The Real Reasons The New Deal Is At Stake

The future of the New Deal—the social insurance state that has Social Security and Medicare as its twin pillars—is at stake in not just this, but coming presidential elections. In that, Mike Konczal and Bryce Covert writing in The Nation, are correct. Where they are wrong is the notion that prescriptions put forth by GOP vice-presidential candidate Paul Ryan constitute a clear and present danger.

Konczal and Covert’s article is a thoughtful one and a good read, but its analysis is fundamentally flawed. They critique Ryan on two basic levels—the first is his plan to block grant Medicaid money to the state, the second being his plans to start transforming Medicare into a voucher program.

It's misguided to say Paul Ryan's proposals threaten the New Deal--the only thing we have to fear is the status quo itself.

A block grant, simply put means the federal government gives the money for the health care program for the poor directly to the states. The criticism is that the money may be used for other means, such as low-income housing, or that in future years, if a state is financially strapped, they may cut the Medicaid budget.

The response to this is twofold—what if one state really has a greater need for low-income housing than it does for health care dollars? Is it so unthinkable that there could be a community where health care costs are lower than the national average, but there might be a housing shortage? It’s a flaw of modern left-wing thinking that it seeks to impose a one-size-fits-all social policy when every state—every community in fact—is different, and the government body closest to the people is best suited to decide what that is.

As to the concern over what might happen in the future, I suppose their scenario is possible. So are any other number of scenarios. The federal government is also financially strapped, and if China ever calls in our debt, we might have to cut Medicaid as it is. Or, presuming the federal government gets its fiscal house in order, they might respond to a future state crisis by increasing the size of the block grants.

It’s certainly possible that a block-grant proposal today could turn into a slash-and-burn effort tomorrow. Should this happen, I would then agree oppose such cuts. But the programs are best suited to run at the local and state levels and it’s far from a certainty that adoption of the Ryan plan today means the end of the New Deal tomorrow.

The Nation’s writers also criticize the move to adopt a voucher program in place of Medicare, arguing that the voucher could prove insufficient to cover costs. Well, no one is suggesting the voucher be worth five bucks. An essential part of any plan to voucherize the system would involve a debate on the size of the voucher, and again I would side with those who wanted to ensure it was sufficient. Ryan’s critics say that the size of the voucher is not guaranteed—again, let’s reiterate—what if our debt gets called in by the foreign investors who hold it? The mindset that the federal government is some omnipotent body, capable of giving guarantees where no one else can just isn’t backed up by the porous fiscal condition Washington is in.

Furthermore, since the potential doom scenarios The Nation sees are all decades down the line, let’s also point out the purpose of going to a voucher system is to bring market forces to bear, increasing competition among the suppliers of medical services and thereby having the natural effect of pushing price downward, as medical providers can no longer just bill the government. They’ll have to explain their costs and justify them to consumers like any other business.

If the critics of Paul Ryan’s plan are looking for some guarantee of what policymakers would do in 2062, none exists. But those same critics ought not pretend the status quo is filled with security. A look at the national debt makes that obvious and it’s why a true progressive position would look to move New Deal into the 21st century, not leave it frozen in time in 1935.

Dan Flaherty is the author of Fulcrum, an Irish Catholic novel set in postwar Boston with a traditional Democratic mayoral campaign at its heart, and he is the editor-in-chief of TheSportsNotebook.com

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3 thoughts on “The Real Reasons The New Deal Is At Stake

  1. Joe M says:

    Another way that The Nation articles analysis is flawed is that it doesn’t recognize the affect that voucher values will have on prices. Health-care providers will be forced to match their prices to the value of the vouchers or risk losing market share to competitors.

  2. GREG SMITH says:

    Dear Dan – Please allow my to use my once a trimester snarkiness ration here: So we have Franklin Delano Ryan and Elinor Ayn Rand?
    Pax~ Greg

  3. Ryan is No FDR but Romney Looks Like Nixon says:

    Your articles are even more bizarre than the stuff Lyndon LaRouche comes up with . . . Keep reading The Nation, though. That might help.

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