Fiscal Policies Archives - Page 19 of 24 - Progressive Policy Institute

Obama Needs a Bipartisan Elder Statesman Road Show to Tackle the Deficit

Posted on April 19, 2011September 18, 2024 by The Progressive Policy Institute

As President Obama begins taking the budget deficit battle show on the road, he faces a number of obvious challenges. But perhaps the most pressing one is this: In the hyper-polarized political environment, how does a President whose approval ratings are stuck in the 40s successfully make the public case for a serious deficit reduction plan?

The answer is he’s going to have to try something different. If it’s just the usual campaign-style events like the GW speech from last week (“I don’t think there’s anything courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill.”), Republicans will respond predictably with wild demagoguery on tax hikes and entitlement cuts, and the battle lines will solidify into familiar gridlock patterns.

But here’s an alternative: Obama should to send a signal that this is serious, this is above party, this is for the good of the country, and if we don’t solve this problem soon, we’re going to pay a major price later. To do this, Obama should assemble a bipartisan team of elder statesmen to accompany him around the country as he talks about this. Imagine if he brought together Clinton and Bush Sr. on a hard-choices-to-tackle-the-deficit tour to give this some gravitas beyond the usual campaign-style events. At the very least he should be going around with Bowles and Simpson.

While the conventional wisdom is that the President can use the bully pulpit to move public opinion, the reality is that this is rarely the case. Public opinion is not easily moved, especially not by a highly divisive President on an issue that touches on issues of entitlements. (see, George W. Bush, privatization of Social Security).

And Obama seems smart enough to know that once a particular plan becomes the “Obama plan,” it’s going to be very hard to get any Republican co-sponsors, which is one reason he’s been slow to talk in specifics.

The political problem is that any serious deficit reduction plan has the dyspeptic taste of chalky medicine going down. This is not Ronald Reagan seeking public support for his tax cuts. A responsible deficit reduction proposal that requires tax increases and entitlement cuts (as a responsible plan must) exposes its advocates to attacks on the two most easily-demagogued issues in American politics. (He wants to raise your taxes! He wants to cut your Medicare and Social Security!) In other words, the politics of that responsible plan are very bad.

And yes, we know deficit reduction good for us, and increasingly, we know we really need to take that medicine (the federal deficit is rapidly shooting up among the ranks of Gallup’s most important problem). But we also keep thinking there must be a tastier medicine that can do just as good of a job, in good part because there’s always somebody out there promising a tastier medicine – magical elixirs based on heroic assumptions about tax cuts or mythical savings to be had from eliminating waste, fraud, and abuse or wooden-nickel promises about being able to preserve entitlements as they are.

If we’re going to get beyond this destructive dissembling, Obama’s going to need some Republicans out there speaking with him. Any plan needs to be sold as a bipartisan plan from the start.

While it’s unlikely any Republicans in the Senate would put themselves out on a limb and appear publicly with Obama, there should be some retired Republicans who might be willing to lend their name to a bipartisan effort to build a serious deficit reduction plan, especially given the stakes involved.

Had the President jumped out there earlier and defined the parameters of the debate on deficit reduction, he might be in a better place rhetorically. But Obama clearly believes in the rope-a-dope strategy – let the other guy (in this case Ryan) get out there first, and then punch back once he’s over-extended.

And yes, Obama can be the anti-Ryan if he wants, since the Ryan plan does not comport particularly well with the contours of public opinion. This might help in the short run. But it also runs the risk of defining the left flank of the debate, when that should really be reserved for the Progressive Caucus plan of 80 percent tax hikes.

This time, Obama should be more creative. Solving the federal deficit is a generational problem that needs to rise above party. Putting together a bipartisan road show of elder statesmen would signal that this is something grave and serious, not partisan politics as usual.

Obama Reframes the Fiscal Fight

Posted on April 14, 2011September 18, 2024 by The Progressive Policy Institute

Entering the lists at last, President Obama delivered a stout defense of progressive values yesterday and checked the rightward drift of the deficit debate. For all its strengths, though, his speech also left open the question of whether he and his party are ready to grapple effectively with surging health and entitlement costs.

Obama started with a history lesson. As the Tea Party harks back to 19^th century conceptions of limited government, he reminded Americans that the nation’s progress since then has been built upon a pragmatic synthesis of free enterprise and progressive governance. The extent of public activism required to create optimal conditions for shared prosperity is always a legitimate matter of debate, but the basic need for it shouldn’t be.

By insisting that deficit reduction leave room for strategic public investments in scientific research, modern infrastructure and education, Obama underscored a vital distinction that was being lost in the scramble to cut government spending: Reducing budget deficits is integral to reviving America’s economic dynamism. For most Americans, the priority is to get our economy moving again, not shrink government.

Obama also pushed back hard against Rep. Paul Ryan’s delusional budget, which asserts that the America’s path back to fiscal responsibility entails 100 percent spending cuts and 0 percent tax increases. In endorsing (finally!) his own fiscal commission’s plan, the president has set up a clear choice between the GOP’s fanatical devotion to shielding the rich from higher taxes and a bipartisan approach that exempts no one from sacrifice.

The president’s confident rejection of GOP tax dogma left House GOP Whip Eric Cantor sputtering. He was reduced to repeating the ridiculous Republican mantra that asking the wealthy to pay higher taxes is tantamount to killing America’s small businesses. Please Eric, bring it on: this is a debate progressives can win.

But Obama can’t just win debates. He needs to preside over passage of a comprehensive deficit-reduction package that, in a divided government, can only be achieved on a bipartisan basis. If he wants moderate Republicans to play on raising revenues – and a few intrepid souls like Sens. Tom Coburn and Saxby Chambliss have begun to do – he is going to have to convince Democrats to play on entitlement reform.

Here his speech fell short. Clearly mindful of President Clinton’s success in rallying the pubic behind his plans to protect Medicare and Medicaid during the 1995-96 budget battle, Obama categorically ruled out structural changes in how government finances those programs. That could prove to be a mistake.

It’s one thing for Democrats to reject the size of Ryan’s proposed cuts in the big public health care programs. But for both substantive and tactical reasons, they shouldn’t reject out of hand innovative devises to constrain entitlement costs.

It’s 2011, not 1996, and the baby boom retirement is underway, not over the horizon. This demographic surge, combined with health care costs that have been rising for decades faster than the economy has grown, are the real drivers of America’s debt crisis. To put a governor on the engine of federal health care spending, Ryan has proposed moving Medicare to a premium support model, and turning Medicaid into a federal block grant.

In his speech, Obama endorsed an alternative: strengthening provisions in his health reform bill to slow the unsustainable rate of health care cost growth. These provisions would encourage health providers to shift from fee-for-service to fixed fees for bundled services or capitated payments, which reward the value rather than volume of care delivered. These and other Obamacare provisions, including the independent commission set up to explore efficiencies in Medicare, are all good ideas. But even if they work, it will take a very long time for them to reach the scale necessary to break the back of medical inflation.

In the meantime, we need to protect public budgets from surging health care costs that threaten to soak up every dollar of revenue raised by 2040. If premium support and block grants are ruled out – even though some prominent liberals and Democrats have long supported one or the other — progressives need to come up with an alternative.

