The Wall Street Journal - USA (2020-12-03)

THE WALL STREET JOURNAL. Thursday, December 3, 2020 |A

R

epublicans and Democrats

in Washington are stale-

mated on health care. Re-

publicans long cam-

paigned on repealing the

Affordable Care Act and won House

and Senate seats on the issue in

2010 and later. Democrats flipped

the script in 2018 and attacked Re-

publicans for trying to undermine

the law’s protections for pre-existing

conditions. But for now at least, a

President Biden will be unable to

pass a “public option,” and Republi-

cans will be unable to repeal the Af-

fordable Care Act. The question the

GOP ought to ponder is: What does

it want to accomplish on health

care?

Mr. Biden may make changes on

the margins. He might expand

ObamaCare by adding special enroll-

ment periods, banning short-term

health plans, automating enrollment

for low-income beneficiaries in

states that haven’t expanded Medic-

aid, or by making subsidies more

generous. Republicans will likely

continue challenging the law in

court.

Opposition to ObamaCare and a

single-payer health system kept Re-

publicans united but unprepared to

act when they controlled the White

House, House and Senate in 2017.

The GOP repealed the individual

mandate penalty, health-insurance

tax, medical-device tax and Cadillac

tax, but the Affordable Care Act re-

mains largely intact. Conservatives

must now use their time to prepare,

so they won’t be caught flat-footed

next time they are in charge. Con-

sider three questions:

• Do conservatives continue fight-
  ing for a full repeal of ObamaCare
  spending and taxes, or do they ac-
  cept current spending as the base-
  line?Republicans have a history of
  saying they want to repeal Obama-
  Care, but using some of the dollars
  on other health-care priorities, and
  spending the rest on balancing the
  budget. Sens. Lindsey Graham and
  Bill Cassidy proposed block-granting
  the law’s Medicaid spending to
  states. Some Republicans have pro-
  posed redeploying ObamaCare’s ex-

Can GOP Find Its Way on Health Care?

change subsidies and Medicaid fund-

ing into more market-friendly

refundable tax credits and high-risk

pools.

It is easier politically to spend

money differently than to spend less,

or to try to offset some of the

spending with savings elsewhere in

the budget. The Congressional Bud-

get Office won’t score enough sav-

ings through various fraud and

waste initiatives to fund the signifi-

cant coverage subsidies many Re-

publicans want to offer voters accus-

tomed to ObamaCare. Conservatives

have thus suggested policies like liti-

gation reform, prescription-drug

savings, premium support in Medi-

care, and Medicaid savings through

block grants with slower growth

rates and state flexibility.

A large, and controversial, source

of revenue would be reforming the

tax code’s exclusion of employer-

sponsored insurance. Whereas Presi-

dent Obama tried imposing a 40%

excise tax on high-cost employer

health plans—the Cadillac tax—some

conservatives have proposed con-

verting the exclusion into a fixed de-

duction. Proponents argue that these

changes would discourage inefficient

health-care spending and make the

code fairer toward people who don’t

get insurance through employers.

Unions want to preserve the exclu-

sion because they take credit for ne-

gotiating generous employer plans.

Some conservatives worry about de-

stabilizing a pillar of the private

health system.

• Do conservatives fight for aspi-
  rational goals or negotiate for incre-
  mental gains? Republicans could
  outline how to overhaul the health-
  care system along principles of pa-
  tient autonomy. They could offer
  policies to expand health savings ac-
  counts, create portable coverage to
  encourage professional and geo-
  graphic mobility, allow interstate in-
  surance competition and purchasing,
  provide universal, affordable cata-
  strophic coverage, and reduce the
  scope of government programs in fa-
  vor of private coverage. These poli-
  cies are unlikely to be enacted under
  Mr. Biden, but the GOP can offer a
  contrasting vision to voters.
  Conservatives could instead seek
  to find common ground with Mr. Bi-
  den on more-modest changes. They
  could write policies to discourage in-
  dividuals from dropping private cov-
  erage in favor of taxpayer-subsidized
  coverage, expand the use of “value

based” purchasing in government

programs to reduce costs and im-

prove health outcomes, reduce the

burden of pharmaceutical research

and development costs paid by

American patients, expand the use of

telehealth, end surprise billing, pro-

mote price and quality transparency,

and make it easier for patients to ac-

cess and protect their health data.

