Based on yesterday’s organized leaks from the President’s staff to the press, I am updating my legislative projections one day after making them. Here are the updated projections:

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  • Cut a bipartisan deal on a comprehensive bill with 3 Senate Republicans, leading to a law this year; (was 10% chance, now 5%)
  • Pass a partisan
    [comprehensive] bill through the regular Senate process with 59 Senate Democrats + one Republican, leading to a law this year; (was 10% chance, now 25%)
  • Pass a partisan [comprehensive] bill through the reconciliation process with 50 of 59 Senate Democrats, leading to a law this year; (steady at 25% chance)
  • Fall back to a much more limited bill that becomes law this year; (was 50% chance, now 40%)
  • No bill becomes law this year. (steady at 5% chance)

    • I should clarify two points from yesterday’s post. I described these both as “paths” and “outcomes.” The President, with advice from Speaker Pelosi and Leader Reid, will choose one of the first four paths. My probabilities are instead associated with these as five potential outcomes. So for example, the new White House leaks clearly suggest that the White House is steering away from (1), and probably toward (2). But my projections still allow for the possibility of outcome (1), and give (2) and (3) equal probabilities, because (a) the President may change his strategy, and (b) he can influence but not control the outcome. Please think of these as my projections of the probability distribution of possible outcomes, and not as the probability that the President will choose a particular strategic path. I hope that makes sense.

    Also, path (4) encompasses two very different scenarios – one in which the Gang of Six steps in after the wheels come off and restarts the process with an incremental bill, and the other in which Democrats move a partisan incremental bill through reconciliation. I cannot at this point distinguish between the two.

    I will explain the leaks, their strategic implications, what to watch, and how this has changed my projections. If you have not yet slogged through yesterday’s description of the paths, you will probably need it for this post to make sense.

    Wednesday’s leaks

    The President’s staff, through White House Senior Advisor David Axelrod, sent a new signal yesterday morning. The best coverage (once again) comes from Mike Allen & Jim Van De Hei at Politico.

    The only thing we know for certain is that the President will address a joint session of Congress next Wednesday, September 9th. A joint session is a big deal. You can characterize this as “the President grabbing the reins to lead the country” or “the President taking a huge gamble” as you see fit. It’s probably both.

    There are a lot of other things that the President’s staff are signaling, but which I assume will bounce around over the next six days:

    • He will support but not insist on a public option. He is “willing to forgo” it, according to Politico. This is a reiteration of their long-standing position.
    • Depending on the reporting, he may or may not “get more specific” with his prescriptions. I think this is mostly irrelevant.
    • “Aides [do] not want to telegraph make-or-break demands.”
    • The President’s aides (Axelrod and Gibbs) are going after Republican Gang of Six members Grassley and Enzi, accusing them of “walking away” from negotiations, and simultaneously saying nice things about Senator Snowe.

    Strategic implications

    It appears clear that the President’s team is giving up on Senators Grassley and Enzi, and abandoning path (1). They have shifted to blame-game mode with those two. This is not super-surprising, but it is important. It signals that the President’s team is choosing a partisan path. If he does not establish any new bright lines, then the primary (only?) purpose of the speech is to rally Democratic legislators to support him.

    This initial signal suggests they’re going to try partisan path (2) rather than partisan path (3). Yesterday I wrote “I will list them in the order in which I think they will be considered” So far, so good.

    I conclude they are exploring path (2) because (a) they appear to be appealing to moderates by repeating the signal that the public option can/will drop at the end of this process, and (b) they are stressing how much they like Senator Snowe. Both suggest a 60-vote strategy in the Senate.

    If I’m right, then the President’s focus over the next week will be to rally Democratic legislators to unify around parameters that he specifies. While I’m sure his speech will be characterized as an Address to the Nation, his real target audience will be 255 House Democrats, 58 Senate Democrats and Senator Lieberman, and Senator Snowe.

    This path works well for Senate moderates who want to vote aye on final passage on a slightly-less-left bill. I imagine members like Senators Conrad, Baucus, Lincoln, and maybe Nelson would fall into this category. Clearly they would still prefer a real bipartisan deal, but the President’s team seems to be taking that off the table.

    This path is painful for liberals (House, Senate, and outside) who want a farther left bill, and for scared Democrats (many of whom are moderates) who actually want the bill to be farther left so they can comfortably vote no and protect themselves for next November. The White House advisors are signaling they intend to turn up the loyalty pressure on moderate Democrats at the same time they try to pull the substance (slightly) toward the center.

