James Pethokoukis

Politics and policy from inside Washington

Why the Dems keep pushing healthcare reform despite polls

Dec 15, 2009 14:22 UTC

An average of healthcare polls by Real Clear Politics shows it unpopular by a 53-38 margin. But why are the Ds still pushing hard to get it passed? Byron York analyzes the various motivations after to talking to a Dem strategist:

“In the House, the view of [California Rep. Henry] Waxman and [House Speaker Nancy] Pelosi is that we’ve waited two generations to get health care passed, and the 20 or 40 members of Congress who are going to lose their seats as a result are transitional players at best,” he said. “This is something the party has wanted since Franklin Roosevelt.” In this view, losses are just the price of doing something great and historic. (The strategist also noted that it’s easy for Waxman and Pelosi to say that, since they come from safely liberal districts.)

“At the White House, the picture is slightly different,” he continued. “Their view is, ‘We’re all in on this, totally committed, and we don’t have to run for re-election next year. There will never be a better time to do it than now.’”

“And in the Senate, they look at the most vulnerable Democrats — like [Christopher] Dodd and [Majority Leader Harry] Reid — and say those vulnerabilities will probably not change whether health care reform passes or fails. So in that view, if they pass reform, Democrats will lose the same number of seats they were going to lose before.”

Peter Orszag vs. the WSJ

Dec 14, 2009 20:29 UTC

OMB director Orszag didn’t much like a WSJ editorial about the lack of  fiscal prudence of ObamaCare. And he said so on his blog. I think Orszag makes a few reasonable points, like not counting on cost savings from the pilot programs.  But he side-stepped that fact that America will be spending more on healthcare, even if paid for. Then there is this:

For an economist, the irony is rich.  The editorial board that did more to bring supply-side economics – or in George H.W. Bush’s immortal words, “voodoo economics” – to Washington is raising the specter of a fiscally irresponsible health reform bill in which efforts to rein in health care cost growth are an “illusion.”  But the ironies run richer, since an editorial that hurls accusations of overselling cost containment itself displays more impressive rhetoric than substantive content. The Journal makes three fundamental claims. The first is that health reform represents a huge risk to the federal budget, and will end up exploding the deficit, because it relies on an array of speculative policies to control costs. What the Journal misses is the crucial difference between this health reform effort and the flawed supply-side economics that drove the country into the deep deficits of the 1980s.

Me:   1) The 1980s tax cuts saved the US from complete economic collapse, yet Orszag sees them only as an accounting issue. Also, the worst deficit-to-GDP year of the 1980s was like 6 percent. The US may well average that number over the next decade.

COMMENT

Umm Jimmy P, can you explain exactly how “the 1980s tax cuts saved the US from complete economic collapse.” Just askin’.

Also, even as a conservative I must acknowledge that U.S. economic growth has been rather lackluster since the Clinton presidency. So, what’s up with that, why didn’t supply side economics bring us robust growth and prosperity during the Bush years?

Posted by Bill, Fairfax, VA | Report as abusive

Why ObamaCare is heading in the wrong direction

Dec 9, 2009 18:22 UTC

Arnold Kling sums things up perfectly:

I believe that America’s health care system should be reformed. Medicare is unsustainable. Employer-provided health insurance should never have been instituted in the first place, and it is becoming more dysfunctional every year. I would like to deal with the structural issues that bias our system in favor of specialists, fragmented care, and credentialism. Americans need to learn how to make reasonable judgments about medical procedures that have high costs and low benefits.

None of these problems is addressed by the bills in Congress. This year’s health care debate is proof that top-down reform is not going to work. The more the system is politicized, the less likely it is that it will change. The only direction for reform is market-oriented policy that by today’s standards seems radical and unacceptable. In contrast, the politicians are struggling mightily to do what amounts to minor tinkering and tampering.

Is the ambitious Obama agenda freezing the US labor market? CEOs think so

Dec 1, 2009 17:17 UTC

Just took a break from the Innovation Economy Conference sponsored by the Aspen Institute. Particularly interesting was a joint Q&A with GE’s Jeff Immelt and Intel’s Paul Otellini.  The latter said he was concerned about the “amount of variability in the system” created by Washington. Fluctuating policy when it comes to healthcare, energy, taxes. “It is very difficult for anyone to make a hiring decision” when the future is so uncertain, he said. Immelt added he would just like to “know what the rules are.” About ObamaCare, Immelt said healthcare “costs probably aren’t going to be coming down.” He is also worried about cost shifting due to proposed Medicare cuts

COMMENT

WOW, Jimmy-P, we must have been on a parallel today, I was just talking to my boss about this afternoon, so many variables, unknowns, rules changing daily.Our company is treating it like “crossing the desert” the more water you keep, the slower you sip it, the longer you can last.24 months into the recession, and is there anything in sight, “less-bad” is no longer good enough, or might this be the “new-norm”. 2.8% 3rd quarter, minus all the spending, cash-4-clunkers, FTHB Credit, all the road projects, and we only squeak out 2.8%? What now, the crack is almost gone!?

