The Republican party is torn between two factions at the moment. The first, the traditional mainstream wing of the party, which seeks generally to implement conservative, free-market solutions to major problems and shrink the size and scope of government but recognizes that there is room for accomplishing these legislative goals through compromise and that their survival relies on the public viewing their work as somewhat functional. This wing is led by the GOP's old guard, principally its Senate members. John McCain is certainly a member of this wing. I suspect John Boehner is a member of this wing as well, although he is navigating a minefield with a GOP House that is not mostly of this wing.
The hard-right members that dominate the GOP House caucus now have an entirely different agenda - win on every issue at every time at all costs. If the goal is to defund Obamacare, there is no government agency that they won't shut down, no debt that they won't default on and no measure of loss to their party that is too great in the pursuit of their goal.
So, here we sit again, on the brink of shutting down the government (October 1st) and potentially defaulting on our debt (sometime in late October, although that date could conceivably push later if the government shuts down, since expenditures will fall quickly.)
All of this poses a number of key questions about the GOP strategy. I'm not sure how many of these are real and how many are rhetorical, but I'll give it a try:
(1) If Obamacare will be so bad, why not let it happen?
The world won't end if our health insurance system is ineffective for a year. If Obamacare is the wrecking ball of a disaster that the GOP claims it will be, then the public outrage calling for its repeal will be impossible to ignore, even for Democrats. It will quickly be repealed, replaced, modified, etc. The goal will be accomplished.
But that's not what the GOP thinks. Ted Cruz thinks that if it isn't stopped prior to implementation - he has stated that once the subsidies start, they will be impossible to stop, with an American public addicted to the drug of free money from the government.
This is idiotic on multiple levels. First of all, it is estimated that only between 4% and 6% of Americans will get the subsidies. That is because most will continue to receive health care from their employers and those on Medicare and Medicaid (the second largest chunk of the population) will continue to receive benefits as before.
Second, it is a pretty direct insult to the intelligence of the American electorate. We are so stupid that we will never oppose an entitlement, even a bad one? Besides being elitist, it is historically false - welfare reform in the 1990s is a prototype for reforming entitlements. So was raising the Social Security age by 2 years.
Could the real fear be that people will either ultimately like the program or at worst feel neutrally about it?
(2) Do they really think they will win?
I grant you, the President has shown extreme ineptitude at negotiating these sorts of situations in the past. But does anyone honestly think he will agree to a defunding or a delay of his signature legislative accomplishment? Particularly when Republicans are poised to be blamed for all the ill effects of a government shutdown or a default?
So if this isn't about winning, what is it about? Why drive massive uncertainty into our economy over a battle that you will lose?
(3) How can they possibly think this is good strategy?
The GOP is sitting pretty for 2014 at the moment. President Obama has an approve-disapprove in the -10 to -12 range, which would historically imply a very poor showing for his party in the mid-terms. Republicans should be plotting their strategy to pad their House majority and to retake the Senate, both very achievable goals against this backdrop.
Instead, the GOP risks alienating the swing voters likely to vote for them out of disapproval of the President. They risk, once again, giving the Senate away to the Democrats, which makes their positioning harder.
They should be thinking about how to control the House, the Senate and the White House in 2016. Then they can repeal Obamacare without worry about causes defaults or shutdowns. Instead, they seem intent on losing ground.
There is plenty to criticize about the President's handling of matters budgetary. But House Republicans take the cake by a wide margin for irresponsibility.
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Showing posts with label John Boehner. Show all posts
Showing posts with label John Boehner. Show all posts
Sunday, September 22, 2013
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, January 5, 2013
Our Elected Leaders Punt Yet Again On Real Deficit Reduction, Boehner Narrowly Holds On To Speaker Job, Christie Goes Ballistic
The Fiscal Cliff Deal Isn't Much of a Deal at All
I guess there are things that all sides can claim victory in the fiscal cliff "deal" that was negotiated early in the new year, which was primarily a by-product of discussions between Vice President Joe Biden and Senate Minority Leader Mitch McConnell.
For Republicans, they can feel good that for 99.2% of Americans, the tax cuts that President Bush pushed for in 2001 and 2003, that the vast majority of Democrats and even some Republicans opposed at the time, have no become a permanent reality. They are law forever. They can also feel good that the military cuts that were part of the sequestration deal last year are now put off, albeit for only two months. They can also feel good that they will get another bite at the spending apple in short order with the pending fights over the second half Fiscal 2013 budget and the debt ceiling coming up directly.
For Democrats, they can feel good that they successfully raised taxes on the wealthiest 1% (actually the wealthiest 0.8%, to be precise, but you get the point), that they averted the fiscal cliff cuts for domestic programs, albeit for only two weeks, that unemployment insurance was extended for another year, that renewable energy tax credits were extended for another year and that they really didn't have to agree to any spending cuts to get the deal done.
As for me, I don't feel particularly good about any of this.
Let's introduce a reality into the equation. The deficit last year was $1.128 trillion. We took in $2.435 trillion in taxes, 46% from individual income taxes, 35% from Social Security and Medicare Taxes, 10% from Corporate Taxes and 9% from the miscellaneous set of other federal taxes that the government collects, such as excise taxes on gasoline, cigarettes, alcohol, permitting costs, etc. We spent $3.563 trillion, 45% on Social Security and Medicare/Medicaid, 23% of Defense and Military expenses, 10% on unemployment and other income security measures (such as subsidized school lunches), 6% on interest on the national debt and 16% on everything else.
So what did the fiscal cliff "deal" do? It allowed the temporary payroll tax reduction on Social Security to lapse, which effectively boosts Social Security payroll tax income by 19%, since the total tax (including both employer and employee) rises from 10.4% to 12.4%. This raises about $120B per year in additional revenue, versus the last two years.
The cliff deal also raised income taxes from 35% to 39.6% for individuals making over $400K and married couples making over $450K and raises capital gains and dividend taxes on those individuals from 15% to 20%, as well as capping deductions on those over $200K/$250K. Collectively, this raises about $60B per year in additional revenue.
So, all else being equal (and it is obviously not because not everything else is static, but everything else is pretty well in balance), we took a $1.128 trillion deficit and solved 16% of it. On the 2012 basis, this woud give us about $2.615 trillion in revenue, not quite enough money to fund Social Security, Medicare/Medicaid, Defense and interest on the debt, if you cancelled every single other government program (no FAA, no SEC, no EPA, no FDA, no USDA, no OSHA, no federal court system, no power at the White House, etc.)
In other words, this was a totally and grossly insufficient bill to solve the structural problem that we had.
It amazes me that Democrats now accept 99.2% of the Bush tax cuts that they once opposed, and that we have never been able to afford. It also amazes me that they reject out of hand even the most modest GOP proposals to rain in entitlement spending, such as shifting the chained CPI for Social Security increases, which would save a ton of money over time and make the system much more stable while having only a gradual effect on today's seniors.
It also astonishes me that the GOP continue to fight for low taxes without a serious, specific proposal on how they would cut spending. Since today's revenues don't even cover Defense, Entitlements and Interest and they want even lower revenues than today, to be credible to me, they would need to present a budget that makes deep, deep cuts in Defense and Entitlements to even get close to balance. They have not, as of yet and, in fact, most have strongly opposed defense cuts, while skirting the issue of entitlements.
Let's not forget also the underlying dynamics that make the future budget reality worse. The population is getting older and health care costs are still rising (albeit the rate of health care inflation has slowed from the pace of the past decade) so entitlement costs will rise faster than revenues. Interest rates are at 200 year historic lows, meaning that it is highly probable that interest rates and therefore interest expense will rise in the future, especially with a rising federal debt. There are some positives - unemployment insurance costs are likely to drop as the economy improves along with some other social programs and the wind-down in Afghanistan will save some on the military budget. But in balance, the trajectory is towards a worse budgetary situation, not a better one.
Both parties to date are taking unserious positions. There are only four levers to manage our current situation:
(1) Raise Taxes of Some Form in Meaningful, Broad Way
You can't tax the 1% and get us into balance. To make a meaningful impact on the deficit, you would need to raise taxes on the majority of the population in some form, either in the form of higher income tax rates, higher payroll taxes or a national sales or VAT tax.
(2) Structural Reforms to Entitlements
Higher participation ages, lower benefits, etc. You have to "bend the curve" on entitlement spending.
(3) Meaningful Cuts to Defense
We spend 5 times the next nearest country (China) on our military. Would we be unsafe at 3 times their spending?
(4) Default in Some Way Shape or Form
This is a nuclear option that would cause a depression. There are two ways to do this - either simply don't pay the bills which would be an utter disaster to financial markets that would immediately spark a deep financial and economic crisis or print money to pay the bills (i.e. have the fed buy up and forgive treasury debt), which would likely spark hyper-inflation. Neither of those options is at all appealing, even compared to 1-3.
My other disappointment (or maybe I should be happy, since I didn't love the deal) with the cliff deal is that it doesn't really solve anything. The federal budget still expires March 1st, so there is another, immediate fight over spending. Sequestration cuts still hit March 1st also. And, approximately the end of February, the federal government won't be able to pay its bills unless congress increases the debt ceiling. In other words, get ready for more melodrama, stern rhetoric and down-to-the-wire posturing that solves nothing before another 11th or 12th hour deal that doesn't do nearly enough.
My final disappointment is in President Obama's inability to lead or paint a vision. He wasn't even a participant in most of the talks that cut the deal. He has painted no clear vision for how we get where we need to go with the budget and seems to have no sense of urgency about reducing the deficit. Joe Biden showed far more leadership that the President in this case, and even Biden's leadership was just to cut a deal in the end, not to really solve the problem.
