With Fiscal 2011 Behind Us, The Battle Turns to the Debt Ceiling and the Blueprint
I give John Boehner a lot of credit as a politician. When the GOP swept into control of the House last November, Republicans were quick to note that they still only controlled "one-half of one-third of government", that is, that they controlled half of the legislative branch but not any of the executive branch (certainly true) or the judiciary (not really true, but makes for a good one-liner.) But with control of the House came a very important power, one that I noted that we all should hold the GOP accountable for - control of the purse strings. And use that control the Republicans have done.
Think back to prior to November. The debates that took place in the last congress were about stimulus, health care, Don't Ask, Don't Tell, nuclear arms treaties. The President wanted to talk about comprehensive immigration reform and cap and trade. The Republicans have focused the political debate in this country on one thing and one thing only: government spending. Boehner did a masterful job getting most of what he wanted in the fiscal 2011 budget. This time-consuming debate was just an initial salvo in the debate to come.
First up, the debt ceiling. By sometime in late May, the federal government will have reached the maximum amount that it is allowed to borrow by law and will need permission from congress to continue issuing bonds. As there is no viable path to budgetary balance this year, the impact of not getting that permission would be nothing short of catastrophic. Essentially, large swaths of the government would shut down and the US would fall into default on treasuries, which would destroy the value of the full faith and credit of the government and cause massive spikes in interest rates. I don't think most of the Republicans want to see this happen, but they are certainly looking to use the debt ceiling as a bargaining chip. Boehner and company will attempt to use the debt ceiling legislation to extract even more significant cuts in spending. This is a fairly dangerous game of chicken, but from what I've seen, in games of chicken, the Democrats seem to be blinking first most of the time the past few years.
Then, there is the Ryan plan, the GOP blueprint for the next 10 years of government spending. All but 4 Republicans in the House supported the plan (no Democrats did), which called for abolishing Medicare and Medicaid as we know it, replacing Medicare with subsidized private plans and Medicaid with block grants to the states. It also called for extension of the Bush/Obama tax cuts at all income levels and major reductions in domestic discretionary spending (it left Social Security untouched, although some Republicans have been calling for the retirement age to be raised to 70 over time.)
If you would have told me a year ago that 98% of House Republicans would have supported a plan to dismantle Medicare, I wouldn't have believed you. But it just shows how far Boehner has been able to shift the debate. The Ryan plan is clearly DOA in the Democratically-controlled Senate and President Obama would veto it regardless, but it stakes out a striking opening position in the debate over balancing the federal budget.
Republicans seem highly likely to control both Houses in 2013 (see my previous post on the Senate map and how awful it is for the Dems in 2012), which means that the Presidential election will be very high stakes. If a Republican candidate wins, we could very well see something like the Ryan plan enacted.
President Obama, for his part, has called for more modest reductions in domestic discretionary spending, significant reductions in defense expenditures and allowing the Bush/Obama tax cuts to lapse for those making over $250K. It's a start, but doesn't go nearly far enough to fix the budget. Republicans are sure to strongly oppose the tax changes and a least a portion of the defense reductions.
Let the debate begin.
Why $4 Gas is a Good Thing
In the breakthrough economics book, Freakonomics, economist Steven Levitt makes one point abundantly clear over and over again: people respond to incentives. From drug dealers, to parents with kids in day care to sumo wrestlers, the book chronicles how incentives drive behavior large and small. The same is true with energy policy.
When gas is sub-$2/gallon, whatever we may say about carbon emissions, national security, etc., not a lot will change with the behavior of individuals that drives our oil consumption. When it reaches $4/gallon, magical things happen. People buy hybrid and electric cars. Corporations start investing in alternative energy. We start to make real progress against our dependence on foreign fuels and evolve our economy.
$4/gas hurts, but let's hope it is here to stay. Our green energy economy depends on it.
Sunday, April 17, 2011
Saturday, April 9, 2011
Crafty GOP Strategy Gets Them Most of What They Want
In the late hours of the night on Friday night, congressional leaders and the President reached an agreement on the discretionary budget for the remainder of Fiscal 2011.
On the surface, it looks like a compromise...the GOP had sought $61B of cuts and had sought to eliminate funding for Planned Parenthood. They got $38.5B in cuts and had to live with Planned Parenthood continuing to be funded by the federal government, albeit with the opportunity to symbolically vote against the funding. So they got 63% of their cuts but didn't get their key social policy change. Feels like a compromise that splits the difference, doesn't it?
But look closer. The continuing resolutions passed had already cut over $10B in funding. The temporary 6 day resolution that was passed to allow the government to keep functioning and provide time for the House and Senate to vote on the compromise cut another $2B. That's $50.5B in total cuts, 83% of what the GOP had sought.
And the Planned Parenthood funding? A red herring. The total annual funding to Planned Parenthood from the federal government totals a mere $75 million, or 0.02% of annual federal spending. And Planned Parenthood is already prohibited from providing abortion services with the funding. In fact, the funding provides cervical cancer screening and contraception, perhaps the latter is opposed by the very far right fringe of the GOP, but both are things that 99% of rational people would support. But by making it a central issue, Boehner and company were able to get the Dems to cave on the more important issues at stake.
So, the GOP, with its majority in one House of Congress, was able to get 83% of what it wanted. Nicely done. Now, can we have a debate about the 7/8ths of the federal budget not covered by domestic discretionary spending?
On the surface, it looks like a compromise...the GOP had sought $61B of cuts and had sought to eliminate funding for Planned Parenthood. They got $38.5B in cuts and had to live with Planned Parenthood continuing to be funded by the federal government, albeit with the opportunity to symbolically vote against the funding. So they got 63% of their cuts but didn't get their key social policy change. Feels like a compromise that splits the difference, doesn't it?
But look closer. The continuing resolutions passed had already cut over $10B in funding. The temporary 6 day resolution that was passed to allow the government to keep functioning and provide time for the House and Senate to vote on the compromise cut another $2B. That's $50.5B in total cuts, 83% of what the GOP had sought.
And the Planned Parenthood funding? A red herring. The total annual funding to Planned Parenthood from the federal government totals a mere $75 million, or 0.02% of annual federal spending. And Planned Parenthood is already prohibited from providing abortion services with the funding. In fact, the funding provides cervical cancer screening and contraception, perhaps the latter is opposed by the very far right fringe of the GOP, but both are things that 99% of rational people would support. But by making it a central issue, Boehner and company were able to get the Dems to cave on the more important issues at stake.
So, the GOP, with its majority in one House of Congress, was able to get 83% of what it wanted. Nicely done. Now, can we have a debate about the 7/8ths of the federal budget not covered by domestic discretionary spending?
Sunday, April 3, 2011
The Obama Doctrine, Any Chance for Real Entitlement Reform?, Energy Policy Twisting in the Wind
Is There an Obama Doctrine?
Every President has a philosophy behind how they involve the military in foreign affairs. The notion of a Presidential "doctrine" dates back to President James Monroe, whose "Monroe Doctrine" stated that the US would view further colonization in North America by European nations as an act of aggression but that the US would not interfere with existing colonies or with the internal affairs of European nations.
More recently, the "Bush Doctrine" of former President George W. Bush moved US foreign policy to a more activist position, parting ways with other Post-World War 2 Presidents in supporting the notion of pre-emptive war to protect US security interests, justifying intervention in Iraq, a country which had not attacked the US on the potential for a future threat.
So, more than 2 years into his Presidency, with airstrikes in Libya taking place in the past two weeks, it is worth asking, is there an "Obama Doctrine" and what is it?
The President has stepped up presence in the Afghanistan, wound down operations in Iraq, stayed out of tribal conflicts in Africa, but supported rebels in Libya.
Afghanistan is arguably a "shoot second" war, since the Taliban was clearly the driving force behind the September 11, 2001 attacks on the World Trade Center and the Taliban controlled the former government in Afghanistan. Iraq was clearly a pre-emptive war, as there was no overt act of aggression taken by Iraq.
Taking just these two examples, one would assume that the "Obama Doctrine" is more of a return to the philosophies of George H.W. Bush and Bill Clinton, of US intervention only where there is a national security interest and we are struck first, or where there is a clear act of aggression against a US ally, such as in the case of the first Gulf War.
But then there is Libya. We were not attacked. Libya did not attack a US ally. This is clearly a case of involving the US in a civil war in Libya. And therein lies the distinction. It is not quite a war of pre-emption (no one considers Libya a credible threat to US security compared to Iran or North Korea), nor is it a "shoot second" war. The mission in supporting the rebels is clearly to support regime change and protect humanitarian interests, even if the former is not explicitly stated by the administration.
There is an intellectual argument for supporting humanitarian missions by the US military, but it is a slippery slope. If Libya, then why not Darfur? Or Somalia? The list of civil wars causing human strife in the world is long. But clearly Libya involvement is low impact at this point. We aren't committing ground troops. We have the backing of NATO. US Casualties will be extremely low and the cost low compared to Iraq or Afghanistan.
