issue: Fiscal Policies

Will Congress Regret Banning Earmarks?

Posted on by The Progressive Policy Institute

Over in the New York Times, Carl Hulse writes notes that one of the many unique aspects of this year’s unfolding budget clash is that this will be first budget battle without earmarks.

Generally, the disappearance of earmarks been seen as positive development, since everybody loves to hate earmarks. But say all you want about earmarks being wasteful or corrupt (even though that’s a debatable claim), they helped broker compromise. By giving enough members a stake in an omnibus appropriation bill, earmarks were mechanism whereby leaders could assemble a winning coalition to pass a budget bill, a powerful tool to avoid a government shutdown.

Here’s Diana Evans, a professor of political science at Trinity College, from a book about earmarks called Greasing the Wheels:

Pork barrel benefits, the most reviled of Congress’s legislative products, are used by policy coalition leaders to produce the type of policy that is most admired: general interest legislation. This book makes the case that buying votes with pork is an important way in which Congress solves its well-known collective action problem.

And here’s Scott A. Frisch and Sean Q. Kelly, writing in the National Journal last November:

The reality, as we see it, is that without earmarks it will be much more difficult to get moderate and liberal members to go along with spending cuts that may be necessary to reduce the deficit – one of the major goals of the tea party movement.  By eliminating earmarks, tea party supporters may have lost one of their most effective tools for building coalitions to make painful cuts in spending. Earmarks can be viewed as the spoonful of sugar that makes the bitter medicine of deficit reduction go down; without earmarked projects, enacting tough legislation will be even more difficult.

(Frisch and Kelly are the authors of a book called Cheese Factories on the Moon: Why Earmarks are Good for Democracy.)

Remember, even at their height, earmarks accounted for roughly two percent of all appropriations expenditures. And that two percent hasn’t necessarily been cut out of the budget – it’s just been transferred the executive branch for allocation instead of being Congressionally-directed.

Now, I understand that there were some lobbying abuses in the world of earmarks, but my sense is that most offices were actually remarkably transparent about their earmarks (and indeed happy to brag about their projects). I never saw any reason for banning them and thought it was all silly red-herring type politics that distracted us from more difficult but far more consequential fights over entitlements.

Maybe the folks in Congress will figure out how to come to some sort of eventual budget agreement without a bunch of earmarks to grease the wheels, and we’ll all be better off because of it. But I’m beginning to wonder if, when budget negotiations grind to a standstill, the good folks running Congress might wish that they hadn’t prevented themselves from sweetening the pot with a few special district spending programs.

Wingnut Watch: The Ideological Crusade Behind the Budget Battles

Posted on by The Progressive Policy Institute

In Washington and around the country, conservatives are going on the anti-spending warpath, delighting the Tea Party base with tough talk and confrontational tactics.  The amazing scenes from Madison, engineered by new Wisconsin Gov. Scott Walker, are emboldening GOPers elsewhere (notably in Ohio and Indiana) to go to the barricades in demanding pay and benefit concessions, if not actual suicide, from public employees and their unions.  And in Congress, a government shutdown is beginning to look like a virtual certainty, quite possibly accompanied by the drama of a debt limit collision.

The internal conservative debate on these subjects is being heavily dominated by those counseling “no retreat,” and laboring mightily to explain why a hard-core approach that threatens the daily functioning of government won’t turn out as it did for the short-lived Republican Revolution of the mid-1990s.

But amidst all the dramatics over spending, it’s increasingly obvious that conservatives have a lot of other fish to fry, and are using their demands for big cutbacks in public-sector spending to impose policies and priorities that have little or nothing to do with money.

This is most obvious in Wisconsin, where Walker’s demands go beyond pay and benefit concessions from public employees and aim at severely restricting collective bargaining rights.  Walker and his defenders, of course, claim that no path of budget austerity is compatible with the existence of strong public employee unions.  That’s another way of saying it’s possible to relate all sorts of ideological objectives as having an impact on spending. Interestingly, two Republican governors close to this particular fire, Indiana’s Mitch Daniels and Florida’s Rick Scott (the latter state is not close geographically to Wisconsin, but is similar in the scope of its gubernatorially-induced budget crisis) have conspicuously parted ways with Walker on demanding non-financial concessions from public employee unions.

An even more obvious ideological aspect of state budget “crises” is the determination of nearly all GOP governors to cut taxes and/or create new corporate subsidies even as they claim there’s just no money for spending they don’t particularly favor in the first place.  Walker, in particular, is insisting on both tax cuts and new “economic development incentives” (e.g., public concessions for companies moving into the state) that have significantly worsened the fiscal situation.  So, too, has Florida’s Scott, who is also demanding a major new private school voucher initiative.

The overlap of ideological and fiscal priorities is even more obvious in Washington.  The FY 2011 continuing appropriations resolution passed by the House last weekend is loaded with long-time conservative hobby-horses, including an end to public broadcasting, severe cutbacks in funding for bank regulators and food inspectors, plus an unprecedented assault on federal support for family planning services, including a total ban on use of federal money by Planned Parenthood and an end to the Title X program that funds many clinics dispensing contraceptives.  Echoing the confrontations in Madison, the bill also slashed funding for the National Labor Relations Board by one-third, and 176 House Republicans voted to kill the NLRB altogether.  Meanwhile, Republicans are leaving the Pentagon budget largely alone.

