It Ain’t Broke

by Will Wilkinson on March 1, 2010

A lot of people are saying government is broken. They’re mainly saying it because the Democratic health care bill isn’t going to pass in a form that gives most Democrats what they wanted. The argument, in its general form, goes like this: There is this huge problem! My team’s favored solution to the problem is politically infeasible. So, politics is broken! When you put it like that, it’s evidently a pretty silly argument.

To get a better grip on the debate behind the debate I think you need to understand that big entitlement politics is about enacting policy that generates a kind of lock-in effect for a new power-shifting political equilibrium. Savvy political operators know that big entitlements, once established, create their own political demand. That’s why, for example, it was so important for the left to kill Social Security reform.

Regarding the sustainability of the American public old-age pension scheme, moving to personal accounts was and is an excellent idea. But it was so attractive to the pro-market coalition in large part because it was believed that widening the investor class to include everybody would, by giving the public a more direct stake in economic performance, limit the discretion of legislators to support growth-hampering regulatory and redistributive policies popular on the left. (Whether it would actually have this political effect or not is an open question, but lots of folks both left and right thought it would.) In any case, defeating the reform proposal was easy enough, since Social Security was pretty effectively designed to be democratically untouchable.

Similarly, it is widely believed by folks both left and right that a huge new health entitlement, once firmly established, would generate its own support, and shift the balance of public opinion toward more a thoroughgoing social democracy (i.e., toward socialism) and away from limited government and relatively free market institutions (i.e., away from liberalism, properly construed). From this perspective, the fact that a party decidedly but temporarily in the minority is able to defeat a measure that would have profound, long-term effects on the basic structure of the United States’ institutions is very good evidence that the system works! The unsustainable path of Social Security and Medicare goes to show just how dangerous this kind of large-scale policy lock-in can be, and how important it is to have a system that does not produce fundamental changes to the de facto constitution with each peak and valley of the political business cycle.

If you’re worried that the Democrats’ current inability to convert control of the Congress and the presidency into massive structural reform means that our political system can’t do anything at all, you just need to relax and wait until Obama is forced by the large forthcoming GOP gains to set his sights lower. You may be pleasantly or unpleasantly surprised by how much can be accomplished when a more conciliatory strategy is the only option.

And, as Reihan reminds us in an intelligently hopeful new Forbes column, government is not the solution to everything. So even if the political system is broken, America’s entrepreneurial culture (our greatest asset, IMO) may be able to route around the damage. If we let it.

GJ

If you think that government ought to work by majority fiat, than you're probably justified in thinking that government is broken. But there's a difference between the democratic process as a mechanism for human freedom and the democratic process as a end unto itself. Many of the folks who are upset at the Democrats inability to pass health care are the same folks who trashed the Citizens United decision as an attack on the equitable nature of democracy.

The problem with democracy as an end is that pure democracy is not all that different from mob rule. It's not an accident that we have a system where there is layer upon layer upon layer of checks and balances to ensure that what we don't wind up with is 51% of the population pushing their policies on the other 49%.

And this works both ways. Do away with all the rules that make the filibuster possible and it would be that much easier for Republicans to repeal health care reform once they returned to power.
Nimed

Regarding the sustainability of the American public old-age pension scheme, moving to personal accounts was and is an excellent idea.

Regarding Bush's specific proposals, that's not what the CBO estimated at the time. The plans under consideration were judged neutral with respect to SS solvency.

In any case, defeating the reform proposal was easy enough, since Social Security was pretty effectively designed to be democratically untouchable.

But why? What makes Social Security untouchable? Will is implicitly adhering to the view of entitlements as narcotics - once one is passed, it's forever impossible to end it even though it's harmful to most people in the long run. But Will is just assuming the later part. We would do well to remember that there are countries with stronger redistributive policies than the U.S. which have experienced equivalent levels of per capita growth.
As it happens, the filibuster wan't the reason SSR fell apart. Bush never had a simple majority in both Chambers willing to vote for it.

You may be pleasantly or unpleasantly surprised by how much can be accomplished when a more conciliatory strategy is the only option.

Another implicit assumption is that a greater degree of compromise between the two parties will correspond to greater cost reduction. This simply isn't true: a single payer system would cost less than a system with a public option, which in turn would cost less than the current bill. That is to say, all compromises made so far in HCR have been toward making it more expensive.