So, as best I can tell, the nascent "Obama Doctrine" advocates use of force when:
(1) There is an imminent threat to US security
(2) As a proportional response to an attack on the US
(3) For limited humanitarian reasons, with the support of the international community
We'll see how this philosophy evolves over time.
Will Paul Ryan's Bold Proposal Spark Real Reform?
Rep. Paul Ryan, who is the point man for the 2012 GOP budget, is set to reveal a bold plan for reform Medicare and Medicaid, two of the four albatrosses around the neck of the US budget (the other two being defense spending and social security.) Ryan's plan is reportedly very bold, including:
(1) Changing Medicare as we know it for those 55 and under. Eliminating government coverage for those who retire after 2021 and replacing it with a federal grant to purchase private insurance.
(2) Dramatically reducing Medicaid funding over time and replacing the traditional program with block grants to the states, who would have the freedom to experiment with different systems for the funds in their own states.
This is a radical change. The Medicare plan essentially contains costs by reducing the rate at which government expenditures on Medicare go up. To explain it simply, if costs under Medicare are rising 10% per year, Ryan's plan might increase the insurance grant by only 3% per year, meaning that private insurers would have to figure out ways to provide coverage at a lower cost than the government would. This means that either private insurers will find a way to get vastly more efficient or the level of coverage will go down to something more affordable.
This is basically rationing by another name - a charge sure to be leveled by the left, but actually a good thing, if you have read my prior writings. The ONLY way to significantly "bend the cost curve" is to be more selective about what is covered. You simply can't reduce costs AND provide every form of care to every person at every stage of their life. That is how socialized systems contain cost - they restrict the availability of some treatments. And it's a path we'll have to go down to fix Medicare, even if Ryan won't want to admit that that's what his proposal does.
The Medicaid proposal is basically more of the same...less money and let the states try to figure out how to manage that more limited funding.
Ryan's proposal is a long way from perfect. There are some elements of health care that should be non-negotiable from a cost standpoint - vaccinations and preventative care that are both necessary and economically effective at reducing long-term costs for one and emergency care for another. Executed poorly, his proposal could simply lead to more cost-dumping on emergency rooms and do further damage to the system. And his proposal obviously doesn't address how but foists that choice on individuals and states.
But it's a great starting point to have the debate. I'm sure the Democrats will declare the proposal dead on arrival in the Senate. That's fine. But how about they come forward with an alternative that has a similar level of cost containment and let's have a debate.
Fixing the structural deficit is going to require some hard choices about entitlements. Kudos to Ryan for bravely taking the first step to provoke that debate.
Budget Deal? No Budget Deal? Can We Move On?
The fiscal year is half over for the government. Six times Congress has in some form or another kicked the can down the road. The GOP wanted $61B in domestic discretionary cuts. They've achieved $10B so far with the last two continuing resolutions. The debate now is how much of the remaining $51B they wanted will happen.
Can we please settle this debate quickly and move on to discussing entitlements. We will never even get to the debate on Ryan's proposal if we just keep debating continuing resolutions.
With a $1.5T deficit, does it really matter if we cut $20B more or $40B more? How about we finish this quickly and focus on the $1.5T problem.
If you like this site, tell your friends.
Every President has a philosophy behind how they involve the military in foreign affairs. The notion of a Presidential "doctrine" dates back to President James Monroe, whose "Monroe Doctrine" stated that the US would view further colonization in North America by European nations as an act of aggression but that the US would not interfere with existing colonies or with the internal affairs of European nations.
More recently, the "Bush Doctrine" of former President George W. Bush moved US foreign policy to a more activist position, parting ways with other Post-World War 2 Presidents in supporting the notion of pre-emptive war to protect US security interests, justifying intervention in Iraq, a country which had not attacked the US on the potential for a future threat.
So, more than 2 years into his Presidency, with airstrikes in Libya taking place in the past two weeks, it is worth asking, is there an "Obama Doctrine" and what is it?
The President has stepped up presence in the Afghanistan, wound down operations in Iraq, stayed out of tribal conflicts in Africa, but supported rebels in Libya.
Afghanistan is arguably a "shoot second" war, since the Taliban was clearly the driving force behind the September 11, 2001 attacks on the World Trade Center and the Taliban controlled the former government in Afghanistan. Iraq was clearly a pre-emptive war, as there was no overt act of aggression taken by Iraq.
Taking just these two examples, one would assume that the "Obama Doctrine" is more of a return to the philosophies of George H.W. Bush and Bill Clinton, of US intervention only where there is a national security interest and we are struck first, or where there is a clear act of aggression against a US ally, such as in the case of the first Gulf War.
But then there is Libya. We were not attacked. Libya did not attack a US ally. This is clearly a case of involving the US in a civil war in Libya. And therein lies the distinction. It is not quite a war of pre-emption (no one considers Libya a credible threat to US security compared to Iran or North Korea), nor is it a "shoot second" war. The mission in supporting the rebels is clearly to support regime change and protect humanitarian interests, even if the former is not explicitly stated by the administration.
There is an intellectual argument for supporting humanitarian missions by the US military, but it is a slippery slope. If Libya, then why not Darfur? Or Somalia? The list of civil wars causing human strife in the world is long. But clearly Libya involvement is low impact at this point. We aren't committing ground troops. We have the backing of NATO. US Casualties will be extremely low and the cost low compared to Iraq or Afghanistan.
So, as best I can tell, the nascent "Obama Doctrine" advocates use of force when:
(1) There is an imminent threat to US security
(2) As a proportional response to an attack on the US
(3) For limited humanitarian reasons, with the support of the international community
We'll see how this philosophy evolves over time.
Will Paul Ryan's Bold Proposal Spark Real Reform?
Rep. Paul Ryan, who is the point man for the 2012 GOP budget, is set to reveal a bold plan for reform Medicare and Medicaid, two of the four albatrosses around the neck of the US budget (the other two being defense spending and social security.) Ryan's plan is reportedly very bold, including:
(1) Changing Medicare as we know it for those 55 and under. Eliminating government coverage for those who retire after 2021 and replacing it with a federal grant to purchase private insurance.
(2) Dramatically reducing Medicaid funding over time and replacing the traditional program with block grants to the states, who would have the freedom to experiment with different systems for the funds in their own states.
This is a radical change. The Medicare plan essentially contains costs by reducing the rate at which government expenditures on Medicare go up. To explain it simply, if costs under Medicare are rising 10% per year, Ryan's plan might increase the insurance grant by only 3% per year, meaning that private insurers would have to figure out ways to provide coverage at a lower cost than the government would. This means that either private insurers will find a way to get vastly more efficient or the level of coverage will go down to something more affordable.
This is basically rationing by another name - a charge sure to be leveled by the left, but actually a good thing, if you have read my prior writings. The ONLY way to significantly "bend the cost curve" is to be more selective about what is covered. You simply can't reduce costs AND provide every form of care to every person at every stage of their life. That is how socialized systems contain cost - they restrict the availability of some treatments. And it's a path we'll have to go down to fix Medicare, even if Ryan won't want to admit that that's what his proposal does.
The Medicaid proposal is basically more of the same...less money and let the states try to figure out how to manage that more limited funding.
Ryan's proposal is a long way from perfect. There are some elements of health care that should be non-negotiable from a cost standpoint - vaccinations and preventative care that are both necessary and economically effective at reducing long-term costs for one and emergency care for another. Executed poorly, his proposal could simply lead to more cost-dumping on emergency rooms and do further damage to the system. And his proposal obviously doesn't address how but foists that choice on individuals and states.
But it's a great starting point to have the debate. I'm sure the Democrats will declare the proposal dead on arrival in the Senate. That's fine. But how about they come forward with an alternative that has a similar level of cost containment and let's have a debate.
Fixing the structural deficit is going to require some hard choices about entitlements. Kudos to Ryan for bravely taking the first step to provoke that debate.
Budget Deal? No Budget Deal? Can We Move On?
The fiscal year is half over for the government. Six times Congress has in some form or another kicked the can down the road. The GOP wanted $61B in domestic discretionary cuts. They've achieved $10B so far with the last two continuing resolutions. The debate now is how much of the remaining $51B they wanted will happen.
Can we please settle this debate quickly and move on to discussing entitlements. We will never even get to the debate on Ryan's proposal if we just keep debating continuing resolutions.
With a $1.5T deficit, does it really matter if we cut $20B more or $40B more? How about we finish this quickly and focus on the $1.5T problem.
If you like this site, tell your friends.
Sunday, March 20, 2011
Catching Up with the President's Numbers, Budget Malaise Continues, The Stimulus Winds Down, A US War in Libya?
The President's Numbers and the 2012 Race
As I've often said, the single most determining factor in a Presidential re-election is the incumbent President's approval. Therefore, while it's fun to watch the slow-motion race to the Republican nomination, it's probably far more relevant to look and see how the American public is judging President Obama's term in office.
