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Balanced Budget Amendment: A Gimmicky Disaster-in-Waiting.

Posted on by The Progressive Policy Institute

By refusing to budge on tax revenues, House Republicans have blown a rare chance to get Democrats to swallow trillions of dollars in federal budget cuts. As New York Times columnist David Brooks notes in a shrewd piece today, cuts of such magnitude would have provoked a rancorous split between President Obama and liberals.

Instead, Republicans have opted for ideological purity, including today’s purely symbolic vote on a balanced budget amendment that isn’t going anywhere.

The Balanced Budget Amendment (BBA) is an almost perfect embodiment of the contemporary GOP’s gimmicky approach to governing. It’s an uncomplicated way to convey toughness, and it allows conservatives to drape themselves in the mantle of fiscal responsibility without taking the heat for cutting specific programs. And like many of the faux solutions to which Republicans seem fatally attracted, it would damage our economy.

A balanced budget amendment would handcuff the federal government in times of emergency. Backers say the rule could be waived during recessions, but it’s never clear until after when recessions begin and end. Since most of the states have balanced budget mandates, only Washington can spend at the right time and on a scale sufficient to exert counter-cyclical pressure during downturns. The federal government’s superior resources and borrowing capacity make it in effect the nation’s fiscal reserve.

Republicans almost rammed through a BBA in 1997. In the years that followed, the Clinton administration produced balanced budgets the old-fashioned way, by cutting actual programs and making trade-offs among competing public priorities.

Nonetheless, House Republicans once again claim that only a Constitutional amendment can force Congress to do its fiscal duty. Their “Cut, Cap and Balance” plan not only would bar budget deficits, but would also limit federal spending to 18% of economic output, two points below the average of the past several decades.

In other words, it would force massively disruptive cuts in all federal spending, from Medicare and Social Security to the Pentagon and domestic programs. Not even Budget Committee Chairman Paul Ryan, the GOP’s uber fiscal hawk, goes this far.

At the same time, the proposed amendment would make it well-nigh impossible to raise taxes, which would require a two-thirds vote in the House and the Senate. It’s a formula for rigidity at best and fiscal paralysis at worst. It would invite judicial interference in a power the Constitution unambiguously delegates to Congress – the power of the purse – and narrow the scope of democratic decision-making.

So why are House Republicans pushing it now? Because they know that, in the end, at least some House Republicans will have to vote to raise the debt limit to avert an economic calamity. They want the political cover of having voted for a “permanent” solution to the debt crisis – the BBA – to shield them from the Tea Party’s wrath.

Senate Democrats of course aren’t about to let Republicans write their economic ideology into the nation’s fundamental law, and President Obama has threatened a veto. Still, it’d be a relief if Republicans could find ways to score political points with their base that don’t injure our economy — either by plunging the nation into default, or enshrining archaic notions of a feeble national government in the U.S. Constitution.

Photo Credit: Common Pixels

What Would Reagan Do?

Posted on by The Progressive Policy Institute

Guess who said this:

“The full consequences of a default – or even the serious prospect of default – by the United States are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and the value of the dollar.”

President Obama? Treasury Secretary Tim Geithner? No, Ronald Reagan, in a 1983 letter to then-Senate Majority Leader Howard Baker. And yet GOP Sen. Jim DeMint called Geithner a “Chicken Little” for issuing an almost identical warning against undermining America’s global creditworthiness.

The Republicans have come a long way since Ronald Reagan occupied the Oval Office – and it’s mostly been downhill.

Winning no prizes for statesmanship is House Majority Leader Eric Cantor, who argues that it’s more important to prevent the government from raising a penny more in tax revenue than to prevent it from going bankrupt and defaulting on its debts. He says Republicans are making a major concession to Obama just by considering his request to raise the debt ceiling.

The Gipper must be rolling in his grave. Unlike Cantor, he didn’t worry that doing his public duty might be construed as a favor to his political opponents. Reagan was no fan of higher taxes either, but he manned up and raised them when that became necessary to corral federal deficits and restore fiscal responsibility.

What would Reagan do today? The best way to answer that is to look at what he actually did do as president.

First, Reagan pushed through the giant 1981 tax cut that marked America’s first misbegotten experiment with supply side economics. Whatever stimulative effect it may have had was soon overwhelmed by Fed Chairman Paul Volker’s decision to raise interest rates to wring inflation out of the economy. America suffered a harrowing recession in 1982, and federal deficits exploded.

Reagan urged the nation to “stay the course,” but on taxes he changed course. In 1982, when unemployment stood at 10.1 percent, he signed the Tax Equity and Fiscal Responsibility Act, which increased taxes by around one percent of GDP. Irate conservatives blamed the baleful influence of Senate Majority Leader Bob Dole. A young GOP backbencher and bombthrower, Newt Gingrich, famously called Dole “the tax collector of the welfare state.”

That was something of a bad rap, however, since Reagan ended up raising taxes a total of 11 times during his presidency. Unlike today’s Republicans, he believed fiscal discipline was more important than supply side theories and he understood that compromise is crucial to advancing national interests. In his second term, Reagan embraced a Democratic proposal to broaden the tax base by closing loopholes, and use the savings to bring rates down. The Tax Reform Act of 1986 simplified the tax code by drastically reducing the number of deductions and the number of tax brackets.

