MEDIA COVERAGE:
The event is open to the press. Media in attendance are required to register in advance of the event to Steven Chlapecka at 202.525.3931 or schlapecka@ppionline.org. Camera pre-set: 9:30 a.m.
Hosted in collaboration with the University of California Washington Center.
As Bill Galston points out, there’s no longer much doubt that deficit reduction has become a very large public concern over the last year. It’s a separate question as to whether Americans are willing to support actual spending reductions or tax increases proposed by either party, and thus whether there is really a popular base for a deficit reduction compromise. But no one should argue any longer that the whole subject is just being cooked up by elites.
Still, the current extend-the-tax-cuts debate in Washington demonstrates pretty conclusively that deficit reduction is not, in fact, the preeminent value of either party in Congress. Both are pursuing a path guaranteed to increase long-term deficits and debt. And since the wealthy benefit disproportionately from an income tax rate reduction in the lower brackets (that’s how marginal tax rates work), even the Democratic approach elevates tax cuts for “all Americans” (to use the Republican battle cry) over deficit reduction.
[T]here’s no debate in Washington about whether rich people should get a permanent tax cut. Nor is there any debate in Washington about whether rich people’s tax cut should be financed by long-term borrowing. Nor is there any debate about whether rich people should get a bigger tax cut than middle class people. But we “can’t afford” unemployment insurance, we “can’t afford” to pay bank regulators competitive salaries.We have a bipartisan consensus that the short-term deficit should be made smaller and the long-term deficit should be made bigger even when all the economic logic points in the opposite direction.
Now Republicans, of course, dispute that we’re talking about “tax cuts” at all, and maintain that failing to extend the Bush tax cuts represents a tax increase, even though the reversion to earlier rates has been established in current law from the beginning, and even though the original rationale for the Bush tax cuts was to “rebate” unnecessary revenues when the federal budget was in surplus. But that’s just another way of saying that low tax rates, particularly for those “job creators” at the top, are an end in themselves for Republicans, crucial in every fiscal or economic circumstance, and thus far more important to them than deficits-and-debt.
This week, the British government will formalize an agreement with two Canadian pension funds with enormous implications for passenger train development in the United States. In return for the right to operate a high-speed rail line linking London with the Channel Tunnel for 30 years, the Ontario teachers and municipal employee pension funds have agreed to pay the UK government $3.4 billion.
The sale not only represents a big vote of market confidence in the future of high-speed rail, but points to a route for building and operating new train lines in the U.S.
In the wake of the equities meltdown, U.S. pension funds are seeking “safe havens” to invest, while states and the federal government are looking for ways to build expensive rail infrastructure in the face of record budget deficits.
Here’s a solution: Structure high-speed rail projects to attract pension funds and other institutional investors through operating concessions and other long-term cash-generating instruments.
Making Money While Generating Jobs
Consider the $133 billion Florida State Board of Administration, currently winding down its loss-generating equities portfolio and concentrating on core fixed income.
If the Florida State pension fund invested just 3 percent of its portfolio in the state’s high-speed rail line, that would generate $4 billion. That’s enough to cover both the $500 million shortfall in the high-speed segment between Tampa and Orlando (the Obama administration has already allocated $2.05 billion for this project) and the state’s portion of a Miami-Orlando route with excellent ridership potential.
Similarly, the California Public Employees’ Retirement System (CalPERS) has adopted a new investment policy with a targeted 3 percent allocation of assets, or about $7 billion, in infrastructure.
The proposed bullet train between Los Angeles and San Francisco is expected to generate as much as $3 billion in profits by 2030. By allocating some of its funds to the $40 billion rail project, CalPERS could enjoy a stable return while providing the Golden State with an enormous job-generating public work.
Other institutional investors, such as labor unions, could be attracted to rail partnerships and concessions that diversify their pension portfolios while providing direct economic benefits to their members.
Such new-style financing would require a marketplace with transparent trading and timely data, amounting to a new source of opportunity for the investment community. In a sense, Wall Street could come full circle to its origins as the exchange place for European capital seeking profit in American railway construction in the 19th century.
High Level of Investor Interest
Back to the Brits, it is crucial to note that the $3.4 billion interest in High Speed-1, the London-Channel link, exceeded the highest hopes of David Cameron’s coalition government, which inherited the initiative from Gordon Brown’s Labor government.
In the words of one commentator, the asset sale “came as a pleasant surprise” to observers who believed the UK government “would have to settle for knock-down prices” because of the world recession.
The auction also attracted many more bidders than expected. The Ontario Municipal Employees Retirement System and Ontario Teachers’ Pension Plan, allied with Borealis Infrastructure, beat a long list of potential buyers, including insurance giant Allianz and investment bank Morgan Stanley.
Borealis already operates the Detroit River freight rail tunnel between the U.S. and Canada on behalf of the pension funds. The Borealis group will receive a revenue stream from access charges paid by train companies using HS-1. In return, it will be responsible for preserving the line as a high-speed railway and to periodically improve track and structures to state-of-the-art standards.
Eurostar fields trains between London and Paris and London and Brussels. Deutsche Bahn, the German rail carrier, has announced plans to operate from London to Frankfurt and London to Amsterdam.
In addition to these services, the Borealis group has the right to sell access to other passenger carriers and to develop freight traffic.
Setting a Monetary Value on High Speed
The British approach marks a turning point. Prior to now, high-speed lines, such as France’s TGV and Spain’s AVE, were built and operated by government or government-directed entities. The profits or losses from high-speed trains were part of the financial profile of the larger rail systems.
Nearly all experts agree that fast trains earn higher per-mile revenues than conventional-speed trains and substantially more than commuter and branch-line services.
The British concession puts a monetary value on high-speed rail that can serve as a basis for a market in future railway concessions and stock sales in equipment and infrastructure-building companies.
HS-1 was one of the most expensive rail projects in the world due to extensive bridging, tunneling and station construction. Opened in November 2007, the 68-mile line cost $8.3 billion.
The concession sale returns 40 percent of the build cost to the British treasury. When the concession ends in 2040, the railway will revert back to the government, which expects to re-bid the property for an equal or higher price.
By this means, HS-1 will continue to return a dividend to taxpayers and, over the course of its 150-year-plus lifecycle, repay its construction cost, probably several times over.
