Third, don’t phase it out at 400 percent of the poverty line. Give the subsidies to literally everyone on the exchanges.

Obviously, this will significantly increase Obamacare’s annual spending, which would be a big downside for conservatives. But it would also eliminate the policy and paperwork complexities that come along with means-testing; it would do away with rate shock, since everyone will have the entirety of their premiums covered no matter who they are; it would bring Obamacare’s subsidies closer in form to the universal health care tax credit conservatives advocate; and it would eliminate any latent welfare trap effect from the benefit phase-out.

Finally, this would make a gold plan affordable to everyone. Combine that with the “seal of approval” function mentioned above, and gold plans would become the all-purpose fall back plan. And if a customer decides to go with coverage that costs less than a gold plan, they can just pocket the leftover subsidy. That keeps the incentive for customers to shop for the best deal, and the accompanying competitive market pressure.

3) Get rid of the age bands.

Obamacare also instituted a new rule that premiums for older Americans on the exchanges couldn’t be higher than premiums for younger customers by a factor of more than 3 to 1. Older people tend to be sicker and thus a greater risk for insurers, which drives their premiums higher. The rule was meant to help out the older set with an implicit transfer: drive down their premiums by driving them up for younger customers.

It’s unclear just how much the age restriction contributes to premium hikes and thus to rate shock. Most of the hikes are probably due to the rule that insurers can no longer deny customers based on pre-existing conditions. But the age rule obviously contributes some.

So let’s get rid of it. We’ve already removed all limitations on who can and can’t get a subsidy. So no older American is going to be left out in the cold when their premium goes up. I don’t object to the age rule myself, but it seems to me we can accomplish the same goal through less intrusive tinkering in how insurers design their coverage.

4) Get rid of the coverage requirements for the employer-provided market.

Finally, Obamacare imposes some new requirements on the small and large group markets for employer-provided coverage, which are causing some modest disruptions there. Personally, again, I don’t care about this. If your employer cancels your current plan, the most likely outcome is they’ll just provide you with a better one. If they don’t, then you’ll be getting a bigger paycheck (since none of it’s going to premiums anymore) and you can go shop on the exchanges. Either way, you’ll be fine.

But conservatives seem annoyed by these requirements. And much of the impetus behind Obamacare was the idea that employer-based coverage was already the “good” kind, and we were trying to make the individual market more like it. So I don’t see why the employer requirements are strictly necessary. Why not just get rid of them?

BONUS: Cover everyone who got left out by state refusals to expand Medicaid.

I don’t like describing the expansion of coverage to millions of the least fortunate Americans as a “bonus.” (See my bitching above about whose struggles our political system does and doesn’t value.) But I did frame this post as a response to rate shock and plan cancellations, and expanding Medicaid isn’t strictly relevant to that. Still, as a leftwinger with the attendant moral priorities, this would be a huge “win” for me. So I’m including it.

Right now, to qualify for the exchanges, your income has to be at least 100 percent of the poverty level. That’s because lawmakers figured every state would expand Medicaid, covering everyone below that threshold. But 26 states didn’t, leaving almost 5 million Americans — all of whom are far poorer than those seeing rate shock and plan cancellations — high and dry.

But since we’ve already eliminated the income ceiling on who qualifies for the exchanges’ subsidies, we might as well drop the floor as well. That yields a simpler system: as long as you’re not covered through your job or through some government program (Medicare, Medicaid, Veterans Health Administration, etc.) you’re on the exchanges, end of story.

Yes, again, this would significantly increase the law’s annual expenditures. But it would also serve as a détente of sorts on the Medicaid expansion, and take the political pressure off conservative states that don’t want to participate. Continue reading

If Obama Broke His Health Care Promise, Does That Tell Us Anything Useful About Anything?

Let us stipulate, for the sake of argument, that President Obama has broken his promise that “if you like your health care plan, you can keep your health care plan.” I actually think the accusation is highly contestable on its merits, but whatever. Let’s roll with it. What I want to know is: what, in practical terms, I should take away from this fact?

And I ask in earnest! Because Obama’s critics sure seem to think it’s important. But so far they seem like the dog that caught the proverbial car with this talking point — now that they’ve landed it, they don’t know what to do with it.

