PLANK JUNE 7, 2012
A book that was written in a way that’s apparently pro-President Obama, was written by a guy named Noam Scheiber and in this book he says that there was a discussion about the fact that Obamacare would slow down the economic recovery in this country and they knew that before they passed it. But they concluded that we would all forget how long the recovery took once it had happened, so they decided to go ahead. The idea that they knowingly slowed down our recovery in order to put in place Obamacare, which they wanted and they considered historic but the American people did not want or consider historic, is something which I think deserves a lot of explaining…
As Jon Chait points out, this misrepresents my text in a couple of ways, and in slightly different ways than the first time around. First, the book doesn’t say there was a discussion of how the health care bill would hurt the economy when enacted—no one in the administration believed it would. I certainly found no evidence that they discussed this possibility, much less dismissed it. The point I make in the book is that pursuing health care had an opportunity cost: If you throw yourself into a major domestic reform, it’s going to leave you with less time and political resources to fight for more stimulus.
Relatedly, it’s not true that Obama decided to take on health care reform knowing it would slow down the recovery as a result of this lost opportunity. The argument is simply that, at a certain point, Obama spent more time focused on health care than he did worrying about the economy. He didn’t pay enough attention to the risk that he’d badly undershot on the stimulus.
Having said that, Chait goes too far in suggesting the administration wasn’t worried about the link between health care and the recovery. A number of top officials—like Joe Biden, Tim Geithner, David Axelrod, and Christy Romer—either advised Obama to set aside his domestic agenda in order to focus on the economy, or were concerned about what might happen if he didn’t. Several administration aides also acknowledged that health care disrupted some of their plans on the economy by taking so damn long to resolve. Here’s how I reported it in the book:
No administration official, not least the president, ever decided that health care reform would take precedence over the economy. Team Obama simply never imagined itself to be facing such a trade-off. In the master plan Rahm Emanuel had drawn up, the administration would notch its health care victory before Congress adjourned in August, then “pivot” to employment. “We were going to be done, under the plan, by the summer doing health care and energy,” said a White House aide. “Then we’d return to the economy in the fall. That would be highlighting parts of the Recovery Act [aka stimulus] that worked, and it would be discrete proposals . . . to help the economy and jobs.” …
Beginning the week of Labor Day, the White House embarked on the counteroffensive it had always intended to avoid, beginning with a presidential speech before a joint session of Congress. The new push clearly saved reform, which would finally pass the following March. But having bumped the economy off the agenda for the summer, health care would now repeat the feat for the fall. “No one thought we would have to take every element of the administration and dedicate it to health care both publicly and privately,” said the White House aide. “Which is what we ended up having to do [starting in] September.”
Which brings us to what Chait calls the “intellectually interesting” question at the core of this debate: “Did Obama blow it by turning to health care reform rather than passing a second stimulus? That’s the case Noam makes in his book (though it’s primarily a narrative rather than an argument), and has continued to press."
But this oversimplifies things: The point wasn’t that health care reform alone prevented Obama from passing more stimulus. Instead, I argue that health care was one of several reasons Obama did too little. I count at least seven, in rough chronological order:
1. Obama’s top economists held back when advising him how much stimulus the country needed.
2. Obama’s economic and political team thought Democratic leaders in Congress would balk at a bigger stimulus; it turned out those Democratic leaders were open to a few hundred billion dollars more.
3. Obama declined to make a scorched-earth, George W. Bush-style push during the Senate fight over the stimulus. “There were definitely people at the White House who would play ball like that—the Rahm contingent,” a White House aide told me. “But that’s not the president’s style. It’s never how he would do it.”
4. Before and after the stimulus passed, Team Obama touted it as sufficient rather than pointing out its inadequacy and blaming Republicans. This made it hard to come back for more when unemployment kept rising. It looked like Obama had gotten what he wanted and it just hadn’t worked.
5. A widely-cited White House memo projecting that the stimulus would hold unemployment below 8 percent made the stimulus look like a failure when unemployment blew past that figure.
6. Health care reform (and, to some extent, climate-change legislation) had the impact described above.
7. By late 2009, Obama’s economic team stalemated over whether to pursue more stimulus, and what form of stimulus would be best.
And, of course, those are just the factors the administration could control. As Chait points out, there was always the matter of dicey Senate math and public opinion to worry about. I argue that there were ways to overcome these obstacles, but they were certainly huge obstacles.
So, yes, I do think Obama’s focus on health care made it harder to pass more stimulus and, as a result, contributed to a weaker recovery. But these consequences weren’t well-appreciated beforehand, and in any case health care was one of only several reasons the administration came up short.
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