Killing Obamacare

BY JAY COST

There’s no time to waste.

The recent government shutdown illustrated a lot of political truths. For starters, people are unhappy when the government is shut down, and they naturally tend to blame the party of less government. The media instinctively help them conclude that the Republicans are at fault.

But the shutdown also illustrated just how unprepared the Republican party is to deal with the threat of Obamacare. Even though the law is unpopular, Republicans failed to convince the country of how great a threat it poses to the public good. Poll after poll shows that only a minority thinks the law will make them worse off, despite growing evidence that Obamacare’s side effects are serious and far-reaching. “Shutdown theater” did nothing to alter that attitude, which reflects poorly on the Tea Party backbenchers who wanted this fight and the leaders who prosecuted it. And now it appears House Republicans intend to deemphasize Obamacare and focus again on cutting traditional spending.

This is a mistake. The fight against Obamacare cannot be pushed to the sidelines. If the shutdown failed to notch any victory against it, then conservative leaders need to rethink their tactics and try something different. The easiest path to victory against the law, at first glance, is to win total control of the government in the 2016 elections. But a closer look at the law, especially in historical context, indicates grave risks associated with that approach: Obamacare may do much damage by that point, and it may be substantially more difficult to undo four years down the road.
Obamacare is, of course, a liberal law, as all agree. But its place within liberalism is a peculiar one, and worth investigating in some detail. When we think about the modern American left, we often think of the provision of benefits, suggested by Franklin Roosevelt’s “Four Freedoms”: freedom of speech, freedom of worship, freedom from want, freedom from fear. It is that third freedom that American liberals have focused on for generations, giving us Social Security, Medicare, aid to education, and so on. Four Freedoms liberalism has been decidedly rights-based. 

But there was an earlier brand of liberalism that did not emphasize the distribution of benefits to the same extent. Theodore Roosevelt and the Bull Moose progressives promoted some rights-based goals, like restrictions on child labor, but these were pieces of a grander puzzle: the management of the entire American economy by technocratic experts for the greater good. This is why the Bull Moosers did not want to outlaw all trusts: They saw the utility of some trusts, and believed that with governmental guidance trusts could be made to work in the public interest. Indeed, many progressives at the turn of the last century spoke of the concept of individual rights as an antiquated notion that unfortunately had been embedded in the Constitution.

As an academic, Woodrow Wilson believed that the Constitution wrongly immortalized principles whose time had gone, and during the 1912 campaign, he nominally opposed TR’s “New Nationalism.” In practice, however, he advanced the Bull Moose vision as much as anybody could have hoped. The legislation creating the Federal Trade Commission, for instance, which was passed under his guidance, granted the new regulatory agency vast discretion. And World War I was a decidedly progressive affair, with the government taking a firm hand over the management of the economy for the war effort.

It was the success of the progressives in World War I that inspired Franklin Roosevelt—Wilson’s assistant secretary of the Navy—to treat the Great Depression as a national emergency akin to the Great War. Accordingly, his administration took a heavy hand in managing both agriculture and industry. The Agricultural Adjustment Act (AAA) restricted agricultural output in the hope of stabilizing farm prices, with remuneration to farmers who followed the rules. The National Industrial Recovery Act (NIRA) offered big business a bargain: The government would suspend the Sherman Antitrust Act, allowing businesses to coordinate through trade associations, so long as they worked with the government to create and abide by socially responsible production goals. This was the pinnacle of Bull Moose progressivism. The government would convene and manage a coalition of economic stakeholders for the public good. If that meant the diminution of traditional rights, so be it.The real danger of Obamacare is that it combines the micromanagement of the AAA and the NIRA with the rights-based approach of Social Security and Medicare. The former doesn’t work in practice, while the latter is politically unassailable. Thus, Obamacare may turn out to be a policy that does enormous harm to the country but that simply cannot be eliminated.

Why should we believe that the federal government is remotely capable of managing something as complicated as American health care? The complexities of the task make a mockery of the very notion of “expertise.” The disastrous rollout of the health insurance website indicates quite clearly the hubris of governmental experts who populate Washington, D.C., these days. Moreover, it is only a matter of time until perverse second-, third-, and fourth-tier effects of this law undermine its goals. Already, there is plenty of evidence that Obamacare, like the AAA and NIRA, invites political interference. Politically connected groups like unions and large businesses have received exemptions that average people simply cannot enjoy. And politics heavily influenced the implementation timeline, which was set to culminate almost at the midpoint between two national elections.

But the NIRA and AAA could be abandoned because at their core they did not extend individual rights, and thus did not create new political clients dependent upon government services. Obamacare does precisely that. It uses First New Deal methods to accomplish a Second New Deal goal. That will complicate efforts to repeal and replace the bill when (not if) it falters. A lot of people will receive federal benefits because of it, and the experience of Social Security, Medicare, and scores of other programs demonstrates that, once in place, they cannot be easily altered.