The political “grand bargain” Obama must strike couldn’t be clearer. It’s embedded in the fiscal commission plan: GOP support for raising revenues in return for Democratic support for constraining public health care and retirement costs. As the political action now shifts to the Senate, Obama needs to challenge his own party too.

Wingnut Watch: How the Budget Compromise Played Out on the Far Right

Posted on April 13, 2011September 18, 2024 by The Progressive Policy Institute

The consensus in Washington that last week’s appropriations deal represented a victory for conservatives was not shared very widely on the Right. Polls showed self-identified Republicans significantly less likely to approve of the deal than Democrats or indies. At the activist/elite level, the negative reaction was much stronger. Fits were pitched over the surrender of policy “riders,” notably by RedState’s Erick Erickson, who accused congressional GOPers of, quite literally, selling out “murdered children.” Rush Limbaugh even claimed that media assessments of the deal as a Republican win represented some sort of devious liberal trick.

Part of what’s going on here, of course, is that conservative activists want to maintain their leverage over Republican pols going forward. Many also don’t much appreciate all the bouquets being tossed at John Boehner for how well he “managed” them during the negotiations. Still others, especially on the Christian Right, really did care more about the policy riders than the overall level of budget cuts. A few, including probable presidential candidate Michele Bachmann, have adopted the Ahab Posture, making repeal of “ObamaCare” the condition for their vote on any budget or appropriations measure.

In any event, wingnut opinion is virtually unanimous in demanding a harder line in the FY 2012 budget debate and the associated debt limit vote, which many opinion-leaders (most famously Sen. Marco Rubio) are already promising to reject unless Democrats surrender definitively on every major issue, including “entitlement reform.” You can also expect a lot of conservative pressure to be applied to Republican senators this week to minimize support for the so-called Gang of Six, a bipartisan group that is working on a budget deal (loosely based on the Bowles-Simpson deficit commission report) that includes revenue measures, and may wind up working in tandem with the White House.

Over on the presidential campaign trail, things continue to heat up. Many conservatives took advantage of Mitt Romney’s announcement of a campaign exploratory committee to mock him for his stubborn continued support for the Massachusetts Health Plan, which, as it happens, was enacted five years ago this week. Puzzlement over the Mittster’s strategy for winning the nomination is spreading as well, particularly since it’s beginning to appear he may run away from serious campaigns in South Carolina as well as Iowa.

But the big news on the presidential front has been the startling evidence of significant support for possible candidate Donald Trump, the mythical tycoon and reality show host. A new CNN poll, in fact, shows The Donald running even with Mike Huckabee for the national lead among Republicans at 17 percent. The big question is whether such showings simply reflect name identification (Trump is, after all, nothing if not a celebrity), or perhaps a reaction to his recent high-profile expression of neo-Birther sentiments.

A PPP poll of New Hampshire, showing Trump running a relatively close second to Mitt Romney in that state, indicates the latter could be a factor: Trump actually leads among those denying Obama was born in the U.S. All these polls also show Trump having unusually high unfavorable numbers as well, so he’s hardly a threat to actually win the nomination. Still, his sudden emergence may indicate a craving in the GOP electorate for candidates with greater star quality, and perhaps more hard-core conservative views, though Michele Bachmann is certainly doing everything possible to supply both qualities. The possibility that Trump could actually run (and his bizarre interview with Christian Right journalist David Brody shows he’s trying to check off the interest-group boxes) should remain unsettling to other candidates; aside from his alleged wealth, he would be a nightmare in debates.

While Trump seems to be doing better than had been imagined among the conservative rank-and-file, the big winner during the last week in the Invisible Primary of insiders was Tim Pawlenty, with the announcement that former Republican Governors Association executive director Nick Ayers would run his campaign. Ayers, a Georgia-based wonder-boy (he’s only 28), was given a lot of credit for the GOP’s big gubernatorial gains in 2010. But a lot of the buzz about his T-Paw gig stems from the earlier assumption of many pols that he’d be involved in a different campaign: that of Haley Barbour, who was Ayers’ boss at RGA during the 2010 cycle. If nothing else, Pawlenty now has something important that he has lacked: a prominent backer from the South, where he will need to show strength if he winds up being the “consensus conservative” alternative to Romney to his left and perhaps an actual southerner to his right.

As Obama Prepares to Speak, PPI Hosts Tax Reform Forum

Posted on April 13, 2011September 18, 2024 by The Progressive Policy Institute

Today, President Obama is speaking on long-term deficit reduction. He’s expected to embrace the National Commission on Fiscal Responsibility and Reform’s general framework (also known as Bowles-Simpson).

Yesterday, the Progressive Policy Institute joined forces with the Moment of Truth Project to host an event to discuss what comprehensive tax reform should look like, and what it will take to get it passed. (Moment of Truth was formed by Fiscal Commission co-chairs Erskine Bowles and Sen. Alan Simpson to build momentum behind the commission’s deficit reduction plan.)

Yesterday’s event, at Johns Hopkins University, helped build the momentum for reform. There was wide consensus that tax reform will need to be bipartisan and comprehensive, and will need to scale back most of the $1.1 trillion in tax expenditures. Tax expenditures are at the heart of the “modified zero plan,” which would eliminate or scale them back, and use the savings to cut individual and corporate tax rates, as well as budget deficits.

Coinciding with the event, PPI released a policy memo on the modified zero plan, written by PPI Senior Fellow Paul Weinstein and Marc Goldwein of the Committee for a Responsible Budget, and both formerly of the Commission. Both were on hand.

Yesterday’s forum event featured three Senators who have been leading the charge for reform – Michael Bennet (D-Colo.), Ron Wyden (D-Ore.) and Dan Coats (R-Ind.) – and one CEO and Fiscal Commission member, Dave Cote (CEO of Honeywell). They provided the big picture framing, so I’ll summarize the highlights of their remarks first, and then delve into the two panels of experts second.

Sen. Bennet kicked off the event with stories from the town halls he’d been spending the last two years doing: “In every single meeting, debt and deficit came up,” he said. “There’s a deep skepticism that if we can’t figure out how to pay our bills, it suggests a lack of confidence in our government and our elected leaders, and it’s fairly well-placed.”

Bennet offered three criteria for what a deficit reduction plan would have to accomplish to pass muster with voters. First, it would need to be comprehensive. “People know we can’t fix this overnight, but they want it to be comprehensive.”; Second, sacrifice has to be shared: “They want to know that we’re in this together, and everybody has a share of the burden.”; Third, it has to be bipartisan.

Coats laid out a similar series of principles for the legislation that he has introduced with Senator Wyden. First, he said, echoing Bennet, it has to be bipartisan. Second, it has to be revenue neutral. Third it has to be simple (“Right now we’ve got 71,000 plus pages of tax code, 10,000 plus special preferences and deductions. It’s a nightmare.) Fourth, it has to help out the middle class, and help families to save money for college, and help charitable organizations. And fifth and finally, “this has to be based on a principle of growth…the bottom line is it has to lead to jobs.”

Wyden looked at the problem through the lens of tax simplification, noting that as April 15 approaches, “Americans are going through the 6 billion hours they spend each year filling out tax forms — 690,000 years is what you have in an annual effort going through the water torture of figuring out if line 9 is modifying line 7.”

Wyden also stressed that any tax reform also needed to encourage investment in what he called “red-white-and-blue jobs” – that is, solid American jobs, preferably in manufacturing. Wyden called his bill fundamentally a jobs bill.

Cote, CEO of Honeywell, echoed similar themes in his remarks. “We need a global competitiveness agenda for the U.S.” he began. “Our corporate tax system is globally uncompetitive. We have the highest tax rate in the world, and we’re the only major country with a territorial system that encourages companies to keep their cash overseas. And we give back $1.2 trillion in what is euphemistically named ‘tax expenditures,’ but just another form of spending that’s done through the tax code.”

Echoing the urgency of the Senators, Cote posed the looming crisis this way: “The debt problem can get resolved one of two ways. We can do it now and do it thoughtfully, or the bond market can force us t do it, like Greece and Portugal.”

Moving to the policy substance, the first panel featured Paul Weinstein, PPI Senior Fellow, Diane Rogers of the Concord Coalition, Alan Viard of the American Enterprise Institute, and Howard Gleckman of the Tax Policy Center as moderator

Weinstein gave the quick version and backstory of the “modified zero plan,” which is the subject of a new PPI memo Weinstein co-authored. As the name might suggest, it began as the “zero plan,” which was the name the deficit commission gave the plan that reduced all tax expenditures to zero, saving $1.1 trillion in deductions, credits, and deferrals. The “modified zero plan” put back in only a few consensus tax expenditures, like the EITC, a mortgage deduction, a charitable contribution deduction.

“The rates are lower, it simplifies the tax code to fewer incentives and helps reduce tax avoidance and mistakes,” explained Weinstein. “Obviously the revenue increases get bigger and bigger over time. We estimate $800 billion over ten years.”

Rogers responded favorably to the plan. “I like the approach. There’s something for everyone to love,” she said. “Liberals should like it because it’s progressive and better than having to cut direct spending. Conservatives should like it because it’s an economically efficient way to raise revenues, and it doesn’t raise the size of government. It reduces the size of government.”

Viard gave it two cheers. He called it “Well-specified and thoughtful. This is one of the best approaches you can have with an income-based tax system that includes a separate corporate income tax.” Viard’s stated preference was for a value-added tax (VAT), though the subsequent discussion highlighted how difficult the politics of transitioning to a VAT would be. (Rogers put it this way: “we should work within the existing system first.”)

As the discussion shifted into the politics of policy, there was general agreement that tax reform terminology is confusing to the general public, and any discussion of tax expenditures is going to lead to thousands of interest groups begging to keep their favorites. And again, there was agreement that it needs to be comprehensive. “Tax reform can’t be done unless it’s in the context of deficit reduction,” said Weinstein. “You need to look at the whole apple.”

The second panel featured Leonard Burman of Syracuse University, Marc Goldwein, of the Committee for a Responsible Federal Budget, Joseph Minarik of the Committee for Economic Development and Derek Thompson of The Atlantic as moderator.

Goldwein began by reiterating the consensus: “The current income tax code is a mess. There is a consensus to broaden the base, and reduce the rates, and don’t keep tax expenditures that aren’t worth their cost.”

But how to do that? Burman argued that ending tax expenditures would require not referring to them anymore as tax expenditures. “We need to change the fiscal language. I sometimes call them IRS pork,” he said. “Part of the problem is mischaracterizing tax expenditures. Some people think that by putting new tax expenditures in the code you’re making government smaller, but what you’re doing is just spending more money and making taxes higher to achieve a given level of revenue.”

Minarik, a grizzled veteran of tax fights, highlighted the fact that the inside-the-halls negotiating in Congress is very different from the “outside” formulating that goes on at events like this, and reminded everyone that the simpler the solution, the easier it will be to pass. In that respect, he said, a fifth-best solution that’s simple and straightforward is better than a second-best solution that can lead to more complicated politics.

Next Up: Tax Reform

Posted on April 11, 2011September 18, 2024 by The Progressive Policy Institute

Averting a government shutdown was only the first of a series of gates Congress must clear in this year’s downhill slalom of fiscal politics. Even sharper turns lie ahead – raising the debt ceiling, and approving next year’s federal budget.

In mid-May, the U.S. Treasury will bump up against the limit of its legal authority to borrow money to finance the federal government’s operations and service its debts. Republicans have served notice that they see the coming vote to raise the debt limit as another opportunity to extort deeper cuts in federal spending for next year.

The stakes in this game of fiscal chicken, however, are infinitely higher. Without a debt limit hike, the United States, for the first time in its history, would be forced to slash hundreds of billions in spending, or more likely, default on its obligations. Are GOP leaders really willing to let the Tea Party turn America into Argentina?

More likely they’re bluffing. Still, it wouldn’t be a bad thing if the debt ceiling vote becomes an action-forcing mechanism for serious negotiations to cut future deficits and stabilize the national debt. By “serious” I mean pragmatic and bipartisan, qualities you can only find nowadays by crossing the Capitol from the House to the Senate.

The House this week will probably pass some version of Budget Committee Chairman Paul Ryan’s proposed budget. It’s an ideological document, not a plausible point of departure for horse trading. By taking taxes off the table, Ryan panders to GOP taxophobia and ensures no Democratic support for his plan. And that plan is a distributional horror, concentrating all the pain of deficit reduction on middle- and lower-income Americans, while giving the most fortunate a free pass.

That’s why all eyes are on the “Gang of Six,” a bipartisan group of Senators who are trying to forge consensus around the Fiscal Commission’s deficit reduction plan. Its centerpiece is a call for a sweeping overhaul of tax expenditures, with the savings dedicated both to buying down individual and corporate tax rates and cutting federal deficits. PPI will co-host a public forum on tax reform tomorrow featuring Sens. Micheal Bennet (D-Colo.), Dan Coats (R-Ind.), and Ron Wyden (D-Ore.), as well as prominent budget and tax experts.

And President Obama, who seems to have gone on walkabout, returns to the fiscal fray Wednesday with a major speech on the need for cutting entitlement spending, especially for Medicare and Medicaid. The unsustainable growth of these huge “mandatory” programs – not the domestic spending targeted by House Republicans in the shutdown battle – is the real driver of federal spending and debt.

A decisive intervention at this stage by the President is crucial, since many Democrats are as deeply in denial about the need for entitlement reform as Republicans are when it comes to raising enough tax revenue to finance government. Many liberals, irate over the $38 billion in domestic spending cuts Democrats were forced to swallow to keep the government open, are demanding that Obama stop compromising and take up the ideological cudgels against Republicans. They want a full-throated defense of progressive government. But that requires action against entitlement spending, which is inexorably soaking up tax dollars and squeezing domestic programs that progressives rightly want to protect.

It also means showing the public that Democrats can responsibly manage the nation’s finances and restore fiscal discipline, even as they shield progressive priorities from chainsaw wielding Republicans. Obama’s challenge is to nudge, prod and cajole both sides toward a grand political bargain for shared sacrifice, built around tax and entitlement reform.

On the other hand, both Obama and Ryan have punted on the other big entitlement program, Social Security. It isn’t as big a problem as Medicare and Medicaid, but it must be on the table too because it’s adding to the nation’s overall debts. What’s more, it’s easily fixable. The Fiscal Commission pointed the way with sensible reforms, backed by Senate Democrats and Republicans, for raising the retirement age to match increases in longevity, and trimming future benefits for wealthy retirees.

The next step, however, should be tax reform. If the two parties can coalesce behind a plan similar to the Fiscal Commission’s, they could assure a balanced approach to deficit reduction, and build trust for the hard work of entitlement reform.

The American Electorate and the Budget Battle

Posted on April 6, 2011September 18, 2024 by The Progressive Policy Institute

As the budget negotiations grind to a halt, it’s helpful to keep in mind two important characteristics of the American electorate.

The first is that voters tend to like compromise. In poll after poll, solid majorities of voters say they prefer leaders who compromise over those who stick to their guns. The latest Pew poll is typical: by 55 percent to 36 percent, voters say it is important to compromise on the budget as opposed to standing by principles, even if it means a government shutdown.

The poll is also typical in finding that Democrats are significantly more likely to favor compromise (69 percent do) than Republicans (only 43 percent do). And Tea Partiers, not surprisingly are the most intransigent (only 26 percent favor compromise).

Of course, the same poll found that voters would blame the two sides about equally, with Democrats blaming Republicans and Republicans blaming Obama, with independents split, presumably also along partisan-leaning lines (since most independents are closet partisans). So neither side has a clear advantage right now. Opinion seems to be pretty much solidified along partisan lines.

While it’s not clear Democrats have an advantage on being the party of compromise right now, presumably that will change if a government shutdown does occur and Tea Partiers celebrate and proclaim that their principled stand forced this. This will, of course, help the Democrats.

The second characteristic is that Americans tend to be symbolic conservatives, but operational liberals. What this means in practice is that when government is discussed in the abstract (like, say, in a number) people want less of it. But when it’s discussed in the specific (like, say, any actual program) people like it.

Consider the polling: When asked, 64 percent of Americans think “federal spending and the budget deficit” is a problem that they worry “a great deal” about. But a recent Pew poll found not a single budgetary area in which a majority of voters would favor a decrease, and 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). Cuts to these two line items get you nowhere near $61 billion.

Presumably, Democrats should by now have found a sympathetic, sensible program that Republicans wanted to cut, and let that program stand in for Republicans heartlessness. But I don’t know: Maybe they don’t see that much worth aggressively and publicly defending in the $28 billion that separates them and the Republicans. And in an argument about how much to cut Government (in the abstract), the public is probably going to come down on the side of MORE.

Of course, the larger problem here is that we’re still talking about small potatoes. The federal budget is $3.5 trillion. That means we’re talking here about cutting it by either one or two percent here. That’s because this debate is all about non-military discretionary spending, which is only 13 percent of the overall budget. It remains frustrating to see this lack of context in the way the budget showdown keeps getting reported.

One Cheer For the Ryan Plan

Posted on April 5, 2011September 18, 2024 by The Progressive Policy Institute

As progressives pounce on Rep. Paul Ryan’s new budget proposal, they should also give the man a little credit. The plan he unveiled today is a daring attempt to define an actual conservative governing philosophy. That’s a big improvement on the reactionary and crotchety anti-government platitudes served up by the Tea Party.

And while progressives will rightly reject Ryan’s overall plan as draconian and unfair, they ought to keep an open mind about some of its most audacious elements, especially his ideas for controlling public health care spending.

For better or worse, the House Budget Committee Chairman has produced a coherent vision for limited government. It would sharply cut domestic spending, returning it to 2008 levels, reduce federal deficits by more than $4 trillion over the next decade, and hold federal spending below 20 percent of gross domestic product. It would further roll back the state and buttress “individual responsibility” by repealing Obamacare.

Ryan embraces President Obama’s Fiscal Commission proposal to cut tax expenditures and use the proceeds to bring the top individual and corporate income tax rate down to 25 percent. But unlike the commission’s approach, which commits a chunk of the savings to deficit reduction, Ryan makes his revenue neutral in obeisance to the Prime Ideological Imperative of today’s GOP: taxes must never, on any account, be raised.

Ryan’s most controversial proposals are also his most intriguing. In what he describes as a continuation of the bipartisan welfare reforms of the 1990s, he would convert Medicaid, which provides health insurance to poor families, into a block grant. Currently its costs are shared by the federal and state governments. As critics like Ezra Klein point out, a block grant is a device to limit federal health spending, shifting costs to states and individuals. It’s true that a block grant alone doesn’t constitute “reform” of Medicaid. But in tandem with reforms in health care delivery, especially efforts to move from fee-for-service to capitated “accountable care organizations,” a block grant could dampen inflationary pressures and protect taxpayers against the automatic and unsustainable growth of public health care spending.

Similarly, Ryan proposes to control Medicare costs by replacing open-ended subsidies with a “premium support” model. Under this approach – essentially a voucher, despite Ryan’s denials – Washington would give Medicare recipients a set amount (varying according to income and health status) they could use to buy insurance from competing private plans. Although Republicans wrongly assume that competition alone will drive down health costs – again, changing incentives to focus medical spending on the value rather than the volume of care is the key — premium support at least puts a governor on the engine of mandatory public health care spending, the main driver of America’s debt crisis.

Some liberals undoubtedly will see it as a plot to destroy Medicare. But recall that a bipartisan Medicare reform commission President Bill Clinton created in 1998 came close to embracing premium support. It’s also been endorsed by leading Democrats, including former CBO chief Alice Rivlin, and is part of the Rivlin-Domenici deficit reduction plan. In fact, as part of a more comprehensive strategy to contain health care costs, a Medicaid block grant and premium support for Medicare could serve a progressive purpose, by preventing rapid entitlement spending growth from squeezing vital public investments in children and families, scientific research, infrastructure and a clean environment.

On Social Security, Rep. Ryan disappointingly punts, proving no bolder than the White House. And as certified fiscal hawk David Walker points out, the Ryan plan does not include substantial savings in defense spending, and raises not a penny in new revenues to help the nation whittle down its enormous debts.

In other words, it’s an unbalanced plan, morally and politically, that gives the Pentagon and the wealthy a pass, and concentrates the pain of deficit reduction on middle and low-income families. The Fiscal Commission’s approach, broadly endorsed by 32 Republican and 32 Democrats Senators – if not yet by Obama himself – is infinitely preferable as a starting point for a serious debate.

Nonetheless, the Ryan plan puts conservatives’ ideological cards on the table and helps clarify the trade offs that must be made to strike a bipartisan deal. And it contains some ideas for ensuring that public budgets aren’t swamped by runaway health costs – ideas that progressives ought not to reject out of hand.

Wingnut Watch: How Much to Cut the Budget?

Posted on April 4, 2011September 18, 2024 by The Progressive Policy Institute

This will be a very important week in determining exactly how much fiscal radicalism the Republican Party is going to be willing to embrace. The odds of a government shutdown over Fiscal Year 2011 appropriations remain relatively high, despite major Democratic concessions over the level of cuts. House Republicans remain under significant conservative activist pressure to refuse compromise either on the level of cuts or the appropriations riders Democrats are most likely to go to the mat to reject (e.g., decimation of EPA enforcement powers, defunding of Planned Parenthood).

