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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

Let’s Not Just Read the Constitution, Let’s Actually Discuss It

Posted on by The Progressive Policy Institute

Sign calling for people to get the "Constitution Flu"So the House Republicans are planning to get their “People’s House” show started today by reading the U.S. Constitution, that beloved document that our constitutional law scholar of a President has apparently never bothered to read.

It’s clearly symbolic politics, but I’m not as offended as, say the New York Times editorial board (who thinks it is a “a presumptuous and self-righteous act”). Rather, I think that Akhil Reed Amar, author of “America’s Constitution: A Biography” and a constitutional scholar at Yale Law School, has it right. Here’s what he told the Washington Post:

I like the Constitution. Heck, I’ll do them one better. Why only once in January? Why not once every week?… My disagreement is when we actually read the Constitution as a whole, it doesn’t say what the tea party folks think it says.

For the political right and especially the Tea Party, the Constitution has taken on the quality of a holy relic, a symbol of a lost America. Running through the Tea Party mythology is a familiar decline-of-civilization narrative: America was once an Edenic land of limited government and personal liberty. If only we return to the lost and mythic Constitution, we can somehow Restore America. (Apparently, in this story, Congress has been recklessly passing un-Constitutional laws without anybody even noticing – not even the most conservative Supreme Court in 80 years!)

Tea Partiers certainly have great fun making oh-so-clever signs about America’s lost constitution, but I’d happily wager that very few of them could actually pass a basic test about what’s in the hallowed document. (Surveys show that Americans actually know depressingly little about what’s in their beloved Constitution: a remarkable 49 percent think the President has the power to suspend the Constitution; 60 percent think the President can appoint judges without Senate approval; three-quarters of Americans think the Constitution guarantees a high school education; 45 percent of Americans’ think the Communist manifesto slogan  “from each according to his abilities, to each according to his needs” is found in the U.S. Constitution. Could you name all Ten Amendments?)

 

In this respect, a public conversation about what’s actually in the Constitution would probably be a very good thing. We might actually have a more informed discussion, and, as E.J. Dionne and Greg Sargent have both noted, there’s plenty of reason for progressives to welcome it. Rather than ceding it as a symbol of the political right, maybe we should discuss the broad federal powers to provide for the “general Welfare of the United States” (Article I, Section 8).

Unfortunately, the great likelihood is that the Constitution will be read once, and then promptly tossed aside. The words, in all their 18th Century legalese, will go in one ear and out the other (assuming anybody is actually listening). And life will pretty much be the same as it was before, with the majority of Tea Partiers still desperately clinging to their particular fantasy of what they believe the Constitution represents without any better understanding of what is actually says.

How Reckless Islamophobia Undermines the Struggle Against Radical Islam

Posted on by The Progressive Policy Institute

The brutal Egyptian suicide bombing at a church on New Year’s Day has rightly outraged the world. And yet, rather than focus on those specifically responsible for this brutal attack (most likely some splinter group of Al Qaeda), some – including many right wingers – are using the opportunity to stoke anti-Islamic sentiment. Islam-hater Robert Spencer laments that “Islamic jihadists and Sharia supremacists continue, with ever increasing confidence and brutality, to prey on the Christians in their midst, while those who should be working to protect them make excuses and look the other way.” “A disproportionate share of religious persecution happens in Muslim-majority countries,” writes Gary Bauer. Marty Peretz wrote that “already in the new year there is already news of Islamist terror.”

While there certainly is a problem with jihadist violence towards minorities in the Middle East, the right’s outrage would have a lot more credibility were it not part of a broader anti-Islamic campaign. The hysterical campaign against Park51 in New York City last year was a turning point in American conservatism’s relationship to Muslims, illustrating beyond a reasonable doubt the sheer Islamophobia on the right.

“Muslim life is cheap,” Peretz infamously wrote during the Park51 non-controversy. He apologized for another line in the same article, wherein he called for Muslims to be stripped of their First Amendment rights. But about Muslim life being cheap, well, it was “a statement of fact, not value,” he said later.

