A simple account of the pending government shutdown

The House GOP has voted to repeal Obamacare 41 times, as of last count, but that link is from Sept.12 and maybe by now the number is higher yet.  One can thus conclude that the GOP sees advantage in staking out a public position against Obamacare, whether this be with voters, donors, primary opponents, whatever.

By threatening a government shutdown over Obamacare defunding, the GOP is again staking out a public position against the law.  Such a statement is more focal, and generates more publicity, than a 42nd vote for repeal.  Everyone is talking about it, even me (sorry people).  If you’ve voted 41 times for repeal, you will like the fact that everyone is concerned with this new dispute.

If the GOP lets the government actually shut down, people will talk about their Obamacare stance even more.  But the party, and its representatives, will bear costs from being associated with the shutdown, which is inconvenient, hurts the economy, and lowers our international status.  We don’t know whether they will cross this threshold, but either way it is a purely political calculation and not especially mysterious or “irrational.”

It seems to me that ideally the GOP would prefer to “negotiate” forever, without having to shut down the government at all, see this recent report.

The GOP also wishes to combat the notion that it is the intransigent party, and a battle over the relatively unpopular ACA (“why will Obama negotiate with Putin and Assad but not with us?”) is a better arena for them than most of the other venues where this clash of reputations might pop up.

The GOP, from its budget strategies, might manage to repeal the medical devices tax.  Repealing a tax, and chipping away at ACA, is in this setting a major victory for them, especially given that right now they are not winning so many victories.  It doesn’t matter so much that the medical device tax repeal would be relatively small in its impact.  “We forced the repeal of one part of Obamacare” is a big symbolic victory.

Recent events are simply public choice theory in action.


Glad to see the omission of "and failed" that is often appended. Outright repeal has failed, but the chipping away is significant. ACA defenders will need to remake the case for funding to the public in the not too distant future.

Note how deficit hawk conservative Republicans are always happy to hike the deficit and debt to get tax cuts. Deficits matter to conservative Republicans only when Democratic presidents are in the White House. But for a real conservative Republican president, since 1981 deficits and debt never matter because how else can taxes be cut and reelection be bought by spending.

Obama learned from Reagan to never be more concerned about debt and deficits than Reagan was.

I think this is a bit misplaced. No matter the merit or lack of merit of the overall argument, the idea that we shouldn't be adding a tax to medical devices is hardly as mercenary as all that. Seriously, does anyone really think my family should be paying a tax for my seven year old's medical device that keeps her out of the hospital? Ill conceived to begin with and hardly a revenue flood. I realize "every little bit helps" when you're talking deficits, but seriously, isn't just about any other little bit a better place to go than here?

It's not a tax on the consumer -- it is a tax on the total revenues of the company.

What is the regulatory device which prevents this tax being passed on to the consumer, like every other tax on the total revenue of a company is passed on? At least in part?

And we use a smaller company, not J & J, for our medical device -- I don't want a penny being taken from their R & D, and I don't want there to be even the tiniest chance this will push them out of the market and we'll have fewer choices, and only choices from the big guys like J & J. Is there something in the legislation that stops any of that from happening?

Maybe I'm just like everyone -- tax that guy, not me! But it seems to me a tax on non-condition-related (e.g. not post mastectomy or burn scars, etc.) cosmetic surgery would go over a lot better than a tax on pacemakers.

I know it sounds pretty terrible -- there is a lot of rhetoric out there -- but I don't think the tax really holds much for consumers to worry about.

This analysis from yesterday suggests that device firms will be able to pass very little if any of the tax on to consumers, especially in cases like yours, where the firm is smaller and has limited market power: http://www.cbpp.org/cms/?fa=view&id=3684. The chances that the 2.3% tax gets passed on to consumers is even lower in cases where there are a number of makers, like insulin pumps, and more market competition. And that doesn't account for insurance's role as a payer for most devices, which could further shelter patients from any cost increases. They did put a tax on indoor tanning services in the law, if that helps....:-)

That's not to say that I think a levy on device companies is the best way to raise this revenue! However, I think Congress will need to replace those funds with another source of revenue if they wish to repeal it. I don't see the Republicans and conservative Dems offering that up any time soon, but would be open

I don't see competition helping, since the pressure is already on towards monopoly and since I've seen what excess regulatory costs have done to local foods trying to compete with the big guys. We'll see. . . . . .but that tanning thing helps, misery loves company, particularly tanned company!

That's a tax on the consumer.

Not unless you think that device demand is totally elastic. For most types of medical devices, there are a lot options and prices have been going down for years. Insurers will not let the companies pass that 2.3% tax on to them. Devices generally sold OTC directly to consumers are exempted from the tax.

It’s not a tax on the consumer — it is a tax on the total revenues of the company.

If the companies long term profits go down less than the amount of the tax, then the tax was just passed onto the consumer. Are you actually arguing that the long term profits of all medical device manufactures has been permanently reduced due to this tax?

Ok, so if the device makers should not be taxed, that is corporations should not be taxed, capital should not be taxed, then that means labor must be taxed, individuals must be taxed.

Or the individuals without the means must be be taxed by being denied the device. Unless you think the corporations must be required EMTALA like to provide the devices for free to those who need the device for free, which is a tax on the device makers.

The tax is small based on some handwaving on the increased number of devices sold as a consequence of expanded customer sales which drives down costs due to economies of scale. You can argue the 2.3% figure is the wrong number, or you can argue for a regulatory price control regime that probes the books to find the correct cost reduction from increased economies of scale and then require all prices be reduced or try to pick the winners who get lower prices or rebates....

One way to think about this is to replace medical device with bomb and health care with war, and now the capitalists are having their property defended by a war that drives up their sales and profits from bombs. Would the argument be that the bomb makers should not be taxed because they will simply pass that onto the taxpayers, or cut back on R&D, or make fewer bombs? Instead of the wealthy getting better health care than the workers making them wealthy, this becomes the wealthy getting paid for bombs by the workers in war paying higher taxes on their wages from going to war to protect the property of the bomb makers.

One thing that I see being lost in the past three decades of economic argument is the connection between production and consumption. On the one hand, the argument is the capitalist should get all the gains from technology without considering consumption. On the other hand, the debate revolves around consumption with arguments like "a 2.3% tax on capital will cut consumption and we need more consumption." But will the capitalist getting higher profits from selling devices go out and buy more devices for themselves with those profits? Will the CEO of the pacemaker company who sells more pacemakers from Obamacare buy with his profits more pacemakers and put them in his wife, kids, infants, grandchildren, .... Or will he loan his profits to the US Treasury to fund deficit spending on his medical devices.

