Lies, bribes and hidden costs

Bush's Medicare quagmire -- and the striking parallels to Iraq.

By Eric Boehlert

Published April 6, 2004 3:39AM (EDT)

Last year as the Bush White House tackled overhauling Medicare and invading Iraq, it used strikingly similar political methods for both. Today the two would-be victories have morphed into mirror-like crises and scandals. Both are subjects of widening investigations.

If both the Medicare bill and the war in Iraq had gone as the White House planned -- seniors cheering the new drug prescription plan as Iraqis were supposed to welcome U.S. troops into Baghdad like it was Paris 1944 -- Bush's reelection campaign would be a formality.

"Medicare and Iraq tell us all we need to know about the White House," says Rep. Robert Wexler, D-Fla. "They operate behind a series of misrepresentations, followed by coverups."

Bush's Medicare program and the Iraq war both fit a striking pattern: The real motives were clouded in secrecy and false claims; the true costs distorted; administration officials pressured not to reveal true information; and the White House has relied on taxpayer-funded propaganda operations to try to prop up both.

The Medicare bill was supposed to be "one of the crowning achievements" of the Bush administration, the conservative Washington Times recently noted, but "so far it has turned out to be one of the messiest policies, being attacked on several fronts." Just as support for Bush's Iraq policy erodes over time, polls show senior citizens are increasingly uneasy with the new Medicare plan the White House insists will save them money on prescription drugs.

There are now three separate government investigations looking into the passage of the Medicare bill, including one bribery charge. Meanwhile, the U.S. intelligence regarding Iraq, and the countless administration pronouncements about Saddam's mighty arsenal, proved to be so badly off the mark that President Bush was forced to appoint an independent commission to study what went wrong. And a special prosecutor is investigating who committed the crime of making public the identity of covert CIA operative Valerie Plame to conservative columnist Robert Novak -- "two senior administration officials," he wrote -- an outing that was an attempt to discredit Plame's husband, former ambassador Joseph C. Wilson IV, who had proven that Bush's claim in his State of the Union address about Saddam Hussein seeking uranium to build nuclear weapons was false.

Today, the battle over Medicare is becoming intense and bruising, like the one over Iraq. "I think the very size of the legislation, the closeness of the vote, and perceived politics at stake, all added a level of bitterness that was very unusual. It's entered into the realm of the dark legend, even by Washington standards," says Robert Moffitt, director of health policy studies at the Heritage Foundation, a conservative think tank that opposed the legislation on the grounds that it was too expensive. "I've never seen anything like it."

Moffitt says fiscally conservative Republicans, who traditionally would have opposed the Medicare bill -- the biggest expansion of an entitlement program in nearly 40 years -- are fuming that the actual price of the Medicare bill was suppressed by the administration. "They had grave reservations about voting for it," he says. "They were told repeatedly by the Republican leaderships, 'It's a fiscally responsible bill, we promise you.' Now there's a lot of buyer's remorse up on the Hill."

Indeed, one of the most striking similarities between Medicare and Iraq is the central allegation that the administration intentionally withheld the actual price tag from lawmakers until after they had voted.

Last November, in an extraordinary vote held open for an unprecedented three hours by the speaker of the House, the Republican leadership, after leaning on its members, eked through passage of the historic Medicare bill by a count of 220-215. (Most Democrats opposed it, calling the bill a giveaway to the pharmaceutical industry.) Pivotal to passage were reluctant yes votes by 13 conservative Republicans who had initially balked at the $395 billion price tag. During the pre-dawn hours of the Nov. 22 Medicare vote, they were eventually persuaded to vote yes. Bush signed the bill into law in December.

The following month, the administration announced the program would actually cost $534 billion to implement, nearly 40 percent more than advertised. "Had people known that real price, the bill wouldn't have ever made it to the House floor for a vote," says Rep. Rahm Emanuel, D-Ill. (Similarly, the administration refused to even submit an estimate for the war while Congress was debating whether to give the president authorization to use force.)

Then, last month, Richard Foster, the chief actuary at the Centers for Medicare and Medicaid Services, the top independent Medicare cost analyst, revealed he had been threatened by the Bush administration that he would be fired if he told Congress the true cost of the policy. He received orders in June 2003 from his boss, Thomas Scully, the Bush-appointed director of the Medicare program, instructing him to ignore information requests from members of Congress who were drafting the drug bill. In the past, lawmakers had free access to the actuary's estimates. And they assumed they were getting a true statistic as they considered the bill this time.

