In “Undoing Past Policies: How Likely Are Repeals in the 119th Congress?” political scientist Jordan Ragusa lays out a number of conditions that must obtain if repeal of past policies is to succeed. He makes very good points.

The main example of a successful repeal that I know of is one that does not fit all of Ragusa’s criteria: the 1989 repeal of Ronald Reagan’s Medicare Catastrophic Coverage Act. I remember it well. I was home from school that day sick, and I turned on C-SPAN to watch the vote. I realized that I was watching something historic: the repeal of an entitlement program. Those are among the hardest programs to repeal.

How and why did it happen so soon after the law was passed the previous year? I used to give the example in my class when I was teaching a segment on public choice. Public choice provides the answer.

The usual program that passes is one that imposes dispersed costs to create concentrated benefits. Think of the farm program, which taxes tens of millions of people, and imposes costs on over 300 million consumers, to subsidize about 3 million farmers. Or think of Medicare, which taxes over 160 million people to subsidize 66 million people. [Note: this difference with Medicare and taxpayers is not as stark as I expected when I started writing this post: I had expected that under 50 million people were subsidized by Medicare.]

But Reagan’s act was different. It gave catastrophic care benefits to everyone on Medicare. But to finance the benefits, it imposed higher taxes on only the highest-income recipients of Medicare.

Here’s how New York Times reporter Carl Hulse put it:

Angry Americans voice outrage at being asked to pay more for health coverage. Lawmakers and the White House say the public just doesn’t appreciate the benefits of the new health law. Opponents clamor for repeal before the program fully kicks in.

He got a key verb wrong. They weren’t “asked.” If they had been asked, they probably wouldn’t have had a problem with the program. They were forced. That’s how taxes work.

The measure had passed by a bipartisan vote: 328 to 72 in the House and 86 to 11 in the Senate.

But once higher-income seniors saw their new taxes, they were pissed.

Hulse wrote:

The dramatic climax came on Sept. 17, 1989, when Representative Dan Rostenkowski, the gruff and burly chairman of the Ways and Means Committee, was hectored in his Chicago district by a band of angry older voters. They surrounded and blocked his car and forced him to escape on foot before he could make his automotive getaway. A news crew caught the episode on camera.

The video he references in the quote above, which is only 1:27 long, is worth watching. A lot of people saw this.

The next month, Congress voted to repeal. The vote was bipartisan.

The reason this illustrates a public choice insight is that the costs of Reagan’s 1988 bill were concentrated and the benefits were dispersed.

 

Interesting note: Rostenkowski later went to prison for mail fraud. Here’s what Wikipedia writes:

Charges against Rostenkowski included: keeping “ghost” employees on his payroll (paying salaries at taxpayer expense for no-show “jobs”); using Congressional funds to buy gifts such as chairs and ashtrays for friends; diverting taxpayer funds to pay for vehicles used for personal transportation; tampering with a Grand Jury witness; and trading in officially purchased stamps for cash at the House Post Office.[22][23]

The picture above is of Rostenkowski.