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Wingnut Watch: How the Budget Compromise Played Out on the Far Right

Posted on by The Progressive Policy Institute

The consensus in Washington that last week’s appropriations deal represented a victory for conservatives was not shared very widely on the Right. Polls showed self-identified Republicans significantly less likely to approve of the deal than Democrats or indies. At the activist/elite level, the negative reaction was much stronger. Fits were pitched over the surrender of policy “riders,” notably by RedState’s Erick Erickson, who accused congressional GOPers of, quite literally, selling out “murdered children.” Rush Limbaugh even claimed that media assessments of the deal as a Republican win represented some sort of devious liberal trick.

Part of what’s going on here, of course, is that conservative activists want to maintain their leverage over Republican pols going forward. Many also don’t much appreciate all the bouquets being tossed at John Boehner for how well he “managed” them during the negotiations. Still others, especially on the Christian Right, really did care more about the policy riders than the overall level of budget cuts. A few, including probable presidential candidate Michele Bachmann, have adopted the Ahab Posture, making repeal of “ObamaCare” the condition for their vote on any budget or appropriations measure.

In any event, wingnut opinion is virtually unanimous in demanding a harder line in the FY 2012 budget debate and the associated debt limit vote, which many opinion-leaders (most famously Sen. Marco Rubio) are already promising to reject unless Democrats surrender definitively on every major issue, including “entitlement reform.” You can also expect a lot of conservative pressure to be applied to Republican senators this week to minimize support for the so-called Gang of Six, a bipartisan group that is working on a budget deal (loosely based on the Bowles-Simpson deficit commission report) that includes revenue measures, and may wind up working in tandem with the White House.

Over on the presidential campaign trail, things continue to heat up. Many conservatives took advantage of Mitt Romney’s announcement of a campaign exploratory committee to mock him for his stubborn continued support for the Massachusetts Health Plan, which, as it happens, was enacted five years ago this week. Puzzlement over the Mittster’s strategy for winning the nomination is spreading as well, particularly since it’s beginning to appear he may run away from serious campaigns in South Carolina as well as Iowa.

But the big news on the presidential front has been the startling evidence of significant support for possible candidate Donald Trump, the mythical tycoon and reality show host. A new CNN poll, in fact, shows The Donald running even with Mike Huckabee for the national lead among Republicans at 17 percent. The big question is whether such showings simply reflect name identification (Trump is, after all, nothing if not a celebrity), or perhaps a reaction to his recent high-profile expression of neo-Birther sentiments.

A PPP poll of New Hampshire, showing Trump running a relatively close second to Mitt Romney in that state, indicates the latter could be a factor: Trump actually leads among those denying Obama was born in the U.S. All these polls also show Trump having unusually high unfavorable numbers as well, so he’s hardly a threat to actually win the nomination. Still, his sudden emergence may indicate a craving in the GOP electorate for candidates with greater star quality, and perhaps more hard-core conservative views, though Michele Bachmann is certainly doing everything possible to supply both qualities. The possibility that Trump could actually run (and his bizarre interview with Christian Right journalist David Brody shows he’s trying to check off the interest-group boxes) should remain unsettling to other candidates; aside from his alleged wealth, he would be a nightmare in debates.

While Trump seems to be doing better than had been imagined among the conservative rank-and-file, the big winner during the last week in the Invisible Primary of insiders was Tim Pawlenty, with the announcement that former Republican Governors Association executive director Nick Ayers would run his campaign. Ayers, a Georgia-based wonder-boy (he’s only 28), was given a lot of credit for the GOP’s big gubernatorial gains in 2010. But a lot of the buzz about his T-Paw gig stems from the earlier assumption of many pols that he’d be involved in a different campaign: that of Haley Barbour, who was Ayers’ boss at RGA during the 2010 cycle. If nothing else, Pawlenty now has something important that he has lacked: a prominent backer from the South, where he will need to show strength if he winds up being the “consensus conservative” alternative to Romney to his left and perhaps an actual southerner to his right.

As Obama Prepares to Speak, PPI Hosts Tax Reform Forum

Posted on by The Progressive Policy Institute

Today, President Obama is speaking on long-term deficit reduction. He’s expected to embrace the National Commission on Fiscal Responsibility and Reform’s general framework (also known as Bowles-Simpson).

Yesterday, the Progressive Policy Institute joined forces with the Moment of Truth Project to host an event to discuss what comprehensive tax reform should look like, and what it will take to get it passed. (Moment of Truth was formed by Fiscal Commission co-chairs Erskine Bowles and Sen. Alan Simpson to build momentum behind the commission’s deficit reduction plan.)

Yesterday’s event, at Johns Hopkins University, helped build the momentum for reform. There was wide consensus that tax reform will need to be bipartisan and comprehensive, and will need to scale back most of the $1.1 trillion in tax expenditures. Tax expenditures are at the heart of the “modified zero plan,” which would eliminate or scale them back, and use the savings to cut individual and corporate tax rates, as well as budget deficits.

Coinciding with the event, PPI released a policy memo on the modified zero plan, written by PPI Senior Fellow Paul Weinstein and Marc Goldwein of the Committee for a Responsible Budget, and both formerly of the Commission. Both were on hand.

Yesterday’s forum event featured three Senators who have been leading the charge for reform – Michael Bennet (D-Colo.), Ron Wyden (D-Ore.) and Dan Coats (R-Ind.) – and one CEO and Fiscal Commission member, Dave Cote (CEO of Honeywell). They provided the big picture framing, so I’ll summarize the highlights of their remarks first, and then delve into the two panels of experts second.

Sen. Bennet kicked off the event with stories from the town halls he’d been spending the last two years doing: “In every single meeting, debt and deficit came up,” he said. “There’s a deep skepticism that if we can’t figure out how to pay our bills, it suggests a lack of confidence in our government and our elected leaders, and it’s fairly well-placed.”

Bennet offered three criteria for what a deficit reduction plan would have to accomplish to pass muster with voters. First, it would need to be comprehensive. “People know we can’t fix this overnight, but they want it to be comprehensive.”; Second, sacrifice has to be shared: “They want to know that we’re in this together, and everybody has a share of the burden.”; Third, it has to be bipartisan.

Coats laid out a similar series of principles for the legislation that he has introduced with Senator Wyden. First, he said, echoing Bennet, it has to be bipartisan. Second, it has to be revenue neutral. Third it has to be simple (“Right now we’ve got 71,000 plus pages of tax code, 10,000 plus special preferences and deductions. It’s a nightmare.) Fourth, it has to help out the middle class, and help families to save money for college, and help charitable organizations. And fifth and finally, “this has to be based on a principle of growth…the bottom line is it has to lead to jobs.”

Wyden looked at the problem through the lens of tax simplification, noting that as April 15 approaches, “Americans are going through the 6 billion hours they spend each year filling out tax forms — 690,000 years is what you have in an annual effort going through the water torture of figuring out if line 9 is modifying line 7.”

Wyden also stressed that any tax reform also needed to encourage investment in what he called “red-white-and-blue jobs” – that is, solid American jobs, preferably in manufacturing. Wyden called his bill fundamentally a jobs bill.

Cote, CEO of Honeywell, echoed similar themes in his remarks. “We need a global competitiveness agenda for the U.S.” he began. “Our corporate tax system is globally uncompetitive. We have the highest tax rate in the world, and we’re the only major country with a territorial system that encourages companies to keep their cash overseas. And we give back $1.2 trillion in what is euphemistically named ‘tax expenditures,’ but just another form of spending that’s done through the tax code.”

Echoing the urgency of the Senators, Cote posed the looming crisis this way: “The debt problem can get resolved one of two ways. We can do it now and do it thoughtfully, or the bond market can force us t do it, like Greece and Portugal.”

