How the Republican Congress can create jobs, fix Obamacare

The GOP’s takeover of Congress could mean more battles with the President and Democrats, or could lead to the changes Americans want. 

New Senate Majority Leader Mitch McConnell and House Speaker John Boehner must decide whether pushing for changes to Obamacare is a wise political investment.

The historic takeover of the Senate gives Republicans a powerful opportunity to reshape a health care landscape that’s been almost singularly defined these last six years by President Obama and his Affordable Care Act.

Riding the wave: New Senate Majority Leader Mitch McConnell and House Speaker John Boehner have a chance to work with the President to get a flood of things done for the American people.

Figuring out how to exercise that authority to improve the law’s flaws without overreaching and returning the federal government to total gridlock is a complicated task.

But from the start, let’s be clear: The GOP can claim a mandate to reform what remains, a year after its error-riddled rollout, a deeply unpopular law.

One of the biggest reasons Republicans took back control of the Senate was broad voter dissatisfaction with the Affordable Care Act. On the campaign trail, candidates hammered the point home relentlessly.

 

In exit polls, 48% of voters said the President’s signature health care law went too far; just 21% said it was about right.

This does not mean that the GOP can easily repeal the law. The filibuster in the Senate, combined with Obama’s veto pen, give the Democrats serious leverage. Obama also said this week that removing the law’s individual mandate “is a line I can’t cross” because it would undermine the statute’s basic framework.

But both the House and Senate can and should act decisively to fix some of Obamacare’s most harmful side effects. And there are all kinds of things that President Obama wants — from government spending to reauthorizing legislation to confirming his nominees — which he will only be able to get upon giving some concessions back to the Republicans.

Some might characterize this as hostage-taking, but it really just basic democratic deal-making. It is important to remember that the biggest bipartisan deals in the Clinton administration, such as welfare reform and the budget compromise, came in the period when Republicans controlled both the House and Senate.

And what’s poorly understood is that many of the most pressing Obamacare fixes can and should win substantial Democratic support, so they should not set off major partisan wars.

At the top of this list for reform is the medical device tax, which incoming Majority Leader Mitch McConnell correctly calls “deeply, deeply unpopular with the American people.”

Device tax critics see this 2.3% tax on medical devices as a tax on innovation — and with the backing of Democratic Senators like Amy Klobuchar and Al Franken, from medical device hub Minnesota — this initiative could make it onto Obama’s desk with bipartisan backing.

A second point of attack is the bill’s definition of the work week. The ACA’s definition of 30 hours as full-time employment provides perverse incentives to employers to reduce the number of hours worked so as to avoid the ACA’s requirement that employers provide health insurance or pay a penalty.

Raising the limit to 40 hours a week would end this incentive to reduce the numbers of hours worked. Given the potentially positive impact on employment, changing the definition in this way should generate support from both sides of the aisle.

Third is the excise tax, which both business and labor have concerns with. The threshold for paying this tax, designed to hit high value, “Cadillac”-style health plans, increases over time, and not according to medical inflation.

As a result, an increasing number of plans will trigger the excise tax over the next two decades; by 2031, the average family health care plan is expected to hit the excise tax threshold. The impact that the excise tax will have on lower-income workers, as well as opposition to the tax from both labor and business, could help generate bipartisan support for getting an excise tax repeal through Congress and to President Obama.

The crucial question McConnell and House Speaker John Boehner must reckon with is whether pushing hard for changes to Obamacare is a wise political investment.

Some in the GOP believe that changing the law without repealing it is a strategic error. Under this theory, an improved law might become more popular, and therefore harder to repeal should the GOP gain control of both Congress and the presidency after a future election.

On the other side of the equation is Congress’ understandable desire to prove to the American people that Washington can get things done.

Getting rid of the device tax will help device manufacturers.

Changing the definition of full-time work could strengthen the job market.

Repairing the excise tax will reduce the pressure on employers to engage in cost sharing to reduce the value of their health plans and hence their exposure to the tax.

Far better to fix those problems now when the opportunity is at hand. As President Obama just learned, future elections do not always bring you what you want.