Prepare to be disappointed again in the coming year.
Boehner Holds On With 2 Votes to Spare
John Boehner will be the House Speaker for the next two years, after successfully beating back dissent from about 8% of his caucus. While there was no Republican actively running against Boehner, a cast of 17 Republicans (excluding Boehner, who did not vote, as is tradition) either cast protest votes, voted "present" or did not vote. Some were clear protest votes, for the likes of Alan West (who isn't in the House any more as he lost re-election) and Colin Powell (who has never been in the House), some were semi-serious votes, including 3 for Majority Leader Eric Cantor, who many of the far right view as more sympathetic to their cause than the pragmatic Boehner. Boehner needed an outright majority in order to not force a second ballot on the issue, which required 218 votes. The 220 he received was sufficient - barely, to keep him with the Speaker's gavel for the next two years.
All of this supports what I have long said about Boehner - he is a conservative but not a wing nut as many think. He is hemmed in by a caucus that is well outside the mainstream. The fact that he almost lost his Speakership simply for supporting the deal he did speaks volumes about where the right-wing in the House sits. Heck, a significant number of House Republicans even opposed the Hurricane Sandy aid package that was finally passed on Friday (more on that in a second.)
My advice to Boehner? You know you are never going to be the darling of the right wing, so take your re-election as an opportunity to try to go solve the problems. The hard-liners will hate it, but they already don't support you. So cement your legacy and get something done.
Chris Christie Lets Loose on the House GOP
The fiscal cliff deal on January 2nd was the last thing the outgoing House of Representatives did before disbanding to make way for the new House, which was sworn in yesterday. This greatly upset lawmakers from New York and New Jersey, who had been hoping for and believed they had secured agreement for aid for the battered coastal areas impacted by Hurricane Sandy.
Why the House didn't take the issue up before disbanding is inexplicable to me. Perhaps John Boehner couldn't swallow asking his conservative members to vote on a spending package right on the heels of a painful vote on the fiscal cliff. But, come on, when did relief for people made homeless by a hurricane become a partisan issue?
Christie was specific, and named names in his criticism, stating:
"There is only one group to blame for the continued suffering of these innocent victims, the House majority and their speaker, John Boehner."
Boehner scrambled to pull a vote together on the bill, with an initial aid package rapidly set for a vote yesterday and the balance to be voted on January 15th. The initial package passed the House 354-67, with all 67 "no" votes coming from Republicans. It is shocking to me that there were 67 members of the new House majority willing to vote no on this bill. The bill passed the Senate, which always seems much more reasonable an bi-partisan, without a single "no" vote.
The initial aid package contained only $9B, the bigger $51B package is to come in the January 15th vote. Could that package be in serious jeopardy, given the delay and vote on the first bill? If it is, it would be utter political suicide for the House GOP. Nothing makes you look like a wing nut like pushing hard to keep tax cuts on capital gains for people making millions of dollars and then opposing federal funds to help people made homeless by a hurricane.
If you like this site, tell your friends.
I guess there are things that all sides can claim victory in the fiscal cliff "deal" that was negotiated early in the new year, which was primarily a by-product of discussions between Vice President Joe Biden and Senate Minority Leader Mitch McConnell.
For Republicans, they can feel good that for 99.2% of Americans, the tax cuts that President Bush pushed for in 2001 and 2003, that the vast majority of Democrats and even some Republicans opposed at the time, have no become a permanent reality. They are law forever. They can also feel good that the military cuts that were part of the sequestration deal last year are now put off, albeit for only two months. They can also feel good that they will get another bite at the spending apple in short order with the pending fights over the second half Fiscal 2013 budget and the debt ceiling coming up directly.
For Democrats, they can feel good that they successfully raised taxes on the wealthiest 1% (actually the wealthiest 0.8%, to be precise, but you get the point), that they averted the fiscal cliff cuts for domestic programs, albeit for only two weeks, that unemployment insurance was extended for another year, that renewable energy tax credits were extended for another year and that they really didn't have to agree to any spending cuts to get the deal done.
As for me, I don't feel particularly good about any of this.
Let's introduce a reality into the equation. The deficit last year was $1.128 trillion. We took in $2.435 trillion in taxes, 46% from individual income taxes, 35% from Social Security and Medicare Taxes, 10% from Corporate Taxes and 9% from the miscellaneous set of other federal taxes that the government collects, such as excise taxes on gasoline, cigarettes, alcohol, permitting costs, etc. We spent $3.563 trillion, 45% on Social Security and Medicare/Medicaid, 23% of Defense and Military expenses, 10% on unemployment and other income security measures (such as subsidized school lunches), 6% on interest on the national debt and 16% on everything else.
So what did the fiscal cliff "deal" do? It allowed the temporary payroll tax reduction on Social Security to lapse, which effectively boosts Social Security payroll tax income by 19%, since the total tax (including both employer and employee) rises from 10.4% to 12.4%. This raises about $120B per year in additional revenue, versus the last two years.
The cliff deal also raised income taxes from 35% to 39.6% for individuals making over $400K and married couples making over $450K and raises capital gains and dividend taxes on those individuals from 15% to 20%, as well as capping deductions on those over $200K/$250K. Collectively, this raises about $60B per year in additional revenue.
So, all else being equal (and it is obviously not because not everything else is static, but everything else is pretty well in balance), we took a $1.128 trillion deficit and solved 16% of it. On the 2012 basis, this woud give us about $2.615 trillion in revenue, not quite enough money to fund Social Security, Medicare/Medicaid, Defense and interest on the debt, if you cancelled every single other government program (no FAA, no SEC, no EPA, no FDA, no USDA, no OSHA, no federal court system, no power at the White House, etc.)
In other words, this was a totally and grossly insufficient bill to solve the structural problem that we had.
It amazes me that Democrats now accept 99.2% of the Bush tax cuts that they once opposed, and that we have never been able to afford. It also amazes me that they reject out of hand even the most modest GOP proposals to rain in entitlement spending, such as shifting the chained CPI for Social Security increases, which would save a ton of money over time and make the system much more stable while having only a gradual effect on today's seniors.
It also astonishes me that the GOP continue to fight for low taxes without a serious, specific proposal on how they would cut spending. Since today's revenues don't even cover Defense, Entitlements and Interest and they want even lower revenues than today, to be credible to me, they would need to present a budget that makes deep, deep cuts in Defense and Entitlements to even get close to balance. They have not, as of yet and, in fact, most have strongly opposed defense cuts, while skirting the issue of entitlements.
Let's not forget also the underlying dynamics that make the future budget reality worse. The population is getting older and health care costs are still rising (albeit the rate of health care inflation has slowed from the pace of the past decade) so entitlement costs will rise faster than revenues. Interest rates are at 200 year historic lows, meaning that it is highly probable that interest rates and therefore interest expense will rise in the future, especially with a rising federal debt. There are some positives - unemployment insurance costs are likely to drop as the economy improves along with some other social programs and the wind-down in Afghanistan will save some on the military budget. But in balance, the trajectory is towards a worse budgetary situation, not a better one.
Both parties to date are taking unserious positions. There are only four levers to manage our current situation:
(1) Raise Taxes of Some Form in Meaningful, Broad Way
You can't tax the 1% and get us into balance. To make a meaningful impact on the deficit, you would need to raise taxes on the majority of the population in some form, either in the form of higher income tax rates, higher payroll taxes or a national sales or VAT tax.
(2) Structural Reforms to Entitlements
Higher participation ages, lower benefits, etc. You have to "bend the curve" on entitlement spending.
(3) Meaningful Cuts to Defense
We spend 5 times the next nearest country (China) on our military. Would we be unsafe at 3 times their spending?
(4) Default in Some Way Shape or Form
This is a nuclear option that would cause a depression. There are two ways to do this - either simply don't pay the bills which would be an utter disaster to financial markets that would immediately spark a deep financial and economic crisis or print money to pay the bills (i.e. have the fed buy up and forgive treasury debt), which would likely spark hyper-inflation. Neither of those options is at all appealing, even compared to 1-3.
My other disappointment (or maybe I should be happy, since I didn't love the deal) with the cliff deal is that it doesn't really solve anything. The federal budget still expires March 1st, so there is another, immediate fight over spending. Sequestration cuts still hit March 1st also. And, approximately the end of February, the federal government won't be able to pay its bills unless congress increases the debt ceiling. In other words, get ready for more melodrama, stern rhetoric and down-to-the-wire posturing that solves nothing before another 11th or 12th hour deal that doesn't do nearly enough.
My final disappointment is in President Obama's inability to lead or paint a vision. He wasn't even a participant in most of the talks that cut the deal. He has painted no clear vision for how we get where we need to go with the budget and seems to have no sense of urgency about reducing the deficit. Joe Biden showed far more leadership that the President in this case, and even Biden's leadership was just to cut a deal in the end, not to really solve the problem.
Prepare to be disappointed again in the coming year.
Boehner Holds On With 2 Votes to Spare
John Boehner will be the House Speaker for the next two years, after successfully beating back dissent from about 8% of his caucus. While there was no Republican actively running against Boehner, a cast of 17 Republicans (excluding Boehner, who did not vote, as is tradition) either cast protest votes, voted "present" or did not vote. Some were clear protest votes, for the likes of Alan West (who isn't in the House any more as he lost re-election) and Colin Powell (who has never been in the House), some were semi-serious votes, including 3 for Majority Leader Eric Cantor, who many of the far right view as more sympathetic to their cause than the pragmatic Boehner. Boehner needed an outright majority in order to not force a second ballot on the issue, which required 218 votes. The 220 he received was sufficient - barely, to keep him with the Speaker's gavel for the next two years.
