Green Room

Obamacare, the Decision, and Austerity

posted at 9:44 am on July 2, 2012 by

There is no government mandate requiring people to write about the Supreme Court decision upholding Obamacare, but you wouldn’t know that from visiting the internet. I briefly considered refereeing some of the fine points of the debate over whether there are Silver Linings in that decision. However, people’s opinions seem so entrenched for the time being that writing that sort of piece seems rather pointless. It might be more useful to look at Obamacare and the decision upholding it in the context of the future of American politics.

The central feature of those politics is the unsustainable increases in our debt and unfunded liabilities. Our future politics is likely to be dominated by the politics of loss. This has near-term implications for the fate of Obamacare, but the ramifications go beyond that.

After all, even an incipient fiscal crisis is unlikely to cause Democrats to convert to conservatism or libertarianism. In the debt-fueled political battles to come, most Democrats will likely cling to their traditional tax-and-spend philosophy. They will want to address the debt with the highest ratio of tax increases to spending “cuts” as they can extract politically. They will want to pretend taxes are not taxes and spending is not spending. They will try to devise ways of moving their agenda forward without taxes. They will try to devise ways to burden others with the costs of their agenda.

From this perspective, we can learn much from Obamacare and the decision upholding it. Knowingly or not, Obamacare is a bit of a trial run for the sort of tactics Democrats may increasingly employ as our fiscal crisis grows. In this context, the Supreme Court’s willingness to characterize the mandate penalty as a tax may encourage further dishonesty from the Democrats. In another sense, it is regrettable that if the mandate penalty is considered a tax, it is not considered as simply a lesser tax paid by those who opt out of our newly quasi-socialized health insurance program. Democrats likely colluded with the CBO to prevent the ostensibly private health insurance industry from becoming part of the federal budget — and as long as the same ol’ insurance companies remain in place, the right will be unlikely to get most Americans to realize what actually happened.

On the other hand, the decision that the mandate is a form of tax — as opposed to a regulation of commerce — helps ensure that the Democrats’ agenda will carry an economic and political price. Moreover, it is not as though Democrats were not already dishonest about the nature of the mandate. They insisted it was not a tax, then went to court arguing it was a tax and won. That history ought to shred Democrats’ credibility in similar future battles. That the Obama administration is still trying to claim it is not a tax is their tacit admission they will have an increasingly difficult time selling taxes going forward.

Even more broadly, regardless of its label, the mandate by any other name smelled as rank to most Americans. I read commentary suggesting that if Obamacare ever gets fully phased in, there will be no getting rid of it. I think that perspective does not account for the fact Social Security and Medicare were popular when passed, whereas Obamacare was not. That perspective also fails to account for the fact Social Security and Medicare were passed during an era where American politics were dominated about carving up America’s prosperity instead of accounting for America’s debts. That perspective further fails to account for the fact Social Security and Medicare are structured as traditional government entitlements, while Obamacare retains the facade of capitalism, which makes it much more vulnerable to repeal/replacement/reform not just next year, but every year. This is why so many Democrats loathe Rep. Paul Ryan’s Medicare reforms, despite their similarities to Obamacare.

The establishment may prefer a Grand Bargain based on the recommendations from the chairmen of the Bowles-Simpson commission on the debt crisis, which would retain Obamacare and impose further taxes. A majority of voters prefers neither retaining Obamacare nor increasing taxes. Moreover, the Bowles-Simpson recommendations seek to raise revenue through 1986-style tax reform: broadening the tax base while curtailing tax deductions. This approach runs contrary to the approach of Obamacare and Democrats generally (even the supposedly more responsible Bill Clinton) of engineering social policy and paying off favored party clients via the tax code. The Obama approach on taxes, while representing the core constituencies of the Democratic Party, is outside the establishment’s center-left approach.

Lastly (for now), the Supreme Court ruling that states have the ability to opt out of Obamacare’s expansion of Medicaid may lead to substantially higher costs for the federal government. However, that is not an entirely bad thing going forward. If Obamacare will leave the taxpayer on the hook for an additional $500 billion or so in federal costs over the first decade, national Democrats ought to have to answer for it. As Justice Kennedy might say, federalism preserves liberty in part by preserving separate lines of political accountability. Restraining attempts by Washington to strong-arm state governments into bearing the burden of the Democrats’ national agenda likely will be increasingly important in the battles to come. How committed the Court will be to these principles remains to be seen; the right needs to be committed to them well before future disputes wind up in court.

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One point of your argument is worth hammering home again and again. Demos are not suddenly going to become austerity obsessed, supply-side, Austrian economist devotees just because we go bankrupt. I see a lot of commentary from our side basically arguing that when we finally leave the cliff the left will wake up ask us to implement all of our remedies while they cheer loudly. It’s not going to happen.

Greece, anyone? See the protest where the left is demanding more and more austerity? No?

Well, how about France. That newly elected president really has a lot of great free-market ideas, doesn’t he? No?

Well, surely a downgrade in the US credit rating would get people’s attention, without a doubt. What’s that you say?

The left is the left because they are not rational. The party of reason and science ignores math. They will not tell you how much taxation is enough because no percentage short of 100% will ever be enough.

It’s who they are. Frog, scorpion and all that.

The Hammer on July 2, 2012 at 10:15 AM

Hammer, you are right that the left will never see (or at least admit) that it has been their policies that have driven the country to the edge of this cliff, and that are now stomping on our desperately clinging fingers there.

But hopefully, the great unwashed, the independents, the low-information types, will finally see the truth when they get hit with bigger and bigger tax bills and vote the left out of office.

And no, I’m not holding my breath on that either.

Siddhartha Vicious on July 2, 2012 at 4:59 PM

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Allahpundit on July 2, 2012 at 9:30 PM

If ZeroCare gets fully implemented, it will result in the sharp increase in premiums, insurance companies driven out of business, and calls for a government takeover of the mess. That is the plan.

As for Zero, I’m not convinced that to him this isn’t a push in the direction of Cloward-Piven at a time when our economy is in peril and our debt is beyond staggering, again perhaps because of a previous stab at Cloward-Piven known as Stimulus.

Four more years of this and our economy is shot to hell. Is that the plan?

hillbillyjim on July 2, 2012 at 6:43 PM