Lessons from the Debt Ceiling Crisis: Bipartisanship in the Tea Party Era

(originally published September 6, 2011)

On the day that the bipartisan debt ceiling deal was announced in August 2011, the flurry of comments from lawmakers included two that stood out, both for their candid assessments of the agreement, and for the stark contrast between them. While Speaker John Boehner (R-OH) declared that, “I got 98% of what I wanted; I’m pretty happy”, Rep. Emanuel Cleaver (D-MO) lamented that the deal amounted to a “sugar-coated Satan sandwich”. The two views could not be more diametrically opposed.

They illuminate the disequilibrium within the final deal, despite President Obama’s determined efforts to craft a balanced solution. They show the absence of bipartisanship in the content of the deal, even though the looming consequences compelled bipartisan votes for final passage.

This outcome was principally due to the obstinate position of the Tea Party faction in the House (rather than Republicans in general). Their actions also troubled many Republicans who were concerned about the consequences of inaction. The Tea Party’s role displays the power of a sizeable extremist faction to reject bipartisanship and impose its demands at any cost, in this case jeopardizing the nation’s credit rating and overall economy, with ominous future implications.

How could such an outcome have occurred in the era of President Obama’s tenacious emphasis on bipartisanship and post-partisanship as cornerstones of his Administration and its policies? Does this mean that bipartisanship and post-partisanship are antiquated concepts? What does this portend for the prospects of bipartisanship in the future, starting with the “super committee”?

Factionalism Surpassed Partisanship in the Evolution Toward a Deal

Among the many twists and turns leading up to the resolution of the crisis, a few dynamics which curtailed bipartisan efforts were paramount in the evolution of the final deal:

• The Tea Party faction in the House Republican Caucus took an extreme position, maintained uncompromising allegiance to that position, used their leverage as a voting bloc, and refused to negotiate on anything that wasn’t in their wish list, even refusing to consider compromises proposed by Senate Minority Leader McConnell, the Simpson-Bowles Commission, and the conservative Republican Senators in the “gang of six”.

• In contrast with battles between opposing policies (which lead to compromises among policy options), the Tea Party faction shifted the terms of debate to a battle between Democratic policy and the Tea Party’s unwillingness to negotiate at all. Their notion of compromise was to require total capitulation by the Democrats on the substance of the bill in exchange for the procedural concession of allowing a bill to proceed. They simply did not care if there was no action on the debt ceiling, and, regrettably, those who don’t care have a tactical advantage.

• The Tea Party House-members co-opted the agenda of grass roots Tea Party activists to advance a different agenda. Whereas the objective of the grass roots movement is to get the government’s fiscal house in order by reducing the debt and eliminating borrowing for deficit spending, the objective of many in the House faction is to minimize – some would say deconstruct – the federal government. Rep. Cantor’s call for FEMA disaster aid to be offset by cuts in other programs exemplifies this. The objective of the grass roots activists can be achieved through balanced solutions (combining spending reductions and revenue enhancements), while the House faction’s objectives are thwarted by this approach.

• Speaker Boehner and Minority Leader McConnell understood the importance of raising the debt ceiling, and the dire consequences for the country and the economy if it were not raised. Although McConnell’s workable solution and Boehner’s negotiations with the President did not come to fruition, their influence was vital in reaching the eventual agreement. Yet, in the months leading up to the August 2nd brink of disaster, they utilized the Tea Party members’ intransigence to strengthen their own bargaining leverage, which intensified the impasse.

• Once it was clear that Tea Party faction was not willing to negotiate or compromise on any elements that were critical to a balanced solution, Speaker Boehner faced a choice between advancing legislation that could be supported by a coalition of (a) the Tea Party members and the rest of the House Republican Caucus (many of whom recognized the perils of an extended crisis), or (b) the majority of House Republicans and the House Democratic Caucus (as well as the Senate Republicans and Democrats).

• Speaker Boehner chose to advance legislation with a coalition of Tea Party members and the other House Republicans, even though he knew it wouldn’t pass the Senate. His bill (prior to the final deal) met all of the Tea Party members’ escalating demands, from the inclusion of a balanced-budget amendment to the exclusion of any revenue increases, without any compromises. Yet, in the Tea Party’s eyes, it was a compromise, simply because it included a rise in the debt ceiling, which is normally non-controversial.

• The net result is that the Tea Party members first caused the problem and then castigated President Obama for presiding over a problem. The Tea Party faction entered an arena that was always governed by certainty, injected uncertainty into the process, and then wailed about businesses facing uncertainty. Their rebukes are disingenuous at best, since the Tea Party faction created the problems which it claims to abhor.

Lessons Learned for Future Bipartisanship

Some suggest that the prospect for future bipartisan / post-partisan efforts (both procedurally and substantively) has been debilitated, since the politicization of the debt ceiling sacrificed problem-solving in favor of ideology. But that view disregards the evolving nature of bipartisanship, the lessons learned, and the opportunity for progress. Bipartisanship remains possible, following adjustments that have been necessitated by the Tea Party faction’s tactics.

