A Cut By Any Other Name Is Still a Cut

Bob Somerby is mad at me again. That’s nothing new, but this time it’s for saying that the only honest way to evaluate Trumpcare’s proposed Medicaid funding is by using inflation-adjusted numbers. What makes this odd is that Somerby agrees. He’s agreed about it for more than 20 years:

We first wrote about this particular type of confusion in 1995. The liberal world’s inability to settle this question with respect to the Gingrich Medicare proposal was one of the year-long gong shows which led us to start this site.

The problem, it turns out, isn’t that Somerby thinks I’m wrong, it’s that he doesn’t like the exact way I phrased it: namely that it’s a lie to say that Medicaid spending isn’t being cut in the Republican health care bill. And yet, back in 1996, when Republicans were peddling this same fiction about Newt Gingrich’s proposed Medicare cuts, he blasted them for it:

[Gingrich has] presented a profoundly misleading analysis, which has badly confused substantial segments of the public about the fundamental nature of his budget proposal….The analyst’s tool that is called “constant dollars” was devised just to deal with this kind of problem—to avoid the misunderstandings that inevitably arise in comparing budget figures from different years. By using constant dollars, or by accounting for inflation in some other way, budget analysts, every day, work to avoid the kind of confusion that Gingrich built into the misleading argument he has made over the past several years.

….When the GOP decided, in March 1995, that no one should use the term “Medicare cuts,” they were in fact creating a new micro-language, one very different from the one used before. In 1995, both parties proposed spending less in future years than it would cost to continue the existing Medicare program. This would not only mean reduced future spending; this would likely mean a reduction in services too. And this was a type of proposal that, reasonably enough, had always been described as a “cut.”

He says profoundly misleading, I say lie. Potato, potahto. But I suppose shooting wars have been started over less. In any case, that’s not really the point of this post. The point is that in his 1996 post Somerby quoted a book I’ve never read, Tell Newt to Shut Up! It’s fascinating. I always assumed that this nonsense about a cut not being a cut had just grown organically over time, but it ain’t so. It happened the same way we got “death tax” and “personal accounts” and “tax relief.” It came from a focus group and was very pointedly hammered into the media even though the GOP knew it was essentially bogus. The heroes of this story are Newt Gingrich; pollster Linda DiVall; RNC chair Haley Barbour; and House Budget Committee Chair John Kasich. Here are David Maraniss and Michael Weisskopf describing the events of early 1995, right after the Gingrich Revolution put Republicans in control of Congress. It’s worth your while to read the whole thing:

The rhetorical planning began one afternoon in March 1995, when Gingrich convened a group to discuss what words should used in the war….Everyone understood the perilous circumstances. The GOP needed to squeeze $270 billion from Medicare to fulfill its promise of a tax cut and balanced budget in seven years….But if Republicans were to succeed, revolutionary rhetoric had to replaced by soothing words that evoked stability….[DiVall] advised the group to be “leery” of the words “cut,” “cap,” and “freeze”—they would bring nothing but trouble and help Democrats define the process in negative terms.

….They spent late March and early April following up on DiVall’s presentation and trying to compile a group of words that could best impart the Medicare message. They knew that Gingrich was interested in a run of three words. He believed in the rhetorical power of threes, which had biblical connotations….The next day, Barbour met with Gingrich, who made the final call on the words….Gingrich told his communications director, Leigh Ann Metzger, “It’ll be preserve, protect, and improve.”

….As important to the Republicans as finding the right words was making sure that the press would not use the wrong ones. The ultimate wrong word was “cut.” Polls by DiVall showed that the public reacted negatively when told that Republicans would cut Medicare, but positively when informed that spending would increase but at a slower rate. “The phrase ‘spending would increase, but at a slower rate’ is literally 20% to 40% stronger than ‘reduce the rate of growth’ and certainly using the word ‘cut,’ ” a DiVall memo said.

House Republicans had already learned a lesson on cuts earlier in the session when Democrats battered them for “cutting” the popular school lunch program. After they lost that message war, when stories had appeared about hungry children and gleeful Democrats had posed for pictures holding ketchup bottles, Republicans vowed from then on they would not allow reductions in the rate of growth to be called “cuts.” From Barbour to CommStrat to committee chairmen to House members, the word went out that no statement or story using the word “cut” should go unanswered. “Don’t be school-lunched,” they warned each other. Barbour promised to raise “unshirted hell” with wayward members of the press.

To reinforce the point at a leadership meeting, Kasich threw a hat on the table and said, “The first guy who says the word ‘cuts’ has to throw a dollar in the hat.” As it turned out, Kasich was the first linguistic perpetrator. “Yeah, I threw in the first buck,” he acknowledged later. But he also pounded fiercely on the issue, calling reporters late at night or early in the morning to warn them off the dreaded word. “I worked them over,” he said. Barbour was equally vigilant. He called the anchormen at NBC and ABC and a correspondent at CBS and chided them for using the word. He held breakfasts and lunches with reporters at his conference table at the RNC to go over the difference between cuts and slowing the rate of growth.

Barbour was technically correct. Average spending per Medicare recipient in the Republican plan rose from the $4,800 to $6,700 in seven years, numbers that were etched in the mind of every Republican. But when quality of care was factored in, Democrats scored big. To provide today’s level of services seven years later would cost $8,000 per beneficiary.

….At the White House, advisers to President Clinton expressed admiration for Gingrich’s communications monolith, marveling at the way the Republicans pressured the news media to stop writing about cuts…. “Newt’s very good,” said [George] Stephanopoulos.

Newt was very good, but he still lost this battle. Bill Clinton and the Democrats continued to say that Republicans wanted to cut Medicare, and they portrayed their own cuts as cuts too. It worked. After several vetoes and a couple of government shutdowns, the final Medicare budget was much closer to Clinton’s than to Gingrich’s. In other words, using constant dollars and insisting that it’s dishonest to do otherwise won the day in 1996, and in 2017 the press remains generally willing to use constant dollars and CBO baselines as the measure of whether something is being cut. Perhaps they’re still stung by Gingrich’s obviously mendacious media hardball in 1995 and 1996.

Ironically, none of this mattered in the end. In the late 90s the economy boomed and health care inflation plummeted. By 1998 the federal budget was already in surplus and Medicare spending slowed down all by itself. A few years later this all changed when George Bush passed a couple of huge tax cuts and health care inflation bounced back. But that’s a tale for another time.

Moral of the story: Always use real, inflation-adjusted dollars when you’re comparing spending over time. Anything else is dishonest, and there’s no reason anyone should be afraid to say so.