The unsustainable path of Social Security and Medicare goes to show just how dangerous this kind of large-scale policy lock-in can be, and how important it is to have a system that does not produce fundamental changes to the de facto constitution with each peak and valley of the political business cycle.

We mustn't forget that, while the filibuster is indeed effective in preventing the creation of new entitlements, it also makes existing ones more deeply entrenched. Let's assume HCR is dead for the remainder of Obama's presidency, and furthermore the GOP wins the November elections and the Presidency in 2012. If History is any guide, it will be very difficult for the GOP to obtain a filibuster-proof majority (the last time the GOP had 60% of the Senate was in the 1921-1923 Congress). Democratic Senators will, of course, behave exactly like the present present Republican Senators. Meanwhile, Medicare will have grown another 36%. Eventually, the threat of an imminent fiscal crisis will force Congress to do something. But we don't know what that something will be.

It's a mistake to conclude from our current situation that the filibuster rule has an inherent small government bias. It has instead a status quo bias, increasing government inertia and delaying action until a crisis is all but certain. The filibuster also arguably makes the public impatient and more tolerant to increases in Executive power. A "Rawlsian" analysis of the filibuster rule should primarily take into account these two biases.
Guest

Having read your piece on your ideal health care system, I definitely agree that a truly free market health care network would trump a French style socialist system in the long-run. However, in the short-run, we're talking about real people who cannot get the health care they need and as flawed as the Dems proposed solution may be, it does more to address that problem than simply doing nothing.
Michael Drake

"When you put it like that, it’s evidently a pretty silly argument."

It is true that if you state a silly argument, it is evidently silly.

Of course the actual argument is based on an asymmetry that is not really all that silly. When Bush was ramming through his legislative agenda, congressional Democrats weren't holding rallies calling him a "fascist," or conservatism a "cancer." Congressional Democrats weren't ginning up filibusters to twice their antecedent rate. To wit, mainstream conservatives have embraced the Crazy, and their obstructionism is different enough in degree to be a difference in kind.

Do such facts render our politics "broken"? Probably not really. (Cf. adam's comment above.) But they do render the argument that Obama will be able to do a lot more when he's humbled into using "a more conciliatory strategy" evidently silly.
Stuhlmann

"Regarding the sustainability of the American public old-age pension scheme, moving to personal accounts was and is an excellent idea. But it was so attractive to the pro-market coalition in large part because it was believed that widening the investor class to include everybody would, by giving the public a more direct stake in economic performance, limit the discretion of legislators to support growth-hampering regulatory and redistributive policies popular on the left. "

Given that the stock market still is below its level 10 years ago, having people absolutely dependent upon their investments for their retirement incomes may prove to be a double edged sword. In theory people would be against government regulations and actions that would reduce the growth of their retirement portfolios. On the other hand, there is a perception that the markets are rigged in favor of insiders - Wall Street vs Main Street. This perception leads to distrust of the markets and call for government action - for regulation.
Sarah

Here's an alternative take on "entitlement politics" -- not necessarily one I endorse, but one you might want to think about.

People love having big social programs once they've got them. Republicans as well as Democrats. Nobody wants to make cuts in anything, no matter how "conservative" they describe themselves. (Obviously people who really want to shrink government exist, but they're a minority of both voters and politicians.) Progressives like Matt Yglesias have actually used this as an argument for big social programs.

Think of it this way: our long-term preferences, as revealed pretty consistently by our polls and actions, are for more social democracy, once we've got it. But before we've got it, we resist it.

This behavior is pretty much the same as a toddler who says "I'm not tired! I'm not tired!" but in fact is much less tired and cranky once you force him to have a nap. I realize that sounds demeaning -- the point is that the public's short-term preferences are different from its long-term preferences.

Democrats advocating health care are essentially saying "You'll thank me for it when you've got it." But bills don't get passed that way, which is why they're using muscular counter-majoritarian measures to ram it through.

The question is, assuming that we want legislation to roughly reflect the preferences of the majority, how do we understand the preferences of the majority? Do people "prefer" the policies they endorse today? Or do people "prefer" the policies they're statistically likely to be happy about, once implemented?

One added kink is that polling has become much more widespread and accurate in recent years. We're constantly polling the public about its current policy preferences. We see more in the news about the public's current policy preferences than we once did. So that encourages politicians to give people what they say they want, instead of what they'll be happy about after the fact.

