Saturday, October 06, 2012

Secretary of Explaining Things

The first presidential debate between Messrs. Romney and Obama affected the media's election narrative but did little to provide the average voter with a substantive understanding of key issues.

The widespread and bipartisan media consensus is that Mitt Romney won Wednesday's first presidential debate.  A somnolent President Obama spent most of his time on stage looking down at his podium, handing an easy victory on appearances to the guy who dissed Big Bird. What was reinforced to me, though, is that these debates -- barring the emergence of a popular caricature of one of the candidates -- are aimed at influencing the media's election narrative, not at voters.

These debates are supposed to elucidate a candidate's positions and to help voters distinguish between their choices.  But in practice, we're not given much to work with.  The candidates present what seem like "Mad Libs", random numbers without context or explanation ("4 million jobs" from energy independence; "2 million more slots in our community colleges"; a "$5 trillion tax cut"; "$2 trillion in additional military spending"; a "$4 trillion deficit reduction plan").  The result is empty speechifying, not debating.  And in a generally polite encounter without memorable "zingers" from either man, my eyes were glazing over.

Granted, it's difficult to properly explain complicated policies in two minute soundbites, and few politicians are good at breaking down big ideas into digestible bites without patronizing the audience.  Bill Clinton has long been an exception; most recently, his show-stealing speech at the DNC this year inspired a widely-quoted Tweet declaring he should be appointed "Secretary of Explaining Things"!

Here's how I would have addressed the debate's main talking points relying on substance to inform the public:

1. The deficit

In 2011, the federal government spent $3.6 trillion while taking in just $2.3 trillion through taxes.  Deficits aren't something new: going back to Ronald Reagan's presidency which started in 1981, the government has run a deficit every year except from 1998-2001.  So this is not a recent problem nor is it something that has been caused by one political party.

Gov. Romney says he will "stop the subsidy to PBS" and cut other government-funded programs.  While that may be politically pleasing to the right, the amount of money at stake there is so small, it's not even worth arguing over: funding to the Corporation for Public Broadcasting (which funds PBS and NPR, another target of the right) was $445 million in 2012, or just 0.012% of the budget.

It's impossible to seriously tackle the deficit problem without looking at the three biggest components of federal spending: Medicare/Medicaid, Social Security, and the military.  These three areas combined cost the government $2.26 trillion in FY2011, or 62.8% of the budget.  It is impossible to tackle the deficit by making scores of tiny cuts elsewhere and not addressing the "Big Three".  Reforming Medicare/Medicaid, Social Security, and defense spending will, by definition, require some sacrifices somewhere -- what Democrats and Republicans should be talking about is how, and letting us know.  President Obama said of his $4 trillion plan "It's on a website".  Not good enough.

2. Taxes

As previously mentioned, the government took in $2.3 trillion in tax revenue last year, and spent $3.6 trillion.  It's important to note here that the U.S. is not a wildly irresponsible spender nor is it spending at a rate unseen by the rest of the world.  Gov. Romney noted that "Spain spends 42% of their total economy on government... I don't want to go down the path to Spain", but looking at spending as a share of GDP shows Canada at about 40%, the U.K. above 47%, and Sweden at 52.5%.  Sweden, if we're going to cherry-pick examples, grew their economy by 4.4% last year, compared to the U.S.' 1.7%.  Nonetheless, although deficit spending helps keep an economy afloat during a slowdown, the U.S. does need to take steps to tackle its growing debt.  How?

The "Big Three" of Medicare/Medicaid, Social Security, and defense spending account for about 63% of money spent; another 13% is other mandatory spending, and 6% is interest payments.  That leaves only 18% of federal spending as non-military "discretionary", which funds government agencies like Health & Human Services, Housing & Urban Development, and the Justice Department.  All of that accounted for only $646 billion in 2011, obviously not enough to cover the budget shortfall.

That's why the only sensible solution to tackling the deficit is a combination of reduced spending and increasing revenue collected from taxes.  The marginal tax rate on the top bracket of earners ($388,351+ in 2012) was 35%, the rate which it has been since 2003, when it was cut by President Bush.  In fact, that top rate has only been lowered, never raised, over the past 20 years.  Gov. Romney, as the president noted, said during the Republican primaries that he would not accept even $1 in tax increases for every $10 in federal spending cuts, an ideologically-toeing position of insanity.

Republican president Ronald Reagan, who was "a tax cutter legislatively, emotionally and ideologically", still agreed to tax increases when faced with a growing budget deficit. So too did his Republican predecessor George H.W. Bush.  Gov. Romney has promised he can solve the problem just by "closing loopholes and deductions", a dubious proposal, made harder to believe given the lack of specifics he has offered.

