Tag: mitt romney

Recalculating Romney’s Four Percent Gimmick

I have a new piece up at ForeignPolicy.com on Ron Paul and the Republican Party, focused in particular on the strong support that Paul draws from young people, with some additional speculation about where those young people will end up, if and when Paul steps back from his very public role. My instincts are that these young people are motivated at least as much by the ideas that Paul espouses as by Ron Paul, the person. If I am correct, many of them are likely to remain active in politics. I close with a warning to GOP leaders that they would be making a grave error if they ignored this libertarian-leaning voting bloc. Unfortunately, that is what the GOP’s leading candidate, Mitt Romney, seems to be doing by pushing a short-sighted plan for boosting military spending at a time when the country is awash in debt.

I have always been puzzled by the fact that conservatives who rail against welfare dependency here at home miss the pernicious effects of security dependency among our allies. Tim Pawlenty didn’t get it. Neither does Mitt Romney. Rather than questioning the mantras that have guided U.S. foreign policy for over a generation, Romney simply assumes that the United States will remain the world’s policeman, other countries will continue to free-ride on our security guarantees, and U.S. taxpayers will happily foot the bill. He proposes spending at least four percent of GDP on the military’s base budget, plus whatever additional money might be needed to fight the wars that he wants to fight (for example, this one).

I commented on the Four Percent Gimmick a few months ago, and now I have a bit more detail about Romney’s plan relative to the Obama administration’s latest 10-year projections. I alluded to these numbers in the ForeignPolicy.com piece, and below provide some more detail. (I am grateful, as always, for the help of my colleague Charles Zakaib in sorting through these, and in preparing the charts).

The chart above shows spending in nominal, current-year dollars, over the next ten years. The Obama administration plans to spend $5.7 trillion between 2013 and 2022 (the blue bars). If Romney keeps his promise of four percent for defense, he will spend at least $8.3 trillion (using OMB’s GDP projections) over that same period, an additional $2.58 trillion (the yellow bars). His budget in 2022 would top $1 trillion, and would be at least 61 percent higher than Barack Obama’s. He hasn’t said what other spending he will cut, or what taxes he would increase, to cover that difference. Until he does, it is logical to conclude that he plans to pile on more debt.

And we should remember that current laws call for even less spending than President Obama has proposed, but he has chosen to ignore the sequestration provisions of the Budget Control Act. GOP leaders in Congress seem equally disinterested in following through on their promise to kick the spending habit, and several have put forward plans to undo sequestration for the Department of Defense. Either way, the bottom line is more debt. As I speculate at ForeignPolicy.com, no wonder young people seem to like Ron Paul so much (and Mitt Romney so little).

Another way to demonstrate the absurdity of Romney’s plan is to control for inflation and compare it to future and past trends. Looking ahead, in constant, 2012 dollars, annual Pentagon spending will average $744.8 billion over the next ten years—again assuming the same GDP projections as Obama’s plan. That is 44 percent higher than Obama’s average budget (the bright pink line) over that same period, and nearly 59 percent higher than sequestration (the dark red line).

Now consider how this compares with the recent past. As you can see, Romney’s Four Percent Gimmick would result in taxpayers spending more than twice as much on the Pentagon as in 2000 (111 percent higher, to be precise), and 45 percent more than in 1985, the height of the Reagan buildup. Over the next ten years, Romney’s annual spending (in constant dollars) for the Pentagon would average 64 percent higher than annual post-Cold War budgets (1990-2012), and 42 percent more than the average during the Reagan era (1981-1989).

Mitt Romney may genuinely believe that today’s enemies are 42 percent more frightening than the big bad Soviets. He might believe that spending an average of $450 billion (in constant dollars) every year since 1990 has left the country dangerously vulnerable. If that is true, he should say so. More importantly, however, he should be compelled to answer the question on everyone’s mind: Where is he going to get the money to fund his Pentagon spending binge?

Cross-posted from the Skeptics at the National Interest.

Does Mitt Romney Have Health Insurance?

It’s an interesting question. Romney is under age 65, which means that he would have to obtain private health insurance. He jokes that he is unemployed, which means he may have to purchase it on his own. Or he may get it as a retiree benefit from Bain Capital.

The question is interesting because Romney is so wealthy that to spend his money on health insurance might seem like a waste. (Of course, Romney may be very risk averse, and a man to whom $10,000 is a small wager probably isn’t going to notice a $20,000 health insurance premium. But Romney could pay for whatever medical care he and his wife – and his children, and his grandchildren – could possibly need.) On the other hand, if Romney doesn’t have private health insurance, it would look bad that he forced other people to buy it.

Moreover, Romney turns 65 on March 12, meaning he becomes eligible for Medicare on March 1. He likely received his Medicare card in the mail two months ago. If Romney does not enroll in Medicare, it would again look bad that he who forced others to purchase health insurance is opting not to obtain health insurance himself. But if he does enroll in Medicare, it’s worth asking whether the 99 percent should subsidize people like him.

What Was the Point of Romney’s China Op-Ed?

Mitt Romney has an op-ed in today’s Wall Street Journal that Dan Drezner has aptly characterized as “Romney SMASH China!” Drezner takes Romney’s arguments on their own terms, but I’m more cynical, and accordingly I’m interested in why Romney wrote this piece. Sure, sure, maybe it’s possible that he just has strongly held ideas about U.S.- China policy and chose to voice them, but let’s be real: the man is trying to get the GOP nomination and then get elected president. He or someone in his campaign decided that now was a good time to reach out to the largest circulation conservative op-ed page in the country—one that gets read by a lot of people from whom he’d like to get contributions—with this message.

And what is the message? There’s the usual inchoate American nationalism (making the 21st “an American, not a Chinese century”) and criticism of Obama’s extravagant spending, sure, but there are also some fairly clear signs that Romney wants to signal he’ll get tough on China. He argues that Washington must “directly counter abusive Chinese practices in the areas of trade, intellectual property, and currency valuation.” On the latter, he goes so far as to promise that “on day one of my presidency I will designate [China] a currency manipulator…” despite gradual appreciation in the renminbi highlighted in today’s New York Times.

On the security side, he unsurprisingly suggests that the United States should bolster its role as the balancer-of-first-resort in the Asia-Pacific, claiming without evidence that our allies are worrying that we’re going to leave the region.

Now let’s go back to my question: What’s the play here? Does he think that this is some sort of mass appeal argument that will burnish his credentials in the eyes of the median Republican primary voter? Is he trying to tie economic malaise to the looming ChiCom menace? Maybe so, but does he think that the wealthy potential contributors who read the Journal op-ed page are going to be aroused by this message? That doesn’t seem right to me at all.

There are lots of people who’ve gotten wealthy running political campaigns who no doubt got this piece placed (and probably wrote it), but the questions remain: Why this message? Why this outlet? What was this piece supposed to accomplish? I can’t figure out a persuasive answer.

Obama’s Neocon Moment

In his State of the Union address, President Obama emphatically declared, “Anyone who tells you that America is in decline or that our influence has waned, doesn’t know what they’re talking about.” Obama sought to put to rest the notion that he is embracing American decline, as GOP candidates Romney, Gingrich and Santorum have accused him of doing. He likewise affirmed his belief in the country’s exceptional place in history.

In particular, this president believes, as his predecessor did, in the necessity of the U.S. military to act beyond its constitutionally mandated function, put out any fires that flare across the globe, and underwrite world security. I examine this in an op-ed published today on CNN.com:

The president sounded like a neoconservative when he declared during his recent State of the Union address that the United States was, and would remain, the world’s “indispensable nation.” Obama’s proposed Pentagon budget, released last week, affirmed his intention to retain most of the U.S. military’s current missions, even when they aren’t needed to safeguard the United States’ vital security interests.

Meanwhile, the Pentagon’s latest strategy document was carefully designed to convince allies and adversaries alike that the United States can continue to prosecute multiple armed conflicts in far-flung corners of the globe. Taken together, Obama’s strategy document, budget and State of the Union remarks articulate a coherent philosophy on military spending and global engagement that ought to hold a lot of appeal for the neoconservatives in the GOP.

But … our foreign policy leaders have consistently ignored … an argument that should have strong sway at a time of economic uncertainty: this country’s tax dollars can be better spent than on defending wealthy allies who are more than capable of protecting themselves.

This talk of the United States as the “indispensable nation” is straight out of the neoconservative playbook. They should have no quarrel with President Obama’s policies. And it is interesting that while Mitt Romney criticizes the president in this arena, Romney foreign-policy advisor, neoconservative stalwart Robert Kagan, has gotten the president’s attention.

Like Kagan and Romney, President Obama believes the world is better off with the United States doing for wealthy allies what they should be doing for themselves: securing their interests. President Obama talked of “fairness” in his State of the Union and a “shared sacrifice” among citizens in these trying economic times. But this sacrifice apparently does not extend beyond the borders of the United States. Under President Obama, as under a Romney presidency, the American taxpayer will continue to pay for the security of Europe and East Asia, and our troops will be saddled with a nearly endless list of missions. That isn’t fair, nor is it wise.

Romneycare & Free Riders

During last night’s GOP presidential debate, Rick Santorum and Mitt Romney had a polite disagreement over Romneycare’s impact on free-ridership in Massachusetts. The short version: Santorum was right. Romney and even FactCheck.org disputed Santorum’s claim, but they misunderstood it.

The exchange comes 2:15 into this video from Kaiser Health News:

Here’s the Kaiser Health News transcript:

SANTORUM: Just so I understand this, in Massachusetts, everybody is mandated as a condition of breathing in Massachusetts, to buy health insurance, and if you don’t, and if you don’t, you have to pay a fine.

What has happened in Massachusetts is that people are now paying the fine because health insurance is so expensive. And you have a pre-existing condition clause in yours, just like Barack Obama.

So what is happening in Massachusetts, the people that Governor Romney said he wanted to go after, the people that were free-riding, free ridership has gone up five-fold in Massachusetts. Five times the rate it was before. Why? Because…

ROMNEY: That’s total, complete…

SANTORUM: I’ll be happy to give you the study. Five times the rate it has gone up. Why? Because people are ready to pay a cheaper fine and then be able to sign up to insurance, which are now guaranteed under “Romney-care,” than pay high cost insurance, which is what has happened as a result of “Romney-care.”

ROMNEY: First of all, it’s not worth getting angry about. Secondly, the…

(APPLAUSE)

ROMNEY: Secondly, 98 percent of the people have insurance. And so the idea that more people are free-riding the system is simply impossible. Half of those people got insurance on their own. Others got help in buying the insurance.

FactCheck.org writes:

Romney is right. The percentage of insured residents in the state went up from 93.6 percent in 2006, the year the law was enacted, to 98.1 percent in 2010. And data from the state Division of Health Care Finance and Policy show a 46 percent decline in the number of free care medical visits paid for by the state’s Health Care Safety Net. The number of inpatient discharges and outpatient visits under the program went from 2.1 million in 2006 to 1.1 million in 2010 (see page 12)…

A Santorum campaign spokesman pointed us to a Wall Street Journal column by Michael F. Cannon of the libertarian Cato Institute, who stated that “Massachusetts reported a nearly fivefold increase in such free riding after its mandate took effect.” But that doesn’t square with official data just cited. Cannon didn’t specify the time period and so may have referred to some temporary or transitory bump in free riders. We will update this item if we are able to get more information from Cannon.

Speaking of facts, here’s a fun one: both Kaiser Health News and FactCheck.org unnecessarily flank “Romneycare” with quotation marks when it appears within a quote from Santorum. As if Santorum had used quotation fingers. Adorable. But I digress.

Romney and FactCheck.org failed to consider that there are different types of free riding. One type happens when government guarantees access to emergency-room care: people show up to get care, and they don’t pay. Another type happens when government guarantees people the ability to purchase health insurance at standard rates no matter how sick they are: people wait until they are sick to purchase health insurance and drop it right after they get the care they needed. These free riders pay far less than they would in a free market, which would not allow such behavior. Romney and FactCheck.org assumed Santorum meant the former type of government-induced free riding, when he was clearly talking about the latter.

The data that Santorum and I cite come from a report by the Massachusetts Division of Insurance. See this June 2010 blog post, where I quote the Boston Globe:

The number of people who appear to be gaming the state’s health insurance system by purchasing coverage only when they are sick quadrupled from 2006 to 2008, according to a long-awaited report released yesterday from the Massachusetts Division of Insurance.

The result is that insured residents of Massachusetts wind up paying more for health care, according to the report.

“The active members subsidize some of the costs tied to those individuals who terminate within one year,” the report says…

The number of people engaging in this phenomenon — dumping their coverage within six months — jumped from 3,508 in 2006, when the law was passed, to 17,177 in 2008, the most recent year for which data are available.

Actually, it more than quadrupled: 17,177/3,508≈4.9. But whatever. Santorum was right.

One might object that these numbers seem like small potatoes compared to the apparent drop in visits paid from the Commonwealth’s Health Care Safety Net program. Fair point. But the type of free riding Santorum identified is incomparably worse than the kind that happens in hospital emergency rooms. When people can wait until they are sick to purchase insurance, overall premiums rise so high that the health insurance market collapses in an “adverse selection death spiral.” That’s how Obamacare destroyed (and is destroying) the market for child-only coverage in dozens of states. It’s why Obamacare’s CLASS Act collapsed years before it collected a single premium. It’s happening very slowly in Massachusetts, but it is happening. And it will happen to all private health insurance under Obamacare. In contrast, as I mention in my Wall Street Journal piece, the ER-type of free riding increases health insurance premiums by “at most 1.7 percent,” according to the Urban Institute. That’s not ideal, but it’s not catastrophic.

One might also object that this latter type of free riding can’t be a problem since Romneycare has increased the number of Massachusetts residents with health insurance coverage. Also a fair point. But not only can adverse selection occur at the same time that coverage is expanding, it has the potential to completely undo those coverage gains over time. Moreover, some of Romneycare’s supposed coverage gains might be people who are actually uninsured but conceal that fact from government surveys rather than admit to unlawful behavior. These are the ultimate free riders: they’re not even paying the fine. In this Cato Institute study, Aaron Yelowitz and I found evidence consistent with such concealment behavior in the Census Bureau’s Current Population Survey.

‘Romney vs. Obamacare: What the Presumptive Nominee Should Say’

Yuval Levin and Ramesh Ponnuru have a fantastic article on health care [subscription required] in the February 6 issue of National Review that, while not excusing RomneyCare, offers probably the best way that a compromised Mitt Romney could run against ObamaCare. If you don’t have a subscription, find a copy.