Meanwhile, Rep. Paul Ryan is due to release the House GOP’s draft long-term budget resolution tomorrow, which is almost certain to include “entitlement reforms” that Democrats will heatedly oppose. One tactical consideration is whether hard-core conservatives want to “take their stand” and threaten highly irresponsible behavior over the appropriations measures (which would involve a government shutdown) or over the budget (which they have linked to a debt limit increase vote many are promising to oppose unless they get their way on “entitlement reform.”).

A closely related question is how far conservatives (including those considering a 2012 presidential run) go out on a limb with Ryan on specific entitlements. Intel on Ryan’s plan indicates he’s going to give Social Security a fairly wide berth. Medicaid is most likely to get a big, obvious ax, with a trillion dollars in savings over ten years being the figure heard most often, and conversion of the entitlement into a block grant to the states being the most likely mechanism. Medicare will be the most interesting subject, given recent Republican demagoguery on the alleged impact of health reform on Medicare benefits, and Ryan’s past identification with the idea of turning benefits into vouchers that would have to be spent on buying private health insurance and that will not keep up with actual costs. One guess is that Ryan will use terminology that avoids the “v word” and makes it appear he is simply offering Medicare beneficiaries more choices, which will boost competition and thus hold down costs (an interesting proposition in itself, since past private-sector options for Medicare beneficiaries have been far more expensive than the traditional government plan).

On both Medicaid and Medicare, expect conservatives to object emotionally to any description of what they are proposing as “cuts,” since levels of spending will rise, just not remotely as much. Democrats will then be under the burden of explaining the concept of “current services,” whereby changing population levels and rapidly rising health care costs make the same dollars buy fewer actual services over time. During the budget struggles of the 1990s, Democrats largely won that linguistic fight, at least on Medicare. But one factor that might play out differently arises from Ryan’s likely strategy of “grandfathering” everyone 55 years are older into the current system, and limiting major structural changes to younger Americans. That didn’t work for George W. Bush when he attempted the same tactic for selling partial privatization of Social Security in 2005, but could have some effect at a time of perceived austerity when demographic groups tend to look after their own interests.

A parallel question is how far Republicans go in stimulating Tea Party resentment of the poor and minorities in promoting destruction of Medicaid as an entitlement. Initially, they will almost certainly focus on the demands of Republican governors for “flexibility” in administering Medicaid, which actually means the power to reduce eligibility and benefits. But Democratic arguments that the most vulnerable Americans will be bearing the burden of budget cuts could well produce a Santelli-like backlash among hard-core conservatives who don’t have much sympathy for “looters” dependent on government benefits. There’s not much evidence such sentiments are broadly shared in the population, but they are visible enough on the Right as to find expression among House Republican freshmen.

Throughout the appropriations and budget “crises,” the reaction of presidential candidates to ongoing events could be an aggravating factor, given the competitive pressure to express base-voter fury against Congress and conventional politicians and show “leadership” by saying outrageous but crowd-pleasing things. And by the same token, events in Washington could affect the lay of the land on the campaign trail quite a bit. It’s worth remembering that with one exception, no one among the likely presidential candidates is currently serving in Congress. And the one exception, Rep. Michele Bachmann, has staked out a permanent position of opposing any conceivable compromise with Democrats on any topic.

Speaking of the fiery Minnesotan, she’s finally beginning to get some attention in the mainstream media as something other than a gaffe machine and a cartoon character. First-quarter fundraising figures for the various proto-candidates’ leadership PACs showed her unexpectedly out in front, just ahead of Mitt Romney, having already raised over $2 million. Since she raised over $13 million for her 2010 House re-election campaign (more than Mike Huckabee raised for his entire 2008 presidential campaign), this was just a small indication of what she might ultimately raise if she does run for president.

Separate War Funding Still Makes No Sense

Posted on April 4, 2011 by The Progressive Policy Institute

On Friday, I spent an hour or so with Senate staffers selling the merits of ending the war funding supplemental bills. We remain mired in the midst of budget negotiations, and my aim was to get Hill staff to keep in mind the bigger picture while they’re in the midst of scrutinizing every line-item.

As I state in the paper, as well as the op-ed in Politico that accompanied it, the goal of ending war funding bills is simple: as the costs of Iraq and Afghanistan have long been predictable (save the troop surge in Afghanistan, but even that isn’t a huge outlier), we should be paying for our military operations at the same time and with the same Congressional scrutiny as the rest of the Defense budget. Currently, we pass separate budgets to pay for what have become known as “Overseas Contingency Operations”, which essentially writes a blank check to the Pentagon, reduces Congressional oversight, and creates uncomfortable votes for Democrats.

The issue remains both valid and pressing. If policymakers want to demonstrate their fiscal chops in the current environment, I suggest a read. Here’s a excerpt:

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.

Is the Tea Party Finally Boiling Over?

Posted on March 31, 2011September 18, 2024 by The Progressive Policy Institute

Maybe the Tea Party is finally starting to boil over, after all. According to CNN’s latest polling, 47 percent of the public now views the Tea Party unfavorably, a new high (up four points from December, and up 21 points from January 2010). By contrast only 32 percent now view the movement favorably, down five percent from December. Tea Party favorability had actually been pretty stable for the last year in the high 30s, so the recent downslide is significant.

Meanwhile, in Washington, House Speaker John Boehner appears increasingly willing to leave Tea Party demands for $100-billion-in-cuts-or-bust behind, and instead gamble that he can find enough moderate Democrats to support a shutdown-averting deal.

Tea Partiers are descending on the Capitol today to hold a “continuing revolution rally” to demand no surrender on the budget. Tea Party nation founder Judson Phillips wrote in an email to supporters that: “Boehner must go. The Tea Party must unite and make sure Boehner is replaced in the next election. Boehner is living proof of something I have said for a long time. It is not enough that we vote out bad leaders, we must replace them with good leaders.”

I hope Boehner’s stand will be a decisive moment: a solid break that begins the marginalization of the Tea Party as too-crazy-to-govern.

Presumably, Boehner the strategist understands a few things that the Tea Partiers do not.

First: that, if there is a government shutdown, Republicans are much more likely to get blamed, and nobody really wants a government shutdown.

Second: 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, they like those. As a recent Pew poll reminds us, there is not a single budgetary area in which a majority of voters would favor a decrease, and 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). The only other program that at least 30 percent of voters support decreasing is military defense. (I’m still mystified with how this squares with the fact that 64 percent of Americans think “federal spending and the budget deficit” is a problem that they worry “a great deal” about, but that’s a rant for another time)

If Boehner can make a break with the Tea Party, it will presumably drive the Tea Party into over-boil (I envision more Boehner-must-go memes). And that’s good.

The more visibly extremist the Tea Party gets, the high the level of disapproval (I hope!). But even better, if they’ve declared war on Republican leadership, it means that Republican leadership now has a vested interest in casting them as unhelpful extremists. And this is the key.

