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Miles Mogulescu Headshot

Obama, the Public Option, the Huffington Post, and Me

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(Preface: Before going into the substance of this article, I want to make clear that despite my disappointment in the Obama administration and Congressional Democrats since the 2008 elections and my disagreement with much of their political approach, the scariest words in the English language are "Speaker Boehner" and I'm doing everything I can to prevent that from coming to pass, including opening my (modest) checkbook to Democratic candidates and making calls on their behalf -- I urge Huffington Post readers to do the same.)

I recently returned from a belated summer vacation to a stack of snail mail which included the October 14, 2010 edition of Rolling Stone featuring an interview by editor Jann Wenner with President Obama.

In the interview, President Obama defends his record of legislative accomplishments on the size and scope of the stimulus bill, financial reform and health care reform. He tells Wenner,

"I could have had a knock-down, drag-out fight on the public option that might have energized you and The Huffington Post, and we would not have health care legislation now."


There are two notable things about this statement. First, despite the Obama administration's continued attacks on the progressive base that helped him win the Democratic nomination and the Presidency (e.g. Rahm Emanuel calling progressive activists "Fucking Stupid" for criticizing Blue Dogs who didn't support the President on health care; Robert Gibb's attack on "professional liberals") the administration, right up to the President, actually seems to pay attention to what progressives like The Huffington Post have to say and seems to be concerned enough about their influence to try to rebut them. (In fact, in a somewhat bizarre fascination with all things Huffington, on the very first page of The New York Times Magazine's cover story on Obama and the election, presumably intended to rally the troops, Obama notes-- without the intended irony--Arianna's slightly tongue-in-cheek criticism of Obama's cautious taupe-colored redecorating of the Oval Office.)

Second, when it comes to the public option, Obama's statement is essentially untrue: It's an attempt to rewrite history, and ignores the fact--reported in the The New York Times, The Ed Show, Tom Dashle's recent book, and in a series of articles I wrote in The Huffington Post--that even as Obama was proclaiming his belief in the public option in order to maintain support for his health care bill among his liberal base as well as among the 60% of voters who told pollsters that they supported it, he had already made a back-room deal with the for-private hospital industry to kill it.

Which brings me to my own encounter with the White House regarding my articles in The Huffington Post on health care reform, a subject about which I've written over 25 articles going back to the early days of the last Presidential campaign in 2007.

The Obama administration's deal with the drug industry that his health care reform would continue President Bush's policies of banning Medicare from using its market power to negotiate lower drug prices and outlawing the importation of cheaper drugs from Canada--in return for drug industry money and political support for Obamacare--was well reported and caused considerable consternation among progressive activists, as well as a sense among voters that Obamacare was turning into a series of special interest deals.

I spilled a good deal of electronic ink in The Huffington Post last summer and fall trying to blow the whistle on a second--and far less publicized deal--that the White House made with another health care special interest group, the for-profit hospital industry, in exchange for its political support for Obamacare. See here, here, and here.

The deal included two parts: First, the cost of health care reform to the for-profit hospital industry would be limited to $155 billion over ten years (an average cost of $15.5 billion per year). Second, the final bill would not include a national public option that might compete with private insurance and use Medicare rates to extract lower costs from for-profit hospitals. As The New York Times first reported in August, 2009,

"Several hospital lobbyists involved in the White House deals said it was understood as a condition of their support that the final legislation would not include a government-run health plan paying Medicare rates--generally 80 percent of private sector rates--or controlled by the secretary of health and human services. 'We have an agreement with the White House that I'm very confident will be seen all the way through conference', one of the industry lobbyists, Chip Kahn, director of the Federation of American Hospitals, told a Capital Hill newsletter...Industry lobbysist say they are not worried [about a public option]. 'We trust the White House,' Mr Kahn said."

When I published the last of my expose on this deal in March, 2010--at a point when there was still time for Congressional Democrats to save the public option--I was surprised to learn that a White House official called an editor at The Huffington Post to challenge part of my article and to ask that a portion be changed.

