- The Washington Times - Wednesday, January 29, 2003

WASHINGTON, Jan. 29 (UPI) — The UPI think tank wrap-up is a daily digest covering opinion pieces, reactions to recent news events and position statements released by various think tanks. This is the second of three wrap-ups for Jan. 29.

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The Heritage Foundation

WASHINGTON — State of the Union reaction

by Michael Franc

In the days leading up to last night's State of the Union, journalists and pundits gravely informed us that this was President Bush's most important speech. He would have to juggle the twin threats of a weak economy at home and an increasingly unpopular and ill-conceived war abroad. Public confidence in his leadership was on the wane, and his presidency stood on a precipice, poised to tumble and shatter if he did not rise to the occasion.

How did he do?

Bush responded to these lofty expectations with a robust domestic agenda. The common theme among his proposals is that the solution must be long term in nature and rooted in Bush's sense of equity and opportunity. To revive the economy, Bush advocates permanent, growth-oriented tax cuts rather than one-time steroid shots like rebates or temporary tax "holidays." Rather than shy away from the most controversial element of his tax plan — ending the double taxation of dividends — Bush confronts it head on, claiming the moral high ground that perplexed the class warriors in the efforts to end death taxes and the marriage penalty.

While it is "fair" to tax a company's profits, Bush told us, it is "not fair to again tax the shareholder on the same profits."

Bush evoked the theme of generational equity in making his case for personal retirement accounts carved out of a portion of Social Security pay roll taxes, saying, "we must offer younger workers a chance to invest in retirement accounts that they will control and they will own."

On Medicare, Bush used an equity argument that strikes at the heart of Congress and preemptively paints his Capitol Hill opponents as hypocrites. He announced that his reform plan will resemble Congress' own highly regarded health system: "Just like you, the members of Congress, members of your staffs, and other federal employees, all seniors should have the choice of a healthcare plan that provides prescription drugs." What's good for the goose …

Finally, Bush established a standard for growth in government spending, also rooted in equity, that ordinary Americans struggling with their family budgets will appreciate. Link future growth in the federal budget to growth in the family budget, in this case four percent.

With large projected increases for the Department of Defense and a new $6 billion bio-terror initiative in the Department of Homeland Security, this means most other domestic agencies will see no increase in spending. As Bush said elsewhere in his speech, this is a "good start."

These proposals, perhaps buoyed by a possible retirement on the Supreme Court, guarantee that 2003 will continue the recent trend of unrestrained political warfare on Capitol Hill. Enjoy.

If the spirit of Winston Churchill suffused last year's State of the Union, the ghost of Abraham Lincoln entered this year as Bush turned to the war on terror. Consider this passage: "Our war against terror is a contest of will, in which perseverance is power. In the ruins of two towers, at the western wall of the Pentagon, on a field in Pennsylvania, this nation made a pledge, and we renew that pledge tonight: Whatever the duration of this struggle, and whatever the difficulties, we will not permit the triumph of violence in the affairs of men — free people will set the course of history."

One hears a president who still mourns the dead of Sept. 11, 2001, even as he prepares us for the long struggle that lies ahead. Just as the Union victory at Gettysburg convinced Lincoln that the Union would ultimately prevail, the arrest of 3,000 suspected terrorists and the successful prevention of several terrorist plots in the last year — including the arrest of the members of terrorist cell in Buffalo, N.Y. — give this president an obvious and overwhelming confidence that America will do the same.

As with his domestic agenda, Bush used this speech to stand his ground and, indeed, charge forward in the face of mounting criticism. Was it a mistake to define Iraq, Iran and North Korea as an "axis of evil?" No, says Bush, because each of these three regimes are unique and "different threats require different strategies."

Would he back away from the Bush Doctrine's justification of unilateral action in the face of an imminent threat? One week after the French ambush at the United Nations, Bush reiterated his oft-stated view that America's national interest stands at the center of our foreign policy, saying: "the course of this nation does not depend on the decisions of others. Whatever action is required … I will defend the freedom and security of the American people."

Isn't there a role for containment in the war on terror? "Trusting in the sanity and restraint of Saddam Hussein is not a strategy," he said, "and it is not an option."

And what about Iraq? Would the president agree with the pacifist Left that Saddam Hussein poses no threat to the United States and back off?

