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WHAT HAS KENT CONRAD DONE?
There are two things that will not be in Senate Budget Chair Kent Conrad's budget draft: Actual money for health care and the instructions that could activate the reconciliation process. Another way of saying that is that Kent Conrad has deleted all of the specifics from the health reform portion of the budget. So why are reformers so happy?
Take the $634 billion reserve fund that was supposed to partially pay for health reform. In Conrad's budget, which is to say the Senate's first draft of a budget, there will be no $634 billion reserve fund for health reform. But there will be space for a health reform reserve fund. Conrad deleted the President's specific revenue streams, cost-cutting proposals, and ending number. He says that health reform must be fully paid for in the budget. That means that rather than $634 billion, Congress will need, as they always would eventually, to find the whole of the estimated trillion or so needed to pay for health reform over 10 years.
Oh, right. The 10 years thing. Conrad offered a huge concession to reformers. He's pulling the budget's spending window back to a five-year perspective. That hides the size of the 10-year budget. But he's allowing health care to be scored under an 10-year time frame so that initial investments in system reform have time to pay themselves off. The system, in other words, doesn't have to be deficit neutral over five years, which will see bulk of the upfront investments, but over 10, when those investments should begin paying their dividends. To give you an idea of how important this is, Max Baucus's immediate response was “I’m very happy that health care reform does not have to be paid for in the first five years. We could not do meaningful healthcare reform [otherwise].”
The next question is why Conrad deleted the President's specific revenue streams. The $300 billion that came from limiting itemized deductions for the rich, for instance, is gone. As is the proposal to squeeze Medicare's overpayments to private insurers. Some argue that that's actually a good thing: Watching the itemized deduction proposal get batted around in recent weeks was an important lesson. You can't let pieces of the bill -- particularly the hard financing pieces -- stand alone. It's easier to oppose a tax hike than universal health care. It has to be built, and then argued, in its totality.
On the other hand, the Senate must now find north of $1 trillion for health reform over 10 years rather than $500 billion or so. That's a heavier lift.
Lastly, Conrad's decision not to include reconciliation is both less meaningful and more politically savvy than it might initially seem. The key here is that the House budget will include reconciliation. And the two budgets must merge in conference committee. The Senate can still import reconciliation instructions from the House budget at a later date. What Conrad has just done, in other words, is undercut the Senate Republicans' ability to justify non-cooperation on grounds of reconciliation. Senate Democrats can now claim, credibly, that they are not considering the reconciliation process. Which means the balls is back in the Senate Republicans' court: They now have their opportunity to prove that this can be a constructive process conducted through the normal procedures of the Senate. If that proves impossible, Senate Democrats can sigh deeply and gravely lament the obstruction of their colleagues and return to reconciliation after conference committee.
Related: Jon Cohn has more. And don't you feel like reading a longer explication of the reconciliation process?
COMMENTS (5)
This feels like lipstick on a pig.
Conrad is saying that health care reform via reconciliation should not happen. That raises the bar to do it in the future. His own words, as will others, can be used against them, giving Republicans good ammunition against this process being used down the road. Its possible that this is all part of the strategy, but I think occam's razor applies-- reconciliation is not something that moderate Democrats are willing to use for health care. Until we see otherwise, these super-double-top-secret political strategies aren't really that meaningful.
More importantly, he's also making it very clear that health care needs to be deficit neutral. If you actually spend time with the CBO scorecards of options, you'll see that there are very few savings within the ten year timeframe. Less than $100 billion in total. Which is correct, by the way (thankfully these guys don't get swooned by the happy talk). This all means that, while Obama can talk a good game on health IT, prevention and biosimilars, unless the numbers change magically, the bean counters (read CBO) know that the cost-savings won't be there in ten years. Which means that you're looking at $1 trillion in new revenues or true (read painful) cost cuts that aren't currently on the table. That's a very big deal.
Posted by: wisewon | March 25, 2009 10:41 AM
In re: reconciliation and conference ... if you can get to conference, it's sort of moot; a conference report cannot be amended (though the Senate or House can vote to return to conference, that Never Happens--the last time it did was I think the Clinton Crime Bill), so if the GOP filibusters the conference report they will shut down the government
Posted by: Nicholas Beaudrot | March 25, 2009 10:52 AM
I think (surprise!) that wisewon is right on both points, but that doesn't necessariy make me feel negative on Cnrad: I think Conrad's moderation is a welcome development, somebody who knows the budget numbers actually asking us to ry, on some level, to face our debt crisis and realize how it affects our ability to do major projects. Health care reform shouldn't, I think, be in "reconciliation" because it's a major change, with major implications and deserves to be treated as a normal, major piece of legislation, not a back door surprise. And yes, what it will cost and how we pay for it needs to be planned and though through, even over 10 years... and if we can't find some improvements in cost savings in ten years... I'd say we're looking at the wrong plan.
Look, our debt crisis and economic problems are serious. he Obama budget, as interesting as it was, and full of admirable ideas we should all strive to reach, may just be trying to do too much at a moment when we need to face facts - about deficits, about our spending, and about the need to try harder to live within limits. That Kent Conrad - hardly anyone's idea of a radical, or especially daring politician - feels the need to step in and speak up about the budget's problems strikes me as a measure of just how serious a moment we have... and that he's taking it seriously - actually working through his own budget, as opposed to the GOP, which can't figure out any coherent alternative - also seems like a welcome development. There's a workable compromise somewhere in here, I have to believe... and even a chance to make progress on healthcare (where personally, I'd be more impressed if someone got serious about reforming Medicare and Medicaid, as a way to seriously deal with the cost issues). It may not be the sweeping change progressives want... and that's a question fo what we can live with. Bu overall... I'm not as down on these developments as some appear to be. I think this is government actually doing the work. And isn't that what we said we wanted? Government that actually works?
Posted by: weboy | March 25, 2009 11:10 AM
Hmm, well you're the only one I've seen reading it this way. I'm not saying you're wrong - certainly everything you've said is not outside the bounds of reason. I'm just saying your way of looking at it requires one to take a great deal on faith that the Senate Dems will 'do the right thing in the end'.
I'm not sure I feel as positive about that as you. :)
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