The shutdown ends, but problems persist

I’m on record as believing the federal government shutdown strategy, while legitimate, was a tactical mistake on the part of congressional Republicans. Not only did the made-for-cable-news theatrical episode detract from the unmitigated disaster that was the Obamacare rollout, but President Barack Obama and company have no more interest in negotiating over policy than they do in competently handling any other aspect of governing a free nation.

Using a pseudo-threat of pseudo-default and the resulting economic calamity isn’t much of a weapon against a ruling party that:

a) believes debt is not really a problem and b) bases its entire economic policy platform on arranging economic calamity.

We can argue about tactics — the wisdom of whether or not Republicans should have bothered with the shutdown strategy in the first place, or, having gone that route, whether or not they should have held out longer. Maybe they could have. Chances are, hitting the debt ceiling would have passed as unnoticed as the shutdown. Except that, like the shutdown, it would have given Obama a splendid political weapon.

Politics is perception. So, largely, is economics. As any analyst will tell you, markets react to perception. Hitting the debt limit wouldn’t have meant an automatic default. But it would have meant the government would have to prioritize what it pays for — servicing debt instead of funding a study of the mating habits of some obscure species of desert tortoise,

for instance. And just like he did when he needlessly barricaded — I love Mark Steyn’s phrase “Barrycaded” — various unmanned open air monuments and memorials, the president would have selected spending priorities on purely political grounds and further damaged the GOP’s chances of winning enough elections in coming years to be able to try and repair some of the damage of the past five years.

But the long and the short of it is that we’re still left with, for all the GOP’s futile efforts, the same problems: unsustainable debt and an oxymoronically named health care plan that, even if it doesn’t collapse under its own weight, will make the cost of health care rise to even more crushing levels.

Conservatives are absolutely correct in trying to insist any increase in the debt limit be accompanied by compensatory spending reductions. In fact, this is a very moderate position. Serious efforts must be directed at addressing the main drivers of that debt — namely the entitlement programs of Social Security, Medicare and Medicaid — for any progress to be made on reducing debt. Economic growth — the encouragement of which the government’s role is limited mainly to instituting such pro-growth tax reforms as flattening and reducing the income tax, eliminating capital gains tax and sharply reducing the corporate rate, for starters, and removing itself from the path of enterprise — would certainly help. But without some structural curb on the spending that’s using up the resources, debt control will be as elusive as a stable Palestinian government.

Meanwhile, Obamacare rolls on unabated. There’s little question the program will have disastrous consequences to the American health care system, even if somehow the electronic component of it gets sorted out in due course. Even if Obamacare “works,” it can’t work over the long term.

The problem it’s trying to tackle is that of health care being too expensive in this country. The reason health care is too expensive is there’s too much artificial demand for medicine. We overtreat ourselves. We do so because there’s a disconnect between what health care costs and what most people pay for it. For most people, insurance pays the bulk of the expenses, after a relatively modest investment on our part. And a large number of people (Medicaid recipients) pay nothing or almost nothing for health care. And this number will only expand under the Affordable Care Act.

Obamacare doesn’t address the root cause of higher health care costs, but instead simply injects artificial elasticity into the health care market in increasing demand for health care. This might make liberals feel better about themselves, but will inevitably result in the cost of that care rising.

Whether the GOP “caved” in the recent showdown is irrelevant. That’s because the twin problems of crushing, spending-fueled debt and the economic calamity of Obamacare — which Republicans legitimately, if quixotically, attempted to ameliorate — will not only remain, but also get worse under the current makeup of the government in Washington. The only fix is electoral.

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