Health Care Deal, Part 2?
Senator Charles Schumer (D-NY) has announced that a deal has been struck between Senator Ben Nelson (D-NE) and Majority Leader Harry Reid (D-NV) to secure Nelson's vote to invoke cloture on the health care bill. Now, it's understandable if we are all a little skeptical, given that this comes a week after the first "deal" between liberals and moderates was announced, and then promptly criticized by Sen. Joe Liebermand (I-CT) and Nelson as unacceptable.
I get the sense that this time things are different. First of all, Senator Nelson himself was the person with whom the negotiations took place. Secondly the deal appears to deal with the abortion issue, whereas the first "deal" dealt only with a compromise on the public option. I think this deal is the real deal.
Which is not to say that passage is assured. The Democrats could still lose another Senator from the center (Jim Webb being an unofficially undecided vote who apparently was not involved in these negotiations) or from the left (Roland Burris, for instance, has indicated that he might vote down a bill that doesn't have a strong enough public option, although he has moderated his tone in recent weeks.) And the Democrats still have a calendar problem -- it is razor thin to try to even get to a cloture vote by December 24th, and you have to believe that Republicans will continue to use every tactic available to them to slow things down. Today, the Senate is working through the Defense Appropriations Bill (the last regular appropriations bill of the year, at long last), hamstrung by the fact that the previous continuing resolution expired at midnight and non-essentially Defense operations are technically unfunded at the moment (which is okay on a Saturday, but pretty bad come Monday if a bill isn't signed.)
Finally, even assuming Senate passage of the bill, there is still the whole conference process....how much will liberals in the House be willing to give ground to keep Nelson on board?
But, despite the remaining obstacles, Democrats are far closer to passage than I expected them to get this year, assuming this deal is real.
What exactly the deal contains is not yet clear. The Reid "manager's amendment" that makes all these changes is posted online at the link below:
http://www.politico.com/static/PPM145_chris.html
It is almost 400 pages long, so I haven't had time to digest it yet, but I'l provide full analysis as soon as I can.
How Much Does H.R. 1 Matter?
It is the crowning political achievement for the still-young (although looking older) President Barack Obama -- the American Recovery and Reinvestment Act. The $787 billion stimulus bill, the heart of a brutal political fight last winter and spring and the largest economic stimulus ever passed in absolute dollar terms (although certainly FDR had a larger stimulus program relative to the size of the economy), this bill is certainly the most significant legislation signed into law of the 115 bills the President Obama has signed in the past 334 days.
But, does it matter? It was (unwisely) advertised as keeping unemployment below 8% (unemployment stands at 10.0% today, down slightly from last month's high of 10.2%). The number of jobs even its strongest advocates claim to "save" or create is dwarfed by the overall job losses in the economy. And in many ways, the actions under TARP and the massive expansion of the Fed's balance sheet, gobbling up everything from bonds to mortgage-backed securities to keep easy money flowing in the economy, contributed far more money to stabilizing the economy (TARP was $700 billion, the Fed's balance sheet has ballooned to over $2 trillion.)
Finally, the stimulus is now pretty unpopular. People don't tend to be particularly patient where unemployment is concerned (ask George Herbert-Walker Bush, who went from 91% to 38% approval in about a year, thanks to an unemployment rate nowhere near as bad as this one.)
Actions under the stimulus bill have been slow as well. The government will miss my benchmark of having 40% of the funds distributed in the 2009 calendar year. The latest government report, as of December 11th:
Tax Cuts: $92.8 billion paid out of $288 billion authorized (32.2% spent)
Spending: $152.6 billion paid out of $499 billion authorized (30.6% spent)
Total: $245.4 billion spent out of $787 billion authorized (31.2% spent)
A quarter of a trillion dollars is a lot of money to have spent this year, but is a small piece of the $3 trillion or so that all of the sources above add up to that has been pumped into the economy since the start of the financial crisis.
So was the stimulus even worth doing?
Absolutely. As amazed as you might be by this, I actually think the bill looks better in retrospect. The coordinated actions of the federal government, while imperfect, have had a huge impact in staving off a massive depression and spurring positive economic growth in the third quarter (and almost surely the fourth quarter as well.)
Consider:
(1) TARP for Banks
Without TARP (credit goes to President George W. Bush on this one for alienating the base of his party to do what needed to be done), it is very likely that Citigroup and Bank of America would have gone bankrupt, causing such a severe contraction of credit that we would likely be mired in depression for years. The banks are paying back the money with interest, meaning that on top of saving the economy, the bank-funding portion of TARP is actually turning out to be a good financial investment for the government.
Yes, the final plan looked nothing like what Hank Paulson described to congress when the bill was passed, whereby the government was supposed to buy the bad assets, not invest in the banks and certainly the original approach was better in many ways, but the government quickly determined it was not feasible in the timeline with which they needed to act.
(2) TARP for AIG
This was a bad deal. A big chunk of money was poured into insurance giant AIG ($180 billion in total) and short of a miracle, I see no path to recovering all that money. I have also been highly critical of this funding in the past -- you don't need to bail out the guy insuring the loan if you bail out the guy making the loan. There was a legitimate interest in protecting the stakeholders in other divisions of AIG (seniors who depending on a fixed annuity from AIG for retirement income, for instance), but this could have been accomplished by severing those portions of AIG and providing much smaller levels of funding to keep them afloat.
(3) TARP for the Auto Industry
Okay, so President Bush got this wrong initially, pumping more money into a losing business model. President Obama initially made the same mistake, before realizing that bankruptcy was the ONLY path to survival for GM and Chrysler. These bankruptcies should have come months earlier without the thrown-away federal money, but the structure of providing bridge capital to these companies in exchange for large equity stakes was ultimately the right way to go. Without these actions, two industrial giants would have collapsed entirely, sending manufacturing into a deadly tailspin (you think 20% unemployment in Detroit is bad, try 50%!)
(4) Ben Bernake's Management
Federal Funds rates of 0.25%, the lowest in history have spurred short-term borrowing rates as low as 4% for many consumers and even lower short-term borrowing rates for businesses. Money has been made historically extremely cheap. You think the credit crunch is bad now, try to the same environment with interest rates at 1.5x or 2x this level.
The Fed sopping up other securities to the tune of $2 trillion is another mechanism to inject liquidity into the monetary system. In essence, it amounts to the government printing money and using it to suck up debt. This would be a really bad move in an economy with even moderate inflation, but inflation risk has been extremely low to date.
(5) The Stimulus
While it doesn't look like a ton of money in the grand scheme of 1-4, the stimulus has done several very important things. First, it stabilized state governments, who can't deficit spend in a recession, avoiding massive layoffs of government workers. Second, it has started to provide infrastructure employment, which has a halo effect on economic growth beyond the immediate employment impact of those projects. Third, it has provided support for two key industries, the auto industry and the home-building industry through cleverly designed, highly effective tax subsidizes. Fourth, lest we forget, for the most part, the infrastructure spend is by and large things that NEED to be done anyway. In fact, I would argue that there wasn't ENOUGH investment in roads, bridges, rail and green energy in the bill.
The stimulus is structured to be a slow-burn: stabilizing state governments and providing the tax subsidizes immediately, but putting out the infrastructure spending on a much slower calendar. This is a politically-losing structure, at least in the short-term, but may be the right move in the long-term.
Working together, all these things have staved off disaster. I freely admit that looking out over the abyss, I did not see the magnitude of this crisis. Fortunately, Bernake, Paulson, Geithner and company did and the coordinated effort of the federal government is an example of government actually doing a massive program well.
There is a ton of mess to clean up:
(1) Unwinding all the TARP investments in banks. This has started, but getting all that money back is a slow process.
(2) Unwinding the AIG investment. This could take years as AIG is still in no position to pay.
(3) Unwinding the auto industry investment. GM owns a huge stake in GM (as the controlling owner) and a smaller stake in Chrysler. Unwinding this will take a stock offering that fetches a price enabler the government to recover its money.
(4) Unwinding the Fed balance sheet. This should start immediately, but in a measured way. The risk of inflation is starting to return as the economy sputters back to life. Acting too late on this could have terrible effects on our currency and the value of savings. The indications from the Fed so far is that it may take too long to act.
(5) Returning interest rates to normal levels. When the fourth quarter GDP figures come out, if they continue in the 2-3% growth range, I would argue that slowly bumping up rates should begin immediately. The currently low rates are great for borrowers, but are killing savers and people living off interest income, mostly seniors. They also risk allowing a surge in inflation, which would further destroy individual assets Historical norms put this rate around 3%. Bumping it to 0.5% in the spring wouldn't be so bad, would it? Alas, the Fed seems unlikely to touch rates until at least early 2011, at which point, the risk of inflation may be significant.
I was overcritical of men like Bernake and Geithner. Bernake deserves a second term at the Fed, having, on balance, made mostly the right moves. Geithner, for all his flaws, has done important work to stabilize the economy and deserves to stay on the job.
