First Lady's Garden, Like Obamacare, Will Prove Hard to Uproot
Michelle Obama has spent a long time building a “kitchen garden” for the White House, intended as an example to the nation of local eating and healthy food. Now that she’s leaving the White House, she doesn’t want to see it wither away.
Obama Wednesday afternoon will formally unveil a much bigger version of the garden that uses cement, stone and steel to make it a more permanent fixture on the South Lawn. The updates are seen not just as preserving Obama’s garden -- recognized globally as a symbol of local food -- but also as a way to dissuade, say, a President Donald Trump from scrapping it the way Ronald Reagan tore out Jimmy Carter's solar panels after he moved into the White House.
A truly dedicated anti-garden fanatic could, of course, just call in the bulldozers. But this will make it more difficult, expensive and noticeable to do so. By itself, this is a mildly amusing instance of a political figure trying to reach into the future and prop up her own legacy. But it’s actually an example of a much bigger political phenomenon, one that matters a great deal for both our political system and our economy.
Take the Social Security system. There’s no particular reason to fund it the way we do -- with a flat payroll tax on a certain amount of income. It would be just as economically efficient, and perhaps more so, to fund it out of regular tax revenue, instead of weirdly bifurcating the personal income tax into two components. It would also arguably be fairer to pay a single, flat benefit to everyone, instead of tying the benefit to wages. Until very recently, no one drawing Social Security payments had put more into the system than they were taking out, so what was the argument for giving people more benefits simply because they’d been richer when they were working?
That argument can be summed up by a remark attributed to FDR: “With those taxes in there, no damn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.”
Politicians, you see, face a problem. They can pass all the splendid programs they want, but there’s always a risk that some future politician will come along and unpass them. Bureaucrats have a similar issue: spend a long career crafting careful rules, and see your successor undo them. So they tend to have a preference for programs that create what’s called “lock-in,” making them politically expensive to undo.
The easiest way to get lock-in is to create a class of beneficiaries who obtain a very large and easily quantifiable benefit from your program. A tax break that is worth $3 apiece to every voter in America has very low lock-in. A tax break that hands $3 million apiece to 15 beneficiaries, each of whom regards that as a large sum of money worth fighting for, ironically has more lock-in than the more widespread but smaller-benefit program, because those 15 people will organize and fight tooth and nail to preserve it, and the costs are spread very thin over a very large group of taxpayers who will not organize to fight them. And a program that constitutes a significant fraction of the annual income of a large class of people with a lot of time to politically organize, all of whom believe that this is not a welfare benefit, but something they have earned through a lifetime of contributions into the system … well, there’s a reason that Social Security reform is called the “third rail of American politics”: touch it, Mr. Politician, and you die.
The problem with lock-in is that it reduces the ability of future politicians to respond to future crises and future needs that earlier generations might not have imagined. Over time, the number of locked-in programs increases to consume more and more of the federal budget, most of which ends up immune to cuts or even reform.
The other problem is that a locked-in program that doesn’t work right can create disaster.
Obamacare is a good example of a program with substantial lock-in. It is not very popular, and it has created large problems in the market for individual health insurance policies. And yet it is also firmly locked in place, because its design centers around four components, all of which depend on each other to work properly:
- Guaranteed issue: Insurers cannot turn patients away
- Community rating: Insurers cannot charge sick patients more money
- Mandate: People have to be insured, or pay a penalty
- Subsidies: People who can’t afford policies get subsidies
The first two policies are broadly politically popular, and because the topic of health insurance is very emotional, they are very hard to repeal once you’ve got them. Subsidies are, as with most subsidies, popular with folks who get them and unpopular with folks who don’t. The mandate is hated by basically everyone except health-care wonks.
This creates a bit of a problem for would-be reformers on both sides. No one wants to increase the mandate, which is probably the most important step toward fixing the current problems with Obamacare. Subsidies -- which means more taxpayer cash spent on an unpopular program -- will be more popular, but not much. On the other side of the aisle, "repeal and replace" is out of the question, because the two most popular parts of the program are also the ones that will systematically destroy the market unless they’re attached to the unpopular parts.
So where do we go from here? As I wrote the other day, that’s hard to see. We’re locked into a program that doesn’t work, and no one seems to have the key.
On the other hand, if a program is bad enough, it will -- eventually -- unlock itself. States have experimented before with guaranteed issue and community rating, without a mandate and subsidies to offset them. Predictably, this started those markets off on the dread death spiral. That has been rectified by Obamacare, which has been a big net improvement for individual markets in states like New Jersey and New York. (A weak mandate is better than none.) In Washington State, however, the reckoning came too soon for Obamacare to help. Instead, after the last insurer exited the market, the state ended up dramatically weakening the guaranteed issue, allowing insurers to wait up to nine months to cover people with pre-existing conditions.
Republicans may yet be able to repeal and replace: All they have to do is wait until it is virtually impossible to buy an individual policy in the U.S. It’s not easy to undo any policy that serves powerful interests or has popular support, even one as small as a kitchen garden. But one approach is to wait until it no longer serves powerful interests or has popular support -- when the program is entirely taken over by weeds.
Without community rating, guaranteed issue is meaningless, because the insurer can just say: “Sure, I’ll sell you a policy. $10 million a month.” Without a mandate, guaranteed issue and community rating will destroy the insurance markets, because people will wait to buy insurance until they get sick, and consequently, the price of the insurance will skyrocket to the point where no one wants to buy it. Without the subsidies, you can’t have a mandate, because you end up penalizing folks who are already too poor to buy insurance -- and without a mandate, the subsidies are hard to sustain, because guaranteed issue and community rating keep pushing up the cost of insurance.
On the other hand, historical experience suggests that it has to be pretty bad. States like New York and New Jersey kept the provisions, sometimes with minor modifications, even as the number of insured people plunged. (Between 1994 and 2009, the number of people on the individual market in New York State declined by 96 percent.)
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