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Time To End Supplemental Budgeting

Posted on by The Progressive Policy Institute

The House has taken up a $30 billion supplemental appropriations bill to fund Afghanistan. However, the bill has ballooned to over $70 billon as the Democratic leadership has had to slather on non-defense appropriations to attract the votes of more progressive caucus members frustrated with nine years of slow progress in Afghanistan. There’s a $10 billion education jobs fund, $18 billion in Department of Energy loan guarantees, and $500 million for border patrol. This bill has turned the old guns vs. butter argument into a fight about guns and butter.

The bottom line is Democrats’ left flank is fed up with tough but “must have” votes on issues they view as too centrist (a health care bill minus the public option, multiple war appropriations). But this bill’s incentives are wholly inappropriate: Spending $10 billion on education-related jobs may be a worthy expenditure when considered separately, but it has no business in a defense bill. The Republicans, of course, are having a field day — they’ve exposed the Democratic split by threatening to pull potentially vital support of war-funding unless the bill is stripped “clean” of non-defense expenditures.

The good news is that there is a magic bullet, and it would solve a lot more than political bickering: End the practice of supplemental budgeting. Beyond politics, having just a single, unified defense budget would force trade-offs in a defense spending culture that has run wild in the last 10 years.

Here how supplementals work. Every year since 9/11, we’ve had essentially two or three defense budgets. This year, we’ve had three: a baseline defense budget appropriation of approximately $549 billion, a $159 billion “overseas contingency operations” (i.e., mostly Afghanistan and Iraq) budget and the current supplemental request of $30 billion (which includes several tens of billions for non-defense items discussed above).

The dirty secret is that even many of Pentagon’s “emergency war appropriations” have nothing to do with our current wars. Take the F-22, for example. Before Secretary Gates won last year’s fight to cap production of the F-22, lawmakers inserted $600 million to buy additional planes in the 2009 “emergency supplemental” after the money was shut out of the baseline 2009 budget. This happened even though not one of the 183 F-22s already owned by the U.S. military had flown a single mission over Iraq or Afghanistan. That doesn’t sound like an emergency spending necessity, does it?

Having three budgets is like having three strikes in a baseball at-bat — you have the luxury to swing and miss twice. Projects that don’t make the baseline DoD budget (strike one!) can be considered in either of the additional supplementals (strike two! strike three!) before they’re “out.”

Ending the supplementals would be like giving the batter just one strike. By combining all defense spending into one (larger) appropriation each year, the batter has just one swing — miss the first time, that’s it. The practice would force Congress to make hard choices that prioritize the war-fighter. Who wants to be the representative that adds defense pork to a bill at the expense of our fighting soldiers’ needs? And with no hope of getting additional money later in the year, it would begin to create a culture of efficiency and discipline in spending priorities.

Ultimately, Afghanistan will be funded. Having a single defense budget minimizes divisive political bickering and prioritizes the war-fighter. That’s a real win-win.

Marshall to Testify Before National Commission on Fiscal Responsibility and Reform

Posted on by The Progressive Policy Institute

NEWS RELEASE
FOR IMMEDIATE RELEASE
June 30, 2010

PRESS CONTACT:
Steven Chlapecka—schlapecka@ppionline.org, T: 202.525.3931

PPI President to Offer Recommendations on Curbing National Deficit

WASHINGTON, D.C. – Will Marshall, president of the Progressive Policy Institute, will testify today at 2 p.m. before the National Commission on Fiscal Responsibility and Reform during the commission’s first public listening session. Marshall will urge the commission to carefully examine national spending and create an ambitious but attainable fiscal target to address the United States’ mid- and long-term deficit challenges. The commission’s listening session live webcast can be viewed at https://www.whitehouse.gov/live.

“There is a common assumption in Washington that you can either have a fiscally responsible government or a progressive government, but you can’t have both,” said PPI President Will Marshall. “But, I’ve always rejected this assumption as a false choice. A progressive government can and must live within its means. It’s not really progressive if it chases the illusion of borrowed prosperity.”

The bipartisan National Commission on Fiscal Responsibility and Reform, created by President Obama to address our nation’s fiscal challenges, is charged with creating a plan after the midterm election to start unwinding America’s massive debt.

“We are looking for ideas,” said Commission Co-Chairman Erskine Bowles opening the commission’s third meeting on June 30, 2010.

Marshall is a member of the Brookings–Heritage Fiscal Seminar, a nonpartisan group of 16 federal budget and policy experts and frequently writes on the need to control the large and growing federal debt.

For further questions, please contact Steven Chlapecka at schlapecka@ppionline.org, 202.525.3931 (office), or 202.556.1752 (cell).

# # #

Marshall’s testimony as prepared for delivery.

The State of U.S. Infrastructure: A Snapshot

Posted on by The Progressive Policy Institute

We all want the infrastructure market to pick up dramatically and generate jobs, build productivity, and create competitiveness. But there is a yawning gap between public expressions of optimism and what infrastructure executives have been telling me about the state of their business. We continue to hear good news about the infrastructure industry in the media and from the administration, yet head counts at infrastructure firms are still down by as much as 25 percent, and executives say that the U.S. market is still essentially flat.

To get a granular picture of the state of infrastructure, my firm, CG/LA Infrastructure, last week sent out a survey of about 11,000 infrastructure executives and professionals throughout the U.S. and in all sectors of the industry. While only a fraction of the responses have come in so far, I’d like to share some preliminary results, which affirm the pessimistic mood that I’ve picked up in conversations. Here’s a snapshot of the state of U.S. infrastructure through the eyes of the men and women running our top firms:

1.) What is your current perception of the U.S. infrastructure market? Fifty-one percent of executives who have responded so far say that the market is “getting worse,” while 33 percent said that it is essentially flat and 15 percent said that it is improving.

