The Democratic Danger to Obama

The real danger to President Obama comes not from the knee-jerk nihilism of Rush Limbaugh, but from within the Democratic Party. Obama, who famously observed as a candidate that a president has to be able to do more than one thing at a time, has rejected internal counsel to postpone his healthcare proposal in favor of a single-minded focus on the economy. Recovery is obviously a central test for him. But as he sees it, his mission is not simply to undo Republican damage; it is to achieve the fundamental change, including health care reform, for which he campaigned.

Several of Obama’s most impressive economic advisors, including OMB director Peter Orszag and Jason Furman, director of the National Economic Counsel, have argued in the past that national health care should be paid for by taxing employer-provided health insurance. Without endorsing such a policy, Orszag told a Senate committee recently that the idea “should remain on the table.” The Senate Finance Committee Chairman Max Baucus and Oregon Democratic Senator Ron Widen actually want the health care tax included in a final bill.

But in a debate with John McCain last fall, candidate Obama ruled the idea out of bounds. That’s exactly where it should stay. Even in modified form, taxing what McCain called “gold-plated” health insurance policies could doom health care reform once again. Orszag and Furman may have a fine policy point, but let me preview the opposition ad.

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Husband at kitchen table: “I thought he was going to fix health care, but now Obama wants to tax our health coverage.”

Wife holding newspaper: “They say our coverage is ‘gold-plated.’”

Husband: “Well for you last year, it was a lifeline.”

Wife: “I just want to keep what we have.”

We’re told Obama won’t stop Congress if it decides to tax employee health coverage. That masterfully kills the proposal without offending its champions. Most liberal Democrats oppose it; Republicans say they won’t go along unless Obama explicitly advocates it.

However, this episode reflects a wider danger—the tendency of Democrats to break ranks far more readily than Republicans do under a new President. Baucus, who by gift of seniority runs one of the Senate’s most powerful committees, may favor taxing the health coverage of millions; but he opposes the Obama plan to limit tax deductions for the very wealthy to what they were under Ronald Reagan’s administration. Does Baucus think Reagan was too hard on the rich? Likewise, while Senate Agriculture Committee Chairman Tom Harkin favors Obama’s farm subsidy reforms, Budget Committee chairman Kent Conrad says he’s “opposed to any effort to cut support of the farm safety net.” (Never mind that Obama has proposed no change for farmers earning $250,000 or less a year.)

Congressional Republicans also want to scuttle Obama proposals—for reasons that are far less well intentioned. The GOP’s leaders calculate that by delaying change, they increase their chances of defeating it. The history of the Clinton health care effort, which dragged on past the early potential of his presidency and into the partisan deadlock of 1994, validates their strategy. Democrats would do well to remember 1994, as well, especially if they don’t want to repeat it. Many Democrats who broke with Clinton in the hope of saving themselves were swept away in the Republican landslide that resulted from Clinton’s apparent failure. Of course, there will be differences to settle, details to thrash out, and compromises to be made on Obama’s agenda. But it’s useful for Democrats to heed the adage that if they don’t hang together, they will hang separately. The difference is that Obama, like Clinton, will survive the 2010 elections, with two years remaining before he has to face the voters.

Obama understands that postponing major initiatives, however well intentioned, is wrong. Health care reform, for example, is now an economic as well as a moral issue, as soaring costs burden businesses and hobble America’s ability to compete and sustain a recovery. Similarly, a new energy policy is not just central to combating global warming; it’s also an indispensable spur for the green industries and jobs of the future.

The one thing that could defeat Democrats in 2010 is Democrats themselves. That won’t happen, in my view, because Democrats readily recall the 1994 debacle and because they’re led by a President who’s already demonstrated his capacity to bend history to forge a path. Watching his first two months in office, I don’t doubt that the Strategist-in-Chief will listen to advice, weigh the politics and then push through his agenda largely intact. He will change America. I can’t wait to hear what talk radio’s Mouth Rushmore says about that.