Bill Clinton on Student Loans and Health Care

me-and-bill.thumbnail.jpegI told you all that I was going to cover Bill Cinton’s Clinton Global Initiative this week. What I didn’t tell you is that I was invited to attend a meeting between Clinton and a group of about 15 bloggers. On the eve of his big shindig, Clinton generously spent an hour and a half with us last night, answering at least one question from each of us.

I’ll talk about what he said about CGI last night as I cover the event itself. For now, I want to point out an inconsistency between what Clinton said about student loans and what he said about a public option for health care.

In response to a question on education, Clinton hailed the House’s recent action to give Federally-guaranteed loans directly to college students rather than via private loan companies. Clinton noted that under his Administration, he provided this as an option, as opposed to the required change now before Congress. Even with just the optional program, students who took their loans directly from the Federal government saved $9 billion in loan repayments. And the Federal government saved $4 billion because fewer people defaulted on the loans held by the Federal government than defaulted on private loans (this was partly because the Federal government could build in flexibility to keep loan payments affordable). If the Senate succeeds in passing this bill, Clinton noted, it would make college more accessible and affordable for the middle class, and would be a crucial element in keeping America competitive internationally.

In short, Clinton argued that by bypassing the private sector in supporting a critical service to taxpayers, both the users of that service and the government could save money and achieve better outcomes.

Clinton was much less insistent on bypassing the private sector with health care, though. While Clinton made it clear that he personally supports the public option, he suggested that those insisting health care reform must have a public option were being unreasonable. "If it’s not a net negative," Clinton said, "we ought to pass it," repeating a sentiment he voiced at Netroots Nation. Of note, Clinton also pointed out that the public option had been largely gutted by limiting access to it to those who buy their own insurance, suggesting that that made it more expendable in the bill itself.

To explain his stance, Clinton invoked an op-ed Paul Begala wrote last month. In it Begala spoke with regret of being a purist during the health care debate in 1994 and, by insisting on perfection, losing the opportunity to pass anything. The history of Social Security, Begala explained, suggested that an imperfect program would evolve over time to become a great one.

If that version of Social Security were introduced today, progressives like me would call it cramped, parsimonious, mean-spirited and even racist. Perhaps it was all those things. But it was also a start. And for 74 years we have built on that start. We added more people to the winner’s circle: farmworkers and domestic workers and government workers. We extended benefits to the children of working men and women who died. We granted benefits to the disabled. We mandated annual cost-of-living adjustments. And today Social Security is the bedrock of our progressive vision of the common good.

Health care may follow that same trajectory. It would be a bitter disappointment if health reform did not include a public option. A public plan that keeps the insurance companies honest is, I believe, the right policy and the right politics. I believe subsidies should extend to as many Americans as need help and that the hard-earned health benefits of middle-class Americans should not be taxed. I believe insurer abuses like the preexisting-condition rule should be outlawed. The question is not whether I or other progressives will support a health-reform bill that includes everything we want but, rather, whether we will support a bill that doesn’t.

Baucus and the others working on health care have earned the right to take their best shot, and we progressives should hold them to a high standard. I carry a heavy burden of regret from my role in setting the bar too high the last time we tried fundamental health reform. I was one of the people who advised President Bill Clinton to wave his pen at Congress in 1994 and declare: "If you send me legislation that does not guarantee every American private health insurance that can never be taken away, you will force me to take this pen, veto the legislation, and we’ll come right back here and start all over again." I helped set the bar at 100 percent — "guarantee every American" — and after our failure it’s taken us 15 years to start all over again.

Clinton made a similar argument. He argued that if we just get something that embraces universal coverage, even if it doesn’t achieve that, it would lead to similar fixes of the program over time. He projected that once people got health care, it would be impossible to take it away. So Congress would be forced to implement changes to bring cost savings to the government, otherwise those increasing health care costs will bankrupt America. Once people have the presumption of health care, he argued, it’ll succeed in bringing enough countervailing pressure on interest groups (the industry) to make it politically possible to pass the necessary fixes to health care to bring cost savings to the government and businesses.

Now, whether or not this scenario would work as planned, I challenge whether we can bring countervailing pressure quickly enough to solve the urgent health care problem. For example, another of Clinton’s key points is that the US needs to deal with climate change at least partially because the investments in new technology to fix climate change will drive job growth. I pointed out that health care costs today would prevent us from seeing the benefits he promised. Even though the Volt is a great car, it won’t be able to compete with Chinese-built electric cars partly because GM’s health care costs are so great. We don’t have the manufacturing capacity to build wind turbines, largely because our lack of competitiveness (partly driven by health care) has driven that capacity overseas. Clinton didn’t have a convincing response to my challenge on this point.

