South Carolina Senator Lindsey Graham joined me today:
HH: I’m joined now by United States Senator Lindsey Graham. He is the senior senator from the great state of South Carolina. Senator Graham, always a pleasure to talk to you.
LG: Thank you, Hugh, good morning.
HH: Good morning. I want to dive right in to the American Health Care Act.
HH: Do you agree with Senators Cotton and Cruz that the bill as currently written cannot pass the Senate?
LG: Yeah, pretty much. There’s a couple of assumptions they’re making that are just flawed. We’re getting ourselves into a box canyon. I think it was on your show that Senator Cotton said this three step approach won’t work, and I will tell you this. If you believe buying across states lines, opening up health care to more competition, you can buy it from anywhere in the country, just not your state is important, we require 60 votes to get that into place, because it doesn’t fit in reconciliation. There’s no way we’re going to get 60 Democratic votes to help us fix health care. They’re not going to do it.
HH: Now today, the AP is reporting, and I’ll read the quote. House Republicans are working on a companion to their bill replacing Obamacare. It’s a legislative second act that would ease cross-state sale of health insurance and limit jury awards for pain and suffering in malpractice lawsuits, closed quote. That’s actually fiction. That’s propaganda, because that takes 60 votes, and you’re not going to get it. I am curious if you agree with me that the House Republicans do not understand reconciliation, and that they can use tax policy to dis-incentivize bad behavior, and that it will pass muster with the parliamentarian?
LG: Yeah, I think this is the key point. I think this is what Senator Cotton’s trying to say. Reconciliation is a limited venue to make changes. It has boundaries, right? so if you have a three-step approach, reconciliation being the first step, and buying across state lines doesn’t fit into reconciliation, then any package coming from the House after reconciliation must get 60 votes. There’s no way the Democratic Party is going to vote for a concept that opens up health care to more competition and outside government control. That’s what this whole damn thing’s about to begin with, is that they believe that health care should be provided by the government. We believe you should have more choices. And I don’t see eight of them helping us get our, you know, get this thing done. That’s just not going to happen.
HH: Well, I want to test on you some concepts that I’ve been trying to sell to House Republicans that I think fit within the Reid Rule as I understand it. You’ve been there 14 years, so you should have…
LG: The Byrd Rule
HH: The Byrd Rule. You ought to have the Byrd Rule memorized by now. I won’t test you on that, but you should have it memorized. If, for example, and amendment is offered in the House or the Senate that will tax all health insurance policies that issue from companies that don’t offer at least one policy with a limited number of essential benefits, the so-called high deductible, catastrophic coverage…
HH: Would that fit within reconciliation?
LG: You know, I don’t know. The whole thing, well, reconciliation means it’s got to reconcile, that when you do expenditures, and when you do cuts, you get reconciled, that if you’re going to increase spending, you have to cut somewhere else. If you want to reduce the size of government, this is a way to do it. If you do a revenue enhancement, it’s got to be paid for. So the whole idea is to use this procedure to reconcile the budget. Social Security is off limits when it comes to reconciliation.
LG: Medicare, this is what they used to pass Obamacare, okay? I don’t believe that the buying across state lines is a policy change, not a revenue change. So reconciliation doesn’t allow you to make policy structural changes as much as it does reconcile numbers.
HH: But tell me if I’m wrong about this. You know, I put on my lawyer hat. You’re a good lawyer as well. If you use tax policy to dis-incentivize things…
HH: So for example, if you tax an insurance company that fails to offer a policy that is available in more than one state the identical policy, if you add a surcharge to all their other policies, they will be incentivized, that passes reconciliation.
HH: If you tax all policies from states that do not limit pain and suffering damages, you will incentivize those states to put limits on their pain and suffering damages.
HH: Is anyone doing this sort of thing? It’s not that creative.
LG: No, that’s actually, well, okay, we also say if you don’t have seat belt laws, you don’t get federal transportation money, right?
HH: Right, right.
LG: So that concept is definitely in our law where the federal government would say if you don’t do what I want you to do in a particular area, you can’t get federal dollars. Yes, I guess you could open up reconciliation to that process. But from a conservative point of view, there’s got to be some kind of limitation of what we do to tell people to act our way using federal government punishment.
HH: I don’t mind punishing states with high pain and suffering damages that drive up the cost of health care. I don’t mind taxing their policies and having their consumers push them to do that reform.
LG: So basically, you’re pushing for state tort reform as becomes the seat belt.
HH: Yeah, and portability becomes a seat belt.
HH: And you just use tax policy, and you get…
LG: Well, you might could do that. That might work. That might work in.