Reagan’s determination to not let deficits get too far out of hand continued under his successor. President George H.W. Bush even broke his “read my lips” pledge in 1990, pushing a deficit reduction package that cut spending by $324 billion and raised revenues by $159 billion over five years. Many conservatives were apoplectic, but Bush’s brave move helped put America on track toward the budget surpluses that President Bill Clinton achieved in the late 1990s.

Tea Party Republicans reject that legacy – even though it led to the balanced budget they are now loudly demanding. As conservative NYT columnist David Brooks wrote recently, that’s a radical departure from the party’s tradition of fiscal rectitude as well as the political give and take that makes democratic politics work.

It’s also repudiation of Reagan, the man conservatives love to venerate and name airports after but, as it turns out, honor in the breach when it comes to protecting the full faith and credit of the United States.

Photo Credit: Brett Tatman

Will Cantor Blow Up the Economy?

Posted on by The Progressive Policy Institute

The stock market plunged over 150 points yesterday as Republicans hardened their stance in debt reduction talks with the White House. The sharp drop was a timely reminder that a political failure to raise the debt ceiling would be a body blow to America’s already weak economy.

The odds of that happening rose sharply this weekend, as House Speaker John Boehner broke off talks with President Obama because he couldn’t get Republicans to support a fiscal “grand bargain” that would include higher tax revenues. That puts Majority Leader Eric Cantor in charge of GOP negotiating strategy — and on the spot.

Unlike Boehner, who seems to have the quaint idea that voters sent him to Washington to solve problems, Cantor is a faithful medium for channeling the Tea Party’s anti-Washington wrath. Rather than prepare his troops for the compromises and shared sacrifices that reducing America’s debts inevitably will entail, he’s been a zealous enforcer of the GOP’s “zero tolerance” dogma on taxes.

Cantor says Republicans can live with closing tax loopholes, as long as every penny saved goes into lowering tax rates. Meanwhile, most House Republicans last week opposed even modest efforts to trim defense spending. So here in essence is Cantor’s generous offer to President Obama and the Democrats: You agree to cut domestic programs by about $2 trillion now and we’ll vote to raise the debt ceiling by that amount. Oh, and after that, we’ll start whacking entitlement programs.

What a deal! Since no self-respecting Democrat would ever bargain on such one-sided terms, it’s hard to avoid the conclusion that House Republicans actually want to plunge the nation into a new economic crisis. Do they really hate taxes – or Obama – that much? Or maybe in their revolutionary fervor the Tea Party patriots have unwittingly internalized the old Bolshevic slogan: “the worse, the better.”

In any case, the public seems to be in no mood for a politically manufactured crisis on top of the steady drumbeat of bad economic news — and Obama has deftly set up Republicans to take the political fall.

In contrast to the GOP’s truculence on taxes, the president has appeared reasonable, flexible and persistent in trying to get Republicans to “yes.” To the chagrin of many Democrats, he’s offered to cut $3 in federal spending for every $1 in new revenue. Obama is receptive to the idea of lowering tax rates, as long as some revenue is left over for cutting deficits, and last week even gave liberals chilblains by offering to put entitlement reform on the table.

In slapping away the President’s outstretched hand, the GOP seems to be in the grip of not one but two mass delusions.

The first is that Americans are groaning under crushing tax burdens that would make Pharaoh blush. But the federal tax take has sunk to just 15 percent of GDP, far below its usual average of 19 percent.

The second delusion is that failing to raise the debt ceiling might have no repercussions. On Fox News Sunday, Sen. Jim DeMint accused Treasury Secretary Tim Geithner of trying to scare Republicans into making a bad deal. “Secretary Geithner has been irresponsible. He’s playing Chicken Little here. The fact is that we will pay our debts if it’s the last dollar we have… We’re not going to default.”

DeMint’s logic apparently is this: Since tax revenues are sufficient to cover about 55-60 percent of what Washington spends, there will be plenty of money to pay our foreign creditors. There just won’t be nearly enough to finance federal programs but, who’ll miss them? One possible answer: Social Security recipients, whose checks are supposed to be mailed Aug. 3. Others include military personnel, federal employees, and all those families hoping to visit National Parks during their summer vacation.

When the public backlash comes, Republicans won’t be able to say they weren’t warned. Geithner broke it down clearly this weekend on NBC’s Meet the Press:

“Remember…we have to borrow now 40 cents for every dollar we spend…And every week starting the week of August 2, we have to go out and finance roughly $100 billion in maturing obligations of the government. We make 80 million checks a month to Americans, 55 million people on Social Security benefits, millions more Americans on veterans’ benefits, Medicare, Medicaid, people who supply our troops in combat. Eighty million checks a month.”

The imponderable here is the markets’ reaction to a failure to lift the debt ceiling. There’s a serious risk of higher interest rates, plunging confidence in the dollar and an even deeper freeze on job-creating investments in the U.S. economy.

Eric Cantor imagines the public is behind him on taxes. More likely, he’s saddling up to lead a fiscal reprisal of Picketts’ Charge.

Photo Credit: Republican Conference

Michael Mandel Featured in the Baltimore Sun

Posted on by The Progressive Policy Institute

The thoughts of PPI’s Chief Economic Strategist Michael Mandel were highlighted in Baltimore Sun Columnist Jay Hancock’s recent piece on research and development investment.

“Two years ago Michael Mandel, then chief economist for Business Week magazine, wrote a cover story titled “The Failed Promise of Innovation in the U.S.” The piece blamed the lack of technology breakthroughs over the last decade as a factor in the 2008 financial collapse.

I asked Mandel, now chief economic strategist for the Progressive Policy Institute in Washington, whether the problem is getting worse.”

Read the full article here and check out Mandel’s recent brief on the FDA and innovation.

Wingnut Watch: Cut, Cap, and Pledge

Posted on by The Progressive Policy Institute

As negotiations in Washington over a prospective debt limit increase stall and sputter, the process is not exactly getting an assist from Republican presidential candidates. With the exception of Mitt Romney and Jon Huntsman, the field is joining conservative activists demanding that congressional GOPers hold the line against any revenue increases as part of a solution in favor of huge domestic spending cuts. Romney hedged his bets by signing onto the notorious “cut, cap and balance” pledge to oppose any debt limit increase not associated with big immediate spending cuts, a permanent limitation of federal spending to a fixed (and much lower) percentage of GDP, and a balanced budget constitutional amendment with a supermajority requirement for tax increases. Using his pledge signature as cover, the former governor is refusing to comment on the specifics of negotiations.

On the other hand Michele Bachmann, who is surging in Iowa and other states, and has earned some grief for (so far) failing to sign the CCB pledge, is settling into her own hard line of unconditionally opposing any debt limit increase (a demand for spending cuts large enough to obviate the need for an increase in the limit). As we get closer to the first real event of the 2012 presidential cycle, the August 13 Iowa State GOP Straw Poll, you can expect the candidates competing there — Bachmann, Pawlenty, Cain and Paul — to get more emphatically shrill about prospects for a “betrayal” of conservatives by their purported leaders in Congress.

While Bachmann has run some risks by declining to sign the CCB pledge (especially the displeasure of South Carolina Sen. Jim DeMint, one of its most prominent sponsors), she wasted no time signing onto a very different and more controversial “pledge”: the “Marriage Vow” released last week by the Iowa social conservative group known as The FAMiLY LEADER. The “Vow” contains a host of radical “pro-family” commitments, from standard right-wing fare like total opposition to same-sex unions to more exotic positions such as tougher divorce laws, opposition to women serving in combat, a national effort to wipe out porn, and natalist support for “robust” child-bearing. The pledge also includes a preamble with even more controversial propositions like the claim that African-Americans under slavery had a stronger family structure than they do today, and arguments that it’s “anti-scientific” to believe there is a genetic basis for homosexuality.

The language about slavery set off a firestorm, which made The FAMiLY LEADER scramble to make revisions, and gave candidates other than Bachmann and Rick Santorum (another early signatory) a good excuse to hold off on taking the “Wedding Vow.” What makes the situation difficult for candidates is that the promulgator of the pledge, FAMiLY LEADER President Bob Vander Plaats, is a big wheel in Iowa GOP politics (he was co-chair of Mike Huckabee’s 2008 Iowa campaign, and leader of the successful 2010 effort to recall three judges who supported the state Supreme Court’s 2009 decision legalizing same-sex marriages). Bachmann and Tim Pawlenty (who hasn’t taken a position on the pledge) particularly lust for Vander Plaats’ support, or at least his neutrality.

Meanwhile, in the broader context of the Iowa battle, a new poll of likely caucus-goers from The Iowa Republican site confirms Michele Bachmann’s surge in the state, showing her moving ahead of Mitt Romney (whom she narrowly trailed in a recent Des Moines Register poll) by a 25 to 21 percent margin. The poll also had some much-needed good news for T-Paw after his sixth-place showing in the Register survey: TIR has him inching past Herman Cain into third place with an anemic but still better-than-usual 9 percent. Moreover, the poll gave both Bachmann and Pawlenty significantly better favorable-unfavorable ratings than Romney, who has a barely visible Iowa campaign and is not competing in the August 13 Straw Poll. Interestingly enough, the survey showed Bachmann doing well with all ideological subgroups in the Iowa GOP (perhaps due to her mostly autobiographical ads and speeches so far)– a situation that greater scrutiny of her platform and background may not sustain. If T-Paw is able to parlay his strong organization into at least a second-place finish in Ames, he has some reason to hope he could catch Bachmann by the time of the Caucuses as voters learn more about her long association with extremist causes.

On a more immediate note, voters in southern California are going to the polls today in a special election to choose a successor to retired Congresswoman Jane Harman. In this solidly Democratic district, the favorite all along has been Los Angeles City Councilwoman Janice Hahn, who enjoys strong labor and party-establishment backing. But wealthy Tea Party Republican Craig Huey, who upset Democratic Secretary of State Deborah Bowen for a runoff spot in a May special election primary, has been running surprisingly well against Hahn in polls and in estimates of early voting. Hahn will probably still win. But in a very low-turnout scenario, an upset is possible, which would neutralize the Democratic optimism generated by a victory in a recent special congressional election in New York, and also perhaps indirectly validate a sexually and racially loaded web ad run by “independent” conservatives against Hahn widely viewed as the most offensive political ad since, well, forever.

Photo Credit: TalkMediaNews

The Price of Civility

Posted on by The Progressive Policy Institute

Recently released polls have shown disappointing returns for Republican presidential candidate Jon Huntsman, whose percentage of the vote has hovered around 3 percent since early May, and received no noticeable bump from his June 21 campaign announcement. It gets worse: Only 42 percent of Republicans actually know of Huntsman, 20 percent less than the average candidate. Huntsman’s poll number plateau lends credence to Washington Post Columnist Dana Milbank’s view that Huntsman and his amicable approach were doomed on arrival.

In a “normal” presidential cycle, Huntsman should be polling much better. His ability to test the president in an area of strength, foreign policy, and position as the most moderate candidate should resonate with a larger niche of independent voters allowed to participate in early state primaries like New Hampshire. But campaigning on the moral high road in this Republican Party nomination contest may come with a hefty toll.

Huntsman is mired support levels similar to Newt Gingrich, and has one of the lowest positive intensity scores (the percent strongly favorable minus the percent strongly unfavorable and gage of the “intensity of support among a candidate’s base of followers.”) out of any of the candidates at (+2). The positive intensity score is critical to building up a volunteer base that is eager to engage in critical but mechanical activities like phone banking, and fight harder at early manpower-driven campaign events like the Iowa caucuses.

Herman Cain, who is more in line with the Republican base, has similar recognition levels but higher intensity numbers at (+25). Cain’s fiery rhetoric, not just his policy, drives his positive intensity levels. Herman Cain‘s bombastic language underscores his policy, and reinforces his firebrand image and in-line with the base policies. Huntsman’s politeness pledge lacks the wherewithal to aggressively contrast his positions with the other contenders, coming off as bland and out-of-synch with the Republicans.

Civil campaigns have a three-part cycle: an initial surplus of press, followed by a drastic drop-off of publicity, ending with the candidate languishing in obscurity. The initial glut of press at the onset of their campaign seems like a severance package to compensate candidates for the minimum attention they receive after the initial surge.

Beyond reducing visibility, limited press also restricts a candidate’s number of defining moments. Each moment carries more weight in marking a candidate’s personality – Huntsman’s desire for civility has labeled him boring and uninteresting. Furthermore, the nature of a campaign drives the media’s branding. Huntsman’s tough-guy motorcycle doesn’t help shake his nice guy image and all the connotations and lack of attention such monikers bring. Here’s a striking figure: only five percent of the 42 percent Republicans that know of Huntsman support his candidacy strongly. That’s just 2 percent of all Republican voters overall. Rising above the fray in politics is an honorable notion, but like most things, it comes with a price.

Huntsman’s low recognition is a by-product of his polite campaign. Conflict drives newspapers and the press drives identification. Politeness just doesn’t generate any headlines.

Photo Credit: David Keller

Will Marshall Tackles Democrat Entitlement Anger in Politico’s Arena

Posted on by The Progressive Policy Institute

PPI President Will Marshall today discussed the “Hill Democrats Entitlement Mentality” in a post for Politico’s Arena today.

“House liberals, on the other hand, want to use “protecting Medicare” as a cudgel against GOP opponents in next year’s elections. That’s understandable, but can Democrats really afford to torpedo prospects for long-term debt reduction to win a few marginal House districts?”

Read the full post here.

NEA vs. TFA

Posted on by The Progressive Policy Institute

Simmering tensions between the nation’s largest teachers’ union and a highly acclaimed national service program boiled over this week. The National Education Association vowed to “publicly oppose Teach for America (TFA) contracts when they are used in Districts where there is no teacher shortage or when Districts use TFA agreements to reduce teacher costs, silence union voices, or as a vehicle to bust unions.”

Teach for America is a nonprofit organization that recruits graduates from leading universities to teach for two years in some of the nation’s most impoverished school districts. Study after study shows that TFA’s dedicated teachers are effective in lifting achievement levels among the poor and minority students they serve. Why would the NEA want to deprive our neediest kids of good teachers?

NEA member Marianne Bratsanos of Washington, who proposed the anti-TFA resolution, complained that the volunteer group undermines schools of education and accepts money from foundations and other funders who are hostile to unions. The key complaint, however, seems to be that TFA volunteers are displacing more experienced teachers, even in districts with no teacher shortages.

Full disclosure: I’m a TFA alum. You may discount my views accordingly, but the NEA’s indictment is very far from the reality I encountered on the ground teaching Language Arts to inner city kids in Charlotte, N.C.

TFA corps members fill vacancies in schools that many teachers want to avoid, or that are saddled with the least-skilled and effective teachers. Believe me, we don’t take jobs from good teachers who are making gains in student achievement. And it’s hard to see how TFA undermines schools of education. In fact, Teach for America has formed many successful partnerships with colleges of education to help train their recruits and provide ongoing development. TFA’s success in molding volunteers who bypass traditional education schools into good teachers may raise troublesome questions about the relevance and effectiveness of those schools, but whose fault is that?

