UPDATE: A correspondent who used to work in the Bush EOP writes:
Regarding your comments today about Bush's new health plan being a bluff, I completely disagree -- this is something that has been in the works for a long time and has widespread support internally.
The proposal has many limitations, but the White House is very serious about wanting to replace the exclusion with this new standard deduction for health insurance, despite the fact that it could be characterized as a tax increase. The motivation is due to the efficiency properties of the proposal, which people internally believe could help slow the long-run growth rate of health care expenditures (though health economists are highly uncertain about magnitudes of such long-term effects).
The proposal is being mis-cast by many as being a bad way to reduce current uninsurance, but that is not the primary motivation of this policy; any short-run reduction in uninsurance would be welcomed, but the real uninsurance benefit would come over the long-run if health care cost growth really were to be slowed.
I'm sure the substantive policy people developing this don't regard it as a bluff, but instead as the furthest they can push Bush toward reality. But there are other factions within the administration.
For example, Treasury Secretary Paulson doesn't regard his negotiations about Social Security reform as a bluff. Inside the White House, Richard Cheney is doing everything he can to turn them into a bluff.
I think he gets it almost right:
Steven Pearlstein - Bipartisan Cooperation on Health Care Is Dead on Arrival - washingtonpost.com: When it comes to domestic economic policy, Bush the Wounded President is much to be preferred over Bush the Decider. After six years of stubborn inflexibility, President Bush signaled last night in his State of the Union address that he is ready to come to the negotiating table on a range of domestic issues, holding some new and credible ideas that are consistent with his conservative philosophy but open to ideas that aren't.
[I]t is possible it could be a bluff, a desperate and hollow attempt by an unpopular president to demonstrate that he's still relevant to the policy process. But whether it is or not, the right response for Democrats is to call that bluff, treating it as the jumping-off point for a much-delayed dialogue on domestic policy and seeing how his proposals can be transformed into something better....
The president's health plan would, in fact, put a cap on a $200 billion-a-year tax break that now goes disproportionately to those with the most generous and costly employer-provided health insurance plans. It would redirect a small portion of that break to those who have less generous coverage or those who have to buy their own insurance.... Now is this the magic bullet that will solve the health-care crisis? Of course not. Would any real solution also require finding billions of dollars more to subsidize the purchase of health insurance by low-income workers and getting states to reform dysfunctional markets for individual and small group insurance? No doubt about it....
But anyone seriously interested in health reform would welcome the president's proposal as a basis for negotiations, raising public expectations and increasing pressure on the president to embrace more comprehensive reform...
Where I disagree with Steve is that I believe it is overwhelmingly likely that this is, in fact, a bluff. And it is not clear to me why anybody should be in the business of welcoming things that are not "real solutions."
We should certainly welcome real solutions. But otherwise it seems to me that we are still in the standard Bush administration game of Dingbut Kabuki. The administration has made no effort to convince us that this will do more good in terms of redistributing income and increasing access to health insurance than it will do harm in magnifying adverse selection problems.