January 25, 2010


Squeeze Play (Reihan Salam, 01.25.10, Forbes)

As former House Speaker Newt Gingrich has suggested, Republicans would be wise to join forces with Democrats on an incremental bill. Many Democrats object that serious insurance market reforms, like guaranteed issue and community rating, requires an individual mandate, and they may well be right. But what they fail to acknowledge is that neither the House nor the Senate bill included an individual mandate strong enough to prevent young, healthy individuals from simply paying a modest fine and purchasing insurance when they become ill enough to need it. It is by no means clear that the weak mandate in both bills would have prevented a so-called "insurance death spiral" in which insurers are forced to cover a sick, expensive population while the healthy are left to free-ride.

If Republicans do cooperate with the Democrats on new health legislation, they can press for investments in state high-risk pools or reinsurance programs for the individual and small-group markets that could greatly expand access to coverage without tough-to-enforce regulations. By building on COBRA, they could also help make insurance coverage more portable as workers shift from one employer to another, or as they start their own businesses. While the president condemns Republicans as obstructionists, the party could earnestly work towards effective bipartisan reform.

And as the White House shifts its attention to financial reform, Republicans should embrace the core ideas advanced by presidential adviser Paul Volcker. The Wall Street Journal editorial page, known for its staunch advocacy of free markets, has offered a qualified endorsement of the Volcker plan, which essentially calls for withdrawing taxpayer guarantees from firms that engage in the riskiest financial transactions.

Though there are many questions that remain unanswered, this represents an excellent opportunity for Republicans to remind the voting public--and to remind themselves--that a pro-market stance is not the same as a pro-business stance, and that the taxpayer-funded bailouts of large financial firms reflected a dangerous concentration of economic and political power in the hands of a self-interested financial elite.

The Contract with America served not only to unify the GOP's message but to give them the sort of legislative agenda that W had in 2001 and that the UR conspicuously lacked this past year.

Posted by Orrin Judd at January 25, 2010 7:04 AM
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