issue: Politics

Beware of Partisan Tax Zombies

Posted on by The Progressive Policy Institute

There has been growing chatter this week in response to James Surowiecki’s recent piece in The New Yorker suggesting we create a new, higher-rate tax bracket for the “super rich.”  It’s the kind of side story I should expect to see and not take too seriously when major tax changes are on the political agenda.  But I can’t just ignore this one, because it keeps getting more traction, and I think it baits extremists on both sides into all-too-familiar class warfare arguments, which are exactly the kind of discussions we should not be having right now.

As a Democrat, I am strongly in favor of a progressive tax system.  It’s one of the widely held values that defines us as a party, and it’s something we should not shrink from fighting for.  But there comes a point when the zeal for progressivity can overtake reasonable concerns about encouraging economic growth, and this year is not the time to let that happen.  Questions of distributional justice are important, and the Bush tax cuts did a lot to worsen inequality in our country that need to be remedied, but let’s keep the bigger picture in mind here.

The proposed “super rich” bracket is a supercharged example of how progressives are misdirecting our energies in the tax debate.  While there’s not much chance that it will make the jump to becoming an actual legislative proposal, the idea has struck a nerve on the left, which is already twitchy over the debate over whether to extend the Bush tax cuts for the top tax brackets, as Paul Krugman dutifully showed in his Times op-ed on Monday.   CNBC was quick to give the story more legs by bringing on Michael Linden from the Center for American Progress to endorse the idea in a segment on Monday.  Then they came back to it with another segment Wednesday night with Matt Miller (also from CAP) facing off with Stephen Moore from the Wall Street Journal.

For someone who has written about the Tyranny of Dead Ideas, Miller really let himself go a little zombie on this one, sounding too much like the “talking dead” with the old-school liberal argument for steep progressivity in the tax code and a deaf ear to the concerns about economic growth.  I’m not criticizing him personally as much I am CNBC for painting him that way, since Miller has repeatedly weighed in with very good thoughts about cuts for payroll and corporate taxes, but I think volunteering to step into the scripted left-wing role for this segment was a step backward from his earlier calls for a more radical centrism.

Is this really the kind of debate we are going to get dragged into this year?  With the country still languishing in recession, people in every tax bracket are looking to Washington to do what needs to be done to get the economy going again.  Do we really have to listen to the same broken records from both sides this time around (and they really are records, because these arguments haven’t changed much since the days of vinyl)?    This is the type of discussion that will drag the current tax debate into a predictable and unproductive battle of liberal and conservative clichés, which all but ensures that Congress will spend the fall in a tug-of-war over marginal tweaks to the Bush tax cuts and ignore other proposals for reform and stimulus.

We Democrats should not paint themselves into our usual corner in the tax debate by limiting our ideas to line-drawing, whether it’s the Administration’s line for the richest two percent or a new line for the “Ultrarich” in the top 0.1 percent.  Letting this happen would be a mistake for two reasons:

First, it obscures and marginalizes better policy questions at a time when sustainable economic growth should be our top priority.  Putting aside broader reform proposals, even the Bush tax cuts may not deserve to be lumped together and simply cleaved in two at the $250,000 line.  For example, rates on dividend income for the top brackets could jump from 15% to 39% in 2011, while capital gains income will stay at a lower 20% rate.  There is a good case to be made that the dividend rate should be kept in line with the capital gains rate, regardless of what happens to marginal rates, because having a disparity between these two taxes on investment negatively affects the cost of capital for utilities and other companies paying high dividends, which discourages spending on new capital and infrastructure.  But we likely won’t have that debate, because the distributional effects of playing with the dividend rate fall mostly within the top brackets, so they are on the wrong side of the dividing line Obama has drawn.

Second, Republicans usually do a much better job delivering their zombie rhetoric than Democrats.  As John Boehner so frequently demonstrates, the Republican response for talking about the top brackets is to use “small business” as a euphemism for rich people.  They have shaky new statistics every week about how the Democrats are raising taxes on small business.  But trying to explain away all the false numbers tends to put Democrats on the defensive, when they should be making an affirmative case for promoting economic growth.   And so far, Boehner and company are getting away with doing just that, because the President and congressional leaders are following our party’s tradition of being reactive on taxes instead of laying out a real vision.  So right now the public thinks the “Democrats’ plan” is pretty much whatever John Boehner and the tax zombies say it is.

Progressives’ top priority right now needs to be reviving economic growth and broad-based prosperity.  We can’t have a meaningful debate about economic inequality until we get our economy growing again.  Jobs and growth—not punishing the rich—are what Americans are interested in, and what we should be talking about.  Instead, progressives are limiting their talking points to justifying the dividing line between those who deserve tax cuts and those who don’t—the helps and the help-nots—and we’re letting Republicans own the growth side of the debate.

Democrats need to have something more than tired old thinking that says the Bush tax cuts are mostly OK for now, as long as we give them a quick liberal haircut—just a little off the top.  Instead of trying to repackage Bush’s mistakes, we should be framing the debate around the pro-growth virtues of a free-standing package of “Obama tax cuts.”  All we need now is for Obama to actually propose one.  I hope the zombies didn’t get to him too.

Photo credit: JamesCalder’s photostream

Is the modern partisan majority dead?

Posted on by The Progressive Policy Institute

Last weekend, Australia held a national election. And for the first time in 70 years, the land down under is now facing a hung parliament.

While Australia struggles to figure out how to govern itself, it’s worth reflecting on a larger trend: there is now a hung parliament in every major nation that is governed by a winner-take-all, “Westminster model” parliament (For those of you keeping score at home, that’s India, U.K., Canada, Australia, and New Zealand). And just about every other major industrial democracy relies on some version of proportional representation, resulting in multi-party governing coalitions of varying stability.

India obviously is an astoundingly heterogeneous country, so that makes sense. But it’s not immediately obvious why the four Anglo countries should be having such a difficult achieving political consensus these days. It’s enough to make one wonder: have we entered a new era of global politics in which it’s no longer possible for any party to win an electoral majority anymore?

Some quick background: The May U.K. election resulted in the first hung parliament in 36 years. Canada has experienced hung parliaments in every election since 2004, resulting in periods of minority government, though  prior to 2004, it had been 25 years since the voters couldn’t agree on a majority. New Zealand has had minority government since 1996, when the country introduced a mixed member proportional voting system.

And then of course, there is the good U.S. of A. (not a Westminster parliament, obviously, but also a winner-take-all system) where even though Democrats control both Congress and the Presidency, filibuster powers in the hands of an obstructionist minority sure makes it feel like a hung parliament.

But the big U.S. story this election is of course how the voters are growing increasingly sour on both parties, and no matter who winds up in control of the House and Senate come 2011, it’s not like any electoral majority is going to have anything close to a meaningful national mandate.  In the latest National Journal poll 28 percent of all respondents disapproved of both parties, and the number of Independents has been rising over the last six years to the point where the plurality of voters (36 percent) now choose to identify themselves as independents. And even if most independents tend to vote like partisans, the changing self-identification suggests they are less and less happy about it.