Economics is zero sum when it comes to labor plus capital equals production equals labor consumption plus capital consumption.


Your argument is not from the real world.

In the real world I don't want to avoid the 2.3% tax on production of medical devices because of class discrepancies or because of the disconnect between production and consumption.

I want to avoid it because I believe my small medical device company is already struggling to stay alive. I believe its costs are already largely federal legislation created (FDA) and that I've already seen a poorer product because of silly bureaucratic costs that J & J just eats through like paper but this company struggles under. I believe if it dies, J & J will own all of the products in this field soon, just like it does in so many other fields, and that no one in either party is touching J & J. In fact, I'd find it very credible that this tax is there in order to benefit J & J and corporations like them, just like the big food agribusinesses often love higher regulatory barriers that shove their little guy competition out of the market. I think that if I find out this small company that has increased my kid's health and quality of life enormously is going out of business after ACA, and if it happens to be on a day I'm seeing footage across Yahoo of politicians on more expensive vacations, I'm going to despair of democracy and maybe of humanity.

Sure, I get the math, in theory they'll get a ton of money from ACA funding poor (ish) people getting these devices when they didn't before (I say ish, because we're not talking Medicaid or Medicare patients, or CHP kids, we're talking the folks with too many assets for those programs). So the feds want to "take back" what they put in. Nice theory. How about we go a year and see what the increased profits are on these companies, then institute a tax after that, rather than on spec? There's a whole bunch o miracles that are promised to come out of ACA, I'm not sure the device companies are going to be rolling in bullion like projected. Let's watch it happen first, and consider it a government grant to medical research for one year.

Capitalism in the 20th century is private gains public losses. Anything the government does is bad for business unless it is bailing them out.

If there is a company out there that would fail because of a 2.3% tax hike I want them to fail now because I'd likely have to bail them out in the future. 2.3% isn't even that much above the inflation rate.

The Republicans can make the proposal revenue neutral by proposing a tax to make up for it. If "any other place" is better, it should be easy to find. Especially near the top. Yet for some reason, I don't see the Republicans making such a proposed substitution...

So as long as you can characterize the Republicans as hypocrites, it's all right if the Democrats institute a law that hurts the poor and sick in the name of being champions of the poor and sick.

To be fair, I'm sure you wouldn't concede a tax that increases the cost of doing business for a medical research and supply company would hurt any of the folks consuming its product. To me, it's common sense that it would. Will.

I'm guessing if you knocked on the door of any Republican in Congress and asked for a list of programs to cut you'd get an earful. You know as well as I do that the minute they say, "We should replace the revenue from the medical device tax with X" the new subject becomes X, and the medical device tax gets forgotten in the mist. . . .

Marie, this is a terrible example for your ideological position because research has overwhelmingly shown that medical devices are overused and overbilled in America.

It's not a burden for consumers if they're better off without it. Higher prices will mean less usage, even in our broken health care system, eventually it will work.

The entire argument that taxes are only shifted to consumers is correct, but also misleading. Taxing corporation has led to different behavior, even if you think it wouldn't - jobs have been created historically when profits were taxed. Eventually, of course, enterprises have some freedom to move over time, but that shouldn't obscure the fact that 'passing on the costs' is a separate phenomenon than bearing the cost directly.

Why are profits at an all time high under record low taxes? Because the costs of doing business are highly separated from the price structure. Corporate taxes work historically, and that's why.

They did remake the case for funding with the re-election of Barack Obama. He ran on the ACA while his opponent ran against it.

A weak case made for not making a weak sauce change. The current senate makeup is the better case for ACA funding, and even there the mandate is not tremendous. Electorally, both reek of status quo.

They did remake the case for funding with the re-election of Barack Obama. He ran on the ACA while his opponent ran against it.

So since George W Bush was re-elected, the Left failed to make the case against the Iraq War?

Yes, hence why Nancy Pelosi did not, post-2006, take a CR hostage in an effort to defund the war.

She didn't take a CR hostage because attempting to defund anything while there were troops in combat in-theater would have been political suicide, and she's not actually that stupid. Presumably the recalcitrant GOP members of the House, rightly or wrongly, don't believe this CR to hold that particular threat.

Didn't they try this multiple times in trying to cut off funding for the war in order to get it to stop? They only buckled at the very end because they weren't willing to keep troop stranded. It's a similar game of chicken though.

I seem to remember similar tactics on the Bush tax cuts as well, but once the financial crisis/ recession began you got enough dems to not wat to raise taxes quite yet.

Democrats actually waged more battles increasing the military budget - the war costs were put in the budget and removed from the "emergency" appropriations, but that meant the deficit increased driving pressure for higher taxes or spending cuts in other places, like on tanks and fighters and bombers so the military budget did not increase.

After 5 years and a victory the needed a fifty year occupation of Iraq a la Korea - that was John McCain's argument in the 2008 debate after Bush had signed an agreement with Iraq to pull out totally in 2010, the cost of the Iraq occupation needed to be on budget just like the Korea and Japan occupation are on budget.

The long term costs of war have been put in the military budget but the tax cuts since starting the wars puts downward pressure on the military budget which means weapons spending to create jobs must be cut to pay for health care to the soldiers who served, as well as the new methods of war.

And the Tea Party faction of the Republican caucus has forced Republicans to agree to military budget cuts and to oppose off budget spending on military, creating an anti-war anti-intervention faction in the Republican Party.

Romney ran against the ACA? Wasn't the right's loudest criticism of him was that he was staying too quiet about it?

Why would that matter?

Were voters somehow confused that Obama wouldn't support 'Obamacare'? Were voters confused when Romney said he'd repeal 'Obamacare'? Are you trying to find a loophole because Romney sucked at communication?

You are your record. The Republicans are a minority party and while they are free to continue their usual time-wasting tactics, actually stopping the government is suicidal.

They are 'rational actors', Tyler, NOT RATIONAL in the usual sense of the term, i.e. acting smartly in their best interests.

