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Hey, Big Spender

IN A CLASSIC EPISODE OF “The Simpsons” that first aired in 1993, Grampa Simpson, the doddering family patriarch, unexpectedly starts receiving checks in the mail. But, rather than ponder the source of his good fortune, he just shrugs and takes the money. Eventually somebody asks, “Didn’t you wonder why you were getting checks for absolutely nothing?” Grampa answers, “I figured ’cause the Democrats are in power again.”

No, this was not a ham-handed effort to channel Fox News dogma through the network’s famous cartoon show. It was, rather, an accurate reflection of the Democratic Party’s public image in the early ’90s—one to which Washington pundits still cling tenaciously. Even though it’s George W. Bush and the Republicans who have been running up all the red ink lately, pundits continue to bash Democrats as pathological big spenders unwilling to confront the exploding costs of entitlement programs benefiting the elderly. Last month, when New York Times columnist David Brooks decided to chastise Republicans for excessive spending on the Medicare prescription-drug bill, he also made sure to indict Democrats “who loudly jeer at Republican deficits but whose own entitlement proposals would make the situation twice as bad.” And, on last Sunday’s edition of NBC’s “Meet the Press,” when the discussion turned to Bush’s Social Security privatization proposal, Joe Klein of Time derided Democratic opposition to it as just another example of the party’s shortsighted obstructionism. “The Democrats have, for the last 10 or 15 years, blatantly, shamelessly demagogued this issue,” Klein said. “They’ve offered nothing positive on Social Security or on Medicare or on Medicaid.” 

You can expect to read and hear many more quotes like these in the next few weeks. For the advocates of privatization, it’s an effective way of shaming Democrats into breaking ranks with the party leadership and embracing a compromise. For pundits and news reporters, it’s a quick and easy way to maintain the appearance of evenhandedness on the most politicized debate of the day.

But have Democrats really been as fiscally reckless as the Republicans? Recent history would seem to suggest otherwise. One of the most effective ways to prepare for future entitlement spending is to manage the budget responsibly now—since, among other things, lower deficits today mean less debt to pay off tomorrow. And, when Democrats have had the power to shape budgets in the last decade or so, that’s exactly what they have done. In 1993, President Clinton ditched campaign promises for substantial public works spending in order to concentrate on reducing the deficit, pushing through his budget with nary a Republican vote. Later in the decade, when the booming economy turned those reduced deficits into actual surpluses and Republicans were salivating over the prospect of lucrative new tax breaks, Clinton responded by arguing that government should keep paying down its existing debt in order to “save Social Security first.” In 2000, Al Gore promised more of the same, vowing to create a “lockbox” that would legally guarantee that monies now spent retiring the government’s debt would be used to finance Social Security. The worthy (if widely mocked) idea died with his presidential bid. But Democrats have continued to press the case for fiscal responsibility since then, frequently proposing to repeal Bush’s deficit-inducing tax cuts or, at the very least, allowing them to expire in 2011. 

One reason Democrats don’t get much credit for this sensible budget stewardship is that they won’t embrace the radical overhauls of entitlement programs that the Republican majority, which controls the political agenda, has put up for discussion. But the Democrats have perfectly valid reasons for opposing those changes. Never mind that privatizing Social Security or turning Medicare and Medicaid into voucher schemes would expose retirees to much greater financial risk. It turns out that Republican plans for these programs don’t even do a very good job of making the programs more affordable. After all, it’s the Republican plan for Social Security privatization that anticipates the federal government borrowing trillions of dollars in “transition funds” in order to pay current beneficiaries while younger workers start their investment accounts. (Privatization advocates argue that these transition costs don’t matter, because they merely force the government to take out a loan equal to the amount it already owes—as an implicit debt—to future retirees. But many economists worry that the bond markets will react much more harshly to this new, “explicit” debt.) And it’s the Republican plan for Medicare that lards up the program with tens of billions of dollars in subsidies to the private insurance industry. (Remember, Democrats advocated a much more cost-effective approach that envisioned the government using its massive bargaining power to negotiate cheaper pharmaceutical prices.) Writers like Brooks and Klein may still prefer conservative entitlement reforms on purely philosophical grounds; Klein, for one, seems to think the whole concept of social insurance is a relic of the industrial age. But, then, Democrats are hardly being demagogic for saying they don’t agree. They’re merely standing up for a different set of values. 

Democrats deserve a little more credit in the budget debate for one other, highly underappreciated action. When you look at the long-term picture for the federal budget, financing future Social Security benefits are really just a small part of the problem. The real trouble is with the price of the two government health insurance programs, Medicare and Medicaid. And, while the aging of the population has a lot to do with this—one-quarter of Medicaid spending is on the elderly—so does the skyrocketing cost of medical wares and services. Assuming Americans decide they don’t want to keep spending so lavishly on their health, they will have to come up with an agreeable method for deciding exactly what medical care they do want to pay for. The honest way to do this would be to put forward an ambitious health care reform plan and confront, head-on, all the trade-offs between spending, access, and quality of care. A decade ago, one political party tried to do this. The other answered with grotesque demagoguery. Guess which party did which. (Hint: Think Harry and Louise.)

Of course, a senile old man like Grampa Simpson could be forgiven for forgetting this bit of history. But what’s the pundits’ excuse?

This article appeared in the March 21, 2005 issue of the magazine.