A Moderate By Any Other Name...
A conservative friend of mine, whose intellectual capabilities I respect greatly, was discussing potential 2016 nominees with me this week.
We started by debating the GOP potentials. I was partial to candidates who had done actual governing, such as Bobby Jindal and Chris Christie. He is not a Christie fan, feeling Christie is too moderate for his liking. He does like Scott Walker and Mitch Daniels but was also bullish on Rand Paul and Marco Rubio, the former of which I think would be an utter disaster as a Presidential candidate (in spite of my respect for his recent principled stands) and the later of which I think is highly unproven as a leader.
Our discussion then turned to the Democratic side of the aisle. We quickly agreed that if Hillary Clinton chooses to run, the nomination is hers to lose. The more interesting scenario was if Hillary didn't decide to run in which case the field is fairly open to guys like Andrew Cuomo, Martin O'Malley, Joe Biden or even a dark horse like Kirsten Gillebrand. I stated that I didn't see Biden as Presidential timber and that my concern with Cuomo and in particular O'Malley was that they were too liberal for a mainstream candidacy.
It is then that this thoughtful thinker said something that I think is absolutely astounding. He stated "well, Obama got elected and it isn't like it is possible for someone to be more liberal than him."
This is a popular talking point in GOP circles, that President Obama is on an extreme liberal edge and is essentially a socialist or even less flattering terms like a "statist". The amazing thing to me is that smart people actually believe that.
Sure President Obama did some things that are on the left hand side of the American political ledger. He oversaw a stimulus package that received only 3 Republican votes. He pushed for a universal healthcare plan that was universally opposed by Republicans. And he sought higher tax rates on high income individuals.
But, let's be real. The stimulus plan was supported by every Democrat in the Senate and by three Republicans, including non-socialists Susan Collins and Olympia Snowe. While it may have been a left-of-center solution, it was hardly outside of the mainstream of American politics. Liberals like Paul Krugman were aghast at how small the stimulus package was.
His health care plan, while opposed by the GOP and some conservative Democrats was far, far, short of the level of state involvement in health care in every other first world nation. It was well short of single-payer solutions sought by liberals and was, in essence a plan architected by Republicans such as Bob Dole and Mitt Romney just a few years earlier. Hardly the "most liberal" health care proposal ever.
On foreign policy, President Obama has essentially continued most of the policies of the Bush administration. He sent more troops to Afghanistan, upped drone strikes, extended the Patriot Act and kept Gitmo open. Hardly a liberal at all.
On social issues, President Obama has not sought federal funding for abortions, has only recently come out in favor of gay marriage (after a majority of the public already supported that view) and has only in his second term even spoken of gun control.
He has appointed an ex-Goldman Treasury Secretary, 2 Republican Secretaries of Defense and a Republican Secretary of Transportation.
Certainly President Obama is left of the Republicans who would run for the Presidency. But he is more George Herbert Walker Bush than Karl Marx. He didn't institute price controls like President Nixon (who also supported single-payer healthcare, incidentally.) The tax rates he proposed were a full 50% lower than the top right under Dwight Eisenhower and his tax increases were proportionally a fraction of those signed by Herbert Walker Bush.
The most liberal ever? Heck, he's hardly more liberal than half the US population.
The Right Way to Do Gay Marriage
Public opinion on gay marriage has turned. 9 states have gay marriage laws, with many others sure to follow in the next few years. Advocates for gay marriage are hopeful that the Supreme Court this summer will strike down Proposition 8 in California as well as the Defense of Marriage Act and clear the way for gay marriage nationally.
I support striking down the Defense of Marriage Act. The full faith and credit clause in Article IV, Section I of the US Constitution is very clear:
"Full faith and credit ought to be given in each state to the public acts, records, and judicial proceedings, of every other state; and the legislature shall, by general laws, prescribe the manner in which such acts, records, and proceedings, shall be proved, and the effect which judgments, obtained in one state, shall have in another."
The meaning of this to me is clear - states must honor marriages granted in another. The Defense of Marriage Act relegated gay marriage to a status where someone can be married in one state, but become unmarried when they cross state lines. This is unprecedented in US laws - states that marry cousins must have their marriages honored by other states as do states that allow 13-year-olds to wed. The reason for the full faith and credit clause is very simple - if contracts are allowed to be broken when one crosses state lines then contracts cease to have meaning. The Supreme Court would be well justified in striking down DOMA.
Prop 8 is another issue. By striking down Prop 8, the court would need to find that prohibiting gay marriage violates the equal protection clause of the constitution. To do so would be to usurp the Democratic process and substitute their judgement for that of voters and elected officials. While I favor gay marriage, it seems both unnecessary and unwise to supplant the Democratic process. Public opinion has made gay marriage inevitable. Interpreting the equal protection clause as requiring gay marriage would be to instill in it a meaning that was clearly never intended by those who wrote the 14th amendment.
Public acceptance of gay marriage will be stronger with a full public debate. And striking down DOMA alone would ensure that gay people have a place to go to get married in a way that will be recognized.
Sometimes how you get to an outcome is as important as the outcome itself. I feel this is the case with gay marriage.
Sunday, March 31, 2013
Sunday, March 17, 2013
Believe It Or Not: The Budget Process Is Working, Rob Portman's Game-Changing Statement
Bipartisan Gridlock Is Striking the Right Balance
To the casual observer and most members of the mainstream media, or political system looks an utter mess as it relates to the federal budget. In the past two years, we have almost shut the government down just to agree to pay our bills, we have gone down to the wire to agree to a tax policy for this year and we have implemented across-the-board spending cuts without rhyme or reason and trade-offs of government programs.
Taking a step back, while the process is certainly not working perfectly, the split control of the budgeting process between House Republicans and the President is producing positive results.
First, let's think about the deficit. The only modern role model for a balanced budget that we have is during the Clinton administration. During that time period, spending averaged between 19% and 20% of GDP and taxation also averaged between 19% and 20% of GDP. The tax side was achieved through the 1993 tax hikes, which included an increased gas tax and increased income taxes, including the creating of a 39.6% bracket for those making over $250K. The revenue side was contained by cuts to defense and welfare reforms, as well as a booming economy that led to low costs of things like unemployment benefits.
Fast forward to 2011. Revenues had fallen to 15.4% of GDP, a Post-World War 2 low. This was a combination of the Bush tax cuts and the Obama payroll tax cuts, which created historically low tax rates and, through various exemptions and deductions, excluded a large percentage of the tax base. Spending, meanwhile, had grown to 24.1% of GDP, increased by heightened military spending, new Medicare drug benefits, extended unemployment benefits, homeland security spending and growing entitlement costs as boomers retired (Obama's stimulus package and Bush's TARP program had both largely concluded their costs by this point.) Essentially, up 4-5% of GDP in spending, down 4-5% of GDP in revenue from when we were in balance.
Those of us who would take a rational, fact-based approach, would say that we clearly had a problem of wanting the government to do a whole bunch of new things (drug benefits, wars) combined with more expensive existing things (Medicare, Social Security) while paying less for them. Not a sustainable path. The obvious path would be to try to get back to Clinton-era levels of taxation and revenue. That sounds easy but isn't - we were still entangled in Iraq and Afghanistan, entitlements were going to inherently be more expensive if nothing systemic was done and people had reset the baseline in their mind and would consider Clinton-era rates a massive "tax hike".
The gridlock in 2011, while walking on the edge of a knife, produced a spending agreement that substantially reduced federal discretionary spending out of the gate and produced the sequester. The recent fight between the President and congress produced higher tax rates, both a repeal of the Obama payroll tax cut and a partial repeal of the Bush tax cuts for higher earners. The sequester further reduced spending.
So what has happened? The 2013 budget year, which runs October 2012 - September 2013 paints an incomplete picture as the changes are only partially implemented (the tax hikes will only be effective for 9 of the 12 months and the sequester spending cuts for only 7 of the 12 months.) Even so, in fiscal 2013, revenues have risen to 17.8% of GDP and spending has fallen to 23.3% of GDP. Next year, revenues will further rise to 18.7% of GDP and spending will further fall to 22.6% of GDP, leaving a deficit of only 3.9% of GDP, versus the 2011 level of 8.7% of GDP.
