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Obama Endorses Innovation as Regulatory Principle

Posted on by The Progressive Policy Institute

Today President Obama took a big step towards improving the federal regulatory process. In particular, he came out with an executive order that addresses two of my big concerns: The cumulative effect of regulations, and bringing innovation as a key goal in the regulatory process.

Sec. 3.  Integration and Innovation.  Some sectors and industries face a significant number of regulatory requirements, some of which may be redundant, inconsistent, or overlapping.  Greater coordination across agencies could reduce these requirements, thus reducing costs and simplifying and harmonizing rules.  In developing regulatory actions and identifying appropriate approaches, each agency shall attempt to promote such coordination, simplification, and harmonization.  Each agency shall also seek to identify, as appropriate, means to achieve regulatory goals that are designed to promote innovation.

This is very important.  Up to this point, innovation has just not been part of the regulatory assessment process at all. Similarly, the cumulative impact of regulation has not been taken into account at all. I applaud the Obama Administration for this change.

However, the Obama initiative doesn’t go far enough to set out the principle of countercyclical regulatory policy–that is, stressing the importance of encouraging  growing and innovating industries during this period of economic weakness, and only regulating if necessary.

In addition, at the Progressive Policy Institute, we’ve been working on a proposal for  a Regulatory Improvement Commission. The RIC,  modeled on the BRAC commission, will provide a transparent and systematic process for identifying regulations that can be improved or pruned, while  maintaining important social values. Stay tuned.

This piece is cross-posted at Mandel on Innovation and Growth

What’s Next For Climate Change Policy?

Posted on by The Progressive Policy Institute

The new Congress is now in session, with a large GOP majority in the House and a much diminished Democratic majority in the Senate; the prospects for serious climate change legislation in the U.S. are dimmer than ever. The Republican Party has largely turned its back on science and its own conservative ideas (remember, McCain was a champion of cap and trade back in 2008), and because of the profound climate denialism of the Tea Party movement even once reasonable Republicans are now turning their backs on the overwhelming scientific evidence, and the many ways comprehensive climate policy is good for the overall economic and security interests of the nation. (To be fair, there are a few Democrats in fossil-fuel dependent states that are also opposing new climate measures, such as Senators Rockefeller and Manchin of West Virginia.)

But not all is bleak; there are still a number of reasons to be mildly optimistic that significant progress can still be made in the run-up to the 2012 elections.

  1. The EPA is set to roll out new regulations on greenhouse gas emissions from power plants, which have the potential to reduce greenhouse gas emissions from the power sector by a few percentage points over the next few years. The rules will make coal generation less economically viable, and likely spur new development in less greenhouse gas-intensive sources, such as natural gas, in addition to renewable sources. I highly recommend the work by David Roberts at Grist for details on the EPA’s actions and their consequences. On January 13th the EPA revoked the permit for a massive mountain-top removal coal plant (which had been approved by the Bush Administration in 2007), signaling that the agency is prepared to put an end to the industry’s controversial practice.
  2. The Obama Administration has given the okay for a host of huge new solar plants on federal lands and gone a long way to streamlining the process by which such plants can be built. By reducing bureaucratic hurdles and red tape for large solar installations, we are likely to witness a large increase in mega-solar plants. Aside from the higher cost of solar (relative to fossil fuel), the biggest hurdle to widespread adoption has been the huge time lags and transaction costs in the permitting process; the Administration’s moves go a long way towards decreasing these barriers. The economies of scale of these plants will likely lead to significant cost reductions, making solar much more competitive in the near future. It’s important to note that these solar plants mostly rely on solar thermal technology―an 18th century technology using mirrors to heat water and produce steam, which powers a turbine―that is fast-becoming the low-cost solar alternative.
  3. The announcement by Google that it will invest $5 billion in a massive electricity transmission line in the Atlantic will help spur the development of massive wind farms off the Eastern seaboard. These hold tremendous potential and could one day provide most or all of the power for many of the East Coast’s major cities.
  4. The G-20 is moving forward with its plan to eliminate or severely reduce fossil fuel subsidies in the “medium” term. This is extremely difficult to accomplish politically, given both the entrenched interests who will lose billions and the effect on consumer prices, but even a slow and steady removal of these subsidies will help to tilt the energy mix towards less greenhouse gas-intensive forms of energy and decrease overall emissions.
  5. California is finally moving forward with its climate legislation AB32, as the final challenges to the law have been defeated. While the legislation doesn’t go into effect until 2012, it is the most progressive and far-reaching climate change policy in the world and the results are likely to be extremely consequential for the nation, and ultimately any future international climate change regime. California is the world’s 8th biggest economy so if comprehensive climate change legislation can work here it will prove a global model; according to UC-Berkeley Professor Peter Berck AB32 is likely to lead to a net increase in jobs in California because of the major energy efficiency improvements that the legislation will force into action. We will soon see if these optimistic predictions are borne out by the reality on the ground.
  6. In 2010 private investment in green energy soared to a record high, and with the global economic recovery gaining momentum oil prices are likely to keep rising, providing additional economic incentives for alternatives. To date, much of this green investment has been outside the U.S. because of the failure to pass comprehensive national policy, but there is still time for the U.S. to catch up if we can get serious.
  7. Significant progress was made in the recent COP16 meetings in Cancun, with the major developing country emitters agreeing to verification of their emissions reductions in the future. Steps were also made to begin the implementation of the major forest carbon program, REDD, which has the potential to provide a cheap path to effective carbon emissions, while also preserving much of the world’s remaining forests.

As I detail in my new book, What Environmentalists Need To Know About Economics, the theory, facts, and ingredients for good policy, are on the side of those who want to take an aggressive and forward-looking approach to global climate change (and other critical environmental issues); hopefully, the intellectually honest and serious Republicans and conservatives will pressure the GOP to return to its pro-environmental roots and become constructive players in the national conversation. More on this soon.

Testing the New Mood in Washington

Posted on by The Progressive Policy Institute

Everyone in Washington is signaling that political life will return to semi-normal after the hiatus created by the shootings in Tucson, though gestures (genuine or not) of enhanced civility and collegiality remain the order of the day, for a while at least.  This “new mood” will be put to the immediate test next week when House Republicans hold a formal vote on the (seriously, this is the official title) “Repealing the Job Killing Health Care Act.”