Of course, that good old American public is fickle. Famously, President George Herbert-Walker Bush had a 91% approval (that was actually just in one poll, his average was something close to 80%, but you get the point) a year before one of the worst re-election showings in history, receiving a mere 38% of the popular vote. The thing that turns these numbers on a dime is the economy, and more specifically the 1.5% income growth rule...that is that President's that have the good fortune to see 1.5% income growth in the election year are generally re-elected, while those that see less are not.
Still, you have to know where you are before you can project where you are going.
So, let's look at the last 2 months of poll data. There is some noise along the way, but here is how I would generally explain the trend:
(1) The President CLEARLY got a real bump from his end of year legislative victories, including the ratification of the START treaty, the passage of the 9/11 first responders bill and the repeal of Don't Ask, Don't Tell (a policy change still mired in the pentagon maze, but that's another story for another day.) At the beginning of January (before the range on the chart), the President was average around -4%. By the end of January he was at around +7%, an 11% upswing - huge in the world of electoral politics.
(2) The bounce didn't last at those levels. As is often the case with big bumps like that, memories fade as time goes by. By the end of February, the President's averages were down to about +2.5%, still 6.5% better than where he was at the end of the year, but a 4.5% downgrade from his end of January numbers.
(3) He settled in at this higher level so far in March. So while the President has not maintained all of his bounce, he has certainly maintained at a higher level than he ended last year. This, in my opinion, is in large measure due to improving economic conditions.
Looking at his monthly numbers over his Presidency, we can February was the President's best numbers month since the first year of his Presidency, when there was a halo effect over his historic victory. The last 3 months have marked 3 months in a row in the black, following 6 straight months in the red.
So, what does all this mean for 2012? The President is back at an approval level where he could win, but it is far from a slam dunk. At number of +2.5%, he's right in the range where we could be in for a very competitive 2012 race. Of course, this could all change in either direction in a hurry.
Is This the Last CR?
It's amazing that the new Congress has been in session for nearly 3 months and with the exception of a few symbolic votes (the House voting to repeal Obamacare, for instance) and some non-controversial business, basically all it has done is to pass short-term extensions to the budget - 2 of them so far, but the 5th and 6th ones of a budget year that began October 1st and is almost half over. The latest, which extends government funding for 3 weeks, with $6B in domestic discretionary cuts, passed fairly easily with bi-partisan support, with opposition mostly coming from liberals who felt it went too far with the cuts and conservatives who felt it didn't go far enough with the cuts.
Both sides are saying this is the last one and the bi-partisan "gang of 6" is working towards a compromise, but it is very unclear still how exactly what the compromise they are driving towards will look like. Basically, with the 2 continuing resolutions passed so far, $10B of the $64B that the GOP sought to cut from the discretionary budget has already been passed. So the debate comes down to how much of the remaining $54B will be agreed to. I imagine that the final figure will be somewhere in the $30B range of additional cuts, but again, we are dealing with chump change, relative to the other aspects of the budget.
I continue to hold out hope that congress and the President will dispose of the domestic discretionary question relatively soon and have a real adult debate about entitlement spending, taxes and defense spending, the three levers that really matter when it comes to deficit reduction.
The Winding Down of the American Recovery and Reinvestment Act
Remember the stimulus? That $787B package of tax cuts, infrastructure investments and short-term entitlement enhancements that was more or less the first order of business when the President took office?
As I said at the time, it was really more a 3-year package of economic policy than a short-term shot in the arm to the economy. And, after over 2 years, it is reaching the end of its implementation. And while the GOP has talked tough about repealing its elements, it has more or less run according to its original plan. The latest numbers show the following dispersement of stimulus funds:
Tax Cuts: $260B out of $288B spent (90% spent)
Spending: $368B out of $499B spent (74% spent)
Overall: $628B out of $787B spent (80% spent)
The stimulus was really one of several pieces of key economic policy over the past 2+ years. Let's review all of them and their effectiveness:
(1) The Troubled Asset Relief Program
The $700B package of funding that was used to recapitalize banks, fund the transformation and bankruptcy of GM and Chrysler, bail out AIG and manage the massive losses at Fannie Mae and Freddie Mac was originally passed in the final days of the George W. Bush administration, but largely implemented during the Obama administration. Despite lots of, frankly very fair, criticism at the time, about the lack of limits on executive pay and the lack of help for the borrowers while lenders were being bailed out, the program has, in essence, been a pretty unqualified success.
The bank bailouts will turn a healthy profit and the auto bailout will likely yield only a small loss. With more substantial losses surrounding AIG and Fannie and Freddie, the total net tab for TARP is now estimated at $25B...a pittance to save our financial system.
Of course, neither TARP nor the Dodd-Frank financial reform bill that followed truly addressed the problem of banks getting too big to fail so the systematic risk still exists, but as a stabilization program, TARP worked exactly excellently.
(2) The American Recovery and Reinvestment Act
As discussed above, the stimulus dealt both a series of tax breaks and credits (think Cash for Clunkers and Energy Efficient Home Tax Credits), short-term expansions to unemployment and social welfare programs and infrastructure investments.
The success of the program is obviously the subject of a lot of debate and it is very hard to parse apart the impact of this program relative to other things happening in the macro-economy.
What I will say is that aspects of the program definitely contributed to the recovery. Cash for Clunkers provided a spike in auto sales that stabilized the auto industry and made the non-bankruptcy survival of Ford and the successful emergence from bankruptcy of GM possible. The energy efficient home tax credits have led to a boom in investments in windows, doors and insulation -- if you don't believe me, ask a contractor.
The bill was sold as preventing unemployment from exceeding 8%. It clearly did not do that. But, on balance, the country is better off with it than without it, in my opinion.
(3) The Obama Tax Cuts
Lost in all the debate over extending the Bush Tax Cuts (which I think we can now safely drop the Bush moniker from) was the fact that it's cost, over the next two years, actually exceeds the cost of the stimulus. The economic impact of extending the rate reductions passed during the Bush administration, along with the newly minted short-term reductions in Social Security taxes is yet to be determined. The deficit impact is obvious.
(4) The Federal Reserve
The role of the Federal Reserve in fiscal policy cannot be understated. In many ways, it's policy decisions have more significant impacts on the economy than any stimulus or tax package passed by our elected officials. The fed's policy over the past several years has been to maintain short-term interest rates near zero, indeed the short-term rate has been in the range of 0 to 0.25% since December of 2008.
The Federal Reserve has also embarked upon two rounds of what it has termed "Quantitative Easing". The program works pretty simply, the Federal Reserve buys US Treasuries, effectively printing money and using Treasuries as a mechanism to inject liquidity into the monetary system. The effect of these buys is to artificially suppress interest rates on treasuries and put more money into the system.
Both moves are basically designed with the same purpose...increase economic activity by making money cheap. It also has the side-effect of amping up inflation and reducing the relative value of the US Dollar.
Up to this point, overall inflation has been very tame during the recession, with the economy showing tons of available capacity in the labor market that might help to avert big inflation. But the dollar has been dropping and core commodities such as oil and grains have been spiking, yielding a concern that inflation may soon rise. The short-term impact of the Fed's actions have been positive to the economy - the long-term is a lot more questionable. I would hope the Fed will back off any further QE and consider raising rates in the not-to-distant future.
Airstrikes in Libya
Backed by French support and a UN resolution, the US is participating in Tomahawk launches and air patrols to enforce a no fly zone over Libya and offer support to rebel fighters. This action is in stark contrast to our actions in Iraq, where we went in alone and sent ground forces. This intervention is more akin to our actions in the former Yugoslavia during the 1990s, where we were able to support political and human rights interests with no American casualties by using our superior technology and air strength.
This is exactly the sort of military intervention that we should be leading - one where the free world is united and where our involvement can yield a large reward at a relatively lower cost.
Meanwhile, we are still trying to wind down Iraq and Afghanistan remains a massive cost both in financial and human terms, with no clear long term strategy in the region.
If you like this site tell your friends.
As I've often said, the single most determining factor in a Presidential re-election is the incumbent President's approval. Therefore, while it's fun to watch the slow-motion race to the Republican nomination, it's probably far more relevant to look and see how the American public is judging President Obama's term in office.
Of course, that good old American public is fickle. Famously, President George Herbert-Walker Bush had a 91% approval (that was actually just in one poll, his average was something close to 80%, but you get the point) a year before one of the worst re-election showings in history, receiving a mere 38% of the popular vote. The thing that turns these numbers on a dime is the economy, and more specifically the 1.5% income growth rule...that is that President's that have the good fortune to see 1.5% income growth in the election year are generally re-elected, while those that see less are not.
Still, you have to know where you are before you can project where you are going.