Moving to the policy substance, the first panel featured Paul Weinstein, PPI Senior Fellow, Diane Rogers of the Concord Coalition, Alan Viard of the American Enterprise Institute, and Howard Gleckman of the Tax Policy Center as moderator

Weinstein gave the quick version and backstory of the “modified zero plan,” which is the subject of a new PPI memo Weinstein co-authored. As the name might suggest, it began as the “zero plan,” which was the name the deficit commission gave the plan that reduced all tax expenditures to zero, saving $1.1 trillion in deductions, credits, and deferrals. The “modified zero plan” put back in only a few consensus tax expenditures, like the EITC, a mortgage deduction, a charitable contribution deduction.

“The rates are lower, it simplifies the tax code to fewer incentives and helps reduce tax avoidance and mistakes,” explained Weinstein. “Obviously the revenue increases get bigger and bigger over time. We estimate $800 billion over ten years.”

Rogers responded favorably to the plan. “I like the approach. There’s something for everyone to love,” she said. “Liberals should like it because it’s progressive and better than having to cut direct spending. Conservatives should like it because it’s an economically efficient way to raise revenues, and it doesn’t raise the size of government. It reduces the size of government.”

Viard gave it two cheers. He called it “Well-specified and thoughtful. This is one of the best approaches you can have with an income-based tax system that includes a separate corporate income tax.” Viard’s stated preference was for a value-added tax (VAT), though the subsequent discussion highlighted how difficult the politics of transitioning to a VAT would be. (Rogers put it this way: “we should work within the existing system first.”)

As the discussion shifted into the politics of policy, there was general agreement that tax reform terminology is confusing to the general public, and any discussion of tax expenditures is going to lead to thousands of interest groups begging to keep their favorites. And again, there was agreement that it needs to be comprehensive. “Tax reform can’t be done unless it’s in the context of deficit reduction,” said Weinstein. “You need to look at the whole apple.”

The second panel featured Leonard Burman of Syracuse University, Marc Goldwein, of the Committee for a Responsible Federal Budget, Joseph Minarik of the Committee for Economic Development and Derek Thompson of The Atlantic as moderator.

Goldwein began by reiterating the consensus: “The current income tax code is a mess. There is a consensus to broaden the base, and reduce the rates, and don’t keep tax expenditures that aren’t worth their cost.”

But how to do that? Burman argued that ending tax expenditures would require not referring to them anymore as tax expenditures. “We need to change the fiscal language. I sometimes call them IRS pork,” he said. “Part of the problem is mischaracterizing tax expenditures. Some people think that by putting new tax expenditures in the code you’re making government smaller, but what you’re doing is just spending more money and making taxes higher to achieve a given level of revenue.”

Minarik, a grizzled veteran of tax fights, highlighted the fact that the inside-the-halls negotiating in Congress is very different from the “outside” formulating that goes on at events like this, and reminded everyone that the simpler the solution, the easier it will be to pass. In that respect, he said, a fifth-best solution that’s simple and straightforward is better than a second-best solution that can lead to more complicated politics.

Less is More: The Modified Zero Plan for Tax Reform

Posted on by The Progressive Policy Institute

 

As the ideological battles between the House Republicans and the President over discretionary spending continue to dominate news headlines, the real progress toward defusing America’s debt crisis is occurring more quietly in the Senate. There, a bipartisan group known as the “Gang of Six” has rallied behind the balanced blueprint produced by the National Commission on Fiscal Responsibility and Reform (Fiscal Commission).

Originally derided by some on the left and right when it issued its December 1, 2010 plan, the Fiscal Commission plan has become the only bipartisan game in town when it comes to deficit reduction. In March, 64 Senators (32 Democrats and 32 Republicans) called on the President to support a broad approach for addressing deficit problem and stated that the Fiscal Commission’s “work represents an important foundation to achieve meaningful progress on our debt.” Shortly thereafter, ten former heads of the Council of Economic Advisers, both Republicans and Democrats, co-signed a public statement urging that the Fiscal Commission’s report “be the starting point of an active legislative process that involves intense negotiations between both parties.”

The Fiscal Commission plan includes something for everyone to dislike, but along with a real plan to cut the deficit, the proposal includes a number of reforms that break through the partisan logjam that has plagued Washington in recent years. One such reform is the Fiscal Commission’s tax reform plan, which despite reflexive opposition from conservative anti-tax groups was supported by all three Senate Republicans on the Commission.

Read the Policy Memo

Nobel Laureate Joseph Stiglitz is All Sorts of Wrong on Inequality

Posted on by The Progressive Policy Institute

I’m never going to win a Nobel Prize. Maybe in literature. I don’t know why Joseph Stiglitz’s new Vanity Fair piece on inequality is so off-base. But it is. And it’s incredibly frustrating (1) to see someone so intelligent be thwarted by ideology and (2) to watch as his views are propagated on the basis of his name recognition.

What’s a lonely uninvited-to-Davos blogger to do? Blog. Herewith, my fact check of the VF article. Stiglitz writes

The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent.

Stiglitz doesn’t cite any of his figures (possibly a limitation of the outlet), but the Piketty & Saez estimate of the top one percent’s income share in the most recent year (2008) was 18 percent, which is just a hair closer to “nearly a quarter” than it is to “just over a tenth”. Their data says that share was 9 percent in 1985, but that should be adjusted upwards to 13 percent. Similarly, CBO says the top one percent’s share was 17 percent in 2007 for after-tax income, up from 11 percent in 1989. Saez’s estimate of the top one percent’s share of wealth is 21 percent for 2000, 21 percent for 1990, and 22 percent for 1985. Edward Wolff’s is 35 percent for 2007, up from 34 in 1983 (which I doubt is statistically different from 35 in this case). The top appears to have experienced income and wealth losses from 2007 to 2009 while the bottom experienced gains. Taken together, the top one percent’s income share rose from 11-13 percent twenty-five years ago to 17-18 percent according to the most recent data. The top one percent’s wealth share basically hasn’t risen.

MIT economist Erik Brynjolfsson’s comments led me to add this paragraph: Brynjolfsson raises an important point (though I wouldn’t call it a mistake) in noting that Stiglitz may have been referring to the Piketty and Saez numbers that include realized capital gains in “income”. I chose the series excluding capital gains because the timing of when capital gains are realized has everything to do with tax law, the strength of the economy, and when people retire. The P&S series including capital gains still doesn’t account for all the unrealized gains accruing to people (most importantly, those accruing to people in their retirement accounts). Capital gains realization is “lumpy” in a way that makes trends problematic.

But I will concede that the level of the top’s income share (including realized capital gains) is closer to 25 percent than the P&S numbers I cite above suggest. Now whether their share of income including unrealized capital gains is closer to 25 percent or 17 or 18 percent is an open question. And I still say the series excluding capital gains is the way to go for trend estimation. But look, all this aside, the CBO series includes realized capital gains (but also considers taxes and other things the P&S series leaves out). And it shows the same basic trend and level as my conclusion above.]

While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone.

The 18 percent figure looks to be from Piketty and Saez (the change from 1998 to 2008). The claim about median incomes falling is incorrect if one takes into account the value of employer- and government-provided health insurance. (Majorities of workers with employer coverage say they prefer more generous coverage to higher wages, so it turns out employers aren’t crazy in substituting ever-more-costly insurance for wages over time.) The decline in earnings (not income) for men with just a high school diploma is probably less than 12 percent. Based on some analyses I’ve been working on using the Current Population Survey, I find that men with a high school diploma but no four-year college degree saw a 12 percent decline in earnings over the roughly 33-year period from 1971-73 to 2003-2007, but that doesn’t take into account the caveats I mention in this post. And earnings among women with the same level of education rose by over 50 percent, so that’s inconvenient for Stiglitz.

