A Fresh Angle on Health Care? Leonhardt Delivers

We’ve given the Times’s David Leonhardt credit before for economic writing that threads the tricky “news analysis” needle, and, in today’s piece, he once again displays that ability. But he also accomplishes what may be a more daunting task, finding a fresh angle on health reform at precisely the moment when it didn’t seem possible.

After so much shrill political back and forth over the legislation, Leonhard goes the sober economic route. And he brings a set of fresh economic insights that left me wondering why—amid the long hours and many words of the health care debate—some of these points hadn’t been brought to light sooner.

The piece begins with a real this-is-a-big-moment feel that firmly places it on the front page, below a photo of the White House bill-signing ceremony.

For all the political and economic uncertainties about health reform, at least one thing seems clear: The bill that President Obama signed on Tuesday is the federal government’s biggest attack on economic inequality since inequality began rising more than three decades ago.

Leonhardt then moves quickly to what he sees as the meat of the matter:

Over most of that period, government policy and market forces have been moving in the same direction, both increasing inequality. The pretax incomes of the wealthy have soared since the late 1970s, while their tax rates have fallen more than rates for the middle class and poor.

Nearly every major aspect of the health bill pushes in the other direction. This fact helps explain why Mr. Obama was willing to spend so much political capital on the issue, even though it did not appear to be his top priority as a presidential candidate. Beyond the health reform’s effect on the medical system, it is the centerpiece of his deliberate effort to end what historians have called the age of Reagan.

Now, we’ve also given Leonhardt grief before, as we did back in November 2007 when he took an ill-advised and poorly supported leap into the counterintuitive, seeing the bright side in signs of economic catastrophe that had then begun to manifest themselves. Nobody’s perfect, and we’re happy to give credit where it’s due and to note, if it’s not too condescending, no small amount of professional growth in his columnizing over the past year or so.

A key element is the heavy dose of research that goes into each piece.

Not sure about that tax rate claim? Click through to find this hearty academic study of the declining progressivity of the U.S. federal tax system. In this era of what Big Chief Audit Dean Starkman calls the hamster-wheel-like productivity demands plaguing MSM basically all journalists these days, that’s a depth of reporting that can really only be done by someone like Leonhardt who usually writes once a week. Give a reporter time to think, good things happen. Believe it.

Leonhardt sets out some basics of the bill, “the most sweeping piece of federal legislation since Medicare was passed in 1965,” plainly stating that it would help people “to afford medical care after they lose a job or get sick. And it would do so in large measure by taxing the rich.”

As Michael Calderone pointed out, there’s been no escaping the health care debate, which filled 37 percent of the news hole across all platforms during the past week, according to the Project for Excellence in Journalism. If it seemed like health care was even more dominant, it probably was. On talk radio and cable news, it occupied 80% of airtime.

Maybe that’s why Leonhardt’s context seems so valuable. For instance, here’s a stat that is known but not fully internalized among the business press corps, we feel:

Since 1980, median real household income has risen less than 15 percent. The only period of strong middle-class income growth during this time came in the mid- and late 1990s, which by coincidence was also the one time when taxes on the affluent were rising.

For most of the last three decades, tax rates for the wealthy have been falling, while their pretax pay has been rising rapidly. Real incomes at the 99.99th percentile have jumped more than 300 percent since 1980. At the 99th percentile — about $300,000 today — real pay has roughly doubled.

That he presents all this without a partisan edge — and with data from the Census Bureau and the
Congressional Budget Office to back it up – makes for a pretty forceful argument.
There are some pretty good details in those reports, too. “Capital income grows in importance at the very top of the distribution,” seems obvious enough. But the CBO gets granular with the data.

Interest, dividends, and realized capital gains accounted for 29.8 percent of pretax household income for people in the 99.5 through 99.9 percentiles, 42.6 percent of income for people in the 99.9 through 99.99 percentiles, and 55.9 percent of income for the 0.01 percent of the population with the very highest income.

Health care blogger Merrill Goozner promptly declared Leonhardt guilty of “overreach” this morning, pointing out that the legislation “also taxes middle class households (the so-called Cadillac-heatlh-plans tax). Moreover, it provides its benefits in the form of services, not wages, and none of it goes into effect for another five years.”

But Leonhardt seems to go him one better, pointing out that he knows the limits of the case he’s making:

Health reform hardly solves all of the American economy’s problems. Economic growth over the last decade was slower than in any decade since World War II. The tax cuts of the last 30 years, the two current wars, the Great Recession, the stimulus program and the looming retirement of the baby boomers have created huge deficits. Educational gains have slowed, and the planet is getting hotter.

For more on the slow growth of the past decade, dig into a long magazine piece Leonhardt wrote last year. That story concluded this way:

When Washington sets out to rewrite the rules for the economy, it can pass new laws and shift money from one program to another. But the effects of those changes are not likely to be merely the obvious ones. The changes can also send signals. They can influence millions of individual decisions — about the schools people attend, the jobs they choose, the medical care they request — and, in the process, reshape the economy.

That’s true about rewriting the rules for health care, too. “The effects are not likely to be merely the obvious ones.” Kudos to Leonhardt for pointing it out.

Has America ever needed a media watchdog more than now? Help us by joining CJR today.

Holly Yeager is CJR's Peterson Fellow, covering fiscal and economic policy. She is based in Washington and reachable at holly.yeager@gmail.com.