HH: So why doesn’t the Senate, now this is the big difference. The Senate is mad at the House for not being aggressive enough within reconciliation. The House says well, the Senate hasn’t offered a single page of legislation. Is Donald Trump the guy who’s going to bring you all together on this?
LG: I just want to say this. I had lunch with him last week. I talked to him two nights ago. He is working really, really hard to try to find a way forward. Can I tell you what the friction points are in the Senate?
LG: Rand Paul believes that a refundable tax credit, which is used to help low income Americans purchase health care in the private sector, is no different than an Obama subsidy. A refundable tax credit will basically use the tax code to help people buy health care when they have no tax liability. So it truly is a subsidy in another form. I don’t mind using that concept as part of a reform package, but you’ve lost Rand Paul.
HH: That’s one.
HH: Yeah, that’s one.
LG: Okay, my state did not take Medicaid expansion, because I argued to our governor that Medicaid is already broken, that Obamacare’s effort to expand Medicaid has taken a broken system and making it worse, not better, that the federal government cannot sustain this 90/10 match. Don’t buy a pig in a poke. Ohio, New Jersey took it, other Republican governors took Medicaid expansion. The current bill allows for an open enrollment to continue through 2019. So not only can you still add people to the Medicaid rolls at a 90/10 match, those states who did not in the past will have to do it now, or they’ll be complete fools. I’m not going to vote for a bill that’s set up that way.
HH: All right, so I get that. And so there are, everyone’s got their haves. I’m writing off Rand Paul. We’re not going to get him, because of…
LG: Yeah, that’s right.
HH: The vast majority of Republicans believe that people transitioning from Medicaid need help. I have a four square box – poor, not poor, young, not young, and I think the tax credits ought to go to the poor not young in overwhelming proportion and followed by the poor young, but mostly to the poor people to help them transition from Medicaid so we don’t create a poverty trap.
LG: Right, right.
HH: Rand Paul’s not going to buy that. I understand it. That’s fine. He’s down. Susan Collins isn’t going to buy any of this. She’s down. So we’ve got to get everybody else, right?
LG: Good luck.
HH: Good luck. We’ve got to get everybody else. Is that doable, Senator Graham, because this is the once in a lifetime…
LG: In its current form, no. And okay, it’s a once in a lifetime opportunity for every Republican to own a bad bill. It’s a once in a lifetime opportunity for every Republican to replace Obamacare with something better. Here’s what I would suggest. If you don’t believe it’s better than Obamacare over the long haul, if you think you’re going to own it for the rest of your life, President Trump, it will be called Trumpcare, don’t buy it, because everybody says you have to. Here’s what I would prefer he do. If he can’t get us in a good spot where we all feel comfortable, we’ve improved Obamacare dramatically, which we told people we would, let it collapse. There were five health care providers in South Carolina exchange. We’re down to one.
HH: No, no, no. No, no no.
LG: Let it collapse.
HH: We’re going to get killed.
LG: No, we won’t.
HH: We’ll get killed if we don’t repeal the medical device tax, the individual mandate. We’re going to get slaughtered.
LG: Well, you will, and here’s how you will do it. Here’s what you’re going to get killed. If you pass a bill that is using the same process the Democrats did, you ignore every warning sign and you go through anyway, and you take CBO numbers and you just excuse everything the CBO said, if at the end of the day the 62 year old person in Greenville, South Carolina doesn’t get help from this bill, if their premiums don’t go down, that if Medicaid continues to explode and expand, then what good have you done? Here’s what I would suggest to the President. Keep working hard. I want to work with you. I want to get to yes. But if it doesn’t work, if we can’t get there by ourselves, let it collapse. It is collapsing. Obamacare is a nightmare for the country. Democrats are not going to lift a finger to help President Trump. I would do collapse and replace if you can’t get a good, solid fix to Obamacare using reconciliation.
HH: I think you’re misjudging the political consequences of that strategy dramatically.
LG: Could be. Could be.
HH: And I really do believe…
LG: That’s why we have this show. Here’s what I’m not misjudging. I’m not misjudging we own it. We’re going to own it forever.
HH: Well, you do, but you’re going to own inaction worse, and I think Dean Heller is just, he ought to come by and ask you for a loan, because he’s going to need it to transition out of, to find a new job because of Lindsey Graham and Rand Paul (laughing).
LG: Well, no, no. I’m not saying I’m voting no. I want to get to yes. Here’s what I am saying. This idea you’ve got to do it now, and you’ve got to do it right now this way, if this way doesn’t work, why would you do it now?
