In his latest column, which chides President Obama for choosing “easier politics over harder truths” when dealing with America’s fiscal challenges, Washington Post editorial page editor Fred Hiatt provides a near-perfect example of inside-the-Beltway deficit hawkery run amok.
Which, as a columnist, is his prerogative. If Hiatt thinks that the “most vexing challenge facing the country” is “how not to go bankrupt”—despite the fact that the federal government continues to be able to borrow at favorable rates, that long-term unemployment remains at terrifying levels and income growth is stagnant, and that action on climate change now seems unthinkable—well, who are we to argue?
But in building his bill of particulars against Obama, Hiatt presents one argument that is so misleading as to require correction. He writes:
His signature achievement is a health-care bill that represents, happily, a major step toward universal health care and contains some hopeful seeds of cost control. But it is also the biggest new entitlement since Medicare with little new revenue to support it. The bill does include a watered-down version of a tax on high-priced employer-provided health-care plans, but even that won’t take effect until after a second Obama term would be over.
The clear implication here is that health care reform will further expand the federal deficit. Medicare, after all, is one of the biggest deficit drivers, and if a program is the biggest entitlement since Medicare and comes with only “little new revenue,” how could it be otherwise?
Except, according to the Congressional Budget Office, it could. In fact, that big new entitlement could even help reduce the deficit.
In an analysis of the bill (PDF) released days before Obama signed it into law, the CBO estimated that health care reform “would produce a net reduction in federal deficits of $143 billion over the 2010-2019 period as a result of changes in direct spending and revenues.” For the following decade, the analysis forecast deficit reduction of “between one-quarter percent and one-half percent of gross deficit product.” Estimates obviously get hazier the farther you go into the future, but even after that, “CBO anticipates that the reconciliation proposal would probably continue to reduce budget deficits relative to those under current law in subsequent decades.”
This was kind of a big deal at the time, with all of official Washington waiting for the budget-crunchers at CBO to finish their work. It’s the sort of thing you’d expect a columnist at a major newspaper to remember, and—even if he had reason to disagree with the CBO’s projections—to acknowledge.
And it’s not as if those estimates appeared by chance. From the outset, officials at the White House and in Congressional leadership were determined that health care reform not be projected to expand the deficit. And contra Hiatt, that determination created a host of political challenges for the Obama administration.
While the tax on high-end insurance plans Hiatt refers to is phased in, for example, its very existence was unpopular among labor unions, who form an important part of the Democratic base. Meanwhile, in order to hold down costs over the first decade, the White House also delayed the onset of many key benefits, which angered liberal supporters—many of whom also argued that the subsidies provided to help low-income individuals buy insurance were too meager.
But it was various cost-control measures that did most to make the politics of health care reform hard for Obama. The false “death panel” meme started with efforts to support counseling about end-of-life care, which often produces skyrocketing costs. And a range of provisions designed to hold down Medicare expenses provided Republicans fodder for attacks in the 2010 midterms. Those attacks seem to have worked: while it’s always good to be wary about claims that specific issues led to election outcomes, there’s evidence (PDF) that health care’s passage helped make the GOP landslide even bigger than it would have been otherwise—which, in turn, has made the political environment for Obama more difficult than it would have been otherwise.
Despite all that, it appears the White House is persisting in efforts to implement unpopular deficit-cutting measures. Two weeks ago, a story on the front page of The New York Times reported anger among hospitals over a provision in the law that will hold them accountable for Medicare spending on a patient in the ninety days after a patient is discharged. There was no indication that the protests were forcing a reconsideration of the provision.
So why does Hiatt ignore or overlook all this evidence in the course of arguing that Obama is chicken about deficit politics?
Here’s one guess: Later in the column, Hiatt suggests that he has a very particular kind of deficit-reduction in mind, one that involves a bipartisan grand bargain over the size of government. The country doesn’t want a government that consumes only 18 percent of GDP, as GOP presidential contender Tim Pawlenty has suggested, Hiatt writes, but neither does it want the 25 percent that the government has accounted for under Obama. And since Obama has not been, in Hiatt’s view, insufficiently full-throated in his embrace of the various commissions and working groups assembled to that end, he is at fault here.
This isn’t, logically speaking, necessary: the budget could be perfectly well brought into balance, and the long-term debt stabilized, at either of those levels. (The actual services provided, of course, would be very different.) But again, it’s Hiatt’s column; if that’s what he wants to wish for, fine.
But if Hiatt wants what he started the column talking about—a politician who will prioritize deficit reduction even in the face of political risk—the Barack Obama who presided over the health care reform push is a pretty good model. And any honest accounting of that episode would acknowledge as much.
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