Matt Miller - The Archives

The breakthrough deal we need
The Washington Post, October 9, 2013

It's frighteningly obvious that our two parties need a face-saving way to avoid the abyss. We're on the cusp of a deep and entirely self-inflicted national economic wound because of a tragic clash of psychologies. In 2011, President Obama let the GOP use the threat of default as extortion; when he caved in during that standoff, and agreed to an all-spending cut budget deal plus the creation of the ill-fated "supercommittee," the blackmailers won. Two irreconcilable lessons were drawn. First, Obama learned he can never let this brand of hostage-taking happen again, lest he weaken his office and assure the endless spectacle of governance by crisis. Second, tea party Republicans learned that, when push comes to shove, this president blinks. Little wonder they think Obama will shortly buckle again. But no sane steward of the office can allow the debt-ceiling tactics of 2011 to prevail once more. Thus, real danger is much closer than even the sliding stock market in recent days suggests.

We need a way out. It would be nice if Obama simply said, "let's raise the debt ceiling just enough to accommodate the $1.2 trillion in new debt the latest Republican budget calls for"—but the GOP would assent only if the rest of its (deeply misguided) budget were also enacted. It also would be nice if the press pointed out (in between breathless countdowns to calamity) that we're the only nation that even has a "debt limit" available to be hijacked as a forcing device; in countries with common sense, when a budget is passed, any new debt associated with that budget is automatically okayed. It would be nice, too, if Congress hadn't made a foolish fetish of eliminating earmarks, so a shrewd set of courthouses and bridges in "deserving" Republican districts could have sealed a reasonable budget deal weeks ago.

Alas, we are where we are. And so the cry goes up from across the land: If only there were a deal to be struck that honored both parties' values, a deal that advanced the cause of both economic rationality and social justice.

The surprising news is that, with a little imagination, that deal exists. It's this: The president should offer to give states a waiver from the rollout of Obamacare if (and only if) they implement instead a system of universal catastrophic health insurance in their state.

How might this work? Governors could ask the Department of Health and Human Services for the ability to consolidate all federal cash now coming to their state for nonelderly health care—including Medicaid, the new Obamacare subsidies and, ideally, the cost of the tax subsidy for employer-provided care—to fund a universal catastrophic plan. (Regulations say such waivers can't be sought until 2017, but Obama would offer to start them immediately).

Two (and only two) requirements would be imposed on the state plans. First, "catastrophic" would be defined relative to income. (A $5,000 deductible for a family earning $22,000 doesn't make sense). Second, there would have to be some form of funding—perhaps via pre-loaded health savings accounts—to assure that people can pay for proper preventive care, typically shortchanged in catastrophic insurance schemes.

What would this deal accomplish? The president would show unprecedented "flexibility" vis-a-vis his signature domestic accomplishment, while getting Republicans to join him (finally) in endorsing the principal of universal coverage. (Since Obamacare will leave as many as 25 million people still uncovered, it is possible that many more Americans would become secure against financial ruin from illness under this proposal than under the Affordable Care Act itself).

Republicans can boast of plunging a dagger into the heart of that "evil" Obamacare; of moving states to the forefront of policy innovation, itself a conservative ideal; and of rescuing poor Americans from the clutches of that "second-class" system, Medicaid, because poorer folks would have private catastrophic/preventive plans instead.

In short, this deal walks everyone back from the brink and lets both sides and their allies claim important victories. House Speaker John Boehner and Obama could agree to a "term sheet" now, and pledge to legislate within a few months. Tea party leader Steve King (R-Iowa) told me Tuesday that this kind of deal held promise.

Of course, in Lt. Colombo's famous mantra, "there's one more thing"—the debt limit must be scrapped altogether. The president is right: The hostage taking can't go on. In a sense, Obama would have submitted to "blackmail" one last time to get Republicans on board with universal coverage and to bury the debt limit forever as an instrument of policy. Rightly understood, this would cement the president's legacy in ways even the unfettered rollout of Obamacare in current form can't achieve. Meanwhile, in exchange for "slaying" Obamacare, Republicans would agree to have us join the community of nations that views the passage of a budget as authorization for any debt that budget may contain.

In the hothouse of today's crisis, this deal may be beyond the imagination of those ostensibly in charge. But a few creative lawmakers on each side of the aisle could join to float something like it tomorrow. The alternative, I fear, will be some muddled repeat of 2011, a new chain of pointless fiscal cliffs that further diminishes the United States' s standing in the world, or worse, an unforgivable but all-too-plausible "Guns of August"-style tumble into catastrophe.