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November 20, 2011
David Warsh, Proprietor


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Health Care Overhaul and the (Legislative) Hot Stove League

When the Supreme Court agreed to take the case of the 2010 health care act, it virtually guaranteed that, barring an unforeseen emergency, the overhaul will be the central issue in next year’s election, set against the background of the general state of the economy.

In search of some perspective on 2012, I pulled down The Laws that Shaped America: Fifteen Acts of Congress and their Lasting Import, by Dennis W. Johnson.  A professor at George Washington University, Johnson is a scholar of considerable ingenuity and energy.

Many other surveys of legislative history are available. His has just the right combination of simplicity and depth. He omits declarations of wars and related acts. It’s a thick book: he writes a good deal about the background of each measure.  There is an annotated appendix for important statutes that didn’t make the cut. The fifteen that did are listed below.

Johnson thinks that the Patriot Act of 2001 and the Emergency Economic Stabilization Act of 2008 may qualify in time. I have my doubts about the second, since it was the 95-year-old Federal Reserve Board that stemmed the panic in 2008, not the Congress.  Johnson is hoping for a second edition of his 2009 book in due course; let’s hope he gets it.

Meanwhile, for the purpose of creating a Legislative Hot Stove League, I have added to his list a sixteenth law, the Nation Defense Education Act of 1958, for purposes of symmetry; a seventeenth and eighteenth, the Sherman Antitrust Act of 1890, and the Immigration and Nationality Act of 1965, for purposes of inclusiveness; and a nineteenth and twentieth, the Federal Reserve Act of 1913 and the Glass-Steagall Act of 1933, for reasons that will become clear in due course.

Here, then, are twenty landmark acts against which to measure the prospects for the health care overhaul.

The Northwest Ordinance of 1787.  Originally enacted by the Confederation Congress, the measure incorporated the lands west of the Appalachians and north of the Ohio River, provided for creation of new states (no fewer than three, or more than five), set aside land for public schools, and, at the last moment, banned slavery from the territory.

The Louisiana Land Purchase Ratification of 1803.  When Napoleon, defeated by rebels in Haiti and hard at war with the British, offered to sell not just New Orleans but French claims to land west of the Mississippi River, President Thomas Jefferson accepted with alacrity.  A special session of Congress quickly ratified the deal.

The Kansas-Nebraska Act of 1854. Illinois Sen. Stephen Douglas wanted to facilitate the building of a transcontinental railroad west from Chicago. To attract support from delegations of the Southern states, he sought to overturn the Missouri Compromise of 1820, which had extended slavery to that state but banned its further spread. The measure passed, leaving the slavery question to “popular sovereignty” in each state, precipitating events that led to the Civil War – “bloody Kansas,” Harpers Ferry and all that.

The Homestead Act of 1862 and the Morrill Land Grant College Act of 1862, passed without controversy in the first months of the Civil War, greatly stimulated the westward expansion by selling off vast tracts of public land to build railroads and canals, establishing colleges and universities throughout the West, and creating 1.7 million homestead farms outside the South in the next twenty years.

The Sherman Antitrust Act of 1890. Sen John Sherman (R-Ohio) had been a colleague of John D. Rockefeller.  He thought he knew anticompetitive behavior when he saw it.  The act that bears his name, drafted with shrewd economic intuition, prohibits monopolies and the restraint of trade. It quickly became the centerpiece of US competition policy, especially after the Supreme Court in 1911 interpreted it to require the breakup of Standard Oil. (Thanks to Peter Gosselin for the addition.)

The Federal Reserve Act of 1913. After J.P. Morgan stemmed the Panic of 1907, Congress quietly created the Fed to oversee a powerful banking system, damp speculation leading to frequent crises, and serve as lender of last resort when crises occurred. (The nation had done without a central bank since 1836, when the charter of the Second Bank of the United States, which performed some of the same functions, had been allowed to lapse.) This time twelve regional banks with public/private governance were created, along with a national board of governors. Only in the 1930s was the Federal Open Market Committee established, assuring federal authority over the system.