Bipartisanship based on rational policy, pragmatic problem-solving, and a spirit of goodwill should give way to a revised practice of bipartisanship based on the exertion of strength and strategic leverage. In the new incarnation, the fundamental tenet of collaboration – that all parties will be sensibly motivated by mutual benefit to negotiate toward pragmatic results for some of their desired outcomes – should be replaced by a real politik principle – that political power must be used to pressure parties to negotiate in good faith. At that point, benevolent negotiations can ensue in which parties relinquish some ground to achieve bipartisan prioritized objectives.

The lessons learned from the debt ceiling debacle include the revised approach to bipartisanship and a number of mechanisms that could enhance bipartisan outcomes, even when legislative efforts are obstructed by the intransigence of the Tea Party or other factions:

1. When the Tea Party politicizes or intensifies an issue, the President could develop and publicize a purist solution of his own that could be implemented by Executive Order, which he keeps in his back pocket in deference to bipartisan solutions. Doing so will show the Tea Party what could happen if they do not join bipartisan negotiations in good faith. It will motivate their participation and minimize their intransigence. Since those who do not care about inaction have a tactical advantage, this approach will give the Tea Party faction an incentive to care and negotiate meaningfully.

2. When the Tea Party faction makes an issue contentious, others should link the issue’s underlying policy and values with the grass roots Tea Party activists’ principles. By linking the two, the Tea Party House-faction’s obstruction of progress on the issue would make them vulnerable to criticism from Tea Party activists that they are violating their own principles. The inherent inconsistency would also illuminate ulterior motives.

3. When Tea Party members are intransigent, Democrats should welcome other Republicans, whose goals or values are obstructed by Tea Party positions, as negotiating partners. Focus should be on areas of potential common ground, where a failure to act would pose tangible risks). This could isolate Tea Party members, transcend their opposition, encourage them to come to the negotiating table, and achieve substantive results where consensus is possible.

4. Speaker Boehner has relented to the Tea Party faction to hold his caucus together, both for party unity and to solidify his position at the helm. Yet, he also has an interest in Republicans not being seen as extremist, retrogressive, and dogmatic, which could alienate Independents and swing voters. When facing Tea Party extremism and intransigence on major issues, he should craft bipartisan coalitions rather than allow the Tea Party faction to drag other Republicans into precarious positions. By reaching across the aisle instead of succumbing to Tea Party demands, he can advance solutions and sound policy with broader benefits.

5. In addition to a legislative or “inside” strategy, a public opinion or “outside” strategy can focus public attention on the risks to individuals, families, and businesses of relenting to Tea Party recalcitrance. Outside-strategies could target the districts/states of key legislators and clearly communicate the benefits of stymied legislation, especially when bipartisan values are at stake. Public support can urge Republicans to repel policy and political risks of inaction and obsequiousness to Tea Party agendas. Democrats and Republicans can even collaborate when Tea Party members threaten basic principles or vital programs. Tea Party members may not need the support of independents and swing voters, but many other Republicans do.

6. The outside-strategy can also expose the motives, extreme positions, and intransigence of the Tea Party faction by drilling down to granular explanations of their underlying goals, and the short- and long-term consequences that their policies would cause. Critiques should impose transparency and accountability on the Tea Party faction, enhance scrutiny of its judgment, and increase pressure on others for bipartisan, balanced solutions.

7. The Senate leadership sometimes foregoes floor votes due to the likelihood of Tea Party-led filibusters (and insufficient votes for cloture). Yet, deferring floor votes sends the wrong message. Senate leaders should bring legislation – especially when crafted with bipartisan input – to a vote, even if there will not be enough votes to proceed. In the debt ceiling crisis, doing so would have shown: (a) the efforts being made to find bipartisan common ground, (b) the policy solutions that could be adopted if intransigence were overcome, (c) which Senators are willing to take action, and (d) the Tea Party’s hold on Republicans, forcing them into obstructionist roles as “the Party of No”. The McConnell-Reid and Gang Of Six proposals could have been advanced in this way, intensifying pressure for a bipartisan solution.

8. Once the Senate brings up legislation, if it is halted by a filibuster, then its opponents will be identified and their motives will be on full display, facilitating an outside-strategy to mobilize public support. A filibuster is not a failure, but rather a speed-bump en route to the next stage of the process. If legislation reaches a vote and passes in the Senate but the House refuses to pass a bill that can send the legislation to a conference committee, then the Senate’s passage of its preferred policies still strengthens the President’s position, enabling him to convene a bipartisan group of Senate and House leaders to negotiate a solution.