It's less paternalistic, certainly, to understand "preferences" to mean "what you say you want, today." But we need to keep in mind -- which you know, Will, from your happiness research -- that people can be mistaken about what will make them happy in the future.
solarjetman

While it's true that revealed long-term preferences about large social programs are different from short-term preferences, they're not necessarily better. Once a social program is in place for a long time, people see its benefits; they see their Social Security checks or their Medicare benefits. They do not see the wealth they would have had if those programs had not existed. It is a common fallacy to overvalue the visible benefits of a policy over its less-visible costs.

I don't think there is any extra virtue to long-term revealed preferences over currently held ones which would confer extra weight in democratic decision-making. Long-term preferences are just as likely to be irrational as short term preferences.
aretae

"I don't think there is any extra virtue to long-term revealed preferences over currently held ones"

One of the most notable areas in behavior economics is a strong refutation of this point. People in the abstract have preferences that conflict with their actions. In general, the best way to allow someone to pick with their human brain instead of their monkey-brain is to push it further away. $1 now vs $5 in a week often chooses the $1 now. $1 in a year vs. $5 in a year and a week NEVER chooses the $1.

So...no. Long term preferences are NOT as likely to be irrational as short term preferences
Sarah

That's interesting.

I tend to agree with solarjetman, though. One's future preferences aren't intrinsically more rational than one's present preferences. (What you described, aretae, is a decrease in time preference -- but I don't see anything particularly irrational about having a time preference.)

The point I was trying to make is that if the public's likely future preferences are different than current preferences, then there are downsides (from a democratic standpoint) to giving the public what it wants now. Put it this way: the right kind of choices for a politician to increase his poll numbers today are not necessarily the right kind of choices to improve history's reading of him fifty years from now.

It seems quite possible for people to think a social program will make them miserable when in fact it makes them quite happy after the fact. (Consider Social Security.) Perhaps it's a fool's paradise, or creeping socialism -- you can assign whatever valence you like to it. But either they were wrong to hate Social Security before it was implemented, or they're wrong to like it now.

One way or another, you have to accept the fact that people are confused about their own preferences; you have to judge the voters ignorant of their own interests, either in the present, or the future.
aretae

It seems as if there are at least three points to address here.

First...is a preference now (I like Chocolate Ice Cream now) more or less privileged than a preference later (I will like Vanilla Ice Cream tomorrow).
We are mostly agreed upon no. I think this is what you said.

Second...is a preference for a future state (I want to Save $100 out of my next paycheck) more or less privileged than a future preference for a current state (when my next paycheck comes, I want to buy a $100 of booze, instead of saving). I think it is also established that original preferences ARE privileged. This is what my information supports.

However, there's also the third situation, which Will was talking about: In state X, I prefer X, but in state Y, I prefer Y. In this case, there does not appear to be a reason to prefer X or Y, in the absence of other data.

In the case of social programs, I believe that all the evidence that you have on the social programs is one specific case: G17 democracies pursuing programs which terribly cleverly hide the costs of the program from the average consumer, while demonstrating benefits, and which are in their prime, before they cause significant other pain (SS and Medicare are both insolvent soon ... Other socialized medicine isn't far behind). Granted, that's where we sit now, in 2010, and also where we've been for the past 30-40 years.

I'd caution against placing too much weight on the idea that people prefer something when a program is engineered to show benefits and hide costs, while becoming insolvent over time.
Nimed

You can make exactly the same argument about policies that shrink government. Take, say, tax cuts - immediate visible benefits, hidden costs. This is one of the reasons why preferences aren't internally consistent in polls, where people are in favor of measures that both shrink and expand government (one could say that these positions aren't necessarily contradictory if respondents were in favor of large deficits, but they are against that too if asked).

But I fail to see how this can be used as a defense of the filibuster.
dgauthier

We love the big entitlements? Not necessarily. My parents loved Social Security, Medicare, etc. I resent them. (The programs, not my parents.) I could've utilized that money much more effectively than the government did. In fact, to the extent that I could, with 401K, high-deductible health insurance with an HSA, and other options and investments, I did do better.
Sarah

By "We" I don't mean every single person, I'm talking about the aggregate. There are polls that show that large majorities, even of self-described conservatives, don't support cutting existing government programs like Social Security and Medicare. Conservative politicians defend existing entitlements (Scott Brown, for example, touts the success of the Massachusetts health care plan.)