"You know what I am? I'm a dog chasing cars. I wouldn't know what to do with one if I caught it! I just do things."

“I’m a dog chasing cars. I wouldn’t know what to do with one if I caught it! I just do things.”

The most obvious implication they’re pushing is that this invalidates the law: as Ben Domenech put it at a recent Wonkblog debate, whether Obamacare succeeds or fails should be judged by whether it lives up to the White House’s promises.

But this is an obviously stupid argument. First off, Obama is not my Dear Leader or anyone else’s. He’s just some dude I voted for. We’re all perfectly capable of forming our own opinions on a policy and coming up with our own metrics. I’m not obligated to adopt his. And as a matter of common-sense, it seems to me most voters will judge the law on whether it makes American lives better off on the whole, not whether it matches up with a few political talking points the vast majority of them weren’t paying attention to anyway.

Tim Carney, however, does a better job with two distinct takeaways:

1) Never trust Obama again.

I can’t really say I disagree, though I don’t share the sentiment. I’m deeply cynical and utilitarian about this stuff — politicians are function algorithms, whose behavior is determined by self-interest and the environment of political forces they encounter. I vote for them accordingly, looking for the one that I think will best advanced my preferred policies and values given their nature and circumstance. I gauge the likelihood they’ll keep their promises by the same measure. (As such, Obama’s done a good job of keeping his promises to me, since I’m a lefty-liberal, and am smack-dab in the middle of the political coalition that most affects Obama’s fortunes.) In short, trust doesn’t really enter into it for me, except at the margins.

Carney’s point is certainly relevant to, say, conservative voters who are curious about immigration reform. If the final bill’s concession to conservatives is increased border security, and that increase is written in the legislation such that it relies heavily on executive discretion, then yeah, they should be worried Obama will welch. But really, that would be just as true before the current Obamacare brouhaha, because that’s the nature of politics. It’s also a good reason to leave the executive as little discretion as possible in a law’s language, which is how we ought to be doing things anyway.

I also think the decisiveness and gravity with which Carney renders this judgment is uncalled for. As I said, the charge is contestable, even from his framework. Obama’s promise has held true for everyone on Medicare, Medicaid, and the vast majority of employer-provided plans. That’s most Americans right there.  The Congressional Budget Office projected that 8 million Americans would lose their current coverage. By my lights, when you make a promise to 300 million-odd people, keeping it for 97 percent of them is doing pretty well. It’s also arguable the White House was honest if cagey at the time that the grandfathered plans wouldn’t last.

The most you could say, I think, is that this is one data point in the case you shouldn’t trust Obama, and a relatively mixed one at that.

2) Loosen the rules that are outlawing insurance plans.

As Carney says, “Why should it be illegal for me to buy a plan that doesn’t cover mental health or contraception? Why should it be illegal for my neighbors to buy a plan that doesn’t cover maternity or prescription drugs? Why should a $5,000-in-network out-of-pocket maximum combined with a $10,000 out-of-network max be outlawed?” Those are all fair questions! And it’s absolutely true that loosening Obamacare’s rules about how coverage can be constructed and what benefits must be included would cut down on the amount of plan cancelations.

But this is a debate over an a priori policy preference. We’d still be having it, in exactly this same form, even if Obama had been totally up front from the beginning that some plans would get nixed. And if you do think tall those practices should be outlawed, then saying the plan cancellations are merely “transitions” is a perfectly valid argument.

It’s worth noting that most conservative health wonks want to equalize the tax treatment of employer-provided plans and individual ones. Now that would lead to some serious upheaval in what coverage is currently available, and who gets to keep what. So the mere fact of changing plans can’t be taken as evidence that a particular policy is bad.

Again, I don’t see how Obama’s failure to keep his promise illuminates anything here. For myself, I’m sympathetic to the idea that Obamacare’s rules on this score shouldn’t be so demanding. But I’m also firmly in agreement with Josh Barro and Austin Frakt that our current health care system is a mess, that changing it into something better will inevitably lead to lots of people losing what they now have, so Obama’s promise is something that shouldn’t be kept because doing so would be bad policy.

