I'm glad there was a debt ceiling deal and that the federal government didn't face a funding crisis, but the whole controversy was ugly and at most minimally productive. Watching the fury and wailing on MSNBC made me feel better for a moment, but...
All that political friction, intra-Republican fighting, going to the edge of disaster, and we got one trillion dollars of back loaded cuts to discretionary spending and some cuts to be named later. And we still haven't come close to dealing with the real health care and entitlement-related drivers of our unsustainable budget deficits. It reminds me of the nominally center-right Karamanlis government in Greece. It was in power from 2004-2009. The Karamanlis government would announce a policy to incrementally liberalize some tiny corner of the labor market or to privatize this or that. There would be protests and carrying on. Sometimes the Karamanlis government would back down and sometimes it wouldn't. The Greek state and economy continued heading for the rocks at the same speed. The fights the Greek center-right took on were the best sign that neither the politicians, nor the public were willing to tackle real issues.
Comparisons shouldn't be pressed too far. Most conservative Republicans are much more serious about producing a sustainable level of government spending and a competitive economy than was the last center-right Greek government. But they are making a similar strategic mistake. The long-term structure of government spending is almost as important as the level of spending. Winning public opinion battles now and implementing incremental changes in the next several years is more important than the size of spending cuts enacted for this year or next.
How we cut is just as important (politically even more important) that how much we cut. The potential across-the-board Medicare provider cuts in the new agreement are stupid as policy and unsustainable as politics. As Reihan Salam points out, " winning deep cuts in FY 2012, which really could be destimulative, isn't nearly as important as getting buy-in on some version of premium support from grassroots conservatives, moderates, and elected Democrats" I would extend the point to include changes to the health care sector in general rather than just Medicare.
But how to do that? First, let's start from where we are. The structure of the provider cuts in the debt ceiling agreement, along with the Medicare cuts in Obamacare, along with IPAB should be on the lips of everybody on the center-right. This is what Medicare in an Obama second term will look like. It will be some combination of meat cleaver program cuts drawn up by politicians in midnight meetings and denials of care managed by unaccountable bureaucrats. And as Obamacare unravels the private insurance market, we can expect most Democrats to try to move Americans into a Medicare-like system for everybody. That is a Mediscare I can get behind.
We also need a plan of our own. Salam likes Domenici-Rivlin. I like Capretta-Miller. The Ryan Plan in the PTP isn't quite good enough as either policy or politics. It probably doesn't budget enough money for Medicare, and outright ending the FFS program for future retirees is both too scary for marginal voters and might not even be ideal policy in some circumstances (like rural areas.)
We also need to incrementally move the ball on health care for the under-65 crowd. One way to do so would be to form alliances with state and municipal-level elected officials to let them enroll their employees in Indiana-style HSA/catastrophic health care plans. This could save state and local governments (and taxpayers) money while increasing the take home pay of their workers and increasing the constituency form market-oriented health care reform. That kind of regulatory change would be worth twice as much as this week's debt ceiling deal.
Conservatives are right to be unhappy with the debt ceiling deal, but the problem isn't that it didn't cut enough. The problem isn't that the House Republicans weren't willing to jump into a government funding crisis in order to insist on a balanced budget amendment that wasn't going to happen. The problem was that we weren't even arguing about the kinds of programmatic changes that we need and that there is no consensus for those kinds of change in either the Congress (what with Democratic control of the Senate), the White House or the country. Getting that consensus is the political challenge of our time.