Health Care Reform is Critically Important, But Getting Americans Back to Work is More So

Presidents tend to overcompensate for the errors of their predecessors in the same party and in so doing sow seeds of their own mistakes. Bill Clinton wanted above all to avoid Jimmy Carter's fate -- losing re-election because the economy was heading south on Election Day. So Clinton made a deal with Alan Greenspan to slash the budget deficit and thereby jettison much of his ambitious campaign agenda (that was Greenspan's precondition for lowering interest rates and causing an economic boom in time for the re-election) and then Clinton took direction from Dick Morris, who told him to move to the right. The result: Clinton avoided Carter's failure and won re-election handily. But the Clinton years produced few if any major social reforms. Clinton spent so much of his initial political capital, as well as his time and energy, on deficit reduction that he didn't have enough left to enact health care in 1994.

Barack Obama came to the White House intent on not repeating Clinton's failure to enact universal health care. Did he over-learn the Clinton lesson? Obama seems to have made all the right moves to enact something he can credibly label health-care reform: Rather than spend his political capital elsewhere, he reserved most of it for health care.

I sincerely hope America gets genuine health reform and I hope it's stronger than what's emerging in the Senate. (Whoever voted for Joe Lieberman last time around ought to pray for continued good health.) I worry, though, that Obama's strategy may turn out to be a mistake comparable to Clinton's overemphasis on deficit reduction. Obama's focus on health care rather than jobs, when the economy is still so fragile and unemployment moving toward double digits, could make it appear that the administration has its priorities confused. While affordable health care is critically important to Americans, making a living is more urgent. Yet the administration's efforts to date on this more basic concern have been neither particularly visible nor coherent.

The current rate of unemployment would have been even higher were it not for the federal stimulus package, but the stimulus should have been much larger. Especially with the states still cutting back on spending and raising taxes, the federal stimulus will be barely enough to keep unemployment from hitting 11 percent by the middle of 2010. Yet as the rate of unemployment continued to rise faster and higher than the White House anticipated, Obama could not return to Congress to seek a larger stimulus. He was spending political capital on health care.

The Wall Street bailout, meanwhile, has saved Wall Street but left most regional banks in deep distress. Almost nothing has trickled down. Small businesses still can't get loans. Foreclosures continue to mount largely because jobs continue to vanish and homeowners can't pay their mortgages. Yet at this point, on the eve of a health care bill, it would be difficult for Obama to return to Congress seeking billions more to aid distressed homeowners and small businesses.

While health care reform, if done right, can help American families stay afloat in the economy, the current bills won't offer most Americans any appreciable decline in the cost of their health insurance nor clear improvement in the efficiency or quality of the health care they receive, and those who will benefit won't see the benefits until 2014 at the earliest. All this is partly a result of Obama's sharpest break from Clinton -- whose ambitious health care plan drew immediate fire from Big Pharma, the American Medical Association, and health insurers: The Obama White House bought off the medical-industrial complex by promising it fatter profits, bolstered by tens of millions of new paying customers.

That and other deals cut with industry -- including promises to Big Pharma that Medicare wouldn't use its bargaining clout to reduce drug prices, to the AMA that doctors wouldn't have to face larger cuts in Medicare reimbursement rates, and to private insurers that the White House wouldn't fight hard for a public insurance option -- are likely to make the resulting reform far more costly than it would be otherwise. These extra costs will be borne by those Americans who will be required to buy insurance but won't qualify for federal assistance, along with Medicare beneficiaries who will be paying more and receiving less. These people may not know they're indirectly paying the costs of buying off these industries, but they'll know they're getting shafted (Republicans will be sure to make them aware, even though the GOP has a much longer record of shafting the middle class for the benefit of big business).

The optimist in me says Obama can pivot off a health-care victory and launch some new initiatives that palpably and quickly spur job growth. The realist says there aren't any such initiatives -- at least none that can work fast enough to reverse the tide of unemployment before the midterm elections. Fiddles such as a new jobs tax credit can help but they won't make much of a dent. Even with a larger stimulus, a jobs recovery would still be far off. The tangible benefits of health-care reform are likely to be so elusive in the meantime that the public may become easy prey for demagogues on the right who blame Democrats for the economic insecurities that bedevil the nation next November.

If Obama and the Democrats lose one or both houses of Congress in the midterms, it will be because the president learned only the most superficial lesson of the Clinton years. Health-care reform is critically important. But when one out of six Americans is unemployed or underemployed, getting the nation back to work is more so.

Cross-posted from Robert Reich's Blog.