We should decide whether the essential health benefit requirements are a good idea or a bad idea, then alter or not alter the law accordingly. Obama’s personal virtue has nothing to do with it. And if those rules are a good idea, we certainly should’t get rid of them anyway just to bring the law into line with the President’s previous sales pitch.

You Can’t Talk Honest Budgets Without Acknowledging the Politics of Depressions

Reihan Salam dubs Ryan’s budget the “put up or shut up” budget, in that it forces confrontations with the unspoken unpleasantries that would accompany either the Democrats preferred spending or the Republicans preferred cuts:

[A] March 2012 report from the Tax Policy Center by Eric Toder, Jim Nunns, and Joseph Rosenberg examines the top marginal tax rates we’d need to bring debt to sustainable levels without significantly altering the federal government’s spending trajectory and they are strikingly high.  This is part of why a number of neoliberals, including Matt Yglesias and Josh Barro, have argued that we need significant tax increases on middle-income households: the spending cuts we’d otherwise need to achieve fiscal balance are in their view unacceptable…

Democrats declare Ryan’s proposed spending cuts unacceptable without acknowledging that broad-based tax increases are the most realistic way of avoiding them. Republicans, meanwhile, have not generally thought through the impact of (in particular) the Medicaid cuts envisioned in the Ryan budget.

The math of this is correct. I’m firmly in the Yglesias camp on this. You can’t make the kind of government I’d prefer fiscally sustainable without hiking taxes on the middle class.

However, you also can’t talk about this stuff without acknowledging the unique political environment of an economic depression. Americans are freaked out by the deficit in the abstract. But they don’t want their taxes hiked — reasonable, given that we’re in a depression — and they don’t want their government support cut — also reasonable, given that we’re in a depression. Politically, this should lead everyone to a pretty straightforward policy response: Don’t cut the deficit!

Happily, that response is fully consistent with Keynesianism and textbook macroeconomics. You don’t reduce deficits during economic depressions, through sending cuts or tax increases, because this sucks demand out of an already struggling economy. In fact, in the short run, you increase deficits through new spending to help drive the economy back to its prior level of output. Once the economy is back on its feet, then you reduce the deficit.

With robust economic growth, the tax hikes or spending cuts needed to reduce the deficit become much less politically fraught. People tend to feel more secure in their circumstances, which makes them more tolerant of higher tax rates or lessened government support. I think this point is woefully under-appreciated. Depressions don’t just make deficits harder to close on a policy level, they make them harder to close on a sociological level as well. Conversely, getting back to robust growth lessens the hurdles on both fronts.

This should reemphasize what a godawful tragedy not getting a sufficiently large fiscal stimulus actually was. (Or sufficiently large monetary stimulus, for that matter.) We pumped enough demand into the economy to prevent a full-scale meltdown, but not enough to boost us back out. That left us limping along in a prolonged period of high unemployment, thus low revenue, thus expanded deficits. It also left us limping along through a prolonged period in which most Americans are already on the ropes, and thus vociferously opposed to any of the steps necessary to close the deficit. So both good politics and good policy converge on just not cutting the deficit right now.

Unfortunately, the Republican Party has made such an agreement all but impossible. While no politician ever suffered at the polls for increasing the deficit, fears of runaway deficits operate as a stalking horse in the public’s mind for a bad economy. So in a depression, demagoguing the deficit becomes a very effective short-term political tactic. And now that the Republicans have demagogued the deficit, they can’t very well turn around and agree to a policy program that blows it up over the short term, and they’ve mad it much harder for the Democrats to do so as well.

One other point: Your average European country not only has a broader, more regressive tax system than American — it also has a much more generous and expansive social safety net as well. I take that as evidence of an implicit deal required to satisfy your average populace of western voters. Low and middle income voters only tolerate significant tax burdens if those burdens are in equilibrium with generous government support programs. The kind of tax system American conservatives prefer has to be balanced against the kind of social safety net American liberals prefer, for political sustainability as well as fiscal sustainability. Right now America has neither.

You could argue that this is good reason to reduce both the tax burden and the size of government concurrently. But I think it’s pretty clear that the free market, absent significant government intervention, creates circumstances and distributions most Americans find utterly unacceptable. And we’re already pushing that boundary of the voters’ tolerance on that front.