And while there are any number of possible explanations (Is it the hyper-adversarial nature of modern politics, stoked by the 24/7 media cycle, in which every trivial tiff is the new Waterloo? Is it something about the grim global economy, and the difficult reckonings that almost all nations are facing on some level?).  One wonders: have we entered a new era in which it is impossible for the majority of any modern nation to come together behind one banner? Is the modern partisan majority dead? And if so, what do we do about it?

Photo credit:  Marxchivist’s photo stream

Diagnosing our pervasive intellectual laziness

Posted on by The Progressive Policy Institute

David Brooks’ column today tackles what he sees as a pervasive intellectual laziness in modern political discourse, emerging in good part out of confirmation bias run amok and coddled by a culture that errs on the side of affirmation as opposed to challenge.

The ensuing mental flabbiness is most evident in politics. Many conservatives declare that Barack Obama is a Muslim because it feels so good to say so. Many liberals never ask themselves why they were so wrong about the surge in Iraq while George Bush was so right. The question is too uncomfortable.

Brooks figures maybe this has something to do with that simple fact that giving people what they want is always more profitable than the alternative:

In the media competition for eyeballs, everyone is rewarded for producing enjoyable and affirming content. Output is measured by ratings and page views, so much of the media, and even the academy, is more geared toward pleasuring consumers, not putting them on some arduous character-building regime.

Brooks is surely right on this point. But here are two additional ways in which the current media environment probably contributes to intellectual laziness:

1) Given the inexhaustible availability of content at any given moment, it is easier than ever to stay on a selective media diet, only munching on the news you know you like. Gone are the days when if you wanted to know what was going on in the world, you had only your local papers and evening television news to guide you. Today, you can read and read and read and watch and watch and watch to your heart’s content without ever so much as having to encounter an idea with which you disagree, or even a discomfiting fact.

2) The infinite chaos of the modern media stream might just be too overwhelming for anyone to approach without the crutch of an ideological filter. Imagine, for a moment, that you were truly agnostic as to some policy question, and you earnestly wanted to research it objectively. Where would you start? And more importantly: where would you stop? And when contrary ideas and facts emerged, how would you evaluate them? Picking an ideology to start provides coherence in a chaotic world (as it always has). And with the news environment more chaotic and expansive than ever, having a starting ideology seems even more helpful.

All of this suggests that those of us who agree with Brooks about the dangers of intellectual laziness built on ideology may be facing more obstacles than ever before. In short, we have our work cut out for us.

The McClellan Principle

Posted on by The Progressive Policy Institute

It’s a familiar argument: we know that putting a price on carbon will impose economic costs, but we can’t be absolutely sure that major climate change will happen. Therefore, we shouldn’t impose a carbon price, or at least we should avoid doing so in a recession, and be very reticent to do so at any point. The argument strikes many as logical and wise.

It is neither. And it won’t help make good policy or make progress towards consensus on what good climate policy should be.

At its core, the argument claims that any uncertainty about climate change means we should either give up, or at least wait indefinitely for better evidence. I call it the “McClellan principle.” Like the Civil War general, proponents of the argument counsel doing nothing until absolutely certain of success. The principle is frequently stated or assumed to be true in climate policy debates, often but not always by professed climate skeptics. To give a few recent examples, Stephen Calabresi states the principle explicitly in a Politico debate last week, while Steve Everley of Newt Gingrich’s American Solutions outfit uses the stealth version of the principle by listing costs of a carbon price while failing to mention climate change at all. But perhaps the most common form of the principle is simply as a concluding statement, thrown in as if its implications were obvious and unworthy of debate. The Wall Street Journal does this when criticizing California’s AB32 cap-and-trade policy in an April editorial:

While almost all of AB32’s benefits are speculative and uncertain, its costs are hitting businesses and residents now. This is one more blow to jobs and growth that California doesn’t need.

The appeal of the McClellan principle may come from the fact that it is cloaked in rational language, but it isn’t a rational approach to policy at all. In fact, it’s the inverse of the familiar “precautionary principle” advanced by many Greens (at least in the precautionary principle’s strong form). The strong precautionary principle would require a policy response even if uncertainty is large. The McClellan principle requires inaction even if uncertainty is small. Both principles are simplistic, and neither leads to good policy decisions.

The reason for this is that there are both costs and uncertainty about those costs associated with climate policy and with doing nothing. Both are real choices with consequences, even if we can’t say with complete precision what those consequences are.

The McClellan principle stresses that the economic costs of climate policy—primarily higher energy prices—are certain, while there is at least some chance that all the climate science models are wrong and that there will be no costs associated with doing nothing. Holding out hope that the Earth will not warm (or that we can do nothing about it) strikes me as absurdly Panglossian, but the basic premise that we can be more confident in estimates of the economic costs of policy—particularly that they will not be zero—is probably right.

The McClellan principle’s conclusion does not follow from this premise, however. Making policy based only on which kind of costs we think are more or less likely to be zero doesn’t make sense. We should instead do the best we can in estimating the two costs, both their magnitude and precision, and make the policy we can based on those estimates. That is of course incredibly difficult in practice. It raises questions about discounting of future costs and benefits, the tensions between national policy and global risks, and distributional impacts, among others. But it has to be the basic framework for making a decision. Both the McClellan and (strong) precautionary principles try to offer shortcuts, but in doing so they obfuscate rather than clarify.

I illustrating this is hard because conversations about climate policy are, unfortunately, so loaded with politics and preconceived ideas. Instead, let’s look at another issue loaded with different politics and preconceived ideas: crime. Imagine you are on a parole board considering release of a prisoner. There is a cost to releasing the felon (he might commit another crime) and a cost to keeping him in prison (prisons are crowded and expensive, and he might contribute to society if released). You know the cost of prison is not zero. The cost of release might be zero, or it might be big. But that doesn’t mean you should release the felon— or even that you should be any more likely to. Setting moral/ethical considerations about the prisoner aside, all we should care about is balancing our best guess about the costs of both options.

Of course, the way that parole boards work in practice—or at least the way most people demand that they work—is that any real chance of repeat offense is regarded as a reason for denying parole. So why is there such a dissonance between the way many people view parole decisions and the way so many view the climate policy debate? Why does the mainstream view on releasing felons appear to be a form of the precautionary principle, while the McClellan principle, if not the mainstream view on climate, is at least a major and usually uncriticized one? Surely a big factor is that the risks of crime are viewed as more personal and visceral, even if the chances of actually being a victim of a re-offender are low. It might be as simple as saying that most of us fear criminals more than we fear the more emotionally and temporally, if not probabilistically distant risks of climate change—and that mainstream positions are defined by what we most fear. That’s unavoidable to some extent, but it’s not a rational approach to making good policy.

Others, most notably Richard Posner, have made a similar analogy between major climate change and asteroid impacts—for which uncertainty is similarly paired with catastrophic downside risk. This analogy is useful because asteroid impacts are completely politically irrelevant—there’s no party line, and little fear—and as a result few people seem to have either a precautionary or McClellan principle-style reaction. A rational approach is the most appealing, though the same lack of fear may cause us to ignore the risk entirely and do nothing.

As these analogies hopefully illustrate, precision is important, but lack of it shouldn’t keep us from acting—on climate or on other problems of risk. Precision is just another factor in estimation of risks and costs. And whether the costs of action or inaction might have a chance of being zero doesn’t provide a shortcut out of the difficult task of balancing the two and making policy. Uncertainty matters, but it does not and cannot do the work alone.