But put aside the urgency of health care reform and go back to the analogy Clinton and Begala are making with social security–and the analogy I’m making between health care and student loans.

First, the analogy between social security and health care–at least as described in the Max Tax–is not directly on point. That’s because the people who would be getting a new government benefit (aside from subsidies) would be those added to Medicaid–those up to 133% of the poverty level. I’m skeptical, first of all, that conservatives couldn’t succeed in cutting this benefit in the future. After all, that’s one of the things states are doing as they try to deal with budget crises, cutting back on access to Medicaid. So it’s clear that it is politically possible to take Medicaid benefits away from poor people. And subsidies–not to mention mandates that require middle class families to spend up to 13% of their income–would seem to be much vulnerable to political attack in the guise of deficit control.

And then there’s the lesson of direct loans to students, where I started this post. Clinton’s optional direct loan program did save money and it was a valuable benefit for students. But then Bush came in and moved away from that program, channeling the money instead through private loan companies, in spite of the fact that it was worse on many levels for the taxpayers. Sure, we may succeed in reversing Bush’s work and further expanding the direct loan program (though the loan industry is gearing up for a frontal assault on the bill in the Senate). But the direct student loan program shows that sound government benefits are not unassailable and do not necessarily progress towards greater access. And this is particularly true where a powerful industry stands to gain captive customers, as is the case with health care as well. 

We’re going to have to fight to fix health care regardless of what bill passes. But this goes back to why including a public option–no matter how circumscribed–is so important. If Clinton and Begala are so sure that an imperfect program can be perfected and expanded through time, isn’t it crucial to start with the program in the first place? That is, if we’re going to eventually get to the point where the middle class can buy health care through the government, rather than through private companies, don’t we need to start with that program in place in the first place? 

I want to reiterate that Clinton himself supports a public option–he just assigns it less importance than many of us do in the overall bill. But it seems that two of the examples that Clinton himself raised demonstrate the need for a public option now to ensure that some day–hopefully, before it’s too late to make the US competitive internationally–an imperfect health care plan does evolve into a more effective one.

33 replies
  1. NelsonAlgren says:

    Did you, or anyone ask him how he thought a good health care bill(as compared to the shitty Baucus or Conrad solutions) would drive election turn out at the mid-terms? And did anyone challenge him that the 1994 mid-terms were such a clusterfuck for the Democrats because Clinton and his neo-liberal economic team insisted on playing the Versailles game of “punch the hippies”? I guess what I am asking is: Does he realize that the Democrats can decide the results of the mid-term by whether they pass half-ass stuff or whether they pass a strong health care bill and rein in the banksters?

  2. Gregg Levine says:

    “If Clinton and Begala are so sure that an imperfect program can be perfected and expanded through time, isn’t it crucial to start with the program in the first place?”

    Thanks for writing formally what I have been saying casually for weeks. The expand Social Security analogy is a PRO PO argument. SocSec isn’t the “marketplace” in this story, it is the PO. We pass a public component, then expand on that.

  3. SaltinWound says:

    It’s hard for me to tell if these imperfect programs are a compromise or if they’re part of the plan. Congressional Democrats just seem so eager to abandon the perfect plans, even before anyone’s asked them to. It’s how we ended up with crap like immunity for telecoms.

  4. Arbusto says:

    Clinton/Obama, Pragmatism inaction (pun?). 1/6 of our GDP is not only contributing to the death of the un/under insured, but as Marcy points out again, makes manufacturing in the US noncompetitive. Heath care is the crux to bringing jobs back to the US and establishing new, green industries.

    Watching Trumka last night on Maddow, his simple, though difficult to implement, theme is easier union formation, better pay, the ability to live on your income without going into debt and better health care. Of course those three pillars are anathema to Blue Dogs/GOP and every reform will be fought, regardless of the consequences on the Nation.

    • solerso says:

      A reinvigorated union movement is so important to any broad progressive reform movement. When the unions leadership and membership were complacent for 30 years we get what we have now;unions busted almost out of existence and a democratic party that thinks the unions and they’re 10 million members are a perk and a fundraising gift to lure conservative-corporate -blue dog democrats. I hope they (AFL CIO, AFCME, SEIU )are waking up. they seem to be, I have less hope for the teamsters.

