The 1989 Repeal of an Entitlement

In “Undoing Previous Insurance policies: How Probably Are Repeals within the 119th Congress?” political scientist Jordan Ragusa lays out a variety of situations that should acquire if repeal of previous insurance policies is to succeed. He makes excellent factors.

The principle instance of a profitable repeal that I do know of is one that doesn’t match all of Ragusa’s standards: the 1989 repeal of Ronald Reagan’s Medicare Catastrophic Protection Act. I keep in mind it effectively. I used to be house from college that day sick, and I turned on C-SPAN to observe the vote. I spotted that I used to be watching one thing historic: the repeal of an entitlement program. These are among the many hardest applications to repeal.

How and why did it occur so quickly after the legislation was handed the earlier 12 months? I used to provide the instance in my class once I was instructing a phase on public selection. Public selection offers the reply.

The same old program that passes is one which imposes dispersed prices to create concentrated advantages. Consider the farm program, which taxes tens of tens of millions of individuals, and imposes prices on over 300 million customers, to subsidize about 3 million farmers. Or consider Medicare, which taxes over 160 million individuals to subsidize 66 million individuals. [Note: this difference with Medicare and taxpayers is not as stark as I expected when I started writing this post: I had expected that under 50 million people were subsidized by Medicare.]

However Reagan’s act was totally different. It gave catastrophic care advantages to everybody on Medicare. However to finance the advantages, it imposed larger taxes on solely the highest-income recipients of Medicare.

Right here’s how New York Instances reporter Carl Hulse put it:

Offended Individuals voice outrage at being requested to pay extra for well being protection. Lawmakers and the White Home say the general public simply doesn’t recognize the advantages of the brand new well being legislation. Opponents clamor for repeal earlier than this system absolutely kicks in.

He acquired a key verb flawed. They weren’t “requested.” If they’d been requested, they most likely wouldn’t have had an issue with this system. They have been pressured. That’s how taxes work.

The measure had handed by a bipartisan vote: 328 to 72 within the Home and 86 to 11 within the Senate.

However as soon as higher-income seniors noticed their new taxes, they have been pissed.

Hulse wrote:

The dramatic climax got here on Sept. 17, 1989, when Consultant Dan Rostenkowski, the gruff and burly chairman of the Methods and Means Committee, was hectored in his Chicago district by a band of offended older voters. They surrounded and blocked his automotive and compelled him to flee on foot earlier than he may make his automotive getaway. A information crew caught the episode on digital camera.

The video he references within the quote above, which is just one:27 lengthy, is value watching. Lots of people noticed this.

The subsequent month, Congress voted to repeal. The vote was bipartisan.

The rationale this illustrates a public selection perception is that the prices of Reagan’s 1988 invoice have been concentrated and the advantages have been dispersed.

Attention-grabbing notice: Rostenkowski later went to jail for mail fraud. Right here’s what Wikipedia writes:

Expenses in opposition to Rostenkowski included: holding “ghost” staff on his payroll (paying salaries at taxpayer expense for no-show “jobs”); utilizing Congressional funds to purchase items comparable to chairs and ashtrays for buddies; diverting taxpayer funds to pay for autos used for private transportation; tampering with a Grand Jury witness; and buying and selling in formally bought stamps for money on the Home Submit Workplace.^[22][23]

The image above is of Rostenkowski.