The 'Grand Bargain' of Entitlements Reform Is No Bargain
Days before becoming responsible, in the eyes of a public fixated on the presidency, for almost everything, Barack Obama vowed to convene a "fiscal responsibility summit." It will consider the economy's long-term problems, one of which is the growing cost of entitlements in an aging nation that is caught in the tightening grip of an iron law of welfare states: Graying means paying.
Presumably the president's summit will help chart a path toward what has been called a "grand bargain." This Big Bang will aim to create a new universe of domestic policy by, among other things, making the entitlement menu -- particularly Social Security, Medicare and Medicaid, which are more than 40 percent of federal spending -- manageable. Obama spoke of his summit a day after the House of Representatives, evidently believing that the nation is so flush that there is no need for restraint, voted to make matters worse by enriching that menu.
By a vote of 289 to 139, with 40 Republicans joining the majority, the House, in the process of reauthorizing the State Children's Health Insurance Program, doubled the funding, thereby transforming it through "mission creep." SCHIP's purpose, when it was enacted by a Republican-controlled Congress in 1997, was to subsidize state governments as they subsidize health care for families too affluent to be eligible for Medicaid but not affluent enough to afford health insurance. Because any measure acquires momentum when it is identified as for "the children," SCHIP was said to be for "poor children" or children of "the working poor."
In 2007, after President Bush proposed a $5 billion increase in SCHIP, the House voted for a $50 billion increase but receded to the Senate's proposed $35 billion, which became the definition of moderation. That compromise, which Bush successfully vetoed, at first would have extended SCHIP eligibility to some households with incomes up to 400 percent of the poverty line (up to $83,000 for a family of four), and more than $30,000 above the median household income ($50,233). So people with incomes higher than most people's became eligible for a program supposedly for low-income people. Call that compassionate arithmetic.
The new expansion, which is vengeance for Bush's veto, is mission gallop: It will make it much easier for some states to extend SCHIP eligibility to children from families earning up to $84,800. Furthermore, to make "poor" an extremely elastic concept, generous "income disregards" are allowed. Families can, depending on their state's policies, subtract from their income calculation what they spend on rent or mortgage or heating or food or transportation or some combination of these. So children in some families with incomes well over $100,000 will be eligible.
Grace-Marie Turner, a student of health-care policies, says this SCHIP expansion is sensible -- if your goal is quickly to get as many people on public coverage as possible and to have children grow up thinking that it is normal for them to get their health insurance from the government. That is the goal.
And this is the Congress with which the president will try to strike a grand bargain. Because of the 22nd Amendment, he may not be president long enough to get a Democratic Congress to agree to the shape of the table at which to bargain.
If he does tackle the problem of the teetering entitlement system, he will do so at an unpropitious moment: Events are making reform more necessary while making it seem less urgent. A nation in which $350 billion was but the first half of the Troubled Asset Relief Program and in which TARP is distinct from the perhaps $825 billion "stimulus" program, is a nation being taught not to take seriously sums with merely nine digits and two commas. Remember, just 15 months ago Bush vetoed SCHIP because of $30 billion, a sum that, from the TARP bucket, nowadays disappears into the thin air from which much of the almost $1 trillion of stimulus will be conjured.
The theory of a grand bargain is that if every American faction is being nicked simultaneously -- if tax increases and benefit cuts ("cuts" understood, perhaps, as disappointing increases) make everyone surly at the same time -- there will be unity born of universal grievance, which will morph into a public-spirited consensus. Perhaps. On the other hand, George Kennan, diplomat and historian, said that the unlikelihood of any negotiation reaching an agreement grows by the square of the number of parties involved.