Streetcar Line

Streetcar Line
Summit Strategems

By Quin Hillyer on 2.26.10 @ 6:09AM

Forgive me this stream of consciousness. I had another topic in mind entirely for this column, but the live coverage of this health care "summit" has distracted me all day. President Obama's superciliousness infuriates me; his insistence on speaking each time between each speaker is outrageous; his Democratic colleagues are not much help to him (although, much as Sen. Dick Durbin of Illinois is smarm personified, his misleading riff in defense of jackpot justice trial lawyering was, unfortunately, very effective); yet I can't help thinking that the president is winning among his intended audience, which are the Democrats in Congress. By going on for six full hours about his plans, all in a reasonable tone of voice, he makes those plans somehow less scary, no matter how many good licks the Republicans get in. All he needs to do is to lower the volume, provide enough reassurance to congressional Democrats that there is a defensible set of talking points in favor of his plans (even if it isn't logically defensible, he makes it sound politically defensible merely by defending it for so long without cracking), and keep from making any major gaffes, and... presto!… Obama convinces wavering Democrats in Congress that they already have taken all the body blows that can possibly come, and that they can't get hurt any worse than they already have been, so they might as well roll the dice and vote his way.

Since this is stream of consciousness, I'm not sure I explained that as well as I could or should, but the point is this: As long as Obama keeps this alive, he, yes, keeps it alive. In that tautology lies his continuing chance to get a bill passed.

It's like this. I once sat in a meeting of the board of an organization on which there was a bitter division. I was the vice-chair; the chairman was on the other side. There were, I think, nine people on the board, with four (including me) on my side, three (including the chair) on the other, and two swinging back and forth with each argument. At one point the chairman said each side had clearly made its points and that he would call a vote after he wrapped up his last points. But as he wrapped up, he could tell that one of the two "swing votes" he thought he was swaying had, instead, become puzzled, and he wasn't sure he had her vote after all. So when he wrapped up, despite my objections, he decided not to take the vote after all. Instead, he called on the swing voter to ask what was puzzling her. Well, that re-opened the whole shebang again. The debate went back and forth, and then he again promised to finally hold the vote. This time, because of who had spoken when, I had what should have been the last word. When I finished, the body language in the room made it clear I had won the day: Both swing members were about to vote my way.

So the chairman didn't take the vote. He started making his arguments again, and threw in a new wrinkle. And the swing members started swinging back his way.

Well, this process repeated itself about six more times. No matter what happened, the chairman would not, absolutely would not, actually allow the vote to take place until he felt sure beyond a doubt that he had the majority. It didn't matter how many times he promised a vote after "just five more minutes." Unless he could win, he wouldn't hold the vote, and unless he held the vote, he couldn't lose. This went on for something like two hours overtime, late into the night. And when I objected to his tactics, he said, in effect, "Tough: I'm chairing this meeting. I decide when we vote." It sounded an awful lot like Obama saying "I won."

Finally, having worn down everybody, the chairman saw that just in order to get out of there, both of the swing members would give in. Reading their expressions correctly, he suddenly called for a vote, and he won, 5-4.

That's what Obama is doing. But refusing to admit defeat, by keeping the subject open, he is hoping to find the one window of opportunity when the stars and votes line up, and then have Congress pass this health care monstrosity.

What Thursday's summit did was buy time. It kept everybody at the table. It kept the issue open. And the whammy vote is still waiting to be sprung on us.

That said, Obama is so wrong on all this that it is outrageous. He made a terribly false analogy. He spoke about the advantages of purchasing power, saying that with greater purchasing power that supposedly comes from consolidating into a large purchasing pool, costs will go down. He used Wal-Mart as an example. But it's a bad example. What happens with Wal-Mart is that, once Wal-Mart has driven all of its nearby competition out of business with low prices, then it slowly hikes its prices -- because it can afford to do so, because it has no competition. At least to an extent. The other thing Wal-Mart does is it starts buying more and more from small-shop suppliers, until it becomes a majority of the suppliers' business. It then pressures the suppliers for "exclusive" deals, so that because it purchases in bulk, it corners the market for that particular supplier. Then, and only then, once the supplier is hooked, it unleashes the whammy: It dictates to the supplier the prices at which it, Wal-Mart, will buy the suppliers' goods. So while consumers of Wal-Mart benefit in the short term, the suppliers all get squeezed. In the long run, the suppliers, the wholesalers, get squeezed almost out of business -- and the repercussions can spread, so that sometimes a whole community gets pinched.

This isn't to knock Wal-Mart. Thank goodness Wal-Mart is there to provide goods at low prices. And thank goodness that no community acts entirely in isolation, and that cars exist, because market forces still apply from community to community and state to state so that Wal-Mart itself answers to market forces too. The market is mostly self-correcting. If Wal-Mart squeezes too much, its supplier runs out of business. That hurts Wal-Mart. So Wal-Mart answers the market forces. And we all benefit.

But health care cannot work that way, or at least not with government in the role of Wal-Mart -- because the government does not answer to market forces. We saw that with Fannie and Freddie. When they "failed," they didn't go out of business: Government just bailed them out. By borrowing from our children, and by raising taxes or fees. Meanwhile, thousands of banks were forced to adopt new lending standards that are too strict, even though their old lending practices were fine under normal circumstances -- and the economy slowed down even more without enough credit acting as necessary grease for the works. In short, the downstream consequences were horrible, while Fannie and Freddie skated.

So too, in health care, will the downstream consequences be horrible. Once government takes over the huge role of "bulk purchasing agent," it faces no real pressure -- but the doctors face pressures, and the remaining insurance companies face pressures until they go out of business, and the patients face rationing, and.... and so on.

In short, Obama's argument is nonsense. Yet even nonsensical arguments sometimes can start sounding reasonable when you are tired of a subject -- and even if there is only a small window when the argument is taking hold, the "chairman" or president can call for a vote right at that moment -- especially in a closed universe such as Congress -- and pull out a "win" on the issue at hand.

The Democrats tried the bulk purchasing argument, by the way, with the Medicare prescription drug program. In what was otherwise an execrable new program, Republicans insisted on one market-based provisions: namely, that drug prices be determined by the market rather than by having government do the negotiating. Democrats desperately wanted government to negotiate the prices, through bulk purchasing power. When they couldn't get their way, they did some math and tried to insert a provision saying that government would at least set the premium prices that the private companies would charge. The premium they wanted to set to start at $35; they thought that without such price controls, the premiums would rise astronomically, well above that.

With G.W. Bush in the White House, that premium price control also was blocked. So, to the dismay of the Dems, the market was allowed to set premium prices.

Well, lo and behold, what happened? After the first two years, the average premiums were $24. In other words, the market worked better by $11 per month – right around a 30 percent savings for the average participant. What the Democrats thought would be a great price, $35, and wanted to write into law, turned out to be an absolutely awful deal -- or at least it would have been awful if it actually had been written into the law.

Obamacare would follow the same model. The bulk purchasing of government would destroy competition, not add to it. And costs would go up, not down.

But Obama will keep trying to argue otherwise. And when he thinks that, by hook or by crook, he finally, at least temporarily, has the votes in hand, he will try to shove it right down our throats. Conservatives who want to block it will need never to let down their guards.

Quin Hillyer is a senior editorial writer at the Washington Times and senior editor of The American Spectator. He can be reached at QHillyer@gmail.com.