This prospect differs from the scary scenario presented by U.S. critics (including the Republican governor-elects of Wisconsin and Ohio) who charge that high-speed rail is a money pit requiring long-term government subsidies to operate.
Summing up the rap against rail as “high-speed pork,” Washington Post columnist Robert J. Samuelson recently complained, “If private investors concurred [that fast rail was profitable], they’d be clamoring to commit funds; they aren’t.”
The high-speed chase by investors for High Speed-1 shows just how off track these critics are.
FCC Chairman Julius Genachowski should be given a measured round of applause for his proposed “rules of the road” for Internet openness. Genachowski addressed the core issues including a basic no-blocking rule and giving telecom providers the right to “reasonable network management.” And he did so without putting an excessively heavy new regulatory burden on the communications sector.
The truth is, the FCC is walking a tricky path. The broad communications sector that the agency oversees, long-maligned, has turned into a crown jewel in today’s domestic economy—vibrant and dynamic. Yet the FCC has come under pressure to impose strict net neutrality rules—a nutty move that would have been the equivalent of doing invasive surgery on a healthy patient.
Instead, Genachowski and the FCC are following the basic principle of countercyclical regulatory policy — the government should stay away from imposing onerous new regulations on growing and innovative sectors such as communications while the economy is still sluggish.
Between now and the December 21st meeting of the Commission, Genachowski needs to make sure that his rules of the road stay as ‘minimally invasive’ as possible. Attempts to broaden them, no matter how well-meaning, will have the effect of putting the communications sector on notice that any commercial negotiation, technical decision, or investment strategy could be second-guessed by regulators—not the best way to have rapid innovation or job creation.
The democratic cause lost an eloquent and effective champion yesterday when former Rep. Stephen J. Solarz (D-N.Y.) succumbed to cancer at age 70.
Over nine terms in the House of Representatives, Steve distinguished himself as one of that body’s preeminent spokesman on international affairs. He understood that the foundational principle of a liberal foreign policy – what Arthur Schlesinger Jr. called its “fighting faith” – is implacable opposition to tyranny. And he applied that principle with unswerving consistency, backing Eastern Europe’s bid for freedom from its Soviet overlord, the anti-apartheid movement in South Africa, and democratic reformers challenging pro-American autocrats in the Phillipines and South Korea.
We at PPI drew inspiration from Steve and were proud to count him as a friend and sometime contributor to our work. See his chapter in our 2006 book, With All Our Might, in which he argued presciently that Pakistan is the pivotal battleground in America’s fight against al Qaeda and Islamist extremism in general.
Finally Steve was a staunch backer of the National Endowment of Democracy, serving on its Board and receiving its Democracy Service Medal in 2001.
A rash of party-switching by former Democratic state legislatures in the South has drawn attention to the parlous condition of the Donkey Party in that region following a terrible midterm election. Jonathan Martin of Politico captured the zeitgeist with a much-discussed piece entitled, “Democratic South Finally Falls,” a testament not only to Republican gains in the region but to the advent of such endlessly predicted but long-delayed developments as the GOP conquest of the Alabama state legislature.
How bad was election night 2010 for southern Democrats? Well, there were a total of 14 Senate and gubernatorial races in the eleven states of the Old Confederacy, and Republicans won all of them except for the Arkansas governor’s race. Exactly one-third of the 66 House pickups for the GOP occurred in the same eleven states (along with one-third of the three Democratic pickups). Republicans gained control of four state legislative chambers (the House and Senate in both Alabama and North Carolina), then picked up control of the Louisiana House due to a party switch. Today Democrats control the Arkansas and Mississippi House and Senate; the Senate in Louisiana and Virginia; and nothing else. And the Mississippi, Louisiana, and Virginia bastions will be at risk in 2011.
Were there regional bright spots for Democrats? Sure, in individual races. But it’s hard to call, say, North Carolina a bright spot because endangered House Democrats Larry Kissel and Mike McIntyre survived, since the state legislature was lost for the first time since Reconstruction. Similarly, two of three targeted House Democrats in Georgia won, but Republicans swept all the statewide races for the first time ever, and are approaching a veto-proof supermajority in both state legislative chambers.
Democrats had unusually strong gubernatorial candidates facing Republicans with problems in four southern states: South Carolina, Florida, Georgia, and Texas. All these Democrats lost.
Now it’s important to understand that the demographic turnout patterns that made the midterms so hospitable to Republicans nationally were especially strong in parts of the South, where the pro-Republican trend among older white voters in 2008 was especially pronounced, and the predictable falloff in African-American voting after a historic cycle was especially damaging to Democrats. That means Democrats will likely rebound (relatively speaking) in 2012 in the South as elsewhere. Indeed, post-midterm PPP polls of Virginia and North Carolina, the two southern states carried by Obama in 2008, show the president in pretty good shape in both for 2012.
What really happened in 2010 of enduring significance is that the post-Civil Rights Act era of ticket-splitting in the South, which enabled Democrats to do much better in state and local election than at the presidential level, is finally drawing to a close, with one important qualifier: as Republicans become the natural governing party of the South, they will also be vulnerable to unhappiness with the status quo, which could produce Democratic victories, particularly in states with an irreducibly strong Democratic base. Generally, though, congressional districts with a long history of going GOP in presidential races and Democratic in House races, like South Carolina’s 5th district or Mississippi’s 4th, aren’t likely coming back to the Democratic column now that their long-time incumbents have lost. In addition, as the party-switching in state legislatures demonstrates, Democrats will no longer benefit from being perceived as the party of convenience for ambitious politicos with flexible ideological views.
The upside for southern Democrats is that the long-term demographic trends favoring them in the region—growing minority populations, continued in-migration of less conservative voters, and the increased importance of “knowledge jobs”—haven’t gone away. And without question, southern Democrats are continuing to converge with their national counterparts in ideology as conservative white rural voters complete their migration out of the Democratic coalition. Overall, southerners will still be more moderate than Democrats from areas with a strong labor movement or a tradition of cultural progressivism, but much of the argument that southern Blue Dogs are muddling the message or obstructing the legislation of the national party has become moot.
