Should Reconciliation Be Used to Pass Health Reform?

If reconciliation is the only way to get health reform through the Senate this year, requiring a majority vote instead of the normal 60 votes, I would answer with a lukewarm “Yes,” but there are some big drawbacks.

Number one, reconciliation is viewed by nearly all Senate Republicans and by some Democrats as nuclear attack on the rights of the minority to full and complete debate and to offer amendments.  Health reform could pass in mangled form, but the Senate’s ability to pass anything else would diminish as disaffected senators would call a halt to business as usual to express their displeasure at having health reform rammed down their throats.

Number two, only health reforms that cut spending or raise taxes would pass muster under the “Byrd Rule” prohibitions against “extraneous” measures.  That would leave out a lot of elements of any sensible health reform bill, including most insurance reforms, like outlawing pre-existing condition exclusions and requiring renewal; requiring employers to provide health insurance; preventive care; most new incentives for improved quality of care; President Obama’s proposed Independent Medicare Advisory Council (IMAC); most health workforce improvements; and most of the administrative foundations of health reform.  In theory, the Senate would pass these other essentials of health reform in a second bill subject to the normal 60 vote requirement.  However, I doubt that bill would pass if the reconciliation bill did or was about to.

Number three, it will make it more difficult to use reconciliation later on for deficit reduction, which we will sorely need once the economy is safely in recovery.  Next Tuesday, OMB and CBO are expected to estimate a $1.579 trillion FY09 deficit and deficits in excess of $1.0 trillion in FY10 and FY11 as well.  Those are deficits approaching 12% of GDP, a record not approached since World War II.

When the Budget Act was enacted in 1974, reconciliation was envisioned as the final accounting at the end of the fiscal year containing spending cuts and tax increases to bring the budget deficit back to the level approved in the original budget resolution.  The idea was to circumvent the normal impediments, like the Senate’s filibusters and never ending amendments, to achieve deficit reduction.  The first reconciliation bill at the end of 1980 fit that conception, as tiny as it was, but the next reconciliation bill, President Reagan’s 1981 tax cut used reconciliation to enact the largest tax cut in U.S. history.  Former GOP Congressman and OMB Director David Stockman’s brain child, using reconciliation to expand the deficit with massive tax cuts to take away the federal government’s credit card, worked like a charm legislatively, but spending took off anyway, particularly for defense, leaving record high peacetime deficits that persisted until 1997.  Reconciliation bills devoted mostly to deficit reduction were enacted almost every year from 1982 through 1997.

Like President Obama, I would much prefer a bi-partisan bill, but Republican delays and right wing disruptions of town hall meetings make it clear, that this isn’t so much about health reform, it’s about raw political power and whether our government remains broken and unresponsive to the obvious need for health reform.

Yesterday, Mr. Obama took this message directly to the right wing by inviting Michael Smercomish to interview him on radio at the White House.  Mr. Obama stated in part:

“Well, look, I guarantee you, Joe, we are going to get health care reform done.  And I know that there are a lot of people out there who have been hand-wringing, and folks in the press are following every little twist and turn of the legislative process.  You know, passing a big bill like this is always messy.  FDR was called a socialist when he passed Social Security.  JFK and Lyndon Johnson, they were both accused of a government takeover of health care when they passed Medicare.  This is the process that we go through — because, understandably, the American people have a long tradition of being suspicious of government, until the government actually does something that helps them, and then they don’t want anybody messing with whatever gets set up.

And I’m confident we’re going to get it done, and as far as negotiations with Republicans, my attitude has always been let’s see if we can get this done with some consensus.  I would love to have more Republicans engaged and involved in this process.  I think early on a decision was made by the Republican leadership that said, look, let’s not give them a victory and maybe we can have a replay of 1993-94 when Clinton came in; he failed on health care and then we won in the midterm elections and we got the majority.  And I think there’s some folks who are taking a page out of that playbook.

But this shouldn’t be a political issue.  This is a issue for the American people.  There are a bunch of Republicans out there who have been working very constructively.  One of them, Olympia Snowe in Maine, she’s been dedicated on this.  Chuck Grassley, Mike Enzi, others — they’ve been meeting in the Senate Finance Committee.  I want to give them a chance to work through these processes.