Are there principled small-government types? Sure. Given that you're reading this blog, it's quite likely that you're one of them. But there are far more people who are "small-government" only in name, and are quite happy with more government when they get it.
dgauthier

Thank you, Sarah, for the non-snarky reply. As is probably obvious, I'm a non-academic without access to polls, aggregates and such, so I suppose I tend to use myself as a "population". Being a completely ordinary and unremarkable person, I assume there are enough folks who think like me to be significant.

Maybe I'm being suspicious, but your post sounds a bit like you hope to justify bigger government and more entitlements on the basis of data that says us folks like bigger government and more entitlements even though we think we don't. But is there some mechanism that tends to make people prefer the status quo, even if it wasn't what we wanted?

Again resorting to myself as a case in point, I was quite unhappy about the change to my high-deductible / HSA health coverage from my more generous conventional coverage. Had it been a public policy choice that I could've influenced as a voting citizen, I would've probably opposed it. But after experiencing it, I wholheartedly embrace it because it works very well. I'm protected against catastrophe but have incentive to forgo optional, frivolous care and to apply downward pressure on costs, and I do. I didn't get what I wanted, but now I like what I have, even though I have less.

You wrote "People love big social programs once they've got them." My personal experience suggests the reverse might also true - that people will (eventually) be ok with losing big social programs we think we don't want to lose, after we lose them.
Sarah

You could be right; it might not be a preference for big social programs, just a preference for stability. I think that people are more adaptable than we imagine, and could get comfortably used to lots of circumstances, including fewer social programs.

I do think that politically, movements towards more government generate their own steam, their own constituencies, in a way that movements towards less government don't.

I'm not a shill for the Congressional health care plan. My politics, when I have them, are semi-libertarian, and on health care the ideal solution seems to be market reforms, plus subsidized vouchers for the poor. I still can't decide what's worse, the Democratic plan, or no reform at all.
Nimed

Hmm, your personal opinion is not a more accurate reflection of American sentiment than polls, and is therefore irrelevant for the question of whether we love big entitlements or not. But thanks for solicitously sharing your very wise financial and insurance-related decisions.
musa1

What a boon social security privatization would have been for TARP. We all would have complaining about how small it was.
Anne

If you think government is broken, how do you view health care in America today? Think those Anthem rates in CA are sustainable? Think that booting sick people off of their insurance is a great idea?

Our health care system today is not sustainable. High unemployment means the employer-provided health care subsidy that millions have enjoyed has come to a sudden end for far too many people. Which means governments will need to pick up the slack via payments to hospitals, rising Medicaid costs, etc.

What do you think about the entitlement program the government promises to the financial sector - the promise (provided since Continental Bank failed decades ago) that "too big to fail" financial institutions will be bailed out? And bonuses will be paid out, thanks to tax-payer bailouts, no matter how awful your firm's performance was?

Capitalism in America is deeply wounded. We can blame government, which is a cop out. Or the capitalists can take a look at their business model and use their intelligence to figure out solutions. Not seeing that right now, sadly.
sconover

"away from limited government and relatively free market institutions"

Relatively free-market institutions. That's quite a large swath of territory you've carved for yourself, including the current completely insane manner in which we provide health insurance (a festering, deeply intertwined public-private mess). Why is this mess accepted by libertarians as even a less bad solution?
Q.Q.Q.!

Reversal: "This is a huge problem! My team's opposition to entitlements is politically infeasible. So, entitlements are just a power play!"
Mark

It seems to me like you're dodging the quantitative debate about just how much of a majority should be required to pass major legislation. You seem to think 59-41 isn't enough. Why not?
Sparks123

Social Security had 77 Senate votes. Medicare had 68. Something of this magnitude that can't simply adjusted like marginal tax rates should require at least 60 votes.
adam

Hrm, I rather think that the "government is broken" thing comes from the fact that (1) a 59 member majority can't pass legislation that's very important to it, (2) there is perceived to be aggressive use of the hold tactic to prevent a substantial number of nominations from even being considered, and (3) that the minority is perceived to be focused on complete obstruction of legislation/nominations/governmental function and is seen to be accomplishing that (see: unprecedented number of holds, unprecedented numbers of filibusters on non-health care-related legislation, etc etc).