There may be no method in North Korea’s madness, but the world’s response to its episodic outrages has settled into a familiar pattern. It’s a dangerous pattern, and one likely to recur as long as China keeps enabling Pyongyang’s belligerent behavior.
First comes an utterly unprovoked attack on South Korea. Seoul reacts angrily and threatens unspecified consequences. Washington firmly backs its ally, and solicits global censure of North Korean aggression. The Chinese, however, decline to assign blame and instead urge resumption of direct talks with Pyongyang. South Korea eventually backs away from confrontation, on the perfectly rational premise that living with the North’s occasional spasms of violence is preferable to an all-out war that would devastate both countries.
The latest crisis began last week when the North shelled a South Korean island. South Korean President Lee Myung-bak called the attack, which killed two civilians and wounded 16, a “crime against humanity” and warned that Seoul would not tolerate a direct attack on its soil. The United States dispatched an aircraft carrier, the George Washington, while China called, irrelevantly, for a resumption of the long defunct six-party talks aimed at dismantling the North’s nuclear weapons program. And yesterday, Seoul moved to dampen war fever by canceling live-fire artillery drills on the stricken island.
Essentially the same cycle played out last spring, when North Korea sunk a South Korean patrol boat, the Cheonan, killing all 46 sailors aboard. Pyongyang paid no price for this act of war, either.
Pyongyang’s behavior may look like a classic case of winning through intimidation, except that it’s not clear what it gains from such brutal tactics. The North is as isolated and poverty-stricken as ever, and, with dictator Kim Jong il preparing to hand off power to his son, no relief is in sight for its thoroughly regimented society.
One explanation is that the regime from time to time must manufacture external threats to justify the extreme sacrifices it demands of its people. Another is that its assaults are part of an elaborate shake-down racket meant to get the world’s attention – along with bribes for good behavior. Except that it seems to be having the opposite effect. Last week’s shelling, along with the Cheonan incident, have driven the final nail in the coffin of the South’s “sunshine policy” of economic and humanitarian aid to the North. Nor is Washington eager to reward Pyongyang’s bellicose conduct by rushing back into the six-party talks.
This latest outrage throws a spotlight on China’s role as North Korea’s enabler. Not only does Beijing shield Pyongyang from the consequences of its disruptive behavior, it also helps to keep the regime afloat by supplying fuel and other economic assistance. Perhaps it’s too facile to assume – as Republicans like John McCain and Lindsay Graham do – that China can bring the mercurial Kim regime to heal just by threatening to shut down oil shipments or cross-border trade. But is it really too much to ask of China that it at least not cover up the North’s crimes and collude in its ludicrous lies?
Beijing wants very badly to be accorded the respect that its growing wealth and power implies. It wants a seat at the table where global decisions are made. Yet on issue after issue, China is proving to be a free rider. Beijing takes maximum advantage of an open world economy while contributing little to strengthening the system that has made it rich. Instead, it pursues a mercantilist policy that creates enormous imbalances in world trade and investment flows, while keeping its currency artificially high to make discourage imports from the U.S. and elsewhere. Instead of trying to tamp down tensions on the Korea peninsula, it feeds them by shielding its delinquent ward in Pyongyang from accountability. Instead of throwing its weight behind international efforts to restrain rogue regimes from Khartoum to Tehran, it seeks commercial advantage while hiding behind the supposedly sacrosanct principle of non-interference in other nation’s internal affairs.
China’s amoral and selfish behavior increasingly engenders doubt and fear, not respect. Its failure to accept the responsibilities that accompany its growing power undermines global cooperation and stability. It’s time for the Obama administration to move China’s free-riding to the center of its engagement with Beijing.
As the new Republican House majority settles in and tries to figure out exactly which issues and positions to take, a new poll from Gallup highlights just how difficult it will be to keep the coalition of swing independents, old-fashioned Republicans, and tea partiers together.
The problem, in short, is this: Both Republicans and Independents prefer Tea Party-backed Republicans to old-fashioned Republican leaders in Congress. But at the same time, by a 51-to-39 percent margin, Independents are concerned that Republicans will go too far in trying to reverse the Democrats’ policies. In other words, good luck, Speaker Boehner: If you aren’t aggressive enough, you will lose the mad-as-hell Tea Party voters. But if you are too aggressive, you will lose the majority of independents who are worried you are going too far. And you’ll need to please both to keep your majority.
As we know, Independents broke 56-to-38 percent for Republicans in the Mid-Term Election after breaking strongly for Democrats in the prior two elections, giving Republicans the keys to the House and tightening the balance in the Senate. Looking at the Independents’ preferences for who they say they want as the key policy player, we can see that those who voted Republican prefer Tea Party-backed Republicans by a 32-23 margin, an even more sizable balance than registered Republicans. (I’m admittedly interpolating here a bit, assuming (safely, I think) that those who voted Republican want Republicans to be in charge)
However, things get a little more complicated when we consider the next result of the poll: Independents, by a sizeable majority (51-to-39) are more worried that Republicans will go too far in reversing Democrats’ policies than that they will not go far enough. In other words, the majority of Independents are not radicals, even if the plurality supports the Tea Party.
At first this seems like a bit of a puzzle. One possibility is that the except for the third of Independents who want the Tea Party to be in charge, almost all the rest are worried about Republicans going to far.
But here’s what I see as the more likely explanation: swing Independents are frustrated with the state of the economy, and see Washington politics-as-usual as a reasonable culprit. The Tea Party brand has tapped into that frustration. But swing Independents, who abandoned Republicans in 2006 and 2008, are not exactly running back to the Republican Party with open, loving arms. To them, the Tea Party taps into the “we don’t like either party, but we’re not happy, so we’ll vote out the incumbent” rationale.
As a recent Pew poll demonstrated, only 48 percent of respondents felt happy about the Republicans’ victory the day after the election, and only 41 percent of respondents approved of the Republican’s policies and plans for the future – significantly lower numbers than both 1994 Republican victory or the 2006 Democratic victory.
I see a mixed message from the angry swing vote: we’re mad as hell, but we’re also kind of moderate. We’re not happy with the way things are going, but we’re not sure we want a dramatic change either. We want to send a message, but we hope you don’t take that message too seriously.