Here's to a better economy in 2010.
Saturday, December 19, 2009
Friday, December 18, 2009
Will President Obama Get His Christmas Wish?, Polls Stabilize, What Are We Going to Do About the Deficit?
Race to 60 -- It's All About Senator Nelson
Amazingly, after months of protracted debate, ugly town halls, tea parties, negotiation, accusations and discussion the fate of health care legislation in the US Senate, one of President Obama's top two domestic priorities (the economy being the other) appears to rest completely in the fate of classically moderate Senator Ben Nelson (D-NE). Sure, there are other variables. Olympia Snowe (R-ME) could jump back in the fold with the public option gone and support passage. Jim Webb (D-VA) could jump ship and torpedo things. Joe Lieberman (I-CT) could get unhappy all of a sudden again. Heck, Robert Byrd (D-WV) is still very ill and could be unable to vote.
But by far the most likely scenario is: 57 Democrats and 2 Independents support the bill, 40 Republicans oppose it, Ben Nelson casts the deciding vote on whether or not to break the filibuster. And he knows it.
Senator Nelson's primary concerns have been #1 abortion and #2 the cost of the bill. My sense is that a favorable CBO opinion could solve #2, but I'm not sure Senator Nelson is in the mood for anything less than absolute victory on #1, which would mean a full extension of the Hyde amendment to any government-subsidized program, essentially barring abortion coverage on subsidized policies. The Democrats will probably have to give him what he wants to get a bill passed.
Meanwhile, the GOP is becoming more brazen with their delay tactics. It looks like we are in for a lot of out loud bill reading as they continue to use every available legislative tactic to delay, torpedo, pick your word, the bill. The GOP is bolstered by polls that the public doesn't support the plan (although, they appear to support almost all of its provisions, in yet another example of the "we don't understand, so we fear" dynamic in American politics) and is already smelling blood in 2010.
My odds on passing a bill by Christmas? 2:1 against. But I'm not taking or placing any bets...the situation is too fluid.
President Obama Stabilizes
The slide in President Obama's approval numbers appears to have been arrested, at least for now. This is a continued pattern of what we have seen in the past 11 months, periods of declining popularity followed by periods of stability. For now, he has stabilized with slightly more people approving of his job performance than disapproving. Honestly, if an election were held today, this means he would probably win. But his slide has been massive since early in his Presidency and he has yet to show any capability to regain "disapprovers" once he has lost them.
The pattern actually looks quite a bit like Bill Clinton's numbers in 1993, which has to strike fear in Democratic hearts as to the potential results of the mid-terms.
Little movement in the monthlies from my last post, but when you stand back and look at the path over the past 11 months, you do get the sense that the President needs to get in better control.
Deficits Galore
Okay, myself and most major economists would give the President a pass on the deficit last fiscal year and this fiscal year. We were in a risky economic situation, which is exactly the time that you should be running large deficits to stimulate the economy. But the budget that passed out of Congress contains huge increases in discretionary spending, entitlements are increasing at massive rates on their own as the baby boomers start to retire and defense spending is likely only to increase as we escalate in Afghanistan. The President doesn't get a free pass in Fiscal 2011, so what should he do?
#1 Let the Bush tax cuts expire. All of them. The tax cuts for those over $250K will no doubt expire, but President Obama has ruled out rolling back the other tax cuts.
#2 Freeze discretionary spending. Probably not going to happen
#3 Accelerate exit from Iraq -- saves big money. Could happen.
#4 Lift the income cap on Social Security taxes. Odds are against, but could happen.
#5 Raise the retirement age for both Medicare and Social Security by 3 years. Zero chance of happening.
These 5 things alone would put us on the path to stability, but as I handicap above, few of them will happen. What is far more likely is very modest deficit reductions based on an improving economy and the piece of the Bush tax cuts that do expire that cause President Obama to declare we are on the right path, when in fact we will still be headed for wreckage.
Times like these make me appreciate the courage of President George Herbert-Walker Bush who did the right thing (raised taxes) even though it infuriated his own party, alienated moderates and probably cost him re-election. He did it because he knew it was best for the country. That's a real leader. Anybody can promise more spending and lower taxes. Courage is making the tough calls to raise taxes and cut spending. And we haven't seen much courage in the past two administrations.
President Clinton also had the courage to raise taxes...on upper income earners, on gasoline. He, combined with a GOP congress that didn't want to give him a dime for social programs, balanced the budget. Pretty powerful stuff. Maybe we'll get to a good dynamic like that in 2010 if the GOP takes back or makes major inroads into the House. The 90s weren't so bad, I'd take a do-over. Heck, I might even vote GOP in 2010 if I don't see a credible, serious deficit reduction plan from President Obama that makes real sacrifices (I'm not holding my breath.)
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Amazingly, after months of protracted debate, ugly town halls, tea parties, negotiation, accusations and discussion the fate of health care legislation in the US Senate, one of President Obama's top two domestic priorities (the economy being the other) appears to rest completely in the fate of classically moderate Senator Ben Nelson (D-NE). Sure, there are other variables. Olympia Snowe (R-ME) could jump back in the fold with the public option gone and support passage. Jim Webb (D-VA) could jump ship and torpedo things. Joe Lieberman (I-CT) could get unhappy all of a sudden again. Heck, Robert Byrd (D-WV) is still very ill and could be unable to vote.
But by far the most likely scenario is: 57 Democrats and 2 Independents support the bill, 40 Republicans oppose it, Ben Nelson casts the deciding vote on whether or not to break the filibuster. And he knows it.
Senator Nelson's primary concerns have been #1 abortion and #2 the cost of the bill. My sense is that a favorable CBO opinion could solve #2, but I'm not sure Senator Nelson is in the mood for anything less than absolute victory on #1, which would mean a full extension of the Hyde amendment to any government-subsidized program, essentially barring abortion coverage on subsidized policies. The Democrats will probably have to give him what he wants to get a bill passed.
Meanwhile, the GOP is becoming more brazen with their delay tactics. It looks like we are in for a lot of out loud bill reading as they continue to use every available legislative tactic to delay, torpedo, pick your word, the bill. The GOP is bolstered by polls that the public doesn't support the plan (although, they appear to support almost all of its provisions, in yet another example of the "we don't understand, so we fear" dynamic in American politics) and is already smelling blood in 2010.
My odds on passing a bill by Christmas? 2:1 against. But I'm not taking or placing any bets...the situation is too fluid.
President Obama Stabilizes
The slide in President Obama's approval numbers appears to have been arrested, at least for now. This is a continued pattern of what we have seen in the past 11 months, periods of declining popularity followed by periods of stability. For now, he has stabilized with slightly more people approving of his job performance than disapproving. Honestly, if an election were held today, this means he would probably win. But his slide has been massive since early in his Presidency and he has yet to show any capability to regain "disapprovers" once he has lost them.
The pattern actually looks quite a bit like Bill Clinton's numbers in 1993, which has to strike fear in Democratic hearts as to the potential results of the mid-terms.
Little movement in the monthlies from my last post, but when you stand back and look at the path over the past 11 months, you do get the sense that the President needs to get in better control.
Deficits Galore
Okay, myself and most major economists would give the President a pass on the deficit last fiscal year and this fiscal year. We were in a risky economic situation, which is exactly the time that you should be running large deficits to stimulate the economy. But the budget that passed out of Congress contains huge increases in discretionary spending, entitlements are increasing at massive rates on their own as the baby boomers start to retire and defense spending is likely only to increase as we escalate in Afghanistan. The President doesn't get a free pass in Fiscal 2011, so what should he do?
#1 Let the Bush tax cuts expire. All of them. The tax cuts for those over $250K will no doubt expire, but President Obama has ruled out rolling back the other tax cuts.
#2 Freeze discretionary spending. Probably not going to happen
#3 Accelerate exit from Iraq -- saves big money. Could happen.
#4 Lift the income cap on Social Security taxes. Odds are against, but could happen.
#5 Raise the retirement age for both Medicare and Social Security by 3 years. Zero chance of happening.
These 5 things alone would put us on the path to stability, but as I handicap above, few of them will happen. What is far more likely is very modest deficit reductions based on an improving economy and the piece of the Bush tax cuts that do expire that cause President Obama to declare we are on the right path, when in fact we will still be headed for wreckage.
Times like these make me appreciate the courage of President George Herbert-Walker Bush who did the right thing (raised taxes) even though it infuriated his own party, alienated moderates and probably cost him re-election. He did it because he knew it was best for the country. That's a real leader. Anybody can promise more spending and lower taxes. Courage is making the tough calls to raise taxes and cut spending. And we haven't seen much courage in the past two administrations.
President Clinton also had the courage to raise taxes...on upper income earners, on gasoline. He, combined with a GOP congress that didn't want to give him a dime for social programs, balanced the budget. Pretty powerful stuff. Maybe we'll get to a good dynamic like that in 2010 if the GOP takes back or makes major inroads into the House. The 90s weren't so bad, I'd take a do-over. Heck, I might even vote GOP in 2010 if I don't see a credible, serious deficit reduction plan from President Obama that makes real sacrifices (I'm not holding my breath.)
