Bradylama
So Old I'm Losing Radiation Signs
http://economist.com/printedition/displayStory.cfm?Story_ID=2246429
If the public becomes more informed about the larger part of the medicare bill how will it affect Bush's chances of re-election?
How do you feel about the bill itself? Will this sign of fiscal irresponsibility have a negative impact on Republicans?
This week's law-making may have helped George Bush win next year's election—providing voters don't do the sums
ACCORDING to Otto von Bismarck, the making of laws, like the making of sausages, should never be watched. Congress this week illustrated his point. The Republican leaders were very keen to pass two laws that would help the White House—the energy bill and a huge extension of the Medicare programme—before adjourning for Thanksgiving. To do so, they subjected the world's most powerful democratic body to a messy mixture of arm-twisting, procedural manipulation and special-interest politicking.
Despite these sterling efforts, the Republicans actually failed on energy. Some 40 senators, including six Republicans, stood firm against the proposed law, enough to delay it by filibuster if necessary. A costly law that does little for America's energy problems, but piles subsidies and tax breaks in the lap of every conceivable business connected to energy, has been shelved—at least until January.
The mammoth Medicare bill, however, squeaked through. It passed the House of Representatives at 5.53am on Saturday, November 22nd, after an unprecedented three hours of voting. Normally, congressmen have 15 minutes or so to cast their votes. This time, the House Republican leaders held the roll-call open for three hours while they bullied the fainthearted. George Bush, just back from Britain, stayed up unusually late on Friday to lobby congressmen, and was woken before dawn on Saturday morning to plead with a few more. Disillusioned Democrats accused the Republicans of “stealing” the vote, just as they were supposed to have stolen the 2000 election.
The vote in the Senate was less dramatic. The Democrats' attempt at another filibuster was fended off, and the Medicare bill passed by 54 votes to 44 on November 25th, to the White House's jubilation.
More than any other piece of Mr Bush's domestic agenda, the expansion of Medicare to include prescription drugs is seen as the key to electoral victory next year. This is the biggest expansion of the government's health-care plan for the elderly since it was introduced in 1965, and the elderly may account for one in four of the votes cast in the election. By bundling a big new benefit into Medicare, Mr Bush has shown that he gets things done in Washington (unlike those useless Democrats, who talked about drug coverage for years but failed to deliver).
Health care is a leading issue for many voters; it ranks higher than tax cuts, for instance. In the Democratic primary debates the contenders queue up to bash Mr Bush's bill. Not only has health care been seen as Democratic turf, but also older Americans especially have distrusted the Republicans on Medicare, believing they meant to undermine the entitlement. After all, didn't Newt Gingrich once hope in the 1990s that Medicare's bureaucracy would “wither on the vine”?
Now Mr Bush has put those fears to rest, and underlined the compassion in his conservatism. The White House hopes the Medicare drug benefit will be as defining for Mr Bush's domestic agenda as Bill Clinton's adoption of welfare reform (long a conservative issue) was for his presidency.
The political logic in all this is hard to fault. But turkeys, no less than slimmer poultry, eventually come home to roost. The full economic disaster of this one will probably not be apparent until after next year's election, since most of it will not come into effect until 2006. But people may begin to do the numbers before then. Whenever they do, it could be painful. For this hotchpotch of compromises provides neither a sensible drug benefit nor any real reform of the Medicare programme.
From the old folks' perspective, the bill does not mean (as many believe) that Uncle Sam will now pick up the tab for all their prescriptions. The $400 billion that the bill promises is only a fraction of the amount that America's old will spend on drugs over the next decade. Besides, not all that money will go towards pill-buying. More than $100 billion will go on subsidies to employers, doctors and private providers of health plans.
Retired people will have to pay a premium of around $35 a month. The coverage will kick in only after grandma has spent $250, and even then there will be a 25% co-payment, up to a total drug cost of $2,250. Between $2,250 and $3,600 there is no coverage. Only after grandma's bills top $3,600 does the government step in again. This “doughnut” benefit (with a large hole in the middle) could well be enormously unpopular. Although poorer old people (whose premiums will be subsidised) and those with exorbitant drug bills will be better off, not everyone will.
In fact, some old people may be worse off, especially if their former employers use this Medicare expansion as an excuse to stop providing them with drug coverage. The Medicare bill envisages spending over $80 billion to bribe these firms not to do that. But the Congressional Budget Office (CBO) reckons that 2.7m retired people may lose their employer-provided drug coverage despite the subsidies. As Steve Moore of the Club for Growth, a conservative anti-tax group that opposes the bill, puts it, the Medicare issue could become a “hand grenade that explodes in the Republicans' lap”.
History suggests that the wrath of the elderly is not something to be taken lightly. In 1988, Ronald Reagan also signed a bill that dramatically expanded Medicare to include catastrophic-health coverage and some prescription-drug benefits. That bill, too, was praised as the central plank of Mr Reagan's social policy and, like Mr Bush's bill, it got the coveted support of the huge old people's lobby, the AARP (the now official abbreviation of the American Association of Retired Persons). But the act was repealed in 1989 after protests from retired people, who resented the means-tested “surtax” they were asked to pay.
This year's Medicare bill carefully avoids some of the political mis-steps of 1988. As Norman Ornstein of the American Enterprise Institute points out, the Reagan benefit was entirely financed by premiums on retired people, it was means-tested, and the surtax kicked in long before the benefits. This time the plan is voluntary, the cash comes from the government, there is only a tiny means-tested component, and the carrots are available long before any sticks.
The early polls on Medicare provide no great comfort to either side. One survey of its members by the AARP found that 75% thought the law should be passed, even though 62% knew little or nothing about its details. On the other side, a poll by the AFL-CIO union federation, which has opposed the bill, found that 65% of its respondents disliked it too. A poll of retired people commissioned by Mr Moore's Club for Growth showed 43% of them supporting the bill, but that figure halving once they were told that it might raise costs for some. The best guide may be a poll by the independent Annenberg Public Policy Centre: it found the total population evenly split, but among the elderly only 33% supported the Medicare bill and 49% were against.
Written in red ink
This may explain why the Republicans have ensured that most of the law does not really take effect until 2006. Voters may decide to “wait and see”, and ignore Democratic scaremongering. But over the medium run—say, two years into a second Bush presidency—the drawbacks could become clearer.
By then the argument will be less about the added benefits than about fiscal recklessness. The $400 billion figure applies merely to the next decade. As the baby-boom generation starts to retire, the costs will balloon; the 20-year figure could reach $2 trillion, according to the CBO. Reformers had hoped that the generous new benefit would come with some effort to discipline a wasteful programme. Instead there is only limited means-testing, and only a few pilot schemes to test competition from the private sector starting in 2010.
You could argue that, after presiding over double-digit increases in non-defence discretionary spending, Mr Bush already sounded pretty hollow talking about budget discipline. Post-Medicare “reform”, his rhetoric is a sham. When Americans see the consequences of the red ink and start to care again about the budget, the Republicans could pay a high political price.
If the public becomes more informed about the larger part of the medicare bill how will it affect Bush's chances of re-election?
How do you feel about the bill itself? Will this sign of fiscal irresponsibility have a negative impact on Republicans?