The grim results may seem surprising, but it makes sense when you think about it. Most states have not recovered from last year’s cataclysm and continue to cut their budgets across the board. Considering that 70 percent of infrastructure spending is the responsibility of states and municipalities, it would be a surprise if infrastructure spending didn’t go down.

2. In your day-to-day infrastructure work, what are the most problematic issues in terms of improving project development speed? The U.S. needs to dramatically increase investments in infrastructure. Our survey question tried to get at the barriers to that kind of increased investment, and the current problems for restarting the market.

In our menu of options — respondents were allowed to choose as many as they wished from a list of factors — fifty-four percent of infrastructure executives mentioned “financing” as a problem. Meanwhile, 30 percent highlighted weak public sector capacity. This is significant. If we are going to invest in infrastructure, then we need a highly capable public sector.

Additionally 30 percent of executives also highlighted permitting issues as a barrier. Surprisingly, environmental issues, normally the biggest ‘problem’ on any industry survey, ranked fourth, highlighted by only 24 percent of executives.

Clearly the overriding issue is financing. How is that going to be addressed, and who will benefit? These are questions for another survey, and deserve a lot more attention than they are getting – particularly given the preponderant role of state and municipal budgets, and the dramatic weakness in those budgets. And lurking behind these concerns is a question few people are asking: What has become of the Obama administration’s initial National Infrastructure Bank proposal?

3. High-speed rail (HSR) is a signature initiative of the Obama administration. How do you rate this proposal in terms of current progress, and future potential, on a scale of 1-10, with 10 being excellent and 1 being poor? Another striking result: 53 percent of respondents clustered their answers in the 1-3 range (97 percent scored the high-speed rail program “7” or below). The results reflect my experience with industry, where the initial excitement about the program has rapidly given way to doubt and incredulity.

This question allowed for comments, and those comments clustered into two groups: justifications for their scores, and constructive comments on what is wrong with the program. Under the first category, one commenter noted that there were “serious issues…of whether the funding provided will be sufficient to implement a meaningful program and whether the funding will be concentrated on the most promising HSR opportunities.” Another, more critical respondent wrote, “I have not seen any significant developments since the topic was broached.”

On the constructive side: “Existing rail corridors that host HSR should be exempt from most of the overly burdensome environmental laws. This is unnecessary and needless bureaucracy and is slowing everybody waaaaaay down.” Another comment noted that the program “needs a long term funding source; it will not survive as a jobs program.” Perhaps the most critical comment, in terms of strategy, was the following: “There are a few corridors where high speed rail makes a lot of sense; the Northeast corridor in particular. However, there is no national consensus on its utility in other parts of the country.” Without consensus, at a time of tremendous austerity, it is indeed difficult to see this “man on the moon” initiative moving forward. Note that nothing has been spent from the original authorization of $8 billion.

4. In infrastructure, where are the greatest [geographic] opportunities for your firm over the next 12 months? The answers to this question were surprising and underscore that the U.S. infrastructure industry is focused on the home market – and at the same time, does not see much future for itself in that market. Overall, 42 percent of executives surveyed see their greatest opportunities in the U.S., a market that they qualify as depressed. After the U.S. market, 32 percent of respondents see the greatest opportunities in Latin America (a region with four percent of global GDP), followed by North America (the U.S., Canada and Mexico), with 29 percent. Europe and the Middle East were each ranked at 20 percent, while non-China Asia was ranked below 10 percent. None of the infrastructure executives surveyed see opportunities in the closed Chinese market.

5. You expect your firm’s gross revenue in 2010 to _____. Only seven percent believe that their firm’s revenue will grow “significantly” in 2010, with 48 percent projecting moderate growth, and 32 percent stating that economic performance will remain flat. Two facts stand out: It is a cause for concern that 13 percent of executives see their firm’s performances actually declining and 80 percent see moderate or no revenue growth for their firms in 2010. Considering their point of comparison is 2009, the worst year for infrastructure in 80 years, this is dismal news.

All in all, the survey results speak for themselves. U.S. infrastructure executives don’t see much hope for revival this year – in fact, they see things getting worse. President Obama’s signature program, high-speed rail, does not receive anything like passing grades and it is increasingly not being taken seriously. The financing issue — not a surprise for anyone in the infrastructure business — is the number one problem facing the industry.

When I was starting in the infrastructure industry a friend would tell me, over and over, that “nothing is as stubborn as a fact.” Well, these are the facts. We should all take them seriously if we are going to create jobs, generate competitiveness and build opportunities. And it seems like the executives in this most public of industries have a pretty clear grasp of reality, and some good ideas about what should be done.

Photo credit: SP8254

In Plain Sight: A Look at the Russian Spy Ring

Posted on by The Progressive Policy Institute

I peered nervously into my colleagues’ offices after reading this morning’s wrap-up of the Russian spy case:

The operation, referred to by U.S. investigators as “the Illegals program,” was aimed at placing spies in nongovernmental jobs, such as at think tanks, where they could glean information from policymakers and Washington-connected insiders without attracting attention.

I realize Steven had studied in Russia, and this afternoon I’m going to fire up the old Blackadder tapes and figure out just how to catch him in the act.

Kidding aside, the story goes that 10 Russian spies were arrested (one remains at-large) as part of the largest espionage takedown I can remember.

