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Rousing the Rising American Electorate

Posted on by The Progressive Policy Institute

One of the big talking points about the election last week was that Democrats lost independent voters. But a new survey from Greenberg Quinlan Rosner reminds us that they weren’t the only ones the Democrats missed on election night.

The GQR survey of Virginia and New Jersey registered voters (not all of whom voted in the election) confirmed what Ed Kilgore posited the other day: that the story of the 2009 election was the poor turnout of the “Obama Coalition.”

GQR conducted the survey for Women’s Voices. Women Vote, an organization that focuses on political outreach to historically underrepresented groups in the electorate: unmarried women, younger voters, Latinos, and African Americans. GQR dubs this coalition the “Rising American Electorate” (RAE), a group that turned out in historic numbers last year for Barack Obama but trickled to the polls this year. The ones that did vote overwhelmingly chose Democrats Jon Corzine in New Jersey (by 25 points) and Creigh Deeds in Virginia (by 27 points). It’s just that there weren’t enough of them to win the election for Democrats.

The problem facing Democrats is how to motivate the RAE next year. Polls show that Obama is still well-liked personally and that his approval ratings are holding up, despite the nagging recession. But Obama isn’t up for election next year – Democrats are. And while the Republican base is fired up, the Democratic base shows no sign of rousing from its slumber. Couple that with signs that independents are starting to inch to the right and you have a recipe for a bad 2010 for Dems.

Why the U.S. Needs to Ratify a Free Trade Agreement with Colombia

Posted on by The Progressive Policy Institute

A little over one year since his election, President Obama has been tepid at best on the issue of trade. The tariffs on Chinese tires, while not the administration’s finest hour, have not ignited the trade war its detractors feared. But in an era of economic uncertainty, the U.S. needs to reassert its global leadership on free trade. Ratifying a Free Trade Agreement (FTA) with Colombia would be a good first step.

In 2009, it’s not immediately obvious how to establish trade leadership. The Doha global free trade talks are dead in the water. While there are doubts about the benefits of bilateral trade deals (such as those expressed by Columbia University’s Jagdish Bhagwati), they are a more attainable goal. In his fiscal year 2010 proposal, President Obama said he would be consulting with Congress to try and ratify one or more FTAs, including the one negotiated with Colombia in 2006. Ratifying the Colombia FTA would not just be good economics – it would be good foreign policy.

On October 30, our ambassador signed a deal on the use of Colombian bases in Bogotá. The U.S. had long-standing counter-narcotics flights that were based out of Manta Air Base in Ecuador under an agreement that Ecuadorian President Rafael Correa refused to renew when it expired in July. The agreement with Colombia allows U.S. forces access to seven Colombian military bases for a decade to continue these flights. A ratified FTA also would be a natural complement to the Colombia bases deal. It would show the Colombian people that the U.S. is interested in more than just the narcotics war, but in their economic development as well.

It would also have the added bonus of showing actors like Correa that even if we don’t always see eye-to-eye on every issue, there is benefit to working with the U.S., rather than trying to score political points with hackneyed complaints about Yankee imperialism.

A Colombian FTA would also be a no-brainer economically. We already have effective free trade with Colombia. The Andean Trade Preferences and Drug Enforcement Act (ATPDEA) exempts over 6000 goods from Colombia, Ecuador, Peru and Bolivia from tariff. The President has indicated he will extend ATPDEA for another year before it expires at the end of December. It’s a move that has broad bipartisan support — Sen. Dick Lugar (R-IN) has even recommended ATPDEA be extended to cover Paraguay and Uruguay. But instead of kicking the can down the road another year, and extending what in 1992 was supposed to be a stop-gap act before the launch of a Free Trade Area of the Americas to an 18th year, the Obama administration and Congress should take the opportunity to ratify our FTA with Colombia.

Objections to the Colombia FTA come down to concerns that it will hurt labor and the environment in Colombia or cause job losses here in the U.S. Concerns about labor and the environment have been addressed in a protocol to the treaty adopting the “New Trade Policy Template.” This bipartisan agreement — negotiated between Rep. Charlie Rangel (D-NY) and the Bush administration in 2007 — is made up of six parts covering progressive economic issues such as labor, environment, investment, government procurement, intellectual property, and port security. The job-loss issue is mitigated by the fact that Colombia is a tiny trade partner compared to the U.S., making up less than 1% of our total trade.

But while the costs of a free trade agreement are minimal, there are great benefits to be had. While the North American Free Trade Agreement (NAFTA) is most often looked at through the prism of U.S.-Mexican economic relations, NAFTA’s greatest benefit has been the democracy dividend Mexico has paid out. When NAFTA was signed in 1992, Mexico had been under one-party rule for 60 years — within a decade, it had transformed into a vibrant democracy. The institutionalization of the rule of law by NAFTA was instrumental in making this happen. NAFTA also provided reassurance during the Tequila crisis of 1995.

