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Executive Times |
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2006 Book Reviews |
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Imposter:
How George W. Bush Bankrupted America and Betrayed the Reagan Legacy by
Bruce Bartlett |
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Rating: |
*** |
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(Recommended) |
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Click on
title or picture to buy from amazon.com |
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Reformation Readers of any
political persuasion will find interesting reading in Bruce Bartlett’s new book,
Imposter:
How George W. Bush Bankrupted America and Betrayed the Reagan Legacy. His
key point is that there’s an emerging conservative backlash to President Bush
that’s calling for reform of the Republican Party and for a return to fiscal
responsibility. Despite the inflammatory language in the subtitle, REPUBLICANS
SELL THEIR SOULS Once upon a time in the
not-too-distant past, Republicans were deeply skeptical about so-called
entitlement programs like Medicare. These are programs for which no annual
appropriation is necessary. Spending is automatic for everyone and everything
that meets specified criteria.20 In the case of Medicare, the principal
criterion is simply being at least sixty-five years old. Historically, Republicans
have felt that such programs—virtually free of budgetary control—were the
epitome of bad policy Ronald Reagan’s Office of Management and Budget
director David Stockman articulated this position well during an appearance
on the ABC News program Issues and Answers
on March 22, 1981. Said
Stockman: “I don’t believe that there is any entitlement, any basic right to
legal services or any other kinds of services, and the idea that’s been
established over the last ten years that almost every service that someone
might need in life ought to be provided, financed by the government as a
matter of basic right, is wrong. We challenge that. We reject that notion.” Although
Stockman later got into trouble for some things he said to a reporter that
almost cost him his job, this was not one of them. On this occasion, he was
reflecting a widely held view within the Republican Party on the evil of
entitlements. Fast
forward twenty-two years and we see a very different philosophy within the
Republican Party. Instead of fighting entitlements, the party now embraces
them. It would
be one thing if this flip-flop were based on some careful analysis of elderly
medical care, which concluded that expanded drug availability might reduce
unnecessary hospitalization. Indeed, it would be possible to make such a
case. However,
this was not the situation. It is quite clear that Republican support for
this massively expensive new entitlement program was based on one thing and
one thing only: votes. The elderly wanted subsidies to pay for the rapidly
rising cost of prescription drugs, they are a very large and growing part of
the population who vote in the highest percentages of any age group, and
Republicans wanted their support.22 Therefore, they threw all
budgetary restraint aside (along with their principles) and simply gave the
elderly what they wanted in order to buy their votes. Lichtenberg, by the way,
opposed the legislation as devised solely to meet a political need, with no
economic rationale whatsoever. He told Daniel Altman of the New York Times, “This just seems like
a creature of political expediency or compromise. It’s not plausible to me
that there’s really an economic logic to the political policy that’s being
proposed.” 23 It is
revealing that on the eve of the final congressional vote, former House
Speaker Newt Gingrich, Republican of Georgia, who had led the charge in
cutting Medicare in 1995 after Republicans took control of Congress, urged
his fellow Republicans to vote for the drug bill in a Wall Street Journal op—ed. His core argument was simple politics:
Vote for the drug bill or go back to being in the minority. “Obstructionist
conservatives can always find reasons to vote no,” he said, “but that path
leads right back into the minority and it would be a minority status they
would deserve.” 24 Objective
political professionals were less sure that the drug bill was really in the
GOP’s interest. Charlie Cook, one of the best, wrote in July 2003, “For all
this talk about prescription drugs being a breakthrough issue for the GOP, I
think it just as easily could become a liability they really don’t need given
everything else that is going on.” Cook thought that by not giving seniors
the more generous bill pushed by Democrats, they
were bound to be disappointed by the smaller version written by Republicans.