Since the House CR is primarily symbolic, the real tale of the tape will be in the internal priorities Republicans set in negotiations with Senate Democrats and the White House.  But GOP leaders are under intense pressure from the large majority of its Members from the arch-conservative Republican Study Group, and from Tea Party-oriented freshmen, to use budget cuts to completely change the scope as well as the size of the federal government.

Most interestingly, there is a growing sense that House conservatives and the right-wing chattering classes are increasingly favoring a federal government shutdown (which will happen on March 4 if no agreement is reached on the CR or on a short-term stopgap, which Republicans say they will oppose unless it incorporate major spending cuts) not just as a negotiating tactic, but as an end in itself.  Highly influential anti-tax lobbyist Grover Norquist has been explicit about what he sees as the political advantage Republicans would derive from a shutdown: “Obama will be less popular if — in the service of overspending and wasting people’s money — he closes the government down, as opposed to now, when he’s just wasting people’s money.”

More to the point, Republican leaders would like to get rid of the RINO label as soon as possible and earn the trust of Tea Party types. It’s even possible that they are powerless to act otherwise (particularly given the example set by Walker in Wisconsin) or will be forced to engineer a shutdown in order to head off the more economically-consequential defeat of a debt limit measure.

In any event, conservatives are busy reassuring GOP pols that a shutdown won’t produce the sort of political damage the brief 1995 shutdown incurred.  They are typically blaming the 1995 setback on Newt Gingrich’s clumsiness, Bill Clinton’s diabolical political skills, the post-Oklahoma City backlash against government-hating, the malice of the pre-Fox “liberal media”—all ingredients that are missing from today’s impending confrontation.  All these psychological factors should be kept in mind in assessing what happens before, on, and after March 4.

Small Spending Cuts’ Big Impact on America in the Middle East

Posted on by The Progressive Policy Institute

Now is the winter of discontent for Middle East dictators. A great political awakening is roiling the region – which makes this exactly the wrong moment to weaken America’s ability to help people struggling to free themselves.

House Republicans, however, are determined to do just that. Oblivious to the growing democratic ferment in the Muslim world, they voted last week to cut funding for U.S. diplomacy and assistance by some $4.4 billion, along with a haircut for the National Endowment for Democracy (or NED, and full disclosure: Will Marshall is a member of NED’s board). Although it usually flies under policy-makers’ radar, the NED is America’s premier instrument for assisting democratic transitions in long-closed societies.

To be fair, President Obama’s new budget proposes an even deeper cut (12 percent versus the GOP’s six percent) in the NED’s already miniscule $118 million budget, though it wouldn’t take effect until next year.

These changes were tucked deep in the giant, $61 billion package of 2011 spending reductions the House approved last week in a frenzy of misplaced fiscal probity. We hope the Senate doesn’t overlook them as it tries to salvage something sensible from the House package and continue funding the federal government. If you want to establish your bona fides as a resolute budget cutter and enemy of big deficits, domestic spending isn’t the place to look for serious savings. The real money is in the big middle class entitlement programs and in tax expenditures, backdoor spending programs that cost the federal government over $1 trillion a year.

We are fiscal hawks, but these untimely cuts in democracy assistance illustrate the perfect folly of trying to balance the budget on the back of domestic discretionary spending, which accounts for only 13 percent of total federal outlays. They are too small to make an appreciable dent in America’s $1.6 trillion deficit, but they would curtail our ability to support the spread of America’s democratic ideals in the Middle East and elsewhere.

The NED was established in 1983 under the bipartisan auspices of Ronald Reagan and Democratic Rep. Dante Fascell of Florida. They believed the United States needed a non-official way to lend a helping hand to homegrown reformers. Funneling support through a non-government entity like the NED rather than the State Department or USAID makes it hard for autocrats to tar recipients as tools of American policy.

Since its inception, NED has backed virtually every significant struggle for freedom in the world. It helped ease democratic political transitions in Poland, Chile, South Africa, Nigeria and Russia. Crucially, it nurtures political dissidents from Burma to Cuba, including Nobel Laureate Liu Xiaobo in China, as well as countless lesser-known but equally courageous champions of human rights and democracy.

The NED and its core institutes are active in the Middle East and North Africa, although its nearly $22 million in annual grants to the region now seems wholly inadequate. In Egypt, for example, its micro-grants support youth participation in government, workers’ rights and – presciently, in light of the crucial role Twitter and Facebook played in drawing crowds to Cairo’s Tahrir square – digital media workshops for young people. In Yemen, another flash point, the NED supports young entrepreneurs and helps human rights and women’s empowerment groups build capacity.