Likewise, an FTA can provide Colombia with structural support as it strengthens its democracy. President Álvaro Uribe has accomplished much in his two terms in facing down the FARC guerrillas and drug-traffickers (in many cases now one and the same), but the consolidation of democracy in Colombia is not complete. While he is pursuing a third term in extensive consultation with the public and legislature, a third term does raise questions about democratic structures and the viability of institutions — not individuals — in the country. An FTA with Colombia would help consolidate those institutions more than continuing ATPDEA would.

Finally, an FTA would take some of the capriciousness out of U.S. foreign policy. Trade sanctions under FTA sanctions are caused by economic foul play or failure of democratic systems. Their application would send a strong signal encouraging the rule of law and economic fair play. Under the annual renewal of the ATPDEA, the application of sanctions could signal nothing more than political gamesmanship holding up congressional business.

On a Good Night, A Discordant Note

Posted on by The Progressive Policy Institute

Some on the left have been going hard against Democrats for caving on the Stupak amendment in the health care reform bill the House passed on Saturday. The amendment, sponsored by Rep. Bart Stupak (D-MI), prohibits federal funds from going to insurance companies that cover abortions in the health exchanges. Never mind that the House health bill, if it becomes law, would improve the lives of millions of Americans – the Stupak amendment is a stain that can never be erased, according to some in the blogosphere.

Digby, one of the left’s preeminent bloggers, saw the failure extending all the way to “the president himself [who], like many of his elite male cohort, often gives the impression that women’s rights are just another annoying special interest.”

In an earlier post, Digby waxed even more indignant about the Stupak amendment:

I suspect that the leadership decided that abortion was the least important thing they could throw to the slavering Blue Dogs to take home as a victory over the liberals in this debate. And they had to find a hippie to punch to make the thing acceptable to the villagers, so they decided to punch the desperate pregnant girl. She’s used to it.

Since the Republicans have made themselves irrelevant with their obstructionism the Democrats have decided that in order to further the president’s edict to change the tone and further bipartisanship they will just have to compromise with themselves.

Democrats everywhere will now be able to brag about furthering the Godly cause of forced pregnancy, while having also voted to pass health care.

Look, the Stupak amendment was an unfortunate concession to the pro-life faction in the Democratic caucus. I certainly don’t like it. But what would Digby have the Democratic leadership do? Refuse Stupak a vote and risk passage of the final bill? The leadership certainly didn’t think that that was worth the risk – Rep. Jim Cooper (D-TN) said today that reform “would’ve failed” without the compromise — and I don’t blame them.

Or perhaps Digby would rather that those Dems who voted for the Stupak amendment be expunged from the party. That would certainly cut down on the number of Democrats with whom Digby disagrees. It would also be a fast track to shrinking the Democratic tent – a tent that, thanks to the self-destruction of the GOP, now encompasses left and center. Digby has been an astute observer of a Republican Party that’s hell-bent on purifying itself into obscurity, and yet she sees no contradiction in her own views toward the Democratic coalition.

Would Digby prefer that progressives cast out all pro-lifers from our ranks? According to Gallup’s most recent poll on abortion attitudes, 47 percent of the public identify themselves as pro-life, while 46 percent identify themselves as pro-choice. A May 2009 Pew survey found that 46 percent said that abortion should be legal in all or most cases – the lowest figure since 1995 – and 44 percent said it should be illegal in all or most cases – the highest since 2001. Because Democrats now occupy the center as well as the left, many Americans who count themselves as pro-life now might consider themselves Democratic or at least lean that way because of other issues. Are we really prepared to tell half of the electorate that they’re not welcome because of that one issue alone?

The irony is that the blogosphere’s prescription of denying the existence of pro-lifers within the Democratic ranks probably contributed to the success of the Stupak amendment. Amy Sullivan, writing in Time’s Swampland blog, argues:

But it also seems clear that the Democratic leadership and White House dropped the ball on finding a compromise with pro-life Democrats. The deal reached late last night/early this morning in the Speaker’s office is not a compromise; it is in fact more than the Catholic bishops and Stupak himself asked for as late as mid-summer. The Speaker didn’t get rolled by crafty or stubborn members of her party, though. This was a predictable consequence of a high-handed approach to dealing with pro-life members of the Democratic caucus.

Despite the fact that anyone who has followed U.S. politics over the last thirty years could have told you that abortion would be a controversial aspect of health reform, no one tried to preemptively address the concerns of pro-life Democrats by sitting down with them early in the process. The White House didn’t reach out to some of the more good-faith players on the pro-life side until early September. And Pelosi didn’t sit down with Stupak until September 29. This despite the fact that 19 Democratic members sent her a letter in June expressing their concerns with abortion coverage in health reform.

In other words, you can ignore those who disagree with you, but it doesn’t make them disappear. In this case, it may even have come back to bite the leadership.