Posted by Ed753 | Report as abusive

If you believe ObamaCare will be deficit neutral …

Nov 30, 2009 20:06 UTC

….  then you must believe all of the following (via The Health Care Blog):

Health reform adds a heap of new cost saving political obligations on Congress. A partial list:

1)that Congress not extend the five-year shelter for states from their share of the cost of a 15 million person Medicaid expansion (e.g. more than a 30% increase). Presently, states are sheltered from Medicaid cost sharing for this expansion until 2014, but then have to find $34 billion in new money to pay their share. States, who are drowning in Medicaid costs already, will press hard to have their existing matching requirements reduced, as they have been for S/CHIP in the two bills.

2)that any “public option” health plan be self-supporting after an initial start up investment, which must be repaid. Recent CBO analysis suggested that because it will attract a ton of sick people, public plan premiums may end up costing more than private insurance unless they are either heavily subsidized or else impose Medicare rates unilaterally. Who will sign up if it’s so expensive?

3)that premium subsidies to help support a 21 million-person expansion in private insurance coverage not rise if health insurance premium growth exceeds present estimates. The premium subsidies are a huge new entitlement- $574 billion over a decade in the more generous House bill. Neither Congress nor the CBO have the faintest idea how health insurers’ costs will be affected by all the proposed restrictions on their underwriting practices. The subsidy cost estimates are, therefore, a Jules Verne moon shot. What happens if, as seems likely, they are way too low?

4)that Congress let stand recommendations of the proposed (by the Senate anyway)

“independent” Medicare Commission that would reduce spending below a target

(and not fiddle with the deficit neutrality rule which requires them to find offsetting revenues if the cuts are not implemented). This Commission was forbidden by Senate charter from affecting hospital payments (45.5% of the program’s cost in 2007!), not an auspicious beginning. The House has thus far predictably refused to let go of Medicare’s reins.

5)that Congress not tamper with the health benefit package employers are mandated to provide or individuals are mandated to carry. In both bills, the relatively restrained “opening” benefit package is left under the (political) control of the Secretary of Health and Human Services. If there is benefit creep (chiropractic, podiatry, in vitro fertilization, massage therapy, reiki, you name it), the required premium subsidies will have to increase apace.

How confident are you that Congress will bite all these bullets and exercise fiscal restraint when confronted with organized advocacy? The CBO kabuki dance on health reform’s deficit neutrality has pivoted around the risible assumption that Congress will actually enforce laws, like the Part B cap, that require, at some future point, fiscal discipline

The Afghanistan war surtax gambit

Nov 24, 2009 19:32 UTC

Why is passing healthcare reform so difficult? One big reason is that Democrats are trying to pay for a broad-based new entitlement without enacting a broad-based new tax.

As the joke goes, the only real difference between Republicans and Democrats is that the Rs don’t want to raise taxes on anybody and the Ds want to clip only the top 2 percent.

But some Democrats have finally found a cause worth taxing the middle class for: the war in Afghanistan. A group of powerful House committee chairmen are pushing a graduated income surtax. (A Senate effort would tax only the wealthy.)

The twin goals, backers say, are fiscal probity and transparency, especially now that it looks like President Barack Obama will be sending up to $34 billion worth of new troops to Afghanistan.

As Barney Frank, House Financial Services chairman, puts it: ‘It’s important for people to understand how these wars are adding to our deficits.’

Nonsense. The same lawmakers supporting the war surtax also support a healthcare reform plan that is structured to hide long-term costs. No accounting trick is spared. Taxes are front loaded. Some spending is back loaded, while other spending is shunted to a separate bill.

No, the goal of the surtax is to drain public support for a war many Democrats think should be downgraded. And no doubt if this legislative effort proves successful, it would be tempting to eventually make the temporary surtax permanent.

Indeed, the whole effort could be laying the groundwork for a broad value-added tax that many centrist and liberal economists think necessary to shrink America’s long-term budget gap.

But why not take this opportunity to help pay for the war through spending cuts?