Don’t Worry, It’s Totally Fine to Invoke Religious Values in Policy Debates

I generally like Sarah Posner’s work, but her piece yesterday — assessing the debate over whether Paul Ryan’s latest budget for the House GOP can claim the Catholic tradition of subsidiary — goes off the rails:

These disputes — particularly for a religion reporter like me — are the stuff of fascinating and illuminating stories on religious history, theology and political gamesmanship. In a pluralistic democracy, though, they have no place in determining the federal budget.

No one’s religious view is entitled to preference when Congress is crafting the federal budget. To be sure, given the attention paid to the plight of the poor by the most prevalent religions in the United States, there are many politicians, and many citizens, whose faith would inform how they evaluate the priorities — or lack thereof — in the Ryan budget. At the same time, secular humanists, atheists, and other varieties of the non-religious also have a set of values on income and wealth inequality.

Progressives and conservatives should duke it out — but without invoking religion. The budget should be based on shared concepts of fairness and justice, not whether Jesus or God or Allah (oh, never mind, the Republicans would never go for that!) approves.

This passage is just strange to me. The unspoken assumption here seems to be that the mere presence of religious values in the public discourse forces non-religious people to adhere to those values. From there, Posner proceeds to the spoken conclusion that everyone should just keep religion out of the public discourse. Which is both logically silly and utterly antithetical to the values of a liberal democracy based on individual rights, free speech, and so forth.

There is also a practical problem with saying “the budget should be based on shared concepts of fairness and justice.” Few frameworks of value for determining what constitutes “fairness and justice” are more widely shared than religion. Now, not all Americans share that framework of value. But then not all Americans share the same framework when it comes to, say, whether free market capitalism does a good job dishing out just deserts in correspondence with merit.

It comes down to what Posner means by “shared.” If she means shared by every single American, there is no conception of fairness or justice that would meet that requirement. If there was one, we wouldn’t have political division, party disputes, or arguments over the morality of the budget in the first place. By contrast, if Posner means “shared by a broad enough chunk of the American population to be useful,” then religion certainly qualifies. Elevating an argument because it has a “religious imprimatur” is no different than elevating it because it was made by FDR, Ronald Reagan, Ayn Rand, Marx, Lenin, the Founding Fathers or Alec Baldwin. Voters have all sorts of criss-crossing signals for what they consider authoritative voices and sources of legitimation.

There are lots of people in America who are Catholic, and even more who respect Catholic theology, and subsidiary helps crystalize our notions about government’s moral obligations towards the least fortunate, its effectiveness, and its proper role. Even from a pure numbers standpoint, this makes a debate over whether subsidiary supports or condemns Paul Ryan’s budget a very useful and germane one to have. There will be moments of tribal silliness and stupidity — like trying to tar Ryan with his admiration of Ayn Rand, not because her moral views were monstrous but just because she happened to be an atheist. But American political debates are always shot through with tribal silliness and stupidity along all sorts of vectors.

Plenty of Americans aren’t Catholic, plenty aren’t religious, and plenty don’t know and/or don’t care about subsidiary. They are all free to ignore this particular debate and base their support or condemnation of Ryan’s budget on whatever frameworks and conceptions of value they see fit. One side or the other will accumulate an ad hoc coalition of different-but-overlapping frameworks, and thus put together a voting majority sufficient to drive a policy decision. That’s the way it’s supposed to work in a democracy.

I Don’t Think Charles Blahous Understands the CBO’s Models or the Politics of Medicare

One of the key assumptions in the Congressional Budget Office’s model — upon which it based its conclusion that the Affordable Care Act will reduce the deficit — is that the depletion of Medicare’s trust fund will be ignored and Congress will simply continue spending to maintain Medicare’s benefits. One of the key assumptions in Charles Blahous’ new study — which says the CBO flubbed it and the ACA will actually worsen the deficit — is that this depletion will most certainly not be ignored. From a follow up defense Blahous wrote of his study, which I think best encapsulates his logic on this point:

The historical evidence is overwhelming that Congressional behavior is heavily influenced by Social Security and Medicare solvency determinations. Specifically, Congress is much less likely to enact cost-containment measures in either program when projected insolvency is more distant.