Dan Drezner over at Foreign Policy thinks the whole thing is “low-rent” and “bizarre” because the ring is charged only with being “unregistered agents of a foreign government.” Drezner’s opinion is just odd — by definition, the nature of espionage is difficult to detect and harder to prove. To put this in perspective, it’s a huge deal when one intelligence operative gets caught — think Aldrich Ames, Robert Hansen, or most recently, my former professor Kendall Myers. Now we have 10, who worked in a loosely coordinated manner. The fact that we know as much as we do is testament to some pretty solid counterintelligence work.

Perhaps Drezner is unimpressed because of the nature of the suspects’ work: The press has categorized them more as talent-spotters who would recruit Americans in influential positions to provide information, not the actual spies themselves who’d bring documents out of sensitive government buildings. But I think categorization is likely an underestimation of what they actually did. These individuals may have recruited talent, but they also would have probably played a role in transmitting information back to Moscow.

The group was likely composed of Russia’s best. Remember the first (and best) Mission:Impossible with the “NOC” list? NOC stands for Non-Official Cover, and that’s what we’re talking about here — deep cover spies whose true identities are hidden from all but a handful of people. When Russian Foreign Minister Sergei Lavrov claims to have no idea what this is all about, that’s because he really doesn’t. Anonymity and deniability is by design.

Click over to Jeff Stein’s SpyTalk blog to get a flavor of how seamlessly the ring blended in with their American communities. I always find it hysterical that the neighbors are so shocked when spies in their midst are exposed — if the neighbors aren’t shocked that the normal-looking Canadian next door was leading a massive international Russian spy ring, then that would be news.

The investigation went on for nearly 10 years. Seem excessive? Why, after all, would we let these guys continue to spy on the U.S. if we knew what they were up to? Since this group served as talent spotters and intelligence mules, their operations had to be drawn out and subtle as they slowly became comfortable with, and then pitched, their recruits.

To firm up their cover, they’d spend months and months working their “real jobs” and only dip into the shadowy underworld on occasion and when they felt safe. Furthermore, the FBI needed to catch them absolutely red-handed, which is no easy task. Nothing like starting a potentially massive international scandal without iron-clad proof, huh? The FBI finally got what they needed on Sunday, with a fake dead drop of $5,000. And the decade-long investigation probably means that any intelligence damage has been limited. By keeping tabs on them for so long, we should know their extended network fairly well.

Should we be surprised that Russia is still spying on us? Hell no. We do it to them. And other countries, including our close allies, do it to us (albeit for varying motives). Everyone’s looking for an informational advantage, and that’s what spying can get you.

Finally, there’s been a lot made of the timing of this incident, right on the heels of Russian President Dmitry Medvedev’s visit to DC. Accordingly, we should expect Russian retaliation just to save face — they’ll probably PNG a handful of low-level diplomats whom they suspect of doubling as spies.

This could become a major international incident akin to Britain’s deteriorating relations with Moscow after the 2006 murder in London of Alexander Litvinenko, likely by Russian intelligence agents. However, I doubt it will. The timing of the arrests was bad, but they send a message of subtle strength to the Kremlin — despite wanting good relations with Moscow, Washington won’t be pushed around.

Photo credit: worldeconomicforum

Can Republicans Run the Table in November?

Posted on by The Progressive Policy Institute

A lot of the buzz about Republican prospects for retaking control of the U.S. House is based on fairly abstract factors, such as historical averages and national generic ballot polls. But in reality, of course, elections are individual contests, no matter how “nationalized” the cycle. And four months and change out from the November elections, it’s worth taking a somewhat more concrete look at the House landscape and where Democrats are vulnerable.

For purposes of this analysis, I’ll use the authoritative (if somewhat conservative, in the sense of caution about predicting incumbent losses) Cook Political Report ratings as of June 24 (no link, because it’s subscription-only). According to Cook’s highly astute David Wasserman, there are 66 seats currently held by Democrats that are involved in competitive races. Of those, nearly half (32) are actually rated as “lean D” at the moment. To win control of the House, Republicans need a net gain of 40 seats, and seven of their own seats are in competitive races, including three (DE-AL, HI-1 and LA-2) that most observers consider very likely to flip. So from the get-go, retaking the House will require a very high win rate for Republicans in competitive races, and/or continued improvement in their overall national standing—i.e., races now deemed “Likely D” slipping into the competitive range.

Looking at the 66 vulnerable Democratic seats, 15 are open. That’s a reasonably large number, but only half of the 30 open seats Democrats had in the last Republican “wave” election of 1994 (Republicans had 26 open seats in 2008, greatly helping the Democrats achieve a second straight big winning cycle). Twenty-five seats, however, are represented by freshmen, traditionally the most vulnerable incumbents. Most significantly, 51 of the 66 seats have a pro-Republican Partisan Voter Index (PVI), based on an average of party performance in the last two presidential elections. This indicates that most Republican gains in November will be a “correction” of recent overperformance by Democrats in House races rather than a true GOP “wave.” And it’s a reminder of the simple but often overlooked fact that because all members of the House face re-election every two years, a “landslide” is not defined by gains, but rather by overall performance. A GOP “landslide” in November would involve gains of closer to 100 seats than to the 40 necessary to eke out a small margin of control.

There are not any large regional disparities among the vulnerable Democratic seats: 18 are in the South, 18 in the Northeast, 18 in the Midwest and 12 in the West. Nor is it easy to typecast vulnerable Democrats by ideology: an analysis of the ideology of Democratic incumbents in competitive races published just yesterday by Swing State Project shows they span the intra-party ideological spectrum quite broadly.

