Opinion

KOLB: Instead Of Running 2020 On ‘Free Stuff,’ Candidates Should Work On Fixing The Economy

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Charles Kolb Deputy Assistant to George H.W. Bush

For the Romans, it was bread and circuses. For 21st century Americans, it’s the temptation of “free stuff.”

Both political parties are now in full pander mode. After two debate rounds, many progressive Democratic presidential candidates support free health care, free postsecondary education, and free universal pre-kindergarten. For President Trump and the GOP, it’s free money thanks to the Fed’s zero-interest-rate policy, unfunded tax cuts, and a ballooning annual federal deficit (and national debt) to finance border walls, infrastructure, and the military. Recent efforts to raise the debt ceiling enable this bipartisan profligacy to continue past November 2020.

Many Democratic presidential candidates also endorse the “Green New Deal” with its $93 trillion 10-year price tag according to some estimates. Some candidates on the left are now championing free housing as a basic right. If healthcare and education are fundamentals, then surely you need a roof overhead to access both healthcare and education. And what about free transportation to and from doctors and schools?

This bidding war will shape the contours of the 2020 presidential and congressional elections. Annual budget deficits will again exceed $1 trillion without anyone caring. Borrow-and-spend is today’s game.

We are becoming increasingly like the French, whose economic system has become extremely difficult to reform because of the myriad little government handouts enacted over decades to subsidize everything from low-income rents to extremely generous unemployment benefits. Reform is tough because citizens want to protect their particular handouts or “benefices.”

But let’s at least give French President Emmanuel Macron an A+ for trying. He and Prime Minister Edouard Philippe are attempting important structural reforms. You know they’re serious because the Yellow Vests and other protesters are fuming over their proposals.

Structural reforms, however, aren’t happening in the United States.   Leaders in both political parties keep identifying new goodies and then worry later (if at all) about how to pay for them. Reforming the incentives and underlying structures of existing and costly programs is rarely considered.

Take health care and higher education, where we spend more than virtually any other country in the world and get paltry results. President Obama got it right at a March 2009 White House health care convening when he announced that before we focused on expanding access, we first needed to control costs. That approach made sense then and now: expand access on top of a structurally flawed program and costs would rise dramatically.   We needed new incentives that rewarded value, not volume, in health-care services. Unfortunately, Obama outsourced the drafting to Nancy Pelosi and Harry Reid and signed into law legislation that did the precise opposite of his initial approach.

Sen. Bernie Sanders led the charge to make public higher education “free.” Other progressives now want to forgive some or all of the $1.5 trillion in student loan debt that is a drag on our economy and on young people starting their careers. As this policy debate evolves, few candidates are asking the tougher questions such as: how did we get into this mess initially, what factors drive postsecondary-education costs to increase twice as fast as health care costs, and how can school governing boards, administrators, and legislatures contain costs?

Purdue’s Mitch Daniels is one of the few university presidents with creative approaches to these problems.

Republicans used to be the party of fiscal responsibility. Today, their versions of “free stuff” take the form of unsustainable budget deficits, fiscally irresponsible tax cuts, excessive defense spending, and low-interest money from the Federal Reserve. The late Peter G. Peterson, commerce secretary under President Nixon and co-founder of the Blackstone Group (the world’s largest private equity firm), spent decades speaking and writing about the need for fiscal restraint and responsibility. Peterson also established the Concord Coalition and the Peter G. Peterson Foundation, both of which favor reducing our deficits and national debt. He would be appalled at today’s bipartisan irresponsibility, especially among Republicans.

As the promises continue in the run-up to November 2020, let’s hope that our traditional American pragmatism raises three important questions: (1) before spending more, shouldn’t we first determine how to spend better, (2) won’t spending better require significant structural reforms before we talk about making some programs “free,” and (3) just how much more can we run up our national debt before jeopardizing our currency and our economic security?

We need government programs that work and that are held accountable for results. We also need government programs that we can afford.

Charles Kolb was deputy assistant to the president for domestic policy in the George H.W. Bush White House from 1990-1992. From 1997-2012, he was president of the nonpartisan, business-led think tank, the Committee for Economic Development.


The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.