 

Comments

[igotthis]

I just discovered this blog, so I am LATE to the discussion. So let me say that I respect Professor Reich a great deal, but he is mostly wrong in this blog.

President Obama’s policies to save major banks, Wall Street financial institutions, GM and Chrysler, thousands of homeowners from foreclosure and policies to stimulate the economy with an approximately $900 billion stimulus package, kept the U.S. economy from falling into another Great Depression. Had we fallen into another Great Depression, the unemployment situation would have been much worse. Professor Reich understands better than anyone else about the depth of the unemployment situation in 1933: it was a horrifying 24.9%!

So, yes, the 10.2% unemployment number today is awful, and it will be awful if it tops off at 11% by the end of next year, but these numbers would be much worse had the president not accomplished what he did: he prevented us from falling into another Great Depression!

Mr. Reich is correct in saying that the Obama administration may have over learned the lessons of the Clinton era mistakes on legislating health care reform. Nevertheless, President Obama has pushed major health care reform legislation to the brink of passage, which has never been done before. Furthermore, Professor Reich must admit that the Senate health care bill under consideration for passage was greatly improved under Senator Harry Reid’s leadership.

The Senate bill under consideration does not resemble the monstrous thing that the Senate Finance Committee unleashed…

[igotthis]

…If further improvements can be made when the Senate and House bills are merged, then we must give the president credit for saving us from another Great Depression and for giving us health care legislation that will vastly improve health care and insurance affordability and accessibility for nearly all Americans.

Now Mr. Reich argues that the president took the most difficult route to pass major health care legislation. Specifically, he believes the president should have saved the economy from falling into another Great Depression, but then he should have pursued bold policies (a bigger stimulus package) to invigorate job growth quickly rather than a bold push to introduce major health care legislation. Indeed, Mr. Reich makes an implicit but powerful argument: successful job growth policies would have made it easier for the president to push through major health care reform legislation at a later date.

Nevertheless, both the optimist and realist in me says the president can still push through a major jobs stimulus package through the Congress if he succeeds in passing a strong health care bill. Democrats in Congress are already chomping at the bit to do something to spur job growth in the country. Success on health care reform combined with real public angst about the employment situation will give the president and Congressional Democrats the cache and impetus to implement policies that will spur substantial job growth in this country by November of 2010.

Triple success is still possible if President Obama demonstrates his mettle!

[DosGatos2]

Repubs screamed that the U.S. could not afford a bigger stimulus because of the deficit. Don't know how they expect to pay that debt off unless people are working and paying taxes, but this administration fell for the argument. Obama made concessions to the Right--a too-small stimulus one-third of which was devoted to tax cuts (tax cuts are NOT stimulus, food stamps would have been better). Repubs vetoed the stimulus bill anyway and now as you point out Professor, take credit for it.

But the biggest issue to me is not health care reform--its the bank bailouts, the optics of record Goldman bonuses while unemployment is so high and people are still losing their homes, and the refusal to break up banks too big to fail and proposing to create big-bank super-regulator instead. You don't need an economics degree to appreciate that the systemic risk posed by too big to fail banks; people on both sides of the political spectrum want them broken up.

Even if the administration could wave a wand and cut the unemployment rate in half, the failure to take on the big banks and the risks they pose--and will continue to pose in the future absent robust and well-enforced regulation--damages the president's attempts to enact health legislation. If he has sold out to the big banks, he'll sell out to the health industry too. And he has.

[Mister Wu]

GOP:
Money for war profiteers=no problem.
Money for war widows= defficits!!

[JohnLloydScharf]

You can always blame Bush, but Obama is Bush 3.O or 3 Point Oh NO. TARP was originally part of a proposal by Gaithner and the payouts that went to bonuses were on his watch.

[JohnLloydScharf]

If health care is the problem, insurance is not the cause and government is not the answer.
Of those "50 million," that lack insurance there were 45,000 who died without health care.

WITH health care, 98,000 died FROM health care because of malpractice.

The question is do we want to trust that largest corporation in the world, the U.S. Government. Do not expect house calls anytime soon.

We have seen how well the government delivers on its promises and its bureaucracies pursue the money without giving us benefits on so many levels.

Imagine another 111 bureacracies that only ultimately must listen to the Secretary of the Treasury - another "service" of which is the IRS.

http://theprogressivecapitalist.blogspot.com/2009/10/affordable-health-care-for-america-act.html

That blog of mine above has several .pdf connections (HR. 3962 and two summaries, a few videos, and page references for new taxes and other mandates).

If you cannot use the link, google "Progressive Capitalist H.R. 3962."