So, let's look at the last 2 months of poll data. There is some noise along the way, but here is how I would generally explain the trend:
(1) The President CLEARLY got a real bump from his end of year legislative victories, including the ratification of the START treaty, the passage of the 9/11 first responders bill and the repeal of Don't Ask, Don't Tell (a policy change still mired in the pentagon maze, but that's another story for another day.) At the beginning of January (before the range on the chart), the President was average around -4%. By the end of January he was at around +7%, an 11% upswing - huge in the world of electoral politics.
(2) The bounce didn't last at those levels. As is often the case with big bumps like that, memories fade as time goes by. By the end of February, the President's averages were down to about +2.5%, still 6.5% better than where he was at the end of the year, but a 4.5% downgrade from his end of January numbers.
(3) He settled in at this higher level so far in March. So while the President has not maintained all of his bounce, he has certainly maintained at a higher level than he ended last year. This, in my opinion, is in large measure due to improving economic conditions.
Looking at his monthly numbers over his Presidency, we can February was the President's best numbers month since the first year of his Presidency, when there was a halo effect over his historic victory. The last 3 months have marked 3 months in a row in the black, following 6 straight months in the red.
So, what does all this mean for 2012? The President is back at an approval level where he could win, but it is far from a slam dunk. At number of +2.5%, he's right in the range where we could be in for a very competitive 2012 race. Of course, this could all change in either direction in a hurry.
Is This the Last CR?
It's amazing that the new Congress has been in session for nearly 3 months and with the exception of a few symbolic votes (the House voting to repeal Obamacare, for instance) and some non-controversial business, basically all it has done is to pass short-term extensions to the budget - 2 of them so far, but the 5th and 6th ones of a budget year that began October 1st and is almost half over. The latest, which extends government funding for 3 weeks, with $6B in domestic discretionary cuts, passed fairly easily with bi-partisan support, with opposition mostly coming from liberals who felt it went too far with the cuts and conservatives who felt it didn't go far enough with the cuts.
Both sides are saying this is the last one and the bi-partisan "gang of 6" is working towards a compromise, but it is very unclear still how exactly what the compromise they are driving towards will look like. Basically, with the 2 continuing resolutions passed so far, $10B of the $64B that the GOP sought to cut from the discretionary budget has already been passed. So the debate comes down to how much of the remaining $54B will be agreed to. I imagine that the final figure will be somewhere in the $30B range of additional cuts, but again, we are dealing with chump change, relative to the other aspects of the budget.
I continue to hold out hope that congress and the President will dispose of the domestic discretionary question relatively soon and have a real adult debate about entitlement spending, taxes and defense spending, the three levers that really matter when it comes to deficit reduction.
The Winding Down of the American Recovery and Reinvestment Act
Remember the stimulus? That $787B package of tax cuts, infrastructure investments and short-term entitlement enhancements that was more or less the first order of business when the President took office?
As I said at the time, it was really more a 3-year package of economic policy than a short-term shot in the arm to the economy. And, after over 2 years, it is reaching the end of its implementation. And while the GOP has talked tough about repealing its elements, it has more or less run according to its original plan. The latest numbers show the following dispersement of stimulus funds:
Tax Cuts: $260B out of $288B spent (90% spent)
Spending: $368B out of $499B spent (74% spent)
Overall: $628B out of $787B spent (80% spent)
The stimulus was really one of several pieces of key economic policy over the past 2+ years. Let's review all of them and their effectiveness:
(1) The Troubled Asset Relief Program
The $700B package of funding that was used to recapitalize banks, fund the transformation and bankruptcy of GM and Chrysler, bail out AIG and manage the massive losses at Fannie Mae and Freddie Mac was originally passed in the final days of the George W. Bush administration, but largely implemented during the Obama administration. Despite lots of, frankly very fair, criticism at the time, about the lack of limits on executive pay and the lack of help for the borrowers while lenders were being bailed out, the program has, in essence, been a pretty unqualified success.
The bank bailouts will turn a healthy profit and the auto bailout will likely yield only a small loss. With more substantial losses surrounding AIG and Fannie and Freddie, the total net tab for TARP is now estimated at $25B...a pittance to save our financial system.
Of course, neither TARP nor the Dodd-Frank financial reform bill that followed truly addressed the problem of banks getting too big to fail so the systematic risk still exists, but as a stabilization program, TARP worked exactly excellently.
(2) The American Recovery and Reinvestment Act
As discussed above, the stimulus dealt both a series of tax breaks and credits (think Cash for Clunkers and Energy Efficient Home Tax Credits), short-term expansions to unemployment and social welfare programs and infrastructure investments.
The success of the program is obviously the subject of a lot of debate and it is very hard to parse apart the impact of this program relative to other things happening in the macro-economy.
What I will say is that aspects of the program definitely contributed to the recovery. Cash for Clunkers provided a spike in auto sales that stabilized the auto industry and made the non-bankruptcy survival of Ford and the successful emergence from bankruptcy of GM possible. The energy efficient home tax credits have led to a boom in investments in windows, doors and insulation -- if you don't believe me, ask a contractor.
The bill was sold as preventing unemployment from exceeding 8%. It clearly did not do that. But, on balance, the country is better off with it than without it, in my opinion.
(3) The Obama Tax Cuts
Lost in all the debate over extending the Bush Tax Cuts (which I think we can now safely drop the Bush moniker from) was the fact that it's cost, over the next two years, actually exceeds the cost of the stimulus. The economic impact of extending the rate reductions passed during the Bush administration, along with the newly minted short-term reductions in Social Security taxes is yet to be determined. The deficit impact is obvious.
(4) The Federal Reserve
The role of the Federal Reserve in fiscal policy cannot be understated. In many ways, it's policy decisions have more significant impacts on the economy than any stimulus or tax package passed by our elected officials. The fed's policy over the past several years has been to maintain short-term interest rates near zero, indeed the short-term rate has been in the range of 0 to 0.25% since December of 2008.
The Federal Reserve has also embarked upon two rounds of what it has termed "Quantitative Easing". The program works pretty simply, the Federal Reserve buys US Treasuries, effectively printing money and using Treasuries as a mechanism to inject liquidity into the monetary system. The effect of these buys is to artificially suppress interest rates on treasuries and put more money into the system.
Both moves are basically designed with the same purpose...increase economic activity by making money cheap. It also has the side-effect of amping up inflation and reducing the relative value of the US Dollar.
Up to this point, overall inflation has been very tame during the recession, with the economy showing tons of available capacity in the labor market that might help to avert big inflation. But the dollar has been dropping and core commodities such as oil and grains have been spiking, yielding a concern that inflation may soon rise. The short-term impact of the Fed's actions have been positive to the economy - the long-term is a lot more questionable. I would hope the Fed will back off any further QE and consider raising rates in the not-to-distant future.
Airstrikes in Libya
Backed by French support and a UN resolution, the US is participating in Tomahawk launches and air patrols to enforce a no fly zone over Libya and offer support to rebel fighters. This action is in stark contrast to our actions in Iraq, where we went in alone and sent ground forces. This intervention is more akin to our actions in the former Yugoslavia during the 1990s, where we were able to support political and human rights interests with no American casualties by using our superior technology and air strength.
This is exactly the sort of military intervention that we should be leading - one where the free world is united and where our involvement can yield a large reward at a relatively lower cost.
Meanwhile, we are still trying to wind down Iraq and Afghanistan remains a massive cost both in financial and human terms, with no clear long term strategy in the region.
If you like this site tell your friends.
Sunday, March 13, 2011
The Wide Open and Empty 2012 GOP Field, Budgeting a Week at a Time
2012 - No GOP Favorite, No Candidates Yet
The 2012 Presidential race should prove to be fascinating and the next 12 months will be all about deciding the GOP nomination. In the past 30+ years, I can't recall a GOP nomination fight that is as open as this one. Let's recall the history:
In 1980, Ronald Reagan was the clear front-runner after his previous attempt to unseat Gerald Ford in 1976 fell short and Ford ultimately lost to the unknown Jimmy Carter. He fairly easily disposed of George Herbert-Walker Bush by running to his right.
In 1984, Reagan ran for re-election unopposed.
In 1988, then-Vice-President George Herbert-Walker Bush was an easy front-runner and quickly disposed of a motley field that consisted of no-hopers such as Pat Robertson and uninspiring candidates such as Bob Dole.
In 1992, while then-President George Herbert-Walker Bush faced a primary challenge from Pat Buchanan, who made some headway, fueled by conservative anger at Bush's agreement with congressional Democrats to raise taxes, but ultimately failed to win any contests.
In 1996, GOP iron horse Bob Dole, the next man in line, was offered up as the sacrificial lamb to high popular incumbent Bill Clinton.
In 2000, probably the most open race up until now, name-brand candidate then Texas Governor George Walker Bush disposed of a mostly easy field (remember Alan Keyes and Orrin Hatch?), fending off the only serious challenge from upstart John McCain by running to his right.
In 2004, then-President George Walker Bush faced no serious opposition.