And we’re happy to make sensible compromises.  What we’re not willing to do is give up on the core principle that Americans who don’t have health insurance should get it; that Americans who do have health insurance should get a better deal from insurance companies and have consumer protections.  We’ve got to reduce health care inflation so that everybody can keep the health care that they have.  That’s going to be my priorities, and I think we can get it done.”

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About Pete Davis 99 Articles

Affiliation: Davis Capital Investment Ideas

Pete Davis advises Wall Street money managers on Washington policy developments that affect the financial markets. President of his own consulting firm since 1992, Davis Capital Investment Ideas, he draws on 11 years of experience as a Capitol Hill economist with the Joint Committee on Taxation (1974-1981), the Senate Budget Committee (1981-1983), and Senator Robert C. Byrd (1992). He worked in the House and Senate, and for Republicans and Democrats.

Davis brought the first computer policy model, the Treasury Individual Income Tax Model, to Capitol Hill in early 1974, when he became a revenue estimator on the Joint Committee on Taxation. He formulated the 1975 rebate, the earned income tax credit, the 1976 estate tax rates, the 1978 marginal tax rates, and the Roth-Kemp tax cut. He left Capitol Hill in 1983 for the Washington Research Office of Prudential-Bache Securities, where he advised investors for seven years.

Davis has long written a newsletter on the Washington-Wall Street connection for his clients; Capital Gains and Games is his first foray into the blogosphere.

Visit: Capital Gains and Games

9 Comments on Should Reconciliation Be Used to Pass Health Reform?

  1. “but Republican delays and right wing disruptions of town hall meetings make it clear, that this isn’t so much about health reform, it’s about raw political power”

    This comment shows ignorance of the real reason for opposition to health care reform. How about you learn the real reasons for the passionate arguments first before dismissing what 62% of the country are saying? It’s not about political power, it’s about saving our country from socialist zealots who lack the foresight to see the inevitable outcome of their ambitions.

  2. I beg you BO and other liberals. Please please please attempt to use reconcilation to get what you want. Alas, I know this will never happen. Why? Because every conservative knows that liberals don’t have the balls. Period. Even the President’s aides refer to left wing radicals as bedwetters. Mommy!

  3. PrezBO says that there is a Republican conspiracy to kill health reform. Nope. Got it wrong. There’s a Republican conspiracy to prevent the Democrats from nationalizing health care. Different things!! Besides, Democrats have enough seats to pass this bill. Don’t blame Republicans! Maybe it is the monstrosity of this bill. The more informed people become the more they hate the bill. PERIOD!!

  4. NO CO-OP’S! A Little History Lesson

    Young People. America needs your help.

    More than two thirds of the American people want a single payer health care system. And if they cant have a single payer system 77% of all Americans want a strong government-run public option on day one (86% of democrats, 75% of independents, and 72% republicans). Basically everyone.

    Our last great economic catastrophe was called the Great Depression. Then as now it was caused by a reckless, and corrupt Republican administration and republican congress. FDR a Democrat, was then elected to save the nation and the American people from the unbridled GREED and profiteering, of the unregulated predatory self-interest of the banking industry and Wallstreet. Just like now.

    FDR proposed a Government-run health insurance plan to go with Social Security. To assure all Americans high quality, easily accessible, affordable, National Healthcare security. Regardless of where you lived, worked, or your ability to pay. But the AMA riled against it. Using all manor of scare tactics, like Calling it SOCIALIZED MEDICINE!! :-0

    So FDR established thousands of co-op’s around the country in rural America. And all of them failed. The biggest of these co-op organizations would become the grandfather of the predatory monster that all of you know today as the DISGRACEFUL GREED DRIVEN PRIVATE FOR PROFIT health insurance industry. And the DISGRACEFUL GREED DRIVEN PRIVATE FOR PROFIT healthcare industry.

    This former co-op would grow so powerful that it would corrupt every aspect of healthcare delivery in America. Even corrupting the Government of the United States.

    This former co-op’s name is BLUE CROSS/BLUE SHIELD.

    Do you see now why even the suggestion of co-op’s is ridiculous. It makes me so ANGRY! Co-op’s are not a substitute for a government-run public option.

