Dems Want Republicans To Bail Them Out Of Political Gamble

In response to the government shutdown hitting the one-month mark, an unnamed adviser to Donald Trump said that the president has “had it with these people [i.e., congressional Democrats], because he knows they’re playing politics.” He’s right — but the administration hasn’t articulated the half of it.

Democrats have shut down the government due to their demands that Republicans extend enhanced Obamacare subsidies set to expire on Dec. 31. Such a demand would give a bailout to insurance companies totaling $350 billion plus interest. But it would also give a political bailout to Democrats themselves, who ended up in this situation only because they thoroughly mis-calculated when and how to seek a subsidy extension.

Flash Back to Summer 2022

This government shutdown effectively originated in July 2022, when Democrats passed their Inflation (Reduction) Act. After interminable negotiations behind closed doors with then-Senate Majority Leader Chuck Schumer, D-N.Y., Sen. Joe Manchin, D-W.V., threw out most of Democrats’ $5 trillion Build Back Bankrupt wish list. He suggested legislation that would 1) empower the federal government to “negotiate” drug prices in Medicare and 2) use some of the money from those price controls to extend the enhanced Obamacare subsidies, originally enacted by Democrats in March 2021 for a two-year period.

Put aside for the moment that this plan, and Democrats’ eventual legislation, raided Medicare to fund an expansion of Obamacare — just like Obamacare itself. Reports from the summer of 2022 noted that “the health care deal Manchin offered would reduce premiums for two years.” In other words, Manchin’s original proposal would have extended the enhanced subsidies, then set to expire at the end of 2022, for calendar years 2023 and 2024.

A Political Gamble That Backfired

Instead, the bill Democrats ended up passing extended the enhanced subsidies for three years, such that they expire at the end of this year, rather than doing so last December. Democrats’ reasons for so doing seem as obvious now as they did then — but events couldn’t have played out any worse for them.

I noted last summer that the enhanced Obamacare subsidies were set to expire at the same time as major portions of the 2017 Tax Cuts and Jobs Act (TCJA). Doubtless Democrats recognized this fact in 2022, and persuaded Manchin to go along with a three-year extension of the enhanced subsidies, such that the subsidies and TCJA would expire on the same timeline.

If Democrats had controlled any of the three elected branches of government this year, this gamble would have given them a sizable leverage point in discussion of a TCJA extension. They could have, and almost certainly would have, demanded a permanent extension of the enhanced subsidies in exchange for extending tax relief for the middle class. Indeed, with unified control of the elected branches, Democrats could have permanently extended the enhanced subsidies and let some or all tax relief for “the rich” expire.

One minor detail in all of this policy calculation: Democrats needed to win elections. They didn’t. Republicans control the three elected branches of government, and passed a permanent TCJA extension — without any Democratic votes, and without the enhanced subsidies attached — as part of this summer’s “big, beautiful bill.” The left’s leverage point went up in smoke, leaving the party scrambling for options.

Gross Miscalculation?

Ironically enough, when Manchin floated his initial deal in July 2022, the press noted that his proposal “would force the [Democratic] party to confront the prospect of rising premiums again in two years — just ahead of a presidential election.” In retrospect, Kamala Harris probably wishes she would have had the prospect of rising health care premiums as a tangible cudgel to use against Trump during her campaign last fall — “If you don’t vote for me, your costs will go through the roof.”

As a conservative who doesn’t want the enhanced subsidies extended, I’m glad that Democrats punted the issue beyond the presidential election. Having seen Republicans scared of their shadow on anything to do with health care far too many times, I could readily envision an alternative 2024 universe that became the worst of both worlds — a series of damaging headlines about rising premiums over the spring and summer to activate leftists, followed by a political cave where Republicans took ownership of Obamacare right before the presidential election, demoralizing the conservative base and depressing Republican turnout.

By punting the issue into 2025, Democrats hoped they would have a better chance of getting a permanent extension of the enhanced subsidies, rather than another one or two-year extension. They neglected to remember the fact that, for this strategy to succeed, they had to win an election first. (Oops.)

Schumer miscalculating politically is nothing new. This spring, he assumed Republicans could not pass a spending bill through the House of Representatives without relying upon Democratic votes — when they did, he felt obligated to retreat for lack of a better strategy. Now, however, his poor decisions three years ago have officially come a-cropper, and the American people have been made to suffer the ill effects of a government shutdown manufactured by Democrats because they 1) can’t think strategically and 2) can’t win elections.