In a short span of weeks in early 2020, Congress passed over $2 trillion in legislation aimed at rescuing the U.S. economy from the scourge of SARS-CoV-2, the novel coronavirus. Currently, a third funding bill is on the way.
So is Congress doing a good job of spending our money? What’s next on the COVID-19 policy agenda? How do we best address the economic dislocation that is affecting everyday Americans and vulnerable populations? And are there things we can do to help Congress better navigate complex policy challenges like this one?
To help us think through these questions, FREOPP President Avik Roy invitedRep. Mike Gallagherof Wisconsin’s 8th District to join theAmerican Wonk podcast. At 36 years old, Rep. Gallagher is one of the youngest members of Congress and has emerged as one of the most interesting and energetic engines of conservative thinking in that chamber.
Among other things, Rep. Gallagher and Roy talk about how to address the COVID-19economic apocalypse; decoupling America’s economyfrom China’s; Gallagher’s expansive thoughts on theunsexy but essential project of reforming the way Congress works; and how members of Congress navigate the treacherous politics ofhealth care reform.
You may listen to the podcast here:
Below is a lightly edited transcript from the conversation.
$2 Trillion Stimulus Process
Avik Roy:Welcome back to another edition of American Wonk, where we dissect the facts and figures that shape policy and politics in America. I’m your host, Avik Roy, President of the Foundation for Research on Equal Opportunity.
As we record this, the world is contending with the global Coronavirus pandemic. Congress has spent over $2 trillion in an effort to prop up the economy. Did they do the right thing? What will they do next? And what else should we be thinking about in this turbulent time for public policy? To answer these questions, we are joined by Congressman Mike Gallagher, representing Wisconsin’s 8th congressional district, representing Green Bay and other parts of Northeastern Wisconsin.
Welcome, sir.
Mike Gallagher:It is a pleasure to be with you.
Avik Roy:How are you this morning?
Mike Gallagher:You know, it’s a beautiful day in my basem*nt, in Green Bay, Wisconsin, where I’ve spent most of the last three weeks trying to have a positive influence for my constituents.
Avik Roy:Well, that has been an interesting journey, particularly recently, as we know Congress has recently passed over $2 trillion worth of stimulus in three bills, particularly this most recent one called the CARES Act. What’s it been like being involved in that process? What do you take away from these last couple of weeks, these last couple of months?
Mike Gallagher:Well, it really has been a whirlwind. I mean, if you sort of take each of the three evolutions separately, the 1.0 was as simplest. This was the over $8 billion in direct appropriation to help tackle the crisis early on through funding, supplies, testing, PPE, things like that. I think almost everybody voted for that.
Appropriation 2.0 was a little bit trickier. This was the bill involving the expansion of sick leave and paid medical leave. Well-intentioned, no doubt. I mean, the idea that we shouldn’t force people, particularly those living paycheck to paycheck, to potentially have to come to work while they’re sick and thereby negate our efforts to slow the spread definitely makes sense to me. However, the reason I and the other members of the Wisconsin delegation voted against it is because it seemed odd in the way it sort of put all the burden on small and medium size businesses with the promise of an opaque tax credit to recoup their expense later on.
In other words, we’re about three weeks into the shutdown right now. I mean, this has already been an extinction level event for a lot of small businesses in my district in Northeast Wisconsin. They simply don’t have the cash on hand to be able to pay their employees not to work for weeks. And also the exemption for businesses over 500 employees seemed a bit odd.
However, Congress then did not come back into session. We left the morning after we passed that bill, or rather the same morning because the bill passed around 1:00 AM on Saturday morning, and I remember thinking when I saw some of my colleagues at the airport in D.C., waiting to go back, that it seemed, one, very irresponsible to dismiss Congress, 435 organisms that had just been in close proximity and interacted with thousands of people, and then you’re going to shoot them to every congressional district in the country. But also on a more practical level, knowing that we would have to come back and pass another bill. But through a bizarre parliamentary procedure, we passed the $2 trillion bill without anyone actually having to vote for it.
I think it’s too early to tell what will and what won’t be effective. I do think there are some problems with the small business aspects of it. There are some disincentives to work in the unemployment provisions. Perhaps the most important part of it will be the $100 billion that has been directly appropriated to the health care system.
My own naive view, and Avik, I’d be curious if you agree, is that, until you get the virus under control or defeat the disease, to put it more colorfully, there’s simply aren’t enough federal dollars you can print to cover the economic costs of saying, “Shut down.” And so we need to tackle the disease with urgency, and that incidentally is the best thing we can do for our economy.
Avik Roy:Yeah, I think that’s right. And that we have to tackle the disease between some combination of testing and treatment in order to bring the economy back, but we also have to think hard about—what sectors of the economy can we bring back first? Where should we target the testing? And at FREOPP, we’re trying to do that work to say, “Okay, we all know that we need to test more and we need to treat more; we need to develop good treatments in order to get the economy back going so that people can go back to work.”
But are there stages, are there ways to phase that in, so that we’re leveraging or directing the test to the place where we can get the most bang for the buck economically? That’s what we’re trying to work on. And I have to say, I share your concern that you spent $2 trillion in a very hasty legislative process; only a fraction of that is going to be well targeted. I mean, I feel like the bill was better than I hoped and worried that it would be. I think there was a lot of stuff, particularly on the Senate side that seemed reasonable, but still a lot of stuff in there that isn’t going to be that well targeted, throwing checks to every single person under a certain income bracket.
Not everyone in that income bracket has lost their job; many have, certainly a lot of people are facing hard times, with some that need that money more than others. And I feel like just throwing money at everybody in equal amounts didn’t really address that problem.
