Republicans think they are so clever, having rammed through a massive expansion of the welfare state by giving drug benefits to the elderly. They co-opted the AARP--long considered to be in the pocket of the Democrats--and left the Democrats with no real domestic issue to run on. Hence, Republicans believe they have bought themselves an easy reelection next year at a cost of just $400 billion over the next 10 years.
In the very short run, they are probably right. As is the case with all entitlement programs, the benefits come first and the costs later. So, for a time, people believe they have gotten something for nothing. And for many, this is literally true. The first Social Security recipients paid virtually nothing into the system, but got benefits forever afterward. For this largesse, which Democrats used to buy reelection in 1940, every working American now pays far higher taxes than would be the case if those first Social Security recipients had been forced to play by the same rules.
So too for the drug benefit. The program doesn't even really start until 2006. Thus, between now and then, there will be no premiums collected, no private benefits lost, or any of the other costs associated with the program. For 2 years, in other words, Republicans and their new found AARP allies will be able to tell the elderly what a great thing they have done for them without any fear of backlash.
But sooner or later, there will be a backlash. Many retirees with good drug benefits from their employers will lose them for inferior Medicare coverage. Premiums will be collected and drug prices will rise from increased demand, reducing affordability even as the new benefits kick in. Then, seniors will come up against the bizarre rules of the program, where some drugs are covered and some are not, depending on one's income.
The Democrats, of course, will be there to explain every negative aspect of the program and exploit any discontent. Seniors will be led to believe that every problem would not exist if only Congress had adopted the Democratic plan instead of the Republican. If seniors will only vote for Democrats, everything will be fixed and seniors will get all the drugs they want at no cost.
Bruce Bartlett is a former senior fellow with the National Center for Policy Analysis of Dallas, Texas. Bartlett is a prolific author, having published over 900 articles in national publications, and prominent magazines and published four books, including Reaganomics: Supply-Side Economics in Action.
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