The “Super Committee” for Debt Reduction

The “super committee” for debt reduction is an unusual construct with unique rules and incentives for action. The trigger will be a “sword of Damocles” that encourages its twelve members to find common ground for bipartisan solutions. Numbers 2 through 6, above, could play an important role and foster mutual respect. An outside-strategy, by which public support urges balanced bipartisan policy choices and illuminates the Tea Party’s objectives, can reinforce the need to choose options that distribute the fiscal pain of debt reduction fairly. As the “super committee’s” work product will affect every American, it is essential for their work to reflect the public’s sensibilities for fairness and not impair those who are lower on the socio-economic ladder.

The Challenge of Bipartisanship Going Forward

The debt ceiling crisis exemplified the challenges faced by those who seek to instill a bipartisan or post-partisan ethic of cooperation. Despite the set-back, prospects for bipartisanship remain, and may be more necessary now than ever before. It should, however, be viewed through a different lens. In contrast with bipartisanship motivated by Republicans’ and Democrats’ good faith cooperation to advance shared values for the common good, the Tea Party’s tactics necessitate the use of power politics to soften recalcitrance, compel bipartisan negotiation, and, at that point, collaborate to advance vital mutually-held objectives.

In essence, instead of starting off on a bipartisan path based on mutual respect and trust, given the current political climate, it seems necessary to work up to it.

Americans Want Health Security & Affordability, and Don’t Care About Myths & Legislative Procedures

As the House of Representatives prepares to vote on health care reforms that President Obama made a priority and which the electorate brought him to the presidency to enact, it is vital to focus on the big picture. The American people – and Members of Congress – should recognize the unique nature of this historic opportunity. This is a watershed moment that will define our nation’s social responsibility, preserve our economy, and improve our quality of life.

Americans Care About the Policy, Not the Process & Sideshow Issues

When facing such a transcendent turning point, it is no longer appropriate to be dissuaded by the arcane intricacies of the legislative process, nor by myopic devotion to sideshow issues. We all want enhanced health security and affordability, and, once we have it, we won’t care if it came by way of Reconciliation, the “deeming” mechanism, or some other legislative vehicle. After reforms are enacted, Americans who are protected against termination of their coverage for pre-existing conditions won’t care about targeted programs for Vermont, Florida, Connecticut, and Montana.

The same Americans who are angry now about the reform process will become much angrier in future years if reforms are not enacted and their insurance is terminated or becomes unaffordable because they are not protected. Without reform, an ardently pro-life family whose insurance stops due to reaching their lifetime coverage limits after a serious illness of their child will be much more focused on that than on their opposition to the 2010 bill due to its abortion language.

Policy That Does What Is Right for Americans

Ultimately, the benefits of substantive policy – and its improvement of our social fabric and quality of life – prevail. Abraham Lincoln did not allow projections of commodity market fluctuations to alter his drafting of the Emancipation Proclamation. Franklin Roosevelt did not withhold his leadership on Social Security legislation until the intricacies of tax treatment of deferred income for early retirees could be fully coordinated. Lyndon Johnson did not delay the enactment of Medicare until the anti-government naysayers – who today have organized into Tea Parties – were on board. Today’s America would be unimaginable without these advances.

At historic moments, such as the one that our country is currently facing, it is necessary to simply do what is right. The health care reforms that are under consideration are the right policies for America, in both the near- and long-terms, as they would have a positive impact for virtually all Americans (even including the insurance industry, which would collect premiums from millions more people, and enable the risks and costs to be spread among a much larger pool).

Myths, Misconceptions, & Deceptions Are Overcome By Facts & Courage

Doing what is right takes courage and commitment to the facts, especially in light of the many myths, misconceptions, and deceptions that have been propagated by self-focused special interests. Insurance companies fear the reforms because they will have to stop certain activities that have given them a competitive advantage, at the expense of the people who they are supposed to serve. But, since it would be unseemly and transparent for them to fight the bill on those grounds, they have instead manufactured illusory demons which fuel opposition by those who are susceptible to such manipulations.

Knowing that some percentage of the population is stridently anti-government, the myth of a government takeover of health care was created, even though there is absolutely nothing in the bill – nor even in earlier incarnations – which substantiated this. Knowing that most Americans are strongly supportive of their chosen health care providers, the myth was created that the ability to choose one’s providers and insurer would be curtailed, even though President Obama repeatedly emphasized that if you like your doctor and/or your insurer, then you can keep them, and the legislation confirms that. Knowing that everyone is worried about the cost of health care, the myth was created that the legislation would cause premiums to skyrocket, which has been debunked by economists and the Congressional Budget Office, and is patently untrue by virtue of the millions of Americans who would enter and pay premiums into the health insurance market.

In the current climate of unfounded, unsubstantiated, and even paranoid fears of change, doing what is right for the overwhelming majority of Americans requires fortitude to take action based on the facts, rather than on fears, by summoning dedication and determination. Moving the country and the people toward increased health security and affordability will depend on decision-makers’ willingness to embrace the responsibilities, ideals, and commitment to public service that are inherent in serving the greater good, rather than the good of special interests.