Meanwhile, Nate Silver of FiveThirtyEight has just released an update of his Senate race forecast, which now shows a slight improvement in Democratic prospects compared to his last forecast a couple of months ago.  His model now predicts as a matter of probabilities that Democrats should get through November with 55 senators, with the Republicans holding 44 and, perhaps, one true independent (Charlie Crist). Silver gives Republicans a six percent chance of running the table and taking control of the Senate, a figure that improves to 12 percent if they can convince both Joe Lieberman and Charlie Crist (if he wins) to caucus with them.

Poll Watch

In polling news, two new surveys of the Massachusetts gubernatorial race by the University of New Hampshire and Rasmussen both show vulnerable incumbent Democrat Deval Patrick maintaining a seven-point lead over Republican Charlie Baker, with independent Tim Cahill losing steam. A rare poll of the Wyoming governor’s race (again by Rasmussen) shows the importance of term limits: four different Republicans have sizable leads over three different Democrats, while lame duck Democratic Gov. David Freudenthal enjoys an approval/disapproval ratio of 72/25 (a bit better than President Obama’s 30/70).

Yet another Rasmussen poll is the first post-primary survey of the South Carolina governor’s race, and given the positive hype surrounding Nikki Haley after her runoff win, Democrat Vincent Sheheen should be pleased to be trailing only 52-40 (his approval/disapproval ratio is 50/35, while Haley’s is predictably and perhaps temporarily in the stratosphere at 70/26).  And while it’s hardly that significant at this early stage, it’s interesting that a PPP survey of Texas Republicans shows Newt Gingrich leading the 2012 presidential field, with or without Rick Perry listed as an option. Presumed front-runner Mitt Romney is in the middle of the pack.

Ed Kilgore’s PPI Political Memo runs every Tuesday and Friday.

National Journal: Labor’s Uphill Climb This Year

Posted on by The Progressive Policy Institute

PPI President Will Marshall tells the National Journal‘s Eliza Newlin Carney that labor’s aggressive fight to unseat incumbent Democrats has been destructive and a losing strategy for Democrats to maintain a congressional majority:

The unions’ Arkansas challenge angered Democrats, from the White House on down. Some argue that the tens of millions of dollars that labor threw into the race was a waste, especially given that Arkansas is not union-friendly. Demanding loyalty to base voters, as tea party activists have set out to do in several GOP primaries, is a losing strategy for Democrats, said Will Marshall, president of the Progressive Policy Institute.

“Trying to enforce litmus tests and punish Democrats for ideological heresy [is] divisive and does not reflect the reality that Democrats are inevitably a coalition party,” Marshall said. He called the labor movement’s anti-Lincoln campaign “extraordinarily destructive.”

“The sad truth is that labor has not found a way to arrest its decline in the private economy,” Marshall added. “And this year, for the first time, we see more labor union members in the public sector than in the private sector.”

Read the entire article.

RIP Robert Byrd

Posted on by The Progressive Policy Institute

It’s been a tough year for the Democratic tradition in the U.S. Senate, with the loss of Edward Kennedy and the solidification of the Almighty Filibuster as the real power in the institution. But the death of Sen. Robert Byrd of West Virginia really does turn a lot of pages, while denying the Senate its unrivalled historian and parliamentarian.

Byrd’s tenure alone makes him one of the titans of Senate history: more than a half-century, spanning the administrations of eleven presidents. He was, however, the junior senator from West Virginia until he was 68, and in another reflection of the Senate’s slow pace of change, his career overlapped with only five Democratic leaders — not counting Byrd himself.

When Byrd was first elected to the Senate in 1958, Democrats from his corner of the world were typically hard-core segregationists and equally hard-core New Deal economic progressives. He abandoned and apologized for the former habit, but never the latter. The persistent poverty of West Virginia — for much of career it included some of the very poorest areas of the country — made it one place where politicians never shrank from the full exercise of power on behalf of the home folks, or from celebration of the seniority system that gave Byrd and so many others the clout to serve as equalizers. Byrd became the embodiment of Senate traditions for good reason: they served his constituents well.

He survived wave after wave of efforts in both parties to change the Senate and make it more responsive to national political trends, and might well have survived one or two more had he been born 10 years later. He also survived wave after wave of efforts to bend Congress to the will of presidents of both parties, and in that respect was more consistent than most of his colleagues in both parties.

In this era of political turbulence and simmering resentment of professional politicians, it’s unlikely America will ever see another senator like him. And so in a very real sense a big part of national history will go to the grave with him. His distinctive and authoritative voice will be missed, and may he rest in peace.

This item is cross-posted at The Democratic Strategist.

Photo credit: cliff1066™’s Photostream

Dodd-Frank Hits and Misses

Posted on by The Progressive Policy Institute

First the giant stimulus package, then the ambitious revamping of America’s health care delivery system. Now Congress, under the patient prodding of President Obama, is lurching toward passage of another stupendously complex bill, this time centered on financial regulatory reform. Whether you like them or not, you have to admit that big things are getting done in Washington on Obama’s watch.

If Congress passes the Dodd-Frank bill, it will be another major notch in the belt of a president who could use a political victory about now. But what’s a non-master of the universe like me to make of this 2,000-page behemoth?

It may do considerable good, but we ought to be clear about one thing: It won’t prevent the next financial crisis. As long as there are fortunes to be made in financial markets, there will be excessive risk-taking and speculation, new bubbles and panics, and powerful incentives for chicanery and fraud. No regulatory scheme can fully protect the public against ingenious new forms of human greed and folly.