I suspect that many people who advance the McClellan principle as their argument against pricing carbon would still oppose a price even if there were much less uncertainty about climate change risks (or would simply disbelieve claims of certainty). In their case, the McClellan principle may provide cover for less politically-acceptable positions, like an economic or political interest in fossil fuels or a very large discount rate. But many people who state the principle are not being disingenuous just to score rhetorical points. You don’t even have to reject climate science to advance the McClellan principle—you just need to point to the uncertainty within it.

But even for the intellectually honest, the wellspring of the principle’s appeal is, again, fear. Especially in a recession, the downside of pricing carbon sparks greater concern than climate change does, at least for many people. To them, the economic costs of a carbon price are very real, immediate, and personal, while the costs of climate change are distant and abstract. This is to some extent true for everyone, though if you are unemployed and live in a coal state, economic costs are certainly more apparent: a recent study suggests that unemployment and some measures of concern about climate change are negatively correlated. In a democracy, these perspectives cannot and should not be dismissed. They are valuable and should be listened to when considering climate policy, and in particular its distributional impacts.

But the fact that costs are tangible—that they are feared—doesn’t mean the McClellan principle is any more logically sound. Lack of certainty about climate change risks doesn’t justify inaction any more in Ohio than it does in California—or places at great risk from warming, like Bangladesh. The McClellan principle is ultimately based on fear, not reason. Stripping the principle of its thin cloak of rationality might therefore make a difference, however small, in the politics of climate policy. As I mentioned above, I’m certainly not the first person to try to do this, but the principle remains a resilient meme. It’s worth having the counterargument in your pocket.  Next time you hear it, ask its proponent what they would do on a parole board.

The Economist’s Strange Attack on Industrial Policy

Posted on by The Progressive Policy Institute

Last week’s The Economist leader and cover story, “Picking winners, saving losers”, painted an insidious picture of governments’ increasing intervention in market economies, arguing that the hideous Leviathan of the state was gobbling up one sector after another and warning that “picking industrial winners nearly always fails.” Now, put aside the fact that the government was forced into some sectors—such as automobiles and financial services—only after mammoth market failures and pleas for rescues from capitalism’s chieftains.  The more important fact is that the article feeds a Socialism-is-coming hysteria and ignores how picking winners—within limits—has worked in the past for the United States (and Japan, South Korea, etc.) and is needed more than ever to bolster our long-term competitiveness.

Of course, the debate about the appropriate role between the state and the private sector in market economies has raged for centuries. The debate is marred in part by vague terminology, and The Economist perpetuates this problem by throwing around a slew of terms—“picking winners”, “industrial policy”, “innovation policy”—without adequately distinguishing between them but while uniformly indicting them as inappropriate manifestations of government economic intervention.

It would be more constructive to envision a continuum of government-market engagement, increasing from left to right in four steps from a “laissez faire, leave it to the market” approach to “supporting factor conditions for innovation (such as education)” (which The Economist endorses, as, certainly, does ITIF) to going further by “supporting key technologies/industries” to at the most extreme “picking specific national champion companies”, that is, “picking winners.”  And while it is generally inadvisable for governments to intervene in markets to support specific national champion companies, ITIF believes there is an appropriate role for government in placing strategic bets to support potentially breakthrough nascent technologies and industries.

Ironically, The Economist asserts that, “Industrial policy may be designed to support or restructure old struggling sectors, such as steel or textiles, or to try to construct new industries, such as robotics or nanotechnology. Neither track has met with much success. Governments rarely evaluate the costs and benefits properly.” Yet, seconds later, the authors admit, “America can claim the most important industrial-policy successes, in the early development of the internet and Silicon Valley.” In one sentence, the article glosses over the point that the government, in this case the Defense Advanced Research Projects Agency (DARPA), “supported creation of ARPANET, the predecessor of the Internet, despite a lack of interest from the private sector.” (Italics mine.) But this point, as economists are wont to say, is “non-trivial.” In fact, it is the precisely the point.

Early on, companies were reticent to invest in the nascent field of computer networking because the sums required were enormous and the technology was so far from potential commercialization that companies were unable to foresee how to monetize potential investments. Moreover, such basic research often results in knowledge spillovers, meaning the company cannot capture all the benefits of its R&D investment (in economist’s terms, the social rate of return from R&D is higher than the private rate of return), and thus companies tend to underinvest in R&D to societally optimal levels. Of course, this dynamic pertained not just to the Internet, but applies today to a range of emerging infrastructure  technologies such as biotechnology, nanotechnology, robotics, etc. As Greg Tassey, Senior Economist at the National Institute of Standards and Technology (NIST), explains it, “the complex multidisciplinary basis for new technologies demands the availability of technology “platforms” before efficient applied R&D leading to commercial innovation can occur.” In other words, the levels of investment required to research and develop emerging technologies is so great that the private sector cannot support it alone, and thus, “government must increasingly assume the role of partner with industry in managing technology research projects.”

Such was the case with the initial development of the Internet, as government stepped in and provided initial R&D funding, helped coordinate research between the military, universities, and industry, and thus seeded development of a breakthrough digital infrastructure platform, making the Internet a reality decades before the free market ever would have (if ever) if left to its own devices. And this admittedly-successful industrial policy has indeed been a spectacular success. As ITIF documented in a recent report, The Internet Economy 25 Years After.com, the commercial Internet now adds $1.5 trillion to the global economy each year—that’s the equivalent of adding  South Korea’s entire economy annually.

Moreover, the list of technologies in which government funding or performance of research and development (R&D) has played a fundamental role in bringing the technology to realization is long and compelling. It includes: the cotton gin, the manufacturing assembly line, the microwave, the calculator, the transistor and semiconductor, the relational database, the laser beam, the graphical user interface, and the global positioning system (GPS), amongst many others. The National Institute of Health (NIH) practically created the biotechnology industry in this country. And yes, even Google, the Web search darling, isn’t a pure-bred creature of the free market; the search algorithm it uses was developed as part of the National Science Foundation (NSF)-funded Digital Library Initiative. (But Google hasn’t done much to spur economic growth!) The point is that companies like IBM, Google, Oracle, Akamai, Hewlett-Packard, and many others may not have even come into existence─and certainly would not have prospered to the extent they have─if the U.S. government was not either an early funder of R&D for the technologies they were developing or a leading procurer of the products they were producing. And if you don’t get Intel developing the semiconductors, or Cisco building out the Internet, or Akamai securing it, or Google making it accessible, then you don’t get the downstream companies like the Amazons or eBays, the latter of which 724,000 Americans rely on as their primary or secondary source of income.

Thus, while governments shouldn’t be creating and running such companies itself—that is for the free market to do—the government has a role to play in thoughtfully, strategically, and intentionally placing strategic bets on nascent and emerging technologies—as the United States did with information and communications technologies in the 1960s and 1970s—that have the potential to turn into the industries, companies, and jobs that drive an economy two to three decades hence. We call this innovation policy, as opposed to industrial policy. Today, this augurs the need for smart policies and investments in industries such as robotics, nanotechnology, clean energy, biotechnology, synthetic biology, high-performance computing, and digital platforms such as the smart grid, intelligent transportation systems, broadband, and Health IT. Explicit in this approach is a recognition that some technologies and industries are in fact more important than others in driving economic growth—that “$100 of potato chips does not equal $100 of computer chips.” Indeed, they are not because some industries, such as semiconductor microprocessors (computer chips) experience very rapid growth and reductions in cost, spark the development of subsequent industries, and increase the productivity of other sectors of the economy—not to mention support higher wage jobs.

