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Learning from Lieberman

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Should progressives in Congress hold their noses and vote for a badly bowdlerized health bill? Or should they vote down this bill, teach the corporate Democrats a lesson, spare the administration the voter backlash from an unpopular bill that has no public option and that raises taxes on decent worker health plans -- and fight another day?

What an excruciating dilemma! Some of my friends argue that this flawed, incremental reform will lead inexorably to more reform. It does, after all, increase regulation of the insurance industry and prohibits denials based on pre-existing conditions, as well as providing coverage to over 30 million uninsured. Others contend that it tightens the drug and insurance industry's grip and leads to the wrong kind of cost containment, as the basic inefficiency of the system is preserved and costs are gradually shifted to families mainly through higher deductibles and co-pays. It's no accident that insurance stocks soared as word of the Senate deal spread.

I debated this issue on Bill Moyers' show Friday with Matt Taibbi. I came down narrowly on the side of hold-your-nose-and-vote-for-the-bill. But the real fight will be in House-Senate conference, and the Senate should not be allowed to dictate the terms of the measure.

My main reason for saying that I hoped that even a flawed bill would pass was that both the Republicans and the White House have framed this as a make-or-break vote for the Obama administration. If the bill goes down, the far right will add another notch to their belt, the media will paint Obama as a loser, and Obama will be even more cautious and pro-corporate going forward. If he wins, maybe he'll be a little bolder and maybe progressives can call in some IOUs.

But that doesn't mean progressives in the House should just roll over and back the Senate bill. For starters, they should get rid of the taxation of workers' collectively bargained health insurance benefits. These plans are misleadingly termed "Cadillac Plans," but in fact they are Chevrolets with high sticker prices that cost a lot because of the system's broader inefficiency. This proposed tax violates Obama's pledge not to raise taxes on working families.

Some 180 House Democrats have signed a letter organized by Rep. Joe Courtney* insisting that this provision be dropped, and they should hang tough. (How would you like to run for re-election in 2010 and defend a vote to tax workers' health premiums?) The House bill, by contrast, raises the same amount of money with a highly progressive income surtax, of 5.4 percent of income exceeding $1 million for couples and $500,000 for individuals.

The bill should also demand that employers who fail to offer decent health coverage pay more than a token tax, as in the House version. And more of its provisions should take effect before 2013. The tax increases take effect before the benefits -- mainly to reduce the short term budget impact. Politically, how stupid can you get?! Lyndon Johnson's far more sweeping Medicare law was delivering benefits within a year.

The way the issue played out on the Senate, any single senator could get his or her way by threatening to defeat the entire bill. So Joe Lieberman got to block (an already enfeebled) public option; Ben Nelson got more abortion restrictions; Mary Landrieu got more money for Louisiana Medicaid, and so on. Why can't progressives play this game, too?

The health bill passed the House November 7 by just five votes. Today, Democratic progressives are in a really sour mood not just because Obama got rolled on the Senate bill, but because the White House and the Treasury are doing nothing to promote a jobs bill, and were mostly on the wrong side of key amendments on the recently enacted financial reform bill. That bill narrowly passed the House earlier this month, but some progressive Democrats, such as Marcy Kaptur and Dennis Kucinich, were so disgusted that they voted no.

Progressive House Democrats would be wise to learn from the Senate's centrists. Certain provisions should be non-negotiable -- and progressives shouldn't limit their leverage to health care. They might come in with a whole package of needed reforms that the president should commit to work for -- not just with empty rhetoric as in his carefully staged moment of tough talk about bankers on CBS's Sixty Minutes, but by walking the talk and working Congress hands on.

For instance, where was Obama last week when the House barely passed a $154 billion jobs bill, by a margin of 217-212, and many centrist Democrats deserted it out of fear of attack from deficit hawks? Answer: the White House was playing footsie with the fear-mongers and signaling support for a budget commission that would almost certainly lead to a gutting of Social Security and Medicare.

How about mortgage relief? Eight million Americans stand to lose their homes. Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan have been boasting that 750,000 homeowners have received "trial modifications" averaging monthly savings of $550 under the Obama administration's voluntary program for mortgage relief, but the Treasury's own December numbers reveal that fewer than 32,000 homeowners got permanent reductions. Independent experts say most of these trial modifications go back into default.

At his recent testimony before the Congressional Oversight Panel, Geithner resisted a call for reductions in principal and interest, citing "fairness." Funny, but fairness didn't come up when Treasury funneled hundreds of billions to big banks.

What the mortgage program lacks is authority for a bankruptcy judge to order reductions in principal and interest. Back when the program was enacted, the White House nominally supported that measure, but cynically let key Democratic legislators know that it wasn't a priority and 12 Senate Democrats voted against the measure.

So House progressives need to play the same kind of legislative hardball as turncoats like Joe Lieberman. And if the final conference bill comes back lacking key provisions, don't kill it but trade support for a badly flawed bill for ironclad commitments on other progressive goals and future improvements to the health plan. Obama might even find that helping regular people rather than bankers and insurance executives is winning politics.

*This post originally credited the letter to Rep. Connolly. The letter was authored by Rep. Courtney.


Robert Kuttner is co-editor of
The American Prospect and a senior fellow at Demos. His recent book is Obama's Challenge: America's Economic Crisis and the Power of a Transformative Presidency.