Big news from yesterday, both policy-wise and politically. Remember, Senate Dems are going to try to sink Tom Price during his confirmation hearing this month because he wants to replace Medicare with a voucher system. Medicare will be a linchpin of their 2018 midterm strategy, especially in red states where they’re in trouble: Between Price, Mick Mulvaney at OMB, and of course Paul Ryan, Trump has aligned himself with some of the most aggressive entitlement reformers in Washington. The more power you hand to Republicans, Dems will say to Trump’s blue-collar base, the more you’re gambling with your health care once you turn 65. That’ll leave Trump stuck between the fiscal conservatives in his own party who see Medicare as unsustainable unless it’s reformed and the working-class populists who elected him and who want the government to, er, keep its hands off their Medicare.
John Dickerson put Reince Priebus on the spot about it yesterday, as you’ll see in the second half of the clip below. How’s Trump going to fix Medicare, he asks? Reince’s answer: He won’t “meddle.” We’ll solve it by growing our way out of the problem. There’ll be so much economic growth, supposedly, that the boom in revenue will balance the books. Which, in reality, almost certainly isn’t true. A Heritage study published last year put the problem in stark terms:
Medicare spending has routinely been underestimated (though making such projections is admittedly difficult because of the vagaries of patient behavior, changes in medical technology, or shifting medical practice patterns) and historically has outpaced inflation, the growth of the federal budget, and the growth of the economy. In the near term, the Medicare trustees report, Medicare’s total spending will increase from $683.2 billion in 2016 to $716.8 billion by 2017 and will surpass $1.2 trillion by 2025. Over the period from 2017 to 2025, outlays will generally outpace the growth in the general economy (as measured by GDP), aggregate national health expenditures, and private health insurance.
More retirees and longer lifespans are an ominous problem for a program whose costs are already notorious for outstripping projections. In terms of the overall national debt, the Committee for a Responsible Budget (co-chaired by Republican budget hawk Mitch Daniels) noted in 2015 that “To put the debt on a downward path to reach its historical average by 2040, productivity would need to be three times as high as projected. In other words, for growth alone to solve the debt, the country would need sustained annual productivity growth between 2.5 and 4 percent. By comparison, the historical record for any 25-year period since 1950 is 1.9 percent.” None of that means that the entitlement crisis will grow so dire so soon that Trump will need to address it rather than one of his successors, but it almost certainly means that growth won’t be enough. He can kick this can, but eventually it’ll be too big for the government to kick. Reince is telling you here that he’s prepared to kick it, which is good news for Republicans in the midterms but not so good for the country long-term. I hope Ryan, Price, and Mulvaney are okay with it. But then, I guess they have to be.
You should watch the first half of the clip too as it provides a clue about Trump’s intentions towards ObamaCare. Rand Paul created a stir over the weekend when he claimed that Trump told him he supports replacing ObamaCare as soon as possible. Most Republicans in Congress support “repeal and delay,” though, in which the party would give itself two to three years to build a replacement system while keeping O-Care’s exchanges going in the meantime. Which is it, Dickerson asked Priebus? Does Trump back “repeal and delay” or does he want them to rush out a replacement plan? Priebus is cagey in his reply, noting that Trump prefers to see the program replaced ASAP, but he implies that the White House is okay with a delay of some kind. “I think we all understand that things sometimes do take some time,” he says, “and the full repeal and replace may take a little bit more time.” Sorry, Rand.