Posted on 09/02/2009 6:54:18 AM PDT by Uncledave
Members of the House and Senate will return to Washington the evening of Tuesday, September 8th. Over the following several days they will compare constituent feedback on health care reform. There will be thousands of small informal discussions – Members talking to each other on the House and Senate floor during votes, in the hallway, in the gym, over lunch or coffee or drinks.
The House and Senate Democratic leaders will convene caucus meetings of all their Members to get more structured input. These leaders will meet separately and together to discuss the feedback they are receiving. Senior White House staff will be involved in most of these discussions.
At some point in those first two weeks the President, Speaker Pelosi and Leader Reid will need to choose a legislative path. So far the President has allowed the horses to run all over the field – at some point he needs to corral them. But all his options are now bad, and he may continue to delay choosing a path. To do so would further diminish his fading chances of legislative success.
I think much of the chaos we are seeing results from a combination of:
Absent Presidential leadership on a specific policy proposal, Democrats are pulling in various directions. And I think everyone underestimated the depth and intensity of public opposition to the proposed policy changes. The August citizen town hall blowback will radically affect the closed-door Member discussions beginning next week, as will the expert polling analysis projecting large potential 2010 election losses for Democrats. A full-fledged Democratic Member panic is not out of the question.
I have written repeatedly that no one knows what will happen in September. Any analysis like this is dominated by tremendous uncertainty. I’m going to give it my best shot.
I see five possible paths for the President and Democratic Congressional leaders. I will list them in the order in which I think they will be considered, and I will assign my subjective probabilities to each.
If you add the probabilities for A + B + C (in my case, 45%) you get the predicted probability of a Presidential “success,” defined as a comprehensive bill that looks somewhat like what is being publicly debated. Today I project a 55% chance of failure.
I will provide an overview of the legislative landscape, then walk through each path. What follows is highly judgmental, and I can prove none of it. It can and will change rapidly beginning seven days from now. My only defense is that over a 15-year period a President and two Senators paid me in part to do this kind of analysis. You get it for free.
A big bill is in deep trouble. The President and his team had serious problems before the August recess. Failing to pass a bill out of the House was an enormous setback. Speaker Pelosi picked up a little late momentum by cutting a deal with some Blue Dogs to get a bill out of the Energy & Commerce Committee, but at the cost of delaying final passage until the fall.
On the Senate side, bipartisan discussions among the Gang of Six (Senators Baucus, Conrad, Bingaman, Grassley, Enzi, and Snowe) were stalled. The President and Democratic Leaders needed to pick up substantial momentum in August.
Instead they lost tremendous ground, far more than anyone anticipated. More importantly, things are still rolling backward. For most Republican Members of Congress their constituent feedback makes this an easy call – they oppose the proposed bill. Many Democratic Members face conflicting pressures from their constituents, their leaders, and the President.
The Leaders’ choice of legislative path is both difficult and important. Choosing a path means picking winners and losers within the Democratic caucuses. The President’s choice can easily affect whether certain Members win re-election next November. He has postponed this decision so far. If things were going well, this would be a brilliant strategy, because he would have the flexibility in September to choose from among a few good options. Deterioration over the summer has provoked factions to dig in their heels, making all options increasingly difficult for the President. I think he now faces the question “Which path is viable,” rather than “Which path do I prefer?”
This is the most straightforward of the three options. A deal among the Gang of Six would lead to a signed law. Such a deal would likely come to the Senate floor as a free-standing bill outside of the reconciliation process.
A bipartisan Gang of Six deal would obviously be more centrist than the bills now being discussed. I would expect:
I would expect moderate House and Senate Democrats to support such a deal. Liberals would be upset at the loss of the public option. The White House, Speaker Pelosi and Leader Reid would stress to liberals that a partial win is better than nothing. This is a common refrain when you compromise on legislation.
This path looks increasingly unlikely. Senators Grassley and Enzi have been sending negative signals over the past two weeks, reaffirming the conventional July wisdom that the “Gang of Six” discussions were not moving forward.
White House Press Secretary Gibbs is laying the groundwork for Democrats to embark on a partisan path by pointing to Senator Enzi’s recent radio address as evidence that Enzi is “walking away” from negotiations. I think all Members of the Gang of Six (Baucus, Conrad, Bingaman, Grassley, Enzi, Snowe) have been negotiating in good faith since day one. I think they have been unable to get a deal for two reasons:
Senators Grassley and Enzi are experienced negotiators. They know that any agreement with Senators Baucus, Conrad, and Bingaman would be reopened on the Senate floor, and in conference by both House Democrats and the White House. I presume that Baucus/Conrad/Bingaman could defend the deal on the Senate floor from amendments by the Left, but they could not guarantee the outcome of conference negotiations with the House. Nobody wants to have to negotiate twice (or three times), so Grassley and Enzi need either Pelosi or the President to give Chairman Baucus their proxy to close a deal. Speaker Pelosi can’t do that, and so far the President won’t. If the Gang of Six fails, it will be because the President undercut Chairman Baucus by failing to commit to a bipartisan path.
Projection: Today this path has a 5% chance. I’m assigning it a 10% chance over time, because as other paths fail it’s possible the Gang of Six could develop a Hero Complex and try to save the day.
If a bipartisan deal among the Gang of Six is impossible, I expect the three Democrats (Baucus/Conrad/Bingaman) would argue for a 60-vote floor strategy outside of reconciliation. They would take a substantive position similar to what I describe under Path 1 and push Senator Reid to bring it to the floor outside of reconciliation.
