Political Hay

Angle Wins, Toomey Loses?

Sharron Angle didn't allow Harry Reid to demagogue Social Security. Pat Toomey will have to do the same to Joe Sestak.

By 10.20.10

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Harry Reid didn't just vote for the failed, wasted, trillion dollar stimulus. As Senate Majority Leader, he led its enactment. And he didn't just vote for President Obama's record smashing federal spending, deficits, and debt. As Senate Majority Leader he led their enactment. And he didn't just vote for the TARP bailouts. As Senate Majority Leader even then, he led their enactment.

And Harry Reid didn't just support Obamacare. He, again, led its enactment.

Now in two weeks the voters of Nevada will have their chance to hold him accountable.

The Disgrace of Harry Reid

When Harry Reid became Senate Majority Leader in January, 2007, the nation's unemployment rate was 4.6%. Today it is well over twice that at 9.6%. In August, the unemployment rate in Nevada was a shocking, Depression level 14.4%, highest in the nation, higher even than in Michigan, suffering a long-term depression.

When Harry Reid became Senate Majority Leader, George Bush's failed economic policies of the past, as Barack Obama likes to call them, had just set a record of 52 straight months of job creation, which we can only dream about under President Obama's failed economic policies of the 1970s. Economic growth in the most recent quarter then was 3.5%, more than twice today's growth.

And when Harry Reid became Senate Majority Leader, we were in fiscal 2007. The budget the Republican controlled Congress adopted for that year resulted in a $161 billion deficit. Today's deficit is almost 10 times as high.

Maybe that is why the nation today, after nearly 4 years of Harry Reid's leadership, suffers record numbers in poverty and on food stamps, and why September saw record foreclosures at over 100,000. Nevada knows foreclosures, having suffered the nation's highest foreclosure rates for months, to go with its national leadership in bankruptcies.

But Harry Reid's greatest disgrace is his campaign. In millions of dollars of advertising financed by special interest donations, Harry Reid has accused Sharron Angle of wanting to do to Medicare what he has already done in leading passage of Obamacare.

Medicare RIP

The official documentation of the impact of Obamacare on Medicare is found in the latest Annual Report of the Medicare Board of Trustees. The data embodied in that report reveals that in the first 10 years of full implementation under Obamacare, 2014 to 2023, Medicare will be cut by over $1 trillion. Under the first 20 years of full implementation, the Medicare cuts total just under $5 trillion.

These draconian cuts were the basis for the CBO score repeatedly cited by President Obama that Obamacare would actually reduce the deficit while expanding or adopting three entitlement programs. Too bad the President never disclosed that. In last week's debate with Tea Party favorite Sharron Angle, instead of disowning these cuts, Reid actually took credit for them, saying, "We, according to the Congressional Budget Office, have been told that we will reduce the debt by $1.3 trillion…including extending the life of Medicare for 12 years."

These are mostly cuts in the payments to doctors and hospitals for the medical services they provide to seniors under Medicare. Such extreme cuts would create havoc and chaos in health care for seniors. Doctors, hospitals, surgeons and specialists providing critical care to the elderly, such as surgery for hip and knee replacements, sophisticated diagnostics through MRIs and CT scans, and even treatment for cancer and heart disease, will shut down and disappear in much of the country, and others will stop serving Medicare patients. If the government is not going to pay, then seniors are not going to get the health services, treatment, and care they expect.

Medicare's Chief Actuary reports that even before these cuts, already two-thirds of hospitals were losing money on Medicare patients. He further reports that ultimately under Obamacare Medicare payment rates will be only half of what is paid by Medicaid, where the poor often can't find access to essential care. Health providers will either have to withdraw from serving Medicare patients, or eventually go into bankruptcy.

Effectively refusing to pay the doctors and hospitals that provide the medical care Medicare promises to seniors is no way to solve Medicare's financing problems. That would not only suddenly leave seniors suffering sickness without the health care they have been promised, and have come to rely on as a result. It would suddenly leave doctors, clinics, specialists, and hospitals with uneconomic practices for seniors that they entered in good faith on the promise of payment from the government.

This is like trying to achieve budget savings in national defense by not paying the manufacturers of the Air Force's planes, the Navy's ships, the Army's tanks and artillery, and the bullets, bombs and guns. How long do you think our national defense would remain functional under that policy? That is how long Medicare now has as well, thanks to Harry Reid dancing to the tune of the ultra-left piano players in Washington.

Think of it this way. You wouldn't try to balance your own family budget by just refusing to pay your bills, particularly for goods and services you planned to continue to consume. You would recognize that is really just stealing. Instead, you would either cut back on your purchases, or find ways to increase your income. You wouldn't refuse to pay the cable bill, thinking you are nevertheless going to be able to continue to watch your 300 channels on cable TV. But that is the new Obama/Reid policy for Medicare.gt;

Contrast this wild, reckless, dysfunctional, Obama/Reid Medicare carpet-bombing with the careful, fundamental reforms of Medicare in Paul Ryan's Roadmap. Ryan's reforms make no changes for today's seniors, and phase in the reforms slowly over time for younger workers so they can plan and prepare for their retirement years. With seniors covered by private insurance they choose in a competitive marketplace, doctors and hospitals will be paid competitive market rates, ensuring America's seniors will still enjoy access to the best, most advanced health care in the world. Yet Ryan's reforms are scored as achieving permanent, full solvency for Medicare.

