The Magazine

As Simple as One, Two, Three

A legislative strategy for the House Republicans.

Nov 15, 2010, Vol. 16, No. 09 • By JEFF BERGNER
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♦ Reduce executive and congressional benefits to levels comparable with the private sector, including eligibility ages for retirement.

These initiatives will be unpopular inside the Beltway. You will be criticized by both federal employees and the Washington media. You will receive strong support from the electorate across the country.

Reduce federal payments to individuals. Rolling back discretionary spending is important, but the principal engine of growth in federal spending is direct payments to individuals—entitlement spending. Social Security, Medicare, Medicaid, unemployment compensation, and roughly 190 other such programs consume an ever larger share of the federal budget—well over half the federal budget this year. Consider the chart above and the graph at the end of this article.

Here is America’s real spending problem. Some observers ask why there seems to be so little federal money for large national projects—whether space exploration, infrastructure modernization, high-speed rail, or cutting-edge research. They need look no further. Americans discovered in the 1930s that they could vote themselves benefits, and politicians ever since have been only too eager to oblige. 

Whether we should tackle the growth of these programs is not a serious question. They are unsustainable. What we must decide is when and how to modify them. Out of economic necessity, the American private sector has gradually moved away from a pension system of defined benefits and to a system of defined contributions. Government at all levels needs to do the same. In a world of intense economic competition with rising powers and hungry work forces, we cannot afford massive income transfers unrelated to productivity. Down that course lies third world status.

Solving the entitlement problem is easy enough conceptually, but very difficult politically. We may not yet have developed the inbred entitlement mentality of France or Greece, but the political dynamics in the United States are actually much the same. No one wants to cut Social Security benefits, and if either party chooses to demagogue the issue, there is little hope of joint action. What then is to be done?

Republicans should invite Democrats to participate in an entitlement review commission. This would not be a commission to provide cover for tax increases while adjusting payments at the margins; it would be a commission to examine the role, trend lines, and sustainability of entitlement payments in a nation which must compete in the world economy. Democrats might or might not agree to participate.

More broadly, Republicans should begin a serious effort to explain to the American people the need for intergenerational justice. Reforms of this scope, as the Bush administration learned in 2005, cannot be rushed. The ground must be prepared. Republicans should explain the advantages of medical insurance and retirement accounts which are owned by individuals rather than paid out of current government revenues or borrowing. In this endeavor, they should enlist the young, who will be the main beneficiaries of entitlement reform. Most young Americans already doubt that Social Security will be there for them when they retire; show them how individual retirement accounts work—invested in the same kinds of instruments as pension funds and university endowments and private fortunes across America, with statements sent regularly to the owner, who can plan for retirement.

In all of this, Republicans should stress one major point. Like candidate Obama, who promised during the presidential campaign that everyone who liked their present health insurance could keep it, Republicans should impress upon the public that no one at or near retirement age will be forced into a new program. 

Republicans should borrow another page from the political left. What the left does when it cannot pass a program wholesale is contained in the magic words “pilot program.” Republicans should push to establish voluntary pilot programs for medical insurance and retirement accounts. Voluntary retirement accounts could be -modeled on the federal Thrift Savings Plan, which allows individuals to choose from a prescribed range of options, from financially aggressive to safe. These pilot programs would demonstrate the superior long-term returns of private accounts. They would function much like charter schools in the educational field: While charter schools have not broken the back of status quo inner city education, they have demonstrated to a certainty the superiority of freedom and choice over government mandates.

Going Forward

It may be that not all these initiatives will pass in the next Congress. The Senate might bottle up some of them or amend them in unhelpful ways. The president might veto some or all of them. But at least Congress and the president will be working from a pro-growth, job-creating Republican agenda. People in America are ready for this. They will reward a political party that advances these ideas, whether it can fully achieve them right away or not. What the American people will not reward is business as usual from a Republican Congress.

Perhaps, too, we will discover whether, and in what ways, the Democratic party is committed to the bipartisanship it so often espouses. It has often been said that there has been no bipartisanship on domestic issues during the last two years. This is actually not true. A strong bipartisan majority of all Republicans and 31 Democrats in the House favor the extension of all of the Bush tax cuts. Isn’t this an example of bipartisanship? Wouldn’t Obama-care have been lauded by the mainstream media as bipartisan legislation if it had secured 31 Republican votes in the House? The way to achieve genuine bipartisanship is to work off a pro-growth, job-creating agenda. Many, if not all, of the initiatives described above will receive some Democratic support.

The American people would like to see a direct and understandable legislative response to their desires. They are tired of being told that there are reasons too subtle and complex for them to understand why it is acceptable to keep spending far more money than we raise. Or that the government must spend even more to achieve an unemployment rate lower than 9.6 percent. Or that every single federal program is so vital that we should borrow 40 cents of each dollar from our children to pay for it. Or that we are really just “spreading the wealth around” when we are actually engaging in outright intergenerational theft. Or that making ever more Americans reliant on government payments is the just and humane path to civic virtue. Or that which medical procedures are available to our families will be determined by what is “fair” in the mind of an assistant secretary of Health and Human Services. Or that it is shameful and xenophobic to adopt a generous and lawful system of immigration and to enforce it at our borders. Or—perhaps most important of all—that America can no longer compete successfully and that we and our children should get used to having less. The American people are not looking for a sociological explanation for our decline as a nation; they are looking for leadership to reverse it.

If President Obama is politically savvy, he will find a way to accommodate significant portions of this agenda. If he is not, let him defend in 2012 a platform of business as usual in Washington, of vast and growing debt, of continued illegal immigration and stalemate for current illegal residents, of higher taxes, of health care controlled by a massive bureaucracy and health insurance premiums ever-rising. Let him run as the candidate of the political class in Washington. As someone once said, “Bring it on.” 

Jeff Bergner has served as staff director of the Senate Foreign Relations Committee and as assistant secretary of state and has been a professor of government.

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