Timelines and Testing
Mike Gallagher:Well, I wonder, and maybe you could help me think through this, this is sort of two assumptions that I worry might be flawed. One is the overall timeline of it, right? In other words, I’ve been thinking a lot about, traditionally, when Americans face crisis, particularly in war, we have time to mobilize; one thinks of Freedom’s Forge and the way in which we mobilized our entire economy in World War II, and we started just churning out bombers and all sorts of things in Ford factories, and it’s a beautiful thing. However, that didn’t happen overnight; that took at least three years. In many ways, we had begun preparing for it prior to the attack on Pearl Harbor.
What’s different in this case is, one, the timeline is so much shorter, right? In other words, the pandemic can spread in a matter of weeks and months while we try and fumble in order to shore up supply chain vulnerabilities in our medical and pharmaceutical supply chain and build surge capacity into a hospital system where it doesn’t exist. And I just bring that up to suggest that if three months from now, while we are living off the $2 trillion, we’re still scrambling to make enough masks, ventilators, or get testing where it needs to be, I feel like the virus will have already won via fait accompli at that point. I wonder if there are flawed assumptions around the timeline.
And then also on testing, my wife had a friend who had to go to the hospital—healthy, young—and it took three tests, including the final one being an invasive test (I think it was effectively like a graft of his lung) in order for him to turn out positive. And it made me very much more skeptical about some of the drive-thru testing that we’re trying rightly to ramp up here in this country, and think about the implications of that. It would suggest there’s going to be a ton of false negatives in the broader population and that may further create difficulties for our ability to control this thing.
Avik Roy:Yeah. With any test, and this is something you learn in year one of medical school, there are going to be false positives and false negatives. And a big part of how you develop a test for something like Coronavirus COVID-19, SARS-CoV-2, is you’re trying to minimize the false positives and the false negatives, and you keep testing and refining to get to that point.
Now in this case, we didn’t have the time to do that normal process where you really work hard to work out the kinks; you needed to get things out there right away. So there’s going to be, I would assume, a higher rate of false positives and false negatives. Balancing that out is the fact that science and technology have gotten better, so our ability to develop tests based on the genetic sequence of the virus is better.
Another thing that’s helped in this case, and it’s also helped on the treatment side, is the Asian experience with the first version of SARS. The reason why this virus is called SARS-CoV-2, or severe acute respiratory syndrome coronavirus 2, is because SARS-CoV-1 was the original SARS from the early 2000s that a lot of Asian countries dealt with. So the genetic sequence of that virus is pretty similar to this one, and so that enabled, I think, a bit more rapid ramp up of the testing.
All that to say that we’ve got to get testing more widespread; we all know that, but that’s proven to be challenging. And also, you’ve got a lot of different people developing tests now—that’s a great example of American ingenuity, but you got to have some way of saying, “Which of those tests are working, which of those tests are not working? Which ones have fewer false negatives and positives?” And that’s where the FDA’s got to do its job and get those things quickly evaluated.
Mike Gallagher:Well, it’s funny—we have hospitals here in Northeast Wisconsin that are incredible, and in a matter of hours are building these mobile testing facilities, but we’re discovering (painfully) that even if you increase the ability of a hospital to collect a test, the test obviously then still, until we get the point-of-care tests or the blood tests (I don’t fully understand yet), has to be couriered down to the state labs in Madison and Milwaukee or to the private labs. And we’re still facing seven to 13 day turnaround times, in part because we don’t have enough reagent to process the test, which then creates all these other really interesting and frustrating secondary effects because hospitals that are ordering testing kits and reagent from private suppliers then have, or at least claim, FEMA coming in and redirecting that to higher priority areas.
You have this competition between States and within States based on priority or less priority areas, but then FEMA will say, “No, it’s not us redirecting, it’s that the manufacturers of these components can’t satisfy the demand that’s out there right now.” And again, I think this does come back to the fact that we have very little to no surge capacity built into our system. I’ve studied that issue mostly in the defense space, but I’m struck by the parallels within the medical industry, and also just how many single points of failure there are in our supply chain.
If you follow the trail far enough, the road leads back to Beijing; and obviously in a crisis like this, you do not want to be dependent upon the largesse of the Chinese Communist Party when it comes to things like masks, APIs for drugs, let alone ventilators or reagent for testing.
How long will the shutdown last, and what are its impacts?
Avik Roy:I want to bookmark that comment on China and get back to it, but before we do that, we’ve been talking a little bit about this issue of how long the economic shutdown will have to take place. And I think what I hear you implying and it’s something that I actually believe and agree with, that I think the population in general, and a lot of people who are economic participants, don’t appreciate that the economic shutdown may last longer than advertised. The hope was originally—well, President Trump said—“Let’s get back to business by Easter;” then it’s, “Well, maybe let’s get back to business by May 1st.”
What if this stretches through April, through May, into June, possibly later? I don’t know if people are mentally and psychologically prepared for that at this point.
Mike Gallagher:Yeah, I would agree with that. I wrote an op-ed in a Wisconsin publication called Wisconsin Can Cancel the Apocalypse. And yes, your nerdier readers will note that that is a not-so-subtle reference to a great movie called Pacific Rim that is an under-appreciated work of art. But basically, I just tried to sort of tease out, what would the pillars of the next phase look like based on the recognition that shutdown is not a viable long-term strategy? I mean, as I said before, it is an extinction-level event for a lot of our businesses, small and medium in particular.
I think there will be enormous not only physical health costs to a prolonged shutdown, but also mental health costs to a prolonged shutdown. And obviously that’s all related to the economic costs of a prolonged shutdown, particularly one that would induce a great depression-like event. And so, while I’m not saying we can minimize the threat of Coronavirus, and while I’m explicitly saying that anyone still partying on spring break or that stubborn boomer parent of yours who thinks this is just a seasonal flu, we need to tell them that they are wrong.
