Obama’s New Democratic Populism
There is something new going on in the Democratic Party. The President’s top domestic priority, health reform, ran into determined and increasingly effective Republican obstruction and misinformation. Opinion polls registered growing public opposition built on the foundation of Republican attacks. The Democrats lost a special election in a normally safe seat. Democratic Senators and Representatives panicked and loudly expressed their desire to seek compromise with Republicans and/or abandon the issue. How did the President react?
He could have moved rightward, adopting a Republican issue (tort reform?) as his own and intentionally antagonizing Democratic liberals. Bill Clinton was notorious among Democrats for maneuvers like this (remember “triangulation”?). He could have fired his cabinet, making a clean break with an unsuccessful team. That move helped seal Jimmy Carter’s fate in 1980. Instead, Obama stuck to his original plan, carefully designed from the beginning to reach for major policy goals while maximizing interest group support. He tweaked his position to add popular cosmetic elements (insurance company rate review) and eliminate unpopular ones (cornhusker kickback). Then he stage-managed a confrontation with Republicans to emphasize the shallowness of their appeals to bipartisanship. When he calls the question, chances are he’ll have the votes.
Two things are striking about this response: its confidence and its populism. Barack Obama trained as a community organizer in Chicago. He spent years training community leaders to use the power of populist confrontations to win concrete, lasting policy achievements. That’s how community organizations are built. He also knows that most of his supporters are motivated by symbolic issues with an easily identifiable villain (like ending the anti-trust exemption for insurance companies), so he should campaign on those instead of on the policy elements that will actually have the biggest impact (exchanges and subsidies). Furthermore, he apparently understands that Independents want to see an open process with bipartisan intent, but, again, the policy specifics don’t matter as much to them. So the recipe for success is clear: build an interest group coalition around concrete, winnable issues, emphasize populist components in the campaign, make highly visible overtures to Republicans, and then set up confrontations with entrenched opponents on your terms.
As a candidate Barack Obama promised to change politics. Few thought this was what he meant, but as a former organizer myself this is definitely change I can believe in.
Watch This Story. It Could Be Obama’s Legacy.
The foundation of one component of Obama’s legacy may be established with his planned health care summit. We saw a preview two weeks ago in his appearance at the GOP retreat. For lack of a better description it’s a form of unilateral bipartisanship. And it is poorly understood. Jon Chait gets it.
This apparent paradox is one reason Obama’s political identity has eluded easy definition. On the one hand, you have a disciple of the radical community organizer Saul Alinsky turned ruthless Chicago politician. On the other hand, there is the conciliatory post-partisan idealist. The mistake here is in thinking of these two notions as opposing poles. In reality it’s all the same thing. Obama’s defining political trait is the belief that conciliatory rhetoric is a ruthless strategy.
Chait was writing about foreign policy. In a must read post today he notes the same elements at work with health reform. There, Obama has already adopted many of the opposition’s ideas. If they accept that fact and walk with him, he’s won a bipartisan victory. If they walk away in plain view, their disingenuous inconsistency is revealed.
At the moment, Obama’s outstretched hand exists in a quantum superposition-like state, simultaneously an olive branch and cudgel. Republicans’ response will determine which is realized. Unless Republicans find a way to rewrite the narrative Obama ends up looking good either way. Chait calls this The Obama Method.
I’m not saying this is some kind of genius maneuver. I’m not even saying it will work. (I wouldn’t bet against it, though.) I’m just saying that this — not starting over, and not pleading for bipartisan cover — is what Obama is trying to accomplish.
If it works I expect it will be identified as a quintessential element of Obama’s legacy. Unilateral bipartisanship may be, logically, semantically, an oxymoron, but it is exactly the marrying of those two ideas that Obama offers as a third way of governing. Though it may also end up as productive as one hand clapping.
SOTU and Health Care: Politics vs. Policy
I’ve been hyper-busy today and not able to keep up 100% with all the SOTU spin and interpretation. Nevertheless, at the risk of repeating something someone else has said and I failed to read (yet), I’ll toss in my two cents about the way Obama handled health care in the speech.