The outcome is foreordained by the earlier party-line vote on the rule for this bill, and no one expects it to get anywhere in the Senate.  Thus it’s all agitprop, and House GOPers will strain to keep some control over the lurid rhetoric about health reform threatening the fundamentals of American liberty that so many congressional candidates embraced during the 2010 campaign cycle.

Meanwhile, the clock is ticking on the broad fiscal issues that will in particular challenge congressional Republicans, who have made so much noise about restoring fiscal discipline, but who have mostly distinguished themselves by putting tax cuts off the table while thumbing their noses at the Congressional Budget Office’s once-sacrosanct role of acting as a bipartisan scorekeeper on the cost and benefits of proposed legislation.

One key issue, of course, is whether Republicans will signal an intention of doing something about entitlement spending or will instead let the full brunt of deficit reduction fall on non-defense discretionary spending (questionable in part because of the immediate negative economic impact that would have by reducing public sector employment and further dampening consumer demand).  An interesting and sure-to-be-debated perspective was offered today in a New York Times op-ed by National Review’s Ramesh Ponnuru, who bluntly reminded Republicans of the long history of failed GOP efforts to go after Social Security and Medicare absent Democratic “cover:”

Reforming these programs is vital to our nation’s long-term fiscal health — which is why Republicans should resist this advice and leave the issue alone. Reform is impossible this year or next unless President Obama takes the lead on it. What’s more, Republicans have no mandate for reform, and a failed attempt will only set back the cause.

Unsurprisingly, there’s also an effort underway from the left side of the ideological spectrum, under the loose umbrella of a group called “Strengthening Social Security,” to raise pressure on the president to avoid embracing the kind of entitlement benefits cuts suggested by the Bowles-Simpson deficit reduction commission when he makes his State of the Union Address.  If Republicans do predictably make their interest in entitlement spending contingent on presidential “cover,” as they did during the Clinton administration, then the internal White House decision on the administration’s own fiscal strategy could have a big impact on what actually happens to non-defense discretionary spending this year.

On the more purely political front, the Republican National Committee is voting today on its chairmanship, with prospects for another term for embattled incumbent Michael Steele looking grim.  With three major opponents in the field, none of whom seems to command a majority of the RNC, a multi-ballot election is very likely, with Wisconsin Republican chairman Reince Priebus, once a Steele ally, considered the front-runner.  Steele’s supporters appear to be making a last-minute attempt to spread fears that Priebus is too close to potential presidential candidate Haley Barbour and his nephew, Mississippi RNC member Henry Barbour.

Speaking of presidential wannabees, Georgia-based conservative radio talk host Herman Cain became the first Republican to officially file exploratory committee papers for the 2012 race to oppose Barack Obama.  Cain, an African-American former business executive, made an unsuccessful run for the Senate in 2004 (losing to fellow-Republican Johnny Isakson), but has become a Tea Party favorite on the airwaves.  He recently won a 2012 straw poll conducted on the website of the influential RedState blog, though it should be noted that RedState is Georgia-based as well.

More generally, as David Weigel of Slate has noted, the 2012 presidential cycle is getting underway very slowly; 14 candidates had at least set up exploratory committees by this time four years ago (in 2004, five Democrats had done so by this point on the calendar).  In the absence of a real front-runner, the reluctance of supposed “dark horse” candidates like John Thune, Haley Barbour, Mike Pence, Mitch Daniels, and Chris Christie to get into the race has increased the stock of better-known retreads like Mike Huckabee, Newt Gingrich, and Mitt Romney.  And while Sarah Palin’s political status has taken a serious hit just before, during, and after the Tucson tragedy, she is another potential beneficiary of a sluggish-to-develop field.  If Palin decides against running, keep an eye on her close friend Rep. Michele Bachmann of Minnesota, who is making noises about a candidacy and planning to spend some time in her native state of Iowa, where she will be squired around by right-wing icon Steve King.

The Washington Post Gets its Signals Wrong on High-Speed Rail

Posted on by The Progressive Policy Institute

One might expect, with a disastrous oil spill just behind us and gas prices predicted to soar to $5 a gallon by 2012, that the Washington Post would address the Obama administration’s alternative to oil-based transportation with nuanced understanding.

Sad to say the paper has instead served up an editorial full of misinformation about the administration’s high-speed rail project in California. The proposed 200-mph train system between southern California and the Bay Area has been in the crosshairs of House Republicans led by Jerry Lewis (R-Cal.), who has introduced a bill to force the return of $2 billion in federal stimulus funds awarded to the project.

The Post has placed its prestige behind Lewis (without saying so) by calling for a halt to the project until its costs, route alignment, potential ridership, and other details are studied to some unspecified level that meets the paper’s approval.

To justify such a draconian proposal, much at odds with the prevailing bipartisan support for rail in the state, the Post characterizes the project as a flakey California “experiment” – a suggestion that’s pretty far removed from reality.

The railway is based on technology that’s been in operation for 46 years in Japan (where it has carried three billion riders without a single fatality) and has spread throughout Europe and southeast Asia. China is committed to opening a dozen HSR lines equal in size and complexity to the California project.

The editorial says that “a series of skeptical blue-ribbon documents” have called into question the financial viability of the system. “Most damning” of these documents is a report by the California High-Speed Rail Peer Review Group calling official estimates of potential ridership so unreliable that they “offer little basis for proceeding.”

Those words would be damning if they weren’t yanked out of context. They come from a discussion of the methodology of the ridership study and the assertion by one consultant that, due to large “error bounds,” the projections might or might not be accurate. Either outcome was equally possible.

The Review Group called on the California High Speed Rail Authority to reexamine and refine the methodology, if needed. That’s it. There was no implication that the estimates were cooked to favor the project, as the Post implies. In fact, the Review Group went out of its way to say that no forecasting model can predict 100 percent accuracy.

The editorial continues by describing the first segment of the route, going from Bakersfield north to the small village of Borden, as the “train to nowhere.” This is plain nonsense. As explained at public hearings and on an internet posting by project CEO Roelof van Ark, the railway is not designed to terminate at Borden anymore than the Interstate Highway system planned to end in Missouri, where the first miles were laid.

