Matthew Yglesias offers some gracious words about my review of Paul Starrâ€™s book on health care reform. But he professes â€œworry that Pollackâ€™s take on this falls into the progressive reformer trap of underplaying the centrality of tax policy disagreements to current American politics.â€
To summarize Mattâ€™s argument, Democrats oppose increasing taxes on the non-rich. Republicans say they oppose increasing taxes on the rich. Soâ€¦.
If you donâ€™t tax the rich, and you also donâ€™t tax the non-rich, then you canâ€™t really expand social welfare provision. One doesnâ€™t need to say much more about interest group politics or anything else to reach this conclusion. Thatâ€™s not to say that interest group politics or partisan games are irrelevant, but simply to note that as regards expansion of the welfare state the system is constipated in a profound way over a persistent tax policy disagreement. The idea that writing a health care bill that included lots of ideas conservatives had embraced in the past but also featured lots of increased progressivity of the tax code, would attract bipartisan support is a form of tax policy denialism.
Mattâ€™s right to note our national policy gridlock caused by our gridlock in tax policy. In my view, this tax policy gridlock actually makes interest group politics and partisan games more toxic than they would otherwise be.
Suppose you were designing a health reform plan to constrain future costs while covering the uninsured. Suppose further that you knew that you couldnâ€™t really raise taxes on anyone. In a different political and institutional context, you would push that much harder on the levers of fiscal discipline to accomplish this reform. These levers would include a â€œstrongâ€ public option and other forms of aggressive demand-side marketing bargaining to constrain prices of pharmaceuticals, medical devices, and services. These levers would also include aggressive use of comparative effectiveness research to scrutinize coverage of potentially inappropriate services.
Many of these levers are politically difficult or impossible. Why? Because various constituencies and â€œprotected publicsâ€ Starr discusses believe they have little to gain and something to lose in pulling these levers, because these measures create political opportunities to rail against death panels, because sclerotic legislative structures make it too easy to thwart large and coherent proposed health reforms. Once again, tax policy gridlock reflects and maybe amplifies other pathologies in our political system.