Eventually there would be a backlash and Republicans would be worse off
politically than if they had done nothing. 25 Business Week’s Howard Gleckman warned that seniors were anticipating drug
benefits as generous as those offered by corporate pension plans, which
typically covered 70 percent of drug costs. With the new Medicare drug
benefit picking up only about a third, disappointment was baked into the
cake. When the program finally takes effect in 2006, there is guaranteed to
be widespread complaints from seniors, even from those who previously had no
drug coverage at all, when it doesn’t meet their expectations.26 Instead of
listening to Newt on this occasion, Republicans would have been a lot better
off listening to, of all people, Sen. Ted Kennedy of In the POLITICAL
BACKLASH The irony is that
Republicans appear to have bought themselves very little additional support
among the elderly for the multi-trillion-dollar largesse they bestowed upon
them. Every poll taken in the wake of the drug bill’s passage showed a high
level of dissatisfaction among the elderly The titles on the releases by
various polling organizations well summarize their findings: ABC News/ Kaiser Family Foundation:
“Survey Finds People with Medicare More Negative Than Positive Toward New
Drug Law” (August 10, 2004). Contributing
to the political letdown from the drug legislation were reports that drug
prices were rising so rapidly that the new subsidy was barely going to cover
the ongoing increase, thus doing nothing to improve the affordability of
prescription drugs. 28 According to a May 2004 AARP study, the 197
most commonly used name-brand drugs had risen in price by 27.6 percent over
the previous four years, compared with a general price level increase of just
10.4 percent.29 Commenting on the study, Ron
Pollock of Families USA said. “It’s the functional equivalent of going to a
used car salesman and being told you’re getting a great deal because you got
a $3,000 discount. Only before you came, he raised the price of the car by
$4,000.” 30 The GOP’s political error
became apparent almost immediately. In a February 2004 Washington Post story, reporters Amy Goldstein and Helen Dewar
found that discontent was so strong in Congress that the drug bill would fail
if the vote were taken again. They quoted Sen. Lindsey Graham, Republican of
South Carolina, as saying, “There is buyers’ remorse among many who voted for
it.” Goldstein and Dewar found
Democrats already gloating. Said Congressman Rahm
Emanuel, Chicago Democrat and former Clinton White House operative,
“Republicans thought they were going to get a big political bang. They’ve got
a dud. Unless they turn perceptions around, they’ve got an anchor around
their neck.” 31 Among political
conservatives, there was universal disgust at the administration’s actions in
ramming a bad bill through Congress and covering up its true cost. National Review editor Rich Lowry
reflected a widely held view on the right in his February 2, 2004, column: The
Medicare revision—up 30 percent in just two months—is just a taste of the
entitlement cost explosion to come as retiring boomers begin to fatten
themselves on all the benefits of the Conservative
columnist Robert Novak wrote in his newsletter in March 2004, “The Medicare
drug prescription bill, crafted by the White House and the congressional
Republican leadership, now is shaping up as a political disaster with Bush
accused of falsifying its massive price tag. Designed to give short—term
political pleasure at the cost of long-term pain, there is now also
short-term pain apparent.” 33 By summer,
most political observers agreed that the drug benefit was a failure
politically, giving no boost whatsoever to George Bush or congressional
Republicans. “The measure is a bust on the hustings,”
wrote Business Week’s Howard Gleckman. 34 Novak reported in a column that
this view was even shared by senior White House officials, who privately
admitted that “last year’s prescription drug bill was a disaster
substantively and politically.” 35 Although
Bush went on to best John Kerry in the November presidential election and
his party kept control of the House and Senate, even increasing their
numbers, there is no indication that the drug bill provided any political
benefit. As columnist Harold Meyerson observed,
“There’s no evidence to suggest that Bush’s Medicare reform.
. . yielded him any votes at all.” 36 More than
likely, Republicans would have done just as well electorally
if they had passed a much more targeted bill with a much lower cost or simply
done nothing. It would not have been hard to make the case that Medicare’s
costs were already out of control and that a new unfunded drug benefit was
unaffordable. It would have had the added virtue of being true. BIG
CORPORATIONS ARE BIG WINNERS No sensible person would
argue that Medicare’s policy of paying virtually unlimited sums for hospital
care while paying nothing for prescription drugs made any sense. And no one
denied that some seniors needed help paying for prescription drugs. But many
already had perfectly good prescription drug coverage from their employers.
Yet they, too, ended up being covered by the Medicare drug benefit. I puzzled for a long time
about why Republicans would write a bill that provided benefits even for
those who had no need for them. They were making it more expensive without
improving health care in any way at all. The answer became clear
when the New York Times reported
that the drug program would reimburse corporations for the drug benefits they
were already providing to their retirees.37 The federal government
would send huge checks to some of the largest corporations in the United States
for costs that they were already contractually obligated to pay The final
legislation provided a 28 percent tax-free subsidy that is expected to
average $660 per retiree per year. The numbers are huge. After
passage of the legislation, the Wall
Street Journal reported that General Motors anticipated receiving $4
billion to cover its prescription drug costs. Other big recipients included Verizon ($1.3 billion), BellSouth ($572 million), Delphi
($500 million), U.S. Steel ($450 million), American Airlines ($415
million),John Deere ($400 million), United Airlines ($280 million), and
Alcoa ($190 million).38 Other companies planned to
drop their drug coverage and let the federal program take it over.39 Either
way, the effect is to substantially raise corporate
profits. Business Week estimates
the aggregate profit increase at $8 billion per year—$6.S billion for the
subsidy itself and another $1.5 billion because the subsidy is tax-free.
40 And under existing accounting rules, future savings can be added to
the bottom line immediately. 41 Oddly, this aspect of the
drug bill has been almost entirely ignored even on the political left.
