Compassionate Conservatism, No Child Left Behind and Medicare Part D

A Republican President signed the largest new entitlement since the Great Society, and he did it with a smile. That was Medicare Part D, and conservatives are still arguing about it at the dinner table. So is its partner in trouble, No Child Left Behind, which put Washington in charge of how every public school in the country measures a third-grader. Ask a hundred conservatives which Republican President grew the federal government most in his first term, and you will get arguments, not answers. Folks, these are not obscure footnotes.

So let me explain both laws plainly, how each got through Congress, what the fiscal hawks said then and say now, and what supporters said back. Then I will tell you what I think the movement should have learned. The facts come first, because on this subject everybody argues from the slogan and almost nobody argues from the statute.

What "compassionate conservatism" meant

The phrase was the organizing idea of George W. Bush's 2000 campaign. The pitch was simple, and it was aimed at a problem the party felt it had. After the 1990s, many voters thought of Republicans as the party that knew the price of everything and the worth of nothing. Bush's answer was that conservatives should keep their principles about limited government and personal responsibility, but should also show they cared about outcomes for people at the bottom of the ladder, using government tools where they could be made to work.

On schools, the line he used on the trail was that low expectations for poor and minority children were a kind of bigotry, a "soft bigotry of low expectations." Whatever you think of the policy that followed, that was a genuine conservative argument: stop excusing failure, measure results, and let parents act on what the measurements show. On health care, the argument was about modernization. Medicare had been built in 1965, and the medicine of 1965 was surgery and hospital stays. The medicine of 2003 was increasingly a bottle of pills that kept you out of the hospital.

Notice what is conservative in that and what is not. Measuring results and offering choice are old conservative instincts. Spending a great deal of new federal money to do it is not. That tension is the whole story, so keep it in your pocket.

No Child Left Behind: what the law did

The No Child Left Behind Act was signed in January 2002. It was not a new program written from scratch. It was the reauthorization of the Elementary and Secondary Education Act of 1965, the same law that created Title I aid for schools serving low-income students. If you want the earlier history, we cover it in From Title I to ESSA, Fifty Years of Washington Meddling in Your Schools.

What changed was the strings. Before 2002, Washington sent Title I money and asked for fairly light reporting. After 2002, the money came with a testing-and-accountability machine attached. In plain terms, the law required:

1. Annual testing. States had to test students in reading and math every year in grades three through eight, and once in high school. Science tests were added in a few grade bands.
2. State standards, state tests. The states, not Washington, picked the standards and wrote or bought the tests. The federal government approved the state plans.
3. Adequate Yearly Progress. Each school had to show its students were hitting rising targets, and the law aimed for every student to reach proficiency by the 2013-14 school year.
4. Subgroup reporting. Schools had to break out results for groups such as low-income students, major racial and ethnic groups, students with disabilities and English learners. A school could look fine on average and still fail because one group fell short.
5. Consequences. Schools that missed targets year after year faced escalating steps. Families could transfer to a better public school or get tutoring paid from federal funds, and schools that kept failing could face restructuring.

That list is the conservative half of the bill, and a good half it was. A parent could finally see how a school was doing for children like hers, not only on average. The subgroup rule meant a school could not hide poor results behind its best students.

How it passed

The politics were the opposite of what we see in Washington now. The bill was a bipartisan product, negotiated in committee between the administration and senior Democrats, including Senator Ted Kennedy and Representative George Miller, along with Republican leaders such as Representative John Boehner, who then chaired the House Education and the Workforce Committee. It passed both chambers by large bipartisan margins. You can look up the roll calls on Congress.gov; I will not recite the tallies here, but the point is that this was no party-line squeak-by.

That tells you something. When a bill passes with large majorities of both parties, ask what each side gave up. Democrats gave up on much of the old "send money and trust the system" approach. Republicans gave up on their long-standing hope, stated in party platforms going back to the Reagan era, of shrinking or abolishing the federal Department of Education. The deal produced more federal money and more federal rules. The Republicans who voted yes mostly did not think of it as a betrayal. They thought of it as a trade: more money for accountability.

What the fiscal hawks and the federalists said

Here is the strongest version of the case against No Child Left Behind, stated the way its critics on the right would state it.