Judging from the number of House members and senators who stood and applauded the president's latest, and most thorough, indictment of the homicidal regime in Iraq, one suspects that the nay saying and carping of recent weeks from some quarters of Capitol Hill will end abruptly. At the heart of the recent surge in skepticism with respect to our campaign to disarm Iraq is the implication that the United States and the U.N. inspectors shoulder the burden of proof to find the weapons of mass destruction. Bush deftly turned that premise around, laying it on Saddam's doorstep. "It is up to Iraq," he emphasized, "to show exactly where it is hiding its banned weapons … lay those weapons out for the world to see … and destroy them as directed."

Perhaps more than anything else, last night the president knew he needed to link Saddam and all of his evil to al Qaida and the war on terror. Convince the American people that the forthcoming campaign against Iraq — if there is one — is but one piece of a much larger puzzle. The essence of this argument is that, as Bush put it, "secretly, and without fingerprints, he could provide one of his hidden weapons to terrorists, or help them develop their own"

"Imagine," Bush continued, "those 19 hijackers with other weapons, and other plans — this time armed by Saddam Hussein. It would take just one vial, one canister, one crate slipped into this country to bring a day of horror like none we have ever known."

One imagines that, upon hearing this scenario, many members of Congress cringed and realized that, with these words, Bush upped the stakes considerably for those who publicly oppose the likely confrontation with Saddam's Iraq.

Seems like a successful speech to this observer.

(Michael Franc is vice president for government relations at the Heritage Foundation.)

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WASHINGTON — State of the Union reaction: Disarming Iraq and more

by Helle Dale

Foreign policy occupied fully half of Tuesday night's speech, appropriately so for a country that may be moving closer to war. The president provided not just new information regarding Iraq's weapons of mass destruction but a new sense of momentum as well.

The U.S. policy on Iraq is grounded in American principles and security interests alike, Bush said. "The qualities of courage and compassion that we strive for in America also determine our conduct abroad … This conviction leads us into the world to help the afflicted, and defend the peace, and confound the designs of evil men."

Appropriate compassion was embodied in aid for the rebuilding of Afghanistan, for fighting AIDS in Africa and for planning a better future for the people of Iraq, whom the president urged to realize that, "Your enemy is running your country."

Meanwhile, Bush's promised reassuringly to fight the "man-made evil of terrorism," to extend the protections for Americans at home through the new Department of Homeland Security and through the fielding of missile defense, which he urged Congress to fund. He also urged the intelligence services to support the creation of a "terrorist threat integration center," to share their information about potential attacks.

Ultimately, the main story of Tuesday night's speech was case Bush made for disarming Iraq. It is a case that has been made before, and which Bush made again, and did with passion, resolution and deep conviction.

The nexus between terrorists and outlaw regimes striving for or possessing nuclear, chemical weapons of mass destruction is the greatest threat to the United States and our allies. Bush, in his speech, echoed the report of chief U.N. inspector Hans Blix to the Security Council on Monday, which detailed Iraq's recalcitrance in the face of international inspectors.

"The dictator of Iraq is not disarming. To the contrary, he is deceiving," Bush said.

Countering U.N. Security Council members Russia, China and France, who argue for giving the inspectors more time, Bush put them on notice that arms control is "not about process, but about results."

In his clearest statement yet that this country will move ahead with or without the United Nations, he said that while the United States has asked other nations to join, "the United States does not depend on the decisions of others. I will defend the freedom and security of the American people."

Three months ago, Bush reminded his congressional audience, the United Nations gave Saddam yet another chance to disarm and account for his weapons of mass destruction. In return the Iraqi dictator showed the world his "utter contempt for the United Nations," Bush said. You have only to look to North Korea to see what will happen if we allow Iraq to continue in this direction, he noted.

Americans heard for the first time the evidence presented by Bush that Iraq is violating its cease fire obligations, including the charge that Iraq is actively thwarting the work of the U.N. arms inspectors, continuing to acquire equipment potentially for the production of nuclear weapons, and has produced no evidence that its agents of biological and chemical weapons have been destroyed. The examples were compelling, yet there will be more to come.

On Feb. 5, said Bush, Secretary of State Colin Powell will present an even stronger and more detailed case to the U.N. Security Council. The Bush administration has begun to build its case against Iraq in a way it has not been done before.

"The call of history has come to the right country," the president stated. For Iraq the final countdown has begun.

(Helle Dale is deputy director of The Heritage Foundation's Davis Institute.)

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WASHINGTON — State of the Union response: The model for real Medicare reform

by Robert E. Moffit, Ph.D.

In his State of the Union address, President George W. Bush is advocating a major reform of the troubled Medicare program. He has proposed $400 billion over 10 years to accomplish that ambitious goal.