In 2008, next-in-line John McCain overcame early stumbles and lingering conservative anger over the 2000 race and McCain's subsequent vote against the Bush Tax Cuts to sweep through a large field that consisted of Mitt Romney, Rudy Guliani and Mike Huckabee, who all showed strength in some contests, but ultimately fell short.
By the theory of the last 30 years, Mitt Romney should be the prohibitive favorite, being the "next guy in line". This pattern of GOP loyalists getting the nomination in their second run - Reagan in 1980, HW Bush in 1988, Dole in 1996 and McCain in 2008 (George W. Bush being the only first-timer to be nominated.) However, Romney has his challenges:
(1) Romney-Care - it's pretty hard to dispute the fact that the healthcare legislation that has spawned mass anger from the tea-party and other elements of the right-wing of the GOP (just the sort of people that show up for primaries and caucuses) is more or less a carbon copy of Mitt Romney's plan in Massachusetts Romney's attempts to explain this away are downright painful to watch, where he claims that Romney-Care is okay because it's a state program and is consistent with his desire for the states to experiment versus having a federal program.
So....death panels and socialism are okay if they are done at the state level? I hardly think the tea-partiers spewing venom about the health care law are doing so simply on federalist grounds.
(2) Other philosophical inconsistencies
The thing that is particularly damning about Romney-Care, from the perspective of the right-wing, is that it is the latest in a pattern of Romney holding moderate-to-liberal positions while Governor and then attempting to distance himself from them. Abortion and gay rights are two other glaring examples where Romney held a progressive position for years, then conveniently became a born-again conservative when he wanted to run for President.
(3) Mormonism matters
Let's face it, whether it is right or not, Mormons are not part of the evangelical club. The religion is still viewed as fringe in much of the country and if Mitt is actually leading heading into Iowa, don't think for a second that it won't become a campaign issue.
So, this leaves the field wide open...
...wide open and empty. It's mid-March and still no declared candidates. Newt Gingrich is probably running - word is he is set to announce his candidacy in May. Jon Huntsman is flirting with the idea, so are Romney, Huckabee and Palin. Mitch Daniels is talking, but seems undecided. Tim Pawlenty is probably in, but not definitely. Ron Paul is running, like he always does. Rick Santorum and Haley Barbour may try, but are probably no hopers, like Paul.
It's very, very early, but here's how the average of averages of the polls look to-date (5 non-partisan polls I could locate):
Mike Huckabee - 19.8%
Mitt Romney - 18.8%
Sarah Palin - 16.7%
Newt Gingrich - 9.7%
Ron Paul - 5.5%
Tim Pawlenty - 3.3%
Mitch Daniels - 2.8%
Rick Santorum - 1.5%
Haley Barbour - 1.3%
Jon Huntsman - 1.0%
Undecided / Other - 19.7%
So, the front 3 consist of two well-known second-runners (Huckabee and Romney) that represent different wings of the party (Huckabee more the social conservatives, Romney more the corporate conservatives) and the best known member of the Republican Party, the ever present momma grizzly Sarah Palin (who clearly also represents social conservatives). The fact that Newt Gingrich polls at almost 10% even though he has been out of the public eye for basically the last 15 years and didn't necessarily leave on great terms with the party establishment is impressive and probably means that he will be a force to be reckoned with. Ron Paul always draws a sizable minority from the libertarian / anti-neo con wing of the party, but he can't build the critical mass to win. The other candidates don't register at significant levels yet.
It's early, so you expect the better-known candidates to poll better at this stage. But the polls simply punctuate the point that the lesser-known candidates don't have long to get in, if they expect to build the name recognition necessary to have a serious shot at the nomination.
Budget Logjam -- A Few Week at a Time
The Republicans are winning on domestic discretionary spending. As the Republican House and the Democratic Senate and Democratic President don't seem any closer to a deal, yet another continuing resolution is being drafted to bridge the federal government, whose latest continuing resolution (the fifth of this budget year) will expire March 18th, which would shut the government down if not extended.
The GOP got $4B in spending cuts in their first 2 week resolution (the fourth overall, but the first since they took over the House) and there will apparently be $6B in spending cuts in the new 3 week resolution. Continue down this path and they will get the $61B in cuts that they seek eventually.
But budgeting by a string of continuing resolution is a horrible practice. It is incredibly inefficient for government agencies to operate not knowing what their budget will be in 3 weeks. It leads to inefficiency and waste, all the things that both parties love to rail against in government, especially the GOP.
And let's not forget the fact that the domestic discretionary budget isn't where the money is. Domestic discretionary represents a mere 13% of federal government spending. Defense is 23%. Entitlements are 56%. The balance is interest and minor one-time expenditures.
In fact, simply allowing the Bush/Obama tax cuts to lapse, rather than extending them as Obama and the GOP agreed would have very nearly funded the ENTIRE domestic discretionary budget.
Let's talk about the 79% represented by defense and entitlements. At least the GOP is starting to talk about entitlement reform. Reforming Medicare and Medicaid (and less critically, Social Security) along with massive cuts to defense (which no one except Rand Paul, Barney Frank and Bernie Sanders seem to be discussing), are the key to solving the deficit, along with some reasonable tax increases (is it reasonable that half the population doesn't pay income taxes?)
I voted for both President Obama and the GOP House (Jon Runyan, in my case.) I call on them to work together to solve the real problem.
If you like this site, tell your friends.
The 2012 Presidential race should prove to be fascinating and the next 12 months will be all about deciding the GOP nomination. In the past 30+ years, I can't recall a GOP nomination fight that is as open as this one. Let's recall the history:
In 1980, Ronald Reagan was the clear front-runner after his previous attempt to unseat Gerald Ford in 1976 fell short and Ford ultimately lost to the unknown Jimmy Carter. He fairly easily disposed of George Herbert-Walker Bush by running to his right.
In 1984, Reagan ran for re-election unopposed.
In 1988, then-Vice-President George Herbert-Walker Bush was an easy front-runner and quickly disposed of a motley field that consisted of no-hopers such as Pat Robertson and uninspiring candidates such as Bob Dole.
In 1992, while then-President George Herbert-Walker Bush faced a primary challenge from Pat Buchanan, who made some headway, fueled by conservative anger at Bush's agreement with congressional Democrats to raise taxes, but ultimately failed to win any contests.
In 1996, GOP iron horse Bob Dole, the next man in line, was offered up as the sacrificial lamb to high popular incumbent Bill Clinton.
In 2000, probably the most open race up until now, name-brand candidate then Texas Governor George Walker Bush disposed of a mostly easy field (remember Alan Keyes and Orrin Hatch?), fending off the only serious challenge from upstart John McCain by running to his right.
In 2004, then-President George Walker Bush faced no serious opposition.
In 2008, next-in-line John McCain overcame early stumbles and lingering conservative anger over the 2000 race and McCain's subsequent vote against the Bush Tax Cuts to sweep through a large field that consisted of Mitt Romney, Rudy Guliani and Mike Huckabee, who all showed strength in some contests, but ultimately fell short.
By the theory of the last 30 years, Mitt Romney should be the prohibitive favorite, being the "next guy in line". This pattern of GOP loyalists getting the nomination in their second run - Reagan in 1980, HW Bush in 1988, Dole in 1996 and McCain in 2008 (George W. Bush being the only first-timer to be nominated.) However, Romney has his challenges:
(1) Romney-Care - it's pretty hard to dispute the fact that the healthcare legislation that has spawned mass anger from the tea-party and other elements of the right-wing of the GOP (just the sort of people that show up for primaries and caucuses) is more or less a carbon copy of Mitt Romney's plan in Massachusetts Romney's attempts to explain this away are downright painful to watch, where he claims that Romney-Care is okay because it's a state program and is consistent with his desire for the states to experiment versus having a federal program.
So....death panels and socialism are okay if they are done at the state level? I hardly think the tea-partiers spewing venom about the health care law are doing so simply on federalist grounds.
(2) Other philosophical inconsistencies
The thing that is particularly damning about Romney-Care, from the perspective of the right-wing, is that it is the latest in a pattern of Romney holding moderate-to-liberal positions while Governor and then attempting to distance himself from them. Abortion and gay rights are two other glaring examples where Romney held a progressive position for years, then conveniently became a born-again conservative when he wanted to run for President.
(3) Mormonism matters
Let's face it, whether it is right or not, Mormons are not part of the evangelical club. The religion is still viewed as fringe in much of the country and if Mitt is actually leading heading into Iowa, don't think for a second that it won't become a campaign issue.
So, this leaves the field wide open...
...wide open and empty. It's mid-March and still no declared candidates. Newt Gingrich is probably running - word is he is set to announce his candidacy in May. Jon Huntsman is flirting with the idea, so are Romney, Huckabee and Palin. Mitch Daniels is talking, but seems undecided. Tim Pawlenty is probably in, but not definitely. Ron Paul is running, like he always does. Rick Santorum and Haley Barbour may try, but are probably no hopers, like Paul.
