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How GOP can rebound from its 'Waterloo'

By David Frum, Special to CNN
Republican lawmakers arrive at the House chamber Sunday to vote on the health care legislation.
Republican lawmakers arrive at the House chamber Sunday to vote on the health care legislation.
  • David Frum says Republicans suffered a big defeat with passage of health care
  • Frum says it's not realistic to think the bill's benefits, which will be popular, can be repealed
  • He says GOP can pledge to stave off higher taxes and more regulation of small businesses
  • Frum: Strategy served interests of talk radio by whipping up anger but led GOP astray

Editor's note: David Frum writes a weekly column for A resident fellow at the American Enterprise Institute, he was special assistant to President Bush in 2001-2. He is the author of six books, including "Comeback: Conservatism That Can Win Again" and the editor of FrumForum.

Washington (CNN) -- What the hell do we Republicans do now?

In the very short run, our course is obvious enough: There will be more votes on health care in the Senate, and we will vote nay again. But this is anti-climax territory. The decisive vote occurred Sunday night.

The "what next?" question pertains to the days further ahead, after President Obama signs the merged House-Senate legislation and "Obamacare" becomes the law of the land.

Some Republicans talk of repealing the whole bill. That's not very realistic. Even supposing that Republicans miraculously capture both houses of Congress in November, repeal will require a presidential signature.

More relevantly: Do Republicans write a one-sentence bill declaring that the whole thing is repealed? Will they vote to reopen the "doughnut" hole for prescription drugs for seniors? To allow health insurers to deny coverage to people with pre-existing conditions? To kick millions of people off Medicaid?

It's unimaginable, impossible.

But there are things that can be done, and here are some early priorities:

1) One of the worst things about the Democrats' plan is the method of financing: an increase in tax on high-income earners. At first that tax bites only a very small number, but the new taxes will surely be applied to larger and larger portions of the American population over time.

Republicans champion lower taxes and faster economic growth. We need to start thinking now about how to get rid of these new taxes on work, saving and investment -- if necessary by finding other sources of revenue, including carbon taxes.

2) We should quit defending employment-based health care. The leading Republican spokesman in the House on these issues, Rep. Paul Ryan, repeatedly complained during floor debate that the Obama plan would "dump" people out of employer-provided care into the exchanges. He said that as if it were a bad thing.

Yet free-market economists from Milton Friedman onward have identified employer-provided care as the original sin of American health care. Employers choose different policies for employees than those employees would choose for themselves. The cost is concealed.

Wages are depressed without employees understanding why. The day when every employee in America gets his or her insurance through an exchange will be a good day for market economics. It's true that the exchanges are subsidized. So is employer-provided care, to the tune of almost $200 billion a year.

3) We should call for reducing regulation of the policies sold inside the health care exchanges. The Democrats' plans require every policy sold within the exchanges to meet certain strict conditions.

American workers will lose the option of buying more basic but cheaper plans. It will be as if the only cable packages available were those that include all the premium channels. No bargains in that case. Republicans should press for more scope for insurers to cut prices if they think they can offer an attractive product that way.

4) The Democratic plan requires businesses with payrolls more than $500,000 to buy health insurance for their workers or face fines of $2,000 per worker. Could there be a worse time to heap this new mandate on smaller employers? Health insurance comes out of employee wages, plain and simple. Employers who do not offer health insurance must compete for labor against those who do -- and presumably pay equivalent wages for equivalent work.

Uninsured employees have now through the exchanges been provided an easy and even subsidized way to buy their own coverage. There is no justification for the small-business fine: Republicans should press for repeal.

That platform is ambitious enough -- but also workable, enactable and likely to appeal to voters. After 18 months of overheated rhetoric, it's time at last for Republicans to get real.

I've been on a soapbox for months now about the harm that our overheated talk is doing to us. Yes, it mobilizes supporters -- but by mobilizing them with hysterical accusations and pseudo-information, overheated talk has made it impossible for representatives to represent and elected leaders to lead.

Now the overheated talk is about to get worse. Over the past 48 hours, I've heard conservatives compare the House bill to the Kansas-Nebraska Act of 1854 -- a decisive step on the path to the Civil War. Conservatives have whipped themselves into spasms of outrage and despair that block all strategic thinking.

Or almost all. The vitriolic talking heads on conservative talk radio and shock TV have very different imperatives from people in government. Talk radio thrives on confrontation and recrimination.

When Rush Limbaugh said that he wanted Obama to fail, he was intelligently explaining his own interests. What he omitted to say -- but what is equally true -- is that he also wants Republicans to fail.

If Republicans succeed -- if they govern successfully in office and negotiate attractive compromises out of office -- Rush's listeners get less angry. And if they are less angry, they listen to the radio less and hear fewer ads for Sleep Number beds.

So today's defeat for free-market economics and Republican values is a huge win for the conservative entertainment industry. Their listeners and viewers will be even more enraged, even more frustrated, even more disappointed in everybody except the responsibility-free talkers on television and radio. For them, it's mission accomplished.

For the cause they purport to represent, however, the "Waterloo" threatened by GOP Sen. Jim DeMint last year regarding Obama and health care has finally arrived all right: Only it turns out to be our own.

The opinions expressed in this commentary are solely those of David Frum.