Policy Based on Core American Principles

The upcoming vote on health care reform is about principles. Humanism and equality are at the core of expanding coverage to those who do not have it, and preserving coverage for those who do. Fairness and consumer protection are at the core of affordability, to ensure that insurance corporations cannot price families out of the market with hikes in premiums, copayments, and deductibles. Fiscal responsibility is at the core of reforming the economics of our health care system to ensure its long-term sustainability for both the public and private sectors. Opportunity and justice are at the core of health security, which enables individuals and families to engage in “the pursuit of happiness” as they choose, without vulnerability to corporate self-interest.

The denial of these principles for the benefit of all Americans would be tantamount to giving amorphous, intangible, unsubstantiated fears priority over people. If a republic relegates the needs of its people to the back bench, it would be a foreboding sign of the unraveling of the social fabric. The deficiencies and injustices of our health care system have been so extensively evidenced and documented that it is imperative that they be remedied. Anyone who thinks that they are not vulnerable to these shortcomings is just one serious diagnosis or illness away from discovering that they are wrong. Reform is necessary to reinvigorate our core principles. The moral deficit that is being inflicted by our health care system is reprehensible and intolerable.

The health reform legislation being considered might possibly mean that each of us would pay an extra dollar for a meal at a restaurant to ensure that the cook, the waiter, the cleaning team, and their families have health coverage and the security that comes with it. But who among us would rather pay a dollar less for a nice dinner while looking at a crew that is uninsured and living in fear of illness? Moreover, if they do not have insurance, they may not have gotten treatment for an illness or disease that could be communicable to us at the restaurant. And, without insurance, if they did get treatment, it is likely that they went to an emergency room or a public health facility which was paid for by the rest of us anyway, as taxpayers and by shifting the cost to those with insurance. The waiter who serves the dinner would also like to be served well by legislators who can provide them with health security.

Rising to the Occasion to Do What Is Right

The day of reckoning on health reform is rapidly approaching. It will be one of the most important votes in the career of every legislator. It is a vote that each legislator will remember long after their retirement, either with satisfaction for having done the right thing or with dismay for having succumbed to pressure, special interests, and unfounded fears.

Some might worry that support for reform could impact their career, including their re-election prospects. But, opposition to reform could also result in their electoral defeat, both for denying their constituents the benefits of health security and affordability, and for their failure to take a courageous, principled stand that would improve the quality-of-life of those who they were elected to serve.

The legislation would advance health security and affordability in many ways, from prohibiting denials of coverage due to pre-existing conditions, to enabling millions of uninsured Americans to obtain coverage; and from limiting insurer hikes in premiums, copayments, and deductibles that price people and small business out of the market, to ensuring long-term sustainability of the health care system by containing costs for the public and private sectors. This is very tangible, meaningful progress. Yet, that doesn’t mean that the legislation is perfect, nor that it exactly reflects what any single person would most like it to contain. But that is the nature of democracy and politics as “the art of the possible” between President Obama, 535 Members of Congress, and a long list of citizen- and interest-groups. The old maxim that “the perfect must not be the enemy of the good” is perhaps more true in the context of health reform than any other issue.

An Historic Moment For the Country…..and For Each Legislator

If Congress does not pass health reform now, there will not be another opportunity for many years to come. And, when it does come again, the problems with our nation’s health care system will be so much more extensive, intractable, amplified, and varied, with costs having skyrocketed past the point of being able to be reined in. Reform at that time will be much more extreme and painful, and much less likely to resolve deficiencies and put our nation’s health spending on a sustainable track. It is critical that we do not miss this historic chance at substantial progress for the sake of individuals and families, businesses and economic growth, and preservation of our society and fiscal health. Now is the time to unite our diverse citizenship under the tent of health security and affordability for all, or risk further fragmentation and hardship which will be monumentally more difficult to repair.

Legislators for whom the vote on health reform is especially vexing would be well served to consider not only the impact of voting for the bill, but also the impact of voting against the bill. This vote goes right to the heart of public service. It will become increasingly apparent in the years to come that supporting this legislation was the right thing to do for America and Americans. Years from now, when looking in the mirror, a legislator will not see the insurance lobbyists, a group of Fortune 500 CEOs, nor a little room of over-heated Tea Partiers. Instead, the person looking back will be the person who voted on the 2010 legislation to increase health security and affordability for all Americans.

A 10-Point Program for Job Creation and Economic Transformation

Job growth is a top priority right now for most government officials, regardless of party. But recent job-growth proposals have mainly offered measures to avoid layoffs, assist those already unemployed, and induce only incremental hiring, mostly in well-established industries. Although the recent proposal by Sens. Chuck Grassley (R-Iowa) and Max Baucus (D-Mont.) was encouraging for its bipartisan process, its job-related provisions suffered from these limitations.

