MITT ROMNEY, THE SERIOUS ONE

In a speech last week, Mitt Romney grasped the toughest issue — how to reform entitlements to avoid a fiscal catastrophe — and he sketched out a sophisticated way to address it.

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In a speech last week, Mitt Romney grasped the toughest issue — how to reform entitlements to avoid a fiscal catastrophe — and he sketched out a sophisticated way to address it.

In the Marx Brothers movie that is the Republican presidential race, Mitt Romney is Zeppo. He doesn't spin out one-liners. He's not the rambunctious one. He's just the earnest, good-looking guy who wants to be appreciated.

But Romney continues to run an impressive presidential campaign. Last week, while the Twitterverse was entranced by Herman Cain, Romney delivered his most important speech yet. It was politically astute and substantively bold, a quality you don't automatically associate with the Romney campaign. Romney grasped the toughest issue — how to reform entitlements to avoid a fiscal catastrophe — and he sketched out a sophisticated way to address it.

The speech was built around the theme that government should be simpler, smarter and smaller. First, he established his bona fides. Romney reminded his listeners that when he went to work at the Winter Olympics in Salt Lake City, he inherited a $370 million deficit. He left behind a $100 million surplus that went into an endowment fund.

Then he argued that over the decades government has become bloated and lethargic. In World War II, the Navy commissioned 1,000 ships a year and had 1,000 employees in the purchasing department. Today, Romney said, we commission nine ships a year but have 24,000 employees in the department.

Romney then laid out a measured fiscal strategy, starting with a promise to bring federal spending down to 20 percent of gross domestic product, which is about the precrisis average. He then turned to entitlements.

The fact is that you are not a serious presidential candidate in 2012 unless you have a specific method to reform these programs. Medicare costs are devouring the federal budget. The country can't wait another four years to address this problem.

A few weeks ago, Romney seemed to realize this. He sent out senior policy aides and close advisers to harvest the best entitlement reform ideas from the conservative policy johnnies. The experts were impressed. The Romney campaign operates like a smooth-running White House, with a process to identify the core issues, cull ideas and present options to the candidate.

In his speech, Romney proposed some sensible Social Security reforms: gradually raise the retirement age and slow the growth of benefits for richer retirees. His Medicare plan is more radical because the problems are more fundamental.

Medicare's central problem is that it institutionalizes the fee-for-service payment system, which rewards providers for the quantity of services provided, regardless of quality, outcome or cost.

True Medicare reform replaces the fee-for-service system with premium support. Government gives people money, rising slowly over time, to shop around for their own private insurance plans. The system would reward efficiency and quality, not just quantity. Competition between providers would unleash a wave of innovation.

Romney proposed keeping Medicare just as it is for everybody currently in or close to the system. But he would slowly introduce a premium support system, with less-affluent beneficiaries receiving more support than more-affluent ones.

Many reporters claimed that the Romney approach is similar to the Paul Ryan plan. It's actually closer to the plan that Pete Domenici, a former Republican senator, and Alice Rivlin, a former Clinton budget chief, devised. Romney would create a premium support system, but he would also give seniors the option of a government-run insurance plan that works a lot like the current fee-for-service Medicare.

This is politically smart because Democrats cannot legitimately charge that Romney is "ending Medicare." But it is also substantively smart because, while people like me believe that intense competition among private insurers will lead to more innovation and cost reduction, we can't really be sure. The Romney approach sets up a prudent experiment. If real competition works, seniors will migrate toward that. If it doesn't, seniors will stay in Medicare and conservatives will have a lot of rethinking to do.

Romney's plan still has some holes in it (how fast would premium supports grow?), but it exemplifies the sort of big reformist vision that should be at the center of a serious Republican campaign. The United States is beset by sclerotic institutions: health care, the tax code and the education system among them. To thrive, these institutions need a burst of creative reinvention. The point is not to talk gloom and austerity but to confidently set the stage for an avalanche of innovation.

Romney is running in an atmosphere in which it is extremely difficult to remain serious and substantive. Yet he is doing it. Democrats should not underestimate him.

© 2011 New York Times News Service

MITT ROMNEY, THE SERIOUS ONE 11/08/11 [Last modified: Tuesday, November 8, 2011 4:46pm]

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