That, however, is not an argument for doing nothing. The government had to react to Wall Street’s near meltdown in the winter of 2008-2009. Its interventions, beginning under President Bush and continuing into Obama’s administration, doubtless averted a full-bore financial collapse. But they also triggered a fierce and abiding public backlash against bailouts.

The Dodd-Frank bill doesn’t get everything right, but on balance it’s a reasonable response to the crisis. It imposes new disciplines on bank behavior, increases transparency for complex financial transactions and institutions, and offers consumers new protections against the clever breed of predators who have degrees from elite universities and sport $3,000 suits.

Some liberals are chagrined that the bill doesn’t break up the big banks. Conservatives echo the Wall Street Journal’s charges that the bill is a regulatory nightmare that will make it more expensive for banks to supply capital to businesses. It’s tempting to say that Sen. Chris Dodd (D-CT) and Rep. Frank (D-MA) must therefore have found some kind of centrist sweet spot, but there is something to the left-right critiques.

Most important, for example, the bill doesn’t slay the “too-big-to-fail” dragon. It leaves financial power more concentrated than ever in the hands of five mega-banks: Goldman Sachs, J.P. Morgan, Citigroup, Morgan Stanley and Bank of America. True, Dodd-Frank does impose the “Volcker Rule,” forbidding banks covered by federal deposit insurance from making bets (called “proprietary trading”) with their own money.  It increases capital reserve requirements to keep banks from taking excessive risks. It also sets up a council of financial guardians to anticipate systemic risks, and gives federal authorities power to seize and oversee the “orderly liquidation” of financial firms whose collapse could bring other institutions down as well.

But it’s hard to avoid the impression that the big banks will henceforth operate with a tacit government guarantee against systemic failure. This not only intensifies moral hazard – making it hard for administration officials to claim the bill would bar bailouts in the future – it also risks creating a privileged class of quasi-public banking utilities that will be able to borrow money more cheaply. That will raise the bar for new entrants and dampen competition in the banking sector.

Elsewhere, the picture looks more positive. Dodd-Frank would move much of the trade in financial derivatives onto exchanges and clearinghouses, though banks could still trade in over-the-counter derivatives to hedge their own risks. This seems like a sensible compromise that brings derivatives trading out of the shadows while retaining the ability of firms to hedge against interest rate and currency risks. In another boost for transparency, the bill would require private equity firms and hedge funds to register with regulators.

Dodd-Frank also puts in place what Obama last week called “the strongest consumer financial protections in history.” It creates a new Consumer Financial Protection Bureau housed with the Fed to police mortgage lending, credit and debit cards and other consumer loans – though not by auto dealers, who somehow won an exemption from oversight. This agency presumably will prevent abuses like the “no doc” and “liar” loans that helped to trigger the subprime lending frenzy, which was the spark that started the financial crisis.

The bill doesn’t deal at all with Fannie Mae and Freddie Mac. This is a huge omission, considering that these giant mortgage finance firms still hold a pile of dubious assets and are essentially in federal receivership.

For all its imperfections, Dodd-Frank seeks to protect consumers without creating undue regulatory obstacles to innovation in the financial sector, which traditionally has been a source of comparative economic advantage for the U.S. Pragmatic progressives ought to support it, while retaining a sense of humility about the ability of new regulatory bodies to prevent future abuses.

Photo credit: Center for American Progress Action Fund

Learning from Eurostar, Where London Meets Paris

Posted on by The Progressive Policy Institute

It’s a curious truth, though not yet widely understood, that we pay for high-speed rail whether we have it or not. We pay not only in congested highways, delayed air flights and disastrous oil spills, but also in a cumulative national slowdown that might be called arrested development.

This point is conveyed by a sharply reported article in the Financial Times that describes the business, cultural and even culinary changes in London 15 years after the start of high-speed Eurostar service to Paris.

Paris is 213 miles from London as the crow flies (about the same as Washington from New York), but “Paris seemed almost as exotic as Jakarta to Britons” before Eurostar service began in late 1994, FT’s Simon Kuper writes.

Nowadays, “what strikes you when going from Paris to London are the similarities.” Boasting a quarter of a million French inhabitants, London has become the sixth-largest French city, Kuper notes, while central Paris is “packed” with British nationals, some of them commuting multiple times a week to London on the train.

Transforming Travel

Eurostar is more than just a sleek conveyance for spoiled travelers, but a fundamental driver of progress. Back in the 19th century, people spoke of steam trains as “annihilating time and space.” Until railways became widely available, humans depended on animals for overland transportation and were limited by such factors as the feed required for a team of horses.

Each subsequent transportation revolution – the development of steamships in place of sailing vessels, the advent of flight with the Wright brothers, the mass production of motorcars, the arrival of jet planes replacing propeller craft – packed a wallop that reverberated across boundaries and social classes, tying people together in new and different ways.

 

The automobile made suburbia possible, while jets turned tourism into a global enterprise, to cite two examples. Equally fascinating is that the technology undergirding all of these revolutions was widely known and available to all nations, but only in western Europe and the U.S was the technology exploited in full.

That is until recently when the rebirth of rail travel – trains operating at several times the speed of highway traffic on dedicated rights of way – was pioneered in Japan, improved in Europe and now exploited to the max in China.

User-Friendly Networks

American policymakers, preoccupied by budget deficits and poll numbers, appear to be missing the larger picture, namely, that our standard of living is dependent on deploying the latest tools in transportation. In many corridors, high-speed rail is the best solution among traffic needs and sound environmental policy, and concentrating public funds upon it would represent a vast step forward in the use of transportation money.