I think these Senators (who are quite influential) prefer this substantive path. Senators Baucus and Conrad are also critical to Path 3 – the reconciliation path, and Senator Conrad in particular has been publicly emphasizing the procedural challenges of that path. So if you’re a “moderate” Democrat (I use the term loosely) who wants to vote aye on final passage, you would like the bill to be a centrist one.
If you’re a liberal, as are the bulk of both the House and Senate Democratic caucuses, you probably hate this path. You’re not getting any political cover from Republicans (Senator Snowe doesn’t count), and you’re sacrificing “essential” elements of the bill that you [could/might] be able to get through a reconciliation path. I would expect liberal House Democrats would argue strongly against this path, as would outside liberals. This path requires dropping the public plan in favor of a Conrad co-op approach, and I cannot see the Left being willing to abandon their cause celebre with little tangible legislative benefit.
Five people to watch in this scenario are Democratic Senators Reid, Byrd, Specter, and Nelson, and Republican Senator Snowe:
Watch how hard Baucus and Conrad publicly push back against Path 3.
Projection: This path happens only if (a) Senator Reid wants it for personal reasons or (b) paths 1 and 3 are impossible. 10% chance.
This is clearly the preferred path of the Left. The Left dominates the House and Senate Democratic caucuses, and their views are closely aligned with the President’s stated policy goals (especially preferring to have a “strong” public option).
The primary problem with this path is procedural. I have written about this at length, but to summarize, there’s a two-part test:
At some point behind closed doors Senator Reid will ask Budget Chairman Conrad and Finance Chairman Baucus, “Can [a particular bill] avoid the fatal budget points of order?” If the answer is yes, then he’ll ask, “And what elements should we expect to lose to the Byrd rule?”
If the first question gets a no, then this path is not viable. If it gets a yes, then it’s viable, but at a substantive cost. It is the easiest path to conference with the House, and it leads to a more leftward bill, including a “strong” public option.
I would expect many moderate Democrats to oppose the bill if this path is chosen. This poses several challenges:
Projection: If they can overcome the fatal points of order, this is the highest probability path of a big bill becoming law. The White House and Democratic leaders would have to bend and break arms to hold a majority in both bodies, but with sufficient White House pressure they can probably do it, barely. This is the highest probability path for a big bill only because paths 1 and 2 are so fouled up. 25% chance.
Not gonna happen. It’s just too hard for the leaders to coordinate the votes across the two bills. If things were politically stable and these bills had a high probability of legislative success, then maybe you could split it up. In the current environment, it’s too unstable and too risky for the leaders to pursue. Leaders like manageable risks when they bring bills to the floor. This path creates unmanageable risks.
Projection: 0% chance
If paths 1, 2, and 3 fail, the President and Democratic leaders will have no alternative but to fall back to a much smaller bill. It’s in this context that the Gang of Six might return to power, although a smaller bill could be implemented on a bipartisan or partisan path.
A much smaller bill would definitely exclude a public option. Some friends suggest it could include “insurance reforms” like guaranteed issue and community rating, since there appears to be bipartisan support for both. I don’t think this works for a reason I have previously explained:
You can’t make the insurance “reforms” work by themselves. In addition, insurance reforms without the individual mandate would cause insurers to awaken from their confused slumber and enter the debate with vigor (in opposition). At a late stage this could matter, especially if Democrats are trying for a bipartisan smaller bill.
For this reason, I think it’s easier to “build up” to a smaller bill. There will clearly be a bipartisan consensus to increase Medicare spending on doctors (the so-called “doc fix”). I will guess that this path leads to $100B — $200B of spending over 10 years: more Medicare money for doctors, combined with expansions of Medicaid for the poor. To offset the deficit effect, they would cut Medicare Advantage and nick at other Medicare providers, and maybe do some of the Kerry tax increase proposal. This would be an “incremental” package that advocates would argue is a small step in the right direction. I would oppose such a package, but it might be able to get 60 votes, and could almost certainly get the 50 votes needed through reconciliation, and without any significant procedural hurdles. This path could be partisan or bipartisan, and it’s way too soon to predict which.
This is what Democrats do when all else has failed, to make sure the President has something to sign. It’s a failure path that they would unconvincingly argue is a first step toward a larger reform.
This would be small compared to the big reform policy being discussed, but in any other context it would be an enormous bill. For comparison, in 2007 and 2008 President Bush sustained two vetoes over a ten-year $15 billion difference in SCHIP spending. Here we’re talking about moving $100B – $200B around as a “fallback” position.
Projection: 50% chance, because I think paths 1-3 have low probabilities of success. This probability increases by 5 percentage points each week the President delays choosing a path.
It’s hard to imagine how you end up here. If everything falls apart, they at least do a doc fix and throw in some “quality improvement” provisions to save face, which puts them on path 4. Still, stranger things have happened.
Projection: 5% chance.
Thanks for making it through this lengthy post. I hope it helps you understand the multi-dimensional nature of this decision and the interaction of what I call “the 5 P’s”: policy, politics, personalities, the press, and legislative process. It is complex and important.
(photo credit: dlkinney)
Lots of folks don’t grasp that a mandate is not required.
It was always politically unworkable anyway, just in the terminology. Auto insurance alone is about 20% (at least) noncompliance, in “mandated” states.
Pooling of claims or serious medical conditions, combined with a toothless mandate will clean up 90% of what people hear about. Many others don’t have the assets to protect, thus don’t see a need for insurance. They could be heald to a higher standard of financial accountability.
The industry wants change, as does all sides in congress. Leadership is lacking to make it happen.
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