I do think we need to consider what phase two looks like. And it can be a hybrid model of continuing to quarantine the most vulnerable population based on what we know about spread, assuming that we get our testing under control, and trusting our businesses to figure out what social distancing looks like within the unique context of their organization. Because some can do more telework, others, particularly in the manufacturing industry, will have to get creative in terms of how they run their factory and their shifts; but ultimately, they, not a governor (and certainly not the President of the United States), are going to be able to design a strategy that works for them. It’s going to have to be a bottom-up strategy that is geared towards the unique aspects of each city and county and community, and by extension, each State.
And so, I just think at a minimum, we need to be thinking through that. And I worry that what I see emerging is a politicization of this issue along the lines of all out shutdown with no end in sight on the one hand and Great Depression on the other hand. And obviously, that is a false choice, and there has to be a variety of options that lie in between those two extreme poles.
Avik Roy:You know, you mentioned the Great Depression. Moody’s just came out with an analysis showing that just based on the businesses that have had to shut down (not the second order or third order effects), economic output has declined by 29% in the United States. And in the Great Depression, from 1929 to 1936, economic output declined by 26%. Meaning we’ve had a bigger decline in economic output already in a matter of a month than we had in the Great Depression over seven years. This is effectively a short-term depression.
In Wisconsin, I’m curious to know—in your district, when you talk to your constituents, how do they feel about all this? Have they been staying at home? Are they frustrated? What are they saying to you? What are you hearing?
Mike Gallagher:Well, I think it depends entirely on their profession and background, right? So, if you talk to everybody in the health care industry, obviously, it’s interesting, and I don’t fully understand it right now. We obviously haven’t been overrun yet, and hopefully we won’t ever be overrun in the way that New York is being overrun. It seems like they are stretched to their capacity right now. However, we are already seeing shortages of PPE, and the hospitals, I think it’s fair to say, are very concerned about our ability to withstand a surge, which is odd to me since we’re not having that surge right now. But I guess it gets to this issue of how integrated the supply chain is. In other words, if Chicago is needing a lot of supplies, it’s necessarily sapping from our supplies even up here in Northeast Wisconsin.
Everyone in the health care industry is taking it incredibly seriously, and they’re doing a great job in terms of public service announcements and getting that message out to the general population. I’d say by and large, based on my own observation, most Northeast Wisconsinites are trying to do social distancing responsibly. There are still some pockets of resistance, but, for example, I went to a gun store the other day to get some ammo, and everyone was being very diligent about it. They wouldn’t let more than, it was 10 people at the time, 10 people into the store at any one time. They had a person who was specifically in charge of making sure everything was spaced out.
And so, this is all anecdotal, but I think most people are taking it seriously. However, within the business community, I think particularly since we haven’t yet seen a massive surge here in Northeast Wisconsin, there is increasing concern about the economic consequences of this. And I think it’s not a, “Hey, this is overkill, we’re going overboard with how we’re doing all this;” it’s more distinguishing between essential and nonessential businesses is hard if not impossible. Because every businesses thinks they’re essential and can make a case that they feed into something essential that our State needs to do.
It’s more, “Hey, trust us to take care of our employees, because at the end of the day we care more about our employees. And by the way, we need them and want them to be our employees when we come out of this far more than the governor does or any politician.” And so, I would say there is mounting frustration right now, or at least a recognition, that we cannot stay shut down forever. And the final thing I say, Avik, is that for every parent whose kid has now been forced to stay home from school, who in many cases are not going to finish the school year, whether they are in grade school, high school or college, I think there’s a mounting concern about what that means for their child’s education. And a concern I hear among parents is that, “Our kids simply cannot afford to fall further behind,” because not all schools have figured out how to weather this storm with online learning, and not every parent has the ability to spend all day homeschooling their kids.
Impacts on travel and the dairy industry
Avik Roy:It’s a huge issue. In fact, our education scholar, Dan Lips, is working on a paper on just this topic, about how children of lower income parents have the toughest time, right? Those of us who may be more educated ourselves or have more resources, have more spare time, are able to give our kids more of those supplemental learning opportunities; but if you’re a single mom working two jobs and you have to go to work because you’re in an essential industry, what’s your kid doing right now? You don’t have much in the way it helps.
We could talk for hours, if not days about that, and I think over the ensuing months and perhaps years, we’re going to be learning about all the dislocations that this have caused. I’m looking at a map right now that the New York Times put out that came out of Google data—looking at reduced travel based on people’s GPS on their cell phones. And Wisconsin is one of the States that actually has had pretty significantly reduced travel, mainly because, I guess, there was a stay-at-home order in Wisconsin relatively early on like most of the big 10 upper Midwest States. And as a result, Wisconsin locked down earlier, and maybe will get out of this a little bit earlier as well.
Mike Gallagher:Well, let’s hope so. And obviously Wisconsin is just geographically and demographically more dispersed than a lot of other areas, but it’s interesting—we’re America’s dairyland. We’re known for having a lot of cows. In some counties we have more cows than people, and those cows produce a lot of milk that also produces a lot of cheese. And we lead the world in that. And we’re very proud of that.
But what we’re seeing right now is, think about the impact of that reduced travel on dairy. Just think about how everything accumulates, right?
Avik Roy:It’s been hard to get milk and eggs at the grocery store, at least here in Austin, Texas. I don’t know about other parts of the country. That’s been the hardest thing to get.