Supporters of the ACA have elsewhere made clear that they agree the ACA will extend the Medicare Trust Fund’s solvency, protect its spending authority, lessen the risk of near-term benefit reductions, and mitigate the urgency of further Medicare reforms. Examples include David Cutler’s public policy memo, various Administration announcements, and Congressional Dear Colleagues.

These and countless other statements contradict the theory—on which the scorekeeping convention depends—that the extension of Medicare solvency is a budgetary non-event that leaves Congress just as likely to enact the same amount of further Medicare cost constraints as before the ACA was passed.

What this doesn’t answer is the question of why this is so. Does Blahous really think voters, and thus Congress, are concerned with the trust fund qua the trust fund? Of course they aren’t — neither the vast majority of voters nor legislators are policy wonks. What concerns them is whether Medicare’s benefits will keep coming as they always have. Voters and politicians are concerned with the insolvency of the trust fund only to the extent they think it will stop Medicare from buying retirees’ health care. “Trust fund solvency” is a stalking horse for “continuation of benefits.”

CBO assumes that when the chips are down, Congress will break the link between the trust fund and Medicare benefits. It will let the trust fund die, and continue funding Medicare out of general revenue. This shift would occur sometime in the next decade or two. And yes, I’m sure as news reports came filtering out that Medicare’s trust fund was going insolvent, there would be a bit of panic. But as soon as voters realized their Medicare benefits were still coming, the issue’s political potency would utterly vanish. To claim otherwise is to claim American politics values an abstraction (the solvency of the trust funds) over a concrete reality (whether Medicare benefits keep coming). Does anyone doubt me on this point?

This leads to a profound irony in Blahous’ dismissal of CBO’s model. One of conservatives’ biggest critiques of the ACA is that Congress lacks the fiscal discipline to maintain some of the spending and tax changes the law calls for. They cite such things as the Sustainable Growth Rate, which passed in 1997 and was supposed to cut Medicare payment rates, but which Congress has postponed every year afterward. Fair enough. But the fiscal discipline required to honor current law, and slash Medicare benefits in conjunction with the depletion of the trust fund, would dwarf the discipline required to adhere to the ACA or the SGR. Which is precisely why CBO assumes Congress will display no such discipline, and just keep spending to maintain Medicare.

This is important, because it helps illuminate what may be Blahous’ key logical error — and the error of the rest of the ACA critics crying “double counting.” Here’s Blahous explaining double counting in the appendix of his study:

[I]magine a law that cuts Medicare HI payments by $1 while also spending $1 on a new health program. The $1 Medicare HI spending cut extends the solvency of the Medicare HI Trust Fund, thereby allowing Medicare HI to spend an additional $1 at a later date. The $1 of near-term Medicare savings thus results in an additional $1 of later Medicare spending. Thus, if the law also spends $1 on a new health program, then altogether the law would permit $2 in total new spending while enacting only $1 in savings. On the whole, such a law would increase spending and worsen federal deficits. The case is similar with the ACA.

This misses one absolutely critical detail: CBO assumes up front that all Medicare spending will be honored, so that additional $1 of later Medicare spending is already built into its model. It’s already accounted for that $1 of promised future spending with commensurately higher future deficits. So that $1 is already in the baseline against which CBO measured the effects of health care reform. When the ACA finds $1 of additional savings and enacts $1 of additional spending, those latter two dollars balance each other out. $1 of new savings, $1 of new spending, $1 of future spending, and $1 of future deficits. “Double counting” or no, the CBO’s math adds up. Throw in the other bits of new revenue the ACA pulls in, and you have a net reduction in the government’s deficits.

One last way to look at it: Consider the government’s finances before the ACA passed. The Medicare trust fund is predicted to go insolvent in the next decade, and the CBO’s unified budget model is predicting large future deficits and debt. Now imagine that to shore up Medicare, the government decides to pass a hike in the payroll tax. What happens?

