The Magazine

$12 Trillion of Difference

Feb 28, 2011, Vol. 16, No. 23 • By STEPHEN F. HAYES
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In 1968, George Wallace groused, “There’s not a dime’s worth of difference between the Republicans and Democrats.” No one would say that anymore. Today, the difference between the parties is worth $12 trillion. 

Now, Democrats are the party of profligacy, and Republicans the party of fiscal responsibility. If there were any doubts about this new reality, they should have been dispelled by the events of the momentous week from February 11 to February 18, 2011.

On Friday, February 11, Indiana governor Mitch Daniels addressed the Conservative Political Action Conference in Washington, D.C. In a long and meaty speech, Daniels implored conservatives to embrace “fundamental change” and begin work on the only thing that will allow the United States to reverse its steep plunge into insolvency: entitlement reform. “We know what the basic elements must be,” Daniels said:

an affectionate thank you to the major social welfare programs of the last century; their sunsetting when those currently or soon to be enrolled have passed from the scene. The creation of new Social Security and Medicare compacts with the young people who will pay for their elders and who deserve to have a backstop available to them in their own retirement.

These programs should reserve their funds for those who are most in need of them. They should be updated to catch up to Americans’ increasing longevity and good health. They should protect benefits against inflation but not overprotect them. Medicare 2.0 should restore to the next generation the dignity of making their own decisions, by delivering its -dollars directly to the individual, based on financial and medical need, entrusting and empowering citizens to choose their own insurance and, inevitably, pay for more of their routine care like the discerning, autonomous consumers we know them to be.

That Daniels chose to address entitlement reform in his speech is encouraging. That he offered specific proposals​—​means testing, adjusting the eligibility age, Medicare vouchers​—​is important. That he did so not only as the governor of Indiana but as a possible 2012 presidential candidate is remarkable.

For years, politicians have warned in apocalyptic terms about the growing national debt. But most of those willing to propose solutions have been former politicians operating from the safe confines of a commission or college campus. 

But Daniels says our fiscal situation is so dire that avoiding the topic is no longer an option. And the current occupant of the White House, he notes, is not interested in making these tough choices.

President Obama confirmed as much when he presented his 2012 budget proposal on Monday, February 14. Not only did the budget include new funding for pet Obama priorities​—​$53 billion for high-speed rail​—​it didn’t touch entitlements. Under the White House’s plan, the federal government would spend $3.819 trillion in 2012​—​$1.645 trillion more than it would take in. When Obama was elected, the public debt totaled $6.3 trillion. By the end of his first term, it will have nearly doubled, to $11.9 trillion.

The White House was roundly criticized for its unseriousness, prompting the president to hold a press conference to quiet his critics. It didn’t work. Obama explained that addressing entitlements would require Republicans and Democrats to come together and set politics aside in favor of real solutions​—​precisely what his bipartisan deficit commission had done, only to have its recommendations ignored.

Monday evening, at a well-attended whip meeting for House Republicans, California representative Kevin McCarthy, the majority whip, announced to his colleagues that the leadership had decided to embrace entitlement reform. On Tuesday, the leadership released a statement promising to lead where President Obama had failed to do so. The GOP budget, they wrote, “will include real entitlement reforms so that we can have a conversation with the American people about the challenges we face and the need to chart a new path to prosperity.”

As a practical matter, this meant that Paul Ryan, the chairman of the House Budget Committee, would be allowed to include entitlements in his 2012 budget, due out later this spring. As a political matter, House Republicans had decided to touch the untouchable​—​a courageous decision that carries high risk. 

They did not make the decision lightly. Ryan had been engaged in discussions with GOP leadership​—​and pollsters, political strategists, policy experts, and budget mavens​—​since November’s election. Several pollsters advised against tackling entitlements before the 2012 presidential election, and House GOP leaders were nervous.

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