Was Health Reform a Political Blunder? How Could We Know?

Back on January 12 I wrote “People in the future will look back and, with some reason, debate whether it would have made more sense [for the Obama administration] to stay focused on the short-term economic picture especially when the condition of the economy turned out to be so much worse than forecast when the Recovery Act was initially outlined.”

Today, Charlie Cook does just that:

Honorable and intelligent people can disagree over the substance and details of what President Obama and congressional Democrats are trying to do on health care reform and climate change. But nearly a year after Obama’s inauguration, judging by where the Democrats stand today, it’s clear that they have made a colossal miscalculation.

The latest unemployment and housing numbers underscore the folly of their decision to pay so much attention to health care and climate change instead of focusing on the economy “like a laser beam,” as President Clinton pledged to do during his 1992 campaign. Although no one can fairly accuse Obama and his party’s leaders of ignoring the economy, they certainly haven’t focused on it like a laser beam.

Here, though, you do loop back to the question of policy substance. Brendan Nyhan doubts there’s much of anything that the administration could have done to improve the short-term labor market outlook. Appearing to be more focused on jobs would have brought some political benefit initially, but ultimately the jobs-opinion link is going to be determined more by the actual state of the job market than by appearances. By focusing on health care, the Obama administration can at least say they delivered something about health care.


Incidentally, I think this is why Ezra Klein’s proposal for more specialization between political reporters and policy reporters is a little bit misguided. Cook is the gold standard is pure political analysis. But you can’t analyze the politics of jobs without thinking about the substantive impact of different policy options and you can’t really assess short-term economic policy without thinking about the political constraints. Under the circumstances, it’s really hard for anyone to do a consistently good job. This is probably one reason why the quality of expert political judgment is so low.

Anyway, here’s a story I made up about how Obama could have improved his political position by handling economic policy differently:

Had Barack Obama chosen not to renominate Ben Bernanke, and instead put a Democrat forward as Fed chair for the first time in over 30 years, this would have unsettled markets. The right-tilting business press and corporate executive class would have interpreted it as a sign that the Fed was likely to manage monetary policy in an “irresponsible” and unduly inflationary way in order to bring unemployment down. According to no less an authority than Ben Bernanke these increased inflation expectations would probably have reduced unemployment. This would have directly made Barack Obama more popular, made the short-term budget deficit smaller, and also increased the apparent efficacy of the American Reinvestment and Recovery Act, all of which would have made additional fiscal policy measures more politically feasible. Faced with that brighter economic outlook, Martha Coakley would have a much more secure position in Massachusetts, etc.

Now maybe that story’s wrong. I think it’s right, but I’ll happily admit that my confidence level is not all that high. The point is just that only a very comprehensive theory tying all these different pieces together can even purport to answer the question.