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Mainstream, VOL LI No 44, October 19, 2013

Obamacare and the Politics of Libertarian Right

Monday 21 October 2013


This article was written before the shutdown of the US Government ended after senior lawmakers of the country worked through the night on October 15 to reach a deal (to extend the US borrowing authority till February 7, 2014) to avert a debt default that could have had catastrophic consequences for the global economy.

by Krishnakumar S.

The Republicans have stalled the clearance of the demand for grants for the Federal government, alleging fiscal profligacy engendered by the government subsidisation of medical insurance purchases to around 15 per cent of the US population, through the 2010 Patient Protection and Affordable Healthcare Act (by now popularly known as Obamacare). This has resulted in the partial shutdown of the government, forcing thousands of employees to go on unpaid leave. This as well as the Republican threat that the debt ceiling of the government would not be enhanced shows the extent to which the Republican/Tea Party messiahs of austerity discourse could go to when it comes to stalling discretionary expenditure on social security and healthcare.1 All this is due to the minority sub-group of forty odd Tea Party sympathisers in the House of Representatives. This is the extent to which institutions of democracy could be subverted in the leader country of the world economy when it comes to attempting greater accessibility to public goods for the common people.

Through this unprecedentedly large overhaul in the history of social welfare in the United States, ever since the days of the Great Society of the 1960s, Obamacare intends not just to subsidise the insurance purchase of the people just above the poverty line, but tries to take to task the insurance firms which have been denying the benefits of the coverage to the consumers under the garb of one reason or another. Moreover, it tries to widen the scope of the coverage of the medical care extended by the state to the poor and the elderly, and enhances the age of being considered as a dependent. The Republicans and the libertarian Rightists are taking umbrage over the requirement that the onus of medical coverage of the employees working in firms employing more than fifty people would be with the employer, and argue that it would be antithetical to enhancing American competiveness in the international arena.

For all the hype made of the huge expenditure to be incurred in this overhaul, it is a plain fact that the same is a trifle compared to the subsidy transfers made to the American farmers through the Budget, not to speak of the plethora of tax concessions and tax holidays extended to American business, thanks to the efforts of the lobbyists. Overall, it tries to address the crucial issue of spiralling medical costs in the American economy due to the nefarious nexus which exists between the insurance companies, pharma-ceutical industry and medical services industry. Once through, Obamacare would be to this Great Recession as were the large highways constructed under the Public Works Administration to the Great Depression.

There are plenty of studies which compare and contrast the excellence in the medical technology in the United States as against the pathetic state of delivery and accessibility. In various indices measuring the efficiency of heath care systems, including those of the World Health Organisation, the US fares very poorly, even compared to developing economies like Costa Rica.2 In many studies, Sen and others have drawn attention to the relative deprivation suffered by the coloured populations in the United States as far as the health indicators are concerned. The widening distributive disparities of income and wealth in the course of the Washington Consensus period has worsened the situation all the more. Neither does the United States have a Scandinavian-style state delivery system in place, nor does it have a Canada-style system based on universal health coverage. Once the new system is in place, the average American would no more be left to the whims and fancies of the market and governed by the ideas of laissez-faire and a minimalist state.

No wonder, this has become the cynosure in the eyes of the Republicans who are reviving their faith in the idea of the fiscal marksmanship, now that their investment bankers and industry tycoons have got a fresh lease of life by the huge handouts made in the course of these five years.

Not to speak of the readiness of the Fed Reserve to buy worthless commercial paper, expanding its balance-sheet to save those sinking companies, who were otherwise considered to be ‘too big to fail’. The Republicans, who did not want the government to be a spectator in the typical Hayekian sense, wanting the investors to pay for all the faulty decisions taken, and who did not protest against the government handouts, which had contributed to the growing public debt in this regard, are now up in cudgels against the government, with their association of debt with sin, and cranky ideas of balanced budgets, when it comes to providing relief and accessibility to the deserving in the United States. In fact, the Republicans are deploying the best of the libertarian vocabulary (freedom, non-interference, individual space, liberty, minimalist government), even as the world knows only too well that their ulterior intent is to come to the defence of the insurance sector, whose fortunes and vested interests are at stake, in the light of the growing popular conscientisation reflected through movements like the Occupy Wall Street.3

The Republicans, under the leadership of Speaker Boehner, are trying to armtwist the government to the procrastination of the medicare facilities extended, lest they do not support the demand for raising the debt ceiling. Knowing too well that this would affect the credit rating of the bonds of their own country in the international financial markets and the ability of the United States to keep borrowing in the international market, are they attempting an American harakiri in the international markets in the hope of infusing new life to conservative politics and rescuing it of its sagging fortunes? Are they expecting a threatened President to buy peace with them, even as they have made many an unsuccessful attempt towards dragging the 2010 Bill to the Supreme Court, only for the Court to attest to the fact that there was not an iota of constitutional impropriety in the same? Do they really think President Obama would go for a climbdown, even as the Wall Street executives, whom he had summoned at the White House during the bipartisan discussions, had supported him in the issue of raising the debt ceiling in the current context? Or, are Boehner and his group caught in a fix that they are trying to wriggle out of the situation, making a desperate attempt for an escape route, lest they be alienated not only from the people at large, but even from their saviours in the Wall Street? Only time would tell as to who would have it in this political see-saw between the Republicans, suffering from austerity delusion, and the Democrats, vouching by their commitment to enhancing entitlements to the needy.


Blyth, Marc (2013), Austerity: History of a Dangerous Idea, OUP.
Patnaik, Prabhat (1995), Macroeconomics, OUP.


1. In his recent work, Blyth (2013) attempts a history of austerity delusion, the consequences of which different economies and people had to suffer. This fixation with austerity measures informs largely the economic ideology of the libertarian Rightists of the Republican/Tea Party groupings.

2. This is despite the per capita health expenditure in the US being next only to that of Switzerland.

3. For a detailed overview of the various theories of the state, as well as critique of the libertarian theories, see Jayati Ghosh’s article in Patnaik (1993).

Krishnakumar S. is an Assistant Professor, Department of Economics, Sri Venkateswara College, University of Delhi.

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