Facing a snap vote in just six months, Egypt is ill-prepared for a democratic transition. It has no organized opposition parties and its civic groups, non-governmental organizations, and democratic institutions are—to be generous—underdeveloped. This is no time to be denying U.S. policy-makers the tools they need to help. But seeding the ground for democracy in the Middle East is a long game. Whatever the outcome in Egypt, we need a sustained and strengthened effort to help local reformers throughout the region put in place the building blocks of an independent civil society and functioning democracy.

That is the NED’s mission, and it needs more resources, not fewer. If our political leaders really want to show they are serious about whittling down America’s monstrous debts, they ought to follow Willie Sutton’s advice and go where the money is.

Twilight of Collective Bargaining?

Posted on by The Progressive Policy Institute

The Battle of Madison is in full cry, as labor and its progressive allies rally to block Wisconsin Governor Scott Walker’s plan to curb union bargaining power. The leftish Nation magazine calls it “Labor’s Last Stand.”

That’s a tad melodramatic; unions probably aren’t headed for extinction. But the traditional model of collective bargaining looks increasingly like an anachronism that may not survive this political donnybrook.

Like most states, Wisconsin is facing serious budget shortfalls. But Walker, a first-term Republican, isn’t just calling for givebacks from state employees. In addition to asking workers to chip in more for their health and pension benefits, he wants the legislature to pass a bill that would restrict their bargaining rights to the subject of wages. And he’s not alone: other GOP Governors, including John Kasich of Ohio, plan to follow suit.

Many Republicans blame states’ budget woes on generous labor contracts, which they see as creating a privileged class of public sector workers sheltered from the vicissitudes of the “real” economy. “Unionized public employees are making more money, receiving more generous benefits, and enjoying greater job security than the working families forced to pay for it with ever-higher taxes, deficits and debt,” Republican presidential aspirant Tim Pawlenty wrote recently in the Wall Street Journal.

This has incensed liberals, who note that it was Wall Street bankers and speculators, not bureaucrats, who plunged the nation into the fiscal crisis and the Great Recession. They say Walker is exploiting the fiscal crisis to aim a dagger at the heart of the only part of labor that has grown in recent decades: public sector unions. (More than 36 percent of public employees belong to unions, compared to just 7 percent of private sector workers.) Democrats view the GOP bid to strip public employees of collective bargaining rights as an attempt to topple a key pillar of the party’s progressive coalition.

In this view, what’s happening in Wisconsin and elsewhere is a political power play, pure and simple. Says Paul Krugman:

You don’t have to love unions, you don’t have to believe that their policy positions are always right, to recognize that they’re among the few influential players in our political system representing the interests of middle- and working-class Americans, as opposed to the wealthy. Indeed, if America has become more oligarchic and less democratic over the last 30 years — which it has — that’s to an important extent due to the decline of private-sector unions. Given this reality, it’s important to have institutions that can act as counterweights to the power of big money. And unions are among the most important of these institutions.

But things aren’t quite this simple, for three reasons.

First, Krugman conflates public and private unionism. Where public sector unions are concerned, the “boss” isn’t some private oligarch, it’s the government — ultimately the public. Unlike private unions, they get to pick the people on the other side of the bargaining table by funneling union dues into their political campaigns. Even if union leaders and lawmakers were saints, such an arrangement inevitably would put the public interest and the interests of government workers in tension. That is why no less a liberal paladin than Franklin D. Roosevelt opposed public sector unions, saying “The process of collective bargaining, as usually understood, cannot be transplanted in the public service.”

Second, progressives should acknowledge that many states have gone overboard in negotiating generous compensation packages for public employees. For example, the states are carrying about $1 trillion in unfunded pension liabilities on their books. Many pay a higher percentage of their workers’ health care premiums than private employers typically do. It rankles private sector workers to see states go into debt to provide public employees with pay and benefits (not to mention job stability) that are beyond their reach.

Third, progressives need to improve the quality of public services even as they reduce the cost of government. Collective bargaining agreements often impede the quest for flexibility, innovation, and higher productivity in the public sector. A classic example is teacher tenure, which makes it difficult for public school systems to get rid of ineffective teachers or to pay good ones on the basis of superior performance.

There’s no doubt that progressives must defend workers’ right to organize to protect their mutual interests. But organized labor also needs to evolve alternatives to the traditional collective bargaining model, which no longer fits the modes and organization of work in a post-industrial, globalized economy, and arguably has always been problematic in the public sector for the reasons that gave FDR pause.

Unlike private firms, high labor costs can’t drive government out of business or overseas. But running deficits to give workers what looks like special treatment can drive down public confidence in government. That’s why public employees need to develop new strategies that reconcile basic job protections with the need for a more effective, accessible, and fiscally responsible government.

The Coming Fight Over Foreign Assistance

Posted on by The Progressive Policy Institute

Above is my quick and dirty comparison of the coming fight over foreign assistance. In green is the amount already spent in 2010 on each of the discreet line items (I’ve chosen these four areas because they were directly comparable between the various proposed appropriations).