Stopping temporarily at Borden was decided because the environmental review was nearly complete and the line could connect to existing rail track, allowing the new line to have “independent utility” (as required by the California legislature) before construction resumed north to Sacramento and northwest to San Francisco.

The editorial is similarly disingenuous when it says that the system “has attracted zero private capital” and has been “unable to guarantee any source – governmental or private – for almost half of the cost of completion.”

Rail consortiums in France, Germany, Japan, and Korea, as well as the U.S., have expressed interest in the project. China has told outgoing Gov. Arnold Schwarzenegger that it might underwrite California’s construction costs. But the project hasn’t yet reached the stage when companies have been invited to make bids.

If the Post read the Review Group report carefully, it would better understand why private capital has been reluctant to openly commit to the project. “The demonstration of firm public sector financial commitments will be an absolute necessity prior to approaching sources of private capital,” it stressed. In other words, investors won’t sink money into a project that’s under the threat of rescission by the likes of Rep. Lewis.

There’s more to suggest a willful ignorance of the facts pertaining to high-speed rail by the newspaper. For example, its statement that “in much of the country passenger rail can’t compete with car travel by interstate highways.” That’s only true because Amtrak trains run at 50 mph averages. As Robert Cruickshank points out, trains that zip passengers between LA and San Francisco in under three hours – or less than half the time it takes to drive between the cities on a good day – are going to change the way people travel.

The base projection of 65 million annual riders when the system is completed in 2030 may prove too low considering that California is expected to add 8-10 million more residents over the next 20 years. The Peer Review report says that the railway could “achieve high profits” once it’s finished.

That’s a bonny prospect for Californians, even if it doesn’t fit the prejudices of the Post, which ends its editorial with the revealing comment that it’s probably only in its own backyard, the Northeast Corridor, where federal rail investment “makes sense at all.”

The Emerging Crisis in Lebanon

Posted on by The Progressive Policy Institute

While the nation’s attention focuses on Tucson, a crisis emerges in Lebanon. Hezbollah, a member of the Lebanese governing coalition since a deal brokered in 2008 by President Michel Suleiman— has pulled out of the government coalition.  The move is in anticipation of the results of the UN-backed inquiry into the death of former Prime Minister Rafik Hariri, which is expected to find Hezbollah members implicated in his murder. This is the first time a Lebanese coalition government has collapsed under pressure from resignations, a dangerous first in a country that was wracked by a brutal civil war in the 1980s. The ethnic-religious balance of power is precarious in Beirut, with Hezbollah representing the Shi’ite Muslims from the South.

All of this shows the problem with the Bush administration’s reckless democracy promotion in 2005 and 2006. The administration was quick to hold up the rallies in the wake of Hariri’s murder as the best example of the new post-Iraq Middle East, a future filled with democratic pluralism and rule of law. Lebanon “can serve as a great example (to other countries) of what is possible in the Middle East,” President Bush said.

But there was no follow-up, no larger strategy beyond supporting the UN tribunal.

The administration never had a plan for how to make Hezbollah disappear, save for giving Israel time to crush it in the 2006 war. The reality is that Hezbollah has a strong base in parts of the country, making the terrorist group-cum-political party impossible to excise without upending the country’s fragile balance.

Which is why promoting democracy from afar is so difficult. Local actors can always undermine the master plans of outside powers, and people living in any given country often have as much to fear from instability as they do from illiberalism. The Lebanese people seem to want justice. But not at the cost of further bloodshed.

The Obama administration is continuing on this risky path. Secretary Clinton accused Hezbollah of trying to wreck the UN probe by resigning from the government. She is surely correct, but the Iranian-sponsored group is not going to simply back down. And so there is a stand-off of sorts, with the U.S. and its allies on one side, Hezbollah and Iran on the other, and the majority of Lebanese people in the middle.

The worst outcome of all for the U.S. would be more violence. The best bet is to continue with the Syrian-Saudi attempts at mediation, which hopefully can find some solution that allows both sides to save face while preserving stability.

New Congress and Military Spending: This is Going to Be Fun

Posted on by The Progressive Policy Institute

Last week, Secretary of Defense Robert Gates announced plans to pare back another $78 billion in Pentagon spending, a sum on top of the $100 billion in efficiencies he’s promised to find.  And while one fight’s a-brewing over what to do with those savings (Gates tried to get out in front of the coming austerity package by investing his savings back into DoD, while Obama’s deficit commission wants to use that money to pay down the national debt), a much bigger one is taking shape in the Republican party.

In response to Gates’ proposed savings, the GOP leadership — including new House Armed Services Chairman Buck McKeon (R-CA) — was typical: plow more money into the Pentagon, even when the Pentagon doesn’t want it.

“We are fighting two wars, you have China, you have Iran: Is this the time to be making these types of cuts?” says McKeon.

But the Tea Party — which backed a large percentage of the 85 new Republicans in Congress – has other ideas. Tea Party leader Judson Phillips has posted a letter (restricted access) on the Tea Party Nation website demanding “serious and meaningful cuts in the budget.”  It’s little wonder why so many leading conservatives are trying to paint on the blank canvass of Tea Party intellectualism and co-opt the movement before its heart-felt but un-Washington ways engulf the Republican party.

Most Democrats and progressives understand the need for fiscal restraint at the Pentagon.  After all, solving the deficit requires increasing revenues, fixing entitlements, and counting on a contribution from the government’s largest agency, the Pentagon.  The public knows this too – a new poll suggests that over half of Americans support reduced military spending.

In other words, we could be approaching the tipping point on fiscal responsibility and military spending.  Mainstream Republicans, who want to shovel money towards the Pentagon that even it doesn’t want, are beginning to swim upstream more and more.

Congress vs. The EPA, Round II

Posted on by The Progressive Policy Institute

Everything old is new again. Around this time last year, the Environmental Protection Agency (EPA) was in the process of issuing major rules that would lead to regulation of greenhouse gases under the Clean Air Act (CAA). Many in Congress opposed these moves, and sought to delay or halt them. I wrote about these attempts in this space (here, here, here, and here) and, as I predicted, they failed—none reached the President’s desk.

