Some people celebrate good fortune by visiting Disneyland or Las Vegas. Republicans often commemorate success by beating themselves bloody against the foundations of America’s social safety net.
The sweeping budget blueprint that House Budget Committee Chairman Paul Ryan, R-Wis., released this week marked the fifth time since 1980 that Republicans have followed an electoral breakthrough by attempting to restructure Medicare or Social Security. Each of the previous efforts ended in tears, largely because the GOP’s approach failed to attract support beyond its core coalition. Ryan’s plan, by seeking to end Medicare as it now exists, reprises the same risk—at a time when the GOP is growingly increasingly reliant on votes from white seniors.
This history of futility begins in 1981, when President Reagan, after his 1980 landslide, sought to reduce cost-of-living adjustments and early-retirement benefits under Social Security. Both parties barraged the White House, and he quickly retreated. No matter: In 1982, a surge in elderly support helped power the Democrats to big midterm election gains that restored their working majority in the House. In 1985, after Reagan’s commanding reelection, Senate Republicans passed a budget that again limited Social Security increases—but it died when both parties rejected it in the House. Democrats recaptured the Senate the next year.
In 1995, House Speaker Newt Gingrich’s Republican revolutionaries followed the 1994 GOP landslide with proposals to sharply limit Medicare spending. President Clinton won the ensuing showdown—mostly by arguing that Republicans were bleeding Medicare to fund tax breaks for the wealthy—and then cruised to reelection in 1996.
It was once more unto the breach in 2005 when President Bush followed his narrow reelection by proposing to carve out private investment accounts from Social Security while reducing guaranteed benefits. That plan collapsed without a vote in either chamber—and accelerated the downward spiral in Bush’s approval ratings that helped fuel the Democrats’ big electoral gains in 2006 and 2008.
From this trail of wreckage, one lesson is clear: Restructuring entitlements without bipartisan support is a high-wire proposition. Even expanding entitlements on a party-line basis isn’t easy. Although the Medicare prescription drug plan that Republicans passed with little Democratic support in 2003 has been popular, Democrats are still struggling to sell the American people on the new entitlement to health insurance that they established last year over unified GOP opposition.
It’s even tougher to limit entitlements without bipartisan consensus. Only twice in the past three decades has Washington retrenched entitlements without provoking a major backlash: the 1983 Social Security deal (which raised both payroll taxes and the retirement age), and the 1996 agreement that ended the entitlement to welfare (while providing funding for training and child care). Each time, sponsors crafted a balanced policy that attracted bipartisan congressional support. By contrast, the four other Republican efforts faced unwavering Democratic resistance—and ultimately crashed against strong public opposition.
Ryan, discounting that history, has aimed his plan squarely at Republicans. Even though federal revenue, as a share of the economy, is at its lowest level since 1950, Ryan would attack the debt solely with spending reductions.
Ryan’s plans to convert Medicaid into a block grant and replace Medicare with a voucher (or premium support) system would reduce financial risk for Washington by shifting it to the programs’ beneficiaries. While Democrats hope to tame health care spending mostly by changing incentives for providers (through measures in the 2010 health reform law to reward efficiency and promote coordination), Ryan primarily aims to change incentives for patients by having them shoulder more out-of-pocket expense.
As important, Ryan’s Medicare proposal echoes Bush’s Social Security plan by seeking to shift Americans’ reliance for retirement security from government to the private sector. Ryan would transform Medicare from a program that guarantees seniors a defined benefit (it now pays seniors’ doctor and hospital bills directly) into one that ensures them only a defined contribution—an annual stipend to purchase private insurance.
Like Bush with Social Security, Ryan contends that his Medicare plan provides retirees with greater choice. But Democrats won that argument in 2005 by insisting that the GOP reforms would expose seniors to greater risk. And risk could trump choice again—especially because Ryan’s choice compels seniors to rely on the health insurance industry for their care.
“If you ask people who run campaigns whether they wanted to do this while controlling only one of three branches of government,” one senior GOP strategist said, “I don’t think any of them would have
Republicans won about three-fifths of white seniors in both the 2008 presidential and 2010 House elections, and they now hold 99 of the 150 House districts with the highest proportion of the elderly. A gray backlash could cost them dearly (especially if President Obama, Clinton-like, successfully links the GOP tax-cut and Medicare proposals).
But the country will lose, too, if the necessary conversation about controlling entitlement spending devolves into a partisan standoff. Ryan’s bold thinking should challenge Democrats to clarify their own plans for stabilizing the long-term debt. Mostly, though, Ryan’s ambitious but unbalanced manifesto demonstrates why neither party can solve the budget dilemma alone.
This article appears in the April 9, 2011, edition of National Journal.