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The Progressive Fix

05/20/2013 Behind the Headlines, Blog By Ed Kilgore
From 501(c)(4) Applications to Tax Audits, an Unmoved Public, and the Self-Exile of Mark Penn

After Friday’s Ways & Means Committee hearing, Beltway focus on IRS “scandal” continues unabated. But there are some shifting sands “behind the headlines.”

1. With impressive speed, congressional Republicans are seeking to link IRS scrutiny of organizations applying for 501(c)(4) status to general negative perceptions of the agency, particularly with respect to tax audits of individuals (not at issue in the tax-exempts’ cases) and alleged IRS hostility to conservative religious groups. A leading indicator: a bill introduced by Rep. John Fleming (R-LA) suspending all IRS tax audits for 18 months until the depths of the “scandal” are plumbed.

2. Public opinion research continues to show tepid public reaction to “Obama scandals.” A new CNN-ORC survey shows Obama’s job approval rating actually increasing to 53% as of late last week. Poll internals show belief in major presidential wrongdoing in Benghazi and IRS cases still mostly limited to Republicans and conservative independents.

3. Senate Judiciary Committee has already disposed of 99 amendments to the Gang of Eight-based immigration reform bill, and plans to report bill to the floor by week’s end. Most successful amendments look more like standard senatorial constituency-tending rather than effort to tweak the overall shape of the bill.  Having avoided a meltdown last week, the House “Gang of Eight” group working on immigration reform seems to have gone back to ground, satisfied for the moment with an “agreement in principle.”

4. Democrats looking ahead to 2016 are buzzing about the Jason Horowitz Washington Post piece on turnover in HillaryLand since 2008. Of particular interest to progressives suspicious of HRC is the apparent self-exile of pollster and “chief strategist” Mark Penn, now working for Microsoft and disclaiming interest in politics.

05/17/2013 Behind the Headlines, Blog By Ed Kilgore
Hearings Fish for IRS Misdeeds, Republicans Mull Scandal Strategy, and the House Gang Agrees to Disagree

After a wild week, political news settles down into a dull roar, amidst shifting assessments of Scandalmania “behind the headlines.”

1. The first day of the House Ways & Means Committee hearing on IRS scrutiny of tax-exempt applicants indicates Republicans will expand scope to examine other instances of alleged IRS “politicization,” particularly if they can’t find evidence White House involved in “targeting” decisions. Get out your fishing poles.

2. A semi-public tussle between House GOP backbenchers and leadership seems to be breaking out over how to handle scandal investigations, as the latter fret about “overreaching” and the 1998 precedent while the former react to pressure from “the base.”

3. Polling from Gallup indicates “below-average” public interest in the Benghazi and IRS “scandals.” Interestingly enough, the two subjects register about the same interest levels, even though the Benghazi “scandal” has been in the news off-and-on for eight months and the IRS “scandal” is brand new and ill-defined.

4. In non-scandal news, the House “Gang of Eight” announces “agreement in principle” on immigration reform, just a day after rumors of a deadlock spread. It appears, however, the agreement has several major holes where competing provisions will be voted on in committee, particularly as related to health coverage of newly legalized immigrants, and the size of the proposed “guest worker” program.  All in all, it looks like an effort to “move the process along” rather than a breakthrough.

05/17/2013 Blog By Diana G Carew
A Government Takeover of Student Debt Won’t Solve the Problem
Tagged Economy, Education, Social Policy

If you believe the recent blitz of student debt coverage, private student lenders are to blame for the economic woes of recent college graduates. Lending at what is seen to be excessively high interest rates, the pressure on private lenders to restructure student loans, even at the expense of public funds, is rising. At the same time, the government is taking concrete actions to squeeze private lenders out of the student loan market. Most recently, Senator Elizabeth Warren followed in President Obama’s footsteps by proposing to peg student loan interest rates to the government’s historically low borrowing costs.

Tempting as it may be, attacking private lenders alone will not solve the student debt problem. For one, private student loans are an increasingly small fraction of total outstanding student debt. And while overall student loan defaults have been rising, private student loan defaults have been falling. Second, although not innocent, villainizing private lenders misses the point: outstanding student debt is rising too much too fast. A government-controlled student loan market will not solve the underlying problem that recent college graduates are struggling in today’s slow-growth economy.

Since the 2008 financial crisis, the Department of Education has essentially taken over the entire student loan market. The federal guarantee program was scrapped, and interest rates on subsidized Stafford loans were “temporarily” cut in half. New government student loans increased 40 percent over 2008-2012 while new private loans fell 75 percent, to just $6 billion last year. The government now holds over 85 percent of the $1 trillion in outstanding student debt. Meanwhile, just three major private lenders remain active in the market.