  5. Leen says:

    I believe Steve Clemons (another of my favorite bloggers) is there.

    EW did Clinton say anything about those of us who want to flip private loans taken out by and for our kids to attend college into federally guaranteed loans.

    Made a big mistake allowing my youngest to take out a loan with Wells Fargo to attend Univ of Colorado. While she is now (and she did it by the rules) an in state student…we borrowed far more than we could afford for her to attend her first year there. Where I made a huge mistake is supporting her decision to attend a state school (my two older daughters attended private schools where they received far more economic support as a direct connection to their academic standings along with family need). My youngest now 22 received substantial scholarships at small private schools but at the last minute decided to go to school in Boulder.

    When she graduates next year I am a bit terrified to even look at what the loan will be at with interest when we have to start paying six months after she graduates. I am wondering about the possibility of flipping this private loan over to a federal loan?

    On top of this 3 of her roommates (all six parents are either Doctors, lawyers no kidding) all figured out a way to get in state status so that they are paying the same as we are.

    they did this by claiming that they were not giving their kids money (complete and absolute bullshit) and then the kids take out loans in their own names. Have all ready heard that the one kids parents will pay his loan back in full six months after he graduates. What fucking scams.

    Of course my daughter does not want me to turn these folks in she is good friends with her roomies. But I keep telling her this is the way these kids get trained to take advantage, keep their dough and scam the system from the top tier. In training for Wall Street seats


    EW “Clinton made a similar argument. He argued that if we just get something that embraces universal coverage, even if it doesn’t achieve that, it would lead to similar fixes of the program over time. He projected that once people got health care, it would be impossible to take it away. So Congress would be forced to implement changes to bring cost savings to the government, otherwise those increasing health care costs will bankrupt America. Once people have the presumption of health care, he argued, it’ll succeed in bringing enough countervailing pressure on interest groups (the industry) to make it politically possible to pass the necessary fixes to health care to bring cost savings to the government and businesses.”

    When Clinton was wagging his finger at us at NNO9 about the stand many of the Netroots folks seem to be making…. No public option no deal. I could not help but think Bill knows a great deal about how this all works and after the history of failures in the past to bring full health care benefits to all that he was being realistic. That incremental steps is what we can get right now but we need to get in the door so that we can expand the plan as we go forward

    • Leen says:

      so professional

      But we had better watch it. Clinton might grab our brilliant Marcy for his global initiative work which is fantastic.

    • bonkers says:

      Yes, it’s kind of poetic really. A journalist who got some grief for saying a certain word on TV, and a guy who…

      oh, nevermind.

  6. TarheelDem says:

    Even if HR 3200 is passed as the original bill, down the road it will be necessary to federalize Medicaid because states are hamstrung by the balanced budget amendments in their constitutions. The cuts in Medicaid will always come at the time when there are more people eligible for it.

  7. Leen says:

    Still hope EW gets in the

    False Pre war intelligence “snowjob” = hundreds of thousands dead and injured, milions displaced.

    the perpetrators of this false intelligence are busy repeating unsubstantiated claims about Iran

    We know what happens to a Pres who lies under oath about BJ = impeachment

    Congresspeople and Americans keeping their priorities straight

  8. Teddy Partridge says:

    If the original health care reform doesn’t include a public option, politicians will describe adding a public option later as “too disruptive” to the wonderful system they built. This is the reason triggers won’t ever get pulled, too.

    Great that you got to meet Bill Clinton, Marcy — I’m so glad he has the benefit of your perspective. It sounds like he learned something.

  9. Leen says:

    Ew while your in New York look who else will be in town
    Iranian President Ahmadinejad to Speak at UN Amid Row over Iranian Nuclear Program

    “The talks come against a backdrop of widely diverging accounts around Iran’s nuclear activities. The Obama administration says it believes Iran possesses or is close to possessing enough enriched uranium to produce a nuclear weapon. Last month, a controversy erupted when the Associated Press reported the UN’s nuclear watchdog, the International Atomic Energy Agency, had concluded Iran possesses the capability for a nuclear bomb and had worked on a missile system to carry an atomic warhead.

    The IAEA has denied the report and says it has no evidence of any Iranian nuclear weapons program.”…..o_speak_at

  10. joanneleon says:

    Well, first of all:

    If that version of Social Security were introduced today, progressives like me would call it cramped, parsimonious, mean-spirited and even racist.

    Begala is not a progressive.