Look up groupthink some time to see what's happened with the dysfunctional Bill O'Reilly/Republican demagoguery relationship. Modern democracies need modern government, which tea party types, themselves a minority of a minority, flat out deny. It's impossible to govern with anarchists, right? As proven by every anarchist movement, like, ever. It's essentially self-defeating groupthink that you can govern by consent by denying that governing is necessary. What do they really want? To be a confederacy again? Both confederacies failed for good reasons.

Public choice theory simply points out potential failure modes, much like the commons dilemma points out a failure mode in markets. There is no need to simply accept these failures as inevitable (or worse, in some sense justified).

You can eliminate a commons problem by propertizing the common resource. People are then maximizing subject to different constraints. There is no such easy fix for politicians who are trying to maximize re-election--what are going to do, vote them out?

Yes there is, you can eliminate those sectors from government control... which propertizes the common resource.

The House GOP has voted to repeal Obamacare 41 times

You do know that's not a count of the number of times the House GOP has voted to repeal it fully, right? That includes every single vote to repeal a piece of the bill-- and thus includes about 7 or 8 things that have actually become law, such as repealing the CLASS Act and repealing the 1099 reporting act. It includes repealing the medical device tax, which 79 Senators also voted for in principle (yet won't make into law.) It also includes votes like the House passing a bill that would merely codify the Administration's existing action to delay the employer mandate. It includes votes to amend the law in order to provide various conscience exceptions for abortion or contraceptive coverage. (Agree or disagree, those aren't the same thing as "repeal." Here's a list of the various House bills and votes.

There's only been 3 or 4 votes to fully repeal the bill.

Bottom line: if that's 41 votes to "repeal Obamacare," then the PPACA itself "repealed Medicare."

The count of 41 also, while including 8 provisions that have had funding reduced or been repealed, manages to count repealing the CLASS Act several times, since the House repealed it once in a standalone bill, and then it was actually repealed in the deal from the fiscal cliff.

What's remarkable is that the Republicans (as shown on Virginia Foxx's page) are as perfectly willing to count high in order to trumpet the 41 votes against the bill as the Democrats- though they, naturally, prefer to emphasize the different nature of the bills so that they can highlight the ones that became law.

Suppose this gets repealed. Then, great, it's a 9th bill reducing funding or repealing a section signed into law, one that, like the others, took more than one House floor vote to accomplish it. I can't see it as marking a change in strategy or rhetoric for either side. Just add it to the pile.

Some Democrats are happy to increase the debt and deficits if the Republicans insist on hiking the deficit and debt - Reagan proved deficits don't really matter to conservatives.

Your commentary on Reagan and deficits is incorrect.

Congress controls the budget. Faced with a Democrat controlled Congress, Reagan got what he could. His proposed budgets spent far less than the budgets passed by Congress.

Now, you can make a good case that Congressional Republicans during G.W. Bush's presidency weren't spending resistant at all, which basically boiled down to wanting to have war and anti-terror spending without cutting spending elsewhere, but otherwise Republicans have been much more reluctant to spend than the Democrats.

As the chart at http://comeletusreasontogether.com/revenue-problem-or-spending-problem makes obvious, increased spending is the primary problem and generally it's a Congressional problem.

On some issues, yes, primarily if it's about repealing taxes.

Delaying the mandate would, according to the CBO, actually reduce the deficit. (Because people not signing up will forgo more subsidies than the low initial penalty tax would raise.)

Your facts are unwelcome to people who cite the NYT, MSNBC, Josh Marshall and the like. Of course there weren't 41 votes to "repeal Obama Care", of course Obama and Harry Reid also signed some of those votes and have waived (or, in squirrely language parroted above "repealed") many other ACA provisions.

But these facts fuzzify the truthier point: GOP = Bad, stupid, deranged. The sooner we Golden Dawn them, the better.

Actually delaying the collection of the medical device tax would be a positive fiscal move as it would be marginally stimulating, preventing the deficit from fallingso rapidly.

Only if it increases the number of medical procedures funded by subsidized private insurance policies.

Medicare already pays for the standard ones in common use, pacemakers, drug pumps, hip and knee replacements, without any rationing and the doctors installing them get paid the same no matter what the device costs - a lower billing cost will not affect the quantity Medicare pays for.

For the employed with benefits, the insurance has been making patients pay more, based on advice from conservatives who argue this will reduce demand for medical services, which includes medical devices.

And for those without insurance, medical devices are often out of financial reach, and hospitals only reluctantly use them based on that being the only option for some who somehow ends up under their care and EMTALA applies. The 3% max difference in price isn't going to alter the opposition by the hospital accountant.

The subsidized insurance will result in lots of poor people getting medical devices installed boosting profits to these makers who will probably do as all the other high tech firms have been doing, park the profits in an offshore patent havens where is gets laundered through a global bank to buy T-bills to help fund the debt from buying all the increased medical devices. How is buying government debt with medical device profits more stimulative than paying taxes - Republicans just want to cut gross consumption and that will cut gross production.

The only medical devices I know about are insulin pumps and continuous glucose monitoring systems.

In communicating with parents in other nations, I'm seeing that the use of those devices for kids with Type 1 diabetes is pretty common in the U.S., unheard of in most of the world, and fairly rare in places like New Zealand, Australia, Great Britain, and Canada. I've seen parents having to appeal to boards to get insulin pumps, some places where they have only in the last few years become available at all, and they are not government funded.

The problem is this, in a population there is no difference in health outcomes between a kid using an insulin pump to deliver insulin and a kid using syringes. For many, there is a huge difference in the work care takes and in lifestyle with the pump -- like, I heart my insulin pump bumper sticker level difference. And for any one person, complications and hospitalizations may be drastically reduced. But within a studied population, there is not a significant increase in health outcomes.

The same can probably be said, in addition, about the new insulins which allow a kid to take insulin to match a meal instead of taking a set dose and having to eat pre-determined meals and pre-determined times every day or risk a hospitalization.

So in a centrally controlled health financing system, I don't see any reason to believe there will be more use of these two devices among the poor, who usually have access to at least a pump in the U.S. through Medicaid (it's harder to reject a pump, I would think, if most people not on Medicaid can get one). Seems like it will stay about stable, or maybe reduce for middle class and below.

Speculation, of course.

"Only if it increases the number of medical procedures funded by subsidized private insurance policies."

Huh? Either the tax incidence falls on consumers or producers. If it falls on consumers, obviously they won't buy more insulin pumps (demand is presumably pretty inelastic), but they will have more money and will buy more of something else. If it falls on producers, they will have more profits which they will spend on more R&D or distribute to investors who will buy more of something.

