President Carter

by Stuart E. Eizenstat

  Was this the opening salvo in a presidential run? I met on July 26 in his Capitol hideaway office with Kennedy, Horowitz, and Carey Parker, the senator’s chief of staff. Kennedy said emphatically: “I want one bill, with different ways of phasing in benefits.” He said that since it was still unclear if we favored one bill or not, if he delayed his own plan, “I will be caught in the middle.” Kennedy did not even want to come to the White House to see the president, but would only talk with him on the phone.39 This left me thinking: Which of the two was a senator and which the president of the United States? Health care was degenerating into an ominous political brawl within the Democratic family.

  Now fed up with Kennedy’s demands and his refusal to come to the White House for a meeting, Carter was willing to let Kennedy break off negotiations. Since the senator refused to come to a White House meeting, I had a conference call with him, Horowitz, and Califano. Kennedy hurled accusations: “You’ve slid on so many timetables, I fear this will slide more. Without one bill we will lose, as we did on hospital cost containment.” He drew a hard line on the all-important issue of triggers: “I can’t go to the groups [unions] and say we may get benefits if we meet the triggers. The key is one bill with a minimum of standards. Otherwise opponents can pick it off bit by bit.”40

  I debriefed the president and told him I now believed we could not win with a comprehensive bill, and that my preference was for an incremental approach, starting with an incremental approach, beginning with an affordable first phase of expanded coverage. He agreed.41

  KENNEDY HOLDS OUT FOR ALL OR NOTHING

  If there ever was a political equivalent to Muhammad Ali’s “Thrilla in Manila” championship fight against Joe Frazier, it was the confrontation at which Kennedy finally deigned to come to the White House on July 28 and confront Carter. Horowitz, Mondale, Califano, and I served as seconds. The president began by lauding Senator Kennedy’s courage and admitting he had “slipped on timing.” He said he did not want national health insurance to become a campaign issue in the congressional midterms. He told Kennedy he would release his health care principles on Saturday, but he did not back away from the ideological divide between the two. “The Democratic Party and I need to enhance an image of fiscal responsibility, and the reputation of national health insurance is that it would be irresponsible fiscally.” Carter then made a prophetic statement: “It will doom health care if we split. I have no other place to turn if I can’t turn to you.” He continued earnestly: “I would like to leave office with a comprehensive bill in place, but I must emphasize fiscal responsibility if we are to have a chance.”

  Kennedy replied that no plan would pass without developing a national constituency: “I want to go around the country and say you are the first president who wants national health insurance. We should give it a fair chance.” He insisted on wrapping the program into one bill, so the public could see all the benefits it would receive in the first phase and those that would automatically come later: “They need to understand the program won’t be stopped because of unemployment or budget concerns, but only to make [midcourse] corrections. If there is more than one bill, it means the program can be stopped, and the principle of universality has no meaning.”

  It is one thing for an individual senator, even one like Kennedy, to introduce a broad health care bill when he alone will not have to live with the consequences. It is quite another for a president, who must consider broader interests like the impact on the budget, economy, financial markets, and his other priorities, to embrace costly, transformative legislation. So Carter replied, “I need to have flexibility to stop due to economic conditions.” Horowitz put the difference between them in its rawest form: “We need to have an entitlement, and if bad economic or budget conditions come, then you can introduce separate legislation.” Carter replied that social programs like this are rarely cut back after they start but are usually expanded. He said he needed the public to trust Congress to be fiscally responsible or the idea of government-backed coverage would die: “If I say national health insurance will happen regardless of what economic conditions are, I’ll never get it passed.” Kennedy disagreed and told Carter that he was heading in a direction where he would encounter the most political resistance, without rallying support from labor and consumer groups. The senator’s only concession was to agree to delay any bill until after the November midterm elections. Otherwise their differences seemed irreconcilable.42

  This was equally obvious to Kennedy, who immediately called a news conference to denounce whatever the administration would put forward on health insurance. He had called me and Califano to warn us to put out the White House plan first, but Califano said he could not be ready that day. The president was livid, saying that Kennedy “betrayed our trust.“I agreed.43

  At his news conference Kennedy was flanked by the major labor leaders and representatives of senior citizens’ and church groups who had formed a Committee for National Health Insurance, which was financially supported by the UAW and AFL-CIO. The senator blamed Carter for a failure of leadership in proposing only a “piecemeal start” that would cripple any program and disappoint millions. He then announced he would introduce his own comprehensive bill. If he wanted an audition for an eventual challenge to Carter’s renomination, he could not have organized it better, by stripping away our union support.

  SAIL AGAINST THE WIND

  In many ways Kennedy’s public rollout for his presidential run came on Saturday, December 9, 1978, when Carter also effectively lost control to the senator of his own party’s activist liberal and labor base. The Democratic Party held a midterm convention in Memphis—thankfully never repeated since—which gave Kennedy and the liberal constituency groups a forum to challenge Carter’s tight anti-inflation budget before he even presented it. Budget Director Jim McIntyre had already proposed severe cuts in a variety of health care programs for the forthcoming budget as part of the administration’s anti-inflation program; they were leaked to the press, probably by Califano, to create a backfire.