The change in household or family income among men with just a high school diploma was, I’d wager, positive even before factoring in the caveats. And while I can’t cite the paper yet, research I’ve seen using the PSID rejects the conclusion that wives have been forced to work more due to stagnant husband earnings—the biggest increases in work were among wives with the best-educated husbands, and while the hours of married men declined, those of single men did not (suggesting that the decline among married men was a reaction to increased work among their wives). I’ll update this post when I can cite the paper (though that won’t be for a couple months anyway). But think about it–did all these women increase their college-going simply in anticipation of marrying men with stagnant earnings, or did they prefer the fulfilling professional options that a college degree afforded them? Or consider–is declining fertility, delayed marriage, and increased college-going among women in developed countries around the world all somehow related to rising American inequality? You can get the basic trend on work by sex by marital status from Table 1 of this paper while you anxiously await my update.

All the growth in recent decades—and more—has gone to those at the top.

Nope, not if “the top” refers to “the top 1 percent” cited two sentences earlier. According to the Piketty and Saez data, depending on whether one uses the share of nominal or real (inflation-adjusted) gains and whether one includes or excludes capital gains in “income”, the share of income growth going to the top one percent from 1998 to 2008 was between 22 and 33 percent. If you go back to 1988, the range is from 19 to 32 percent of gains since then. And keep in mind that when you start from an unequal distribution, if everyone experiences the same rate of income growth, a disproportionate share of gains will go to the top.

In terms of income inequality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran.

Compared to nearly all of the major nations of western and central Europe, the U.S. does have higher inequality (but it may not be that far off from the U.K. or Canada). The only numbers I could find for Russia and Iran are from the CIA World Factbook (the quality of which I can’t speak to). Out of 136 countries, the U.S. is ranked 40th worst. Iran is ranked 43rd and Russia 52nd. So that sounds bad, right? Meh. Hong Kong and Singapore rank worse than the U.S., and Indonesia, India, and Ethiopia rank much better than Russia. Stiglitz will have to do better than this if he wants to argue that American inequality is a big deal.

First, growing inequality is the flip side of something else; shrinking opportunity….Second, many of the distortions that lead to inequality—such as those associated with monopoly power and preferential tax treatment for special interests—undermine the efficiency of the economy.

OK, so now Stiglitz is trying to tell us why we should care about the inequality that he exaggerates. But these are just assertions. The best evidence suggests that opportunity for men to move from the bottom to the top over the course of a career hasn’t changed much over the past 35 to 40 years, and it has unambiguously increased for women (see Figures 15A and 15B). Across generations, the evidence is extremely thin, but it doesn’t point to an unambiguous increase or decrease in opportunity over the past few decades. As for inequality and efficiency, my dissertation advisor, Christopher Jencks, has found that there is little correlation between economic growth and inequality levels, which doesn’t exactly help those who believe inequality promotes growth but is equally problematic for Stiglitz and others who believe that inequality is inefficient.

When you look at the sheer volume of wealth controlled by the top 1 percent in this country, it’s tempting to see our growing inequality as a quintessentially American achievement…

Here Stiglitz is conflating income inequality (growing) with wealth inequality (basically flat and at a historic low in the U.S.). Whatevs.

America’s inequality distorts out society in every conceivable way. There is, for one thing, a well-documented lifestyle effect—people outside the top 1 percent increasingly live beyond their means.

So document it! The share of families with any debt rose from 72 percent in 1989 to 77 percent in 2007, though note that the share with assets also grew. Median net worth (assets minus debt) rose from $75,500 to $120,600. In the wake of the housing bust, it fell, but it was still around $92,000 in 2009. Among people with debt, median debt payments rose from 15.3 percent of family income in 1989 to 18.6 in 2007. These are pretty small changes in indebtedness, and I’m not sure how Stiglitz could empirically link them to inequality.

Inequality massively distorts our foreign policy.

Ummm…going for the Peace Prize next?

The chances of a poor citizen, or even a middle-class citizen, making it to the top in America are smaller than in many countries of Europe.

What little evidence there is suggests that upward mobility is lower in the U.S. only for men and only for those who start out poor. [UPDATE: Just to clarify, I’m talking about only men who start out poor, not men plus all people who start out poor. See the linked paper for details, but we’re talking about 12 to 13 percent of the population, roughly.]

All of this is having the predictable effect of creating alienation—voter turnout among those in their 20s in the last election stood at 21 percent, comparable to the unemployment rate.

Oh boy, the shift to political science by economist pundits is always fraught with danger. The 2010 election is a single data point (and an off-year election, when voting rates are much lower). I’ll just quote from a fact sheet from a Tufts research center that studies civic engagement among youth: “The 2008 election marked the third highest turnout rate among young people since the voting age was lowered to 18.” What any of this has to do with inequality is anybody’s guess.

In recent weeks we have watched people taking to the streets by the millions to protest political, economic, and social conditions in the oppressive societies that they inhabit….The ruling families elsewhere in the region look on nervously from their air-conditioned penthouses—will they be next?…As we gaze out at the popular fervor in the streets, one question to ask ourselves it this: When will it come to America?

My guess is never. By the way, Joe, be honest–were you using a pseudonym here?

 

Crossposted at ScottWinshipWeb

PPI EVENT: Tax Reform Now

Posted on by The Progressive Policy Institute

With April 15 just around the corner, PPI and Moment of Truth, and a bipartisan cast of U.S. Senators, are joining forces to call for the most sweeping overhaul of federal taxes since 1986.

Moment of Truth was formed by Fiscal Commission co-chairs Erskine Bowles and Sen. Alan Simpson to build momentum behind the commission’s deficit reduction plan. At the heart of that plan is the “modified zero plan,” which would eliminate or scale back tax expenditures, and use the savings to cut individual and corporate tax rates, as well as budget deficits.

In addition to Sen. Michael Bennet (D-Colo.), a leading voice for restoring fiscal responsibility in Washington, Sens. Ron Wyden (D-Ore.) and Daniel Coats (R-Ind.) will be on hand to discuss their new bill, which would also close tax loopholes to finance lower rates and deficits.

Both approaches embrace the “broaden the tax base, bring down tax rates” logic of the last great tax reform in 1986. PPI also will release a new report by Paul Weinstein, a key architect of the “modified zero plan,” on how the plan sparked a bipartisan breakthrough on the commission, and on how the plan could be further refined and strengthened.

The April 12 forum, to be held at Johns Hopkins University’s Washington campus, will also feature prominent budget and tax experts. Click here to see the whole program and RSVP.

More Regulatory Overreach at the FCC

Posted on by The Progressive Policy Institute

Imagine that you had an industry where customer satisfaction was increasing faster than any other part of the economy. Now imagine that the same industry showed rising real investment, even during the worst recession in 75 years. Finally, imagine that industry charged falling prices for both consumers and businesses.

But of course, that industry is not imaginary: The telecom industry, and in particular the wireless sector, has outperformed the rest of the economy on key measures such as customer satisfaction, investment, and price. Moreover, at a time when President Obama is calling for more innovation, the wireless industry has produced more genuine new products and services than anyone else.

So given the great performance of the industry during this tough period, why the heck does the Federal Communications Commission keep imposing additional regulations on wireless providers? The latest case of regulatory overreach: On April 7, the FCC issued an order forcing the big wireless providers to sign ‘data-roaming’ agreements with smaller carriers. In effect, the smaller carriers can now tell their customers that they could have data service all over the U.S., free-riding on the mammoth investments by the big carriers. In addition, the FCC made it clear that it is willing to set the price for each data roaming agreement if it doesn’t like what the big carriers are offering–effectively reinstituting price regulation for the most dynamic sector of the economy.