Mike Gallagher:It’s really interesting. Certain grocery stores are rationing your ability to buy milk and eggs, which actually makes no sense because the dairy farmers are also being forced to dump their excess product right now. So there isn’t a shortage of supply, at least for fluid milk right now. And certainly when it comes to cheese, there is a massive need for them to offload the stockpiling of cheese they have right now. So something is getting lost in translation, but demand is down in the sense that, on your daily commute, you may not be stopping at QuikTrip (or whatever the gas stations are in Texas, I feel like everyone just has their own gas and it’s the land of the free home of the brave down there or it goes right from the well to everyone’s individual home)—you’re not stopping and getting that extra carton of milk on your way home, right? I mean, behavior is changing, and it is, by extension, hurting a lot of our most valuable industries. And for dairy farmers, milk prices have been persistently low for years now. They were also hit in many cases by just the overall trade environment. And so they’re really having a tough time weathering this and all the unintended consequences of having to stay shut down for weeks.
The role of China
Avik Roy:Now let’s talk about China for a bit. It’s obviously something that has come up, particularly in certain quarters; not just the role of China in propagating this pandemic by suppressing information about it, but also elements related to the degrees to which we are dependent on China for certain types of manufactured products and ingredients.
You spend a lot of time thinking about China from a hawkish point of view, from a national security point of view. What can you share with us in terms of your latest thinking on that topic?
Mike Gallagher:Well, I should confess at the outset that I did not spend the last three years in Congress focusing on our pharmaceutical supply chain. You know my background is military, and I spent a lot of time focusing on the fragility of our Defense Industrial Base, particularly the intersection of our Defense Industrial Base and the future of the telecommunications market and 5G internet. I wrote a series of articles in 2017 saying that if we had to mobilize for a Great-Power War with China or another country, we would not be able to in the way we did in World War II because of how brutal our industrial base has gotten.
Now, this crisis has forced me to similarly analyze our pharmaceutical supply chain and work with Senator Tom Cotton on legislation that could potentially strengthen it. We have a bill that would attempt to incentivize pharmaceutical companies to bring their manufacturing either back to the United States or at least to countries that won’t threaten to cut off exports of APIs and plunge us into a sea of Coronavirus, as Chinese Communist Party officials recently have.
I actually think, regardless of which way the political winds blow in the coming months and years, the new consensus position in US foreign policy is a hawkish position, and it is related to what I see in both parties as a desire to bring manufacturing back to the United States. I think we underestimate, however, because of how comfortable we’ve all gotten with cheap Chinese goods in the last decade, how costly that will be. And certainly, the pharmaceutical industry, I think it’s fair to say, would oppose any attempt to rebalance their supply chain in the short-term because it would cost them money.
And I think most Americans may say nice things about American-made manufacturing—made in America this, made in America that—but we haven’t yet really thought through how much this is going to cost all of us. But at the end of the day, I would say the cost of being dangerously dependent on a potentially hostile foreign power far outweighs the economic costs, or what it’s going to cost all of us, in terms of the cheap stuff we buy on Amazon every single day.
On Serving in Congress
Avik Roy:I want to ask you also about, you mentioned you’ve spent three years in Congress. You were elected in 2017. You actually have a pretty interesting background. You’re one of the youngest members of Congress, grew up obviously in Wisconsin, went out to Southern California to Mater Dei, which is an incredible athletic powerhouse where a lot of Heisman Trophy winners and other professional athletes have played. Tell me about that. What was it like going to high school with so many high-profile athletes, and who were some of the cool athletes who were there when you were there?
Mike Gallagher:Well, when you’re not a skilled athlete, as I am not, it’s embarrassing to go to a high school that’s that powerful, but Mater Dei is amazing. I went to junior high with Matt Leinart, and then high school with Matt Leinart. He was a year above me, and obviously he went on to win the Heisman Trophy. He had a really great career. Really good guys.
Well, if we didn’t win the State Championship in basketball or football, we were always near the top of that, but Mater Dei is an amazing, amazing school. I think it’s still the largest Catholic school West of the Mississippi, and really that’s where my interest in foreign policy started. Because I remember being a senior when 9/11 happened, and though I didn’t fully understand the implications of it, and though I didn’t, at the time, rush out to enlist in the Marine Corps, it did start a spark of interest in what was happening outside of the United States, what was happening outside of Wisconsin, and ultimately led me to study the Middle East and the Arabic language in college.
And the more I went down that rabbit hole, the more I started thinking about military service, and I didn’t know anything about the military. Everyone in my family is actually a physician, I’m the only non-physician. They’re all OB/GYNs in Northeast Wisconsin, which is the most valuable political thing ever. When everyone in your family has delivered the babies in Northeast Wisconsin, people feel indebted to them. And we also have a pizza restaurant in Northeast Wisconsin called Gallagher’s Pizza—Irish Pizza—I’m not sure how that makes any sense, but nonetheless, it exists.
But I wanted to do something different, and I just got interested in what was happening in other parts of the world and in the Middle East in particular; the more I studied the language and the culture, the more I felt like I could serve my country by serving abroad. Joining the Marine Corps was absolutely the best decision I ever made. And through some series of bizarre events, it led me eventually to Congress.
Avik Roy:Well, you’re being somewhat modest, because where you went to college was Princeton, then you got a Master’s and a PhD in International Relations from Georgetown. You worked for Scott Walker and the US Senate Committee on foreign relations. And then all of a sudden, you were asked by a lot of people to run for Congress when a seat opened up, and here you are.
What’s it been like, I mean, you’re here in Congress now, you’ve been there for three years, you worked as a staffer in the Senate, not on the House side; what’s it like being in Congress as a member versus being a staffer? As a staffer you get to see how this place works on the inside as well, but what have you learned being a member versus being a staffer in Congress?
