The Post-Obama Triumph of Conservatism
Quietly, underneath the radar, all
of Barack Obama’s legacy as President is already crumbling. By the end of
2017, his promise of fundamental transformation of our nation will be as faded
and forlorn as Ozymandias.
Balancing the Budget
Within a couple of months, the
Republican House and the Republican Senate will have passed matching budget
resolutions that will balance the budget within 10 years. The
Congressional Budget Office projects the budget deficit for fiscal 2015 (which
ends on Sept. 30) under the current baseline at $468 billion. That is
still the highest in history before President Obama, with the previous record
at $458.6 billion in 2008. Moreover, CBO projects that the 2015 deficit
will more than double by 2024 to $1.088 trillion.
But the prospect now is that new
House Budget Committee Chairman Tom Price (R-GA) and new Senate Budget
Committee Chairman Mike Enzi (R-WY) will propose identical budget resolutions
that will balance the federal budget within 10 years. They can build on
the budgets by former House Budget Committee Chairman Paul Ryan, which sharply
reduced federal spending and debt over the long run, but never reached the
shorter term, 10 year balanced budget milestone.
The key to that is careful,
politically sensitive entitlement reform. That would include Ryan’s
Medicare reforms, sold under the banner that Ryan’s reformed Medicare is better
for seniors than Medicare under Obamacare. For all the hysterical,
ignorant, hypocritical demagoguery that Democrats have spouted about Ryan’s
Medicare reforms, all that those reforms amount to is expanding the more
modern, popular, Medicare Parts C and D with their market incentive structure,
proven effective at controlling costs, to the old fashioned Medicare Parts A
and B.
The further, necessary entitlement
reforms are to expand the wildly successful 1996 welfare block grant reforms of
just one federal welfare program, the old, New Deal Aid to Families with
Dependent Children (AFDC) program, to ultimately all federal welfare programs.
The incentives of those 1996 reforms successfully led two-thirds of
those formerly dependent on AFDC to go to work and leave the program
entirely. As a result, after 10 years, the program, renamed Temporary
Assistance to Needy Families (TANF), cost 50% less than the old program would
have cost under prior trends. Yet the poor who went to work were
documented to enjoy incomes roughly 25% higher than their former welfare
benefits.
Expanding those reforms to all
federal means tested welfare programs would achieve the ultimate dream of
President Reagan, and his legendary top welfare reform advisor Robert Carleson,
to send welfare back to the states. But it also would save trillions over
the first 10 years alone. This year’s budget should at least aggressively
expand those reforms to as many federal, means tested welfare programs as
possible.
The Republican Budget Committees
should avoid the political trap of proposing Social Security benefit
cuts. Social Security reform should wait until the Republican Party is
ready to revisit proposals for personal savings, investment and insurance
accounts for Social Security, on Milton Friedman’s Chilean model. That
would result ultimately in the greatest reductions in government spending in
world history. Yet seniors would enjoy higher, not lower, retirement
benefits, from lifetimes of real savings and investment, and they would choose
their own, individual retirement ages, under market incentives. This too
was Reagan’s ultimate dream for Social Security.
Emerging Republican leaders among
the Presidential candidates will reinvigorate that issue. Social Security
reform would better wait until an inspired, grassroots, reform tidal wave in
2017. The final entitlement reform component would be to repeal and replace
Obamacare, as discussed below.
All of this will greatly hearten the
Republican grassroots conservative base, and lay groundwork for Republican
victory in 2016.
Tax Reform
A second, emerging, major reform
breakthrough for conservatives involves tax reform. The key here is the
highly politically appealing tax reform proposal of new Ways and Means Chairman
Paul Ryan. His plan, which was included in his budget proposals adopted
by the entire Republican House, would apply a 10% federal income tax rate to
family incomes up to $100,000, and 25% after that. Under that plan, close
to 90% of working families would be subject to only the 10% rate. The
federal corporate income tax rate would be reduced to 25% as well. Such
a tax reform would leave federal tax rates after Obama lower than they were
after President Reagan!
