Comprehensive reform is overrated, for real change, Washington must think small

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No doubt, the problems we face — massive unemployment, a broken immigration system, a malfunctioning financial sector — are monumental. But it does not follow that each complex, giant problem must be addressed by one complex, giant bill. If anything, history shows that piecemeal reforms are often more lasting than a legislative Big Bang.

Washington has fallen in love with “comprehensive reform” — legislation aimed at solving all aspects of a big problem in one dramatic and history-making move.

We saw it with health care. Now comprehensive financial regulatory reform has passed in the House, with a Senate vote expected soon. Up next may come energy legislation, following President Obama’s Oval Office speech last month proclaiming a new “national mission” to wean America off fossil fuels. Comprehensive immigration reform, which failed back in 2007, waits in the wings, with the president calling for such an effort in a July 1 address. And a push for comprehensive fiscal reform will surely come on the heels of the recommendations this fall from Obama’s deficit commission.

No doubt, the problems we face — massive unemployment, a broken immigration system, a malfunctioning financial sector — are monumental. But it does not follow that each complex, giant problem must be addressed by one complex, giant bill. If anything, history shows that piecemeal reforms are often more lasting than a legislative Big Bang.

Politicians are seduced by comprehensive reform because history tends to glorify presidents and legislators who pass big, definitive laws. Sen. Henry Clay of Kentucky, for example, is celebrated for averting the Civil War for a decade by passing the Compromise of 1850, which temporarily resolved disputes over slavery in territories that the United States gained in the Mexican War. But the compromise came together only after a large omnibus bill failed; the legislation was broken up into five smaller bills, each of which passed separately.

President Franklin Roosevelt set a high standard for legislative accomplishments during the first 100 days of his administration in 1933, but here, too, popular memory can mislead. While some of FDR’s signature achievements, such as the Glass-Steagall Act, passed during those early days of his presidency, his central accomplishment of that period — the National Recovery Administration — was a flop that the Supreme Court ruled unconstitutional in 1935. One of the most lasting achievements of the New Deal was Social Security, and it came in 1935, long past those 100 days.

And while President Lyndon Johnson is remembered for the Civil Rights Act of 1964, it was the culmination of increasingly bold civil rights laws in 1957 and 1960 that chipped away at segregation before the final push shattered American apartheid.

Politicians and advocacy groups say they have no choice but to push for all-encompassing reforms because the alternative — slow, incremental change — is doomed to fail. On health care, for example, advocates of comprehensive reform said costs couldn’t be contained unless the problem of increasing coverage was solved, too. Similarly, proponents of an immigration overhaul contend that you can’t secure the borders without fixing the status of illegal immigrants already living here.

On any issue, it seems, the pieces are all so connected that it is impossible to solve one challenge without the rest. And time is never on your side, because the titanic struggle to pass any reform will be so bruising that, succeed or fail, shell-shocked lawmakers will shun the issue for years to come.

But there are three critical problems with comprehensive reform — problems that a more methodical, step-by-step approach could help remedy.

First, large-scale reforms give excessive leverage to politicians and groups representing narrow interests. In the health-care battle, holdouts such as Sens. Ben Nelson (D-Neb.) and Joe Lieberman (I-Conn.) enjoyed disproportionate bargaining power precisely because so much was at stake. And during the push for immigration reform during the George W. Bush administration, business interests forced the last-minute addition of a provision for hundreds of thousands of new guest workers — and helped doom the legislation by inspiring the opposition of organized labor.

In such cases, the outcome might have been different if Congress had passed a series of more limited bills, each with different sets of supporters, instead of creating one giant victim that a small group of representatives and senators could take hostage.

The second reason comprehensive reform is problematic is that it assumes an ability to foresee problems and fix them in advance — a skill not necessarily found among mere mortals. The longer the time horizon, the greater the hubris of those who claim to be solving problems not just for today but for generations to come.

This overconfidence spans the political spectrum. For example, both liberal environmentalists and conservative deficit hawks rely on sophisticated models to predict dire threats decades away, whether a catastrophic rise in the Earth’s temperature or unsustainable entitlement spending. In each case, even slight changes in the variables can make the remote future look either scary or benign. But when scholarship gives way to advocacy, possible problems generations out are often presented as all-but-certain disasters — avoidable only by immediate action.

In reality, we have no idea what the global temperature or the budgetary climate will be like in 50 or 100 years. If the United States had adopted a comprehensive energy strategy in the early 1900s, for example, it would have been based on the assumption that known reserves of coal and oil would soon run out. No one could have foreseen the oil reserves of Texas, the Middle East, West Africa and the Gulf of Mexico (including the deep-sea reserves squandered by the BP disaster). We could not have imagined nuclear energy or techniques to reach enormous quantities of shale gas.

In the case of budgeting for entitlements, none of the designers of the Social Security system foresaw the rapid expansion of the U.S. population following the immigration reforms of the 1960s, which inevitably increased the number of people receiving benefits. When Alan Greenspan’s commission sought to fix Social Security in the 1980s, it did not envision how the bubbles and busts of the 1990s and 2000s would reduce payroll tax revenues by annihilating jobs and reducing wages. Efforts to anticipate the medium-term future are necessary, but proposals to fix the problems of the remote future are dubious.

A third challenge is our tendency to define every issue as a problem with a potential and distinct solution. This comes naturally to policy wonks and bureaucrats, as well as politicians who like to brag about the reforms they’re leading and the legislation they’re passing. However, if their rationalism were informed by a sense of the tragic, and a sense of realism, they would understand that some challenges are not problems to be solved, but situations to be ameliorated or endured. Wisdom lies in knowing that there are some things — such as irreducible levels of crime or terrorism, or environmental damage caused by other countries — that we just have to live with.

Instead of striding boldly into the future, we should grope our way cautiously forward, ever ready to back up upon encountering an obstacle and always prepared to consider an alternative path if the road is blocked, or to abandon the effort and simply live with frustration if there is no way ahead. Instead of aspiring to achieve irrevocable, comprehensive reform by the second Monday of next month, let’s consider reforms that are piecemeal and reversible if we discover they do not work.

Today’s financial reformers would do well to remember that Franklin Roosevelt’s administration dealt with financial regulation in numerous bills over several years. The 1933 Glass-Steagall Act was modified by the 1935 Banking Act; the Securities Act of 1933, which required public disclosure of corporate information to shareholders, was followed by the 1934 Securities Exchange Act, which created the Securities and Exchange Commission. So even during the Great Depression, financial regulations were assembled piece by piece, not all at once.

The same could go for immigration today. Although stronger enforcement at the border and in the workplace is probably a political necessity before any new attempts at legalizing the status of illegal immigrants can move forward, there are some other pieces to bite off short of a single, all-encompassing reform push. The backlog of green cards for legal immigrants can be cut by issuing cards more rapidly, for example, so that legalizing the status of illegal immigrants later will not seem unfair.

Congressional leaders appear to have learned the lesson of step-by-step reform when it comes to economic stimulus. According to news reports, new stimulus programs and aid to state and local governments may come in the form of smaller packages that are less vulnerable to attack than the Troubled Assets Relief Program and the American Recovery and Reinvestment Act.

Obama and Congress can learn even more from FDR, whose accomplishments were the result more of ceaseless trial and error than of all-or-nothing reform. “The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation,” he declared during the 1932 campaign. “It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something.”

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