This aggressive regulatory move by the FCC follow its enactment of confusing ‘net neutrality regulations’ in December 2010, an 87-page order that raises more questions than it resolves. And then coming down the road is the ‘bill shock’ regulation. In order to address the rather rare and fixable problem of a surprisingly high bill, this regulation would force providers to spend scarce investment dollars on revamping their billing system rather than building out their networks.

In many ways, enacting this series of regulations is like throwing pebbles in a stream. One pebble doesn’t make much of a difference, but throwing enough pebbles in the stream can dam it up.

Frankly, the degree of regulation that the FCC wants to impose is more appropriate to a failing industry rather than one which is demonstrably successful and growing. Let’s just run through the performance of the telecom/wireless industry over the past five years. According to the American Customer Satisfaction Index, satisfaction with wireless service has increased by 14% over the past five years, by far the biggest jump of any industry.

Now let’s look at investment. The data on investment is somewhat fuzzier than for satisfaction, since the government’s figures on industry investment only run through 2009, and merges the telecom and broadcasting industries.

But here’s what we see: In the telecom/broadcasting industry, real investment in equipment and software is up 30% since 2005, despite the turbulence of the financial crisis. By contrast, overall private sector real investment in equipment and software is down 8% over the same period.

And then of course the price of wireless service keeps falling. The latest figures from the Bureau of Labor Statistics say that consumer wireless prices are down 6% since 2011, and business wireless prices are down a lot more.

Right now the FCC has the good fortune to preside over one of the few growing industries in the economy. If the commissioners genuinely want to support innovation and growth, they should stop throwing regulatory pebbles into the stream.

Crossposted at Mandel on Innovation and Growth

Next Up: Tax Reform

Posted on by The Progressive Policy Institute

Averting a government shutdown was only the first of a series of gates Congress must clear in this year’s downhill slalom of fiscal politics. Even sharper turns lie ahead – raising the debt ceiling, and approving next year’s federal budget.

In mid-May, the U.S. Treasury will bump up against the limit of its legal authority to borrow money to finance the federal government’s operations and service its debts. Republicans have served notice that they see the coming vote to raise the debt limit as another opportunity to extort deeper cuts in federal spending for next year.

The stakes in this game of fiscal chicken, however, are infinitely higher. Without a debt limit hike, the United States, for the first time in its history, would be forced to slash hundreds of billions in spending, or more likely, default on its obligations. Are GOP leaders really willing to let the Tea Party turn America into Argentina?

More likely they’re bluffing. Still, it wouldn’t be a bad thing if the debt ceiling vote becomes an action-forcing mechanism for serious negotiations to cut future deficits and stabilize the national debt. By “serious” I mean pragmatic and bipartisan, qualities you can only find nowadays by crossing the Capitol from the House to the Senate.

The House this week will probably pass some version of Budget Committee Chairman Paul Ryan’s proposed budget. It’s an ideological document, not a plausible point of departure for horse trading. By taking taxes off the table, Ryan panders to GOP taxophobia and ensures no Democratic support for his plan. And that plan is a distributional horror, concentrating all the pain of deficit reduction on middle- and lower-income Americans, while giving the most fortunate a free pass.

That’s why all eyes are on the “Gang of Six,” a bipartisan group of Senators who are trying to forge consensus around the Fiscal Commission’s deficit reduction plan. Its centerpiece is a call for a sweeping overhaul of tax expenditures, with the savings dedicated both to buying down individual and corporate tax rates and cutting federal deficits. PPI will co-host a public forum on tax reform tomorrow featuring Sens. Micheal Bennet (D-Colo.), Dan Coats (R-Ind.), and Ron Wyden (D-Ore.), as well as prominent budget and tax experts.

And President Obama, who seems to have gone on walkabout, returns to the fiscal fray Wednesday with a major speech on the need for cutting entitlement spending, especially for Medicare and Medicaid. The unsustainable growth of these huge “mandatory” programs – not the domestic spending targeted by House Republicans in the shutdown battle – is the real driver of federal spending and debt.

A decisive intervention at this stage by the President is crucial, since many Democrats are as deeply in denial about the need for entitlement reform as Republicans are when it comes to raising enough tax revenue to finance government. Many liberals, irate over the $38 billion in domestic spending cuts Democrats were forced to swallow to keep the government open, are demanding that Obama stop compromising and take up the ideological cudgels against Republicans. They want a full-throated defense of progressive government. But that requires action against entitlement spending, which is inexorably soaking up tax dollars and squeezing domestic programs that progressives rightly want to protect.

It also means showing the public that Democrats can responsibly manage the nation’s finances and restore fiscal discipline, even as they shield progressive priorities from chainsaw wielding Republicans. Obama’s challenge is to nudge, prod and cajole both sides toward a grand political bargain for shared sacrifice, built around tax and entitlement reform.

On the other hand, both Obama and Ryan have punted on the other big entitlement program, Social Security. It isn’t as big a problem as Medicare and Medicaid, but it must be on the table too because it’s adding to the nation’s overall debts. What’s more, it’s easily fixable. The Fiscal Commission pointed the way with sensible reforms, backed by Senate Democrats and Republicans, for raising the retirement age to match increases in longevity, and trimming future benefits for wealthy retirees.

The next step, however, should be tax reform. If the two parties can coalesce behind a plan similar to the Fiscal Commission’s, they could assure a balanced approach to deficit reduction, and build trust for the hard work of entitlement reform.

Will New State Dept. Human Rights Site Make a Difference?

Posted on by The Progressive Policy Institute

Along with its annual Human Rights Report, the State Department has unveiled a new website, HumanRights.gov, ostensibly for the cause’s promotion. I’ve spent some time browsing the site, and though I was disappointed that it doesn’t seem to be fully stocked with reports — I searched for this year’s on Iran and came up empty — I’m sure that problem will take care of itself over the long term.

The outstanding question in my mind is what a new government website can really accomplish. Yes, it’s fine and welcome that Foggy Bottom puts time and resources towards building a dedicated internet portal, but the challenge is to avoid the bureaucratic temptation to measure success by having created something, rather than judging its usefulness by the effect it has on others. Essentially, it’s a question of measuring inputs (a site) vs. outputs (what the site accomplishes).

Will, for example, the State Department just use the site as a repository for mounds of data? Or will it build a community around it through web chats, live broadcasts from human rights events world wide, and an interface enabling ideas to be exchanged with the government? A worst case scenario is if a human rights website becomes a one way mirror, with information streaming out of the administration but rarely entering it. We all know how much this White House likes to put things online, but all the information in the world is underutilized if it’s not actively contextualized.

Human rights have an indispensable role in negotiations with all of the United States’ major antagonists. In a way, Secretary Clinton got lucky when she said that human rights’ issues couldn’t “interfere” with more pressing crises in the U.S.-China relationship: the resulting outcry seems to have refocused the administration’s efforts on the issue. The White House now seems to have a better understanding that including human rights in the basket of issues discussed across any negotiating table broadens the discussion and creates new angles for American leverage. As my friend Andrew Albertson wrote with Ali Scotten in 2009 on the Iranian situation:

By broadening our support for the aspirations of ordinary Iranians, the Obama administration can continue to tilt the balance of power in its favor. Such an approach would add pressure on the Iranian regime, enhance domestic political support for talks and maximize the opportunity for successful negotiations.

And of course they’re a good thing for their own sake, too.

Discussing Iran and human rights is something we’ve done quite a lot of over the past few weeks. Please take a look at the new study group we’ve launched in conjunction with our friends at Freedom House in an effort to help the administration think of ways beyond just sanctions to bring about real change in Iran. Here are a few quotes from Ben Smith’s story in Politico on why we’re doing it:

“PPI believes a more democratic world is a safer world. The United States has failed to apply that principle to Iran, even as popular movements for freedom spread throughout the Middle East. It’s time for a new approach,” PPI President Will Marshall said in an emailed statement.

