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What Is Max Baucus Doing?

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No one knows what Sen. Max Baucus is doing right now. Well, that's not quite true. Chuck Grassley probably knows. And Olympia Snowe probably knows. And Kent Conrad. And a few other senators and staff members. But that's about it. The Finance Committee, in recent months, has entered total lockdown -- even from itself. Sen. Jay Rockefeller, who chairs Finance's health subcommittee, has been totally shut out of the process. So too have a number of other Democrats on the Committee.

That's created a huge amount of uncertainty at the center of health-care reform. Baucus is the key senator on the key committee. And very few know what he's doing, or why it's taking this long, or what the sticking points are. House Democrats are terrified that they'll take a tough vote on an aggressive health-care reform bill only to see their legs cut out from underneath them when Baucus emerges with a tepid -- but bipartisan -- alternative. Senate Democrats are furious that Chuck Grassley and Olympia Snowe have had more of a role in the process than they have. And above all, everybody is confused.

My semi-informed guess is that if you want to see where Finance is going, look at what Doug Elmendorf, the director of the Congressional Budget Office, is doing. He is systematically, and fairly explicitly, closing off every door to control costs save for reforming the employer tax exclusion. He has dismissed any serious savings from the Independent Medicare Advisory Council proposal and the public plan and comparative effectiveness and general efficiencies. He has said that in the House bill, "the curve is being raised." This prompted Grassley to say that Finance is working to "overcome the shortcomings" of the House's effort.

Baucus and Grassley have long wanted to reform the employer tax exclusion. And they're right to do so: It's bad policy, and breaking it apart is in fact one of the best things we could do to resolve some of the system's inefficiencies. The problem is that no one else wants them to touch the employer tax exclusion. Not the Democrats in the Senate. It has no support from Democrats in the House. A few weeks ago, it looked completely dead. Now, it doesn't.

It's hard not to wonder whether Baucus is waiting on his bill while Elmendorf does some of his work for him. By holding his proposal back while the CBO trashes the House bill, he's letting people become more desperate for a bill that can be said to solve the cost problem. It may not be that Baucus can't reach a deal in his own committee -- or at least within the inner circle on his committee -- so much as he's waiting until the rest of the Senate is ready to embrace the deal he actually wants.

The question is what exactly he wants. Reforming the employer tax exclusion would be a good thing. Cutting subsidies and traveling further away from universal coverage would not be. And the problem, for now, is that no one knows what Baucus is doing, and he's cut out almost all the liberal voices on his own committee. That's made people understandably nervous. On the other hand, Orrin Hatch left Baucus's process last week. So whatever is going on in that room, it's not to the liking of conservative Republicans, either.

Photo credit: Melina Mara -- The Washington Post Photo .

By Ezra Klein  |  July 27, 2009; 11:17 AM ET
Categories:  Health Reform  
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Comments

To those select few who know what Max is doing I would add some number of lobbyists and insurance industry muckity-mucks.

Posted by: humfry | July 27, 2009 11:38 AM | Report abuse

If all these sins of CBO and Baucus are about rest of the world finally squaring with the need to tax employer benefits, amen! Ezra let us hope you are right and it is not just your wishful thinking considering your predilection from start for such a source of funding.

And indeed if this is Baucus and Grassley's playbook - they are following one heck of a playbook. This means they need to have nerves to pull off such a high wire act, be able to 'bend Obama White House as well'. Can our Senators be politically so savvy to that? Anything is possible, Senators of United States can be smart too.

Posted by: umesh409 | July 27, 2009 11:46 AM | Report abuse

Is it too paranoid to think that the Hatch walking-out was staged?

Posted by: smhjr1 | July 27, 2009 11:51 AM | Report abuse

The reality is that it's proving impossible to sell an entitlement expansion and a tax increase as a cure for the deficit and the economic crisis. It's just not a workable sell. The American people just aren't stupid enough for Democratic Healthcare reform to work. They will have to put together the largest pork bbq in history to get this rubbish through.

Posted by: fallsmeadjc | July 27, 2009 12:01 PM | Report abuse

The Democrats were hoping that they could get away with talking about controlling costs but not actually proposing anything that would meaningfully cut costs because they are worried those things are unpopular. (And they probably would be- the real cost problems are that people simply cannot afford to fix many problems) Dramatically changing the compensation structure to healtcare workers would change costs. Dramatically changing end of life decisions would change costs. Spending money on IT infrastructure is just not the kind of change that will change the cost at a meaningful level.

Posted by: spotatl | July 27, 2009 12:02 PM | Report abuse

Is there any reason Harry Reid can't just do what Pelosi and Waxman did and tell Baucus to get a bill out of his committee by such-and-such date or he'll go to the floor with one of the other committee's bills?

Posted by: redwards95 | July 27, 2009 12:21 PM | Report abuse

We had the greatest entitlement expansion in history in the Great Depression. Now when the American people are at greatest risk of losing their health care coverage through unemployment or cost (employers dropping health care coverage) it is not a stretch to say there is support for this entitlement that every other developed country in the world has. When we pay 2 trillion$ for Iraq we can't pay a little more in taxes for the security of knowing you always have health care coverage. And health care security is the central point, not cost:
Latest polling-
http://www.politico.com/blogs/bensmith/0709/Insecurity_not_satisfaction_with_heath_care_system.html

Of course the Congress and the punditocracy all have theirs so they don't get this at all!
http://www.statesmanjournal.com/article/20090726/OPINION/907260324/1050/NLETTER01?source=nletter-news

Posted by: cmpnwtr | July 27, 2009 12:28 PM | Report abuse

Baucus needs to be term-limited when he's up for re-election. Or better, can we recall senators?

Posted by: jlohman | July 27, 2009 2:03 PM | Report abuse

If what you suggest is correct (and I suspect it myself), Elmendorf is way out of line. It's one thing to analyze the costs of a series of options, quite another to publicly destroy all but the one that Elmendorf demands. If true this is moving far beyond the CBO's legitimate role, and if true Elmendorf is personally endangering the chances of passing health care reform.

Maybe there is something to be said for taxing employer provided health insurance, but this wuold affect people in states with a high cost of living far more than people in say--Montana. A couple with children in a state like Massachusetts where I live could easily get pushed into the taxable plan category even with a very modest income for the state. Even with the tax benefit, Massachusetts taxpayers are still sending out more tax dollars by far than the state receives back.

Posted by: bdlieberman | July 27, 2009 2:23 PM | Report abuse

Why is Doug Elmendorf closing off every door to control costs?


Why is he putting his thumb on the scales?

Posted by: reach80 | July 27, 2009 7:09 PM | Report abuse

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