If you believe the promises of this bill, you have to deal with the lie that it fosters competition with a government option called the "Public Option" and establishes the government as a monopoly making its own rules.
.
If you read the bill, there are plenty of opportunities to soak the middle class, if you do not mind the 1.6 million made jobless.

REPUBLICAN MAKING HEALTH Care Affordable For EVERY AmeriCAN

http://thehill.com/images/stories/whitepapers/pdf/ainsfloor_01_xml.pdf

[atretrioeciii]

Beginning with Rush Limbaugh wanting Obama to fail and continuing to this day the current administration has never received a full effort from everyone involved in fixing the economy. Ask anyone on Wall Street if a rumor can destroy a company and they will tell you yes. Now think about all the negativity being directed at the White House by the republicans, they are screaming that nothing is working. While at the same time taking stimulus money and taking credit for it. The republicans have done everything they can think of to undermine the president politically, didn't Mark Kirk (R-IL) tell China not to trust the United States? Did not U.S. Reps. Ileana Ros-Lehtinen and brothers Lincoln and Mario Diaz-Balart, recently say that they supported the coup in Honduras over a democratically elected government? How are "we" going to fix the economy if "we" don't all help out and do our share of the work? For good or for ill this is our democratically elected government. It's amazing we aren't in worse shape. Can you imagine if everyone did their share to help? We might have already been out of this mess.

[Gadema]

HEALTHCARE REFORM OFFERS A NATIONAL INVESTMENT OPPORTUNITY!
Our Healthcare System as it is right now, is Unsustainable, we need to used Health Information Technology (HIT) to: Eliminate Fraud and Administrative Inefficiencies, and Reduced Costs, as well as Improve Outcomes.

Proper Deployment of Health Information Technology Solutions and Training can Incrreased Productivity (i, e, medical data mining/warehousing, risks treatement, service delivery), Efficiency (i, e, medical errors, redundant and inappropriate care), and have Costs Savings of around 20-30% of our Annual national healthcare Expenditures ($2.4 Trillions).

The Engine of Economic Growth in the 21st Century is "Broadband." We can start by Deploying Packet-based, All Optical/IP, Multi-Service Transport Network. This type of Investment is like the one in the past with the National Inter-State Highways.

G. K. Quoquoi

[abbienormal]

The balance between long-term goals and short-term goals is tricky as any CEO will tell you. Clinton decided to heavily weight the short-term and Obama has decided to heavily weight the long-term. I applaud Obama in his choice, if not the final health care product. We can only hope that it is a step in the right direction and opens up opportunities for revisions that puts health care spending on the downward slope.

Structural unemployment is a difficult problem which also requires a long-term fix. I think that Obama is headed on the right track with investments in green technology sectors and in research that has been so lacking in the last administration. His solution is good, I just think that it might be the wrong one politically.

Additional stimulus is needed. There is no doubt. He cannot leave people who are stuck in this structural shift out in the cold and it will take a lot of determination to convince Congress of this.

I'm stating the obvious, I know.

[gordonla]

Robert,
I don't know how you could be so perceptive about the problems of corporate lobbying in your book on Supercapitalism, and so blind to the same problems of the lobbying by those promising that federal health care isn't the same thing, only by non-corporatists. Both are attempts to lobby for something that they themselves do not want to pay for. The Federal Government is seen as an endless pool of money and is promising to provide something it cannot deliver, except through a ponzi scheme, which is exactly what this health care scheme is. The 60 minutes expose of medicare fraud ought to be further proof that a federal bureaucracy is the easiest thing the defraud and the most difficult thing to police.

The only way to reduce the waste and corruption evident in the pending legislation, and also establish a healthcare system that is affordable and covers everyone, is to remove it and the taxes that fund it from the federal government. Let the states compete to find the best solutions with a federal law that says every citizen should get emergency care. Let the citizens vote with their feet by having the freedom to move to the state that provides the solutions they best prefer. That is freedom with a conscience. Don't try to ram a federal monopoly down our throats under a fraudulent promise that it is deliverable. It will only hasten the burst of the federal debt bubble.

[wildedge]

Obamja did not want a prolonged health care reform fight. What he wanted was to hand over the issue to conservative Democrats as a health insurance issue, announce a victory by August and then sweep it under the rug so no oe would notice the lack of change. Team Obama completely failed to grasp how passionate progressives are about health care reform. They also underestimated the extremity of opposition to their very existence from the right -wing. Finally, they overestimated the job-creation power of the stimulus, despite the fact that major economists like Krugman had warned that the compromised package gotten through congress was just not enough. And since most of them are Clintonites, they don't grasp that in the severity of the situation we need more than stimulus money, we need government sponsored job-creation programs. We needed the new New Deal; we got Clinton III.