There’s no doubt that subsidized government student loans must be an essential part of higher education funding. College remains the best way to raise incomes and the government plays an essential role in providing access to higher education for those who are otherwise unable to afford it.

But making the government the only higher education lender, at subsidized rates, risks turning student lending into a faucet that can’t be turned off.  A government that controls all student lending could eventually be forced to get into the business of controlling today’s excessively rising tuitions. That could be a slippery slope the government may not want to slide into.

Instead of attacking the bearer of bad news, we should use private market insights to help guide future education policy. Right now the private market is questioning the financial viability of student debt. The student loan asset-backed securities (SLABS) market remains well below pre-crisis levels. The latest bond offering from Sallie Mae, which tied performance to older student debt obligations, was cancelled after two weeks. Clearly the market has doubts about the underlying quality of student debt. We would be wise to take these doubts seriously.

Part of this private market uncertainty is due to the rising chorus of student debt legislation – nobody wants to invest in an asset that may not make it to maturity.

But that’s exactly the point – investors realize young college graduates are struggling to pay off their debt for reasons other than interest rates. PPI research shows earnings for recent college graduates fell 15 percent – or by $10,000 in annual terms – since 2000. The slow-growth economy of the last decade hit young people harder than other age groups, with many college graduates taking lower skill jobs for less pay. The private market is signaling that recent college graduates are financially over-extended.

It’s easy to attack private lenders for unfairly charging high interest rates at a time when borrowing costs are historically low. But the fact is students are charged higher interest rates because they are not AA+ rated governments. They are borrowers with little to no credit whose repayment is dependent on future earnings, taking out a loan with no collateral. It’s not so simple to refinance this debt, public or private, especially if expected future earnings are falling.

Eventually the Obama administration will have to decide if subsidizing the entire student loan market is desirable or sustainable. Until then, it should work with private lenders instead of working to squeeze them out. That includes requiring better communication with borrowers and encouraging more repayment alternatives for private loans. It also includes borrower protections in the form of responsible oversight. But it should not include showing private lenders the exit.

05/16/2013 Behind the Headlines, Blog By Ed Kilgore
Obama Wins a News Cycle, Second Thoughts on Scandalmania, and a Possible Filibuster Showdown in Senate

President Obama responds to the three-headed hydra of “Scandalmania 2013″ on all fronts, and is awarded a “win” of the news cycle by Politico.  Figuring out what it means and what we are missing requires a peek “behind the headlines.”

1. Within a 24-hour period, the White House signaled support for “reporter news shield” legislation, released a large batch of emails from the period leading up to the Benghazi “talking points,” and fired the acting IRS director. There are also rumors surfacing that Obama is considering Massachusetts Gov. Deval Patrick (a former Assistant Attorney General) as a possible replacement for Attorney General Eric Holder if that particular kitchen gets too hot.  None of these actual or prospective steps is likely cool off Republican efforts to pursue all three “scandals” aggressively, but it is clear the White House isn’t buying the “damage control” strategy of refusing to “validate” complaints.

2. There’s now a minority opinion within and outside the GOP holding that the Scandal Offensive will or should lose momentum before long. The Editors of National Review have warned Republicans not to put all their eggs in this basket, citing 1998 (a midterm election when Republicans lost House seats–a very rare occurrence for the party not holding the White House–after seeking Bill Clinton’s impeachment) as a precedent.  And Ezra Klein summarizes the holes appearing in all three “scandals,” particularly in terms of presidential involvement.

3. An interesting and little-noted straw in the wind on the IRS/non-profits front: Franklin Graham complains directly to the president about IRS “targeting” of two 501(c)(3) organizations he controls, raising the possibility of the debate over tax-exempts being extended from “social welfare organizations” to the much larger universe of churches, charities and think tanks.

4. Meanwhile, back in the world of more conventional partisan warfare, the Senate HELP Committee has approved the nomination of Thomas Perez as Secretary of Labor on a party-line vote.  This could set up a dual showdown on the Senate floor, where Harry Reid has already hinted he’ll re-open filibuster reform if Republicans block a pending vote on Consumer Financial Protection Bureau director Richard Cordray.  If this actually happens, the stakes could be a lot bigger than any one or two nominations.

 

05/15/2013 Behind the Headlines, Blog By Ed Kilgore
“Triple Play” Hysteria, Rolling Heads at IRS, a New Impasse on Immigration, and the Return of the Fair Tax

The “triple play” of scandals (Benghazi, IRS, AP) is now dominating mainstream news coverage to a remarkable degree (there are currently thirty-six separate stories on them appearing on the front page of the Politico site), so you really have to look “behind the headlines” for useful news.