Just as Democrats found these voters impossible to satisfy after winning their support in 2006/2008, my prediction is that Republicans will find them equally difficult to satisfy. Once Republican leadership has to make choices and register votes, they will learn that you can’t please all the people all the time, and these days, it’s increasingly hard to even please some of the people, some of the time.
When it comes to innovation-based growth, not all states are equal. Certain states are on the front lines, and are accordingly most likely to lead the way to economic recovery. According to a new report from the Information Technology and Innovation Foundation, the most leading New Economy states all excel at supporting a knowledge infrastructure, spurring innovation, and encouraging entrepreneurship.
The new report, The 2010 State New Economy Index, uses 26 indicators to assess states’ fundamental capacity to successfully navigate economic change. It measures the extent to which state economies are knowledge-based, globalized, entrepreneurial, IT-driven and innovation-based – in other words, the degree to which state economies’ structures and operations match the ideal structure of the New Economy. Indicators include percent of the population online, fastest growing firms, exports, industry and state R&D among others.
The top five states – Massachusetts, Washington, Maryland, New Jersey, and Connecticut —are at the forefront of the nation’s movement toward a global, innovation-based economy. Massachusetts has been the top ranked state in all iterations of the report (1999, 2002, 2007 and 2008). The Bay State boasts a concentration of software, hardware, and biotech firms supported by world-class universities such as MIT and Harvard in the Route 128 region around Boston. It survived the early 2000s downturn and was less hard hit than the nation as a whole in the last recession. And it has continued to thrive, enjoying the fourth-highest increase in per-capita income. Washington State (which ranked fourth in 2007 and second in 2008) scores high due not only to its strength in software (in no small part due to Microsoft) and aviation (Boeing), but also because Puget Sound region has emerged as entrepreneurial hotbed.
Maryland remains third (as it was in 2007 and 2008, as well), in part because of the high concentration of knowledge workers, many employed in the District of Columbia suburbs and many in federal laboratory facilities or companies related to them. These and the other top ten New Economy states (New Jersey, Connecticut, Delaware, California, Virginia, Colorado, and New York) have more in common than just high-tech firms. They also tend to have a high concentration of managers, professionals, and college educated residents working in “knowledge jobs” (jobs that require at least a two-year degree). With one or two exceptions, their manufacturers tend to be more geared toward global markets, both in terms of export orientation and the amount of foreign direct investment.
All the top ten states also show above-average levels of entrepreneurship, even though some, like Massachusetts and Connecticut, are not growing rapidly in employment. Most are at the forefront of the IT revolution, with a large share of their institutions and residents embracing the digital economy. In fact, the variable that is more closely correlated with a high overall ranking is jobs in IT occupations outside the IT industry itself. Most have a solid “innovation infrastructure” that fosters and supports technological innovation. Many have high levels of domestic and foreign immigration of highly mobile, highly skilled knowledge workers seeking good employment opportunities coupled with a good quality of life.
The two states whose economies have lagged most in making the transition to the New Economy are Mississippi and West Virginia. Other states with low scores include, in reverse order, Arkansas, Alabama, Wyoming, South Dakota, Kentucky, Louisiana, and Oklahoma. Historically, the economies of many of these and other Southern and Plains states depended on natural resources or on mass production manufacturing, and relied on low labor costs rather than innovative capacity, to gain advantage. But innovative capacity (derived through universities, R&D investments, scientists and engineers, and entrepreneurial drive) is increasingly what drives competitive success.
While lower ranking states face challenges, they also can take advantage of new opportunities. The IT revolution gives companies and individuals more geographical freedom, making it easier for businesses to relocate, or start up and grow in less densely populated states farther away from existing agglomerations of industry and commerce. Moreover, notwithstanding the recent decline in housing prices, metropolitan areas in many of the top states suffer from high costs (largely due to high land and housing costs) and near gridlock on their roads. Both factors may make locating in less-congested metros, many in lower ranking states, more attractive, particularly if their metropolitan areas offer high-quality schools, high-quality and efficient government, and a robust infrastructure.
Perhaps the most distinctive feature of the New Economy is its relentless levels of structural economic change. The challenges facing states in a few years could well be different than the challenges today. But notwithstanding this, the keys to success in the new economy now and into the future appear clear: supporting a knowledge infrastructure (world class education and training); spurring innovation (indirectly through universities and directly by helping companies); and encouraging entrepreneurship. In the past decade a new practice of economic development focused on these three building blocks has emerged, at least at the level of best practice, if not at the level of widespread practice. The challenge for states will be to adopt and deepen these best practices and continue to generate new economy policy innovations and drive the kinds of institutional changes needed to implement them.
As we head into the Thanksgiving weekend, the preeminent public concern with government appears to be TSA airport screening, with polls showing a majority of Americans supporting new and more intrusive security measures, but with a very unhappy minority, including more frequent travelers making a lot of noise (Nate Silver of Fivethirtyeight has a very detailed breakdown on polling data, trends, and past experience with tightened airport security). Opponents of full-body screening are probably not going to help the popularity of their cause by slowing down TSA operations during tomorrow’s so-called Opt-Out Day.
Meanwhile, prospects for a harmonious lame-duck session seem as remote as ever. While some observers perceive an increased possibility of a consensus proposal by the Deficit Reduction Commission, acceptance of any such proposal by Congress still remains extremely unlikely. The one bipartisan deficit-reduction idea that is gaining steam at the moment is an effort led by Tea Party favorites Jim DeMint and Tom Coburn, in conjunction with environmentalists, to block extension of tax subsidies for ethanol production, a proposition that will create problems for Republican presidential wannabees who will soon be spending a lot of time in Iowa. Meanwhile, more and more conservatives appear to be eager to sign onto a “no” vote on increasing the public debt limit, which could force an government shutdown early next year.
Another contentious issue hanging fire is the pledge by Republicans in both chambers of Congress to pursue a repeal of health reform legislation. Ezra Klein has a succinct summary of the political and substantive problems this effort will run into:
For now, Republicans have been talking about which policies to repeal. They want the 1099 tax gone, or the individual mandate reversed. But when they actually have to repeal anything, they’re going to have to talk about what functions they want repealed. Repeal the individual mandate, for instance, and you make it possible for the irresponsible to freeload on the system, and impossible for the responsible to get insurance at low rates. You also make it impossible to end discrimination based on preexisting conditions. And do Americans really want that repealed?