On the one hand, policy wonks (myself included) would have loved for him to give a crystal clear signal of what direction he wants Congress to go. My preference would have been for him to say, “To the House: pass the Senate bill. To the Senate: work with the House to amend it.” That’s clear enough. That’s the policy approach.
On the other hand, there’s the political. Obama wants to (and did) set the stage for the midterm campaign claim that Republicans have brought nothing serious to the table. That’s why he said (I’m paraphrasing), “If you’ve got a good idea on health reform, send it to me.” Of course, unless Republicans are actually willing to vote for anything, all the politically feasible ideas that make any policy sense have already been offered. We know what they are. There really isn’t any other way to go from here except in the direction the House and Senate have already gone.
So, the expectation on the part of Obama and the Democrats is that Republicans won’t offer any serious alternatives, and won’t vote for anything. We all heard Obama ask for their ideas and help. If the GOP doesn’t turn up a good idea that they’ll actually vote for then that prepares the ground for accusing them of politically motivated obstructionism.
Notice, Obama can’t simultaneously invite new ideas and also command Congress to pass existing legislation. Or, he can do that but not in the same speech. In not giving the House and Senate marching orders he made a choice away from highlighting policy and in favor of the political. That’s natural given the nature of a SOTU address in an election year. A political event calls for political tactics. And that’s exactly what was delivered.
A Pivot Plop?
Obama is trying to pivot from health care to jobs and the deficit. The best view of that with respect to health care is that he’s trying to boost his ratings (which would help) and give Democrats some cover as they scramble to put their agenda back together. (Now if they had not blown it up themselves last week I might have some sympathy). The worst view is that he’s walking away from health care.
Independent of that, the pivot is just not looking good. When Ezra Klein says the Democratic President is failing to communicate I think it is safe to say he [the President] has got a problem.
[I]t’s also the administration’s white flag on the argument that the deficit must be understood as a health-care reform problem rather than a taxes and spending problem. This was their most audacious effort to change the way Americans think, and it didn’t work. For all the effort Democrats put into building a health-care bill that cuts the deficit, a full 60 percent of Americans think (pdf) the legislation increases the deficit. Only 15 percent think it’s a deficit reducer….
What we have here is a failure to communicate.
Now, I don’t care that much about who wins or loses in politics so long as we get policies I think make sense. So, if Obama wants to blow up his presidency with a bunch of hooey, that’s not my big concern in and of itself. But I know that political capital matters. The weaker the President gets the less likely it is we’ll get anything good out of him, including on health care.
Tomorrow’s State of the Union address is his big chance to save his pivot or pivot back to what he pivoted from and save that. Either way, he may just look like he’s running in circles.
Later: From DeLong, “If it really is as small a deal as it now looks, it is not a budgetary and economic disaster–it is a rhetorical, political, and messaging disaster.” Ouch.
Chilly Reception for Obama’s Spending Freeze
I’m up early so I might as well round up some reactions to Obama’s proposed spending freeze. I’ll give mine first. It’s pretty simple. Want to deal with the long-term spending problem? How ’bout doing something on the biggest source of spending increases, which is–wait for it–health care! Now if we only had a legislative vehicle that begins to address that problem, maybe one that could be passed quickly…hmmm….
OK, want to know what others think? Read on.
Matt Yglesias runs through the scenarios for how the proposed freeze will pass through the congressional sausage machine. But he is actually skeptical the proposal is serious. Yglesias concludes, “I suspect this initiative was deliberately leaked to progressive bloggers in an effort to get denounced by the left and I don’t want to give them the satisfaction.” That is, Obama is inviting a fight with the left in order to center himself.
Ezra Klein describes how spending freezes normally work through Congress.
The administration will target worthless programs, like agricultural subsidies, in order to preserve good programs. But the reason worthless programs live in budget after budget is they have powerful backers. And those backers will rush to Congress to protect their profits. …
Now you’ve removed some of the cuts, but you still want to hit the overall target. So the cuts could get reapportioned to hit programs that lack powerful constituencies. Many of those programs help the poor.