Make no mistake: progressives should stand for a woman’s right to choose, and Democrats should do all they can to kill the odious amendment in conference without endangering the end goal of reform. But to reduce the complicated work of politics into a with-us-or-against-us game is neither normatively nor politically desirable. The progressive rank-and-file have to realize that you make laws with the public you have, not the public you wish you had. Some in that public will have different, deeply held beliefs that might differ from yours and mine. With progressives now ascendant, we have to take into consideration the views of moderates, independents, and centrists in governing this often-unwieldy polity.

Some progressives like to believe that there is no such thing as the moderate middle — that a projection of brute liberal force will disabuse moderates of their milquetoast views and they’ll come to see the light. Forget the condescension inherent in that view. Try getting 218 votes with that attitude. If Speaker Pelosi had taken that approach on Saturday, I doubt these same bloggers would be congratulating her for losing health reform but at least standing her ground on a woman’s right to choose.

Making Our Tax System More Fair

Posted on by The Progressive Policy Institute

PPI’s Will Marshall and Mike Derham have a new column on reforming the U.S. tax system in the Washington Times :

Americans want a tax system that is fair, simple and capable of raising the revenue we need to pay the nation’s bills. The one we have fails on all three counts.

That’s why President Obama will probably have to add comprehensive tax reform to his already jammed agenda.

The first imperative of reform is to restore progressivity, the keystone of a fairer tax system. Since there is a lot of fatuous talk about “socialism” in the air these days, it’s worth noting that progressive taxation, which dates back to 1913, is a deeply American tradition.

It recognizes that our free enterprise system couldn’t function properly without public laws, rules and investments in common goods like schools, roads, police and defense. Those citizens who reap the greatest rewards from our modern, mixed economy therefore have an obligation to give back, as Thomas Jefferson put it, in proportion to the bounty they have received.

Read the full column at the Washington Times.

Why the Wall Came Down

Posted on by The Progressive Policy Institute

Twenty years ago today, I was a seventh grader at the American Community School in Surrey, England. My family had lived in the U.K. for two years (we’d stay for two more) because my father was the European sales manager for an American chemical company.

Even at such a young age, I liked to think that I was seeing the Cold War from the “front lines.” I was riveted the first time our family crossed into West Germany, and I felt pride when my middle school cross-country and baseball teams would compete on British-American military bases. I was particularly fascinated at the Moscow Music Peace Festival, though I’m sure as much for the appearances by Motley Crue and Skid Row as for its rather striking implications about freedom, openness, and globalization.

In truth, I led an obnoxiously comfortable life in a quite English town. But the broader experience of living abroad during a time of such sweeping change fueled my budding consciousness with an interest in geo-politics and foreign policy, and, of course, rock and roll.

Conservatives will crow today about Ronald Reagan’s role in the entire affair, drawing a straight line between the Gipper’s “Mr. Gorbachev, tear down this wall!” and the crumbling of 70 years of Communism. Of course, the Soviet Union’s demise was far more complex. George Packer’s column in The New Yorker sums it up far better than I could ever hope to:

The wall came down not because Ronald Reagan stood up and demanded it but because on the evening of November 9th, at a televised press conference in East Berlin, a Party hack named Günter Schabowski flubbed a question about the regime’s new, liberalized travel regulations. Asked when they took effect, Schabowski shrugged, scratched his head, checked some papers, and said, “Immediately,” sending thousands of East Berliners to the wall in a human tide that the German Democratic Republic could not control. Soldiers and Stasi agents didn’t shoot into the crowd, but things could easily have gone otherwise.

The revolutions of 1989 were made possible by a multiplicity of conditions: the courage of East Bloc dissidents and the hundreds of thousands of fellow-citizens who finally joined them; American support for the dissident movements and containment of the Soviet Union; the disastrous economies of the Communist countries; the loss of confidence among ruling-party élites; the crucial forbearance of Mikhail Gorbachev. For Europe’s Communist regimes to disappear so suddenly and bloodlessly (Romania was a different story), everything had to fall into place, above and below, within and without. Such circumstances are improbably rare, and they can’t be mechanically replicated by the laws of history or by divine design or by universal human aspiration. A false lesson drawn from 1989 involves a kind of shallow eschatology of totalitarianism: this is how it always happens—the people rise up, the regime withers and dies, peace and democracy reign. The chaos that followed the overthrow of Saddam Hussein was in part a consequence of this thinking. In planning the postwar period in Iraq, George W. Bush and some of his advisers had 1989 in mind—“like Eastern Europe with Arabs,” as one official put it.

The House Health Reform Vote

Posted on by The Progressive Policy Institute

Amidst general pleasure over the House´s passage of health reform legislation Saturday night, there´s also progressive angst over two issues: the narrowness of the vote, which leaves little or no margin for error when the conference committee report comes up, and the passage of the Stupak Amendment, which goes much further than previous House or Senate bills in restricting the ability of consumers to purchase abortion coverage in the new exchanges.