So could this be the moment for some GOP leaders to re-discover a bit of courage in moderation and finally offer some real thought leadership that gives ordinary Republicans an alternative to the exasperating slash-and-burn anger that has dominated the dialogue for too long? I certainly hope so.

Wingnut Watch: Iowa’s Cattle Calls and Conferences Continue, But is it Too Much Camp Christian?

Posted on March 30, 2011September 18, 2024 by The Progressive Policy Institute

Aside from rather predictable carping about the president’s handling of the military intervention in Libya, the wingnut world has been preoccupied the last week with an anticipatory sense of betrayal on federal spending and with sorting through its 2012 presidential options.

Conservative activists continue to pant for a government shutdown over FY 2012 appropriations, and are alarmed at any and all Republican efforts to avoid a shutdown via negotiations with the White House or congressional Democrats. News that Speaker John Boehner has begun talks with “moderate Democrats” in the House as a hedge against conservative defections on a compromise plan has spurred shrieks throughout the wingnut-o-sphere.

RedState’s Erick Erickson left no cliché undeployed in announcing that the GOP leadership had “no spine” and was so “scared of its own shadow” that it would “sell its soul, betray its base, and out-negotiate itself.” Conservative activists vary somewhat in their bottom lines; some are demanding no compromise on the policy riders aimed at Planned Parenthood, EPA and NPR; some want language crippling “ObamaCare;” some just want much deeper cuts, even though Democrats seem willing to reach the targets originally announced by House Republicans. Some want a separate deal on “entitlement reform” as part of the initial discussions on a long-term budget. And some will scream about any deal blessed by the America-hating socialist in the White House.

From a tactical point of view, of course, this conservative agitation will give Republican negotiators a bit of extra leverage, so long as the rank-and-file in the House doesn’t take it too seriously and sabotage any ultimate agreement.

Even as they keep a suspicious watch on their current representatives in government, conservatives are already avidly engaged in the 2012 presidential nomination contest, particularly in Iowa, where the whole game begins. There were two major Iowa events last weekend: a home-schoolers conference addressed by Michele Bachmann, Ron Paul, and Herman Cain; and a cattle-call organized by Iowa’s own favorite wingnut, Rep. Steve King, which drew Bachmann, Cain, Newt Gingrich, Haley Barbour, and John Bolton. At the former event Bachmann touted her own history of homeschooling her kids (before setting up a “Christian school” with her husband) while Paul proposed a large tax credit for homeschoolers. It was not lost on anyone that homeschoolers were a significant part of the coalition that won the 2008 Iowa Caucuses for Mike Huckabee.

Steve King’s event produced an array of proto-candidate speeches. Bachmann and Cain gave all-red-meat addresses split between liberal-baiting and challenges to the audience to get ready for 2012 and ultimately for leadership of the country. Bolton stuck to foreign policy in his speech, while Barbour stuck mainly to economic and fiscal policy. Gingrich gave his standard stock speech. In what is likely to become a pattern for such events, Cain and Bachmann got far and away the strongest audience response. And King’s influence was validated by the appearance of not only the presidential candidates, but of national conservative titan Sen. Jim DeMint (R-SC). King is widely expected to endorse Bachmann, his closest colleague in Congress, if she ultimately makes the race.

The cavalcade of culturally conservative events in First-in-the-Nation Iowa is spurring some debate, there and nationally, about the extent to which other Republican voices are being marginalized. Doug Gross, who was the Republican gubernatorial nominee in Iowa in 2006 and ran Mitt Romney’s 2008 Caucus operation, complained to The New York Times:

We look like Camp Christian out here. If Iowa becomes some extraneous right-wing outpost, you have to question whether it is going to be a good place to vet your presidential candidates.

The observation earned Gross some seriously angry responses (the Iowa Republican’s Craig Robinson referred to him as “Mr. Irrelevant”). But it did get some non-Iowa analysts looking at the numbers to see if the “Camp Christian” rep of Iowa Caucus-goers was overblown. RealClearPolitics’ Erin McPike ran some numbers:

The strength of religious conservatives in Iowa, while formidable, may be somewhat overstated.

To be specific, add Romney’s 2008 results in Iowa (about 30,000 votes, or 25.2 percent) to Arizona Sen. John McCain’s (about 15,500 votes, or 13 percent) to former Tennessee Sen. Fred Thompson’s (16,000 votes or 13.4 percent) to former New York City Mayor Rudy Giuliani’s (4000 votes or 3.4 percent), and the total is about 55 percent of the votes. Texas Rep. Ron Paul garnered a tenth of the votes. Compare that to winning Mike Huckabee’s winning share of some 41,000 votes, 34.4 percent of the vote.

The problem with this analysis is that in 2008 Mitt Romney was running as the “true conservative” candidate (he was ultimately endorsed by Jim DeMint, Paul Weyrich, Sean Hannity, Robert Bork, and many other hard-right figures) while Fred Thompson was the candidate of both Steve King and the National Right to Life Committee. Limiting “Camp Christian” to Huckabee caucus-goers misses a big part of the picture.

In any event, 2012 proto-candidates seem to be taking seriously the state’s reputation as a stomping ground for the Christian Right specifically and “movement conservatives” generally. King’s being treated like a senior statesman rather than a much-mocked crank. Romney’s giving the state a wide berth for the time being and trying to tamp down expectations. And if Mitch “Truce” Daniels is ultimately going to run, he certainly hasn’t shown his face in Iowa. Newt Gingrich probably did a very smart thing politically by getting one of his PACs to pour money into the successful 2010 effort to recall some of the judges responsible for the Iowa Supreme Court’s 2009 decision legalizing same-sex marriage. In a Caucus environment where evangelical fervor has a lot to do with the willingness to spend hours on an icy night standing up for a candidate, investing in the foot soldiers of the Christian Right makes a lot of sense.

Wingnut Watch: The House Conservative Budget Revolt is (Almost) All About Healthcare

Posted on March 16, 2011September 18, 2024 by The Progressive Policy Institute

In a fairly predictable development, the Republican Party and the conservative movement are showing some signs of division over strategy and tactics, if not much in the way of ideological diversity. The latest indication of underlying fissures was the loss of 54 House Republicans in the vote to enact a second short-term continuing appropriations resolution.

Many observers will likely attribute those “no” votes to a Tea Party-bred determination to maximize budget cuts and intimidate Democrats, and there’s some truth to that. But the real story is that much of the angst on the Right about budget and appropriations negotiations isn’t about levels of spending, or even the size of government, but about the ideological hobby-horses embedded in the earlier House-passed appropriations bill (H.R. 1) that the Senate quickly rejected.

Two of the ringleaders of the House conservative revolt on spending, the hardy duo of Michele Bachmann of MN and Steve King of IA, sent out an encyclical explaining their vote in advance. They swore perpetual opposition to any appropriations measure that did not “defund” last year’s health reform legislation—not just money appropriated to implement it, but mandatory spending (e.g., through Medicaid and Medicare) required by it. Bachmann and King, then, don’t even think the radical appropriations bill passed earlier by the House went far enough, because it did not accomplish their ideological goals.