Here’s how to read the graph: The actual amount spent in 2010 by the USG on each line item is in green. In red is the amount Republicans want to cut back to for the remainder of FY2011, expiring on 30 September. And in blue is what the White House would like to spend in FY2012’s budget proposal.

Now, I understand that there’s a conversation to be had about fixing how we spend foreign assistance and what we should receive back from it. But this is a more basic philosophical disagreement about whether or not America should be a world leader, or whether we should disengage from the rest of the world. After all, at its best, foreign assistance buys soft power, something that has been in relatively short supply of late.

In light of that, it’s worth keeping in mind this quote from Joe Nye’s new book, The Future Power:

In general, the United States has not worked out an integrated plan for combining hard and soft power….Many official instruments of soft power – public diplomacy, broadcasting, exchange programs, development assistance, disaster relief, military-to-military contracts – are scattered around the government, and there is no overarching strategy or budget that even tries to integrate them with hard power into an overarching smart power strategy. The United States spends about five hundred times more on the military than it does on broadcasting and exchanges.

Photo Credit: Marines Haiti Relief

Budgeting for a Fast Train Future

Posted on by The Progressive Policy Institute

President Obama’s proposal to fund high-speed rail in the next surface transportation bill does more than boost the prospects that fast trains could be running in places like Florida and California by 2018. He calls on Congress to end its haphazard pork-barrel approach to building infrastructure.

In today’s 2012 budget plan, the president outlines a new template for federal transportation spending. He calls for strategic infrastructure spending that ends congressional earmarks that have resulted in the squandering of taxpayer money, and for consolidating many of the current funding streams for surface transportation into a unified “Transportation Trust Fund,” a proposal that echoes the recommendations of a recent PPI policy memo.

He challenges Congress to move “toward a cost-benefit analysis of large transportation projects” and to an “integrated national strategy” that harkens back to the original purpose of federal transportation spending – to defend America at the height of 1950s Cold War by building interstate highways.

Obama smartly frames today’s overarching issue not as a matter of simple budget cutting, but of helping business and labor compete in a global marketplace by modernizing infrastructure “in desperate need of repairs and upgrades.” The 2012 budget calls for $556 billion in transportation spending for the next six years, with about 10 percent going to high-speed rail and Amtrak’s existing train service, about 8 percent to mass transit and the remaining 82 percent for highway infrastructure improvement.

Now begins the raucous debate.

For one, Obama’s proposal will need to withstand the political strain of special interests vested in the “old ways” of funding highways from preset state formulas and congressional earmarks.

For another, House Transportation Committee Chairman John Mica (R-Fla.) has his own ideas: a six-year bill of only $250 billion (less than half of what Obama wants). A quarter of a trillion equals the amount of tax revenues expected from federal gas taxes.

The good news is that Mica understands that America needs better surface transportation, including selective high-speed rail. His solution is leveraging private capital with federal funds.

Getting high-speed rail into the dedicated funding scheme of the transportation bill is the essential first step to attract private capital. Mica knows this and will need to educate his colleagues to this basic fact of economic life.

Raising the 18.4 cents-per-gallon federal gas tax, which has remained unchanged since 1993, could help fund the $556 billion Obama proposes. This approach has been endorsed by the U.S. Chamber of Commerce, but faces congressional opposition because of the potential public blowback of higher taxes at the pump.

In short, winning approval for better transportation in the tricky crosswinds of a divided Congress and tax-phobic public is going to require the White House to stay laser-focused on the right track.

Obama’s Minimalist Budget

Posted on by The Progressive Policy Institute

President Obama’s new budget is a highly tactical exercise in fiscal minimalism. It proposes just enough spending cuts to be plausible, while putting off the critical work of tax and entitlement reform. Its unspoken premise seems to be: Given the ax-wielding frenzy that grips House Republicans, the best the White House can do now is to frame the fiscal debate on terms favorable to progressives.

The President’s $3.7 trillion budget would trim federal deficits by just over $1 trillion over the next decade. To the chagrin of liberals, the budget proposes to reach this total through a formula of two-thirds spending cuts, one-third tax cuts, rather than a 50-50 split. Also, it limits military spending growth without cutting specific programs. Meanwhile, the blueprint freezes discretionary spending for five years, and cuts over 150 programs, for $25 billion in budget savings next year. In short, the toughest discipline falls on domestic spending, so expect howls of betrayal from the left.

For all that, however, the Obama proposal would still leave us with deficits over 3 percent of GDP in 2020, while doing nothing to brake the runaway growth of costs for Medicare, Medicaid or Social Security, which account for 40 percent of the budget. These costs, propelled by soaring health care prices and demographics, and growing automatically each year, are what drive our nation’s long-term debt crisis.

The new budget does stabilize the national debt, but at a level – 77 percent of GDP – that most economists believe is well above what’s good for our fiscal health. It’s getting panned by deficit hawks. “This budget fails to meet the Administration’s own fiscal target, it fails to tackle the largest problem areas of the budget, and it fails to bring the debt down to an acceptable level,” said Maya MacGuineas of the Committee for a Responsible Federal Budget.

Over the weekend, GOP leaders lambasted Obama for not embracing the much more robust and comprehensive recommendations of his own Fiscal Commission. Its plan would cut deficits by $4 trillion by 2020, make big reductions in tax expenditures, and trim future Social Security and Medicare benefits for the well-off. Bear in mind that, even as they criticize the President’s fiscal pusillanimity, House Republicans have rejected the Fiscal Commission blueprint, oppose tax increases of any kind, and are engaged in an Alphonse-and-Gaston routine with the White House over who should go first on entitlement reform.

Nonetheless, the Commission’s Democratic co-chairman, Erskine Bowles, also expressed disappointment that the President hasn’t used its work as the point of departure for a serious push to restore fiscal stability in Washington. He accurately called the President’s proposal “nowhere near where they will have to go to resolve our fiscal nightmare.”

The administration apparently is calculating that its modest deficit-reduction proposal has several tactical advantages. First, it may better reflect the public’s actual appetite for fiscal restraint. The same polls that show strong public support for reining in public deficits also find majorities opposed to major program cuts. Second, and relatedly, the White House wants to contrast its moderate approach to GOP austerity zealots, who have launched a single-minded jihad against government spending. Once the public tumbles to the implications of the GOP’s demands for $100 billion in domestic program cuts now, Democrats reason, they will recoil and demand a more balanced approach that includes defense cuts and tax hikes.

That seems likely. Republicans have convinced themselves that most Americans share their goal of shrinking government by cutting off its credit card. “The country’s biggest challenge, domestically speaking, no doubt about it, is a debt crisis,” House Budget Committee Chair Paul Ryan said this weekend.

But progressives believe that Americans – especially the independents and moderates who abandoned Democrats in the midterm election – are even more concerned about the scarcity of good jobs and America’s eroding competitiveness. More than fiscal stringency, they are looking to their leaders for a hopeful plan to jumpstart the stalled U.S. job machine.

The President’s budget accordingly makes room for significant new public investments, especially in infrastructure, innovation, and education. He wants to spend $53 billion over the next six years on high speed rail, and invest $50 billion in capitalizing a National Infrastructure Bank. The GOP’s knee-jerk dismissal of such strategic investments as just more government waste is wrong as a matter of economics, and it leaves conservatives without a credible theory for how they would rekindle economic growth.

So maybe Obama is right to stand back and give Republicans all the fiscal rope they need to hang themselves from the tree of uncompromising budget austerity. But his Fiscal Commission, which labored diligently and successfully to find some fiscal common ground between the parties, especially on scaling back tax expenditures, deserves better from him. And sooner rather than later, the President will have to step up and lead on entitlement reform, a national imperative that can no longer be safely deferred.

End Separate War Spending

Posted on by The Progressive Policy Institute

It’s federal budget season. Before you doze off, stick with me: there’s a deceptive budgetary maneuver that is costing you billions in defense dollars, forcing progressive members of Congress into uncomfortable votes on Iraq and Afghanistan, and defying every historical precedent in Pentagon budgeting.

This maneuver is the supplemental appropriation for war funding. Every year since the United States launched military operations in Afghanistan in response to the September 11th attacks, Congress has appropriated separate funds for unanticipated wartime costs in addition to the Pentagon’s baseline budget. In some years, only one extra war spending bill is approved; in 2010, two supplemental appropriations were passed.

Supplemental war funding appropriations are hardly new, beginning in World War II. When used correctly, the process serves as a vital tool that delivers timely funding to America’s fighting men and women. In the initial stages of combat, supplemental appropriations are extraordinarily useful in the face of the lengthy Congressional budget process, which does not allow for unanticipated military spending. Typically, the supplemental funds pay for pre-deployment costs, servicemembers’ transportation to the warzone, combat operations, equipment needs, and military construction. Without this tool, the Pentagon would essentially be forced to sacrifice long-term projects to meet immediate wartime needs.

Here’s the rub: Under the Bush administration, allegedly “emergency” supplemental appropriations for war costs became routine avenues for backdoor spending. Their opaque nature and lack of oversight have created a propensity to fund low-priority programs that has effectively eroded any sense of fiscal discipline at the Pentagon, bloating military spending. We must put an end to the practice

The Department of Defense (DoD) is the unquestioned champion of discretionary spending—money the government chooses to spend, rather than is obliged to pay for entitlements like Medicare, Medicaid, or Social Security. With more than $700 billion in discretionary funds available, the Pentagon far outpaces its nearest competition, the Department of Health and Human Services, at $80 billion.

Since 2001, the Congressional Research Service (CRS) estimates that Congress has approved $1.12 trillion in supplemental appropriations, 90 percent of which—$1.01 trillion—has been destined for the Department of Defense. One estimate is that Congress has no control over one-fifth of supplemental war spending; therefore, a rough calculation suggests that some $200 billion has been wasted in 10 years.

While those on the extreme left and in the Tea Party would like to see slashes in the Pentagon’s spending, what DoD’s budget really needs is not gutting, but a solid dose of discipline.

Read the policy memo

Can the Republicans Really Pull Off $100 Billion in Cuts?

