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The Real Price of Politics

Obamacare is not an aberration

Dec 2, 2013, Vol. 19, No. 12 • By JAY COST
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From an electoral perspective, not a single member of Congress is responsible for the good of the nation, though many are happy to indulge groups that dominate their states or districts. Only the president is accountable to everyone, but even he is also answerable to his party—and his formal powers are limited by the Constitution. If the government were asked to do only what a fair reading of the Constitution authorizes it to do, this design would not be a problem. In its time, the arrangement of powers and branches was a brilliant innovation to ensure that all sides were treated fairly. A government, however, that is expected to generate economic growth, build highways and bridges, support farmers, make sure families have food on the table, provide access to health care, fund scientific research, ensure food, drug, and product safety, help kids afford college, maintain expansive and unmatched armed forces—even put a man on the moon—invites special treatment for well-positioned interest groups. In a word, it breeds corruption

Worse, the more authority the government claims for itself, the more parts of society it affects. This rouses otherwise dormant factions to defend their interests. Thus, the price of politics rises higher and higher. More federal power means more interest groups and therefore still more side deals. If you want to know why the population of metropolitan Washington has skyrocketed, in numbers and wealth, over a generation, this is the answer. An ever-more ambitious government has drawn more and more interest groups to the capital to make sure they get their cut of the federal pie. 

This helps account for the disaster of Obamacare. There are, of course, vigorous debates to be had about whether government should be responsible for everyone’s health care. But for our government to accomplish this goal, Obama and congressional Democrats had to buy off a motley crew of factions. Indeed, this was one of their principal concerns: luring on board the “stakeholders” who had stymied reforms before. 

The result is a socially indefensible law. Even if we grant that the government should insure all Americans, Obamacare’s distributional effects are perverse. An unstated rule of politics is that policy should leave middle-class families better off, or at least no worse off. Obamacare tramples on this principle, sticking it to families who buy insurance on the private market. Millions of Americans are seeing their insurance rates go up while their coverage networks shrink. 

Why did they lose out? Not because they are wealthy and privileged, and so can bear the cost. Rather, it is because of the bill’s political design. These people had the misfortune of being unorganized politically at the time the bill was passed; most of those receiving cancellation letters had no idea they would suffer this way. Well-organized interests, meanwhile—doctors, hospitals, drug manufacturers, insurance providers, the AARP, labor unions—all were cutting deals so they could walk away winners. Similarly, a straightforward tax on the American people to pay for expanding health coverage was avoided for fear that people would organize in opposition. So President Obama and congressional Democrats shifted the burdens of the bill onto an unorganized group in a hard-to-detect manner. Political brilliance perhaps, but social perversity.

This is not the only example of the toll of politics. Take Medicare. It is an obscenely wasteful program that has cost substantially more than anyone initially imagined and still leaves gaps in health coverage for seniors while straining the resources of doctors and hospitals. Yet it remains essentially unreformed, because altering it would offend too many entrenched groups. Besides, who notices its gross inefficiencies? We never experience what it would be like to have the money that Medicare wastes. The loudest voices clamor to protect the inefficient status quo. 

It is not just liberal sacred cows that have this effect, either. Those who champion the tax code as a tool for promoting economic development or social improvement must answer for its chronic wastefulness. The noble goal of spurring the economy is hindered in our system; you have to purchase well-positioned groups by burying hard-to-find payoffs in the tax code. Again, who suffers? The government collects less revenue than it would otherwise, but nobody personally feels a loss. The tax code, however, becomes so weighed down with special deals that it must be reformed once a generation. 

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