“The dominant issues in the Middle East are democracy and freedom. The Iran regime thinks that it can escape demands for change,” said Apostolou. “The United States, and its allies, therefore need a strategy that will help Iranians attain the human rights they so richly deserve.”

 

Tax Reform Now: Cutting Rates and Deficits

Posted on by The Progressive Policy Institute

You are cordially invited to join the Progressive Policy Institute and the Moment of Truth Project for a special event

Tax Reform Now: Cutting Rates and Deficits

Speakers:

Sen. Michael Bennet (D-CO)
Sen. Ron Wyden (D-OR)
Sen. Daniel Coats (R-IN) (invited)
Dave Cote, National Commission on Fiscal Responsibility and Reform
Will Marshall, Progressive Policy Institute


Panel 1: Reforming the Tax Code: The Case for the Modified Zero Plan
Diane Rogers, Concord Coalition
Paul Weinstein, Progressive Policy Institute and Johns Hopkins University
Alan Viard, American Enterprise Institute
Howard Gleckman, Tax Policy Center (Moderator)

Panel 2: Enforcing Reform: Designing Tax Expenditure Fail-safes and Triggers
Leonard Burman, Syracuse University
Marc Goldwein, Committee for a Responsible Federal Budget
Joseph Minarik, Committee for Economic Development
Derek Thompson, The Atlantic (Moderator)

Date:
Tuesday, April 12, 2011
10 a.m.–1:30 p.m.
Lunch will be served

Location:
The Johns Hopkins University, DC Campus
1717 Massachusetts Ave. NW, Washington, DC
Lecture Hall LL7

To RSVP, contact Conor McKay at mckay@newamerica.net.

Space is limited. RSVP required.

Please join us for an event focused on the urgent need for comprehensive reform of the U.S. tax code. Guest speakers include Senators Michael Bennet (D-CO) and Ron Wyden (D-OR) and Dave Cote, Chairman and CEO of Honeywell International.

The event will also feature a panel on comprehensive tax reform, which will discuss the Fiscal Commission’s “Zero Plan” which dramatically lowers rates, broadens the tax base, and reduces the deficit. A second panel will discuss possible fail-safes and triggers designed to cut tax expenditures across the board in order to force action on reform. The event will also mark the release of a new PPI report by Paul Weinstein and Marc Goldwein entitled “Less is More: The Modified Zero Plan for Tax Reform.” This paper offers an in depth analysis of the Fiscal Commission’s “Zero” and “Modified Zero” tax reform plans.

This event is cosponsored by The Progressive Policy Institute and The Moment of Truth project, and is being hosted by the Center for Advance Governmental Studies at The Johns Hopkins University.

To RSVP, contact Conor McKay at mckay@newamerica.net.

America’s Come Undone

Posted on by The Progressive Policy Institute

Book Review: Age of Fracture, by Daniel T. Rodgers

The Princeton Historian Daniel T. Rodgers has written a fascinating new book about how the U.S. has gone from being one big beacon of light to a thousand little points. The title gives it away. We are in an Age of Fracture. We’ve gone from shared sacrifice and shared identities to individual expression and diffuse identities. We’ve gone from limits to dreams; we’ve shed the confines of the past for the endless possibilities of future reinvention. The only problem is, it’s starting to look like we might now want the past back after all, and limits are starting to look more prudent.

The story begins in the Cold War, an era of asking what you could do for your country. History and tradition weighed heavily; big institutions dominated. “Dedication, courage, responsibility, self-scrutiny and sacrifice,” writes Rodgers, “these were the nouns that bore the burden of the Cold War presidential rhetoric.”

But by the time sunny Ronald Reagan was in the White House, the confining rhetoric of the Cold War was gone and “terms like ‘crisis,’ ‘peril’ and sacrifice slipped one by one out of Reagan’s major speeches like dried winter leaves.” (What can he say? The man likes his collections of representative words.) In Reagan’s speeches, the historian detects the new optimism of self-actualizing philosophy, and the (re?)-birth of an American faith that from three simple words – “We, The People” – anything was possible.

But Reagan may just be the transition’s most visible mouthpiece. The shift away from institutions to individuals was just as much the rage among intellectuals. First, most visibly, in economics: In the 1960s, Keynesian economics was the consensus view, with its focus on institutions and macro-level supply and demand. But then it proved unable to either explain or solve the stagflation of the 1970s, leading Daniel Bell to proclaim that, “nobody has any answers he is confident of.”

Enter the new microeconomics: the atomized market of millions of socially-detached, utility-maximizing individuals, owing nothing to society other than to make themselves happy. “In its very simplifications,” writes Rodgers “it filled a yearning for clarity that the older, more complex pictures of society could not.”

Like Reagan’s soaring rhetoric, the new faith in markets was a way to break free of limits. In contrast to the gray pessimism of planners and government bureaucrats who wanted people to live within their means, the new models bespoke a land of heroic entrepreneurs and innovators, of an America that could re-invent itself constantly from the bottom up.

Other social sciences tracked the trends in economics. In political science, models of rational choice, with their focus on individual utility, replaced the importance of larger institutional structures and forces. Everything now could be explained by examining the incentives of individuals as if they were independent from larger social institutions. Phrases like the “will of the people” became meaningless when complex models showed how impossible it actually was to usefully aggregate independent preferences.

In sociology, the guiding concept of power “grew less tangible, less material, more pervasive, more elusive, until, in some widespread readings of power, it became all but impossible to trace down.” Michel Foucault found power everywhere, and by doing so, effectively rendered it meaningless – for if it was everywhere, than who could pin it down? In anthropology, Clifford Geertz found “nothing but a play of texts.” Everything was performance and masks.

In more popular books, Alvin Toffler’s widely-read Future Shock proclaimed “The death of permanence.” John Naisbitt’s Megatrends promised the triumph of the individual in the new information age.

The politics of race and gender were likewise affected. On the subject of race, conservatives embraced the notion of a color-blind society, and race as a social construct. “In the ‘color-blind’ society project,” writes Rodgers. “Amnesia was a conscious strategy, undertaken in the conviction that the present’s dues to the past had already been fully paid.” Again, the same theme: the triumph of individualism came at the expense of the past. One could not have a world of endless new opportunities if one got bogged down with worries about history and obligations.

On gender, the breakdown was internal to the movement. A representative 1977 woman’s gathering in Houston fell apart when it became apparent there was no single woman’s experience everyone could agree on. The feminist scholar Judith Butler concluded in her landmark book Gender Trouble: Feminism and the Subversion of Identity: “There were only scripts, nothing outside or beyond them.” Postmodernism strikes again. If everything is socially constructed, nothing has a foundation.

“Choice, provisionality, and impermanence,” writes Rodgers. “A sense of the diffuse and penetrating, yet unstable powers of culture; an impatience with the backward pull of history – these were the emergent intellectual themes of the age.”

And yet by the late 1980s, one could also detect a backlash. In the academy, Allan Bloom railed against the nihilistic deconstruction of everything in The Closing of the American Mind. Conservative think tanks began looking to local communities as sources of civic republicanism. Evangelicals saw the church as the center that could and must hold.

“Conservative intellectuals by the end of the 1980s still yearned for a common culture,” wrote Rodgers. “They could half-remember and half-invent in their mind’s eye a more consensual age, when terms like ‘civil religion’ and the ‘American creed’ had been sociological commonplaces.”

But the great irony was that the new conservative embrace of the American tradition was itself a creative reinvention –a mythic golden age that only selectively drew on actual history.