Instead, they have concentrated their criticism on the pharmaceutical
companies. The added drug demand will fatten their profits, they say, and the
federal government will have no power to control them, because the drug bill
prohibits using the government’s buying power to negotiate lower prices. This may
be true in the short run. But in the longer run, it is inevitable that price
controls will be imposed on drugs. Realistically, it will be the only way
that exploding costs can be controlled quickly. Indeed, some new cancer drugs
now cost $100,000 for a single course of treatment.42 There is no
way that taxpayers will be able to afford this expense. That is why virtually
every other industrialized country substantially controls the prices of most
prescription drugs.43 It is also the reason why The problem is that price
controls eventually dry up the supply of new drugs—just as rent controls in Despite having made the
nation’s public finances vastly worse by ramming the drug benefit through
Congress, President Bush nevertheless launched a major effort to reform
Social Security as his first order of business after being reelected. Oddly,
no one laughed as he said over and over again that Social Security reform was
necessary to avoid national bankruptcy Yet as we have seen, Social Security’s
unfunded liability is 60 percent less than just that of the drug program and
only 16 percent that of the Medicare program as a whole. In early 2005, a few
Republicans in Congress suggested that it might be prudent to reopen the drug
bill, before substantial spending for it began, which would doom any future
effort to cut benefits. Even though he was no longer running for office, Mr.
Bush reacted with uncharacteristic venom at the suggestion. At the
swearing-in ceremony for new HHS secretary Michael Leavitt, Bush said, “I
signed Medicare reform proudly and any attempt to limit the choices of our
seniors and to take away their prescription drug coverage under Medicare will
meet my veto.” 47 Keep in mind that up until
this point, Mr. Bush had not vetoed a single bill. This may explain why Mr.
Bush had so much difficulty getting political traction on his Social Security
proposal. He simply had no credibility as someone who cares one whit about
whether the nation can afford all the entitlement promises it has made.
Therefore, he was forced to fall back on arguments for reform that were less
compelling to the American people. Thus, one cost of the drug bill may be
that his effort to privatize Social Security—a worthy goal—will fail to
become law. In
September 2005, there was some effort among the dwindling band of true
conservatives in Congress to at least delay implementation of the drug
benefit to pay for Hurricane Katrina. Some even suggested repeal. Said Sen.
John McCain (R-AZ), “I’m saying cancel it. It was a bad idea to start with.”
48 White House aides rejected the suggestion. WORST
LEGISLATION IN HISTORY For these
reasons, I believe that the Medicare drug bill may well be the worst piece of
legislation ever enacted. That it was enacted by a president and Congress
controlled by my party is a source of great distress to me. It will cost
vast sums the nation cannot afford, even if its initial budgetary
projections prove to be accurate, which is highly doubtful. It will
inevitably lead to higher taxes and price controls that will reduce the supply
of new lifesaving drugs. 49 And all of this will be done without
even giving my party any long-term political benefit—after supporting the
drug bill, the AARP immediately turned around and launched an intensive
attack on Bush’s Social Security reform. Said
former House Majority Leader Dick Armey (R-TX), “The recent expansion in
Medicare to include prescription drugs provides an example of how policies
that expand government are ultimately harmful to Republicans.”50 Sadly,
there is no place to turn. Democrats opposed the legislation only because
they thought it wasn’t expensive enough. This left many elderly believing
they could have done better if only those miserly Republicans hadn’t been so
cheap. It is doubtful that anything less than 100 percent reimbursement for
all drugs for the elderly would have satisfied them. In the
future, it will be a simple matter for Democrats to run against every problem
that develops in the drug program and continue to promise seniors a better
deal no matter how much it costs. Moreover, if costs do explode—as seems
inevitable—Democrats will be in a position to excoriate Republicans for
anything they do to rein them in. For this reason, smart liberals like
columnist Bob Kuttner concluded that passage of any
drug bill was fundamentally in the Democrats’ political interest. 51 On the
other hand, if Democrats had still been in control of Congress and the White
House, they would have had less incentive to pander to the elderly. Because
many of the elderly suspected them of secretly wanting to destroy Medicare,
Republicans had to pay a premium to buy the AARP’s support. Democrats might
have been able to cut a better deal, demanding some sacrifice by the elderly
in return for the new benefit. And because they have credibility as the
party of Medicare, they might have gotten it, thus giving us a less expensive
bill in the end. As the excerpt in indicates, Steve Hopkins,
July 26, 2006 |
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The recommendation rating for
this book appeared in the August 2006
issue of Executive Times URL for this review: http://www.hopkinsandcompany.com/Books/Imposter.htm For Reprint Permission,
Contact: Hopkins & Company, LLC • E-mail: books@hopkinsandcompany.com |
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