The astonishing thing about Park51 was that powerful figures in the conservative movement revealed themselves as concerned with Islam, suddenly and selectively. Sarah Palin called on “peaceful Muslims” to reject the planned Islamic center, as if erecting such a building were a statement of violence. John McCain said Park51 would “harm relations, rather help.”

Here’s an idea: avoiding sweeping statements about Islam’s supposed propensity towards violence would help relations. It’s something those who claim to be so concerned with Islamist violence might want to consider.

Where Regulation Did and Did Not Intensify, 2000-2010

Posted on by The Progressive Policy Institute

As Republicans go on the attack about excessive regulation under the Obama Administration, it’s worth noting two things. First, the regulatory state started growing under President George Bush, as I showed in my posts The Age of Regulation Started Ten Years Ago and Homeland Security and the Regulatory Burden.  Homeland Security accounts for roughly 90% of the increase in federal regulatory employment over the past ten years.

The second point is that the growth of regulation over the past ten years has been quite uneven, even outside of Homeland Security. Take a look at the chart below.

You can see that workplace and the environment has lagged in terms of regulatory employment. Just something to keep in mind.  Some of the big gainers were the FDA, the SEC, and the NRC.

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

Memo To Obama: Rise Above Party

Posted on by The Progressive Policy Institute

As you think about how to regain public support for your administration, Mr. President, one political imperative looms above all others: winning back the independents who voted for you in 2008 but abandoned the Democratic Party in 2010.

Independents are a motley political crew. Most habitually vote for one party or the other. But as many as a third of those who self-identify as independent really are nonaligned. How you can reach these true swing voters is a subject of endless debate in progressive circles. Centrists argue that you should move to the center. Liberals insist that by standing firm for progressive principles, the center will move to you. Persuading independents, however, is less a matter of political positioning than effective governing.

What these voters are looking for can be summed up succinctly: a more prosperous economy, a more disciplined government, and a more responsive political system that yields results, not partisan deadlock. These voters are upset not because they think you’ve gone socialist, but because they feel you haven’t delivered on these three fronts.

Read the entire article in Washington Monthly

Kicking Off the 112th Congress

Posted on by The Progressive Policy Institute

The 112th Congress convenes this week, amidst considerable maneuvering in both parties to set an agenda for the year.  Unsurprisingly, most developments involving Republicans are centered in their new stomping grounds in the House, and most involving Democrats are happening in their Senate redoubt.

The big headline for the GOP is its plan to hold a House vote next week on total repeal of the Affordable Care Act of 2010, a.k.a. ObamaCare.  This is expected to pass the House easily; with the decimation of Blue Dogs last November, it’s not clear how many Democratic votes the gesture will attract.  But it is clear the repeal will go nowhere in the Senate, leading to the next phase of the GOP effort to disable ObamaCare through some combination of appropriations denials, state obstruction, and selective congressional forays against the least popular elements of the law (especially the individual mandate and anything that can be construed as a restriction of Medicare services).  Lurking in the background, of course, is the slow march towards litigation of constitutional attacks on ACA, which will eventually make their way to the U.S. Supreme Court.

A less visible but potentially more dramatic House GOP development is the announcement of investigatory plans by the new Oversight and Government Reform chairman, the veteran conservative provocateur Darrell Issa of California.  Here’s the Washington Post’s description of Issa’s initial plans:

Issa, who will have power to subpoena government officials to appear before the committee, said he intended to conduct inquiries into the release of classified diplomatic cables by Wikileaks; recalls at the Food and Drug Administration; the role of Fannie Mae and Freddie Mac in the foreclosure crisis; the Financial Crisis Inquiry Commission’s failure to identify the origins of the meltdown; as well as business regulations and alleged corruption in Afghanistan.