Posted on by The Progressive Policy Institute

Well, that was quick. Rather than risk a mutiny, House Republican leaders have agreed to now cut $100 billion from the $1.1 trillion federal budget, rather than their original plan of a mere $40 billion. The question is: Can they pull it off? And if they do, will they come to regret it?

Yesterday, I predicted a coming Republican crack-up based on the premise that the Young Turks of the Tea Party are out to take a stand (gosh darnit!) against big government, but it’s a stand that’s not compatible with the continued electoral success of the Republican Party. And the spending cuts are a perfect example.

Say Republican leaders are indeed serious about  cutting $100 billion. Where will they cut? A new Pew poll found only two federal programs in which more respondents favored a decrease in spending than an increase: Global poverty assistance (45 percent for a decrease, 21 percent for an increase) and Unemployment assistance (28 percent for a decrease, 27 percent for an increase). Neither of these are big ticket items.

The only other area that is close to even is Defense (30 percent for a decrease, 31 percent for an increase). Defense accounts for about half of discretionary spending. But I’m guessing a good percentage of those 31 percent who want to increase the military are solid Republican base voters.

So here’s the hard reality: There is some serious bloodlust going around Washington about cutting the budget, in part because there is some serious bloodlust about cutting the budget in the Tea Party base. But when it comes down to the actual programs that will get cut, the picture changes.

You see, many voters are symbolic conservatives in that they like to say they are for things like small government and fiscal discipline. But when it comes to specific government programs, well, why would you go and cut my well-deserved Medicare benefits when you could be cutting federal salaries or aid to the poor? In fact, with the exception of federal pay and foreign aid or aid to the poor, it’s hard to find a single government program or funding source that any majority would support cutting.

Democrats, of course, know this, and are just waiting for Republicans to go wild with their proposed cuts – especially Senate Democrats, who will play the role of putting the pieces back together.

In the end, there are two likely scenarios. In one, Republican leaders hold to the Tea Party line, but play right into Democrats’ hands, demanding harsh cuts — and in the process they awaken all kinds of anxious voters who are now suddenly worried about protecting the programs that benefit them. In the other, Republicans compromise, but alienate the Tea Party contingent, leading to an internecine battle. Either way, it’s not gonna be a pretty scene for the GOP.

The Defense Budget Sleight of Hand That’s Costing You Billions

Posted on by The Progressive Policy Institute

Look, I get it. If you’re not a budget wonk, I can understand how you might not care about this stuff. But if you’re a progressive and you’re concerned about the Tea Party destroying the EPA for no good reason, then that’s reason to pay attention.

I’ve written a policy memo about something else that is crucial to understand if we want to even the discussion of getting Defense spending under control: it’s simply vital that we end the practice of supplemental war funding bills.

Wait! Wait! Don’t fall asleep. Seriously. We’ve wasted $200 billion over the last ten years through a little-discussed system of back-door Pentagon budgeting, which essentially funds the stuff on DoD’s wish list by falsely calling them “emergency war necessities.” Why, for example, did Congress give Don Rumsfeld an $11 billion slush fund to spend as he pleases without any Congressional oversight?

We have to end this systematic abuse of your taxpayer dollars — start reading here to find out how.

Read the policy memo

State of the Union on Foreign Policy: Hardly an After-Thought

Posted on by The Progressive Policy Institute

Though the president failed to mention the words “foreign policy” until 80 percent of his speech lay in the rearview mirror, it very much served as the underpinning of the entire exercise.

“Winning the Future”, after all, is inherently a call to rise against two competitors: domestic political obstacles that restrain American growth and prosperity, and those nations who seek to best the American model of democratic free enterprise. In that sense, the best line of his speech–“We do big things”–was probably the most forceful testament to American greatness and world leadership of the Obama presidency. It was an effective reminder that despite the impasses our politics so routinely produce that our calling is at the head of the world’s pack, and for a damn good reason.

He used the buttress of China and India to raise the spectre of international competition, even though the notion of “competing” with with New Delhi and Beijing hardly boils down a zero-sum game.  But to gird Americans to tackle the huge tasks in their way, the frame was apt–other big countries are succeeding, and their models are sub-optimal.  We can be the best, he said, even though our democracy is messy.

Pundits may critique the speech for its lack of specific initiatives, that wasn’t really the point. Lofty rhetoric and inspirational moments fall well within the president’s balliwick, particularly at a political moment when a statement of first principles establishes the possibility of buy-in from erstwhile opponents. The specifics of regulatory reform, for example, may draw knee-jerk heckles from conservatives, but the idea of political cooperation that unleashes the power of American entrepreneurship and reestablishes American economic might on the world’s stage?  That’s rhetoric to start a conversation around.

When President Obama did get down to the foreign policy details, it was a mixed bag. Some, like Josh Rogin over at The Cable, took a cynical bent and criticized the president for glossing over some of the, er, finer details. Fair enough — I might disagree with some of Rogin’s “translations”, but he underlying point is that all isn’t going quite as swimmingly in the world of foreign policy as Obama makes it appear, and that’s about right.  Even if Obama’s foreign policy deserves, in broad strokes, a good amount of praise.

