How to Screw Up Health Care Reform, Part One

A few weeks ago, when progressive/liberal disenchantment with Obama's conduct (or more accurately non-conduct) of the health care reform "debate" was just starting to reach major proportions, Paul Krugman wrote a typically perceptive column on what he called "Obama's Trust Problem" with the Left.  One of The Shrill One's key points had to do, not with health care reform per se, but with what he called "the matter of the banks."  As Krugman put it:

I don’t know if administration officials realize just how much damage they’ve done themselves with their kid-gloves treatment of the financial industry, just how badly the spectacle of government supported institutions paying giant bonuses is playing. But I’ve had many conversations with people who voted for Mr. Obama, yet dismiss the stimulus as a total waste of money. When I press them, it turns out that they’re really angry about the bailouts rather than the stimulus -- but that’s a distinction lost on most voters.

It was a shrewd point: the administration's (mis)handling of the financial sector's implosion--the apparent eagerness to continue Hank Paulson's we're-all-Wall-Street-barrons-here approach to financial crisis management--was a profound blow to whatever hopes some may have entertained that an Obama administration would constitute a sharp break with the immediate political past.  To judge from the evidence of this early performance, it quickly became clear to all that there would be no such break, but rather a barely perceptible shift of emphasis, consisting mostly in mildly technocratic and largely symbolic chastisement of the pack of well-healed crooks and liars who had just finished capping off years of unparalleled greed by wrecking the world economy and handing the American taxpayer the bill for containing and cleaning up the resulting mess.

Well yesterday the estimable Barry Ritholz made a similar, but much more sweeping and, I think, profound point: Not only did the failure to go after the hideously bloated financial sector when the moment was ripest dismay Obama's strongest supporters--even worse, it forfeited a golden opportunity for a truly game-changing victory, both substantive and political.  You should by all means read the whole thing but here's a big, wallopping dose of Ritholz:

As Rahm Emmanuel likes to say, one should “never waste a crisis” -- and the White House has done just that.

There was a narrow window to effect a full regulatory reform of Wall Street, the Banking Industry and other causes of the collapse. Instead, the White House tacked in a different direction, pursuing health care reform. 

This was an enormous miscalculation.

...Instead of a populist clean up of The Street (ala Eliot Spitzer circa 2,000), Obama advisors allowed a smoldering resentment to take hold and build amongst the electorate. The massive taxpayer wealth transfer to inept, corrupt, incompetent bankers has created huge resentment amongst the populace -- regardless of political affiliation.

...Passing reform legislation successfully would have fulfilled the campaign promise of “Change;” it would have created legislative momentum. It could have provided a healthy outlet for the Tea Party anger and the raucous Town Hall meetings. It might have even led to a “throw the Bums out” attitude in the mid-term elections, forcing the most radical de-regulators from office.

Also wasted: The enormous anti-Bush attitude throughout the country that swept team Obama into office. He should have been “Hooverized,” and O should have tapped into that same wave to force the greatest set of Wall Street and Banking regulatory reforms seen since the 1930s.

Instead, we have a White House that appears adrift, and the most importantly, may very well have missed the best chance to clean up Wall Street in five generations.

That hardly needs any improvement from me, but I'll just draw out the full implication of it for the present sad spectacle of the health care reform "debate":  It's not at all hard to see how the royal road to health care reform--reform that could have been both far more serious in taking on industry interests and far more popular than anything we are likely to get--would have run through deliberately picking an early, populist fight with Wall Street, and winning that fight. 

Because here's the thing: Really big reform efforts like health care (as Bob Somerby keeps pointing out) need a preexisting narrative framework to fit into, if they are to survive the combination of people's natural reluctance to sanction large-scale, deliberate change as well as the massive concentrated fire that comes from the entrenched interests who stand to lose big if such reform succeeds.  What the spectacular crack-up of our runaway financial industry provided was precisely an instant version of such a narrative framework, tailor-made for the reforming politician who was ready and willing to seize upon it.

Of course, this assumes that the present leadership of the Democratic party and the liberal/progressive intelligentsia would have wanted fundamental reform of that kind, in either the financial sphere or, subsequently, in health care.  And that assumption, on the evidence of what they have actually done and said, is almost certainly false.