In other words, the range of budget fights have increased taxes by 3.3% of GDP and cut spending by 1.5% of GDP. That's fairly balanced, although there is clearly more work to do. The big area of spending opportunity is clearly entitlements, which to-date have been untouched. There are also still large opportunities in the defense budget, which is still running way above 1990s era levels.
But what about the arbitrary nature of the spending cuts? While there has been a lot of hand-wringing over the across-the-board nature of the cuts, this is not that different from what happens in private industry all the time. If you work in a private corporation, have you ever experienced a travel ban or a freeze on all raises? These are private sector examples of exactly the same behavior - it may not be the most precies way to cut spending, but it is simple to implement and allows each department manager to make trade-offs within the budget that they know the best. The sequester isn't a bad thing in this regard.
We are making progress on the budget. But Congress and the President must be willing to make some uncomfortable choices about entitlements over the next few years. Entitlements are sucking up more and more federal money as the population ages and Medicare inflation continues to rise.
Rob Portman: Late to the Party, But Right
Rob Portman's revelation that he has a gay son and that he has come to support gay marriage is courageous for a man who is viewed as a leading elected conservative. His personal story of coming to understand his son's orientation and reconciling it with his previous held religious and social beliefs is insightful and touching.
Portman may be late to the party, but to his credit, he is but a few months President Obama in coming around.
What is most fascinating to me about Portman's shift is that there isn't much anger among prominent conservatives on the issue. While there are still screaming so-called "values voters", more and more young conservatives are embracing the notion of the GOP as the party of liberty and realize that embracing that notion means providing liberty to everyone, not just straight people.
While I could criticize Portman for not coming forward with these views last year when he was a contender for the VP spot, I could make the same criticism of President Obama for not supporting this view in 2008, when gay marriage support would have been a clearer political negative.
I welcome Rob Portman to the fold of those fighting for marriage equality and hope more conservatives follow his and Dick Cheney's lead on this issue.
If you like this site, tell your friends.
To the casual observer and most members of the mainstream media, or political system looks an utter mess as it relates to the federal budget. In the past two years, we have almost shut the government down just to agree to pay our bills, we have gone down to the wire to agree to a tax policy for this year and we have implemented across-the-board spending cuts without rhyme or reason and trade-offs of government programs.
Taking a step back, while the process is certainly not working perfectly, the split control of the budgeting process between House Republicans and the President is producing positive results.
First, let's think about the deficit. The only modern role model for a balanced budget that we have is during the Clinton administration. During that time period, spending averaged between 19% and 20% of GDP and taxation also averaged between 19% and 20% of GDP. The tax side was achieved through the 1993 tax hikes, which included an increased gas tax and increased income taxes, including the creating of a 39.6% bracket for those making over $250K. The revenue side was contained by cuts to defense and welfare reforms, as well as a booming economy that led to low costs of things like unemployment benefits.
Fast forward to 2011. Revenues had fallen to 15.4% of GDP, a Post-World War 2 low. This was a combination of the Bush tax cuts and the Obama payroll tax cuts, which created historically low tax rates and, through various exemptions and deductions, excluded a large percentage of the tax base. Spending, meanwhile, had grown to 24.1% of GDP, increased by heightened military spending, new Medicare drug benefits, extended unemployment benefits, homeland security spending and growing entitlement costs as boomers retired (Obama's stimulus package and Bush's TARP program had both largely concluded their costs by this point.) Essentially, up 4-5% of GDP in spending, down 4-5% of GDP in revenue from when we were in balance.
Those of us who would take a rational, fact-based approach, would say that we clearly had a problem of wanting the government to do a whole bunch of new things (drug benefits, wars) combined with more expensive existing things (Medicare, Social Security) while paying less for them. Not a sustainable path. The obvious path would be to try to get back to Clinton-era levels of taxation and revenue. That sounds easy but isn't - we were still entangled in Iraq and Afghanistan, entitlements were going to inherently be more expensive if nothing systemic was done and people had reset the baseline in their mind and would consider Clinton-era rates a massive "tax hike".
The gridlock in 2011, while walking on the edge of a knife, produced a spending agreement that substantially reduced federal discretionary spending out of the gate and produced the sequester. The recent fight between the President and congress produced higher tax rates, both a repeal of the Obama payroll tax cut and a partial repeal of the Bush tax cuts for higher earners. The sequester further reduced spending.
So what has happened? The 2013 budget year, which runs October 2012 - September 2013 paints an incomplete picture as the changes are only partially implemented (the tax hikes will only be effective for 9 of the 12 months and the sequester spending cuts for only 7 of the 12 months.) Even so, in fiscal 2013, revenues have risen to 17.8% of GDP and spending has fallen to 23.3% of GDP. Next year, revenues will further rise to 18.7% of GDP and spending will further fall to 22.6% of GDP, leaving a deficit of only 3.9% of GDP, versus the 2011 level of 8.7% of GDP.
In other words, the range of budget fights have increased taxes by 3.3% of GDP and cut spending by 1.5% of GDP. That's fairly balanced, although there is clearly more work to do. The big area of spending opportunity is clearly entitlements, which to-date have been untouched. There are also still large opportunities in the defense budget, which is still running way above 1990s era levels.
But what about the arbitrary nature of the spending cuts? While there has been a lot of hand-wringing over the across-the-board nature of the cuts, this is not that different from what happens in private industry all the time. If you work in a private corporation, have you ever experienced a travel ban or a freeze on all raises? These are private sector examples of exactly the same behavior - it may not be the most precies way to cut spending, but it is simple to implement and allows each department manager to make trade-offs within the budget that they know the best. The sequester isn't a bad thing in this regard.
We are making progress on the budget. But Congress and the President must be willing to make some uncomfortable choices about entitlements over the next few years. Entitlements are sucking up more and more federal money as the population ages and Medicare inflation continues to rise.
Rob Portman: Late to the Party, But Right
Rob Portman's revelation that he has a gay son and that he has come to support gay marriage is courageous for a man who is viewed as a leading elected conservative. His personal story of coming to understand his son's orientation and reconciling it with his previous held religious and social beliefs is insightful and touching.
Portman may be late to the party, but to his credit, he is but a few months President Obama in coming around.
What is most fascinating to me about Portman's shift is that there isn't much anger among prominent conservatives on the issue. While there are still screaming so-called "values voters", more and more young conservatives are embracing the notion of the GOP as the party of liberty and realize that embracing that notion means providing liberty to everyone, not just straight people.
While I could criticize Portman for not coming forward with these views last year when he was a contender for the VP spot, I could make the same criticism of President Obama for not supporting this view in 2008, when gay marriage support would have been a clearer political negative.
I welcome Rob Portman to the fold of those fighting for marriage equality and hope more conservatives follow his and Dick Cheney's lead on this issue.
If you like this site, tell your friends.
Saturday, March 9, 2013
Why Rand Paul is Right and Obama, McCain and Graham are Wrong
Something different happened this week. In a Senate where true filibusters had long been replaced by the mere threat of filibuster - where Senators no longer stand and talk to stall a bill but simply vote against a "cloture motion", Senator Rand Paul (R-KY) went old school.
Incensed by the implication by Attorney General Eric Holder's implication that while the US had never used a drone strike against a US citizen on US soil, that the executie branch might have the right to do so, Paul took to the Senate floor for over 12 hours.
Paul's filibuster was impressive on multiple levels:
(1) He Actually Filibustered - rather than hiding behind procedural rules, Paul took to the floor to make his point and left no lack of clarity about what he was doing and why.
(2) He Filibustered Something Relevant - filibustering the CIA director nomination on the basis of what the CIA director might actually order is a pertinent filibuster. Paul did not filibuster some unrelated nomination, he filibustered a nominee until it was clear what that nominee could or could not do in office.