In conservative legal scholarship, Rodgers writes: “The originalist argument tapped not a desire to go back to any actual past but a desire to escape altogether from time’s slipperiness – to locate a trap door through which one could reach beyond history and find a simpler place outside of it. Originalism’s appeal to the past was, like the economists’ modelings of time, profoundly ahistorical.”

As a document of intellectual history, Rodgers’ book is brilliant. Learned, wide-ranging, delightful to read, full of keen little insights (and epoch-defining bundles of nouns.) But it leaves open the question: is the fracture permanent? “One might reach nostalgically for a fragment of the past,” Rodgers concludes. “But the time that dominated late-twentieth-century social thought was now.”

One way to view politics is about the tension between the individual and the group. All the great political trade-offs – liberty vs. security, equality of opportunity vs. equality of outcome – are at root conflicts between the desires of individuals to do as they please and attempts by the group to keep individuals from doing so much of what they please that the group falls apart. Such a view takes history as civilizations as bouncing back and forth between the two poles: give people too little room for individual self-expression, and they’ll demand to be free. But give them too much room to do whatever they like and be whatever they want, and they’ll demand more order and group identity.

Rodgers leaves us at the moment in which a hunger for a rootedness in history seems to be growing. Have we gone as far as individualism will take us? And if so, what takes us back? Here’s a hypothesis: do the new social networking tools that increasingly dominate our lives restore the possibility of a new and different kind of collective identity? And am I the only one wondering this? Maybe I’d better post this review to Facebook, and see what other people think…

Stop Dithering on Colombia Free Trade Agreement

Posted on by The Progressive Policy Institute

First on South Korea, now on Colombia, President Obama has been working assiduously to make trade agreements palatable to skeptics within his own party. By negotiating an “action plan” with Colombia on labor rights, he has removed any reasonable pretext for opposing a pact that has languished in Congress for five years.

It’s not clear, however, whether the anti-trade coalition of organized labor and Congressional liberals will take “yes” for an answer. Rep. Louise Slaughter (D-NY), ranking Democrat on the powerful House Rules Committee, vowed Wednesday to continue blocking the treaty. The pact, negotiated by the Bush administration, “turns a blind eye to rampant human rights violations and anti-labor practices of Colombia, where merely joining a union or advocating for workers rights can be a death sentence,” she said.

In fact, anti-union violence in Colombia has waned in recent years and there’s little evidence that the national government is implicated in it. Nonetheless, to allay Congressional criticism, Colombia pledges more vigorous action to protect union leaders as well as legal reforms to strengthen unions. Obama meets today at the White House with Colombian President Juan Manuel Santos to formalize the plan.

The free trade deal would lower Colombia’s high tariffs on U.S. agricultural and manufactured goods. The International Trade Commission estimates the U.S. exports to Colombia would increase by $1 billion if the treaty is approved (Colombia’s GDP in 2010 was $283 billion, and has been growing solidly for years). As Washington struggles to cut trillion-dollar deficits, that may not seem like much. But boosting U.S. exports – Obama has pledged to double them – is integral to bringing unemployment rates down.

While Washington has dithered, other countries have rushed into the breach. Colombia has been signing trade agreements with countries in Europe and Asia, and China is now its second-largest trading partner. It’s a vivid illustration of how U.S. policymakers’ inability to forge consensus on opening foreign markets is undermining our global competitiveness.

The political case for the free trade pact is even stronger. Colombia is one of America’s closest partners in South America. In a region rife with populist demagogues – the loudest being Venezuela’s virulently anti-American Hugo Chavez – Colombia stands out for its steady march in a liberal democratic direction.

And for its resilience. Nearly engulfed by drug cartels and narco-terrorism in the 1990s, Colombia, with America’s help, managed to defeat them while also strengthening the rule of law. The United States invested $8 billion over a decade in Plan Colombia, which now offers Mexico a model for its struggle against hyper-violent drug gangs that have overwhelmed civil authorities and killed over 30,000 people in recent years.

Congress’s refusal to approve the U.S.-Colombia free trade agreement is no way to treat a friend. It also puts the parochial interests of organized labor over the nation’s interest in opening markets to U.S. exports. The moderate House New Democrat Coalition has endorsed Obama’s efforts to smooth the way toward passage of the pact. It’s time for liberals to stop making excuses and let the deal get done.

Obama Needs a Stronger Veto Threat on EPA Regulations

Posted on by The Progressive Policy Institute

Brinksmanship is the name of the game in Washington this week. GOP leaders are publicly shifting away from negotiation tactics and turning to endgame spin strategy in advance of a government shutdown, while President Obama continues working to secure a deal without staking out an early position in the blame game that’s soon to follow.

A perfect example of the GOP’s unanswered offense in this game is the timing of votes in both houses this week to strip the EPA of its ability to move forward with new greenhouse-gas regulations. There has been no shortage of Republican proposals in both houses of Congress to do this for months, plus a handful of Senate Democrats who also support some version of stopping or delaying the EPA climate rules. But what better time to bring up a divisive issue with no hopes for compromise than in the last hours of an overheated budget standoff? Tactically speaking, it’s a reminder of why Republicans are always so much better at strategy and spin than Democrats, but it could also prove to be another example of how their ideological extremism eventually undermines their strategic successes.

Already the White House is playing defense, trying to calm environmentalists after rumors that the administration has been using the EPA’s authority as a bargaining chip to secure a budget deal and avoid a shutdown. On Tuesday, OMB issued a policy statement warning that if the House measure ever reaches the President’s desk, “his senior advisors would recommend that he veto the bill.”

That’s fairly strong language for OMB bureaucrats to use, but it’s pretty pathetic as the only public response of the White House to direct attacks one of the most significant regulations issued by this administration. Much of the media coverage has interpreted the statement as a promise to veto the House bill, but it includes no such promise. As veto threats go, this one is half-hearted at best.

With the budget fight reaching a fever pitch and GOP leaders raising the stakes by bringing climate change into the game, it’s time for the President to take a side on this fight before votes are cast, not after.

President Obama should announce clearly and unequivocally that he will not sign any bill that delays, repeals, or compromises the EPA’s greenhouse-gas regulations, until Congress has passed legislation adopting some form of long-term national energy and climate strategy.

Here’s why: the EPA regulations are the last leverage he has left at this point to get any energy bill through Congress, and they may be one of the only political defenses he has post-shutdown for not reaching a budget deal with Republicans. Even entertaining the possibility of trading away EPA’s regulations for a budget deal is not only a loser’s hand in the short term, but it would be the end of any hopes he might have to move any meaningful energy agenda during his first term, and possibly his second.

For some presidents, calling for this type of statement and strong positioning might not be a big thing to ask for. But President Obama has shown consistently he prefers to lead from the rear, leaving the bloodshed to members on the front lines in Congress, many of whom are no longer around to fight after casting tough votes for last year’s energy bill. The administration’s reluctance to lead on climate and energy in 2010 gives congressional Democrats facing tough races little reason to think they will get any cover in 2012 for defending the EPA this year.

What’s more, President Obama faces two problems if he chooses to stand up more forcefully for the EPA’s regulations. His first problem is the perception Republicans are promoting that this is more simply more “job-killing” regulation heaped onto an already weak economy. That thinking has a number of vulnerable Democrats spooked, especially in the Senate, where a handful of moderates already co-sponsored a bill to delay the regulation for two years.

Obama’s second problem with trying to defend the EPA rules is that he has never strongly supported them up until now. The administration has soft-pedaled its commitment to the EPA rules from the beginning, presumably to use them for leverage to motivate industry opponents and their many representatives in Congress to support a less painful alternative, such as cap-and-trade. The fact that they did such a poor job of using that leverage to actually enact an alternative now leaves them stuck with regulations they have said they don’t want, and a Congress that doesn’t want them either, but also doesn’t want to give him a better alternative.

