Last week, I suggested that Democrats could (and probably would) tolerate raising the Medicare retirement age as part of a deal with Republicans. This has caused not a few liberals to react unhappily. The disagreements run across, and sometimes blur together, a series of objections, so I’d like to try to pull them apart and clarify my thinking.
We’re all agreed that raising the Medicare retirement age is bad policy. I hope it doesn’t happen. If it does happen, I hope it can eventually be reversed. The questions are: How bad of a policy is it? And will (or to what degree will) Democrats need to agree to bad policies?
Politics first. David Dayen argues, “I think that exchanging a series of cuts to Medicare and Social Security and the domestic budget in exchange for the $800 billion in letting the top-end tax cuts expire, a pitiful sum of new revenue, would make a decent liberal vision of government impossible and represent a sellout of these ideals by the President.” I agree! Obama can and will get $800 billion from the expiration of the Bush tax cuts without offering any concessions at all. Since Obama couldn’t even get that much revenue last year (and hypothetical revenue at that, tied to a future tax reform process) in return for cuts, he’s in a much stronger position now.
But I also think Obama is going to want more than $800 billion. How does he get another half-trillion or so in additional revenue? Jonathan Cohn suggests ratcheting down the cost-of-living index for Social Security, which has the imprimatur of the liberal Center on Budget and Policy Priorities. Almost surely that will be part of the deal. But it only saves about $200 billion. If that’s enough for Obama to get more revenue from the GOP, that’s great. I’m not sure it is.
Now, how much revenue Obama needs here is a separate question. I think he could get away without any deal at all if he needs to — just expire the Bush tax cuts for the rich and have a stalemate with the Republicans for the rest of his term. But I place a pretty high value on more revenue. Obama has already agreed to cut discretionary spending at low (probably unsustainably low) levels for the next decade. More revenue will make it easier to loosen those caps if and when Congress realizes that the targets can’t be hit without cutting deeply into basic government functions.
Obama can also bargain for extended unemployment benefits and other stimulus spending. Without a deal, unemployment benefits will expire. That’s really bad.
Keep this in mind when assessing the strain of moralistic attacks emphasizing my alleged cruelty to working people who are pawns in the game I am playing from my cushy Washington perch. (Charles Pierce: “Raising the Medicare eligibility age will hurt people. It will hasten their deaths. It will bankrupt their families.”) Well, failing to extend unemployment benefits will hurt a lot of people, too. I am not proposing this just for kicks. We live in a world where you need to get some pretty crazy people to agree to stuff or else bad things will happen.
Another question that plays into the calculus: Just how bad is raising the Medicare retirement age? Ezra Klein describes, without endorsing, a way to do it that would spare the poorest seniors.
This wouldn’t make the pain disappear completely. I argued that one compensatory benefit would be to strengthen the coalition for implementing Obamacare. Scott Lemieux thinks I’m making an argument for “heightening the contradictions” — the old Marxist strategy of opposing reforms that would make the system better on the grounds that more misery would make the whole system collapse faster and bring about communism.
It’s not the kind of argument I’m making at all. I’m not trying to make anything collapse. I’m making a classic liberal argument about political coalitions. The uninsured are a traditionally isolated, politically weak constituency. Medicare has turned the elderly into a relatively powerful constituency. Raising the retirement age would shift 65- and 66-year-olds from Medicare to Obamacare and thus put Republicans looking to roll back Obamacare into the position of denying health care to constituencies they have previously needed to placate. That would, I’d argue, make it harder to roll back universal health insurance (hurt people, etc.). To be sure, this is a bit of a guess. You never know how political events will unfold.
In any case, my premise is that some bad stuff is going to have to happen. Since the Medicare retirement age holds such strange totemic power on the right, and since there are ways to mitigate the harm, it seems like a sensible bargaining chip that can be traded for other policies that have a lot of value. And that’s the real question here — not, Are bad policies acceptable?, but, Which bad policies should we be willing to accept?