First of all, it’s pretty clear they have to pivot to more popular/populist measures. The bank tax is a great way to start — let the Republicans spin it and vote against it. Either way it isn’t good for them, from either a populist or fiscal responsibility angle.
On health care, however, Democrats can at least salvage something from their lengthy negotiations over the summer/fall/winter, as well as somewhat soften the blow they will get for failing to pass the Senate bill in the House.
They should slice up the health care bill, aiming to pass the most portions that are popular among the electorate as well as Congressmen and Senators (by the way, “most popular” does not include the public option, which isn’t going anywhere in Congress whether or not it is popular among the electorate). If nothing else, they should enact the requirement that insurers accept everybody regardless of pre-existing conditions, and this should be passed without linking it to an individual mandate.
Now, I think that passing the pre-existing conditions piece as a stand-alone is terrible from a policy standpoint, but it is good politics. And since the Democrats are now apparently concerned neither with good policy nor good politics, I’d gladly take one of the two. Here are the political benefits:
(1) In the immediate term, it will force the Republicans to take a tough vote. The pre-existing conditions piece is indisputably very popular with voters. Republicans would rather not see this pass, but those who don’t go along with it will pay a political price.
(2) Taking this up will please the party’s liberal wing, many of whom do not like the individual mandate but do like the pre-existing conditions piece. Of course, many moderates and even conservatives support this piece as well.
(3) Assuming it passes, it gives the Democrats at least something to hang their hats on for health care, so they can move on to concentrate solely on jobs and recovering money from the banks. It can also go into effect a lot earlier than other parts of the health care bill would have, thus offering a more immediate political benefit.
(4) Though more speculative, the passage of this piece will likely have some long-term political benefits as well. First, it at least moves the ball towards greater regulation of the insurance market a little bit, and it will help people who were dropped from insurance or unable to get it because of pre-existing conditions. It’s a move in the right direction.
(5) Second, without an individual mandate, forcing insurance companies to take all comers will radically increase health care insurance costs as many people wait to get insurance until they get sick. While bad policy, the increased costs will make health care an even more salient issue in the minds of voters. Hopefully the outrage at insurance companies raising their rates will result in further regulation, similar to and even beyond the original health care bill passed by the House earlier last year.
So if Democrats do nothing else, they should at least get this piece passed, as it will certainly have some immediate political benefits, and likely long-term benefits as well. As health care costs continue to spiral out of control, perhaps the next shot at enacting universal health care (including a public option) will be within the next decade, rather than in the next generation or two.
and could make the GOP look like the rats that they are… what a perfect way to contast the two parties. I’ll be damned if this party lets another fucking GOP bankster seize the “populist” mantle… what a friggin joke.
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p>The Blue Dogs will need to be put in their place, though. Barack, Nancy and Harry are going to have to inform each and every one of them that they don’t get a DIME of dscc/dccc/dnc support if they vote against these bills. Not a single dime. There’s no more screwing around — it’s for all the marbles, now.
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p>I also agree with “slicing” up the health care bill, as well as any other potential monolithic “we’re solving this problem in one fell swoop” style bill. If you keep each piece of the reform simple, not only will they be more likely to pass, but we’ll probably end up with a far more progressive series of bills… as well as a far more engaged, active base, continually working to pass each and every one of those bills.
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p>One other thing we need to do before 2010: We need to pass bills critically important to our core constituencies. The base needs to be ramped up in 2010, so we’ve got to give them something to be excited about. Some of these things are very popular with mainstream voters, too, so there’s no excuse not to pass any of those.
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p>I think that’s a nonstarter. He’s the (extremely reasonable) counterargument:
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p>If insurers have to accept and cover anyone who wants to buy a policy, but people can choose whether or not to be insured, then a lot of people who are healthy and feel that their risk is low won’t buy insurance… until, that is, they develop some new condition or injury that makes them feel like insurance is now a good deal. Then they’ll buy insurance, but at that point, they’ll cost more to cover (on average) than they’ll pay in. That’s a rational point for people to decide to buy insurance. But it undermines the whole concept of insurance as a way of spreading risk, and it’d mean that on average insurance companies would have to cover the most expensive patients without getting premiums from many of the least expensive ones.