Mike Gallagher:You know, that’s a really interesting question. I think the first thing is that… Yeah, I remember when I was the staffer on the Senate Foreign Relations Committee. I worked for the chairman, Bob Corker, who’s a great guy. And my portfolio was Middle East and North Africa, so basically everything roughly from Morocco to Iran, and then counterterrorism globally. I used to think that that was an impossible portfolio to genuinely have an expertise on.
In other words, I knew a decent amount about Iraq and Syria, but it was very difficult to stay abreast of everything that was happening, particularly sort of post-Arab Spring turned Arab Winter throughout the entire Middle East and North Africa. And I just always felt like I was struggling to get above water. Now, that problem has been exacerbated in the sense that it would be a luxury right now to only focus on the problems of the Middle East. As a member of Congress, I have to at least think about domestic policy in addition to foreign policy globally, and that is a challenge.
And I think a lot of what I’ve seen successful members to do, and what I struggle, however painfully, to do myself is—you just really have to get good at delegating, trusting your staff, recruiting a good staff. And then so much of what you do is not related to policy, it’s just basic bread and butter constituent services. How do you help people navigate getting their social security benefits, their veterans benefits or navigating the immigration system? And that’s some of the most rewarding work you do.
The second, and I think strange, thing that I didn’t fully appreciate when I was a staffer is just how much power the staff has. In other words, in a modern Congress where everyone is prioritizing fundraising most of the time, and the demands of re-election get evermore onerous, I think it has the unintended and bad effect of transferring so much of the power to write bills, negotiate bills, to unelected staffers. And I don’t say that as a criticism of staff, because I come from that world, But the fact is, I mean, just look at the $2 trillion bill we passed without a vote or even a debate or the ability to amend the bill. How much of that bill do you think was actually written by members of Congress versus the professional staffers that do this full-time? It creates a sense of, I think, inertia or status quo mindset in Congress, that I’m not convinced is healthy.
I wrote a bit about this at the end of my first term in an Atlantic article entitled “How to Fix Congress.” I think the sin of the modern Congress, which started in the 70s and accelerated in the 90s under Republicans, is that it’s concentrated all of its power at the very top of the organization, and this abets the bigger trend, which is the transfer of power from the legislature itself to the executive branch. There’s a lot there, but those are my initial impressions three years in.
Avik Roy:I love that you’ve embraced this totally unsexy and dry topic of congressional process improvement, which is incredibly important, but obviously makes so many people’s eyes roll over.
Mike Gallagher:I don’t know why I’m so fascinated by this. You’re right, there’s no political value in focusing in it at all, there’s no personal value. People roll their eyes and shun you, your colleagues hate you when you talk about it, but for whatever reason, I’ve always been fascinated by the evolution of Congress as an institution, and then the competition between the branches. And then most of my academic work before I got sucked into politics was focused on the late 40s and early 50s. I was always fascinated by the way in which both Truman and Eisenhower managed their congressional relations, and also I think what I would call the myth of the Cold War foreign policy consensus.
In other words, we look back on the Cold War as a time when everyone was a statesman; we all put aside our political differences and we fought the Soviets. Well, if you actually dig into the historical archives, that is not true. I mean, they had intense political disagreements. There were times when Eisenhower worked more closely with Democrats since the Republicans in his time were more isolationists. I mean, it was always a mess. We were always dealing with a ton of crises, and I’ve always just found that very fascinating.
Avik Roy:If we were having this conversation again in 2030, what will you hope you have accomplished in public life given how realistic you are about how Congress works?
Mike Gallagher:Well, honestly, I hope I’m not still in public life in 2030. Part of my view is—I think the current Congress, and politics more broadly, has become a career in ways that I don’t think it should. I think we’ve strayed from the framers model of the citizen legislature where you serve for a period of time and then you go back home. However, I don’t see that changing anytime soon.
What do I hope I will have accomplished? I think I have a little bit to contribute to the debate about geopolitical competition in general and US-China competition in particular, and this question of, how do we responsibly rebalance some of our resources from a region that I spend a lot of time (which is CENTCOM), towards a region that will inevitably need more of our attention in the future (INDOPACOM)? And that’s not an easy thing to do, but it’s something that I spend a lot of time thinking through.
By extension, I hope I will have contributed a little bit to how we modernize not only the military in general, but the Navy and the Marine Corps team in particular, and how we better integrate the Navy and the Marine Corps team. And then finally, I do think this question of how we responsibly decouple from China—and I’m not saying completely decouple, but we’re going to have to find certain areas, I would suggest pharmaceuticals, medical devices, and then anything intersecting with defense equipment, are prime candidates—we’re going to have to find areas where at least we build a moat around those industries and we aren’t as dependent on China.
I actually think that’s going to be the most interesting question of the next decade. Certainly, if you look at Chinese efforts like Made in China 2025, their goal is to domestically produce and eventually globally dominate key industries. And right now we don’t have a plan that is comprehensive enough to counter that. The only sort of final thing I put in that is the question of allies. I’ve always thought that there were… How do I put this?
A Chinese academic went in the New York Times a few years ago, I forget exactly when, and he said something that’s haunted me ever since. I forget his name even, but he said, “The core of competition between the US and China will come down to who has better friends.” And I do think that fundamental key to our success in World War II, throughout the Cold War, remains true today. Which is to say we have a network of friends and partners around the world that no hostile, great power, whether it’s China or Russia, can rival right now. However, we need to modernize those relationships; we need to convince our allies to invest more in their defense. And that’s a really interesting question that I hope to be able to influence, as I also waste time writing about congressional reform and proposing fixes that no one listens to.
