The real Mediscare trap

By sacrificing all other issues for an exclusive focus on Medicare and other entitlement reforms, Republicans would also be making a policy mistake. However much it may loom in the future, Medicare is not what imperils the economy right now. Businesses are not hiring not because Medicare might go insolvent a number of years down the road. If the economic trajectory of the past four years continues indefinitely into the future, almost no version of Medicare (including Paul Ryan’s) will be affordable. If the point is to reform Medicare to make it sustainable (as Ryan allies claim), then we had best look at more pressing issues for the sustainability of Medicare and the future of the American economy as one of dynamic growth. Moreover, even Ryan’s reforms, which many in the Beltway conservative establishment have rallied around, would do nothing to change entitlements for the next ten years at least. Ten years is a long time, and there need to be conservative alternatives for the medium term as well as the long term.

So Romney and his fellow Republicans should not let the focus slip too much from the theme of economic restoration and renewal. And I for one am doubtful that reducing the deficit or cutting spending alone will solve our economic problems. Many other structural risks are posed to the American economy. For instance, banking reform could be a key policy and political move for Romney. We still live in an era of too-big-to-fail. Many on the right have become increasingly aware of how TBTF endangers both economic growth and the freedom of the American economy. It seems very likely that the president’s signature financial reform initiative, Dodd-Frank, has made it worse. Finance will need to be made a market again (rather than a government-backed syndicate) in order for the economy to take off.