It's very, very early, but here's how the average of averages of the polls look to-date (5 non-partisan polls I could locate):
Mike Huckabee - 19.8%
Mitt Romney - 18.8%
Sarah Palin - 16.7%
Newt Gingrich - 9.7%
Ron Paul - 5.5%
Tim Pawlenty - 3.3%
Mitch Daniels - 2.8%
Rick Santorum - 1.5%
Haley Barbour - 1.3%
Jon Huntsman - 1.0%
Undecided / Other - 19.7%
So, the front 3 consist of two well-known second-runners (Huckabee and Romney) that represent different wings of the party (Huckabee more the social conservatives, Romney more the corporate conservatives) and the best known member of the Republican Party, the ever present momma grizzly Sarah Palin (who clearly also represents social conservatives). The fact that Newt Gingrich polls at almost 10% even though he has been out of the public eye for basically the last 15 years and didn't necessarily leave on great terms with the party establishment is impressive and probably means that he will be a force to be reckoned with. Ron Paul always draws a sizable minority from the libertarian / anti-neo con wing of the party, but he can't build the critical mass to win. The other candidates don't register at significant levels yet.
It's early, so you expect the better-known candidates to poll better at this stage. But the polls simply punctuate the point that the lesser-known candidates don't have long to get in, if they expect to build the name recognition necessary to have a serious shot at the nomination.
Budget Logjam -- A Few Week at a Time
The Republicans are winning on domestic discretionary spending. As the Republican House and the Democratic Senate and Democratic President don't seem any closer to a deal, yet another continuing resolution is being drafted to bridge the federal government, whose latest continuing resolution (the fifth of this budget year) will expire March 18th, which would shut the government down if not extended.
The GOP got $4B in spending cuts in their first 2 week resolution (the fourth overall, but the first since they took over the House) and there will apparently be $6B in spending cuts in the new 3 week resolution. Continue down this path and they will get the $61B in cuts that they seek eventually.
But budgeting by a string of continuing resolution is a horrible practice. It is incredibly inefficient for government agencies to operate not knowing what their budget will be in 3 weeks. It leads to inefficiency and waste, all the things that both parties love to rail against in government, especially the GOP.
And let's not forget the fact that the domestic discretionary budget isn't where the money is. Domestic discretionary represents a mere 13% of federal government spending. Defense is 23%. Entitlements are 56%. The balance is interest and minor one-time expenditures.
In fact, simply allowing the Bush/Obama tax cuts to lapse, rather than extending them as Obama and the GOP agreed would have very nearly funded the ENTIRE domestic discretionary budget.
Let's talk about the 79% represented by defense and entitlements. At least the GOP is starting to talk about entitlement reform. Reforming Medicare and Medicaid (and less critically, Social Security) along with massive cuts to defense (which no one except Rand Paul, Barney Frank and Bernie Sanders seem to be discussing), are the key to solving the deficit, along with some reasonable tax increases (is it reasonable that half the population doesn't pay income taxes?)
I voted for both President Obama and the GOP House (Jon Runyan, in my case.) I call on them to work together to solve the real problem.
If you like this site, tell your friends.
Sunday, February 27, 2011
Wisconsin - Latest Front in the Public Worker Battle, A Budget Compromise of Sorts?, What Are Our Spending Values?
Of Public Pensions and Unions
This battle has been brewing for a long time. It started in Washington DC, where former School Superintendent Michelle Rhee battled the teacher's unions over merit pay and tenure. It moved to New Jersey, where rising star Governor Chris Christie demanded that public workers contribute to their benefits. It moved to San Diego, where the township abandoned traditional pensions in favor of 401K matches, And it spilled over into the streets in Wisconsin, where public worker angrily protested a plan by the Republican majority to force public unions to decertify, essentially stripping public workers of the ability to unionize.
The battles is over public unions and the cost of public benefits. First, let's examine a brief history lesson. The strength of the union movement in this country, which began in the manufacturing sector, reached its height in the 1950s and 1960s, as steel workers, auto workers and other manufacturing workers, who numbered in the millions, joined up to demand better pay and benefits, shorter work hours and improved safety. Since that time, unions in the private sector have been on a steady decline. Manufacturing jobs have left for overseas or been lost to automation. And what workers remain in manufacturing have abandoned unionization more and more as federal regulators have largely dealt with the extreme safety and environmental violations of years past and manufacturers have wised up and offered better pay and benefits to non-union employees to discourage organization. In fact, union membership in the US is at an all-time low, with a mere 8% of workers now members of a union local.
The last vestige of union power in this country is among public workers. Teachers, police officer, fire fighters, garbage collectors, you name it, most government employees are unionized. And those unions have been effective. While the private sector is almost completely through a 20 year migration away from defined benefit pensions, free health care and other plush benefits of years past, they are still in full force in the public sector. And state and local governments, while they have been quick to agree to generous pensions, have been very slow to fund them, with up to $15 trillion in unfunded pension liabilities saddled on the backs of state governments by some estimates.
Now, as the recession and the housing collapse have sapped state coffers, the battle over those generous benefits is in full force. And it is on display in Wisconsin, which has taken the most radical step to date, of moving to legally prohibit state workers from joining a union.
A few thoughts. First of all, I'm no great fan of modern unions, especially public employees unions. Opposing merit pay for teachers and opposing the dismissal of corrupt police officers and incompetent DMV employees isn't a great way to earn my love. Neither is failing to recognize the economic reality of the times or the obligations that public employees have to the taxpayers.
Having said that, I think the whole Wisconsin thing is an overreach. I have a radical idea. Rather than forcing the Wisconsin unions to decertify, couldn't the GOP just simply not agree to their demands? No pay or benefits package can or will exist that is not agreed to by the government. Unions or no unions, the government holds all the cards, they simply have to play them.
Full on display have been the worst of both parties. Union members comparing themselves to Egyptian protestors (as if!) and their democratically-elected Republican officials to Hitler (aren't we all a little tired of those intellect-insulting comparisons?). On display by the right? A naked attempt to sap the Democratic union power base and debasement of the protestors first amendment rights.
Can't we all grow up a little?
Boehner: No Shutdown Looming
John Boehner is no fool. Unlike Newt Gingrich, the Speaker of the House realizes the damage that was done to the GOP when it went toe-to-toe with then President Clinton over the budget in 1995, a battle that led to a government shutdown that helped to lead to a resounding re-election victory for Clinton in 1996. Boehner was explicit today that he would do everything possible to prevent a government shutdown, when the current continuing resolution expires next Friday and showed an openness to agree to a short-term measure to keep the government operating while Republicans negotiate a compromise with Senate Democrats and the President, although he was clear that any such measure would be at a reduced rate of spending.
Boehner is also now on record that the Republican budget proposal will address entitlement reform. This is progress. Entitlement reform (along with defense spending reform, which Boehner was notably silent on) will be the key to solving the deficit, not the nickels currently being argued over around discretionary spending. Let's just hope the GOP plan doesn't include a privatization of Social Security, an idea which makes the funding gap worse and subjects the federal safety net to the risks of the market. Stick to retirement age, tax ceilings and the tax rate, Mr. Boehner, and don't look to gamble with poor seniors primary source of income.
On the budget, I predict the GOP will get most of what it wants. President Obama has shown little backbone on economic issues, as evidenced by the "compromise" on the Bush (now Obama) tax cuts, where the President gave ground on essentially everything. Plus, the fact remains, the President can't get a budget that doesn't pass the GOP-controlled House, so they still hold all the cards.
What Spending Tells Us About Values
This past weekend, I was at my parent's house for lunch and dinner. My father, a retired defense contractor, is a committed economic conservative. He has voted Republican most of his life, hates high taxes and detests government spending on almost everything except the military. We agree on some things economic (farm subsidies drive both of us nuts!) and disagree on others (I would like a lot less military spending, he has long been a defense hawk.) But when we talked health care, he had a pleasantly pragmatic view.
You see, he had several back surgeries about a year ago. He noted that if he had paid for them himself, the total cost would likely have been close to a hundred thousand dollars. That's untenable for any private party to manage, he conceded - people have to have access to insurance. He also isn't a fan of single payer: "in the UK, they would just write me a prescription for some narcotics and send me on my way" he said, also a solution he didn't like. "So what do we do?", I asked. "I think," he said, pausing to consider the options, "that we are all going to have to get used to spending more on health care than we are used to."
And there you have the rub. You can't have world class care for everyone and not pay a premium for it. You can't continually reduce costs and improve care. We have to decide what kind of system we want. And that involves choices. Cost versus quality. Access versus innovation. How we balance these things reflect our values and determine our economy. The problem is, we are still having a sound-bite debate. This isn't about individual mandates or Medicare reimbursement rates. It is about how we design a system we can afford that contains choices that reflect our values. And that is no easy task. Obamacare doesn't solve it. But the GOP has offered no real alternative, other than the status quo, which is even more unsustainable.