It’s inside-the-Beltway wisdom that Congress won’t cut spending. But eventually spending will need trimming to deal with the long-term budget deficit without resorting to currency devaluation or inflation or huge tax increases.

So let’s start now. The war in Afghanistan currently costs some $43 billion a year. As the Heritage Foundation rightly notes, “that sum is dwarfed by the $72 billion in improper payments (i.e. over-payments, payments made for services and goods never received, benefits and tax credits paid to people who didn’t qualify) that the Government Accounting Office said the federal government made last year.” Then there’s $92 billion in corporate welfare and $123 billion in programs that simply aren’t really showing any positive impact, according to government auditors.

Time for Congress to prove the common wisdom wrong and do the unexpected: Cut spending.

COMMENT

Maybe they’ll suggest a modest, temporary VAT to pay for the war. Also, let’s not forget about the billions of waste and fraud that Obama found in Medicare which he could cut painlessly.

Healthcare reform update: It’s all about 60 votes

Nov 18, 2009 19:37 UTC

My sources tell me that reconciliation — pushing through HC in the Senate with 51 votes with a special parliamentary procedure — isn’t going to happen. So the big votes will need 60, including just opening debate. And rest assured that if Reid thinks he has 60 to pass, the debate will immediately come to an end.

Keith Hennessey gives his odds update:

I am lowering from 60% to 50% my projection for the success of comprehensive health care reform.

  1. Pass a partisan comprehensive bill through the House and through the regular Senate process with 60, leading to a law; (was 40% –> 30%)
  2. Pass a partisan comprehensive bill through the House and through the reconciliation process with 51 Senate Democrats, leading to a law; (steady at 20%)
  3. Fall back to a much more limited bill that becomes law; (was 20% –> 15%)
  4. No bill becomes law this Congress.  (was 20% –> 35%)

I think there is zero chance a bill makes it to the President’s desk before 2010.  If a bill were to become law, I would anticipate completion in late January or even February. …

I have lowered my projection of Leader Reid succeeding for three reasons:  Pretty much everything has to go right for him to win on cloture in mid-December. He has no more wiggle room on the schedule, and new intra-Democrat policy fights are popping up.

I think his members are going to get beat up about health care and jobs over Thanksgiving recess, then return to Washington to face another bad jobs day Friday the 4th. If moderates demand large substantive concessions for their votes, liberals like Senators Rockefeller and Boxer may refuse. They may tell Reid they will oppose cloture if the bill moves toward the  center, and instead advocate abandoning regular order and starting a clean reconciliation process in January. House liberals might join this effort.

COMMENT

I’m hopeful this thing will get killed in the Senate, but have big doubts. The fact that Reid included a public option in the Senate bill suggests to me he has more confidence in getting those 60 votes than the critics are suggesting. Without a public option he could still armtwist liberals by saying it would be restored in conference. But including the public option suggests his fears of losing centrists over that issue may be overblown. For my money, Leiberman is the last best hope of sanity in this matter and his could be the key vote.

Posted by Bill, Fairfax, VA | Report as abusive

Afternoon speed round

Nov 17, 2009 21:34 UTC

Some of the best things I read today:

1) Tyler Cowen gives his version of healthcare reform. Ideas 3-10 are particularly strong.

2) Noam Scheiber agrees with Summers that budget deficits are not a big deal since less private borrowing mean no crowding out. I wouldn’t get too satisfied with this explantion.

3) IBD’s Jed Graham has  great post that speculates “come 2013, we might begin to see help wanted ads that emphasize the lack of employer-provided insurance as a perk.”

4) Matthew Yglesias looking how Republicans will try to roll back HC reform if it ever passes. The delayed-start will make this easier.

5) Joel Kotkin again show how California is doing everything wrong to boost growth. Just look at Northern California:

Indeed by some accounts, most embarrassingly in a recent Time magazine cover, the shift to green technologies has already created a “thriving” economy.

Time extols Google, Apple, Facebook, Twitter and the other Silicon Valley companies as exemplars leading to a glorious prosperity; somehow the article missed the empty factories, vacant offices and abandoned farms across the state.

For Apple’s Steve Jobs, Google’s Eric Schmidt and venture capitalists connected to Al Gore, these could well be the best of times. Fed policy prints money for investment bankers to speculate; stock prices rise as people have nowhere else to invest. And for the much celebrated venture community, there’s also an Energy Department that pours hundreds of millions into “green” start-ups that build things like expensive electric cars.

