Republicans Are Drunk on Repealing Taxes and Regulations

Unwilling to confront risk, the results of their policies remain to be seen

House Speaker Paul Ryan. Mark Wilson/Getty Images

At the end of last month, Senate Majority Leader Mitch McConnell unveiled his chamber’s response to the health care bill passed by Paul Ryan’s House Republican caucus. As with most “policy debates” on the national stage these days (if “policy” and “debate” are apt to describe our vacuous tribal pep rallies), the chasm between the party faithful of the Democrats and Republicans was wide and deep. To Republicans, the Senate and House bills fulfill the promise to “repeal and replace” Obamacare, their decade-old battle cry. To many conservative politicos, they inject market incentives into the health care industry and push back on Big Government. To Democrats, the bills are nothing short of a debacle as a result of which, as Sen. Bernie Sanders put it, “people will die.”

If this sounds familiar, it should. On issue after issue, the Republican “invisible-hand” deregulation agenda squares off against the “protect the people” mantra of Democrats. The most striking comparison is with environmental protection, and climate change in particular. A handful of policy wonks and retired (politically moderate) deans of the Republican establishment aside, the Republican Party has concluded—and even enshrined in its 2016 platform—that no regulation or tax to address climate change is too small to justify full-throated opposition.

The Republican argument rests on the premise that Big Government stifles productivity, innovation, freedom and economic growth. In fact, the intellectual case for the evils of Big Government is pretty strong. In government-run systems, incentives for efficiency are replaced with incentives to follow—or circumvent—arbitrary and arcane rules. Following rules takes time and money, often creating a drag on the economy. Worse, if the rules don’t make sense or give unfair preference to certain players, talented actors with workable solutions stay out of the game. All it takes are a few hours replacing a driver’s license or applying for a permit to refresh one’s memory of these facts.

There is a problem with the Republican approach, however, that can be summed up in one word: Risk.

On issue after issue, congressional Republicans engage in optimistic scenario development, indulge wishful thinking, and spout ideological talking points—anything to avoid considering the potential negative outcomes that could befall the American public as a result of their laissez-faire policy prescriptions.

In an earlier, more rational and less cynical age, Republican policymakers considered risks and sought to minimize them while limiting the damage to market incentives and keeping government solutions small-scale. In short, it was serious solution-seeking through optimization. Today, however, Republican policymaking cannot countenance any tax increase or new regulation. Don’t take my word for it; Grover Norquist claims 90 percent of congressional Republicans have signed on to his “Taxpayer Protection Pledge” opposing all new taxes. And President Trump in his first month in office issued an executive order mandating that for every new regulation, two existing must be eliminated, which in practice brings the gears of government oversight to a virtual halt. Under Trump, the Environmental Protection Agency is being gutted and new rules and watchdog functions rolled back willy-nilly.

Some problems, such as rule-setting in the marketplace to level the playing field and managing negative environmental externalities (e.g., by dumping waste, the polluter saves money while everyone else suffers), require government solutions. The extreme rigidity of the reigning GOP ideology, however, necessitates wishing out of existence the problems that government-led approaches are meant to solve.

Which brings us back to health care reform. Buying insurance is fundamentally about reducing risk: By paying in advance for the right to medical care you might not need, you protect yourself against adverse health outcomes and financial insolvency. Yet remarkably, few voices in the public debate seem to be focused on risk, which is arguably as important as cost and as results. The purpose of Obamacare was to reduce individual risk at limited additional cost to insurance markets and government. The House and Senate Republican plans exacerbate risk for them all.

Could the Republican plan yield an improvement on the status quo? Yes, it is possible. Everyone knows Obamacare is far from perfect. Conservative health care wonks insist the Senate health care reform bill will improve health care and save money; Avik Roy claims, “It’s likely that, if the Senate bill passes, more Americans will have health insurance five years from now than do today.”

But the likelihood of their prognostications coming true is in the eyes of the beholder. The respected and non-partisan Congressional Budget Office concluded that, if the Senate plan becomes law, 22 million fewer Americans will be insured by 2026, of which 15 million will drop from the Medicaid rolls. Could the CBO be wrong? Sure. Is it worth betting on the alternate Republican scenarios? Not with my money.

It’s a safe bet, though, that Mr. Roy is not among the working poor or middle class who bear any risk of being without health insurance in 2026. Instead, many on the right are fine treating the American public as guinea pigs and the country’s health care system as one giant test tube. What if the health care overhaul doesn’t save the billions we expected? Rural hospitals and insurance companies go bust? The opioid epidemic dramatically worsens? These are very possible scenarios that haven’t been accounted for.

Republicans are betting that looser constraints on health insurance premiums, fewer obligations on insurance companies to insure individuals with pre-existing conditions and pay for a predetermined set of treatments, and bigger subsidies for young people will bring down the price of insurance and convince a flood of millennials to buy, thereby stabilizing insurance markets. The problem is that in scrapping the individual mandate, lowering subsidies for older working class individuals, and allowing into the market flimsy and high-deductible insurance plans no one wants, markets could just as easily collapse. Why take that chance? And what happens when the people who don’t buy insurance or have their Medicaid cut get sick? Don’t ask. That’s a personal risk Republicans don’t want to hear about.

In a similar category are climate change risks: bad outcomes that many experts predict but that Republicans portray as overhyped and possibly wrong, therefore not worth planning for. What happens if carbon emissions actually harm the climate? And if private innovation alone doesn’t solve it? Or sea levels actually rise faster than we can adapt and developing countries collapse due to climate change-induced droughts and hurricanes?

Don’t call congressional Republicans. See no evil, hear no evil, make provisions for no evil.

Andrew Eil is an independent consultant with expertise in climate change and clean energy policy, international development and sustainable investing. As former Coordinator of Climate Change Programs at the State Department, he managed a $75 million portfolio of clean energy programs. Prior to the State Department, Andrew worked for the World Bank. Andrew has an MPA from the Woodrow Wilson School at Princeton University and a BA in Russian history and literature from Harvard University. 

Republicans Are Drunk on Repealing Taxes and Regulations