No, Healthcare Reform Was Not a Mistake

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.

Ezra Klein takes on the conventional wisdom that President Obama made a mistake by spending so much time on healthcare reform in 2009 instead of “focusing on the economy.” Exhibit A is the calendar:

The stimulus bill passed in February 2009. Most of its spending was scheduled for 2010 and 2011. Health care reform passed in March 2010. That is to say, the bulk of the health care debate took place in 2009 — before the stimulus had really begun its work. If Obama hadn’t done health care, he would have needed to be doing something else between February 2009 and March 2010. Some people seem to think that “something else” could have been passing more stimulus bills. I find it very hard to believe that Congress would have greenlighted further stimulus before the $800 billion stimulus bill they’d just passed began spending out.

The smart version of this criticism has always focused on October 2009, when Democrats had a filibuster-proof majority in the Senate and there were some early warning signs that the economy might be faltering. But Ezra is right. Take a look at the chart on the right, which shows new employment figures through October 2009. It shows steady improvement. At the moment in time when Obama supposedly should have been pressing for more stimulus, our primary sign of economic health was looking pretty good. And it would continue to look pretty good for the next six months. It wasn’t until the second half of 2010 that employment growth started to falter.

So what are the odds that Congress would have passed a second stimulus in the fall of 2009? About zero, I’d say. Using reconciliation, which would have allowed a stimulus bill to pass the Senate with 50 votes, was off the table because the Senate had previously decided to approve budget reconciliation instructions that included only healthcare and education. This means that a new stimulus bill would have required every single Democratic vote to pass, and that just wasn’t in the cards. The awkward truth is that Obama simply didn’t lose anything by spending time on healthcare during the summer and fall of 2009.

A better criticism is a simpler one: the original stimulus was too small. But even here, the problem is raw numbers. Obama needed a couple of Republican votes to win passage in the Senate, and one of those votes, Olympia Snowe, had already demanded reductions in return for her support. There was no feasible way to pass a bigger package.

But is there an even better criticism to be made? I think there is. Although Obama didn’t have the leverage to get more stimulus spending even if he’d wanted it, he could have done more on the housing front. A full-court press on cramdown would have been a good start, and serious pressure on Fannie Mae and Freddie Mac to support principal reductions would have made a difference too. This, I think, is easily the biggest mistake the Obama administration made during 2009. Focusing some serious attention on debt overhang, especially in the key areas of California and Florida, was quite feasible and would probably have made a noticeable difference in keeping the recovery on a stronger track.

But even here, this was a plain and simple mistake, not something that slipped through the cracks because they were spending too much time on healthcare. Tim Geithner just didn’t like the idea of pressing harder on the mortgage relief front, and Obama went along. Healthcare reform had nothing to do with it.

DONALD TRUMP & DEMOCRACY

Mother Jones was founded to do journalism differently. We stand for justice and democracy. We reject false equivalence. We go after stories others don’t. We’re a nonprofit newsroom, because the kind of truth-telling investigations we do doesn’t happen under corporate ownership.

And we need your support like never before, to fight back against the existential threats American democracy faces. Fundraising for nonprofit media is always a challenge, and we need all hands on deck right now. We have no cushion; we leave it all on the field.

It’s reader support that enables Mother Jones to report the facts that are too difficult, expensive, or inconvenient for other news outlets to uncover. Please help with a donation today if you can—even a few bucks will make a real difference. A monthly gift would be incredible.

payment methods

DONALD TRUMP & DEMOCRACY

Mother Jones was founded to do journalism differently. We stand for justice and democracy. We reject false equivalence. We go after stories others don’t. We’re a nonprofit newsroom, because the kind of truth-telling investigations we do doesn’t happen under corporate ownership.

And we need your support like never before, to fight back against the existential threats American democracy faces. Fundraising for nonprofit media is always a challenge, and we need all hands on deck right now. We have no cushion; we leave it all on the field.

It’s reader support that enables Mother Jones to report the facts that are too difficult, expensive, or inconvenient for other news outlets to uncover. Please help with a donation today if you can—even a few bucks will make a real difference. A monthly gift would be incredible.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate