Obama is choosing to be weak
As he promised last year, Barack Obama has brought climate change and healthcare reform to the centre of the nation’s attention. As well as evangelising, he is pressing Congress to act. Last week the House of Representatives passed the Waxman-Markey cap-and-trade bill to curb carbon emissions, a measure that, if enacted, would touch every part of the US economy. Both House and Senate have drafted far-reaching healthcare bills, with stunning price tags.
Mr Obama aims to keep his promises, which is admirable. Unfortunately, there is a problem. This is not, as many Republicans argue, that neither issue requires forthright action. Both do. The problem is that the bills emerging from Congress are bad and Mr Obama does not seem to mind.
Mr Obama aims to keep his promises, which is admirable. Unfortunately, there is a problem. This is not, as many Republicans argue, that neither issue requires forthright action. Both do. The problem is that the bills emerging from Congress are bad and Mr Obama does not seem to mind.
The cap-and-trade bill is a travesty. Its net effect on short- to medium-term carbon emissions will be small to none. This is by design: a law that really made a difference would make energy dearer, hurt consumers and force an economic restructuring that would be painful for many industries and their workers. Congress cannot contemplate those effects. So the Waxman-Markey bill, while going through the complex motions of creating a carbon abatement regime, takes care to neutralise itself.
It proposes safety valves that will ease the cap if it threatens to have a noticeable effect on energy prices. It relies heavily on offsets – theoretical carbon reductions bought from other countries or other industries – so that big US emitters will not need to try so hard. It gives emission permits away, and tells utilities to rebate the windfall to consumers, so their electricity bills do not go up. It creates a vastly complicated apparatus, a playground for special interests and rent-seekers, a minefield of unintended consequences – and the bottom line for all that is business as usual.
It proposes safety valves that will ease the cap if it threatens to have a noticeable effect on energy prices. It relies heavily on offsets – theoretical carbon reductions bought from other countries or other industries – so that big US emitters will not need to try so hard. It gives emission permits away, and tells utilities to rebate the windfall to consumers, so their electricity bills do not go up. It creates a vastly complicated apparatus, a playground for special interests and rent-seekers, a minefield of unintended consequences – and the bottom line for all that is business as usual.
If you regard universal access to health insurance as an urgent priority, as I do, the draft healthcare bills are easier to defend as at least a step in the right direction. Nonetheless, the same evasive mindset – the appetite for change without change – has guided their design. If you are happy with your present insurance, the bills’ designers keep telling voters, you will see no difference.
The crux of the US healthcare problem is the incentives that encourage over-production and over-consumption of services. Addressing that would alter the way healthcare is paid for and delivered to all Americans. At that scary prospect, Congress looks away. Debate thus revolves around how much of an increase in coverage you can buy for $1,000bn over 10 years in subsidies and other outlays. That is a good question. But legislators aim to duck the bigger challenge: controlling long-term growth in costs per patient.
On both climate change and healthcare, in other words, the US wills the end but not the means. This is where a president trusted by the electorate and unafraid to explain hard choices would be so valuable. Barack Obama, where are you?
The president has cast himself not as a leader of reform, but as a cheerleader for “reform” – meaning anything, really, that can plausibly be called reform, however flawed. He has defined success down so far that many kinds of failure now qualify. Without hesitating, he has cast aside principles he emphasised during the campaign. On healthcare, for instance, he opposed an individual insurance mandate. On climate change, he was firm on the need to auction all emissions permits. Congress proposes to do the opposite in both cases and Mr Obama’s instant response is: “That will do nicely.”
The crux of the US healthcare problem is the incentives that encourage over-production and over-consumption of services. Addressing that would alter the way healthcare is paid for and delivered to all Americans. At that scary prospect, Congress looks away. Debate thus revolves around how much of an increase in coverage you can buy for $1,000bn over 10 years in subsidies and other outlays. That is a good question. But legislators aim to duck the bigger challenge: controlling long-term growth in costs per patient.
On both climate change and healthcare, in other words, the US wills the end but not the means. This is where a president trusted by the electorate and unafraid to explain hard choices would be so valuable. Barack Obama, where are you?
The president has cast himself not as a leader of reform, but as a cheerleader for “reform” – meaning anything, really, that can plausibly be called reform, however flawed. He has defined success down so far that many kinds of failure now qualify. Without hesitating, he has cast aside principles he emphasised during the campaign. On healthcare, for instance, he opposed an individual insurance mandate. On climate change, he was firm on the need to auction all emissions permits. Congress proposes to do the opposite in both cases and Mr Obama’s instant response is: “That will do nicely.”
The White House calls this pragmatism. Never let the best be the enemy of the good. Better to take one step forward than blah, blah, blah. The argument sounds appealing and makes some sense, but is worth probing.
First one must ask whether the bills really do represent progress, however modest. As they stand, this is doubtful, especially in the case of cap-and-trade. Then one must ask whether the US will get to where it needs to be on climate change and healthcare via a series of small steps. Perhaps the country has just one chance in the foreseeable future to get it right. The White House has said as much: “Never let a good crisis go to waste.” Botch these policies this time, and it may be years before Congress can start again.
A White House that is more interested in promotion than in product development has another great drawback: it squanders talent. Mr Obama has impeccable taste in advisers: he has scooped up many of the country’s pre-eminent experts in almost every area of public policy. One wonders why. On the main domestic issues, they are not designing policy; they are working the phones, drumming up support for bills they would be deploring if they were not in the administration. Apart from anything else, this seems cruel. Mr President, examine your conscience and set your experts free.
First one must ask whether the bills really do represent progress, however modest. As they stand, this is doubtful, especially in the case of cap-and-trade. Then one must ask whether the US will get to where it needs to be on climate change and healthcare via a series of small steps. Perhaps the country has just one chance in the foreseeable future to get it right. The White House has said as much: “Never let a good crisis go to waste.” Botch these policies this time, and it may be years before Congress can start again.
A White House that is more interested in promotion than in product development has another great drawback: it squanders talent. Mr Obama has impeccable taste in advisers: he has scooped up many of the country’s pre-eminent experts in almost every area of public policy. One wonders why. On the main domestic issues, they are not designing policy; they are working the phones, drumming up support for bills they would be deploring if they were not in the administration. Apart from anything else, this seems cruel. Mr President, examine your conscience and set your experts free.
The greatest waste of talent in all this, however, is that of Mr Obama himself. Congress offers change without change – a green economy built on cheap coal and petrol; a healthcare transformation that asks nobody to pay more taxes or behave any differently – because that is what voters want. Is it too much to ask that Mr Obama should tell voters the truth? I think he could do it. He has everything it takes to be a strong president. He is choosing to be a weak one.
Clive Crook, FT 28.06.09
Clive Crook, FT 28.06.09
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