Item five on this six-item list could be the most interesting, since Issa has penned an encyclical to corporate lobbyists asking for examples of government regulations that are allegedly preventing a revival of economic growth.  This is the legislative equivalent of ringing a dinner bell.  But item two is revealing as well, given the high likelihood that Issa will veer from Fannie Mae and Freddie Mac into  full-scale airing of the common Tea Party theory that ACORN and other “radicals” caused the housing crisis and then the financial meltdown by encouraging poor and minority folk to take out mortgages they couldn’t afford.

The buzz among Democrats (aside from the struggle of House Members to adjust once again to the second-class citizenship of minority status) is over plans in the Senate to enact filibuster reforms as part of the first-day adoption of Senate rules, which requires only a majority vote.  Despite public claims by all 53 surviving Democrats that they support filibuster reform, the exact nature of what they will support remains something of a mystery, though almost no one thinks such major steps as lowering of the threshold for cloture will be enacted.  Senate Democrats have already announced their package will not be unveiled, as originally planned, on the first day of the session (tomorrow); since the Senate will quickly recess, the “first day” when Senate rules can be adopted will technically not conclude until January 24.  That gives Democrats nearly three weeks to figure out what they can actually accomplish on filibuster reform.

Meanwhile, aficionados of political theater are enjoying the long and painful process that is almost certain to conclude in the dismissal of Michael Steele as chairman of the Republican National Committee. Steele surprised many observers by announcing over the holidays that he would pursue another term in the post; his tenure has been characterized by chronically poor fiscal stewardship and embarrassing gaffes, but Republicans can’t be too happy with the spectacle of firing an African-American who presided over the best GOP midterm election cycle in decades.  At present, the front-runner to succeed Steele is Wisconsin Republican chairman Reince Priebus, who can boast of a midterm election in which his party picked up a Senate seat, the governorship, and both state legislative chambers, perhaps the best GOP year in Wisconsin since Joe McCarthy’s heyday.

Elsewhere this week, state legislative sessions are gearing up amidst nearly universal fiscal crisis alarms, with Republicans in a vastly stronger position nationally than in the recent past.  As the two parties circle each other in Washington, state capitals could be where the real action occurs.

Framing the Fiscal Battle

Posted on by The Progressive Policy Institute

Republicans are convinced they have a mandate to cut government down to size. That’s hard to do when you only control one House of Congress, and harder still when your fiscal plans are fraught with internal contradictions.

It’s not even clear, for instance, what Republicans really want to accomplish. Senator-elect Kelly Ayotte, delivering the GOP’s weekly address Jan. 1, said that “Job one is to stop wasteful Washington spending.” At the same time, she said that “Congress must get serious about meaningful debt reduction.”

So which is it—cut public spending or cut public deficits? That’s a distinction with a difference, especially to investors worried about the basic soundness of the U.S. economy. To them, deficits are simply the arithmetic result of government spending too much, taxing too little or both, as is clearly the case today. Last month, Republicans struck a deal with President Obama on a tax cut package that will add $950 billion to the nation’s debts. Key GOP House leaders have made it clear they will oppose any tax hikes to solve the budget crisis, which they pretend is purely a matter of overspending.

Ayotte seemed closer to the mark in saying Republicans come to Washington to “make government smaller, not bigger.” In practice, however, that ideological goal may not be compatible with what the public seems to want. Independent voters especially have focused on narrowing the enormous deficits that force America to get deeper and deeper in hock to Chinese and other foreign lenders.

And if Republicans are serious about taking taxes off the table, they’ll have to make even deeper cuts in public spending—including Social Security, Medicare and Medicaid—to close our yawning budget gaps. It will be interesting to see which GOP bravos are willing to walk that plank. Thus far, House Republicans are proposing only cosmetic cuts, like trimming the House budget by $25 million. It’s a good idea for the House to discipline its own spending, but in a $3 trillion budget, that’s chump change.

