issue: Politics

Time to Panic for Obama?

Posted on by The Progressive Policy Institute

Sometime around 1:00 pm last Friday, you may have heard a loud caterwauling outside your window. That was the sound of the punditry class going gaga upon the release of Gallup’s daily tracking poll showing that President Obama’s job approval rating had finally inched below the symbolic 50 percent line.

Combined with the recent losses for Democrats in New Jersey and Virginia — and the alleged flight of independents into the waiting arms of the GOP in those elections — the milestone might be another indicator of the trouble this administration now finds itself in.

But let’s not lose our heads. The estimable Charles Franklin of Pollster.com takes a look at the polling data over the last few months and finds much ado about nothing:

There is no evidence that any group of Dems, especially liberal Dems are unhappy with Obama’s performance. Critical is that moderate and even conservative Dems have not moved away since August. Angry conservative Reps are indeed very unhappy with Obama, at almost the same level of disgust as Dems felt for Bush, but they too have reached a plateau at a steady 10% approval. The small number of moderate Reps have also plateaued (I’d discount small moves in the last week of the aggregation.)

So the point is simple: Claims of abandonment of Obama by independents (or lib-Dems or con-Dems) are substantially exaggerated over the past three months. Significant decline from May through August, yes indeed among Inds and Reps, but that trend halted in August.

Far from plummeting, Obama’s approval rating has stabilized in recent months to a range close to his percentage total in last year’s vote. And when did we decide that a president dipping below 50 percent was a kiss of death for the rest of his term? Pundits made a big deal of the Gallup news, calling the fall “historic,” as it was the fourth fastest rate of decline of any president since World War II. Third on that list? Ronald Reagan, who was so damaged by his swift descent that he failed to win Minnesota in the 1984 election. (He did win all the others.)

To put Obama’s 49 percent in proper context, take a look at this chart from the Wall Street Journal:

Presidential approval ratings since World War II

These are the approval ratings for all the presidents since World War II. Every single president save for Eisenhower and Kennedy dipped below 50 percent. In fact, Truman, Reagan, and Clinton all hovered around or dipped below the 40 percent mark at some point in their first terms. And yet they somehow managed to win reelection.

For all of the overheated talk about polls and public opinion, you can bet that there’s little panic in White House. As we’ve noted before, this White House seems to have an almost eerie capacity to block out the noise of the day-to-day and take the long view. Andrew Sullivan put it well:

He is strategy; his opponents are tacticians. And in my view, their tactics are consigning them to a longer political death than if they had taken a more constructive course.

In the Obama world view, a stumble is a non-event, a bad poll a blip. What counts is whether you get to the destination in the end. It’s an outlook that got him to the finish line during the campaign. Let’s see if it gets him to where he wants to go in the crucial months ahead.

Charlie Crist’s Blasphemy

Posted on by The Progressive Policy Institute

Florida Gov. Charlie Crist is a Republican candidate for the U.S. Senate facing a conservative challenger who is attracting a lot of attention, support and money from conservatives around the country. He is, in fact, the number one target of the Club for Growth and other purge-obsessed conservatives determined to stamp out any hint of moderation in the GOP.

Crist’s opponent, former state House speaker Marco Rubio, has been picking up steam in the early polls, and is routinely trouncing the governor in local party straw polls. Aside from his gaudy national endorsements (including such conservative True Believers as Mike Huckabee, James Inhofe, and Jim DeMint), Rubio is assumed to have the private backing of his political patron, the Big Dog of Florida GOP politics, Jeb Bush. Crist, who aroused national conservative ire by endorsing President Obama’s stimulus package, increasingly has a great big bullseye on his back at a time when the right wing of the Republican Party is in a vengeful and triumphant mood.

So you’d think ol’ Charlie would be spending all of his time kissing the rings of talk radio hosts, yelling about socialism, sending out tea bags with his name stamped on it, and in general trying to build a Cristian Right. Florida is, after all, a closed primary state where the independents and conservative Democrats that Crist has attracted in the past can’t vote for him against Rubio unless they re-register as Republicans.

But to everyone’s surprise, Crist shows signs of doing the exact opposite: attacking not just Rubio, but his supporters, for being, well, wingnuts. In an interview with a Florida newspaper, Crist seems to be mocking Rubio’s supporters for being angry over nothing and for embracing nutty causes like that of the Birthers. Here’s how Evan McMorris-Santoro analyzed Crist’s apparent strategy for TPM:

While his attacks on Rubio’s conservative backers are sure to fire them up even more than they already are, Crist is hoping his confrontational approach will force Rubio into uncomfortable discussions about Obama’s citizenship and other right-wing rhetoric. He really had nowhere else to go — Crist’s record doesn’t allow him to make a serious run at changing the minds of Rubio’s supporters, so he has to run with the moderate message that has been successful in the past.

This being total blasphemy in the contemporary GOP, it will be interesting to see how it works out for Crist. If it does, Crist will become the maximum, and perhaps the sole, symbol of defiance against the rightward trend of the GOP. If it doesn’t, he may backtrack into can’t-beat-em-then-join-em territory, or add his scalp to the collection of the Club for Growth. Either way, that would be good news for Florida Democrats.

Accounting Reform for…Biofuels?

