POLITICS SEPTEMBER 21, 2009
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If health care passes, will it be a grand historical achievement, or a crushing disappointment? The answer, I predict, will be both. The American health care system is an indefensible morass of waste and cruelty. The distance between the status quo and the ideal is therefore so vast that we could—and probably will—end up with a reform that massively improves the system, while coming nowhere close to the ideal.
Which basis of comparison will prevail? In the long run, obviously, the substantive merit of the legislation is what counts. But, over the next few years, President Obama’s political capital will hinge in part on whether Americans see health care reform as genuine progress or a political fig leaf. And his biggest foe in the perception battle seems to be the liberals.
That’s what happened in the aftermath of the economic-stimulus package. Indeed, the contours of that episode strikingly resemble the health care debate. Obama began with hopes of winning broad bipartisan consensus for a sweeping overhaul. But staunch GOP opposition and the fecklessness of moderate Democrats forced him to scale back both his political and policy ambitions. Ultimately, he eked out a partisan bill, which moderates scaled back for no coherent reason other than to burnish their own centrist credentials.
As a matter of policy, the stimulus still represented a major success. The law signed by Obama is massive. Yet a bizarre disconnect has opened up between economists and everybody else. As numerous articles have shown, economists believe almost unanimously that the stimulus has provided a significant boost. Polls, though, show most people think it either has done nothing or has hurt the economy. Republicans have pounced, waving around proposals to cancel the stimulus.
Why did Obama’s substantive triumph turn into a political liability? One reason is that the Keynesian intellectual basis for the stimulus is harder to explain than the intuitive (but wrong) gut reaction that when times are tight, the government should tighten its belt, too. Another is that joblessness has continued to rise, and explaining that it would have risen more quickly without the stimulus is tricky.
But, surely, a third factor came into play: the almost total lack of approving commentary. Liberals like Paul Krugman and, um, me devoted nearly all of their efforts to demanding a bigger and better stimulus. That sort of constructive criticism is necessary. It’s certainly cathartic as well, given the maddening stupidity of the centrist compromises, which removed the most effective parts of the stimulus for the sake of meeting arbitrary round numbers. Yet this left a landscape in which one side was attacking the stimulus as a socialistic outrage, and the other was attacking it as a feeble half-measure. No wonder the public turned against it.
Health care, alas, seems to be following the same track. My liberal friends seem convinced either that Congress will reject health care reform, or that it will pass a meaningless palliative. The main exception among this admittedly unrepresentative sample consists of liberals who study health care reform for a living and those (like me) who regularly communicate with them. These wonks (and wonk acquaintances) all think Obama will sign a historic health care bill. Sadly, the wonk cohort is starkly outnumbered.
So, it’s worth pointing out that, for all the flaws of the process, Obama appears to be on track to sign one of the towering social reforms in American history—the most important change in our social contract since at least 1965, or (I’d argue) even longer. Even the most conservative of the bills working its way through Congress would regulate the health insurance market to prevent the discriminatory practices that ruin the lives of the sick and make vulnerable workers fear to change jobs or strike out on their own. It would start to rationalize the practice of medicine and slow the explosive growth in costs that have gobbled up any growth in wages for many years. (The establishment of the Independent Medicare Advisory Commission, charged with targeting wasteful practices, would constitute a massive reform on its own.)
And, of course, every bill would establish a practical entitlement to health care. The extent of the coverage remains weak. But remember that the original Social Security Act not only offered meager provisions and no disability benefit— Got hurt in the factory and couldn’t work? Tough luck—it also excluded nearly half of the working population, including most women and African Americans. The important point was setting a new societal expectation of what constituted basic economic rights, which, over time, would be filled in so that the reality met the promise. Fifty years from now, the notion that people would die from lack of access to medical treatment, or lose their homes and life savings because they got sick, will seem as barbaric and foreign as the notion of the elderly dying in poverty did after the establishment of Social Security.
So why are liberal activists, bloggers, and even members of Congress so sullen? First, they think anything that has the support of the insurance industry must be bad policy. And, while it’s true that the interests of insurers and the interest of good policy work at cross-purposes, they aren’t mutually exclusive. Insurers want government to cover the uninsured, and they are willing to cut some fat from their profit margin to tap into that new customer base.
Second, liberal health care activists have come to fixate on the public option as the end-all, be-all of reform. “If Barack Obama’s health care plan gets changed to exclude a public option like Medicare, then it is not health care reform,” insists Howard Dean. “Legislation rises and falls on whether the American public is allowed to choose a universally available public option or not.” It’s worth recalling that Dean’s own health care plan from 2004 did not include a public option. Most liberal health care wonks think a public option is helpful but not vital. Maybe they’ve all been bought off by the insurance industry, but I doubt it. If anybody sees Jonathan Cohn tooling around in a new Bentley, let me know, and I’ll reconsider.