  Shortly before the midterm convention Kennedy suggested that Califano should resign in protest, and Califano responded by assuring him these were only preliminary budget office proposals, which he would appeal to the president. When Carter mounted the convention podium on Friday night to open the event, he did not bring the message liberal activists wanted to hear, even if they needed to understand it. He explained the need for budget stringency but assured the delegates that he would give priority to protecting the poor.44

  On Saturday afternoon, Califano and I were on a health care panel with Kennedy, moderated by the governor of Arkansas, Bill Clinton. Califano spoke first, reassuring the audience that Carter remained committed to national health insurance, that our differences with Kennedy could be resolved, and that the president had a broad responsibility to deal with inflation and the economy. I remember as if it were yesterday the air of anticipation as Kennedy rose to reply, but also because I became his unwitting foil.

  His office had alerted the press that he would be making a major address, and the reporters were there en bloc, even for a late-Saturday-afternoon panel in Memphis.

  In our many private meetings, I often found Kennedy’s conversation halting, with sentences and thoughts left dangling and incomplete; but when he gave a speech, he was a man transformed by passion, power, and fluency that transfixed his audience. Kennedy said the Democratic Party was not the party of McKinley, Harding, Coolidge, or Hoover, as if somehow Carter fit into this Republican pantheon. Using terms common at his family’s summer retreat on Cape Cod to steer directly at the administration’s budget cuts, he exclaimed: “Sometimes a party must sail against the wind. We cannot afford to drift or lie at anchor. We cannot heed the call of those who say it is time to furl the sail.”

  He said the party that had torn itself apart over Vietnam in the 1960s could not afford now to do so by fighting inflation through budget cuts at the expense of the elderly, the poor, the black, the si
ck, the cities, and the unemployed, while wasteful tax subsidies and inflationary spending continued for defense. Sacrifices must be fair. When he turned to the panel’s focus on the urgent need for national health insurance, he emphasized that America stood virtually alone among major countries without it; the rich and members of Congress were covered but not millions of average citizens; and he insisted that only through cost-controlled national health insurance could inflation be brought down and health care be provided to every person. The audience in the large auditorium leaped to its feet and erupted in sustained applause.

  I spoke next, feeling like a pinch-hitter fresh from the minors batting right after Ted Williams had hit a grand slam. I cited our support for various health initiatives, including health maintenance organizations (HMOs), and financially distressed medical institutions, including predominantly black ones. At that point Kennedy dramatically pulled out a spreadsheet with a leaked copy of the OMB’s proposed cuts. As I finished, Kennedy said: “When the president reviews the budget, I hope Stu gives him the same lecture he gave us.” I retorted with a bite: “The president doesn’t need a lecture, and I don’t lecture him.”

  Kennedy then held up the OMB spreadsheet in his left hand and laced into me, gesturing with his large right hand, almost shouting, although his target really was the president: “Mr. Eizenstat talked of President Carter’s support for HMOs. How much does the OMB budget mark propose for new starts for HMOs? Zero.” He then systematically went through the other proposed cuts. At this point Califano came to the rescue, underscoring that these were not President Carter’s decisions. As he put it: “OMB makes its recommendations and I make mine. But only the president decides. We should all [with]hold judgment until the president decides.” But Kennedy had drawn first blood in what would be the signature issue for his presidential campaign: national health insurance.45

  TOO LATE, KENNEDY REGRETS

  Throughout 1979 we maintained a lengthy and complex effort to develop our own health insurance legislation. In January, Califano sent the president a draft plan melding the Long-Ribicoff plan to insure against catastrophic illness, with expanded and federally financed Medicaid to cover more poor and low-income people with a basic benefit package. For working Americans and their dependents (156 million of the 220 million population at the time), employers would be mandated to provide coverage, paying half the premium cost, with the government picking up the rest. I continued meeting with Horowitz and the unions, the heads of major insurance companies, and congressional leaders, often together with Califano.

  Califano tried to narrow our differences at meetings with Kennedy at his home. On May 19, 1979, Kennedy announced his Health Care for All Americans bill and publicly asked President Carter to join him in enacting it. While it was less a government-centered program than Kennedy’s previous bills, Califano felt it was not only administratively unworkable but politically unachievable. We continued developing an administration bill through the winter and spring of 1979.46

  Finally, after more than two years of work, the president unveiled his first-phase bill at a White House briefing with Califano and me on June 12, with the public support of liberal congressmen Charles Rangel of Harlem and James Corman of Los Angeles and conservative senator Russell Long of Louisiana, along with a detailed Message to Congress on our National Health Plan.47

  In a press conference that followed with me and Califano, he pointed up the contrast with Kennedy’s all-or-nothing approach and took note of the fact that no national health insurance bill had ever passed Congress. Califano uttered his most memorable line: Kennedy’s approach “had less chance of passing than putting an elephant through a keyhole.”48 To show he had not lost his sense of humor, Kennedy sent Califano a huge poster board with a big keyhole cut out of the center, through which, suspended on a spring was a small stuffed pink elephant.49

