Kevin Drum

Ezra Klein surveys the political landscape behind healthcare reform and concludes that big business doesn't really have that much power after all:

This year, the Obama administration succeeded at neutralizing every single industry. Pharma supports the bill. Insurers are incoherent on it, but there's not a ferocious and united campaign to kill the proposal. The American Medical Association has endorsed the Senate bill. The hospitals have endorsed the bill....[But] it's been almost meaningless when it's come to Republican support. For all that liberals think the GOP is owned by insurers and pharmaceutical companies, this battle has been proof positive that they are owned by their base and they represent industry only when convenient. Imagine the concessions Pharma or the hospitals could have gotten by bringing three Republican senators onto the bill. They could've written the thing. But no such luck. Partisan incentives proved far stronger than industry interests.

Matt Yglesias takes the opposite lesson from the events of the past year:

What happened in the health care debate is that interest groups were able to get their way on most key points without needing to seriously attempt to deliver votes in exchange. The AMA is supporting the bill, but it’s not running ads against opponents. Pharmaceutical companies and insurers haven’t dropped out of the ferociously anti-reform Chamber of Commerce. No interest group that I’m aware of is cutting off the flow of funds to Chuck Grassley to punish him for his role in sabotaging health reform. Nobody is hitting Olympia Snowe for her bait-and-switch. I haven’t read a single story about a single Republican being “in trouble” with supporters for his or her opposition to reform.

I think I'd interpret this a bit differently. Obama had three basic choices when it came to dealing with the big industry groups:

1. 1993 Redux: Push for the best possible bill and plan on a knock-down-drag-out fight with every interest group out there.
2. Total Cave-In: Give the interest groups everything they could dream of in an effort buy their active and enthusiastic support.
3. Centrist Wankerism: Buy off the big interest groups just enough to ensure that they wouldn't actively sabotage reform — at least, not sabotage it too hard, anyway — but nothing more.

Option #1 was obviously impossible. Option #2 was probably never in the cards, and in any case would have been so horrific that public revulsion would have killed it. So Obama chose Option #3. But what that means is that industry groups were pretty much indifferent. They didn't spend a lot of time and energy fighting the bill, but neither did they spend a lot of time and energy trying to persuade their favorite Republican senators to support it. This doesn't mean that industry groups have lost their influence over Republicans (or Democrats) or that their power is so awesome that they get everything they want with barely an effort.

Obviously you can question whether Obama and Senate Dems made the right deal. Could they have pushed a little harder and still kept the big industry groups neutral? Could they have given in on a few small things and earned enough support to have passed the bill months ago with a few Republican votes? Beats me. But from where I sit three thousand miles away, it looks to me like Obama played the game pretty well. There wasn't a lot of wiggle room on either side.

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I asked Inkblot to do something interesting this morning so I could take a picture of him, but he just yawned at me. And then fell back asleep. Meanwhile, Domino headed out to the backyard to snooze among the spring flowers.

Speaking of which, spring starts tomorrow. And then on Sunday, the first full day of spring, we should get ourselves a shiny new healthcare reform bill. Nice symbolism, I think.

And now I'm off to lunch, followed by another session of Windows 7 troubleshooting. The upgrade basically went OK, and I'm now working through the list of annoying things that don't work quite right. Like the color balance on my monitor and the fact that I can't get VNC to work. (This is highly detrimental to my maternal tech support duties.) Top of the list, however, is my printer. It doesn't work. Plug it in and nothing happens. Just the little USB thunk sound effect and that's it. No error message, no searching for drivers, no nothing. My computer just sits there, providing no clue about what's wrong. And yet, the USB port works fine with other devices, the printer works fine on a different computer, and I don't think there are any conflicts since everything I own worked fine together on the old computer. Very strange.

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Hey, have I mentioned that the House will be voting on healthcare reform this weekend? I have? Well, courtesy of Taegan Goddard, here's a summary of the gruesome details:

The House Rules Committee will likely meet on Saturday morning to draft a special rule that allows the House to pass a bill by approving the rule and not necessarily the bill itself. By all indications, this rule will be the now famous "self-executing" rule which "deems" the Senate health care bill passed upon adoption of the rule.

While Republicans on the Rules Committee may try to amend the rule, they're dramatically outnumbered by Democrats 9 to 4.

The House will likely debate the rule for about an hour and hold a vote on whether to end debate. Assuming that passes, the House holds another vote on adopting the rule. If the rule is approved with 216 votes, the House may begin debate on the reconciliation bill that makes fixes to the Senate version of the health care bill.

The House then debates the reconciliation according to guidelines set forth by the rule. Once debate is finished, the House will finally hold an up-or-down vote on the reconciliation bill. If it passes with 216 votes, the original Senate bill goes to the President for his signature.

In other words, to summarize even more, if Nancy Pelosi can round up 216 votes, it passes. If not, not. So if your congress critter is one of the fence sitters, give 'em a call. Today would be good.

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I've been trying to decide what I really think of Chris Dodd's financial reform bill, and so far the answer is: not much. Yesterday, for example, Mike Konczal took a look at how it handles the problem of winding up big failed banks. Basically, the bill mandates that large banks write their own "living will," with fines proposed for those who do a lousy job. Here's Mike:

Notice how this strategy would look for FDA if we were creating the FDA now: “Drug companies will be required to submit the effects of their drugs that they market from internal studies that they’ve carried out. That is all.”

There’s an obvious agency problem: if you are a large, complex company and you’ve failed, you want the regulators to be as confused, scared, and uninformed as possible so they will bail you out. It’s worked before. What’s the penalty for a failed firm that doesn’t do this well? They are already failed. If you are less cynical about the financial markets than I am, it’s still costly, time consuming and kind of a pain in the ass to collect this information well, so you will probably half-ass it.

I'd add something even more fundamental: can this work even in theory? Mike is right that banks have lots of reasons to do a self-serving job when it comes to drafting their plans, and when times are good it's unlikely that the Fed or any other regulator is going to be especially tough on them. But beyond that, is it even possible to set forth a plan in advance that would, say, unwind Citigroup cleanly and without a big government bailout? I have my doubts, and I'd sure like to hear a few skeptical experts weigh in on this. What would a real resolution plan for Citigroup look like?

In another post, I think Mike gets to the key issue: we really ought to be more concerned with detection than with resolution. Once a gigantic bank has started to spiral out of control, it's probably going to need some kind of massive government support no matter what kind of resolution plan it has in place. So what's really important is stopping that spiral before it starts. But that gets us back to things like limiting leverage, insisting on more robust capital requirements, insisting that derivatives are traded openly and only by firms with the collateral to back them up, etc. Resolution authority is something the federal government needs — regardless of whether or not it's messy — but I'd put it somewhere in the bottom half of the top ten things we should be concerned about.

I am, however, extremely persuadable on this point. So: is resolution authority more important than I think? And if so, what would it take to do it right? I'll try to follow up on this later.

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