I suppose a third possibility is that the tax falls on government payors (Medicare and Medicaid), in which case it has no fiscal impact whatever, and the cost of administration is pure deadweight loss.

Repealing a tax, and chipping away at ACA, is in this setting a major victory for them, especially given that right now they are not winning so many victories.

OTOH, it's not that different from repealing the CLASS Act that was folded into the ACA, or repealing the 1099 reporting requirements, or several other similar sections that have already been repealed. If it does happen, it will simply be added to another one of the tallies of the "41 (42, etc.) votes for repeal." That's even if it gets approved by a Democratic Senate and signed by President Obama into law.

Yes, it's part of the continuing effort to go after small particularly unpopular parts of the law, but I don't see it as a game-changer, considering that it's already happened a number of times before, and certainly hasn't changed the rhetoric. Bipartisan agreement is apparently no reason for either side to continue attacking the other publicly over that very agreement and the negotiations that led to it.

Let's see how this works with the intersection of the opening of the exchanges on Tuesday. Should be interesting.

Given about a third of the population is in States where States are already funded to operate and promote the health insurance marketplace that Ted Cruz wants to block because he knows the millions who buy insurance that way will like it, and those insurance policies will come with tax code subsidies, a Federal shutdown will not stop those insurance sales, nor the efforts to get the young to buy insurance.

The delays that have made Obamacare so confusing are based on the conservatives claims that things should be done by the States, so the States have had four years to plan, pass laws, implement, and finally execute the Federal and their State laws.

The way I see it, the SCOTUS ruling that the Feds could not change Medicaid unilaterally to mandate expansion also means the Feds can't unilaterally contract Medicaid and the State run insurance markets with their subsidies.

Hope you're right, otherwise the Democrats have managed to take away the working poor's current insurance options and the Republicans will be taking away their new options.

One of the 41 "repeal votes" is a bill signed into law that altered the Modified Adjusted Gross Income calculation used for subsidy calculation so that people who are receiving Social Security benefits but not receiving Medicare (usually people who choose to get Social Security early) would have any Social Security income not counted as gross income for taxes still counted as gross income for the purposes of subsidy eligibility and amount of subsidy when buying on the exchanges. This was used as a pay-for for something else. The Senate approved the bill, and the President signed it into law.

There are some good arguments for that change, though I imagine that some of the elderly would like to argue against it. Either way, it's more of a technical change to the law, yet both parties are willing to put it in the "repeal" pile, which includes any bill whatsoever that touches any provisions of the ACA.

"The GOP, from its budget strategies, might manage to repeal the medical devices tax. Repealing a tax, and chipping away at ACA, is in this setting a major victory for them, especially given that right now they are not winning so many victories. It doesn’t matter so much that the medical device tax repeal would be relatively small in its impact. “We forced the repeal of one part of Obamacare” is a big symbolic victory."

The problem is that the strategy to get that victory is unpopular and damaging. If the outcome of pursuing that strategy was something major, like appealing the ACA, the public (or at least the part of the public that wants the ACA appealed) might be understanding.

But if the public asks "what was all that for", and the answer is: "we repealed a minor tax most people have never heard of, increased the deficit and benefited the poor, huddled manufacturers of medical devices", its hard to see how that's going to play well with the public, or even the GOP faithful.

To channel Ronald Coase for a moment, why does Obama threaten a government shutdown unless he gets Obamacare funding?

Yes, you'd think someone knowledgeable about game theory like Tyler would at least once discuss this in those terms. But like everyone else in the media, he seems to think only one party is threatening to shut down the government.

"he seems to think only one party is threatening to shut down the government."

Go ahead, blame the hostages ...

So those voters in districts who wanted conservative representatives are hostage takers? Good heavens, do you believe in the divine right of kings or something equally silly?

Derek - do you think that the Democrats in the Senate would be justified in demanding tax increases on the rich as a condition of approving a continuing resolution and threatening to shut down the military if the Republicans don't go along? The principle is the same.


I think if the Democrats in the Senate, who were actually elected by the populations of the various states were willing to go that far, I would think it completely legitimate, but I would be amazed if they actually did it.

Somehow I suspect that in a signifigant number of states that have Democratic senators that a threat to shut down the Defense Dept. would prove terribly unpopular, but this is probably because almost everyone acknowledges that war making is an essential function of any state. You might as well be calling for a defunding of the Justice Dept, FBI, Coast Guard, and Border Patrol.

Granted I know people who would be excited by this, but then I was once president of my college Libertarian Party and had an argument last week on James Burnham's interpretation of Georges Sorel, so I am not exactly normal. But I suspect the continued existence of the US military is more popular than the ACA, and possibly even the entirety of other govt programs.

Absolutely. But they didn't. They know that if they did, the Republicans would probably get the Senate next year. Obama and Reid figure that they can get the house next year by pushing it to a shutdown. There are precedents for pretty well all scenarios.

Both parties use whatever levers they have to accomplish what they want to accomplish. Both have, and both will.

So again, justify your calling elected representatives doing what their constituents want hostage takers. Call them fools if you like, and I'll agree.

If you have a problem with the "hostage" analogy, you should take it up with Mitch McConnell.

"So those voters in districts who wanted conservative representatives are hostage takers? Good heavens, do you believe in the divine right of kings or something equally silly?"

1. The hostage taking analogy refers to elected officials, not voters.

2. Why would it be inconceivable for voters to be hostage takers? Aren't those same voters the ones who, during the GOP primaries, cheered the idea of letting a patient die because he didn't have insurance? How many tragedies in the world have happened with the complacency and sometimes the complicity of average citizens?

3. The law has been in the books and in implementation for 3 years. What about funding it today implies a divine right of kings? What are we advocating here, lawlessness? If the GOP doesn't want the law, there's a process for dealing with that. They should just repeal it. If that doesn't work, there's a process for that too. It's called an election. Otherwise, you do your job instead of spending 4 years sabotaging the government you're elected to run.

GOP lawmakers, for once, DO YOUR JOB, ye lazy bums!

1) he won the election
2) he knows this is not a one round game
3) he knows his opponent is institutionally incapable of bargaining in good faith.

And he knows that after constantly seeking compromise and not punishing Republicans for near constant opposition, and when Boehner and then McConnell bargained and they and Obama cut deals, the Republican caucus recorded those as losses, so from the Republican, especially McConnell and Cruz and Tea Party standpoint, they have been beaten repeatedly by Obama so they are no longer going to bargain.

Boehner has been informed that if he bargains, he will be be forced out by Republicans. And McConnell is being primaried for cutting a deal with Biden, so he can't afford to bargain.

Game theory makes it clear that Obama can not bargain any more - he tried multiple times and that only hardened Republicans into not bargaining. Note McConnell would never bargain with Obama from before Obama took the oath, and he is paying a significant price for bargaining with Biden.

Right. This is not a one round game and it is not the first round of the game.

1) Everyone in question won an election.
2) And?
3) By definition, both sides are institutionally incapable of bargaining in good faith.

(1) Obama won the Presidency. No one else did that; (2) I was responding to a post invoking game theory. if you don't understand the importance of one round versus multi-round I can't help you. (3) I disagree.

1) The President is only one of many elected officials here. Everyone can point to support from their electorate.
2) I never doubted or disputed that this is a multi-round game. You're the guy who brought it up as if it mattered.
3) You are incorrect to do so. Hell, the first round of debt ceiling negotiations ended with the administration openly bragging about how they gamed the debated and acted in bad faith.

But beyond that, there's the more basic game theory point that institutionally there are simply no constraints on the offices, or the individuals who hold them, or their successors to their deals.

Because if he agrees to cuts to Obamacare to stop a government shutdown, then in two weeks he will be required to resign after Joe Biden resigns to avoid a default on the debt.

Because the law already passed. And the people could have voted Obama out if they wanted - they did not. Despite getting less votes in the House elections, due to gerrymandering, the Republicans have a slight control of the House. But if they want to change the law (i.e. the status quo) they need the House, Senate, and President to go along. They do not offer a a compromise (giving the Dems something new in exchange for something the R's want). Instead, they threaten sabotage. In the words of Abraham Lincoln: "Your purpose, then, plainly stated, is that you will destroy the Government, unless you be allowed to construe and enforce the Constitution as you please, on all points in dispute between you and us. You will rule or ruin in all events."

You fail to include the entire picture, which turns your point into it's opposite. The status quo is that parts of the government stop being funded very soon and the Constitution calls for the House to initiate spending and taxes.

So if the House prefers the status quo to what the Senate and the President prefer (a new law being passed to authorize additional spending), then the Senate and President need to convince the House to go along with that. The House has generously passed a bill to approve new spending and just included a few provisions around what they'd like to change in terms of where money is spent.

Why is the President and the Senate refusing to negotiate that? Why won't they compromise? Why do they prefer sabotage to just passing and signing the bill the House already passed to fund the government longer?

The status quo is a functioning government, not shutdown. It requires quite a bit of sophistry to make your claims.

First, I'd disagree that we have had a properly functioning government in a long time, but that little quibble aside, it should be obvious that I was referring to the legal status quo, since I was replying to someone who said "if they want to change the law (i.e. the status quo) they need the House, Senate, and President to go along."

That implied the opposite of the truth. With no changes in the current law by Congress and the President, parts of the government stop being funded, not the other way around. So accepting his point means that among other things, they need the House to go along in order to change the current laws.

International status?!? Might the world be disabused of whatever that may be.

The shut down will happen and will be rolled forward into the debt ceiling fight (which hits crisis in two weeks).

The Republicans have passed an umbrella budget but have not been able to finalize any part of the budget. Never mind settling with Obama or Reid - the Republicans cannot settle among themselves.

Obama will negotiate with Putin and Assad but not Boehner because:
1) Putin and Assad do not demand unconditional surrender as a pre-condition to negotation.
2) Putin and Assad are not deliberately rude to Obama's face the way that Cantor was
3) Putin and Assad are not insane
4) Obama thinks he might be able to trust Putin or Assad but knows he cannot trust Boehner
5) If Putin makes a deal he can deliver his side whereas Boehner has demonstrated that he speaks for himself and cannot be sure of delivering any votes.

It is unfortunate that the President and the Senate insist on continuing down this path against the will of the American people. They are willing to shut down the Government in order to degrade our medical care. Tyler is too easily fooled by our political class.

"By threatening a government shutdown over Obamacare defunding, the GOP"

The GOP is not threatening to shut down the government; the President and the Democrat controlled senate are.

Baffled by this. Does the GOP have the right to demand anything and its the fault of the Democrats if they refuse?

My husband is in charge of getting my kids fed.

I'm in charge of the budget.

My husband wants to feed them ice cream every day. I think that's bad, so I withhold not all grocery money, just the money that would go to ice cream.

He decides not to feed the kids at all until I cave on the ice cream money.

Neither one of us comes out as saintly if the situation remains like this.

Now, replace ice cream with arsenic. Then my husband is faced with two choices -- either let me starve the kids to death or let them eat arsenic.

So if you regard this as just a p$ssing match, both "parents" are horrible.

If you consider ACA deadly, the parent with the budget strings is in a no win situation. As are, by the way, the kids.

Oops, I switched parents mid-stream. Well, you get the bad metaphor anyway. . . . .

Just to be clear, I can understand a story that the Republicans are engaging in high risk, destructive tactics to prevent an incredibly dangerous program from launching. But we should be clear that is what they are doing - that is not j1 's claim.

Baffled by this. Do the Democrats have the right to demand anything, and it's the fault of the Republicans if they refuse?

This sort of reminds me of grade school level logic. How is it a Democrat demand to fund an established law?

If the situation was reversed and House Democrats passed a plan that included massive tax increases on the rich and a Republican Senate and President refused would it be there fault that government shut down?

It's not grade school logic to see that both are at fault. The point of the original and J1's comment is that you can reverse the parties in the sentence and it is just as true as the other formulation.

That's a fascinating question in light of the amount of legislation the administration has openly declared it will not execute.

I've always considered Congress' budget-making power to be a check on the executive, but when the executive refused to execute legislation I thought that was essentially the President not filling his role.

So you could look upon it, I guess, as budget-making being the role of Congress, not a tool of Congress. In which case, they are being negligent.

I wonder if there's a Constitutional answer.

Overall, I'm fond of wild Hail Mary moves, risking careers on principal. I want to support Congress here, because I do feel this may rise to the level of "an incredibly dangerous program". But it feels a little more like Sherman's March. . . .

"This sort of reminds me of grade school level logic"

Yes, that's exactly what it is.

I don't think your example is analogous to the current situation, but FWIW, if a Republican administration was running trillion dollar deficits and a Democratic house threatened to shut down the government unless they got huge tax increases and maybe some spending cuts in other areas, yes, I would absolutely blame that shutdown on the Republicans.

A better example would be if a Republican congress passed a reinstatement of the draft, and a subsequent Democrat majority house refused to fund it and threatened to shut down the government defending that position. Again, yes, I'd blame the Republicans for that one.

This doesn't make sense. Whatever else you can say about the Republicans (and you can say a lot), they are under no sort of legal or moral commitment to "fund an established law." Congress deliberately has the authority to fund or not fund things as one of its powers.

Norman, I am curious in your view is it possible for both sides to not be at fault? What would it take?


So in your view is the House always right on funding issues?

"So in your view is the House always right on funding issues?"

In my second example it is not possible for both sessions to be correct. So no, I guess.

The Senate and President say they are willing and able to sign a continuing resolution (to continue current funding levels). The republicans in the House respond that Obama must help destroy his signature law, which was the subject of the last election. The Republicans say that unless the government is changed to meet Republican demands to negate a law passed by the House, Senate, and signed by the President, they will destroy that government. Lincoln noted a similar analogy: "In that supposed event, you say, you will destroy the Union; and then, you say, the great crime of having destroyed it will be upon us! That is cool. A highwayman holds a pistol to my ear, and mutters through his teeth, "Stand and deliver, or I shall kill you, and then you will be a murderer!" To be sure, what the robber demanded of me - my money - was my own; and I had a clear right to keep it; but it was no more my own than my vote is my own; and the threat of death to me, to extort my money, and the threat of destruction to the Union, to extort my vote, can scarcely be distinguished in principle."
The Republicans lost the argument about Obamacare in the 2012 election. But what they could not win through the ballot box, they threaten to destroy by hostage taking and sabotage.

Remember, the House sent the CR to the Senate and the Senate only refused over really one part of the whole thing, the defunding of Obamacare.

But yes, the Democrats and Obama, it's not their fault, no sirree!

A clean CR would pass the House if brought up for a vote.

Agree with previous comments that it's scary how easily minimally informed people like Tyler just swallow whatever the media narrative of the moment is, without the slightest bit of questioning.

The relevant "public choice theory" has to do with gerrymandered districts in the House, nothing more.

Were representatives subject to non-gerrymanded local pressure, none of this would be happening.

You only say that because Democratic congressional candidates received more total votes than Republican congressional candidates.

Quite so. :-)

Republicans are the only congressmen from gerrymandered districts?

There was no gerrymandering. Republicans would have won essentially the same number of seats using the old districts. Democrats are going to lose the House pretty much from now on, since THEY can't gerrymander based on race anymore and all of their districts have concentrated votes.

The effects are often overstated, but A) there absolutely was gerrymandering and B) it resulted in a net positive for the GOP, but they still would have held the House anyway.

So what happens if the government shuts down? Post offices all locked up? No more JP-4 for the F-16s? Can't get into Yellowstone Park? Unsigned social security checks? TSA frottage technicians forced to stay home and watch Seinfeld re-runs? No IRS audits? What's not to like?

Interesting point of trivia: You'll still be able to visit national parks in Texas. The authority to close state highways (apparently Texas had a state highway system in 1836) is one of the Texas laws that supersedes federal law. One of the stranger episodes in the 1995 shutdown was a federal court ordering the park service (and some military installations) to re-open roads on federal property because closing them violated state law.

During the 1995 shutdown I remember being shocked by a report on NBC, where they broke from the hysterical coverage of "THE GOVERNMENT SHUTDOWN!" and went out to Iowa or somewhere. They asked random people on the street what they thought of the government shutdown, and most people were unaffected or even completely unaware of it.

The secret to the Republican position (though I do not think they are this Machiavellian, rather it reflects their voters' preferences) is that their voters do not suffer much from a shutdown. Pain is acutely concentrated in the heavily Democratic federal workforce.

Be that as it may, it seems pretty senseless to just give up on the 30% of fed employees who vote GOP just to spite the 70% who vote Dem. This ratio almost certainly leans more GOP in defense sector, which is getting hit by sequester and this current debacle.

The last shutdown didn't do any favors for the GOP, though they still retained control after the subsequent election.

I wonder what the party affiliation numbers look like in defense and homeland security contractors.

Very interesting. Cite?

I'll see if I can find something. I know about it because the Feds (the Air Force I think) shut down a major road I (and a LOT of other people) used that went through a military base. It was also a state highway, and they were ordered to reopen it. The order applied to other state highways on federal land, including the road through Big Bend NP. My understanding is there was some agreement when TX became a state that some state laws would supersede federal law. Don't know how often that's an issue, but it was very surprising.

the GOP politicians are more likely seeking favor with healthcare insurers and healthcare providers that are against obamacare.

Obamacare may be unpopular with the people, but at least half the people who are against take that position because they think it does not go far enough.

Ever heard of Nancy-Ann DeParle? She was, as the director of the White House Office of Health Reform, the architect of the Patient Protection and Affordable Care Act. She's also been a director of Accredo Health Inc., Boston Scientific, Cerner Corp., DaVita, Guidant, Medco Health Solutions, Specialtly Laboratories, Triad Hospitals, and CCMP Capital. There can't have been any input from the healthcare industry as far as she's concerned.

have you heard of the ACA provision that will eventually require health insurers to pay out approx 85% of all premiums? That will effectively force healthcare insurers to become nonprofits.

You need to realize something: I know a lot more about this than you do.

The horror, the horror - an insurance company limited to 15% of gross premiums for overhead.

I see nothing wrong with forcing insurance companies to become nonprofits.

Then you have bad eyesight. What do you think made these companies what they are that you think they are finally worthy of taking over?

They are unnecessary. Many countries do just fine without health insurance companies.


Many of insurance companies were mutual before they were finally worth turning into joint stock companies.

This is exactly the sort of logic that led to "cost plus" in aerospace.

If the goal is to limit costs, forcing insurance companies to raise revenue in order to raise profit is a bad move.

Yet health insurance companies fully supported and do support ACA publicly. Know why? All the extra people who will be buying insurance now. They secretly funneled money to the Chamber of Commerce to defeat it at one point. Know why? The medical loss ratio. Same with the device tax--those companies want more people insured to buy their products, but don't want the small tax on revenues that comes with it. Every impacted entity has things they like about the ACA and things they don't like. Problem is, if you go back and start making special interest revisions for all those entities, the whole thing falls apart.