The Wall Street Journal first reported March 18 that Foster received a note from Scully's aide ordering him to answer the Republicans' questions but warning him not to respond to Democratic queries -- "with anyone else until Tom Scully explicitly talks with you -- authorizing release of information. The consequences for insubordination are extremely severe."

One Democratic staffer on the Hill who worked on the Medicare bill has told reporters she confronted Scully months prior to the vote about not being able to get Foster's independent estimates and was told, "If he gives that [information] to you, I will fire him so fast his head will spin."

Foster says he and others knew months before the November vote that the real cost would be more than $500 billion, which would have likely killed the bill's chances for passage. He told the Washington Post he thought Scully was working at the behest of the White House to hide the real Medicare costs. A White House spokesman has insisted that Bush didn't learn about the higher estimate until after the Medicare legislation was signed into law.

One man who could likely answer that question is the president's chief healthcare advisor, Douglas Badger. Foster believes Badger knew about the higher estimates, which suggests that the administration's most senior officials also knew. But last week the White House refused to allow Badger to testify under oath before Congress. Scully, for his part, also refused to testify in person before Congress.

The Department of Health and Human Services' Inspector General is now investigating Foster's claim that he was threatened with dismissal for doing his job.

If Foster was nervous about his job, he needed to look no further than the build-up to the Iraq war for an example of professional retribution taken out on government officials who crossed the White House over the sensitive issue of costs. During September 2002, Bush's former White House economic advisor, Larry Lindsey, in an interview with the Wall Street Journal said the war might cost between $100 billion and $200 billion. The sky-high estimate set off a storm of controversy and was soundly dismissed as folly by Lindsey's administration colleagues.

Three months later Lindsey was forced out of his White House post. Today, his estimate stands as the most accurate offered up by anyone associated with the administration. To date, the White House has sought more than $150 billion to pay for the war, according to the Washington Post.

The radical way the Medicare bill was rammed through, with Democrats shut out of the legislative process, was an exercise of partisanship on steroids, say critics. "The process reflected the fact Republicans run the government, the House, the Senate, the courts, and it's given them a sense of arrogance. It's a power that's made them act in ways never been permitted before," says Waxman. "Thirty years ago it was unthinkable to hold an open vote for three hours. And even Nixon during Watergate wasn't offering bribes to party members for their vote."

The Medicare-related bribe allegation is all the more startling -- and credible -- because it was raised by an angry Republican member who claimed his own leadership team dangled a $100,000 campaign contribution in front of him in return for his Medicare vote. When that didn't work, according to Rep. Nick Smith, R-Mich., a fiscal conservative and former dairy farmer, party leaders then threatened to derail Smith's son's upcoming campaign to succeed him in Congress.

Appearing on a Kalamazoo radio station Dec. 1, Smith explained, "The prestige of leadership is partially at stake if the vote doesn't succeed for the majority. And that's what happened in this case. They didn't have the votes ... They started out by offering the carrot, and they know what's important to every member, and what's important to me is my family and my kids."

"This has got to be investigated," says Moffit at the Heritage Foundation. "People have got to go under oath." The House Ethics Committee and the FBI have now launched investigations into whether Smith was offered a bribe. Smith, who has edged away slightly from his original bribery allegation, has promised to cooperate.

With Iraq, the White House forced a war-authorization vote just weeks before the midterm elections, while Republicans used the issue of national security to their partisan advantage. Bush's drumbeat insistently sent the message that to be opposed to him was to be weak or accommodating on terrorism.

But Bush's suppression of true costs may still carry a political price. "If the American people sense in their guts they're not being dealt with in a straightforward fashion, and they know something is wrong, and they don't buy it," says Rep. Wexler. "And that's what's happening with Medicare and Iraq."

"The take-away for voters is there is something wrong here [in Bush's Medicare plan], that it costs too much," says Robert Blendon, a professor at the Harvard School for Public Health and Kennedy School of Government. "There's a little taste of scandal in leaning on the Medicare actuary and covering up the costs. But more importantly it's becoming unraveled because seniors don't like it."