The biggest problem here is that
Ryan seems too willing to hold off until he explores possible compromises with
Obama. But Obama is not serious about any of that, as evidenced by his
proposal to impose draconian, punitive, double taxation on the overseas
earnings of American multinational companies. Ryan should talk to
Obama. But he should also push rapidly ahead advancing his own proposal
out of the Ways and Means Committee, and through enactment by the entire
House. He should focus more on compromise and agreement with Senate
Finance Committee Chairman Orrin Hatch, who should have no problem embracing
Ryan’s reform outline. This would be the most effective strategy to force
any possible compromise with Obama as well.
Of course, Obama will most likely
veto any bipartisan tax reform plan passed by the entire Congress.
Possibly, as Congressional Democrats grow in awareness that they will be on
their own after the passing of Obama’s Age of Aquarius, that Obama veto can be
subject to a truly historic Congressional override, supported by a grassroots
tidal wave. Otherwise, 2017 is soon enough to reestablish and expand
Reaganite tax policy. All of this will further hearten the Republican
conservative grassroots base.
Repeal and Replace Obamacare
Finally, there is the pending repeal
and replacement of Obamacare, which is on a fatal collision course with the
Supreme Court case of King v. Burwell, to be decided by this
summer. That case involves a legal challenge to the Obamacare subsidies
for the purchase of health insurance, which the Obamacare law as enacted by
Congress provides are only available for health insurance purchased on Exchanges
established by states.
The problem for Obamacare is that
only 14 states have established their own health care Exchanges. A total
of 34 have refused to establish them, and 2 more tried and failed to do
so. So the Supreme Court by this summer will strike down the Obamacare
subsidies for health insurance in 36 states. I filed a brief in the
Supreme Court for the American Civil Rights Union, which I serve as General
Counsel, urging the Court to do precisely this, as the plain language of the
statute leaves no other alternative.
Moreover, the Obamacare law also
provides that where the Obamacare subsidies do not apply, the Obamacare
individual mandate and employer mandate do not apply either. This would
mean that the remaining 14 states could repeal the highly unpopular individual
mandate, which is effectively a tax on the middle class and working people, and
the highly unpopular employer mandate, which is effectively a tax on middle
class jobs and wages, just by repealing their state Exchanges. The end
result would be that the Obamacare health insurance benefits, and the
individual and employer mandates would be gone in at least 36 states, and maybe
more.
President Obama would no doubt come
to the Congress asking it to fix his broken Obamacare by providing for the
Obamacare health insurance benefits, and individual and employer mandates, to
apply in all 50 states. But he would get exactly zero support in the
Republican controlled Congress for that.
Instead, Congressional Republicans
should pass legislation that would finally repeal and replace Obamacare.
That Republican replacement should focus primarily on just two issues: (1)
targeting public assistance to help the poor buy essential health insurance,
and (2) providing means for those uninsured who have developed highly expensive
pre-existing conditions, such as cancer or heart disease, to obtain essential
health insurance.
The first can be achieved by going
back to the first theme above of block granting federal means tested welfare
programs back to the states. That would include block granting Medicaid
to the states, with each free to adopt the reforms that would best suit the
poor of their state. Preferably, states would transform their Medicaid
programs to provide health insurance vouchers for each poor family sufficient
to enable them to buy essential health coverage of their choice.
The second goal can be achieved by
providing that states could use part of their Medicaid block grant funds to
establish an Uninsurable Risk Pool in each state. That Risk Pool would
offer coverage to the uninsured who had become so sick while uninsured with
highly costly illnesses like cancer or heart disease that they could no longer
buy coverage anywhere in the private market. The Risk Pool would charge
applicants a premium based on their ability to pay to ensure that the Pool can
serve a safety net function. The Medicaid block grant funds and state
taxpayers would finance the remainder of the Pool’s costs.