We have reached the point when the USA must rapidly stimulate major, broad-based job growth over a sustained period of time. The focus should be on transformative economic development in key industries that hold the promise of becoming the drivers of economic prosperity and exports for years -- and even decades -- to come. Rather than merely keeping workers and the economy afloat, we must invest in industries that will create the need for workers, both today and over the long-term, on a massive scale. When spending tax dollars on job growth, the emphasis should be on emerging industries, to invigorate the demand for workers in companies with global high-growth potential.

As President Obama stated on February 16th, "Whether it's nuclear energy, or solar or wind energy, if we fail to invest in the technologies of tomorrow, then we're going to be importing those technologies instead of exporting them. We will fall behind. Jobs will be produced overseas, instead of here in the United States of America. And that's not a future that I accept."

Starting Points for the "Jobs Bill"

The "Jobs Bill" that will emerge from Congress should include support for job retention and incremental hiring, as well as for the unemployed, both to stop our economic bleeding and to capture the "low hanging fruit." These steps include aid to state and local governments, a payroll tax credit for small businesses that hire unemployed workers, assistance to homeowners who are in jeopardy of foreclosure, and extension of unemployment insurance and COBRA benefits. The bill should also accelerate the Obama Administration's initiatives for highway and bridge construction, energy-efficiency retrofits of homes and buildings, and a seamless national broadband infrastructure.

Long-Term Job Growth and Transformation via the "Jobs Bill"

Yet, to maximize its impact in the near-term and lay the groundwork for future prosperity, the "Jobs Bill" must fully embrace President Obama's vision for economic transformation fueled by investment in innovation-intensive industries which will propel exports and economic primacy of the US economy for decades to come. The US must aggressively grab the advantage and secure the leadership role in these fast-evolving global industries. The key technologies and industries that should be designated as top national priorities include: renewable energy / clean energy, mobile telephony, broadband computing, biotech and health care, water desalinization and clean water production, transportation safety, homeland security, recycling and waste management, and environmental protection and remediation.

Although there is already considerable activity in the US in these industries, the progress is far short of positioning the US as the dominant world leader in them. The "Jobs Bill" provides a prime opportunity to galvanize our aim, commit our resources, and accelerate our activity in these transformative industries. The level of commitment and support should be akin to that given to the "Manhattan Project" in the 1940s and space exploration in the 1960s.

President Obama reiterated the case for such a commitment, and the high stakes involved, during his State of the Union address last month, in the context of clean energy and energy efficiency: "I know there have been questions about whether we can afford such changes in a tough economy... But here's the thing -- even if you doubt the evidence, providing incentives for energy-efficiency and clean energy are the right thing to do for our future -- because the nation that leads the clean energy economy will be the nation that leads the global economy. And America must be that nation."

The importance of the "Jobs Bill" in advancing US long-term leadership and economic prosperity can be illustrated by envisioning the WTO trade negotiations of 2025 and 2035. The US will seek to secure fair trade and competitive advantages in industries with maximal worldwide growth opportunities in those eras and beyond. The question will be whether the US is trying to wrest a foothold from others, or be in the driver's seat. We must work TODAY to build the competencies, technologies, infrastructure, and supportive services that enable the US to lead in the high-growth industries of the future.

10-Point Program for Job Growth Now and in the Future

A program could be included in the "Jobs Bill" to propel near-term and long-term US job growth, exports, innovation, and economic leadership in the global economy. To be eligible for government assistance and benefits under this program, a company would have to be involved in one or more of the national priority industries identified above, and need to be engaged (or seek to be engaged) in at least one of the following activities:

(a) research and development of a new technology or service for which there is a high growth potential;

(b) manufacturing of a product utilizing a high-growth potential technology in connection with a patent or patent pending;

(c) implementation of a marketing and sales plan that would reach, or significantly expand penetration into, export markets with a demonstrable high-growth potential;

(d) execution of a business model that would bundle products and/or services relating to one of the targeted industries, by partnering with at least one other US-based company, for enhanced reach, scope, and impact in high-growth export markets; and/or

(e) fulfillment, order processing, inventory management, transportation, and/or delivery services for companies engaged in one or more of the targeted industries.

For qualifying companies - including start-ups, micro-enterprises, and existing companies - government assistance and benefits under this program would include:

(1) an enhanced Research and Development Tax Credit, for companies described in paragraph "a", above;

(2) an Expedited Review and Processing of Patent Applications, in the case of companies described in paragraphs "a" and "b", above.