And that’s why the left would be enraged. He concludes, “You can attend a lot of Democratic rallies without ever hearing the chant, “When I say ’spending,’ you say ‘freeze!’ ‘SPENDING!’”"
Clearly Obama is trying to reinvent himself in the wake of the Massachusetts vote and this spending freeze idea is just one of several responses. Kevin Drum is gobsmacked at the rapidity of this pivot:
I’m not sure I’ve ever seen this level of political panic grip a party so fast over a single election loss. It’s just remarkable. Yes, I know Dems were getting nervous before last week’s election, and Scott Brown’s victory just opened the floodgates, so to speak. But still. I’ve just never seen anything quite like this.
Finally, at least a few economists are not pleased. First, there’s Brad DeLong who calls this “dingbat kabuki” and insinuates that Obama is Herbert Hoover with a better smile (actually, did Hoover have a smile?). And, finally, Mark Thoma makes my point, which is the best way to conclude:
The long-term budget problem is due to primarily one thing, rising health care costs. Everything else is dwarfed by that problem. If we solve the health care cost problem, the rest is easy. If we don’t solve it the rest won’t matter.
This was an opportunity for Obama to explain the importance of health care reform and how it relates to the long-term debt problem.
Exactly.
The Real Lesson of Massachusetts
Until last night I thought the lesson of Massachusetts for health reform stemmed from the experience of its state-wide version. The real lesson seems to be less about policy and far more about politics. If health reform fails it will not be due to Coakley’s loss. Rather, her Senate bid and health reform will both be victims of an Administration so focused on the ball they didn’t clearly see the field or the other team.
When Obama won in November 2008 he switched from campaigning to governing. His cool, hands-off style made considerable sense for health reform. With it he avoided the mistakes of the early Clinton presidency and let Congress do the work they must. That approach worked well through last summer.
But when House and Senate bills emerged from committee the broad structure of health reform was clear. Congress had done 90% of the policy work. What remained was largely politics. By Thanksgiving, if not before, Obama could have and should have shifted from governing to campaigning. A national “health security” tour might have helped confused and skeptical Americans understand reform and what’s in it for them. In truth, he’d have had to also work in a “job security” message as well, not an impossible task.
Josh Marshal looks back to President Bush’s response to Republican defeat in the 2006 mid-terms centered on dissatisfaction with the war in Iraq. Bush countered aggressively (too aggressively some might say) with the Iraq surge. Marshal’s point is he fought and fought hard for his agenda. In contrast Obama has not, or at least not in a way that resonates with Americans. (Private meetings with members of Congress has all the resonance of a wet rag.)
I recall Bush’s Social Security tour in 2005. He took his message to town halls to speak directly to Americans about his vision for reform. It didn’t work for Bush and Social Security but in part that’s because the idea made no sense and there was no impending crisis. Health reform, in contrast, does make sense, and the coverage and cost crises are with us and have been for years.
Had Obama been campaigning on health reform in late fall and into this winter he might have had better control of the message, not just in Washington but nation-wide. Instead he has left a large opening for Republicans to exploit the populace’s confusion and discontent, with tangible electoral results, at least in Massachusetts. Obama was playing an inside-the-beltway game when the real threat to his agenda was elsewhere. In this I agree with Josh Marshal:
What the Democrats — and a lot of this is on the White House — have done is get so deep into the inside game of legislative maneuvering, this and that ‘gang’ of senators and a lot of other nonsense that they’ve let themselves out of sync with the public mood and the people’s needs.
The president needs to find way to say, we’ve heard you. We’ve gotten so focused on working the Washington channels to get this thing done and we need to be more focused on the public’s mood and urgency. Well, we’ve heard you. We’re going to stop playing around and get this thing done. And then we’re going to work on getting Americans back to work. We know the urgency of the moment and we know you expect results.
