David Brooks pens another keeper: Ultimate Spoiler Alert
President Obama and Paul Ryan are two of the smartest, most admirable and most genial men in Washington. It is sad, although not strange, that in today’s Washington they have never had a serious private conversation. The president has never invited Ryan over even for lunch.
As a result, both men are misinformed about the other, and both have developed a cold contempt for the other’s position. Obama believes Ryan wants to take America back to what he sees as the savage capitalism of the 1920s (or even the 1760s). Ryan believes Obama wants to turn America into a declining European welfare state.
If they met, would they resolve their differences? No, but they would understand them better. Paul Ryan believes five things Barack Obama does not. First, he believes that aging populations, expensive new health care technologies and the extravagant political promises have made the current welfare state model unsustainable. Fundamental reform is necessary or the whole thing will collapse, here and in Europe.
Second, he believes that seniors and the middle class cannot be excused from the benefit cuts that will have to be imposed to rebalance these systems. Third, he believes that health care costs will not be brought under control until consumers take responsibility for their decisions and providers have market-based incentives to reduce prices.
Fourth, he believes that tax increases should not be part of these reforms because the economic costs outweigh the gains. Fifth, he does not believe government can nurture growth and reduce wage stagnation with targeted investments.
Obama, meanwhile, does not believe the current welfare arrangements are structurally unsustainable. They have to be adjusted, but not fundamentally altered. He does not believe the seniors and members of the middle class have to suffer significantly in the course of these adjustments. The approach he outlined Wednesday mostly shields these groups from cuts, even if Congress can’t reach a deal on deficit-cutting and a fiscal trigger kicks in.
Obama does not believe in relying on market mechanisms to reduce health care costs. Instead, he would rely mostly on a board of technical experts, who would be given power to force their recommendations upon Congress.
Obama believes that tax increases on the rich have to be part of a fiscal package. His approach claims to contain $3 in cuts for every $1 in taxes, but if you count these things the way a normal person would, it’s closer to 1 to 1. Finally, Obama believes that government investments in research and infrastructure nurture broad-based prosperity.
Personally, I agree with Ryan on items 1-3 and with Obama on items 4 and 5, and I think an acceptable package could be put together to reconcile these views. But I do not believe there is any chance this will happen in the current climate. What’s going to happen is this: We’re going to raise the debt ceiling in a way that fudges the issues. Then we’re going to have an election featuring these rival viewpoints, and Obama will win easily.
It doesn’t take a genius to see that Obama is very likely to be re-elected. Every few years, Republicans try to reform the welfare delivery systems to make them more marketlike. Every few years, voters, even Republican voters, reject this. The situation today is slightly less hostile to these ideas, but not much.
The president, meanwhile, hit the political sweet spot with his speech this week. He made a sincere call to reduce debt, which will please independents, but he did not specify any tough choices. He called for defense cuts and asked the Pentagon to find some. He called for a reduction in tax credits but didn’t point to any that should actually go. He called for reductions in Medicare costs and asked his board of technocrats to come up with some.
These are exactly the sort of vague but well-intentioned policies that have sold well in election after election. The president is not being cynical about this. He genuinely does believe that seniors and the middle class can be spared from any shared sacrifice. He really does believe in calling together teams of experts to devise proper solutions. Obama’s sincere preferences happen to be more popular.
Hopes of any Gang of 6-style bipartisan compromise are being washed away by the partisan fury. After the next election, though, interest costs on the national debt are likely to rise ruinously, global markets might lose confidence in America’s debt, with catastrophic consequences.
The coming age of permanent austerity will be terrible for those conventional Democrats and Republicans who propose policies that could pass only if the other party ceased to exist. But it will be a moment of opportunity for us Hamiltonians, who believe, with Ryan, in market mechanisms to allocate resources and control costs and also, with Obama, in government’s ability to selectively nurture prosperity.