Overlapping with the “ObamaCare” obsession on the Right has been the fear that House Republicans won’t follow through with the assault on family planning services and other cultural targets encompassed in the original House-passed appropriations bill. Cultural conservative groups have been rattling sabers about this from the very beginning of the appropriations struggle, as noted by People for the American Way:

Religious Right anti-choice activists are continuing to draw a line in the sand, and dozens of them – including Tony Perkins, Tom Minnery, Penny Nance, Phyllis Schlafly, Charmaine Yoest, Richard Land, Marjorie Dannenfelser, Andrea Lafferty, and Bob Vander Plaats – have signed on to a new letter to Speaker Boehner and Rep. Eric Cantor to ostensibly thank them for supporting efforts to defund Planned Parenthood and remind them that this issue is “non-negotiable.”

Certainly some GOP pols are taking such threats seriously. As Politico’s David Catanese explained, the more ambitious among them largely joined the rebels:

A breakdown of Tuesday’s vote on a three-week budget bill to keep the government operating shows that a slew of House members considering promotions to a statewide office in 2012 bucked their parties.

The fascinating floor count reveals the complicated and risky political implications across the country surrounding a vote that temporarily avoids a shutdown.

Nine Republicans currently running or seriously considering Senate or gubernatorial bids bucked House leadership and voted “no.”

They include Missouri Rep. Todd Akin, Utah Rep. Jason Chaffetz, Ohio Rep. Jim Jordan, Florida Rep. Connie Mack, New Mexico Rep. Steve Pearce — all who have been mentioned as potential Senate candidates, as well as Arizona Rep. Jeff Flake, Nevada Rep. Dean Heller and Montana Rep. Denny Rehberg, who have each announced bids for the upper chamber.

Indiana Rep. Mike Pence, also a “no” vote, is likely to run for governor.

This dynamic should be duly noted by those who persistently think Republicans facing tough electoral competition wish to “move to the center” and cooperate with Democrats. Even if that were the case, Republicans have to survive primary competition, and many now have become convinced by the 2010 results that harsh conservatism awakens a conservative majority in the general electorate.

In any event, as House Republicans, Senate Democrats and the White House struggle towards some sort of compromise on FY 2011 appropriations, it will be important to remember that numbers aren’t everything in this fight. Many conservative activists view this as an ideal opportunity to grind axes and settle old scores, and a full-fledged revolt could ensue if Republican leaders sacrifice their pet causes in pursuit of an agreement .

Speaking of the views of conservative activists, Public Policy Polling has a new national survey of self-identified Republicans out, and it’s interesting in several respects.

First of all, the poll breaks out Republicans into the 69 percent who are regular viewers of Fox News, and the 31 percent who are not. The non-Fox viewers are rather notably less conservative, and certainly less supportive of conservative pols, than their Fox-watching counterparts. For example, Newt Gingrich’s favorable-unfavorable ratio among Fox-watching Republicans is 59-24. But it’s 31-49 among non-Fox-watching Republicans. That’s a very big swing.

The poll also shows exactly how big a problem Mitt Romney faces on his health policy problem. Asked if they would “willing to vote for someone who supported a bill at the state level mandating that voters have health insurance for President,” fully 61 percent said no, while only 17 percent said yes. The very idea of a mandate, even without reference to Obama’s health reform initiative, attracts considerable hostility. And there’s no way around the fact that Romney has supported and still supports a mandate.

But perhaps the most striking number in the PPP survey is that one-fourth of self-identified Republicans think that the community organizing group ACORN is going to steal the 2012 election for Barack Obama. ACORN, of course, went out of business nearly a year ago. It takes a special kind of determination to believe that this never-more-than-marginal group somehow represents a threat to democracy from the grave.

Kerry Builds A New Road To Infrastructure Bank

Posted on March 15, 2011September 18, 2024 by The Progressive Policy Institute

Showing the kind of bipartisan leadership that has become all too rare these days, Senators John Kerry and Kay Bailey Hutchison have announced a new proposal to improve the way we fund infrastructure and unlock hundreds of billions in much-needed financing for new projects across the country. Their bill has one of those great acronym-friendly names that congressional staff labor to perfect: The Building and Upgrading Infrastructure for Long-Term Development Act of 2011, or for short: The BUILD Act.

Kerry and Hutchison announced the BUILD Act today in a packed Senate hearing room, flanked by the heads of the U.S. Chamber of Commerce and the AFL-CIO, who both endorsed the proposal and spoke about the shared need that business and labor have for Washington to move beyond its political dysfunction to address the urgent needs for building and maintaining the backbone of our economy and help create jobs. Senator Mark Warner is as an original co-sponsor of the bill and also joined the press conference. Senator Warner issued a similar warning that he delivered at PPI’s infrastructure conference last fall, explaining that we must reverse the decline in U.S. infrastructure investment to make our country a more competitive place for attracting capital investment and jobs in the global economy.

The BUILD Act represents an entirely new approach to the idea of creating a National Infrastructure Bank, one that goes a long way to reconcile the huge levels of needed investment with the very real spending constraints facing the current Congress. Given the realities of the current political environment, their proposal launches the bank on a fiscally responsible scale, while preserving the best principles of political independence and economics-based decision making that make the bank worth doing in the first place. They do this by structuring their bank as a financing authority under the Federal Credit Reform Act, a model used by the U.S. Export-Import Bank and other existing federal lending entities, that allows the bank to shift enough lending risk to borrowers to keep the burden on the government and taxpayers low, which avoids the large capital requirements of traditional infrastructure bank proposals.

By combining a smart financing structure with a 50% cap on the federal share of any project’s total funding, the BUILD Act avoids the high price tag that other infrastructure financing bills often carry. That makes it an innovative approach that needs to be a part of the upcoming debates on the already underfunded transportation bill. As Chamber President Tom Donohue said today, it’s an invaluable part of the solution to how we pay for maintenance and improvements that we can’t afford to ignore, but it can only work if added to a strong foundation of spending in the transportation bill, which he said will also require increasing our 17 year-old gas tax, to meet our current needs and adjust to lower fuel consumption by more efficient vehicles.

PPI has long supported the idea of a National Infrastructure Bank, including the current House bill sponsored by Rep. Rosa DeLauro, the long-time champion for infrastructure in Congress. DeLauro joined other top political, business, and labor leaders to discuss the bank proposal at our infrastructure conference last fall. Economist and infrastructure heavyweight Ev Ehrlich released an excellent paper at that conference laying out some of the key benefits to the bank approach. The experts who participated in that conference agreed that there were many approaches to structuring a bank that would be acceptable and achieve the benefits Ehrlich described, with the caveat that we could not afford to abandon the principles of independence and project selection based on economics, not political logrolling. Senators Kerry and Hutchison have managed to apply those principles in crafting a workable proposal during this time of fiscal austerity, and we at PPI applaud them for their resourcefulness and leadership.

Gang of Six Steps Up

Posted on March 8, 2011September 18, 2024 by The Progressive Policy Institute

If there’s any hope for making headway this year against America’s debt crisis, it lies with the bipartisan “Gang of Six” in the U.S. Senate. This group is filling the political vacuum created by House Republicans’ lemming-like rush to the ideological cliffs, and President Obama’s reluctance to commit himself on tough fiscal choices.

