Caveat lector

Our current howler (part II): A tale of three numbers

Synopsis: In 1996, the Medicare debate was a tale of three numbers. The press corps kept giving you two.

The Surplus Illusion
Editorial, The Washington Post, 7/5/99

Chief of Panel Seeks Increase for Medicare
Robert Pear, The New York Times, 6/3/99

Commentary by Newt Gingrich
The NewsHour, PBS, 11/14/95

“Tell Newt to Shut Up”
David Maraniss and Michael Weisskopf, Touchstone, 1996

In its July 5 editorial, the Washington Post offered quick response to the change in the projected federal surplus, arguing that the cheerful projections were based on assumptions that were almost wholly illusory. Writing about the 1997 balanced budget agreement, the Post also offered an intriguing aside:

THE WASHINGTON POST: In the 1997 legislation, the president and Congress were trying not just to balance the budget but to give a tax cut. To do both they had to cut spending on paper, if not in fact, but as ever they found it easiest to agree on which spending not to cut...They ended up making a lot of cuts in Medicare, some of which they may be about to ease, and achieving most of the rest through a promissory note. [Our emphasis]

The possibility that 1997 Medicare cuts might be eased had been reported in the New York Times a month earlier. Here is Robert Pear's opening paragraph; Pear refers to Gail Wilensky, chair of the Medicare Payment Advisory Commission:

PEAR: The head of a Federal advisory commission, an influential Republican, said today that Congress should increase Medicare payments for certain nursing home and hospital services because budget cuts appeared to be harming the quality of care for some patients.

The reference to a senior Republican complaining about 1997 Medicare cuts might surprise a casual observer. Throughout the course of the 104th Congress (1995-96), the new Republican majority, under Speaker Newt Gingrich, had pushed a balanced budget proposal, always insisting that their budget proposal did not contain Medicare "cuts." The battle over the GOP Medicare plan became the defining issue of a two-year budget struggle—and the centerpiece of a battle about Bill Clinton's character. As the 1996 election approached, Gingrich was openly calling Clinton a liar for his references to "Medicare cuts."

The 1997 Medicare adjustments were substantially smaller than those the GOP had first proposed. The 1997 agreement called for $116 billion in Medicare savings over five years; the original GOP plan, in 1995, called for $270 billion in savings over seven years. But here was Wilensky—"widely respected by lawmakers of both parties for her technical knowledge of the program," Pear said—suggesting that some of the adjustments in spending be rolled back closer to previous levels.

If a casual observer were confused, one could offer a simple explanation. The Medicare debate of 1995-96 was the press debacle of the decade—a two-year descent into conceptual chaos in which the entire mainstream press corps took part. As the debate unfolded, press and public were each confounded by aggressive arguments from the new Congressional leadership, in which Speaker Gingrich repeatedly insisted there were no "cuts" in the GOP plan. Over time, the Speaker's arguments largely won the day; by mid-1996, the press corps was generally convinced that Clinton was deceiving the public with his talk about Medicare "cuts."

Now here was Wilensky, saying that patient care had been adversely affected by the more modest 1997 agreement. How to explain the apparent disconnect between this state of affairs and the GOP's original argument?

In fact, the original GOP Medicare argument was one of the truly remarkable sophistries of recent years—a casuistic presentation which the press corps never challenged in two years of numbing debate. In the argument, Speaker Gingrich and his followers routinely presented just two parts of a three-number story, grossly misleading all who heard them, including the mesmerized press. Anyone who followed politics during the 104th Congress heard the Speaker's standard argument. Here it is, as expressed on the NewsHour, in November 1995:

GINGRICH: President Clinton talked about Medicare cuts [in the GOP budget]. There are no Medicare cuts. We increase Medicare from $4800 per senior citizen [in 1995] to $6700 per senior citizen [in 2002]...That's an increase, that's not a cut.

Anyone who followed the Medicare discourse heard some version of this two-number presentation, in which Gingrich compared 1995 spending ($4800) to proposed 2002 spending ($6700) to prove there were no "cuts."

Omitted was a crucial third number. At the time that Gingrich appeared on the NewsHour, the Republican-supervised Congressional Budget Office was estimating that it would cost around $8000 per recipient, in the year 2002, to maintain the current Medicare program. The Republican budget proposed spending $6700 per person on a program it would cost $8000 to maintain. Obviously, when that third number was thrown into the mix, Gingrich's cheerful budget proposal took on a whole new aspect.

To be fair, the Republicans were recommending changes in Medicare designed to make it more cost-effective. But could the Republicans maintain the established level of services at the spending level they had proposed? Most citizens would at least have wondered about that, had they been given all parts of this three-number story. But throughout 1995 and 1996, Gingrich made his presentation on major news shows—and we never once saw the third number mentioned. No one attempted to put the GOP spending proposal into a meaningful context.

One pair of journalists did put the third figure before the press and public. In 1996, David Maraniss and Michael Weisskopf of the Washington Post published "Tell Newt to Shut Up," a book on the "Republican revolution." (The book was excerpted in the Post in December 1995.) In an invaluable chapter on the Medicare battle, the writers described the GOP plan:

MARANISS AND WEISSKOPF: Average spending per recipient in the Republican plan rose from $4800 to $6700 in seven years, numbers that were etched in the minds of every Republican. But when quality of service was factored in, Democrats scored big. To provide today's level of service seven years later would cost $8000 per beneficiary. And premiums for more pensioners would rise to help generate the huge savings Republicans had envisioned.

Maraniss and Weisskopf, almost alone in the press corps, managed to cite the third number. But they were clearly wrong in their second sentence above; Democrats never "scored big when quality of service was factored in," because quality of service was virtually never "factored in" in the course of the two-year debate. The public was virtually never given that crucial third number—was never told how much it would cost to maintain the existing program. Because of that remarkable breakdown, the public received little warning that the Republican plan might lead to cuts in services—the process that is now being acknowledged and addressed in Wilensky's report to the Congress.

Throughout 1995, the proposal to spend $6700 per person on an $8000 program was described by the Speaker as a "40% increase in Medicare." The press corps' failure to clarify this presentation was the public information debacle of the decade. More tomorrow on that failed discussion, which managed to grind on for an astounding two years. And we begin to explain our central question: why a press corps which was able to clarify the surplus discussion proved so hapless in the Medicare debate.

Tomorrow: We begin to explain why the press corps failed to clarify the Medicare discourse. And we offer links to more detailed discussions of the 1995-96 Medicare debate.

Note on numbers: In late November 1995, the GOP adjusted its spending proposal upward. From that point on, it proposed spending $7100 per Medicare recipient in the year 2002.