Though green when I entered Teach for America in 2007, I quickly honed the requisite skills through classroom preparation, student teaching, and one-on-one time with my support staff. The first few months of actual teaching were difficult to say the least, but with the support and continuous development I received from TFA, my students demonstrated significant progress by the end of the year.

TFA isn’t anti-union, it’s pro-student. Its mission is to ensure that all children have a chance for an excellent education. It exists because there is a dearth of highly qualified and effective teachers in America’s poorest communities.

TFA members serve the lowest performing schools in 39 urban and rural regions. Teachers, known as corps members, commit to teach for two years to help end educational inequality. Applicants go through a rigorous application period, where approximately twelve percent of applicants are selected and around 4,500 first year teachers accept. Corps members begin their journey with five weeks of intensive training and are supervised by experienced teachers and support staff. TFA members are then provided with ongoing professional development and one-on-one support throughout their two years as teachers.

The Teaching as Leadership Model that Teach for America employs is different than the traditional training model used by many schools of education. Though many union members argue that the summer leadership institute is not the best way to insure excellent teaching, the proof is in the pudding.

In a 2010 study, Gary Henry and Charles Thompson found that TFA members had a greater impact on student success than teachers who graduated from a traditional school of education. A 2008 Urban Institute study likewise found that TFA teachers were more effective than other teachers in similar settings, including more experienced teachers and those certified in their field. Similarly, a NYC study concluded that TFA members were more effective in improving math and reading scores than those traditionally certified.

The RAND Institute has found that a five-year increase in teaching experience improved student achievement very little – less than one percentage point. Likewise, the level of education and the licensure scores held by a teacher had no effect on student achievement. Additionally, research has shown that corps members’ impact exceeds that of experienced and certified teachers in the same schools.

Policy Studies Associates, Inc. recently published a report that may explain why the NEA is kicking up such a fuss about Teach for America. “Ninety-five percent of the principals rated corps members as effective as other beginning teachers in terms of overall performance and impact on student achievement; sixty-six percent rated corps members as more effective than other beginning teachers, ninety-one percent of the principals reported that corps members’ training is at least as good as the training of other beginning teachers, sixty-three percent rated corps members’ training as better than that of other beginning teachers, and eighty-seven percent of the principals said they would hire a corps member again.”

In light of such evidence, it’s hard to avoid the conclusion that what really rankles the NEA is competition, and worse, being shown up by the competition. Instead of trying to crush the competition, teachers’ unions ought to learn from it.

Here’s a thought for the NEA: why not work with Teach for America to develop ways to attract more talented college grads to teaching, and for that matter, encourage some of TFA’s two-year volunteers to go pro?

Photo Credit: Tulane Publications

Policy Brief: The Risks of Over-Regulating End-User Derivatives

Posted on by The Progressive Policy Institute

The passage of the Dodd-Frank Act was a historic effort in the wake of the 2008 financial crisis to modernize and tighten federal oversight of the nation’s financial services sector.

Among these reforms were a variety of much-needed new rules to bring more transparency and accountability to the derivatives industry. The new law, for example, provides regulators with more power to regulate the over-the-counter (“OTC”) derivatives market, requires more derivatives to be traded on exchanges rather than in private transactions, and requires data collection to improve market transparency.

As sweeping as it is, this new regulatory framework for the derivatives industry is more a framework than a detailed set of rules, and there are many blanks for regulators to fill. As a consequence, policymakers must still be wary of unintended consequences as they implement the law.

A particular example deserving of this special attention is the pending regulations of so-called “end users” in the OTC derivatives market. No one doubts that the abuse of some forms of exotic derivatives contributed to the systemic risk that led to the 2008 crisis. But derivatives are an important tool used by major American manufacturing and service companies (“end users”) to manage and protect against risks—not create them. These derivatives contribute little—if anything—to systemic risk.

Read the entire policy brief.

Wingnut Watch: The Perry Proposition

Posted on by The Progressive Policy Institute

The “invisible primary” of Republican presidential candidates positioning themselves to become the Wingnut alternative to Mitt Romney is now getting close to its first major landmarks: the “closing of the field” when Republicans stop fantasizing about late entries who will shake up the race, and the August 13 Iowa State GOP straw poll, which will likely end the campaigns of poorly financed also-rans who can’t show significant grassroots support in Iowa or other early states.

Although bored pundits will probably continue to offer implausible scenarios for late candidacies by Chris Christie or Jeb Bush right on through the autumn, the only real mystery left is whether Texas Gov. Rick Perry will enter the race. He will reportedly decide for or against by the end of this month.

