Put Republicans on Defense

As the  old saying goes, the best defense is a good offense. As Obama finds himself having increasing difficulties over health care reform, he should offer a few carrots to shame the Republicans into cooperation. Advocates of his might say this signals weakness, but the murky status quo of being open to anything is a doomed position.

As former Senator Bill Bradley suggested in a NY Times op-ed over the weekend, dangling tort reform might galvanize support among the middle. Obama’s reason for not doing so thus far is transparent; he does not want to jeopardize the relationship Democrats have with trial lawyers— a wealthy and powerful constituency. To succeed in politics, however, political parties must occasionally compromise with their financial backers. President Clinton got NAFTA through at the chagrin of the unions. President Bush distanced himself from the militant, anti-immigrant wing of the Republican party to change immigration laws. His attempt failed, but that was more a function of Bush’s inability to overcome his abysmal approval ratings in 2007 than a failure in challenging a special interest group. If Obama promised the Republicans tort reform, they would have to acknowledge it and at least come to the table. Except for vague promises of bipartisanship, nothing about health care hitherto now has really involved Republican ideas. And no one can deny that  liability insurance has played a key role in the rise of health care costs.

Another possibility is for Democratic lawmakers to personally pledge that they would join the “public option.” Over the years conservatives have successfully accused Democrats of hypocrisy. Two such examples of this are  when Democrats told middle-class communities that their schools should have poor students bused in while those same liberals sent their children to expensive private schools and when they  asked for ordinary citizens to personally reduce their carbon footprint while they  unnecessarily flew on private planes. To preempt this type of accusation, Democrats could show authenticity by joining a program they are creating.

And the White House should consider changing its political strategy to achieve its goals. Instead of exclusively going to 2012 swing states (Colorado, Ohio, Indiana, North Carolina, etc.), Obama should go to states that have a Blue Dog or moderately Republican senator. If within the same few days Obama announced tort reform and did a townhall in Nebraska, Sen. Ben Nelson would be a lot more likely to come on board. The same logic applies to  folks like Louisana’s Mary Landrieu and North Dakota’s Byran Dorgan. President Bush successfully did this for his 2001 and his 2003 tax cuts.  It is hard to see how going to swing a state and recieving good press for a day will tangibly make a difference three years from now, especially when swing voters  repeatedly tell pollsters that they make their electoral decisions within weeks of election day. And if a President can’t pinpoint to any policy successes, what difference will it have made if he shook an extra hundred hands in these states?

The brilliant and billionare investor George Soros said, ” I’m only rich because I know when I’m wrong…[I]basically have survived by recognizing my mistakes. I very often used to get backaches due to the fact that I was wrong. Whenever you are wrong you have to fight or [take] flight.” Obama would be wise to heed to the secret behind Soros’ success. His current strategies and tactics have failed; he must change course.

Let Logic, Not Facts Govern the Debate

The main schism over health-care can be reduced to a philosophical difference over how to approach a problem. The President’s supporters swat away criticisms by explicitly referencing what the House bill says and what Obama says. Arguments not grounded in legislation or Obama’s words, they say, are unfounded speculation. Critics of the President instead point to the inevitable outcome of any bill that becomes law. If A happens, then B will happen, eventually leading to C. In a sense, they detect a nefariously causal and linear sequence ultimately leading to the rationing of health-care except for the uber-elite. Although many neatly formed causal puzzles that are predicated upon one fact tend to be spurious, in this case it is better to air on the side of logic than to rely on factual chicanery.

