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Why Should We Lower the Bar on Healthcare Reform But Not Climate Change Policy?

April 22nd, 2009 . by economistmom

Walter Alarkon in The Hill reports how Democrats in Congress are justifying the use of “reconciliation” procedures to support the President’s proposals for health care reform, while opposing it for the President’s climate change (carbon) policy:

…the Democrats have drawn distinctions over the use of the special process for climate change and for healthcare.

Sen. Debbie Stabenow (D-Mich.) noted that the reconciliation option was instituted specifically for programs that deal with federal revenues. Because some healthcare reforms could directly affect funding streams for government programs such as Medicare and Medicaid, she hasn’t ruled out backing the special process for healthcare like she has for climate change.

“Some of the provisions in climate [bills] may not specifically be tied to raising revenue or lowering revenue,” she said.

To the contrary, I think it’s very clear that the climate policy proposed by President Obama–a carbon cap and trade permits policy with 100% of the permits to be auctioned–has very clear revenue implications ($629 billion worth according to CBO).  That a carbon policy would involve a substantial amount of revenue, whether through auctioned permits or an explicit carbon tax, is much clearer than the revenue or cost savings implied by the President’s health care proposal.  The “health reform reserve fund” proposed in the Obama budget included two items:   (i) health cost savings that are highly speculative at this point, and (ii) a revenue increase through a limit on itemized deductions that has already been panned by both sides of the Congressional aisles.

The real reason the Democrats like the idea of reconciliation for health care reform is that reconciliation would make it easier for their policies to pass without the cooperation of the (”obstructionist”) Republicans.  Stan Collender explains:

The most important and obviously controversial part is that reconciliation bills can’t be filibustered because the debate is limited by law. That would mean nothing if there were 60 votes to do what was in one of these bills. But in the current environment when there may not be 60 votes to declare today Tuesday, being able to pass spending and taxing changes with a simple rather than a super majority changes the politics significantly.

This is why reconciliation is such a hot topic this year. The House-passed version of the 2010 budget resolution allows health care reform to be included in a reconciliation bill and, therefore, adopted in the Senate with 51 votes; the Senate-passed budget resolution does not. This critical difference now has to be ironed out in the conference and many believe that passing health care reform this year depends on which set of rules are used…

[H]ealth care reform will have a substantial impact on federal finances and so can’t be said to be unrelated to the budget, which is one of the critical criteria for using reconciliation…

But why don’t such arguments apply to climate change policy as well?  Maybe because the Democrats in Congress aren’t so sure they want to pass climate change policy on their own, with the lower 51-vote bar, precisely because the revenue increase, and the “losers” from that revenue increase, are much more obvious in the case of climate change.  From that Hill article:

Bayh said that reconciliation could be used for healthcare, even if it’s not used for climate change.

A climate change bill, “if not done correctly, could have disproportionate effects on parts of the country,” he said. “But healthcare [reform] would affect most Americans uniformly.”

In other words, health care reform sounds like it will create all winners, because the “loser” part of it (the offsets that make the proposal deficit neutral) are vague and elusive at this point.  Climate change policy has obvious “losers”:  it seems pretty clear that for the policy to work, carbon-intensive energy costs will have to rise (no matter how the politicians may try to finesse/deny this).  In fact, that “losing” quality is so objectionable that the President himself has basically said “never mind” to the “winning” side of the climate change reserve fund, his own Making Work Pay credit.

The burning question in my mind (if you can believe that anyone could have a “burning” question on something as exciting as budget reconciliation procedures):  Is lowering the bar (via reconciliation) for health reform supposed to make it easier for Congress to make the “tough choices” about fiscal sustainability–i.e., to pass the offsetting tax increases which the Republicans indeed may be obstructing?  Or is reconciliation instead being used to more easily pass new and expanded spending programs (which the Republicans may also intend to obstruct) that could actually worsen the fiscal outlook?  Should we make it easier to pass such a major policy that should ideally be done in a bipartisan manner and which could have a major effect on the federal budget–good or bad?

2 Responses to “Why Should We Lower the Bar on Healthcare Reform But Not Climate Change Policy?”

  1. comment number 1 by: Tim

    Why are we discussing any of this when our spending has reached suicidal proportions?

  2. comment number 2 by: Gary

    You’re being very perceptive here. Health care reform (actually, medical insurance reform) doesn’t appear to be a logical fit for the reconciliation process and carbon taxes do. But the Democrats–and politicians in general–rarely practice logic (or ethics).