The Big Distraction: Yes, Obamacare Diverted Obama from Helping the Economy
Mitt Romney is accusing President Obama of having put his legacy—in the form of healthcare reform—ahead of the economy back in 2009, saying the president ”knowingly slowed down the recovery in this country… in order to put in place Obamacare.”
Part of Romney’s evidence is the book The Escape Artists by Noam Scheiber. Indeed, Scheiber covers the push for healthcare reform in a chapter he titles “The Big Diversion.”
And here are some damning tidbits from that chapter:
… a sustained-but-honest campaign by the White House [in 2009] might have laid the groundwork for another substantial round of job-related spending. But that proved impossible. The administration by then had its hands full with something else—something that would rival even the dreaded stimulus for the scorn it inspired in voters. No administration official, not least the president, ever decided that healthcare reform would take precedence over the economy.
But healthcare reform did take precedence, as Scheiber makes crystal clear. More:
“We were going to be done, under the plan, by the summer doing healthcare and energy,” said a White House aide. “Then we’d return to the economy in the fall … [with] discrete proposals … to help the economy and jobs.”
But healthcare ended up nudging these new proposals out. And more:
Like Biden, [Christina] Romer worried that [healthcare] would distract from the economy.
And more:
Obama told his aides that if he didn’t reform healthcare, another generation would pass before a president tried again. Even waiting a year or two was out of the question. “The president’s view was, yes, we had to deal with the economic emergency at hand,” said a White House aide. “But if we didn’t move on healthcare in the first few years, we’d probably never be able to get it done.”
And more:
Beginning the week of Labor Day [2009], the White House embarked on the counteroffensive it had always intended to avoid [on healthcare reform], beginning with a presidential speech before a joint session of Congress. The new push clearly saved reform … but having bumped the economy off the agenda for the summer, healthcare would now repeat the feat in the fall.
And one more:
Before the fateful meetings in August [2009], one frantic senator went to see Obama in the Oval Office to make a final plea to set aside healthcare, a move he’d urged since the transition. For forty-five minutes, the two men debated with rising emotion on both sides. “Had I been elected president last fall, at the end of my first year in office, I would have wanted people to know one thing about me: that I had spent the entire year working to find a way to put people back on the payrolls,” the senator said. “What they’re going to know about you is that healthcare is the most important issue.”
The president responded that he had a once-in-a-lifetime opportunity to bring about transformational change and that he intended to seize it. Besides, he added, “I campaigned on health reform.”
“Yes, you did,” said the senator. “And in October the month before the election, the bottom fell out. And you’re standing in a hole trying to reach just as high, and it’s just not possible.”
Oh, and here is Scheiber commenting on Romney’s charge:
I argue that Obama really was more focused on long-term, historically significant accomplishments than marginal, near-term differences in the pace of the recovery. On some level, Obama was prepared to accept (and I’m making up these numbers for argument’s sake) three years of painfully high unemployment with health care reform rather than 30 months of painfully high unemployment without it. And the reason is the one Summers alluded to (before disputing): Health care was simply more historically important than avoiding those extra six months of pain.
Gee, how could Romney ever conclude from Scheiber’s book that maybe, just maybe, Obamacare was a big distraction from doing more to boost the economy? What a leap of logic—not.
Now, Ezra Klein leaps to Obama’s defense by making several points:
1. Having just passed an $800 billion stimulus plan in February, Congress was not going to pass another one before the bulk of the spending from the first one had kicked in.
2. The economy looked like it was healing right on schedule until the 2010 swoon, by which time Obamacare had already passed.
3. Healthcare reform is super, super important.
I would counter as follows:
1. Yes, Obamacare was such an emergency that many of its major provisions don’t kick in until 2014. Indeed, data from the Center for Medicare and Medicaid Services show that the annual increases in national healthcare spending has been declining for a decade, from more than 9% in 2002 to just 3.9% in 2010. And last time I checked, out-of-control healthcare spending over the longer term still threatens to bankrupt the economy, as the CBO noted earlier this week.
2. Whatever the short-term state of the economy in the summer and fall of 2009, it was certainly clear at that point that the economy had been malfunctioning for years and needed fundamental, pro-growth reform. Obama could have followed his stimulus plan with long-term, pro-growth measures—including tax and regulatory reform—that would have boosted the economy after the stimulus spending abated. And in the near term, greater investor and business confidence would provided a more immediate lift.
But nope, instead we got Obamacare, like it or not, constitutional or not.
The Big Diversion was the Big Distraction.
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Comments:
Jun '10
Re: The Big Distraction: Yes, Obamacare Diverted Obama from Helping the Economy
I don't think Obama was afraid of the economic problems becoming even bigger. Bigger problem, bigger solution. He expected a slow natural recovery, so he just had to get his patented "big solution" in place before any recovery happened that he couldn't take credit for.
Jun '10
Re: The Big Distraction: Yes, Obamacare Diverted Obama from Helping the Economy
I think it was Larry Kudlow who recently said (right after the recent disastrous jobs report) that the administration may now be praying that the Court will declare Obamacare unconstitutional so that (1) the administration won't now take the political hit for the larger deficits that it will have as a result of Obamacare (thus saving the administration from itself) and (2) allow Obama to try to run against the Supreme Court instead of defending its dismal economic performance.
This makes sense, but I'm not certain the first proposition is true given the ideological inflexibility of Obama. I also don't believe the second proposition will work: Obamacare is unpopular and while Obama may try to run and hide from the economy, he won't succeed.
There is no doubt that Obamacare has been a political disaster for Obama, and likewise a huge distraction to the country.
Jul '11
Re: The Big Distraction: Yes, Obamacare Diverted Obama from Helping the Economy
Rahm Emmanuel was not happy with Obama's decision to pursue health care.
May '10
Re: The Big Distraction: Yes, Obamacare Diverted Obama from Helping the Economy
Stop dealing in facts. Only emotions are important...and good intentions.
/liberalism
Mar '12
Re: The Big Distraction: Yes, Obamacare Diverted Obama from Helping the Economy
It might be that Obama assumed that the economy as simply in a cyclical downturn, and that nothing he did could change that. That would explain why he didn't really care about the content of the stimulus, or that much of it wasn't "shovel ready" in any true sense of the term. On the other hand, it did allow state and local governments to keep their payrolls up while tax collections declined.
Similarly, if he assumed that the economy would simply bounce back naturally, there was no reason for him not to go for health care. And it might be that some economists agreed. Hence the famous chart saying that unemployment would not go much above 8%.
But this was not a regular cycle. This was a finacial crisis, and it might also be a crisis of the welfare state.
And it's also the case that Obama seems to have little understanding of the impact of regulations and uncertainty have on economic growth.
Oct '10
Re: The Big Distraction: Yes, Obamacare Diverted Obama from Helping the Economy
My only comment is that it was more than a distraction, it was that it made the recovery more difficult.And It was not so much that it distracted Obama (when it comes to Obama, distraction is good-I am happiest when he is on the golf course), it was that it was a distraction to those trying to plan, hire, invest, etc.
Sep '10
Re: The Big Distraction: Yes, Obamacare Diverted Obama from Helping the Economy
Todd hit the nail on the head. If ObamaCare was a distraction, it was a distraction from doing active harm.
Obama has not the slightest idea of how to improve the economy, and I'm not sure he has any deep conviction that improving the economy is actually a good thing. Distraction is better than destructive tinkering.
Jul '10
Re: The Big Distraction: Yes, Obamacare Diverted Obama from Helping the Economy
Ocare was much more than a distraction from doing active harm. Wait until the taxes and huge bureaucracies associated with it kick in, not to mention a lowered quality of health care for everyone. This is exactly what the New Party had in mind (Re Stanley Kurtz) - to have a gov't takeover of as much of the pirvate sector as possible.
Jul '11
Re: The Big Distraction: Yes, Obamacare Diverted Obama from Helping the Economy
Barry knew he had a two-year window to ram BarryCare through - he couldn't have predicted the specifics of the Tea Party, but there would be backlash, and a lot of it. So, solution offered: Ram it through. Delay taxpayer impacts until after the next election. Campaign like hell in Year 3 and 4, creating excuses for lack of economic growth, and touting tough-guy achievements. Hope to God that no one pays attention to the whiplash-like about-faces performed in his tough guy role. Hope to God that the unemployed don't vote. Hope to God that the half of the country that actually pays taxes doesn't come out in force in November.
If health care is a right, is Barry denying us our rights by delaying implementation? If the stimulus was absolutely needed to help Democrat constituencies, er, "fix" the economy in the short run, why did it take over 2 years for that money to be lavished upon the proletariat?
Barry's house of moron cards can and should be blown over in a stiff breeze. This level of stupidity is something that only the ocean levels receding can cure. Or something.
May '10
Re: The Big Distraction: Yes, Obamacare Diverted Obama from Helping the Economy
I do not think it was diversion or a distraction. Increasing society's and the economy's dependence on Govt. was exactly in line with his objectives(I believe). As such, a rapid improvement of the economy, or even an increasing belief that this was in the works, would have been counter productive. Policies to greatly spur economic growth would, by their very nature, make people and the economy less dependent on Govt.
I can't think of anything that has credibly been said by the administration, or any major action, that does not support my position.
May '10
Re: The Big Distraction: Yes, Obamacare Diverted Obama from Helping the Economy
The economy is subject to headwinds? Maybe, but how much of that wind comes from fans that Obama installed, plugged-in, and turned on himself?