This reform would restore the
primacy of guaranteed renewability in American law. Even before
Obamacare, state and federal law provided that health insurance could not be
canceled because the insured became sick while insured. That was prohibited
even under the common law as breach of contract. Under guaranteed renewability,
health insurance must be continued as long as the premiums continue to be paid,
nor could premiums be discriminatorily increased beyond the standard for
everyone else already covered because an insured became sick.
Obamacare was sold to gullible
“progressives” on the grounds that it would provide for universal health
insurance coverage. But even the establishment CBO scored Obamacare as
leaving 30 million Americans uninsured 10 years after full implementation!
Under the above reforms, the poor who lack the necessary funds to buy
health insurance would be provided financial help to do so. Those
uninsured who became too sick without health coverage to get health insurance
in the market would be able to get essential coverage through the Uninsurable
Risk Pools. Those with health insurance would be assured they could keep
it through guaranteed renewability.
The Obamacare replacement plan would
improve Medicare for seniors by repealing the $700 billion in Medicare cuts
imposed by Obamacare. It would also ensure that seniors on Medicare would enjoy
the freedom to choose Health Savings Accounts for their Medicare coverage
through Medicare Part C.
Repealing and replacing Obamacare
would also involve a major tax cut. Close to a trillion dollars in
Obamacare taxes would be repealed. That would include a 16 percent
reduction in the capital gains tax rate, and in the tax rate on corporate
dividends, and nearly a 25 percent reduction in the top Medicare payroll tax
rate, which is a direct tax on employment. The employer mandate, which is
a massive effective tax on jobs, would also be repealed. The individual
mandate is another massive effective tax on the middle class and working people,
contrary to Obama’s pledge as a candidate never to increase taxes on those
workers. The reduction in the capital gains tax and the tax on corporate
dividends would increase job creation by increasing the necessary capital
investment. These reforms would also save trillions in unnecessary
federal spending over the years.
The reforms would also sharply
reduce burdensome and unnecessary health care and insurance
overregulation. Repealing the employer mandate would end the Obamacare
incentives for part time 29 hour a week jobs to replace full time 40 hour a
week jobs. Repealing the individual mandate would mean that if you liked
your health care plan, you could keep it, because your health care plan would
be entirely a matter of your own personal choice.
These reforms would also involve a
comprehensive strategy to control health costs. Health Savings Accounts
(HSAs), proven effective in controlling costs, would be expanded throughout the
whole health care system. The poor on Medicaid would be free to choose
HSAs with their health insurance vouchers. Seniors on Medicare would be
assured that they could choose HSAs through Medicare Part C. The repeal
of costly Obamacare overregulation, including the employer mandate, the
individual mandate, guaranteed issue, and community rating, and costly
Obamacare taxes would further reduce health costs. Further provisions
could empower state tort reform.
All of this would further inspire
the Republican conservative grassroots base to victory in 2016.
Here Comes the Sun
Imagine Obama’s furious,
“progressive,” fundamental transformation of America succeeded by a fully
enacted plan to achieve a balanced federal budget, tax reform providing for
lower federal tax rates than under President Reagan, and Obamacare repealed and
replaced by Patient Power, free market medicine. In the process, we would
achieve Reagan’s ultimate dream for welfare reform, and Social Security reform.
All that would be necessary then to consign Obama and his “Progressives”
to the dustbin of history would be a Reagan-like rebuilding of the nation’s
defenses, and a Peace through Strength foreign policy realigning America with
its traditional allies. The Reagan fundamental transformation of America
would then have been fully restored. America would have survived the
same, furious, assault by the Marxist “Progressives” that brought down many
other countries, thanks to the brilliant Constitution of America’s Framers, and
the indomitable spirit of the American people.
Peter Ferrara served in the White
House Office of Policy Development for President Reagan and as Associate
Deputy Attorney General of the United States under President George H.W. Bush.
He presently serves as a Senior Fellow for the Heartland Institute and for the
National Tax Limitation Foundation.
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