6:13 a.m. Wednesday 7/31/96
Now that our moderator has ruled that the Reagan record is irrelevant to a discussion of how to win a presidential election, I scarcely know what to say next. With the Reagan model off the table, I suppose we are left with the Nixon model, which was fashioning a landslide (however momentary) from wage-price controls, detente with Russia, trashing the U.S. dollar and otherwise stealing the Democrats’ clothes. I see that in this morning’s New York Times, Herb drops the impartiality and, in arguing that proposing tax cuts won’t win votes, explicitly commends Mr. Nixon as Mr. Dole’s political mentor. The Reagan formula–smaller government, tax cuts, morality and strong defense–somehow seems to me more relevant. To be sure, some conditions are different. If Mr. Dole wins he will not inherit an inflationary crisis, for example, and is likely to have a Republican Congress. He would have an opportunity to complete the parts of the agenda, chiefly on the spending side, that even Mr. Reagan could not force through the Democratic majority. The big two decisions remain are an economic program and a vice-presidential selection. Reports from the tax debate within the Dole camp are encouraging. And I have already declared myself on the vice-presidency, a candidate of presidential stature, with a good field to pick from and Rumsfeld, Cheney and Engler as my top suggestions. (See WSJ, “Dole Is Urged to Press Repeal of Tax Boosts” and “For VP: A Grown-Up.” See note below.) As for spending, I certainly would play down the Balanced Budget Amendment. It obviously has demagogic appeal, as Ross Perot demonstrated, but is likely to prove an impediment to governing. For one thing, it can’t be written sensibly, unlike a line-item veto or supermajority for appropriations. For another, an amendment would have to be based on federal accounting, which is dizzy. In particular, the “deficit” does not even reflect the big problem of unfunded promises in Social Security, Medicare and other entitlements. Over the years, Democrats have demagogued Social Security so successfully neither party can propose obviously needed reforms. The labor unions are now trying to do the same thing with Medicare (see WSJ, “Labor’s Lies” and AFL-CIO President John Sweeney’s response), and the Congressional left and its media allies are waging a rear-guard fight against the end of the federal welfare entitlement. Mr. Dole and other Republicans should meet the medical savings account and welfare issues directly. I would not recommend taking on Social Security in this campaign, though the time may be approaching, as Steve Forbes’ primary proposals suggest. As for the rest of spending, the Republican Congress did better than it has been given credit for (see WSJ, “Congress Took a Whack at Big Government …”). But it did protect some of the most egregious special-interest provisions, such as maritime subsidies, sugar quotas and ethanol subsidies. Indeed, as “Senator Ethanol,” Bob Dole could do something dramatic by proposing to drop that program; at the current price of corn, his Midwestern constituents wouldn’t even be hurt. Note on links: to find WSJ stories, enter the interactive edition, select search from clickable image to right of title, then search for key words in headline, up to 70 characters. Mary Matalin
9:09 a.m. Wednesday 7/31/96
Our moderator offers an opportunity to divert our chat from policy back to politics, i.e., the Dole VP selection (although it’s worth repeating the trite-but-true adage: good policy is good politics). For campaign purposes, the VP selection is inherently tactical; for governing, the selection can have major policy consequences, as Al Gore and Dan Quayle proved. The political staging of Al Gore’s selection was masterful, unlike the 1988 Quayle debacle. This operative will never forget being briefed in New Orleans in preparation for battle with the press beast. Unlike every other potential contender’s (Kemp, Dole, etc.) brief, voluminous three-ring binders of every tidbit from birth on, Dan Quayle’s consisted of one single Xeroxed page from the almanac of American politics. Needless to say, the result was not a spin meister’s finest hour. However tortured his inception, Quayle’s performance in office left a legacy for all to follow–from the Atlantic Monthly to Bill Clinton. Dan Quayle was right, and his apostles populate the fierce Freshman Class. Though the mainstream press could never stomach it (exceptions being David Broder and Bob Woodward in a multi-part Washington Post series), Quayle’s popular support was evidenced by the stunning success of his first book, Standing Firm. Gore’s literary contribution to environmental-wackoism was less auspicious (though more humorous), but his policy, political and personal impact on Clinton is well documented … or at least his daughter’s impact. Woodward reports Gore’s entreaty to Clinton for sanity on a Bosnia policy was motivated by his daughter’s concern. (What is it with these Democrats? Amy Carter had a big hand in foreign policy too!) Gore apparently, unlike Quayle’s infinitely respectful and deferential behavior with President Bush, feels free to rein in with regularity Clinton’s prodigious meandering on all matter of issues. Back to tactics: The whole GOP learned well from the 1988 Republican failure and the 1992 Democrat success. Dole will choose a well-vetted VP, announce him (too bad no her fits the bill) so as not to step on the convention message (Restoring America’s Dream–there, you