Meanwhile, the GOP is planning to vitiate budget caps imposed by the previous Congress. Under the caps, any new spending or tax cuts would have to be offset by equivalent spending cuts or tax hikes. Republicans would eliminate the later requirement, so that tax cuts too would trigger deeper spending cuts. This of course is a formula for a deepening fiscal crisis and intensifying polarization between the two parties. And House Republicans will take a run at repealing Obamacare, which would certainly reduce federal spending but actually increase future budget gaps. In any event, it’s not happening

Some of the more fervid Tea Party types are even threatening to vote against raising the debt ceiling in March if Democrats don’t agree to new spending cuts. If they are serious, this could mean America would default on its debts for the first time in history. It would be, as Obama’s chief economic adviser, Austan Goolsbee, said yesterday, an act of political insanity, the equivalent of taking yourself hostage and threatening to shoot.

Finally, there’s the crucial question of timing. Incoming House Budget Committee Chairman Paul Ryan reportedly is planning a package or rescissions aimed at cutting about 21 percent from 2011 spending Congress approved last year. The aim is to return domestic spending to its 2008 level, before Obama took office.

The risk is that withdrawing a significant chunk of fiscal stimulus could abort an economic recovery that at last seems to be getting traction. There’s no question that Americans want to restore fiscal discipline in Washington, but what they want even more is for the economy to grow and unemployment to start falling.

Goolsbee hinted that Obama’s next budget also will contain some spending cuts. But the GOP’s ideological zeal to cut government gives Obama an opportunity to offer a more pragmatic approach that puts jobs growth first, while taking balanced and gradual steps to put the federal government on a fiscally sustainable course.

Progressives do need to get serious about getting federal spending under control. But by framing the coming fiscal battles as a choice between a more robust economy and a smaller government, they can speak directly to Americans’ number one priority and thereby regain the political initiative.

How the War Looks From Al Qaeda’s Perspective

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In the new issue of Vanity Fair, journalist Peter Bergen argues that we are, in fact, winning our war against Al Qaeda. “[I]t is not the West that faces an existential threat, but al-Qaeda,” he writes. “Above all, we need to keep al-Qaeda in perspective, remembering that its assets are few, and shrinking.”

Now, Bergen is one of the few Western journalists to meet Osama Bin Laden, and among the world’s foremost experts on Al Qaeda. He also opposed the Iraq War for the same reason President Obama did, as a distraction from the hunt for Al Qaeda in Afghanistan. In other words, Bergen is not just another hawk or war cheerleader, reflexively supporting military action divorced from any realistic aim. He does not claim progress in this war because he always mistakes militarism for wisdom, as, say, Republican hack Bill Kristol does. So it’s very worth taking what Bergen has to say very seriously.

Even if he is wrong about the astuteness of continuing to fight in Afghanistan, as I think he is, Bergen points to a larger truth about the vast majority of commentary and analysis about Al Qaeda: most of it focuses not on Al Qaeda but on us. Our blunders, our costs, our misguided decisions and our weaknesses. Very little looks at developments from Al Qaeda’s point of view. And from Al Qaeda’s point of view, things don’t look so pretty.

Bin Laden imagined Muslims rising up worldwide and overthrowing their oppressors after 9/11, so inspired by the attacks would they be. That obviously hasn’t happened. Al Qaeda imagined the U.S. ceasing its support for Egypt, Saudi Arabia, Jordan, and other un-Islamic regimes in the Middle East. That hasn’t happened, either.  Bin Laden’s right-hand man, Ayman al-Zawahiri, believed his organization could gain control of a state and expand its Taliban-like rule outward. Nope. In fact, all of Al Qaeda’s larger goals of restoring the caliphate and ushering in a period of worldwide ultra-Islamic rule have failed to materialize.

Nearly 10 years after the 9/11 attacks,  Al Qaeda is much further away from achieving its primary aims than it was before the attacks, when it could at least claim to have a mini-state within Afghanistan. Yes, the U.S. has expended great resources, lost thousands of soldiers, and traded away many valuable liberties and values. I think Bergen understates these costs when he writes, “During the past decade, misguided actions taken in the name of the War on Terror—notably the invasion of Iraq, the bungled war in Afghanistan, and the heavy-handed approach to the treatment of prisoners—have bought bin Laden and his allies some time.”

But for Al Qaeda, bruising America is only a means to an end. The point of hurting the United States was for it to crumble, not for it to carry on in a wounded state. After America broke apart easily, like a spider web, Saudi Arabia, Egypt, Jordan, and Israel would surely follow, bin Laden thought. Taking over those lands was the purpose of attacking the U.S. in the first place. What good are spectacular terrorist events against infidels if they don’t lead to the outcomes you want?

True, Al Qaeda still exists, and arguably might even still be able to execute another attack on the American homeland. But it has not done so in nearly 10 years, and not for lack of trying. The ultimate way to defeat Al Qaeda is not just to prevent it from killing Americans—though of course that is a major sub-goal of ours—but to kill or capture its current members, and convince prospective future anti-American jihadis not to join its cause. Preventing Al Qaeda from achieving its larger Islamist aims is a prime way to do that. Even the most committed ideologues can only fight for so long without making significant progress towards its goals, after all.

All of which is to say that things probably aren’t as bad as they seem. Things probably aren’t as bad as they always seem. Al Qaeda has a fundamentally unrealistic goal and a deeply unappealing ideology. As long as the U.S. and its allies refrain from making too many too mistakes, as long as we play the long game and keep Al Qaeda isolated, as long as we protect the American homeland, we will win this war. We already are.

Standing Up to the Chinese Threat

Posted on by The Progressive Policy Institute

Maybe it’s just the growing pains of an adolescent superpower, but China has begun to flex its newfound muscles in ways inconsistent with its “peaceful rise.” Its bullying behavior demands a firm pushback from the United States – starting next month when Chinese President Hu Jintao comes to Washington for talks with President Obama.

The unmistakably imperious trend in China’s conduct has definitely caught the world’s attention. Take its recent arm-twisting campaign to prevent nations from participating in a Nobel Peace Prize ceremony for Liu Xiaobo, a prominent democracy activist serving an 11-year sentence for subversion. Nineteen countries caved shamelessly to China’s demands. In a display of insecurity worthy of Burma’s insular and paranoid junta, the government also cracked down on domestic dissidents and barred travel to Oslo.

read the entire piece at RealClearWorld

 

Will American Exceptionalism Sink or Save Obama?

Posted on by The Progressive Policy Institute

A new Gallup poll out today highlights what could be a problem for Obama going into the 2012 election: his reluctance to embrace the idea of American exceptionalism. According to Gallup’s polling, 37 percent of Americans think that Obama does not “believe the U.S. has a unique character that makes it the greatest country in the world.”

What makes this dangerous is that Americans are in an anxious and insecure mood these days, seeing a world that doesn’t match up with well-established ideas about American greatness. These days, only 20 percent of Americans think the U.S. has the strongest economy in the world, and only 34 percent expect Americans can get back to the world’s top economy in 20 years. Only 17 percent of Americans are satisfied with the way things are going in the United States.

And yet, despite all this, 80 percent of Americans still believe in America’s unique greatness (73 percent of Democrats, 91 percent of Republicans).

There is a gap here. American exceptionalism is part of our cultural heritage and our self-identification. We believe there is something special about our nation. And yet, something is preventing us from achieving its full potential. What is it? No wonder there is so much anxiety.

The danger is the temptation to blame the wrong causes. The political right has increasingly spinning stories about how big government socialism is preventing America from achieving its true potential, and as The Washington Post’s Karen Tumulty recently noted in an excellent round up of Republican talking points on American exceptionalism, “Lately, it seems to be on the lips of just about every Republican who is giving any thought to running for president in 2012.

But there is an upside here too, which is that despite the mood of declinism, there is also an underlying base of confidence and resilience. Americans still feel there is something special about this country, which means that there is a narrative on which to build a story of recovery. We’ve done it before, and we can do it again. This is America. We can roll up our sleeves and make hard choices about our future.

Can Obama be the leader to make that pivot? The good news is that 58 percent of Americans actually do think Obama believes in America’s unique greatness, including 57 percent of Independents (not surprisingly, 83 percent of Dems but only 34 percent of Republicans think Obama believes this). Not overwhelming, but at least it’s a start.

As numerous commentators have noted, the Obama administration is in need of an overarching narrative, a coherent and aspirational story about the direction in which he is trying to take the country. Recently, Obama tried out a “Sputnik Moment” trope in speeches. Though it hasn’t exactly caught on (and the analogy is a bit strained), at least he’s thinking along the right lines.

American greatness does not have to be a jingoistic tool of the political right. It can also be a powerful set of ideas for Obama to tap into about how we don’t have to give into declinism, and how we can indeed get America moving again because always have. We’re special like that.

Too Soon to Tell About FCC Rules

Posted on by The Progressive Policy Institute

I had hoped to write a simple post giving thumbs up or down to yesterday’s FCC ‘net neutrality’ rule-making. Alas, I can’t, yet.

Let me explain. I judge their actions by applying the principle of countercyclical regulatory policy: In recessions, the government should refrain from imposing heavy-handed regulations on innovative, growing sectors. The goal is to keep the communications innovation ecosystem growing and healthy.

From that perspective, the three basic rules that the FCC approved are fine: Transparency, no blocking of legitimate websites, and no “unreasonable discrimination” by wired broadband.

The key here is the transparency provision, which gets little attention. If we look back at the wreckage of the financial boom and bust of the 2000s, the big problem was not financial innovation. Rather, the big mistake made by the financial regulators was not pushing for more information about the decisions being made by Wall Street. That would have enabled regulators to put up a stop sign before things got out of hand.

Learning from that bad example, an intelligently-enforced transparency provision for broadband providers—requiring them to release “accurate information regarding the network management practices, performance, and commercial terms of its broadband Internet access services”—would go an awfully long way to deterring abusive practices without interfering with innovation.

If the FCC had just stopped with its three rules, we could be heading for the best of all possible worlds …where the communications innovation ecosystem keeps growing, the providers earn enough profits to allow them to keep investing, but where transparency helps encourage them to be good stewards and not to be too greedy.

But not content to leave well enough alone, the FCC appears to have added a lot of extra verbiage to the order that muddies the waters,  to the point where I can’t even figure out what they are trying to achieve. I say ‘appears’ because all we have so far is excerpts from the text, rather than the full text itself.

If regulators can’t make rules that are clear and straightforward, it’s a sign they shouldn’t be doing it. I wait eagerly for the actual text of the order.

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

Where the U.S. is Building Knowledge Capital

Posted on by The Progressive Policy Institute

I’ve been posting about knowledge capital writedowns, so now it’s time for a post on where the U.S. is building knowledge capital.

Let’s start with research and development: R&D is not the only type of knowledge capital investment, but it’s one of the more important parts.  In my upcoming paper “Biosciences and Long-Term Economy Recovery”, I wanted to compare biosciences R&D  in the U.S. with infotech R&D.  (Biosciences, by my definition, includes pharmaceuticals, medical equipment makers, and biotech).

Now, these numbers are not published by the government,  but I was able to take a decent shot  using NSF data. Take a look at the chart below:

By my calculations, the U.S. R&D effort, outside of defense, is divided into thirds–one third biosciences, one third infotech, one third everything else.

I estimate that  biosciences accounts for  approximately $100 billion a year in domestic R&D spending. This includes domestic business spending, nondefense federal spending and nondefense academic spending.

U.S. domestic infotech R&D totals roughly $95 billion, outside of defense. However, my calculations don’t pick up the portion of the government defense R&D that goes into IT-related projects, which would gross it up to $100 billion. For all intents and purposes,  domestic IT R&D is roughly equal to biosciences R&D.

In these two areas–biosciences and IT–it’s likely that the rate of U.S. knowledge capital creation exceeds the rate of knowledge capital writedown. Other areas of R&D? Much dicier.

Note: These are preliminary estimates. I will likely update them in the full version of the paper.