  Although this was only a first phase, Carter’s proposal represented a revolutionary change in the American health care system. No American would have to pay more than $1,250 a year in costs, and the government would pay anything above that for catastrophic coverage. Sixty million old, disabled, and poor Americans would be covered with no copayments, while protecting an additional sixteen million people who were not already on Medicare. Employers would be required to provide coverage by paying 75 percent of the premium for their workers and dependents. The remaining nine million Americans, either self-employed or part-time workers, would be able to buy coverage from government health care corporations, as would small companies who could not afford to purchase from private insurers. Prenatal, delivery, and first-year infant care would be provided for all women and children with no cost sharing. Reforms in reimbursements would reduce costs and reorient service toward preventive care. The government’s cost was estimated at $18.2 billion in 1980 dollars, and $6.1 billion for employers to cover employees who were not already covered at work by private plans.

  Kennedy never tried to move our bill in his committee. In November, Senator Long persuaded a majority of his Finance Committee to support our proposal but eventually abandoned it in 1980 because of a deteriorating economy. More than a quarter of a century later during President Obama’s first term, Congress passed a national health insurance bill modeled after our proposal, strongly supported by Kennedy shortly before his death, with not one Republican vote—and later under relentless attack by President Trump and a Republican Congress. The demise of the Carter plan was a political tragedy for the president and a health care tragedy for Americans.

  Years later, in 1987, Kennedy invited Karen Davis, one of the key architects under Califano of Carter’s first-phase bill, for a discussion of another unsuccessful new national health care bill he was sponsoring. It was also drawn from Carter’s first-phase bill, relying on an employer mandate with less federal funding. Wistfully if very belatedly, Kennedy said to her: “Where’s the Carter bill now that we need it?”50

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  NO GOOD DEED GOES UNPUNISHED

  It is difficult to conjure up a more catastrophic final year in any American president’s term of office than 1980, Carter’s last year in the White House—or, to be precise, from November 4, 1979, the day the hostages were seized in Tehran to his defeat for reelection by Reagan on November 4, 1980. In between came the Soviet invasion of Afghanistan, Fed chairman Paul Volcker’s decision to apply the monetary brakes, the daring but tragic effort to free the hostages, the disastrous Mariel boatlift of Cubans fleeing the Castro regime, and a scandal surrounding his wayward younger brother that was dubbed “Billygate.” In the best of circumstances it would have taken a political magician to sustain the unlikely coalition of Southern and working-class Northern whites, blacks, women, and liberals that had elected him in 1976. But 1980 was hardly the best of times.

  Jimmy Carter needed a united Democratic Party, but rumbling up from his presidency were resentment and misunderstanding among all the major building blocks of the winning coalition that had narrowly carried him into the White House four years earlier, and which was now crumbling. His conservative white Southern base; urban, labor, and liberal groups; and Jewish and women’s advocates were all after his scalp. In seeking to eliminate pork-barrel water projects, Carter had alienated the congressional old bulls he would need to push through his energy and tax reform programs as well as the idealistic young Democrats who urged him in vain to veto a flawed public works bill. Announcing out of the blue even before assuming office that he would propose a comprehensive energy plan within ninety days of his inauguration, and imposing a ban in sharing drafts of the plan with Congress, led to a debilitating fight lasting two years. He made the Panama Canal Treaty a top priority, turning it into his bloodiest congressional battle, which not only lost him Southern conservative support but almost all the seats of Democratic senators who voted for the treaty. Killing the B-1 bomber lost him the support of defense hawks, and ironically, personally presiding over the first peace treaty between Israel and any Arab country helped him lose Jewish vo
tes. Appointing Paul Volcker to squeeze out inflation through painfully high interest rates hit everyone.

  This is just an abbreviated list of the “right things” Carter accomplished for the long-term benefit of the country while ignoring the great political cost to himself. Add to this his decision to put the lives of the Iranian hostages before all other diplomatic and security considerations, and you have the ingredients that, along with Kennedy’s challenge and Reagan’s charm, made him a one-term president. It would take a new generation of Democrats to absorb Carter’s lessons of fiscal moderation and liberal social and foreign policy and return the Democratic Party to power with Bill Clinton’s political magic, powered by an improving economy.

  Carter’s most loyal constituency remained black Americans, a well-deserved but great irony for a president from the Deep South. Throughout his presidency he carried with him the same ambivalence toward his Democratic Party that he held on the exhilarating night he accepted its nomination: a keen recognition that the liberal base of the party he needed to win the presidency and govern successfully was out of step with the realities of the 1970s and a rising conservative polity.

  At the most profound level Carter was a moderately conservative Democrat heading a party dominated by outspoken liberal interest groups. His difficulty in pulling the party to the center was accentuated by a troubled economy, which allotted him fewer federal resources to fund popular social programs. The necessity of budget cuts to fight inflation was resisted by the insatiable demands of the liberal base he saw as an enormous weight around his neck until it finally led Senator Edward Kennedy to challenge his renomination. The middle ground where Carter stood was not the high ground, which was occupied on the left by Kennedy and on the right by Reagan, who built a winning coalition of defense hawks, supply-side tax cutters, and Christian evangelical conservatives that has lasted for two generations.