First, it was a federal takeover of a local job. The Constitution does not mention schools. Education was a state and local function for the country's first two centuries. We make this point at length in The Constitution Never Mentions Schools and That Is the Whole Point. If you believe that, then a federal testing mandate with federal sanctions is a step in the wrong direction, even if you like the tests.

Second, tests measure what you ask them to measure, and you get what you measure. Critics, including a lot of teachers, said the law pushed schools to narrow the curriculum to reading and math and to drill for the test. That is a standard worry about any accountability system and it is not silly.

Third, the 100 percent proficiency target was a trap. As the years passed, the targets rose toward a goal no state could realistically meet. More and more schools were labeled failing, which made the label meaningless. The Obama Education Department later granted states waivers from the law's central requirements, which was an admission that the law as written could not be run.

Fourth, it spent money. Spending on federal education programs went up. Hawks pointed out that more federal dollars did not produce a lasting jump in results, and that it fed the notion that the answer to every school problem is another Washington program.

Now the supporters' answer, which deserves a fair statement too. They said: before 2002, many states had no honest data. You cannot fix what you cannot see. The law forced states to publish results by group, and families and reformers could use those numbers. They said the money was never the point; the transparency was. And they said that a federal government already sending billions of taxpayer dollars to schools has every right to ask what it is buying.

My verdict is mixed, and I will be blunt about it. The transparency was worth having. The federal enforcement machinery was a mistake, because it assumed Washington could define "proficiency" for fifty states and then punish schools that missed it. In December 2015 Congress replaced the law with the Every Student Succeeds Act, which kept the annual testing and public reporting but handed much of the sanctioning back to the states. That outcome tells you where the argument landed: keep the data, return the decisions.

Medicare before Part D

To understand Part D, you have to understand what Medicare did not cover. Medicare was signed into law in 1965 by Lyndon Johnson. Part A covered hospital care. Part B covered doctors' services and was optional. Outpatient prescription drugs were not covered at all, because in 1965 they were a small part of medical spending. Our explainer on Medicare part by part, what A, B, C and D cover and who pays walks through the alphabet.

By the early 2000s that gap looked absurd. If a senior needed heart surgery, Medicare paid for the operation. If a pill could keep her out of the operating room, she paid out of pocket, or she did without. Any politician who ignored that was going to have trouble at a senior center. And the Democrats had a prescription drug benefit ready to offer, one run by the government directly. If Republicans did nothing, they were going to hand the other side a winning issue. That was the political calculation, and the people who made it were not fools.

What the Medicare Modernization Act did

The Medicare Prescription Drug, Improvement, and Modernization Act, usually called the Medicare Modernization Act, was signed in December 2003. The drug benefit it created, Part D, began operating on January 1, 2006. The design was where the conservative fingerprints were. Instead of a government-run drug plan, the law:

• Created private drug plans that compete for seniors' enrollment. A senior picks from a menu of plans, either a stand-alone drug plan or a Medicare Advantage plan that includes drugs.
• Paid the plans through government subsidies and premiums paid by the enrollees, with extra help for low-income seniors.
• Barred Medicare from directly negotiating drug prices for the program. That "noninterference" language was meant to keep the government from setting prices. Congress changed the rules for a limited set of drugs in the Inflation Reduction Act of 2022, which is a separate fight.
• Included a coverage gap, nicknamed the doughnut hole, where enrollees paid more out of pocket after reaching an initial coverage limit. Later laws phased it down.
• Created Health Savings Accounts, which let people with qualifying high-deductible health plans set aside money tax-free for medical costs. That piece, often overlooked, was a long-standing conservative goal.

Look at that structure. The market-friendly parts, private plans and competition among them and Health Savings Accounts, were real. The federal commitment to pay a large part of the bill, for every senior, forever, was also real.

How Part D passed

If NCLB was a bipartisan deal, Part D was a knife fight. The House vote on the final bill came in the early hours of a Saturday morning in November 2003, and the roll call was held open for an unusually long time while leadership worked on members who were wavering. Conservatives were among the holdouts. The bill got through the House by a very narrow margin and then cleared the Senate. I will point you to the roll calls on Congress.gov rather than recite them.

Why were conservatives uneasy? Because there was no new money to pay for it. The drug benefit was financed by general revenue, meaning by borrowing, as the bill carried no matching tax increase or offsetting cut. Cost estimates were fiercely disputed during the debate. Check the Medicare Trustees reports and the Congressional Budget Office for the actual path of spending; the numbers are public and they are not small.