The president has also settled on a specific model for reform. The best model for Medicare reform is not conventional, private employer-based health insurance, where personal choice of plans and benefits is either restricted or nonexistent. It is not an updated version of the 1993 Clinton administration proposal to enroll millions of senior citizens in large, federally regulated and controlled managed care networks. It is not another variation of the flawed "Medicare+ Choice" program, burdened by congressionally engineered and inefficient administrative pricing as well as reams of costly and incomprehensible red tape.

The president's preferred model for Medicare reform is the Federal Employees Health Benefits Program, known as FEHBP, the consumer-driven system of competing private insurance plans that covers members of Congress, the White House staff, the federal judiciary, the U.S. Postal Service, and approximately 9 million federal workers, retirees, and their dependents.

In his speech the president stated, " … Just like you, the members of Congress, members of your staffs, and other federal employees, all seniors should have the choice of a heath plan that provides prescription drugs."

White House officials have further clarified the substance of the president's agenda, stating that, "All seniors will be given choices of a variety of health plans — similar to those enjoyed by members of Congress."

As members of Congress know, there are indeed a variety of health plan options available to them and their staffs, including health plans offered by traditional insurance companies, union and employees plans, Preferred Provider Organizations, managed care plans, and recently, a health plan combining health reimbursement accounts with traditional insurance, and managed care plans.

The president previously outlined this model for reform in July 2001. This model is also broadly based on the recommendations of the majority of the National Bipartisan Commission on The Future of Medicare. The Bipartisan Commission majority stated that the best option to provide high quality healthcare, particularly for the baby boom generation, is to transform Medicare into a new program that looks very much like the FEHBP.

The FEHBP is older than Medicare and Medicaid, and older than managed care networks in employer based health insurance. It is a public — private partnership, with a historically solid record of cost control and patient satisfaction.

The 17-member Bipartisan Commission, created in the Balanced Budget Act of 1997 to address the long-term problems of the Medicare program, was tasked with making formal Medicare reform recommendations to the White House and the Congress. In 1999, after 18 months of hearings, meetings, and working group sessions, the commission adopted a reform proposal to create a "premium support" program for Medicare, replicating the premium support system of the FEHBP, by a vote 17 to 10, one vote short of the statutorily required number to make a formal recommendation.

While the commission was unable to muster the one extra vote for a formal recommendation in 1999, the new Congress can work with Bush and build upon its formidable accomplishments. One key accomplishment is that a bipartisan majority of public officials on that panel have already agreed on a major plan for structural reform to improve Medicare on the basis of patient choice and market competition.

Just as importantly, the commission's extensive policy work, including the expert testimony, the data collection and financial analyses of the Medicare program — offered by professionals from the Congressional Budget Office, the General Accounting Office and private organizations like the Lewin Group — remains a treasure trove of detailed policy provisions. This reservoir of research and analysis is an excellent resource for the new Congress in the drafting of comprehensive Medicare reform legislation.

While current retirees should not be excluded from Medicare reform, major structural changes in the Medicare program should be put in place for the next generation of retirees. Medicare reform is for the future. Specifically, real Medicare reform would accomplish three major objectives:

— A massive reduction in bureaucracy and red tape. It would create an administrative structure that guarantees a minimum of regulation and bureaucracy, guarantees a core benefits package, including catastrophic coverage and prescription drug coverage, available to every Medicare beneficiary. This would replicate the successful experience of the FEHBP.

— A flexible, solid and competitive benefits package. Every new retiree or Medicare beneficiary who wants to enter a reformed program should be legally guaranteed a core benefits package. Benefits, medical treatments and procedures or therapies — beyond the core package — should be subject to consumer demand and market-based supply; in other words, what patients want and what doctors and other medical professionals can deliver. The Medicare reform proposal should also maximize health plan flexibility in the setting of benefits, premiums and co-payments. This, too, would replicate the successful experience of the FEHBP.

— Personal freedom for patients and professional independence for doctors. Most importantly, Medicare reform would advance the professional independence and integrity of physicians and enhance the personal freedom of patients in the choice of medical services and benefit packages. Medicare reform would also allow retirees to carry any unused funds from Health Reimbursement Arrangements, or HRAs, with them into retirement, and would also allow retirees to choose a medical savings account option is they wanted it.

The true test of Medicare reform is that it would allow patients to spend their own money on legal medical services of their choice without bureaucratic interference. In no other government program, except today's Medicare program, do such statutory restrictions exist.

(Robert Moffit is director of Domestic and Economic Policy at the Heritage Foundation.)

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