The Solution
Pie In The Sky?—An Offer You Can’t Refuse
Part 2 of 7
 

The Republican Wheel of Fortune stopped at entitlement reform. Making this look like a winner would be the toughest job yet for the new leadership on Capital Hill. To show some progress on deficit reduction and reduce taxes, their plan called for significant cuts in projected welfare and Medicare expenditures. There was never any thought of making cuts in absolute terms, of spending less money next year. With no strategy for immediately balancing the budget they rejoiced over one with less red ink.

Republicans searched for the root cause of the deficit by the process of elimination. It was not to be found in lack of revenue or in discretionary spending. Nor could they blame it on nonhealth entitlements. That left the major health care entitlements, Medicaid and Medicare. Growing at 10 percent annually, these combined expenditures would reach 6 percent of the gross domestic product by 2005, overtaking both Social Security and discretionary spending. Much of their deficit reduction plan relied on slowing the growth of these programs.

Advocating a proposal to cut welfare was relatively easy for Republicans. Their plan would return much of that program to the states along with limited block grant funding. Without a federal welfare program Democrats would have difficulty selling their hardhearted Republican story. Besides, indigent voters were not a Republican constituency; the party could do without them. What it could not afford was to irritate 37 million voting seniors.
 

Democrats denounced Republicans for reforming entitlements to solve budget problems, for robbing the poor and elderly to generate billions in savings earmarked as tax breaks for the wealthy. They complained of seniors being herded into managed care programs, of increases in their Medicare co-payments and deductibles. It made good political rhetoric because some of it was true.

On close inspection the Republican health care revolution was not very revolutionary. It had much the same flavor as the earlier, more comprehensive Clinton health care reform package. In true capitalist style it called for more market mechanisms. It offered seniors a choice between fee-for-service and less expensive HMOs, in effect putting a competitive squeeze on medical service providers—hospitals, clinics and nursing homes, doctors, nurses and technicians—to operate at lower cost.

Republicans knew that changing popular social programs for purely economic purposes flirted with suicide. Fearful over its effects on political prospects, their plan required only a down payment until after the 1996 elections, leaving tougher measures for later years. They carefully selected politically correct words—”preserve, protect and strengthen”—to sell it.

Their plan was not bad, just inappropriate. Cuts could never be deep enough to solve long-term social problems and were too deep for simple short-term reform. As much as public demand for basic changes in welfare programs, the prospect of using the projected savings for immediate tax cuts prompted the legislation.

In a knee-jerk reaction Democrats castigated Republicans for employing health care practitioners and recipients to bail out the budget boat. True enough, but their kinder, gentler counter-proposal, reducing proposed cuts by $200 billion, offered only changes in scale not job assignment. Most members of both parties agreed with or consented to the plan’s basic proposition.

If Congressional hypocrisies had the cash value of trading stamps there would be no federal deficit. Each party vacillated between preaching insolvency and denying the existence of a crisis, swapping sides of the policy fence in less than two years. Their usual political posturing did not amuse voters.

Political leaders on both sides refused to grasp the welfare nettle firmly. Instead, they hacked its top off with a machete in hopes of stunting its growth. Budget considerations darkly colored their perception.

The public sees welfare in a lighter shade, as a safety net for the deserving, most of them children, not a hammock for the lazy or a snare for those temporarily unemployed or otherwise disadvantaged. They expected entitlement reforms to concentrate on the elimination of fraud and abuse, not to punish the needy for situations largely beyond their control. If “renewing America” meant increasing the desperation of an already alienated underclass and the inequality of the middle class, it would boomerang.