All of this supports what I have long said about Boehner - he is a conservative but not a wing nut as many think. He is hemmed in by a caucus that is well outside the mainstream. The fact that he almost lost his Speakership simply for supporting the deal he did speaks volumes about where the right-wing in the House sits. Heck, a significant number of House Republicans even opposed the Hurricane Sandy aid package that was finally passed on Friday (more on that in a second.)
My advice to Boehner? You know you are never going to be the darling of the right wing, so take your re-election as an opportunity to try to go solve the problems. The hard-liners will hate it, but they already don't support you. So cement your legacy and get something done.
Chris Christie Lets Loose on the House GOP
The fiscal cliff deal on January 2nd was the last thing the outgoing House of Representatives did before disbanding to make way for the new House, which was sworn in yesterday. This greatly upset lawmakers from New York and New Jersey, who had been hoping for and believed they had secured agreement for aid for the battered coastal areas impacted by Hurricane Sandy.
Why the House didn't take the issue up before disbanding is inexplicable to me. Perhaps John Boehner couldn't swallow asking his conservative members to vote on a spending package right on the heels of a painful vote on the fiscal cliff. But, come on, when did relief for people made homeless by a hurricane become a partisan issue?
Christie was specific, and named names in his criticism, stating:
"There is only one group to blame for the continued suffering of these innocent victims, the House majority and their speaker, John Boehner."
Boehner scrambled to pull a vote together on the bill, with an initial aid package rapidly set for a vote yesterday and the balance to be voted on January 15th. The initial package passed the House 354-67, with all 67 "no" votes coming from Republicans. It is shocking to me that there were 67 members of the new House majority willing to vote no on this bill. The bill passed the Senate, which always seems much more reasonable an bi-partisan, without a single "no" vote.
The initial aid package contained only $9B, the bigger $51B package is to come in the January 15th vote. Could that package be in serious jeopardy, given the delay and vote on the first bill? If it is, it would be utter political suicide for the House GOP. Nothing makes you look like a wing nut like pushing hard to keep tax cuts on capital gains for people making millions of dollars and then opposing federal funds to help people made homeless by a hurricane.
If you like this site, tell your friends.
Friday, December 21, 2012
The GOP is Playing a Very Bad Game of Chess - But Does That Mean Anything for a Cliff Deal?
December has not exactly been the GOP's proudest moment. They have been out-flanked every step of the way by the Democrats and have looked disorganized, unreasonable and even downright silly. Two events cap how badly they have navigated the fiscal cliff debate:
(1) McConnell Filibusters Himself
President Obama, as part of one of his offers on the cliff, had proposed as part of the resolution, that Congress do away with the need to periodically increase the debt ceiling. The President's thinking was - Congress has to authorize all of the actual expenditures that lead to a debt-ceiling hike being necessary in the first place, so the vote is redundant and all it does is create conflict and risk the US credit rating. The GOP, of course, has no desire to give up leverage on the debt ceiling, which they hope to use to extract additional spending cuts, including entitlement reform.
Hoping to embarrass Obama by showing how little Democratic support his proposal hid, Mitch McConnell proposed a bill that would permanently eliminate the cap on the debt ceiling. His thinking surely was that Democrats in the Senate were not ready to sign off on such a bill. The only problem is that they absolutely were and Senate Majority Leader Harry Reid moved quickly to vote to pass the bill.
All of this put McConnell in the position of realizing that this bill that he has proposed, but opposed, would actually pass. McConnell promptly filibustered a vote on his own bill in order to kill it. That's right, HE proposed the bill, then filibustered it.
That's a high score on the stupid-meter if I've ever seen it.
(2) Boehner Better Get a Plan C
There is no doubt about the going-in GOP position to the negotiations - that they didn't want any income taxes to go up (they were less worried, as far as I can tell, about payroll taxes going up, but income tax rates were critical.) The House has already passed a bill, essentially with only GOP votes, to extend all of the tax rate cuts at all income levels.
Realizing that there was no way that the President was going to sign off on such a bill and that he would likely slam the GOP for holding middle-class tax cuts hostage to tax cuts for the very wealthy, Boehner rallied this week around a "Plan B" - a plan to extend tax rate cuts for everyone under $1 million in income. Surely, he must have thought, if the President vetoes that bill (or the Senate refuses to take it up), it will be the Democrats who will be blamed for holding middle class tax cuts hostage, since he would have compromised and agreed to let rates rise for the richest.
There was only one problem with Boehner's plan - his own caucus didn't support it. Boehner had to suddenly cut bait and not even vote on the proposal yesterday, after it became clear it would fail broadly in a floor vote.
So the GOP is clearly is disarray at the moment, and the polls reflect this. His approval rating is up to 56% in the Gallup poll (and at similar rates in other recent polls), the highest in over 3 years. A solid majority (52%) believe that the GOP needs to give more on the fiscal cliff, while a much smaller minority (40%) believe that the President hasn't given enough.
All of that said, I don't know how this will play out. Knowing how badly they've fumbled and that the nation is uniting against their point of view, the GOP should give ground. A conservative friend of mine, certainly no fan of the President or the Democrats (he told me the last time he voted for a Democrat was a state senate race in Virginia in 1988), put it very clearly - "we had an election over this. We lost. We need to get over it." But the modern GOP is a complex animal. Certainly Boehner and the mainstream Democrats in the Senate from purple states (see John McCain or the departing Scott Brown) want a deal. But the Tea-Party loyalists who won primary battles on the basis of their ideological purity, may not care a whiff that the public is against them. If they can't even get behind a $1 million+ rate hike increase, what are the odds that they can support a deal that the President can live with?
The best chance for a deal is a coalition of most of the Democratic party with the most moderate elements of the GOP. Until the new House is sworn in come January, there are only 193 Democrats in the House, with 218 votes needed to pass a compromise, meaning that any deal that attracted all of the Democrats would need 25 Republican votes. Realistically, any deal that attracted significant GOP support would likely lose some Democratic support from the far-left, so a more realistic scenario might be a deal that say wins all but 20 of the Democrats and wins 45 Republican votes. Such a deal would require some hard selling in the House by Boehner and Pelosi.
In the Senate, assuming the deal is not deficit-reducing and subject to reconciliation, which is a safe assumption since the "base case" of going over the fiscal cliff is likely far more deficit-reducing than anything that will be agreed to, you would need all the Democrats and Democratic-leaning Independents plus 7 Republicans to break a filibuster. There are a lot more moderate Republicans in the Senate, so this seems a much easier goal to reach with a deal than in the House.
Of course, come January, both the Senate and the House become more Democratic, meaning a deal would require less GOP support to pass. And with Congress headed home for the holiday and not due back until December 27th, the time window to get a deal done before the cliff goes into effect is running short.
I think at this point it is 50/50 that we get a deal before the New Year. Unfortunately for congress and the President, the Mayan Zombie Invasion (or whatever nonsense was supposed to happen today) didn't happen, so they will have to deal with this issue.
Expect a deal of some sort early in the New Year if we don't get more 11th-hour heroics in the next week and a half. It might look something like having rates rise on those making over $400 or $500K, having Social Security indexed to chained CPI rather than regular CPI-U, patching the AMT and repealing some of the DoD sequestration cuts.
If you like this site, tell your friends.
(1) McConnell Filibusters Himself
President Obama, as part of one of his offers on the cliff, had proposed as part of the resolution, that Congress do away with the need to periodically increase the debt ceiling. The President's thinking was - Congress has to authorize all of the actual expenditures that lead to a debt-ceiling hike being necessary in the first place, so the vote is redundant and all it does is create conflict and risk the US credit rating. The GOP, of course, has no desire to give up leverage on the debt ceiling, which they hope to use to extract additional spending cuts, including entitlement reform.
Hoping to embarrass Obama by showing how little Democratic support his proposal hid, Mitch McConnell proposed a bill that would permanently eliminate the cap on the debt ceiling. His thinking surely was that Democrats in the Senate were not ready to sign off on such a bill. The only problem is that they absolutely were and Senate Majority Leader Harry Reid moved quickly to vote to pass the bill.
All of this put McConnell in the position of realizing that this bill that he has proposed, but opposed, would actually pass. McConnell promptly filibustered a vote on his own bill in order to kill it. That's right, HE proposed the bill, then filibustered it.
That's a high score on the stupid-meter if I've ever seen it.
(2) Boehner Better Get a Plan C
There is no doubt about the going-in GOP position to the negotiations - that they didn't want any income taxes to go up (they were less worried, as far as I can tell, about payroll taxes going up, but income tax rates were critical.) The House has already passed a bill, essentially with only GOP votes, to extend all of the tax rate cuts at all income levels.
Realizing that there was no way that the President was going to sign off on such a bill and that he would likely slam the GOP for holding middle-class tax cuts hostage to tax cuts for the very wealthy, Boehner rallied this week around a "Plan B" - a plan to extend tax rate cuts for everyone under $1 million in income. Surely, he must have thought, if the President vetoes that bill (or the Senate refuses to take it up), it will be the Democrats who will be blamed for holding middle class tax cuts hostage, since he would have compromised and agreed to let rates rise for the richest.
There was only one problem with Boehner's plan - his own caucus didn't support it. Boehner had to suddenly cut bait and not even vote on the proposal yesterday, after it became clear it would fail broadly in a floor vote.
So the GOP is clearly is disarray at the moment, and the polls reflect this. His approval rating is up to 56% in the Gallup poll (and at similar rates in other recent polls), the highest in over 3 years. A solid majority (52%) believe that the GOP needs to give more on the fiscal cliff, while a much smaller minority (40%) believe that the President hasn't given enough.