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Monday, December 14, 2009
What Deal?, Senate Passes the Minibus
The Health Care Deal That Never Was
I must admit I'm baffled. Senator Harry Reid announces a deal between liberals and moderates on the public option. This weekend the house of cards came crashing down as Sen. Ben Nelson (D-NE) expressed reservation, as did Sen. Mary Landrieu (D-LA) and Sen. Joe Lieberman (I-CT) expressed unequivocal outright opposition. All of which begs the question -- how could a deal be struck between liberals and moderates without these three in the room? Just exactly what the heck is going on here?
Liberals are reportedly furious at Lieberman for basically completely ruling out the Medicare buy-in compromise, even in advance of the CBO cost estimate. But should they really be surprised? Lieberman has been outspoken in his opposition to a public option from the get-go, so if he wasn't a part of the deal-making, they have no one the blame but themselves.
Yes, Lieberman is a hypocrite. He campaigned on the public option in 2000 and supported it on camera as recently as 2006. Yes, he is looking like a bit of a narcissist these days as he frequently grabs media attention and conservative love as he lurches to the right (endorsing John McCain, praising Sarah Palin, for war in Iraq and the surge, against the public option), as well as ocassional liberal deal-brokering (the stimulus plan.) But he is hardly an unknown commodity at this point.
Can the Dem's still get a deal? Looks like not with the public option in. This means access but no real mechanism for cost containment. We'll get more people insured, but we'll be having this debate again in a few years when the whole thing is all to unaffordable...just like the much more expensive perscription drug plan (oh wait, we don't talk about that cost.)
$800 billion? Socialism! $600 billion -- That's Just the Biz
Politics are a funny thing. The Senate quietly busted through an attempted GOP filibuster and passed the Minibus spending package on Sunday, the same bill passed by the house last week. It is a $600 billion bill that has thousands of earmarks and that I doubt anyone in congress has actually read (given that it was just written late last week!) So...we can get this pork-laden minibus done in a few days, but health care, a bill of a similar size, but spread over 10 years, instead of 1, we can't get done in 11 months? Heck, the stimulus bill spends more in 3 years than health care will cost in 10. The perscription drug plan passed by a GOP congress costs almost twice as much.
I guess some things just become lightning rods. Back to funding that honey bee research.
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I must admit I'm baffled. Senator Harry Reid announces a deal between liberals and moderates on the public option. This weekend the house of cards came crashing down as Sen. Ben Nelson (D-NE) expressed reservation, as did Sen. Mary Landrieu (D-LA) and Sen. Joe Lieberman (I-CT) expressed unequivocal outright opposition. All of which begs the question -- how could a deal be struck between liberals and moderates without these three in the room? Just exactly what the heck is going on here?
Liberals are reportedly furious at Lieberman for basically completely ruling out the Medicare buy-in compromise, even in advance of the CBO cost estimate. But should they really be surprised? Lieberman has been outspoken in his opposition to a public option from the get-go, so if he wasn't a part of the deal-making, they have no one the blame but themselves.
Yes, Lieberman is a hypocrite. He campaigned on the public option in 2000 and supported it on camera as recently as 2006. Yes, he is looking like a bit of a narcissist these days as he frequently grabs media attention and conservative love as he lurches to the right (endorsing John McCain, praising Sarah Palin, for war in Iraq and the surge, against the public option), as well as ocassional liberal deal-brokering (the stimulus plan.) But he is hardly an unknown commodity at this point.
Can the Dem's still get a deal? Looks like not with the public option in. This means access but no real mechanism for cost containment. We'll get more people insured, but we'll be having this debate again in a few years when the whole thing is all to unaffordable...just like the much more expensive perscription drug plan (oh wait, we don't talk about that cost.)
$800 billion? Socialism! $600 billion -- That's Just the Biz
Politics are a funny thing. The Senate quietly busted through an attempted GOP filibuster and passed the Minibus spending package on Sunday, the same bill passed by the house last week. It is a $600 billion bill that has thousands of earmarks and that I doubt anyone in congress has actually read (given that it was just written late last week!) So...we can get this pork-laden minibus done in a few days, but health care, a bill of a similar size, but spread over 10 years, instead of 1, we can't get done in 11 months? Heck, the stimulus bill spends more in 3 years than health care will cost in 10. The perscription drug plan passed by a GOP congress costs almost twice as much.
I guess some things just become lightning rods. Back to funding that honey bee research.
If you like this site, tell your friends.
Friday, December 11, 2009
The Sort of Health Care Deal, Dirty Tricks and Bad Government, The Closely Divided Nation, A Tale of Two Tales
Democrats Strike a "Broad Agreement"
You have to give Senator Reid this...he is trying like hell to keep his caucus united behind health care reform. The announcement this week of a "broad agreement" between liberal and moderate Democrats on the public option potentially paves the way for passage of a health care bill from the Senate this year...maybe. Assuming Sen's Lieberman, Webb, Landrieu, Lincoln and Nelson are all on board with the agreement (Lieberman and Nelson being by far the most staunch critic of the public option, Webb and Nelson being the two Senators who have mostly voted with the GOP on recommit motions thus far and Senator Lincoln being among the most vulnerable to attack from the right on this issue in 2010), it settles one of the two key issues that has divided the Democratic caucus.
The agreement, in essence, would dissolve the public option in its present form and replace it with a hybrid system, whereby those 55 to 64 would be able to buy into the Medicare system (in essence, creating a "public option" for them, complete with the accompanying cost controls), while those 54 and under would be able to buy into a program that is managed by the government but provided by a private provider or private providers, similar to the government employees insurance program. It gives the public option liberals the 55 to 64 year old population on the public rolls and gives public option opponents the fact that no new government-run program is created.
The compromise is actually better in my eyes than the original legislation. The public option as originally designed in the Senate bill did little to curb costs as it would only allow the government to negotiate with providers, the same as any insurance company and would likely include only a pool of high-risk individuals, those who couldn't find a deal in the private market. The Medicare compromise allows the government to leverage its power to legislate compensation levels for people in the program and is a much more powerful carrier, since the program already contains basically everyone 65 and up. Providers could, as always refuse to treat people on Medicare, but rejecting providing care for all seniors is worlds different from rejecting providing care for a relatively smaller group of high-risk individuals. As has been the case with Medicare so far, I would guess most providers would play ball, which would mean favorable pricing and therefore cost containment. None of this helps the 54 and under crowd, but I'll take something over nothing.
But, the public option is not the only source of division in the Democratic caucus. The Senate also rejected the amendment offered by Senator Nelson this week that would have strengthened the prohibition of the inclusion of abortion coverage in the health care bill.
The bill, as presently written, prohibits use of government subsidies to pay for abortion coverage, but allows for abortion to be in the overall coverage schemes provided by private insurers, provided the portion of the coverage that covers abortion is funded through the out-of-pocket portion of the premium. In other words, if there is a $500/month health policy and the individual pays $100/month of that premium with the government picking up the rest of the tab, the policy could provide abortion coverage as long as the cost of that coverage is not more than $100/month. Nelson and other anti-abortion advocates (as well as some that favor abortion rights but are wary of funding abortions with federal dollars) object to the provision as currently written, since virtually all policies would have an individual contribution sufficient to fund abortion coverage, meaning that virtually all federally subsidized policies would be free to offer coverage for abortion services.
Senator Nelson's amendment would have expressly prohibited providing abortion coverage for subsidized policies. Essentially, it would require someone wanting abortion coverage to pay for a separate policy to insure abortions, although that could, theoretically come from the same company. It is very similar in language to the House amendment that Bart Stupak successfully pushed through in the House version of the bill. The senate rejected the amendment 54-45, with Republican Senators Susan Collins and Olympia Snowe joining the majority of Democrats to defeat the amendment, which won the support of the remaining Republicans plus 7 Democrats.
Senator Nelson has said that he will not support the final bill with the abortion amendment, so assuming that Reid has agreement with all the Democrats on the public option, he will still need to win over either Nelson or one Republican (presumably Olympia Snowe) to carry the day and get his 60 votes.
Victory is in sight for Reid, but is still not assured. The Democrats would be wise to give ground on the abortion issue...it is unlikely that the bill could get back through the House without the provision anyway.
Which brings me to one more point...if the Democrats do get a bill through the Senate, why not vote on that bill in the House unamended and skip the conference committee process? Let me explain...ordinarily when the House and Senate pass differing versions of legislation, a conference committee from the two bodies melds the two bills into a final bill that is then revoted on by both houses. But that is not how it HAS to work. Given that any final bill would have to look essentially the same as the Senate bill, if one passes, why not just have the House adopt the Senate bill as is? It would shorten the process, dodge another tough fight in the Senate and get a bill to the President by year's end (assuming the Senate is able to move something by then, which is far from assured.)
