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Reforms at Risk: What Happens After Major Policy Changes Are Enacted 

It was not all that long ago that the careful study of the interaction of public policy and politics was a somewhat moribund field in political science. What little work existed was, too often, not terribly useful for those of us—citizens, activists, statesmen—interested in improving the quality of governance.  

The last twenty years has, by contrast, witnessed an explosion of work examining how “policy makes politics”—how the design of policies influences their subsequent development, and even how they influence larger political dynamics. Doug Arnold’s The Logic of Congressional Action and Kent Weaver’s Automatic Government traced out the way that different public policies work with or against politicians’ desire to claim credit and (especially important in an era of relative austerity) avoid blame. Paul Pierson’s Dismantling the Welfare State? demonstrated that there are substantial limitations on the capacity of conservatives to retrench the welfare state inherent, in particular the high “transition costs” of change and the need for politicians to avoid blame for the consequences of change. Jacob Hacker showed in The Divided Welfare State that the central role of private providers and employers in the early development of the American welfare state made it difficult to switch to another, more state-dominated system later on. The work of Andrea Campbell, Joe Soss and Suzanne Mettler has investigated the ways that policy design shapes the degree and intensity of political participation—encouraging it in the case of Social Security and the GI Bill, discouraging it in the case of welfare policy and higher education finance.  

Activists need to study works like these because they need to make choices. Because all politics is a series of games—rather than a single shot or a Battle of Armageddon—activists need to ask, “When we play this game again in a few years, which policies put in place today are most likely to make our side stronger and our opponents weaker?” All of the works mentioned above and many more I have not mentioned provide the intellectual foundation for activists to answer these sorts of questions—to be shrewd as well as idealistic.  

In my judgment, there is no single book that is more instructive about the way that policy design influences the long-term development of policies than Eric Patashnik’s recently published Reforms at Risk: What Happens After Major Policy Changes are Enacted? Unlike most of the works noted above, Patashnik is less concerned with redistributive policies than with what he calls “general interest reforms”—policies designed to enhance the overall efficiency of the economy by uprooting areas of government captured by special interest—what Baumgartner and Jones astutely called “policy monopolies.” Baumgartner and Jones showed in their work that, in contrast to what has been traditionally believed, almost all of these policy monopolies are actually vulnerable—they survive only because the political system only has enough “parallel processing capacity” to draw peoples’ attention to a few issues at a time. Once a special interest’s number has been called, once policy entrepreneurs have focused the public’s attention (often through generating scandal and embarrassment), however, they often find it very hard to protect their interests. The most popular stories of the victory of the public interest over special interests—airline deregulation, tax reform, acid rain cleanup, cutting agricultural subsidies—all fit more or less into the structure Baumgartner and Jones provided.  

The question Patashnik asks is (in the words of a previous version of his argument), what happens “after the public interest prevails?” Does the reform stick, or can the bruised and battered special interests recover their lost power, in some cases by completely scrapping the reform? The nature of the problem is clear from the structure Baumgartner and Jones provided—if special interests lose because the public suddenly attends to them and notices how embarrassing the special favors and protection they are receiving are, what happens when the public’s attention shifts elsewhere? Once the outrage dies down, do we just revert back to the status quo ante?  

I won’t go into all of Eric’s cases—I’ll leave that for our discussion later. But let me present just one that, I believe, is immensely useful for the actual conduct of politics. As some of the old timers on FDL might remember, as recently as the 1970s airline travel was relatively luxurious but immensely expensive. Airlines’  routes and prices were tightly regulated by the Civilian Aeronautics Board, an agency that had been captured by the airlines themselves and used to prevent price competition and to limit the entry of new airlines into the business. Unable to compete on prices or routes, airlines fought over the only margin left to them—service. Wealthy fliers might fondly remember the era of glamorous air travel, including perks such as on-board piano players. The cost of such plush service were high prices that limited air travel to businessmen and the very occasional holiday trip by the middle-class.  

The exception to this regulatory regime were intra-state flights, which were under the control of state authorities. California and Texas, for example, did not regulate routes and prices in the way that the CAB did, and the consequence was that prices on flights inside those states were dramatically lower than comparable flights between states. Getting the price of flights nationally down to the price of those within CA and TX would open up the skies to millions of Americans who could not afford to under the CAB’s regulated system. The airlines, by contrast, were perfectly comfortable with the regulatory status quo, which guaranteed them rich profits in a comfortable, gentlemanly market, rather than the red in tooth and claw markets that deregulation promised. I won’t go into all the details, but—due partly to the remarkable political entrepreneurship of Alfred Kahn and his allies Ted Kennedy and his young staffer Steven Breyer—the airlines lost and the reformers won.  

Given the enormous losses that deregulation threatened to impose on the airlines, why were they not able to reverse deregulation once everyone’s attention shifted elsewhere? Patashnik shrewdly notes a few of the factors that caused airline deregulation to stick. First, the airline deregulation bill eliminated the CAB, meaning that the opponents of deregulation would—literally—have to rebuild an agency to achieve their ends. Second, airlines were faced with a very tricky strategic choice after deregulation—they could either adapt to the new regulatory structure by totally redesigning their route and price system, or they could stick with the status quo and hope to reverse deregulation. In classic prisoner’s dilemma fashion, every airline “defected”—even though they would have rather stuck with the old system, they had no choice but to shift to a more competitive approach, out of fear for what their fellow airlines would do. Changing their route structure meant huge fixed costs, especially those involved in creating “hubs” in particular cities. Once these had been built, the airlines now had a concentrated investment in the new system.  

Most critically, however, the policy of airline deregulation killed off its most fervent political opponents. Those who most feared deregulation were the financially weakest airlines, and it was they who fought the hardest to keep it from happening. Almost as soon as deregulation happened, these weaker airlines quickly were ushered into Chapter 11. Being out of business also meant that they were out of politics—dead men don’t lobby. Airline deregulation stuck in part because the design of the policy ensured that the political game in the future would be played with a new cast of characters.  

I think there is a critical lesson here for health care reform. Those of us who care about getting to universal health care often pay a great deal of attention to how the new system will work and whether care will be improved in quality and cost. Equally important to these questions is whether the reforms we put in place now will survive, and whether they will reshape the political environment in a way that will make further reforms more likely? The best way to reshape that political environment is, as airline deregulation showed, to use policy to destroy your most fervent opponents.  

So, as a first question, I’d like to ask Eric what his important book has to tell us about the debates that are going on even as we speak about the shape of health care reform. What are the features of the bills currently under discussion that have the most potential to reshape the contours of health care politics in the future? And what does your book tell us are likely to be the reforms that will have the greatest difficulty sticking in the future?