Meanwhile, several campaigns are holding on by a thread, and will probably be liquidated (or reduced to a platform from which the candidates can make free debate appearances to sell their books or keep their names in the public eye) after the straw poll. The most obvious casualty of earlier events is Newt Gingrich, who never had much of a chance at the nomination even before a series of missteps chased off most of his staff. Rick Santorum’s all-abortion all-the-time candidacy hasn’t gone anywhere. Herman Cain is the candidate most likely to be “winnowed” in Ames. His earlier surge in support in the early states has subsided to a considerable extent. More importantly, his languorous campaign pace, reminiscent of 2008 candidate Fred Thompson, has frustrated his staff and supporters; in just the last couple of weeks, he’s lost his top staffers in both New Hampshire and Iowa. In the latter state, that couldn’t come at a worse time, when he needs the organizational heft to convert the cheers he generates with his stock speech into tangible support in the straw poll. His second quarter fundraising numbers, showing he raised just under $2.5 million, didn’t impress anybody.

The candidate most desperately in need of a strong showing in Ames is Tim Pawlenty, who continues to struggle in the polls and whose reported $4.2 million second-quarter haul was even less impressive than Cain’s, given T-Paw’s heavy expenses in Iowa. Anything other than a first or strong second-place finish in the straw poll could kill off Pawlenty entirely, eliminate the prospects of a “consensus” candidate who appeals equally to all of the GOP’s conservative factions, and set up a potentially protracted and divisive nomination contest between Romney and either Michele Bachmann or (if he runs) Rick Perry.

While a Perry candidacy excites a lot of observers, it remains a debatable proposition. Yes, on paper he looks formidable. He’s a candidate equally rooted in the Tea Party Movement and the Christian Right. He’s got a great economic “story” to tell, dubious as his claims really are to have generated Texas’ impressive (if generally low-wage) record of recent job growth. He’s considered good-looking by those who like the rugged Marlboro Man stereotype of masculinity. He’s a good stump speaker who enjoys campaigning far more than governing, and has no moral compunctions about serving up big platters of the rawest red meat. And he’s a proven fundraiser who has the important Republican Governors Association rolodex in his pocket.

On the other hand, a PPP poll just last week showed Perry losing a hypothetical general election contest to Barack Obama in his home state of Texas, performing worse than Michele Bachmann, Tim Pawlenty or Herman Cain (and far worse than Mitt Romney). This sign that Perry has clay of feet in his cowboy boots could be a real problem, particularly if his message depicts him as the economic savior of the Lone Star State, whose residents would normally be expected to toss rose petals in his path to the White House.

Perry also has a timing problem. If he is to compete in the Iowa straw poll, he can’t delay his candidacy much longer. But announcing a campaign this month would significantly undermine the legitimacy of his much-ballyhooed August 6 prayer rally in Houston, dubbed “The Response,” which is reportedly intended to usher in a convergence of Christian Right support for a Perry candidacy. Getting in after Ames could be risky, since it could enable Michele Bachmann to become the celebrity national candidate of precisely the Tea Party/social conservative coalition that Perry would offer to lead.

Meanwhile, Bachmann is riding pretty high at the moment, though her own second-quarter fundraising numbers have yet to be revealed. She has a reputation as a champion fundraiser (she holds the all-time record for cup-rattling in a House race, having pulled in an astonishing $13 million for her 2010 re-election contest). Whatever she’s raised, it is unlikely to match Mitt Romney’s reported haul of just under $20 million. But it will almost certainly be more than her fellow Minnesotan T-Paw, who is presently struggling to get some right-wing leverage from association with their state’s current government shutdown.

All in all, the dynamics of the contest continue to pull the field even further to the Right, as Bachmann, Pawlenty and potentially Perry battle to become the anti-Romney in an atmosphere of partisan meta-conflict in Washington over the debt limit. The two dynamics, moreover, may be reinforcing each other: six candidates, including Romney and T-Paw, have now signed the maximalist “cut, cap and balance pledge” rejecting any debt limit increase that is not accompanied by deep cuts in domestic spending (without revenue measures), a cap on federal spending linked to a low percentage of GDP, and a balanced budget constitutional amendment that includes a super-majority requirement for tax increases. Bachmann is actually trying to outflank cut-cap-balance candidates on the right by demanding repeal of “ObamaCare” as a precondition for a debt limit increase. As we approach white-knuckle time in the shaping of the 2012 field, the GOP is spending little time worrying about how poorly it may be positioning itself to face Barack Obama.

Photo Credit: Iowa Politics

New CBO Report Highlights Republican Intransigence

Posted on by The Progressive Policy Institute

Last week, President Obama vented his frustration at Congressional Republicans for storming out of White House budget talks over raising the debt ceiling. Anyone who thinks the president overreacted should look to the Congressional Budget Office’s (CBO) latest budget forecast, which warns that the national debt is poised to spiral out of control.

Released on the same day GOP negotiators abandoned their post at the budget talks, CBO’s “Long-Term Budget Outlook” predicted that the debt will reach 100 percent of GDP in less than a decade, then zoom to twice the size of the U.S. economy by 2037. In other words, we are moving inexorably toward the unsustainable level of debt (about 150 percent of GDP) that has plunged Greece into crisis.

CBO’s grim forecast, said the fiscal hawks at the Committee for a Responsible Federal Budget, “should erase any thoughts of waiting until after the election – or worse, until markets force our hand – to make the needed changes to our budget.” Such warnings, however, have fallen on deaf ears among Republicans, who refuse to even talk about debt reduction if it includes tax hikes.