Liberal Democrats in Congress understand that they won’t have any leverage unless they can credibly claim to vote against reform that falls short of their ideal. This requires them to say things like “health care reform without a public plan is not reform.” It becomes a problem if enough people actually believe their own bluff.
5 comments
Chait: The distance between the status quo and the ideal is therefore so vast that we could—and probably will—end up with a reform that massively improves the system, while coming nowhere close to the ideal. george: This sort of thinking floats right on the surface of political debate in this country. And, paradoxically, it reflects precisely the sort of extremism on the left and the right that Chait would surely try to distance himself from. The ideal!! WHAT ideal? WHOSE ideal? Don't the left and right wingnuts spout this sort of sophistry all the time? There is no Ideal solution. That would be like saying there is an Ideal relationship between government, Wall Street and Main Street. Instead, there are existential relationships between them [rooted firmly in the intersection of political and economic power] that heavily favor some blocks of citizens over others. You know the ones. The most "ideal" solution in my view is to yank those relationships closer to Main Street. Instead, we have this: According to the data at OpenSecrets.org, the health care industry [as a whole] contributed the following to the folks in Congress: 2010* $23,700,000 * so far 2008 $166,600,000 2006 $100,200,000 2004 $123,900,644 2002 $95,600,000 2000 $97,600,000 1998 $59,100,000 1996 $69,000,000 1994 $49,800,000 1992 $43,900,000 1990 $21,900,000 Total: $851,500,000 george: That's nearly ONE FUCKING BILLION DOLLARS!!! And no doubt will go over that when the 2010 election cycle is over. Yet Chait and The Editors at New Republic pretend this is just one more piece of puzzle---instead of the biggest piece by far that it really is. Oh, and the border and the frame as well. Let's not forget about that. Same with Obama's reaction to the economic crisis. Chait: Obama began with hopes of winning broad bipartisan consensus for a sweeping overhaul. But staunch GOP opposition and the fecklessness of moderate Democrats forced him to scale back both his political and policy ambitions. Ultimately, he eked out a partisan bill, which moderates scaled back for no coherent reason other than to burnish their own centrist credentials. George: For Chait, it is always the personalities or the inter/intra party squabbles. Partison blahblahblah politics. Niall Ferguson had another take on it. He penned an excellent article in last week's Newsweek magazine on what he [or the magazine] called "Wall Street's New Guilded Age": Between 1990 and 2008, according to Wall Street veteran Henry Kaufman, the share of financial assets held by the 10 largest U.S. financial institutions rose from 10 percent to 50 percent, even as the number of banks fell from more than 15,000 to about 8,000. By the end of 2007, 15 institutions with combined shareholder equity of $857 billion had total assets of $13.6 trillion and off-balance-sheet commitments of $5.8 trillion—a total leverage ratio of 23 to 1. They also had underwritten derivatives with a gross notional value of $216 trillion. These firms had once been Wall Street's "bulge bracket," the companies that led underwriting syndicates. Now they did more than bulge. These institutions had become so big that the failure of just one of them would pose a systemic risk. Last year's crisis made this problem worse in two ways. First, it wiped out three of the Big 15: goodbye Bear, Merrill, and Lehman. Second, because the failure of Lehman was so economically disastrous, it established what had previously only been suspected—that the survivors were TBTF [To Big To Fail], effectively guaranteed by the full faith and credit of the United States. Yes, folks, now it's official: heads, they win; tails, we the taxpayers lose. And in return, we get … a $30 charge if we inadvertently run up a $1 overdraft with our debit card. Meanwhile, JPMorgan and Goldman Sachs executives get million-dollar bonuses. What's not to dislike? None of the regulatory reforms proposed so far do anything to address the central problem of the TBTFs. What did Treasury Secretary Timothy Geithner propose over the summer? • The Fed should become the "system risk regulator" with power over any "systemically important" institutions, a.k.a. TBTFs. But wasn't it that already? • The originators of securitized products should be required to retain "skin in the game" (5 percent of the securities they sell). What, like Bear and Lehman did? • There should be a new Consumer Financial Protection Agency. So what were the other regulatory agencies doing? Oh, yes, protecting the TBTFs. • There should be a new "resolution authority" for the swift closing down of big banks that fail. But such an authority already exists and was used when Continental Illinois failed in 1984. • And "federal regulators should issue stand-ards and guidelines to better align executive compensation practices of financial firms with long-term shareholder value." I can't wait to hear what those will be. george: Chait and the wonks. Who will be right and who will be wrong about the politics of healtcare when [if] a bill reaches the president's desk!!! Oh boy, we can hardly wait to find out. Maybe before the next White House Correspondence Dinner!!! But then Chait turns it about and takes it down a more promising cul de sac: The important point was setting a new societal expectation of what constituted basic economic rights, which, over time, would be filled in so that the reality met the promise. Fifty years from now, the notion