From far outside-the-beltway it appears that the Administration forgot about the people, forgot about the broader fight, and failed to notice the election in Massachusetts, until there was little time to do much about it. Obama showed up last weekend to campaign for Coakley, but it was far too little, far too late. His chance to make a difference in that fight was earlier. Has he already missed the chance to deliver the winning message on health reform? We will soon find out.
Health Reform Trajectory II: State of the Union Scheduled
Tonight the Administration announced that the State of the Union address will occur on January 27. If a health reform bill is to pass by then it can only be done with the House passing the Senate’s bill. There is not time to wrap up negotiations, obtain a CBO score on a new bill, and complete all the cloture votes in the Senate necessary to pass a new bill. If that is indeed what the Administration thinks is going to happen then it is a strong signal that they expect Coakley to lose the Massachusetts special election tomorrow, which appears likely.
Or perhaps the Administration is resigning itself to the fact that health reform will slip past the State of the Union deadline. That begs a question: what’s the next natural deadline?
Health Reform Trajectory
With a very tight race for Ted Kennedy’s seat to be resolved tomorrow (barring any drawn out recounts), the likely trajectory of health reform is coming into focus. The two most plausible paths are:
- Coakley (D) wins and the House/Senate negotiations continue.
- Brown (R) wins and Democrats shift to plan B, which calls for the House passing the same bill that 60 Senators have already voted for and then revise it via reconciliation.
Neither route to reform comes with a guarantee of success. Negotiations could fall apart and House Democrats could fail to pass the Senate’s bill.
What is still a bit uncertain (to me at least) is the timing. Of course the Administration wants a bill before the State of the Union, which has yet to be scheduled. That’s just the latest in a string of deadlines going back to last summer. That production of a final bill has taken even this long has come at the cost of fewer accomplishments in Obama’s first year. The Democrats have entered an election year with far less to show for their super-majority control than many hoped or expected. Independent of the outcome of Tuesday’s election in Massachusetts, that’s a victory the Republicans have already achieved.
Obama’s Medicare Half-Truth
Obama was called a liar during his recent address to a joint session of Congress. Actually, on another point he was not fully truthful about the implications of cuts to Medicare. Obama repeated that his health reform plan includes payment cuts for private Medicare Advantage (MA) health plans:
The only thing this plan would eliminate is the hundreds of billions of dollars in waste and fraud, as well as unwarranted subsidies in Medicare that go to insurance companies — subsidies that do everything to pad their profits and nothing to improve your care. … So don’t pay attention to those scary stories about how your benefits will be cut… That will never happen on my watch. I will protect Medicare.
Obama’s claim that the cuts will trim insurer profits but not Medicare benefits was meant to calm nervous seniors. As I and others have pointed out the proposed cuts will in fact reduce benefits to some degree, contrary to the President’s assertion. But seniors, in general, should not be concerned. First, only about 23% of Medicare beneficiaries are enrolled in an MA plan.
Second, there will be very little loss in consumer surplus due to MA payment cuts. Estimates from my 2008 International Journal of Healthcare Finance and Economics paper (co-authored by Steve Pizer and Roger Feldman) suggest that the consumer surplus loss associated with cuts in payments to MA plans will be only 14 cents per dollar saved. The study on which our paper was based was funded by the Changes in Health Care Financing and Organization (HCFO) Initiative of the Robert Wood Johnson Foundation and is summarized in a HCFO Findings Brief.
In this case, consumer surplus is the dollar value that Medicare beneficiaries receive from the benefits provided by their chosen health plan. This is estimated by examining the detailed choices seniors actually make and then calculating what they would be willing to pay, on average, for particular bundles of benefits. It turns out that the additional benefits and flexibility created by recent increases in MA payment rates simply weren’t worth very much to seniors. By comparison, the consumer surplus loss per dollar saved associated with eliminating prescription drug plans, something no one has proposed, would be nine times larger.