The Nineteenth Amendment to the US Constitution, 1919.  The suffrage movement bubbled throughout the second half of the nineteenth century, as women entered the workforce in increasing numbers. Anti-suffrage sentiments waxed and waned, but after the first woman (Jeanette Rankin) was elected to Congress, in 1917, bills to amend the Constitution were introduced, both President Woodrow Wilson and evangelist Billy Sunday signed on, and in 1920 Tennessee was the thirty-sixth state to ratify the measure.

The Glass-Steagall Act of 1933. Reacting to waves of bank closings in the wake of the stock market crash of 1929, Congress created the Federal Deposit Insurance Corp. to insure bank deposits, separated commercial banks from investment banks, and expanded the powers of the Fed. It took forty years for financial entrepreneurs to begin to innovate around the intentions of the act, and another thirty-five before the US once again experienced a full-throated panic.

The National Labor Relations Act of 1935.  More commonly known as the Wagner Act, after its chief sponsor, Sen. Robert Wagner (D-NY), the law supported the rights of workers to join unions and to bargain collectively.  In 1937, its constitutionality was affirmed by a narrow margin in the Supreme Court

The Social Security Act of 1935. Enacted in haste by a large Democratic majority, Social Security created federal grants to states for unemployment insurance and welfare programs, established various public health and job-training programs, and established old-age pensions paid directly by the federal government to individuals.  It was gradually expanded over the years, all but eliminating poverty among the elderly.

The GI Bill of 1945 and the National Defense Education Act of 1958.  Both made higher education available to much broader populations than before.  Each expanded support for research and development at critical junctures in American economic growth.  The NDEA, in particular, gave a jump-start to the computer age.

The Marshall Plan of 1948.  Passed at the urging of Secretary of State George Marshal, the Economic Cooperation Act of 1948 committed large sums of foreign aid to European reconstruction – precisely the opposite of the disastrous Allied reparations policies that followed World War I. The measure was a central pillar of US opposition to Soviet communism in the early stages of the Cold War.

The Interstate Highway Act of 1956.  The most expensive public works project ever undertaken in the United States, the highway act transformed the American landscape, financed in large measure by a federal gasoline tax.  Automotive culture flourished, over the next fifty years, but older cities were diminished.

The Civil Rights Act of 1964, the Voting Rights Act of 1965, the Immigration and Nationality Act of 1965.  Much like the suffrage movement, the civil rights movement bubbled just beneath the surface of national life for fifty years before erupting on the front pages in the 1960s in a variety of non-violent protests.  In the aftermath of the assassination of President John F. Kennedy, President Lyndon Johnson overcame Southern domination of Congress to pass first a bill barring discrimination, then another, enfranchising new voters.  A third measure, repudiating restrictive immigration quotas enacted in the 1920s, passed into law almost unnoticed.

The Medicare and Medicaid Act of 1965.  Proposals to establish a program of national health insurance had been defeated after President Harry Truman was re-elected in 1948, but Congress opened the back door to it in 1965 (and added medical assistance for the poor) when Rep. Wilbur Mills (D-Ark.) devised an eldercare package that defused physicians’ and hospitals’ objections and which passed smoothly into law.

The National Environmental Policy Act of 1969.  The act was just five pages long, and did little more than express a series of good intentions, such as establishing a Council on Environmental Quality to advise the President.  But it set the stage for the passage of the Clean Air and Water Acts, and the creation of the Environmental Protection Agency and the National Oceanic and Atmospheric Administration.

At the end of his book, Johnson seeks some common features of his landmark statutes. The president was deeply involved in some measures, not in others he writes.  Some were enacted quickly, while other others were drawn out. Seven of his fifteen statutes were enacted when one party dominated Congress and also held the White House as well. (The National Environmental Policy Act and the Marshall Plan passed divided Congesses practically by acclamation.)  Two measures were bitterly resisted: the Kansas-Nebraska Act, by the fragmented anti-slavery forces; and the 1964 Civil Rights Act, which sparked a filibuster by Southern Democrats hoping to kill the bill.

