the national interest

Yuval Levin Dissembles Madly

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Yuval Levin, editor of the conservative journal National Affairs, frequent contributor to both National Review and the Weekly Standard, winner of the $250,000 Bradley Prize for excellence in the field of conservative punditry, and unofficial adviser to Paul Ryan, is probably the preeminent conservative intellectual of the Obama era. He has helped to formulate and justify the Republican strategy on domestic policy.

Unfortunately, as I pointed out a couple of weeks ago, two of the most important intellectual premises of that strategy have fallen to pieces. On Friday, Levin wrote a reply — or, at least, a column that purports to be a reply. Mainly, it is a series of evasions about what he and the Republicans have argued, serving only to further confirm the impression that Levin’s analysis has collapsed and he has no idea what to do about it.

The most damaging development for the Republicans is the crumbling of economic support for “expansionary austerity” — that is, the notion that the high budget deficit is not merely a long-term problem but a short-term one as well, and that immediate cuts to the budget are appropriate and may even stimulate rather than hamper growth. Levin denies, or creates the appearance of denying, ever having advocated this in the first place, though his denial is both evasive and uncharacteristically brief:

His first point on that front assumes that what Paul Ryan or I or others on the right argue for is a version of European austerity, which it plainly isn’t, and that conservative fiscal worries were based on the particular finding of a particular paper by two Harvard economists [Reinhart and Rogoff] that has been shown to have had some data errors. That latter notion is surely among the more curious liberal hallucinations of the past few years.

I’m not certain exactly what “European austerity” means, and I never used the phrase. Levin wants to shrug off the serious flaws in the work of Rogoff and Reinhart, whose relationship to the Republican platform is a “hallucination.” Really? Paul Ryan’s seminal “Path to Prosperity,” the Levin-praised manifesto-platform, cites exactly one piece of empirical evidence for its claim that the national debt had already reached dangerously high levels:

A recent study completed by Reinhart and economist Ken Rogoff of Harvard confirms this common-sense conclusion. The study found conclusive empirical evidence that total debt exceeding 90 percent of the economy has a significant negative effect on economic growth. The study looked specifically at the United States, focusing on growth and inflation relative to past periods when this nation has experienced high debt levels. The study found that not only is average economic growth dramatically lower when gross U.S. debt exceeds 90 percent of the economy, but inflation also becomes a problem.

Essentially, the study confirmed that massive debts of the kind the nation is on track to accumulate are associated with “stagflation” – a toxic mix of economic stagnation and rising inflation.

Granted, if Levin is right about liberal hallucinations about the influence of Reinhart-Rogoff, I may also be hallucinating that I just read Ryan’s report cite Reinhart-Rogoff as its sole piece of empirical evidence for its hysterical claims about debt. So I would urge non-liberals to click the link and confirm that it is real.

There have been a couple of other studies also bolstering the expansionary austerity premise, but those two have developed serious flaws, which, combined with the failure of austerity across Europe in its many forms, have left the rationale for immediate deficit reduction in tatters.

But immediate austerity is still the Republican fiscal position. And Levin has been giving that position his full-throated support. Here he is last year cheering on the House Republicans for implementing immediate spending cuts:

For fiscal year 2012, for instance, the House GOP budget proposed to spend $3.529 trillion, while President Obama’s budget proposed to spend $3.708 trillion. In the end, after a series of dramatic showdowns, the federal government will spend $3.618 trillion, according to the Congressional Budget Office. On nondefense discretionary spending, Republicans proposed to spend $581 billion in 2012 while the president called for $644 billion. In the end, the government will spend $628 billion. That’s a start, but a very modest one. Doing more requires further victories.

Indeed, one of the very few areas of public criticism Levin has ventured against Ryan is that his budget does not cut spending enough immediately. (His budget “could have taken a more aggressive approach to cutting domestic discretionary spending in its first year,” Levin clucked.) But what evidence could Levin cite that this would not retard economic growth and that austerity ought to be postponed until unemployment has returned to precrisis levels? I have no idea. The Levin passage I quoted above is the entirety of his defense on this rather vital point. He, Ryan, and the Republican caucus are continuing to stand behind a discredited fiscal doctrine. He waves this away by implying there’s more to his position than Rogoff and Reinhart but does not tell us what this might be.

The second development undercutting Levin and Ryan’s premises is the slowdown in health-care inflation. It’s on health care where Levin’s imprint on the party has run deepest — unsurprisingly, given his background as a health-care aide in the Bush administration — and his response to me does devote far more verbiage than the cursory treatment he gives to austerity. But here Levin is also scrubbing his arguments even more brazenly.

Levin has helped persuade Ryan and other Republicans that the long-term deficit is mainly a function of the rising cost of health care (i.e., “Simply put, our coming debt crisis is a health care cost crisis.”). On this point, many liberals agree. What has set Levin apart from other health wonks is his rabid hatred for Obamacare, his fanatical certainty that Obamacare would worsen the cost growth problem, and his equally fanatical certainty that Ryan-style privatization is the only possible thing that could halt the rise in health-care costs. The problem for Levin is that health-care inflation has in fact slowed sharply, and several recent studies attribute the slowdown in large part to deep structural changes, not merely the temporary effects of the recession.

Up until his Friday response, Levin insisted the health-care slowdown was simply a recession-induced fluke and that costs were certain to accelerate once the economy recovered. As recently as two months ago, he dismissed any analysts who gave the slightest credence to the slowdown as a long-term change — the possibility that health-care costs “just magically remain very low,” as he put it — as “rosy” and “very implausible.”

Levin’s new line pretends he never said any of these things. Of course there’s a slowdown in health-care costs, he now tells us. The “major slowdown in cost inflation began in 2003 … began in dramatic fashion five years before the recession.” If it was so dramatic, why did he not only fail to see it, but also insist those who did see it were fools? And if it doesn’t undercut his argument, why did he so insistently deny its existence until denial became impossible to sustain?

Levin now falls back on the insistence that health care may be slowing down, but Obamacare has nothing to do with the slowdown — “the law,” he informs us, “doesn’t really take effect until next year.”

But Levin wasn’t just warning that Obamacare would fail in its goal of reducing health-care inflation. He was insisting that Obamacare would make cost inflation worse — indeed, that until the law was repealed, any slowdown in health-care inflation was impossible. Levin asserted this over:

Repeal of Obamacare is essential to any meaningful effort to bring down health care costs.”

And over:

The president refused to consider any changes to Obama-care as part of the deal … Under such circumstances, cost cutting can only be achieved at the expense of quality care​—​and even so it rarely happens.”

And over again:

And without meaningful reform, this problem will only grow worse … Under Obamacare… the most powerful driver of American health care costs​—​the fee-for-service design of the Medicare system​—​would be left essentially untouched.”

So now he tells us the health-care inflation slowdown is completely unrelated to Obamacare, without acknowledging his previous, fervent insistence that Obamacare would render such a development hopeless.

And while Levin now insists Obamacare could not be contributing to the health-care cost slowdown because it has not yet taken effect, he used to maintain just the opposite. In 2010, Levin argued that the law’s “major provisions do not take effect for four years, yet in the interim it is likely to begin wreaking havoc with the health care sector—raising insurance premiums, health care costs, and public anxieties.” If health-care costs had risen since 2010, Levin would now be telling us he was right. Instead he is telling us the law hasn’t had any impact yet.

At any rate, Levin is not only inconsistent but wrong about this, too. Obamacare tries to enact a large-scale reorientation of the health-care system, from one that pays for quantity to one that pays for quality. Some elements are already in effect (like incentives for doctors and hospitals to use electronic medical records and take steps to reduce infections, the results of which are already bearing fruit). What’s more, insurers and medical providers can anticipate new regulations set to take effect and position themselves to comply in advance, which is why, even though the law’s reduced tax deduction for the most expensive health insurance plans hasn’t taken effect yet, employers are already cutting back their most expensive plans.

Just how much of the health-care slowdown would have occurred in the absence of Obamacare, and whether it will continue, I cannot say. The Marxian grandiosity of Levin’s pro-market, anti-government maxims gives him an overweening certainty I am happy not to share. Even though the early news has exceeded the most buoyant hopes of Obamacare supporters, I am sure at least some unhappy surprises will await. Life is complicated.

The sheer certainty of Levin’s prediction was not just an ideological tic. The certainty was the glue behind the entire Republican strategy. Levin (and Ryan and the party) knew we were facing an imminent debt crisis, and they knew theirs was the only possible solution. The convergence of those two certainties justified the Republican approach. There is no point in compromising with Obama on a long-term debt plan, buying time to perhaps see if Obama’s pay-for-quality reforms might work, because Republicans knew they wouldn’t.

Levin now takes umbrage at the characterization: “He accuses me of urging Republicans away from ‘half-measures’and compromise because I opposed the particular counterproductive price controls the president has proposed for Medicare.” But again, Levin has made this case emphatically:

Such trivial steps would make real reforms less likely, by letting our leaders persuade themselves they have dealt with entitlements when in fact they would have only bought a little time … To fix health care and the federal budget, reformers must set their sights on a much more fundamental shift, away from central planning and toward a genuine marketplace in health care​ … In April, the House passed a budget that moves Medicare and Medicaid decisively in this direction. Such a step, and a similar approach for the individual market and small employers, is essential for our health care system, and for the nation’s fiscal future. If there ever is to be a grand bargain with the Democrats, Republicans must make reforms like these their absolute bottom-line demands​—​because our badly broken health entitlement system is at the heart of the government debt problem.”

The key to Levin’s rise, as with Ryan’s rise, is maintaining the appearance of empirical curiosity. Levin may arrive at conclusions that gratify the tea party, but he does not merely rant against big government. He presents his analysis as the considered result of careful study. He harnessed himself, at least rhetorically, to a series of falsifiable claims. They are being falsified, but the restraints of his ideology give him no room to do anything but obfuscate.

Yuval Levin Dissembles Madly