Monday, September 6, 2010

Overpaying as a Winning Strategy

Catching up on some stuff I missed...

Matt Yglesias made an interesting argument a few days back that, had the Obama Administration not been committed to deficit neutrality (and, as it turned out, deficit reduction) in health care reform, then the ACA could have been used for stealth stimulus.  It's an interesting idea, but I think he's misunderstanding the point of deficit neutrality when he calls it a "political talking point."  I don't think that's right, if what he means by that is general public relations.  Instead, I think the way to think of it is in the context of the broader strategy for passing health care reform, which was built not around public relations -- the administration didn't do much more than a bare minimum of that -- but around buying off interest groups who were inclined to oppose it but willing to be bought.  That's the story of the doctors, Pharma, the hospitals, and others; the plan seemed to be to sacrifice a lot of things that liberals would ideally want in the bill in order to win the support, or at least to win less enthusiastic opposition, of those groups.  I think that's how to see the deficit stuff: it was a way of buying off the "interest group" of deficit hawks both inside and outside of Congress.

When I used to teach the Clinton health care policy debacle, I used to say that Clinton's mistake was in not buying off groups, and I speculated that he should have picked two of doctors, hospitals, Pharma, and health insurance, secured their support, and then he could have won in Congress.  Barack Obama's calculation took that one farther: his team seems to have concluded that passing health care was almost impossible, and that the only hope was overkill: get as many groups on board as possible.  That was bound to be inefficient, since it meant giving away more things than was strictly necessary, but a reasonable strategy if it was unclear exactly which concessions to which groups were necessary to put together a minimum winning coalition.  Given the narrow passage of ACA, it seems to me that there's every possibility that they were correct. 

Bottom line: Hardly any Americans were going to support or oppose health care reform based on its projected budgetary effects, but among those Americans who might have cared were a handful of prominent columnists and pundits, and very possibly a handful of moderates Democratic Members of Congress.  And whether in fact that was true or not, I strongly suspect that the administration strategy was based on influencing those people, and not the larger electorate.


  1. The ACA was attacked as a budget-busting bill ("government takeover costing trillions of dollars," "16,000 new IRS agents," etc.) even with its deficit neutrality/reduction in both the short and long terms. Attacks on the bill's alleged fiscal irresponsibility were so fierce that even with a thumbs-up from the CBO it still only passed by a narrow margin.

    Imagine, under Yglesias' stealth stimulus scenario, that the CBO said the bill would in fact expand the deficit in the near term. Given how even the neutral/positive CBO report (not to mention the bill itself) was misconstrued to make the ACA look scary and dangerous, does Yglesias really think a negative CBO report on the 10-year window would have gone unnoticed?

  2. Wonderful post JB, very thought-provoking.

  3. Well, of course it wouldn't have gone unnoticed. The question is whether it would have actually cost any votes in either House of Congress. If not, I think Yglesias may well be correct. Basically, most of the people who opposed health care believed it was bad for the budget even when it wasn't; their opposition would be essentially unchanged if their beliefs were accurate. Out in the country, meanwhile, I think there are about zero people who actually care about the deficit *and* bother with the facts, so there is no mass constituency who supported ACA as is but wouldn't have if it was bad for the budget. What you do probably lose is some elite-level belief that Obama is responsible, which to some (probably very small) extent filters down. On the other hand, if Obama had used the ACA for a few hundred billion dollars of stealth stimulus -- and it worked -- well, that really might affect his approval ratings and the Dems' chances in November.

    On purely p.r. grounds, I'd have recommended the stealth stimulus over the rhetorical high ground on the deficit. But if the judgment was that stealth stimulus sinks the bill, then that's a good reason to go deficit-hawkish. And that's leaving aside the policy reasons for the path they chose, which is a whole other set of arguments.

  4. What constantly surprises me is how many people on my side of the political aisle, the liberal-progressive side, seem blind to the fact that you have to buy off groups to get legislation passed. Maybe Obama appeased to one group too many during the HCR debate but he knew that the vested interests needed to be appeased. Even FDR had to buy off Southern politicians by excluding people in the agricultural and service industries from New Deal legislation to get it passed.

    Even in parliamentary systems, groups often need to be brought. The Labour pol behind NHS said he had to "stuff their mouths with gold" to get the BMA not to block NHS.

    Yet, many liberals and progressives, at least the people who post on the blogosphere, seem incapable of recognizing this fact and a lot of them are very angry that they didn't get single-payer in one shot. They also seem to have incredible rage at the other compromises made.

    Any ideas why liberals seem to have a lot of problem recognizing this?

  5. The attitude isn't exclusive to liberals; look at the Tea Party candidates attacking incumbent conservative Republicans over tiny deviations from the party line. Both sides have their purists.

  6. Jonathan, yes but with liberals the anger seems more potent and raw. Maybe its because I'm on the liberal side, so I'm noticing the purists on my side more because thats whose sites I haunt but I still find it weird that so many apparently believe that we are either in a parliamentary system or that Obama could have gotten single-payer with sufficient will power. Many at least seem to think that he should have "tried" to get single-payer even if it meant the entire thing crashed and burned.

  7. I think that it's your perception. The best comp for the current complaints about Obama would be how conservatives sounded about Reagan in's really very, very similar, in my opinion. I don't want to claim that both sides are identical, because there may be differences of emphasis or style, but overall I think the similarities are pretty striking.

  8. LR:"so many apparently believe that we are either in a parliamentary system or that Obama could have gotten single-payer with sufficient will power."

    From north of the border, I agree with LR. (Must be the poor job political scientists have done educating their students who then don't teach civics very well at high school!!)


Note: Only a member of this blog may post a comment.