Yet The Economist frets that governments aren’t very good at identifying and investing in strategic emerging technologies. In impugning governments’ ability to pick winning technologies, the article cites failures such as France’s Minitel (a case of a country picking a national champion company) and argues that “Even supposed masters of industrial policy {like Japan’s MITI, or Ministry of International Trade and Industry} have made embarrassing mistakes.” But this would be tantamount to pointing to the spectacular failure of Apple’s Newton and arguing that Apple’s no good at innovation. The Economist seems to suggest that if governments failed 80-90% of the time in picking technology winners (and ITIF actually thinks their success rates are much higher), then they must be pretty incompetent at the effort and should stop trying altogether.

But if private corporations followed that advice, then we would have no innovation whatsoever. Indeed, research by Larry Keeley of Doblin, Inc. finds that, in the corporate world, only 4 percent of innovation initiatives meet their internally defined success criteria. More than ninety percent of products fail in the first two years. Other research has found that only 8 percent of innovation projects exceed their expected return on investment, and only 12 percent their cost of capital. Yet companies have to continue to try to innovate, even in the face of these long odds, because research finds that firms that don’t replace at least 10 percent of their revenue stream annually are likely to be out of business within five years. The point is that just because innovation is difficult and success rates are low, this does not mean that corporations, or governments, should quit trying—or that their successes, like the Internet, can’t be spectacularly successful and have a profound impact on driving economic growth.

But The Economist laments that industrial or innovation policies are subject to capture by industries. What this neglects is that all countries, including the United States, already have de facto industrial policies that favor some industries over others. In the United States, for example, our regulatory and tax system favors agribusiness through farm subsidies, the oil industry through oil subsidies, airlines and highways at the expense of rail, and mortgage and financial industries. In fact, it is precisely because the United States has historically lacked an ability, or willingness, to have a clearly defined innovation strategy and an open dialogue about “making strategic decisions about strategic industries” that we’ve ended up with a de facto industrial policy ill-suited to supporting industries that will drive economic growth in the future. The Economist notes that “there is no accepted framework for “vertical” policy, favoring specific sectors or companies.” True. So let’s make one.

Finally, while The Economist criticizes President Obama’s new Strategy for American Innovation (released in 2009), it fails to come up with compelling evidence that breakthroughs such as mapping the human genome, unlocking nanotechnology’s potential, or achieving the technology-enabled transformations that need to occur in sectors from energy to transportation will occur solely because of the market’s ability to allocate capital efficiently. In this, it discounts the need for effective, intentional public-private partnerships to invest in and collaborate in the development and diffusion of these industries and technologies.

This critique is not meant to pick on The Economist, which is usually chock full of solid reporting and informed commentary. Rather it is take on the myth of America’s purely free market capitalist system and make the case for an informed innovation policy. It is also to note that countries (like the United States) find themselves desperately turning to industrial policy in a last ditch effort to save stumbling sectors such as automobiles because they have failed to make adequate investments in innovation policies that would support science and technology, R&D, and the development and diffusion of innovative processes and technologies that could have helped keep old sectors like automobiles at the technology frontier while supporting the development of new sectors to drive the economy forward.

Finally, it seeks to rebut the ideological and highly politicized assault on the idea the governments cannot make prudent, targeted bets on the industries of tomorrow. As Greg Tassey has noted, competition among governments has become a critical factor in determining global market share among nations. Indeed, the role of government is now a critical factor in determining which economies win and which lose in the increasingly intense process of creative destruction.

There are appropriate and inappropriate roles for governments to play in this competition. Supporting education, removing barriers to competition, supporting free and fair global trade, opening countries to high-skill immigration, and targeting strategic R&D investments towards the technologies and industries of the future are appropriate roles for governments to play in this competition. Other government policies, such as mercantilist ones which deny foreign countries’ corporations access to domestic markets, pilfer intellectual property by stealing it outright or making it a condition of market access, creating indigenous or proprietary IT standards, failing to adhere to trade agreements, or directly subsidizing domestic companies or their exports, are illegitimate forms of global economic competition. The United States—and The Economist—must abandon its fanciful, stylized neoclassical notion of a purely free global economic marketplace unfettered by any form of government intervention whatsoever, and recognize that governments play a legitimate and crucial role in shaping the innovation capabilities of national economies. As between corporations, it’s a competition; and, as with companies, the ones that develop the best strategies and skills at fostering, developing, and delivering innovation are the ones most likely to win.

Photo credit: chrismear’s photo stream

Lobbying Yields Nothing?

Posted on by The Progressive Policy Institute

Today’s New York Times “Idea of the Day Blog” features this sensationalist headline: “Lobbying Often Yields Nothing” — followed by this provocative summary

The real outcome of most Washington lobbying is … nothing. Until the right party or person comes to power. So finds a 10-year study.

Actually…  according to Lobbying and Policy Change (the landmark book by five political scientists that the post references), 40 percent of the time, lobbyists succeeded.   So yes, technically, 60 percent of the time is most of the time and so it is correct to say that most of the time lobbying yields nothing.

But, to me, 40 percent is actually an astonishing success rate.

Sure, this may not look like much if your starting assumption is that special interests own Washington, and that all a clever lobbyist needs to do is approach a Congressman with the promise of a campaign check and that poor helpless Congressman will practically be begging to fete that lobbyist with most indefensible corporate giveaway.

But, on the other hand, if you’ve spent any time in Washington, and you know how hard it is to get just about anything done, 40 percent is definite batting champion territory.

And the big point of the study is actually about the difficulty of change: the status quo is really, really sticky in Washington, in good part because on most important issues there are forces mobilized on both sides, and every action on one side provokes an equal but opposite reaction on the other side. Forces fight each other to stalemate for years. But then then, suddenly, there is movement – and whoever has won the war of positioning is likely to win the war of motion.

But the problem is that nobody – not even the cleverest of lobbyists – really knows which ideas and issues are likely to break and when. Which means the keys to success in the Washington wars of influence are a long-term strategy and the patience and resources to carry it out. One must build a compelling case, nurture allies, and be in position to take advantage of the rare windows of opportunity when they do arise.

Still, the more one works at it, the more likely the success. As the authors of this study note: “The passage of time increases the odds of policy change among our cases. We observer policy changes on significantly more issues after four years than after just two years” (237)  (This study only covered a four-year period (1999-2002). Had it looked at a longer period of time, perhaps the success rate would have topped 50 percent. Would the headline then have been “Lobbying Often Yields Something”?)

Interestingly, the study finds that having more resources is no guarantee of success, partly because there are often large resources on both sides of an issue. But that doesn’t mean that money doesn’t matter – it just suggests the price of entry to even get in the fight is quite high. Overall, lobbying is now a $3.5 billion industry, with corporations and business associations accounting for about two-thirds of the expenditures.

