Republican Recalcitrance

As Obama tries to win over the Republicans on his health care reform, it is worth remembering how the votes in Congress fell when Clinton passed the legislation that reversed decades of deficits. Not a single Republican voted for his plan. Gingrich led opposition in the House and Dole in the Senate, where the vote was 50-50 (Gore broke the tie).

Clinton was not, as the Republicans would now want you to believe, forced into deficit reduction by Newt. Advised to lower interest rates, he was instead reducing the deficit in order to win over the Fed (Greenspan could lower short term rates) and bond traders (who could lower long term rates). His strategy worked and helped to stimulate the greatest expansion of the last century.

When Clinton left office, the projection for the surplus through 2015 was $4 trillion. In what now seems almost comical, Greenspan was worried about what would happen when there were no T bills as an investment option. By the time Bush left office, the projection for the same period was a deficit of nearly $4 trillion, a reversal of about $8 trillion (which would fund Obama's health care plan for 80 years - an entire lifetime).

Newt's biggest play for spending reduction was to make drastic cuts to Medicare in the wake of Republicans winning the midterm election in 94. Clinton called his bluff on this, defending health care for the elderly to the point of a government shut down. The result was a rise in the polls for Clinton and a drop for Gingrich and the Republicans.

It is lovely that Obama is inclined towards including the Republicans in the formulation of a health care plan. The lesson from Clinton's presidency,though, may be that the Republicans will simply be an obstructionist party and Obama has to give them a deadline by which they should either come along or stay behind.