GOP intransigence boosts the odds that Congress will fail to raise the debt ceiling by the August 2 deadline set by U.S. Treasury Secretary Timothy Geithner. If that happens, the federal government would have to cut government programs drastically, or else risk defaulting debts to foreign creditors — “the first-ever failure by the United States to meet its commitments,” notes Geithner.

But even if the White House and House Republicans somehow strike a deal over the debt ceiling, the larger challenge of closing America’s enormous fiscal gap will remain. Before the Republicans quit the talks, the goal was to cut the debt by as much as $2 trillion over the next decade. The president’s Fiscal Commission, however, concluded that we need to close the gap by closer to $4 trillion. There’s no politically responsible or feasible way to get to that number by cutting government spending alone; that’s why tax revenues have to be on the table.

So do entitlements. The CBO report makes clear that we need a comprehensive deficit reduction plan that not only stabilizes and reduces the debt over the medium term, but also grapples with long-run spending on healthcare and Social Security. The CBO projects that by 2035, health care spending under both the baseline and alternative scenarios will grow 5.1 to 9.2 percent and 8.5 percent of GDP respectively. Similarly, the CBO expects Social Security to grow to from 4.8 to 6.1 percent of GDP under both scenarios.

President Obama is right: With the deadline for raising the debt limit only a month away, it’s time for an outbreak of fiscal sobriety in Washington. In truth, there is neither time nor political will to forge a comprehensive solution to America’s exploding debts before August 2. But lawmakers could put together a reasonable down payment that would include temperate cuts in domestic and defense spending; more tax revenues from closing backdoor spending through the tax code, such as oil and gas subsidies; and adoption of the “chained CPI” something I wrote about earlier, would lower spending growth on big entitlements like Social security, Medicare and Medicaid.

Either way, the debt ceiling must be raised, and a grand bargain on deficit reduction must be struck. So President Obama is right to reject the invitation from Senate Minority Leader Mitch McConnell to come hear Hill Republicans rehearse their undying opposition to raising taxes. We’re in the fiscal red zone now, and the time for posturing is behind us.

Photo Credit: Gage Skidmore

Will Marshall Featured in the Washington Examiner

Posted on by The Progressive Policy Institute

President of the Progressive Policy Institute Will Marshall was quoted in a weekend article of the Washington Examiner discussing possible Democratic reaction to a debt ceiling deal.

“The president’s display of exasperation was very revealing,” said Will Marshall, president of the Progressive Policy Institute. “He feels like he’s already made concessions and he was met with utter intransigence. I don’t think he’s personally inclined — or has the political space — to make more.”

Read the full article here.

Campaign Finance Reformers Take Heart

Posted on by The Progressive Policy Institute

Being a campaign finance reformer in the era of Citizens United is good for job security and bad for one’s sense of personal achievement. Most people agree that the need for sweeping reform is greater than ever and most people fear that it’s harder than ever to achieve. “Most people” are right.

And as if Congress and the President were not a tough enough audience already in the era of billion-dollar, incumbent-dominated campaigns, the Supreme Court, by a narrow majority, has repeatedly shown an activist zeal for striking down hard-won reforms of the past. All that’s not to mention the perpetual partisan deadlock at the onetime election law watchdog, the FEC.

Which is why a week of back-to-back victories for campaign finance reform, however modest, is a step worth marking on the long road back to democratic accountability in America. In a pair of decisions each at the Supreme Court and FEC this week, existing campaign reforms were reaffirmed and a pathway to more comprehensive reforms in future was acknowledged by the Court.

First, in a long-awaited Supreme Court decision Monday on public funding, a 5-4 majority struck down a narrow provision of Arizona’s landmark Clean Elections law, which the “triggered” matching funds to publicly funded candidates who are outspent by private money. On the surface, this may seem like a defeat, but — crucially — the Court’s ruling left unquestioned the constitutionality of public funding writ large. In fact, Chief Justice Roberts, in his majority opinion, even went out of his way to say that nothing in the narrow decision should be interpreted as foreclosing public funding.

While the majority’s wrongheaded decision in the Arizona case will cause some consternation for reformers in that state, simple fixes to the “trigger” provision are available and more than a dozen other public funding states and municipalities remain uneffected. More important still, the push for public funding of federal elections is, if anything, bolstered by the Court’s conclusion that reforms cherishing and expanding free speech–rather than more incremental, limits-based reforms–is the clear path forward.

In a second fortuitous act this week, the Supreme Court denied cert in a separate public funding challenge to Connecticut’s model Citizens Election Program. In refusing to take the case, the high court cemented a lower court ruling upholding the constitutionality of a system that has seen three-quarters of state legislators and all statewide officials elected without accepting a dime in special interest money.

