James Pethokoukis

Politics and policy from inside Washington

Obama needs a new healthcare plan, not a new speech

Sep 9, 2009 18:03 UTC

Crazy — at least according to a snarky definition — is doing the same thing over and over and expecting a different result.

By that measure, President Barack Obama looks as if he’s going to indulge his crazy side tonight when he once again reiterates his core principles for healthcare reform, in his 122nd speech on the subject.

Now there may be a bit more detail (a public option trigger? tort reform?), a bit of different language and perhaps a more strident tone, but no one should expect a bold departure. And maybe not a different result, either.

Obama has to reassure:

- more independents that ObamaCare isn’t a budget buster

- more seniors that Medicare won’t get slashed

- more liberals that reform without an immediate public option is still worthy of being called reform, and

- more members of the middle class that the risk of inaction outweighs the risk of change to a health insurance system with which they’re kind of satisfied.

(The president’s support among indies and old folks, in particular, has been in free fall.)

That’s a lot of reassuring still to do for speech No. 122.

Maybe what’s going on here isn’t mild political insanity but rather quirky irrationality identified by behavioral economists as “anchoring.” Once people anchor to an idea or a belief, that becomes the metric by which they analyze competing ideas or beliefs.

Indeed, the president and many congressional Democrats seems to be anchoring to existing outlines for reform and ignoring competing ideas that could actually gain broader political support and work more efficiently.

Take the 166-page Healthy Americans Act sponsored by two senators, Oregon Democrat Ron Wyden and Utah Republican Robert Bennett. It reads as if it were designed by a bunch of centrist economists rather than by lobbyists representing unions, activist groups and healthcare companies.

It would do a lot of the stuff many Republicans and Democrats agree on, such as mandating everyone buy insurance and requiring insurance companies cover everyone.

But it would also scrap America’s weird employer-based healthcare system by giving individuals a big tax deduction so they could buy their own insurance from private companies.

Of course, many conservatives would hate the increase in regulations and government involvement, while liberals would loathe the absence of a public option that could one day lead to a single-payer system.

But it seems like a plan that Americans could understand intellectually and accept ideologically. It seems like the kind of plan that Americans would expect from the centrist president they thought they voted for.

Time for that guy to let go of the anchor and try a new plan. If speech No. 122 goes as well as the previous 121 in capturing moderate Democrats and independent voters, Obama may have no other choice.



45.7 Million Uninsured Breakdown
Illegal Immigrants = 9.3 million
Medicad Undercount = 6.4 million
Medicaid/SCHIP Eligible = 4.3 million
Childless Adults = 5.0 million
Over 300% of Poverty = 10.1 million
Remaining Uninsured = 10.6 million

Medicad Undercount – People who are on one of two government health insurance programs, Medicaid or S-CHIP, but mistakenly (intentionally or not) tell the Census taker that they are uninsured.

Medicaid/SCHIP Eligible – Eligible for free or heavily subsidized government health insurance (again, either Medcaid or SCHIP), but have not signed up.

Childless Adults – Adults between ages 18 and 34 and without kids.

Over 300% of Poverty – Do not fit into any of the above categories, and they have incomes more than 3X the poverty level.

Remaining Uninsured – U.S. citizens, with income below 300% of poverty, not on or eligible for a taxpayer-subsidized health insurance program, and not a childless adult between age 18 and 34.


Posted by xinunus | Report as abusive

First financial reform, then healthcare

Sep 9, 2009 17:05 UTC

I think this is a pretty smart piece of political analysis from my friend Barry Ritholtz:

I believe the brain trust behind the Obama White House has made a huge tactical error.

As Rahm Emmanuel likes to say, one should “never waste a crisis” — and the White House has done just that.

There was a narrow window to effect a full regulatory reform of Wall Street, the Banking Industry and other causes of the collapse. Instead, the White House tacked in a different direction, pursuing health care reform.

There was widespread popular support for a full reform of finance. What the White House should have pursued was: 1) Reinstatement of Glass Steagall; 2) Repeal the Commodity Futures Modernization Act; 3) Overturning SEC Bear Stearn exemption allowing 5 biggest firms to leverage up far beyond 12 to one; 4) Regulating the non bank sub-prime lenders; 5) Continuing high risk trades to be compensated regardless of profitibility; 6)  Mandating (and enforcing) lending standards, etc.

All of this could have been accomplished in the first 6 months of the Obama administration. The consumer protection stuff could have been tossed in as well, though it was not the cause of the collapse.

What we got instead, was the usual lobbying efforts by the finance industry. They own Congress, lock stock and barrel, and they throttled Financial Reform. It did not help that the Obama economic team is filled with defenders of the Status Quo — primarily Summers, but it appears Geithner also — the dynamic duo that fiddled while the economy burned.

Such dithering can be fatal to an administration.

This was a colossal blunder.  Passing reform legislation successfully would have fulfilled the campaign promise of “Change;” it would have created legislative momentum. It could have provided a healthy outlet for the Tea Party anger and the raucous Town Hall meetings. It might have even led to a “throw the Bums out” attitude in the mid-term elections, forcing the most radical de-regulators from office.


You forgot:

7) Repeal the Riegle–Neal Interstate Banking and Branching Efficiency Act of 1994 (signed by CLINTON), until then at least enforce the 10% deposits rule in it.