(3) He Was Dead Right - the notion that without charge or trial that the US government could even conceive of killing an American on American soil should outrage each and every US citizen. Liberals were all too proud to protest during the Bush administration when the government encroached on civil liberties, but have been silent as the Obama administration has continued many of the same policies - or even worse in this case. On the left, only Senator Ron Wyden (D-OR) showed up to support Paul's cause. Good for Senator Wyden - and shame on the rest of the Democrats in the Senate.
(4) He Got His Way - Paul's filibuster was successful. Attorney General Holder clarified, in no uncertain terms, that the executive does NOT have the authority to kill Americans on American soil. Paul won a meaningful victory for American civil liberties.
(5) He Was True to His Word - Paul stated that he was filibustering the Brennan nomination to ensure that Americans would not be killed on American soil - once he was assured, he not only voted to invoke cloture, he also voted for the nominee. There was nothing below board or disingenuous about what Paul did - he stated a clear principle (that we all should support) and didn't move the goal posts when he got what he wanted.
I am astounded that Holder or any Obama administration official ever implied the right to kill Americans without review in the first place. He was dead wrong and I feel better now that he has admitted as much.
I am even more astounded at the sniping by John McCain and Lindsey Graham at Senator Paul for his filibuster. In a year where John McCain promised not to filibuster, then filibustered the nomination of Chuck Hagel, a man he once named as a probable Secretary of Defense in a McCain administration, McCain has no moral high ground. This is the same McCain who said we couldn't afford the Bush tax cuts, then turned around and hurled mud at President Obama for supporting a very modest partial repeal of those cuts. In the realm of respectful politics, what Rand Paul did is far ahead of what John McCain has done of late.
Rand Paul captured the spirit of liberty, the very spirit that I have previously written is the key to the Republicans not being relegated to a minority party for the next 50 years. Republican leaders would be wise to pay attention and learn from what happened this week, not shove it to the side as childishness.
Rand Paul is to be commended for his actions this week. I certainly don't agree with a lot of his views, but this was a classy, principled defense of our rights. We all owe Senator Paul a debt of gratitude.
Incensed by the implication by Attorney General Eric Holder's implication that while the US had never used a drone strike against a US citizen on US soil, that the executie branch might have the right to do so, Paul took to the Senate floor for over 12 hours.
Paul's filibuster was impressive on multiple levels:
(1) He Actually Filibustered - rather than hiding behind procedural rules, Paul took to the floor to make his point and left no lack of clarity about what he was doing and why.
(2) He Filibustered Something Relevant - filibustering the CIA director nomination on the basis of what the CIA director might actually order is a pertinent filibuster. Paul did not filibuster some unrelated nomination, he filibustered a nominee until it was clear what that nominee could or could not do in office.
(3) He Was Dead Right - the notion that without charge or trial that the US government could even conceive of killing an American on American soil should outrage each and every US citizen. Liberals were all too proud to protest during the Bush administration when the government encroached on civil liberties, but have been silent as the Obama administration has continued many of the same policies - or even worse in this case. On the left, only Senator Ron Wyden (D-OR) showed up to support Paul's cause. Good for Senator Wyden - and shame on the rest of the Democrats in the Senate.
(4) He Got His Way - Paul's filibuster was successful. Attorney General Holder clarified, in no uncertain terms, that the executive does NOT have the authority to kill Americans on American soil. Paul won a meaningful victory for American civil liberties.
(5) He Was True to His Word - Paul stated that he was filibustering the Brennan nomination to ensure that Americans would not be killed on American soil - once he was assured, he not only voted to invoke cloture, he also voted for the nominee. There was nothing below board or disingenuous about what Paul did - he stated a clear principle (that we all should support) and didn't move the goal posts when he got what he wanted.
I am astounded that Holder or any Obama administration official ever implied the right to kill Americans without review in the first place. He was dead wrong and I feel better now that he has admitted as much.
I am even more astounded at the sniping by John McCain and Lindsey Graham at Senator Paul for his filibuster. In a year where John McCain promised not to filibuster, then filibustered the nomination of Chuck Hagel, a man he once named as a probable Secretary of Defense in a McCain administration, McCain has no moral high ground. This is the same McCain who said we couldn't afford the Bush tax cuts, then turned around and hurled mud at President Obama for supporting a very modest partial repeal of those cuts. In the realm of respectful politics, what Rand Paul did is far ahead of what John McCain has done of late.
Rand Paul captured the spirit of liberty, the very spirit that I have previously written is the key to the Republicans not being relegated to a minority party for the next 50 years. Republican leaders would be wise to pay attention and learn from what happened this week, not shove it to the side as childishness.
Rand Paul is to be commended for his actions this week. I certainly don't agree with a lot of his views, but this was a classy, principled defense of our rights. We all owe Senator Paul a debt of gratitude.
Sunday, March 3, 2013
Something Wonderful Is Happening
Frequent readers to this space know that I am an unwavering advocate for gay rights. While there are many social issues that give me a deep sense of moral conflict - late term abortions, for instance, I see utter moral clarity in the struggle for equal rights for gay men and women. I have always rejected traditionalist views that revolve around either unprovable religious theories ("that is what God intended" rings shallow for me, unless you can put him or her on the phone) or constructs lacking evidence ("children are best raised by a mother and a father" may sound nice, but a. presents an utterly false choice and b. is not born out by the evidence of the success of children of gay adoptions versus straight adoptions and/or birth children raised by gay couples versus other divorced/remarried children.)
Beyond any factual debate of the social impacts of gay marriage, gay adoption and non-discrimination laws against gay and transgendered people, this is fundamentally a moral debate. If we believe in freedom and equal rights as fundamental American and human moral precepts, then they demand that those rights be applied without filter.
To wit, would anyone argue against black marriage or black adoption due to the fact that children raised by black couples have higher recidivism rates than those raised by white couples? To do so would be repugnant, racist and offends our very moral fabric.
Would anyone argue that Catholics should not be allowed to adopt children or get married since Catholic children experience a higher rate of sexual abuse than those raised by parents of other religions? To do so would be absurd and bigoted.
Such it is with gay rights. Gay people have a right to lead the lifestyle that they choose. They have a right to have the person that they love make critical medical decisions when they cannot. They have a right to protect the financial well-being of those that they love. They have the right to access to the same health care benefits as straight people. Or at least they should.
Gay marriage has been a lightning rod issue in this country. I have said frequently that I believe that the evolving moral compass of this country always eventually swings towards greater social justice. But the path is not always a straight line. It has taken us over 200 years to get to where we are with civil rights and women's rights, and there the work is certainly not done.
So it is with a level of wonder and excitement that I take in the pace at which our attitudes and laws about gay rights are changing.
Think back to 2004, a mere 9 years ago. In that election cycle, gay marriage was a wedge issue for the right. 11 states passed ballot initiatives banning gay marriage, including blue states like Oregon and Michigan. Karl Rove leveraged public sentiment against gay marriage to mobilize conservative voters and defeat John Kerry, who, ironically, was against gay marriage.
In fact, every Presidential candidate from both parties through 2008 had stated opposition to gay marriage. Bill Clinton signed the awful Defense of Marriage Act during his Presidency. Al Gore was opposed to gay marriage, as was John Kerry. Barack Obama was a stated opponent of gay marriage in 2008.
Then the wonder began to happen.
In 2004, Massachusetts became the first state to legalize gay marriage, by court order. Connecticut followed in 2008, then Iowa in 2009, also by court order.
While gay marriage was beginning to happen in the US, it was happening at the dictate of judges. Through 2009, no state legislature had passed a gay marriage law and no pro-gay marriage ballot proposition had ever passed a state.
Then, a flurry of change happened. Vermont legalized gay marriage in 2009 by legislative action. New Hampshire followed in 2010. Washington, DC did so in 2010 also. New York followed in 2011, including passage from a Republican state house. Legislators were showing courage and changing their stripes.
President Obama and Vice-President Joe Biden showed up to the part, albeit way too late and endorsed gay marriage.
Then the voters weighed in in 2012, legalizing gay marriage in Maine, Maryland and Washington by ballot initiative. Minnesota, while not legalizing gay marriage, explicitly rejected a ballot initiative that would have amended the state constitution to ban gay marriage.
Now comes the Supreme Court Case over the gay marriage ban in California. Amazingly, to date, over 100 national REPUBLICAN figures have signed on to an amicus brief in SUPPORT of gay marriage. While they do not include 2016 Presidential aspirants, they do include Meg Whitman, Rep. Ilena Ros-Leithan, Rep. Richard Hanna, former RNC Chair Ken Melhman and former Governors Jon Huntsman, Wiliam Weld, Christie Todd Whitman, Jane Swift and Paul Celucci. Former Wyoming Senator Alan Simpson is also a strong supporter of gay marriage, although he has yet to sign the brief.
Republicans SHOULD be advocates for same sex marriage. If they are to be the party of liberty and freedom, as they aspire to, they should never acede to having the government dictate marriage terms. Democrats should also support same sex marriage as it supports their cause of social justice.
We have come a long way on this issue. National recognition of same sex marriage now seems inevitable at some point in the next 20 years. And it can't come soon enough.
If you like this site, tell your friends.
Beyond any factual debate of the social impacts of gay marriage, gay adoption and non-discrimination laws against gay and transgendered people, this is fundamentally a moral debate. If we believe in freedom and equal rights as fundamental American and human moral precepts, then they demand that those rights be applied without filter.
To wit, would anyone argue against black marriage or black adoption due to the fact that children raised by black couples have higher recidivism rates than those raised by white couples? To do so would be repugnant, racist and offends our very moral fabric.
Would anyone argue that Catholics should not be allowed to adopt children or get married since Catholic children experience a higher rate of sexual abuse than those raised by parents of other religions? To do so would be absurd and bigoted.
Such it is with gay rights. Gay people have a right to lead the lifestyle that they choose. They have a right to have the person that they love make critical medical decisions when they cannot. They have a right to protect the financial well-being of those that they love. They have the right to access to the same health care benefits as straight people. Or at least they should.
Gay marriage has been a lightning rod issue in this country. I have said frequently that I believe that the evolving moral compass of this country always eventually swings towards greater social justice. But the path is not always a straight line. It has taken us over 200 years to get to where we are with civil rights and women's rights, and there the work is certainly not done.
So it is with a level of wonder and excitement that I take in the pace at which our attitudes and laws about gay rights are changing.
Think back to 2004, a mere 9 years ago. In that election cycle, gay marriage was a wedge issue for the right. 11 states passed ballot initiatives banning gay marriage, including blue states like Oregon and Michigan. Karl Rove leveraged public sentiment against gay marriage to mobilize conservative voters and defeat John Kerry, who, ironically, was against gay marriage.
In fact, every Presidential candidate from both parties through 2008 had stated opposition to gay marriage. Bill Clinton signed the awful Defense of Marriage Act during his Presidency. Al Gore was opposed to gay marriage, as was John Kerry. Barack Obama was a stated opponent of gay marriage in 2008.
Then the wonder began to happen.
In 2004, Massachusetts became the first state to legalize gay marriage, by court order. Connecticut followed in 2008, then Iowa in 2009, also by court order.
While gay marriage was beginning to happen in the US, it was happening at the dictate of judges. Through 2009, no state legislature had passed a gay marriage law and no pro-gay marriage ballot proposition had ever passed a state.
Then, a flurry of change happened. Vermont legalized gay marriage in 2009 by legislative action. New Hampshire followed in 2010. Washington, DC did so in 2010 also. New York followed in 2011, including passage from a Republican state house. Legislators were showing courage and changing their stripes.
President Obama and Vice-President Joe Biden showed up to the part, albeit way too late and endorsed gay marriage.
Then the voters weighed in in 2012, legalizing gay marriage in Maine, Maryland and Washington by ballot initiative. Minnesota, while not legalizing gay marriage, explicitly rejected a ballot initiative that would have amended the state constitution to ban gay marriage.
Now comes the Supreme Court Case over the gay marriage ban in California. Amazingly, to date, over 100 national REPUBLICAN figures have signed on to an amicus brief in SUPPORT of gay marriage. While they do not include 2016 Presidential aspirants, they do include Meg Whitman, Rep. Ilena Ros-Leithan, Rep. Richard Hanna, former RNC Chair Ken Melhman and former Governors Jon Huntsman, Wiliam Weld, Christie Todd Whitman, Jane Swift and Paul Celucci. Former Wyoming Senator Alan Simpson is also a strong supporter of gay marriage, although he has yet to sign the brief.
Republicans SHOULD be advocates for same sex marriage. If they are to be the party of liberty and freedom, as they aspire to, they should never acede to having the government dictate marriage terms. Democrats should also support same sex marriage as it supports their cause of social justice.
We have come a long way on this issue. National recognition of same sex marriage now seems inevitable at some point in the next 20 years. And it can't come soon enough.
If you like this site, tell your friends.
Sunday, February 24, 2013
The Machete vs. The Scalpel: Why John Boehner is Playing It All Wrong
In the 2008 Presidential debates, Senator John McCain proposed across-the-board cuts the federal budget as a starting point on the road towards deficit reduction.
Then-Senator Barack Obama responded: "Senator McCain is looking to apply a machete to the budget when what is needed is a scalpel", essentially criticizing the indiscriminate nature of across-the-board spending cuts and making the point that he would be more surgical about what he would cut.
An aghast John McCain, having seen federal spending expand wildly across virtually every budget line item during George W. Bush's Presidency, responded, "I would apply a machete and THEN a scalpel."
The current hysteria in Washington over the sequester would make you believe that it is a big machete - that massive reductions to federal programs will take place, starving the poor, endangering national defense and putting food safety and clean air at risk.
What the sequester actually amounts to is $85 billion in cuts, material to be sure, but we are talking about a federal budget of $3.6 trillion, meaning the sequester essentially amounts to 2.4% reduction in planned federal spending. If you had to take a 2.4% pay cut in your personal life, you wouldn't like it, but, it probably wouldn't mean that you wouldn't make the mortgage or car payments - it would probably be more akin to having to eat out once less in a month or moving from 93 octane to 87 octane gas.
It has been pointed out by some, correctly, that since entitlements are not impacted by the sequester, that the remaining elements of the federal budget will endure far greater percentage cuts than the overall 2.4%. And they are right, to a point. Entitlement spending makes up $2.1 trillion of the $3.6 trillion federal budget. Federal interest payments, which obviously cannot be directly impacted by the sequester, makes up about another $200 billion. Put those together and you have $1.3 trillion of discretionary spending across which the $85 billion reduction is spread. This therefore equates to a 6.5% cut to other programs, across-the-board.
A 6.5% cut might sound more severe and that some of the hysteria is warranted, but let's place it in proper context. Since the year 2000, discretionary spending has grown by 72%, or a compound annual growth rate of 4.5%. Adjusted for inflation, this means real discretionary spending has grown by 39% over that time period. It would seem that, being that most people would say government was relatively more functional in 2000 than it is today, that "only" being 32.5% higher in discretionary spending in real terms is a very small machete indeed.
So it was with a degree of shock that I read John Boehner's piece in the Wall Street Journal, bemoaning the sequester and laying blame at the feet of President Obama.
Speaker Boehner opens his editorial with the following line:
"A week from now, a dramatic new federal policy is set to go into effect that threatens U.S. national security, thousands of jobs and more."
This is utterly contradictory. Isn't it Boehner and the Republicans that have always stated that government spending doesn't create jobs? Aren't they the anti-Kenyes party? Threatens national security? A 6% cut in a defense budget that his TRIPLED since 2000? Is he serious?
If the GOP is going to be the party of deficit reduction through spending cuts, getting hissy over a 6% cut in defense spending is a bit absurd.
The Speaker does make a legitimate point that entitlements must be dealt with. At 61% of all federal spending, it is difficult to imagine a scenario that balances the budget with entitlement reforms. The Speaker is also right that the sequester is a crude instrument, making no distinction between effective and ineffective programs.
But Republicans should be taking an AND approach to budget cuts - do the sequester AND eliminate ineffective programs AND reform entitlements. While an across-the-board cut is a crude machete, it is a small one. Lots of private corporations do similar exercises to control spending - think of how troubled companies do across-the-board pay freezes or cancel all travel, often not distinguishing between top and bottom employees or value-added versus non-value added travel. Across the board approaches are a quick way to get cost containment. THEN, you go after the tough trade-offs.
John Boehner opposes any and all tax increases. If he is serious about cutting the deficit, he should be advocating for any-and-all budget reduction opportunities. By sound hysteria over relatively small budget cuts, he just looks like an idiot. The answer is machete AND scalpel.
Then-Senator Barack Obama responded: "Senator McCain is looking to apply a machete to the budget when what is needed is a scalpel", essentially criticizing the indiscriminate nature of across-the-board spending cuts and making the point that he would be more surgical about what he would cut.
An aghast John McCain, having seen federal spending expand wildly across virtually every budget line item during George W. Bush's Presidency, responded, "I would apply a machete and THEN a scalpel."
The current hysteria in Washington over the sequester would make you believe that it is a big machete - that massive reductions to federal programs will take place, starving the poor, endangering national defense and putting food safety and clean air at risk.
What the sequester actually amounts to is $85 billion in cuts, material to be sure, but we are talking about a federal budget of $3.6 trillion, meaning the sequester essentially amounts to 2.4% reduction in planned federal spending. If you had to take a 2.4% pay cut in your personal life, you wouldn't like it, but, it probably wouldn't mean that you wouldn't make the mortgage or car payments - it would probably be more akin to having to eat out once less in a month or moving from 93 octane to 87 octane gas.
It has been pointed out by some, correctly, that since entitlements are not impacted by the sequester, that the remaining elements of the federal budget will endure far greater percentage cuts than the overall 2.4%. And they are right, to a point. Entitlement spending makes up $2.1 trillion of the $3.6 trillion federal budget. Federal interest payments, which obviously cannot be directly impacted by the sequester, makes up about another $200 billion. Put those together and you have $1.3 trillion of discretionary spending across which the $85 billion reduction is spread. This therefore equates to a 6.5% cut to other programs, across-the-board.
A 6.5% cut might sound more severe and that some of the hysteria is warranted, but let's place it in proper context. Since the year 2000, discretionary spending has grown by 72%, or a compound annual growth rate of 4.5%. Adjusted for inflation, this means real discretionary spending has grown by 39% over that time period. It would seem that, being that most people would say government was relatively more functional in 2000 than it is today, that "only" being 32.5% higher in discretionary spending in real terms is a very small machete indeed.
So it was with a degree of shock that I read John Boehner's piece in the Wall Street Journal, bemoaning the sequester and laying blame at the feet of President Obama.
Speaker Boehner opens his editorial with the following line:
"A week from now, a dramatic new federal policy is set to go into effect that threatens U.S. national security, thousands of jobs and more."
This is utterly contradictory. Isn't it Boehner and the Republicans that have always stated that government spending doesn't create jobs? Aren't they the anti-Kenyes party? Threatens national security? A 6% cut in a defense budget that his TRIPLED since 2000? Is he serious?
If the GOP is going to be the party of deficit reduction through spending cuts, getting hissy over a 6% cut in defense spending is a bit absurd.
The Speaker does make a legitimate point that entitlements must be dealt with. At 61% of all federal spending, it is difficult to imagine a scenario that balances the budget with entitlement reforms. The Speaker is also right that the sequester is a crude instrument, making no distinction between effective and ineffective programs.
But Republicans should be taking an AND approach to budget cuts - do the sequester AND eliminate ineffective programs AND reform entitlements. While an across-the-board cut is a crude machete, it is a small one. Lots of private corporations do similar exercises to control spending - think of how troubled companies do across-the-board pay freezes or cancel all travel, often not distinguishing between top and bottom employees or value-added versus non-value added travel. Across the board approaches are a quick way to get cost containment. THEN, you go after the tough trade-offs.
John Boehner opposes any and all tax increases. If he is serious about cutting the deficit, he should be advocating for any-and-all budget reduction opportunities. By sound hysteria over relatively small budget cuts, he just looks like an idiot. The answer is machete AND scalpel.
Saturday, February 16, 2013
My Apologies to the Readers, Why the GOP is Failing, Worse Than Damn Lies on the Minimum Wage
Sorry I Missed You
There were many visitors to this space the night of the State of the Union. Most years, I cover the State of the Union, as I do all major American political events. It was simply personal circumstances beyond my control that caused me to miss the speech (which I was just finally able to watch, along with Marco Rubio's Republican response.)
I am continually humbled by the number of people that come here to learn a little bit more about our Republic and its politics. I am sorry to have missed you this State of the Union.
Where is the Optimism?
The Republican Party has been out in the wilderness for a little while now. They have been out of the White House for over 4 years now, have not controlled the Senate in over 6 years and have controlled the House for only 2 of the last 6 years.
This is hardly unprecedented in US politics. The Democrats were cast from the White House for all but 4 of the 20 years from 1973-1993, when a young Governor from Arkansas named Bill Clinton revitalized the Democratic center coalition.
Republicans were completely out of power in both Houses of Congress all the way from 1955 until the Reagan revolution coattails swept them into power in the Senate in 1981.
The Republican Party certainly has the capability to return to power. We are naturally a nation of economic conservatives (at least as compared to our first world allies) and while demographic shifts appear at the moment to be a huge headwind to the GOP, the growing Latino voter base is largely socially conservative and family-oriented, a seemingly natural constituency for the GOP.
But right now, the GOP isn't helping itself.
What Bill Clinton for the Democrats and Ronald Reagan for the Republicans had in common when they led their parties back from the wilderness was optimism. They had powerful, positive visions for the country and sold them with a smile.
Voters are drawn to optimists. They tell us about what is possible. They propose solutions to seemingly overwhelming problems that sound reasonable. They stoke our patriotism.
Pessimism doesn't sell. It implies a lack of faith in our nation. It promises a bleaker future. It isn't a product anyone wants to buy.
And herein lies the core problem for the GOP - a lack of optimism. From chattering heads to internet message boards to elected officials, the words coming out of the GOP imply that we are going to hell in a hand basket. This is a natural extension of very overheated rhetoric in both the 2008 and 2012 campaigns. The thinking goes - President Obama is a socialist or even a communist and we've been saying for years that if he got into office, he was going to wreck the country, so it must be true. I think Francois Hollande is laughing somewhere at the notion that the President is a socialist. We debate the difference between 35% and 39.6% marginal tax rates - the French impose top taxes of 75% when they get a "real" socialist in office.
The man or woman who can step forward and paint a truly optimistic vision for the country will emerge as the natural leader of the GOP. Based on the State of the Union response from Marco Rubio, which was a drab and uninspiring affair, I do not believe that man will be Marco Rubio, at least not yet. I'd look to the Governor's mansion, where you have people building that optimistic vision. Think Bobby Jindal, Chris Christie and Mitch Daniels. Pragmatic men who work hard to build better states. Leave the Tea Party and the wingnut survivalists behind and you have a path back to leadership.
Is the Wall Street Journal Ignorant or Dishonest?
I like the Wall Street Journal. While they have a clear conservative bent, they provide excellent reporting on the world of business and do strong investigative journalism into corporate wrongdoing.
So it is quite disappointing to me that they would publish a highly intellectually dishonest commentary on proposed minimum wage hikes entitled "The Minority Youth Unemployment Act". In the piece, the Journal argues that hiking the minimum wage would lead to fewer available minimum wage jobs, which would disproportionately impact young minorities.
It was once said that in the order of significant lies, there are lies, damn lies and statistics. Such is certainly the case with the Journal piece.
Firstly, they present a graph that shows minimum wage hikes and black youth unemployment and total you unemployment plotted on a timeline from 2007 to the present, with hikes in the minimum wage from 2007 to 2009 noted on the graph. The point the author attempts to make is that youth unemployment spiked from 2007 to 2009, correlated with the rise of the minimum wage from 2007 to 2009.
The chart is factual but wildly deceiving. Any first year statistics student knows that correlation does not imply causation. Murders and ice cream consumption spike at the same time every year, but no fool things ice cream causes murder, the thoughtful realize that both spike in the summer for different reasons. Certainly, the minimum wage went up during that time period (due to a bill supported and signed by President George W. Bush, incidentally), but there was also this little financial crisis that led to the Great Recession. Does anybody with connected brain cells not think that the financial crisis led to the spike in unemployment?
To punctuate that point, note that the author singles out just one set of minimum wage hikes and does not chart the countless other minimum wage hikes and corresponding unemployment rates. The hike from 3.80 to 4.25 in 1991? Unemployment crashed after that one on the heels of an economic recovery. The successive hikes from 4.25 to 4.75 and then 5.15 in 1996 and 1997? The economy recorded some of the lowest unemployment rates in history following those hikes.
Bottom line, cherry-picking only the data that support your point of view is the type of deception that should be reserved for political spin doctors, not publications that are ostensibly paragons of journalism.
The premise of the article, that higher minimum wages lead to employers refusing to hire workers also defies logic. As any first year business student knows, businesses exist to make money. They don't generally employ workers that are unnecessary. If a hotel needs 5 maids in order to clean all the rooms, they are going to hire 5 maids, whether the minimum wage is $7.15 or $9.00. They aren't going to hire 5 extra maids that they don't need if the minimum wage is lower. Likewise, they aren't going to hire 3 maids and simply not clean some of the rooms if the minimum wage is higher. They are going to hire the people that they need.
What is true is that if labor costs rise, those costs will be passed on to consumers in the form of higher prices for things that require minimum wage labor, such as hotel rooms and fast food meals. Companies still want to make their profit, so they simply mark up their items to maintain their profit margins. This essentially amounts to a tax on all of us to support slightly higher wages at the bottom rung.
This is a trade-off that we have been willing to make as a country since 1938, when the first minimum wage law went into effect.
The minimum wage is near historic lows at the moment. In real dollar terms, the minimum wage was $7.33 in 1950, slightly higher than today. In 1956, it was then hiked to the equivalent of $8.57 in today's dollars and continued to rise from there in real dollar terms, peaking at a real-dollar rate of $10.74 in 1968. It remained above $9/hour in real terms until 1981, when Ronald Reagan essentially put a freeze on minimum wage hikes, allowing it to fall in real terms (thanks to inflation) to under $6/hour in real terms before President George H.W. Bush signed a hike.
If higher minimum wages lead to higher unemployment and lower minimum wages lead to lower unemployment, unemployment should be near historic lows.
The Wall Street Journal article is dishonest and wrong. I would like to hope this was out of ignorance, but given the depth of experience on the Journal editorial board, I suspect it was deliberately deceptive.
If you like this site, tell your friends.
There were many visitors to this space the night of the State of the Union. Most years, I cover the State of the Union, as I do all major American political events. It was simply personal circumstances beyond my control that caused me to miss the speech (which I was just finally able to watch, along with Marco Rubio's Republican response.)
I am continually humbled by the number of people that come here to learn a little bit more about our Republic and its politics. I am sorry to have missed you this State of the Union.
Where is the Optimism?
The Republican Party has been out in the wilderness for a little while now. They have been out of the White House for over 4 years now, have not controlled the Senate in over 6 years and have controlled the House for only 2 of the last 6 years.
This is hardly unprecedented in US politics. The Democrats were cast from the White House for all but 4 of the 20 years from 1973-1993, when a young Governor from Arkansas named Bill Clinton revitalized the Democratic center coalition.
Republicans were completely out of power in both Houses of Congress all the way from 1955 until the Reagan revolution coattails swept them into power in the Senate in 1981.
The Republican Party certainly has the capability to return to power. We are naturally a nation of economic conservatives (at least as compared to our first world allies) and while demographic shifts appear at the moment to be a huge headwind to the GOP, the growing Latino voter base is largely socially conservative and family-oriented, a seemingly natural constituency for the GOP.
But right now, the GOP isn't helping itself.
What Bill Clinton for the Democrats and Ronald Reagan for the Republicans had in common when they led their parties back from the wilderness was optimism. They had powerful, positive visions for the country and sold them with a smile.
Voters are drawn to optimists. They tell us about what is possible. They propose solutions to seemingly overwhelming problems that sound reasonable. They stoke our patriotism.
Pessimism doesn't sell. It implies a lack of faith in our nation. It promises a bleaker future. It isn't a product anyone wants to buy.
And herein lies the core problem for the GOP - a lack of optimism. From chattering heads to internet message boards to elected officials, the words coming out of the GOP imply that we are going to hell in a hand basket. This is a natural extension of very overheated rhetoric in both the 2008 and 2012 campaigns. The thinking goes - President Obama is a socialist or even a communist and we've been saying for years that if he got into office, he was going to wreck the country, so it must be true. I think Francois Hollande is laughing somewhere at the notion that the President is a socialist. We debate the difference between 35% and 39.6% marginal tax rates - the French impose top taxes of 75% when they get a "real" socialist in office.
The man or woman who can step forward and paint a truly optimistic vision for the country will emerge as the natural leader of the GOP. Based on the State of the Union response from Marco Rubio, which was a drab and uninspiring affair, I do not believe that man will be Marco Rubio, at least not yet. I'd look to the Governor's mansion, where you have people building that optimistic vision. Think Bobby Jindal, Chris Christie and Mitch Daniels. Pragmatic men who work hard to build better states. Leave the Tea Party and the wingnut survivalists behind and you have a path back to leadership.
Is the Wall Street Journal Ignorant or Dishonest?
I like the Wall Street Journal. While they have a clear conservative bent, they provide excellent reporting on the world of business and do strong investigative journalism into corporate wrongdoing.
So it is quite disappointing to me that they would publish a highly intellectually dishonest commentary on proposed minimum wage hikes entitled "The Minority Youth Unemployment Act". In the piece, the Journal argues that hiking the minimum wage would lead to fewer available minimum wage jobs, which would disproportionately impact young minorities.
It was once said that in the order of significant lies, there are lies, damn lies and statistics. Such is certainly the case with the Journal piece.
Firstly, they present a graph that shows minimum wage hikes and black youth unemployment and total you unemployment plotted on a timeline from 2007 to the present, with hikes in the minimum wage from 2007 to 2009 noted on the graph. The point the author attempts to make is that youth unemployment spiked from 2007 to 2009, correlated with the rise of the minimum wage from 2007 to 2009.
The chart is factual but wildly deceiving. Any first year statistics student knows that correlation does not imply causation. Murders and ice cream consumption spike at the same time every year, but no fool things ice cream causes murder, the thoughtful realize that both spike in the summer for different reasons. Certainly, the minimum wage went up during that time period (due to a bill supported and signed by President George W. Bush, incidentally), but there was also this little financial crisis that led to the Great Recession. Does anybody with connected brain cells not think that the financial crisis led to the spike in unemployment?
To punctuate that point, note that the author singles out just one set of minimum wage hikes and does not chart the countless other minimum wage hikes and corresponding unemployment rates. The hike from 3.80 to 4.25 in 1991? Unemployment crashed after that one on the heels of an economic recovery. The successive hikes from 4.25 to 4.75 and then 5.15 in 1996 and 1997? The economy recorded some of the lowest unemployment rates in history following those hikes.
Bottom line, cherry-picking only the data that support your point of view is the type of deception that should be reserved for political spin doctors, not publications that are ostensibly paragons of journalism.
The premise of the article, that higher minimum wages lead to employers refusing to hire workers also defies logic. As any first year business student knows, businesses exist to make money. They don't generally employ workers that are unnecessary. If a hotel needs 5 maids in order to clean all the rooms, they are going to hire 5 maids, whether the minimum wage is $7.15 or $9.00. They aren't going to hire 5 extra maids that they don't need if the minimum wage is lower. Likewise, they aren't going to hire 3 maids and simply not clean some of the rooms if the minimum wage is higher. They are going to hire the people that they need.
What is true is that if labor costs rise, those costs will be passed on to consumers in the form of higher prices for things that require minimum wage labor, such as hotel rooms and fast food meals. Companies still want to make their profit, so they simply mark up their items to maintain their profit margins. This essentially amounts to a tax on all of us to support slightly higher wages at the bottom rung.
This is a trade-off that we have been willing to make as a country since 1938, when the first minimum wage law went into effect.
The minimum wage is near historic lows at the moment. In real dollar terms, the minimum wage was $7.33 in 1950, slightly higher than today. In 1956, it was then hiked to the equivalent of $8.57 in today's dollars and continued to rise from there in real dollar terms, peaking at a real-dollar rate of $10.74 in 1968. It remained above $9/hour in real terms until 1981, when Ronald Reagan essentially put a freeze on minimum wage hikes, allowing it to fall in real terms (thanks to inflation) to under $6/hour in real terms before President George H.W. Bush signed a hike.
If higher minimum wages lead to higher unemployment and lower minimum wages lead to lower unemployment, unemployment should be near historic lows.
The Wall Street Journal article is dishonest and wrong. I would like to hope this was out of ignorance, but given the depth of experience on the Journal editorial board, I suspect it was deliberately deceptive.
If you like this site, tell your friends.
Sunday, February 3, 2013
The Q4 GDP: Conservative Economics in Action, On To The Budget Battles
A Very Economically Conservative Quarter
The headline was scary - the US Gross Domestic Product contracted by 0.1% in the fourth quarter of 2012. While this is just ever so slightly below the zero line, we are technically halfway to a new recession (traditionally defined as two consecutive quarters of contraction, although, in modern times, more complex definitions have been used) after what has been a less than stellar recovery from the last deep recession.
The recession more or less started in the first quarter of 2008 and lasted for 18 months. During that time period, the size of our economy contracted by 4.6%. This may not sound like a ton, but bear in mind that under "normal" circumstances, the economy needs to grow by 1% just to keep up with population growth and that contraction of the economy disproportionately impacts working class workers in industries like manufacturing, construction and retail and entertainment services, as belts tighten.
During the 18 month recession, unemployment skyrocketed from 5.0% to 9.5% (it would eventually peak after the end of the recession, in October 2009 at 10.0% - it is normal for unemployment to peak slightly after the recession ends, as companies don't start hiring until several months after business picks up) and 7.5 million jobs were lost, meaning that that the actual percentage of people working dropped even more than the official unemployment rate would tell.
Since then, the recovery has been painfully slow, against the norm for recessions (although, many would argue, not for recessions born of deep financial crises) and against the predictions of many, including myself, who expected a more "V-shaped" recovery. Average growth in the 3+ years since the recession ended has only been 2.3%, which would be okay if the starting point was a healthy economy, but nowhere near sufficient to relieve the pain caused by the recession. Unemployment has fallen to 7.9%, lower than the peak certainly, but way above pre-recession levels. There are STILL 3.2 million less jobs now than when the recession started 5 years ago. And it wasn't until the fourth quarter of last year that the GDP surpassed its pre-recession level.
This gap would make the fourth quarter GDP contraction very troubling. But, looking at the internals, things aren't as bad as they appear on the surface. This quarter is actually a positive argument for economic conservatism and austerity, if you look under the covers.
You see, while the overall GDP contracted by 0.1%, private sector GDP rose by 2.6%, while government expenditures at all levels fell by 2.7%. In other words, the private sector is in recovery, as evidenced by rising corporate earnings and corresponding rising stock prices. It is government that is shrinking. Most of the reduction is coming at the state and local level, as governments are forced to balance their budgets and (with California as a big exception) are largely turning to reducing government spending as opposed to raising taxes to make ends meet. There has also been some reduction of federal expenditures and some modest cuts from prior budget deals take effect and we lap the tail end of the stimulus spending.
So why is this a good thing? Employment in the quarter is actually the strongest it has been in a long time. You see, while the overall economy contracted, just over 600,000 net jobs were added in the quarter, even more than that in the private sector. In other words, at least for this quarter, the reduction in government spending did not have a dampening effect on the thing that matters most to the average person - available jobs. Private sector hiring more than made up for public sector austerity.
This model seems destined to play out to some degree on the federal level as well. Sequestration cuts take effect automatically on March 1st and the Republicans have been pretty clear that while they would like to replace the defense cuts, they have no interest in punting on the amount of the overall cuts. Good for them - I hope they stick to their guns. We have to solve the budget deficit one way or another and while we can argue the balance between tax hikes and spending cuts, doing something is better than doing nothing.
Also in play is the federal budget - the current continuing resolution lapses March 27th, which means that if Congress does not pass some sort of budgetary measure to fund the government, the government will shut down on that date. Republicans, having had to give ground on the tax cut debate, since tax rates were slated to go up automatically, are not in a giving mood on the budget. They, after all, hold the cards this time around - no budget can pass without the consent of the Republican-majority House.
With the debt-ceiling discussion wisely out of the way (sanity did prevail, as I'd hoped, on that topic, with the GOP agreeing to suspend the debt ceiling at least until mid-May, long after the budget battles), federal spending will be front-and-center in Washington.
These debates will play out over the next 1 to 2 months.
Rebuilding a Second-Term Cabinet
President Obama has some work to do. Much of his first-term cabinet has left or is leaving. Let's review the status of the key cabinet-level department head positions:
State Department
Hillary Clinton, as we all know, has moved on. This is one that the President doesn't have to worry about as former Senator John Kerry has already taken the top job at state, confirmed easily by a 94-3 vote in the Senate. He took office February 1st.
Treasury
Tim Geithner has already departed, officially resigning January 25th. President Obama has nominated Jack Lew as his replacement. Lew have his hearing in the Senate, but is widely expected to be confirmed, although he has generated some controversy.
Defense
Leon Panetta, President Obama's second Defense Secretary (his first, Robert Gates, was a keeper from the Bush Administration) is still in office but has asked to leave as soon as a successor can be confirmed. Chuck Hagel just had his grilling this week before the Senate. The majority of Republicans are expected to vote no for their dovish fellow Republican, but most expected that all 55 Democrats and Independents will vote for Hagel and that few enough Republicans will want a filibuster fight that he will ultimately be confirmed.
Attorney General
Eric Holder is staying, at least for now.
Interior
Ken Salazar has announced his desire to leave office in March. President Obama has yet to nominate a successor.
Agriculture
Tom Vilsack has not announced his second term plans, but appears to be staying, at least for the time-being.
Commerce
This has been the most difficult cabinet position for President Obama. Gary Locke, Obama's third nominee in his first term, finally took office in March of 2009, but stayed only 2 and a half years, basically competing the census and then departing. Obama's second Commerce Secretary, John Bryson, lasted a mere 8 months, resigning after a bizarre incident involving a hit-and-run car accident and a stroke. For the past 8 months, Rebecca Blank has been acting Commerce Secretary, awaiting an appointment and confirmation. President Obama has yet to nominate a new Commerce Secretary.
Labor
Hilda Solis has already left office on January 22nd, leaving the post open. President Obama has yet to name a replacement and most of his top picks from the world of labor are sure to generate controversy from Republicans.
Health and Human Services
Kathleen Sebelius appears to be staying, at least for now.
Housing and Urban Development
Shaun Donovan appears to be staying, at least for now.
Transportation
Ray Lahood is still in office but has announced his intention to leave when a successor can be confirmed. President Obama has yet to name a successor.
Energy
Stephen Chu just announced this week that he will also be stepping down. President Obama has yet to name a successor.
Education
Arne Duncan appears to be staying, at least for now.
Veterans Affairs
Eric Shinseki appears to be staying, at least for now.
Homeland Security
Janet Napolitano appears to be staying, at least for now.
So, to wrap it all up, of the 15 federal departments (I'm excluding "cabinet-level" positions that do not run a federal department) here is where President Obama stands:
Staying on from First Term: 7 (Justice, Agriculture, Health & Human Services, Housing & Urban Development, Education, Veterans Affairs and Homeland Security)
Nominee Already Confirmed: 1 (State)
Nomination Made But Not Yet Confirmed: 2 (Defense, Treasury)
Nominee Yet-To-Be-Named: 5 (Interior, Commerce, Labor, Transportation, Energy)
Clearly, the President has some work to do to rebuild his team. This is doubly important given the significant budgetary changes to these departments likely to come down the pike with both sequestration and the continuing resolution battle in March. Having interim leaders is not the best way to go ever, but is particularly bad when there are big changes coming.
Expect a flurry of nominations in the next few weeks as well as a lot of hearings and votes on nominees. The President has named his most critical team (generally State, Defense, Treasury and Attorney General are considered the most critical positions in the cabinet), but there is much work left to do on the rest of the team.
If you like this site, tell your friends.
The headline was scary - the US Gross Domestic Product contracted by 0.1% in the fourth quarter of 2012. While this is just ever so slightly below the zero line, we are technically halfway to a new recession (traditionally defined as two consecutive quarters of contraction, although, in modern times, more complex definitions have been used) after what has been a less than stellar recovery from the last deep recession.
The recession more or less started in the first quarter of 2008 and lasted for 18 months. During that time period, the size of our economy contracted by 4.6%. This may not sound like a ton, but bear in mind that under "normal" circumstances, the economy needs to grow by 1% just to keep up with population growth and that contraction of the economy disproportionately impacts working class workers in industries like manufacturing, construction and retail and entertainment services, as belts tighten.
During the 18 month recession, unemployment skyrocketed from 5.0% to 9.5% (it would eventually peak after the end of the recession, in October 2009 at 10.0% - it is normal for unemployment to peak slightly after the recession ends, as companies don't start hiring until several months after business picks up) and 7.5 million jobs were lost, meaning that that the actual percentage of people working dropped even more than the official unemployment rate would tell.
Since then, the recovery has been painfully slow, against the norm for recessions (although, many would argue, not for recessions born of deep financial crises) and against the predictions of many, including myself, who expected a more "V-shaped" recovery. Average growth in the 3+ years since the recession ended has only been 2.3%, which would be okay if the starting point was a healthy economy, but nowhere near sufficient to relieve the pain caused by the recession. Unemployment has fallen to 7.9%, lower than the peak certainly, but way above pre-recession levels. There are STILL 3.2 million less jobs now than when the recession started 5 years ago. And it wasn't until the fourth quarter of last year that the GDP surpassed its pre-recession level.
This gap would make the fourth quarter GDP contraction very troubling. But, looking at the internals, things aren't as bad as they appear on the surface. This quarter is actually a positive argument for economic conservatism and austerity, if you look under the covers.
You see, while the overall GDP contracted by 0.1%, private sector GDP rose by 2.6%, while government expenditures at all levels fell by 2.7%. In other words, the private sector is in recovery, as evidenced by rising corporate earnings and corresponding rising stock prices. It is government that is shrinking. Most of the reduction is coming at the state and local level, as governments are forced to balance their budgets and (with California as a big exception) are largely turning to reducing government spending as opposed to raising taxes to make ends meet. There has also been some reduction of federal expenditures and some modest cuts from prior budget deals take effect and we lap the tail end of the stimulus spending.
So why is this a good thing? Employment in the quarter is actually the strongest it has been in a long time. You see, while the overall economy contracted, just over 600,000 net jobs were added in the quarter, even more than that in the private sector. In other words, at least for this quarter, the reduction in government spending did not have a dampening effect on the thing that matters most to the average person - available jobs. Private sector hiring more than made up for public sector austerity.
This model seems destined to play out to some degree on the federal level as well. Sequestration cuts take effect automatically on March 1st and the Republicans have been pretty clear that while they would like to replace the defense cuts, they have no interest in punting on the amount of the overall cuts. Good for them - I hope they stick to their guns. We have to solve the budget deficit one way or another and while we can argue the balance between tax hikes and spending cuts, doing something is better than doing nothing.
Also in play is the federal budget - the current continuing resolution lapses March 27th, which means that if Congress does not pass some sort of budgetary measure to fund the government, the government will shut down on that date. Republicans, having had to give ground on the tax cut debate, since tax rates were slated to go up automatically, are not in a giving mood on the budget. They, after all, hold the cards this time around - no budget can pass without the consent of the Republican-majority House.
With the debt-ceiling discussion wisely out of the way (sanity did prevail, as I'd hoped, on that topic, with the GOP agreeing to suspend the debt ceiling at least until mid-May, long after the budget battles), federal spending will be front-and-center in Washington.
These debates will play out over the next 1 to 2 months.
Rebuilding a Second-Term Cabinet
President Obama has some work to do. Much of his first-term cabinet has left or is leaving. Let's review the status of the key cabinet-level department head positions:
State Department
Hillary Clinton, as we all know, has moved on. This is one that the President doesn't have to worry about as former Senator John Kerry has already taken the top job at state, confirmed easily by a 94-3 vote in the Senate. He took office February 1st.
Treasury
Tim Geithner has already departed, officially resigning January 25th. President Obama has nominated Jack Lew as his replacement. Lew have his hearing in the Senate, but is widely expected to be confirmed, although he has generated some controversy.
Defense
Leon Panetta, President Obama's second Defense Secretary (his first, Robert Gates, was a keeper from the Bush Administration) is still in office but has asked to leave as soon as a successor can be confirmed. Chuck Hagel just had his grilling this week before the Senate. The majority of Republicans are expected to vote no for their dovish fellow Republican, but most expected that all 55 Democrats and Independents will vote for Hagel and that few enough Republicans will want a filibuster fight that he will ultimately be confirmed.
Attorney General
Eric Holder is staying, at least for now.
Interior
Ken Salazar has announced his desire to leave office in March. President Obama has yet to nominate a successor.
Agriculture
Tom Vilsack has not announced his second term plans, but appears to be staying, at least for the time-being.
Commerce
This has been the most difficult cabinet position for President Obama. Gary Locke, Obama's third nominee in his first term, finally took office in March of 2009, but stayed only 2 and a half years, basically competing the census and then departing. Obama's second Commerce Secretary, John Bryson, lasted a mere 8 months, resigning after a bizarre incident involving a hit-and-run car accident and a stroke. For the past 8 months, Rebecca Blank has been acting Commerce Secretary, awaiting an appointment and confirmation. President Obama has yet to nominate a new Commerce Secretary.
Labor
Hilda Solis has already left office on January 22nd, leaving the post open. President Obama has yet to name a replacement and most of his top picks from the world of labor are sure to generate controversy from Republicans.
Health and Human Services
Kathleen Sebelius appears to be staying, at least for now.
Housing and Urban Development
Shaun Donovan appears to be staying, at least for now.
Transportation
Ray Lahood is still in office but has announced his intention to leave when a successor can be confirmed. President Obama has yet to name a successor.
Energy
Stephen Chu just announced this week that he will also be stepping down. President Obama has yet to name a successor.
Education
Arne Duncan appears to be staying, at least for now.
Veterans Affairs
Eric Shinseki appears to be staying, at least for now.
Homeland Security
Janet Napolitano appears to be staying, at least for now.
So, to wrap it all up, of the 15 federal departments (I'm excluding "cabinet-level" positions that do not run a federal department) here is where President Obama stands:
Staying on from First Term: 7 (Justice, Agriculture, Health & Human Services, Housing & Urban Development, Education, Veterans Affairs and Homeland Security)
Nominee Already Confirmed: 1 (State)
Nomination Made But Not Yet Confirmed: 2 (Defense, Treasury)
Nominee Yet-To-Be-Named: 5 (Interior, Commerce, Labor, Transportation, Energy)
Clearly, the President has some work to do to rebuild his team. This is doubly important given the significant budgetary changes to these departments likely to come down the pike with both sequestration and the continuing resolution battle in March. Having interim leaders is not the best way to go ever, but is particularly bad when there are big changes coming.
Expect a flurry of nominations in the next few weeks as well as a lot of hearings and votes on nominees. The President has named his most critical team (generally State, Defense, Treasury and Attorney General are considered the most critical positions in the cabinet), but there is much work left to do on the rest of the team.
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