" I know a lot more about this than you do."
Oh, yeah? You're not proving it with that statement. Since literally no one has a complete grasp of one of the most complicated pieces of legislation ever, you must be a congressional researcher or maybe even an elected official yourself. Many of the executives that run "non-profits" haul in big bucks. Supermarkets make maybe 3% on their money, they'd love to be able realize 15%.

Love that Tyler is so adept at absorbing and explicating the Mainstream Narrative.

You get an 'A' on the exam.

HEW is way behind in Obamacare roll out, unsure of prices and haven't reached their market. Nothing they would like better than a four week delay.

The law is unpopular, badly implemented, increases costs, subject to numerous waivers and executive orders to prevent outright failure and rejected for personal use by the Congressmen fervently pushin it; but the GOP are being unreasonable obstructionists, political terrorists etc.

On one hand I think the US is completely screwed. There is no chance it's decline will be arrested. But then I see a private company send a rocket flawlessly into space, and I think there's hope.

Awful politicians vs the world's most innovative and productive people.

Who will win?

You know it was Obama who promoted private space flights, right? Most of those guys would be bankrupt by now without NASA contracts. The awful politicians giveth and the awful politicians taketh away.

'but either way it is a purely political calculation and not especially mysterious or “irrational.”'

The same applies to a 2 year old's tantrums.

Plainly the Republican Party must believe that "Obamacare" is very bad for the Republican Party. Isn't that the core of the public choice analysis?

Or how 'bout that the medical device tax really does hurt smaller providers.

Can some economist comment on this concept, here promulgated by Obama: "This excise tax is one of several designed so that industries that gain from the coverage expansion will help offset the cost of that expansion,"

I'm no economist, but this seems pretty simple to me. 20-30 million previously uninsured people now have access to insurance, which makes them new potential customers for these device manufacturers. It seems logical that an increase in demand for medical devices would increase profits for manufacturers.

The medical device tax was one of several strongarm moves in the healthcare law the administration used to pay for the thing without raising income taxes. It wouldn't be a big deal if it were repealed, but then the other industry stakeholders would line up with their hands out. If we are OK putting the $30 billion the device tax raises on the national credit card, I'd rather keep that tax and spend the extra money on more worthwhile projects - maybe a pilot program to allow larger employers to send their employees to the exchange.

Great comments from John Thacker.

One can thus conclude that the GOP sees advantage in staking out a public position against Obamacare, whether this be with voters, donors, primary opponents, whatever.

See this is where you go wrong in your attempt to apply game theory. The position the GOP is seeking to stake publically is not against Obamacare, it's against Obama. The GOP would be perfectly fine with Obamacare if it was McCainCare or RomneyCare or BushCare. Evidence? Medicare D for one and well, hey, they even nominated Romney!

So since Obamacare is Obama's signature bill, and his most lasting legacy (policies like the SSM court decision are only indirectly linked to Obama, others like Syria, the stimulus, the auto bailout are over and done with now), the most effective way to attack Obama to provide emotional pleasure to Obama haters is to attack Obamacare. That's it.

Now given that, it makes sense that Democrats are not inclined to 'negotiate'. The GOP doesn't want a better health bill, they want to hand Obama a defeat. Which means that negotiations offer a very limited range of possible bargains. This is not a case where you have an ideological fight. Where liberals want a 50% top tax bracket, conservatives want 25% and they can meet at 35%. Any bargain the GOP strikes will harm them with Obama haters. Any bargain Obama can offer the GOP would by definition have to be harmful to Obama since that is what the GOP wants.

The only solution to this game is to outsmart someone. If the GOP could offer Obama a deal fools him into thinking it's a good bargain, while it really harms him, that could work. Likewise Obama could offer the GOP something they might think they like, but will really harm them. OR the GOP could offer Obamahaters something that looks like they are fighting the fight to defeat Obama, even though they are making a deal. In other words, which group is more stupid than the others. Those will be the ones the others will attempt to 'con' with a deal.

The sequestor was a good example of this. Afterwards there was a period of confusion. Some liberals noted that it's spending cuts primarily hit military spending and tax cuts on the upper bracketrs will expire.. Some conservatives noted the cuts to gov't programs. Obamahaters saw obama crying over the sequestor. Kind of confusing to figure out who really won and who really lost? That's exactly the solution for this type of game, each side can go back and telll their base that they think they won and it will be very hard to prove them wrong.

The GOP leadership would be fine with Obamacare if it was a Republican plan, which contra that heritage study it was not.

But, and in politics this is the single biggest but. The Tea Party and its cohorts have supplanted the evangelical right as the party's activists, and they are the product of a very different part of the Right, with a somewhat different history. They would always be very unhappy with any expansion of the welfare state, no matter how it was funded. They are far less committed to the GOPs older coalitions as well, such as Wall Street, who they see as backing the other side, defense spending, and they are almost entirely immune to calls for compasssion iin a way that is actually pretty alien to the religious right (evangelical and catholic). The party is being dragged to an almost paleo-conservative ideology not by its leadership but by its base.

Elected politicians serve at the sufference of their constituents, especially their own factions constituents. When Mitch McConnell has to worry about a primary challenge and a Sitting senator is forced out by his own party's voters in defiance of state leadership, and this happens in Utah. It is not the same party on the ground that it was in 2008. Remember the anyone but Romney farce from 2011-2? That tells you a lot.

Think about 1964. If Nelson Rockefeller had been the GOP nominee in 1964 and lost, it would have only delayed the Goldwater Revolution. Reagan would have probably still happened. The GOP coalition is in flux, and it has radically changed since 2000. Just as the Democratic coalition changed dramatically between 1992 and now.

"The party is being dragged to an almost paleo-conservative ideology not by its leadership but by its base."
Of course the base of the party, most of whom carry no membership cards but simply identify themselves as conservatives, look on the establishment Democrats and Republicans both as residents of an elitist, government-focused never-never land where twelve zeros are added to every number. This base was the average American in the 19th century, so that must make them "paleos".

The GOP leadership would be fine with Obamacare if it was a Republican plan, which contra that heritage study it was not.

Single payer, off the table. Public Option, off the table. Trigger, off the table.

Yet the bill was a pure Democratic bill rammed down the nations throats since not a single Republican voted for it?