    I’m concerned that Clinton and Begala are pushing this position that the public option isn’t really necessary. This isn’t 1993. The situation is entirely different. And we do have the votes. What we don’t have, clearly, is the political will at the top.

    Also, the healthcare reform we are talking about is already far from “the perfect” so the “enemy of the perfect” meme just doesn’t fly. What Begala and Clinton, and many other politicians apparently, feel is possible, or what they feel is acceptable as a starting point for negotiation, is weak and flawed, IMHO. I suspect that campaign money and avoiding a fight with these industries is higher on their list than getting the best possible reform, and their views are too tainted by the failures of ‘93. They find equivalences where there are none. The situation is *much* worse today and the people *much* more motivated. Wall St. and insurance companies are loathed.

    I am curious to know if you think Pres. Clinton called the blogger meeting in order to try to convince you to back off on the public option, or at least, if this was one of his motives.

    One last thing is that while I don’t doubt that Clinton really wants to get the best possible reform, I wonder if his relationships with health related companies, the ones I figure he must be dealing with to get medicines and other health equipment for CGI initiatives, are coloring his views on reform.

  11. earlofhuntingdon says:

    The health care debate is a tug of war. Advancing a few feet left, then assuming more will follow without having the need to pull bloody hard, is foolish. All it will accomplish is that progressives and the health care needs of most Americans will be pulled over the line far to the right, because the Right and massively funded health insurers Won’t Stop Pulling, even when Democrats like Clinton do.

    Imagining that health care reforms will continue because a few have been achieved, as Clinton implies, is a recipe that tastes good only for the Right. For progressives, it’s Castor oil that’s been left too long in the sun.

  12. joanneleon says:

    As I read more about the Clinton/blogger meeting, I see that one of my questions is answered — Clinton’s focus was not on health care for this meeting, and climate change dominated the conversation.

  13. rwcole says:

    this really comes down to:

    “Should progressive democrats insist on a public option or nothing?”

    Knowing full well that the most likely outcome may be “nothing”.

  14. Scarecrow says:

    Marcy’s right about the Begala argument. He says, start with a small public social insurance program like SS, and extend it to more people in the future. But you have to start it, otherwise it can’t grow.

    So that argument becomes, start with a small public health insurance program, and increase access to it to more people in the future. But you have to start it . . .

  15. brendanx says:

    My employer just offered a Health Savings Account option for the first time. It’s the Republican antithesis of a public option. It’s great, for anyone who can capitalize on it — fiendishly so. Not so great for the public at large.

  16. KarenM says:

    Interesting comparisons. Obviously, this topic is so complex that none of us can really understand all of the forces at work now… or in the future. I am hopeful that the future will see some positive countervailing forces that we cannot yet predict…

    Michael Pollan, for example, made an interesting suggestion in this essay in the NYTimes from September 9th. He writes that BigInsurance will eventually be on the side of the sustainable agriculture people… i.e., against BigFood once they have to start covering everyone (assuming no more pre-existing conditions, rescissions, etc.) and the costs/benefits of our current ways of eating (in general) can be measured.

    An excerpt:

    As for the insurers, you would think preventing chronic diseases would be good business, but, at least under the current rules, it’s much better business simply to keep patients at risk for chronic disease out of your pool of customers, whether through lifetime caps on coverage or rules against pre-existing conditions or by figuring out ways to toss patients overboard when they become ill.

    But these rules may well be about to change — and, when it comes to reforming the American diet and food system, that step alone could be a game changer. Even under the weaker versions of health care reform now on offer, health insurers would be required to take everyone at the same rates, provide a standard level of coverage and keep people on their rolls regardless of their health. Terms like “pre-existing conditions” and “underwriting” would vanish from the health insurance rulebook — and, when they do, the relationship between the health insurance industry and the food industry will undergo a sea change.

    The moment these new rules take effect, health insurance companies will promptly discover they have a powerful interest in reducing rates of obesity and chronic diseases linked to diet. A patient with Type 2 diabetes incurs additional health care costs of more than $6,600 a year; over a lifetime, that can come to more than $400,000. Insurers will quickly figure out that every case of Type 2 diabetes they can prevent adds $400,000 to their bottom line. Suddenly, every can of soda or Happy Meal or chicken nugget on a school lunch menu will look like a threat to future profits.

  17. Sara says:

    One of the small details in the great student loan flapdoodle at the beginning of Clinton’s administration, was that getting access to the direct student loan program required the educational instution to sign up and sponsor it. Many Colleges and Universities found it far more to their interests to follow the guidance they received from private lenders, and not sign on to administer the program on their campuses. In effect, this made many schools captive to the programs of the private lenders.