California’s high-tech greens may talk a liberal streak in terms of diversity and social justice, but their prescriptions offer little for those who would like to build a career and raise a family in 21st century California. Their policies in terms of land use regulation and greenhouse gas emissions will make it even harder for existing factories, warehouses, homebuilders and other traditional employers of the middle- or working class.

Yet the “greenest” parts of the country–places like the northern end of the Bay Area–are among the toughest places to build or manufacture anything, without huge public-sector subsidies. Indeed, California’s new green requirements, compared with places like Texas or China where manufacturing has other advantages, would further undermine an already struggling sector. Few businesspeople see much growth in the near future in office or residential construction.

How about some healthcare federalism?

Nov 17, 2009 20:06 UTC

From the astounding Arnold Kling:

The bill I would propose would be one that encourages experimentation at the state level. Offer to support an experiment that allows an individual state to adopt single-payer, while allowing another state to offer deregulated insurance and medical practice.

What is frustrating to me is that many people would agree that the Massachusetts health experiment failed, and yet that is the experiment that is being used as the model for the current bill. The original promise in Massachusetts was that by eliminating the “free-riding” of the uninsured and by setting up an efficient government insurance exchange, insurance costs would go down. Instead, insurance costs there soared.

The current health care bill is viewed skeptically by every reputable health care economist. My guess is that even someone like Peter Orszag, who obviously is not free to speak his mind, is somewhere between disappointed and appalled at what is coming down the pike.

It would make sense to try more state-level experiments before choosing a model for a national system.

COMMENT

I am tired of this administration feeling like they have a blank check book that they can utilize whenever they feel the need to without accountability to the ones paying the bill…” The Taxpayers”

Posted by Samantha | Report as abusive

6 reasons healthcare reform might fail in the Senate

Nov 17, 2009 18:05 UTC

“We no longer expect Congress to pass impactful health reform legislation this year, or even in this political cycle.” That is the opinion of Sector & Sovereign analyst Richard Evans:

1. Voter attitudes are shifting away from both Democrats and health-reform; placing the considerable number of Dems from conservative states and districts in increasingly untenable positions.

2. Substantial time should pass before a vote on final legislation; the Senate is unlikely to vote on a bill by year end, and a final vote on a conference bill is virtually impossible before late January. If trends in voter opinion continue, this is almost certainly too late.

3. On top of this, efforts to keep abortion as a neutral issue have failed. 20 pro-life House Dems have put the issue ahead of health reform, refusing to support legislation that does not completely bar abortion coverage in plans that receive Federal funding.

4. Pro-choice House Dems outnumber their pro-life House Democratic peers nearly 8 to 1. As any final legislation will certainly be well to the right of the House bill, this means House progressives may be asked to support a final bill whose healthcare provisions they find lacking in appeal, and to surrender ground on choice in the process. We bet at least a few refuse.

5. Immigration is a less potent but still meaningful wild-card; 20 House votes rely on the Senate ultimately agreeing to loosen its language and let illegal immigrants purchase coverage on the exchanges with their own money, and to extend subsidies not only to citizens, but to anyone who is in the US legally. 15 Senate Democrats hail from states that Obama either lost, or carried with a 5 percent margin or less. These swing-votes hold inordinate power, and are much more conservative on immigration than their blue-state peers; we believe they may balk at these House provisions.

6. The House bill’s largest source of funding is an incremental tax on the wealthy, which the aforementioned 15 Democratic Senators from red- or swing-states cannot support. The Senate Bill’s largest source of funding is taxes on relatively more expensive ‘Cadillac’ health plans, which the union friendly House cannot support. In effect, each has settled on a plan that the other cannot pass.

Me: Never underestimate the power of numbers. And the Ds do have a big majority in the Senate. And what do they fear more, passing the bill or not passing it? Obama might still sign something, but it might not resemble comprehensive healthcare reform anymore. We await the CBO score ….

COMMENT

Defeat of the anti-heathcare people control bill is essential for the defeat of the collectivist liberals in 2010 who have killed the once great democratic party and now occupy it’s corpse like some demon Parasite in a B grade SI-FI movie. This an attempt to take over another one sixth of the American ecconomy. Make no mistake about it, this is a full blown coup in progress to distroy the American economy and force the transformation the United States into a Fabian Socialist/Communitarian Totalitarist State. The don’t give a damn about people, just power. As Cicero said “Power Corupts, Absolute Power Corupts” Absolutely… The sad thing is that they are not truly dedicated social revolutionary cadres, just corrupt evil people. Real revolitionaries don’t try to make themselves rich on the backs of the people as Al Gore is! They are behaving just like the Laissez-faire Capitalist they want to replace!

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