The White House's first objection was seemingly trivial and hardly seemed worth their attention. I had stated that deputy White House Chief of Staff Jim Messina had confirmed the for-profit hospital deal to a The New York Times reporter. This was technically not accurate. Rather, the Times writer reported that he learned from White House officials and lobbyists that Messina had confirmed that the White House was standing behind the deal on a call with the hospital lobbyists; Messina had not spoken directly to the Times reporter. Since I believe that even opinion pieces must be factually accurate--that everyone has a right to their own opinions but not their own facts--I went online and corrected this detail on whom Messina confirmed the deal to.

The White House's second objection was that the deal only concerned the hospitals' share of costs and that the Times did not state that the deal included killing the public option. The White House was not factually correct about this and I did not change the article to reflect this incorrect objection. The quote from the Times article above about the hospital lobbyist's understanding of the agreement made it clear that the Times did report a deal between the White House and the for-profit hospitals to kill a national public option.

Moreover, as I reported in the blog to which the White House objected, the Times reporter had gone on The Ed Show on MSNBC the day before and reconfirmed his reporting that hospital lobbyists had confirmed a deal with the White House that there would be no public option, stating:

"That's a lobbyist for the hospital industry and he's talking about the hospital industry's specific deal with the White House and the Senate Finance Committee and, yeah, I think the hospital industry got a deal here. There really were only two deals, meaning quid pro quo handshake deals on both sides, one with the hospitals and the other with the drug industry. And I think what you're interested in is that in the background of these deals was the presumption, shared on behalf of the lobbyists on the one side and the White House on the other, that the public option was not going to be in the final product."

Why would the White House go to the trouble of trying to kill part of a story on a progressive website like The Huffington Post, even as it consistently attacked its progressive base? Well, maybe the Obama administration pays more attention to the views of its progressive base, and cares what it believes, more than it lets on. More specifically, my blog and the White House objections came during the last period when a public option could have passed as part of the final health care reform bill and the Obama administration didn't want to be exposed for killing it.

The House was about to pass the reconciliation bill. The bill that the House had previously passed included a (weak) public option and the House could have included this provision in the reconciliation bill it sent to the Senate which only required 51 Senate votes to pass. 41 Senators had already signed a letter that they would support a public option if it were allowed to come to a vote. Adam Green of The Progressive Change Campaign Committee appeared on The Ed Show and named 10 additional Senators who were on record that they would vote for the public option--Kay Hagan, Clair McCaskill, Tom Harkin, Jay Rockefeller, Herb Kohl, Mark Begich, Max Baucus, Mark Warner, Jim Webb and Robert Byrd (plus Joe Biden was available if a 50-50 tie needed to be broken). So President Obama's recent statement to Rolling Stone that "we would not have health care legislation now" if it included a public option is not true.

But the White House didn't want its fingerprints on the death of the public option since it had told its progressive supporters that it supported it, even as it had made a deal to kill it. Since the story about this deal was finally starting to pick up steam, it even went as far as contacting a Huffington Post editor to try to slow the story's momentum. I can't prove this, but it's the only explanation that makes sense.

I bring this up at this point not to re-litigate the health care debate among liberals who supported single payer, the public option, or Obama's compromise. However, as a former history major who cares about historical accuracy, when the history of Obama's health care legislation is written, I'd like the history to be accurate on the reasons the public option was not part of the final bill, and I don't believe Obama's Rolling Stone statement should be allowed to stand as the final word.

More important, Obama's approach to health care reform provides a microcosm of a weak strategic and philosophical approach to Democratic and progressive politics which leads both to flawed policies and to losing electoral support in the name of a false political "pragmatism". It failed for Bill Clinton in 1992-1994 and Obama has repeated the same mistakes in 2008-2010, often advised by some of the same people like Rahm Emanuel, Robert Rubin, and Larry Summers who helped drive Clinton's Presidency into the ditch. Obamacare is a case study of the political reasons Obama and Democrats have demoralized their base and lost support among moderates since the 2008 elections, and are likely to sustain big losses in the Congressional midterms (although I hope and pray that despite these flaws, they manage to prevent extremist Republicans from gaining majorities in the House and/or Senate).

