The House Republicans are rolling the political dice. Theyve pledged that in their budget for next year they will offer detailed proposals for curbing spending on entitlements Social Security, Medicare and Medicaid.
When Democrats heard this, their world suddenly brightened. One congressional aide dismissed the Republicans as suckers.
Democrats were buoyed for good reason. Heres how this movie usually runs: Republicans offer specific plans for curbing entitlement growth and the Dems promptly portray the GOP as a party of heartless barbarians. Result: Democrats gain ground in the next election.
Yet given the dire state of the nations finances, its no longer clear the usual rules apply.
What were watching not only in Washington but in states like Wisconsin are the death throes of what the author Walter Russell Mead calls the blue state model. Were in the early stages of a long period of financial instability, groping for a path from the old model to a new one.
More than a generation ago the economy was dominated by large entities big government, big labor and big business. The auto industry had the Big Three. TV news had three networks. Telecom was dominated by AT&T. Decent middle-class jobs were plentiful, even for those without a college degree.
The era of relative stability gave way to one of fierce competition. Good jobs for those with only high school became hard to come by. More to the point, the familiar centralized, defined-benefit pension was no longer viable for many companies, which began shifting more responsibility for retirement savings to individuals, largely through 401(k) plans.
Government is the last remnant of the old, centralized Big Unit economy. The question is not whether it will change but how long it will take and at what cost. What we have now is unsupportable, and voters understandably resist the high taxes needed to keep the clanking beast bumping along as if our economy hasnt changed in 50 years.
As Mead notes, more services delivered not only by government but by other high-cost, low-efficiency sectors like medicine, education and law will have to become much more productive and affordable. Which also means the power of the public-sector unions an in-your-face lobby for ever-larger government will have to be curtailed.
This struggle is moving Democrats and Republicans into roles that dont fit their stereotyped images.
The party of the so-called progressives finds itself in strategic retreat fighting for the privileges of a tiny, protected minority public sector unions after ramming through a ruinously expensive health law based on an obsolete, top-down, central-planner mindset.
Meanwhile, its the supposedly hidebound conservatives who want to reform the safety net so that it echoes the broad decentralizing trends in the economy, before our entitlement programs drive the nation into insolvency.
Many of these Republicans (joined by a few brave Democrats) are coalescing around a concept that would shift key programs from open-ended entitlements to fixed contributions, allowing individuals to make their own choices, say, on health care.
The House Republicans know they cant enact serious changes in entitlements as long as the Senate and White House remain in Democratic hands. Their aim, rather, is to make the case, to remind voters that time is running out, and set the stage for the 2012 campaign.
Past attempts at entitlement reform went badly for Republicans. President Ronald Reagan suggested Social Security cuts in 1982 and the GOP lost seats in Congress. Newt Gingrich tried to curb Medicare in 1995 and ended up aiding President Bill Clintons re-election. President George W. Bush pressed for Social Security reform in 2005 and got nowhere.
House Republicans, led by Budget Committee Chairman Paul Ryan, are betting that this time its different. If they shoot for the modest goal of preparing the ground for 2012, they have a chance to advance their arguments in the face of Democratic opposition, which will be backed up by media reports painting the Republicans as uncaring boors. If they press too hard and something like a government shutdown results, theyll lose.
Entitlement reform requires leadership from the president. The sad reality is that on this issue, our current president, judging by his recent budget, has abdicated.
Real progress awaits a successful GOP presidential candidate who can balance an entitlement-reform message with a buoyant economic program capable of jolting our stagnating economy back to life.