    One must never forget the rot that Elliot Spitzer uncovered in New York State at the State University System, the pay-off’s to top administrators and the Financial Aid Administrators. What Spitzer found was actually nation wide — but they settled with New York so fast it made your head spin, and no one moved the investigation to a higher level. Many of the private lenders put their top people on boards of trustees, available to fund this and that special project as such wants and needs became evident from Trustee meetings. Many of the lenders also offered investment services as a free-bee to educational instututions. Twas not at all unusual for College VP’s and Presidents, and Financial Aid officers to receive a leased BMW or Lexis without charges from that very helpful lender who of course leased a whole fleet of them. Conferences in the Bahamas in January were pretty common for College Financial Aid officers. All to the end of getting exclusive deals for providing Student Loans, and all because Clinton allowed them to make the direct loan program voluntary on the part of institutions.

    To make matters worse, all the fancy lobbies in DC that are paid for by American Colleges and Universities were persuaded to support this small detail in the direct student loan program — the institution had to volunteer to offer the program. (Students at many institutions could not choose to take a direct student loan.)

    Back in 1993-94 when this was an issue, my Senator, Paul Wellstone went around the country talking to activist student groups about taking a stand on the matter — doing some intense student lobbying work state by state. He needed about ten additional votes to create the level playing field, so that all institutions had to offer the Direct Student Loan program. Clinton cut him off at the knees. It was a very nasty story.

  18. cregan says:

    Here is one area where I agree with Bill Clinton. If the government is handing out money, loans, etc., it should be handed out directly by the government.

    To me, there really ought to be a real connect between the two camps. Private sector and public well being.

    The public well being needs money to fund it. The more, the better. The private sector needs profits to survive and advance, the more the better.

    In our town, highly liberal, here is how it goes: put up as many road blocks to business as you can, restrict them in as many ways as you can. Then, oh, we don’t have the revenue to do this project or that.

    It never dawned on them that the more money coming into City businesses, the more taxes they get and the more projects they can undertake. They are so busy worrying about punishing evil profit takers, they cut off their own nose.

    The two actually work together. Help local businesses (for local government) be as successful as possible, and rake in the taxes, then use it to help others.

    Government actually has no other source of funds other than the success of businesses. Americorp doesn’t pay any taxes. Neither does Move On. YOu can tax goverment employee salaries, but that is only returning money you just had. Other’s salaries are only there to tax because some business was doing well enough to hire them.

  19. masslib says:

    Well, yes, the entire premise of the health reform is completely at odds with the principle underlying student loan reform. in other words, while we’ve decided direct funding is the right way to go(Clinton implemented direct funding in the late ’90’s, Bush wiped it out), then clearly that is also the answer on health care, if one is consistent with principle. But with or without a PO, the plan crafted by Congress subsidizes private insurers for something the government can do better and cheaper. However, I believe BC is making a political argument. The premise is that at this point Dems have to deliver something or they will be viewed by voters as unable to govern, rightly so. I don’t think he’s saying this is great reform. i think he’s saying something needs to pass for political reasons alone. He was an early, outspoken advocate for the PO, and I think he was giving Obama a hint. Obama needed to talk early, often and STRONGLY for a large public insurance program for all takers to achieve it. We know Congress has not crafted anything remotely like that. From what nyceve said, BC said the PO should be open to everyone, and the gold standard, which is very smart because the PO crafted thus far in Congress is neither and thus will not reach it’s potential, drive people out of the private market, and force insurers to sell a worthy product. So, I don’t think he’s saying, yeah, this is great, let’s leave it up to the private sector, meanwhile let’s not subsidize the private sector on student loans. i think he’s making an honest assessment of where we are, why the Dems need to pass something, and laying the ground work for what will have to happen next, as this plan doesn’t go nearly far enough.

  20. cwolf says:

    Is it possible that there is an unseen Obama Plan here and that his recent speeches & TV appearances are merely Half-Time entertainment in the long overdue war on the health insurance crime syndicate.

    A climactic senate vote Next August or so would really put blueblood & sellout congress slime on the spot with the voters. As the BS capitalist arguments run out of steam a campaign of carpet bombing the country with truth & reality might succeed & lead to a 4th quarter progressive rout,,, maybe even single payer.

    Obama keeps saying we’re 80% there. Shit – we’ve been 80% there since Dickens wrote Bleak House.
    5% still have all the ca$h.

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