Stay tuned. This issue isn't going away.
This battle has been brewing for a long time. It started in Washington DC, where former School Superintendent Michelle Rhee battled the teacher's unions over merit pay and tenure. It moved to New Jersey, where rising star Governor Chris Christie demanded that public workers contribute to their benefits. It moved to San Diego, where the township abandoned traditional pensions in favor of 401K matches, And it spilled over into the streets in Wisconsin, where public worker angrily protested a plan by the Republican majority to force public unions to decertify, essentially stripping public workers of the ability to unionize.
The battles is over public unions and the cost of public benefits. First, let's examine a brief history lesson. The strength of the union movement in this country, which began in the manufacturing sector, reached its height in the 1950s and 1960s, as steel workers, auto workers and other manufacturing workers, who numbered in the millions, joined up to demand better pay and benefits, shorter work hours and improved safety. Since that time, unions in the private sector have been on a steady decline. Manufacturing jobs have left for overseas or been lost to automation. And what workers remain in manufacturing have abandoned unionization more and more as federal regulators have largely dealt with the extreme safety and environmental violations of years past and manufacturers have wised up and offered better pay and benefits to non-union employees to discourage organization. In fact, union membership in the US is at an all-time low, with a mere 8% of workers now members of a union local.
The last vestige of union power in this country is among public workers. Teachers, police officer, fire fighters, garbage collectors, you name it, most government employees are unionized. And those unions have been effective. While the private sector is almost completely through a 20 year migration away from defined benefit pensions, free health care and other plush benefits of years past, they are still in full force in the public sector. And state and local governments, while they have been quick to agree to generous pensions, have been very slow to fund them, with up to $15 trillion in unfunded pension liabilities saddled on the backs of state governments by some estimates.
Now, as the recession and the housing collapse have sapped state coffers, the battle over those generous benefits is in full force. And it is on display in Wisconsin, which has taken the most radical step to date, of moving to legally prohibit state workers from joining a union.
A few thoughts. First of all, I'm no great fan of modern unions, especially public employees unions. Opposing merit pay for teachers and opposing the dismissal of corrupt police officers and incompetent DMV employees isn't a great way to earn my love. Neither is failing to recognize the economic reality of the times or the obligations that public employees have to the taxpayers.
Having said that, I think the whole Wisconsin thing is an overreach. I have a radical idea. Rather than forcing the Wisconsin unions to decertify, couldn't the GOP just simply not agree to their demands? No pay or benefits package can or will exist that is not agreed to by the government. Unions or no unions, the government holds all the cards, they simply have to play them.
Full on display have been the worst of both parties. Union members comparing themselves to Egyptian protestors (as if!) and their democratically-elected Republican officials to Hitler (aren't we all a little tired of those intellect-insulting comparisons?). On display by the right? A naked attempt to sap the Democratic union power base and debasement of the protestors first amendment rights.
Can't we all grow up a little?
Boehner: No Shutdown Looming
John Boehner is no fool. Unlike Newt Gingrich, the Speaker of the House realizes the damage that was done to the GOP when it went toe-to-toe with then President Clinton over the budget in 1995, a battle that led to a government shutdown that helped to lead to a resounding re-election victory for Clinton in 1996. Boehner was explicit today that he would do everything possible to prevent a government shutdown, when the current continuing resolution expires next Friday and showed an openness to agree to a short-term measure to keep the government operating while Republicans negotiate a compromise with Senate Democrats and the President, although he was clear that any such measure would be at a reduced rate of spending.
Boehner is also now on record that the Republican budget proposal will address entitlement reform. This is progress. Entitlement reform (along with defense spending reform, which Boehner was notably silent on) will be the key to solving the deficit, not the nickels currently being argued over around discretionary spending. Let's just hope the GOP plan doesn't include a privatization of Social Security, an idea which makes the funding gap worse and subjects the federal safety net to the risks of the market. Stick to retirement age, tax ceilings and the tax rate, Mr. Boehner, and don't look to gamble with poor seniors primary source of income.
On the budget, I predict the GOP will get most of what it wants. President Obama has shown little backbone on economic issues, as evidenced by the "compromise" on the Bush (now Obama) tax cuts, where the President gave ground on essentially everything. Plus, the fact remains, the President can't get a budget that doesn't pass the GOP-controlled House, so they still hold all the cards.
What Spending Tells Us About Values
This past weekend, I was at my parent's house for lunch and dinner. My father, a retired defense contractor, is a committed economic conservative. He has voted Republican most of his life, hates high taxes and detests government spending on almost everything except the military. We agree on some things economic (farm subsidies drive both of us nuts!) and disagree on others (I would like a lot less military spending, he has long been a defense hawk.) But when we talked health care, he had a pleasantly pragmatic view.
You see, he had several back surgeries about a year ago. He noted that if he had paid for them himself, the total cost would likely have been close to a hundred thousand dollars. That's untenable for any private party to manage, he conceded - people have to have access to insurance. He also isn't a fan of single payer: "in the UK, they would just write me a prescription for some narcotics and send me on my way" he said, also a solution he didn't like. "So what do we do?", I asked. "I think," he said, pausing to consider the options, "that we are all going to have to get used to spending more on health care than we are used to."
And there you have the rub. You can't have world class care for everyone and not pay a premium for it. You can't continually reduce costs and improve care. We have to decide what kind of system we want. And that involves choices. Cost versus quality. Access versus innovation. How we balance these things reflect our values and determine our economy. The problem is, we are still having a sound-bite debate. This isn't about individual mandates or Medicare reimbursement rates. It is about how we design a system we can afford that contains choices that reflect our values. And that is no easy task. Obamacare doesn't solve it. But the GOP has offered no real alternative, other than the status quo, which is even more unsustainable.
Stay tuned. This issue isn't going away.
Monday, February 21, 2011
61 Billion Things to Debate, 2012 Congressional Showdown
House GOP Passes a 2011 Budget
We are very late in the season to be talking about the budget for the year. You see, the government's fiscal 2011 budget actually began on October 1st of 2010, but as the Democratically controlled Congress of the time essentially punted on the budget, here we are.
Not that all of the Democrats reasons were bad. Don't ask, don't tell repeal, debating the Bush/Obama tax cuts (not the ending I would have liked, but an important issue nonetheless), and the START Treaty consumed the waning days of the last Congress. And not that they didn't try - an omnibus bill was on the agenda for the lame duck session of Congress, but was too expensive for the tastes of Senate Republicans, who preferred to let the incoming, more conservative congress determine the rest of the budget. In place of a budget, Congress simply put in place a couple of continuing resolutions that, in essence, kept government funded at least years levels through March 4th. Hence the showdown that we see now.
What passed the House was more or less true to the pledge that Republicans had made to cut $100B in domestic discretionary spending in year one. I say more or less, because the budget they passed cuts only $61B from the current levels of funding, but cuts $100B from the original request that President Obama had made for the year. ToMAto, Tomato.
I've written many times, but will make the point once more that this is, in large measure, a sideshow to the real budgetary choices that will have to be made. Those involve entitlement reform and military spending. You could cut 100% of domestic discretionary spending and not balance the budget. In fact, the $61B in cuts reduces this year's deficit by a whopping 4%. But I digress.
The budget cuts are brutal. Cuts to traditional conservative targets, to be sure. Planned Parenthood is axed. So is NPR and PBS. Home heating oil subsidies for poor people? Massively cut. Health care implementation funds? Forget it. Interestingly, Amtrak funding somehow survived the bevy of amendments that were debated in the House.
The final product passed the House 235-189 with all 186 Democrats who were present voting against the bill, joined by 3 Republicans, with the balance of the GOP members of the House voting in favor.
The bill has been essentially labeled a non-starter by Senate Democrats, who, in spite of a weakened majority in the Senate, are still strong enough to block bills they don't like.
Congress is in recess this week, which means it won't reconvene until February 28th. The current continuing resolution expires on March 4th, which means that Congress has one week to work out some sort of deal. I see three possibilities:
(1) Democrats and Republicans come to a fast deal
This seems unlikely and would almost certainly have to involve Democrats giving most of the ground on proposed GOP cuts. The GOP isn't in the mood to give too many concessions, given the strength of their showing in the past election and their belief that their charter is to cut spending. Democrats might give a lot of ground in order to prevent a government shutdown (look how fast they caved on extending the Bush tax cuts) but this scenario seems unlikely.
(2) Agree to pass another temporary measure
Fund the government for another month while they work something out. This seems like the most likely scenario and one that the GOP appears somewhat open to, although they are unlikely to agree to an extension at current levels of spending unless they had firm commitments on what the final budget might look like.
(3) Shutdown the government
While some on the far right seem to be itching for a government shutdown, they would be wise to remember the battles the GOP lost with President Clinton over government shutdowns. This scenario seems more likely than a fast deal for the whole year but less likely than a temporary funding measure.