Troy is president of the American Health Policy Institute and a former deputy secretary of the U.S. Department of Health and Human Services.

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Battles over fiscal stimulus and Obamacare should remain in the past, and both parties should focus instead on immigration and reforming tax codes. 

The new Congress, led by newly empowered Senate Majority Leader Mitch McConnell and House Speaker John Boehner, must first do no harm. That is, avoid repeating the debilitating brinksmanship over the federal budget that led to last year’s government shutdown and threats to default on the federal government’s debt.

This is a low bar, but a critical one. Strong recent job growth and the rapidly falling unemployment rate show that U.S. businesses have finally gotten their grooves back. Instead of continually focusing on cost, they are thinking about how to expand.

It is no coincidence that this shift in business thinking occurred after Washington called a truce in its budget battles, ending the October 2013 shutdown. Once lawmakers took themselves off the front pages, uncertainty lifted and confidence improved. The economy kicked into higher gear.

To avoid more of this political warfare, which was so economically debilitating, Democrats should give up on further fiscal stimulus — temporary government spending increases and tax cuts. While these were effective in ending the recession, they are no longer needed. Republicans hate fiscal stimulus.

For their part, Republicans should give up on repealing Obamacare. While healthcare reform has been messy, it is well on its way to being accepted and may ultimately do some good. The cost of medical care has increased more slowly since the reform. Nothing would anger Democrats more than a continuing drive to scrap it.

Doing nothing isn’t much of an economic policy, however, especially when our economy faces so many challenges. Left unaddressed, these won’t short-circuit the recovery, but they will corrode and weaken it. Longer term, the economy will be a shadow of what it could be.

Immigration reform is key. The U.S. population is rapidly aging and the baby boom generation is retiring. In just a few years our biggest problem will be not unemployment, but a shortage of qualified workers.

The best and brightest from the rest of the world who come to our universities should be allowed to stay and work here when they graduate. Because of our antiquated quota system, many can’t.

Immigrants are a fountain of innovation and entrepreneurship. They are by definition risk-takers — most overcome difficulty and even danger to get to the U.S. They are prodigious at starting new businesses, which are the largest contributors to job creation.

Corporate tax reform would be another big plus. Eliminate the loopholes and preferences in the tax code that favor some industries and firms over others, and use the additional tax revenue to lower tax rates for all businesses. High corporate tax rates put American companies at a significant competitive disadvantage.

Such a deal has long been discussed, but Republicans and Democrats haven’t had the political courage to take the plunge. Finally, they must.

Also eliminate the incentives that large multinationals have to keep their profits overseas to avoid higher U.S. taxes. The cash could come home and help finance more investment and hiring. Obama has hinted that he would be open to such an approach, as has McConnell.

Coming to terms on trade deals pending with Europe and Asia would be a boon to the economy. Our companies are highly competitive, and given a level playing field do very well against the rest of the world. While the global economy will have its ups and downs, much of the future demand for what we produce will come from overseas.

Opening the U.S. economy to trade has been hard on less-skilled workers, who must compete head-on with cheaper foreign labor. But this process is for the most part over. China and the rest of the emerging world are now much wealthier, and increasingly want to buy the goods and services U.S. companies produce.

It is mind-boggling that we aren’t investing more in our infrastructure. Our roads are riddled with potholes, our Internet is way too slow, our airports and air-traffic control systems are antiquated, and many of our seaports are too small to handle the ships vital for commerce.

Though a few members of McConnell’s and Boehner’s caucuses will revolt at the prospect of spending more on anything, common sense will win out. The cost of upgrading our infrastructure will never be lower than it is today. Long-term interest rates are at rock-bottom and private investors are falling over themselves to team up with government on these projects. This is a chance to create new jobs and spur economic development that shouldn’t be missed.

This economic policy agenda is politically difficult, but doable. Plenty of common ground exists between Republicans and Democrats on these issues, if they choose to find it. Yet even if lawmakers can’t come to terms, nothing will keep our economy down — as long as they simply don’t get in the way.