Anyone who thinks Obama will fall on his sword to protect the EPA rules in addition to passing an energy bill hasn’t listened to what he and his advisors have said about the rules for the last two years. You just need to look at the EPA’s official press release for its initial endangerment finding in December, 2009, which was supposed to explain why the regulations were so critical and necessary to mitigate the threat that greenhouse gases pose to public health and welfare. Instead, EPA pitched it as an unavoidable Plan B forced by a Supreme Court decision and Congress’s failure to act first:

President Obama and Administrator Jackson have publicly stated that they support a legislative solution to the problem of climate change and Congress’ efforts to pass comprehensive climate legislation. However, climate change is threatening public health and welfare, and it is critical that EPA fulfill its obligation to respond to the 2007 U.S. Supreme Court ruling that determined that greenhouse gases fit within the Clean Air Act definition of air pollutants. (link here)

If anything, the administration seems even less committed now to greenhouse gas regulations than it did then. Carbon emissions aren’t exactly at the top of President Obama’s list of talking points these days. In fact, his recent signals on energy policy appear deliberately calculated to move away from climate change positions altogether in favor of arguments for energy innovation, job growth in clean energy industries, and (as of last week’s speech at Georgetown) energy independence.

Obama made a bold attempt to reframe the energy debate in his State of the Union address, but not once in that speech did he reference climate change, cap-and-trade, the environment, or the EPA. His proposal for a new “clean energy standard” that moves us away from older fossil-fuel resources over the next 25 years has not picked up much energy of its own in Congress, and the President has yet to fill in the details of the proposal, leaving congressional leaders struggling to make sense of it on their own.

It is still unclear whether President Obama believes his clean energy standard or any of the proposals he mentioned last week would be sufficient steps toward carbon reduction to justify trading away the EPA’s regulatory authority over greenhouse gases. It’s even less clear whether all of those things together would be enough for environmentalists to even entertain the thought such a trade might happen.

Presumably, the comprehensive energy bill that passed the House last year would have been a strong enough substitute, but Waxman and Markey are not committee chairmen anymore. GOP members in the House have turned back time and aggressively attacked the science behind global warming, forcing advocates to invest more in defending the EPA’s actions, which may make it harder for the President to make a deal that undermines those actions.

Regardless of what hopes environmental groups may have for moving forward on clean energy while defending the EPA at the same time, it may be necessary to put everything on the table if we want any forward movement on energy policy in the foreseeable future.

But for now, what’s important is there is no such movement to be seen yet. So whatever type of climate or energy bill might justify regulatory horse trading, now is the time for talking about it. Given the state of the budget mess and the absence of political will to tackle energy legislation, now is the time for backing up bold speeches with firm conviction.

The American Electorate and the Budget Battle

Posted on by The Progressive Policy Institute

As the budget negotiations grind to a halt, it’s helpful to keep in mind two important characteristics of the American electorate.

The first is that voters tend to like compromise. In poll after poll, solid majorities of voters say they prefer leaders who compromise over those who stick to their guns. The latest Pew poll is typical: by 55 percent to 36 percent, voters say it is important to compromise on the budget as opposed to standing by principles, even if it means a government shutdown.

The poll is also typical in finding that Democrats are significantly more likely to favor compromise (69 percent do) than Republicans (only 43 percent do). And Tea Partiers, not surprisingly are the most intransigent (only 26 percent favor compromise).

Of course, the same poll found that voters would blame the two sides about equally, with Democrats blaming Republicans and Republicans blaming Obama, with independents split, presumably also along partisan-leaning lines (since most independents are closet partisans). So neither side has a clear advantage right now. Opinion seems to be pretty much solidified along partisan lines.

While it’s not clear Democrats have an advantage on being the party of compromise right now, presumably that will change if a government shutdown does occur and Tea Partiers celebrate and proclaim that their principled stand forced this. This will, of course, help the Democrats.

The second characteristic is that Americans tend to be symbolic conservatives, but operational liberals. What this means in practice is that when government is discussed in the abstract (like, say, in a number) people want less of it. But when it’s discussed in the specific (like, say, any actual program) people like it.

Consider the polling: When asked, 64 percent of Americans think “federal spending and the budget deficit” is a problem that they worry “a great deal” about. But a recent Pew poll found not a single budgetary area in which a majority of voters would favor a decrease, and only two federal programs in which more respondents favored a decrease in spending than an increase: Global poverty assistance (45 percent for a decrease, 21 percent for an increase) and unemployment assistance (28 percent for a decrease, 27 percent for an increase). Cuts to these two line items get you nowhere near $61 billion.

Presumably, Democrats should by now have found a sympathetic, sensible program that Republicans wanted to cut, and let that program stand in for Republicans heartlessness. But I don’t know: Maybe they don’t see that much worth aggressively and publicly defending in the $28 billion that separates them and the Republicans. And in an argument about how much to cut Government (in the abstract), the public is probably going to come down on the side of MORE.

Of course, the larger problem here is that we’re still talking about small potatoes. The federal budget is $3.5 trillion. That means we’re talking here about cutting it by either one or two percent here. That’s because this debate is all about non-military discretionary spending, which is only 13 percent of the overall budget. It remains frustrating to see this lack of context in the way the budget showdown keeps getting reported.

The UN Flexes Its Muscles in Cote D’Ivoire: What Does it Mean?

Posted on by The Progressive Policy Institute

Not much has been made of the truly stunning events unfolding in Cote D’Ivoire over the past 48 hours. Laurent Gbagbo, the ex-president who lost last year’s vote but refuses to cede power, is on the verge of giving up the post in favor of Alassane Ouattara, the rightful victor.

Gbagbo has held his country hostage for nearly four months, as forces loyal to him had hunkered down in Abidjan, the commercial capital. But Outtara massed his own army, and in recent days made a strong push essentially pinning down Gbagbo’s forces in the city.

Everyone from the UN to the African Union to international NGOs and the ghost of Elizabeth Taylor acknowledges that Ouattara is president-elect, so there’s no question about taking sides, despite legitimate concern that Outtara’s forces could commit crimes against civilians. To that end, on March 30, the United Nations Security Council unanimously approved Resolution 1975, which among other things, authorizes UN and the French forces supporting them to use “all necessary means … to protect civilians under imminent threat of physical violence… including to prevent the use of heavy weapons.”

Last night and under this mandate, UN and French forces hit the presidential palace as well as other strategic military sites around Abidjan. The pressure has apparently brought Gbagbo to the verge of ceding power, despite somewhat conflicting reports.

In the process, we’ve learned two important things about the UN: First is that the United Nations is beginning to take its “responsibility to protect” (R2P) — an international norm adopted in 2009 that obliges the international community to act in the face of humanitarian crises — quite seriously. R2P grew out of the UN’s non-intervention in the Rawandan genocide of 1994; one of its principal pillars is that the international community is compelled to take timely action to protect civilians when a state is failing to protect its population. Cote D’Ivoire is just the second potential atrocity since R2P was established (Libya was the first) that the UN has had the opportunity to act. So far, it’s 2 for 2.

It’s remarkable that Resolution 1975 passed by the Security Council by a 15-0 margin, just weeks after a very similar Resolution 1973 passed by a comparatively difficult 10-0 vote (with five abstentions) authorizing the same “all necessary measures” to protect civilians in Libya. What compelled Russia, China, Brazil, Germany, and India to vote with the Ivoirian resolution while abstaining from the Libyan version just weeks earlier is somewhat of a mystery.

Most likely, the different vote tallies are due to a simple fact: no two situations are exactly alike and major international decisions aren’t made in a vacuum. Certainly Moscow and Beijing in particular didn’t wake up last week and decide they were liberal interventionists comfortable authorizing force to advance democracy. Perhaps the difference was in a certified election result in Cote D’Ivoire, while no election had taken place in Libya?

