Econ 115 Lecture 3 Audio: Stagnant Incomes and the Poverty of the Globe, 1800-1870
links for 2009-09-04

Health Care Reform: Memories of 1994

The Week: After President Clinton's 43 percent plurality victory in the presidential election of 1992, I worked as a spear carrier in the U.S. Treasury Department under Secretary Lloyd Bentsen. The plurality view in the Treasury Department throughout 1993 and up through the middle of 1994 regarding the health-care reform situation had six analytical pieces:

(1) There were not even 50 votes available in the U.S. Senate for any health-care reform bill sponsored by President Clinton. It did not matter what the bill included or how good the policy might be, because key Democratic senators placed a higher priority on teaching the hick from Arkansas that he was not their boss; they were determined to vote against it. Thus even though the Democrats had a majority in the Senate, they could not pass Clinton's bill—whatever it was—even if the Republicans did not filibuster it.

(2) There were, on the other hand, 80 votes in the Senate for any health-care reform bill that would be blessed by Republican Senate leader Robert Dole.

(3) Dole was not a cruel or cynical or amoral man, and really did want to make the country a better place.

(4) Dole—with his own long-standing health problems stemming from his World War II injuries—was keenly aware of the importance of health care.

(5) Dole was smart: He understood how the American health-care financing system was broken and how much public good would be achieved by fixing it.

(6) Dole and Bentsen, who had represented Texas in the Senate before becoming Treasury chief, had worked well together throughout the mid- and late-1980s and into the 1990s trying to repair the damage done to America's budget by the supply-siders. (Dole, remember, was the guy who told this joke: "The bad news is that a bus went over the cliff. The good news is that it was loaded with supply-side economists.")

Therefore, we in the Treasury thought that sometime—probably in the second quarter of 1994—Bentsen's personal policy staff would start feeling out Dole's personal policy staff on the issue. Then President Clinton would invite Sen. Dole to a private Oval Office meeting, after which Clinton would tell the cameras that the health-care legislative process had gotten bogged down and that he was seeking Sen. Dole's wise counsel to break the logjam.

Dole would then announce the Dole Compromise. This would provide the nation with desperately needed health-care reform. And it would provide Sen. Dole with a capstone achievement to a senate career that had been too often misspent spinning his wheels and backtracking.

As we all know, that scenario never happened. The Republican congressional delegation believed that President Clinton was in some sense illegitimate—Mr. 43%—having been elected only because Ross Perot hated George H.W. Bush and sabotaged his reelection. It was their business, they thought, to make Clinton's presidency appear a failure. And Sen. Dole, they said, needed to understand that his path to the Republican nomination and the White House lay not in sharing credit with Clinton for health-care reform but instead in advancing the Republican project of making Clinton's presidency appear a failure by blocking every single White House initiative they could.

In the medium run this was a disaster for Robert Dole: He got the Republican nomination in 1996 but no presidential term, no capstone legislative achievement, and a retirement spent keenly and bitterly aware that he had opened the door to a group of Republican barons—Gingrich and company—whom he liked even less than he liked supply-side economists.

And it was a disaster for the Democratic congressional barons, as well: Yes, they proved that the hick from Arkansas did not run Washington. But they all lost their committee chairmanships after the 1994 midterm election and many of those in Republican-leaning states lost their seats. When the president of your party is unpopular, your chances for reelection decline—even if you have spent most of your time blocking his legislative initiatives.

The really interesting question is: What are America's senators now thinking, in the privacy of their vacation retreats or in the pandemonium of "town halls," about this ancient history? I have drawn what I think are appropriate lessons from it. First, Democratic senators do themselves no good either in the next world or in this  when they block sensible initiatives from Democratic presidents. (But what lessons are Democrats Landrieu, Nelson, and Lincoln drawing?) Second, Republican senators do themselves no good either in this world or in the next when they block sensible initiatives from Democratic presidents. (But what lessons are Republicans Grassley, Voinovich, and Hatch drawing?)