have your bumper sticker). Given the age issue, his qualifications must include “Ready from day one.” This requires a solid record, though not necessarily stature. Obviously, physical and mental health will be overly scrutinized. Other considerations will include, in no particular priority, geography (swing state or regional appeal), philosophical profile (unfortunately, predominantly abortion record), personal compatibility, demographic appeal (veterans, labor, Catholics, women, youth), campaign skills (at this point, ability to walk and chew gum would suffice), scandal free (anyone with spurned lovers or business partners need not apply). Aspirations for the 2000 contest should not be Dole’s problem, but it will be thrust upon him by acolytes and detractors alike. In as much as these criteria dictate a cautious choice when this environment requires the proverbial Bold Stroke, some additional unconventional element attendant to the convention might be necessary for that adrenal addiction political junkies and press pundits crave. We considered, too briefly and unconsummated, naming a new cabinet in 1992. Treasury and State nominees could help flesh out a Dole presidency profile as well as divert the press pack. Announcing additional high level administration posts could also possibly provide a place for diversity (God forbid, of course a meritorious non-white, non-male). A final response to our moderator’s well-versed admonition, “You can’t step in the same river twice”: It is true we cannot repeat the Reagan record, but we could resurrect it as the first generation of successful offspring–Whitman, Engler, Pataki. The best genes survive … just ask Darwin! Chris DeMuth
9:11 a.m. Wednesday 7/31/96
Bob Dole has a deep bench to choose from in selecting a running mate–several Republican governors, senators, and former officials who are obviously qualified to be president and who would help with the Electoral College arithmetic. My short list is Dick Cheney, John Engler, and Don Rumsfeld. Bill Bennett, Carla Hills, and Jeane Kirkpatrick are intriguing possibilities, but their lack of electoral experience is a serious drawback. The Veep question, by the way, demonstrates yet another problem with the “front loading” of the presidential primaries and the lengthening of the nomination process. In the past, runners up in the party primaries have been good choices as running mates. They have demonstrated the ambition and gumption to take on the arduous business of national campaigning, and have gained valuable experience and public exposure; and they typically represent a wing of the party the nominee needs to build bridges to. For all of these reasons, Lamar Alexander, Steve Forbes, and Phil Gramm ought to be serious prospects this year. That they are not is due largely to fact that memories of their campaigns have already faded among the party faithful and the general public. Deficit reduction has lost much of its allure as a political rallying cry. The annual deficit has come way down in recent years and will continue to fall for the next several years. No deficiencies in current economic performance can plausibly be blamed on the deficit. And, although many notable reductions in federal spending since 1994 may be attributed to the Republicans’ emphasis on deficit reduction, they were badly burned last fall in their efforts to use deficit reduction as the rationale for “cutting” Medicare. As Herb Stein points out, the really big, scary deficits are beyond the conventional political time horizon, beginning when the baby boomers reach retirement in 15 years (although the Medicare “trust fund” will almost certainly go into deficit during the next presidential term if nothing is done.) Medicare and Social Security present the most challenging policy dilemmas in American politics today. Both programs are financially and demographically unsustainable in their current forms; fixing them now will be vastly easier than when the crunch arrives; politicians are highly averse to risking major changes in popular programs in order to produce benefits–even large, clear benefits–in the distant future. I believe that Mr. Dole and President Clinton have a duty to begin talking seriously about the long-run problems of these programs during their 1996 campaigns, and that doing so will not be unduly risky for either them if they proceed responsibly and with a careful eye on each other. (The problems are already generally understood, especially among younger voters with respect to Social Security; as a result, old-style NARP demagoguery has itself become politically risky and less likely.) My advice for Mr. Dole on how to “begin talking about” these programs in the context of a presidential campaign is that he emphasize the benefits of private markets over direct government provision in both medical care and retirement pensions. This might be called the “UPS versus Postal Service” strategy. I think deficit reduction talk has been proven ineffective where it comes to the big social insurance/income transfer programs. The emphasis should not be on the painful necessity of taking something away from retired citizens, because that is not in fact what is necessary or desirable. Instead it should be on harnessing the efficiency of modern financial and insurance markets to provide superior–and sustainable–retirement support. Social Security reform was discussed in detail in this department of last week’s issue of Slate; I refer readers to this discussion. Most retirement income today comes from private pension plans and other forms of private savings and investment, not from Social Security checks–so the idea of moving from worker-to-retiree income transfers (the current Social Security scheme) to individual private retirement savings is not longer outré. My AEI colleague Carolyn Weaver, and several other members of the Clinton administration’s Social Security Advisory Council, will soon recommend concrete reforms in the direction of real-savings Social Security. Mr. Dole should not shy away from saying that such reforms are worthy of serious consideration. Medicare presents different issues and requires a bit more exposition here. The policy history of Medicare since 1964 has been a) the progressive stripping away of conventional insurance mechanisms (such as deductibles and co-payment requirements) that give patients and providers incentives to make economical medical care decisions; b) followed by explosive growth in Medicare expenditures due to the lack of elementary incentives; c) followed by the imposition of federal regulatory controls on medical care decision-making and reimbursement rates, designed to reduce expenditure growth by “command and control”; d) followed by EVEN HIGHER growth in Medicare expenditures, caused by the very regulatory controls intended to reduce expenditures. In the meantime, private health care insurance was becoming far more efficient, through the introduction of managed care plans and new deductible/coinsurance/copayment schemes (including private MSAs). In the last half of the 1980s, per-enrollee health care expenditures by private health insurance carriers grew 10.8 percent annually on average while Medicare expenditures grew 6.9 percent annually. From 1991 to 1994, private sector reforms reduced annual per-enrollee expenditure growth to 4.1 percent annually with no sacrifice in quality of care, while Medicare expenditures growth increased to 9.8 percent. Medicare has thus become the sick baby of the U.S. health care system. The Republicans’ proposed Medicare “reforms” of 1995 would actually have continued this sorry story, and made Medicare’s financial problems worse, by attempting to control aggregate expenditures through “cuts” in per-service reimbursements and new regulation. Mr. Dole should pass over this chapter in silence and never use the word “cuts” in the same sentence as “Medicare.” Instead, he should talk about learning from the important innovations underway in private health insurance; moving toward vouchers for old-age medical care (“defined contribution” rather than “defined benefit”) with ample support for those of lower incomes; and toward moving from regimented, second-class medical care for the elderly toward an insurance system that is as pluralistic, dynamic, and “pro-choice” as it has become for younger citizens. Here as in many other areas, Republicans need to avoid “market triumphalism.” Privately managed health insurance is not heaven on earth; it is not without its own trade-offs and constraints, and it is not “popular.” Its advantage and political appeal is that it is superior to government-provided health insurance, provided it is adequately subsidized to keep the “social” in “social insurance.” Herb Stein
1:26 p.m. Wednesday 7/31/96
DeMuth and Bartley have both commented on the long-range problem associated with the future retirement of the baby boomers, Medicare, Social Security, looming deficits and all that. DeMuth seems somewhat more eager to have candidate Dole face that problem than Bartley, who wants to keep Social Security out of the current campaign. I am unclear whether DeMuth and Bartley think that this problem has a painless solution, involving reforms like privatization. Do they think it is possible to appeal successfully to the American people of this generation to make a sacrifice for the next one? I would like to hear what the other panelists think about this. Changing the subject radically, I wonder why the Republicans seem so far to have been so unsuccessful in making gains from the scandals, ineptitude and other “personal” qualities commonly attributed to this administration. (In my capacity as moderator I pass not judgment on the validity of this common attribution.) Is it that the scandals are too complicated and boring for ordinary mortals to understand and get excited about? I must say that although I receive the American Spectator, the Standard and the Wall Street Journal, the thought of reading about Whitewater makes me dizzy and I don’t do it any more. Can the Republican Party do anything about this? With regard to the by-play between me and Bob Bartley: I have no desire to censor him. He has generously tolerated me on his editorial page for 22 years and it would be churlish of me to try to limit him on the little bit of ether that I now manage. To paraphrase my mentor, “I am not a churl!” On the subject of me and Reagan, Bob can find in the pages of his paper about 16 years ago an article by me entitled, “My Case for Reagan.” I said then that although I objected to his tax policy I was for him because I thought he would defend the country and also get inflation down. I think he did both, and I respect him for it. As for Richard Nixon, I am an admirer and not an idolater. I have submitted to Bob’s paper (which shall be nameless) an article that I hope they will run on Aug. 15, 1996, the 25th anniversary of Mr. Nixon’s New Economic Policy. The reader will see that I observe the event but do not celebrate it.