The answer lies somewhere between “no” and “hell, no.” And as Klein notes, Republican claims that they have other ways to protect the uninsurable (mostly involving the old chestnut of state-run high-risk pools, which typically offer bad policies at very high premiums) may not look too good when fully explained. Meanwhile, absent some national policy on pre-existing condition exclusions, another Republican hobby-horse, allowing interstate sales of insurance products, could actually erode existing state protections by creating a “race to the bottom” of insurers to low-regulation states.
Indeed, whatever else happens, the repeal effort could produce the sort of public awareness of the realities of health reform that pro-reform education efforts have so far failed to generate.
Three weeks after Election Day, the 2010 cycle refuses to end. Joe Miller continues to seek a way to block a formal declaration of victory for Lisa Murkowski in the Alaska Senate race, even as Republicans begin to pull the rug from beneath him. Tom Emmers lost a key court battle in his fight to prevent final certification of Democrat Mark Dayton as winner of the Minnesota gubernatorial race. And the number of unresolved House races is now down to four (two in CA and two in NY); if the current leaders win those races, the final count of House GOP gains will be 63.
Turning to the 2012 cycle, the University of Minnesota’s Smart Politics web page has unveiled a study demonstrating that party control of governorships has (at least since 1968) had virtually no impact on which party wins a given state in presidential elections. The write-up of this study is amusingly sprinkled with election-night quotes from media pundits claiming that Republican gubernatorial wins would have a massive impact on the outcome in key states in 2012.
And for those who can’t wait for the presidential election to get fully underway, I’ve done a fairly elaborate piece for TNR on the GOP presidential landscape coming out of the midterms. Long story short, no prospective candidates did that much good for themselves during the midterms, with the main impact being the erosion of conservative activist willingness to accept candidates they don’t like on electability grounds. This could be bad news for Mitt Romney, or for any establishment cabal determined to pre-select a nominee or veto someone like Sarah Palin.
Speaking of Palin, tonight we will learn if her daughter, Bristol, will win the annual competition on the top-rated network TV show Dancing With the Stars, despite relatively low marks from the show’s professional judges, thus creating a brouhaha over Republican ballot-box-stuffing and probable cries of persecution from both Palins and their fans.
In the wake of the mid-term elections, it makes sense that those on the political right would try to claim that there has been a fundamental “right turn” among voters, just as many on the left claimed but two short years ago that there had been a fundamental “left turn” among voters.
Those on the right predictably have seized on the fact that now 42 percent of the U.S. population identifies as conservative, a 20-year high, and that conservatives in 2010 broke 86-14 percent for Republicans, a 30-year high.
Consider the Gallup political ideology poll, which shows an uptick in the number of self-identified conservatives in the electorate:
Over at The Democratic Strategist, Ed Kilgore and Ruy Teixeira have counter-argued that what we are seeing is not so much a shift to the right, but rather more Republicans and Republican leaners choosing to identify as “conservative” rather than moderate. I think this is largely right, though not the whole story.
The Weekly Standard’s Jay Cost, however, has some problems with the Kilgore/Teixeira analysis:
If we follow Gallup, we’d draw two conclusions: (a) the increase in self-identified conservatives in the broader public has increased more than Teixeira and Kilgore acknowledge; (b) conservatives were not over-represented as a share of the electorate in 2010, but rather were under-represented in previous cycles.
Cost’s argument is slippery for a number of reasons. First, it’s not that Kilgore/Teixeira don’t acknowledge the increase in self-identified conservatives. It’s just that they ascribe it mostly to Republicans becoming more conservative, which, again, I think is probably the case.
Second, the claim that conservatives were under-represented in previous cycles seems to rely on an assumption that only now, in 2010, did many voters wake up to the fact that they indeed were conservative, after thinking for all these years that they were moderate. At last, perhaps thinks Cost, the fog has lifted!
A couple of additional considerations:
First, when you look at the balance of responses over 20 years, the balance is remarkably stable. Sure, it goes up and down, but “liberal” stays between 16 and 22 percent, conservative stays between 36 and 42 percent, and moderate (with the exception of its high point of 43 in 1992) stays between 35 and 40 percent. As Prof. James Stimson has shown (see here), the mood of the public goes back and forth between liberal and conservative. And power oscillates back and forth between the two parties in semi-predictable patterns
And there is good reason for this. The public is fundamentally moderate, and any time our winner-take-all system of elections produces a result that gets too far away from the moderate public, the electorate produces a response within a few cycles.
So, if there is a rightward shift, it’s probably only going to be a short blip, no more permanent than the supposed left turn of 2006-2008. Cost, to his credit, recognizes that the bump-up is more of a blip than a turning point. He also puts a good deal of hope (probably fairly placed) in the fact that Republicans will now be in charge of redistricting and Republican voters are better spread out while Democrats are more concentrated in urban districts
The second caveat is about the meaning of the word “conservative”
According to research by Chris Ellis and James Stimson, some people genuinely know what it means to a conservative in the current political debate, and indeed express matching preferences across all issues. But these “constrained conservatives” (as Ellis and Stimson call them) account for only 26 percent of all self-identified conservatives.
More common are the “moral conservatives” (34 percent), who think of themselves as conservative in terms of their own personal values, be they social or religious. And they are indeed right leaning on social, cultural, and religious issues. But they also like government spending on a variety of programs and generally approve of government interventions in the marketplace, hardly making them true conservatives.
And still others, “conflicted conservatives” (30 percent), are not conservative at all on the issues. But they like identifying themselves as conservatives. To them, it somehow sounds better. Or at least, they like it better then their other choices in the traditional self-identification questionnaire: moderate and liberal.
A smaller group of self-identified “conservatives” (10 percent) could be classified as libertarian – conservative on economic issues, liberal on social issues.
In other words, just because people identify as conservatives doesn’t mean that they are actually true conservatives . There are numerous reasons why they might identify so. It has long been the case that that the American public, on average, is operationally liberal and symbolically conservative. That is, that when asked about specific “liberal” government programs – be they spending on education, environmental protections, regulation of business – the majority of voters consistently say they approve. But when asked to self-identify themselves as liberals, moderates, or conservatives, many of the same voters say they are “conservative.”
So here’s my guess, though we don’t have the data to prove it (yet): part of what appears to be a rightward shift is Republicans identifying more as conservatives and less as moderates, as Kilgore/Teixeira argue, and part of the shift is more people attaching themselves to the conservative label because they like the branding of conservative as sober and responsible, and at a time of growing deficits, like associating themselves with the brand.
The challenge for conservatives will be to resist interpretations that assume America has made a rightward turn and is now (finally!) on the road to truly embracing real conservative values. It hasn’t. This election was far more a rejection of Democrats who failed to turn around the economy in short order and whose unified control of government made some moderate voters more uncomfortable than they expected in 2006 and 2008.
If I were a gambling man (and I’ve been known to make the occasional political bet), I would gamble that 42 percent marks a high-water mark for conservatives in the electorate. Simple reason: history shows that these things go up and down, and are pretty stable.
Finally, the demographics matter. According to a new study from Project Vote, turnout among key Democratic constituencies dropped off drastically between 2008 and 2010. Young voters, down 55 percent; African-Americans, down 43 percent. Hispanics down 40 percent. These groups, particularly young voters, and Hispanics, are the future of the electorate. When they come back and vote in 2012, it will be a whole different ballgame.
Talk about a blessing in disguise. Just as the Obama administration’s high-speed rail program was running out of congressionally-appropriated cash, Governor-elects Scott Walker of Wisconsin and John Kasich of Ohio have come chugging to the rescue.
By vowing to kill planned passenger train lines in their states, the newly elected Midwest Republicans have potentially freed $1.2 billion in federal rail money that can be used to build “true” high-speed routes elsewhere. The windfall represents more than the $1 billion that the White House has requested from Congress in next year’s budget. It gives the administration breathing space to keep the program going even if the Republican-led House blocks rail appropriations in 2011.
Since the Wisconsin and Ohio grants are of secondary importance to the national goal of getting a 150-mph-plus rail line up and running, the governors’ anti-train stance amounts to an unintended gift to the Obama administration
To be sure, benefiting high-speed rail was not the intent of Walker and Kasich. Both politicians have a history of hostility to public transit. Walker has opposed light rail, commuter rail and other transit initiatives in his current job as Milwaukee County Executive. Kasich, a former Ohio Congressman turned Fox News host, likes to say that the only kind of train he approves of is a freight train.
Both have called on Washington to divert the rail money to state highway projects. Ray LaHood, U.S. secretary of transportation, said this isn’t permitted under the law. LaHood told a rail conference last week that he plans to reallocate the money to other states and will bill Wisconsin and Ohio for federal funds already spent on the suspended rail lines.
Poor Choices for Rail Aid
The $810 million in Wisconsin money was to extend Amtrak’s existing Milwaukee-Chicago Hiawatha line to Madison, with a top speed of 79 mph in 2013, rising to 110 mph in 2015; Ohio’s $400 million was to build a Cleveland- Columbus-Cincinnati route operating at 79 mph maximum speeds over existing freight tracks. It received a $400 million grant.
The Obama administration funded these projects largely because they were “shovel ready” (a key criteria of the stimulus act that provided $8 billion in rail aid to states) and because they represented “regional balance” for the Midwest that Congressmen from both parties demand when money is allocated for highways.
As we have argued, spreading out federal funds to too many marginal projects is a mistake operationally and politically. Operationally, intercity passenger rail will succeed only if it provides an obvious and understandable margin of superiority over highway trip times. Politically, moderate-speed lines advertised as high-speed (or as “emerging high speed,” in Obama administration nomenclature) confuses the public and opens up the federal initiative to legitimate criticism.
Studies indicate that somewhat-faster service will not create the transformational transportation that will get Americans out of their cars and jumpstart regional economies. This was underscored by a recent study of high-speed rail compared to conventional rail commissioned by the U.S. Conference of Mayors.
Because the up-front costs of truly modern train lines are high, the administration needs to concentrate on finishing one or two routes with state-of-the-art equipment to prove that fast rail is an efficient and even profitable venture once construction is completed.
Florida Should be Centerpiece
The administration now has the opportunity to fund true high-speed rail by reallocating the Midwest money. It can fully fund the high-speed Tampa-Orlando line in Florida as well as help get a segment of California’s proposed 200-mph railway between San Francisco and Los Angeles into revenue service. There may even be money left over to accelerate “shovel-ready” projects in busy rail corridors with proven ridership in Illinois and Connecticut.
Newly elected California governor Jerry Brown (D) is a strong supporter of his state’s rail program – as is outgoing Republican governor Arnold Schwarzenegger. Both Illinois incumbent governor Pat Quinn (D) and Connecticut governor-elect Dan Malloy (D) are also pro-train.
Florida’s Republican governor-elect, Rick Scott, initially opposed the Tampa-Orlando line (the current governor, Charlie Crist, supports the project). But Scott has recently relaxed his rhetoric and says he is in favor of high-speed rail so long as Florida taxpayers don’t pay for it.
What reportedly swayed Scott was $800 million in fresh federal funds for the project last month. Florida now has $2.05 billion to complete the $2.6 billion line, including the $1.25 billion in federal funds it received in January.
Public-Private Partnerships
By reallocating a portion of the Wisconsin-Ohio funds, the $550 million gap could be closed. Or better yet, Washington could encourage private companies to invest in the Florida line by using federal funds as an incentive. Already Siemens, the high-speed locomotive maker, has announced interest in bidding on the Florida project if government shares a portion of the operational risk.
Such a public-private partnership would appear to satisfy Scott’s objections and could go a long way to appease Rep. John Mica (R – Fla.), a fan of public-private rail partnerships who is expected to become chairman of the House Transportation and Infrastructure Committee in January.
All of this could leave Wisconsin’s and Ohio’s new chief executives on the wrong side of the tracks. Or as a transportation official told the Milwaukee Journal Sentinel last week, “Expanding passenger rail is a national priority. Just because Wisconsin says no doesn’t mean it’s going away.”
