President Obama Should Have Listened to Rahm

Throughout his historic campaign for the White House, his cool and disciplined approach earned him the nickname No Drama Obama.  It is unfortunate that he could not have applied this same image to his signature healthcare campaign.  Instead, President Obama and Speaker Pelosi made something that should have been a very easy bill to pass with significant bipartisan support into a divisive issue that included literally no Republican support and not an insignificant amount of defections from Democrats.  The Press are calling this a victory.  Vice President Biden had his own choice f-bomb description that is now on sale as a t-shirt. From my perspective, the most significant legislation on healthcare reform within the last 45 years did not have to be a situation where Democrats win and Republicans lose.

For example, as a finance guy, to me the overall cost of this bill is not really the main issue.  While a trillion dollars may seem like a lot of money over a ten year period of time, the reality is that the annual cost per person for extending coverage to thirty million uninsured citizens comes to about $3,300 per person (or $63 per week).  That is less than the $3,650 personal exemption allowance for an individual on the 2009 federal tax return.

As reported recently in the New York Times, Speaker Pelosi was caught off guard when Scott Brown, an upstart Republican, won his Senate race in Massachusetts.  Particularly troubling to the White House Chief of Staff, Rahm Emanuel, was the fact that Scott Brown had based his campaign platform directly against the Obama Healthcare initiative.  In response to this evidence from Massachusetts, Rahm Emanuel was advising President Obama to reconsider his healthcare initiative.  Speaker Pelosi scoffed at the idea of a scaled down plan because the President still enjoyed significant majorities in both houses of Congress and there would never be another opportunity to push this legislation forward.  In other words, Speaker Pelosi advised the President that there was no need to seek bipartisan support on a healthcare plan that would impact the lives of every American citizen for decades to come.  Senator Reid adopted the same strategy, managing to lose the one Republican vote (Senator Snowe) that would have withstood a filibuster.

Is this “the Change” that President Obama promised to bring to Washington during his campaign?  It certainly does not reflect what I heard him say in his victory speech in Chicago, when he said “to those Americans whose support I have yet to earn, I may not have won your vote, but I hear your voices.  I need your help, and I will be your president, too.”  The Healthcare bill that President Obama signed this week not only did not include a single Republican vote, it also failed to gain the support of 33 Democrats (14%) representing 25 states.

Let us contrast these results with the vote for Medicare in 1965, when President Lyndon Johnson and the Democrats enjoyed an even larger majority in Congress.  The Democrats held very dominant supermajority advantages of 68% in both the House of Representatives (295 out of 435) and the Senate (68 out of 100).  President Johnson and the Democratic leadership could have passed the Medicare bill (and virtually any other bill they wanted to during this time) with literally no support from the opposite side of the aisle.  But President Johnson did not want his legacy to be tied to purely partisan efforts.  Instead, he convinced 70 Republicans (50%) in the House of Representatives and 17 Republicans (40%) in the Senate to support his landmark legislation.  It is striking to me that 33 Democrats voted against the Obama healthcare bill while 87 Republicans voted in favor of 1965 Medicare bill.  This contrast should be a concern to Democrats in November.

The Democrats and Republicans who voted against this initiative should not feel as though they have missed out on an important opportunity.  Instead, the battle has really just begun.  Contrary to what the pundits like to portray, this battle is not just between so called greedy insurance companies and consumers.  The battle is between freedom of choice and who makes decisions.  There is also an issue of unfunded mandates that are a serious concern to legislators and state officials.  At least a dozen state attorneys general have vowed court challenges, and more than three dozen states are considering health care reform nullification bills.

As the voting public learns more about the details of this convoluted plan over the next six months, it will be the Democrats who will suffer big time in the polls.  For example, few people know that President Obama and Speaker Pelosi – through this budget reconciliation process – have also rammed through major changes in the government’s role in providing student financial aid.  Banks and other private lenders are about to lose $70 billion-a-year student loan business.  What does this have to do with healthcare?  Absolutely nothing.  But when Speaker Pelosi and President Obama saw an opportunity to append the financial aid issue to the healthcare bill that only needed a majority vote to pass, they added it to the companion bill.  Prior to this incident, the student loan legislation was not moving in the Senate because it lacked 60 votes to overcome a filibuster.  Is this another example of “the Change” President Obama promised to bring to Washington?

What have President Obama and Speaker Pelosi gained through their process of excluding Republicans in this milestone legislation?  Will excluding Republicans help President Obama with his other goals pertaining to immigration reform and balancing an out-of-control budget?  Only time will tell, but history suggests that there could be some rough sledding ahead.  As with the case of President Clinton, the backlash of this unilateral process could be a loss of leadership of both the House and the Senate (which happened in 1994).  Many Democrats blame President Clinton and his wife for pushing back the possibility of a national healthcare plan by a decade or two.  Ironically, it was the Republican’s Contract with America that balanced the budget for President Clinton during his entire tenure in office.  So, this just goes to show that a President can accomplish a lot through working with folks on the other side of the aisle.  While President Obama has yet to learn this lesson, he will probably have plenty of opportunity to do so after the November elections.  Maybe at that time President Obama will realize that he should have listened to Rahm.