But failure has not stopped EPA opponents from trying again. Since last year, some things have changed. The EPA has moved forward with regulation, implementing GHG-related permitting requirements for new and modified emitters, and announcing in December that it plans GHG emissions standards for existing power plants and refineries. But none of these moves are surprising—the EPA is not pushing any harder now than it was last year.

But of course the 2011 Congress is different from the 2010 version, particularly since Republicans now control the House. Will this Congress be able to derail the EPA?

Maybe. It depends, not just on politics, but on what avenue of attack Congress chooses. This choice will probably be made first in the House, where new Energy and Commerce Committee Chair Fred Upton (R-Mich.) will set the agenda. Four broad options are on the table. Last year, each of the first two options were pursued. All four are likely this year. Let’s briefly look at each in turn.

1) New legislation: Congress could simply pass a law modifying EPA authority. Proposals range from a short delay in EPA GHG authority to removing GHGs from the CAA entirely, effectively overturning the Supreme Court’s Massachusetts v. EPA decision.

While Republican control of the House does smooth the path of new legislation somewhat, the Senate and above all the President remain significant barriers. While modest legislation, such as a delaying bill, is likely to attract some Democratic support, it will need 60 votes to pass the Senate. Even then, President Obama is certain to veto any legislation restricting EPA authority. It seems very unlikely that any such bill could attract a veto-proof majority.

2) Congressional Review Act: Congress has the authority to cancel any regulatory action with specific legislation. This authority is only available for 60 days after the regulation is formally issued, however.

 

CRA resolutions do not require 60 votes to pass the Senate. This is relatively little help, for two reasons. First and most obviously, the President will likely veto any resolution. Furthermore, almost all of the significant GHG rulemakings made by the EPA were issued well over 60 days ago, and cannot be rescinded by CRA resolution anyway.

3) Appropriations: Congress may choose not to fund EPA programs, even if they remain legally permissible (or even required).

 

Congress has not yet passed a budget for 2011, so this Congress will need to pass two over the next year. This gives ample opportunity for restricting EPA funding. The appropriations process is ultimately subject to the same procedural requirements as other legislation, so any budget will have to pass the Senate and be signed by the President. Defunding the EPA makes either far less likely — but unlike EPA-specific legislation, the politics are hard to predict. The budget process always involves compromises. How hard are EPA’s opponents and supporters willing to fight? If Congress does pass a budget that defunds agency GHG regulation, would the President veto it – risking a government shutdown?

4) Oversight: Even if none of the above is possible, Congress’s (or often individual committee’s) subpoena power can be used to investigate and, in practice, slow EPA action.

 

While oversight measures cannot alter EPA’s legal authority, they can make regulatory life very difficult. Since individual committees can conduct hearings and investigations, there is relatively little to stop motivated members of Congress from targeting the EPA with these tools. They are unlikely to stop any regulatory program, but they will be a drain on agency resources and energy.

In short, I don’t think headline-grabbing moves to alter EPA legal authority over GHGs are much more likely of success this year than last. That’s unlikely to change until and unless there is a change in the White House. These kinds of bills are more politics than policy; I doubt their supporters really think they will pass. Instead they allow members to make statement votes, and force EPA supporters to make votes that may be used against them later.

But the appropriations process and Congress’ oversight powers are both real, though different, threats to EPA regulation. Budget negotiations this year are likely to be acrimonious, and the EPA is a small pawn in a bigger game. If EPA opponents make defunding the agency a priority, they may be able to achieve it by doing so in an otherwise-palatable budget that the President determines he cannot afford to reject. In this sense, the relative political unimportance of the EPA works to its advantage — will Republicans in the House choose defunding the agency as their line in the sand, over other measures with much larger fiscal impact? This seems unlikely, but certainly not impossible.

Committee oversight presents a different challenge to the EPA. Some level of Congressional interference is certain, but its extent probably depends greatly on the agency’s ambition. If the EPA fears Congressional subpoena, it is less likely to regulate strongly or creatively. Instead, it may slow-walk some measures, and scrap others. Unfortunately, this may have the perverse effect of making regulation less efficient, rather than simply leading to less regulation. If agency resources are stretched (because of Congressional demands, underfunding, or both), it is less able to do careful analysis. If the agency makes avoiding controversy a paramount goal, it is less likely to try innovative approaches (such as tradable GHG performance standards) aimed at more efficient regulation. An EPA that does the minimum required by law might be more costly to the economy, not less.

This piece is cross-posted at Weathervane

Obama’s Approval Numbers Creep Up: How Can He Build on This?

Posted on by The Progressive Policy Institute

About a month ago, in the wake of a the great tax-cut compromise, I wrote a post entitled “Why Obama’s Approval Numbers Are About to Creep Up.” At the time, I reasoned that the tax cut deal was popular, Obama was playing to his strength as a broker of compromise, and a little public disagreement with the hard left might help him among political independents and moderates.

At the time, his approval rating was hovering around 47 percent. A month later, the latest AP-GfK Poll has it at 53 percent, the highest it’s been since March 2010, right before the healthcare debate kicked into high gear. More importantly for Democrats, 53 percent of Americans now rate them favorably, compared to 45 percent who view them unfavorably, almost an exact reverse of where voters were on Election Day.

But Republicans are also doing better. Last fall, only 29 percent approved of Republicans in Congress, but now that number is up to 36 percent. And Congress’s overall approval ratings, which fell to the teens at the end of last year, are back up to 26 percent.

So, in the wake of a lame-duck Congress in which some serious stuff was accomplished, it seems that Americans feel a little better about their leaders generally. It’s also possible that without the vitriolic attacks ad of campaign season invading everybody’s space, there’s a little bit of an inevitable bounce.

But the main takeaway point is that this is good news for Obama and the Democrats. As a new Gallup Poll highlights, across the political spectrum, every group except “very conservative” (even just plain old conservative) thinks that it is more important to compromise than to stick to beliefs. On this question, by the way, moderates look almost identical to both the “liberal” and “very liberal” group.

Hopefully, the Arizona tragedy will have at least some staying power as a wake-up call to the dangers of political extremism, and continue shine a favorable light on Obama’s talents as adult-in-the-room.

However, the challenge for Obama remains to do more than just get all the kids to play nice with each other. He also still needs to lay out a galvanizing positive vision to get voters excited, as he did in his campaign. These are anxious times, and anxious times are fertile ground for the politics of blame and anger, especially absent any optimism for the future.

Obama and the Democrats are gaining back a little political momentum, and the spirit of problem-solving is enjoying a mini-renaissance. Great. But let’s capitalize on this. It needs to be a starting point for working toward solutions to the generational problems that our nation faces, like solving our looming deficit crisis or restructuring the economy for the 21st century. You’ll be hearing more from us on this subject soon.

White Voters vs. Obamacare

Posted on by The Progressive Policy Institute

House Republicans want to repeal health care reform in the worst way, even if it means doing what they slammed President Obama for doing last year: taking their eye off Americans’ economic travails.

They’ve convinced themselves that health reform is a drag on recovery, even though its main provisions won’t kick in for several years. They also claim a popular mandate to undo reform, even though polls show the public evenly divided on the issue.

There is one significant voter block, however, that strongly backs repeal: white voters, and especially white blue collar voters. Health care, unfortunately, is an issue that illuminates a deep racial/ethnic fissure in American politics.

As Ron Brownstein reports in a fascinating National Journal analysis of new exit poll data, 56 percent of white voters back repeal, while an overwhelming majority of minority voters favor either expanding or maintaining Obama’s reforms.

It’s already been widely reported that white voters backed Republican candidates in last year’s midterm 60-37 percent. That’s the lowest percentage Democrats have garnered from white voters since modern polling began. Brownstein’s analysis sheds new light on those voters’ attitudes toward Obama’s policies and government’s role in general. For Democrats and progressives, it’s not a pretty picture:

  • Three fourths of minority voters, but only 35 percent of whites, approve of Obama’s performance.
  • Whites are strongly skeptical of expansive government: 63 percent say government is doing too many things best left to people and businesses. An almost identical percentage of minorities say government should do more to solve problems.
  • Whites give priority to reducing government deficits; minorities to more public spending to create jobs.
  • Nearly half of whites who voted in the midterm identified themselves as conservatives.
  • Blue collar (non-college graduates) whites form the hard core of skepticism toward Obama and his party. They backed GOP candidates by 2-1.
  • Democrats were only competitive among whites in 2010 in two demographics—college-educated women and under 30-voters.

It’s always a mistake to over interpret the results of a single election, but it’s been a very long time—the post-Watergate election in 1974—since Democrats won an outright majority of the white vote. The defection of blue collar Democrats, the mainstay of the grand old New Deal coalition, also is old news.

Margins matter, of course, and Obama will have to narrow the racial-ethnic chasm to win reelection in 2012, even as he re-energizes his base of minority and young voters, and college women. But electoral calculations aside, the appearance of what Brownstein calls a new “color line” in U.S. politics isn’t good for the nation’s political soul. Progressives need to engage white voters more directly on questions about the size and role of government. We should be serious about making government more accountable, about enabling citizens and communities to do more for themselves, and about reining in runaway federal deficits and debts. But we should also stand firmly for public activism to rebuild America’s productive capacities, particularly our run-down infrastructure, curb out-of-control medical costs and make the promise of equal opportunity real for all citizens.

Obamacare, in fact, is a good place to start that conversation. Progressives ought to be open to refinements and improvements (especially strengthening its cost containment provisions), while remaining resolute in defending the core achievement of extending, at long last, basic health protection to all Americans. After all, blue collar white voters are not natural allies of health insurance companies. They have as much interest as anyone else in having access to affordable care, not losing coverage if they get injured or sick or change jobs, keeping their kids covered through age 26, and in encouraging medical providers to charge based on the quality, rather than quantity of care they deliver.

Progressives should also take the opportunity to remind white voters that Obamacare is no alien import from Canada or Europe, but a national version of Romneycare – the comprehensive coverage approach pioneered in Massachusetts with the full support of that notorious socialist, then-Gov. Mitt Romney.

It’s time, in short, to bring the health care debate down from the level of ideological abstraction – the only level on which conservatives can win – to the concrete realities facing U.S. families struggling with soaring health costs and spotty coverage.

This Week in the New Congress

Posted on by The Progressive Policy Institute

Political and legislative activity in Washington was largely suspended in the immediate wake of the shootings in Tucson. As anyone who’s been sampling the news media since the weekend is aware, there’s been a discussion about whether there ought to be a debate over possible connections between the tragedy in Tucson and the type of overheated anti-government and even insurrectionary political rhetoric we’ve heard of late from conservatives, some of it aimed at Rep. Gabrielle Giffords herself. The “let’s don’t debate” side appears to be winning. Indeed, conservative outrage at the alleged “politicalization” of the shootings has rivaled outrage over the shootings themselves.

Not surprisingly, scattered calls for a fresh look at the ready availability of the kind of weapons and ammunition deployed in Tucson haven’t gotten much traction. Rep. Carolyn McCarthy (D-NY) has reintroduced her bill to ban certain high capacity ammunition magazines, which is a way to reduce the lethal effect of firearms without banning the weapons themselves. But it’s not likely to see the light of day in the Republican-controlled House. A more likely avenue of response to the shootings is via interest in care (voluntary or involuntary) for the violence-prone mentally ill. Still, the very eve of perhaps the most intensive effort ever to reduce discretionary social spending isn’t the best possible time to call for a boost in mental health services.

With or without any formal sanction, beefed-up security for Members of Congress and other elected officials is almost certain to emerge, along with significantly greater caution about public events and casual contact between elected officials and constituents. (Typically, conservative blogger Ben Domenech suggested arming congressional staff). Again, the timing isn’t great, given existing levels of public unhappiness with government and politicians, much of it motivated by the sense that officeholders have “lost touch” with the citizenry.

The hiatus on activity in Washington has not extended to state and local governments (other than in Arizona), where a difficult new year is unfolding under the shadow of one of the worst fiscal crises since the Great Depression. A new analysis from the Center on Budget and Policy Priorities shows that in December alone, state and local governments laid off 20,000 employees. Overall, state and local payrolls have dropped by 397,000 since August 2008, with just over half the reductions attributable to local school districts, even though national public school enrollment levels have risen by 741,000 since the beginning of the recession. with revenues still bottoming out and stimulus funds scheduled to run out soon, state and local employment is likely to drop even further in 2011. This even without taking into account many new Republican officeholders determination to public employees for cutbacks while cutting taxes for corporations and high-income individuals.

Just last week there was a development within the conservative movement that may pour cold water on Republican “tax reform” efforts at the state level, which were aimed at paying for income tax cuts with increases in sales taxes. Conservative policy commissar Grover Norquist of Americans for Tax Reform condemned a Republican-sponsored proposal in Georgia to boost net revenues through a broadening of the sales tax base accompanied by income tax cuts. Any “reform” plan, said Norquist, would violate the no-tax-increase pledge his group has secured from a vast number of GOP pols unless it reduces the overall tax burden, not just the portion borne by corporations or the wealthy. This ukase has obvious implications for similar talk of a more-revenues-through-base-broadening-and-lower-rates deal in Washington. And aside from the impact on tax progressivity, an abandonment by conservatives of schemes to raise more revenues via more regressive taxes will increase the pressure on public spending, as Norquist made plain by calling for major reductions in the “size and scope of government.”

Mr. Gates Goes To Beijing

Posted on by The Progressive Policy Institute

Defense Secretary Robert Gates is in China, meeting with President Hu today in a diplomatic effort to warm military-to-military relations between the two countries. Gates’ trip is in advance of the Obama-Hu summit in Washington next week.  Military relations had frosted over this summer following $6.4 billion in U.S. arms sales to Taiwan.

Gates’ meeting with Hu followed on the heels of an encounter with Chinese defense chief Liang Guanglie, where the two agreed to begin regular strategic security talks in an effort to reduce tensions. The Pentagon believes that a structured long-term dialogue will build trust and focus on longer term issues as the United States—regardless of administration—will likely arm Taiwan for decades to come.

Top of the to-do list on military cooperation will no doubt be North Korea, and it’s hardly coincidence that Gates used this visit to highlight advances in Pyongyang’s military technology that could threaten the West Coast within five years.  Further, as Michael Chase points out in a series of PPI memos on the Chinese military, getting Chinese buy-in on North Korea may rely in part on building trust first in areas like humanitarian assistance, disaster relief, and anti-piracy missions, to name a few.

Sino-American tensions in military relations are nothing new, but Secretary Gates’ trip continues to expose a fascinating—and potentially dangerous—rift inside the Chinese bureaucracy: the lack of communication between Beijing’s military and civilian leaders.

This week, China unveiled the J-20, its first and only stealth fighter.  China’s bizarre choice of this week—during Gates’ visit—to flex its newfound military muscles by test-flying the J-20 for the first time. When Gates signaled to President Hu that the test flight was unnecessarily provocative, Hu replied that it had “absolutely nothing to do” with Gates’ visit. Pointedly, Gates acknowledged his concern about the Chinese military acting independently of the political leadership, a problem that could in a worst-case scenario lead to unauthorized military action against, for example, Taiwan.

Getting China’s leaders to communicate with one another is well-outside the Obama administration’s powers, of course, but continuing to press Beijing’s political leadership on the issue is a good start.

Tucson: The Real Questions

Posted on by The Progressive Policy Institute

Flag half mast at Captiol BuilidingWe at the Progressive Policy Institute are heartsick over the senseless attack Saturday on Rep. Gabrielle Giffords, which also claimed the lives of six people, including a nine-year-old girl. Not only is Gabby our friend, she is an exemplar of the pragmatic progressivism that puts country before party. We pray for her recovery, and grieve for those who will never recover from this rampage.

As if this tragedy were not bad enough, some pundits have disgraced themselves by using it to score political points and vindicate their own particular stance. Thus, we’re instructed that the attack was the inevitable result of a climate of hostility created by the Tea Party, or Sarah Palin, or anti-immigration groups in Arizona. There’s no evidence this is true, but political gladiators apparently can’t help themselves.

We’ve refrained from commenting until now in hopes of learning more about the motives of the alleged shooter, Jared Lee Loughner. It seems he suffers from severe mental illness and was animated by his own inner demons, rather than “vitriol” in the atmosphere.

The political finger-pointing that has followed the shooting has been revolting. It’s not too early to start grappling with some of the pertinent questions this tragedy actually raises. We’d highlight three:

First, why is it so easy for mentally disturbed individuals to acquire handguns in America? The gun shop that sold Loughner the semiautomatic Glock 19 apparently ran a background check. Why did it not turn up the fact that the suspect had recently been booted out of a community college for his erratic and disruptive behavior? Surely more rigorous checks are in order and don’t impair the basic right to gun ownership.

And what public purpose is served by allowing citizens to buy high-capacity magazines more suitable for war than self-protection? These were covered under the ban on assault weapons passed on President Clinton’s watch, which has since lapsed. Let’s hope the Tucson massacre gives fresh impetus to reinstating it.

Second, how is it that we lack the legal tools to protect society against mentally unhinged people before they turn violent? Most people with serious mental illnesses aren’t dangerous, but some are. Obviously, it’s hard to assess such risks in advance. Yet when people exhibit patterns of bizarre and sociopathic behavior—as did the alleged suspect in Tucson, and as did Seung-Hui Cho, who massacred 32 people at Virginia Tech in 2007—they shouldn’t simply be left to their own devices. Determining how to preempt the potential for violence entails careful thought and a delicate calibration of individual rights and public safety. But society can’t simply look the other way as individuals descend into madness.

Third, will this attack result in erecting new barriers between elected representatives and the people? As we have seen since 9/11, elected officials have a tendency to overreact to acts of violence, erecting elaborate and costly security shields against low-probability threats. Will Members of Congress now demand bodyguards and be enveloped in security cocoons like the president? If the Tucson attack leads to a greater separation between politicians and those who elect them, it will have dealt a serious blow to our democracy.

The Republicans’ Kabuki House

Posted on by The Progressive Policy Institute

The 112th Congress got underway with the House Republicans’ ritual reading of the U.S. Constitution.  More symbolic measures are in the wings; Kabuki exercises continued with this morning’s House vote on the rule for the bill to repeal last year’s health reform legislation.  This closed rule, which ensures an up-or-down vote without amendments, passed 236-181, with all Republicans and just four Democrats supporting it.  That’s probably about how the vote on the actual bill will go down next week, and the sparse number of Democrats crossing the line—there were 34 who voted against health reform last year, 13 of whom have returned in this Congress—is disappointing to the GOP.  The repeal effort will die, quietly or noisily, in the Senate.

But amidst all the competing rhetoric about health reform, Republicans took one step with even larger implications than the reform law itself: exempting the repeal legislation from budget offset rules, even though, or more likely because, the Congressional Budget Office “scored” it as increasing the federal budget deficit by some $230 billion over the next ten years (no surprise, since CBO scored the health reform legislation as a deficit reducer thanks to its health care cost containment provisions).  Speaker John Boehner explained the move by simply asserting that he didn’t believe CBO’s numbers.

This gambit doubles down on the earlier step by House Republicans to ignore previously universal standards for measuring budget deficits: their decision to exempt tax cuts—all tax cuts—from budget offset rules.  The health repeal “scoring” decision means that even spending increases will be off the table if Republicans choose to believe they won’t ultimately add to the deficit, or simply favor them on policy grounds.  The next shoe to drop could be a similar announcement placing defense spending off the table, which a variety of leading Republicans from Sarah Palin to John Bolton have already called for.

If deficit reduction does become a preeminent goal in the 112th Congress, the pressure this kind of sequestering would place on domestic spending—particularly nondefense domestic spending—is incalculable.  But House Republicans may cut themselves some immediate slack by scaling down the spending reduction target for current-year appropriations, which will be taken up in March when the continuing resolution passed during the lame-duck session expires.  Their rationalization for this action might be that the $100 billion cuts promised in the 2010 campaign document, the Pledge to America, used the Obama administration’s appropriations requests, not actual spending, as a benchmark, lowering the target to about half the original number.

Either way, the appropriations bill has become closely linked to a vote on increasing the public debt limit, which conservative activists have become increasingly excited about defeating, regardless of the potentially dire effect on financial markets.  March could mark the contemporary equivalent of the 1995 confrontation between congressional Republicans and President Bill Clinton that led to a temporary government shutdown. In that case, playing chicken did not work out well for the GOP, but they are under very intense pressure from their Tea Party faction to hang tough.

Overshadowing even the heath reform repeal vote and the impending collision over spending is the appointment of former Commerce Secretary Bill Daley as White House Chief of Staff, and of former Clinton administration National Economic Council director Gene Sperling to the same post in the Obama administration.  Daley’s extensive financial sector background, along with his outspoken opposition to making universal health reform a key agenda item for Obama in 2009 and 2010, has made his appointment the latest flash-point for liberal unhappiness with the White House.  But his and Sperling’s appointments also indicate the administration has decided it’s in a difficult and protracted battle with Republicans on almost every topic, and wants people on board with parallel experience under Clinton.

GOP: Soft on Deficits

Posted on by The Progressive Policy Institute

Republicans talk a big game on fiscal responsibility, but don’t be fooled: Today’s GOP has gone soft on budget deficits.

This week, the new House Republican majority adopted rules aimed at controlling federal spending. That sounds innocuous enough, but a closer look at the new rules reveals the GOP’s dirty little secret: in their zeal to shrink government, Republicans have abandoned the fight to rein in America’s colossal budget deficits.

This year’s budget deficit is estimated to be about $1.7 trillion. Since House leaders adamantly oppose raising taxes to close the gap, they’d have to make epic cuts in federal spending to make even a modest dent in the deficit. But as the New York Times reports, House GOP leaders already are backing off on their promise to hack $100 billion out of domestic spending this fiscal year. Since Republicans also insist on sparing the Pentagon from the budget ax, that would have meant draconic cuts (between 20-30 percent) in domestic programs. Sobered GOP leaders are now talking about cuts in the $50 billion range.

The assertion, pressed most vehemently by Tea Party types, that fiscal discipline can be restored through spending cuts alone is new. Don’t forget that Ronald Reagan signed 11 major tax increases, including a whopper in 1988 amounting to 2.7 percent of GDP. George Bush’s willingness to boost taxes (and tax rates) as part of his 1990 budget helped set America on a course toward the budget surpluses later achieved on Bill Clinton’s watch.

By taking taxes off the table, House Republicans are breaking with their own party’s tradition of fiscal rectitude and saying, in effect, they don’t care all that much about deficits. Evidently for this curious new breed of fiscal “conservative,” expanding deficits in pursuit of smaller government is no vice.

That’s the real message sent by the new rules adopted Wednesday, which seem calculated to lock in big deficits as far as the eye can see.

Most egregious, for example, is their new “cutgo” rule. Under existing “paygo” rules, new tax cuts or spending increases must be offset with tax increases and/or spending cuts. Cutgo, in contrast, says that any new spending must be paid for by spending cuts alone, and it exempts tax cuts from offsets altogether. In other words, their costs will simply be added to the deficit. Similarly, changes in budget reconciliation rules would bar spending increases in reconciliation bills, but allow tax cuts. Expect a torrent of new tax expenditures as lawmakers realize that they can dole out new tax favors without the bother of paying for them.

If the new rules weaken fiscal discipline on the tax side of the federal budget, they do strengthen constrains on the spending side. For instance, they include a new point of order on legislation which increases mandatory spending at any point over the next four decades. They also repeal the “Gephardt Rule,” which allows lawmakers to avoid an on-the-record vote on raising the debt ceiling. The Committee for a Responsible Federal Budget offers a detailed analysis of the new rules here.

Unfortunately, the overall effect of the new rules will be to undermine serious bipartisan negotiations to curb both federal spending and deficits. The Senate, still controlled by Democrats, rightly will reject the GOP’s transparent bid to force all the painful decisions to the spending side of the ledger. As a slew of recent reports by bipartisan fiscal commissions show, there’s no plausible way to deal with America’s debt explosion without closing tax loopholes and raising revenues. Even such hard-core fiscal conservatives as Sen. Tom Coburn (R-OK) recognize the need to curb tax expenditures. By impeding the search for common ground on fiscal issues, the House GOP’s anti-tax fundamentalism only delays the inevitable day of reckoning, at enormous cost to the nation’s economic prospects and the public’s confidence in their government’s ability to solve urgent problems.

Unlike House Republicans, U.S. voters think deficits matter, not just the level of public spending. This is especially true of independents, who abandoned Democrats in last year’s midterm elections in part because of their spendthrift ways. To these voters, big deficits connote not just chronic mismanagement of the nation’s economy, but also a breakdown in political responsibility in Washington.

That’s why President Obama and progressives should miss no opportunity to drive home the reality that Republicans are now the party of big deficits.

We Need a North Star For Foreign Policy

Posted on by The Progressive Policy Institute

Pole StarIn early December, President Obama described his role as a “north star out there” for Americans – a distant guide that keeps us moving towards a goal.  He was defending his tax and benefit compromise with Republican leaders, explaining that compromise was in the country’s DNA and that there was value in moving in generally the right direction.

But is Obama – or anyone in the last two decades – a “north star” for American foreign policy?  Keep in mind that when I say “north star”, I’m talking about the core, uniquely American values that guide our leaders, no matter which party they come from.

Furthermore, the “north star” is not to be confused with the “Kennan Prize” of American diplomacy, named for renowned diplomat George Kennan upon coining the guiding term “containment” for America’s strategic approach to the Soviet Union. No one since the legendary Kennan has distilled an overarching American strategy into such a perfectly appropriate, yet bumper-sticker length slogan.

At foreign policy conference after foreign policy conference, academics compete for the next iteration of mythical award, which is all shined up to be ceremoniously bestowed in columns and blog posts upon the author the next great foreign policy framework.

With the “north star” concept, I’m looking more broadly.  Kennan won his prize for a specific strategy vis-a-vis a specific enemy.  I’m asking for America’s guiding foreign policy values to be articulated. Not tactics or strategies, but values.  And not liberal, progressive, or conservative ones, but American values.

I suppose the void exists because world events since the end of the Cold War have been scatter shot.  Consider major American foreign policy events since 1991:

— Disintegration of the Soviet Union
— Bill Clinton’s “Peace Dividend”
— September 11th
— Afghanistan
— The Global War on Terror (run a muck)
— Iraq
— Diffusion of power to individual actors
— Iran and North Korea struggling to get the bomb
— Lack of progress in Israeli/Palestinian peace
— The rise of democratic world powers (Brazil, India)
— … and autocratic ones (China)

It’s hardly a cohesive group, hardly lending itself to a coherent “north star.” In retrospect, it’s really tough to argue that the Iraq war comes from the same value set as a strategy to resolve the Israel/Palestinian divide.  But as America emerges from its pressing, all-consuming commitments (Iraq, Afghanistan), the Obama administration will have time to breathe, reassess, and think about America’s guiding north star in foreign policy.

Lacking one is a big concern to us here at PPI, and you’ll be hearing more from us on it in the near future.

A Bizarre Labor Market (with data)

Posted on by The Progressive Policy Institute

Two old coinsAs we start the New Year, we face what is perhaps the most unpredictable and bizarre labor market I can remember. This morning the Conference Board released the December Help-Wanted Online report, which apparently shows a sharp increase in labor demand over the past year in most occupations. However,  the BLS  employment by occupation data shows no corresponding gain, even in occupations with soaring want ads.  Nor does the unemployment by occupation data show any corresponding movements. I have my own thoughts about what the data means, which I’ll share below. But first let me present the full array of data, by occupation,  so you can make your own judgments. The first column of data in the table below is the Supply/Demand Rate, as calculated by the Conference Board. That indicates the ratio of unemployed workers to ads, so a small number is better.  The second column is the change in online ads over the past year, as measured by the Conference Board, so a big number shows that demand has ramped up. The third and fourth columns are the changes in occupational employment and unemployment over the past year, respectively, as measured by the BLS. The ordering of occupations by supply/demand rate feels more or less right. But when it comes to the link between changes in demand, employment, and unemployment, there’s little  consistency. We’ve got occupations with soaring demand and no gains in employment (management, transportation).  We’ve got occupations with good supply/demand ratios and no gains in demand (health practioners).  And so forth and so on. *************************************************

A Bizarre Labor Market
Supply/Demand yr/yr percentage change**
Rate* Want Ads Employment Unemployment
Healthcare practitioner and technical 0.3 2% -1% 8%
Computer and mathematical 0.4 27% -3% 21%
Life, physical, and social science 0.8 40% 4% -3%
Architecture and engineering 1.0 47% 1% -18%
Management 1.4 56% -3% -5%
Legal 1.5 -6% 1% -32%
Business and financial operations 2.1 6% 2% 10%
Community and social services 2.3 19% -8% 6%
Arts, design, entertainment, sports, and media 2.6 9% -1% 12%
Healthcare support 2.6 2% 0% 7%
Sales and related 3.5 -2% 2% -1%
Office and administrative support 3.9 21% 0% 3%
Installation, maintenance, and repair 4.0 36% 3% 3%
Education, training, and library 4.3 22% -1% -7%
Personal care and service 5.5 8% 5% 14%
Transportation and material moving 7.4 61% 2% -2%
Protective service 8.0 34% 1% 36%
Food preparation and serving 9.2 26% 2% 6%
Production 10.8 59% 10% -6%
Building and grounds cleaning and maintenance 14.1 39% -2% 0%
Farming, fishing and forestry 28.4 38% 2% 52%
Construction and extraction 29.7 31% -8% -15%
*Supply/demand rate, calculated by the Conference Board, is the number of unemployed workers
divided by number of want ads based on latest data.
**December 2009-December 2010 for online wants ads, November 2009-November 2010 for other data
Data: The Conference Board, Bureau of Labor Statistics
Calculations: South Mountain Economics LLC

************************************************* My interpretation: The labor market is getting ready for a massive rise in employment over the next year,  as companies finally start hiring for positions they’ve been advertising for. We’ll find out soon. This piece is cross-posted at Mandel on Innovation and Growth