The first concern is probably overwrought. Speaker Pelosi clearly whipped her vote, and gave a free pass to vulnerable Democrats to vote “no.” Since the final version is likely to be less subject to conservative attack than the House bill, Pelosi should be able to hold all 219 Democrats and perhaps add a few.

The Stupak Amendment is more problematic, since 64 Democrats voted for it. But given the arcane nature of the differences between Stupak and earlier anti-abortion provisions, it’s unclear that any Democrats who voted for the House bill would vote against the conference report with a slightly less obnixious anti-abortion provision.

In any event, we should take a deep breath right now and appreciate the historic nature of the House vote, which didn’t look that secure until right before it occurred. Aside from its substantive importance, the vote should prove helpful in diverting the news media from ludicrous overinterpretation of the NJ and VA gubernatorial results.

Theories For the 2009 Turnout Calamity

Posted on by The Progressive Policy Institute

Now that the results from NJ and VA have been masticated for a few days, it´s pretty obvious that the most ominous–but potentially reversible–factor in the dual Democratic defeats was a massive change in the composition of the electorate. According to exit polls, under-30 voters represented 21 percent of the Virginia electorate in 2008, and only 10 percent last Tuesday. And in NJ, the under-30 share of the vote dropped from 17 percent in 2008 to 8 percent in 2009.

African-American turnout didn´t drop so much; in VA, it declined from 20% of the electorate in 2009 to 16 percent this year, and in NJ, it actually went up marginally as a share of the electorate. But since turnout generally dropped, it´s clear that 2008´s massive African-American turnout for the Democratic ticket was not replicated.

With Democratic fears about 2010 already heavily focused on the typically older and whiter composition of midterm electorates, the NJ-VA results simply confirm what we already knew, but at a level of intensity that is surprisiing (though Corzine´s general unpopularity and Deeds´ questionable campaign tactics are responsible for some of the problem).

The question going forward, of course, is why the Obama Coalition turnout was so weak, and what, if anything, Demcrats can do to reverse this trend during the next year.

And that´s where the relative clarity over the numbers breaks down into varying interpretations over the implications.

Unsurprisingly, many self-conscious Democratic progressives think that Obama´s “centrism” has “discouraged the Democratic base,” much as, they believe, Bill Clinton did so in his first two years, leading to the Republican landslide of 1994. In this view, the administration and congressional Democrats need to forget once and for all about “bipartisanship,” congressional compromises, Blue-Dog-coddling, or deficit worries, and plunge ahead with a boldly progressive agenda that revitalizes the 2008 coalition. This interpretation, of course, collides with the counsel of those focused on the disastrous performance of 2009 Democratic gubernatorial candidates among independents, who are (often falsely) assumed to be “centrist” in orientation.

Others focus on the mechanics of voter mobilization, and suggest that what most needs to happen in the next year is a rebuilding of the Obama ¨”machine” that helped boost minority and youth turnout to historic levels in 2008.

And a third theory is simply that conditions in the country, and the enduring unpopularity of both political parties, has eroded the Democratic vote in those segments of the electorate least likely to vote (young voters being most conspicious in that category). According to this theory, a record of forward momentum in Congress (on health care and climate change) and on the economy is most crucial in reducing the fallloff in pro-Obama turnout and the carnage among independents.

The first and third theories point in different directions, since a ¨”bold progressive¨ direction may not be consistent with congressional accomplishments (aiming instead at a Trumanesque placement of blame on Republican obstruction and extremism). And both theories may not sufficiently account for the difficulty in transferring Obama´s relatively strong approval ratings in the potential electorate as a whole to actual voters deciding between actual Democratic and Republican candidates competing across the country in individual races. As Jonathan Singer pointed out this week at MyDD, one scenario going forward is that Barack Obama could become a latter-day Ike, incapable of transferring personal popularity to his party (though split-ticket voting has vastly declined since the 1950s).

Democrats need to debate and sort out these theories of last week´s turnout calamity. But one this is clear: a continuing focus on the dangerous extremism of the GOP is consistent with every theory, particularly if, as is likely, Republicans go into 2010 hoping to reclaim control of the House, and head towards 2012 with a presidential field tilting to the crazy Right. You can argue all day about whether Obama or congressional Democrats have dashed the hopes of many 2008 voters for dramatic change in Washington. But 2008 Obama voters who are made abundantly aware that today´s Republicans want to govern from a position well to the Right of that of George W. Bush and Tom DeLay are a lot more likely to go to the polls next November no matter how sanguine they are about the administration´s record.

Stuck in Dubai with the Kabul Blues

Posted on by The Progressive Policy Institute

I hope that’s the last time I get stuck in Dubai.