[DosGatos2]

"We needed the new New Deal; we got Clinton III."

Absolutely right, wildedge and it's not as if the administration needs to create a New Deal, we've already got a successful blueprint. The question is why doesn't Obama take a page from FDR's book?

[strangelet]

Professor Reich,

I often agree with you, and I always respect your opinions and analyses. In this case, I understand your reasoning, but I disagree with your conclusion. The US "system" for providing health care is a disgrace to the richest country in the world. Aside from considerations of percent of GDP, or job losses to countries with lower employer health-care expense, or whatever; this is the United States of America -- it is abominable that 15% of us have no health insurance, and probably half of us have "insurance" that would fail to save us from bankruptcy in the face of major medical expense.

It appears that the political stars align in a way that allows addressing this matter only once every twenty or thirty years. I believe that makes it the most important short term domestic agenda item -- even more important than the unemployment rate.

There is also the fact that the Republican opposition do not want the unemployment rate to go down, just yet. They will oppose any new efforts to create jobs, as they opposed the original stimulus bill.

The Democrats will lose some seats in both houses in 2010. I think it is unlikely that they will lose control of either house. By 2012, the economy should be in somewhat better shape, the procedural reforms to health insurance will be commonplace, and the new features will be about to kick in. I think that will be an enduring legacy.

[rosiebond007]

Good post.

Getting the US back to work will be better without the stress of added healthcare costs.

These two very important pieces go together.

[FreeNemo]

So we should all sit around unemployed until 2014 when this bill kicks in???

[Hannalee]

Reich shows a sadness in this column that sets it apart from his other work, which, ironic as it usually is, always flashes a little wit. The heavy soberness here comes from the realization that there is little chance we can arrive at something truly "hopeful," good health care reform or a better jobs economy, starting from our present situation. I hope that my take, and his, turns out to be too pessimistic. I'm sure he does too.

[vlm1948]

I do too, but I fear we are headed down a very long, sad and scary road.

[pedernales]

There doesn't seem to be any organic, long-term public-private iniatives vital to our real economy. I believe this is why so many are afraid of the health care proposals, because they come from an Administration that, otherwise, can't seem to do anything right. As the hubris thickens, no creative and rational economic proposals are being laid out by the Cabinet and President that support long term wealth and create a greater common purpose. It feels that a lot is being taken for granted while the Administration seems cold and aloof. It apparently doesnt feel it necessary to explain what it's doing with our money (see: Geithner and Summers) We rarely hear from members of our Cabinet, only our ubiquitous President. Does the President have a Cabinet and what are they doing to rebuild our economy and restore some of our major economic sectors!? Why aren't we, at least, constructing some new vocational high schools? Too much has been geared to the bottomless pit of the pathological financial sector that the President and Congress apparently fear and serve - their stinking gutter of lies and money.

[sixchair]

Things do seem a bit ad hoc.

[masher]

Yup. If President Obama had shown by now a track record of being on the side of working people then things would be very different. But he is clearly pro-Corporate, and pro-Wall Street.

He hasn't ended H-1B regulations which are really hurting my industry. Under H-1B the federal government imports foreigners into the US to drive down wages. Once people realize that Obama is doing this, and look at his lack of Wall Street reform and the GM bailouts(which are just helping GM move more jobs to China)... I think they quickly see what a disaster he is for working folks.

So I am very suspicious of his motives on health care.

[cordyc]

If you haven't seen the Cabinet then you should watch more than Faux Noise. I see and read about them all the time.

Lot's of resources are also going to increasing vocational education especially in health care and new energy tech unless the party of NO blocks the allocations.

You really need to broaden your sources of information before you contend that nothing is happening. That is only what the Faux propaganda masters want you to believe not the reality of what is going on in the real world.

[zanlyons]

Unemployment is a lagging indicator. The fact that America's economy has now returned to growth means that unemployment will continue to grow for another few months before peaking at around 10% and then falling.
With TARP and this year's 2nd stimulus, I expect America will experience fairly healthy employment rates.
The real problem is sustainability of both the economic growth and job creation and this is where Healthcare reform is urgently needed.
I'm still amazed by the disastrous, muddled system America has in place.
As a Brit, I would love - as I'm sure would President Obama and much of America's left - a single payer health system. This unfortunately won't happen yet - even if bill was drafted, it'd never be passed.
What Obama is doing is the next best thing. If he can take at least some subsidy away from drug companies and create a working public healthcare option it'll take a massive strain off of America's economy and ensure a sustained period of growth and ultimately employment.

