COLUMN-Americans will never allow Medicare to be gutted-Freeland

NEW YORK, June 2 (Reuters) - The political theater in the United States this week has been all about the "debt ceiling" -- Congress voting not to increase it; President Barack Obama and the House Republicans meeting to discuss it; the Treasury warning that failure to raise it will bring economic apocalypse for the United States and the world.

Elites like to accuse ordinary Americans of a lack of political sophistication, but everyone from Main Street to Wall Street is savvy enough to understand that so far, the fighting over the ceiling is pure Kabuki. As with the budget deal earlier this year, the real negotiating is unlikely to happen until the very last minute.

But everyone also understands that this summer game of brinkmanship matters because it is a proxy war being fought over a very real problem, the United States' growing national debt and deficit. The wolf is not quite at the door. At just under 60 percent of gross domestic product, the U.S. national debt is lower than that of France, Germany and Britain. And the rest of the world still seems delighted to lend the United States money on historically generous terms.

Americans know that cannot last forever, though: The need to tackle the deficit (although not how to do it) has become a national truth universally acknowledged. What nearly all Americans of all political stripes also understand is that the problem with the budget deficit is healthcare spending -- which is why the most important economic initiative of the Obama administration not directly connected to the financial crisis and its aftermath was healthcare reform, and why the most important new economic policy proposal from the Republicans is Representative Paul Ryan's proposal to transform Medicare.

But here is what no one, particularly the nation's politicians and pundits, can figure out: what Americans want when it comes to sickness and the state. One of the changes Americans decided to believe in when they elected Mr. Obama in 2008 was healthcare reform. It was a central plank in his political platform. Indeed, one of the key substantive scraps between Mr. Obama and Hillary Rodham Clinton during the primary campaign was the debate over whose plan offered truly universal coverage.

Yet when Mr. Obama actually acted on his healthcare pledge, it suddenly seemed as if the issue were anathema to U.S. voters. Obamacare became one of the most effective rallying cries in the 2010 midterms, helping the Republicans to give the president what he himself described as a shellacking.

Again, the message from the electorate was loud and clear. So much so that the Republicans were emboldened to make the opposite of Obamacare -- a cut in state support of healthcare, instead of an extension of coverage -- the centerpiece of the most important conservative initiative this year, Mr. Ryan's budget proposal.

This time, it was the Republicans who misjudged the ballot-box signals. The right's plan to cut back on state-supported medical coverage seems just as toxic as the left's effort to extend it. Witness the verdict voters delivered to the Republicans in a special election last month in New York state's 26th Congressional District where Kathy Hochul, who aggressively attacked the Ryan plan, won an upset victory.

Suddenly, Obamacare, the cry of the happy warriors of the right, became Obamascare, the Republican complaint that Democrats were misrepresenting Mr. Ryan's Medicare proposals to their own advantage.

So which is it? Do Americans love state-funded healthcare or loathe it? Are they fickle? Or just too easily swayed by the latest version of what the Washington chattering classes are calling "demagoguing," a coinage that seems to mean politics.

Maybe the confusion comes not from U.S. voters but from the way elite politicians, policymakers and pundits are framing the debate. Everyone who has a national voice in this discussion is a citizen of that lucky slice of America that enjoys Cadillac healthcare coverage, paid for by someone else, be it the U.S. government, in the case of elected politicians; universities and research organizations, in the case of the policy wonks; or mainstream media companies, in the case of the punditocracy.

For them -- for us -- the healthcare debate is an ideological issue, or a technocratic one. It is about the thrilling clash of ideas, or the exciting, painstaking effort to build an economic model that works.

But for most members of the country's hard-pressed middle class -- whose median wages have stagnated for the past decade -- healthcare and the taxes that pay for it are two of the four pocketbook issues that determine the fate of today's American family (the other two are jobs and housing).

The Americans who benefit from state-funded healthcare are determined to keep it -- which is why Ms. Hochul won last month and why Newt Gingrich was right to worry that the Ryan plan could be a disaster for the Republican Party.

But middle-class Americans, who are feeling more of a financial squeeze than at any time since World War II, are also terrified of anything that further strains their family budgets. And that includes higher taxes that do not directly translate into a personal benefit. If you are a privileged liberal, it is easy to sneer at this unwillingness to pay for state benefits for other people as selfish. But if your family is not poor enough for Medicaid -- the health program for low-income people -- yet is struggling to get by, it makes perfect sense.

All of the sophisticated thinkers on both left and right know that one of the absurdities of Medicare, unlike Medicaid, is that it is universal. Surely, the plutocratic funders of research organizations argue, it is madness to provide equal benefits to the elderly rich and poor alike.

Yet that universality turns out to be the reason Americans will never allow Medicare to be gutted, just as Europeans and Canadians will never give up their universal healthcare systems. People will pay for a good-enough system that they know they can use, even if only in the final decade and a half of their life. And woe betide the politician who tries to take it away. But that does not mean, as Mr. Obama discovered last year, that it is easy to persuade them to pay for benefits that are not a real benefit to their family's bottom line. (Edited by Jonathan Oatis)