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View from DC: Spotlight turns to Harkin as Senate committees look to merge health bills
10/2/2009

By David Drucker
For IowaPolitics.com

With the finance panel of the U.S. Senate wrapping up work on its health care reform bill, attention is turning to the merger process with legislation previously passed out of the Senate's Health, Education, Labor and Pensions Committee -- where the fate of the government-run insurance option could be decided once and for all.

Turning the page on the Senate Finance Committee’s role in President Barack Obama’s drive for health care reform could also shift the spotlight from U.S. Sen. Chuck Grassley of New Hartford, the ranking Republican on Finance, to U.S. Sen. Tom Harkin, D-Cumming, the newly installed chairman of the HELP Committee and a staunch advocate of the government-run insurance option.

Harkin said recently a comprehensive health care reform bill would land on the president’s desk no later than Christmas Day, and he came close to guaranteeing that the legislation would include a government-run insurance option.

"I caution you, reports of the public option's death are greatly exaggerated," Harkin said, noting how four of the five health care reform bills have public option in them.

The Senate Finance Committee’s $900 billion health care reform package does not include a government-run insurance option, but rather would implement nonprofit medical cooperatives in states where there is not enough market competition among private insurance companies.

Two amendments to add a government-run insurance option to the finance bill failed during the committee’s work on the bill. The proposals, offered by Democratic U.S. Sens. John D. Rockefeller of West Virginia and Charles Schumer of New York, were opposed by both Democrats and Republicans.

Finance Committee Chairman Max Baucus, D-Mont., has continued to insist that any bill with a government option will not be able to pass the Senate. In the Senate, it takes 60 votes -- nine more than a bare majority of 51 -- to break a filibuster and pass major legislation.

But the HELP bill includes a robust, national, public option that would be run by the government as an alternative, low-priced insurance company available to anyone who wants to access its services. Democrats like Harkin, who support the government option, are looking to the forthcoming Finance-HELP merger as a means to insert the measure into the bill that is debated on the Senate floor.

Sources say the former Senate Agriculture chairman is likely to be his usual, intense self once the health care reform effort enters the floor debate phase, and that he does intend to push strongly for the government option. Still, it’s unclear if Harkin is prepared to oppose a bill that does not include it.

“Is he going to draw a line in the sand over it? I think it’s too early to tell,” one source said. By Louis Jacobson
For IowaPolitics.com

By virtually any measure, former Iowa U.S. Rep. Jim Leach is a surefire bet to be confirmed as head of the National Endowment for the Humanities, the $155 million a year agency that supports education, research and other programs in the humanities.

He’s widely respected on Capitol Hill following a long career in the House and he has genuine credentials for the job, both from having taught at Harvard and Princeton and from having co-founded the Congressional Humanities Caucus, which was an active advocate for humanities funding during his tenure.

But Leach, whose confirmation hearing wasn't scheduled as of early July, could face questions about his co-authorship of 1999 legislation that removed barriers between commercial and investment banks.

The 1999 bill, a compromise signed into law by President Bill Clinton, was co-authored by Leach, GOP Texas Sen. Phil Gramm and then-Rep. Tom Bliley, R-Va. Some critics have suggested the bill hastened last year’s financial crisis by encouraging a tolerance for risky practices on Wall Street. Supporters say the bill merely changed outdated barriers erected in the 1933 Glass-Steagall Act and that poor regulation is a more likely reason the risky practices mushroomed.

In a document released last year, the Obama campaign didn’t mention any of the bill’s co-authors by name, but it did express clear dissatisfaction with the legislation and how it was assembled. While reform of Glass-Steagall “was desirable,” the document says, “the banking, insurance and securities industries spent over $300 million lobbying Congress to shape that reform to meet their own interests.”

The statement added that while “the regulatory structure was outdated, the need for oversight was not. Unfortunately, in the rush to repeal the law to create immediate opportunities for certain Wall Street firms, little effort went into modernizing the government’s supervision of the financial industry -- to guard against the potential for conflicts of interest, to insist on transparency, or to ensure proper oversight of new and complex financial products or the dramatic rise of investment banks and non-bank financial institutions, like hedge funds and Structured Investment Vehicles. Nearly a decade later, our financial markets -- and everyday Americans -- are paying the price.”

Whatever problems the Obama team may have had with the bill, the campaign treated Gramm -- an adviser and friend to Republican presidential nominee John McCain -- far more critically than it did Leach, a moderate Republican who represented a congressional district in eastern Iowa from his election in 1976 until he was defeated in the Democratic tide of 2006.

At a July 10, 2008, campaign appearance, Obama reacted sarcastically to comments by Gramm that Americans were experiencing a “mental recession” and were a “nation of whiners.” Obama quipped that America “doesn’t need another Dr. Phil.”

By contrast, the Obama campaign courted Leach, one of a dwindling number of prominent Republican moderates, as a supporter. He was given a speaking slot at the Democratic National Convention, and after the election, he was named an emissary to an international economics summit in Washington and later was nominated to head the NEH.

The White House news release announcing Leach’s nomination didn't mention the Gramm-Leach-Bliley Act, even though the fifth sentence of Leach’s own biography on the Web site of Princeton University’s Woodrow Wilson School of Public and International Affairs asserts “the legislation he is perhaps best known for is Gramm-Leach-Bliley, which is considered one of the seminal pieces of banking legislation of the 20th century, second in import only to the Federal Reserve Act of 1913.”

The contrast in the Obama team’s divergent treatment of Gramm and Leach hasn't escaped the notice of some conservatives.

“There is no basis for the difference in treatment other than the fact that Gramm supported McCain and Leach supported Obama during the campaign,” said Peter J. Wallison, a financial policy specialist at the conservative American Enterprise Institute.

In a June interview with IowaPolitics.com, Leach made no apologies for the bill. “It’s a widely misunderstood bill,” he said. “The bill somewhat surprisingly and counterintuitively is not a deregulatory bill. It enhanced competition between commercial banks and investment banks and the insurance industry. … With several exceptions, it was an enhancement of regulation.”

Leach added that the problems on Wall Street were traceable to failures of the regulators themselves and to insufficient congressional oversight, rather than to the bill’s framework itself.

Leach has gotten some rhetorical backup on the bill’s legacy. Said President Clinton, “I don't see that signing that bill had anything to do with the current crisis.”

In addition, the non-partisan watchdog factcheck.org last year slammed a MoveOn.org ad that charged that Gramm-Leach-Bliley “stripped safeguards that would have protected us."

“That claim is bunk,” factcheck.org said. The bill “had little if anything to do with the current crisis. In fact, economists on both sides of the political spectrum have suggested that the act has probably made the crisis less severe than it might otherwise have been.”

Moreover, the organization wrote, “deregulated banks were not the major culprits in the current debacle. Bank of America, Citigroup, Wells Fargo and J.P. Morgan Chase have weathered the financial crisis in reasonably good shape, while Bear Stearns collapsed and Lehman Brothers has entered bankruptcy, to name but two of the investment banks which had remained independent despite the repeal of Glass-Steagall.”

The differential treatment may be partly explained by the personality differences between the two men. Whereas Leach was something of a bipartisan conciliator with a low-key style, Gramm was more of a partisan Republican and was usually perceived in Washington as being pricklier and more outspoken, as illustrated by his “whiners” and “mental recession” comments.

Indeed, one media expert suggests the media may have enabled and compounded the differential treatment.

“Journalists like to think of themselves as seeking out moderate voices, a tendency that conservatives tend to view as liberal,” said S. Robert Lichter, who heads the Center on Media and Public Affairs. “So Leach fits the media’s image of a good guy -- moderate, thoughtful, non-confrontational.”

Leach added in the interview that despite their co-authorship of the legislation, he and Gramm weren't peas in a pod.

“There were some aspects of other bills that we differed quite a bit on, and we had quite a few battles on this particular bill,” he said. “But I think [in the campaign,] people were attacking Phil more than the bill – they did not understand [the details of] the bill itself.”

Meanwhile, on the substance of the NEH job, Leach appears to be on solid footing.

“We’re very happy” with his appointment, said Robert M. Berdahl, president of the Association of American Universities. “He has a real passion for the humanities. When he was in Congress, we would meet with him about projects in the humanities, and when you get an hour from a congressman on one subject, you know he feels very strongly about it.”

The endowment was never as controversial as the National Endowment for the Arts – which was a target for conservatives and sometimes liberals during the “culture wars” of the 1980s and 1990s – but what hullabaloo the NEH did attract has by now largely dissipated. Under former chairman Bruce Cole, an appointee of President George W. Bush, the NEH generally steered away from political turbulence, focusing on public educational and outreach efforts with broad support.

Now, lobbyists said, the biggest policy disputes involving the humanities revolve around how big a budget the NEH should have and whether it should reallocate some of the resources currently devoted to those large educational and public outreach programs toward individual research grants instead.

Advocates for the humanities note the agency’s funding is well below its 1970s peak in inflation-adjusted dollars, and is even below what it was in the early 1990s.

“The NEH needs more support for research and advanced study,” said Jessica Jones Irons, executive director of the National Humanities Alliance. The money awarded by NEH leveraged $2 billion in non-federal giving, she said. “It’s an incredibly important source of seed money, even though it’s a small amount in the federal budget.”

While presidential nominees aren't encouraged to divulge their agenda publicly before their confirmation hearing, Leach did tell the National Journal in June that he wants to help the humanities reassert their “relevance” and be a “cherished phenomenon” rather than the subject of political controversy.


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