    Here are the principal challenges with path (2):

    • Speaker Pelosi keeps repeating that she must include a strong public option to pass a bill out of the House. This poses challenges on her left and her right:
      • Liberals know that even if they vote for a strong public option in House passage, it is certain to drop from a final conference report. The White House is telegraphing that any strong public option in a House passage vote is merely a charade to provide liberal members with cover on the Left. Will that work for key House liberals?
      • Blue Dogs will also know that a strong public option will drop from any final bill. If they think they will catch heat back home for voting for such a bill, then their optimal strategy is to vote no on House passage and yes for the final product (which excludes a public option).
      • Combine these two factors: Can Speaker Pelosi, Leader Hoyer, and Whip Clyburn rally 218 votes for a bill which everyone knows will not be the final product? Or will they lose enough liberals who aren’t willing to play along with the charade, combined with enough Blue Dogs who don’t want to cast a meaningless pro-public option vote, that they can’t get 218 the first time around?
    • In the Senate there will be no margin for error. If the President can convince Republican Senator Susan Collins (R-ME) to consider voting aye, he is at best playing with a universe of 61 votes, out of which he needs 60.
    • Path (2) means they’re not using reconciliation. That has advantages and disadvantages.
      • Advantages:
        • No reconciliation means they don’t have to worry about the Byrd rule. No Byrd rule means they don’t have to offset the deficit increases in each year beyond 2014.
        • No Byrd rule means they don’t have to worry about the “Swiss cheese problem” of losing “extraneous” provisions like the insurance mandates.
        • They avoid the most effective (and valid) process abuse arguments from Republicans.
      • Disadvantages:
        • They need 60 of (59-61) votes consistently. With reconciliation they would need only 50 of 59. That is an enormous difference.
        • They still face a 60-vote budget point of order against increasing the deficit in any of three 10-year periods beginning with 2015. This makes the offset math painful and difficult.
        • The bill can be filibustered. They will need 60 votes to invoke cloture.
        • The debate and votes could stretch over weeks. Is Senator Byrd healthy enough to be available over such a long timeframe?
        • Non-germane amendments are in order. Senate Republicans can offer any amendment they like (health or other), and as many as they like. They can do this to try to change the bill, to cause in-cycle Democrats to have to take politically unpopular votes, or to try to fracture the potential 60-vote coalition. A pro-life amendment, for example, might garner a majority of the Senate but cause a few liberals to drop off so that Leader Reid couldn’t get 60 votes for cloture.
    • Each defection of a Democratic Member will significantly undermine the partisan divide I anticipate the President will try to create. In contrast, the reconciliation path expects that moderate Democrats will defect, so each one who does is not as damaging.

    It is hard to hold 60 votes together with no margin for error. Really hard.

    What (and whom) to watch

    Things are really going to heat up in Washington. Yesterday’s signal suggests a partisan approach by the President. I imagine the August town hall intensity will translate into a partisan skirmish. Expect lots of nasty partisan rhetoric.

    At the same time, the more important battles will be internal to the Democratic party. Will Democrats rally around the President, or will their internal tug-of-war continue? In theory these will be closed-door discussions, but everything will leak. The partisan fight will be intense, and Republicans can affect the debate by continuing to talk about the substance. But the vote counting is almost entirely a Democratic exercise. Is there a substantive policy that all Congressional Democrats can agree to, and can they get to that point legislatively?

    In the Senate, watch Senators Rockefeller and Schumer for an indication of where liberals are. Watch in-cycle Democrats like Senators Bayh, Bennett (CO), Lincoln, and Specter. Watch wildcard Senators Nelson and Lieberman. And watch Leader Reid and Chairmen Baucus and Conrad for any comments about process. Are they all saying the same thing about not using reconciliation?

    In the House, watch the Blue Dogs. After cap-and-trade, will they allow themselves to be BTUd again? Fool me once, shame on you. Fool me twice, …

    Listen closely to the argument the President and his team makes to liberals about why they are not choosing the reconciliation path that could allow for a strong public option. Are they telling liberals that path is not procedurally viable (because of deficit/Byrd rule problems), or instead that the President prefers to keep moderate Democrats onboard, and is willing to sacrifice the Left’s #1 policy priority to hold the Democratic party together? Are the President’s advisors telling liberals that the President is choosing a 60-vote strategy because he wants to, or because he has to?

    Most importantly, watch the American people and whether they continue to drive the debate. Impassioned citizen participation dominated August. The White House will try to change those public views, but will also try to convince nervous Congressional Democrats to vote aye despite their angry constituents. If the August citizen passion continues to affect Members when they return to Washington, then the probability of a comprehensive bill will continue to decline.

    My updated projections

    • Path 1, the Gang of Six bipartisan big deal, is now highly unlikely. I have left it with a 5% probability only because this White House lacks credibility about sticking to any given strategy. If they stick with the partisan approach they are now signaling, the bipartisan big deal is dead.
    • Path 2 today appears to be the White House’s chosen path. I have dramatically increased the probability of this outcome from 10% to 25%. They want to do it, but I am not sure they can do it.
    • Path 3 now becomes their first fallback. I am leaving this at 25%, which should tell you I think path (2) has a fairly high likelihood of failure. It is easy to imagine them trying and failing on path (2), then tacking back to the left and using path (3). Liberals might prefer this, and may therefore dig in to make it harder for path (2) to succeed.
    • Path 4, falling back to a big but incremental bill is still the most likely outcome, but I have decreased its likelihood from 50% to 40%. The President’s team increased their overall chance of success on a big bill by 10% (I think) by signaling a strategy early. Speed is their friend.
    • There is still a 5% chance the wheels come off completely.

    We have now entered a legislative Twilight Zone in which conditions can change on a daily basis. I won’t try to update these projections every day, but will do so occasionally.

    Thanks again for reading, and for those who are leaving so many thoughtful comments.

    (photo credit: teliko82)