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p>Imagine if car insurance worked this way. The difference is that with cars, the accident that you’re being covered for is a single momentary incident, not a condition or injury that requires treatments for a while after it begins. So for the right parallel, you’d have to imagine a system where people would be allowed to drive without insurance, but as soon as they had an accident, they could then buy insurance and it would cover the cost of the accident that just happened (IOW, the “treatment” for the injury/condition that the patient just got or found out about).
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p>I think that’s more than reasonable enough to convince a majority of both the House and Senate even if there weren’t any lobbying money involved.
Who cares about that? You’re talking about policy. What’s important is the politics. Banning pre-existing condition restrictions (without a mandate) is popular. Trying to pass that will lead to one of two things:
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p>1. Forcing your political opposition to cast a series of unpopular votes you can hang around their neck or
2. Succeeding in passing the ban, which would be wonderful negotiating leverage for getting health care reform on our terms (since the insurance companies and many other health cares stakeholders would be terrified of the alternative).
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p>Assuming Democrats in Congress stick to their guns and at least force votes in both houses on this sort of bill (a big assumption, I’ll grant you), what’s the downside?
I agree completely. De-linking the individual mandate and the pre-existing conditions piece is bad policy, and I think virtually all health economists would reach the same conclusion.
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p>However, it is good politics. As I note in my post, the Democrats might as well get something out of the health care debacle. If they are giving up on good policy, they might as well engage in some good politics.
It’s so very clearly bad policy, i a way that can be so obviously explained, that it would be bad politics. And for good reason! It would increase cynicism about Democrats, justifiably.
What are the Republicans going to “explain?” That we can’t pass the pre-existing conditions piece without an individual mandate? And we can’t pass an individual mandate without providing subsidies to those who can’t afford it? If so, that sounds a lot like the Democratic health care bill! And if they don’t make this argument, how do they explain that it is “bad policy” so easily?
I explained it here. It’s a pretty simple concept, and easy to get across.
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p>And sure, you’re right: mandate + cover everyone + subsidies is one of the main combos of the Democratic plan. Republicans seem to oppose the whole thing. That isn’t going to stop them from opposing just one piece of it, the difference is that trying to pass just that piece on its own will also get some Democratic opposition (for the very good reason of it being horrible policy).
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p>Republicans opposing cover everyone w/o mandate don’t have to say “add the mandate and the subsidies”, they can just say “don’t pass it at all”, just as they’ve been doing all along anyway. That’s their position now and it will remain their position. But if dems try to pass just one piece that doesn’t work on its own, it’ll give Republicans a stronger position because they’ll actually have reason on their side for a change.
that if you are correct about Democrats convincing themselves that they shouldn’t pass this pre-existing conditions piece because it is “bad policy”, then they really are setting themselves up for failure.
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p>Especially following Scott Brown’s win, Democrats have convinced themselves that passing health care reform would be bad, because even if it is good policy, it is “bad politics.” Yet if you are correct, and I wouldn’t be surprised if you are, then Democrats will also convince themselves that they shouldn’t pass this one health care piece — or the bank tax — because while it may be good politics, it is “bad policy.” This dynamic sets up a situation where the Democrats do nothing, which would be a disaster in this political environment.
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p>This isn’t a left/right thing, or even a liberal wing/moderate wing thing. It’s a competence/incompetence issue. And the Democrats are quickly convincing me that they fall squarely in the latter category. Will anyone be surprised at further losses in Congress?
Please take a look at a list of the top three concerns rattling around in the heads of the average American. “Banks make too much money and should be taxed” isn’t one of them.
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p>#1 job creation and economic growth, #2 national security, and #3 government spending/deficit. Oops … no bank tax.
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p>And a very strong argument AGAINST taxing the banks can be made. It will kill jobs directly in the banking industry. And it will hurt small business lending which will retard job creation or even kill more jobs.
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p>Banks that have repaid TARP … tell me again why they should be taxed? Not only that, national financial icon and long-time Dem Warren Buffet has very clearly explained why this is a bad idea. On national TV.
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p>People are furious about the government spending the nation into bankruptcy. Are voters going to all on board with killing jobs so Washington can collect more money?
