Republican Deficit Hypocrisy

In the November 2009 Forbes article "Republican Deficit Hypocrisy," conservative Bruce Bartlett reminds readers that the current U.S. budget problem was created by Republicans:

The human capacity for self-delusion never ceases to amaze me, so it shouldn't surprise me that so many Republicans seem to genuinely believe that they are the party of fiscal responsibility. Perhaps at one time they were, but those days are long gone.

This fact became blindingly obvious to me six years ago this month when a Republican president and a Republican Congress enacted the Medicare drug benefit, which former U.S. Comptroller General David Walker has called "the most fiscally irresponsible piece of legislation since the 1960s."

Recall the situation in 2003. The Bush administration was already projecting the largest deficit in American history--$475 billion in fiscal year 2004, according to the July 2003 mid-session budget review. But a big election was coming up that Bush and his party were desperately fearful of losing. So they decided to win it by buying the votes of America's seniors by giving them an expensive new program to pay for their prescription drugs.

Recall, too, that Medicare was already broke in every meaningful sense of the term. According to the 2003 Medicare trustees report, spending for Medicare was projected to rise much more rapidly than the payroll tax as the baby boomers retired. Consequently, the rational thing for Congress to do would have been to find ways of cutting its costs. Instead, Republicans voted to vastly increase them--and the federal deficit--by $395 billion between 2004 and 2013.

However, the Bush administration knew this figure was not accurate because Medicare's chief actuary, Richard Foster, had concluded, well before passage, that the more likely cost would be $534 billion. Tom Scully, a Republican political appointee at the Department of Health and Human Services, threatened to fire him if he dared to make that information public before the vote. (See this report by the HHS inspector general and this article by Foster.)

It's important to remember that the congressional budget resolution capped the projected cost of the drug benefit at $400 billion over 10 years. If there had been an official estimate from Medicare's chief actuary putting the cost at well more than that, then the legislation could have been killed by a single member in either the House or Senate by raising a point of order. Then-Senate Majority Leader Trent Lott, R-Miss., later said he regretted not doing so.

Even with a deceptively low estimate of the drug benefit's cost, there were still a few Republicans in the House of Representatives who wouldn't roll over and play dead just to buy re-election. Consequently, when the legislation came up for its final vote on Nov. 22, 2003, it was failing by 216 to 218 when the standard 15-minute time allowed for voting came to an end.

What followed was one of the most extraordinary events in congressional history. The vote was kept open for almost three hours while the House Republican leadership brought massive pressure to bear on the handful of principled Republicans who had the nerve to put country ahead of party. The leadership even froze the C-SPAN cameras so that no one outside the House chamber could see what was going on.

Among those congressmen strenuously pressed to change their vote was Nick Smith, R-Mich., who later charged that several members of Congress attempted to virtually bribe him, by promising to ensure that his son got his seat when he retired if he voted for the drug bill. One of those members, House Majority Leader Tom DeLay, R-Texas, was later admonished by the House Ethics Committee for going over the line in his efforts regarding Smith.

Eventually, the arm-twisting got three Republicans to switch their votes from nay to yea: Ernest Istook of Oklahoma, Butch Otter of Idaho and Trent Franks of Arizona. Three Democrats also switched from nay to yea and two Republicans switched from yea to nay, for a final vote of 220 to 215. In the end, only 25 Republicans voted against the budget-busting drug bill. (All but 16 Democrats voted no.)

Otter and Istook are no longer in Congress, but Franks still is, so I checked to see what he has been saying about the health legislation now being debated. Like all Republicans, he has vowed to fight it with every ounce of strength he has, citing the increase in debt as his principal concern. "I would remind my Democratic colleagues that their children, and every generation thereafter, will bear the burden caused by this bill. They will be the ones asked to pay off the incredible debt," Franks declared on Nov. 7.

Just to be clear, the Medicare drug benefit was a pure giveaway with a gross cost greater than either the House or Senate health reform bills how being considered. Together the new bills would cost roughly $900 billion over the next 10 years, while Medicare Part D will cost $1 trillion.

Moreover, there is a critical distinction--the drug benefit had no dedicated financing, no offsets and no revenue-raisers; 100% of the cost simply added to the federal budget deficit, whereas the health reform measures now being debated will be paid for with a combination of spending cuts and tax increases, adding nothing to the deficit over the next 10 years, according to the Congressional Budget Office. (See here for the Senate bill estimate and here for the House bill.)

Maybe Franks isn't the worst hypocrite I've ever come across in Washington, but he's got to be in the top 10 because he apparently thinks the unfunded drug benefit, which added $15.5 trillion (in present value terms) to our nation's indebtedness, according to Medicare's trustees, was worth sacrificing his integrity to enact into law. But legislation expanding health coverage to the uninsured--which is deficit-neutral--somehow or other adds an unacceptable debt burden to future generations. We truly live in a world only George Orwell could comprehend when our elected representatives so easily conflate one with the other.

Of course, there are good reasons conservatives oppose expanding the government, as the pending health legislation would do, even if it adds nothing to the deficit. But anyone who voted for the drug benefit, especially someone who switched his vote to make its enactment possible, has zero credibility. People like Franks ought to have the decency to keep their mouths shut forever when it comes to blaming anyone else for increasing the national debt.

Franks is not alone among Republicans for whom fiscal responsibility never consists of anything other than talk. The worst, undoubtedly, is DeLay, who actually went so far as to attack Sen. John McCain, R-Ariz., last year for his principled vote against the drug benefit, one of only nine Republican senators to do so. (By my count, there are still 24 Republicans in the Senate who voted for the drug benefit, including such alleged conservatives as Jim Bunning and Mitch McConnell of Kentucky, John Cornyn of Texas, Mike Crapo of Idaho, Orrin Hatch of Utah and Jon Kyl of Arizona.)

Amazingly, leading Republicans still defend the drug benefit. Just the other day, former Senate Majority Leader Bill Frist, R-Tenn., celebrated its passage, and at a recent American Enterprise Institute forum, former House Ways and Means Committee Chairman Bill Thomas, R-Calif., berated me for criticizing it. In each case, their main argument was that it ended up costing a little less than originally projected. Somehow, I doubt that Frist or Thomas would feel the same way if their wives thought it was OK to buy a closet full of expensive new shoes just because they were on sale.

I don't mean to suggest that Democrats are any better when it comes to the deficit, although they have a better case for saying so based on the contrasting fiscal records of Bill Clinton and George W. Bush. The national debt belongs to both parties. But at least the Democrats don't go on Fox News day after day proclaiming how fiscally conservative they are, and organize tea parties to rant about deficits, without ever putting forward any plan for reducing them. Nor do they pretend that they have no responsibility whatsoever for projected deficits, at least half of which can be traced directly to Republican policies, according to Office of Management and Budget Director Peter Orszag.

It astonishes me that a party enacting anything like the drug benefit would have the chutzpah to view itself as fiscally responsible in any sense of the term. As far as I am concerned, any Republican who voted for the Medicare drug benefit has no right to criticize anything the Democrats have done in terms of adding to the national debt. Space prohibits listing all their names, but the final Senate vote can be found here and the House vote here.

Bruce Bartlett is a former Treasury Department economist and the author of Reaganomics: Supply-Side Economics in Action and Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy. Bruce Bartlett's new book is: The New American Economy: The Failure of Reaganomics and a New Way Forward. He writes a weekly column for Forbes.