With the news today that Senate Republicans are likely to give up their quest to repeal and/or replace Obamacare, we are re-posting our analysis, originally published on June 28. Despite GOP efforts to revamp their plan, the underlying dynamics and conference cleavage we identified last month remain the same.
McConnell may yet fashion a deal, but the delay suggests an uphill battle. Here’s why.
1. Senate Republicans are a deeply divided conference with a slim majority.
The figure below shows the broad historical sweep of the party’s ideological diversity (as measured by the party’s standard deviation in Common-Space Nominate scores) arrayed against its size. Today’s Republican Senate is less ideologically fractured than it was in the late 1970s. But ideological disagreement has been on the rise for over a decade. With such a slim majority, leaders have little margin to spare in securing a majority. The party has also moved significantly to the right since then, making Republicans far less interested in collaborating with Democrats.
This ideological cleavage within the GOP complicates McConnell’s ability to cobble a deal. It’s hard to satisfy both sides of the Republican spectrum. The most conservative senators say that McConnell’s plan leaves too much of Obamacare in place. More pragmatic senators want to save some of the more popular elements of Obamacare, especially if they’re from purple states or from red states where the Republican governor wants to keep the expanded Medicaid that came with the ACA. And with only 52 Republicans in the chamber, McConnell can afford to lose no more than two votes.
2. There’s no clear deadline.
Most heavy legislative lifting in recent years has come on “must-pass” bills before a pressing deadline, like measures to avoid defaulting on the government’s debt or passing a budget to avoid shutting down the government. When lawmakers want to avoid blame for causing a disaster, the central dealmaker has a lever for pressuring for compromise. President Trump has claimed that “Obamacare is dead,” suggesting that senators have no choice but to act. But few seem to believe him.
3. Live by the rules, die by the rules.
Republicans are using arcane budget rules called “reconciliation” so that they can prevent Democrats from filibustering, knowing that Democrats were never going to join the GOP to undo President Barack Obama’s landmark legislation. But these constraints also make it harder for McConnell to forge a compromise. Under these rules, only provisions that affect government spending and taxes can be squeezed into the bill. The bill’s heavy dose of tax cuts for the wealthy must be fully paid for by other provisions in the bill to meet Congress’s demand that the bill not increase the deficit. All that means the rules limit how far McConnell can go to convince individual senators to support the bill.
4. Secrecy seems to have backfired.
McConnell and his staff largely drafted this bill in secret, hoping to speed the final package through a notoriously slow-moving Senate. If negotiated in the open by committees, the party’s slim, divided majorities on key Senate panels might have doomed the bill. But centralized, secret bargaining that kept many senators in the dark for so long is making matters worse for McConnell. He now struggles to bridge those divisions at the last minute.
So what comes next?
During the legislative recess, can Senate GOP leaders regroup to secure a winning deal? It’s possible. Recall that a larger House Republican conference also initially faltered in its drive to pass a bill. Conservatives then refocused negotiations and pulled the bill to the right — and it passed the House. Many senators claimed that the House bill was dead on arrival and would have to be moderated, given senators’ much larger and naturally more diverse constituencies than those of their counterparts in the House.
And yet the current Senate version looks suspiciously like the House bill — even, perhaps, more draconian in its Medicaid cuts. There’s always a chance the president will demean the Senate bill, undercutting GOP support. Delay surely complicates — and may doom — McConnell’s partisan attempt to push conservative policy swiftly through the Senate with a fractured and tenuous majority.
Mark Spindel is founder and chief investment officer at Potomac River Capital LLC, a Washington-based investment firm.
Sarah Binder and Mark Spindel are co-authors of “The Myth of Independence: How Congress Governs the Federal Reserve,” forthcoming from Princeton University Press this summer.