8) Repeal Depository Institution Deregulation and Monetary Control Act of 1980. (signed by CARTER)

9) Never vote Democratic or Republican

And this is only the start…

Posted by Ditto Plus | Report as abusive

The trigger that won’t get pulled

Sep 9, 2009 16:53 UTC

My pal Dan Clifton over at the Strategas Group gives his superinformed two cents:

First, healthcare has served a liability to the Democratic Party and we believe the Administration is making a political argument that doing nothing will hurt the party but doing something may or may not help the party and their reelection prospects. The only potential upside from here is to do something.

We also believe the moderate Democratic Senators can be pushing this trigger idea for the public plan knowing it will never go into effect as is the case with the pharmaceutical prescription drug program.

This last point is key because the rules set up for the trigger will determine the impact this legislation will have on managed care. We don’t believe the moderate Democratic Senators will sign off on a bill that will allow the cannibalization from private to government healthcare plans.

Why the Dems may implode in 2010: 4 scenarios

Sep 9, 2009 10:10 UTC

A Democratic meltdown next year? Washington is abuzz with speculation by prominent political handicappers such as Charlie Cook and Stuart Rothenberg. Republican hopes for a huge congressional comeback in the 2010 midterm elections rest on three pillars:

1) History. Since the start of World War Two, the president’s party has lost an average of 28 House and 4 Senate seats in the midterms. Computer-aided gerrymandering, though, has made incumbents tougher to knock off in the House.

2) Policy. Concerns about ObamaCare — too much government spending scares independents, too little spooks seniors — may help turn 2010 into a 1994 replay. What’s more, cap-and-trade makes Congress appear more interested in imposing new economic costs than creating jobs. Current congressional approval ratings hover around the high 20s, while a new Rasmussen poll shows Republicans hold a 44-37 lead on a generic midterm ballot.

3) The economy. This is the most important of the three. As long as the recession continues, the biggest Obamacrat achievement — the stimulus –- risks looking impotent and a waste of $800 billion. At the same time, healthcare, energy and financial reform almost look like distractions. What’s more, high unemployment – now at 9.7 percent vs. 7.6 percent in January — is driving down President Obama’s approval rating. It’s fallen from 61 percent to 53 percent during the past three months, according to RealClearPolitics. And a president’s approval rating may be the single most important indicator of how his party fares in a midterm election.

But lately some GOPers have been wondering whether the economy might start working against their political fortunes. Economists to whom those on the right pay close attention — Brian Wesbury of First Trust Advisors, Michael Darda of MKM Partners and Lawrence Kudlow of CNBC — have been forecasting a recovery.

And that recovery might look pretty strong initially. During the first quarter of the last 10 economic recoveries, real GDP has risen close to 6 percent on average. And both Wesbury and Darda see the economy growing at least four percent next year. The worry for Republicans is that the Obamacrats will plausibly be able to take credit for both avoiding a depression and igniting the subsequent turnaround. (Ben Bernanke and the Fed kind of get lost in the White House narrative.)

But abstract GDP figures aren’t as important as the unemployment rate. As long as that number is at the highest levels in a generation, Americans are likely to feel anxious about the broad economy and their place in it. Here are four economic scenarios and their political impact:

1) The Double Dip. The worst of all worlds for Dems. The economy slips back into recession next year, pushing the unemployment rate to at least a post-WWII high of 10.8 percent. Economist Nouriel Roubini says that weak labor markets, weak banks, weak consumers, weak profits and weak trade create a strong risk of just such a “W-shaped” scenario. If so, not only does John Boehner maybe take back the gavel from Nancy Pelosi, but Hillary Clinton and Russ Feingold start looking for reasons to visit Iowa and New Hampshire. Probability: 10 percent

2) The Big Muddle. The economy keeps growing, but only in the 2 to 3 percent range. And that wouldn’t generate many new jobs. IHS Global Insight, for instance, predicts GDP growth of 1.8 percent with unemployment averaging 10 percent next year (and 9.4 percent in 2011). This is also where the Federal Reserve lands. The Fed forecasts growth of between 2.5 and 3 percent with unemployment declining “only gradually.” In this case, expect greater-than-average Dem losses. Harry Reid might get voted out by his fellow Nevadans while Pelosi might get the boot from fellow Dems. Probability: 50 percent.

3) The Big Bounce. A combination of Fed stimulus, government spending and inventory restocking by companies produces growth of 4 percent or more. But even so, unemployment remains twice as high as what Americans have become accustomed to during the past generation. Economists at JPMorgan calculate that 4 percent growth would translate into an average of 200,000 new jobs a month next year. And if the unemployment rate ends this year at close to 10 percent, that level of job creation would only bring it down to 9.5 percent or so. Democratic losses are limited to the historical average give or take. Probability: 35 percent

4) The Obama Boom. It’s 1983-84 all over again. The economy soars as fast as it fell. Unemployment drops below 8 percent by Election Day as formerly terrified employers realize they cut too many workers during the recession. Dems have limited losses. Talk of a third party increases. Probability: 5 percent.

Bottom line: Unlike the Reagan boom, neither taxes nor interest rates look to be going lower anytime soon. And economies after financial crises tend to be slow growers. So it’s hard to envision a likely economic scenario without a jobless recovery in 2010. And as economic analyst Ed Yardeni points out, “The industries that have cut back the most (durable goods manufacturing, construction, and retail) are inherently labor intensive, and they are likely to remain in intensive care for quite a while.”

Passing a popular healthcare bill would certainly boost Democratic fortunes. But history and the economy would suggest that 2010 will be a big Republican year.


Very thoughtfull post on achievements. It should be very much helpfull

Karim – Positive thinking

Posted by Karim | Report as abusive