And you thought his first term was a nightmare. What Bush has planned for America if he wins.

[Guest guest]

http://www.salon.com/opinion/feature/2004/08/25/bush_second_term/index.html

 

Salon.com

 

And you thought his first term was a nightmare

What Bush has planned for America if he wins.

 

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By Charles Tiefer

 

 

Aug. 25, 2004 | President Bush's plans for a second

term threaten a devastating series of far-reaching

challenges to the viability of the Democratic Party

itself. Under Bush's slogan of an " ownership society, "

the Republicans intend a long-term effort, using

changes in Medicare, Social Security and taxes to pit

better-off and worse-off Democrats against each other,

offering all-but-irresistible incentives for some to

desert the others -- and any progressive national

coalition. Congressional Democrats reeling from the

impact of the last four years of Republican government

in the White House and Congress (apart from the brief

Democratic-controlled Senate in part of 2001-02) will

find no respite in the platform's subtext about the

party-splitting wedges ahead. A second-term Bush

agenda will constantly impale Democrats on the dilemma

of abandoning their poorer, sicker, older and minority

groups, or seeing their better-off, healthier and

younger members lured off to the other party. If it

sounds like a political nightmare for the Democrats,

that's because that's what it is planned to be.

 

Medicare

A prime provision of the Republican platform touts

Bush's Medicare act of late 2003, focusing public

attention on the drug benefit provisions and such

nice-sounding themes as providing more healthcare

choice and having a free market in healthcare.

Meanwhile, the Republicans distract attention from the

less visible part of the 2003 act, the Medicare

Modernization Act (MMA), which made the most radical

alteration to Medicare in years. These Medicare

maneuvers occurred with the typical Republican

stealth; the act was written in a closed-door

conference committee that excluded meaningful

Democratic input and rammed through Tom DeLay's House

of Representatives by a single vote late at night as

the rule for debate was extended for hours while

moderate Republican doubters were coerced with

threats.

 

Traditional Medicare unifies seniors into a group that

can come together to defend it because it enrolls

everyone in its public fee-for-services plan. The MMA

begins the political splitting of seniors by adding a

new private Preferred Provider Organization option,

dubbed in Orwellian fashion " Medicare Advantage. "

 

Medicare Advantage drains Medicare's total funding by

giving away billions in lopsided subsidies to the

private insurers who provide such plans, with the

expectation that they can pocket most of those

subsidies as profits and yet still offer incentives to

some seniors to join. For example, such plans can

provide the seniors they entice to sign up with a drug

benefit plan without all the cutoffs and ceilings that

make Bush's standard Medicare drug benefit plan a

hollow offering for many seniors. But the insurers

enroll only the healthier and better-off seniors into

these plans. As a result, traditional Medicare, which

must carry an increasingly concentrated share of the

costlier patients, gets perceived as overspending per

patient. This benefits Bush's corporate backers in the

insurance industry who have the healthier, inexpensive

beneficiaries to generate profits without any

particular efficiency by the insurer itself.

 

Then, another part of Bush's MMA sets up " premium

support demonstration projects. " Under the new rules,

competition between traditional Medicare and private

plans will sharply force up the premiums seniors pay

for traditional Medicare. At their start, these

projects will affect about 6 million of the 41 million

people in Medicare and will expand later. When

Republicans have their way, the harsh consequences,

such as 30 percent hikes in premiums, would be imposed

on seniors who, for geographic and other reasons (for

example, they live in Democratic voting states, they

are working poor), Republicans see no reason to spare.

Again, in these project sites, healthier and wealthier

seniors, who can take the risk of leaving traditional

Medicare, would depart for private insurers.

 

Once that happens, the whole senior population would

be split into two antagonistic camps. The sicker and

poorer group would be forced to stay behind in

traditional Medicare, which would suffer increasing

underfunding. However, the healthier and wealthier

group of seniors moving into Bush's private plans

would be well taught to identify their interest with

the Bush-supporting private insurers. Both the

insurers, and this group, would see merit in

supporting tough cost-savings in the traditional

Medicare group -- treating it increasingly the way

stingy states treat Medicaid beneficiaries.

 

Some tough measures against traditional Medicare's

increasingly beleaguered beneficiaries may include

folding some poorer Medicare beneficiaries into their

state's Medicaid program -- a rough fate in states

that take full advantage of potentially lax federal

oversight -- or perhaps even moving some parts of the

Medicare population further toward the Republican

ideal of a capped voucher system. Once the Republicans

have such a capped voucher system, they can make

further cuts from time to time that put all the fiscal

pain of the system's limits, including its industry

subsidies, on those who can least bear it.

 

Politically, the healthier and wealthier group would

eschew the classic seniors' thoughts that traditional

Medicare deserves protection and that Republicans are

not protecting it. That political trend would become

especially strong because the MMA includes a

fast-track provision that could be traditional

Medicare's death warrant. This provision, in

circumstances that portend a larger Medicare draw upon

general revenues, puts Republican-style changes, like

benefit cuts, on a fast track through the House,

rigged to work even if miraculously the Democrats

regain procedural leadership. Democratic-style

changes, like restructuring the self-serving drug

industry, would of course be stymied. With traditional

Medicare seeming to be doomed, those who could would

depart, not defend it.

 

In every election thereafter, an alliance of drug

companies, insurers and other Republican supporters

would spend heavily in floods of easily understood,

simplified advertising to label the Republicans as

Medicare's saviors through so-called choice for

beneficiaries, while labeling the Democrats as

draconian tax increasers (who would also be implicitly

stigmatized as defending minorities). As Medicare's

beneficiaries increasingly separate into two classes,

one of them susceptible to Republican lures, a unified

and vigorous Democratic defense of Medicare would

either crack up or lose key support through desertion.

 

Social Security

Bush's vision of a so-called ownership society is code

language for dismantling not only Medicare, but also

the existing Social Security system and replacing it

with a system by which individuals' contributions go

into personal accounts. Even Bush's handpicked

commission got nowhere on solving the huge problem of

financing the transition from the current

pay-as-you-go system to Bush's privatization scheme.

Perhaps Bush will continue simply presenting his

vision as an unfunded mirage. Or, in order to provide

some actual funding for the change, a Bush victory

would be the context in which to unveil a new tax that

hits people harder the less they have, like a

value-added tax that works like a sales tax but is not

separated out and visible. Either way, Republicans

could pitch to younger and better-paid workers who see

no personal payoff right now in their paycheck

deduction for Social Security.

 

Ordinarily, proposing a new federal tax akin to a

national sales tax would involve too much risk for

Republicans. However, the risk might drop if it were

introduced as a way to end Social Security taxes, at

least in part. As with Bush's tax cuts and the 2003

Medicare act, a long rosy-hued public phase of talking

up the wonders of the proposal would get it through

the House and Senate into a conference committee.

Under cover of political darkness, this conference

committee would produce quietly and in

hard-to-decipher form the actual law that transfers

funds on a broad scale from the have-nots to the

haves.

 

In any event, through this plan, whether or not it's

funded by something like a national sales tax, Bush

would make a play to split younger from older

Democrats. As with Medicare, he would shred the

concept of a social safety net for all -- a unified

protection for the national community. In election

campaigns, Democrats, for trying to hold that unified

protection together, would be depicted as -- no

surprise here -- simple-minded excessive taxers, this

time as to the payroll taxes.

 

Taxes

Democrats may look at the Republican platform's call

for more tax cuts and assume it just means an effort

to extend in time the tax cuts of 2001 and 2003. That

alone would be painful enough for Democrats and for

the country. The Congressional Budget Office recently

confirmed that a third of President Bush's tax cuts

have gone to the top 1 percent of income. And the CBO

estimates show that of the $10 trillion of newly

piled-on debt anticipated from Bush's actions from

2002 to 2014, Bush's tax cuts (including their

renewal) would amount to $5.5 trillion -- an enormous

debt burden that will fall primarily on the middle

class.

 

However, digging a little deeper, Bush's proposals

carry a stealth plan to pit middle-class and worse-off

Democrats against each other. Nina Olson, the Internal

Revenue Service's national taxpayer advocate, gave a

largely overlooked taste of this on June 23 in Chicago

at the National Community Tax Coalition's conference

of advocates for low-income taxpayers.

 

Olson warned the group that the earned income tax

credit (EITC), the tax code provision that aids the

working poor, could fall under the knife that tax

writers will wield in coming years. Until now, even

Bush, with his zeal to play reverse Robin Hood, has

not dared to openly propose assailing the popular and

efficient EITC. Olson points to the EITC's

vulnerability in the context of an impending crisis

arising from the alternative minimum tax (AMT), the

additional income tax that kicks in principally for

those who take certain specific deductions. " Unless

you get attuned to the conversation of how the tax

system is going to deal with the AMT, you will be left

in the dirt, " she said.

 

The AMT taxes incomes at a flat rate of 26 or 28

percent, and omits certain key deductions allowed from

the regular income tax, notably state and local income

taxes. Unlike the regular income tax brackets, which

are indexed for inflation, the AMT's thresholds are

not. So, the AMT will kick in at levels that stay the

same despite inflation -- levels that look

increasingly middle-class for those who have sizeable

deductions for state and local income taxes -- while

the high-rate income tax brackets kick in only at

higher income levels due to tax cuts and inflation.

This means that, absent relief, in a few years the AMT

will impose scores of billions of dollars in taxes

that the middle class would have been spared from

paying as regular income taxes.

 

In plain English, if you're in the middle class, it's

likely you have been paying only your regular income

tax, but in a few years you'll find yourself paying

not just that but also an increasingly hefty AMT.

(Bush's tax cuts in 2001 and 2003 gave very short-term

fixes to this problem. But those short-term fixes

expire at the end of 2005, after which the AMT will

increasingly become a burden on the middle class.)

 

Now here is an especially devious aspect of the

Republican plot. Republicans did not show the interest

in a long-term fix for the AMT in 2001 that they

showed for slashing the estate tax, or in 2003 for

chopping the tax on corporate dividends. After all,

those are taxes that irritate very wealthy

Republicans. By contrast, it so happens that the AMT's

rise creates a much bigger problem for Democrats than

Republicans. The states and localities that levy

income taxes tend to be more Democratic, like

California and New York, than the states that do not,

like Texas. So that's where the taxpayers are whose

income tax, but not their AMT, is reduced by deducting

state and local income taxes -- and who will find

themselves paying lots of AMT in a second Bush term.

Thus the AMT performs the politically dangerous trick

of surcharging Democratic areas and sparing Republican

ones.

 

In fact, the partisan effect of leaving the AMT

without a long-term fix is so potent that an article

in the tax journal Tax Notes during the passage of

Bush's 2001 tax bill had the stark headline, based on

the AMT's long-term effect, " No Tax Cuts for the Gore

States. " Change " Gore " to " Kerry " or just plain

" Democratic " and the post-2005 prospect becomes

alarmingly clear.

 

In order to close the jaws of this political trap, in

2005-06 a Republican Congress and president will

repeatedly and visibly put congressional Democrats to

the politically lethal dilemma of having to vote on a

package that patches the AMT and slashes the EITC. How

would this work politically for the Republicans?

Abolishing the AMT would cost $85 billion, and could

be matched by a repeal of low-income tax credits,

principally the EITC, thereby imposing $74 billion in

taxes on the working poor, according to Olson. Forced

to vote on such a package, some Democratic members may

vote in favor of the measure to avoid the wrath of

their own states and districts that otherwise face an

increasing share of the federal tax burden as the AMT

increases for them. But such votes to slash the EITC

would then turn off the party's base among the working

poor.

 

Thereafter, near election time, the Republicans would

spend heavily on easily understood, oversimplified

negative advertising to label the Democrats, whichever

way they vote, as tax increasers for either their

geographic or economic bases. Meanwhile, Bush could

use whatever funds, such as even more piled-on debt,

he wishes to devote to more regressive tax cuts, for

those measures -- like repealing estate tax for

estates of unlimited size -- which, unlike cutting the

AMT or maintaining the EITC, put money in bulging

pockets of his own high-income constituency.

 

The basic pattern is clear. The 2004 Republican

platform and the program for a second term provide the

blueprint for long-term Republican entrenchment in

office. Bush intends to split the Democratic coalition

by devastating the social gains the nation has created

to guard against the worst effects of economic

downturns, gross inequalities and the health

vulnerabilities of the old.

 

Some observers may comfort themselves with the

reassurance of a pendulum theory of government, in

which even if Bush wins and presides over a unified

Republican government, he may still have no popular

mandate to pursue such a program. In this complacent

view, the pendulum may have swung right at the

present, but it must swing back, not onward even

further toward the far right. But Bush and Karl Rove

have proved they do not passively await popular

mandates or pendulum swings. They have already done

much of the preparatory work for their radical plans

in the past four years. The Medicare revision, for

example, already provides all the legal authority Bush

needs; it only requires a tough-on-beneficiaries

approach by those under his command who make the

Medicare rules.

 

Bush stands on the threshold of his great dream -- or

our nightmare -- of a nation in which key former

Democratic coalitions lose large and important groups

that have an investment in a government that serves

the common good. If Bush succeeds, the Democratic

Party may become a weakened shadow that can rarely, if

ever for very long at a stretch, deploy the national

authority for great public ends. It happened here

before -- after the Progressive era in the 1920s that

led to the crash and Great Depression. It can happen

again.

 

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About the writer

Charles Tiefer, a professor at the University of

Baltimore law school, is the author of the forthcoming

" Veering Right: How the Bush Administration Subverts

the Law for Conservative Causes " (University of

California Press). Based on his experience as

solicitor of the House of Representatives from 1984 to

1995, he has been the author of books and articles on

congressional procedure, and on tax and social

spending legislation.

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