Every Hundred Years or So

In connection with the closing hours of the health care debate, I have been reading 1912: Wilson, Roosevelt, Tafts and Debs — The Election that Changed the Country, by the late James Chace. About all that most of us remember about 1912 is that Woodrow Wilson was elected then, an idealistic president whose administration moved the United States along a certain path.

Then, too, the country was sharply divided. The Republican Party split between William Howard Taft, the incumbent, and his predecessor, Theodore Roosevelt, who wanted his old job back. A Marx-quoting socialist, Eugene Debs, polled a million votes. Wilson didn’t receive a majority of votes cast. But still he won. Oh yes, the Titanic sank in April 1912, becoming a durable symbol of hubris at the juncture of technology and business.

Here’s another thing worth remembering about 1912. A year later, the election produced a memorable pre-Christmas legislative battle. Wilson was inaugurated in March 1913, and, after a considerable debate, the Democrats, who controlled Congress, passed the Federal Reserve Act and Wilson signed it — on December 23.

The Sixty Third Congress passed a graduated federal income tax (mostly on the very rich) and a tariff reduction. And, of course, four years later Wilson led the nation into the closing stages of World War I. But the creation of the nation’s semi-independent central bank was Congress’s most important achievement in those years – witness the extent to which the conduct of the Fed’s affairs preoccupies us today.

Remember how three months ago the Senate passed its version of a healthcare overhaul on December 24 – Christmas Eve itself? (Granted, the tension associated with the vote expected to take place today is greater than the earlier tally. But the December roll call was a real climax; this one is so much grinding dénouement.)

Besides their last-minute legislative nativity, the Federal Reserve Board and the public regulatory framework that is nascent in the health insurance bill (many more battles remain to be fought!) have certain features in common.

Each was designed to bring a new dimension of management and social supervision to a vital industry grown so large and complicated as to require some measure of coordination and control. Not a lot – the Federal Reserve Act demonstrated that it was possible to maintain a good deal of competition among banks while reining in the tendency to devil-take-the-hindmost exuberance that had produced five panics in thirty years.

And each was denounced in turn as fundamentally un-American. Declaimed William Howard Taft, the incumbent president and Republican nominee in 1912, of Wilson’s proposed reforms: “as Socialistic as anything that has been proposed in the countries of Europe. “To the extent they are trying to turn us into a Western European country, we are not going to be helpful,” says Sen. Mitch McConnell (R-Ky), the Senate minority leader, of the Democrats’ health care measure.

There has been nothing secretive about the ambitions of the Democratic Party’s leadership to create a framework for the nation’s largely private health care delivery system, although the furious Republican opposition that has materialized in the past six months has made the goal seem more remote.

Former Senate Majority leader Tom Daschle, who was to have been Secretary of Health and Human Services until a tax problem forced him to withdraw, has proposed a Federal Health Board to develop standards and to structure coverage for that nation’s private insurance companies, as it does already for around 100 million people who are insured through Medicare, Medicaid and the Veteran’s Administration.

In Critical: What We Can Do About the Health Care Crisis, Daschle described in 2008 the basic idea: “Like the Federal Reserve, the Federal Health Board would be composed of highly independent experts insulated from politics. Congress and the White House would relinquish some of their health policy decisions to it. A shift to a more effective drug or service could be accomplished without an act of Congress.”

The legislature would retain the final say on the Board’s powers, very much as it does now with the Fed. The Senate would confirm its governors. In all likelihood, a Health Board would evolve a sectional structure, along the lines of the twelve regional banks that form a key component of the Federal Reserve

True, the Federal Reserve Board stood much higher in popular regard two years ago, when Daschle laid out his proposal in some detail. The next step in restructuring health care is, at best, some years away.

There is, however, a powerful and perhaps irresistible logic to the plan. Probably the medical industrial complex – physicians, hospitals, nursing homes, pharmaceutical companies, medical device manufacturers and even the private insurers themselves – can be expected to embrace it, eventually, preferring to design a more efficient system themselves rather than continue to hope that things will get better on their own.

After all, it was the bankers themselves, led by Paul Warburg, of the merchant banking firm of Kuhn, Loeb, who laid out the basic design of the Fed. And it was Sen. Nelson Aldrich, of Rhode Island, the ranking Republican, who shepherded the bill through the Senate, along with a Democrat, Sen. Carter Glass of Virginia.

As for the politics, who knows about that? In 1912, Chace makes it clear that the split between Taft and Roosevelt in 1912 inflicted wounds on the Republican Party that have never healed. The GOP is still torn between reform and reaction. Many bitter battles over health care restructuring remain. But every hundred years or so, it seems necessary to add a whole new dimension to the tasks of government.