Republicans could aim to preserve

the existing private health-care sys-

tem by making common cause with

Democrats interested in protecting

ObamaCare and opposing Medicare

for All and other government-run

plans. Such an alliance, born out of

expediency, would enjoy strong sup-

port from lobbyists.

• Do conservatives care more
  about cost saving or coverage?Mr.
  Obama marketed his plan as bending
  the cost curve down, knowing Amer-
  icans cared more about affordability,
  but then made coverage his real
  goal. The result of this bait-and-
  switch was Medicaid expansion and
  ACA plans with high deductibles and
  skinny networks. Ignoring the politi-
  cal imperative to reduce costs
  caused the resulting backlash and
  prolonged fight to repeal Obama-
  Care. Most Americans liked their
  doctors and coverage, but felt they
  were paying too much. Mr. Obama
  was more successful at shifting costs
  to taxpayers than reducing costs.
  Democrats attacked Republicans
  successfully on health care in 2018
  and 2020 and turned ObamaCare
  into a political positive by emphasiz-
  ing protections for people with pre-
  existing conditions. They will repeat
  this political playbook until it stops
  working. Republicans, including
  President Trump, repeatedly prom-
  ised they would provide protections
  without offering details. The media
  will measure Republican plans
  against existing coverage levels.
  Republicans must learn to win
  elections on health care, not merely
  avoid losing. They can start by figur-
  ing out what they support, not just
  what they oppose.

Mr. Jindal was governor of Loui-

siana, 2008-16, and a candidate for

the 2016 Republican presidential

nomination.

By Bobby Jindal

CQ-ROLL CALL/GETTY IMAGES

Opposing the ACA is no

longer enough to win

elections. The party needs

its own vision of reform.

Reps. Kevin Brady (R., Texas) and Greg Walden (R., 0re.) in 2017.

OPINION

Walter

Williams,

R.I.P.

By Donald J. Boudreaux

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The White House Favors a Bridge to Recovery

T

hanks to the underlying

strength of the Trump econ-

omy on the eve of this pan-

demic, America’s economic recovery

to date has exceeded even the most

optimistic forecasts. With several

mass-produced vaccines now in

sight, it is essential that Congress

provide a timely, targeted and tem-

porary fiscal bridge to ensure that

American households and firms have

the support they need to keep the

recovery on pace.

This year the U.S. economy was

hit by the worst macroeconomic

shock in almost a century. Real

gross domestic product in the sec-

ond quarter fell 31.4% at an annual

rate. Unemployment jumped to

14.7% between February and April as

more than 20 million Americans lost

jobs.

Thanks to unprecedented action

by the Trump administration and

Congress, the unemployment rate is

now 6.9%. Real GDP growth is on

pace to end the year down by about

2 percentage points. While substan-

tial, that would be a smaller con-

traction than in 2008, and only one-

fifth of the drop predicted by the

Organization for Economic Coopera-

tion and Development.

This robust recovery notwith-

standing, the U.S. still faces signifi-

cant headwinds from the pandemic,

which has restructured transporta-

tion, entertainment, hotels, restau-

rants and commercial real estate.

Adding to these structural woes is

the prospect of renewed lockdowns

across the 50 states.

Timely, targeted relief would do

more than sustain the swift recovery

of the labor market. It would also

help realign federal receipts and

outlays more quickly, as nothing

blows a hole in long-run fiscal sus-

tainability like a large, persistent

output gap.

Additional economic aid should

contain at least three elements.

First, small and medium-size busi-

nesses and their employees would

benefit immediately from reautho-

rizing the highly successful Paycheck

Protection Program. This $669 bil-

lion program provided forgivable

loans to more than five million busi-

nesses to support payroll costs.

Recent estimates suggest PPP,

with an average loan size of only

$101,000, may have supported as

many as 51 million jobs, and saved

as many as 13.6 million. While the

availability of unspent PPP funding

suggests most firms that wanted a

loan were able to obtain one in prior

rounds, a recent survey by the Na-

tional Federation of Independent

Businesses found that 75% of small

businesses reported they would, if

they could, apply or consider apply-

ing for a second PPP loan to avoid

layoffs. Congress could easily pro-

vide this support by simply reautho-

rizing the remaining $135 billion in

untapped PPP funds left over from

the Cares Act.

Second, an expanded Employee

Retention Tax Credit would help

prevent layoffs as we head into a

winter of new restrictions on busi-

nesses. An expanded ERTC is impor-

tant because eligibility restrictions

in the original Cares Act likely lim-

ited the uptake. To qualify, firms

had to be subject to a Covid-19-re-

lated closure order or quarterly

year-over-year revenue decline of

more than 50%, and the credit only

covered the wages of workers not

providing services.

A more generous ERTC with ex-

panded eligibility and an extension

to net new hiring (rather than reten-

tion of payroll employment) would

help preserve quality job matches

between employers and employees.

It would also support re-employ-

ment of workers previously laid off

during the pandemic.

An expanded ERTC appears to

have strong bipartisan support. It’s

included in the Democratic “Heroes”

and the Republican “Heals” aid bills

currently pending on Capitol Hill.

Third, President Trump has pro-

posed additional support to house-

holds similar to what was offered in

Cares. Single tax filers received a

$1,200 rebate; married couples filing

jointly received twice that; and ev-

ery child added $500 to the rebate

total. Unemployed workers also re-

ceived a significant supplement to

unemployment insurance. Both types

of support need a calibrated reload

that strikes the right balance be-

tween income support and facilitat-

ing re-employment.

By targeting income replacement

for the most vulnerable households,

such household support would help

ensure that consumer spend-

ing—70% of U.S. output—is resilient

to potential labor market weakness

in coming months.

A new economic package based

on these three elements should be

thought of not as a stimulus but as

a fiscal bridge between now and the

widespread availability of a vaccine.

With several mass-produced vac-

cines now in sight, the argument for

additional measures to preserve em-

ployer-employee matches is strong.

If we learned anything from the

Great Recession, it is this: The wide-

spread severance of quality matches

between employers and employees

can result in a protracted recovery,

with both labor and goods markets

operating at less than full capacity,

and workers and firms forced to en-

gage in costly searches. Such a pro-

tracted recovery can be avoided by

rapid action.

There is also this harsh reality to

consider: A lot of organizational

capital—operational knowledge and

efficiencies—is embedded in Amer-

ica’s small and medium-size enter-

prises. If these firms cannot survive

the coming months, then those jobs

and all that organizational capital

will be lost forever.

Mr. Goodspeed is acting chairman

of the Council of Economic Advisers.

Mr. Navarro is director of the Office

of Trade and Manufacturing Policy.

By Tyler Goodspeed

And Peter Navarro

Federal relief so far has

exceeded expectations, and

a new round could sustain

growth until vaccines arrive.

A

merica has lost one of its great-
est economists and public in-
tellectuals. Walter Williams
died Wednesday morning after teach-
ing his final class at George Mason
University on Tuesday. He was 84.
For 40 years Walter was the heart
and soul of George Mason’s unique
Department of Economics. Our de-
partment unapologetically resists the
trend of teaching economics as if it’s
a guide for social engineers. This re-
sistance reflects Walter’s commit-
ment to liberal individualism and his
belief that ordinary men and women
deserve, as his friend Thomas Sowell
puts it, “elbow room for themselves
and a refuge from the rampaging pre-
sumptions of their ‘betters.’ ”

A onetime cabdriver who grew up
poor in Philadelphia, Walter knew
injustice—and understood the way
to fight it wasn’t by emoting but by
probing and learning. In 1972 he
earned a doctorate in economics
from the University of California,
Los Angeles, where he learned to
look beneath surface phenomena for
deeper causes and consequences.
His pioneering 1982 book, “The
State Against Blacks,” is an eloquent,
data-rich broadside against occupa-
tional licensing, taxicab regulations,
labor-union privileges and other
fine-sounding government measures
that inflict disproportionate harm
on blacks by restricting the employ-
ment options and by driving up the
costs of goods and services.
The economics profession boasts
many excellent minds, but it has
precious few with the ability and in-
terest to do rigorous research and to
engage the public with its results.
Milton Friedman was such a scholar,
as is Thomas Sowell. Walter was in
their league. From his appearance on
Friedman’s PBS program “Free To
Choose” (1980) through his stints as
guest host of Rush Limbaugh’s radio
program to his syndicated column,
Walter brought economic lessons to
life in a way few others could.
Behold his brilliant explanation of
how minimum wages promote em-
ployment discrimination: “What
minimum wage laws do is lower the
cost of, and hence subsidize, racial
preference indulgence. After all, if
an employer must pay the same
wage no matter whom he hires, the
cost of discriminating in favor of the
people he prefers is cheaper. This is
a general principle. If filet mignon
sold for $9 a pound and chuck steak
$4, the cost of discriminating in fa-
vor of filet mignon is $5 a pound,
the price difference. But if a law
mandating a minimum price for
chuck steak were on the books at,
say, $7 a pound, it would lower the
cost of discrimination against chuck
steak.”
Observing dilapidated and aban-
doned housing in New York and other
cities, Walter blamed rent control,
which dampens landlords’ incentive
to maintain their properties and even
creates an incentive to destroy them
and collect insurance proceeds.
“Short of aerial saturation bombing,”
Walter observed, “rent control might
be one of the most effective means of
destroying a city.”
The author of 13 books, dozens of
academic papers and countless popu-
lar essays, Walter was a scholar’s
scholar. He was one of America’s
most courageous defenders of free
markets, constitutionally limited
government and individual responsi-
bility. I will miss him as a friend. The
world will miss him as a tireless
champion of American values.

Mr. Boudreaux is a professor of eco-
nomics at George Mason University.

His research was rigorous,

and he was one of the few

economists who know how

to engage with the public.

Lamar Alexander (R., Tenn.), who

is retiring at the end of this term,

speaking on the Senate floor Dec. 2:

More than ever, our country

needs a United States Senate to turn

pluribus into unum, to lead the

American struggle to forge unity

from diversity....Divided govern-

ment offers an opportunity to share

the responsibility—or the blame—for

hard decisions, such as controlling

the federal debt.

Now, some advocate another way

to operate the Senate. End the fili-

buster, the Senate’s best-known tra-

dition. Don’t worry about working

across party lines. Pass everything

with a majority vote.

Let the passions of the people

roar through the Senate. If you’re a

Democrat: Abolish right-to-work

laws. Repeal limits on abortion. Pass

restriction on guns.

This is very appealing—if you are

in the majority of the moment.

But what about when the other

party is in charge and the freight

train roars in the other direction,

this time to impose National Right

to Work, pro-life and gun-rights

laws?

Is such back and forth and back

and forth what a fractured country

really needs?

That is why the framers created

the Senate, to be the cooling saucer

for the passions that President

Washington talked about. And the

filibuster—the right to talk your

head off until you force a broad

agreement—is the pre-eminent tool

we use to force those passions into

a compromise that most of us can

vote for and that the country can

live with.

Alexis De Tocqueville, the young

Frenchman who wandered through

the United States in 1831 and 1832

and wrote the best book yet on de-

mocracy in America, saw two great

dangers for the young country: Rus-

sia and the tyranny of the majority.

Ending the filibuster would un-

leash the tyranny of the majority to

steamroll the rights of the minority.

It doesn’t take a genius to figure

out how to gum up the works of a

body of 100 that operates mainly by

unanimous consent. Here’s my view:

It’s hard to get here, hard to stay

here, and while you’re here, you

ought to try to accomplish some-

thing good for the country. But it’s

hard to accomplish something if you

don’t vote on amendments. Lately,

the Senate has been like joining the

Grand Ole Opry and not being al-

lowed to sing.

You don’t have to eliminate the

filibuster to restore the Senate to its

traditional role of working across

party lines to solve big problems.

...Wedon’t need a change of rules.

The Senate needs a change of behav-

ior. And the behavior that needs to

change first is for individual sena-

tors to stop blocking amendments of

other senators. If you are opposed to

something, you ought to vote no.

Why stop the entire body from con-

sidering the amendment? Why join

the Grand Ole Opry if you don’t want

to sing?

Notable& Quotable: Saving the Senate