Compromise and Consequences

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Compromise and Consequences

The ever-insightful Paul Starr has a fine meditation on the nature of compromise up at TNR, in the context of reviewing one book by political philospher Avishai Margalit and another by political scientists Amy Gutmann and Dennis Thompson. He discusses subjects ranging from the the slavery compromises of the late eighteenth century to the Yalta Treaty of 1945, but eventually arrives at the contemporary quandries over gridlock and compromise in American politics, which Gutmann and Thompson are especially anxious to resolve. You should read the whole review, but I wanted to draw attention to a stunning passage involving the consequences of earlier compromises over taxes and health care that still greatly affect our policy debates:

Consider two areas of policy, taxation and health care, that Gutmann and Thompson bring up repeatedly. Their example of a great compromise on tax policy is the Tax Reform Act of 1986, which cut the top marginal tax rate from 50 percent to 28 percent. The law was supposed to simplify the tax code, but the complexity has since crept back, while effective tax rates on the upper brackets remain low. In retrospect, the 1986 legislation was one of the key steps in national policy contributing to increased income inequality....
When viewed broadly, the history of health policy does not provide much of a case for the virtues of compromise. Step by step, the United States has created the most complicated and expensive system in the world. In 1954, Congress codified a special tax benefit for people with employer-provided insurance. The great compromise of 1965 produced Medicare’s hospital insurance plan on one basis, Medicare physician coverage on another, and the Medicaid program—Representative Wilbur Mills’s famous “three-layered” cake, with all too much frosting on the top for the healthcare industry. Later compromises gave us a Children’s Health Insurance Program and a prescription drug program for seniors. Add in a myriad of private plans, and it is no wonder that administrative overhead runs so much higher in health care in the United States than in countries with a more coherent framework of national policy. In both health policy and the tax code, then, compromise has been the mother of complexity and unfairness.

Starr doesn't specifically point this out, but it's striking that in current Republican demands for a "deal" on taxes, the offer is to make rates even lower in exchange for getting rid of some of the loopholes that have steadily crept back into the code since 1986. When you add in the rate-lowering exercise Bush got through Congress using reconciliation during his first term, you have two rounds of rate-lowering accompanied by more and more "loopholes" mostly benefitting high earners, coupon-clippers and corporations. So the cumulative effect is that people favoring a progressive tax system are expected to compromise a third time on rates in order to restore key features of the earlier compromise which didn't stick. It's a very asymmetrical situation, to use the term that Starr and others have so often applied to the more general issues of partisan and ideological polarization.