1. White House quickly getting behind “reporter shield” legislation long promoted by Sen. Chuck Schumer, after expressing lukewarm support at best in the past.

2. Heads will surely roll at IRS, and top Democrat on tax-writing Ways & Means Committee, Sander Levin, is already asking for resignations of acting director and officer in charge of nonprofits.

3. One of the scarce non-scandal stories at Politico reports House Gang of Eight at “impasse” on immigration bill.  This would have been a very big story a week ago.

4. My own prediction: IRS “scandal” will soon produce a major resurgence of “Fair Tax” and other flat-tax proposals that eliminate IRS altogether.  Despite being ignored in Washington, such schemes have never lost popularity with the conservative “base.”

 

05/14/2013 Behind the Headlines, Blog By Ed Kilgore
The “Triple Play,” Media Self-Interest, and Democrats Distancing Themselves

With the sudden ferocious emergence of the story about the Justice Department’s seizure of AP phone records, we now have the BenAP501 “scandal” to deal with, which is less confusing and more interesting if you look “behind the headlines.”

1.The perpetual struggle between government security agents trying to stop and punish “leaks” and news organizations trolling for them has blown up again in the AP “scandal,” which because of the timing is getting far more attention that it would otherwise command.  Merits aside, the case gives news media more of a natural stake in the meta-story of “Obama scandals;” note political scientist Brendan Nyhan’s research suggesting big presidential scandals are generally a “co-production” between the opposition party and “elite political media.”

2. The details coming out about the IRS’ selective scrutiny of applications for 501(c)(4) status paint a picture of  mid-level tax officials overwhelmed with an explosion of applications going into the last two electoral cycles, utilizing a logical but politically disastrous “screen.” Ironically, the large 501(c)(4)s that have played so large a role in recent politics (e.g., American Crossroads GPS and Americans For Prosperity on the right, Priorities USA on the left) escaped scrutiny altogether, though that could change if Congress goes beyond investigations and looks into clarifying the laws under which the IRS operates.

3. In terms of the overall impact of this “triple play,” as Stu Rothenberg is calling it: Emory University’s Alan Abramowitz thinks the media are vastly overplaying it as having a certain or decisive impact on the 2014 midterm elections.

The electorate is deeply divided along party lines. These partisan divisions are very deep because they now coincide with other divisions such as race, values and ideology. Therefore, events such as these are very unlikely to cause any large or long-term shift in evaluations of the president let alone party identification or voting intentions.

4. On the intraprogressive front, watch for congressional Democrats to begin distancing themselves from the administration on the IRS and possibly the AP issues; the president himself, of course, has harshly criticized the IRS, but may not be able to disclaim ultimate responsibility.

05/13/2013 Behind the Headlines, Blog By Ed Kilgore
The Ben501 Frenzy and Its Immediate Fallout

Today’s news is sort of a Republican Disneyland with free admission: the confluence of the Benghazi investigations with the rapidly emerging story of selective IRS scrutiny of conservative 501(c)(4)’s.  It’s hard to understand the potential impact of this convergence without looking “behind the headlines.”

1. The President has already spoken out sharply against the selective IRS scrutiny, and virtually every commentator from every perspective has agreed the subject deserves more discussion and remedial action. But what makes it so effective a political tool for the GOP is the incredible complexity of the underlying tax and campaign finance issues, which means any extended discussion will for most people leave the residual impression of political use of the much-feared IRS to harass enemies (which Richard Nixon famously was revealed to have encouraged during the Watergate Scandal).  Already, you can almost hear the congressional “investigators” saying: “What did the president know and when did he know it?”

2. In conjunction with the Benghazi investigations, the IRS issue makes it easy to paint a picture of an administration that’s either incompetent or dishonest on a broad front, which is precisely the picture hard-core conservatives have been struggling with little success to present of Barack Obama since the 2008 campaign. The special focus of the Benghazi investigations on 2016 Democratic presidential front-runner (and long-time conservative target) Hillary Clinton is a very large added bonus.

3. Politically, the question arising already is whether Republicans will over-reach on either or both issues, and/or conduct the pursuit of the “scandals” in a way that only resonates with anti-Obama “base” voters who view them simply as a confirmation of what they always thought.  If so, a “Ben501″ frenzy could ultimately interfere with earlier GOP efforts to enact immigration reform legislation, and in general to pursue an agenda and message more resonant with middle-class economic concerns.

4. The IRS “scandal” could also have a baleful impact on campaign finance reform efforts, insofar as the scrutinized entities (like the apparently unscrutinized 501(c)(4)’s American Crossroads GPS and Heritage Action) were inhabiting the large gray area of previously unacceptable campaign fundraising and advertising created by the Citizens United decision.

 

05/10/2013 Behind the Headlines, Blog By Ed Kilgore
Benghazi Hearings Fallout, the Coming IPAB Filibuster, and Rand Paul’s Invasion of Iowa

The political chatter today is almost all about the Benghazi hearings, but there are a few things beyond reflexive partisan reactions that can be divined “behind the headlines.”

1. It is not entirely clear where congressional Republicans want to go with the Benghazi issue at this point, though the most likely gambit is to demand more testimony from Hillary Clinton, who is now squarely in the bullseye on this subject even more than the president.  Some Republicans, however, continue to talk about impeaching the president (that worked out for them so well last time around), and others are linking Benghazi to the Boston bombings to demand a general refocusing of national security efforts onto radical Muslims.  At the same time, some voices on the Right are calling Innocence of Muslims film-maker Nakoula Basseley Nakula a “patsy” or even a “political prisoner.”

2. Refusal by Mitch McConnell and John Boehner to nominate members for the Independent Payment Advisory Board charged under the Affordable Care Act with identifying cost savings in Medicare almost certainly means Republicans will filibuster any presidential appointments. This could become a very big deal, since IPAB  is what Sarah Palin famously labeled a “death panel,” and Medicare savings not involving a premium support system are universally attacked by Republicans as “Obama’s Medicare Cuts.”

3. Believe it or not, the 2016 presidential election cycle will get underway tonight with Rand Paul’s speech at the Iowa GOP’s annual fundraiser, after he participates in an influential Christian Right conclave.

4. In intraprogressive news, there’s considerable buzz over a presentation by former Clinton White House political director Doug Sosnik, who warns the “Obama coalition” of voters not reliably attached to the Democratic Party.

05/08/2013 Behind the Headlines, Blog By Ed Kilgore
Dissecting Sanford’s Win, Divining Politics of Benghazi, and Defusing Democratic Divide on Gay Marriage

Mark Sanford’s victory in South Carolina and the Benghazi hearings in House are soaking up most newsprint and bandwidth today. For brainfood, it’s helpful to look “behind the headlines.”

1. Interesting divergence in coverage of the South Carolina special election between those (mostly “empirical” types) who stress the outcome’s predictable and essentially meaningless nature due to the district’s makeup, and those “inside politics” reporters now finding vast differences in quality between the two campaigns. This echoes a similar split in political coverage generally.

2. Democratic Rep. Gerald Connolly of Virginia makes a shrewd observation about the political goal of House Republicans in the new Benghazi hearings: “They’re trying to bring her [Hillary Clinton's] numbers down. That’s what this is all about.” It’s worth noting that HRC’s lofty public opinion ratings depend on small but significant positive evaluations from Republican voters. The hearings are likely to evaporate them.

3. House schedules another “repeal Obamacare” vote next week, which will probably be followed by a vote on Eric Cantor’s high-risk pool legislation, yanked earlier because of conservative anger over perceptions Republicans wanted to “fix” Obamacare.

4. Jack Markell of Delaware becomes the latest centrist Democrat to happily sign marriage equality legislation, signaling this is no longer an intra-Democratic tension point outside the Deep South.

05/07/2013 Behind the Headlines, Blog By Ed Kilgore
Slowdown in the House, Jindal Voucher Program Struck Down, and the Return of Benghazi Fever

It’s a cats-and-dogs sort of political news day so far (probably the most-discussed story is Chris Christie’s lap-band surgery), but there are some more interesting things to think about “behind the headlines.”

1. House committee signals slowdown of Senate-passed internet sales tax bill; this could be a rehearsal for the House’s handling of immigration reform.

2. Louisiana Supreme Court declares Gov. Bobby Jindal’s school voucher program, among the nation’s most ambitious (and least accountable), an unconstitutional diversion of public funds.  Jindal is having a very tough year.

3. Entire Republican Party and conservative commentariat gets ready for tomorrow’s House Oversight Committee hearings to question Benghazi “whistle-blowers,” though there’s little or no indication that much of anyone else is paying attention. It appears latest round of hearings will aim at intensifying scrutiny of Hillary Clinton’s role in the saga.

4. Big Washington Monthly feature on Maryland Gov. Martin O’Malley highlights his devotion to data-driven government accountability initiatives, and his potential role in a post-Obama debate on future of progressivism.

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