No More Miracles

| Wed Sep. 9, 2009 9:23 AM PDT

Over at his new digs, Bruce Bartlett offers some belated advice on healthcare reform from the perspective of someone who was deeply involved in the 1986 Tax Reform Act:

Before the tax reform proposal ever went to Congress in 1985, Treasury already knew all the potential problem areas, which provisions were expendable and which ones were not. Consequently, Treasury was able to manage the inevitable trade-offs necessary to get a bill enacted without sacrificing the basic goal.

I would just add from my own experience that the 1986 act was the culmination of a long-term process that began with a lot of discussion on Capitol Hill, at think tanks and elsewhere about ideas such as a flat rate consumption tax, a comprehensive income tax and other options. By the time the Reagan administration sent a formal proposal to Congress the basic idea of tax reform was clear in everyone's minds. Even so, it took a solid year of work to get a final bill.

This sort of process never occurred with health reform. There was never a study from the Department of Health and Human Services laying out the options, discussing the pros and cons of various alternatives, or with the sort of reference data that is essential for developing really big policy changes. In fact, there has never really been a formal White House proposal. This has made it easy for Congress to take control of the whole health reform debate, with Obama often appearing to be a mere bystander.

For a couple of reasons, I'm not sure I buy this.  First, practically everyone seems to agree that the 1986 Tax Reform Act was little short of a miracle: not only did it manage to accomplish significant tax reform, but it did so without caving in to special interests at every turn.  That might be because Treasury was so well prepared, but lots of bills that have been equally well researched beforehand have failed.  More likely it was because of the bullheadedness of Donald Regan, virtuoso lobbying by James Baker, a Congress that genuinely wanted reform on both sides of the aisle, and the fact that the stars just happened to align.  It was sui generis, and I'm not really sure how many lessons we can learn from it.

Second, healthcare reform has been studied to death.  Granted, there isn't a three-volume HHS study sitting around, but few domestic subjects have gotten more attention from both scholars and activists over the past decade, and all the various options and the tradeoffs between them are well known to virtually everyone.  What's more, before this process ever started there were half a dozen actual proposals on the table from actual members of Congress.  There was in no way a dearth of serious, detailed thinking widely available on healthcare reform.

The real problem is that we just don't have the consensus for action that we had with tax reform in the mid-80s.  Roughly speaking, Democrats wanted to close loopholes and Republicans wanted lower top marginal rates, and both were willing fend off the special interests in order to make a deal on those terms.  This time around, there's nothing Republicans want, so there's no deal to be had.  Democrats have no choice but to bull something through on their own, and with Republicans already opposed en masse they can't afford to make too many other enemies.  The result is a mediocre bill that makes some good progress, but does so only by bribing special interests instead of standing up to them.

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