One basic element ignored in Washington is the recognition that current rail traffic is far below what it would be had intercity rail service been remotely adequate under Amtrak. Some train journeys take longer today than they did when Herbert Hoover was president. It is impossible to predict how much dormant traffic is waiting to be tapped by a revitalized rail system.

The Eurostar trains that link downtown London with central Paris in just over two hours have not only enlivened both cities, according to Kuper, but created “user-friendly networks” that allow scientists and businessmen to exchange ideas quickly.

With other high-speed routes connecting France with Belgium, Germany with Austria, Switzerland with Italy, and, soon, France with Spain, the balance of scientific networks, which shifted to the U.S. after World War II, has swung back to Europe, according to his analysis.

In other words, efficient transportation is as important to a city’s or nation’s bloodstream as unfettered capital markets or sustained R&D. Here’s hoping the Obama administration, which supports high-speed rail, starts to make the case for expanded funding with the same clarity and celerity as the business-minded Financial Times.

Photo credit: Slices of Light

Why Do We Keep Passing All These Sanctions Anyway?

Posted on by The Progressive Policy Institute

A few weeks ago, the United Nations Security Council approved what have widely been hailed as the most wide-ranging and effective sanctions package against Iran ever. Today, word comes that the House and Senate have passed — by massive margins — a reconciled bill of unilateral American sanctions against Iran. The president will likely sign it.

As I’ve written before, it’s an open question how ultimately effective the UN sanctions will be, with massive loopholes for Chinese businesses (a necessary pre-condition for Chinese support in the UN Security Council, and ultimately the lesser of two evils) and a diplomatic split with Brazil and Turkey.

The current package on Obama’s desk looks to penalize companies that do business with Iran’s oil and gas sectors, as well as banks that deal with the Revolutionary Guard Corps, the group of thugs that’s the real power-broker in Tehran. Despite assurances from members of both parties that this bill forces companies into a with-us-or-against-us binary choice, it comes with significant risks: Will a rise in gas prices permit the Iranian regime to rally a divided population against a Western bully? How will the Green Movement, divided itself, react?

(If you want to see an alternate sanctions proposal, click here.)

These questions are particularly pressing amidst reports that Iran has been stockpiling fuel and reducing domestic consumption for six months.

But here’s where we need a lesson in why the international community goes to such lengths to negotiate and then impose sanctions in the first place. Political rhetoric that accompanies sanctions sets unrealistic expectations among Western audiences. Elected officials make it sound like each new round of sanctions will drive Iran to its knees or make them shudder in fear or some other impossible prediction.

The administration has to do a better job explaining why we impose sanctions. When news reports swirl about Iran skirting the sanctions by changing ships’ names, stockpiling fuel, and moving money around, it’s often portrayed in the press as a loss. But that’s actually proof that sanctions are working! The act of forcing Iran’s leadership to spend time and effort trying to evade sanctions is actually a success — it means that Iran’s actions have a cost associated with them.

There’s no guarantee, but the hope is that one day Iran’s rulers will wake up and say, “Gosh, I’m sick of trying to smuggle gas and move money around. It’s really starting to wear me down. It would be a lot easier if we could just do this above-board and have a real place in the international community.” Well, the only way to make that happen is to negotiate in good faith. If we drive Iran back to the negotiating table and force real concessions on their part, sanctions will have been a success.

Photo credit: United Nations Photo

A Lull in Primary Action

Posted on by The Progressive Policy Institute

We’re entering a slow period in state primaries, with the only contests on tap for the next four weeks being a runoff in Alabama on July 13 and Georgia’s primary on July 20. The former event features a Republican gubernatorial runoff between long-time front-runner Bradley Byrne and surprise second-place finisher Robert Bentley, who had to get past an unsuccessful recount petition by Tim James. In Georgia, there are competitive gubernatorial primaries in both parties, though former Gov. Roy Barnes seems to have the Democratic race well in hand at this point; Republicans have a fractious multi-candidate field led for many months by state insurance commissioner John Oxendine (whose ethics record is so controversial that RedState blogger Erick Erickson’s said he’d vote for Barnes if Oxendine wins the nomination), with a runoff almost certain.  I’ll have more about both states when we get closer to the balloting.

As expected, the landslide victories on Tuesday of Asian-American Nikki Haley and African-American Tim Scott in South Carolina has spurred a lot of commentary about the GOP’s new diversity. (It hasn’t got much attention, BTW, but Haley’s Democratic opponent, Vincent Sheheen, is of Arab descent, reflecting the long-time presence of Lebanese in the Deep South). But outside South Carolina, an equally remarkable aspect of those victories has gone largely unremarked: both candidates were protégés of disgraced Republican governor Mark Sanford, who has now achieved the political equivalent of eternal life in the success of his young associates. It will also be interesting to see how well Scott (assuming he wins his heavily Republican district in November), a hard-core conservative ideologue, fits in with the Congressional Black Caucus.

Utah Republicans are recovering from a nomination cycle that involved the rejection of a long-time incumbent Senator, Bob Bennett, and then a savage primary between two very conservative candidates, with the winner, Mike Lee, being very much the vehicle for national groups determined to move the GOP to the right. To understand that these Men of Principle haven’t gotten rid of the hypocrisy of traditional politics, check out the web site of the losing candidate, Tim Bridgewater. At the top is a pre-primary jeremiad that includes this line: “My opponent, D.C.-based attorney Mike Lee, is spending $200,000 on TV and radio, spreading lies and distortions about my business background.” A bit later he accuses Lee of “a desperate lie.” But over to the left on the page is a new bulletin that, predictably, endorses that desperate liar for the general election.

Moving along, you can expect some serious political fallout around the country from the U.S. Senate’s apparent defeat of what some have called a second stimulus bill. Most of the attention in national media has been paid to the impact on people whose unemployment insurance eligibility is running out. But the bill also included $16 billion in assistance to state and local government to help forestall layoffs of teachers and other public employees. Whatever you think of that as economic policy, it’s clear the withdrawn funds will wreak havoc in those states where governors and legislators had counted on the help, including those where Republicans are nervous about the public reaction to teacher layoffs and higher public university tuition. It’s another example of how tough-sounding rhetoric on fiscal austerity and small government is more popular than the practical steps needed to reduce spending, particularly in a recession, since there’s no state budget category called “waste, fraud and abuse” that can painlessly absorb cuts.

Poll Watch

In polling news, Rasmussen has a bunch of new take-it-with-a-grain-of-salt polls.  In the Nevada Senate race, a post-primary survey has Republican Sharron Angle up over Harry Reid 48-41, though her favorable/unfavorable ratio is no better than the incumbent’s. In the first general-election poll of the Vermont governor’s race in a long while, Rasmussen shows Republican Lt. Gov. Brian Dubie leading all the Democratic candidates, though Secretary of State Deb Markowitz holds him to a 47-40 lead. And in Washington, the new poll shows Sen. Patti Murray (D) and Republican Dino Rossi in a 47-47 dead heat.

A new Magellan poll in Arizona has John McCain with a comfortable 52-29 lead over conservative challenger, J.D. Hayworth, who’s having a tough week.

Ancient History

Posted on by The Progressive Policy Institute

Bruce Bartlett has a column up in today’s Fiscal Times that drills home just how far the Republican Party has veered from the center over the last few years. Bartlett recounts the story of the 1990 budget deal, which saw President George H.W. Bush reach across the aisle and strike a compromise with Democrats in an effort to shrink the deficit. The compromise on Bush’s end is, of course, now legendary: a violation of his “read my lips” pledge during the 1988 campaign that there would be no new taxes.

Working with Democratic majorities in both houses, the president knew that getting through measures on the spending side of the ledger would require some concessions on his part. Bartlett sums up the outcome of the budget negotiations:

Budget negotiations finally concluded in late September. The final deal cut spending by $324 billion over five years and raised revenues by $159 billion. The most politically toxic part of the deal, as far as congressional Republicans were concerned, involved an increase in the top statutory income tax rate to 31 percent from 28 percent, which had been established by the Tax Reform Act of 1986. The top rate had been 50 percent from 1981 to 1986 and 70 percent from 1965 to 1980.

More importantly, the deal contained powerful mechanisms for controlling future deficits. In particular, a strong pay-as-you-go (PAYGO) rule required that new spending or tax cuts had to be offset by spending cuts or tax increases. There were also caps on discretionary spending that were to be enforced by automatic spending cuts.

The conservative base, of course, went ballistic. Their opposition was reflected in the House of Representatives, where 163 Republicans voted against the budget, while only 10 voted for it. The Senate was a little better — half of Republicans approved the deal. These days, getting half of the Republican Senate caucus to go along with anything the Democratic majority pushes would be a minor miracle.

The consequences of Bush’s budget deal are well known. The violation of his tax pledge would prove to be a devastating weapon for political opponents in the 1992 campaign. But the economic consequences are less heralded. President Clinton deserves credit for bringing sanity and surpluses to the budget in the 1990s, but budget experts agree that his predecessor’s budget deal contributed to that achievement.

Bartlett quotes the GOP’s tax-cutting commissar, Grover Norquist, to underscore conservative suspicion of budget deals: “Budget deals where they actually restrain spending and raise taxes are unicorns.” Only spending cuts, Norquist argues, are permissible. The way the right is moving these days, we’re more likely to see a unicorn than a GOP leader going against party orthodoxy on taxes.

Photo credit: sdk

Six Things to Watch with Petraeus in Afghanistan

Posted on by The Progressive Policy Institute

Now that Gen. McChrystal is about to add “(ret.)” after his name, let’s examine the implications of the transition to Gen. Petraeus.

The Washington Post story quotes an unnamed White House official saying of the transition: “It’s as seamless as it could be, not only in terms of operations but also because you put someone in who’s widely respected. No one is going to doubt that he’s the right guy for the job.”
A relatively smooth transition, to be sure, but with an emphasis on the relatively. Here’s a look at five areas where the change in command might create a bit of unease.

Political expectations: Petraeus is God, at least if you ask most elected officials on the Hill. Yes, he was the architect of the “surge” in Iraq, and the “surge” was part of the reason that violence decreased in that country. The massive increase in troops helped, but the strategy change, the Sons of Iraq’s change of allegiance and a six-month cease-fire called by Shiite cleric Moqtada al-Sadr were all critical.

If you’re really interested in learning the entire story of how Iraq’s civil war was tamed, read The Gamble by Tom Ricks. In it, Ricks quotes a Petraeus colleague (and I’m paraphrasing from memory) as saying, “David is the best general in the United States military. But he’s not as good as he thinks he is.” It’s like Favre to the Vikings. He’s still really, really good. But he’ll never be as good as in Green Bay.

Keep this in mind because, as Ricks says on his blog this morning, “Afghanistan 2010 may be an even tougher nut than Iraq 2007. … Our biggest problem in Afghanistan is the government we are supporting there, and it isn’t clear to me what Petraeus can do about that.”

Mission: Counterinsurgency theory and practice is Petraeus’ bag, so don’t expect that to change. Bear in mind that COIN is a strategy, not an outcome. It ends with some sort of negotiated peace, and it’s unclear if Petraeus has the same threshold for potential discussions with the Taliban as McChrystal. There has been American resistance to the idea (as there should be) of reconciling with any of the Taliban’s upper eschelon, but would Petraeus draw the line slightly differently than McChrystal?

Relations with Eikenberry: It became clear that the U.S. Ambassador to Afghanistan, Karl Eikenberry, was playing second fiddle to McChrystal, who had established a clear working relationship with Karzai. During Petraeus’ time in Iraq, he may have held more sway than then-Ambassador Ryan Crocker, but they were an inseparable team that appeared together constantly. Petraeus, who is as much of a diplomat as a solider, will work to forge a better relationship with Eikenberry and turn this operation into a true civilian-military effort.

Relations with Karzai: Karzai very publicly lobbied for McChrystal to stay, and by many accounts, the two were on the same page (at least professionally). Is it possible that they were too close? Will Petraeus do a better job using America’s isolated points of leverage to extract more from the Afghan government?

Relations with Pakistan: This quote says it all:

McChrystal also played a key role in improving Kabul’s rocky relationship with Islamabad.

Yet Petraeus probably has as much, if not more, clout in Islamabad. He was an early proponent of a regional strategy that prioritized improving relations with Pakistan in hopes of persuading it to target the Afghan Taliban fighters who use Pakistani hideouts to plot attacks on coalition forces in Afghanistan.

Petraeus has visited Pakistan numerous times, delivering assurances that the U.S. troop buildup in Afghanistan would not spill over into Pakistan, visiting Pakistani paramilitary forces in the northwestern city of Peshawar and regularly praising Pakistan’s fight against its domestic Taliban.

“There’s a complete understanding of each other’s situation,” a senior Pakistani military official said, speaking on the condition of anonymity. “He’s not a stranger.”

Troops on the ground: There’s been no shortage of troops in Afghanistan who voiced their displeasure with McChrystal’s restrictions on the use of force. Think of it this way: you’re an 18-year-old Marine, –and you’ve become a trained killer and sent to a war zone. But your commanding general seems like he’s telling you not to do the job you’ve been trained for. Many of the troops’ quotes imply a certain amount of lost respect for McChrystal. Petraeus will have to work to explain the mission and win them over to a “mission first” mentality. Training stateside should also be adjusted accordingly.

Petraeus is the consummate pro, and he’ll no doubt do his best in an incredibly challenging environment with far-from-certain results. My take is that this transition will be as smooth as one could hope.

Photo credit: Jon-Phillip Sheridan’s Photostream

What No One Is Paying Attention to in the “Rolling Stone” Article

Posted on by The Progressive Policy Institute

The now-infamous Rolling Stone article that earned Gen. Stanley McChrystal a one-way trip out of Afghanistan has attracted attention for what it says about the White House.

And in a way, that’s a good thing.

Because once you get past the name-calling scandal, the article is really a takedown of counterinsurgency strategy and, by extension, a subtle get-out-of-Afghanistan-now message. In an attempt to categorize the debate about whether to adopt a counterinsurgency strategy in Afghanistan, here’s Hasting’s characterization:

COIN, as the theory is known, is the new gospel of the Pentagon brass, a doctrine that attempts to square the military’s preference for high-tech violence with the demands of fighting protracted wars in failed states. COIN calls for sending huge numbers of ground troops to not only destroy the enemy, but to live among the civilian population and slowly rebuild, or build from scratch, another nation’s government – a process that even its staunchest advocates admit requires years, if not decades, to achieve. The theory essentially rebrands the military, expanding its authority (and its funding) to encompass the diplomatic and political sides of warfare: Think the Green Berets as an armed Peace Corps.

[…]

The entire COIN strategy is a fraud perpetuated on the American people,” says Douglas Macgregor, a retired colonel and leading critic of counterinsurgency who attended West Point with McChrystal. “The idea that we are going to spend a trillion dollars to reshape the culture of the Islamic world is utter nonsense.

Or this:

After several hours of haggling, McChrystal finally enlisted the aid of Afghanistan’s defense minister, who persuaded Karzai’s people to wake the president from his nap. This is one of the central flaws with McChrystal’s counterinsurgency strategy: The need to build a credible government puts us at the mercy of whatever tin-pot leader we’ve backed – a danger that Eikenberry explicitly warned about in his cable.

To sum up, you have a questionable description of COIN, followed by a single opinion from someone whose stated qualifications are that he went to college with McChrystal (who knows if Macgregor has any COIN expertise) deriding the entire concept.

It’s one thing to report on who McChrystal is, what he’s said, where he comes from, and the difficulty of mission he’s trying to accomplish. But it’s quite another to falsely characterize his mission as a Sisyphean task from the get-go. Clearly, the president, having consulted and deliberated for three months, believes that there’s significant reason to hope counterinsurgency can bring about hard-fought American security.

For a better discussion of COIN, I’d encourage you to read papers like this, by David Kilcullen, author of the Accidental Guerilla and an actual COIN expert. In the paper linked above, Kilcullen properly characterizes COIN as difficult and far from a guaranteed success, but forwards a thoughtful framework for how COIN practitioners might organize their efforts to bring about the best chances of sustainable security.

…you may now return to your regularly scheduled name-calling.

Photo credit: The US Army’s Photostream