WaPo: 4 Pinocchios for Obama claim on debt-ceiling negotiations

For those who objected to a recent decision by Glenn Kessler to forgo assignment of Pinocchios to President Obama for his “I didn’t set the red line” statement on Syria, perhaps the latest fact check from the Washington Post will assuage that indignation.  Kessler rips Obama’s claim that attaching non-budgetary items to a debt-ceiling increase was somehow unprecedented, and amounted to an attempt “to extort a president.” Au contraire, Kessler writes:


In 1973, when Richard Nixon was president, Democrats in the Senate, including Sen. Edward Kennedy (D-Mass.) and Sen. Walter Mondale (D-Minn.), sought to attach a campaign finance reform bill to the debt ceiling after the Watergate-era revelations about Nixon’s fundraising during the 1972 election. Their efforts were defeated by a filibuster, but it took days of debate and the lawmakers were criticized by commentators (and fellow lawmakers) for using “shotgun” tactics to try to hitch their pet cause to emergency must-pass legislation.

President Obama said that GOP lawmakers now are trying to “extort” repeal of the health care law via the debt limit, but that’s also what Democrats wanted to do with President Nixon, who opposed the campaign-finance reforms.

Indeed, Linda K. Kowalcky and Lance T. LeLoup wrote in a comprehensive 1993 studyof the politics of the debt limit, for Public Administration Review,  that “during this period, the genesis of a pattern developed that would eventually become full blown in the mid-1970s and 1980s: the use of the debt ceiling vote as a vehicle for other legislative matters.”

Previously, they noted, the debt limit bill had been linked to the mechanics of debt management, but now anything was fair game. Major changes in Social Security were attached to the debt bill; another controversial amendment sought to end the bombing in Cambodia. Kowalcky and LeLoup list 25 nongermane amendments that were attached to debt-limit bills between 1978 and 1987, including allowing voluntary school prayer, banning busing to achieve integration and proposing a nuclear freeze.


Kessler even offered the White House a chance to comment on the actual history of debt-ceiling battles.  They took a pass, perhaps too embarrassed to comment.  Kessler assigned Obama four Pinocchios, advising him and the White House to “never say never,” at least not without doing some cursory research first.

Furthermore, the fight over ObamaCare most certainly has some relation to both the budget and the debt.  The ACA was barely deficit-neutral for only the first decade of its run under the rosiest of assumptions, and only because it had a three-year head start on tax collections.  With the jobs market shifting to part-time work to avoid the employer mandate and companies dumping their health insurance coverage, the outflow of subsidies will likely outstrip those initial projections and tilt ObamaCare into the red much sooner.

Some of the private-sector shifts should alert policymakers to a better path of reform.  Plenty of people ripped Walgreens for hypocrisy by bailing out of direct coverage for its 160,000 employees at the same time that they’re selling ObamaCare to the public as a partner of the Obama administration.  However, their solution is familiar — and perhaps a good step to real reform, as I argue in my column today at The Fiscal Times:


Ironically, the private exchange concept has been proposed before. It most closely resembles Rep. Paul Ryan’s proposed Medicare reform from 2011-2, and has the same purpose: to limit the liability of the third-party payer.  With Medicare, the principle was to limit both the control of government over private health-care choices and the cost of funding them to the government.

Ryan proposed issuing annual subsidies (called “vouchers” by the media) for Medicare recipients to use in a federal exchange to buy approved levels of coverage from private insurers. Ryan argued that this would limit the growth of federal health-care costs in a very predictable and non-interventionist manner, as opposed to the Independent Payment Advisory Board and its “death panel”-like power.

Both Ryan’s rejected reform and the private exchanges have their benefit to consumers, however.  First, both expand choices to the end user; retirees had a lot more options than just government-run insurance, and now employees will get more than just one or two options at open enrollment, with twenty-five plans available in the Aon exchange.

Second, the exchanges should allow employees to keep their plans even if they leave their current employer. That option already exists through COBRA, but that is limited to only one year, as the law requires the employer to manage the plan. This arrangement makes the consumer the customer of the exchanges from the very beginning.  A termination would only impact the subsidy, which the consumer/employee could negotiate as part of his compensation package with his next employer.

In short, this model provides complete portability if handled properly, a goal cited by many reformers but never delivered.  Even more importantly, this provides a step in the right direction for true reform, which is to restore price signals on health care back to the consumer through the elimination of third-party payers and middlemen.


The problem in the ObamaCare environment is the lack of choice and innovation in the exchanges. They will have 25 flavors of one-size-fits-all comprehensive coverage when most working-age Americans don’t need it.  Removing the employer buffer to pricing signals on insurance would be a good first step (and one that ObamaCare pointedly doesn’t take), but we also need better pricing signals and competition from providers.  ObamaCare goes in the exact opposite direction, forcing everyone into government-controlled exchanges to pay for coverage they don’t need in order to subsidize care for others, removing all but the most illusory choices, reinforcing price-signal obstacles and blocking innovation.

Finally, John Boehner’s office has a new video poking fun at Obama’s refusal to negotiate with Republicans on a debt ceiling, but his willingness to negotiate elsewhere. Enjoy.

Update: I took “extort” out of the headline, because that wasn’t the focus of the fact check.

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David Strom 5:20 PM | April 15, 2024