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

What to Look For in 2011

Posted on by The Progressive Policy Institute

The 111th Congress is still a few days from concluding, but with Saturday’s Senate vote repealing the military’s Don’t-Ask-Don’t-Tell policy, it can boast a record of progressive accomplishment that may give pause to liberal critics of the Obama administration.  Ratification of the START treaty just before Christmas would be a nice capper before the difficult period begins with the Republican takeover of the House and the official burial of any filibuster-proof Democratic Senate Majority.

Since this is my last memo for 2010, it’s as good time as any to examine the political mood of the country going into 2011.

It’s worth noting that there’s really no consensus interpretation of what ultimately happened in the midterm elections.  Democrats remain divided between those who view the November setback as primarily a structural phenomenon attributable to a bad economy and inevitable shifts in the turnout patterns, and those who believe strategic and tactical errors by the President and congressional leaders invited the defeat. Liberal activist criticism of Obama for his conciliatory public attitude towards Republicans, conservative Democrats, and “big business,” while familiar to anyone who remembers the Clinton years, reached a sharp new point near the end of the year, nearly producing a revolt in the House against the Obama-McConnell tax deal.

But it’s unclear whether this hostility among opinion-leaders is widely shared in the actual “base” of Democratic voters.  The latest Gallup tracking poll does show Obama’s job approval rating among self-identified liberal Democrats dipping below 80 percent for the first time, but 79 percent approval is still a pretty high number. Anyone fantasizing about a left-bent primary challenge to the president should look at last week’s Magellan poll of NH, which showed Obama trouncing any potential rival there, even though it should be one of his weakest states.

Republicans, meanwhile, have largely taken a triumphalist view of the midterms as indicating a conscious conservative “turn” in the electorate that has rejected Obama, Pelosi and their “socialist” policies.  The major topic of dissension among conservative commentators is whether the risk to be most avoided is an ideological rigidity that prevents Republicans from taking advantage of Democratic missteps, or instead a return to the “big government conservatism” and ideological laxity that, in their view, doomed the Bush administration.

Since the air is often full of warnings to party leaders from both sides of the spectrum against compromise with the satanic opposition, it’s interesting to look a little more deeply at Democratic and Republican attitudes on the subject of bipartisanship.  A recent analysis by Pollster.com’s Mark Blumenthal reaches the striking conclusion that poll numbers showing high public support for “compromise” can be misleading:

For many partisans, “compromise” is really a disguised expression of partisanship. They want to see the leaders of both parties working together, but mostly in support of their preferred policies. A larger number of Democrats — a third to half — are open to their leaders compromising with the Republicans, and that difference helps tilt the overall numbers in favor of compromise.

In other words, support for “compromise” is lower than it looks, but for all the progressive angst about Obama betraying his base, he appears to have more maneuverability when it comes to compromise than does his Republican counterparts.  Certainly the base-dominated 2012 presidential nominating process is likely to exert a strong rightward influence on the GOP.

Five key things to look for early next year:

  • Most obviously, the economy: Is it recovering in a way that will be tangible to voters in 2012? Will Republicans at the federal and/or state levels take actions that essentially sabotage recovery by depressing consumer demand?
  • Redistricting: How aggressively will Republicans pursue their midterm advantage in the states, and how much leeway will courts give them in legislative gerrymandering?
  • The deficit debate: Will it develop in a way that encourages cooperation at the risk of premature austerity policies, or that sharpens partisan differences?
  • Afghanistan: The one thing that could turn liberal grumbling about Obama into serious intraparty opposition would be the perception that he’s dragging his feet on withdrawal of troops from Afghanistan.
  • Republicans: Will the GOP finally secure visible leadership that helps rather than hurt the party’s political prospects?  Can they do better than McConnell and Boehner, Gingrich and Palin?

The dynamics of the 2012 election cycle will depend on all five of these factors, aside from the nuts and bolts of money and organization and candidate personalities.  Whether the two parties—or barring that, the president alone via executive action—can accomplish much while jockeying for future position is another question entirely.