David Brooks: The Dime Standard

David Brooks writes in the New York Times:

On Wednesday night, Barack Obama delivered the finest speech of his presidency. The exposition of his health care views was clear and lively. The invocation of Teddy Kennedy was moving and effective. The rumination at the end about the American character and the role of government was the clearest summary of Obama’s political philosophy that he has yet given us.

Best of all for those of us who admire the political craft was the speech’s seductive nature and careful ambiguity. Obama threw out enough rhetorical chum to keep the liberals happy, yet he subtly staked out ground in the center on nearly every substantive issue in order to win over the moderates needed to get anything passed.

First, Obama rested the credibility of his presidency on what you might call the Dime Standard. He was flexible about many things, but not this: “I will not sign a plan that adds one dime to our deficits — either now or in the future. Period.”

This sound bite kills the House health care bill. That bill would add $220 billion (that’s 2.2 trillion dimes) to the deficit over the first 10 years and another $1 trillion (10 trillion dimes) to the deficit over the next 10 years.

There is no way to get from the House bill to deficit neutrality. The president’s speech guarantees that the more moderate Senate Finance Committee bill will be the basis for the negotiations to come.

The Dime Standard also sets off a political cascade. Since the Congressional Budget Office is the universally accepted arbiter in such matters, the Democrats have to produce a bill that the C.B.O. says is deficit-neutral, now and forever. That means there will be a seller’s market for any member of Congress, Republican or Democrat, who has a credible amendment to cut costs. It also means the Democrats will have to scale back coverage and subsidy levels to reach the fiscal targets.

Second, the president accepted the principle of capping the tax exemption on employer-provided health benefits. The specific proposal he embraced is a backdoor and indirect version of the cap. But what’s important here is the movement and the concession on principle. Soon moderates and Republicans will produce amendments to impose a cap directly. These amendments will credibly raise revenue and reduce costs. The administration will now have no principled argument to reject them.

Third, the president accepted the principle of tort reform to reduce the costs of defensive medicine. Once again, the specific proposal Obama mentioned is trivial. The important thing was the concession on principle. There are already amendments being drawn up to create separate malpractice courts and to otherwise reform the insane malpractice system. The president is going to have a hard time rejecting these amendments just because they might reduce campaign donations from tort lawyers to the Democratic National Committee.

Fourth, the president introduced the public option to its own exclusive Death Panel. As Max Baucus has said, the public option cannot pass the Senate. On Wednesday, the president praised it, then effectively buried it. White House officials no longer mask their exasperation with the liberal obsession on this issue.

Fifth, the president also buried the soak-the-rich approach. The House Ways and Means Committee came up with a plan to raise taxes on the rich to pay for health reform. That’s dead, too. Health reform will be paid for by changes within the health care system. The president underlined his resolve to cut $500 billion from Medicare and Medicaid. This is a courageous move that moderates appreciate.

Finally, people in the administration and moderates in Congress would like to beef up the “game changers.” These are the wonky but important ideas like bundling hospital payments and increasing price transparency that might lead to a more efficient system down the road.

In short, the president can read the polls just like anybody else. He has apparently recognized the need to pull back to get something passed. He is, characteristically, trying to rise above old divisions in search of a pragmatic sweet spot. He has opened up many opportunities for intelligent Republicans and moderate Democrats to constructively offer amendments to improve the bill and bring it closer to fiscal sanity.

Which is not to say that this is effective health reform. The only risible parts of the speech came when Obama said that parts of the system work (they don’t; they’re unsustainable) and when he said he would be the last president to take on health care (we still await a president willing to take on fundamental perversities in the system).

For whatever reason, President Obama has decided not to be that president. He has decided to expand the current system, not fix it. His speech on Wednesday, and the coming legislative changes, make it much more likely he will achieve his goal.