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At the Two-Yard Line

• Jonathan Cohn
• January 30, 2010  | 4:16 pm

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[snip] What you might not know is that House and Senate leaders are already finding common ground on issues like improving the Senate bill's affordability protections and getting rid of the “Cornhusker kickback.” Instead of the federal government picking up the entire cost of Nebraska’s Medicaid expansion--a special deal that became an embarrassment even to Nebraska Senator Ben Nelson, for whom the deal was made--the federal government would simply cover a greater share of Medicaid costs for all states. This would actually be good policy, as well as good politics, so it’s win-win.

Still, there is no consensus about the excise tax on generous insurance plans. At the moment, that is the big sticking point in negotiations.

Most House Democrats oppose the tax, either for reasons related to policy (they think it’s an ineffective, unjust way to control costs), politics (they think constituents will punish them for supporting a tax that affects some middle-class people), or both. Although the policy qualms haven’t changed since Massachusetts, the political anxiety has grown. And the deal originally struck on the tax--giving union contracts several extra years of exemption--no longer seems as attractive because it, too, smacks of backroom dealing.

House Speaker Nancy Pelosi has said she’ll have trouble rounding up 218 votes if the tax stays in there. (Remember, she's likely to lose at least a few votes over abortion.) As a result, she has proposed taking it out altogether.

But it’s hard to see how that could happen. Economists, not least among them the ones at the Congressional Budget Office, are convinced that the tax is an essential tool for cutting costs. Take it out and it’s a lot harder to pass off the plan as reducing health care spending over the long run. That will make it tough to get the bill past the Senate, where fiscal conservatives have a lot more sway.

Another complication on the Senate side is reconciliation process itself. Centrists like Evan Bayh and Blanche Lincoln have already made clear they don’t like the idea, because it seems so overtly partisan. To be sure, Democrats can afford to lose up to nine senators on a reconciliation vote. But a lot of senators--like a lot of representatives--are just tired of talking about health care and generally freaked out by the latest poll numbers. They just want to be done with it.

By all accounts, Senate Majority Leader Harry Reid and his allies, like Pelosi and hers, want to keep going. But the math turns out to be tough for him--just like it is for her.

Not that it needs to be. The good news in all of this--the best news, really--is that the political logic for moving forward remains as compelling as ever: Most of these Democrats have already voted for health care reform. They’re going to get blamed for it no matter what happens. Their best defense is to pass something: It gives them a program to defend and an accomplishment to tout.

Besides, when you break the negotiations down, point by point, it's not hard to imagine a new set of compromises, similar to the ones House and Senate negotiators had reached in January, that could work for both sides. On the excise tax, for example, the House and Senate could simply raise the income threshold--that is, make it apply to fewer people, at least initially--rather than create a specific exemption for union plans. (Obviously, they might have to find new offsets, too...)

Some of these compromises should actually make it easier, not harder, for members nervous about political backlash. The prospect of undoing the Cornhusker kickback, for example, should go a long way toward easing the anxiety of nervous centrists. (And if not, it should at least give them political cover.) Liberal House members may not love voting for the Senate bill, but Blue Dogs ought to be thrilled, at least if their rhetoric on fiscal conservatism is genuine.

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Even the decision to focus on jobs, banking, and the economy right now--while letting the "dust settle" on health care reform--may not be quite the sign of retreat it seems at first blush. Many insiders have suggested to me that giving leadership a little breathing space to negotiate, and giving members of Congress more time to adjust to the post-Massachusetts political landscape, will ultimately make a deal more likely. In today's Los Angeles Times, Rep. Gerald Connolly, president of the House Freshman Democrats says that strategy may be working: "The more they think about it, the more they can appreciate that it may be a viable . . . vehicle for getting healthcare reform done."

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During Friday's cabinet meeting, President Obama apparently told his advisers that reform was on the two-yard line. That sounds about right. But it may not get over the goal line unless he, and the rest of the Democratic team, push even harder.

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