This is why conservatives—at the grassroots or inside the Beltway—cannot blithely assume they will be able to undo Obamacare. This is not simply a matter of individual freedom or efficiency in the provision of health services, as conservatives so often argue. This is a law that promises to do something the government has never successfully accomplished during peacetime. Even so, it will work for some people, and history shows that a motivated minority who receive direct benefits from Uncle Sam can prevent commonsensical changes to their precious programs, even to the detriment of the public good.

Obamacare, in other words, combines the worst bureaucratic innovations with the best political innovations of the last century. Conservative leaders have never faced a foe quite like this, and must rise to the occasion. So far, they have failed. There is nothing in the movement’s political playbook that comes close to an adequate strategy for opposing this behemoth, and the recent shutdown only confirms that the Republican party’s leadership is unprepared for the challenge they face. They must do better, for this law is more injurious than they know.

This was an abject failure. By the time the Supreme Court invalidated the NIRA, the justices were doing the president a favor. Businesses were cheating on the codes left and right, to the extent that they participated in them at all. The effect of the AAA was more pernicious. It rested above all upon an economic fallacy, that limiting production would help the country recover from the Depression. Beyond that, it brought unprecedented government intrusion into previously private matters. In Wickard v.Filburn (1942), for instance, the government brought suit against Roscoe Filburn for growing wheat for private consumption, and the Supreme Court ruled with the feds. Worst of all, the AAA degenerated into gross payouts to the Southern plantation class, at that point one of the most important Democratic client groups. They used the cash to buy farm machinery and then fire the black sharecroppers who worked on their land. This, in turn, forced a generation-long migration into the cities, and facilitated the urban crisis of the 1960s.

The experience of this First New Deal helped prove a point that economic conservatives know instinctively: Government does a bad job of managing the economy. The experts are not as knowledgeable as they think they are; it is impossible for them to anticipate all of the various ways their interference will affect society, for good and for ill. For instance, who in the Department of Agriculture could have predicted that the AAA would contribute to an urban crisis in Northern cities some 30 years later? Additionally, the idea that experts can be insulated from politics is illusory. When bureaucrats in the Agriculture Department complained about the inequity of AAA subsidies, they learned the hard way that they were not as removed from Democratic politics as they had liked to think. FDR needed the backing of the Southern Democrats who ran the congressional committees, and the price of admission was support for the wealthy plantation class at the expense of the poor. So he had agriculture secretary Henry Wallace sack the bureaucrats who made a stink.

It was the failure of the First New Deal that brought about the rights-oriented Second New Deal, and with it Social Security, the National Labor Relations Act guaranteeing labor unions the right to organize, and eventually the Fair Labor Standards Act providing for a federal minimum wage. Liberalism shifted from attempting to manage the economy directly toward supplying the downtrodden with tools to fight their own battles. This is why the left remembers the New Deal so fondly. It is not for the quasi-fascist “Blue Eagle” campaign of the NIRA or the AAA’s requirement that millions of baby pigs be slaughtered. Those were failed policies that ultimately led to a change of tactics and the eventual triumph of Social Security, labor rights, and a minimum wage. When LBJ sought to complete FDR’s work, he did not go house to house to make sure nobody was growing wheat in the backyard; instead, he created Medicare, federal aid to education, and public television.

On the surface, Obamacare appears to fit into this tradition. That is certainly how the president frames it, proudly trumpeting all of the people who now have access to health care thanks to federal efforts. But dig a little deeper, and it emerges that Obamacare has much in common with the failed efforts of the original New Dealers to organize vast segments of the economy.

For almost 80 years, the federal government has been in the rights-producing business, especially as regards health care. The elderly, the indigent, low-income children, and veterans have all been brought under the federal umbrella. The people still on the outside looking in are primarily those who refuse to buy insurance or those for whom the economics of insurance cannot account. Insurance is a bet between insured and insurer made amidst uncertainty about when and whether calamity will strike. People with preexisting conditions cannot qualify for insurance for the same reason that a person whose house is burning down cannot get homeowners’ insurance: The calamity is not in doubt.

Rather than provide the uninsurable with separate access to health care—such as veterans enjoy, for instance—Obamacare seeks to fit this square peg into a round hole. People who cannot logically be incorporated into the economics of insurance are nevertheless forced into it. In requiring this, Obamacare behaves in effect much like the AAA or the NIRA. To make these people eligible for insurance, the federal government must manage the intimate details of the health insurance industry, and by extension all of American health care. Dollar for dollar, this has meant a heavier hand than ever envisioned by the New Dealers in the early 1930s.