If you want to know why Trumpcare failed and why most other Republican ambitions for entitlement reform will come up short, look no further than the commentary of Eugene Robinson in Monday’s Washington Post. Robinson penned the following: “You don’t have to be a policy wonk to recognize that replacing income-based subsidies with less generous across-the-board tax credits would mean a net transfer of resources from poorer people to wealthier people.”
There you have it. The reduction (not even the elimination) of government subsidies constitutes a wealth transfer from those who were receiving the subsidies to those who were paying for the subsidies. And Robinson doesn’t even mention the wealth transfers from the sick to the healthy and from the old to the young that would have resulted from eliminating the Obamacare mandate that requires the young and healthy to subsidize, through higher insurance rates, the old and ill.
Even without the Freedom Caucus’ self-immolation, the Democratic drumbeat of taking from the poor to benefit the rich was enough to make a lot of Republicans queasy.
We have known for decades the ironclad rule of American politics that, once granted, government benefits are almost impossible to eliminate. Now we know why. It’s not just that the recipients of benefits constitute a powerful and motivated interest group to resist any reduction in benefits and to challenge any politician daring to suggest that taxpayers cannot continue to fund ever-expanding subsidies. No. It is taking from the poor and giving to the rich. It is immoral. Heck, it might even be theft. As Robinson opines, not even Ronald Reagan or Barry Goldwater would have suggested anything so extreme.
To borrow from Robinson, it doesn’t take a policy wonk to understand that subsidies must be paid for by someone, whether in the form of increased taxes, mandated purchase of over-priced health insurance, or payment of fines (oops, taxes) for failing to comply with the mandate. The great success of Obamacare, we have been told ad nauseam, is that millions of previously uninsured people now have health insurance. True enough, but only because others are paying much or all of the premiums.
Robinson’s claim that a shift from subsidies to less generous tax credits is a cruel transfer of wealth is of a piece with the progressive mantra that all people have a right to health care. All along, by this view, the poor had a right to demand that the wealthy pay their doctor and hospital bills. Obamacare simply put things right.
Progressives reject the distinction between positive and negative rights, but fiscal realities have a way of confirming that the difference is real. Negative rights — guarantees against government interference with individual liberty — come at no cost to the government beyond restraint. Positive rights — guarantees of health care, housing, food, etc. — require government resources.
It is wonderful to have a generous government, but we must remember that governments have no resources of their own — only what taxpayers are willing and able to provide. When subsidies become entitlements, as they almost always seem to (witness the farm programs adopted in the 1930s), we are left to only three alternatives: increase taxes, increase the federal debt, or reduce government services. All of these have their limits, but entitlements are forever.
So Republicans face an almost insurmountable challenge in reforming the welfare/subsidy state. If curtailing entitlements, even if unsustainable, constitutes taking from the poor and giving to the rich, as Robinson concludes, it will be a hard sell, even for Republicans. Easier and politically safer to kick the can down the road and leave it for others to worry about.