(3) a Payroll Tax Credit for two years for each unemployed person hired by a company of any size, if the hire is directly and predominantly for the above activities;

(4) a Loan, for companies described in "c" and "d", above (re: exports) to pay the salary of new hires for one year, with such loans being repaid over the ensuing four years (which could include a requirement to retain the employee for at least one more year);

(5) Job Skills Training assistance for employees who are directly and predominantly engaged in the above activities;

(6) Technical Assistance to start-up companies and micro-enterprises for help in formation, incorporation, and otherwise establishing their company;

(7) expedited Processing Assistance with documents and procedures to enable exports;

(8) Technical Assistance with fulfillment, transportation, and delivery of exports; and

(9) an Online Partnership Development Match-Making Directory for companies that seek to access / provide value-added services from / to other companies in their industry, and for other companies to identify market opportunities that could justify additional hires;

(10) development of a Network of Business Parks throughout the US that are dedicated to accelerating the key national priority industries by co-locating many companies engaged in the same emerging industry so that participants can leverage each other's research, resources, and manufacturing and deployment capabilities, resulting in synergistic benefits for all participants (extended discussion of this proposal is found below, in blog post entitled "Job Creation as Job One: 3 Ideas for The Forum on Jobs and Economic Growth", December 2, 2009).

FINDING COMMON GROUND ON HEALTH CARE REFORM

As health care reform progresses through the House and the Senate, certain issues remain the main points of contention, both between Democrats and Republicans, and between the majority of Democrats and their “Blue Dog” colleagues. Efforts are focused on finding ways to bridge the gap on the Federal option, financing for the initial years (before efficiencies generate major savings), the employer mandate, and medical malpractice claims and liability insurance. In the spirit of brainstorming, the following thoughts offer ways that the divide on these issues could be narrowed, to generate support from at least some of the lawmakers who have concerns.

THE FEDERAL OPTION

The Federal option has been hailed for serving two crucial objectives of reform: less expensive premiums and expanded coverage. Yet, opponents distort these assets into liabilities. While they recognize that the Federal option would be more efficient and less expensive – that it will be so good that most people will choose it – they then suggest that this competition hurts competition! Besides for being illogical, their argument suggests that insurance companies either cannot become efficient or should not be prompted to do so, and that insurers can only survive when their market share is protected from competition. It is akin to calling for a cure to cancer but refusing to fund cancer research on the grounds that cancer deaths would decrease, causing the population to swell out of control. Opponents claim to support consumer choice while, at the same time, denying them the choice!

Why do opponents want to restrict choice to the most expensive insurance alternatives, which are also notorious for denying care? Why do they want to protect market share for companies that they recognize would not be the choice of most consumers? Why do they condemn the Federal option for being too efficient at providing quality health care with higher consumer satisfaction? Senator DeMint (R-SC), for example, claims that he has proposed many health care reform alternatives. But each one just used a pretense of reform to promote business development initiatives for insurance companies, allowing insurers to sell to more people and accept premiums from more sources. Promoting and defending health insurers that charge high premiums for limited care that do not satisfy health needs is an affront to the public interest. True competition would and should force some of the “bad actors” in the health insurance market out of business -- which would be good for consumers and businesses -- while the “good actors” in the private insurance market would continue to thrive

Still, in the spirit of bipartisanship, concerns about the Federal option could be accommodated by imposing some limitations and terms on the Federal option. (1) Enrollment could be limited to individuals and families who are currently uninsured, as well as to those who are not insured under group coverage, and to small businesses (with up to 50 or 100 employees, or under a payroll threshold). (2) The Federal option could provide enrollees with a choice of comprehensive coverage or a catastrophic care plan, which would be a lower-cost alternative for those who seek coverage just for major illnesses, and would alleviate the strain on health care providers from uncompensated care for major treatment. The eligibility of small businesses would mute the objections of advocates who claim that small businesses cannot afford comprehensive coverage from private sector health insurers, since even the opponents of the Federal option acknowledge that it would be much cheaper. Insurance companies would benefit by high-risk persons enrolling in the Federal option (as their care is often more expensive), which would also limit the extent to which the Federal option’s premium pricing could decline below that of private insurers. The ineligibility of large and medium sized groups and employers to enroll in the Federal option would ensure that the private market would continue to play a fundamental role in health insurance coverage.

(3) Health care practitioners who wish to participate in the Federal option could be required to meet Health Information Technology (HIT) standards by a specified timetable that is sooner than that required for other providers. This might inhibit some providers from signing up to provide services through the Federal option, thus limiting its market share and maintaining balance with insurers. Yet, it would accelerate the adoption of HIT among many providers who participate in both the Federal option and private insurance. Insurance companies would benefit from this as their participating providers would become oriented toward the use of HIT --- resulting in administrative and cost efficiencies for both the providers and the insurers --- without the insurers applying early efforts toward that transformation.

FINANCING OPTIONS

Everyone agrees that new revenues must be found to pay for the reformed system. But views differ on how to make revenue generation as painless as possible.