Among the flaws:

1. Even though Obama managed to get a piece of legislation labeled "health care reform" enacted, he did so by trampling on many of his campaign promises on the subject. He had promised to let Medicare negotiate lower drug prices and to allow Americans to import cheaper drugs from Canada, but dealt those promises away to Big Pharma. He promised a public option to give Americans an alternative to the greedy private insurance companies and provide some competition to force them to moderate premiums, but dealt that away to for-profit hospitals. Most critically, in debates with Hillary Clinton, he opposed mandates that would force uninsured Americans to buy unaffordable policies from private insurance companies, but instead fulfilled an insurance company wet dream by delivering them tens of millions of mandated paying customers, while handing Republicans a successful campaign issue. Many progressives, myself included, supported Obama in the primaries partly because of his opposition to Hillarycare's mandates, and more generally because he seemed to represent a slightly progressive alternative to a restoration of Clintonian corporatist policies to the White House. By reversing his campaign promises, Obama both demoralized his base and alienated many independents who voted for him in the hope that he represented a change from politics as usual.

2. Rather than mobilizing the millions of supporters who had helped get him elected, Obama instead pursued an inside-the-beltway "K Street strategy" to achieving health care reform. Its essence, as led by Rahm Emanuel with Obama's support, was to make back-room deals with special interests like drug companies, for-profit hospital companies, and insurance companies, to gain political support and campaign cash, and to limit the parameters of possible reform to what was acceptable to these special interests. A similar strategy was followed in passing "financial reform", limiting reform to those provisions that were not overly threatening to Too Big To Fail banks and other large financial institutions. As the political winds shifted, the strategy failed in passing cap and trade legislation, even as Democrats tried to shape the legislation to something acceptable to oil companies, natural gas companies, and the nuclear power industry. Even though some modest reforms passed (e.g. letting young people stay on their parent's insurance policies until age 26, plugging the Medicare drug benefit "donut hole", forming a Consumer Protection Agency) the overall impression left on voters is that Democrats are more allied with special interests than the public interest.

3. Obama and the Democrats failed to frame its attempts to achieve reform in a wider progresssive governing philosophy that the government could protect citizens from the excesses of the market, greedy insurance companies, and Too Big to Fail Banks, and could be part of the solution instead of part of the problem. Obama failed to make the case that, as in every other advanced capitalist country, health care should be a right and not a privilege. Instead, he allowed the story to be mired in the details of legislative horse-trading, allowing Republicans to frame the issue in terms of "death panels", "government controlled medical care", and "government meddling with Medicare". Likewise, he failed to effectively make the case that the financial meltdown was caused by deregulation (perhaps because the deregulation was implemented as much by Democrats as Republicans) and that strong reregulation was necessary to prevent another cycle of boom, bust and bailout; instead he allowed his administration to be identified by voters as a friend of Wall Street. He failed to explain why Keynesian stimulus and deficit spending is needed in a recession to save jobs and offset the decline in private demand, and instead quickly pivoted to speaking about deficit reduction and allowed Republicans to frame the stimulus as a financial burden on future generations.

4. Most profoundly, rather than provide an alternative to Clinton's "New Democratic" philosophy that reform--even if intended to help ordinary people--is necessarily limited by the parameters acceptable to large corporate interests, Obama's Presidency has turned into Clinton redux. To quote David Brooks,

"[Obama and Clinton] Democrats learned never to go to war against the combined forces of corporate America. Today, whether it is on the stimulus, on health care, or any other issue, the Obama administration and the Congressional leadership go out of their way to court corporate interests, to win corporate support and to at least divide corporate opposition."

This approach represents a political pragmatism that is not pragmatic at all. Instead it leads to repeated political failure for Democrats as it did for Clinton in 1994 and is likely to do again for Obama in 2010. As I warned in The Huffington Post back in December, 2009, in a passage that was bizarrely quoted by neocon leader Bill Kristol to give hope to then demoralized Republican troops,

"As it increasingly appears that Obama is the President of Wall Street, and not the President of Main Street, he is losing not only the left but the center. It's a myth that the path to winning the popular center in American politics is moving to the corporate center. If the only political choice given to American voters is using their taxes to help big government subsidize wealthy corporations, or the Republican message of shrinking the size of government and cutting their taxes, many who voted for Obama will return to the fold of the seemingly brain-dead Republican Party."

Sadly, these warnings are proving all too prescient. I only hope that progressives can continue these debates after November 2 with Democrats still in control of the House and Senate, and not, as in 1994, back in the minority.