Resources and how they affect legislation
Avik Roy:Well, a couple of minutes ago, you were talking about how you’re forced to get smart about things that otherwise you wouldn’t have to because it’s so relevant to the economy or to your constituents. And you mentioned that hiring staff is a key part of that. What other resources do you look to, to try to be effective in these other areas, besides the ones that are in your knowledge base or comfort zone?
Mike Gallagher:Solely the Foundation for Research on Equal Opportunity! That’s it. It’s outsourced all of my thinking in all seriousness! As you know, I’ve worked a bit on price transparency in health care. I do think health care is our most important domestic issue, or at least it’s the biggest concern among my constituents. Obviously, I think it was our biggest failure when we controlled Congress—our inability to reform the health care system. And if you are a defense person like me, you’re confronted with a simple mathematical fact that, in a world in which we’re spending all of our money on health car— a decade from now in 2030, to use your framing—we’re not going to have money left over for ships and guns and bombs if we continue on this current course. Certainly, I think health care is a critically important issue. And within that space, I’m intrigued by price transparency proposals.
I do spend a lot of time reaching out to the academic and think tank community. I will say, however, I think the biggest gap in that community is that they’ll write great white papers, op-eds, foreign affairs articles, national affairs articles, and I love reading those. Those are interesting. They force me to think. But rarely do they write products that are easy for a legislator to turn into action. And you can’t assume that members of Congress have the time right now to be reading journals. I think a more action-focused, more action orientation for a lot of these think tanks would help legislators like me not copy and paste their work and put it into bill form, but something close to that.
I think there’s a lack of legislatively-oriented think tanks in D.C. right now. I don’t know, maybe that’s an unfair criticism. I’d like your thoughts.
Avik Roy:Well, you know what? What I’d say, Congressman, is that you’re right. That the old model of think tanks, or the traditional model of think tanks, was: they were universities without students. And so people would write these fairly dry technical research articles, right? And I think one thing we’ve learned at FREOPP is that, even though we ourselves, we’re built to be much more oriented towards advising and briefing policymakers so that you have what you need to go out there and do what you do and write bills and take action, even then, there is another layer which is: how do you take an idea and turn it into legislative or legal form?
What I’ve learned as people, members like you, have tried to take our ideas and turn them into bills is, there is a lot of work that goes into taking a policy idea and turning it into legislative language. And for someone like me who’s not trained as a lawyer, I’ve come to appreciate how much technical work goes into that. It’s like, you may have an idea of what you want your house to look like, but you would never build the house yourself or be your own architect. You would hire an architect and a contractor to do that for you; that’s a lot of the work that goes into this that I’ve come to appreciate seeing it from the point of view of a legislator like yourself.
Mike Gallagher:Well, the other thing is, I think when I was particularly a new member of Congress, now that I’m a wise old veteran in my second term here, is I thought that once I got the bill and I introduced it, the brilliance would be self-evident and it would naturally move through the legislative process and we’d have a debate in committee and then after it came out of the committee, we’d have a debate on the House floor, and then the Senate would do its thing, and then it would wind its way onto the President’s desk. You know, Schoolhouse Rock! I sort of believed in that basic model.
I underestimated how difficult it is, even when you have a bill that’s fully baked, to just get your colleagues to pay attention. I mean, you really have to hustle, get co-sponsors, member by member, and then convince leadership both within your committees and broader House leadership to actually allow the bill to move through the legislative process. And that gets more difficult because of what I alluded to before, which is how much power is concentrated at the top of the organization.
And there’s a lot of times when I think leadership—and I think this is true of both parties—doesn’t want legislation to move, because then you’re going to force your members to take tough votes from time to time. Having the idea is one thing; turning that idea into legislation is another. But even then, you’re only in the beginning of the whole process. There are many more quarters to play in the game, and it’s a very difficult process.
Avik Roy:You’re reminding me of something else—we talked earlier about the $2 trillion stimulus bill and how most of that was written by staff. A lot of those provisions, the ones that were maybe a little bit more pork barrel nature in particular, but even the ones that had a serious policy element to them, a lot of those came from bills that had been on the shelf and then just got pulled down because there was a real need at that moment.
And the way I look at what you’re describing is, yes, it’s true that you as an individual member of Congress, you put a bill forward; that does not guarantee that that bill makes it into something that year or in that Congress even. But it could be that once you’ve got that bill in legislative form, after many years of hustling and hard work and briefing and persuasion, it does get pulled down and brought into a broader context or into a larger bill. Sometimes that long game becomes, or the time it takes to do that can be really frustrating, and… Go ahead.
Mike Gallagher:Well, yeah. I’m not saying that’s necessarily a bad thing. I mean, it is a feature, not a bug, of our system that it should be hard to pass legislation, particularly when the country is divided. And to some extent I think Congress is doing what it’s always done, albeit imperfectly, which is reflecting broader trends in society. The reason I think health care reform is so difficult is because it’s a divisive issue. If there were easy silver bullets, we would have fired them by now. There are not.
And so, I’m not suggesting that we should make this super easy and that all of my ideas should become law tomorrow, or at least a few of them.
Avik Roy:Well, maybe they should be. Yeah.
Innovations in health care as a result of Coronavirus
Mike Gallagher:That’s right. Well, I’d be curious though, in terms of that hard thinking that maybe becomes reality later on, do you think there are any innovations that are emerging in the crucible of Coronavirus that will be with us, and that come 2030, we’ll look back on and say, “Wow! This was actually a positive externality of a very negative crisis”?
Avik Roy:Well, my hope is, it’s a great question, my hope is that on the health care front we see a lot more ability to deliver health care at home. And what I mean by that is not a doctor even coming to your house and paying a house call on you like in the old days, but I mean there are technologies that allow you to take a urine sample or a mouth swab or your watch that’s checking your heart rate and have that information directly sent to the lab to be tested or directly sent to your doctors and your hospitals to be monitored so that in many ways you go around the middlemen and are able to manage your health care at home without going to the doctor.