Posted on by The Progressive Policy Institute

From yesterday’s Boston Globe comes an op-ed on the need for sound accounting guidelines when it comes to bioenergy and greenhouse gas emissions:

The problem: treaties and laws now treat all forms of bioenergy as carbon neutral and therefore completely non-polluting. In reality, how much bioenergy reduces greenhouse gases depends on the source of the plant material. The right rules will encourage the development of fast-growing grasses and trees that can greatly increase the amount of carbon absorbed by plants on marginal land and thereby reduce global warming. The wrong rules will encourage clearing of forests, which releases carbon dioxide and may even increase greenhouse gases while also threatening biodiversity.

[…]

[T]he climate bill working its way through Congress shares this error.

If the error continues globally, it gives oil firms or electric utilities that must reduce their greenhouse gas emissions a false incentive to switch to those forms of bioenergy that result from clearing forests. Several studies predict they will do so on a large scale. By contrast, the right accounting will give entrepreneurs the incentive to commercialize the great technical innovations in generating more carbon from the earth’s land and converting it efficiently into useable fuel.

The op-ed was co-written by Vinod Khosla and Tim Searchinger, both big names in biofuels, for different reasons. Khosla, cofounder of Sun Microsystems, is a big investor in bioenergy.

Searchinger, meanwhile, is known as a skeptic of biofuels. In 2008, he co-authored a study that found that, taking into account the conversion of forest and grassland into new cropland (as grain is diverted to biofuel production), biofuels actually increase greenhouse gas emissions. More recently, he co-authored a paper in the journal Science that looked into the failure of the Kyoto Protocol and U.S. climate legislation to account for emissions from biofuels.

The op-ed finds common ground in recognizing the promise of bioenergy, even as it calls for a more informed approach to its role in the global energy picture. All too often, the prefix “bio” lulls people into a false sense of enviro-comfort. But as Khosla and Searchinger suggest, if the biofuel you’re putting into your car came from crops planted on — or that eventually led to — a cleared forest, then chances are you’re not helping the climate much at all.

It may seem an obscure area of cap-and-trade, but the op-ed actually underscores the importance of rigorous research and strict accounting in developing a climate bill. Khosla and Searchinger urge policy makers working on cap-and-trade to distinguish bioenergy by its source and production process. The last thing we need is a climate bill that ends up wiping out swathes of forestland, all because of that misleading prefix.

(h/t to NRDC’s Switchboard blog)

The ACORN Derangement Syndrome Goes Viral

Posted on by The Progressive Policy Institute

When you’ve been away from blogging, and from regular access to political news, for more or less a month, as I have, there’s a lot of stuff to catch up on. But I have to say, the thing I missed that amazes me the most, while confirming some of my own uncharitable fears about conservatives, was last week’s PPP poll showing that a majority of self-identified Republicans think the struggling and marginal grassroots organization ACORN stole the 2008 election for Barack Obama.

Matt Compton, Adam Serwer and Eric Kleefield all offered some thoughts on this poll, and Jason Zengerle compared it to the Democratic belief that Bush stole the 2000 elections. (Ed. note: I wrote about the poll here.) But I somehow don’t think most progressives are fully grasping the centrality of ACORN to the conservative world-view these days.

I’ve written about this several times over the last thirteen months, but bear with me: ACORN has assumed an all-purpose demonic role for Republicans. They were, in the lurid view of Fox News enthusiasts (embraced on at least one occasion by the McCain-Palin ticket) the cause of the mortgage crisis and the financial meltdown, thanks to the alleged help they provided to shiftless people to obtain mortgages they couldn’t or wouldn’t pay. They then demanded bailouts for their clients. And because a whole lotta socialism was necessary to keep them afloat, they stole the election for their close ally Barack Obama. Coincidentally, of course, and irrelevant to the narrative of ACORN running the country, was the fact that the group is one of the most visibly minority-oriented organizations in national public life.

The fact that there is virtually no empirical evidence for any of these contentions about ACORN (particularly the election-stealing stuff, which is an absolute hallucination by any standard) hasn’t much mattered; the group was far, far too convenient a scapegoat for everything that displeased conservatives since September of 2008.

But in talking about this so many times, it never really occurred to me that a majority of Republicans bought into the ACORN Derangement Syndrome, with only a quarter of them rejecting the idea that this group stole the 2008 elections. Analogizing this to the Democratic reaction to Florida 2008 is ludicrous; Gore did win the popular vote, Florida was incredibly disputed, and the Supreme Court did shut down the recount to get Bush across the finish line. There is not a shred of evidence that Obama didn’t legitimately and decisively win the election, and no significant Republican spokesman doubted it at the time. It took a full year of conservative shrieking about ACORN to instill this crazy theory into the consciousness of rank-and-file Republicans, nicely validating their hatred of Obama and their bizarre claims that he’s some sort of totalitarian revolutionary determined to destroy the Constitution.

It’s a case history in viral demagoguery of the most toxic sort, and reputable Republicans should be even more upset about it than I am.

This item is cross-posted at The Democratic Strategist.

Progressives and the Filibuster-Round 2

Posted on by The Progressive Policy Institute

One of the functions of The Progressive Fix is to not only to provide an online outlet for “pragmatic progressives” but also to demonstrate that their antipathy to ideological litmus tests extends to their own ranks.

