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The New Economy

Obama healthcare reform threatens truce with business

By / June 23, 2009

At a White House press conference Tuesday, President Obama said a government-sponsored option for healthcare insurance would 'discipline' the private insurance sector.

Ron Edmonds/AP

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One Depression-era movement that's been missing from our own Great Recession is a war on business.

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Is that about to change?

President Obama is going to regulate business more and tax it more. American business has largely given him a pass because of the extraordinary financial crisis he inherited. Healthcare reform is another matter. It has the potential to break the truce that has reigned between business and the White House.

The sticking point: President Obama wants to give consumers a government-sponsored option for insurance. Health insurers, worried it would drive them out of business, have begun to campaign against it.

On Tuesday, President Obama fired back.

"If private insurers say that the marketplace provides the best quality healthcare ... then why is it that the government, which they say can't run anything, suddenly is going to drive them out of business?" he asked at a White House press conference. "It's not logical."

The president went on to say that such concerns would be legitimate if the public option was going to be endlessly subsidized, implying that it would not be. But "the public plan, I think, is an important tool to discipline insurance companies."

These are the inevitable thrusts and parries over public policy. Whether they escalate into an all-out war will depend on whether the administration or the industry can convert the ambivalence of the American public into action. If one side can capture public opinion, it can gain momentum.

Currently, Americans seem ready to accept the current system if it's made comprehensive without much extra cost.

This rhetoric is nowhere near the fiery language Franklin Roosevelt occasionally used against business during the 1930s. Two years after his inauguration, he called for the "abolition of the evil features of holding companies" in his 1935 State of the Union speech.

In Roosevelt's day, electric utilities used holding companies that allowed them to take over smaller competitors. His solution?

A public option. He created the Tennessee Valley Authority (and later, the Bonneville Power Administration) and then extended the government's reach to provide electric power to consumers normally served by the utilities.

It sent a message that business could not ignore.

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