Over the last year, as part of its economic stimulus package, the Obama administration has made the largest one-time investment in clean energy in history. The package included nearly $70 billion for promoting energy efficiency, mainly in homes. This makes political and policy sense: Americans trying to dig out from enormous household debt naturally would like to lower their monthly energy bills. And in light of the continuing downward pressure on housing prices, families undoubtedly welcome opportunities to improve the value of their single largest asset. In late August, Vice President Biden announced the successful retrofit of 200,000 homes under the American Recovery and Reinvestment Act.
As the residential retrofit industry gains momentum, national policymakers should turn their attention to a sector with even larger job-creating potential: commercial building retrofits. Although economists say the Great Recession is over, the private construction industry is still suffering Depression-era unemployment levels and spending has declined by over 30 percent in retail and commercial offices. One in four construction workers are unemployed, according to the Associated General Contractors of America.
A targeted set of short- and long-term policies to spur jobs and drive investment in retrofitting commercial buildings can help reverse these trends. A recent study by Johnson Controls, a leading provider of equipment, controls and services for heating, ventilating, air-conditioning and refrigeration for buildings, found that over 80 percent of management executives identified energy efficiency as a priority for new construction and retrofit projects planned for the coming year. Over the next decade, the market potential for commercial building retrofits is projected to be $18 billion annually. Simply put, retrofitting commercial buildings can help spur economic recovery and therefore should be a top priority for policymakers.
Brookings Institution congressional scholar Thomas Mann is hardly known as a partisan bomb-thrower. A frequent co-author of books and articles on Congress and American politics with the American Enterprise Institute’s Norm Ornstein, Mann is a model of sober and intelligent commentary, calling things as he sees them.
That reputation makes his recent comments on the state of our politics particularly noteworthy. In an interview with Time’s Jay Newton-Small, here’s what Mann had to say:
There is simply no basis for meaningful bipartisan leadership meetings today. Republicans are determined to defeat Obama in 2012; they have no interest in negotiating with him in order to provide him any sort of victory. This is a partisan war and the Republicans are playing to win. The only question is how long it will take Obama to accept this reality and act accordingly.
To hear, say, bloggers vent this way would be expected; to hear Mann, a scholar ensconced in the establishment, speak so plainly underscores the enormity of the problem. Our politics is broken and Mann, correctly, identifies Republican cynicism as its primary cause. Today’s GOP has become slave to the Rush Limbaughs, Glenn Becks, and Sarah Palins. Where are the Olympia Snowes, the Susan Collinses, the George Voinoviches? Why aren’t they banding together with the moderates and liberals on the other side of the aisle to demand a restoration of reasonable discourse? Are the imperatives of electoral politics so strong as to short-circuit any attempt at good-faith governance? (The question, perhaps, answers itself.)
In a follow-up exchange with Greg Sargent, Mann offered a more specific vision of what Obama should do:
With no expectations of passing important new legislation or of garnering anything from Republicans in Congress but political bait, he should pursue his substantive agenda where he can act on his own and use Congress as a place to submit a genuinely serious set of proposals to deal with the country’s more serious challenges (with no expectation that any will pass) and couple them with high visibility straight talk to the American people about the course he is proposing.
If the last two years are any indication, the next two will bring only further distress and disappointment for that vanishing few in Washington who still believe in that old dream of deliberative democracy. But gridlock need not be inaction, and Mann’s advice is spot-on. For the President to regain control of his presidency, he needs to engage in that thing he seems to have been averse to thus far: politics. Use the bully pulpit. Engage in a bit of gamesmanship. Promote his vision of the good society – and make explicit why the conservative vision is the wrong one for the country. Shifting the dynamic between a feral House and a technocratic White House is one of two prerequisites (the other being an improved economy) if we are to preserve any hope of advancing progressive priorities in the time that remains in his first term.
Book Review: The Disappearing Center, By Alan Abramowitz
That our politics are now deeply polarized is a well-known fact. But do the polarized politics in Washington reflect the deep divides in the country between red and blue voters (and their respective desires for increasingly opposite policies on both sides)? Or do these elite divisions exist in spite of an essentially purple, moderate America?
Alan Abramowitz, a professor of political science at Emory University, is on the side of Washington as mirror of a deeply fractured electorate rapidly losing its political middle. His new book, “The Disappearing Center: Engaged Citizens, Polarization, and American Democracy” is the story of how voters migrated to the extremes over the last five decades.
Essentially, four big, interlinked things happened. The first is that the parties “sorted” better. The second is that the number of safe districts and safe states increased. The third is that Americans as a whole became more educated. The fourth is that the engagement gap between strong partisans and political moderates widened.
In their 1960 plumage, Republicans and Democrats were both diverse species, loose-fitting labels that meant very different things depending on where you were from. Northern “liberal” Republicans and Southern “conservative” Democrats made up large minority factions, and both often found more common cause with their fellow “liberals” or “conservatives” across the aisle than their fellow partisans. In such an environment, bipartisanship was the norm, rather than the exception.
Then the tumultuous ‘60s shook the snow globe of American politics. The fight over civil rights broke the Democrats’ hold on the “Solid South,” turning Southern Democrats into Republicans. The Republican center of gravity gradually migrated deep below the Mason-Dixon line, taking on a much redder hue: much more socially conservative, more skeptical of government. Democrats, meanwhile, freed from the need to keep placate the conservative southerners, grew bluer: more socially liberal, and less skeptical of government.
Once upon a time, congressional districts were highly competitive, and a Democrat (or Republican) had to be sensitive to the concerns of voters in the competing party to maintain a seat. Even as late as the 95th Congress (1977-1978), only 24 percent of Democrats and 27 percent of Republicans were in “safe” districts; By the 108th Congress (2004-2005), 49 percent of Democrats and 40 percent of Republicans were in “safe” districts. The consequence: they were far more likely to be worried about fending off extreme challengers in their primaries than about winning the general election by moving to the center. Thus, more extreme politicians replaced more moderate ones.
In 1976, the eight most populous states were all battleground states in the presidential election, and the average winning margin among them was 3.1 percentage points. In 2004, only four of the eight most populous states were battlegrounds, and the average winning margin in the eight states was 9.3 percentage points. Thanks to both realignment and demographic change, Abramowitz writes, “Red states, counties, and congressional districts have been getting redder while blue states, counties, and congressional districts have been getting bluer.”
