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.
Original Article
Source: nymag.com
Author: Jonathan Chait
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