This past Sunday, I boarded a plane with ten other election monitors from Democracy International (including my PPI colleague Mike Signer) to head to Kabul and serve as monitors for the second round of Afghanistan’s presidential elections.

We never made it.

Before boarding the flight, we knew that Abdullah Abdullah — incumbent President Hamid Karzai’s main challenger — planned to boycott the election. We were under the impression that Abdullah’s boycott was unofficial, meaning that his name would still be on the ballot and that the election would proceed as a formality. But there was still reason to go — any election should be monitored for fraud, even when there’s only one active candidate.

Somewhere over Eastern Europe, however, we learned that Karzai had been declared the victor. Rather than risk further violence, expense, and logistical complications en route to a pre-determined outcome, the election’s cancellation was understandable, if disappointing.

However, that still left us several hours from Dubai, our transfer city. After being offered the unappetizing possibility of immediately jumping on a return flight to DC, our weary team came to grips with the situation.

“So what’s Dubai like?” I asked the group, not knowing much about my surroundings and anticipating that I had stumbled upon a short vacation in the Middle East. I forget who said it but, “It’s like Vegas but without the gambling and booze,” stuck out. And so it was.

Dubai is a city of contradictions piled on top of one another. It has glitz and glamour: towering skyscrapers, the world’s only seven-star hotel, an indoor ski slope, and a brand new metro system. Oil money, right? Nope. Dubai isn’t actually rich — petro-dollars only flow to Dubai’s “big brother” in the south, Abu Dhabi. Dubai adheres to a more Costner-ian vision: build it and they will come. And build it the sheiks did, all with highly leveraged debt.  The Emirate’s business plan is predicated on the success of the companies that invest in Dubai.

And this house of cards is starting to crumble as world’s financial sand shifts beneath its feet: real estate prices are dropping fast as international firms search for efficient investments.

The statistic that is most striking is tourism, down 60 percent this year. Why would it affect Dubai so harshly when other areas, though suffering, are muddling through? As far as I can tell, it’s because Dubai lacks an intellectual or cultural soul. In the race to construct the world’s largest X, they forgot to construct anything actually worthwhile, like a university, a museum, or cultural center. The sheiks seem to have recognized the deficit, but haven’t come up with an original idea — the planned museum is apparently a copy of the Louvre in Paris, and the new opera house mimics Sydney’s.

After two days, I understood why tourists had abandoned Dubai — I could spend a month marveling at Paris’ diverse cultural tapestry, but couldn’t muster a third day just to stick around for the indoor roller coaster at the Dubai Mall (the largest in the world, if you’re keeping score).

I was surprised to learn on my second morning that I had apparently observed an election during my diverted trip.  I opened my courtesy copy of Gulf News to find that Sheikh Khalifa Bin Zayed had been re-elected to a five-year term as president of the UAE. Mind you, I didn’t see any campaign posters about, but that may be due to the rather limited electorate: turns out you have to be a ruler of one of UAE’s seven Emirates to have a vote.

If he had one, I imagine Sheikh Khalifa’s platform on domestic issues would have raised some eyebrows. For example, despite legal adherence to a strict Islamic code, it’s easy to buy alcohol provided the establishment is foreign-owned (which is 85 percent of the city) and you’re willing to pay the 50-percent sin tax. But if you want to buy, say, a bottle of wine for your home, you can’t do that at any corner store; those places are a 45-minute drive into the desert and you need a personal alcohol license.  You can’t get one if you’re Muslim, of course, but no one checked my friend Mohammed for his as he sucked down a double vodka Redbull at the Calabar.

If you’re caught publicly intoxicated, then it’s curtains. I heard the story of a French girl who was rear-ended as she drove home a 9:00 a.m. on a Saturday morning after a night of carousing. Despite the fact that she was the victim, the police breathalyzed her and found her blood alcohol content to be a miniscule 0.009 BAC – but still in excess of the strict zero-tolerance law. Her punishment was six months in jail, followed by deportation.

But that’s Dubai — you can get away with anything unless you’re unlucky enough to be caught. It meshes nicely with Dubai’s motto: “What’s good for business is good for Dubai.” True enough.

The Electric Car Ecosystem

Posted on by The Progressive Policy Institute

The second coming of the electric car — particularly in the guise of the highly anticipated Chevy Volt — has certainly received a fair amount of publicity in recent months. No wonder: the electric car represents America’s best bet to rejuvenate its auto manufacturing industry.

But while it’s exciting enough to dream of factories humming again and assembly lines pumping out the next generation of autos, the promise of the electric car goes beyond its immediate boost to the American car industry. A fascinating article by Bernard Avishai in Inc. details what exactly the rise of the electric car could mean to our economy:

Actually, here is where the dots connect and the news turns good. For the technical challenge of greening electric cars means entering a commercial landscape that mirrors the transformative industries of the 1980s and ’90s: computers and software, switching and networking, consumer electronics converging with cellular technology. This landscape is full of start-ups and medium-size supplier businesses that play to American strengths: entrepreneurship, originality, comfort with the virtual. We ought to stop thinking about the auto industry as a handful of great manufacturing companies superintending large, dependent suppliers — or, for that matter, cars as standalone objects. Rather, the electric car will be a kind of ultimate mobile device, produced in expanding networks for expanding networks; a piece of hardware manufactured by a burgeoning supplier grid and nested in an information grid interlacing the electrical grid. Building out these three networks will be more profitable, and a greater engine of economic growth, than building the cars themselves.

A word that pops up frequently in Avishai’s piece is “ecosystem.” Not in the environmental-ecological sense — though that obviously matters, too — but rather in the sense that a new complex of entrepreneurs, innovators, and manufacturers will likely spring up in response to the mainstreaming of the electric car. Reforming the grid, constructing a new electric-car-recharging infrastructure, making the next generation of batteries, building hardware and software for the smart cars: these and other ancillary industries have already been jump-started by the promise of the carbon-free car.

Where does government fit in? The Obama administration has already shown its commitment. The American Recovery and Reinvestment Act included $500 million for producers of electric drive components, $400 million for grants promoting plug-in hybrids and electric vehicles, and $4 billion toward the development of the smart grid. Avishai points out that when Obama signed the stimulus package, he was introduced by the head of Namaste Solar, a company of 60 employees — a subtle nod toward the idea that the green economy will be driven by thousands of new, smart companies that spring up to compete in the clean tech ecosystem. The players in the nascent industry also believe that the government has a role in establishing standards early on to bring stability to a free-for-all environment and remove some uncertainty for start-ups to jump into the fray.

And this doesn’t even get to the other obvious benefit of our car transformation: the reduction of carbon emissions as millions of gasoline-powered cars are replaced by the new breed of automobile. It all seems like a vision out of science fiction. What’s thrilling is, as Avishai reports, it’s already happening.

More Election Day Thoughts

Posted on by The Progressive Policy Institute

After a second day of analysis and reflection, key implications of Tuesday’s elections seem clearer.

The election was a referendum, all right, but on the state of the U.S. economy, not President Obama. In exit polls, most voters (over 80 percent) said the economy was their top concern. Those who professed to be “very worried” backed the Republican candidates for governor in Virginia and New Jersey by wide margins. If high unemployment persists well into next year, as White House economists forecast, it will spell serious trouble for Congressional Democrats.

Republicans were more motivated to vote Tuesday. Democrats suffered a big drop-off of voting by the young and minorities compared to 2008. But the pivotal factor was the dramatic swing of independents, whom Obama won last year. This time, independents voted 2-1 for Republican candidates.

There was an ideological subtext to the independents’ defection. In addition to worries about jobs and the economy, many of them seem fixated on the nexus of “big government,” spending and debt. There’s no doubt that growing distrust of government is complicating President Obama’s ability to forge majorities in Congress for his big, and costly, initiatives, especially health reform.

Many progressives worry that the election results will send moderate Democrats running for the tall grass. Certainly, the outcome should concentrate the minds of Congressional negotiators who are struggling to get 60 votes in the Senate for health reform. Too much time has been wasted on the public option, which already has been watered down and which in any case isn’t worth jeopardizing prospects for an historic breakthrough on universal coverage.

The way for Democrats to hold their moderates in line is to 1) make sure the bill’s cost doesn’t balloon, and that it meets Obama’s demand to add “not one penny” to the federal deficit; and, 2) take tougher steps to reduce medical cost inflation.

The election also may fuel Congressional demands to put on hold President Obama’s other ambitious goals – regulatory reform, a carbon cap-and-trade scheme, immigration reform – so that lawmakers can concentrate instead on the economy. That may make sense, if they can find practical ways to relieve economic distress without aggravating public anxiety about government overreach and profligacy.

But one thing Tuesday didn’t produce was evidence of an electorate turning hard right. The only movement conservative running – Doug Hoffman – lost his race for Congress in upstate New York, flipping a traditionally Republican seat to the Democrats. Will the Palin-Beck wing nevertheless continue their crusade to drive moderates out of the Republican Party? We can only hope.

The GOP’s Failed Stab at Health Reform

Posted on by The Progressive Policy Institute

The Congressional Budget Office has now weighed in on the House Republicans’ proposed substitute to the House health reform legislation. The results aren’t pretty.

According to the CBO, the GOP plan does little to expand coverage: 52 million Americans would remain uninsured by 2019, up from 50 million in 2010. Nor does the plan do anything to end insurers’ practice of denying health coverage because of pre-existing conditions. And forget about subsidies to help working-class Americans afford health insurance.

Ezra Klein sums up the CBO’s findings nicely:

CBO begins with the baseline estimate that 17 percent of legal, non-elderly residents won’t have health-care insurance in 2010. In 2019, after 10 years of the Republican plan, CBO estimates that …17 percent of legal, non-elderly residents won’t have health-care insurance….

But maybe, you say, the Republican bill does a really good job cutting costs. According to CBO, the GOP’s alternative will shave $68 billion off the deficit in the next 10 years. The Democrats, CBO says, will slice $104 billion off the deficit.

The Democratic bill, in other words, covers 12 times as many people and saves $36 billion more than the Republican plan.

But the plan does lower premiums, which is no surprise since sick people who need heath coverage the most will be left out of the system. So Republicans have that going for them.

Cap-and-Trade: Neither a Job Killer Nor a Free Ride

Posted on by The Progressive Policy Institute

Cap-and-trade legislation in Congress has come under fire from both left and right. Some on the left claim that the distribution of free emissions allowances to industry amounts to a “free ride.” Meanwhile, many on the right slam the bill as a job and economy killer.

But a new study (PDF) by PointCarbon Research, a carbon market research firm, rebuts both sides’ claims. The study focuses on the impact that climate change legislation would have on the largest emitters in the power and oil industries, which represent about 40 percent of the covered emissions in the U.S.

Contrary to right-wing forecasts of widespread economic collapse, PointCarbon found that a cap-and-trade market would, in fact, yield winners and losers among industry players. “Some companies will actually be considerably better off with a U.S. cap-and-trade program than without,” the study found, noting that companies like Exelon (the largest American utility), FirstEnergy, NRG, and PG&E stand to gain the most. Firms with a diversified fleet of non-emitting (hydro, nuclear, and renewables) and low-emitting plants are more competitively positioned and will likely see benefits.

Meanwhile, firms that rely heavily on high-emissions plants (Southern Co., AEP, Duke) would see the biggest exposure. That finding debunks the idea that industry receiving free allowances would be getting a “free ride” under cap-and-trade. As the study points out, “in reality the bulk of free allowances destined for [the power] sector will not help large power companies exposed on the generation side.”

But even as some firms do see more of a negative impact on the bottom line, the study notes that as the carbon market matures, “companies will be able to mitigate their exposure through internal reductions and offset investments” – meaning that the incentive to innovate and modernize that a carbon price brings will eventually help these companies adjust to the new low-emissions economy.

The study raises a fundamental point: “[P]utting a cost on emissions means giving a value to reductions.” In other words, a price on carbon will mean a cost burden to some – but a revenue opportunity for others. Letting actors compete in this new market is the most efficient and effective way to address the looming climate crisis.  That is precisely what the Senate cap-and-trade legislation hopes to achieve.

A Five-Billion-Dollar Canary

Posted on by The Progressive Policy Institute

Here in New York City, big numbers always dominate the local news. While it’s easy to talk about how Mike Bloomberg spent at least $90 million to squeak out a win in his race for a third term as mayor yesterday, these days the big number mentioned is $5.4 billion.

That’s the amount that local developer Tishman Speyer and investment powerhouse Blackrock spent to buy the huge Stuyvesant Town development in 2006, at the top of the real estate market. In turn, Tishman and and Blackrock turned around and packaged the promise of future rent flows from the complex as $4.4 billion in loans and commercial mortgage-backed securities (CMBS).

Since then, the Stuy Town project has been plagued by missteps. Promises to keep rates steady at rent-controlled levels — promises the joint venture had to make to get the city to agree to sell the property in 2006 — were almost immediately broken, with tenants being overcharged to the tune of $200 million. But with the downturn in the real estate market, defaults and late payments have risen at Stuy Town, endangering the new owners’ ability to meet their debt payments on the $3 billion in outstanding CMBS issued. People who claim to have looked at the finances claim Stuy Town only has enough liquidity to last through February. Even the eponymous Rob Speyer, co-chief executive along with his father, concedes the CMBS is going to require a restructuring.

In response, the Fitch ratings agency downgraded the CMBS bonds on Friday, and now says a default on the loans is likely.

While Stuy Town is unique in its size, it is not unique in its predicament. Real estate analysis firm Reis says the complex is indicative of the larger commercial real estate market:

About $26.64 billion of CMBS loans outstanding were 60 days or more past due last quarter, according to Reis. The default and delinquency rate rose to 4.52 percent from 0.8 percent a year earlier and 3 percent in the second quarter. Defaults may top 6 percent by year-end, the firm said.

This coming spike in defaults shows that even with the recent positive news — including last quarter’s 3.5% GDP growth — we’re not out of the woods yet. Most of that growth came from Recovery Act funds, including the “cash for clunkers” program and the increase in the first-time home-buyer’s credit. While this kind stimulus spending can provide an economic shot in the arm, it is not the basis for sustainable growth.

The collapse of the residential mortgage market (led by sub-prime mortgages losing value) was a big driver of the economic collapse of last year. The downturn that sends us into the second leg of a “W shaped recession” could be driven in part by the collapse of the commercial real estate market. Stuyvesant Town’s economic difficulties are a $5 billion canary telling us that things may get worse before they get better.

