With Fiscal 2011 Behind Us, The Battle Turns to the Debt Ceiling and the Blueprint
I give John Boehner a lot of credit as a politician. When the GOP swept into control of the House last November, Republicans were quick to note that they still only controlled "one-half of one-third of government", that is, that they controlled half of the legislative branch but not any of the executive branch (certainly true) or the judiciary (not really true, but makes for a good one-liner.) But with control of the House came a very important power, one that I noted that we all should hold the GOP accountable for - control of the purse strings. And use that control the Republicans have done.
Think back to prior to November. The debates that took place in the last congress were about stimulus, health care, Don't Ask, Don't Tell, nuclear arms treaties. The President wanted to talk about comprehensive immigration reform and cap and trade. The Republicans have focused the political debate in this country on one thing and one thing only: government spending. Boehner did a masterful job getting most of what he wanted in the fiscal 2011 budget. This time-consuming debate was just an initial salvo in the debate to come.
First up, the debt ceiling. By sometime in late May, the federal government will have reached the maximum amount that it is allowed to borrow by law and will need permission from congress to continue issuing bonds. As there is no viable path to budgetary balance this year, the impact of not getting that permission would be nothing short of catastrophic. Essentially, large swaths of the government would shut down and the US would fall into default on treasuries, which would destroy the value of the full faith and credit of the government and cause massive spikes in interest rates. I don't think most of the Republicans want to see this happen, but they are certainly looking to use the debt ceiling as a bargaining chip. Boehner and company will attempt to use the debt ceiling legislation to extract even more significant cuts in spending. This is a fairly dangerous game of chicken, but from what I've seen, in games of chicken, the Democrats seem to be blinking first most of the time the past few years.
Then, there is the Ryan plan, the GOP blueprint for the next 10 years of government spending. All but 4 Republicans in the House supported the plan (no Democrats did), which called for abolishing Medicare and Medicaid as we know it, replacing Medicare with subsidized private plans and Medicaid with block grants to the states. It also called for extension of the Bush/Obama tax cuts at all income levels and major reductions in domestic discretionary spending (it left Social Security untouched, although some Republicans have been calling for the retirement age to be raised to 70 over time.)
If you would have told me a year ago that 98% of House Republicans would have supported a plan to dismantle Medicare, I wouldn't have believed you. But it just shows how far Boehner has been able to shift the debate. The Ryan plan is clearly DOA in the Democratically-controlled Senate and President Obama would veto it regardless, but it stakes out a striking opening position in the debate over balancing the federal budget.
Republicans seem highly likely to control both Houses in 2013 (see my previous post on the Senate map and how awful it is for the Dems in 2012), which means that the Presidential election will be very high stakes. If a Republican candidate wins, we could very well see something like the Ryan plan enacted.
President Obama, for his part, has called for more modest reductions in domestic discretionary spending, significant reductions in defense expenditures and allowing the Bush/Obama tax cuts to lapse for those making over $250K. It's a start, but doesn't go nearly far enough to fix the budget. Republicans are sure to strongly oppose the tax changes and a least a portion of the defense reductions.
Let the debate begin.
Why $4 Gas is a Good Thing
In the breakthrough economics book, Freakonomics, economist Steven Levitt makes one point abundantly clear over and over again: people respond to incentives. From drug dealers, to parents with kids in day care to sumo wrestlers, the book chronicles how incentives drive behavior large and small. The same is true with energy policy.
When gas is sub-$2/gallon, whatever we may say about carbon emissions, national security, etc., not a lot will change with the behavior of individuals that drives our oil consumption. When it reaches $4/gallon, magical things happen. People buy hybrid and electric cars. Corporations start investing in alternative energy. We start to make real progress against our dependence on foreign fuels and evolve our economy.
$4/gas hurts, but let's hope it is here to stay. Our green energy economy depends on it.
Sunday, April 17, 2011
Saturday, April 9, 2011
Crafty GOP Strategy Gets Them Most of What They Want
In the late hours of the night on Friday night, congressional leaders and the President reached an agreement on the discretionary budget for the remainder of Fiscal 2011.
On the surface, it looks like a compromise...the GOP had sought $61B of cuts and had sought to eliminate funding for Planned Parenthood. They got $38.5B in cuts and had to live with Planned Parenthood continuing to be funded by the federal government, albeit with the opportunity to symbolically vote against the funding. So they got 63% of their cuts but didn't get their key social policy change. Feels like a compromise that splits the difference, doesn't it?
But look closer. The continuing resolutions passed had already cut over $10B in funding. The temporary 6 day resolution that was passed to allow the government to keep functioning and provide time for the House and Senate to vote on the compromise cut another $2B. That's $50.5B in total cuts, 83% of what the GOP had sought.
And the Planned Parenthood funding? A red herring. The total annual funding to Planned Parenthood from the federal government totals a mere $75 million, or 0.02% of annual federal spending. And Planned Parenthood is already prohibited from providing abortion services with the funding. In fact, the funding provides cervical cancer screening and contraception, perhaps the latter is opposed by the very far right fringe of the GOP, but both are things that 99% of rational people would support. But by making it a central issue, Boehner and company were able to get the Dems to cave on the more important issues at stake.
So, the GOP, with its majority in one House of Congress, was able to get 83% of what it wanted. Nicely done. Now, can we have a debate about the 7/8ths of the federal budget not covered by domestic discretionary spending?
On the surface, it looks like a compromise...the GOP had sought $61B of cuts and had sought to eliminate funding for Planned Parenthood. They got $38.5B in cuts and had to live with Planned Parenthood continuing to be funded by the federal government, albeit with the opportunity to symbolically vote against the funding. So they got 63% of their cuts but didn't get their key social policy change. Feels like a compromise that splits the difference, doesn't it?
But look closer. The continuing resolutions passed had already cut over $10B in funding. The temporary 6 day resolution that was passed to allow the government to keep functioning and provide time for the House and Senate to vote on the compromise cut another $2B. That's $50.5B in total cuts, 83% of what the GOP had sought.
And the Planned Parenthood funding? A red herring. The total annual funding to Planned Parenthood from the federal government totals a mere $75 million, or 0.02% of annual federal spending. And Planned Parenthood is already prohibited from providing abortion services with the funding. In fact, the funding provides cervical cancer screening and contraception, perhaps the latter is opposed by the very far right fringe of the GOP, but both are things that 99% of rational people would support. But by making it a central issue, Boehner and company were able to get the Dems to cave on the more important issues at stake.
So, the GOP, with its majority in one House of Congress, was able to get 83% of what it wanted. Nicely done. Now, can we have a debate about the 7/8ths of the federal budget not covered by domestic discretionary spending?
Sunday, April 3, 2011
The Obama Doctrine, Any Chance for Real Entitlement Reform?, Energy Policy Twisting in the Wind
Is There an Obama Doctrine?
Every President has a philosophy behind how they involve the military in foreign affairs. The notion of a Presidential "doctrine" dates back to President James Monroe, whose "Monroe Doctrine" stated that the US would view further colonization in North America by European nations as an act of aggression but that the US would not interfere with existing colonies or with the internal affairs of European nations.
More recently, the "Bush Doctrine" of former President George W. Bush moved US foreign policy to a more activist position, parting ways with other Post-World War 2 Presidents in supporting the notion of pre-emptive war to protect US security interests, justifying intervention in Iraq, a country which had not attacked the US on the potential for a future threat.
So, more than 2 years into his Presidency, with airstrikes in Libya taking place in the past two weeks, it is worth asking, is there an "Obama Doctrine" and what is it?
The President has stepped up presence in the Afghanistan, wound down operations in Iraq, stayed out of tribal conflicts in Africa, but supported rebels in Libya.
Afghanistan is arguably a "shoot second" war, since the Taliban was clearly the driving force behind the September 11, 2001 attacks on the World Trade Center and the Taliban controlled the former government in Afghanistan. Iraq was clearly a pre-emptive war, as there was no overt act of aggression taken by Iraq.
Taking just these two examples, one would assume that the "Obama Doctrine" is more of a return to the philosophies of George H.W. Bush and Bill Clinton, of US intervention only where there is a national security interest and we are struck first, or where there is a clear act of aggression against a US ally, such as in the case of the first Gulf War.
But then there is Libya. We were not attacked. Libya did not attack a US ally. This is clearly a case of involving the US in a civil war in Libya. And therein lies the distinction. It is not quite a war of pre-emption (no one considers Libya a credible threat to US security compared to Iran or North Korea), nor is it a "shoot second" war. The mission in supporting the rebels is clearly to support regime change and protect humanitarian interests, even if the former is not explicitly stated by the administration.
There is an intellectual argument for supporting humanitarian missions by the US military, but it is a slippery slope. If Libya, then why not Darfur? Or Somalia? The list of civil wars causing human strife in the world is long. But clearly Libya involvement is low impact at this point. We aren't committing ground troops. We have the backing of NATO. US Casualties will be extremely low and the cost low compared to Iraq or Afghanistan.
So, as best I can tell, the nascent "Obama Doctrine" advocates use of force when:
(1) There is an imminent threat to US security
(2) As a proportional response to an attack on the US
(3) For limited humanitarian reasons, with the support of the international community
We'll see how this philosophy evolves over time.
Will Paul Ryan's Bold Proposal Spark Real Reform?
Rep. Paul Ryan, who is the point man for the 2012 GOP budget, is set to reveal a bold plan for reform Medicare and Medicaid, two of the four albatrosses around the neck of the US budget (the other two being defense spending and social security.) Ryan's plan is reportedly very bold, including:
(1) Changing Medicare as we know it for those 55 and under. Eliminating government coverage for those who retire after 2021 and replacing it with a federal grant to purchase private insurance.
(2) Dramatically reducing Medicaid funding over time and replacing the traditional program with block grants to the states, who would have the freedom to experiment with different systems for the funds in their own states.
This is a radical change. The Medicare plan essentially contains costs by reducing the rate at which government expenditures on Medicare go up. To explain it simply, if costs under Medicare are rising 10% per year, Ryan's plan might increase the insurance grant by only 3% per year, meaning that private insurers would have to figure out ways to provide coverage at a lower cost than the government would. This means that either private insurers will find a way to get vastly more efficient or the level of coverage will go down to something more affordable.
This is basically rationing by another name - a charge sure to be leveled by the left, but actually a good thing, if you have read my prior writings. The ONLY way to significantly "bend the cost curve" is to be more selective about what is covered. You simply can't reduce costs AND provide every form of care to every person at every stage of their life. That is how socialized systems contain cost - they restrict the availability of some treatments. And it's a path we'll have to go down to fix Medicare, even if Ryan won't want to admit that that's what his proposal does.
The Medicaid proposal is basically more of the same...less money and let the states try to figure out how to manage that more limited funding.
Ryan's proposal is a long way from perfect. There are some elements of health care that should be non-negotiable from a cost standpoint - vaccinations and preventative care that are both necessary and economically effective at reducing long-term costs for one and emergency care for another. Executed poorly, his proposal could simply lead to more cost-dumping on emergency rooms and do further damage to the system. And his proposal obviously doesn't address how but foists that choice on individuals and states.
But it's a great starting point to have the debate. I'm sure the Democrats will declare the proposal dead on arrival in the Senate. That's fine. But how about they come forward with an alternative that has a similar level of cost containment and let's have a debate.
Fixing the structural deficit is going to require some hard choices about entitlements. Kudos to Ryan for bravely taking the first step to provoke that debate.
Budget Deal? No Budget Deal? Can We Move On?
The fiscal year is half over for the government. Six times Congress has in some form or another kicked the can down the road. The GOP wanted $61B in domestic discretionary cuts. They've achieved $10B so far with the last two continuing resolutions. The debate now is how much of the remaining $51B they wanted will happen.
Can we please settle this debate quickly and move on to discussing entitlements. We will never even get to the debate on Ryan's proposal if we just keep debating continuing resolutions.
With a $1.5T deficit, does it really matter if we cut $20B more or $40B more? How about we finish this quickly and focus on the $1.5T problem.
If you like this site, tell your friends.
Every President has a philosophy behind how they involve the military in foreign affairs. The notion of a Presidential "doctrine" dates back to President James Monroe, whose "Monroe Doctrine" stated that the US would view further colonization in North America by European nations as an act of aggression but that the US would not interfere with existing colonies or with the internal affairs of European nations.
More recently, the "Bush Doctrine" of former President George W. Bush moved US foreign policy to a more activist position, parting ways with other Post-World War 2 Presidents in supporting the notion of pre-emptive war to protect US security interests, justifying intervention in Iraq, a country which had not attacked the US on the potential for a future threat.
So, more than 2 years into his Presidency, with airstrikes in Libya taking place in the past two weeks, it is worth asking, is there an "Obama Doctrine" and what is it?
The President has stepped up presence in the Afghanistan, wound down operations in Iraq, stayed out of tribal conflicts in Africa, but supported rebels in Libya.
Afghanistan is arguably a "shoot second" war, since the Taliban was clearly the driving force behind the September 11, 2001 attacks on the World Trade Center and the Taliban controlled the former government in Afghanistan. Iraq was clearly a pre-emptive war, as there was no overt act of aggression taken by Iraq.
Taking just these two examples, one would assume that the "Obama Doctrine" is more of a return to the philosophies of George H.W. Bush and Bill Clinton, of US intervention only where there is a national security interest and we are struck first, or where there is a clear act of aggression against a US ally, such as in the case of the first Gulf War.
But then there is Libya. We were not attacked. Libya did not attack a US ally. This is clearly a case of involving the US in a civil war in Libya. And therein lies the distinction. It is not quite a war of pre-emption (no one considers Libya a credible threat to US security compared to Iran or North Korea), nor is it a "shoot second" war. The mission in supporting the rebels is clearly to support regime change and protect humanitarian interests, even if the former is not explicitly stated by the administration.
There is an intellectual argument for supporting humanitarian missions by the US military, but it is a slippery slope. If Libya, then why not Darfur? Or Somalia? The list of civil wars causing human strife in the world is long. But clearly Libya involvement is low impact at this point. We aren't committing ground troops. We have the backing of NATO. US Casualties will be extremely low and the cost low compared to Iraq or Afghanistan.
So, as best I can tell, the nascent "Obama Doctrine" advocates use of force when:
(1) There is an imminent threat to US security
(2) As a proportional response to an attack on the US
(3) For limited humanitarian reasons, with the support of the international community
We'll see how this philosophy evolves over time.
Will Paul Ryan's Bold Proposal Spark Real Reform?
Rep. Paul Ryan, who is the point man for the 2012 GOP budget, is set to reveal a bold plan for reform Medicare and Medicaid, two of the four albatrosses around the neck of the US budget (the other two being defense spending and social security.) Ryan's plan is reportedly very bold, including:
(1) Changing Medicare as we know it for those 55 and under. Eliminating government coverage for those who retire after 2021 and replacing it with a federal grant to purchase private insurance.
(2) Dramatically reducing Medicaid funding over time and replacing the traditional program with block grants to the states, who would have the freedom to experiment with different systems for the funds in their own states.
This is a radical change. The Medicare plan essentially contains costs by reducing the rate at which government expenditures on Medicare go up. To explain it simply, if costs under Medicare are rising 10% per year, Ryan's plan might increase the insurance grant by only 3% per year, meaning that private insurers would have to figure out ways to provide coverage at a lower cost than the government would. This means that either private insurers will find a way to get vastly more efficient or the level of coverage will go down to something more affordable.
This is basically rationing by another name - a charge sure to be leveled by the left, but actually a good thing, if you have read my prior writings. The ONLY way to significantly "bend the cost curve" is to be more selective about what is covered. You simply can't reduce costs AND provide every form of care to every person at every stage of their life. That is how socialized systems contain cost - they restrict the availability of some treatments. And it's a path we'll have to go down to fix Medicare, even if Ryan won't want to admit that that's what his proposal does.
The Medicaid proposal is basically more of the same...less money and let the states try to figure out how to manage that more limited funding.
Ryan's proposal is a long way from perfect. There are some elements of health care that should be non-negotiable from a cost standpoint - vaccinations and preventative care that are both necessary and economically effective at reducing long-term costs for one and emergency care for another. Executed poorly, his proposal could simply lead to more cost-dumping on emergency rooms and do further damage to the system. And his proposal obviously doesn't address how but foists that choice on individuals and states.
But it's a great starting point to have the debate. I'm sure the Democrats will declare the proposal dead on arrival in the Senate. That's fine. But how about they come forward with an alternative that has a similar level of cost containment and let's have a debate.
Fixing the structural deficit is going to require some hard choices about entitlements. Kudos to Ryan for bravely taking the first step to provoke that debate.
Budget Deal? No Budget Deal? Can We Move On?
The fiscal year is half over for the government. Six times Congress has in some form or another kicked the can down the road. The GOP wanted $61B in domestic discretionary cuts. They've achieved $10B so far with the last two continuing resolutions. The debate now is how much of the remaining $51B they wanted will happen.
Can we please settle this debate quickly and move on to discussing entitlements. We will never even get to the debate on Ryan's proposal if we just keep debating continuing resolutions.
With a $1.5T deficit, does it really matter if we cut $20B more or $40B more? How about we finish this quickly and focus on the $1.5T problem.
If you like this site, tell your friends.
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