The Public Policy/Errors of Commission
Frum, David
Errors of Commission by David Frum S o much for blue-ribbon commissions. For a decade, politicians afraid to make tough decisions on the budget have nervously suggested passing their job to panels...
...As for the patients, where are they going to go...
...The commission handed in its report on January 27 of this year, and the results are ignominious: The commission members couldn't agree on anything...
...44 The American Spectator April 1995 arrogant his assertions that "we should have been able to agree that reform must be progressive" and "we should have been able to agree that reforming tax expenditures is a necessary part of the solution...
...In the absence of competition, price controls tempt them into an easier way out: water the product down...
...He got his wish in February 1994...
...But the job cannot be evaded for very much longer...
...They couldn't even agree that the problem they were supposed to investigate—out-ofcontrol spending on entitlement programs—actually exists...
...Commissioner Pete Peterson, for example, proposed a mass of tax increases (principally a huge rollback in the home mortgage deduction) and cuts in benefits to middle-income people...
...He and Sen...
...Bob Kerrey of Nebraska demanded a commission to recommend ways of controlling entitlement spending as his price for supporting President Clinton's first budget...
...Since Social Security's projections have historically underestimated its costs, it's worth dropping one's eye down to the worst-case scenario...
...It's an intelligent and comprehensive plan—if you agree that preserving a generous welfare state for the least well-off is more important than avoiding new taxes...
...The hundreds of programs we call "entitlements" together make up the radioactive core of the American welfare state...
...Well, why should they have agreed...
...When the time for serious reform comes, Republicans will owe Sen...
...For a decade, politicians afraid to make tough decisions on the budget have nervously suggested passing their job to panels of bankers and college presidents...
...Canada...
...Basically, an entitlement is any program for which Congress, instead of appropriating a fixed sum of money (asit does for defense or transportation), sets up criteria of eligibility and says: Anyone who meets these criteria is entitled to government help...
...Top-down administrative controls do not lead health-care providers to experiment with new types of service...
...John Danforth of Missouri were named to chair a 30-member commission as festooned with blue ribbons as the prize pigs at a county fair: ten senators, ten congressmen, three bankers, a union leader, the president of the United Negro College Fund, etc...
...As bad as those numbers are, there could be something even worse: the wrong kind of answer to the problem of controlling them...
...The American Spectator April 1995 45...
...But guess what...
...They include not only giant social insurance programs like Social Security, Medicare, and Medicaid, but also the agriculture budget, veterans' compensation, food stamps and welfare, black-lung payments to coal miners, nutrition aid, and on and on and on...
...Not just a delusion but a puzzling delusion: Why should entitlement reformers put their ideologies aside...
...The final report of the entitlements commission confirms how ideological an exercise spending reform necessarily is...
...M ' eanwhile, in the same week that the Kerrey commission's confession of failure landed on the president's desk, congressional Republicans were beginning to assemble what could turn out to be a comprehensive reform of the $140-billion-per-year Medicare program...
...Instead of compelling hospitals to downgrade services offered to Medicare patients, Medicare could be reinvented as a system of medical IRAs that would permit patients themselves to decide where they would economize and where they would spend...
...To Peterson, higher taxes and fewer benefits for the well-to-do represent the simplest common sense...
...But those who reject his values will resent as David Frum is the author of Dead Right (New Republic/BasicBooks...
...By that definition, roughly half the budget goes to entitlements of one type or another...
...What Washington wants to do to balance the budget—cut Social Security, raise taxes, and protect antipoverty programs—conflicts radically with what the voters want done—protect Social Security, cut taxes, and gut antipoverty programs...
...We, the pols say, are crippled by the sniffishness of the voters, but they are free from politics and can ignore the public's squawks and pursue the common good...
...That's why a radical Republican reform agenda is so urgentlyneeded now: these are the last few years in which the baby boom generation will possess the purchasing power to make its own retirement provisions, before its members pass 65 and find themselves helplessly dependent on a deteriorating public-sector retirement system...
...Kerrey, for instance, wants to slow the increase in Medicare spending by unilaterally reducing government payments to doctors and hospitals...
...Why aren't Republicans and Democrats permitted to disagree about whether spending cuts or tax increases should be used to balance Washington's books...
...Washington has been experimenting with this sort of medical price control since 1983, and the verdict is in: patients get worse medicine as a result...
...Medicaid's have quintupled...
...The hope that you could lock bank presidents and union leaders, and Democratic and Republican politicians in a room together, as the Kerrey commission did, and have them work out some grand deal was a delusion from the start...
...The real alternatives are free-market reforms or ever-dingier and more squalid government services...
...It's easy, it doesn't require thinking, and it doesn't disrupt the doctors' accustomed ways of doing business...
...Old-fashioned party politics has seldom looked better...
...And the dinginess and squalor will be intensifying fast as the vast baby-boom generation approaches retirement and threatens to impose nightmarish new costs on the federal Treasury...
...Medicare's costs have tripled since 1980...
...Because the commission could not agree on a single set of recommendations, the two chairmen, many of the commissioners, and the commission staff gathered their own various personal plans together into the final report...
...Kerrey this thanks at least: he has shown them how not to make their case...
...Why couldn't the commissioners agree...
...Simply deliver your captive market of optionless Medicare patients inferior medicine, in dirtier buildings, after longer delays...
...It will be political hell: an eternity of delivering bad news to ever more insanely furious constituents...
...In no area of public policy has the call for commissions sounded as loudly and insistently as with the budget...
...Which is why America's grandest experiment yet with a blue-ribbon budget commission, the Kerrey Commission on entitlements, has just reported spectacular failure...
...The right sort of entitlement reform—the sort of reform that the Kerrey commission refused to consider—must not only liberate Washington from impossible spending commitments...
...If one of the next three or four Congresses does not begin enacting personalized alternatives to the entitlement bureaucracies, all the Congresses after that will find themselves endlessly engaged in chop, chop, chopping the benefits paid by existing programs—or else raising payroll taxes to levels undreamt of even in Denmark or Belgium...
...U ndeniably, entitlement programs cost too much...
...If not, its logic looks far less compelling...
...it must liberate people from the Washington social-welfare system, by moving them toward individual control of their own pension and health plans...
...That scenario posits a 22.2 percent RCA tax by the year 2040 and a 35.7 percent Medicare payroll tax...
...The bankers and college presidents turn out to scare just as easily as the politicians do...
...And the future looks even grimmer...
...Instead of reorganizing Social Security to induce everyone to keep working to 70, personalized tax-sheltered accounts would free Americans to make their choices about when to stop working...
...No blue-ribbon panels, no bipartisanship...
...The Social Security Administration's middle-of-the-road projections predict a 17.4 percent RCA tax by the year 2040 and an 18.4 percent Medicare payroll tax...
...Entitlement reform is about politics, and the more ideological the politics, the better the answers it will deliver...
...In 1993, Sen...
...The details of these proposals have been floating about Washington for some time, but all of them require conservative congressmen actually to enter into the guts of America's major social welfare programs and rewrite them—a job Republicans have looked forward to with all the eagerness of a draftee getting ready to charge the barbed wire at the Somme...
...Kerrey's interest in price controls underscores a harsh truth: that the alternative to free-market entitlement reform is not the unabated flow of benefits to the elderly...
...It's hard to see how the Republican congressional majority, or any congressional majority, can survive under those circumstances...
...health-care providers, like everyone else, only experiment when they're under competitive pressure...
...As a result, the document is sprinkled with literally hundreds of ideas for cutting spending and raising revenues...
Vol. 28 • April 1995 • No. 4