HH: Because it can work. I just, I just don’t think the Beltway is open to using innovative tax policy to get it through reconciliation. I think like the walls are so high around the Beltway, you folks don’t think creatively. And Senator Graham…
LG: Well you are thinking creatively. You could use a series of constructs to use punishment through the tax code to change behavior. I don’t know if that’s viable under reconciliation, but I’ll give you credit for this. You’re thinking outside the box. And I want to tell you about the President. He went bowling with the Freedom Caucus. He called me. We talked for an hour. He is trying very, very, very hard to get repeal and replace done. And I am telling you that the current construct coming out of the house, because of Medicaid, I am not going to punish my state…
HH: I get it. I get it.
LG: I’m not going to do that.
HH: I agree with you, by the way. Ohio made a bet that they would win big.
LG: And they will under this.
HH: And they will. And so they’ve got to win half big, and you have to lose half big. And, but we can’t miss the opportunity to change Medicaid for the first time in 60 years. It will not come back.
LG: Well, that is the number one prize for me. You’ve got to lower premiums, and that should be doable because it went up so much. But this is very important about Medicaid. Ohio and other states on the Republican side gobbled up a lot of their people, put into Medicaid 90/10. I don’t mind saying you can’t pull the rug out from under those who signed up. I do mind leaving open enrollment for another year and a half where all 50 states are…
HH: That’s a non-negotiable. And Donald Trump’s the guy to just line up the non-negotiables and do this. Let me close, Senator Graham…
LG: Yes, sir.
HH: …because I got you to think about tax policy, so I consider that a win.
LG: You did. That’s going to get me thinking about any of…
HH: That’s a win. Now, but I want to talk about Neil Gorsuch. The New York Times today says he has a relationship with a secret billionaire. Phil Anschutz has been on this program 12 times. He’s the opposite of a secretive billionaire.
HH: Is Neil Gorsuch going to get taken down by innuendo and insinuation like this? Or is he getting through?
LG: He’s getting through. The one thing I can tell you, I don’t know how health care ends. I don’t know how that movie ends. I don’t know if there was any warrant ever issued against the Trump campaign. I want to find out. The only thing I can tell your listeners is Donald Trump picked the most qualified conservative in the country to replace Justice Scalia. I voted for Sotomayor and Kagan because they were qualified. This man is beyond qualified. He will be on the Supreme Court, and I will do whatever it takes to put him there. That’s where he’s headed.
HH: Does that include invoking the Reid Rule?
LG: Whatever it takes.
HH: Does that include invoking the Reid rule if necessary?
LG: Whatever it takes.
HH: So that’s a yes.
LG: If you have to change, it’s a hell yes, because I was in the Gang of 8, or 14, trying to preserve minority participation in picking judges. The Democrats changed the rules for the executive branch and all courts below the Supreme Court. Here’s what I would say to Harry Reid. Half the people in Trump’s cabinet would not be there without the rules change. They’re all good people. But what we’re doing now is trying to punish Donald Trump, if that’s what they do by filibustering and not give him a Supreme Court judge, and they gave Obama all the appellate court judges he wants by changing the rules, I’m a guy who’s tried to be an institutionalist. I am telling you this. I think we’ll get 60 votes, that we won’t have to change the rules. But if they try to block Judge Gorsuch, he is going on the Court, whatever it takes, with Lindsey Graham’s vote.
HH: Last question, is General Mattis going to appoint any Republicans at the Department of Defense?
LG: You know, here’s what I would say. I heard this Anne Patterson stuff. I’ve got, I don’t have a problem with Anne Patterson. She’s been a foreign service officer all of her life. The bottom line is somebody better get appointed to the Department of Defense. There are 54 political appointees. We’ve got one filled. We don’t have a deputy at Department of State. We don’t have one at Department of Defense. We’ve got a government to run and reform here. So whatever differences there are between General Mattis and the Trump administration about personnel, they need to be resolved. He’s a fine man. I would give him his team within reason to start rebuilding our military.
HH: I agree, but shouldn’t some of them be Republican conservatives?
LG: Yeah, absolutely. I’m not arguing with you about that. I think we need somebody to be the number two person from the private sector that could reform the Pentagon. Here’s the good news about President Trump from Lindsey Graham’s point of view. I’ve talked with him twice. He is so in to rebuilding our military and repairing the damage done by Barack Obama. It’s music to my ears. I have a lot of faith that President Trump is going to rebuild our military, and we need a team to also reform it. So the sooner we get people in place, the better. And there are a lot of good Republicans ready to serve – Jim Talent’s a great guy. There are a lot of names. Let’s just pick some and get on with it.
HH: Senator Lindsey Graham, always a pleasure, thank you, Senator.
LG: Thank you.
End of interview.