In that spirit, I will take issue with a post published here on Friday by Scott Winship, who is an esteemed friend and colleague, and my predecessor as managing editor over at The Democratic Strategist. Scott offered a defense of the Senate filibuster on traditional, anti-tyranny-of-the-majority grounds, and then suggested that the real problem in the Senate is partisan polarization, with the solution being reforms in primary laws to reduce the power of the “ideological extremes.”

To be clear, my disagreement with Scott on this issue is only partial. I am not hell-bent on eliminating the filibuster as a possibility under the Senate rules (though not opposed to that step in principle, either). But what I object to categorically is the routinization of filibuster threats in recent years, to the point where the Senate has come perilously close to creating an entirely new, non-constitutionally-sanctioned 60-vote requirement for the enactment of all significant legislation (other than provisions taken up under specified exceptions to the usual rules, like the Congressional Budget Act).

Since the Senate already has a built-in red-state bias, a supermajority requirement would basically represent a death sentence for progressive initiatives in the near future.  Yes, I know some Democrats (though not me) celebrated the filibuster when the shoe was on the other foot a few years back, but on the other hand, nobody was excoriating Republicans for demanding that their own senators vote for cloture, were they?

All Filibuster, All the Time

And that’s the crux of the matter today — not the possibility of filibusters, but the elimination of any disincentive to engage in a filibuster on every single piece of legislation. Some senators are acting as though the right to vote one’s conscience or interests on a bill is identical to the right to obstruct it by denying it a floor vote, meaning that the normal practice of party discipline on procedural matters somehow does not extend to the most important procedural matter: votes to end a filibuster — i.e., cloture votes. So even if Democrats have (as they do right now) an improbable and (probably) unsustainable 60 Senate votes, that’s not enough unless they also have 60 votes for a specific bill. That particular shoe has not been on the other foot in living memory, but even if it had been, I certainly think Republicans should have been free to sanction their members for combining with the opposition to bring the Senate, and the country, to a standstill.

If Joe Lieberman or Ben Nelson considers it a matter of deep principle to vote against cloture to block final passage of health care reform (probably for the next decade or so, given the precedents on this topic), that’s well and good, but they should have to pay a price — such as losing a rung on the seniority ladder.

Scott, as noted above, argues that the current situation in the Senate is the product of “polarization,” which he seems to blame equally on both parties, and offers the remedy of electoral reforms to reduce that polarization. By this I assume he means some form of open primary. Scott is a very smart man who knows, I am sure, that “polarization” hasn’t simply been produced by closed primaries. Much of it has resulted from a gradual process of ideological sorting-out between the two major parties that is entirely healthy and natural, as compared to the longstanding dependence on ethnic, religious, and regional factors for party identification that may have made “bipartisanship” technically easier but didn’t really offer most voters (e.g., southerners choosing between Democratic and Republican conservatives and northeasterners choosing between Democratic and Republican liberals) more choice than they have today. If you look at the Senate right now, it’s hard to identify more than a few senators whose behavior would change if they were exposed, say, to primary voting by registered independents (many hard-core southern conservative Republicans are from states with no party registration at all).

Dealing with the Party of No

More to the point, the unity of Senate Republicans right now flows less from the fear of primary opponents from the hard right than it does from a corporate decision by the GOP as an institution that it must destroy the Obama administration by any means necessary. A contributing factor to this decision is the strange but overwhelmingly maintained belief of Republicans that the only way to distance themselves from the hyper-partisan Bush administration’s disastrous record is by claiming it was too liberal! When it comes to big-ticket issues like health care reform and climate change, Republicans have clearly shifted to the right during the last few years, even as Democrats have consistently sought middle ground (e.g., market-based carbon cap-and-trade and a “premium support” approach to universal health care).

So in my opinion, the immediate solution to the polarization of the Senate isn’t an impossible effort to reach accommodation with more than a very few Republicans, or letting a few “centrists” write every bill. Instead, there ought to be a reasonable insistence that Democrats reject the supermajority requirement and support the party on cloture votes as a matter of course. We can then maintain our big-tent party by letting heterodox Democrats stray on final passage of key legislation as they wish. And we can also invite Republicans to go to the country with a stirring, populist campaign slogan of “throw the cloturers out.”

RIP Compassionate Conservatism

Posted on by The Progressive Policy Institute

The Republican message on extending health care coverage can be summed up in two words: “Bah, humbug.”

In taking a purely obstructionist stance, the GOP has evinced scant empathy for tens of millions of fellow Americans who lack basic protection against illness or injury. So much for compassionate conservatism.

On Saturday, not a single Republican voted to allow the Senate to even consider a bill to expand coverage and reform health insurance markets. When the House passed its version of health reform, just one Republican voted aye. He is Rep. Joseph Cao, a freshman from normally Democratic New Orleans.

Republicans, of course, are under no moral or political compunction to support Democratic proposals for health reform. But since they haven’t offered any credible alternatives of their own, it’s reasonable to conclude that they don’t care all that much about fixing America’s broken health care system.

Sure, House Republicans proffered their version of “reform” earlier this month. It would spend just $61 billion over 10 years and leave the percentage of uninsured Americans in 10 years exactly where it is today – at 83 percent. Thanks to population growth, there would actually be more uninsured people than today.

In opposing serious efforts to expand coverage, Republicans say they are trying to protect Americans against runaway deficits, not to mention death panels, publicly financed abortions and other confected horrors. They rail against President Obama and the Democrats for proposing to pile a costly new health care entitlement atop others we don’t know how we’ll pay for.

That’s actually a valid concern, one that progressives should take more seriously. But the GOP’s newfound fiscal piety would be more convincing if President Bush and party leaders had not muscled through Congress a massive new Medicare drug entitlement just six years ago.

Showing their customary solicitude for America’s haves – Medicare offers all seniors the basic health coverage the uninsured lack – Republicans insisted on creating a universal entitlement, rather than targeting help for truly needy seniors. At first projected to cost $534 billion over 10 years, revised estimates in 2005 put the bill’s price tag at $1.2 trillion. That’s several hundred billion dollars more than the bill passed this weekend by Senate Democrats. David Walker, former U.S. comptroller general, called the 2003 prescription drug bill “probably the most fiscally irresponsible piece of legislation since the 1960s.”

In contrast, the Senate Democrats’ bill is paid for. In fact, the Congressional Budget Office estimates that it would cut the federal deficit by $130 billion in the first decade and by more than $500 billion in the second decade.

But there’s a hitch, and it’s a big one. Cutting future deficits refers only to the public costs of expanding medical coverage and reforming U.S. health care markets. That’s not at all the same thing as “bending the curve” of health care cost growth. Slowing the unsustainable pace at which medical costs in America are growing requires confronting the perverse incentives and inefficiencies that plague health care delivery. It also means rebalancing the big entitlement programs, as retiring baby boomers swell the number of people receiving Medicare benefits.

This is the big piece of unfinished business facing both health care reformers and President Obama. The Senate bill expands coverage and cuts the federal deficit. According to some leading budget analysts, however, it doesn’t do enough to slow down the rising health costs that plague the vast majority of U.S. workers and that handicap many U.S. firms in global competition.

They deserve some compassion, too.

The Progressive Challenge in Afghanistan

Posted on by The Progressive Policy Institute

Lorelei Kelly at the New Strategic Security Initiative issues a thoughtful challenge to progressives over at the Huffington Post:

If progressives really want to help forward the policy discussion, they should develop a set of alternatives premised on enduring commitment and solidarity with the Afghan people (local grants through the National Solidarity Program is a good example), and not pose them as a tradeoff for troop levels. Heck, even the commanding general in Afghanistan says this conflict has no military solution. Take that and run with it. But doing so means exercising forbearance when talking about the military presence. Uniforms are going to be part of the picture for a while. What the alliance is actually doing on the ground will determine the outcome. Tactics are already changing. But prioritizing civilians will mean that soldiers bear more of the risk.

We need to come to terms with that.

Any success must also include a significant shift in resources and coordination to make sure Afghans actually receive support to own their future. This kind of partnered consultation can start despite Karzai in office. The Afghan people know who isn’t corrupt. We need to go national and local at the same time because promising upstarts exist at both levels. The goal is a process — and so will be tough to measure, which is why a commitment is important. All sorts of policies here at home provide illustrations. From building the national highway system to public education, broadly distributed achievement through time take time. The laser-focused message the Afghan people need to hear is “we’re on this path with you.” We need to commit.

[…]

The president will put forward his decision soon. It will involve a troop increase. If progressives stay in full opposition mode, they will exist on the margin of the debate right when we need them setting the agenda. Exit to the sidelines will also undercut future efforts to advocate a new strategy for U.S. security. We are moving from a time when we could contain threats to one where we must minimize them. This can only happen through sustained engagement.

The progressive community would do well to consider Lorelei’s words before blindly opposing a troop increase. Even Code Pink has recognized the need for engagement and moderated its position. After all, America’s military is in Afghanistan to protect the Afghan population and promote peace. Those are progressive values.

Dispatches from the Republican Self-Immolation, Vol. 2

Posted on by The Progressive Policy Institute

Another week, another dozen reminders of the insanity that has engulfed the Republican Party.

First is this absolutely astounding poll from Public Policy Polling:

PPP’s newest national survey finds that a 52% majority of GOP voters nationally think that ACORN stole the Presidential election for Barack Obama last year, with only 27% granting that he won it legitimately.

Wow. The mind reels.

Then there was this gem from House Minority Leader John Boehner (R-OH) from yesterday, responding to the release of the Senate health reform bill: “What is even more alarming is that a monthly abortion premium will be charged of all enrollees in the government-run health plan.” That’s right – Boehner’s claiming that everyone in the public plan will be charged a monthly fee for abortions.

If that’s sounds a little fishy, that’s because it is. There is no such fee. In fact, the Senate bill requires insurance plans that offer abortion coverage to segregate their funds so tax money isn’t used to fund that coverage. The bill also states that every state’s health exchange must also offer one plan that doesn’t cover abortion. No consumer would be forced to fund abortions with their premiums. Not that the facts stop congressional Republicans these days.

And finally there was the bow heard round the world. Earlier this week, all conservatives could talk about was President Obama’s shocking bow to the Japanese emperor. Sean Linnane at Frum Forum, applying his expertise on bowing protocol, concluded that Obama “went WAY too low; it is only one step above a kow tow.” He added, “Compare Obama’s bow with how he conducted himself in the company of the Queen of England, and then contrast this with the way he leaned forward to bow and scrape before the King of Saudi Arabia; this certainly leaves a lot of room to wonder about which direction this man’s sentiments lie.”

That’s what conservatives have been reduced to: close textual readings of trivial moments. (And remember – this is from a conservative blog that’s supposed to be more moderate.) As if the right needed reminding of how out of step they are, a Fox News poll found that 67 percent of Americans approved of Obama’s bow — not that we needed a poll to underscore how inane the conservative obsession with the Obama bow is.

These reminders of the freak show on the right should remind progressives of what’s at stake. To put it simply: we are the only grown-ups in the room. We may be a fractious coalition, but the prospect of the other side coming back to power should be impetus enough to get us all to pull in the same direction.

Drive Like a Jetson

Posted on by The Progressive Policy Institute

When you watch an episode of “The Jetsons,” what gets you isn’t so much that Elroy wore an antenna on his head or that the family spent their time in cars that levitated. What still resonates about the show is the extreme ease of transportation — they always just seem to get up and go. For many of us in the modern world, where gridlock and wincing at gas pumps are facts of life, the Jetsons seem spectacularly free of commuter woes. But it’s a cartoon.

Ambitious clean technology schemes have usually been condemned as the province of dreamers. But this week, a new organization threatened to convert Jetson-esque schemes for powering electric cars from futurism into reality through a network of charging stations and new fleets of affordable electric cars. The Electrification Coalition is a group of prominent companies who have committed dollars and workforces to creating the infrastructure to make electric cars. (We previously wrote about electric cars here.)

At a lavish launch in D.C. featuring New York Times columnist Thomas Friedman, Sen. Byron Dorgan (D-ND), and Rep. Ed Markey (D-MA) were some old — and new — captains of industry: Carlos Ghosn, the president & CEO of Nissan Motor Company; Frederick W. Smith, chairman, president & CEO of FedEx; Peter L. Corsell, the young and dynamic CEO of GridPoint, a successful company in Arlington that builds software applications that integrate, aggregate, and manage distributed sources of load, storage, and generation to connect utility customers to the smart grid.

The Future: Closer Than You Think

The coalition’s goals are at once ambitious but practicable. By 2013, they hope to put approximately 700,000 “grid-enabled vehicles” (GEVs) — vehicles with lithium-ion batteries that you can plug into either a 110-volt or 220-volt outlet to recharge — on the road. Through economies of scale and government tax credits and other incentives, the coalition thinks it can put 14 million GEVs on the road by 2020 and more than 120 million GEVs by 2030. Ultimately, they would like to have 75 percent of all vehicle miles traveled by 2040 be electric.

How to visualize this? Ghosn, Nissan’s CEO, put it crisply: “How do you imagine an electric car? There is no tailpipe, no emissions.” He repeated himself: “NO tailpipe.”

A full fleet of silent, tailpipe-less cars is ambitious and could lead even the sane to skepticism. Friedman moderated a panel with several of the coalition members and led with a question: “I want you to sell me on the efficacy and the reality of implementing this roadmap.” The coalition members answered quickly and confidently, relying on actual business plans, dollars invested, consumer habits and charging infrastructure already in place, and cars already in production.

David Crane, president and CEO of NRG Energy, said, “The service station of the future is in your garage.” Ghosn talked up the vastly improved efficiency of new lithium-ion batteries, saying, “We can make batteries today that were not possible 20 years ago.”

Corsell of Gridpoint, the software designer for smart grids around the country, said, “We’ve learned that you can leverage technology…to give consumers benefits.” In response to the oft-raised concern about whether too many drivers charging their cars at once would burden the grid, Corsell said, “The power is there — we have all the power we need. You can incentivize people to use power at the right time by building technology into the car.” Other participants stressed that cars will essentially become “grid appliances” — simple technology will allow charging mechanisms in cars to be controlled through the Internet. In Chicago, one pilot program even pays drivers per day to hook their cars up to the Internet.

The Next Step

What’s needed is policy — leadership by federal and state governments to push electrification through incentives. In the short-term, the coalition’s policy goals include significantly increasing plug-in electric drive vehicle tax credits, establishing tax credits equal to 75 percent of the cost to construct public charging infrastructure, extending consumer tax credits for home charging equipment, and providing tax credits equal to 50 percent of the costs of the necessary IT upgrades for utilities or power aggregators to sell power to GEVs.

These common-sense but aggressive measures would put electrification within the free market by investing, as government can, in providing technology with the threshold it needs for manufacturers to achieve economies of scale. It’s now, not the Jetsons — and nobody will have to wear antennas on their head.

The Real Reason to Support a Financial Transaction Tax

Posted on by The Progressive Policy Institute

Thanks to Gordon Brown’s support, the idea of a financial transaction tax has been gaining a bit of attention over the last couple of weeks. The idea is simple: place a small tax (say, 0.25 percent or less) on all financial transactions.

Partially, it’s a way to raise a little revenue from those who can most afford to pay to create an insurance fund against future bailouts, which is how it is being billed. And just yesterday, it was reported that House Democrats have discussed using it to fund a jobs bill. (Dean Baker has estimated that the tax could bring in $100 billion.)

But mostly, it’s a good idea because it throws a little sand in the gears of the giant financial speculation casino.

Wall Street banks make a good deal of money by running very sophisticated computer programs, looking for tiny (and supposedly risk-free) arbitraging opportunities, and then making those opportunities pay off by investing with incredibly high volume. These trades are something like the equivalent of buying a bunch of dollars for 99.75 cents each. It’s a great deal if you can do it en masse, and an even better deal if you can also borrow almost all of the money you are investing.

But if banks had to pay a 0.25 percent tax on every dollar they sold, then it suddenly wouldn’t seem like such a good deal to buy dollars for 99.75 cents each. This is what a transaction tax would do.

This would mean that Wall Street banks would spend less time looking for short-term opportunities to buy dollar bills for 99.75 cents. This a good thing, because it’s hard to see how having some of the smartest people and most sophisticated computer programs dedicated to this kind activity helps the economy. Something is wrong when 40 percent of all U.S. corporate profits are coming from the financial sector, as they were for much of the 2000s.

A transaction tax would mean that banks would instead devote more time to investing their capital in good, long-term investments. This seems to me what a banking sector is supposed to do — allocate capital to the most promising business ventures, which then sometimes actually spur innovation and improve the standard of living for everyone, not just those who happen to be clever enough to take part in the big casino.

Unfortunately, Treasury Secretary Tim Geithner is against such a tax, and his support is pretty important, since any transaction tax would require an international agreement. This is not surprising, since Geithner is and always will be a creature of Wall Street.

Still, it’s hard not to marvel at the latest round of bonuses on Wall Street and wonder how it is that these guys are making $30 billion while the economy continues to stumble. Slowing down the Wall Street speculation machine might help channel some energy elsewhere — maybe into actual productive recovery.

Knowing Your Juncker from Your Van Rompuy

Posted on by The Progressive Policy Institute

Pop quiz, hot shot:  Who are Jean-Claude Juncker and Herman Van Rompuy?

If you answered, “Two guys I met studying abroad in Florence my sophomore year,” you’d be close…but wrong. And according to the BBC, you wouldn’t be alone in your ignorance — a smattering of man-in-the-street interviews produced hardly better results.

Mr. Juncker and Mr. Van Rompuy are the prime ministers of Luxembourg and Belgium, respectively (and if you trivia buffs need some extra ammo to entertain Aunt Betty around the dinner table on Turkey Day: Juncker, in power since 1995, is the longest serving head of state in Europe).  Both are in the running for the post of EU President, a new position created by the European Union when Ireland, the Czech Republic, and Poland finally ratified the Lisbon Treaty over the last several weeks.

The treaty’s backers argue that Europe has long-needed to speak with one voice on the world stage, thus the desire for a permanent president. Up to now, the EU has had a rather ridiculous six-month rotating presidential term, filled by the EU’s member states’ leaders. It’s a thankless job — at 27 members, there are only a handful of issues that truly unite Europe’s political classes. And some — like the Iraq war — are so divisive that they tear at the very fabric of European integration.

In most free and democratic countries, major offices are chosen by the electorate. Oddly, the first EU president won’t be. Tonight, the EU’s 27 heads of state will lock themselves in a room, dine on the continent’s finest delicacies, sip (or slosh, if you’re one Mr. S. Berlusconi) its most prized wines, and pick one of their peers to hold the post. All without a campaign poster in sight, or a public debate to be had. That’s right — Europe’s first president will be chosen in the manner of Popes and politburos, not democracies.  With no hope for this presidency, let’s hope the next one is chosen by the voters. After all, the EU’s parliamentarians are.

Tony Blair is also in the running for the post, but don’t expect him to get it. When 27 extraordinarily powerful men and women sit down to choose someone to be — in one convoluted sense, anyway — their boss, they aren’t likely to pick a charismatic home-run hitter. A quiet, controllable technocrat from Luxembourg or Belgium like Juncker or Van Rompuy is much more likely.

That tactic could backfire — look at Iraqi PM Nouri al-Maliki. He was chosen in 2005 as a compromise candidate by ethnic powerbrokers; weak at first, al-Maliki has grown to be the most assertive force in Iraqi politics. But then again, don’t count on it in Europe — megalomaniacs like Nicolas Sarkozy aren’t eager to be outshone by the new prez.

Update: Rompuy FTW!

Herman Van Rompuy, the quietest, least-offensive choice in a field of quiet candidates, has been selected as Europe’s first president.

In Germany, a Defense Minister to Watch

Posted on by The Progressive Policy Institute

German Defense Minister Karl-Theodor Freiheer zu GuttenbergAngela Merkel may be the German chancellor, but the country’s most popular politician these days — and the man Americans should pay more attention to than they do—is Defense Minister Karl-Theodor Freiherr zu Guttenberg.

Despite his anachronistic pride in his family’s roots in the Bavarian nobility (“Freiherr” means “Baron”), zu Guttenberg dazzles the German public with his youth (he’s just 37), his oratorical flair (admittedly a low bar in a country used to snooze-fest speakers), and his non-political provenance (unlike most German elected officials, he didn’t enter politics until his 30s; before, he ran the family business).

Zu Guttenberg, a member of the center-right Christian Socialist Party Union (a regional sister party to the national Christian Democrats), was economics minister in the first Merkel cabinet for less than a year, and his selection as defense minister was something of a surprise. But despite his inexperience, he has come out punching: In just three weeks since his appointment, zu Guttenberg has reiterated Germany’s commitment in Afghanistan by deploying another 120 troops; paid a surprise visit to the country (where, dressed in a turtleneck sweater under a bulky bulletproof vest, he posed for cameras behind a helicopter door-gunner, weapon in hand); announced his support for the embattled German general whose decision to bomb a pair of hijacked tankers near Kunduz resulted in scores of civilian deaths; and — most notably — became the first German politician to call the Afghan conflict a “war.”

Normally, a German defense minister does not speak unless spoken to; fears of militarism still run deep there, across the political spectrum. Two-thirds of the German public opposes the Afghanistan deployment. There was talk during and after the campaign that the nearly inevitable ruling coalition between the center-right, relatively hawkish Christian Democrats (CDU) and the free-market, relatively dovish Free Democrats (FDP) could result in a drawdown, if not outright withdrawal, of German troops from Afghanistan. And tensions do seem to be emerging along those very lines—even as zu Guttenberg calls on the German public to support the troops, FDP Foreign Minister Guido Westerwelle has been telling reporters “we can’t stay in Afghanistan for eternity and three days.”

Which is the first reason why Americans need to be paying attention to zu Guttenberg. He is extremely pro-American (during his pre-political career in business, and ever since, he has cultivated close ties to both parties in D.C.) and a true believer in NATO’s Afghanistan mission. He won’t be afraid of checking Westerwelle on defense issues, and should Merkel sour on the mission, he’ll be an important backstop preventing a sudden drawdown.

In fact, don’t be surprised if zu Guttenberg tries to make a run around Westerwelle on other topics as well, from relations with other NATO members to climate change. At 37, he’s an almost-guaranteed candidate for the chancellorship once Merkel exits the stage, and a great way to solidify his position within his party would be to isolate the man most Christian Democrats can barely manage to tolerate. And that’s the second reason to watch zu Guttenberg: He is not just a growing force within German politics today, but he very well may represent the future of U.S. German relations.

Update: A couple of errors in the original post have been fixed. Thanks to commenter Robert Gerald Livingston for pointing them out.

Photo by Michael Panse, MdL / CC BY-ND 2.0

Is Reid Wobbling on the “Cadillac Plan” Tax?

Posted on by The Progressive Policy Institute

A New York Times editorial today threw its support behind a health reform provision that we’ve backed in the past: an excise tax on so-called Cadillac plans. But the Times‘ endorsement came on a weekend when prospects for the tax seemed to dim.

On Thursday, it was reported that Senate Majority Leader Harry Reid (NV) was considering raising the Medicare payroll tax on workers earning $250,000 or more to help pay for health care reform. According to one report, the idea being floated is a half-percent increase in the tax, to raise some $40 billion to $50 billion over 10 years. Another idea is to extend the payroll tax to capital gains and dividends from high-income earners.

Why the decision to tap into a new funding source for the reform package? One reason could be an effort to hike the Senate’s stingier (compared to the House bill’s) subsidies for low-income people. But a likelier reason could be, as the Times reported, an effort by Reid to cut back, if not outright eliminate, one of the Senate’s main financing sources, the excise tax.

If the payroll tax hike ends up replacing the excise tax, it would be an unfortunate development for reform. For months now, some powerful Democratic constituencies have been putting pressure on lawmakers to drop the idea. HCAN, a progressive health reform advocacy group, has come out swinging against it; the AFL-CIO has been running ads like this to scare the public and Congress.

But far from a tax that unfairly targets the middle class, the excise tax on high-cost health plans would actually be progressive. According to the Center for Budget and Policy Priorities, the “thresholds for the proposed excise tax are sufficiently high that most health insurance plans would not be affected.” Moreover, such a tax would go some way toward bending the proverbial cost curve:

The proposed excise tax would make a major contribution to slowing the growth of health care costs by discouraging insurers from offering, and firms from purchasing, extremely generous health insurance coverage that can encourage excess health care utilization. That, in turn, would reduce incentives for excessive health care spending.

As employers seek out cheaper, more efficient health plans, the savings then get converted into higher wages for employees. Indeed, according to the Joint Committee on Taxation, of the $201 billion in increased revenue the excise tax would bring, only $38 billion would come from the excise tax itself — the rest would come from increased payroll and income taxes from the higher wages and salaries that employees would be paid.

While an increase or expansion of the payroll tax for high-income earners might yield some new and badly needed funds for reform, it would not be a sustainable source, what with health cost inflation growing at a far faster rate than payrolls and the taxes levied on them. The fact is that the excise tax on high-cost health plans simply produces too many good outcomes — revenue generation, cost reduction, wage increases — for progressives to pass up, let alone oppose.

Race to the Top Begins

Posted on by The Progressive Policy Institute

The Department of Education today released the final application for its Race to the Top Fund after a period of public comment and revisions. With the release, the department officially parts the curtain on an ambitious education initiative, one that may well prove to be the closest the Obama reform agenda comes to an unqualified success.

The seriousness with which the administration takes education policy can be seen in gestures substantive – Race to the Top – and symbolic, such as the decision to mark the anniversary of President Obama’s election with an education event in Wisconsin.

The department’s rules for Race to the Top offer states a guideline on how best to steer their education policy. At stake: a $4.35 billion pool of funds that the department will award to states based on their performance in more than 30 criteria. Of that $350 million goes to states to create common-standard assessments. The remaining $4 billion will be up for grabs.

The program’s assessment process involves scoring states in a detailed system that goes up to 500 points. The department’s thinking on reform can be gleaned from the breakdown of scores. Under the rubric of “Great Teachers and Leaders,” the department plans on awarding up to 138 points, 28% of the total, more than any category. That category breaks down into subcategories, with points awarded for measuring student growth, developing evaluation systems, and using evaluations to inform key decisions, among other measures. The message is clear: student improvement and teacher excellence are at the heart of reform.

The other category that receives a large share of the points — 25% — is dubbed “State Success Factors,” which enumerates the ways in which states can present to the department their comprehensive vision for reform. The section asks states to articulate its plans for reform, prove its capacity to carry it out, and enlist the support of school districts. Joanne Weiss, the director of the Race to the Top program, explained in an interview with Education Week that the category aimed to encourage states to really think through their reform strategy. “It became clear that a lot of states were treating [the criteria] as a checklist. There was no big picture,” Weiss said. “Now this is where they build their case.”

The key now is the judging process. The department will select 125 judges from 1,400 applicants to go through and grade the state applications. As the Eduwonk blog points out, “If they’re not strong and keenly attuned to change and reform then this initiative won’t succeed.” Here’s hoping that the department applies the same rigor to that process as it wants the states to apply to theirs.

Dispatches from the Republican Self-Immolation

Posted on by The Progressive Policy Institute

First, from Maine, where a new poll shows that Sen. Olympia Snowe would get trounced in a Republican primary by a more conservative opponent. With the mob whipped up into a RINO-hunting frenzy, the party was willing to lose Arlen Specter, so why not Snowe as well?

Then word from South Carolina that the Charleston County Republican Party censured Sen. Lindsay Graham for his willingness to work with Democrats on climate change and other legislation. Let that sink in for a minute. This isn’t a GOP moderate, but someone whom National Journal ranked the 15th most conservative lawmaker in the Senate — apparently, 14 slots too low for the Republicans of Charleston. As we’ve said here before, if that’s the way Republicans want to run their party, then we progressives have no choice but to step back and let them.

But all is not lost for Republicans. First there were the victories in New Jersey and Virginia last week. This week a new Gallup poll showed that independents now break 52 percent-30 percent in favor of the generic Republican candidate if the midterms were held today.

The new poll should worry Democrats. But the real danger lies in what it might make Democrats do — namely, nothing. It may be tempting to forget the agenda, sit tight, and ride out the storm, but Democrats shouldn’t let the dismal numbers cow them into paralysis, particularly on health care reform. The worst thing that can happen is that nothing happens on health reform. Preserving the status quo on health care would mean disaster for our country’s fiscal future. For Democrats, failure to come through with the end goal in sight will depress the base and convince independents that congressional Democrats can’t get anything done — a surefire formula for electoral disaster.

Reform and Its Discontents

Posted on by The Progressive Policy Institute

It has become fashionable among some progressives to lambast the administration and congressional Democrats for the slow pace and incremental approach they have taken in trying to pass health reform legislation. (For a nice sampling, check out some of the posts and comments at Open Left.)

Ezra Klein highlights one emblematic strain among progressive critics, pointing to a piece by Marcia Angell, an M.D. and senior lecturer at Harvard Medical School, in the Huffington Post. Angell, a single-payer supporter, writes, “Is the House bill better than nothing? I don’t think so…. I would rather see us do nothing now, and have a better chance of trying again later and then doing it right.”

Klein offers a sensible counter-argument:

The idea that a high-profile failure in a moment where a liberal Democrat occupies the White House and Democrats hold 60 seats in the Senate for the first time since the 1970s will encourage a more ambitious success later does not track with the history of this issue, nor with the political incentives that future actors are likely to face. If even Obama’s modest effort proves too ambitious for the political system, the result is likely to be a retreat towards even more modest efforts in the future, as has happened in the past.

Among some progressives, there is a kind of denial about the nature of American reform. They fail to grasp that change, when it has come, has happened incrementally and evolutionarily. The New Republic’s John Judis touched on this yesterday when he pointed out that Social Security, that progressive landmark, was in fact less imposing an edifice when initially constructed in 1935:

That act, when it passed, was a bare shell of what it became in the 1950s after amendment. Benefits were nugatory. And most important, coverage was denied to wide swaths of the workforce, including farm laborers.

Why farm laborers? Well, because Franklin Roosevelt and liberal Democrats needed the vote of racist Southern Democrats who wanted to deny benefits to blacks, most of whom were farm laborers.

To believe that failure on reform today would only lead to a more progressive reform effort tomorrow is delusional, plain and simple. As TNR’s Jon Cohn argues, “You could plausibly claim that the reforms on the table today are more or less what moderate Republicans were proposing under Clinton, just as the Clinton reforms were not that far removed from what Nixon himself wanted in the early 70s.”

And yet for far too many progressives, a failure to perfect health reform now would constitute a defeat of epic proportions. This is why when Rep. Dennis Kucinich (D-OH), a single-payer advocate, voted “No” on the House health bill, he received hardly any reproofs from the netroots (Angell praised him), even as they went after other dissenting Dems. (One blogger for Open Left, Mike Lux, did lambast Kucinich – and was then promptly pushed around in his post’s comments section.)

After 70 years of trying to achieve universal health care, progressives are as close as they’ve ever been to that goal. It’s not perfect. It’s not pretty. But let’s not let the perverse allure of being sanctimonious in defeat – an addiction that plagues too many on our side – derail the best shot we have at improving the lives of millions of Americans.