Reid's Medicare DisAdvantage

The discussion above doesn't even count Obamacare's additional cuts to Medicare Advantage, the private option to Medicare that close to one fourth of all seniors have chosen for their coverage under the program because it gives them a better deal. In last week's debate, Reid laughed at Angle, claiming her facts were wrong, and said, "Medicare Advantage people in the state of Nevada are going to pay less rather than more. There will be more Medicare Advantage people on the rolls now, as a result of the health care bill being passed."

But Medicare's own Chief Actuary estimates that 50% of all seniors with Medicare Advantage will lose their plan because of the $145 billion in cuts to Medicare Advantage that Harry Reid supported in the Obamacare bill. Because of those extreme cuts, those who do not lose their Medicare Advantage plan will pay more, or get less in benefits.

Moreover, none of this counts any of the additional Medicare cuts to be adopted by the unelected, appointed, bureaucrats at the Medicare Independent Payment Advisory Board. Obamacare empowers the Board to adopt further Medicare cuts that would become effective without any Congressional action. As the Medicare Chief Actuary reports, "The Secretary of HHS is required to implement the Board's recommendations unless the statutory process is overridden by new legislation."

Joe Sestak's Rocketing Tax Increases

Meanwhile, in the Pennsylvania Senate race, witness how the desperate Joe Sestak provides "responsible" leadership on the issue of Social Security. Regarding a plan that Toomey has favored to allow young workers the freedom to choose to save and invest part of their payroll taxes in their own personal accounts, Sestak says, "It's outrageous that Congressman Toomey wants to gamble our social security on Wall Street," following that with ads on the theme "Keep your hands off of my Social Security."

Sestak voted for the same draconian Obamacare Medicare cuts that Harry Reid did. How stupid does Sestak think voters in Pennsylvania are to now present himself as a champion of seniors? Toomey would be stupid not to hit back at Sestak hard on his Medicare carpet-bombing, just as Sharron Angle has done in Nevada.

Harry Reid also tried to demagogue Angle on Social Security in last week's debate in Nevada. Toomey should take note of her response, "Man up, Harry Reid, you need to understand that we have a problem with Social Security." She scored him for raiding the Social Security trust fund during his 24 years in the Senate, leaving it with nothing but a pile of IOUs that the taxpayers will have to pay for again to pay promised Social Security benefits.

Congressman Paul Ryan has also introduced legislation for a careful, well-structured personal account option for younger workers that has been scored as achieving permanent full solvency for Social Security, without tax increases. But Reid responded to Angle with lame name-calling, saying, "These ideas of my opponent are really extreme." But what is really extreme is the doubling of Social Security payroll taxes that will ultimately be necessary without any personal account reforms and taking any benefit cuts off the table as well. That doubling of payroll taxes is what Joe Sestak is effectively supporting, along with Harry Reid.

Angle also pointed out in the debate that Reid actually enjoys a very similar personal account option in the federal Thrift Savings Plan, where Reid has likely accumulated close to a million dollars by now. Angle said, "If it's good enough for Harry Reid, it should be good enough for the rest of us." As an incumbent Congressman, Sestak enjoys a personal account in the federal Thrift Savings Plan as well, with the same investment for his retirement that he says is too risky for anyone else.

These personal account proposals all involve just a choice even for young workers. Everyone is free to stay in the current Social Security system if they prefer. It is up to the choice of each worker. Moreover, no one with a personal account is required to invest anything in the stock market. That is a choice of each worker as well. This is why it is stupid and dishonest for Sestak to accuse Toomey of wanting to gamble anyone's Social Security on Wall Street.

Most importantly, these personal account proposals all involve no change for anyone retired today, or anyone anywhere near retirement. That is why Sestak's ads featuring seniors he has misled saying to Republicans, "Keep your hands off of my Social Security" are illegitimate demagoguery as well. This debased politics is how America has gotten into the trouble it is in. If we are going to deal with the real problems America suffers, then we have to reject this cynical political manipulation.

The Financial Crisis

President Obama himself has led the demagoguery on this issue, saying he thought the idea of personal accounts "would've been put to rest once and for all by the financial crisis we just experienced." No doubt workers with personal accounts would have lost money during the financial crisis the government's wild, irresponsible financial policies caused. But workers saving and investing in such accounts over their lifetimes would still retire with more than Social Security even promises let alone what it can pay.

The numbers document that an average income two-earner couple investing everything in their personal account in the stock market over their entire lives and just retiring today would still enjoy close to a million dollars in their accounts. In fact, such an average income couple would have been millionaires before the losses of the financial crisis. But even with those losses their account would still be sufficient to pay them 75% more than what Social Security promises them, let alone what it can pay. This calculation is based on the actual returns earned in the stock market over the past 45 years, right through the financial crisis.

But there is a problem among Republicans in regard to Social Security. Those who think that cutting Social Security benefits even in the future is more politically salable than personal account freedom of choice are sorely mistaken. That provides a target for the Democrats that does not enjoy the winning counterarguments discussed above.

Toomey needs to counter Sestak fiercely and making all of these points as forcefully as Angle has done in Nevada, where she is surging ahead now and will surely win. The history is that whenever the Republicans cower in a defensive crouch over personal accounts, they lose. But when they counter with the positive, populist benefits and freedom of choice of personal accounts, they win, as in 2000 and 2002.

The liberals in Pennsylvania destroyed the once mighty steel industry there with the same crass demagoguery over the years that they exhibit today, and the state has never recovered from that. Now they threaten to do the same in regard to coal and natural gas, not to mention Medicare. Toomey, who is one of the smartest, most far-sighted political leaders in America, cannot let them get away with it.

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About the Author
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.