Monday, September 14, 2009

"The Dime Standard"

If you have been following the health care reform debate, it likely would be helpful to read this NYT column from last week by David Brooks.

Important graphs:

Obama rested the credibility of his presidency on what you might call the Dime Standard. He was flexible about many things, but not this: “I will not sign a plan that adds one dime to our deficits — either now or in the future. Period.”

This sound bite kills the House health care bill. That bill would add $220 billion (that’s 2.2 trillion dimes) to the deficit over the first 10 years and another $1 trillion (10 trillion dimes) to the deficit over the next 10 years.

There is no way to get from the House bill to deficit neutrality. The president’s speech guarantees that the more moderate Senate Finance Committee bill will be the basis for the negotiations to come.

The Dime Standard also sets off a political cascade. Since the Congressional Budget Office is the universally accepted arbiter in such matters, the Democrats have to produce a bill that the C.B.O. says is deficit-neutral, now and forever. That means there will be a seller’s market for any member of Congress, Republican or Democrat, who has a credible amendment to cut costs. It also means the Democrats will have to scale back coverage and subsidy levels to reach the fiscal targets.

Second, the president accepted the principle of capping the tax exemption on employer-provided health benefits. The specific proposal he embraced is a backdoor and indirect version of the cap. But what’s important here is the movement and the concession on principle. Soon moderates and Republicans will produce amendments to impose a cap directly. These amendments will credibly raise revenue and reduce costs. The administration will now have no principled argument to reject them.

Third, the president accepted the principle of tort reform to reduce the costs of defensive medicine. Once again, the specific proposal Obama mentioned is trivial. The important thing was the concession on principle. There are already amendments being drawn up to create separate malpractice courts and to otherwise reform the insane malpractice system. The president is going to have a hard time rejecting these amendments just because they might reduce campaign donations from tort lawyers to the Democratic National Committee.

Hat-tip: Sully

image above is from here.

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