Led by Virginia Democrat Mark Warner and Georgia Republican Saxby Chambliss, the Gang of Six has picked up where the President’s Fiscal Commission left off. They’ve embraced the commission’s main political breakthrough – a hard-won bargain in which some key conservatives like Sen. Tom Coburn agreed to cut tax expenditures, while liberals such as Sen. Dick Durbin agreed to constrain Social Security costs.

This is the only bipartisan game in town, and it makes the Senate the main arena in Washington’s three-ring budget circus. What’s happening in the GOP House is essentially a sideshow, though it could turn into a very destructive bit of political theater.

Despite the jobless recovery, the House proposes to cut $61 billion in domestic spending this year – the largest immediate spending cut in U.S. history. Everyone knows there’s no way such a draconian measure gets through the Democratic Senate or past a presidential veto. Senate Democrats have countered with $6 billion in domestic program cuts, but that’s not likely to clear the filibuster-proof 60-vote threshold either.

So we’re in for a game of budgetary chicken in which both sides maneuver to blame the other if the federal government runs out of money in two weeks. Even if there is a federal shut-down, however, it’s unlikely to go on for very long, given how fed up U.S. voters already are with the antics of Washington politicians of all stripes.

But what’s really dumb, if not tragic, is to expend all this political blood and energy in a battle over domestic programs, which account for only 12 percent of the federal budget. Yes, their growth needs to be constrained too, but there just isn’t enough money there to make a sizeable dent in our fast-growing national debt, now $12 trillion and inexorably rising toward 90 percent of GDP if we don’t act soon. In the real world, stabilizing the debt at a sustainable level and eventually whittling it down means putting everything on the table – defense spending, taxes and entitlements.

That’s why the deal struck within the Fiscal Commission is so significant. It targets over $1 trillion in tax expenditures, like the tax exclusion for employer-paid health and scads of smaller business subsidies. To Senate conservatives like Chambliss, Coburn and Gang of Six member Mike Crapo of Idaho, these are essentially back-door spending programs administered through the tax code. And unlike many House Republicans and self-appointed tax commissar Grover Norquist, the GOP Senators don’t regard closing loopholes as tantamount to raising taxes. That brave departure from anti-tax fundamentalism is crucial to any bipartisan budget deal, because no self-respecting Democrat is going to negotiate deficit reductions on the spending side of the budget alone.

In a reciprocal show of political courage and country-first patriotism, commissioners Durbin and Kent Conrad of North Dakota signaled their willingness to entertain reforms in Social Security, notwithstanding all the overheated blather in the lefty blogosphere and cable TV land about the “cat food commission.”

According to today’s Washington Post, the Gang of Six is trying to recruit other Senators to join their center-out coalition. Let’s hope they succeed – and that President Obama enters the lists soon. Obama did the Fiscal Commission he created no favors by declining to endorse any of its recommendations. Worse, top White House aides lately have dropped hints that the administration may try to separate Social Security reform from negotiations over deficit reduction. If true, it would represent backsliding from Obama’s forthright pledges on taking office to confront Social Security’s problems.

In a recent op-ed, OMB Director Jack Lew argued that “Social Security does not cause our deficits,” and added: “Strengthening Social Security is an important, but parallel, issue that needs to be addressed as quickly as possible. But let’s not confuse it as either the cause of or a solution to our short-term fiscal problems.”

It’s true that health care costs are a far bigger problem, but Social Security also faces a long-term spending gap that will contribute to our mounting national debt as the baby boomers retire. The fact that it’s more easily fixed than Medicare or Medicaid is no reason to put that chore off. On the contrary, Democrats’ willingness to get serious about entitlement reform is an indispensible element of any plausible bipartisan deal for getting our fiscal house in order. It’s also the best way to take the heat off domestic programs, including progressive investments in education, infrastructure and social mobility that Democrats rightly defend.

If Durbin, the Democrats’ Senate whip, understands this, then surely President Obama does as well. His reticence on the specifics of a bipartisan budget deal may be purely a matter of tactics, but Durbin, and the Gang of Six, deserve his unequivocal support.

AmeriCorps is Worth Saving

Posted on March 5, 2011September 18, 2024 by The Progressive Policy Institute

With House Republicans on a slash and burn mission to cut federal spending, an agency on the chopping block is the Corporation for National and Community Service and the AmeriCorps programs it operates.

Defunding the community service program would be a huge mistake: AmeriCorps is exactly the kind of program that Republicans should love because it’s so efficient. It’s also the kind of program New York Times columnist David Brooks – who calls this period of fiscal austerity “a potential blessing if it spurs an effectiveness revolution” – should love too.

First launched as a demonstration program under President George H.W. Bush, AmeriCorps legislation was formally enacted during the Clinton administration and later expanded by President George W. Bush. AmeriCorps programs are a kind of domestic Peace Corps. They recruit, train and place citizens in service to meet community needs in education, the environment, disaster response and other areas. The fiscal investment required to operate these programs is widely regarded as reasonable considering the return. The program staff and AmeriCorps members engaged in community service leverage additional outside investments of time and resources, stretching their AmeriCorps grant dollars far beyond their face value. AmeriCorps programs are competitive and performance based with rigorous requirements to establish and reports on progress toward meaningful outcomes. If the outcomes aren’t met, the funding doesn’t get renewed.

A perfect example of how AmeriCorps works is its JusticeCorps program, which helps the judicial system in California better serve the four million or so people who come to court each year to resolve important civil legal matters but can’t afford an attorney. While anyone facing a criminal matter is afforded the right to counsel, a single mother who needs to establish paternity or child support, or an elderly landlord who needs to issue a restraining order against a threatening tenant, for example, is on their own. At rates now hovering close to $300 an hour, few of us can afford to hire an attorney. Legal aid organizations are so under resourced that they have to turn away two of every three meritorious cases. National data indicates that 60 to 90 percent of family law cases involve at least one self-represented litigant. As foreclosures rise, additional self-represented litigants have begun to clog the courts with housing related issues.

In several counties across California, the state judiciary partners with local public universities to recruit, train and place about 300 undergraduate college students in the courts’ self-help legal access centers where people can come get answers about how to file legal paperwork, navigate the system and resolve legal matters on their own. In the 2009-10 program year, JusticeCorps members assisted 60,000 litigants and helped to complete 38,900 legal forms. At a cost of roughly $1 million in federal AmeriCorps and local matching funds combined, that’s $16 per instance of assistance to litigants. This assistance allows people to take less time off work to be in court, avoids costly case continuances, keeps people from being evicted before they can find replacement housing, helps finalize parenting plans to support family stability, keeps potential victims of domestic violence safe and more.

The JusticeCorps program proves what early supporters of national service had hoped—that like any entrepreneurial start-up, AmeriCorps could adjust its founding premises and assumptions against the realities of the markets in which it competes. Seeing the same substantial need in the community and the potential for impact, New York, Chicago and Milwaukee among other cities, are actively trying to replicate the California JusticeCorps model, leveraging AmeriCorps funding to create new partnerships with local universities, bar foundations and the courts.

President George W. Bush praised AmeriCorps members as “armies of compassion.” We need them now more than ever. Leave these armies in place to do their good work while we all cope with other cuts we know lie ahead.