Where are those old-fashioned Republicans when we need them? However misguided Republicans of the '30s and '40s may have been in their opposition to government safety nets of any sort, most at least called a spade a spade. Rather than elaborate schemes to "partially privatize" Social Security, they sought its outright repeal. And if government ran up a deficit for any purpose, they insisted on its honest accounting and lamented the burdens being foisted on future generations.
Those of us in the liberal camp may have thought their absolute faith in private markets misguided and their fears exaggerated, but they surely had a point. The costs of public sector programs deserve an honest accounting. Today the game in Washington, with Republicans in the lead, seems to be one of shifting costs and burdens to someone else.
Political leaders here in my home state of Maine and in many other states are engaged in ugly fights over how to close large structural gaps in the current state budget. State revenues are growing more slowly than state expenditures. An anemic recovery has led to sluggish revenue growth. Ugly as these fights have been, the stakes and the vitriol appear likely to increase.
Republicans in D.C. like to talk about the magic of the market, but in practice are unwilling to take the heat for killing popular programs. What they can do is continually cut funding for these programs. Under the budget resolution just passed by Congress, federal grants for education, housing, natural resources, environmental protection, homeland security and veterans' health care would be cut by $32 billion, or 5.9%, in inflation-adjusted dollars. The cuts would then rise year by year to $59 billion, or 13.5%, in 2010. In addition, Medicaid programs providing health care for low-income families would be trimmed about $10 billion and about 300,000 low-income people are to be eliminated from the food stamp program.
In the face of such federal reductions, states face some draconian choices. They must either cut the services further or raise taxes. The budget passed by the Maine legislature in March already chops about 16 million out of Medicaid and this will only amount to a small installment of what will be necessary if Washington continues on its current course.
Maine could make up for some of its shortfall by expanding the sales tax to include a range of business services. Some other states with relatively flat income tax systems could raise some revenues through modest increases in taxes on high income earners. In my judgment, such steps would be unlikely to promote substantial business flight. Nonetheless, even these positive reforms would fail to address the magnitude of the impending problems. In the larger scheme of things, it is hard for individual states to raise taxes sufficiently in a mobile competitive economy to compensate for the level of cuts now descending from Washington.
Rather than call for Medicaid elimination, Republicans in D.C. are slowly strangling the program. Some may claim that these cuts eliminate only fat, but their practical effect is to increase the pool of uninsured and the number of unpaid medical and hospital bills. These costs in turn are passed along to those individuals and businesses that do continue to provide relatively complete health care.
The burden of providing adequate health care for its workers has now brought Ford and General Motors bonds close to junk status. These icons of the post World War II economy are paying not only for the costs of their own workers but also for the other costs of the uninsured. If these two giants are forced to declare bankruptcy, their pension costs will then be shifted onto taxpayers. The federal pension guarantee fund hardly has the resources to cover a bankruptcy of this scale.
These considerations suggest a broader debate. Should health care, even life itself, be a right or should that also depend on one's resources? Hospitals are now obligated to provide at least emergency service to all. Medicine available only as a last resort produces inordinate social inefficiencies. Many citizens work in poor health, forego necessary immunizations and other forms of preventive care, and end up making costly emergency rooms visits.
If the free market is to work its full magic, hospitals should also be allowed to pass the buck by refusing care for anyone who cannot pay. Perhaps then the problem of the growing ranks of the poor and uninsured would correct itself.
John Buell lives in Southwest Harbor, Maine. Email jbuell@prexar.com.