The Senate is taking a break from health care for a few days while the CBO scores the Reid compromise. In the meantime, they are going to take up a truly awful example of:
Bad Government, Plain and Simple
I've written extensively on how fouled up the appropriations process has been this year and ever year in recent memory. It is the middle of December and the majority of agencies still don't have a budget for the fiscal year that started in October, but rather, have been operating on a series of continuing resolutions, which provide short-term extensions of last years budget into this year. So, basically, the departments have been operating tactically, unsure of what longer term projects will be approved and which will not. Not a great practice.
Enter the Minibus. A bill was shoved through the House this week by a 221-202 vote (all Republicans voting "no", joined by 28 Democrats) that would cover appropriations for the Departments of Transportation, Housing and Urban Development, Commerce, Justice, Labor, Health and Human Services, Veterans Affairs and State in one fell swoop, leaving only the Department of Defense budget to be dealt with at a later date. The Senate will likely vote next week, before the present continuing resolution expires on December 18th.
So shouldn't I be happy that Congress is finally moving the ball on appropriations? Hell no! This massive bill was shoved through with almost no debate, with some of the departments not even having an initial bill that was debated in both houses of congress with an opportunity for amendment. The bill was voted on less than 24 hours after it was printed, leaving zero time for public examination of the legislation, which probably contains poor provisions and irresponsible earmarks that we may never even hear about until after it is law.
Yes, finally passing a budget is good. Doing it in the dark rather than in the sunlight is not. There are plenty of working days for congress to do its job before the fiscal year starts. This type of mess happens when they fail to show any type of discipline with the calendar. And one has to wonder if some members don't like it better this way....rammed through bills are easier to cram in pet provisions.
Democrats should be ashamed. Unfortunately, this issue is complex and mundane enough that it will likely garner little coverage or public outcry, as the whole budgeting process as failed to do, just like every year.
On the President, a Closely Divided Nation
It's obvious that they love President Obama in Europe still. The latest Nobel Peace Prize winner (nope, not going to rehash that debate) is a rock star overseas. He used to be a rockstar here. Now he seems all too human. On the question of whether the President is doing well, Americans are sharply divided, and getting closer and closer to even.
President Obama's aggregate approve minus disapprove numbers have tracked below his 7.2% November vote margin every day since November 29th, his first days below this benchmark threshold. This means that his coalition has shrunk since November. He has yet to have a day where his disapproves exceed his approves yet, but judging by the pattern, if he doesn't start getting some good news, it may be just a matter of time.
His monthly averages, with smooth out the bumps, show a decline of almost 4% from his November numbers to December, which would put him on track to have his worst month since August, when angry town halls and tea party protests dominated the news.
The Rest Is Still Unwritten...
The President's declining poll numbers bring me to my central thought about the Obama Presidency thus far...the road has not yet forked. What I mean by that is I can clearly imagine two distinct narratives being told at the mid-terms in November 2010. Here they are:
"A brutal night for the Democrats as the drag of unpopular President Barack Obama leads the Republicans to retake the House of Representatives and make significant inroads into the Democratic majority in the Senate. The President, who has been plagued by persistent double digit unemployment following his failed stimulus package as well as attacks on his ineffectiveness as a leader as he failed to get either health care reform or environmental legislation passed. His foreign policy is seen as an extension of the policy failures of the Bush administration as casualties mount in Afghanistan and Iraq slips back into civil unrest. Many Democrats are now wondering aloud how they elected a man of such little executive experience and what this will all mean for the future of the party."
or
"A discouraging night for Republicans as they not only fail to make inroads in the House, but lose key seats in the Senate with Democratic wins in Ohio and Missouri. Buoyed by a dropping unemployment rate and a victory on health care, the Democrats now hold the seats to pass legislation virtually at will. President Obama's popularity, at its height, is bolstered by the sense that he is the among the most accomplished first year Presidents in history, having passed not only the most sweeping Health Care reform policy since Lyndon Johnson, but having pulled the country out of the worst economic conditions since the Great Depression, as unemployment falls below 8%. President Obama is also bolstered by strong international support for his policies, which have ended the Iraq war while stabilizing Afghanistan and driving the Taliban into hiding."
Which narrative will we tell? Probably somewhere in between. The point is, we don't really know yet whether the President will get his way on key legislation or whether what he has done on the economy and in the foreign policy arena will work. But the stakes for the performance of the economy, the success of the President's Afghanistan strategy and the fate of Health Care legislation are immense. And not just for the Democrats.
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You have to give Senator Reid this...he is trying like hell to keep his caucus united behind health care reform. The announcement this week of a "broad agreement" between liberal and moderate Democrats on the public option potentially paves the way for passage of a health care bill from the Senate this year...maybe. Assuming Sen's Lieberman, Webb, Landrieu, Lincoln and Nelson are all on board with the agreement (Lieberman and Nelson being by far the most staunch critic of the public option, Webb and Nelson being the two Senators who have mostly voted with the GOP on recommit motions thus far and Senator Lincoln being among the most vulnerable to attack from the right on this issue in 2010), it settles one of the two key issues that has divided the Democratic caucus.
The agreement, in essence, would dissolve the public option in its present form and replace it with a hybrid system, whereby those 55 to 64 would be able to buy into the Medicare system (in essence, creating a "public option" for them, complete with the accompanying cost controls), while those 54 and under would be able to buy into a program that is managed by the government but provided by a private provider or private providers, similar to the government employees insurance program. It gives the public option liberals the 55 to 64 year old population on the public rolls and gives public option opponents the fact that no new government-run program is created.
The compromise is actually better in my eyes than the original legislation. The public option as originally designed in the Senate bill did little to curb costs as it would only allow the government to negotiate with providers, the same as any insurance company and would likely include only a pool of high-risk individuals, those who couldn't find a deal in the private market. The Medicare compromise allows the government to leverage its power to legislate compensation levels for people in the program and is a much more powerful carrier, since the program already contains basically everyone 65 and up. Providers could, as always refuse to treat people on Medicare, but rejecting providing care for all seniors is worlds different from rejecting providing care for a relatively smaller group of high-risk individuals. As has been the case with Medicare so far, I would guess most providers would play ball, which would mean favorable pricing and therefore cost containment. None of this helps the 54 and under crowd, but I'll take something over nothing.
But, the public option is not the only source of division in the Democratic caucus. The Senate also rejected the amendment offered by Senator Nelson this week that would have strengthened the prohibition of the inclusion of abortion coverage in the health care bill.
The bill, as presently written, prohibits use of government subsidies to pay for abortion coverage, but allows for abortion to be in the overall coverage schemes provided by private insurers, provided the portion of the coverage that covers abortion is funded through the out-of-pocket portion of the premium. In other words, if there is a $500/month health policy and the individual pays $100/month of that premium with the government picking up the rest of the tab, the policy could provide abortion coverage as long as the cost of that coverage is not more than $100/month. Nelson and other anti-abortion advocates (as well as some that favor abortion rights but are wary of funding abortions with federal dollars) object to the provision as currently written, since virtually all policies would have an individual contribution sufficient to fund abortion coverage, meaning that virtually all federally subsidized policies would be free to offer coverage for abortion services.
Senator Nelson's amendment would have expressly prohibited providing abortion coverage for subsidized policies. Essentially, it would require someone wanting abortion coverage to pay for a separate policy to insure abortions, although that could, theoretically come from the same company. It is very similar in language to the House amendment that Bart Stupak successfully pushed through in the House version of the bill. The senate rejected the amendment 54-45, with Republican Senators Susan Collins and Olympia Snowe joining the majority of Democrats to defeat the amendment, which won the support of the remaining Republicans plus 7 Democrats.
Senator Nelson has said that he will not support the final bill with the abortion amendment, so assuming that Reid has agreement with all the Democrats on the public option, he will still need to win over either Nelson or one Republican (presumably Olympia Snowe) to carry the day and get his 60 votes.
Victory is in sight for Reid, but is still not assured. The Democrats would be wise to give ground on the abortion issue...it is unlikely that the bill could get back through the House without the provision anyway.
Which brings me to one more point...if the Democrats do get a bill through the Senate, why not vote on that bill in the House unamended and skip the conference committee process? Let me explain...ordinarily when the House and Senate pass differing versions of legislation, a conference committee from the two bodies melds the two bills into a final bill that is then revoted on by both houses. But that is not how it HAS to work. Given that any final bill would have to look essentially the same as the Senate bill, if one passes, why not just have the House adopt the Senate bill as is? It would shorten the process, dodge another tough fight in the Senate and get a bill to the President by year's end (assuming the Senate is able to move something by then, which is far from assured.)
The Senate is taking a break from health care for a few days while the CBO scores the Reid compromise. In the meantime, they are going to take up a truly awful example of:
Bad Government, Plain and Simple
I've written extensively on how fouled up the appropriations process has been this year and ever year in recent memory. It is the middle of December and the majority of agencies still don't have a budget for the fiscal year that started in October, but rather, have been operating on a series of continuing resolutions, which provide short-term extensions of last years budget into this year. So, basically, the departments have been operating tactically, unsure of what longer term projects will be approved and which will not. Not a great practice.
Enter the Minibus. A bill was shoved through the House this week by a 221-202 vote (all Republicans voting "no", joined by 28 Democrats) that would cover appropriations for the Departments of Transportation, Housing and Urban Development, Commerce, Justice, Labor, Health and Human Services, Veterans Affairs and State in one fell swoop, leaving only the Department of Defense budget to be dealt with at a later date. The Senate will likely vote next week, before the present continuing resolution expires on December 18th.
So shouldn't I be happy that Congress is finally moving the ball on appropriations? Hell no! This massive bill was shoved through with almost no debate, with some of the departments not even having an initial bill that was debated in both houses of congress with an opportunity for amendment. The bill was voted on less than 24 hours after it was printed, leaving zero time for public examination of the legislation, which probably contains poor provisions and irresponsible earmarks that we may never even hear about until after it is law.
Yes, finally passing a budget is good. Doing it in the dark rather than in the sunlight is not. There are plenty of working days for congress to do its job before the fiscal year starts. This type of mess happens when they fail to show any type of discipline with the calendar. And one has to wonder if some members don't like it better this way....rammed through bills are easier to cram in pet provisions.
Democrats should be ashamed. Unfortunately, this issue is complex and mundane enough that it will likely garner little coverage or public outcry, as the whole budgeting process as failed to do, just like every year.
On the President, a Closely Divided Nation
It's obvious that they love President Obama in Europe still. The latest Nobel Peace Prize winner (nope, not going to rehash that debate) is a rock star overseas. He used to be a rockstar here. Now he seems all too human. On the question of whether the President is doing well, Americans are sharply divided, and getting closer and closer to even.
President Obama's aggregate approve minus disapprove numbers have tracked below his 7.2% November vote margin every day since November 29th, his first days below this benchmark threshold. This means that his coalition has shrunk since November. He has yet to have a day where his disapproves exceed his approves yet, but judging by the pattern, if he doesn't start getting some good news, it may be just a matter of time.
His monthly averages, with smooth out the bumps, show a decline of almost 4% from his November numbers to December, which would put him on track to have his worst month since August, when angry town halls and tea party protests dominated the news.
The Rest Is Still Unwritten...
The President's declining poll numbers bring me to my central thought about the Obama Presidency thus far...the road has not yet forked. What I mean by that is I can clearly imagine two distinct narratives being told at the mid-terms in November 2010. Here they are:
"A brutal night for the Democrats as the drag of unpopular President Barack Obama leads the Republicans to retake the House of Representatives and make significant inroads into the Democratic majority in the Senate. The President, who has been plagued by persistent double digit unemployment following his failed stimulus package as well as attacks on his ineffectiveness as a leader as he failed to get either health care reform or environmental legislation passed. His foreign policy is seen as an extension of the policy failures of the Bush administration as casualties mount in Afghanistan and Iraq slips back into civil unrest. Many Democrats are now wondering aloud how they elected a man of such little executive experience and what this will all mean for the future of the party."
or
"A discouraging night for Republicans as they not only fail to make inroads in the House, but lose key seats in the Senate with Democratic wins in Ohio and Missouri. Buoyed by a dropping unemployment rate and a victory on health care, the Democrats now hold the seats to pass legislation virtually at will. President Obama's popularity, at its height, is bolstered by the sense that he is the among the most accomplished first year Presidents in history, having passed not only the most sweeping Health Care reform policy since Lyndon Johnson, but having pulled the country out of the worst economic conditions since the Great Depression, as unemployment falls below 8%. President Obama is also bolstered by strong international support for his policies, which have ended the Iraq war while stabilizing Afghanistan and driving the Taliban into hiding."
Which narrative will we tell? Probably somewhere in between. The point is, we don't really know yet whether the President will get his way on key legislation or whether what he has done on the economy and in the foreign policy arena will work. But the stakes for the performance of the economy, the success of the President's Afghanistan strategy and the fate of Health Care legislation are immense. And not just for the Democrats.
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Saturday, December 5, 2009
2010 Election Updates -- Democrats Still Holding On, At Least for Now
Below are the latest updates for the 2010 election. Let me qualify them by saying that generally speaking, my projections are going to be a lagging indicator, at least until we get heavy into the election season. This is because, while we have a number of tracking polls that release new polling data on President Obama's approval rating every day (Gallup, Rasmussen, etc.), 2010 Senate polls and generic House ballot polls are a little harder to come by. What that means is that to the extent that President Obama's sliding approval ratings impact Senate and House races, we may not see the full effect in these projections for a couple of weeks. As I always do, I want to use real polling data to project results, not a projection on top of a projection. Plus, it is difficult to tell from national Presidential polls what the impact on state-level races will be.
With all of those qualifiers, despite the headwinds the Democrats face, they are actually faring reasonably well, at least in the Senate. Of course, less is at stake in the Senate in 2010 than in the House -- only a little over a third of the seats are up, of course, and to a large extent, the map is favorable to the Democrats, since this is essentially a replay of the 2004 Senate elections, while the Democrats made their large gains in the 2006 and 2008 races, which won't repeat until 2012 and 2014 respectively.
So, here are the latest projections:
2010 Senate
A few changes to report here and they are mixed in direction -- I will report on those changes, as well as other races that do have not changed in projection but have new polling data:
Connecticut -- moves from Lean GOP Pick-up to Likely GOP Pick-up. As improbable as it would have sounded just a year ago, this dark blue state now shows Chris Dodd behind by 10 to 11% in the latest polls. He is in big, big trouble.
Delaware -- moves from Lean GOP Pick-up to Toss-up-- a new Susquehenna poll has Beau Biden up by 5%. Castle (who is running) has led in other recent polls, so this is not enough to tip this race back into the blue column, but certainly puts the outcome back up in the air.
New Hampshire -- moves from Toss-up to Lean DEM Pick-up -- Hodes leads anywhere from 1 to 5% in three new polls. While these leads are small, the breadth and direction of the polling, puts this one back marginally in the blue column.
New York (Gillebrand) -- remains a Lean DEM Hold -- she is anywhere from down 2% to up 5% versus Pataki and way up on Rep. Peter King. If Pataki is in, this is a toss-up, if Pataki is out, this is a safe hold.
Illinois -- remains a toss-up. The race to replace the embattled Sen. Roland Burris, appointed by disgraced ex-Gov. Blago is a dead heat in the last poll we have.
Pennsylvania -- remains a toss-up. Specter is up 5% in one poll, down 2% in another -- still no clear direction in this race.
Missouri -- remains a Lean DEM pick-up -- DEM's are up from 1 to 3% in a variety of polls. This one is razor-close, but is still directionally in the DEM column.
Ohio -- remains a Lean GOP Hold -- Portman is up 3 to 5% in the latest two polls.
Florida -- remains a Safe GOP Hold -- while Crist is taking some heat from the right, he is still heavily favored in the Republican primary and is up 17 to 31% in general election polls. If Crist starts to fall behind in the primary, I will re-evaluate. Republicans would be crazy not to nominate him.
This leaves us with:
Safe DEM Holds (7)
Hawaii, Maryland, New York (Schumer), Oregon, Vermont, Washington, Wisconsin
Likely DEM Holds (4)
California, Indiana, North Dakota, Massachusetts*
* Special election to be held in January
Lean DEM Holds (2)
Arkansas, New York (Gillebrand)
Lean DEM Pick-ups (2)
Missouri, New Hampshire
Toss-up -- DEM Controlled (3)
Pennsylvania, Illinois, Delaware
Toss-up -- GOP Controlled
None
Likely GOP Pick-up (1)
Connecticut
Lean GOP Pick-up (2)
Colorado, Nevada
Lean GOP Hold (3)
Kentucky, Georgia, Ohio
Likely GOP Hold (7)
North Carolina, Alaska, Arizona, Iowa, Kansas, South Dakota, Louisiana
Safe GOP Hold (6)
Florida, Alabama, Idaho, Oklahoma, South Dakota, Utah
Which leaves us with a projection of:
GOP Pick-up of 1 to 4 seats (central projection -- GOP +2 seats)
So, depending on the toss-ups, the new Senate would have 54 to 57 Democrats, plus 2 independents. Democrats would lose their filibuster breaking super-majority, but would retain a healthy margin.
The best case scenario for the GOP, that they take all the leaners, would lead to a GOP pick-up of 8 seats, leading to a new Senate with 50 Democrats, 48 Republicans and 2 Independents. This would still ensure Democratic control as the 2 Independents vote with the Democratic caucus and Vice-President Joe Biden is the tie-breaker in the event of a 50/50 split regardless.
In the House,
Generic polls are still all over the place, but I rely on my faith that aggregation produces the best results, reducing the impact of individual poll bias. The averaging shows:
GOP +0.5%
This leads to a projection of: GOP +30 Seats
Republicans would need a gain of 40 seats to regain control of the House. They don't have this kind of margin yet (unless you believe the more favorable polls that have their generic margin greater.) While it may seem kind of odd that an aggregation of polls that shows the GOP getting more votes wouldn't lead to a GOP majority, this has to do with the way the districts are drawn, which is marginally favorable to the Democrats, thanks to their greater control of redistricting after the 2000 census. This is the last election cycle that uses those districts, congressional seats will be reapportioned and redrawn for the 2012 election, following the 2010 census.
At present, the GOP would need to be at about +3% in order to retake the House. Still a tall order, but they are getting a whole lot closer than they were, even a few months ago.
It continues to appear that the GOP has a shot at taking the House in 2010, but little chance of retaking the Senate. Retaking the House would be huge for the GOP as they would essentially have the power to stop all tax and revenue bills, which constitutionally must pass the House before they are even considered in the Senate.
We have a long way to go before the 2010 mid-terms, so a lot could change in either direction. But the mid-terms are shaping up to be a very exciting set of races.
With all of those qualifiers, despite the headwinds the Democrats face, they are actually faring reasonably well, at least in the Senate. Of course, less is at stake in the Senate in 2010 than in the House -- only a little over a third of the seats are up, of course, and to a large extent, the map is favorable to the Democrats, since this is essentially a replay of the 2004 Senate elections, while the Democrats made their large gains in the 2006 and 2008 races, which won't repeat until 2012 and 2014 respectively.
So, here are the latest projections:
2010 Senate
A few changes to report here and they are mixed in direction -- I will report on those changes, as well as other races that do have not changed in projection but have new polling data:
Connecticut -- moves from Lean GOP Pick-up to Likely GOP Pick-up. As improbable as it would have sounded just a year ago, this dark blue state now shows Chris Dodd behind by 10 to 11% in the latest polls. He is in big, big trouble.
Delaware -- moves from Lean GOP Pick-up to Toss-up-- a new Susquehenna poll has Beau Biden up by 5%. Castle (who is running) has led in other recent polls, so this is not enough to tip this race back into the blue column, but certainly puts the outcome back up in the air.
New Hampshire -- moves from Toss-up to Lean DEM Pick-up -- Hodes leads anywhere from 1 to 5% in three new polls. While these leads are small, the breadth and direction of the polling, puts this one back marginally in the blue column.
New York (Gillebrand) -- remains a Lean DEM Hold -- she is anywhere from down 2% to up 5% versus Pataki and way up on Rep. Peter King. If Pataki is in, this is a toss-up, if Pataki is out, this is a safe hold.
Illinois -- remains a toss-up. The race to replace the embattled Sen. Roland Burris, appointed by disgraced ex-Gov. Blago is a dead heat in the last poll we have.
Pennsylvania -- remains a toss-up. Specter is up 5% in one poll, down 2% in another -- still no clear direction in this race.
Missouri -- remains a Lean DEM pick-up -- DEM's are up from 1 to 3% in a variety of polls. This one is razor-close, but is still directionally in the DEM column.
Ohio -- remains a Lean GOP Hold -- Portman is up 3 to 5% in the latest two polls.
Florida -- remains a Safe GOP Hold -- while Crist is taking some heat from the right, he is still heavily favored in the Republican primary and is up 17 to 31% in general election polls. If Crist starts to fall behind in the primary, I will re-evaluate. Republicans would be crazy not to nominate him.
This leaves us with:
Safe DEM Holds (7)
Hawaii, Maryland, New York (Schumer), Oregon, Vermont, Washington, Wisconsin
Likely DEM Holds (4)
California, Indiana, North Dakota, Massachusetts*
* Special election to be held in January
Lean DEM Holds (2)
Arkansas, New York (Gillebrand)
Lean DEM Pick-ups (2)
Missouri, New Hampshire
Toss-up -- DEM Controlled (3)
Pennsylvania, Illinois, Delaware
Toss-up -- GOP Controlled
None
Likely GOP Pick-up (1)
Connecticut
Lean GOP Pick-up (2)
Colorado, Nevada
Lean GOP Hold (3)
Kentucky, Georgia, Ohio
Likely GOP Hold (7)
North Carolina, Alaska, Arizona, Iowa, Kansas, South Dakota, Louisiana
Safe GOP Hold (6)
Florida, Alabama, Idaho, Oklahoma, South Dakota, Utah
Which leaves us with a projection of:
GOP Pick-up of 1 to 4 seats (central projection -- GOP +2 seats)
So, depending on the toss-ups, the new Senate would have 54 to 57 Democrats, plus 2 independents. Democrats would lose their filibuster breaking super-majority, but would retain a healthy margin.
The best case scenario for the GOP, that they take all the leaners, would lead to a GOP pick-up of 8 seats, leading to a new Senate with 50 Democrats, 48 Republicans and 2 Independents. This would still ensure Democratic control as the 2 Independents vote with the Democratic caucus and Vice-President Joe Biden is the tie-breaker in the event of a 50/50 split regardless.
In the House,
Generic polls are still all over the place, but I rely on my faith that aggregation produces the best results, reducing the impact of individual poll bias. The averaging shows:
GOP +0.5%
This leads to a projection of: GOP +30 Seats
Republicans would need a gain of 40 seats to regain control of the House. They don't have this kind of margin yet (unless you believe the more favorable polls that have their generic margin greater.) While it may seem kind of odd that an aggregation of polls that shows the GOP getting more votes wouldn't lead to a GOP majority, this has to do with the way the districts are drawn, which is marginally favorable to the Democrats, thanks to their greater control of redistricting after the 2000 census. This is the last election cycle that uses those districts, congressional seats will be reapportioned and redrawn for the 2012 election, following the 2010 census.
At present, the GOP would need to be at about +3% in order to retake the House. Still a tall order, but they are getting a whole lot closer than they were, even a few months ago.
It continues to appear that the GOP has a shot at taking the House in 2010, but little chance of retaking the Senate. Retaking the House would be huge for the GOP as they would essentially have the power to stop all tax and revenue bills, which constitutionally must pass the House before they are even considered in the Senate.
We have a long way to go before the 2010 mid-terms, so a lot could change in either direction. But the mid-terms are shaping up to be a very exciting set of races.
Friday, December 4, 2009
On Job Summits, Employment and Stimulus, President Obama's Shrinking Coalition, Analyzing the Early Senate Health Care Votes, Goldilocks vs. DC
Where Are The Jobs?
President Obama's highly covered and largely window-dressing "jobs summit" with business leaders has come and gone and the basic question on the mind of the population remains the same -- when will we return to a reasonable level of employment?
Why do I call the summit window-dressing? Because I don't need a summit to know when private industry will start hiring. Private industry will start hiring when their leaders believe that hiring a person will increase their bottom lines. Factories hire people when they believe they can sell more goods profitably and need more people to make them. Service industries hire people when they believe they can sell more services and need more people to provide them. Period. This isn't because business is evil, it is simply because businesses exist to make money. Ask yourself this -- if the President asked you to give money to other people for nothing in exchange, would you? If so, assume he's asking and I'll send my address. And businesses are no different.
So why has unemployment remained high? Because productivity in businesses is surging and sales are still somewhat soft. When productivity goes up, I need less people to do the same amount of work and I don't hire people. Businesses learned how to be more efficient in the recession because they had to in order to survive and consequently employment has lagged. This is very typical in a recession and believe it or not, is a good thing for the long run. Higher productivity means higher output and more wealth when businesses do grow by enough to hire.
But all is not bleak on the jobs front. The monthly BLS report this week showed that private payrolls dropped by only 11,000 jobs last month, the smallest decline in two years (since December 2007, to be precise.) 11,000 is basically a wash. A wash doesn't help bring down a double-digit unemployment number, but it does mean, that for the first time in two years, employment is no longer getting worse. We have a huge hole to dig out of, obviously, but this is as bad as it is going to get employment-wise. And that's great news.
The BLS report also showed unemployment dropping from 10.2% to 10.0%, but ignore that number. You aren't really dropping unemployment until employment grows. This drop was all about people dropping out of the workforce, not about people finding jobs. When the job growth number is 308,000 in a month, the amount that would be needed to drop the unemployment rate by 0.2% organically. We still have almost an 8 million job gap to reach a normal unemployment level of 5%.
So what's a government to do? Odd as it sounds, the best policy is probably to stay the course. The stimulus is actually working, having helped to swing GDP growth positive in the third quarter and it appears it will continue in positive territory in the fourth quarter. There is still plenty of stimulus money left...the latest government report shows:
Tax Cuts -- $92.8B out of $288B spent (32.2%)
Spending -- $144.8B out of $499B spent (29.0%)
Total Stimulus -- $237.6B out of $787B spent (30.2%)
So there is still plenty of life left in the stimulus, which is doling out a slow but steady feed into stabilizing the economy.
Of course, political winds are pushing the President to look like he is doing something, so I expect a series of small initiatives -- more unemployment benefit extensions, some small tax credits, some more infrastructure spending. But that, too, will be window dressing.
The economy is slowly recovering, but people are impatient and Democrats are scared. Expect more saber-rattling from the GOP and more jobs bills from the DEMs.
The Shrinking Obama Cult of Personality
When President Obama was elected President, it appeared that the old political order had been broken. Sure, he carried the Gore / Kerry parts of the country. He swept the Northeast, dominated the mid-west and carried the west coast. But he also won states that neither Kerry nor Gore was close in -- Virginia, Indiana, North Carolina. Heck, he was darn close in Montana -- not a lot of old faithful Democrats there.
As the President's poll numbers have slowly slid, I've continued to point out that he had at least maintained the coalition that gave him a 7.2% margin of victory in the national popular vote on election day.
Now, for the first time, that coalition is broken. His numbers have fallen below his vote totals from last November for the past five days. He is still in positive territory, but the recent trend has to scare the White House.
Judging by his monthly trend, we continue to see a pattern: A few months of stability, followed by a few months of decline. This was okay when he was riding high, but he is getting into dangerous territory now. The public is turning and the White House has yet to show an ability to win them back. He still has the Democratic loyalists and some of the Independents, but the Indies appear to be leaving a little every month.
So what does all this mean?
First, Democrats have more and more reason to be scared of a rout in 2010. As goes President Obama, so they will go. Forget all politics is local. Most politics for national offices is national. See 2006 and 2008 if you don't believe me. Updates on my 2010 projections in my next blog.
Second, President Obama doesn't have a lot of capital left to leverage against the scared moderates, like Sen. Blanche Lincoln (D-AR), who is up for re-election next year. This makes getting things like Health Care Reform through the Senate extremely difficult.
Early Health Care Votes
In the elusive search for 60 votes to break a filibuster in the Senate and move a bill forward, we have some early indications of the dividing lines, based on the votes on early amendments. Here is a recap:
(1) Roll Call Vote 355 -- on Sen. Mikulski's (D-MD) amendment to ensure women's preventative services were covered from dollar one in the bill
Vote: 61-39 for
Democrats voting no: Nelson (NE)
Republicans voting aye: Collins (ME), Snowe (Me)
(2) Roll Call Vote 356 -- On Sen. Murkowski's (R-AK) amendment to remove women's preventative services from the list of services that the government health board could provide requirements for
Vote: 59-41 against
Democrats voting aye: Nelson (NE)
Republicans voting no: none
(3) Roll Call Vote 358 -- On Sen. John McCain's (R-AZ) motion to send the bill back to committee
Vote: 58-42 against
Democrats voting aye: Nelson (NE), Webb (VA)
Republicans voting no: none
(4) Role Call Vote 360 -- On Sen. Thune's (R-SD) amendment to strike a number of the provisions in the bill, including the public option
Vote: 51-47 for (note: because of Senate procedural rules, this amendment required 60 votes)
Democrats voting aye: Bayh (IN), Carper (DE), Lincoln (AR), McCaskill (MO), Nelson (NE), Udall (CO), Warner (VA), Webb (VA)
Republicans voting no: none
(5) Role Call Vote 362 -- On Sen. Hatch's (R-UT) motion to send the bill back to committee
Vote: 57-41 against
Democrats voting aye: Nelson (NE), Webb (VA)
Republicans voting no: none
As you can see from the above, the Democrats have their work cut out for them. An outright majority in the Senate appears to oppose the public option in its present form. Two Democrats -- Nelson and Webb, appear to want to ditch the health care debate entirely for now. Only two Republicans, Collins and Snowe, show ANY inclination to break with their party on ANY issue in this debate.
If Harry Reid figures out a way to get to 60 within these constraints, he would indeed be a genius. This bill could still happen, but it appears the only path to success is going to be to ditch the public option (completely or near completely), give in on the abortion issue and find a way to get liberals to accept that as the best that they are going to do.
Stay tuned...
This Porridge is Too Hot and Too Cold
Oh, the pains of a centrist policy in a polarized Washington. Democrats hate the new Afghanistan policy because we are sending more troops. Republicans hate it because we have defined a date to start leaving (at least a soft date.) It seems nobody much likes President Obama's new Afghanistan strategy. Which is, frankly, probably the best endorsement of the policy available.
The good news for the Obama Administration is that there is zero chance that either party will band together to deny him funding for the war. He will get his policy in the Afghanistan war. Like I said before, I just pray he has it right.
Site Update
We had 353 visitors to the site last month, our high water mark for 2009. It only stands to reason that November means elections and elections means visits to prognosticating sites like this one. But thank you sincerely for reading. I hope you find this site interesting and thought-provoking. As always, I welcome your comments and suggestions.
President Obama's highly covered and largely window-dressing "jobs summit" with business leaders has come and gone and the basic question on the mind of the population remains the same -- when will we return to a reasonable level of employment?
Why do I call the summit window-dressing? Because I don't need a summit to know when private industry will start hiring. Private industry will start hiring when their leaders believe that hiring a person will increase their bottom lines. Factories hire people when they believe they can sell more goods profitably and need more people to make them. Service industries hire people when they believe they can sell more services and need more people to provide them. Period. This isn't because business is evil, it is simply because businesses exist to make money. Ask yourself this -- if the President asked you to give money to other people for nothing in exchange, would you? If so, assume he's asking and I'll send my address. And businesses are no different.
So why has unemployment remained high? Because productivity in businesses is surging and sales are still somewhat soft. When productivity goes up, I need less people to do the same amount of work and I don't hire people. Businesses learned how to be more efficient in the recession because they had to in order to survive and consequently employment has lagged. This is very typical in a recession and believe it or not, is a good thing for the long run. Higher productivity means higher output and more wealth when businesses do grow by enough to hire.
But all is not bleak on the jobs front. The monthly BLS report this week showed that private payrolls dropped by only 11,000 jobs last month, the smallest decline in two years (since December 2007, to be precise.) 11,000 is basically a wash. A wash doesn't help bring down a double-digit unemployment number, but it does mean, that for the first time in two years, employment is no longer getting worse. We have a huge hole to dig out of, obviously, but this is as bad as it is going to get employment-wise. And that's great news.
The BLS report also showed unemployment dropping from 10.2% to 10.0%, but ignore that number. You aren't really dropping unemployment until employment grows. This drop was all about people dropping out of the workforce, not about people finding jobs. When the job growth number is 308,000 in a month, the amount that would be needed to drop the unemployment rate by 0.2% organically. We still have almost an 8 million job gap to reach a normal unemployment level of 5%.
So what's a government to do? Odd as it sounds, the best policy is probably to stay the course. The stimulus is actually working, having helped to swing GDP growth positive in the third quarter and it appears it will continue in positive territory in the fourth quarter. There is still plenty of stimulus money left...the latest government report shows:
Tax Cuts -- $92.8B out of $288B spent (32.2%)
Spending -- $144.8B out of $499B spent (29.0%)
Total Stimulus -- $237.6B out of $787B spent (30.2%)
So there is still plenty of life left in the stimulus, which is doling out a slow but steady feed into stabilizing the economy.
Of course, political winds are pushing the President to look like he is doing something, so I expect a series of small initiatives -- more unemployment benefit extensions, some small tax credits, some more infrastructure spending. But that, too, will be window dressing.
The economy is slowly recovering, but people are impatient and Democrats are scared. Expect more saber-rattling from the GOP and more jobs bills from the DEMs.
The Shrinking Obama Cult of Personality
When President Obama was elected President, it appeared that the old political order had been broken. Sure, he carried the Gore / Kerry parts of the country. He swept the Northeast, dominated the mid-west and carried the west coast. But he also won states that neither Kerry nor Gore was close in -- Virginia, Indiana, North Carolina. Heck, he was darn close in Montana -- not a lot of old faithful Democrats there.
As the President's poll numbers have slowly slid, I've continued to point out that he had at least maintained the coalition that gave him a 7.2% margin of victory in the national popular vote on election day.
Now, for the first time, that coalition is broken. His numbers have fallen below his vote totals from last November for the past five days. He is still in positive territory, but the recent trend has to scare the White House.
Judging by his monthly trend, we continue to see a pattern: A few months of stability, followed by a few months of decline. This was okay when he was riding high, but he is getting into dangerous territory now. The public is turning and the White House has yet to show an ability to win them back. He still has the Democratic loyalists and some of the Independents, but the Indies appear to be leaving a little every month.
So what does all this mean?
First, Democrats have more and more reason to be scared of a rout in 2010. As goes President Obama, so they will go. Forget all politics is local. Most politics for national offices is national. See 2006 and 2008 if you don't believe me. Updates on my 2010 projections in my next blog.
Second, President Obama doesn't have a lot of capital left to leverage against the scared moderates, like Sen. Blanche Lincoln (D-AR), who is up for re-election next year. This makes getting things like Health Care Reform through the Senate extremely difficult.
Early Health Care Votes
In the elusive search for 60 votes to break a filibuster in the Senate and move a bill forward, we have some early indications of the dividing lines, based on the votes on early amendments. Here is a recap:
(1) Roll Call Vote 355 -- on Sen. Mikulski's (D-MD) amendment to ensure women's preventative services were covered from dollar one in the bill
Vote: 61-39 for
Democrats voting no: Nelson (NE)
Republicans voting aye: Collins (ME), Snowe (Me)
(2) Roll Call Vote 356 -- On Sen. Murkowski's (R-AK) amendment to remove women's preventative services from the list of services that the government health board could provide requirements for
Vote: 59-41 against
Democrats voting aye: Nelson (NE)
Republicans voting no: none
(3) Roll Call Vote 358 -- On Sen. John McCain's (R-AZ) motion to send the bill back to committee
Vote: 58-42 against
Democrats voting aye: Nelson (NE), Webb (VA)
Republicans voting no: none
(4) Role Call Vote 360 -- On Sen. Thune's (R-SD) amendment to strike a number of the provisions in the bill, including the public option
Vote: 51-47 for (note: because of Senate procedural rules, this amendment required 60 votes)
Democrats voting aye: Bayh (IN), Carper (DE), Lincoln (AR), McCaskill (MO), Nelson (NE), Udall (CO), Warner (VA), Webb (VA)
Republicans voting no: none
(5) Role Call Vote 362 -- On Sen. Hatch's (R-UT) motion to send the bill back to committee
Vote: 57-41 against
Democrats voting aye: Nelson (NE), Webb (VA)
Republicans voting no: none
As you can see from the above, the Democrats have their work cut out for them. An outright majority in the Senate appears to oppose the public option in its present form. Two Democrats -- Nelson and Webb, appear to want to ditch the health care debate entirely for now. Only two Republicans, Collins and Snowe, show ANY inclination to break with their party on ANY issue in this debate.
If Harry Reid figures out a way to get to 60 within these constraints, he would indeed be a genius. This bill could still happen, but it appears the only path to success is going to be to ditch the public option (completely or near completely), give in on the abortion issue and find a way to get liberals to accept that as the best that they are going to do.
Stay tuned...
This Porridge is Too Hot and Too Cold
Oh, the pains of a centrist policy in a polarized Washington. Democrats hate the new Afghanistan policy because we are sending more troops. Republicans hate it because we have defined a date to start leaving (at least a soft date.) It seems nobody much likes President Obama's new Afghanistan strategy. Which is, frankly, probably the best endorsement of the policy available.
The good news for the Obama Administration is that there is zero chance that either party will band together to deny him funding for the war. He will get his policy in the Afghanistan war. Like I said before, I just pray he has it right.
Site Update
We had 353 visitors to the site last month, our high water mark for 2009. It only stands to reason that November means elections and elections means visits to prognosticating sites like this one. But thank you sincerely for reading. I hope you find this site interesting and thought-provoking. As always, I welcome your comments and suggestions.
Tuesday, December 1, 2009
President Obama's War
10 months into his Presidency, the war in Afghanistan is President Barack Obama's war. Tonight marked a crucial inflection point in our strategy and in how future history books will be written about the long, protracted war in Afghanistan.
On an emotional note first, I found the speech somewhat flat. Recalling the passion that I felt after September 11th to get the evil that killed thousands of innocent Americans for no reason other than that they were in the wrong building on the wrong day, I thought the President missed an opportunity to provide emotional clarity for why we must be in Afghanistan. He mentioned this history, but his words failed to stir me and he has certainly shown a capability to stir and inspire in the past. He felt almost hurried in his delivery and there were a couple of points where he appeared to audibly trip over his words, perhaps a testament to the late finalization of the speech (word was, he continued to work on it in the hour leading up to its delivery.)
On the content, I feel better about the speech, although far from great. President Obama highlighted the risks of the Taliban and an Al Queda unconstrained. He made clear our goals -- dismantle the power base of these two organizations and build a sustainable security infrastructure in Afghanistan. He made clear that more troops were needed to accomplish this mission. He set a clear timeline for withdrawal.
But the speech was short on the specifics of the strategy. I don't leave hearing the speech with a sense of clarity around HOW these additional troops would help us clear these hurdles. The timeline seemed arbitrary -- why draw down after 18 months? Why not 12 months or 24? Why set a rigid timeline? Shouldn't this all be really clear after the length of his deliberations? Doesn't this sound a bit too much like the vaguely aspirational speeches that Bush used to give about Iraq? What about Pakistan? Can Karzai actually govern outside of Kabul?
The speech was also intensely political at times. There were the thinly veiled swipes at Bush Administration policy, which seem unnecessary at this stage of the game. There was also his reference to the 98-0 vote in the Senate and the 420-1 vote in the House to authorize the war. The message? Fellow Democrats -- we got in this together and we are still in this together.
I certainly believe that our prospects for success in dismantling terrorist networks in Afghanistan and establishing a stable (if only marginally Democratic) government are improved with the higher troop levels. Let's face it -- this is the first time we've really not given the military a shot to win this thing resource-wise before. But victory is still far from assured. And the President will have to have the fortitude to withstand public opinion (increasingly opposed to the war), the scrutiny of his own party (he will find few defenders in the Democratic caucus, except amongst the Joe Lieberman's and Jim Webb's of the world) and the emotional toll of bodies continuing to come back in coffins. I certainly respect him for listening to the moderate voices in his cabinet. I just hope for all of our sakes that we have the strategy to pull this off.
One thing is clear...this is the first issue on which President Obama now completely owns the success or failure. The economy? That was wrecked before he got here. Iraq? He was opposed to getting in and now is getting us out. Health care? We don't have a bill and even if we get one, it won't take effect in large measure until 2013 or 2014.
But this one he owns. If we are in a quagmire at this time next year, it belongs to the President. If Afghanistan is stable, it is to his credit.
You could argue that this was President Obama's first true Presidential moment -- Harry Truman's buck stopped with him tonight.
I pray he has this one right.
On an emotional note first, I found the speech somewhat flat. Recalling the passion that I felt after September 11th to get the evil that killed thousands of innocent Americans for no reason other than that they were in the wrong building on the wrong day, I thought the President missed an opportunity to provide emotional clarity for why we must be in Afghanistan. He mentioned this history, but his words failed to stir me and he has certainly shown a capability to stir and inspire in the past. He felt almost hurried in his delivery and there were a couple of points where he appeared to audibly trip over his words, perhaps a testament to the late finalization of the speech (word was, he continued to work on it in the hour leading up to its delivery.)
On the content, I feel better about the speech, although far from great. President Obama highlighted the risks of the Taliban and an Al Queda unconstrained. He made clear our goals -- dismantle the power base of these two organizations and build a sustainable security infrastructure in Afghanistan. He made clear that more troops were needed to accomplish this mission. He set a clear timeline for withdrawal.
But the speech was short on the specifics of the strategy. I don't leave hearing the speech with a sense of clarity around HOW these additional troops would help us clear these hurdles. The timeline seemed arbitrary -- why draw down after 18 months? Why not 12 months or 24? Why set a rigid timeline? Shouldn't this all be really clear after the length of his deliberations? Doesn't this sound a bit too much like the vaguely aspirational speeches that Bush used to give about Iraq? What about Pakistan? Can Karzai actually govern outside of Kabul?
The speech was also intensely political at times. There were the thinly veiled swipes at Bush Administration policy, which seem unnecessary at this stage of the game. There was also his reference to the 98-0 vote in the Senate and the 420-1 vote in the House to authorize the war. The message? Fellow Democrats -- we got in this together and we are still in this together.
I certainly believe that our prospects for success in dismantling terrorist networks in Afghanistan and establishing a stable (if only marginally Democratic) government are improved with the higher troop levels. Let's face it -- this is the first time we've really not given the military a shot to win this thing resource-wise before. But victory is still far from assured. And the President will have to have the fortitude to withstand public opinion (increasingly opposed to the war), the scrutiny of his own party (he will find few defenders in the Democratic caucus, except amongst the Joe Lieberman's and Jim Webb's of the world) and the emotional toll of bodies continuing to come back in coffins. I certainly respect him for listening to the moderate voices in his cabinet. I just hope for all of our sakes that we have the strategy to pull this off.
One thing is clear...this is the first issue on which President Obama now completely owns the success or failure. The economy? That was wrecked before he got here. Iraq? He was opposed to getting in and now is getting us out. Health care? We don't have a bill and even if we get one, it won't take effect in large measure until 2013 or 2014.
But this one he owns. If we are in a quagmire at this time next year, it belongs to the President. If Afghanistan is stable, it is to his credit.
You could argue that this was President Obama's first true Presidential moment -- Harry Truman's buck stopped with him tonight.
I pray he has this one right.
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