The Nutty GOP Games Commence

Today’s leak of the Republican part election platform – the closest thing we ever get here to the manifestos published in the UK – is both revealing and far from shocking. At its core it is a radical right wing document that seeks to undo the American social contract in place since the 1930’s and replace it with an earlier version. Depending on how you view it that earlier version could be from anywhere between the 1850’s up to the 1890’s. Apparently they were better times in the GOP view and we need to return there.

Among the planks of modernity to be trashed is Medicare. The Republicans are hell bent on getting rid of it. Their far right elements, who now dominate the party, choked on it back at its inception and have longed for the day when America can be rid of providing health care to its citizens. In these heady days of libertarian dreaming the extremists now dictate Republican thinking, and so it is no shock to see them seize the opportunity to impose their Rand fueled hatred of society on the rest of us. If they win of course. Which I doubt they will.

Nonetheless we ought to take the extremists seriously. Not only have they plunged us all into endless wars about entirely non-political cultural issues – abortion and gay rights – but now they have taken aim at the precarious defenses of the middle class. And let’s be serious too about the consequences of their plan: the elimination of social programs is, effectively, the elimination of the US middle class. Because there is no way, none, that a middle class family can be expected, on today’s middle class incomes, to replace the insurance value of those programs without depriving itself of other consumption. Permanently. The Republicans seem fine with an impoverished middle class. Their platform surely screams so.

Analysts usually focus on the costs of eliminating social programs. I prefer to focus on the risk.

The GOP plan, as leaked yesterday, is to replace today’s program with a voucher system. In future, if the GOP gets its way, people will receive a voucher from the government which they will then use to buy private health insurance. The tricky part of this privatization is that the voucher will be insufficient to purchase a set of services equal to that being provided by the current system. In effect, and the GOP uses these words, they intend to shift Medicare from being a defined benefit program to being a defined contribution program.

We have seen the consequences of such a shift before.

During the late 19080’s and into the 1990’s as private pension costs rose dramatically, corporations shifted their benefits in similar fashion. The older plans were defined benefits. The newer ones were defined contribution.

The effect of this shift is to move the risk of providing an adequate plan from the employer to the employee.

We are all taught in business school that higher risk brings higher return. But this shift in pension funding flouted that rule. The risk was shifted, but no compensatory shift occurred in wages or salaries to offset that switch. So employees were faced with paying for the higher risk they now bore from existing cash flows. By and large the result has been that people underfund their retirement. Most people do not have sufficient financial savvy to understand how much to save, and even if they did, they found the drain on incomes too great. We will, at some point in the future, have a more impoverished retiree class as a direct result of this uncompensated shift in risk.

The GOP plan for Medicare simply compounds this calamity. It will force retirees to fund a large part of their medical costs from private sources. This is an increased risk that is left underfunded in today’s flat wage and salary era. So just as we are now seeing the emergence of a class of retirees with too little set aside for retirement, we will inevitably see, after the GOP plan is in effect, a steady rise in the number of retirees who cannot afford proper medical care. This will cascade through the economy as families try to fill the gap, or as people respond by slashing consumption to save to offset the additional risk.

There is no way around this consequence. It is built into the GOP plan. Indeed the plan touts it as being the reason for the change. By shifting to vouchers insufficient to pay current costs the GOP declares it will control health care spending. This is not true. What it achieves is the establishment of a cap on government spending. It leaves the rise in medial costs uncontrolled and dooms people to less and less coverage as those costs rise more rapidly that the value of vouchers. It shifts the burden of cost control onto the same shoulders that have signally failed in that mission hitherto: the private marketplace. There is no evidence at all, anywhere, that a voucher system will help rein in ballooning costs. What it will do is ration services, with those hit most by rationing being those least able to top up their vouchers with private supplements.

It is, in short, a vicious attack on the elderly poor.

But, given the mean spirited and extreme libertarian tilt in the Republican party, such viciousness is to be expected.

Along with its overt racism and anti-women stances on health issues, the Republican party has become a strange melange of anti-social libertarianism cobbled together with religious paternalistic authoritarianism, and gun happy violence embracing extremism. Outright rejection of anything vaguely progressive or social is now a necessary condition for a GOP candidate. The emergence of Paul Ryan as the current right wing hero is testimony to this. He is not a social conservative. He is a social radical. Perhaps we should scratch the word social. For he, like many of his wild eyed ilk, deny that anything social exists. They revere the simple minded dystopian vision of Ayn Rand, and like libertarians everywhere, seek to undermine the fabric of society by denying its very existence. So it no surprise to see the modern Republican party indulge in incessant attacks on any group vulnerable enough to require social support. In their devil-take-the-hindmost world there is no society, and the poor, the elderly, women, minorities and the sick are weak detritus to be discarded in the search for individual glory, wealth, and power. Male glory, wealth, and power that is.

It seems to me that by denying the existence of society, libertarians deny the existence of any collective grouping. Like America for instance. Perhaps they should explain how the square this contradiction.

Meanwhile the election games commence in earnest. One side apparently wants to destroy America as we know it. What the other side wants I am not at all sure. But that’s another story. At least we have a clear choice this time. I wonder if anyone notices?