Ultimately, any attempt to simplify lobbying as either fundamentally influential or not influential misses a very basic point: lobbying is a process, a conversation, a multi-dimensional chess game that sometimes never ends. Nobody in Washington carries a magic wand that can make policy happen with a mere wave. Not even lobbyists. Influence happens in more subtle and patient ways, something that anybody who might be concerned about the role of lobbyists needs to understand.

Photo Credit:   PaDumBumPsh’s photo stream

4419

Posted on by The Progressive Policy Institute

4,419. That’s the number of Americans who have died in Iraq since the 2003 invasion, according to the Pentagon. Tens of thousands more have been wounded, maimed, or traumatized in various ways. And although it’s hard to get an accurate count, it’s likely that more than 100,000 Iraqis have perished.

As U.S. troops head home ahead of President Obama’s Sept. 1 deadline for ending major combat operations in Iraq, it’s worth asking: What did all this sacrifice achieve?

No dispassionate observer can doubt that Iraq, the United States, and the rest of the world are well to be rid of Saddam Hussein, one of history’s worst tyrants. He continually menaced his neighbors, invading two of them (Iran and Kuwait) and launching missiles at a third (Israel). At home, the paranoid dictator presided over a nightmarish police state in which anyone suspected of disloyalty – including school children – were abducted, tortured and murdered by the regime’s vast security apparatus. All told, the Iraqi dictator was responsible for the death of nearly two million people. He was Iraq’s weapon of mass destruction.

It took U.S. troops to free Iraqis from Saddam’s sadistic grip. Despite the many blunders the Bush administration committed following the invasion, that act of liberation is to America’s everlasting credit.

Now it remains to be seen what Iraqis will make of it. It’s easy to be pessimistic. Terrorist acts, though down, are still almost a daily occurrence. Sectarian rivalries have abated somewhat, but still seethe under the surface and could yet fracture the country. Five months after its last elections, Iraqi politicians seem paralyzed, unable to agree on a new government.

But if Iraqi democracy is a mess, even a messy politics is preferable to no democracy at all, as James Traub has argued Slowly, fitfully, a brutalized people have begun to take control of their own destiny. The United States, which will keep an “overwatch” force of 50,000 in the country for another year, still has considerable influence. There’s a reasonable chance that Iraq could continue to evolve into the Arab world’s first functioning democracy.

But even if you grant that the United States has accomplished much in Iraq, many Americans, and not just critics of the war, still wonder whether it was worth the cost. That’s a very different question, and one we’re likely to be debating long after the last U.S. soldier has left Iraq.

Beware the JetBlue Election

Posted on by The Progressive Policy Institute

That the mood in this country is sour seems beyond debate. Ronald Brownstein sums up the sentiment nicely in this week’s National Journal: “If polls existed just before the French Revolution, they might have returned results such as these.” One pollster has (appropriately, I think) called this the “JetBlue Election” – a reference to our newest rebel folk hero, Steven Slater.

No doubt, campaign consultants across the country are at this very moment scheming on the ways that challenger candidates can tap into same great ur-fantasy that Steven Slater embodied: that each of us has the courage to lash out at the forces of oppression stifling our creativity and genius and, in so doing, be rewarded as heroes. (Get government off our backs! Stop the corruption in Washington!).

Still, these candidates ought to be careful: they are playing with fire.

No doubt many voters out there, feeling great personal frustration for any number of reasons, are increasingly receptive to the too-good-to-be-true secret that lashing out in anger may actually be the best way to solve things.  Hence, the great success of the Tea Party.  It offers the same seductive solution as Steven Slater: salvation through anger. (Never mind that under normal circumstances, Mr. Slater would now be facing a the rather unpleasant reality of being unemployed and unemployable, as opposed to reality of a possible reality show.)

The temptation for challenger candidates, of course, will be to stoke such sentiment in hopes that they will be the ones to profit from it. But such challengers ought to be careful what they stir up and what they promise. Those who come to Washington on the bold premise that they will be the ones to shake the place out of its alleged abominations are likely to face a sorely disappointed electorate when things don’t, in fact, change immediately (see Obama, Barack).

After all, when the challenger becomes the incumbent, the blame Washington meme isn’t so helpful anymore. (And remember, even if Republicans do manage to regain some control in Congress, it’s not like they are much beloved either. The latest WSJ/NBC poll finds positive feelings about the Republican Party at a new 21-year low: just 24 percent.)

So then, a word to candidates, especially challengers: Be careful. Take succor from the sour mood at your own peril. Teaching voters that lashing out in anger is the best way to solve problems is a lesson they will not forget as easily as you might wish.

Photo Credit: Spackletoe’s photostream

More Clarity on Uncertainty

Posted on by The Progressive Policy Institute

I wrote last week about the political rhetoric of “uncertainty,” both real and imagined.  My thinking was that Republicans should be called out for their recent talking points that attribute our continued economic woes to fears and uncertainties created by the Democrats’  agenda, but that we should be careful not to dismiss legitimate problems of uncertainty that actually do exist in the economy.

In the Times today, Tom Friedman makes a more eloquent case for the need to recognize the real uncertainties we face.  His analysis is from a higher altitude, as one might expect, and it is dead right.  Friedman attributes broad economic uncertainties to three structural problems: (1) a decade of U.S. growth fueled by deficits and borrowing rather than investment and innovation, (2) a wave of new technology that is destroying lower-skilled jobs in favor of those requiring more education and training, and (3) the “existential crisis” of the European Union as German discipline is exported to Greece and elsewhere.   But these real uncertainties are not on anyone’s political agenda:

America’s two big parties still cling to their core religious beliefs as if nothing has changed. Republicans try to undermine the president at every turn and offer their nostrum of tax-cuts-will-solve-everything — without ever specifying what services they’ll give up to pay for them. Mr. Obama gave us expanded health care before expanding the economic pie to sustain it.

Friedman does not get very deep into specifics for structural solutions, but he doesn’t need to.  As is often true of Friedman’s perspective, the real value of today’s piece lies in the diagnosis.  We are facing real economic uncertainties, and the fact that Republicans are mischaracterizing them so shamelessly does not relieve the president and Democrats from the obligation to show more leadership.  As I wrote last week, Democrats need to stop sticking their fingers in the dike and come up with a more comprehensive plan built on a long-term vision of investment and sustainable growth.  Or as Friedman puts it:

The president needs to take America’s labor, business and Congressional leadership up to Camp David and not come back without a grand bargain for taxes, trade promotion, energy, stimulus and budget cutting that offers the market some certainty that we are moving together — not just on a bailout but on an economic rebirth for the 21st century.

I couldn’t agree more.

Kabuki Conference Buys Time on Fannie and Freddie

Posted on by The Progressive Policy Institute

The GSE conference at Treasury today included plenty of big names and good thoughts about the lingering question of how to restructure Fannie and Freddie before releasing them back into the wild.  But one thing missing from the agenda was a sense of urgency.  The conference wasn’t intended to move GSEs up on the agenda right now; it was simply a bit of theater to defuse the issue for a few more months, giving the Administration more time to kick some hard choices down the road.

Everyone knows we still need to do something about Fannie and Freddie.  The problem for Geithner is that everyone keeps talking about it.  The editorial chatter about GSEs is gaining momentum (after all, there’s only so much Steven Slater coverage even August can handle).  The New York Times ran two op-eds last weekend (good and not-so-good), former Treasury Secretary Paulson weighed in on the Post’s opinion page, and think-tank proposals are popping up all over, especially from folks like Don Marron who want to shrink or privatize the role of Fannie and Freddie in lending markets.

So Secretary Geithner did what any good politician would do. He co-opted the debate to keep it from growing beyond his control.  By inviting differing voices to vent their opinions in front of the cameras, Geithner got to look like he was on top of the situation and neutralize the situation for now with a concluding pleasantry that “it’s safe to say there’s no clear consensus yet on how best to design a new system.”  Thanks for that, Tim.  I guess we shouldn’t hold our breaths for “consensus” anytime soon, huh?

With elections weeks away and the crippled housing market still relying on the dual crutches of Fannie and Freddie to move forward at all, it’s no surprise the Administration and Congress are not falling over themselves to begin the fight for a specific reform plan.  Geithner has said the Administration plans to release and administration proposal in January (well after the elections), and the tone of today’s conference was consistent with that schedule.  For anyone who bothered to tune in today (and managed to stay awake), the message from the Administration was this: we know it’s important, and we’ll get around to it eventually . . . maybe once we get back from that Gulf-coast beach trip the President wants us all to take.

Robert Gates, Progressive Conservative

Posted on by The Progressive Policy Institute

Secretary of Defense Robert GatesDefense Secretary Robert Gates makes an unlikely progressive hero. A holdover from the Bush administration, Gates is an ex-spy and button-down conservative who keeps a portrait of President Eisenhower behind his desk. Yet he’s also warned against the “militarization” of U.S. foreign policy, forced the armed services to adapt to untraditional modes of warfare, and axed major weapons programs.

Republicans like to posture as the scourge of big government, but they’ve long been AWOL in the battle to discipline the biggest, most bloated bureaucracy of them all: the Pentagon. Not so with Gates, who has taken Ike’s farewell warning about “the military-industrial complex” to heart.

Even as he’s presided over America’s wars, Gates has sought to restrain military spending. He has canceled dozens of non-essential programs, saving taxpayers over $300 billion, and has ordered his department to find another $100 billion in administrative savings over the next five years. Going where others have feared to tread, Gates has targeted soaring military health-care cuts. And he’s promised to thin the ranks of top military commanders, whose numbers have mushroomed all out of proportion to recent increases in troop strength.

All this has drawn predictable fire from conservative hawks, for whom any cut in defense spending apparently signals an ominous weakening of national will. However, they’ve found it hard to make the usual “soft on defense” charge stick to George W. Bush’s tough-minded former Pentagon chief.

Some liberals, apprehensive over the possibility of deep cuts in domestic and entitlement programs once unemployment rates fall, want Gates to go a lot further. But until the United States is in a position to withdraw most of its troops from the Middle East and Central Asia, that’s not likely to happen. As PPI’s Jim Arkedis has documented, the truly big driver of Pentagon costs is manpower. To get the kind of military spending reductions many doves would like to see would require major changes in U.S. foreign policy – not just nips and tucks in this weapons system or that, or administrative reforms. That’s hard to do in the middle of two wars and a global counterinsurgency campaign against Salafist extremists.

But as Gates recognizes, defense will have to make a substantial contribution to America’s coming fiscal retrenchment. He’s offering credible reforms that will promote efficiency and reduce needless redundancy and waste, and, frankly, provide the administration with political cover against the GOP’s ritual claims that Democrats want to eviscerate the nation’s defenses.

All that may not win Gates many cheers at the next netroots convention. But this is a clear instance in which Obama’s “post-partisan” penchant for reaching across political divides has served him, and the nation, well.

On Gibbs v. the Professional Left

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I returned yesterday from an overseas vacation to find Washington embroiled in furious controversy over Robert Gibbs’s gibes at the “professional left.” Somehow, the shock waves from this momentous development had failed to register in Corsica, which may be a gorgeous, sun-splashed rock in the Mediterranean, but is hopelessly apathetic about U.S. politics.

Fortunately for slackers like me, Washington’s chattering class is too busy for vacations. And cable TV never rests, keeping the vital discourse of democracy going even as Americans frolic heedlessly on beaches, lakes and mountains. Well, the fun’s over for me, so I might as well wade into the fray between the frazzled White House Press Secretary and his netroots tormentors.

For starters, it’s hard not to feel some sympathy to Gibbs, for whom watching cable TV is an occupational hazard. Too much of a bad thing, is, well, bad and it’s only human for Gibbs to vent about the ideological purism of talk show anchors and lefty bloggers who imagine that most Americans are pining for a full-throated liberal avenger in the White House. Real-life politics is nothing like The West Wing.

And Democrats might as well have it out now, the summer of their economic discontent, rather than, say, in October on the eve of the midterm. One truly silly argument is that Gibb’s criticisms of the administration’s “base” could alienate them and cause them to stay home on election day. In the first place, netroots types aren’t really the Democratic Party’s base.

They are a subset of liberals, who are themselves outnumbered by moderates and conservatives in the party. And they love to be attacked, because it validates their rather inflated sense of political self-importance. The worst thing you can do to the netroots is to ignore them.

In fact, every Democratic President in recent memory has been flayed by the hard left for lapses from orthodoxy. That is especially true of Franklin Roosevelt, the President many of today’s disappointed liberals say they wish Obama would be more like.

Like Obama, FDR was called a tool of Wall Street, a trimmer, an opportunist. He was bitterly assailed for trying to rescue and restore the free enterprise system rather than replacing it with central economic planning.

This drove leading liberal New Dealers like Rexford Tugwell and Harold Ickes to distraction. Here’s Tugwell:

 

“They [FDR’s liberal critics] are like Chinese warriors who decide battles, not by fighting, but by desertion…They rush to the aid of any liberal victor, and then proceed to stab him in the back when he fails to perform the mental impossibility of subscribing unconditionally to their dozen or more conflicting principles.” (Schlesinger, The Politics of Upheaval, 414)

And Ickes had some equally choice words for the perfectabilian demands of his fellow liberals:

“That so-called liberals spend so much time trying to expose fellow liberals to the sneering scorn of those who delight to have their attention called to clay feet…I get very tired of the smug self-satisfaction, the holier-than-thou attitude, the sneering meticulousness of men and women with whose outlook on economic and social questions I often regretfully find myself in accord. It seems to be a fact that a reformer would rather hold up to ridicule another reformer because of some newly discovered fly speck than he would to clean out Tammany Hall. Sometimes even the fly speck is imaginary.” (Schlesinger, The Politics of Upheaval, 413-414)

Gibbs has a point when he says that liberals undervalue Obama’s major political achievements. On the big matters that really count – the breakthrough on universal health care, the financial regulatory bill, getting out of Iraq on time, and placing liberal women on the Supreme Court (including the Court’s first Hispanic member) – Obama unquestionably has moved the needle in a progressive direction. But if history is any guide, it won’t matter – he’s still going to get pilloried by the congenitally insatiable left for something (For failing to close Gitmo, or embrace gay marriage, or demand amnesty for immigrants, etc.)

The fundamental problem with the left’s carping about Obama is the underlying assumption that their views are shared by a majority of the country: If only he would fight harder for structural transformations in American life, the latent progressive majority would spring into being and rally behind him!

This is sheer fantasy. If the country has moved in any direction over the past two years, it is to the center, and perhaps even the center right (excepting Republicans, who have surged lemming-like off the ideological cliff). What liberals see as overly tepid moves to restructure and stimulate the economy a healthy chunk of the increasingly cranky electorate, especially independences, see as overweening government intrusion.

The party’s leftists are obviously within their rights to criticize Obama when they think he deviates from the true path, just as centrists and conservatives are. And the dialectic between the President’s essential political pragmatism and left-wing fundamentalists is probably a healthy thing. It could force Obama to articulate more clearly the overarching philosophical framework that informs a Presidency that otherwise seems to proceed on the logic of serial pragmatism.

But ultimately, left leaning Democrats aren’t going to find a better horse to ride. And the more they flog Obama, the worse Democrats are likely to do this November.

Why Progressives Must Embrace the Robust Optimism of American Exceptionalism

Posted on by The Progressive Policy Institute
The Hacketts Gospel Singing Shed
The Shed -- Dermott, Arkansas

Alexis de Tocqueville would understand “The Hacketts Gospel Singing Shed.”

Located in Dermott, Arkansas on the edge of a small cotton farm, “The Shed,” as locals call it, is a venue for gospel singers and fans to gather for song, worship, and fellowship. In the 1830s, Tocqueville toured America and witnessed the very sort of religiosity and voluntarism that motivated the Hackett family to transform a tractor shed into what has become a local community hub. The young Frenchman’s resulting sociological masterpiece, Democracy in America, explains “The Shed” and offers some timeless lessons about America’s uniquely ambitious political culture –
lessons Democrats looking for keys to ending the Great Recession ought to consider.

During his travels, Tocqueville recognized how republican ideals and cheap plentiful land had produced a profoundly optimistic, democratic, individualistic, entrepreneurial, and decidedly populist people. His shorthand for the differences between the U.S. and Western European political cultures – “American Exceptionalism”— remains a handy and useful concept progressives should both heed and employ.

“Exceptionalism” is not a Limbagh-esqe a priori verification of America’s supreme awesomeness. Rather, exceptionalism cuts both ways. The very populist impulses both bred the civil rights movement and spawned the Tea Party.

In the same way, American individualism is responsible for both a vibrant economic growth, a broad middle class, technological innovation, AND an anemic welfare state, concomitant high poverty and comparatively crime rates.

In sum, exceptionalism is not chest-thumpin’ We-Will-Rock-You, rah-rah USA cornpone; Tocqueville would recognize “The Hacketts Gospel Singing Shed” by echoing Denny Green’s infamous postgame rant, “They are who we thought they were!”

American Exceptionalism not only explains “The Shed.” It should also inform Democratic policy responses, both in substance and style, to the Great Recession.

Progressives understandably shy away from a term that seemingly reeks of parochialism and sounds like a potential first and middle name for one of Sarah Palin’s children. Instead of “exceptional” substitute “difference” and then wonder how and why Germans accept 8 percent unemployment as normal, middle class Danes ride bikes to work instead of drive cars, or Canadian cities are so neat-and-tidy. For better or for worse, the American “difference” is real.

Economic recoveries are like snowflakes—no two are ever the same. This should remind us that the “dismal science” is no hard science at all. To hear Paul Krugman or the Cato Institute’s certitude, however, one would hardly realize economists are making little more than highly educated guesses.

Ironically, even as partisan economists claim all-knowing prescience their field is thankfully moving away from technocratic certainty and toward ambiguity. While it is humbling (and quite a bit scary) to accept mysterious, unpredictable, and ultimately unknowable economic forces control our material fates, this is exactly why the American difference matters.

Modern progressive economic policy should combine short-term fiscal stimulus and long-term deficit reduction with rhetorical and policy faith in the American character. While sound policy matters, more and more economists realize that intangibles and emotions often spell the difference between recovery and double dip recessions.

The American difference really matters. Four hundred years of history (including the colonial era) proves that American optimism, individualism, entrepreneurial spirit, and waves of eager immigrants will eventually lead to robust economic recovery. Talk of decline, power moving east, and a new “normal” are reminiscent of the early 1990s when observers claimed Japan and Germany would overtake American economic leadership. If memory serves, the 1990s were fairly good economic times.

President Obama has provided such leadership. Time and again he has extolled the American work ethic and unique character; it is Congressional leaders and the liberal punditocracy, however, who are out of tune with the great resilience of the American tradition., Congressional leaders – who too often dwell myopically on technocratic details, medium versus big stimulus or extending unemployment benefits – fail to convey the most important ingredient for economic policy success: sunny optimism and a profound belief in an American difference.

All peoples in all lands hope, innovate, and work for a better future. Americans do so in their own unique, different, and yes even “exceptional” way. The route of this mess takes good policy but requires bold, optimistic, and a quintessentially American leadership. It is the sort of simple yet profound wisdom that a Frenchman; the folks of Dermott, Arkansas; and skinny kid with big ears and a funny name all know in their bones.

photo credit: Jeff Bloodworth

The Three Little Dutch Boys

Posted on by The Progressive Policy Institute

The economic news out of Washington this week has an eerie ring of déjà vu: Congress just passed an emergency spending bill, the Fed is buying debt securities to keep the economy from sliding toward collapse, and the Administration announced it is committing billions of dollars to mortgage relief for homeowners facing foreclosure. To be sure, none of these actions has the scale or urgency of the initial responses to the financial crisis, but they are perfect examples of the policy philosophy that has dominated both economic policy since the crisis: a focus on playing defense, rather than offense.

What we saw this week were Congress, the Administration, and the Federal Reserve continuing their roles as the three little Dutch boys of the American economy, sticking fingers in the dyke to save the country from disaster. The rhetoric of stimulus is oversold and misplaced: Washington’s fiscal and monetary policies have essentially all been economic tourniquets that are better characterized as containment measures than stimulus. The Fed is shifting into quantitative easing, but only as much as necessary to fight off deflation. Congress is sending aid to the states, but only enough to keep them from having to lay off teachers. Treasury and HUD are providing assistance to the housing market, but only enough to keep people from being kicked out of their houses.

Over and over since the crisis, policy makers in both parties have remained optimistic that the U.S. economy was inherently dynamic and resilient enough that we could rely on growth to materialize from somewhere, as long as we put a solid floor underneath to contain the damage and prevent more negative shocks to the economy. Given the huge amounts being spent and our country’s history from past recessions, this was not an unreasonable approach at the time, especially for those with any concern for fiscal responsibility.

So far, the containment strategy has proved extremely successful in keeping us from sinking into a full-blown depression. However, at this point, we still have farther to go on the path to a sustainable recovery than most economists and politicians had hoped. This morning we got the new jobless numbers, and they aren’t good.  Wall Street was hoping for better news, and the markets’ negative reaction only compounds the growing anxiety (even allowing for the low volume in August, when stocks historically are more vulnerable to bad news). The extended string of bad economic news, coupled with a lack of credible cheerleading from Washington, is creating a palpable crisis of confidence in our economy and our leadership.

While the Fed is signaling between the lines that it may be prepared for stronger action, Congress and the President seem to be headed in the other direction. Campaign politics have lawmakers talking more about contractionary fiscal discipline than taking any new actions to boost the economy. Even in the debate about extending the Bush tax cuts, the options being considered do not include anything stimulative compared to the status quo. Congress has painted itself into a corner by waiting until taxes are automatically set to go up if it fails to act, and now it will likely be forced to extend most or all of them simply to avoid a contractionary fiscal outcome. Again, playing economic defense.

It’s time we think seriously about shifting gears and talking about reasonable stimulus again, instead of waiting for the next hole to plug. As Will Marshall has argued here, keeping public spending and debt under control is critically important, and Democrats need to talk openly about how we prepare for the day of reckoning when the spending claw-backs kick in, since Republicans have lost all credibility on fiscal discipline. However, growth is still the most urgent concern; the signals from bond-market vigilantes are telling us that, as Stan Collander argues well today.

There is a still a place in the debate for looking into additional stimulus, both on the tax side and with additional cost-effective spending. For example, public investment in infrastructure can be used to leverage private capital off the sidelines as well by making the private sector an active partner in stimulus efforts. Instead of continuing to put fingers in the dyke, we need to be more proactive in finding the companies in the private sector who want to rebuild the dyke, and put people and money to work again.

Photo Credit: OliBac’s Photostream

How the Military is Leading the Way on Energy Security

Posted on by The Progressive Policy Institute

As a U.S. Army veteran I am used to dealing with the military, an organization that, by necessity, takes swift and decisive action when necessary, despite the fact that many see it as a conservative organization that is resistant and slow to change. In Washington, I am becoming used to dealing with another organization that is much more conservative and even more resistant and slower: the United States Senate. I am proud to say that the U.S. military is once again taking decisive action on energy independence and security, as well as addressing the military repercussions of climate change. The military is taking action where the United States Congress will not.

On July 27 I attended the White House Forum on Energy Security along with a group of veterans from Operation Free, a nationwide coalition of military veterans from all eras and ranging from Privates and Airmen to Generals and Admirals – all of whom support the goal of energy independence, security, and addressing the national security repercussions of climate change.

We have collectively been touring and speaking throughout the country and in Washington, D.C. in support of breaking our dependence on largely foreign oil and pushing Congress to take real steps toward a comprehensive clean energy climate plan. We have come to support the American Power Act developed through a bipartisan effort by Senators John Kerry and Lindsey Graham with Senator Joseph Lieberman and cooperation from the White House.

July 27 was supposed to be the day that the Senate finally took real action on the issue we have all been working hard for over the past year. It didn’t happen. As we all got on airplanes throughout the country in high spirits, something was happening on Capitol Hill: nothing.

By the time we hit ground in Washington, D.C. we learned that everything had changed. The Senate didn’t have the sixty votes needed to proceed to an up-or-down vote on the bill. We went to the Hill again to meet with fence-sitting Senators and their staff. The opinion we encountered there was disappointing, but not surprising: we need to do something about the issues of energy security, energy independence, and climate change, but we’re not going to do anything now.

Some, echoing Republican sentiment, said the issue hadn’t been discussed enough yet, that the Senate process of debate and hearings needs to be completed, that it would force them to choose ‘winners and losers’ and they are not ready to do that.

Hadn’t been discussed enough? We’ve been talking about energy security and independence since the 1970s. Other countries are taking action while we are being left behind. The CIA includes repercussions of climate change and our dependence on foreign fossil energy in its assessments. The State Department does as well.

Now the U.S. military is taking serious steps to address the issue. It devoted an entire section of the 2010 Quadrennial Defense Review Report (p. 84) to responding to climate change issues.  Secretary of the Navy Ray Mabus has expressed a clear vision of a force independent of fossil fuels. The military is taking action by reducing the use of fossil fuels, researching the use of alternative sources, and increasing the efficiency of its energy use, whether on battlefield outposts in Afghanistan or home installations in Texas. Speakers from each branch of the U.S. military have discussed similar opinions, expressing that action on this issue shouldn’t be taken for political reasons, but for security reasons. The money we pay for oil goes to regimes opposed to our interests. The cost of procuring, transporting, and securing that fuel is extreme, in dollars and to the lives of our troops.

This contrasts greatly with the attitude of too many Senators, who continue to choose politics over security. The U.S. Congress trusts the military and veterans on other security issues. Energy independence, energy security, and planning for the possible consequences of climate change are national security issues. The military is taking action, even if Congress won’t. If they’ll listen on other national security issues, let’s hope they’ll trust the military when it comes to a comprehensive clean energy climate plan that makes us energy independent.

Photo Credit: DVIDSHUB’s Photostream

Is the Google-Verizon Proposal a Killer App in the Broadband Debate?

Posted on by The Progressive Policy Institute

Google and Verizon have finally released the details of the policy proposal they have been negotiating for nearly a year now, and the news has generated enormous chatter around Washington and across the blogosphere, with bloggers panning it andwatchdog groups warning of the end of the internet as we know it.

Obviously, advocacy groups on both sides are focused on the substance of the agreement. But I am more interested in what this means for the policy process, and how effective it will be in nudging Congress and the FCC to clarify the rules of the game for broadband internet service.What these two companies have provided is helpful: a concrete policy proposal that Congress and the FCC can consider, and that imposes a framework for targeted comments from the industry and watchdog groups.

In fact, given the weight of these two companies and the collapse last week of the FCC’s attempts at talks, the roll-out for this proposal may make it a “killer app” in the broadband debate (and not simply an internet killer, as some are calling it).Now that Google and Verizon have put a policy proposal on paper, it becomes the baseline that everyone else has to support or oppose to some degree, including FCC commissioners and members of Congress.Pressuring leaders to make decisions is an appropriate goal, and that’s what this proposal does.

As for the proposal itself, it should be judged as a work in progress.Many of the principles themselves are worthy goals: giving consumers freedom to choose content, applications, and devices; requiring more product transparency from service providers, and prohibiting paid fast lanes for internet traffic. The recommendation that the FCC have real teeth to enforce violations of the proposed rules on a case-by-case basis is a good one.

If the kind of self-regulation proposed for the broadband internet industry is going to be successful, there also needs to be enough competition in the market to empower consumers to punish service providers for violating the principles that Google and Verizon have laid out.That means that in addition to policing the market for bad apples, the FCC needs to be vigilant in monitoring the health and competitiveness of the market for broadband internet access.If there are enough companies offering similar services, and the FCC and watchdog groups hold companies publicly accountable for their behavior by informing consumers of violations, consumers can play a valuable role in policing the market by switching providers when they feel their content or services are being unfairly restricted.

Both CEOs acknowledge that “no two companies should be so presumptuous as to think they can solve this challenge alone,” and no one should see this as an end to the debate.Verizon and Google have given everyone involved a chance to speed up the process by narrowing the conversation to actual yes-or-no decision making.I commend these companies for at least trying to move the ball forward with a good-faith proposal.

Photo Credit:  Peter Huys’s Photostream