Sunday, March 14, 2004

Tyler Cowen linked to this awesome Heritage paper. These guys don't just say "cut spending." They say, "cut spending; here's what to cut; here's how to cut it." In that sense, these guys are very down-to-earth. But in another sense, their heads are in the clouds; the Republican party has become the governing party. As such, it is not surprising that it has become the party of government. Without a Reagan or a Thatcher (or maybe even a Gingrich), such a transformation is inevitable.

My prediction: we will accomplish a lot of the cuts in discretionary spending that the folks in Heritage recommend, though very slowly. What will drive the cuts will be the declining fiscal state of our entitlement programs, which are two thirds of federal spending already. The middle class has the votes, and they hate taxes and love entitlements; they won't miss, say, the U.S. Geological Survey.

Of course, the folks at heritage have ideas about entitlements, such as vouchers: "Vouchers can provide choice without bureaucracy in many other areas. Medicare and Medicaid could be made more like the Federal Employees Health Benefits Program (FEHBP), in which federal employees choose between competing private health plans with the federal government subsidizing the premium. More public housing programs can be replaced with rent vouchers."

I think this is absolutely right, but I'm surprised that means testing isn't also mentioned. Vouchers will make entitlements cost less, increasing the freedom of the taxpayers, and come with fewer regulations, increasing the freedom of the recipients. But they do not alter the following fundamental dilemma:
The middle class loves receiving entitlements.
The rich pay most of the taxes.
The middle class has the votes.
Once the middle class gets used to an entitlement, I don't know what, short of an economic crisis, would convince it to accept significant benefit cuts. (Welfare reform was possible because there aren't that many poor voters.) If vouchers are the first step in moving away from entitlements, then they are so primarily because they make means testing more palatable. If a means test is a stark cutoff such as "Medicare or not," then the middle class will always pass the test. With vouchers, you get a check; that some people need a bigger check than others is not so hard a sell politically. Even better, the "old lady eats dog food so she can afford her drugs" argument becomes an argument for the government to be more generous to poor old ladies, not more generous to every old lady. The middle class is a lot more generous to itself than it is to the poor.

Links to this post:

Create a Link

<< Home