To help explain what I am saying, it is useful to revisit the fractious debate over the stimulus package in February. Proponents of the $787 billion bill said that lower and middle class citizens would particularly benefit because it included a tax cut of $25 per week, prolonged Medicaid benefits, and employment-heavy projects. These facts, treated in isolation, are inarguably true. When critics of the bill would riposte that this empowers government, takes away individual liberty, etc., advocates would always return to those previously stated benefits. The true logic of the bill is that those lower and middle class citizens will  in the future pay for that $787 billion in the form of higher taxation, interest rates, inflation, and/or a weaker dollar. In response, someone on the left could argue that those things will be more burdensome to the wealthy than the poor, but the evidence points to the contrary. The point is that folks on the left exclusively focused on the present facts and benefits while the right would speak of economic laws that they believed will surely come to fruition. Debates over whether more public spending comes at the expense of private spending and whether inflation will always come as a direct consequence of an increase in the quantity of money are perhaps debatable, but they cannot be dismissed in an argument that wants to only stick to the “facts.”

So we once again have the same thing for health-care. The President promises that if someone likes their healthcare, they can keep it. Detractors say the government can lull companies into opting for a public option by the government option promising the same benefits for less as a result of having no cost of capital and being able to run in the red. The logic follows that eventually the government will need to cut costs, meaning fewer benefits and worse care than current insurers offer. The President says that there will be no pressure on cutting costs for old people. Critics say that if he promises to cover a lot more people at a lower cost, that will inevitably result in older people getting worse care. There is no mention of this in any speech or bill. Nonetheless critics say this is what will logically follow.

The espoused logic that refutes Obama’s plan is certainly not airtight. But all of these arguments should be concerned with the logic, not muddled empiricism. In many ways the financial crisis can be tied back to muddled empiricism that paid no attention to the logical outcomes of what it was proposing. Fannie Mae and Freddie Mac had to inevitably fail; a corporation gets to borrow money at artificially low rates because the government guarantees its debt. In return, the companies buy up half of all existing mortgages to promote middle and lower class housing. The outcome: a housing bubble bound to severely crash. Instead of citing graphs and esoteric models, it would have been helpful if a rational and thoughtful debate centered around economic assumptions and outcomes governed our government’s federal housing policies.

The same is true for health-care. Instead of writing off people who come to conclusions that aren’t stated by any public figure, let them articulate their premises and causal links. We’ll make much better policy that way.

The Historian’s Growling Stomach

For the first seven months of the Obama Administration, the economist has been given ample data to work with. For those on the left, Obama’s interventionist policies have corroborated the notion that government can play a positive role in the economy. For those on the right, Obama’s plan to nationalize many parts of the economy will stifle growth. For the political scientist, the  gridlock over health-care further proves that hyper-partisanship  has come to define our era. For the poet, Obama’s fall from the heavens is another illustration that great men are still men—subject to hubris and luck. But the historian’s appetite has not been whetted yet. He is still searching for the great transformation.

As of now  it appears that TARP, the Fed, and all of the other financial shenanigans have simply preserved the status quo on Wall Street and the general economy.  With all of the backlash it looks as if healthcare will undergo minor changes to the current system much akin to President Reagan’s very unmemorable changes to Social Security and immigration.

On foreign policy Obama hasn’t taken any radically different steps from his predecessors. He is upping the ante in Afghanistan and hastening the end in Iraq. He still uses  pro democracy rhetoric while implicitly allowing human rights violations to go on. He finds China to be more a partner than a competitor.

Of course something memorable will happen and it is likely that the beginning of that narrative arc has already been written. Maybe Obama succeeds in Iran like Nixon succeeded in China. Maybe the populist anger at these townhalls will morph into something more tangible. Maybe the US-Japan alliance that has defined East Asian foreign policy is beginning to crumble. Maybe this is the beginning of the end to NATO. Who knows.

The legendary journalist Bob Woodward was in the middle of a manuscript about the politics behind former President Bush’s tax cuts before he decided to do something on the post 9-11/Afghanistan policy instead. It was a smart decision; Bush’s tax cut will only find interest among parochial scholars concerned with debating the extent and importance of economic inequality during the start of America’s 21st century. For everyone else, it will be a footnote at best. The nature of terrorism and Iraq will grab the attention of future Bush scholars. And it seems that pirates, health-care, drug violence in Mexico, the stimulus package, etc. will be footnotes too. The point is that everything hitherto now will seem inconsequential. The historian is waiting for the consequential stuff.