I wanted Obama to draw more of a line in the sand on foreign aid funding. With House Republicans set to eviscerate the foreign assistance line item in the federal budget, Obama could have used the moment to explain that if America is to remain numero uno in the world, it can’t retreat into isolationism. An America engaged with the world protects our security interests and advances our values, and engagement must be properly resourced.

And to conclude, I was pleasantly surprised at Obama’s forceful language on Tunisia and by subtle implication, the nascent rumblings in Egypt: “[T]he United States of America stands with the people of Tunisia, and supports the democratic aspirations of all people.”

Sure, platitudes come easy after a dictator has fallen, and Egyptians — as embodied in the “all people” tacked on the end — certainly wish Obama had been more direct. But in fitting with what I’ve said above, rhetoric is important and falls squarely within the president’s job-description.

Now let’s hope he has begun the process of cajoling our divided government into action.

Grading the State of The Union: A Solid B+

Posted on by The Progressive Policy Institute

Last week, the Progressive Policy Institute released a Memo to President Obama, which contained 10 Big Ideas for Getting America Moving Again. How did the President’s speech match up to our recommendations?

Overall, he did quite well. Eight of our ten ideas were largely consonant with proposals included in the address, and the future-oriented rhetoric echoes the language in our memo. We also appreciate his willingness to look to both sides of the aisle to find solutions.

However, we were disappointed that he did not discuss the sluggish housing market, and that he did offer any ideas to address the roots of the partisan rancor in Washington.

Our overall grade: B+

Here’s a proposal-by-proposal scorecard:

 

1. Removing Obstacles to Growth: A Regulatory Improvement Commission

 

We proposed: A periodic review process conducted by a Regulatory Improvement Commission, modeled loosely on the BRAC Commissions for military base closures.

The President said: “To reduce barriers to growth and investment, I’ve ordered a review of government regulations.”

Analysis: The President clearly understands that we need to prune obsolete and ineffective regulations and stimulate economic innovation and entrepreneurship. But agency self-review is inadequate.

Grade: A-

2. Internal National Building: A National Infrastructure Bank

 

We proposed: Smart, innovative financing solutions that enable us to restore the backbone of our economy. A well-structured National Infrastructure Bank can play this role by leveraging public dollars with the participation of private-sector investors.

The President said: “The third step in winning the future is rebuilding America.  To attract new businesses to our shores, we need the fastest, most reliable ways to move people, goods, and information — from high-speed rail to high-speed Internet.”

Analysis: Making infrastructure one of five sections of the speech gave it real prominence. But the President needs to do more than just propose “that we redouble those efforts.”   He needs to lay out a mechanism to do that rationally, and to identify clear funding for it. A National Infrastucture Bank could accomplish that.

Grade: A-

3. A Way to Pay for High-Speed Rail

We proposed: Restructuring the Highway Trust Fund into a Surface Transportation Trust Fund that recaptures its original mission—to build and maintain an efficient national transportation network—and updates that mission to reflect 21st-century priorities, including upgrades to our passenger and freight rail systems.

The President said: “Within 25 years, our goal is to give 80 percent of Americans access to high-speed rail. “

Analysis: We applaud the President’s full-throated commitment to high-speed rail. However, he’s going to need to figure out a way to pay for it. We suggest he read Mark Reutter’s excellent memo on how to finance high-speed rail.

Grade: A-

4. Restoring Fiscal Discipline in Washington

 

We proposed: Restoring fiscal discipline in Washington by trimming the $1.1 trillion in outdated tax expenditures, capping domestic spending (including defense), eliminating supplemental defense budgets, and slowing mandatory expenditures by reducing benefits for affluent retirees.

The President said: “Starting this year, we freeze annual domestic spending for the next five years… we cut excessive spending wherever we find it –- in domestic spending, defense spending, health care spending, and spending through tax breaks and loopholes… we should also find a bipartisan solution to strengthen Social Security for future generations…we simply can’t afford a permanent extension of the tax cuts for the wealthiest 2 percent of Americans.”

Analysis: The President clearly gets the seriousness of the looming debt crisis, but understands the difference between smart cuts and needed investments. But he could have come out more strongly in favor the Fiscal Commission’s work, and he only paid lip service to entitlements.

Grade: B+

5. Setting National Targets: A Balanced Energy Portfolio

We proposed: A national Balanced Energy Portfolio with a target fuel mix allocated into thirds by 2040: one third of our electricity generated by renewable resources, one third by nuclear power, and one third from traditional fossil fuels.

The President said: “By 2035, 80 percent of America’s electricity will come from clean energy sources.  Some folks want wind and solar.  Others want nuclear, clean coal and natural gas.  To meet this goal, we will need them all — and I urge Democrats and Republicans to work together to make it happen.”

Analysis: The President is thinking big, but also recognizing that nuclear and natural gas need to be part of any energy mix.

Grade: A

6. Greening the Pentagon: An Energy Security Innovation Fund

We proposed: An Energy Security Innovation Fund, housed in the Pentagon, to help companies bridge the gap. Such a fund would leverage public dollars with private money to support research and deployment of the most promising green products.

The President said: “We’re telling America’s scientists and engineers that if they assemble teams of the best minds in their fields, and focus on the hardest problems in clean energy, we’ll fund the Apollo projects of our time.”

Analysis: The next clean energy breakthrough is going to require support from the government. But Obaa should look beyond the Department of Energy and recognize that the military can be a fertile source of innovation, too.

Grade: A-

7. Bringing Public Education into the 21st Century

We proposed: To radically transform public education by growing charter schools, ending teacher tenure as we know it, spurring a network of “Innovation Zones”, and creating a “Digital Teacher Corps”.

The President said: “Our schools share this responsibility.  When a child walks into a classroom, it should be a place of high expectations and high performance.  But too many schools don’t meet this test.”

Analysis: Education is clearly the key to our ability to “win the future,” and the President understands this. We support his Race to the Top program and the call for more bright young people to go into education. But we also hope he thinks more creatively about radical new ideas for 21st century education, embracing the possibilities of charter schools, digital education, and “innovation zones.”

Grade: A-

8. Lifting Housing Markets: One Million Homeowner Vouchers

We proposed: An innovative way to jump-start the housing market would be for the federal government to provide a million vouchers that allow low-income renters to become homeowners.

The President said: (Nothing)

Analysis: Surprisingly, the President failed to mention the sluggish housing market, which many economists believe is one of the leading factors holding back an economic recovery.

Grade: F

9. Align Innovation and Immigration

We proposed: Aligning innovation and immigration by providing a citizenship path for foreign students with advanced technical degrees and illegal immigrants’ children who are interested in national service.

The President said: “I strongly believe that we should take on, once and for all, the issue of illegal immigration… I know that debate will be difficult.  I know it will take time.  But tonight, let’s agree to make that effort.  And let’s stop expelling talented, responsible young people who could be staffing our research labs or starting a new business, who could be further enriching this nation. “

Analysis: The President deserves points for having the courage to bring up immigration reform. But he clearly gets it: our global competitiveness depends on continuing to be a magnet for the world’s best and brightest.

Grade: A

10. Taking Power from Special Interests: A Fair Way to Finance Elections

We proposed: A hybrid Fair Elections system introduced by Sen. Dick Durbin (D-Ill.) to allow federal candidates to choose to run for office without relying on large contributions by using federal money to match small donations.

The President said: (Nothing)

Analysis: Campaign finance reform is not on the agenda, and the President does not seem particularly interested in putting it there. This is too bad. A great way to break the partisan rancor in Washington would be change the way politicians get elected to office. As long as congressional campaigns are privately funded, and as long as the big donations come primarily from ideologues and special interests, pragmatic candidates are going to have a tough time raising the resources they need to get started, and a difficult time winning in all-important low-turnout primaries.

Grade: F

Conclusion:

Overall, it was a great speech. It laid out the problems that we face as a nation, and provided a vision of an America that invests smartly in the future, building infrastructure, providing educational opportunities, and remaining a magnet for the best and brightest in the world, and all in a way that could move us past partisan divides.

Howard Berman Stands Up for Foreign Assistance

Posted on by The Progressive Policy Institute

Foreign aid doesn’t have a constituency, and is often first on the chopping block, a maxim that is no different in the Tea Party Congress. In their haste to slash every penny of government spending (save the tough bits, of course), they have again failed to appreciate why foreign aid exists in the first place.

Unveiled last week was a Republican proposal to slash everything under the sun when it comes to aid: 84 percent of the USAID budget, the U.S. Trade Development Agency, the Woodrow Wilson Center, the USDA Sugar Program, economic assistance to Egypt, and many other programs.

To be sure, America needs a serious discussion about foreign aid reform. But we shouldn’t be questioning its very existence.

That’s why much credit is due to Rep. Howard Berman (D-CA), ranking member (and former Chairman) of the House International Relations Committee, who rises to stand in the path of neo-isolationism:

We all remember the period when the United States tried to go it alone, unwilling to cooperate with other countries and demonstrate global leadership,” We’ve finally begun to turn that all around.  Let’s not go back to the bad old days when the U.S. turned away from the rest of the world, and lost so much of its influence and respect.”

This is nothing short of casting the ideological die. On one side is the principle of standing for an America whose security is enhanced and values forwarded by being engaged as an active world leader. On the other side is an America that shirks from its vast and critical international responsibilities because most conservatives lack the gumption to have a tough discussion on revenues and spending.
Let’s talk about reforming aid and protecting America’s interests and values, not about taking our ball and going home.

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

Posted on by The Progressive Policy Institute

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

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

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

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

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

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

White Voters vs. Obamacare

Posted on by The Progressive Policy Institute

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

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

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

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

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

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

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

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

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

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

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

GOP: Soft on Deficits

Posted on by The Progressive Policy Institute

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

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

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

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

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

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

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

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

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

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

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