The hawks' case against Part D

Again, the best version of the argument from the right.

One. It was a new entitlement with no offset. Any time Washington promises a benefit to tens of millions of people, the promise outlasts the political moment. Once seniors have it, no politician will take it away. That is the lesson of every entitlement since Social Security, and we discuss it in Why Spending Restraint Keeps Losing in Washington, Whoever Is in Charge.

Two. It subsidized people who did not need it. The benefit was open to all seniors, rich or poor, which meant taxpayers were helping pay for drug coverage for people who could have afforded it, or who already had it through a former employer. The law even included payments to employers to keep their retiree drug plans, which critics said paid companies for something many would have done anyway.

Three. It was passed at the wrong time. The country was fighting in Afghanistan and Iraq and had just cut taxes. The party of fiscal restraint added a large permanent program. The 2001 and 2003 tax cuts, which we cover in The 2001 and 2003 Bush tax cuts and why they came with an expiration date, were already law. Cutting taxes while adding spending is a recipe for deficits, and the deficits came.

Four. It taught the wrong lesson to the party. If a Republican President and a Republican Congress will out-spend the opposition on health care, then what, exactly, does the party stand for in the budget fight? Voters noticed. Many of the activists who would later fill the ranks of the Tea Party, a story we tell in The Tea Party Wave of 2010 Explained from Santelli to the Statehouses, cited the Bush-era spending as one reason for showing up.

The supporters' case

Supporters made points just as serious.

• The medicine had changed. A health program that covered the operating room but not the pill was out of date. Modernizing Medicare meant covering the drugs that, for many conditions, replace surgery.
• The design used markets. Competing private plans, rather than a government price list, were the point. Supporters said seniors would shop among plans, and that competition would discipline costs. How much it did is a question for the actuaries and the data, and honest people on both sides cite different studies.
• The politics were real. Had Republicans declined to act, the other party would have pushed a government-run drug program. The choice was never between a benefit and no benefit. It was between a market-based benefit and a government-run benefit.

I give the last point real weight. When a program is coming either way, a conservative who shapes it is better than one who sits it out. But there is a cost to that reasoning. If you always take the deal that is on the table, the table keeps moving left.

What the debate taught the movement

I see five lessons.

1. Accountability without ownership fails. A test that a federal agency designs and a federal agency punishes will always draw resentment. A test whose results a parent and a state official can act on has a chance.
2. A benefit is forever. Conservatives should assume every new entitlement is permanent and demand a way to pay for it on the day it passes.
3. Choice inside a government program is better than no choice, but it is not the same as a free market. Part D's private plans operate inside rules Washington writes. Do not confuse the two.
4. Unified control is not unified principle. The Republican Party held the White House and Congress when the Medicare law passed. It still produced a program that large parts of its own base opposed. Majorities do not settle arguments about the size of government.
5. Be honest about the trade. The Bush team traded some conservative principles for some conservative outcomes. Some of those trades were good. Others were not. A movement that cannot say which is which will repeat the mistakes.

There is also a plain political lesson. The fiscal hawks lost in 2002 and 2003 and won a hearing in 2010, and the fight over the national debt, which we address in twelve questions about the national debt, answered straight, has shaped intraparty arguments since. For another look at how the Bush years read in hindsight, see What conservatives should learn from No Child Left Behind and Medicare Part D. And for the philosophical backdrop, compare What Libertarians Teach Conservatives and Where the Two Part Ways.

The bottom line

• Read the statute, not the slogan. No Child Left Behind was a reauthorization of a 1965 law with testing and consequences added, and Part D was a private-plan benefit paid with public money.
• Keep the part that worked. Public, group-by-group school results and competing drug plans both give families information and choices. Defend those.
• Fight the part that did not. Federal sanctions on local schools and a new, unpaid-for entitlement are exactly what a limited-government party should refuse to repeat.
• When your representative says "this is a compromise," ask two questions: what does it cost, and who pays? If the answer is "borrowed money," you are looking at a bill, not a bargain.
• Check the numbers yourself. The Medicare Trustees reports, the Congressional Budget Office and Congress.gov are free. Use them before you repeat any claim, including mine.