This is sometimes called telehealth or telemedicine, but it’s even more than that because it’s not merely FaceTiming your doctor and talking to him about your symptoms; it’s a lot more technology-oriented than that. We’re starting to see some opportunities to do that, but of course the biggest trial, the reason why health care is so hard to reform, it’s not just that we’re politically divided or ideologically divided; it’s that the $3–4 trillion we spend on health care goes to incumbent industries and incumbent professional sectors that fight tooth-and-nail to preserve those dollars being directed towards them and not benefit the patient in greater amounts.
That is the biggest challenge that people like you have in Congress; you mentioned the committees before. If you were on the Energy and Commerce Committee or the House Ways and Means Committee, the two committees that have the biggest role in health care policy in the House, you’d be overwhelmed; you’d be drowning in lobbyists from all these different health care sub-industries and trade associations telling them, “Well, you can’t do this and you can’t do that and you can’t do that. And it’s because if you do that, all the hospitals will close or all the doctors will go on strike or all the drugs will not be developed if you just make minor tweaks that are pro-patient or pro-consumer or pro-competition.” So that makes things really hard.
And what I’ve found, working with members of Congress, is that it’s people like you who are outside of the committees, who often do the most innovative work from a legislative standpoint, because you’re not drowning in those lobbyists telling you that nothing can be done.
Mike Gallagher:I hope so. Weird question. I know we might be running out of time here, but I think there’s a lot of us conservatives in Congress, and when it comes to health care, we follow you. And I don’t mean that to sort of inflate your ego, it’s true. I’d be curious, who do you follow? I mean, who do you look to? Whose writing is a must-read for you? Who do you think are some of the most innovative thinkers on health care right now that it’d be worth us paying more attention to?
Avik Roy:Wow! That is a great question that I should have a much more prepared answer to. Because what I find is I’m reading all sorts of stuff. These days with everything, the way you can aggregate information through various tools, your ability to just identify things that are interesting and learn from them is so much greater than it used to be, where you’d have to depend on one person to follow stuff.
I’m going to think about that and get back to you on exactly who would be the people that I follow most regularly, who are saying creative and interesting stuff all the time. But what I’d say is that, in general, what I find is that the universe of people who are really thinking hard about how to dislodge the incumbents in health care and create a more diverse entrepreneurial system that isn’t about crony capitalism and isn’t about socialism, it’s this pretty small band of people.
One person who hasn’t been writing a lot recently because he’s launched a startup (but wrote a great book about this topic) is David Goldhill. He wrote a book called Catastrophic Care that was based on an article he’d written in the Atlantic. Hhe’s a Democrat, but he’s a free market Democrat who makes the point that the fundamental problem with health care from an intellectual standpoint is that so many health care economists and health care policy experts have taken for granted this dogma that health care is fundamentally different from the rest of the economy. That if we apply the principles of free markets or economics to health care, somehow, they don’t work. And that’s not true.
People want the same things in health care that they want with every other product or service they buy. They want that product to be of high quality, of high safety and at a fair price. And if we give patients and consumers and families the tools to do that, they will do it a lot better than any of us, whether it were elites or political policymakers or what have you. That’s one place to start. Read that book. David Goldhill, Catastrophic Care. I think you’ll find a lot of good stuff in there.
Price transparency in healthcare
Mike Gallagher:I just put it in my Amazon Cart as you were describing it. Well, sorry, maybe a follow-up related, and cut me off when we’re out of time here, but are there any areas where we’re putting too many of our eggs on the conservative side into a particular basket in health care? I think it became easy in the criticism of Obamacare just to say, “Well, one, Obamacare bad, Obamacare bad, Obamacare bad,” and not do the hard work of thinking, “Okay, what is our alternative? What is the conservative vision for how we not only reduce costs but cover more people?” That’s a harder thing to think through intellectually.
But similarly, we sort of hung our hat on a lot of different buzzwords, like shopping across state lines, a provision I agree with, but I don’t think is a panacea. Similarly, I’ve done a lot of work on price transparency. I don’t want price transparency just to become the next shopping across state lines. In other words, I don’t think we can just assume that even in a world in which hospitals have to publish all their prices or insurance companies have to be more transparent with hospitals and employers have to be more transparent with their employees in terms of how much of their paycheck is being gouged to offset health care costs, I think that’s one part of a broader solution.
Avik Roy:I think you’ve touched on some of it, which is that buying insurance across state lines is a good thing, but it might reduce health care costs by 2-5%, which is great; but we’re paying double what other countries are paying for health care. It helps on the margins, but it’s not going to solve the problem.
Price transparency is an interesting one, because I think the way that a lot of people think about price transparency is similar to the insurance across state lines. In the sense that, if you need to get your knee replaced and you know that one hospital will charge you 20K for your knee replacement, another hospital will charge you 5K for your knee replacement. If your deductible for your health insurance is $1,000 or $1,500, do you really care? Because the insurance company is paying for it, not you. So the price transparency doesn’t really matter for those big ticket items where you’re already crossing your deductible.
What we really need price transparency around is the price we pay for health insurance, because 80 cents on average of every dollar that an American spends on health care flows through the insurance company. And what we typically don’t have is transparency around insurance prices. Why? Because most of us get insurance from either our employer or the government, where that money is taken out of our paycheck pretax or with our tax dollars and spent on our behalf. Of course, we don’t know how much anything costs because we’re not the ones who are paying the doctor or the hospital or the drug company; the insurer or the government is.