All of that said, I don't know how this will play out. Knowing how badly they've fumbled and that the nation is uniting against their point of view, the GOP should give ground. A conservative friend of mine, certainly no fan of the President or the Democrats (he told me the last time he voted for a Democrat was a state senate race in Virginia in 1988), put it very clearly - "we had an election over this. We lost. We need to get over it." But the modern GOP is a complex animal. Certainly Boehner and the mainstream Democrats in the Senate from purple states (see John McCain or the departing Scott Brown) want a deal. But the Tea-Party loyalists who won primary battles on the basis of their ideological purity, may not care a whiff that the public is against them. If they can't even get behind a $1 million+ rate hike increase, what are the odds that they can support a deal that the President can live with?
The best chance for a deal is a coalition of most of the Democratic party with the most moderate elements of the GOP. Until the new House is sworn in come January, there are only 193 Democrats in the House, with 218 votes needed to pass a compromise, meaning that any deal that attracted all of the Democrats would need 25 Republican votes. Realistically, any deal that attracted significant GOP support would likely lose some Democratic support from the far-left, so a more realistic scenario might be a deal that say wins all but 20 of the Democrats and wins 45 Republican votes. Such a deal would require some hard selling in the House by Boehner and Pelosi.
In the Senate, assuming the deal is not deficit-reducing and subject to reconciliation, which is a safe assumption since the "base case" of going over the fiscal cliff is likely far more deficit-reducing than anything that will be agreed to, you would need all the Democrats and Democratic-leaning Independents plus 7 Republicans to break a filibuster. There are a lot more moderate Republicans in the Senate, so this seems a much easier goal to reach with a deal than in the House.
Of course, come January, both the Senate and the House become more Democratic, meaning a deal would require less GOP support to pass. And with Congress headed home for the holiday and not due back until December 27th, the time window to get a deal done before the cliff goes into effect is running short.
I think at this point it is 50/50 that we get a deal before the New Year. Unfortunately for congress and the President, the Mayan Zombie Invasion (or whatever nonsense was supposed to happen today) didn't happen, so they will have to deal with this issue.
Expect a deal of some sort early in the New Year if we don't get more 11th-hour heroics in the next week and a half. It might look something like having rates rise on those making over $400 or $500K, having Social Security indexed to chained CPI rather than regular CPI-U, patching the AMT and repealing some of the DoD sequestration cuts.
If you like this site, tell your friends.
Saturday, December 24, 2011
Boehner's Cheap Suit, The State of the States
How to Do Absolutely Everything Wrong
Extending the payroll tax holiday is a poor idea. I absolutely believe it, just as much as I believe that extending the Bush tax cuts are a mistake. And for the same reason. With a treasury leaking close to a trillion dollars this year, we can scarcely afford to be giving away revenues, especially since we lack any sort of coherent plan to get our budget back in balance.
The payroll tax holiday is an example of why "temporary" tax cuts are so insidious. We saw it with the Bush cuts and we see it again. The narrative goes something like this - someone (President Obama in this case) argues for a "temporary" tax cut, holiday, relief, you pick the name, based on the idea that returning this money to the economy will spur needed economic growth. The supporters of this "temporary" tax cut say we should ignore the negative impact on deficits because, after all, this cut is temporary, so it won't effect our structural imbalance of revenues and spending.
So we pass the "temporary" tax cut, time rolls on, it gets close to the date of expiry, and lo and behold, suddenly those who were arguing for it want to extend it because "we can't raise taxes at a time like this". Never mind that it was sold in as temporary - it's now "in the base". And the beat goes on. And so do the trillion dollar deficits.
Having gotten all that off my chest as to the policy associated with the payroll tax cut, the POLITICS of the matter are another thing. And on this count, the GOP, specifically the House GOP have managed to do absolutely everything wrong in this debate.
First, they didn't communicate their wishes to their Senate colleagues. As a matter of fact, a few weeks ago, it was John Boehner that refused to negotiate a compromise on the payroll tax cut, demanding instead that the Senate work it out. Well, they did. The agreement was a 2 month extension of the cut, paid for by increased fees associated with Fannie Mae and Freddie Mac. Essentially, higher fees on mortgages to pay for payroll tax relief.
Then, after the Senate deal had passed with massive bipartisan majorities (the Senate vote for the plan of 88-10 reflected the support of 80% of the GOP caucus), the House GOP balked. I don't think it was Boehner himself who wanted to raise a stink (as a matter of fact, I think he would have been happy to leave town), but regardless, the House was suddenly making it an issue that the tax cut didn't cover a long enough period of time (somehow 2 months creates uncertainty, but 12 months magically creates certainty) and they wanted the Senate to come back to negotiate a full year deal with them.
So, Boehner and the House GOP handed the keys to the Democrats. They managed to simultaneously portray themselves as holding up tax relief for working Americans while making the Democrats look like the defenders of lower taxes. And all for a battle that they could not possibly win. And they did not. They caved within 72 hours as Harry Reid outright refused to call the Senate back for more discussions until the House passed the plan. And pass it they did. Oh, sure, they got token concessions which change nothing about the underlying legislation in an attempt to save face.
But at the end of the day:
(1) The Democrats looked liked the heroes of lower tax rates for working and middle class Americans
(2) The Republicans looked like shills for the rich, defending the Bush tax cuts for upper income Americans at all costs but balking at more modest relief for the lower brackets
(3) The strengthened President Obama's standing in the polls by as much as 5%
AND
(4) They got no substantive policy changes in return
That's a rare perfecta indeed. I wrote earlier on how the GOP should have some concerns about the House due to its historically low popularity and the best Democratic performance in generic congressional polling since 2006 and apparently they are hell bent on making my writings come true. John Boehner better get that caucus under control or he might have to try back out the "minority leader" title.
What State is the Best?
While the candidates in Iowa are certainly not taking a break for the holidays, the debates are done until after Iowa and the polling won't really resume until after Christmas, so I thought I'd take a little detour and talk about a subject I've been meaning to write about for some time.
In this Presidential campaign on the Republican side, the principle of federalism has been raised repeatedly by the GOP candidates. It is a unique aspect of our form of government that so much of the governing is left to individual states to decide. Federalism at its best is 50 state laboratories trying out different policy approaches to see what measures up best.
But the 50 laboratories only matter if somebody is measuring the results. So, I'm pleased to present my ranking of the most and least successful states in the US.
First, let's talk about my methodology. There are many things that people would like about a state that are subjective. Measuring a state's cultural achievement or the quality of its food would make for interesting debates on message boards, but would be entirely subjective. Do you prefer blues music in Mississippi or grunge in Seattle? Do you like the lobster in Maine or the soft shell crab in Maryland? Is Texas football better than New York hockey? These questions are fun, but ultimately can't be measured.
So, I stuck to 4 very clear objective measures:
(1) Median Income
Standard of living is determined, in large measure, by how much money the average person makes. Median income demonstrates the strength of a state's economy probably better than any single metric.
(2) Educational Attainment
The percentage of adults who are college graduates is an easily accessible "end state" metric on education that allows for easy comparison. You could argue that this measure under weights the impact of primary and secondary education in a state, but I would argue that the primary purpose of primary and secondary education is to prepare students for college. Besides, rating metrics for those things get increasingly subjective.
(3) Crime
We all want to live in safe neighborhoods and crime is a clear indicator of a social problem. Violent crimes per 100 residents normalizes for population and shows how safe states are.
(4) Population Growth
An excellent measure of the quality of a state is whether people are coming there or leaving there. Granted, this metric biases positively to those states that see a lot of illegal immigration, but over time, even illegals will go to where the opportunity is, so I used 10-year population growth as the metric.
For each metric, the state with the BEST score (highest income, highest education attainment, lowest crime, highest population growth) received 50 points, the second best 49 points and so on. The total of all 4 scores were added together to give a state its total score.
Using this methodology, an AVERAGE score would be 102 points.
The states ranked as follows:
1. Utah - 162 points
2. Virginia - 161 points
3. Colorado - 159 points
4. New Hampshire - 158 points
5. Vermont - 143 points
6 (tie). Washington - 142 points
6 (tie). Massachusetts - 142 points
8 (tie). California - 141 points
8 (tie). Connecticut - 141 points
10. Hawaii - 138 points
11. Maryland - 133 points
12. Wyoming - 132 points
13. Arizona - 129 points
14. Oregon - 128 points
15. New Jersey - 125 points
16. Alaska - 123 points
17. Minnesota - 120 points
18. South Dakota - 119 points
19 (tie). Georgia - 118 points
19 (tie). North Dakota - 118 points
21. Rhode Island - 114 points
22. Delaware - 109 points
23. Idaho - 106 points
24. Texas - 105 points
25. Pennsylvania - 104 points
26 (tie). Maine - 103 points
26 (tie). New York - 103 points
NATIONAL AVERAGE - 102 POINTS
28. Wisconsin - 101 points
29 (tie). Nebraska - 100 points
29 (tie). Kansas -100 points
31. Illinois - 97 points
32. Nevada - 91 points
33. Montana - 90 points
34. North Carolina - 85 points
35. Iowa - 79 points
36. New Mexico - 77 points
37. Ohio - 76 points
38 (tie). South Carolina - 72 points
38 (tie). Missouri - 72 points
40. Florida - 68 points
41 (tie). Kentucky - 66 points
41 (tie). Oklahoma - 66 points
43. Indiana - 63 points
44. Alabama - 58 points
45. Tennessee - 55 points
46. Arkansas - 45 points
47. West Virginia - 44 points
48. Michigan - 43 points
49. Mississippi - 40 points
50. Louisiana - 36 points
Let's examine the top and the bottom five in a little more detail. First, the top 5.
Utah
Utah doesn't lead the pack in any single category, but is solid in them all. It is 6th best in crime, 11th best in educational attainment and population growth and 14th best in income. Utah has been a real boom town as Salt Lake City has grown and diversified. Far from being the stereotype of shows about plural marriages and backward ways, it is a thriving state with a broad economic base. Maybe Jon Huntsman was on to something.
Virginia
Virginia is similarly strong across the board, ranking 8th in income and education attainment, 10th in population growth and 17th in crime. Once a tale of two states, with poor Richmond at one end and the DC suburbs at the other, both completely dependent on the government (Richmond for welfare, Northern Virginia for government jobs), Virginia has diversified greatly into high tech industries and boasts arguably the best university system in the country (UVA, Virginia Tech, James Madison and George Mason are all Virginia states schools and all top flight.)
Colorado
Colorado is the 2nd most educated state in the union and the 4th fastest growing, but lags somewhat in the other categories, coming in at 13th in income and a middling 26th in crime. Colorado's strength are the core of large media and communication companies centered in Denver. It is also a regional transit hub and supports a lot of smaller manufacturing industry. Similar to many fast-growing states in the Southwest, the source of some of its population growth is also a drag on its crime and income scores - high levels of illegal immigration.
New Hampshire
New Hampshire would be number 1 if I'd stopped at 3 categories - it ranks 3rd in educational attainment, 4th in crime and 7th in income. But New Hampshire, like much of the Northeast, isn't growing much - it ranks a weak 32nd in population growth. New Hampshire's libertarianism makes it a shopping haven for New Englanders as well as a bedroom community for many commuters into Boston. It also sports a strong tourism industry...especially around this time in an election cycle.
Vermont
Rounding out our top 5 is New Hampshire's much more liberal brother Vermont which, similar to New Hampshire, ranks 3rd in crime and 7th in education but a somewhat weaker 20th in income and 31st in population growth. A popular tourist spot and organic farming hotbed, Vermont has continued to foster a stable economy, despite conservative protestations about its very liberal economic policies.
On the bottom end:
Louisiana
Hurricane Katrina could get some of the blame, but Louisiana has been in decline for a very long time, with one of the worst permanent underclasses in America. It's best ranking is in population growth, at 37th. It ranks 41st in income, 44th in educational attainment and 46th in crime. Louisiana, like many states in the deep south, lacks much of a middle class and has a very large underclass, which is mostly black. Systemically bad schools and poor social institutions carry this problem from generation to generation.
Mississippi
Mississippi scores surprisingly well on crime, 20th best in the country, which keeps it out of the basement of the ratings, but other than that, the news is abysmal. 46th in population growth, 48th in education and 50th in income. A poor, uneducated population that is leaving. I lived in Mississippi and can personally attest that there is poverty in the Delta in a way I never would have thought possible in the United States. My apologies to Haley Barbour, but this is a state failing on virtually all fronts.
Michigan
The dismal state of Detroit and the contraction of the auto industry over the past decade have not been kind to Michigan. It is 34th in income, 36th in educational attainment, 41st in crime and 50th in population growth. In other words, people are leaving in mass and the ones leaving are largely the educated ones. And who can blame them? Have you seen Detroit lately? Interestingly, it is a world away from Mississippi, but the fundamental problem is the same - lower skilled jobs (in Mississippi in agriculture, in Michigan in manufacturing) that have either moved elsewhere or gone away and a working class ill-equipped to do something else.
West Virginia
Appalachia has long been a location of heart-wrenching poverty. Only a relatively low crime rate in this low population-density state keeps it out of the cellar - it's crime rate is 12th best in the nation. Other than that, things are horrible - 49th in income, 49th in population growth and 50th in educational attainment. It's a vicious cycle - lack of education keeps industry away and lack of jobs keeps people in disbelief that an education will benefit them. The permanent underclass here is white and rural, rather than black and urban, but the problem is the same.
Arkansas
You could argue that Arkansas at least "wins the region" by ranking ahead of Mississippi and Louisiana, but things are still not great. It is 22nd in population growth, buoyed by the continued strong growth around Wal-Mart in Bentonville and industrial growth in places like Fort Smith, but 40th in crime, 48th in income and 49th in education. Bentonville is like a metropolis - Little Rock looks worse than Detroit.
So what can we learn about policy from all of this?
Using the imprecise metric of a "red" state being a state John McCain won in 2008, a "blue" state being a state Barack Obama won by more than his national average and a "purple" state being a state that Obama won but by less than his national average,
Of the 10 best states, 8 are blue, 1 is purple and 1 is red, but the red 1 is in the top spot.
Of the 10 worst states, 8 are red, 1 is purple and 1 is blue
The average ranking for a BLUE state is 17th
The average ranking of a RED state is 31st
The average ranking of a PURPLE state is 32nd
While there are certainly inherent socioeconomic differences from state to state, in my mind, this fairly well disproves the notion that conservative states are more business-friendly and drive greater growth. By and large, liberal states are better places to live by the objective metrics. Perhaps we should be paying more attention to what Mitt Romney did in Massachusetts rather than poo-pooing that experience. And maybe, just maybe, Haley Barbour should stop lecturing Governors in New England and start listening to what they are doing.
The other thing interesting is to look at the exceptions. Michigan is a rare underperforming blue state. Why? It made itself into a banana republic in the 70s by tethering its entire fate to the auto industry - an industry that has become more automated (requiring less workers), more diversified (foreign manufacturers and new entrants locating outside Michigan) and more cyclical (car sales crashed in the late 2000s.)
Utah, on the other hand, leads all states but is the only red state in the Top 10. What are they doing right? They've done tourism right, with winter sports growing in the United States and Utah being a very affordable location. They've grown the options for nightlife well beyond anything imaginable 20 years ago. And they've mined their inherent natural resources at a time when commodities are rising.
I'm a big believer that data rather than dogma tells you interesting things. Have a different take? I welcome your thoughts.
Merry Christmas and Happy Holidays, everyone.
If you like this site, tell your friends.
Extending the payroll tax holiday is a poor idea. I absolutely believe it, just as much as I believe that extending the Bush tax cuts are a mistake. And for the same reason. With a treasury leaking close to a trillion dollars this year, we can scarcely afford to be giving away revenues, especially since we lack any sort of coherent plan to get our budget back in balance.
The payroll tax holiday is an example of why "temporary" tax cuts are so insidious. We saw it with the Bush cuts and we see it again. The narrative goes something like this - someone (President Obama in this case) argues for a "temporary" tax cut, holiday, relief, you pick the name, based on the idea that returning this money to the economy will spur needed economic growth. The supporters of this "temporary" tax cut say we should ignore the negative impact on deficits because, after all, this cut is temporary, so it won't effect our structural imbalance of revenues and spending.
So we pass the "temporary" tax cut, time rolls on, it gets close to the date of expiry, and lo and behold, suddenly those who were arguing for it want to extend it because "we can't raise taxes at a time like this". Never mind that it was sold in as temporary - it's now "in the base". And the beat goes on. And so do the trillion dollar deficits.
Having gotten all that off my chest as to the policy associated with the payroll tax cut, the POLITICS of the matter are another thing. And on this count, the GOP, specifically the House GOP have managed to do absolutely everything wrong in this debate.
First, they didn't communicate their wishes to their Senate colleagues. As a matter of fact, a few weeks ago, it was John Boehner that refused to negotiate a compromise on the payroll tax cut, demanding instead that the Senate work it out. Well, they did. The agreement was a 2 month extension of the cut, paid for by increased fees associated with Fannie Mae and Freddie Mac. Essentially, higher fees on mortgages to pay for payroll tax relief.
Then, after the Senate deal had passed with massive bipartisan majorities (the Senate vote for the plan of 88-10 reflected the support of 80% of the GOP caucus), the House GOP balked. I don't think it was Boehner himself who wanted to raise a stink (as a matter of fact, I think he would have been happy to leave town), but regardless, the House was suddenly making it an issue that the tax cut didn't cover a long enough period of time (somehow 2 months creates uncertainty, but 12 months magically creates certainty) and they wanted the Senate to come back to negotiate a full year deal with them.
So, Boehner and the House GOP handed the keys to the Democrats. They managed to simultaneously portray themselves as holding up tax relief for working Americans while making the Democrats look like the defenders of lower taxes. And all for a battle that they could not possibly win. And they did not. They caved within 72 hours as Harry Reid outright refused to call the Senate back for more discussions until the House passed the plan. And pass it they did. Oh, sure, they got token concessions which change nothing about the underlying legislation in an attempt to save face.
But at the end of the day:
(1) The Democrats looked liked the heroes of lower tax rates for working and middle class Americans
(2) The Republicans looked like shills for the rich, defending the Bush tax cuts for upper income Americans at all costs but balking at more modest relief for the lower brackets
(3) The strengthened President Obama's standing in the polls by as much as 5%
AND
(4) They got no substantive policy changes in return
That's a rare perfecta indeed. I wrote earlier on how the GOP should have some concerns about the House due to its historically low popularity and the best Democratic performance in generic congressional polling since 2006 and apparently they are hell bent on making my writings come true. John Boehner better get that caucus under control or he might have to try back out the "minority leader" title.
What State is the Best?
While the candidates in Iowa are certainly not taking a break for the holidays, the debates are done until after Iowa and the polling won't really resume until after Christmas, so I thought I'd take a little detour and talk about a subject I've been meaning to write about for some time.
In this Presidential campaign on the Republican side, the principle of federalism has been raised repeatedly by the GOP candidates. It is a unique aspect of our form of government that so much of the governing is left to individual states to decide. Federalism at its best is 50 state laboratories trying out different policy approaches to see what measures up best.
But the 50 laboratories only matter if somebody is measuring the results. So, I'm pleased to present my ranking of the most and least successful states in the US.
First, let's talk about my methodology. There are many things that people would like about a state that are subjective. Measuring a state's cultural achievement or the quality of its food would make for interesting debates on message boards, but would be entirely subjective. Do you prefer blues music in Mississippi or grunge in Seattle? Do you like the lobster in Maine or the soft shell crab in Maryland? Is Texas football better than New York hockey? These questions are fun, but ultimately can't be measured.
So, I stuck to 4 very clear objective measures:
(1) Median Income
Standard of living is determined, in large measure, by how much money the average person makes. Median income demonstrates the strength of a state's economy probably better than any single metric.
(2) Educational Attainment
The percentage of adults who are college graduates is an easily accessible "end state" metric on education that allows for easy comparison. You could argue that this measure under weights the impact of primary and secondary education in a state, but I would argue that the primary purpose of primary and secondary education is to prepare students for college. Besides, rating metrics for those things get increasingly subjective.
(3) Crime
We all want to live in safe neighborhoods and crime is a clear indicator of a social problem. Violent crimes per 100 residents normalizes for population and shows how safe states are.
(4) Population Growth
An excellent measure of the quality of a state is whether people are coming there or leaving there. Granted, this metric biases positively to those states that see a lot of illegal immigration, but over time, even illegals will go to where the opportunity is, so I used 10-year population growth as the metric.
For each metric, the state with the BEST score (highest income, highest education attainment, lowest crime, highest population growth) received 50 points, the second best 49 points and so on. The total of all 4 scores were added together to give a state its total score.
Using this methodology, an AVERAGE score would be 102 points.
The states ranked as follows:
1. Utah - 162 points
2. Virginia - 161 points
3. Colorado - 159 points
4. New Hampshire - 158 points
5. Vermont - 143 points
6 (tie). Washington - 142 points
6 (tie). Massachusetts - 142 points
8 (tie). California - 141 points
8 (tie). Connecticut - 141 points
10. Hawaii - 138 points
11. Maryland - 133 points
12. Wyoming - 132 points
13. Arizona - 129 points
14. Oregon - 128 points
15. New Jersey - 125 points
16. Alaska - 123 points
17. Minnesota - 120 points
18. South Dakota - 119 points
19 (tie). Georgia - 118 points
19 (tie). North Dakota - 118 points
21. Rhode Island - 114 points
22. Delaware - 109 points
23. Idaho - 106 points
24. Texas - 105 points
25. Pennsylvania - 104 points
26 (tie). Maine - 103 points
26 (tie). New York - 103 points
NATIONAL AVERAGE - 102 POINTS
28. Wisconsin - 101 points
29 (tie). Nebraska - 100 points
29 (tie). Kansas -100 points
31. Illinois - 97 points
32. Nevada - 91 points
33. Montana - 90 points
34. North Carolina - 85 points
35. Iowa - 79 points
36. New Mexico - 77 points
37. Ohio - 76 points
38 (tie). South Carolina - 72 points
38 (tie). Missouri - 72 points
40. Florida - 68 points
41 (tie). Kentucky - 66 points
41 (tie). Oklahoma - 66 points
43. Indiana - 63 points
44. Alabama - 58 points
45. Tennessee - 55 points
46. Arkansas - 45 points
47. West Virginia - 44 points
48. Michigan - 43 points
49. Mississippi - 40 points
50. Louisiana - 36 points
Let's examine the top and the bottom five in a little more detail. First, the top 5.
Utah
Utah doesn't lead the pack in any single category, but is solid in them all. It is 6th best in crime, 11th best in educational attainment and population growth and 14th best in income. Utah has been a real boom town as Salt Lake City has grown and diversified. Far from being the stereotype of shows about plural marriages and backward ways, it is a thriving state with a broad economic base. Maybe Jon Huntsman was on to something.
Virginia
Virginia is similarly strong across the board, ranking 8th in income and education attainment, 10th in population growth and 17th in crime. Once a tale of two states, with poor Richmond at one end and the DC suburbs at the other, both completely dependent on the government (Richmond for welfare, Northern Virginia for government jobs), Virginia has diversified greatly into high tech industries and boasts arguably the best university system in the country (UVA, Virginia Tech, James Madison and George Mason are all Virginia states schools and all top flight.)
Colorado
Colorado is the 2nd most educated state in the union and the 4th fastest growing, but lags somewhat in the other categories, coming in at 13th in income and a middling 26th in crime. Colorado's strength are the core of large media and communication companies centered in Denver. It is also a regional transit hub and supports a lot of smaller manufacturing industry. Similar to many fast-growing states in the Southwest, the source of some of its population growth is also a drag on its crime and income scores - high levels of illegal immigration.
New Hampshire
New Hampshire would be number 1 if I'd stopped at 3 categories - it ranks 3rd in educational attainment, 4th in crime and 7th in income. But New Hampshire, like much of the Northeast, isn't growing much - it ranks a weak 32nd in population growth. New Hampshire's libertarianism makes it a shopping haven for New Englanders as well as a bedroom community for many commuters into Boston. It also sports a strong tourism industry...especially around this time in an election cycle.
Vermont
Rounding out our top 5 is New Hampshire's much more liberal brother Vermont which, similar to New Hampshire, ranks 3rd in crime and 7th in education but a somewhat weaker 20th in income and 31st in population growth. A popular tourist spot and organic farming hotbed, Vermont has continued to foster a stable economy, despite conservative protestations about its very liberal economic policies.
On the bottom end:
Louisiana
Hurricane Katrina could get some of the blame, but Louisiana has been in decline for a very long time, with one of the worst permanent underclasses in America. It's best ranking is in population growth, at 37th. It ranks 41st in income, 44th in educational attainment and 46th in crime. Louisiana, like many states in the deep south, lacks much of a middle class and has a very large underclass, which is mostly black. Systemically bad schools and poor social institutions carry this problem from generation to generation.
Mississippi
Mississippi scores surprisingly well on crime, 20th best in the country, which keeps it out of the basement of the ratings, but other than that, the news is abysmal. 46th in population growth, 48th in education and 50th in income. A poor, uneducated population that is leaving. I lived in Mississippi and can personally attest that there is poverty in the Delta in a way I never would have thought possible in the United States. My apologies to Haley Barbour, but this is a state failing on virtually all fronts.
Michigan
The dismal state of Detroit and the contraction of the auto industry over the past decade have not been kind to Michigan. It is 34th in income, 36th in educational attainment, 41st in crime and 50th in population growth. In other words, people are leaving in mass and the ones leaving are largely the educated ones. And who can blame them? Have you seen Detroit lately? Interestingly, it is a world away from Mississippi, but the fundamental problem is the same - lower skilled jobs (in Mississippi in agriculture, in Michigan in manufacturing) that have either moved elsewhere or gone away and a working class ill-equipped to do something else.
West Virginia
Appalachia has long been a location of heart-wrenching poverty. Only a relatively low crime rate in this low population-density state keeps it out of the cellar - it's crime rate is 12th best in the nation. Other than that, things are horrible - 49th in income, 49th in population growth and 50th in educational attainment. It's a vicious cycle - lack of education keeps industry away and lack of jobs keeps people in disbelief that an education will benefit them. The permanent underclass here is white and rural, rather than black and urban, but the problem is the same.
Arkansas
You could argue that Arkansas at least "wins the region" by ranking ahead of Mississippi and Louisiana, but things are still not great. It is 22nd in population growth, buoyed by the continued strong growth around Wal-Mart in Bentonville and industrial growth in places like Fort Smith, but 40th in crime, 48th in income and 49th in education. Bentonville is like a metropolis - Little Rock looks worse than Detroit.
So what can we learn about policy from all of this?
Using the imprecise metric of a "red" state being a state John McCain won in 2008, a "blue" state being a state Barack Obama won by more than his national average and a "purple" state being a state that Obama won but by less than his national average,
Of the 10 best states, 8 are blue, 1 is purple and 1 is red, but the red 1 is in the top spot.
Of the 10 worst states, 8 are red, 1 is purple and 1 is blue
The average ranking for a BLUE state is 17th
The average ranking of a RED state is 31st
The average ranking of a PURPLE state is 32nd
While there are certainly inherent socioeconomic differences from state to state, in my mind, this fairly well disproves the notion that conservative states are more business-friendly and drive greater growth. By and large, liberal states are better places to live by the objective metrics. Perhaps we should be paying more attention to what Mitt Romney did in Massachusetts rather than poo-pooing that experience. And maybe, just maybe, Haley Barbour should stop lecturing Governors in New England and start listening to what they are doing.
The other thing interesting is to look at the exceptions. Michigan is a rare underperforming blue state. Why? It made itself into a banana republic in the 70s by tethering its entire fate to the auto industry - an industry that has become more automated (requiring less workers), more diversified (foreign manufacturers and new entrants locating outside Michigan) and more cyclical (car sales crashed in the late 2000s.)
Utah, on the other hand, leads all states but is the only red state in the Top 10. What are they doing right? They've done tourism right, with winter sports growing in the United States and Utah being a very affordable location. They've grown the options for nightlife well beyond anything imaginable 20 years ago. And they've mined their inherent natural resources at a time when commodities are rising.
I'm a big believer that data rather than dogma tells you interesting things. Have a different take? I welcome your thoughts.
Merry Christmas and Happy Holidays, everyone.
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Sunday, July 10, 2011
The Grand Deal Falls Through, How Republicans Have Changed the Subject, Why John Boehner is Good for the GOP, 2012: Romney or Bust
No Mega-Deal on the Debt
President Bill Clinton's Democratic Party was dealt a complete spanking in the 1994 mid-terms after public backlash against his proposed health care reform sparked the now famous Republican Revolution and Newt Gingrich's Contract with America. Clinton deftly adapted to the new political reality and negotiated with Gingrich to reform welfare and restrain government spending, which led to budget surpluses, a resounding re-election in 1996 and a lasting legacy for both Clinton and Gingrich.
President Barack Obama's Democratic Party was dealt a complete spanking in the 2010 mid-terms after public backlash against his adopted health care reform sparked a Republican takeover of the House and significant gains in the Senate. Some of us (myself included) hoped that this would lead to a grand deal on the deficit, built on the basis of the bi-partisan debt commissions recommendations.
It appears it is not to be, at least for now. The President and House Speaker John Boehner had been quietly attempting to negotiate a 10-year, $4 trillion deal that would have reportedly included not only tax changes but reforms to all three major entitlement programs. Such a deal would've been course-altering for the country and a major feather for both.
But, as is often the case, political reality got in the way. The House GOP wasn't going to bite on even the smallest of tax increases. Liberal Democrats in the House and Senate weren't going to go for entitlement reform. No compromise, no deal.
So, it appears we will likely get a deal half that size, that consists entirely of spending reductions. $2 trillion over 10 years really isn't as draconian as it sounds. It frankly wouldn't even get government back to the size of 5 years ago. But it's better than nothing. And based on the stated GOP principle that they will only vote to extend the debt ceiling only by the amount of spending that is reduced, $2 trillion would still be sufficient to get the country through the 2012 elections, all of which would set up a huge set of decisions for the population in 2012.
Just remember:
(1) The Bush Tax Cuts, extended by Obama, are slated to expire on January 1, 2013.
(2) Also on January 1, 2013, major tax changes take place as part of the Health Care reform act. These include a 0.9% Medicare tax increase on wages over $200K and a 3.9% tax on investment income for those making over $200K.
(3) Assuming a $2T increase, the new debt ceiling will be breached, likely in late 2013.
(4) The individual mandate tax for health care takes effect on Jan 1, 2014.
So, We, The People will likely have a lot to decide next November about the future of the country.
It's All About Spending, Baby
The 111th Congress, over the course of 2 years, passed 383 bills which became law. Granted, some of these were to name post offices and the like, but some very meaty legislation became law in 2009 and 2010, including:
* SCHIP Expansion
* The Lily Ledbetter Fair Pay Act
* The Stimulus Package
* Healthcare Reform
* Two major financial reform bills (the CARD Act and the Dodd-Frank Act)
* 9/11 First Responders Act
* Start Treaty
* Don't Ask, Don't Tell Repeal
In it's first 6 months, the 111th Congress has passed only 23 bills which have become law, or to put it another way, is only on pace to produce 24% as much legislation.
And this is just the way the GOP wants it. Their desire, coming out of the 2010 mid-terms, was to make the discussion all about reducing government spending. And they have succeeded, in spades. First, it was the Fiscal 2011 budget, in which they extracted over $80 million of spending reductions, albeit less than what they had hoped. Now, it is the debt ceiling increase, which will allow them to extract a large number of spending cuts and will consume all of the political air time until at least early August.
Then, lest we forget, Fiscal 2012 begins in October, and save for the House passing a Defense bill, virtually no work has been done on this opportunity for the GOP to extract more cuts.
When was the last time that you heard anyone talk about Immigration Reform, Environmental Policy or anything other than the budget?
John Boehner: Policy, Not Just Politics
House Speaker John Boehner is good for the GOP. Will Boehner and I disagree on a whole host of policy issues, I greatly respect the fact that he is about getting things done, not simply political grandstanding. It was Eric Cantor and whining wing of the GOP that caused the debt talks to break down (along with the liberal whining wing of the Democratic party), not Boehner. Boehner was willing to put everything on the table.
He also masterfully worked through deals with the White House to extend the Bush Tax Cuts and cut the deal that passed on the 2011 budget.
The more Republicans out there actually trying to make policy and strike deals versus simply scoring political points against the White House, the better off the nation and the GOP are.
Romney Is The Only One Who Can Win
Okay, maybe that's a little too bold a statement. If people actually knew Tim Pawlenty or Jon Huntsman, either would be a viable choice against President Obama, in what could wind up being a very close election in 2012. But that isn't going to happen. It's Romney vs. Bachmann unless someone else breaks out very quickly. And Bachmann can't win. I grant you that polling at this stage of the race is still very tenuous, but look at the average numbers this month:
Obama vs. Romney: Obama +5.5%
Obama vs. Gingrich: Obama +11.5%
Obama vs. Huntsman: Obama +14.0%
Obama vs. Pawlenty: Obama +14.2%
Obama vs. Bachmann: Obama +14.3%
Obama vs. Paul: Obama +18.0%
No polls yet on Obama vs. Thaddeus McCotter (go look it up, if you don't know what I'm talking about.)
It's actually quite amazing given how bad the economy is that President Obama still leads the field. Romney is within striking distance, no one else is even close. I expect things to tighten, particularly if we keep having jobs report like June's.
If you like this site, tell your friends.
Obama vs. Cain: Obama +19.0%
President Bill Clinton's Democratic Party was dealt a complete spanking in the 1994 mid-terms after public backlash against his proposed health care reform sparked the now famous Republican Revolution and Newt Gingrich's Contract with America. Clinton deftly adapted to the new political reality and negotiated with Gingrich to reform welfare and restrain government spending, which led to budget surpluses, a resounding re-election in 1996 and a lasting legacy for both Clinton and Gingrich.
President Barack Obama's Democratic Party was dealt a complete spanking in the 2010 mid-terms after public backlash against his adopted health care reform sparked a Republican takeover of the House and significant gains in the Senate. Some of us (myself included) hoped that this would lead to a grand deal on the deficit, built on the basis of the bi-partisan debt commissions recommendations.
It appears it is not to be, at least for now. The President and House Speaker John Boehner had been quietly attempting to negotiate a 10-year, $4 trillion deal that would have reportedly included not only tax changes but reforms to all three major entitlement programs. Such a deal would've been course-altering for the country and a major feather for both.
But, as is often the case, political reality got in the way. The House GOP wasn't going to bite on even the smallest of tax increases. Liberal Democrats in the House and Senate weren't going to go for entitlement reform. No compromise, no deal.
So, it appears we will likely get a deal half that size, that consists entirely of spending reductions. $2 trillion over 10 years really isn't as draconian as it sounds. It frankly wouldn't even get government back to the size of 5 years ago. But it's better than nothing. And based on the stated GOP principle that they will only vote to extend the debt ceiling only by the amount of spending that is reduced, $2 trillion would still be sufficient to get the country through the 2012 elections, all of which would set up a huge set of decisions for the population in 2012.
Just remember:
(1) The Bush Tax Cuts, extended by Obama, are slated to expire on January 1, 2013.
(2) Also on January 1, 2013, major tax changes take place as part of the Health Care reform act. These include a 0.9% Medicare tax increase on wages over $200K and a 3.9% tax on investment income for those making over $200K.
(3) Assuming a $2T increase, the new debt ceiling will be breached, likely in late 2013.
(4) The individual mandate tax for health care takes effect on Jan 1, 2014.
So, We, The People will likely have a lot to decide next November about the future of the country.
It's All About Spending, Baby
The 111th Congress, over the course of 2 years, passed 383 bills which became law. Granted, some of these were to name post offices and the like, but some very meaty legislation became law in 2009 and 2010, including:
* SCHIP Expansion
* The Lily Ledbetter Fair Pay Act
* The Stimulus Package
* Healthcare Reform
* Two major financial reform bills (the CARD Act and the Dodd-Frank Act)
* 9/11 First Responders Act
* Start Treaty
* Don't Ask, Don't Tell Repeal
In it's first 6 months, the 111th Congress has passed only 23 bills which have become law, or to put it another way, is only on pace to produce 24% as much legislation.
And this is just the way the GOP wants it. Their desire, coming out of the 2010 mid-terms, was to make the discussion all about reducing government spending. And they have succeeded, in spades. First, it was the Fiscal 2011 budget, in which they extracted over $80 million of spending reductions, albeit less than what they had hoped. Now, it is the debt ceiling increase, which will allow them to extract a large number of spending cuts and will consume all of the political air time until at least early August.
Then, lest we forget, Fiscal 2012 begins in October, and save for the House passing a Defense bill, virtually no work has been done on this opportunity for the GOP to extract more cuts.
When was the last time that you heard anyone talk about Immigration Reform, Environmental Policy or anything other than the budget?
John Boehner: Policy, Not Just Politics
House Speaker John Boehner is good for the GOP. Will Boehner and I disagree on a whole host of policy issues, I greatly respect the fact that he is about getting things done, not simply political grandstanding. It was Eric Cantor and whining wing of the GOP that caused the debt talks to break down (along with the liberal whining wing of the Democratic party), not Boehner. Boehner was willing to put everything on the table.
He also masterfully worked through deals with the White House to extend the Bush Tax Cuts and cut the deal that passed on the 2011 budget.
The more Republicans out there actually trying to make policy and strike deals versus simply scoring political points against the White House, the better off the nation and the GOP are.
Romney Is The Only One Who Can Win
Okay, maybe that's a little too bold a statement. If people actually knew Tim Pawlenty or Jon Huntsman, either would be a viable choice against President Obama, in what could wind up being a very close election in 2012. But that isn't going to happen. It's Romney vs. Bachmann unless someone else breaks out very quickly. And Bachmann can't win. I grant you that polling at this stage of the race is still very tenuous, but look at the average numbers this month:
Obama vs. Romney: Obama +5.5%
Obama vs. Gingrich: Obama +11.5%
Obama vs. Huntsman: Obama +14.0%
Obama vs. Pawlenty: Obama +14.2%
Obama vs. Bachmann: Obama +14.3%
Obama vs. Paul: Obama +18.0%
No polls yet on Obama vs. Thaddeus McCotter (go look it up, if you don't know what I'm talking about.)
It's actually quite amazing given how bad the economy is that President Obama still leads the field. Romney is within striking distance, no one else is even close. I expect things to tighten, particularly if we keep having jobs report like June's.
If you like this site, tell your friends.
Obama vs. Cain: Obama +19.0%
Sunday, April 17, 2011
The Next Fronts in the Budgetary War, America's Energy Future
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.
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.
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?
Saturday, January 8, 2011
A Rocky Start to the New GOP House, A Dangerous Game with the Filibuster
Ugly Week 1 for the GOP
The good news if you are a Republican rooting for John Boehner and the new GOP majority to succeed in the coming two years is that the public attention span is short. To the extent that the average voter is paying attention at all these days (which is, in and of itself, fairly questionable), they will likely forget most of this month's misgivings long before November 2012.
Having said that, the new GOP House is off to a fairly embarrassing start. It's been less than a week since they assumed power and there have already been major snafus.
(1) The Non-Swearing In
Two new members of the GOP majority, Rep. Mike Fitzpatrick (PA) and Rep. Pete Sessions (TX) missed the House swearing-in ceremony and where therefore not properly sworn in as members of the House. In spite of this, they cast several votes in the first week, although they were not yet legally congressmen.
The worst part of this story is the reason that they missed the swearing in. They missed it -- they were attending a fundraiser at the capital. Not a great start in standing up to special interests that you are too busy cozying up to them to attend your own swearing-in. Also, House rules prohibit fundraisers at the capital.
The GOP majority elected to pass a resolution invalidating their votes until they were properly sworn in, but letting any bills submitted or speeches given to stand as part of the record. This is an imperfect (if they weren't legal members of the House, they shouldn't be allowed to perform any of the duties) but probably acceptable solution (invalidating bills submitted or speeches given would be largely symbolic, since they could simply resubmit these materials after being sworn in.)
Oh by the way, Sessions participated in the reading of the constitution on the House floor. Maybe he should've paid attention to what he was reading.
(2) Transparency? We Don't Need No Stinking Transparency!
One of the primary complaints of the GOP minority in the House this past congress was the lack of transparency of the operations of the House. In one way, this charge seemed absurd, since all House proceedings are readily viewable by everyone on CSPAN. On the other hand, there were legitimate criticisms...insufficient time for members to read long, complex pieces of legislation, a lack of opportunity for the minority to amend bills and the lack of a mechanism requiring that bills be paid for, rather than simply piling on the deficit.
In order to combat this, the GOP had proposed new rules...a 72-hour requirement between the post of final legislation and a vote, a minimum requirement for the number of amendments that would be allowed and a requirement that bills be paid for with offsetting spending reductions. These were all solid proposals that would improve the operation of the House.
Yet, on the first significant vote of the new House, a bill to repeal the health care bill passed last year, the GOP chose to waive all three of these new rules. Amendments were not allowed. The vote took place less than 24 hours after posting of the final bill. The bill, according to CBO estimate would increase the deficit by over $200B over the next decade.
So much for openness and transparency.
(3) $100B? Who said $100B?
Perhaps the most central issue on which the GOP ran their national campaign this past year was reducing government spending. Over and over, the promise was repeated that the GOP would reduce spending by $100B in the first year, as part of their effort to bring spending back to "pre-stimulus, pre-bailout" levels.
Now, the GOP is already hedging. Boehner says cuts will likely be at only half of that level. He says that this is due to the fact that the actual spending enacted by the previous congress was less than the original proposed Obama budget.
Putting aside for a second the fact that $100B in spending cuts scarcely puts a dent in the federal deficit, backing off even that very modest level of spending reductions is a flaring indication of what I have been saying all along...that if you exclude entitlements, defense, veterans affairs and any new taxes, there is simply no way to balance the federal budget.
If the GOP can't present a credible path to reduce the deficit, then the whole getting the out of control government spending line of logic falls apart. What does the GOP stand for if they intend to continue spending at elevated levels and not pay for it?
On one positive note, the GOP did cut pay for key leadership posts by 5%. This is a good move, although largely symbolic, since the money involved is fairly inconsequential.
Be Careful with the Filibuster
In the 111th Congress, the GOP used the filibuster to a far greater extent than had ever been seen in the history of the Senate. So filibuster reform is an understandable cause that the now-weakened Democratic majority would want to take up.
To borrow a phrase from the South, as with eating catfish off the bone, the Democrats should chew carefully.
There is room to reform the filibuster from its present state to make the Senate more functional. But moves to effectively eliminate it entirely would be extremely dangerous for minority rights in the Senate.
I think proposals that eliminate the capability to filibuster STARTING debate on a bill probably makes sense. I think requiring Senators who wish to filibuster to actually take to the floor of the Senate and speak makes sense. But anything that would weaken the vote requirements to break a filibuster or to eliminate the capability to filibuster a Presidential appointment would be dangerous.
Democrats should remember that they could well be in the minority in two years and apply a little golden rule logic. Having some checks and balances on majority power is not a bad thing.
The good news if you are a Republican rooting for John Boehner and the new GOP majority to succeed in the coming two years is that the public attention span is short. To the extent that the average voter is paying attention at all these days (which is, in and of itself, fairly questionable), they will likely forget most of this month's misgivings long before November 2012.
Having said that, the new GOP House is off to a fairly embarrassing start. It's been less than a week since they assumed power and there have already been major snafus.
(1) The Non-Swearing In
Two new members of the GOP majority, Rep. Mike Fitzpatrick (PA) and Rep. Pete Sessions (TX) missed the House swearing-in ceremony and where therefore not properly sworn in as members of the House. In spite of this, they cast several votes in the first week, although they were not yet legally congressmen.
The worst part of this story is the reason that they missed the swearing in. They missed it -- they were attending a fundraiser at the capital. Not a great start in standing up to special interests that you are too busy cozying up to them to attend your own swearing-in. Also, House rules prohibit fundraisers at the capital.
The GOP majority elected to pass a resolution invalidating their votes until they were properly sworn in, but letting any bills submitted or speeches given to stand as part of the record. This is an imperfect (if they weren't legal members of the House, they shouldn't be allowed to perform any of the duties) but probably acceptable solution (invalidating bills submitted or speeches given would be largely symbolic, since they could simply resubmit these materials after being sworn in.)
Oh by the way, Sessions participated in the reading of the constitution on the House floor. Maybe he should've paid attention to what he was reading.
(2) Transparency? We Don't Need No Stinking Transparency!
One of the primary complaints of the GOP minority in the House this past congress was the lack of transparency of the operations of the House. In one way, this charge seemed absurd, since all House proceedings are readily viewable by everyone on CSPAN. On the other hand, there were legitimate criticisms...insufficient time for members to read long, complex pieces of legislation, a lack of opportunity for the minority to amend bills and the lack of a mechanism requiring that bills be paid for, rather than simply piling on the deficit.
In order to combat this, the GOP had proposed new rules...a 72-hour requirement between the post of final legislation and a vote, a minimum requirement for the number of amendments that would be allowed and a requirement that bills be paid for with offsetting spending reductions. These were all solid proposals that would improve the operation of the House.
Yet, on the first significant vote of the new House, a bill to repeal the health care bill passed last year, the GOP chose to waive all three of these new rules. Amendments were not allowed. The vote took place less than 24 hours after posting of the final bill. The bill, according to CBO estimate would increase the deficit by over $200B over the next decade.
So much for openness and transparency.
(3) $100B? Who said $100B?
Perhaps the most central issue on which the GOP ran their national campaign this past year was reducing government spending. Over and over, the promise was repeated that the GOP would reduce spending by $100B in the first year, as part of their effort to bring spending back to "pre-stimulus, pre-bailout" levels.
Now, the GOP is already hedging. Boehner says cuts will likely be at only half of that level. He says that this is due to the fact that the actual spending enacted by the previous congress was less than the original proposed Obama budget.
Putting aside for a second the fact that $100B in spending cuts scarcely puts a dent in the federal deficit, backing off even that very modest level of spending reductions is a flaring indication of what I have been saying all along...that if you exclude entitlements, defense, veterans affairs and any new taxes, there is simply no way to balance the federal budget.
If the GOP can't present a credible path to reduce the deficit, then the whole getting the out of control government spending line of logic falls apart. What does the GOP stand for if they intend to continue spending at elevated levels and not pay for it?
On one positive note, the GOP did cut pay for key leadership posts by 5%. This is a good move, although largely symbolic, since the money involved is fairly inconsequential.
Be Careful with the Filibuster
In the 111th Congress, the GOP used the filibuster to a far greater extent than had ever been seen in the history of the Senate. So filibuster reform is an understandable cause that the now-weakened Democratic majority would want to take up.
To borrow a phrase from the South, as with eating catfish off the bone, the Democrats should chew carefully.
There is room to reform the filibuster from its present state to make the Senate more functional. But moves to effectively eliminate it entirely would be extremely dangerous for minority rights in the Senate.
I think proposals that eliminate the capability to filibuster STARTING debate on a bill probably makes sense. I think requiring Senators who wish to filibuster to actually take to the floor of the Senate and speak makes sense. But anything that would weaken the vote requirements to break a filibuster or to eliminate the capability to filibuster a Presidential appointment would be dangerous.
Democrats should remember that they could well be in the minority in two years and apply a little golden rule logic. Having some checks and balances on majority power is not a bad thing.
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