[Newbie71]

In and of itself, in the best scenario, health care reform as currently formulated,even if deficit (or especially) neutral, doesn't do anything but shift costs from one sector of the economy to another and re-arrange the winners and losers in the economy. True health care reform, which won't come out of this congress, might actually do some good. But that would offend too many of the vested interests - unions, trial lawyers, politicians (no, not pharmaceuticals, insurance companies or medical device manufacturers; the "evil" interests that have been targeted.)

[FreeNemo]

Bingo!!

[masher]

What you are saying we have heard for the past 8 years under Bush. The facts are that the federal government is interfering with the US labor market and is actively working to drive wages down.

Look up H-1B and all the other fraud ridden work visa regulations. Our own government has detailed the fraud in H-1B.

The other way that President Obama is using the government to drive down wages and increase unemployment is the lack of e-verify. There is a simple solution to illegals crossing the border and taking jobs but Obama doesn't care enough to do anything about it.

Finally, the last problem is trade. Every other successful nation protects their domestic markets. The US does nothing to protect its citizens from dumping practices used by the Chinese. And there is simply the fact that you can't compete with communist governments like China who place no value on human life or liberty.

These are the real problems with jobs. What President Obama is doing is trying to ignore these real problems and instead distract us by creating another Wall Street bubble (the way Bush did) and to distract us with more health care reform (the way Bush did with Medicare Part D).

Obama is Bush. Change fail!

[Samalabear]

I just tried to explain this to an Obamabot who told another commenter to "stop waiting for the government to rescue you." The guy didn't even say he was specifically unemployed, simply was upset about the job-loss numbers. The government engineered this loss through many mechanisms, not the least of which was Wall Street. Neither party has been pro-worker in a long time. It's all been about the bottom lines on Wall Street.

[cirrus]

And then there's the billions going to the banksters and the billions poured into wars. Imagine the health care that could be bought with all those bucks.

[vlm1948]

Exactly, what a phenomenal waste of money, lives and resources.

[Pearlswan]

I disagree. Health is wealth. People die from inadequate health care not from job loss although, job loss is a contributing factor to poor health. Remove the burden of excessive health care costs on small businesses and workers and these people will be freed and secure enough to focus their energy on job creation. Jobs come from people, not presidents. Fifty percent of the jobs in America are due to the small business sector alone. The President and his lawmakers can make the market environment supportive of small business and set up alternative institutions to provide access to credit for them to stay open and pay their bills. Small business freed of its health care burden would provide the economy with jobs. And, with more people able to acquire health care there can be creative ways of delivering it to them that creates jobs too. That's why I think job creation and real health care reform (not merely health insurance reform) go hand in hand. Health is wealth!

Medicare Part E--Medicare for EVERYONE! Because Health is Wealth! All for one and one for All. That's the American Spirit and we sure need it now.

[masher]

No, if you reduce my health care costs then I will still replace you with someone on an H-1B work visa or offshore your job. Either way, you don't have a job.

Why would I hire an American when I can just move manufacturing to China and outsource programming and engineering jobs to India or eastern Europe? And I can even import foreigners into the US to work under federal regulations like H-1B. There are now over 2.2 million foreigners working in the US under H-1B. Obama is just making that more attractive.

Heck the GM bailouts have already helped GM move more jobs to China. They inked a deal to build more factories in China after the bailouts started. Obama is awesome for China.

[bthechangeyouseek]

Good post.

[Sharon Corcoran]

This issue with China started a long time ago - Before Obama was in politics- Isn't it easy to put all the blame on President Obama-.Corporations have been jumping from country to country using their resources and cheap labor for years. How many people shop at Walmart? How many people are supporting local farmers markets or try to buy American made products?. How many hire illegal contractors, landscapers, and housekeepers. We have become dependent on cheap products imported from all over the world. It's easy for us to say do this or that-
Would we be willing to support a ban on products from China? If not why would you expect corporations to stay here? Herseys moved their plants to Mexico. Has it stopped anyone from buying their chocolate? Are we boycotting the corporations using H-1B? Is this a problem yes it is- It needs to be addressed. We are going to have to be the watchdogs. When I was in New Orleans a few years ago I was talking several locals who said that the contractors hired to cleanup New Orleans, Haliburton and others were hiring labor from across the border. Skilled labor from the community couldn't get jobs. The job problem in America has gone unchecked for too long- Now its a disaster.