One thing we’ve talked about in our plan, which we can now call Medicare Advantage for all is… What’s great about Medicare Advantage? Medicare Advantage works in large part because every individual senior shops among dozens of choices for the plan that he or she wants to buy in what we would call in the health wonk world, an individual market for health insurance. Everyone shops for a plan. The prices are transparent for your insurance. And then if you want to pay for a more expensive plan, you pay for the difference. And what does that do? That creates an incentive for the insurers to fight hard to negotiate the best prices they can negotiate, because otherwise their premiums will be too high, and you won’t buy their insurance. That’s how markets are supposed to work. That’s not how markets work for people who are not on Medicare today, because you get insurance from your employer, or you’re on Medicaid and you’re not shopping for that yourself.
If we want price transparency, we’ve got to have price transparency around insurance, not merely what you pay directly for health care service. And I’d say the other thing, to answer your initial question in terms of what are some of the rabbit holes that we’ve maybe fallen down and in an inappropriate way or in a misguided way, one of those would be high deductible health care plans. And the reason I say that is, I used to be one of these people. I’m like, “We should all just have high deductible health care plans.”
Mike Gallagher:Catastrophic plans, right?
Avik Roy:Yeah, catastrophic plans. What does that mean? That makes sense intuitively, economically. Health insurance should look like auto insurance where you crash your car, your car gets totaled, that’s what it covers. It doesn’t pay for your gas or your oil change or whatever. That’s true, and that’s how health insurance should work too. But the deductibles in American health care and American health insurance are already really high.
If you look at the countries that have the most market-oriented systems in the world, like Switzerland, the max deductible you can have in Switzerland is $2,500. Here it’s $6,000, $7,000, $8,000 on Obamacare. And that’s crazy. High deductibles matter, but high deductibles relative to what? What is the actual dollar figure? We’ve gotten to a point now in America where the cost of health care is so high that for many people the deductibles are already really high and they’re still paying thousands of bucks a month for health insurance.
We really have to do a lot more as free marketers, as conservatives, to tackle the problem of the high cost of health care, and that means tackling these incumbent health care industries that have an interest in the cost of health care being so high. And I think that’s a thing you’ve seen Republicans shrink from. You’ve seen a lot more of the applause lines around the things like buying across state lines because that’s easy; not many people are opposed to buying insurance across state lines, except maybe the insurers. But when you really get to the heart of the problem of how you tackle the high cost of hospital care, how you tackle the high cost of physician care, how you tackle the high cost of prescription drugs, then you have multitrillion-dollar industries that you’re facing off against. And that’s not easy for members of Congress.
MikeGallagher:Not easy at all. There’s two issues that I think are going to be increasingly critical. One, and I say this as someone who paid the Obamacare penalty for two years in my late 20s because I did the math and it made more sense for me to do that, but I just think now that we’ve gotten rid of the individual mandate, we need to think about why it didn’t work. And even in a world in which you assume full transparency and perfect information, I think there are a lot of times in which people aren’t necessarily going to be shopping for health care; and I don’t mean this to contradict something you said earlier, but shopping around in the way we would want them to. Which is why I think the idea of auto enrollment in some plans that you could opt out of, is probably more in line with human nature than this platonic idea of people maximizing their utility and rationally shopping among a variety of health care plans. I’d be curious what you think about that.
And then second, and more difficult, and I say this, every physician in my family… I was talking to my sister the other day who’s a brilliant doctor down at Oconomowoc, Wisconsin, and she said, “So much of what I do all day is just paperwork, paperwork, paperwork, paperwork. And if I had known that I’d be doing paperwork all day, I’m not sure I would have gone to medical school just because it is so oppressive.” And, I mean, as you know, in some of these hospitals, some of the most important people are not the physicians, they’re the coders that are making sure the Medicare codes are being filled out the right way or the person that’s sitting next to the doctor helping them fill out all the paperwork. And I just think we’ve got to figure that out. I mean, that is probably just a function of overregulation, but I don’t know the easy fix to that.
Avik Roy:Well, I do. Actually, I am somewhat more optimistic about the paperwork issue than a lot of other issues in health care, because there are incredibly talented people in the tech world who are addressing this. They’re doing things like taking secure recordings between the physician and patient of the encounter of your office visit and using artificial intelligence to translate that into a doctor’s note and the right billing codes and things like that. There are going to be ways to at least minimize some of the paperwork; you’re never going to get rid of it entirely in medicine, but to at least reduce it from where it is today using technology.
But the thing that’s going to drive us over a cliff is the cost of health care, because we can’t keep increasing that cost by 6%, 8% a year, and expect average Americans to pay that. We’re at a point now where the average American family sends more of its income to the hospital industry than it does to the IRS. And that just can’t continue. I mean, that’s just insane. And that’s just hospitals, that’s not the entire health care system. We’ve got big problems to solve, and for better for worse, Representative Gallagher, we’re counting on you to help us solve them.
Mike Gallagher:Yeah. And that uplifting conversation about the state of American health care can end our conversation. But seriously, thank you for all the work you and your entire organization are doing in that space. It really helps people like me make sense of a very complicated issue.
Avik Roy:Well, I appreciate. Thank you so much for joining us.
This has been another episode of American Wonk. I’m your host, Avik Roy, and we’ve been joined by Congressman Mike Gallagher of Wisconsin’s 8th district. If you like what we’re doing on the show, please subscribe to American Wonk on Apple Podcasts or your favorite podcast service. And better yet, rate us on that service. Rating us helps spread the word on what we’re doing, so even more people can learn from our great guests like Congressman Gallagher.
Avik Roy:We are going to be more active this year because of all the important policy conversations that we’re all having around COVID-19. Thanks for listening, and we’ll see you next time.