Downtown at the FEC, a pair of decisions on Thursday provided surprising reinforcement to existing campaign finance regulations. First, in a rare unanimous decision, the three Republican and three Democratic Commissioners denied a request from the new crop of partisan “Super PACs” to allow political candidates to raise unlimited funds on behalf of such entities, which are supposed to remain independent of federal candidates under existing law. The decision averted a major new loophole in the McCain-Feingold ban on solicitation of unlimited soft money by candidates and officeholders on behalf of the parties. While far from sufficient to stem the tide of unlimited corporate and union “independent” spending in elections, the decision amounts to an unusual show of respect for existing law from an otherwise impotent and highly partisan FEC.

Finally, in a second rare show of bipartisan agreement, the FEC granted comedian Stephen Colbert a narrow media exemption in response to his high-profile request, allowing him to promote his Super PAC only on his show. The decision averts a major potential loophole, whereby media corporations could have granted unlimited in-kind support to politician-pundits who appear regularly on the air. Instead, it upholds the century-old ban on direct corporate contributions to candidate campaigns.

To be sure, campaign finance reform will not be won through occasional concessions at the Supreme Court or the FEC. It will take a movement of the American people demanding change from Congress. But when those bodies which interpret and enforce the law are respectful of its meaning and intent, and mindful of the directions it must take, patriots and reformers take heart.

Photo Credit: thelastminute

The Drop Out Crisis and Teen Pregnancy

Posted on by The Progressive Policy Institute

Graduation season is upon us, but the approximately 1.3 million high school students who dropped out this year won’t be hearing “Pomp and Circumstance.” These dropouts are disproportionately black and Hispanic, and overwhelmingly poor. Since failing to finish school contributes mightily to poverty and inequality in America, increasing high school graduation rates should be an urgent national priority.

Why do so many poor kids drop out? Some dwell on low expectations and a lack of motivation among kids who struggle to learn, get frustrated and eventually give up. But lately researchers have drawn attention to an under-appreciated reason that students drop out: pregnancy. Among dropouts, 30 percent of girls cite pregnancy or parenthood as a key reason they left school. According to the National Campaign to Prevent Teen and Unplanned Pregnancy, only 51 percent of teen moms earn a high school diploma compared to 89 percent of female students who did not give birth as a teen. The picture is even worse for the youngest mothers: just 38 percent of teen girls who have a child before they turn 18 have a high school diploma. For these teens, the task of balancing their education and a baby proved impossible.

Focusing on curbing the teen pregnancy problem will most certainly put a dent in the number of school dropouts. While teen pregnancy often causes students to drop out, being engaged in school can reduce instances of teen pregnancy. Teens who stay in school and are academically involved are less likely to get pregnant than their peers who aren’t as engaged. In other words, dropping out also increases the chances that a teen will get pregnant.

Unplanned pregnancy and childbearing are also implicated in the failure of many young women to finish their college education. Research shows that 61 percent of women who have children in community college don’t finish their degree, and less than two percent of teen mothers who have a baby before age 18 get a college degree by age 30.

The nexus between getting pregnant and dropping out adds yet another example to the dismal catalog of social ills that stem from family breakdown and too-early childbearing. Within three years of having a child, about one-quarter of teen moms go on welfare. Children of teen mothers are more likely to suffer abuse, end up in prison, and drop out of high school. High school dropouts are also more likely to rely on welfare and have higher crime and incarceration rates.

While teen birth rates in the United States plummeted by 37 percent between 1991 and 2009, the dramatic decrease may have fed a premature sense of complacency about the issue. There was actually an uptick of teen pregnancies between 2005 and 2007, when the rate rose five percent. In any case, the teen pregnancy epidemic is far from over. In 2009, about 410,000 teen girls aged 15 to 19 gave birth with the majority being Hispanic or African-American. What’s more, America’s teen pregnancy rate is up to nine times higher than that of most developed nations.

Now some social analysts worry that funding for teen pregnancy prevention will be a casualty of budget-cutting fever in Washington. An especially frightening proposition given that teen pregnancy prevention is already dealing with a short stack. In 2010, Congress appropriated $110 million for evidence-based teen pregnancy prevention programs. Meanwhile, the U.S. spends, nationally, nearly $11 billion each year to remediate the social consequences of teen pregnancy.

Yet House Republicans tried to eliminate this modest $110 million investment for FY 2011.They also tried to cut funding entirely for Title X, which is instrumental in helping provide teens and low income women with contraceptives and reducing the number of unintended pregnancies, teen pregnancies, and abortions. If Republicans are really serious about reducing the deficit, they need to realize that investing in teen pregnancy prevention saves money over time and resist cutting this funding. Because of the overall decrease in teen pregnancy rates, taxpayers saved $8.4 billion in 2008 alone.

The school dropout crisis isn’t cheap either — if graduation rates don’t improve, dropouts will cost us $3 trillion over the next decade. Cutting funding for teen pregnancy prevention means more dropouts, which means losses in tax revenue and more spending on welfare, prison costs, and Medicaid, to name a few.

Progressives ought to “just say no” to GOP efforts to balance the budget on the backs of America’s most vulnerable families. In fact, we’ll save money over the long run by investing more in cost-effective teen pregnancy programs. The National Campaign to Prevent Teen and Unplanned Pregnancy has a list of such successful prevention programs here. Investing in them will pay double dividends, reducing both teen pregnancy and mitigating its related ills – including the drop out crisis.