I think saying that democrats view government as "broken" because they can't pass health care per se is rather simplistic. Putting it like you did, clearly it is silly; good thing only the silly people are making that argument.

That said, this democrat thinks that government isn't broken but the democratic party as a structure is.
LouisNapoleon

Hi Will. As you admit, this is a bit of a straw man argument. Of course no one would be persuaded by way you put the argument. But you maybe misinterpret the frustration. The worry (at least for my part) is not that THIS health care bill can't pass, but that EVEN THIS health care bill can't pass. This is a pretty modest bill. If you believe a) no reform should fundamentally change the existing system and b) that we ought to do what we can to cover the increasing number of uninsured, then it's hard to see anything substantially different from this bill. Many deny both (a) and (b). Many, like myself, would like to scrap the entire employer-based system and enact a much less costly, car-insurance-like program where (details not relevant here). But there is NO WAY anything like that will pass in our lifetime save from some disastrous fiscal crisis (waaaay worse than what's happening right now). So we have to accept (a). Many also argue that (b) is blown all out of proportion. Maybe. But that's irrelevant to the BIG problem, viz., Medicare. The democrats included some pretty pathetic and admittedly minor reforms to 'bend the cost curve,' such as taxing Cadillac plans, cost-assessment commissions, etc., and this was easily and extremely effectively demagogued by REPUBLICANS. In short, the worry is that, if THIS plan can't pass, then NO plan can pass, and therefore its doubtful that anything will be done before the sh@t really hits the fan. And any system by which that eventuality is easily predictable but very difficult to avoid is, I 'd say, broken.
Michael

Hi Will. As you admit, this is a bit of a straw man argument. Of course no one would be persuaded by way you put the argument. But you maybe misinterpret the frustration. The worry (at least for my part) is not that THIS health care bill can't pass, but that EVEN THIS health care bill can't pass. This is a pretty modest bill. If you believe a) no reform should fundamentally change the existing system and b) that we ought to do what we can to cover the increasing number of uninsured, then it's hard to see anything substantially different from this bill. Many deny both (a) and (b). Many, like myself, would like to scrap the entire employer-based system and enact a much less costly, car-insurance-like program where (details not relevant here). But there is NO WAY anything like that will pass in our lifetime save from some disastrous fiscal crisis (waaaay worse than what's happening right now). So we have to accept (a). Many also argue that (b) is blown all out of proportion. Maybe. But that's irrelevant to the BIG problem, viz., Medicare. The democrats included some pretty pathetic and admittedly minor reforms to 'bend the cost curve,' such as taxing Cadillac plans, cost-assessment commissions, etc., and this was easily and extremely effectively demagogued by REPUBLICANS. In short, the worry is that, if THIS plan can't pass, then NO plan can pass, and therefore its doubtful that anything will be done before the sh@t really hits the fan. And any system by which that eventuality is easily predictable but very difficult to avoid is, I 'd say, broken.
Michael

Hi Will. As you admit, this is a bit of a straw man argument. Of course no one would be persuaded by way you put the argument. But you maybe misinterpret the frustration. The worry (at least for my part) is not that THIS health care bill can't pass, but that EVEN THIS health care bill can't pass. This is a pretty modest bill. If you believe a) no reform should fundamentally change the existing system and b) that we ought to do what we can to cover the increasing number of uninsured, then it's hard to see anything substantially different from this bill. Many deny both (a) and (b). Many, like myself, would like to scrap the entire employer-based system and enact a much less costly, car-insurance-like program where (details not relevant here). But there is NO WAY anything like that will pass in our lifetime save from some disastrous fiscal crisis (waaaay worse than what's happening right now). So we have to accept (a). Many also argue that (b) is blown all out of proportion. Maybe. But that's irrelevant to the BIG problem, viz., Medicare. The democrats included some pretty pathetic and admittedly minor reforms to 'bend the cost curve,' such as taxing Cadillac plans, cost-assessment commissions, etc., and this was easily and extremely effectively demagogued by REPUBLICANS. In short, the worry is that, if THIS plan can't pass, then NO plan can pass, and therefore its doubtful that anything will be done before the sh@t really hits the fan. And any system by which that eventuality is easily predictable but very difficult to avoid is, I 'd say, broken.