    They are trying to pull the wool over our eye’s again. Senators, if you don’t have the votes now, GET THEM! Or turn them over to us. WE WILL! DEAL WITH THEM. Why do you think we gave your party Control of the House, Control of the Senate, Control of the Whitehouse. The only option on the table that has any chance of fixing our healthcare crisis is a STRONG GOVERNMENT-RUN PUBLIC OPTION.

    An insurance mandate and subsidies without a strong government-run public option choice available on day one, would be worse than the healthcare catastrophe we have now. The insurance, and healthcare industry have been very successful at exploiting the good hearts of the American people. But Congress and the president must not let that happen this time. House Progressives and members of the Tri-caucus must continue to hold firm on their demand for a strong Government-run public option.

    A healthcare reform bill with mandates and subsidies but without a STRONG government-run public option choice on day one, would be much worse than NO healthcare reform at all. So you must be strong and KILL IT! if you have too. And let the chips fall where they may. You can do insurance reform without mandates, subsidies, or taxpayer expense.

    Actually, no tax payer funds should be use to subsidize any private for profit insurance plans. So, NO TAX PAYER SUBSIDIZES TO PRIVATE FOR PROFIT PLANS. Tax payer funds should only be used to subsidize the public plans. Healthcare reform should be 100% for the American people. Not another taxpayer bailout of the private for profit insurance industry, disguised as healthcare reform for the people.

    God Bless You

    Jacksmith — Working Class

    Twitter search #welovetheNHS #NHS Check it out



  5. Use of reconciliation to pass even portions of a health care bill will instantly have howling mobs at the doors and windows of Democrats. This will also result in Democrats being swept out of office during 2010 elections and 2012 elections. Use of reconciliation will serve to legitimize those claims of Democrats being socialist fascists, fair or not.

    This threat of reconciliation, simply this talk of reconciliation, well proves Democrats are deliberately ignoring the voices of Americans, are deliberately ignoring the will of our peoples. This would not be a mistake, this is already a mistake. Americans now have justified reason to critique Democrats as being tyrannical, and justified reason to critique Democrats as ignoring the opening words of our Constitution, “We The People”.

    Democrats’ threat to use reconciliation well serves to exemplify Democrats are working against America rather than working for America. Democrats have committed a fatal political mistake by simply discussing reconciliation. Democrats are now dead political meat.

    Okpulot Taha
    Choctaw Nation
    Puma Politics

  6. The Democrats should enact a real health care reform bill by any means needed. If they fail to enact real reform, like a single-payer system or a US version of Britain’s National Health Service, the Democrats will be voted out in their next election – just like in the 1990’s, when they bungled health care reform then.

    The Republicans are obstructing reform for two reasons:
    1) The Republicans are corporate whores in the pocket of the health care industry.
    2) They know that if real reform is not enacted, the Democrats will not be relected.

    Frankly, I doubt this country will survive another Republican administration – we barely survived the last one intact.

  7. JACKSMITH must be repeating some lie she heard somewhere and I have proof she was drinking the Koolaid.

    A Rasmussen poll put Americans against it at 57% against, 37% for single payer. Here is the link:

    I’d be very curious to see where Jacksmith is getting those false figures. I bet it’s from the very biased New York Times. Don’t believe a word you read from them.

  8. Tamarac Guy comments, “A Rasmussen poll put Americans against it at 57% against, 37% for single payer.”

    Yep, across the board, all polls display a large majority of Americans are against government controlled health care.

    Democrats are working against Americans. This serves as proof Democrats are unwilling to exercise the will of our peoples. Democrats are deliberately ignoring Americans, are deliberately imposing upon Americans what we do not want. This is, de facto, tyranny.

    This, of course, adds legitimacy to claims Democrats are tyrannical socialists.

    I am just as harsh on Republicans. Our leaders are to exercise the will of our peoples. Democrats are refusing to exercise the will of our peoples. This smacks of treasonous thinking on the part of Democrats.

    Okpulot Taha
    Choctaw Nation
    Puma Politics

  9. The article by Pete Davis is so well-written and researched and uses words like “Republican” or “GOP” to refer to the Right.

    And then you get to the comments…you guys boggle my mind, sometimes. If I wanted to hear a shouting match, I’d turn on Fox News. You should all take a page from David Frum and learn to speak like civilized adults.

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