The fact is the bill already repsented a lot of compromises with the Republicans, yet Republicans made it clear securing a defeat for Obama was more important.

I'll ask again, can you seriously look at the way Medicare D was treated by Republicans under Bush and consider if this exact same bill had been proposed as McCainCare or RomneyCare in a slightly different universe where the last two elections turned out differently and argue that it all would have been the same?

The essence of this issue is very simple, and obsessing about what meanies the Republicans are plays into the prevailing narrative of distraction:
In 2005, as a U.S. Senator, Barack Obama warned publicly that ramming a major piece of domestic-policy legislation through Congress on a 51% basis (in that case, it was Bush's partial privatization of Social Security) is divisive and to be avoided.
If that advice had any validity then, then all the more so in this case.
As Montesquieu used to say, laws that are inconsistent with the "general spirit" of a nation are ill-advised.

Oh, is that what it's about? Something senator Obama said publicly in 2005?

Since then we've had one Presidential and several Congressional election and a 'repeal Obamacare' faction has not won the support of the American people. Polls are problematic to cite since they produce incoherent results (i.e. a majority are skeptical of Obamacare, a majority also don't want it repealed) but elections are definitive. Who is really being divisive here?

what precisely does the shut-down havto do with the alleged R concerns aboiut debt, deficit, jobs, the economy?

what does the list of R demands (Keystone XL, tax code reform, et al) in conjunctin with raising debt celing have to do with debt, defict, jobs, economy?
again, nothing

with what to the Rs propose to 'replace' the Affordable Car Act?

For what do the Rs stand?
Nothing .

Just because you don't care to look, doesn't mean the R's haven't proposed anything to replace the ACA. A 30 second google search solves your problem:

I believe that article presents at least 3 alternatives that have been attempted.

There are a number of good ideas in the various Republican health-reform plans (most of them take a whack at the employer health insurance deduction in some fashion). All of them also have significant drawbacks - as in, I believe they could very end up causing as much disruption in the health marketplace as Obamacare has. Whether the eventually outcomes of that disruption would be better or worse depends on where you're sitting.

The bigger question is whether there is actually any political constituency for any of these reforms. When liberals say that the Heritage Foundation developed the blueprint for Obamacare, well, that was a conservative alternative to Hillarycare back in the '90s that was quickly forgotten about once Clinton's plan fell apart. It's not like Republicans haven't had plenty of chances to try some of these approaches in the two decades since then, but the only thing we actually got was an unfunded Medicare Part D.

When I say I support Obamacare, it's not because there aren't other ideas out there that are worth considering and that may have superior features to the PPACA, it's that Obamacare was the thing that managed to get passed and I believe there are enough positive features in it to warrant doing our best to make it work. Hopefully, "making it work" will eventually include making some fixes and bringing some other good ideas.

Quickly forgotten about? Except when it became RomneyCare and it was only the last election that Romney was selected as the GOP champion.

The 'other ideas' are:

1. Do nothing, which leaves millions of people uninsured and without a pragmatic way to reach them (Note Obamacare does allow millions of people to be uninsured, but at least there's a mechanism for those who are willing to move towards insurance).

2. Go to the left with a single payer type system. This can be done under Obamacare by simply expanding on Medicare and Medicaid but there is little consensus on this.

3. There literally is nothing on the right aside from #1. What could there be? In essence Obamacare keeps things as they are while providing some incentives and rather minor sticks to encourage people who are no insured to buy *private* health insurance. I'm not seeing what the right could possibly come up with to counter that other than variations on Obamacare (say using tax credits/deductions to encourage people to buy insurance) or #1.

4. Some libertarian oriented proposals do propose radical changes that might be seen as an alterantive. But as you note there is no consensus on them. Obamacare impacts maybe 7% of the population leaving those who get insurance from their jobs or from medicare mostly untouched. Ideas like changing the tax code to abolish employer provided insurance, turning medicare into a voucher system, etc. are worth talking about but what they are essentially proposing is making 80% of the population buy insurance from the exchanges rather than 7%. If the exchanges are so great, let's see and talk about that for health care reform round 2. Otherwise Republicans have no right to expect us to adopt any such plan unless and until they establish a case for it that gets serious support from the American people and they demonstrate that they are seriously committed to it and aren't tossing it around to just so they have 'ideas' to replace Obamacare.

Obamacare is a law and we must preserve it or Republicans are "terrorists."

Debt limit is a law and it must be overturned or Republicans are "terrorists."

This is logic?

I'm just really happy Republicans are willing to hurt everyone and everything to make sure people can't get health insurance through a bidding market. After all what's the risk of default (but perhaps not but let's get it on and find out! Real world modeling) when such pure evil is being committed by that Nazi Obama (Cruz) or other references to the storming of the .01 castle? ;)

But then none of any fantasy above would touch anyone needing a medical device.

Let'm have the medical equip tax repeal. The shut that terrorist organization (GOP) down.

Good point. But it would be said that the president wouldn't be willing to compromise. Just meet us halfway and shut the government down permanently. Maybe a better strategy would be for the Tea Party faction to advocate repeal of the 14th amendment.

Frankly, after the 08 collapse I began to research intensely what happened, why it happened according to conservative and liberal economists and those seeking to publish independent peer reviewed research, and I remain disappointed that true reform was obstructed by both parties for well discussed reasons. Of course, I do believe one can only come to places like this to get perspective and to form opinions.

And of course I've come to the correct conclusion that animal spirits can never be contained and better to let them run wild and dismantle the Leviathan. Sigh. Not so good for me. Society. My children. But it's just natural, no?

I don't believe Tyler's assumption that the GOP is acting rationally is correct. Although this could be the lead in to a joke, I don't intend it that way. Evidence indicates to me that many in the GOP see this debate in a right-wrong paradigm, not a right-left paradigm. As such, their calculations and decisions might not be subject to Tyler's rational analysis.

Nice try guys, but no-one's buying this just-business-as-usual baloney. A negotiation is when I want us to do stuff that I think is good but you think is bad, and you want us to do stuff you think is good but I think is bad - so we compromise. It's hostage-taking when I threaten to do stuff that we all agree would be disastrous if I don't get what I think is good. It's like you and I are tied together with you threatening to jump off a cliff if I don't hand over what I won fair and square. That's the level the Republicans have reduced themselves to.

Yglesias's point, btw.

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