Entitlement Reform: Don't Count on It


Is entitlement reform really on the table in a "fiscally responsible" Obama White House? That's the big fear I heard expressed on inauguration day when sitting on a Real News Network panel with two journalists to my economic left. But on Sunday, columnist George Will poured a bucket of ice water over any likelihood of that idea, in part by recounting the recent expansionary history of another entitlement, the State Children's Health Insurance Program, or SCHIP:

SCHIP's purpose, when it was enacted by a Republican-controlled Congress in 1997, was to subsidize state governments as they subsidize health care for families too affluent to be eligible for Medicaid but not affluent enough to afford health insurance. Because any measure acquires momentum when it is identified as for "the children," SCHIP was said to be for "poor children" or children of "the working poor."

In 2007, after President Bush proposed a $5 billion increase in SCHIP, the House voted for a $50 billion increase but receded to the Senate's proposed $35 billion, which became the definition of moderation. That compromise, which Bush successfully vetoed, at first would have extended SCHIP eligibility to some households with incomes up to 400 percent of the poverty line (up to $83,000 for a family of four), and more than $30,000 above the median household income ($50,233). So people with incomes higher than most people's became eligible for a program supposedly for low-income people. Call that compassionate arithmetic.

The new expansion, which is vengeance for Bush's veto, is mission gallop: It will make it much easier for some states to extend SCHIP eligibility to children from families earning up to $84,800. Furthermore, to make "poor" an extremely elastic concept, generous "income disregards" are allowed. Families can, depending on their state's policies, subtract from their income calculation what they spend on rent or mortgage or heating or food or transportation or some combination of these. So children in some families with incomes well over $100,000 will be eligible.

Perhaps more importantly, as Will also notes, the Bush/Obama bailout/stimulus has dwarfed all such numbers to the point that complaining about them seems either irrelevant or just plain mean:

A nation in which $350 billion was but the first half of the Troubled Asset Relief Program and in which TARP is distinct from the perhaps $825 billion "stimulus" program, is a nation being taught not to take seriously sums with merely nine digits and two commas. Remember, just 15 months ago Bush vetoed SCHIP because of $30 billion, a sum that, from the TARP bucket, nowadays disappears into the thin air from which much of the almost $1 trillion of stimulus will be conjured.

Reason on SCHIP here.