More than half of senior citizens (55 percent) surveyed last month by the nonpartisan Kaiser Family Foundation said they had an unfavorable impression of the new drug program, with just 17 percent expressing a favorable impression. In the latest New York Times/CBS News poll, 43 percent of those 65 and older said they thought Bush administration policies had actually "increased the cost of prescription drugs for the elderly"; only 8 percent said they thought those policies had decreased the cost.

"The best way to describe it is a political boomerang for the Bush administration," says Ron Pollack, executive director of Families USA, a liberal healthcare lobby. "I haven't heard too many people in the Republican Party rejoice with where they are with Medicare legislation right now."

Asked in March by an Associated Press poll which party is more likely to make prescription drugs for seniors more affordable, just 33 percent said Republican. Meanwhile, an overwhelming 71 percent of seniors said the federal government should negotiate with drug companies for lower prescription drug prices for seniors. Yet that is expressly forbidden in Bush's Medicare plan.

"Bush just spent $535 billion, and the bill's unpopular. That's not easy to do," says Blendon. "Usually you can expect a boost, a political thank-you attached to passing something that expensive."

But Republicans have a solution to turn those soft Medicare poll numbers around; the administration is funding a new $12 million TV ad campaign, paid for by taxpayers, that touts the new Medicare changes with the slogan: "Same Medicare. More benefits." The ads, which are supposed to spread the word to seniors about the new law, cheerfully promise, "It's the same Medicare you've always counted on, plus more benefits like prescription drug coverage."

Critics of the new law, even on the right, complain the commercials are nothing more than propaganda designed to sell flawed legislation. Pete Sepp, vice president for communications at the National Taxpayers Union, a conservative advocacy group, recently told the Ft. Lauderdale Sun-Sentinel, "The ultimate irony here is that the taxpayers are paying millions of dollars on ads that promote a program that will cost them billions or trillions down the road."

The media firm being paid to place the ads is run by Alex Castellanos, the same man who created ads for Bush's 2000 campaign, who is working for Bush's reelection, and who worked for healthcare companies to get the Medicare bill passed. Democrats in Congress had demanded that the General Accounting Office investigate. Last month the GAO concluded that while the ads were misleading, they were not illegal.

No sooner had the GAO ruled than it was forced to launch another investigation into claims that the same Medicare media campaign had sent out a misleading "video news release" to local TV news departments touting the new Medicare law. Federal law prohibits public funds from being used for "publicity or propaganda purposes within the United States not heretofore authorized by the Congress."

Roughly 10 minutes in length, and provided to news stations via satellite, the video includes comments by Health and Human Services Secretary Tommy Thompson and shots of President Bush signing the Medicare drug bill three months ago.

The video includes a 90-second segment identified as a "story package," in which a female narrator, presented as a journalist, describes the new drug plan: "The new law, say officials, will simply offer people with Medicare more ways to make their health coverage more affordable," the narrator reports, before concluding, "In Washington, I'm Karen Ryan reporting." Viewers are never informed that the government produced and filmed the news package or that reporter Ryan is a contract employee reading a prepared script.

The 90-second lookalike segments ran 53 times as straight news on 40 local television affiliates in 33 markets around the country before the New York Times uncovered them, bringing the practice to a sudden halt.

Journalism experts were stunned by the boldness of the fake news campaign. "Why not do a straightforward public service announcement and identify the source of information? Why have people pretend to be journalists?" asks Susan Tifft, a professor of journalism at Duke University. "It's outrageous that viewers were being duped. And this is not Milton Bradley trying to sell games. The ads have serious policy implications and they come during an election year."

But this administration has a history of trying to go around the media "filter" and deliver its story untainted. It was able to masterfully manage the press coverage during the Iraq war. The Department of Defense, an in effort to "get our message out," is creating a 24-hour satellite news and information channel -- dubbed "C-SPAN Baghdad" -- to directly feed local television stations with interviews with U.S. authorities. Like the Medicare "news" segments, it would eliminate the need for journalists as middlemen. Wexler quips, "His administration has taken the misrepresentation of facts to new heights."

Over the next months, the three investigations arising out of Bush's handling of his Medicare bill will present their findings, and they will undoubtedly give seniors a focus for their discontent about the Bush plan as the campaign intensifies. Medicare has become Bush's domestic quagmire.

Eric Boehlert

Eric Boehlert, a former senior writer for Salon, is the author of "Lapdogs: How the Press Rolled Over for Bush."

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