Paul Krugman: All the President’s Zombies

The age of Reaganism should be over, but it isn't:

All the President’s Zombies, by Paul Krugman, Commentary, NY Times: The debate over the “public option” in health care has been dismaying in many ways. Perhaps the most depressing aspect for progressives, however, has been the extent to which opponents of greater choice in health care have gained traction — in Congress, if not with the broader public — simply by repeating, over and over again, that the public option would be, horrors, a government program.

Washington, it seems, is still ruled by Reaganism — by an ideology that says government intervention is always bad, and leaving the private sector to its own devices is always good.

Call me naïve, but I actually hoped that the failure of Reaganism in practice would kill it. It turns out, however, to be a zombie doctrine: even though it should be dead, it keeps on coming.

Let’s talk for a moment about why the age of Reagan should be over.

First of all, even before the current crisis Reaganomics had failed to deliver what it promised. Remember how lower taxes on high incomes and deregulation that unleashed the “magic of the marketplace” were supposed to lead to dramatically better outcomes for everyone? Well, it didn’t happen. ...

President George W. Bush, who had the distinction of ... presiding over the first administration since Herbert Hoover in which the typical family failed to see any significant income gains.

And then there’s the small matter of the worst recession since the 1930s. There’s a lot to be said about the financial disaster..., but the short version is simple: politicians in the thrall of Reaganite ideology dismantled the New Deal regulations that had prevented banking crises for half a century, believing that financial markets could take care of themselves. The effect was to make the financial system vulnerable to a 1930s-style crisis — and the crisis came.

“We have always known that heedless self-interest was bad morals,” said Franklin Delano Roosevelt in 1937. “We know now that it is bad economics.” And last year we learned that lesson all over again.

Or did we? The astonishing thing about the current political scene is the extent to which nothing has changed.

The debate over the public option has, as I said, been depressing in its inanity. ... But it’s much the same on other fronts. Efforts to strengthen bank regulation appear to be losing steam, as opponents of reform declare that more regulation would lead to less financial innovation — this just months after the wonders of innovation brought our financial system to the edge of collapse...

So why won’t these zombie ideas die?

Part of the answer is that there’s a lot of money behind them. ... In particular, vast amounts of insurance industry money have been flowing to obstructionist Democrats like Mr. Nelson and Senator Max Baucus, whose Gang of Six negotiations have been a crucial roadblock to legislation.

But some of the blame also must rest with President Obama, who famously praised Reagan during the Democratic primary, and hasn’t used the bully pulpit to confront government-is-bad fundamentalism. That’s ironic, in a way, since a large part of what made Reagan so effective, for better or for worse, was the fact that he sought to change America’s thinking as well as its tax code.

How will this all work out? I don’t know. But it’s hard to avoid the sense that a crucial opportunity is being missed, that we’re at what should be a turning point but are failing to make the turn.

Many people - people who make up key voting blocks - are happy with the health care coverage they have now (employer based or Medicare for the most part) and they do not want it to change. Thus, if they can be convinced that they will have to give up some of their own health care (and/or pay much higher taxes) in order to expand coverage to the uninsured, then they will be unlikely to support reform. The government death panel lie plays into people's fear of losing what they have now by implying that choices will be much more limited if reform is enacted, and worse, that someone else will make the choices for you. It promotes the general fear that government involvement means less options than are available now, and that many of the choices will be mandated.

Democrats made a mistake, I think, by not emphasizing that just the opposite is true. It is the failure to reform health care that will limit future choices, perhaps severely if cost projections are realized. Government is the best hope of maintaining the choices that are available now, and of expanding the choices available to those who currently have no health insurance. In light of this, the message from reform supporters has emphasized the need for both cost control and expanded coverage.

The problem with the message is that cutting costs and expanding coverage sounds like it's a tradeoff. That is, it sounds like the intent is to cut costs - partly by limiting choices for those who now have coverage - in order to expand coverage to those who are currently uninsured. Because of this, people who have adequate coverage are afraid of losing options and control over their care. Democrats need to explain that universal coverage and cost control are not tradeoffs in this sense, but rather both of these are elements of an overall strategy to do the best we can to maintain the choices that people now have. It's not one of the other, both are part of a system-wide approach to reform. The same is true with other elements of the plan such as the public option. This doesn't take away the choice of health care plans, it adds one and if people don't like it, they don't have to use it.

The point that Democrats must make clear is that doing nothing puts people's existing health care coverage at substantial risk. People should be very afraid if reform fails, especially people who have good coverage now since they're the ones with the most to lose. So while I wholeheartedly agree that Democrats need to confront "government-is-bad fundamentalism," they also need to make clear how government can do good. System-wide reform of health care is the best chance people have for a health care system that meets their needs at least as well as what they have now, and the necessary reform cannot be accomplished without government's help.