A Backlash Against the Rich-Man Candidate?

Posted on by The Progressive Policy Institute

One of the more surprising results from last night was Michael Bloomberg’s win for a third term as New York City mayor. The surprise wasn’t the win but the margin — a mere five-point spread over his opponent despite spending $90 million of his own money.

That performance somewhat mirrored Jon Corzine’s in New Jersey, where the incumbent Democrat spent $24 million, much of it his own money, compared to Republican Chris Christie’s $9 million. For his troubles, Corzine lost the election.

The New Republic‘s Richard Just makes an interesting reading, finding “a repudiation of the rich man’s politics” as practiced by both men. Just notes:

Pundits have made much of the fact that the country is in a populist mood these days. The populism they are referring to is generally understood to be more right than left. But if an upshot of this mood is declining tolerance for the practice of people buying political office with their own money, then that’s one (minor) thing for liberals to celebrate on an otherwise lousy night.

Bloomberg has, in fact, been a popular mayor, with high approval ratings leading up to the vote, but his successful effort to have term limits scrapped to allow a third term did not sit well with voters. Corzine, meanwhile, has been unpopular for a while, and his funding advantage may have been the only thing that gave him a fighting chance. Both men tried to outspend the other side to overcome voter skepticism. One failed, the other succeeded — barely. Money helps in elections, but if the voters think you’re spending too much of it to buy their vote, they can make you pay.

Election Day Lessons for Progressives

Posted on by The Progressive Policy Institute

Tuesday’s election results should be a warning to progressives. In Virginia and New Jersey, Republicans Bob McDonnell and Chris Christie won the governorship, proving that there’s still life in the GOP’s bones. In NY-23, where conservative darling Doug Hoffman lost to Democrat Bill Owens — making Owens the first Dem to be elected to that seat since the 19th century — the upshot might be less favorable than you think.

Never mind that McDonnell won by hiding the fact that he was a Republican. (Dems were guilty of obscuring their affiliations, too.) As the Washington Post‘s Dan Balz writes, “McDonnell pitched his campaign toward the center of the electorate, offering Republicans a model for how to reach independents.” The lesson: some Republicans still know how to play this game, and the Palinization of the party is, in fact, not yet complete.

In New Jersey, Jon Corzine’s tremendous unpopularity for the last 18 months — New Jerseyans really don’t like him — probably had as much to do with his defeat as his opponent’s efforts. The lesson: even in a Democratic state (registered Dems outnumber Republicans by 700,000), voters will oust a Democratic leader if they think he’s done a poor job.

Meanwhile, in New York, the Owens win is certainly a pleasant surprise for Democrats. But it could also be a wake-up call to the Republican establishment that the Beck-Palin faction can make a lot of noise but still fail to deliver the goods, even in a predominantly conservative district. If the Republican Party draws that moral from this race, then the McDonnell model becomes likelier for next year’s round of elections. The lesson: progressives can’t rely on an accelerated conservative crack-up and the GOP’s self-destructive tendencies to help them out in the midterms.

That all said, last night’s elections are hardly indicative of any larger trends in our national politics. Indeed, if exit polls are anything to go by, we know for sure what these elections weren’t about: Barack Obama. Exit polls showed that voters in Virginia and New Jersey did not consider the president a factor in their vote, and gave him OK-to-good approval ratings to boot (48 percent in VA, 57 percent in NJ). The polls also showed that the economy and jobs were at the top of the voters’ minds when they stepped into the booth. Which brings us to the last and oldest lesson of all: it’s still the economy, stupid.

Tip of the Green Spear

Posted on by The Progressive Policy Institute

PPI E3 Initiative Chair Mike Signer has a new column at U.S. News & World Report on how the military is taking the lead on carbon reduction and clean energy:

To some critics, the cause of alternative and sustainable energy will always be associated with the image of dewy-eyed do-gooders earnestly plying a hopeless cause. This caricature has helped opponents today, such as the conservative columnist George Will; by mocking activists as naive idealists, they make the cause they represent seem naive and hopeless as well.

However, it might surprise opponents—and even supporters—that the most innovative and effective actors in the carbon-reduction arena bear zero resemblance to this outdated cartoon. No hemp-wearing hippies here: Today, it’s the Army, Air Force, Navy, Marines, and Coast Guard who are aggressively pursuing plans for sustainable energy, reducing carbon, and achieving energy independence.

It’s no mystery why: Our armed men and women are truly the point of the spear. The services aren’t motivated just by the “soft power” of moral authority or the pursuit of idealism for its own sake. It’s in fact “hard power” concerns—the security of our troops, the economic independence of our energy supply, and the long-term need to better control the geopolitical implications of climate change—that have driven the military to take the lead.

Read the full column at U.S. News & World Report.