I will highlight a few policy elements of the President’s new proposal, then turn to tactical analysis.
Major changes in the President’s proposal
- Like the Senate bill, the President’s proposal would raise taxes on wages by 0.9 percentage points for individuals with incomes > $200K and families with incomes > $250K. In addition, the President’s new proposal would impose a 2.9 percent tax “on income from interest, dividends, annuities, royalties, and rents” for those with income above $200K (individuals) and $250K (families). Flowthrough income from ownership in a small business or partnership would not be subject to this tax.
- The President’s proposal delays the taxes on pharmaceutical and health insurance companies. It appears (but we can’t be certain) that they intend to raise the same amount of revenue from these industries, meaning that the per-year tax would go up.
- The “Cadillac tax” has been delayed to begin in 2018 and the threshholds would be $27K for families (as opposed to $23K in the Senate bill). The Senate-passed levels were so high as to be absurd – they would apply to almost no one. This exacerbates that problem. No word on whether union plans are still exempt.
- The President would create a new federal Health Insurance Rate Authority ”to provide needed oversight at the Federal level and help States determine how rate review will be enforced and monitor insurance market behavior.” Health plans would therefore be subject to state and federal rate regulation. I presume this is a reaction to the recent California/Anthem premium hike story.
Strategy and tactics
Far more interesting than the substance of the new proposal (which is excruciatingly detailed) is trying to understand what Team Obama is trying to do with it.
Speaker Pelosi released a statement that she “look[s] forward to reviewing it with House Members.” I can’t find anything from Senate Majority Leader Reid yet.
POLITICO reports that White House communications director Dan Pfeiffer said:
We view this as the opening bid for the health meeting. … We took our best shot at bridging the differences. We think this makes some strong steps to improving the final product. Our hope is Republicans will come together around their plan and post it online.
Q: Whose opening bid? The President’s? Or Democrats’?
I struggle to understand how the President’s new proposal is relevant to any serious attempts at legislating if he cannot deliver either House or Senate Democrats in support of it. Maybe this is the first part of a well-coordinated strategy in which Pelosi and Reid press their own members to line up behind the President’s proposal. Or they could just be winging it again.
One week ago I wrote about four possibilities for what the President might be trying to accomplish with the Blair House meeting:
- If he thinks a Democrat-only deal is possible, then they’ll need to use reconciliation to pass a bill. The meeting is to set up that hardball legislative process by demonstrating that Republicans are uncooperative.
- If he thinks no Democrat-only bill is possible, then he may be looking to set up Republicans as the fall guy for his exit strategy.
- He may want to begin negotiations with Congressional Republicans.
- He doesn’t have a game plan.
Speaker Pelosi’s comment suggests that (1) does not yet apply. If you’re about to coordinate with House and Senate Democrats and ram through a compromise using reconciliation, you need to have a unified proposal. The point of the Blair House meeting would be to highlight obstructionist Republican behavior and justify hardball procedural tactics. If Democrats aren’t unified behind the President’s substance, then Republican opposition is once again irrelevant.
House and Senate Democratic leaders have been signaling to their friends to get ready for a big partisan reconciliation push. Doing so requires substantive agreement, at least between Pelosi and Reid. That substantive agreement clearly does not yet exist.
Somebody in the Administration put a lot of work into this proposal. It is extremely detailed, and it reads like a best effort to find a fair middle ground between two warring legislative bodies. All that substantive work is subsumed by the apparent lack of strategic coordination and substantive agreement with Members of his own party. The President’s staff appear to be trying to set up the Blair House meeting as a partisan debate, but Democrats are not yet unified. Maybe the pressure of the Blair House meeting will bring Democrats together on substance?
I will believe that a reconciliation push is going to happen only when (a) Pelosi and Reid both definitively say that it will, (b) they announce agreement on a substantive proposal, and (c) a House floor vote has been scheduled. Until then it’s just bluster. For now I continue to believe there’s a 90% chance of no law.
This strengthens my argument from last week that this Thursday Congressional Republicans should show up, propose ideas of their own, and respectfully critique the various plans. Republicans should come with their own reform ideas but should not feel obliged to unite behind a single Republican proposal. They should also ask Speaker Pelosi and Leader Reid if each supports the President’s proposal as a legislative compromise. If Team Obama wants to highlight the partisan differences and Republican obstruction, then the Republicans should want to highlight their positive reform ideas, their problems with the Democratic proposals, and ongoing Democratic disunity.
Blame-shifting exit strategies?
It is possible that we are witnessing uncoordinated Democratic leaders each pursuing their own exit strategy in anticipation of legislative failure:
- The President proposes a “compromise” and blames Republicans for being unreasonable and unconstructive. Legislative failure is the Republicans’ fault, not the President’s.
- Speaker Pelosi continues to press for a two bill strategy in which the House and Senate will pass a new reconciliation bill. If the Senate cannot or will not do so, legislative failure is the Senate’s fault, not the House’s or Speaker Pelosi’s.
- Supported by outside liberals, Leader Reid points out that the House could just take up and pass the Senate-passed bill. Legislative failure is therefore not his fault or the Senate’s.
Each of these strategies is consistent with telling your allies that you’re continuing to push forward, right up until the moment you give up and blame someone else. Of these hypothetical blame-shifting rationalizations, the President’s would be the weakest. It is common knowledge that Republicans have no procedural authority to block either Speaker Pelosi’s two bill strategy, nor to prevent the House from taking up and passing the Senate-passed bill.
Maybe they’re almost ready for a big partisan legislative push using reconciliation, leading to a triumphant partisan signing ceremony at the White House. Maybe the “Never give up, never surrender!“ comments from the President and Speaker Pelosi over the past month are preparation for a stunning legislative victory.
I’m still in the maybe not camp.