Thursday, November 04, 2010

Advice for Speaker Boehner

The Republicans will have to demonstrate that they've learned the lessons from what Newt Gingrich, Tom DeLay and Nancy Pelosi did wrong. The U.S. government can't be run from the House. But the House can set the agenda and be a block to the expansive agenda of the Democrats. And their first task is to give the business world confidence in what is going forth so that they will unleash the money they've been saving to help the economy grow. The WSJ has some very good advice for the House GOP>
This means focusing above all on policies for faster economic growth and job creation. In one sense, this is easier than it sounds: First, stop doing more harm. Merely putting an end to any new taxes or regulation will contribute to business confidence, removing the fear of new higher costs.

The immediate priority is extending the 2001 and 2003 tax rates, which expire on January 1. Democrats are already angling for some classic insider fudge, such as extending lower rates for the middle class permanently but only for a year for upper incomes and dividends. Or perhaps raising rates only on those who make $1 million or more.

The best growth policy and politics is to extend all of the lower rates permanently. Temporary tax cuts don't provide the same assurance for business investment or hiring, and the top marginal rates on income and capital investment are the ones that most affect economic growth.

Conceding the class war argument after picking up 60 or more House seats would also be a terrible signal of political weakness. If Republicans hold firm on tax cuts for everybody, they can force Mr. Obama and Senate Democrats facing re-election in 2012 to oppose an extension for the middle class simply to punish the rich. We think they will fold.

House Republicans will also find political running room to cut spending. President Obama will want to improve his own dreadful fiscal record going into 2012, and Mr. Boehner can use that leverage to reduce domestic discretionary spending to 2008 levels, or lower.

Here is where we'll find out how much Republicans in both the House and Senate have learned from their own failures of the last decade. The culture of spending runs deep in both parties, especially among the lifers on the Appropriations Committee. Rather than reappoint one of the spending cardinals, Mr. Boehner can send a message to the tea party by appointing a younger spending hawk as Chairman.

The same goes for ending earmarks, which is as much about political symbolism as it is saving money. If Republicans want the public to support their budget-cutting, they are going to have to show they can also discipline themselves. Presumptive Majority Leader Eric Cantor spoke yesterday about extending a moratorium on earmarks, and Mr. Boehner can underscore that message by naming an earmark critic like Arizona's Jeff Flake to the spending panel.

Republicans can also help the economy by shining the light of hearings on costly new rules and mandates. A friend of ours suggests that the GOP devote each week to highlighting one way that government is inhibiting investment and hiring—say, the slow-roll on Gulf drilling permits, or obstacles to exploring the Marcellus Shale gas deposits, or the next burdensome ObamaCare rule, or the FCC's re-regulation of the telecom industry.
It sounds like a very good start. Paul Ryan has some good ideas. Here is one to help start reining in federal health care spending.
He'd introduce Medicare vouchers, for example, that could lower prices by turning seniors into informed bargain hunters for healthcare. The concept is that market discipline would lower prices, giving middle class consumers more buying power to cushion the lower benefits that, Ryan says, are inevitable legacy of future promises that can't be met.
Holman Jenkins has another proposal for a similar method to address the "ObamaCare train wreck" headed our way since we are not going to be able to repeal the thing as long as Obama is in the White House.
Happily, a path back to the future exists that just might be politically actionable in a divided Washington. It involves not repealing ObamaCare but adding something to it—an optional federal charter for health insurers.

Under this charter, let's permit insurers to design their policies free of ObamaCare's mandated benefit levels and free of state regulation. Let's let these policies be purchasable with pre-tax dollars and allow them to satisfy ObamaCare's mandate requiring individuals to have insurance and employers to provide it.

Yes, we know the ObamaCare mandate is objectionable on philosophical and constitutional grounds, but since we're seemingly bent on taxing ourselves to make medical care available to those who can't or won't pay for it themselves, an individual mandate perhaps is the only way to short-circuit a collapse toward government-run, single-payer health care under the burden of free-riding.

What's the first thing the new nationally-chartered insurers would do? Rush out cheap, high-deductible policies, allaying some of the resentment that the mandate provokes among the young, healthy and footloose affluent. At the same time, these policies would quickly re-revolutionize ObamaCare from within. Here's why:

First, these folks could buy the minimalist coverage that (for various reasons) actually makes sense for them. They wouldn't be forced to buy gold-plated coverage they don't need so the money can subsidize the old and sick (the hidden tax logic of ObamaCare).

Secondly, this relatively healthy cohort would be covered for a rare major injury or illness. The rest of us wouldn't have to pick up the tab.

Thirdly, and when paired with a health savings account—as would happen as employers large and small rush to take advantage of a better option than ObamaCare now affords them—it would provide a much-needed kick of consumer discipline to the medical complex's pants, which has always been the conservative alternative to a creeping government takeover of medicine.

There's already a base of sensible Democrats who've championed exactly such reforms. And because it can be sold as expanding the options under ObamaCare and lessening the burden of an unpopular mandate, a lot of other Democrats (who can read the election returns) might vote for it too. Even more so when they realize it would allow backing off the unaffordable subsidies required to make ObamaCare's individual mandate go down with the public.
This sounds like a very intriguing idea. What young people need is catastrophic health insurance just like they need collision coverage for their cars. Instead of mandating that everyone buy the same one-size-fits-all plan, let's get some competition in the marketplace. If people have control of their own health-care spending, they'll exercise some discipline and that is just what our health care market needs instead of everyone relying on third-party coverage which drives costs way up.

These are interesting ideas and would be a great start for the GOP in the House. Maybe they won't be able to enact such proposals, but they'll get the conversation started and the ground prepared for when the Republicans once again control the White House.