that people would die from lack of access to medical treatment, or lose their homes and life savings because they got sick, will seem as barbaric and foreign as the notion of the elderly dying in poverty did after the establishment of Social Security. george: Maybe. But like many of his colleagues in the mainstream media, it never even occurs to him there were other players in the game. These: The millions and millions of people out in the streets in both the 1930s and the 1960s that pushed the politicians in Washington to create Social Security, to fight a War on Poverty. All he sees, of course, is The Liberal Pundits and The Democrats against the Blue Meanie reactionaries for the heart and soul of the nation. Trust me. If the lefties at Daily Kos and MoveOn.org et al don't start organizing vigorously for street actions soon [you know like the 2,000,000 Becksters], in 50 years we may be commenting on the 30th anniversary of the Beck/Palin administration's introduction of the Fourth Reich. Liberal yaddayaddayadda Democrats yaddayaddayadda in Congress. Chait in a yaddayaddayadda nutshell, alas.... george walton d/a
- iambiguous
September 21, 2009 at 1:13am
So, Jonathan, your recommendation is what? That we (liberals) capitulate to the idiot centrists and obstruction Republicans already, while there are still multiple bills in the Senate, and nothing close to a final bill to back? I know of no one who expects perfection, or doesn't understand that there will be compromises in the final product, BUT WE'RE NOT THERE YET. We're still in the legislative sausage making phase, where you fight to get your ideas in the legislation, and where the outrage of their constituents is the only leverage progressive Democrats have against the supposed electoral peril of the centrists, and the outrage of the right. You really want us to go all mushy and reasonable now? I guarantee you the others won't. Every inch we give in this phase is an invitation for them to drag the process out and demand more concessions - or maybe you don't think that's what Grassley and Snowe are up to in Finance?
- sdemuth
September 21, 2009 at 8:23am
sdemuth: So, Jonathan, your recommendation is what? That we (liberals) capitulate to the idiot centrists and obstruction Republicans already, while there are still multiple bills in the Senate, and nothing close to a final bill to back? In a word, yes. Even Republicans secretly agree to about 80% of the provisions and there is no way any of them will go on record being opposed to ending recission, or denial for pre-existing conditions, etc. If there is no public option, the Centrist dems can claim they brought in a policy that takes into account Republican and Conservative sentiment no matter how much Republicans try to deny it. "We're still in the legislative sausage making phase, where you fight to get your ideas in the legislation, and where the outrage of their constituents is the only leverage progressive Democrats have against the supposed electoral peril of the centrists, and the outrage of the right." I disagree, if everyone fights to get their ideas in the process will never end. The quicker Liberals cut their losses the quicker a bill can be passed. And I imagine Liberal outrage won't matter a damn to Conservative Dems, in fact I think it will make them dig their heels in more. So we would get sturm and drang to no good effect. "Every inch we give in this phase is an invitation for them to drag the process out and demand more concessions - or maybe you don't think that's what Grassley and Snowe are up to in Finance?" Which is precisely why we should give in now. (I don't include Grassley, but I do accept Snowe) Hell, as far as I am concerned Snowe can write the whole damn bill and we can pass it. The 80% that she agrees with Democrats on is better than passing nothing. I understand you don't agree with me, but I figure this is something that we are in for the long haul. We can revisit it next year, and hell, Obama can run for the Public option as part of his re-election strategy, if he wins Republicans will have a hell of a time arguing that no one knows, and if he loses then even if there is a public option now, the Republicans would simply strangle it in its crib.
- blackton
September 21, 2009 at 12:15pm
sdemuth, by the way, it is nice to be able to debate your clear and cogent argument, I might disagree but that sure as hell doesn't mean you are wrong.
- blackton
September 21, 2009 at 12:17pm
Blackton, We clearly agree that there is a point at which you cut your losses and declare victory. The question is when we've reached that. I'll do it when there is a single bill in each house ready for a vote and headed (hopefully) to conference committee. Until then everyone except the progressives will be arguing their corner, through amendments and various other grandstanding. I don't think you can win by conceding the field mid argument, except in very unusual circumstances - like when you've got an obvious and lopsided victory on which to make your generous stand. But, I personally don't think even the supposed progressives in the Senate and White House have much spine. I think they need at least the ongoing threat of a liberal bolt against them to stick to what they do have. I could be wrong about that, but nothing that they've done or said suggests otherwise to me. As for the argument that this is a start, or a down payment on reform yet to come - so was MediCare. But I'll be dead and my grandchildren middle-aged with near-adult kids of their own, and the United States will be the competitive laughing stock of the world, if we have to wait another 45 years for the next installment. That's not good enough.
- sdemuth
September 21, 2009 at 2:04pm