At the same time, the American public got a whole lot better educated. In 1956, 37 percent of Americans had only a grade school education, and just 19 percent had some college; in 2004, only three percent of Americans had just a grade school education, and 61 percent had at least some college.
This matters, Abramowitz argues, because “College-educated citizens are generally more interested in politics, more politically active, and better informed about candidates and issues than high school-educated citizens. This is especially true with regard to one important form of political engagement: ideological awareness.”
So: the parties got better sorted into distinct camps, districts became less competitive, and an increasingly educated electorate was better able to pick up on the differences and to respond accordingly, sorting themselves likewise into the appropriate categories. Abramowitz notes that especially among the better educated, there has been increased “partisan-ideological polarization” – that is, that high-information liberals are indeed reliably liberal across all issues, and high-information conservatives are reliably conservative across all issues.
All of this polarization has actually been good for political engagement generally. Abramowitz cites numerous measures of a public that now cares more about politics, follows it more closely, and talks about it more to their friends – partly because they are more educated, and partly because if the parties are highly polarized, the stakes of political victory are significantly greater (high stakes are a terrific motivator.)
But, at the same time, a certain slice of the electorate has been left behind: “The American public appears to be increasingly divided into two groups,” writes Abramowitz, “the politically engaged, who view politics in ideological terms, and the politically disengaged, who do not.”
For example, 56 percent of strong liberal or conservatives reported being politically engaged in 2004, as compared to 36 percent of those who “lean” liberal or conservative, and just 20 percent of those who say they are moderate, or of no ideology. In the 1950s, this gap did not exist.
To Abramowitz, the story of the disengaged moderates is mostly a story about less-educated, less-engaged citizens who don’t know or care enough about politics to pick a side. Were they to get wealthy and educated, like the partisans, they would presumably then know enough to pick one of the two distinct teams in American politics. But lacking the means or the will to pick a side, they call themselves moderate, feel disengaged and disenchanted by politics, and try to get on with the business of making a living.
On the descriptives, The Disappearing Center is a terrific compendium to what’s happened. The parties have pulled apart, and in particular strong partisans on both sides are further apart than ever before. There are fewer competitive states, fewer competitive districts, and politicians who dare to compromise are increasingly punished. Nor is this likely to change: “A coalition of moderates is no longer possible because the center is a shrunken remnant of what it was forty or fifty years ago,” concludes Abramowitz. The forecast is for more partisan rancor, far as the eye can see.
But the analysis lacks in a few areas. For one, Abramowitz doesn’t engage with the possibility that political moderates have become less engaged out of frustration with extremism; his preferred explanation is that they remain moderate only out of an ignorance of the stakes involved. More frustratingly, his analysis is based heavily on reported self-identifications, rather than actual issue positions, and the issues he choose to measure polarization tend to be particular hot-button issues, like abortion and the Iraq war. More thorough issue-based measuring of public opinion (see, for example, Morris Fiorina’s Disconnect, or Joseph Bafumi and Michael C. Herron’s research on leapfrog representation) has found a much more moderate public on the issues, a public that has been left behind by two increasingly extreme parties.
No sooner had Congress convened this week for a post-election, lame duck session than a partisan squabble erupted in the Senate that threatens to scuttle a major nuclear arms reduction treaty with Russia.
The contretemps began when Jon Kyl, the Senate Republican Whip, said he doubted the Senate could take up ratification of the NEW START arms accord until next year. This may seem like an innocuous comment on scheduling, but delay could well spell death for the treaty. This year, President Obama needs eight GOP Senators to meet the 67-vote threshold for ratifying treaties; next year, he would need 14.
Kyl’s remarks were especially galling to treaty backers since he had earlier called New START “relatively benign” so long as the United States also takes steps to assure the reliability of its nuclear arsenal. Obama duly committed enormous sums to upgrade national weapons laboratories and modernize again nuclear warheads, including budgeting an additional $4 billion specifically to placate Kyl. In his statement, however, Kyl referred cryptically to “complex and unresolved issues” that still need to be worked out.
The administration nonetheless has said it will press for a vote this year. Failure to ratify the pact would be a major embarrassment for Obama, who promised the Russians the deal would be concluded this year. But even more, it would be a triumph of blind partisan animus over America’s national security interests, and our government’s to carry out a coherent and effective diplomacy with the rest of the world.
More is at stake than the rather modest arms reductions (under the treaty, both sides would cap their nuclear warheads at 1,550, down from the previous ceiling of 2,200). Senate rejection of the treaty could unravel the administration’s efforts to prevent the spread of nuclear weapons to disruptive states, as well as its “reset” of relations with Russia, which it believes has begun to pay dividends on Afghanistan, Iran, and other important fronts.
It’s one thing for Washington partisans to squabble over domestic issues, like extending the Bush tax cuts. It’s quite another to let their fights spill over in the international arena, and undermine America’s ability to lead abroad. In the not-so-distant past – namely, the presidency of George H.W. Bush – arms accords passed the Senate on nearly unanimous votes. If Senate Republicans kill NEW START, it will be another dismal sign that our deeply polarized politics no longer stops at the water’s edge.
This week, the British government will formalize an agreement with two Canadian pension funds with enormous implications for passenger train development in the United States. In return for the right to operate a high-speed rail line linking London with the Channel Tunnel for 30 years, the Ontario teachers and municipal employee pension funds have agreed to pay the UK government $3.4 billion.
The democratic cause lost an eloquent and effective champion yesterday when former Rep. Stephen J. Solarz (D-N.Y.) succumbed to cancer at age 70.
When it comes to innovation-based growth, not all states are equal. Certain states are on the front lines, and are accordingly most likely to lead the way to economic recovery. According to a new report from the Information Technology and Innovation Foundation, the most leading New Economy states all excel at supporting a knowledge infrastructure, spurring innovation, and encouraging entrepreneurship.
Talk about a blessing in disguise. Just as the Obama administration’s high-speed rail program was running out of congressionally-appropriated cash, Governor-elects Scott Walker of Wisconsin and John Kasich of Ohio have come chugging to the rescue.
Brookings Institution congressional scholar 
Book Review: The Disappearing Center, By Alan Abramowitz
No sooner had Congress convened this week for a post-election, lame duck session than a partisan squabble erupted in the Senate that threatens to scuttle a major nuclear arms reduction treaty with Russia.