Just as the Democrats have under-estimated the amount of public anger out there, you are under-estimating the level of anger against the banks and financial institutions (after all, anger at banks is an American tradition). You cannot compare a public feelings about specific policy like the bank tax to general concerns about “the economy” and “national security” and believe that they will be comparable. You’re missing the forest for the trees. The bank tax is tapping into the economy concern — particularly when the CEOs announce their million-dollar bonuses while people are still out of work.
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p>Please. It wasn’t just the TARP money that the banks and financial institutions received. Plus, it was financial institutions’ reckless behavior that wreaked the economy and has cost taxpayers trillions.
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p>Fine, I dare the Republicans to go ahead and make that argument. Defend the banks in this political environment. That will work out well for you.
But I actually somewhat agree with bostonshepherd on this one.
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p>There are a few competing narratives out there:
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p>- General: Bankers’ bonuses are essentially rent extraction from the general public (i.e. bankers are bastards who get paid much more than they are worth). Plus, they own Washington.
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p>vs.
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p>- Free-market conservative: Successful people get paid more; they deserve it. The outrage over banker bonuses is due to the fact (perceived or real) that the bonuses were paid due to Federal bailouts (both directly due to the cash available, and indirectly, due to the fact that the feds didn’t banks didn’t go under- no bad bank, no more bonuses)
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p>There’s a coherent (if wrong) argument that taxing the banks is just more gov’t intervention. Rather than saving them (gov’t intervention- bad) and then trying to internalize the costs of the bailout (bank tax- TAX!- gov’t intervention- bad), we should’ve just let ’em fail. Unemployed bankers don’t get big bonuses.
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p>In my opinion, arguing for no bailout was both unrealistic (gov’ts bail out financial systems in times of crisis. They just do.) and insane (imploded financial systems don’t self-correct very quickly), but it’s perfectly consistent with arguing against a bank tax, if the underlying principle is opposition to gov’t ‘interference’.
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p>To the extent that the general public’s anger with gov’t is comparable to anger at banks, the bank tax could be a loser, politically. Of course it will be a loser with the right; what’s unclear to me is how it sells to the middle. Unfortunately, I think the right has largely owned narratives this past year; if they own this one too, it’s a risk.
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p>Personally, I heed the words of Rick Bookstaber, who is calling for a full bank bust-up. Given that he cut his teeth at Salomon Bros and Morgan Stanley (and now works at the SEC), I take his words quite seriously. He made his career riding the beast, and thinks the beast needs some serious declawing.
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p>I agree — they have owned the populist narrative all year. That’s why Democrats need to wake up and start getting in line with the political environment.
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p>You’re right that free-market conservatives will make the exact argument that you mention here. But the fact is that most people aren’t “free-market conservatives.” They consider themselves moderates who occasionally get outraged at “Big Government” or “Big Banks” or “Big Pharma” or “Big Labor” indeed anything “big.” This is one of those “occasional” moments, and the bank tax is a ripe policy for this time.
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p>The Republicans stick to a single, simple message, which is their big advantage. The same thing will work here if Republicans side with banks and the insurance companies. Democrats, in unison: “The Republicans pretend that they’re looking out for you, but they’re the same old Republicans of only a few short years ago. Look at them now — climbing over themselves to make friends with the big banks and insurance corporations.”
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p>Now is that so hard? Not really. The Republicans manage to make absurd statements true just through endless repetition. At least this Democratic populist narrative has a strong element of truth as well.
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p>Because the underlying problems still exist and they will need to be bailed out again. So we should tax them now, put the money in a pool, and then use it when they need another bailout sometime in the next 3-7 years.
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p>Alternatively, we could break up the big banks so that we won’t have to bail them out. Just let them fail.
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p>Or we could require that all the bonuses be held in escrow for 5 years (maybe even longer). In the event that the banks need a bailout, we will raid the bonus money before using any other money. If the banks can keep themselves out of trouble, they get to keep their bonuses.
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p>Another reason is that the banks which have repaid the TARP funds are benefiting from payments they got from the banks which haven’t repaid their bailouts (especially AIG). So until the banks have fully repaid the TARP (not just what they got, but the entire amount), they haven’t yet returned all of their bailout money. Billions of dollars were funneled through AIG to all the big banks in the world. That money has not been returned yet. So none of the big banks have actually fully repaid their TARP debts.
Minutes ago