Republicans and the third rail
Buenos Aires Herald, April 4, 2011
Social security is often called the third rail of U.S. politics. No fiscally-responsible politician will seek to reform it if she or he seeks higher office. Political parties will doom their chances of winning the next presidential election if they attempt to cut entitlements. In fact, when a politician openly calls for a reform to social security, we can safely take that name out of the likely presidential candidate’s list.
To a lesser extent, Medicare also has a third rail status. The program designed to provide health care for the elderly has grown substantially as more Americans pass the required age of 65 and as life expectancy increases. More than 45 million Americans are now beneficiaries of Medicare and the number is expected to reach 70 million by 2030. Because most of those who receive social security retirement benefits are also Medicare beneficiaries, the two programs are inseparable in the eyes of many Americans. In total, Social Security accounts for 20% of the federal budget and Medicare takes another 13%. One in every three dollars the U.S. governments spends every year goes directly to those programs that primarily benefit the elderly.
The elderly are a powerful voting bloc. They vote in elections at higher rates than other age groups. More than 70% of eligible Americans aged 55 or older voted in 2008, with those age 40 or younger showing a turnout of slightly more than 50%. Thus, politicians know that elderly Americans are much more attentive, and willing to reward, those candidate who advocate on their behalf.
The elderly are a difficult voting force to contend with. The White House and Congress have ignored calls to reform social security and Medicare to help balance the budget. The short terms costs of meddling with those popular, and yet costly, programs have dissuaded reformists. This is particularly the case on election years. Because older voters are also more likely to participate in primaries, presidential hopefuls go out of their way to reassure those voters of their commitment to Medicare and Social Security.
In the current fight over the fiscal deficit, President Obama has been careful to stay away from proposing reforms to Medicare or Social Security. Republican presidential hopefuls have offered little specific details on how to cut the fiscal deficit. Since no Republican are officially running yet, potential contenders have been vague on their ideas and proposals.
Surprisingly, the Republican leadership of the House of Representatives has anticipated details of a bold proposal aimed at cutting fiscal spending by over 4 trillion in the next decade. Medicare would be redesigned (details have not yet been fully specified) and spending caps would be introduced to constrain future growth in the program. The proposal stands little chance of passing the Democratic-controlled Senate. It will find it difficult to gather sufficient support in the Republican-controlled House, with a very competitive election ahead. Moreover, Republican presidential hopefuls will likely distance themselves from the proposal to be competitive in the 2012 election. Still, the proposal will affect the undergoing budget negotiations between the White House and Congress.
Two immediate conclusions can be drawn from the bold decision by the Republican House leadership. First, they seem to realize that Obama is a powerful contender in next year’s election and that there does not seem to be a strong enough Republican hopeful who can confidently aspire to regain control of the White House for their party. Thus, they might as well stick to their principle fiscal conservative position. After 8 years of runaway spending under George W. Bush, the Republican Party is more than happy to demand the Democratic White House to govern under a balanced budget.
Second, by putting the fiscal deficit at the center of the debate, Republicans have handed President Obama a powerful tool. Repealing the Bush tax cuts for the wealthy was among the most cherished of Obama’s electoral promises. When Obama reversed on his promise to compromise with Republicans, after the Democratic defeat in the midterm elections, many liberals were outraged. Now, Obama can bring back the issue of increasing taxes for the wealthy—rather than cutting Medicare—as a priority that distinguishes him from Republicans.
The 2012 electoral battle is taking shape. President Obama has officially announced the launch of his re-election campaign. Republican hopefuls are still weighting the convenience of entering an uphill race. The main economic concern for Americans remains employment. By seizing the debt burden as their primary issue, the House Republicans have allowed Obama to appropriate job creation as his own priority. In addition, because any meaningful debate over reducing the fiscal debt requires reforming Medicare and Social Security, Republicans are potentially alienating the most powerful electoral bloc in next year’s election.
True, a serious debate over the mounting deficit is much welcome. Yet, the absence of officially running Republican candidates for the presidency, has allowed the Republican leadership in the House to propose a budget reform that will likely scare older voters away from their camp in 2012 and make it easier for Obama to win re-election.