First, the solvency of the trust fund is extended, because new bonds are issued. But this is also new revenue, so it also improves the budget outlook under the CBO’s model. No one, I think, will protest this logic, nor claim there is anything untoward going on here. But it is effectively “double counting” as Blahous and the ACA’s critics have defined it. Conversely, the same thing happens if you cut Medicare’s benefits rather than hiking the payroll tax. It makes the bonds already in the trust fund go further, which extends its solvency. At the same time, you’ve reduced the government’s overall level of spending, so its deficits shrink.

In point of fact, this second scenario is precisely what the ACA did. It cut Medicare’s payment rates, which improved both the trust fund’s solvency and the budget outlook. From there, the ACA instituted new spending to help people buy insurance on the exchanges. This had no effect on the trust fund as it wasn’t under the aegis of Medicare, but it did worsen the budget outlook again. Finally, the ACA found new revenue outside of Medicare — the excise tax, new fees, new penalties, etc. — which once again improved the budget outlook.

So, the first step improved both the trust fund’s solvency and shrunk the deficit. The second step expanded the deficit again, but didn’t effect the trust fund. The third step also didn’t effect the fund, but did shrink the deficit again. Add up the net effect of these three steps — first cuts, then spending, then revenue — and the CBO’s unified budget outlook shows a slightly smaller deficit in the first decade, and a much smaller deficit in the second decade, than we had before health care reform was enacted.

As Paul N. Van de Water points out at the Center on Budget and Policy Priorities, these kinds of Medicare savings have been enacted several times in the past, were “double counted” each time — including by Republicans — and no one ever batted an eye. The only difference this time around is that the savings happen to reside in the same package of legislation as a new entitlement conservatives happen to loath. The conceptual complexities of the trust fund gave them an opening to play silly games with accounting logic, and man did they all leap at the opportunity.

Is It Time to Force a Clean Debt Ceiling Hike?

Even though passage of Boehner’s plan is looking increasingly unlikely, I realize the most likely fallback is Boehner cobbling together some cross-pollination of his plan with Reid’s plan. Then that passes through the House with a coalition of Democrats and more moderate Republicans, Reid gets it through the Senate, Obama puts pen to paper, and it’s a done deal. Essentially, not much different from what we would’ve gotten had Boehner’s plan passed the House, and then gone through the inevitable renegotiation in order to clear the Senate. (Although Ezra Klein has broached the possibility that Boehner moves to the right.)

As Klein has observed, today’s House vote was really a referendum on John Boehner himself, and how much credibility he has with his caucus. He’d have to lose Republicans no matter what in order to reach an accord with the Senate, but today’s vote would at least prove he has his party corralled.

Well, it turns out he doesn’t have his party corralled. At all. So assuming some miraculous eleventh-and-a-half hour recovery isn’t in the works, here’s the question: Even with his preferred plan, unsullied by comprise, Boehner wasn’t able to get quite enough Republicans together. Presumably, more than a few of those Republicans voting “yes” would’ve preferred to vote “no,” but didn’t want to be the last holdout. So once he starts moving left to collect votes from the other side of the aisle, I doubt it’s going to be a one-to-one trade off between Democrats and Republicans. It’s going to be more like a cascade effect, as more and more Republicans suddenly feel free to bail, forcing Boehner to acquire ever more Democrats and thus move ever further left.

So where does this end? How many Republicans does he lose? A third of his initial “yes” votes? Half? Two thirds? And once Boehner starts dealing, how much will the Democrats demand? More specifically, would they go so far as to demand a clean debt ceiling hike?

This was the White House’s original preferred route. And I know some Democrats in the House are floating the idea. It seems to me that once Boehner’s credibility with his own caucus starts unraveling, the Democrats could demand a clean bill as the price of cooperation. Force Boenher into working with their caucus, and whatever small number of moderate Republicans he can bring along. Obama could force the issue as well, declare that time has run out on putting together a complicated deal, and tell the legislature to get a simple one-sentence clean debt ceiling hike to his desk ASAP. (Though I doubt he’d do this.)

Am I off with here? Is this a serious possibility? Too much damage has probably already been done to avoid a market freakout should we take this route. But it’s the route that should’ve been taken to begin with, and it will save the country from a whole lot of stupid and destructive cuts.