There will be a great deal of reporting and writing in the coming months about the prospects for the health care bill:  before the Court, in the election, over time. It’s useful, I think, to have in mind at the beginning of the debate a history of legislative landmarks such of these, both to serve as a rough guide to the patterns of the past and a reminder of the way decisions like these have been made. It may all be sausage, but it’s a certain kind of sausage.

Daunting problems besides health care lie just over the horizon, including the mitigation of climate change and financial reform. The prospects for rolling back government altogether in these areas, as the current Republican leadership in Congress seems to promise, are not good. There will, however, be many opportunities to make government more effective.

It is important to remember that the compulsory insurance at the heart of the Patient Protection and Affordable Care Act of 2010 is, at best, only half of what would be required to achieve the restructuring originally envisaged by the Obama administration as a mean of bringing medical costs under control and extending basic benefits to the entire population.

The Independent Payment Advisory Board, established by the 2010 Act but given little real power, was designed to ultimately become a Federal Health Board, modeled on the Federal Reserve Board, with similarly decentralized public-private governance, and great power to set treatment standards for those who participate in its programs.

Almost certainly a second legislative act would be required to extend the board’s powers.  The battles over soaring costs, the extension of Medicare to younger citizens, “death panels” and rationing, and the rights of well-to-do citizens to continue to privately purchase additional medical care would be renewed.

Meanwhile, there will be five and a half hours of oral argument next March before the nine justices (perhaps of sufficient interest to finally bring television cameras to the Court?); then a decision by June 30, when the Court adjourns. After that will come the political conventions, and the run down to the election in November.  It’s going to be a banner year.

 

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4 Comments

  1. John Albin wrote:

    My prediction is that the Supreme Court will strike down the healthcare bill because of the “individual mandate.” The logic behind such a reversal will be specious, except in Scalia-world. That said, I’m not sure how much practical difference it will make. One of the interesting features of some of those “landmark” bills is that they represented ideas whose time had come. I’m put in mind of the ERA, another landmark idea whose rejection by the politico-legal process turned out to be mostly irrelevant. That’s not to say that discrimination against women no longer exists, but the culture and the working world have largely moved past the blatant problems ERA was intended to correct. National health may be an idea whose time has come and to which the markets are beginning to adapt irreversibly. Or so said the NY Times last week, perhaps factually, perhaps propagandistically.

    Monday, November 21, 2011 at 1:32 pm | Permalink

  2. I have to agree that this will be a part of the debate in the up and coming election. My question; is this in favor of Obama or the GOP candidate?

    I would like to think that the court will NOT strike down Obamacare, but then again, black swans aren’t as rare as they used to be…

    Monday, November 21, 2011 at 5:06 pm | Permalink

  3. For black swans to be rare, you would have to be ignorant of Australia.

    The paradigm makes much more sense if it is reconceptualized to “things about which we are ignorant, or paid to pretend ignorance” instead of “things that are unlikely to happen.”

    I would like, for instance,to be ignorant of Antonin Scalia’s history, so I could be optimistic and/or disagree with John Albin. But that model is even less valid than Mankiw, Romer, and Weil (1992) or Chamley (1995, 1996).

    Monday, November 21, 2011 at 5:56 pm | Permalink

  4. edward caulfield wrote:

    The one piece of legislation that is overlooked here and that has completely changed the nature of work in America is the Taft-Hartley Labor Act. It was probably much more important in its outcomes than all of the previous labor legislationit combined. It has been used to systematically exterminate private sector labor unions throughout most of the United States. I suspect that future historians will reguard Robert Taft as a far more important and influential figure than either Eisenhower or Reagen.

    Thursday, January 26, 2012 at 7:58 pm | Permalink

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