The proposal by Senator Kerry (D-MA) to tax health insurers would provide a major source of funds. Some think it would restrain insurers’ ability to compete. But, a tax on insurers that is linked to their overhead and profits would increase quality, efficiency, and consumer satisfaction without impairing insurers’ vital operations. By tying it to insurers’ “expense to premium ratios” (similar to, yet more meaningful than, “loss ratios”), the tax would promote the use of premiums to pay for health care services and treatment, rather than administrative expenses, utilization review, advertising, agent fees, corporate retreats, and profits. Insurers could avoid paying this tax by having a low ratio (below a specified level), since a low ratio would mean that premiums are being used to pay for care, rather than disproportionately paying for overhead. If an insurer’s ratio is higher than the accepted standard, then that excess amount could generate a steep excise tax to recoup those amounts for use in the health care system. Insurers would be incentivized to minimize premiums and expend them on health care services. (“Expense to premium ratios” are a more accurate reflection of insurer behavior than “loss ratios” because “loss ratios” only include insurers’ revenues from premiums, not their major revenues from investment of premiums, which “expense to premium ratios” do take into account.)

Sizeable revenues could also be generated from the House Ways & Means proposal to tax very high-income people, and various efforts to tax “Cadillac health insurance coverage” (e.g., worth more than $15,000 to $25,000 for family coverage). Despite some opposition to these, this criticism could be muted. The tax could be applied only to “Cadillac coverage” over a specified level (e.g., $20,000 for family coverage), and then also be means-tested, to ensure against the tax being placed on a family earning, for example, $100,000. High income families (for example, earning over $250,000 or $350,000 annually) would be taxed at a basic rate for their “Cadillac coverage”, and very wealthy families (e.g., over $1 million) could be taxed at a much higher rate. In this way, “Cadillac coverage”, which is akin to compensation, would only be taxed in the case of those who are most able to afford it (rather than being subsidized by all taxpayers by being tax exempt).

Means testing of “Cadillac coverage” could still be coupled with a reasonable tax on annual incomes over $1 million. This additional tax could be tempered, however, by applying it for just a limited number of years, until the efficiencies of the reformed health care system generate anticipated savings which can be applied to the system.

EMPLOYER MANDATE

To some, an employer mandate is the key to universal coverage, affordability of coverage, and reducing uncompensated care. But to others, it’s just plain scary.

The employer mandate has been derided as unaffordable for small businesses, many of which allegedly would sacrifice business growth to avoid it. Scare tactics are intensifying, with Congressman John Shadegg (R-AZ) on July 30th implying that the mandate would apply to all businesses with two employees. While critics focus on the cost of insurance, they ignore the cost of NOT being insured. Employees in small businesses are not exempt from becoming sick, developing chronic illnesses, and wishing they had health insurance. If these employees do not have health coverage, then it adversely affects the business, for example, if illnesses spread among employees, decrease productivity, intensify due to a lack of treatment, cause skilled employees to quit their jobs, etc. If these realities are ignored, and measures to cushion the impact of a mandate are necessary, then there are some options.

As stated earlier, small businesses should be allowed to enroll in the Federal option to minimize their premiums and out-of-pocket costs, and provide reliable coverage. Additional meaningful incentives could be offered to non-exempt small businesses, especially to encourage their enrollment sooner rather than later. (1) A small tax credit or subsidy could be offered for the first few years if they enroll promptly, to defray a portion of the costs and ease the financial burden. (2) To bolster economic recovery and revitalization too, a tax credit for hiring employees could be made available to small businesses if they purchase health insurance prior to a specified date. (3) An investment tax credit for purchase of durable capital equipment could be available to small businesses if they purchase insurance by a specified date. Both of the latter two tax credits would serve as incentives for early participation in the employer mandate, and help stimulate the economy at the same time.

MEDICAL MALPRACTICE / LIABILITY INSURANCE REFORM

Despite the intrepid popularity ratings of lawyers and volumes of lawyer jokes, medical malpractice laws serve a vital role in ensuring appropriate health care and providing recourse for medical errors. Yet, they do add to the cost of health care. For years, Republicans’ calls for reform in this area have practically been a mantra, closely tied to their desires to limit lawsuits, and tort and product liability laws.

First, health care providers often engage in duplicative and unnecessary care and tests so as to insulate themselves from potential lawsuits if an undesirable health outcome should result. The key to eliminating these extraneous “defensive medicine” costs is not through legal reform, but rather, through the adoption of HIT. When electronic medical records and practice guidelines are fully implemented throughout our health care system, defensive medicine will be ameliorated by the access of providers to patient records of treatment, tests, and health history, as well as the guidance from aggregated data.

Second, there have been many instances in which patients have sued providers and insurers in response to an undesirable health outcome. Although even the best health care cannot guarantee successful health outcomes, some patient lawsuits fail to recognize this. To minimize the burden of frivolous lawsuits, one option would be to encourage (or require) patients to first pursue their claims through mediation or arbitration. Many claims will be able to be resolved through such channels, while others may result in the patient realizing that their claim should not be pursued further. Naturally, however, patients should still retain their full rights, following such a hearing, to escalate their claims through the courts.