3. Medicare

Medicare has been one of the great success stories of government policy helping people.  The program was created in 1965 to provide insurance to the elderly, and has been expanded over the years to cover those with long-term disabilities and ALS patients, among others.   Medicare helps out those with a much greater need for healthcare relative to the general population.  (Medicaid, by contrast, is a health program for certain segments of the very poor, and receives significant funding at the state level or lower.)

Medicare is funded by multiple sources, but hospital and inpatient services (Medicare "Part A") are mostly financed by a payroll tax.  (Ever wonder about that mysterious "FICA" deduction on your paycheck?). Unfortunately, Medicare costs are projected to increase astronomically over the next couple decades, because of rising costs of care and a higher ratio of elderly people (Medicare users) to workers (Medicare funders).  In 2010 there were 3.7 workers for every Medicare enrollee; in 2030 it is projected there will only be 2.4.

In order to manage Medicare spending, the program has to be modified, perhaps by reducing the amount of money hospitals and other healthcare providers are paid to treat Medicare patients, or by making patients pay more out-of-pocket to cover their treatments.  A sensible long-term agreement will require both of those strategies, an increase in Medicare taxes to raise revenue, and a crackdown on waste and fraud.

The candidates have sparred over the president's supposed $716 billion "cut" to Medicare.  The president explained this amount represents a "savings" by limiting payments to insurance companies. Hospital reimbursement rates will also be lowered, and the effect is to incentivize efficiency in the system.  The exact same $716 billion in savings were included in the vaunted budget plan of Republican VP hopeful Paul Ryan, a plan which received the votes of all but four Republicans in the House.

4. Obamacare

The Affordable Care Act (ACA), which forms the bulk of what is known as "Obamacare", achieves two goals beneficial to the public.  First, it greatly expands the number of people covered by health insurance to include the millions of Americans who'd previously had trouble getting coverage due to pre-existing conditions or gender-specific health issues.  Second, as per the non-partisan Congressional Budget Office (CBO), the ACA will on net reduce the deficit and Medicare costs.  Additionally, and of vital importance to young voters, the ACA allows for adult children to be covered by their parents' health insurance until they turn 26 years old.

Although conservatives hate Obamacare for creating an "individual mandate" requiring that everyone have health insurance, the first such healthcare system in the U.S. arose in Massachusetts when Mitt Romney was governor.  He spoke forcefully in favor of the individual mandate, and still touts the bi-partisanship effort with the Democratic state senate required to pass the law.

Now while there are a myriad number of highly technical differences between "Romneycare" and "Obamacare", that mandate is the critical and contentious element which ultimately required the Supreme Court to approve it.  Gov. Romney now clamors for repeal of the ACA but in the debate seemed to push for implementation of a mandate-driven program at the state level.  Is that really that big a difference?

5. Role of government

Republicans cry that Democrats want to "punish success".  Democrats can't decide whether Republicans don't care about 47% of the country or everyone who's not in the top 1%.  Partisanship causes them to lose sight of the basic role of our government: to promote the attainment of the "American Dream" for all of our people.

That starts with ensuring there are quality jobs open to Americans.  Both sides agree on the need for better education and training to ensure that Americans can take advantage of the more advanced jobs of a high-tech economy.  Amazingly, the issue of immigration reform was completely ignored by Messrs. Romney and Obama, likely because neither political party can agree on what to do about unskilled immigration and illegal immigrants.  A compromise, then, should start with a huge expansion of H-1B visas for skilled immigrants, whose math, engineering, science, and technology skills jump-start our economy.  We have been shooting ourselves in the foot by chasing away the foreign-born entrepreneurs who want to start the next Google or Apple and create good jobs for American workers.

A social safety net is important too, to ensure that people going through a rough patch can bounce back instead of being lost forever.  Expanding the eligibility for food stamps has saved lives during this recession.  Many Americans know friends or family who have used government assistance to get their lives back on track, and know there's no shame in that.  Gov. Romney's own father was on welfare for a period of time, and he went on to become a multimillionaire businessman, governor, and presidential candidate.

Finally, regulation is an important aspect of what government does.  Government regulation has always been around to ensure that we breathe clean air and drink clean water and prevent exposure to toxins.  New nutritional disclosure requirements are allowing consumers to be more aware of what they are eating and drinking; tougher new fuel efficiency standards are spurring innovation in the auto industry and will reduce our dependence on oil while lowering drivers' bills at the pumps.  Both candidates state the need for better oversight of Wall Street in the wake of the financial crisis (although Gov. Romney wants to repeal parts of the massive Dodd-Frank bill passed in 2010); hopefully the rationale is obvious.  Regulation -- financial, environmental, and consumer protection -- is vital because it ensures a level playing field for all and keeps Americans safe.

No comments: