An administration and Congress of either party is likely to approve a federal program of universal health insurance. Such a program was endorsed by most of the presidential candidates in both parties, was implemented by former Gov. Mitt Romney in Massachusetts, and has been promoted even by our friends at the Heritage Foundation — despite the prospect that it would substantially increase federal spending, the relative price of medical care, and both price controls and nonprice rationing of medical care.
The failure of any presidential candidate or more than a few members of Congress to criticize the $150 billion debt‐financed “stimulus” package as ineffective or possibly counterproductive suggests that there is a broad bipartisan indifference to responsible fiscal policy. Another major threat to limited government that will probably be approved next year, whatever the outcome of the November election, is a first‐stage national commitment to reducing the emissions of greenhouse gases; this ineffective but potentially very expensive policy is being promoted as a moral obligation, rather than the best of the alternative feasible responses to global warming.
The huge implicit debts for Social Security and Medicare, of course, are the largest threats to the federal budget. This is where the outcome of the November election might make a difference. In his recent State of the Union address, President Bush reminded us that these two programs should be reformed soon to avoid a large annual increase in their implicit debts, a warning that both Congress and the media ignored.
In opposition, the Democrats have either denied any problem with these programs or claimed that small technical changes are sufficient and can be deferred. In general, it is politically difficult to reform a program for which the problems will not be broadly apparent for four or eight years. A substantial Democratic victory in November, however, could accelerate this process by giving the Democrats the political margin to control the restructuring of these programs, most likely by tax increases. The opposition Republicans would have a strong case for criticizing the Democrats for the proposed tax increases or for again deferring the necessary reforms of these programs.
Read the rest of this report at cato.org/pubs/policy_report/v30n2/cpr30n2-2.html.