Second, the limited UN/French military operations in Cote D’Ivoire should underwrite the UN’s confidence that it can act with apparently effective results without more than American moral support. As any as one million Ivoirians may have be displaced by this conflict, and preventing needless harm to them is a testament to the international community’s potential as an effective arbiter.

Why Obama Shouldn’t Play it Safe in 2012

Posted on by The Progressive Policy Institute

So, surprise, surprise, Barack Obama is officially running for re-election in 2012. As someone who knocked on doors in 2008, I watched the official 2012 announcement video with some eagerness, hoping to be inspired anew. Perhaps he would say something akin to his 2007 speech in Springfield, which launched his then long shot campaign with stirring calls to purpose.

“I want to win that next battle – for justice and opportunity,” he said in 2007. “ I want to win that next battle – for better schools, and better jobs, and health care for all. I want us to take up the unfinished business of perfecting our union, and building a better America.”

But Obama doesn’t even appear in the 2012 video, a two-minute montage of five “volunteers” talking in the most remarkably content-free generalities: “There’s too much that is fundamentally important” says a white man from North Carolina, who later admits, “I don’t agree with Obama on everything” (though he does trust and respect him).

“There are many things on the table that need to be addressed,” says a Latino mom, who wants the best for her children, and for Obama to be the person who addresses, you know, things. An African-American woman reminds us that the President has a job to do, so we’ll have to get inspired ourselves. Fade to blue: “It begins with us,” reads the text.

Yes, I understand what Obama is doing. He’s trying to re-capture what made the 2008 campaign work, which was a propulsive sense of “we” – volunteers caught up in the story of Obama and all he could do. And he could get away with the vagueness of “Hope” and “Change” because all he needed to be then was the anti-Bush. And so I hoped: Here was a real intellectual who will not only take the challenges of governing seriously, but who could also stirringly articulate a national vision of coming together to solve hard problems.

Now, as the 2012 campaign season kicks off, Obama is clearly playing it safe. The fundamentals are on his side. The Republican field is weak; the economy is moving back in the right direction; his poll numbers are decent; demographic shifts are expanding his base of supporters. And Obama’s not one to veer from the cautious path. Especially not at this early stage.

But here’s the thing. In 2008, conservatism was discredited. Heck, even McCain wanted to be the candidate of change. In 2011, conservatism is flourishing again, reinvigorated by the Tea Party. And conservatives are telling a compelling about the American spirit, and the way in which it can be regenerated if only we can get rid of that awful greedy leech responsible for everything that’s gone wrong for the last however many years: Big Government. Moreover, the coalition that Obama put together in 2008 looks decidedly weaker now.

Presidential campaigns can be defining moments. There is no other opportunity for a political figure to speak so often and so loudly to the American people about what we stand for as a nation, to define the moment and define the basis for leadership in it. And yet, most incumbent presidents waste this moment, because they just want to play it safe. They figure, I’ll get re-elected, and then, then I’ll finally be free to offer a true vision, to lead this time for real without actually having to worry about re-election.

Except, second terms rarely offer the opportunity for that defining moment. And they especially don’t offer that opportunity if the campaign hasn’t paved the ground for it, hasn’t prepared the public and made the case. As Irving Kristol once put it: “What rules the world is ideas, because ideas define the way reality is perceived.”

I’m sure the Obama campaign people will come up with some wonderful poll-tested cognitive scientist-approved campaign slogan for 2012 and then repeat it ad infinitum. But in doing so, here’s what I ask: please, please don’t squander this opportunity. Please come up with a message and a story that makes an affirmative case for lasting progressive values of pragmatic experimentation and solving hard problems through collective means. Challenge the Tea Party memes. Reclaim history, reclaim the Founders, reclaim the meaning of American Exceptionalism. These are more than just things on the table. They are the way we understand and make sense of present day events.

One Cheer For the Ryan Plan

Posted on by The Progressive Policy Institute

As progressives pounce on Rep. Paul Ryan’s new budget proposal, they should also give the man a little credit. The plan he unveiled today is a daring attempt to define an actual conservative governing philosophy. That’s a big improvement on the reactionary and crotchety anti-government platitudes served up by the Tea Party.

And while progressives will rightly reject Ryan’s overall plan as draconian and unfair, they ought to keep an open mind about some of its most audacious elements, especially his ideas for controlling public health care spending.

For better or worse, the House Budget Committee Chairman has produced a coherent vision for limited government. It would sharply cut domestic spending, returning it to 2008 levels, reduce federal deficits by more than $4 trillion over the next decade, and hold federal spending below 20 percent of gross domestic product. It would further roll back the state and buttress “individual responsibility” by repealing Obamacare.

Ryan embraces President Obama’s Fiscal Commission proposal to cut tax expenditures and use the proceeds to bring the top individual and corporate income tax rate down to 25 percent. But unlike the commission’s approach, which commits a chunk of the savings to deficit reduction, Ryan makes his revenue neutral in obeisance to the Prime Ideological Imperative of today’s GOP: taxes must never, on any account, be raised.

Ryan’s most controversial proposals are also his most intriguing. In what he describes as a continuation of the bipartisan welfare reforms of the 1990s, he would convert Medicaid, which provides health insurance to poor families, into a block grant. Currently its costs are shared by the federal and state governments. As critics like Ezra Klein point out, a block grant is a device to limit federal health spending, shifting costs to states and individuals. It’s true that a block grant alone doesn’t constitute “reform” of Medicaid. But in tandem with reforms in health care delivery, especially efforts to move from fee-for-service to capitated “accountable care organizations,” a block grant could dampen inflationary pressures and protect taxpayers against the automatic and unsustainable growth of public health care spending.

Similarly, Ryan proposes to control Medicare costs by replacing open-ended subsidies with a “premium support” model. Under this approach – essentially a voucher, despite Ryan’s denials – Washington would give Medicare recipients a set amount (varying according to income and health status) they could use to buy insurance from competing private plans. Although Republicans wrongly assume that competition alone will drive down health costs – again, changing incentives to focus medical spending on the value rather than the volume of care is the key — premium support at least puts a governor on the engine of mandatory public health care spending, the main driver of America’s debt crisis.

Some liberals undoubtedly will see it as a plot to destroy Medicare. But recall that a bipartisan Medicare reform commission President Bill Clinton created in 1998 came close to embracing premium support. It’s also been endorsed by leading Democrats, including former CBO chief Alice Rivlin, and is part of the Rivlin-Domenici deficit reduction plan. In fact, as part of a more comprehensive strategy to contain health care costs, a Medicaid block grant and premium support for Medicare could serve a progressive purpose, by preventing rapid entitlement spending growth from squeezing vital public investments in children and families, scientific research, infrastructure and a clean environment.

On Social Security, Rep. Ryan disappointingly punts, proving no bolder than the White House. And as certified fiscal hawk David Walker points out, the Ryan plan does not include substantial savings in defense spending, and raises not a penny in new revenues to help the nation whittle down its enormous debts.

In other words, it’s an unbalanced plan, morally and politically, that gives the Pentagon and the wealthy a pass, and concentrates the pain of deficit reduction on middle and low-income families. The Fiscal Commission’s approach, broadly endorsed by 32 Republican and 32 Democrats Senators – if not yet by Obama himself – is infinitely preferable as a starting point for a serious debate.

Nonetheless, the Ryan plan puts conservatives’ ideological cards on the table and helps clarify the trade offs that must be made to strike a bipartisan deal. And it contains some ideas for ensuring that public budgets aren’t swamped by runaway health costs – ideas that progressives ought not to reject out of hand.