Despite Obama’s rhetoric, the truth is that under his plan a small fraction of Medicare beneficiaries will lose their MA benefits and/or face higher costs. However, the potential savings are enormous and research shows that the benefit cuts needed to achieve them will not be terribly missed. While Obama’s statements about Medicare cuts are not strictly true, in practice they will turn out to be mostly true.
Enter: Health Reform
This post originally appeared on The Finance Buff.
Last week I argued that Geithner’s bank rescue plan (PPIP) preserved Obama’s political capital for other parts of his agenda. While the alternative, nationalizing some banks, may be more effective and ultimately necessary, for now Obama has judged the political cost of doing so to be too high. For what, then, is Obama saving his political capital?
Enter: health reform.
For the first time since early in the Clinton Administration, the President and Congress seem likely to take up the issue of comprehensive, national health care reform. For any reform to be meaningful and lasting it will have to make significant progress toward covering all Americans and reining in health care spending. Both are daunting technical and political problems.
Addressing these issues will require substantial adjustments to government programs and accommodations by interest groups. Indeed, a tremendous allocation of political capital will be required for success, more relative to the level of opposition than our last two Democratic presidents had or were willing to invest (one reference and another).
Where do things stand now with respect to health reform?
President Obama campaigned on the idea, and the fundamentals of his plan have not changed. His late February address to Congress and his remarks before a White House summit on health care in early March signal a serious health reform effort. Key members of Congress share the President’s vision.
Senator Baucus has also proposed a plan to achieve universal coverage. Both the Obama and Baucus plans encourage coverage with income-related individual and small-business subsidies and a requirement that large employers offer insurance. Under either plan, large employers would offer coverage or contribute toward the cost of a public plan. Non-group insurance available through regional health marts would more closely resemble current group coverage. Baucus’ proposal also includes a requirement that individuals have insurance (an individual mandate) with tax penalties for noncompliance.
Another plan proposed by Senators Wyden and Bennett offers a different approach. Their Healthy Americans Act would replace the current employer-based system with state or regional insurance pools. Like the Baucus plan, the Wyden-Bennett proposal includes an individual mandate and subsidies.
Meanwhile key members of Congress and stakeholders have shown signs of cooperation. Senator Baucus and three vital House committee chairmen—George Miller (Education and Labor Committee), Henry Waxman (Energy and Commerce Committee), and Charles Rangel (Ways and Means Committee)—aim to produce a bill this summer (see this and this). Senators Baucus and Kennedy wrote to President Obama “to affirm our continuing commitment to enacting comprehensive health care reform this year.” And members of Senator Kennedy’s staff have been holding regular meetings with stakeholders on issues pertaining to health reform since late 2008.
All key Democrats in Congress agree that health reform should include an individual mandate and that a government health plan should be available as an alternative to private insurance. Both issues are likely to be controversial. While the insurance industry appears to welcome a mandate, making insurance affordable to all may prove too costly. Senator Grassley (the top Republican on the Senate Finance Committee) is “adamantly opposed” to a public health insurance plan. (See also this NY Times editorial.)
President Obama’s FY2010 budget proposal includes a number of components of reform. It would establish a $630 billion reserve fund for health reform, offset by increased taxes on wealthier Americans and efficiencies found elsewhere in the health care system. So far, budgets passed by the House and Senate support parts of Obama’s health reform agenda, but differ on how to pay for it.
Obama’s budget proposal also calls for major changes in areas of health programs, law, regulation, or practice such as reduced payments to private Medicare plans achieved through a competitive bidding system, lower prescription drug prices for federal health programs, expansion of comparative effectiveness research, and accelerated use of electronic health records.
Though not part of Obama’s budget, creeping into the debate is the idea of partially removing the tax deductibility of employer-provided health benefits. Doing so could provide a way to pay the expected one-trillion dollar cost of comprehensive health reform.
I’ve only touched on a few of the more controversial issues related to health reform. In future posts I expect to comment further on them as they arise in the debate. To lay the groundwork for those pertaining to Medicare (e.g., competitive bidding, drug price negotiation), in an upcoming series of posts I will summarize and explain the structure and payment systems of that large and important health care program.
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