Do Obama’s Higher Ed Reforms Have a Chance in Congress?

Jonathan Chait is pessimistic:

But the comparison raises the question of whether his higher-education agenda will repel Republicans just as his health-care agenda did. Finding ways to get the government to spend less on education sounds pretty conservative.

If you put more weight on the ideological explanation [for Republican opposition to the ACA] , then Obama’s higher-education agenda stands a chance of attracting Republican support. Republicans might even take some visceral pleasure in making their cultural enemies in the academy squeal. If you put more weight on the political explanation, then Republicans will convince themselves that Obama’s plan is evil no matter what. Republicans will find themselves believing that free-market principles require that whatever money the government spends on college access must have absolutely no conditions attached.

Josh Barro is more optimistic:

I view scorched-earth Republican opposition to health care reform as having been driven mainly by neither ideology nor animus toward the president. I think the key was a desire to protect Republican constituencies who benefit from the health policy status quo: doctors and Medicare recipients.

In the case of higher education, the constituency getting its ox gored by cost control will be college professors and administrators, hardly a fixture of Republican fundraisers or Tea Party town halls. That bodes well for bipartisan compromise on this issue.

Hmm, I want to side with Barro here, but I can’t for one big reason: Republican rejection of the Medicaid expansion. A quick refresher: Obamacare expanded Medicaid to cover all individuals with income up to 133% of the federal poverty line. Since Medicaid is a state-run program, the government agreed to cover the full costs of the expansion until 2017. From 2017 to 2020, the federal government covers 95% of the costs and thereafter it’s 90%. It’s a great deal for states. But the Supreme Court ruling last summer allowed states to opt out of the expansion. This leaves a gaping hole in Obamacare. Individuals with incomes between 100 and 133 percent of the federal poverty line will still be eligible for tax subsidies, but those with incomes below 100% of the federal poverty line who aren’t eligible for Medicaid already will not receive coverage.

Why does this matter to whether Obama’s higher ed plan has a chance of passing in Congress? Because, as Barro and Chait write, it depends on whether Republicans will immediately reject the plan out of opposition to anything President proposes or whether they will be open to it. Barro’s optimism is based on the fact that Republican opposition to Obamacare was not just pure nihilism, but was also a play to protect their favored constituencies. Except Republican rejection of the Medicaid expansion shows that it was more nihilism than anything else.

That’s because rejecting the expansion will hurt one of Republicans favored constituencies: hospitals and doctors. Obamacare discontinues Disproportionate Share (DSH) payments, which were used to offset uncompensated health care costs of the uninsured pre-Obamacare. When Obamacare expanded Medicaid, those payments became unnecessary. Medicaid would now cover everyone up to 133% of the federal poverty line so uncompensated costs would basically disappear. Thus, there was no need for DSH payments to continue. Except hospitals in states that rejected the Medicaid expansion are still going to face significant costs of treating uninsured patients and now they receive no DSH payments to recoup those expenses. That’s why hospitals have been aggressively lobbying Republican states to expand Medicaid. There’s a lot of money on the line for doctors and hospitals.

But that lobbying has proved ineffective so far. Twenty one states have already rejected the expansion with six still debating it. It’s a great deal from the federal government that allows millions of poor Americans to receive health care coverage. Even more, hospitals are crying out for the expansion. Nope, Republicans are dead set against it. No matter how much hospitals and doctors favor them, Republicans aren’t budging. Republican opposition to Obamacare is less based on protecting Republican constituencies than rejecting anything the President proposes. I don’t see Republicans treating Obama’s education proposal any differently.

Photos: Pardon Bradley Manning Rally

I stopped by the rally for Bradley Manning that happened around 8PM last night in front of the White House. There were a few dozen protesters there, with plenty of signs and whistles to go along. After different people took turns at the mic, the rally moved on and marched towards DuPont Circle. The speeches were what you’d expect. Lots of anger at Manning’s 35 year sentence while the perpetrators of the crimes he revealed go unpunished. In addition to the Free Bradley Manning chants, the protesters also shouted Pardon Bradley Manning, referring to the petition that Manning submitted yesterday afternoon asking President Obama to pardon his sentence. Don’t get your hopes up for that.

Anyways, here are some photos from the rally:

This slideshow requires JavaScript.

Yet Another Reason Janet Yellen Should Be Fed Chair

This one comes from former CFTC chairperson Sheila Bair, who participated in a panel today on restoring economic growth in America. Asked afterwards about Janet Yellen’s gender playing a role in the nominating process, she responded:

Janet Yellen can stand on her own. The fact that she’s a women should be irrelevant to this. I think her gender has been working against her. Some people have been saying that if she gets it, it’s just because she’s a woman. That’s nonsense. Of all the candidates I’ve heard about, I view her as the most qualified.

Absolutely. It should be icing on the cake for President Obama that the most qualified candidate would also be a groundbreaking choice.

Bair then brought up another aspect of Yellen’s candidacy that I haven’t seen written anywhere before: her lengthy time in public service.

[Her appointment] would make an important statement about public service. Revolving door is an accepted practice in Washington. I don’t fault people who do it. But there have been a number of high-level appointments where you’ve had people going in and out of Wall Street. Janet’s not one of those people. Most of her recent career has been in public service or in academia. Some people say, ‘Well, she doesn’t have Wall Street experience.’ I view that as a positive. She hasn’t done the revolving door. She’s got a good public image. That would be another thing that argues in her favor. Others who do come from Wall Street or have come back and forth from there  will reinforce the public’s cynicism that I worry about. But she does not have that. It would be a good tribute to those who do spend most of their time in public service.

Yellen is the best candidate for the job. Period. But this is yet another reason to select her. The Obama economic circle is littered with people with recent ties to the financial industry. That’s not a knock on them – as Bair pointed out, it’s common practice in Washington. But the Fed is going to make a lot of major regulatory decisions in the next couple of years. Wouldn’t it be nice if the Fed Chair wasn’t buddy-buddy with a bunch of bankers interested in watering down those rules?

Bair also correctly emphasizes that nominating Yellen would signal to career public servants that their loyalty to their jobs will not harm their chances of being promoted in the future. I think the counterfactual is even more convincing though. Imagine if Obama selects Summers and one of the reasons for doing so is because of his private sector experience. Now, government officials have incentives to leave their jobs to gain such experience. After all, Obama just demonstrated that not having it will reduce their chances of promotion. The revolving door isn’t necessarily a bad thing, as Matt Yglesias pointed out. But it presents the opportunity for rent-seeking and quid-pro-quo agreements that hinder federal agencies. Selecting Yellen sends a signal to government officials that private sector experience – using the revolving door – is not necessary.

Overall, it’s not a big enough reason to choose Yellen over Summers. Most public workers aren’t going to suddenly decide they desperately need private sector experience if Summers is chosen. But it is yet another advantage that Yellen has. At this point, it shouldn’t be a difficult decision for the President: Yellen is the best choice. We’ll find out soon enough.