Third, the rise in medical malpractice liability insurance premiums in recent years has been disproportionate to the incidence of medical errors, medical malpractice claims, and court settlements. It has been difficult to assess the justifiability of premium rates due to the lack of data from liability insurers. (1) Increased reporting from liability insurers is necessary, e.g., premium rates and revenues, claims paid, medical incidents defended, etc. (2) Greater scrutiny of liability insurers would enhance accountability through reasonable regulation of their premium rate structures, in order to alleviate the burden on doctors, hospitals, and others.

BOTTOM LINE

Health care reform in 2009 is absolutely essential. As the reform debate hones in on remaining critical and challenging issues, it is imperative that all stakeholders dedicate themselves toward finding common ground. Practical solutions can be developed on a bipartisan basis, to serve the needs of all constituents, whether they be those of moderate and conservative Republicans, or progressive and “Blue Dog” Democrats. The final bill will not have everything that any single lawmaker would want. But meaningful reform is in everyone’s best interests, and requires everyone’s whole-hearted commitment and willingness to support a package that meets core objectives for America’s urgent needs. Through creative solutions, the final result will be a key to a sustainable health care system for decades to come.

Convergence of Policy and Business: President Obama's Priorities

President Obama's priorities would have a transformative impact on the United States in many respects. During the 2008 campaign, he advanced many of these policies in terms of long-term sustainability for the US economy, the national and global environment, and the improved quality-of-life impacts for Americans. Since his election and during his Presidency, in the climate of our troubled economy, he has advanced his agenda as a threshold to not only restore our economy, but also to do so in ways that transform our current struggles into long-term sustainable successes. The business opportunities that are facilitated by the President's agenda can be pursued by Americans of all political persuasions, and, as such, are entirely bipartisan. President Obama has truly championed the vision of utilizing our current predicament as a watershed opportunity to build tomorrow's America.

President Obama's agenda lays the foundation for major business challenges and opportunities, as our national success in each of these areas will improve life in America, revitalize our economy, and establish the US's worldwide pre-eminence in each of these fields. The President's priorities are clear from the American Recovery and Reinvestment Act, his leadership in legislation on Capitol Hill, and his White House conferences. At many industry-specific and general policy conferences across the country, there has been a clear recognition of the need for -- and rewards of -- concerted, timely action that takes advantage of the Federal leadership in these domains. There has been a broad understanding of the clear confluence of policy and business, from bipartisan perspectives, in a broad range of technologies and industries. Political and business interests are aligned, and results will now depend on timely, focused, committed action on behalf of all those who are willing to devote their capital, intellectual, human, and other resources to these efforts.

In digesting the discussions, presentations, and agendas of many conferences, forums, and gatherings in recent months, many technological and subject-matter areas appear ripe for action by stakeholders in the business, non-profit, academic research, and other sectors. The following five areas are among those which rise to the top of the list of the many business opportunities that are facilitated, encouraged, and supported by the Obama Administration:

• development of an advanced nationwide health information technology infrastructure and integrated, operational system;
• establishment of a carbon "cap and trade" market, based on offsets, conservation, and shifting to renewable energy "clean tech" technologies;
• deployment of broadband technologies to enable all Americans to participate in the digital-based economy (via fiber, WiMax, 3G, WiFi networks, BPL, and other technologies);
• development of technologies that convert high-value waste streams and municipal solid wastes into useable diesel fuels; and
• advancement of broad-based, affordable access to education and job skills training via e-learning that can be monitored and which leads to tangible results.

This list is by no means exhaustive, as there certainly are other fields and technologies in which the Obama Administration is encouraging and supporting advances and business activity. The Bipartisan Bridge community is encouraged to submit additional technological and business arenas which are of high priority to the Administration, and which can have a beneficially transformative impact on our nation's economy and quality-of-life.

Bipartisanship and Post-partisanship Are Likely To Be Central Themes in This Year's Presidential Election !!

Although this year's Presidential Campaign has heated up, and is sure to become increasingly contentious, both Senator McCain and Senator Obama have defined themselves as bipartisan / post-partisan leaders who, as President, would embrace these values by reaching across party lines. Yet, some observers have suggested that, even if their commitment is heartfelt, the political climate which is inculcated in Washington DC will inhibit their efforts to change the political dynamics. Irrespective of these views, it can also be observed that Senators Obama and McCain have differing interpretations of the meaning and role of bipartisanship / post-partisanship in governing, and that they would have different styles in achieving this objective.

So, reading the tea leaves, their records, their statements, their policies, their personalities, and any other relevant indicators, what do you think? What is your impression of what bipartisanship / post-partisanship means to them? Which of the Senators do you think would be more likely -- and able -- to advance these principles as President?