Also looming is the need in late April to raise the debt ceiling. Some of the tea party loyalists want the debt ceiling hike to be voted down. But they have offered no credible plan for how the government could continue operating without continuing to accrue debt, at least in the short-term (are you going to cancel Social Security for current recipients tomorrow? Lay off all of the military? No good short-term options), so in all likelihood, the debt ceiling hike will pass fairly easily, assuming a deal is struck on the budget -- hard not to vote for the debt ceiling if you voted for the budget that caused it to need to be raised.
At least we are finally having a debate about deficits and spending. That was my hope with the divided Congress.
2012 - A Tough Senate Map for the Democrats
Every Senate election cycle is an echo to the cycle 6 years earlier -- that is, each party has to defend the seats it gained 6 years prior. 2006 was a great year for the Democrats, which makes 2012 a tough year on the map. Here is a preview of the key races.
Likely Democratic Holds (10)
California - Diane Finestein is up for re-election and even in a cycle as strong as 2010, Republicans have shown no capability to win at the statewide level in Cali.
Delaware - Tom Carper is up for re-election in another state the Dems held in 2010. Maybe if they nominate a Mike Castle, they could have a shot, but if you are Mike Castle, do you want anything to do with a state GOP that bumped Christine O'Donnell ahead of you in 2010?
Hawaii - Daniel Akaka is an institution in the Senate and in the liberal state of Hawaii. His seat should be safe.
Maryland - Ben Cardin has not yet announced his intentions, but either way, Maryland is not exactly a hotbed of conservatism, with Cardin winning fairly easily last cycle and Barbara Mikulski winning in a near walk in 2010.
Michigan - While Michigan has historically been more purple than pure blue, Debbie Stabenow has the advantage of incumbency and the benefit of demographic shifts in the state that will likely make it more liberal by 2012.
Minnesota - Could be in play in a big GOP year, but more than like Amy Kloubachar is safe in the home of Walter Mondale.
New Jersey - sure we elected Chris Christie to the state house, but in the arena of national politics, New Jersey is still a reliable blue vote. Bob Menendez should win fairly handily, especially with the only state GOP star in the Governor's mansion.
New York - Kirsten Gillebrand has to run for a full term, since the election she won last November was a special election for the last 2 years of Hillary Clinton's term. She won easily in the GOP-dominated 2010, so there is no reason to think that she won't again, especially being buoyed by victory on the 9/11 first responders bill and Don't Ask, Don't Tell repeal.
Rhode Island - Sheldon Whitehouse toppled liberal Republican Lincoln Chafee 6 years ago. Rhode Island hasn't gotten any more conservative and Whitehouse is now an incumbent.
Washington - Maria Cantwell should be safe in the home of the green movement. Washington is a fairly reliable Democratic state.
Wisconsin - Herb Kohl got 67% of the vote in the last cycle. Even assuming that 2012 won't be as good a year for Democrats as 2006 was, he should win handily.
Lean Democratic Holds (3)
West Virginia - Joe Manchin has to run for a full term. West Virginia is a right-leaning state, but Manchin is a right-leaning kind of Democrat, who managed to win against a GOP tidal wave in 2010.
Ohio - Sherrod Brown will likely face a stiff challenge in this swing state, but he has the advantage of incumbency and is relatively well-liked in the state.
Pennsylvania - Bob Casey Jr.'s brand of socially and economically moderate policies and the brand name he has carried on from his father should make him a favorite in 2012.
Democratically Controlled Seats Likely to Be Competitive (7)
Florida - Bill Nelson is running for re-election and has already drawn three Republican challengers. There is chum in the water after Marco Rubio's resounding win in 2010 and Florida is a classic swing state.
Missouri - Claire McCaskill faces a similarly crowded GOP field...and Missouri is to the right of Florida in its politics.
Montana - Jon Tester eeked out a 1% win in the Democratically-dominated 2006 cycle, but he is running in libertarian conservative Montana and his politics are clearly to the left of the state. It'll be a tough fight for Tester.
Nebraska - Ben Nelson often separates himself out as the most moderate member of congress and the most conservative Democratic Senator. But he also cast the crucial vote for health care reform, which will no doubt be front and center in the campaign in this very conservative state.
New Mexico - Jeff Bingamin is retiring, leaving the race wide open in this swing state.
North Dakota - Kent Conrad is retiring, which probably makes this the single most at-risk seat for the Democrats. Given North Dakota's conservative politics, it is almost hard to imagine a scenario where the Democrats hang on to this seat.
Virginia - Jim Webb's retirement (possible to replace Robert Gates at Defense when he finally retires, although that is just speculation) opens the door to the man he ousted - former Governor and former Senator George Allen. If former Democratic Governor Tim Kaine runs, this race feels like a toss-up, if he sits it out, the dynamics seem to favor the GOP.
Likely Independent Holds (1)
Vermont - Bernie Sanders is an institution in Vermont. The only proud, avowed Socialist in congress, he'll likely go back for 6 more.
Independent Seats Likely to be Competitive (1)
Connecticut - Joe Lieberman is retiring, which will likely put this seat back in Democratic hands. Such a pick-up wouldn't shift the operating majority in the Senate.
Likely Republican Holds (5)
Indiana - Richard Lugar may face a primary challenge but either way, the seat seems unlikely to fall into Democratic hands. Sure Indiana voted for Obama, but it is still far more conservative than the country as a whole.
Mississippi - If Roger Wicker even draws Democratic opposition, it will be fairly token...this is probably the GOP's safest seat.
Tennessee - Bob Corker should be safe in heavily Republican Tennessee.
Texas - in spite of Kay Bailey Hutchinson's retirement, Texas is a reliably Republican state and the GOP field appears stronger than the Democratic field. Not likely to change hands.
Utah - This IS Orrin Hatch's seat and he is running for another term. He won 62% of the vote in heavily Democratic 2006.
Wyoming - John Barasso won 73% of the vote in 2008 in the special election for his seat. Given that 2008 was a pro-Democrat year, he should do about as well in election for a full term.
Lean Republican Hold (2)
Arizona - Jon Kyl is retiring, leaving the field wide open. But Arizona is still right of center and the Arizona GOP has one of the strongest organizations in the country.
Maine - Olympia Snowe is running as a Republican in a Democratic state. But she is also a moderate and has historically been popular back home, wining a whopping 74% of the vote in 2006. If she loses a primary challenge from the right, all bets are off.
GOP Held Seats Likely to Be Competitive (2)
Massachusetts - Scott Brown has to reprise his miracle win in a special election that rested control of Ted Kennedy's seat from the Democrats. Not an easy task in deep blue Massachusetts, where he is sure to draw a strong competitor.
Nevada - a swing state to be sure and John Ensign has had his share of scandal while in office, but he still holds the advantage of incumbency and has no announced challengers yet.
A very tough map for the Democrats. 2 to 4 competitive races for GOP seats and 7 to 10 seats to defend. If it's a strongly Democratic year, they might hold the Senate, if it's a strong GOP year, they could be down to 44 seats or less. In a middle of the road year, you'd expect them to lose around 3 seats, just enough to give the GOP control of the Senate.
The House is another store, because it is an echo to 2010, not 2006, and, of course, the GOP already has the majority. Also, add in the layer of complexity of redistricting, which, given population trends in the census, should give a boost to the GOP, and you have a year where the Democrats may make some small inroads, given that the GOP won virtually every competitive seat in 2010, but are unlikely to gain the majority.
Obviously, a great deal more to come. Stay tuned.
If you like this site, tell your friends.
We are very late in the season to be talking about the budget for the year. You see, the government's fiscal 2011 budget actually began on October 1st of 2010, but as the Democratically controlled Congress of the time essentially punted on the budget, here we are.
Not that all of the Democrats reasons were bad. Don't ask, don't tell repeal, debating the Bush/Obama tax cuts (not the ending I would have liked, but an important issue nonetheless), and the START Treaty consumed the waning days of the last Congress. And not that they didn't try - an omnibus bill was on the agenda for the lame duck session of Congress, but was too expensive for the tastes of Senate Republicans, who preferred to let the incoming, more conservative congress determine the rest of the budget. In place of a budget, Congress simply put in place a couple of continuing resolutions that, in essence, kept government funded at least years levels through March 4th. Hence the showdown that we see now.
What passed the House was more or less true to the pledge that Republicans had made to cut $100B in domestic discretionary spending in year one. I say more or less, because the budget they passed cuts only $61B from the current levels of funding, but cuts $100B from the original request that President Obama had made for the year. ToMAto, Tomato.
I've written many times, but will make the point once more that this is, in large measure, a sideshow to the real budgetary choices that will have to be made. Those involve entitlement reform and military spending. You could cut 100% of domestic discretionary spending and not balance the budget. In fact, the $61B in cuts reduces this year's deficit by a whopping 4%. But I digress.
The budget cuts are brutal. Cuts to traditional conservative targets, to be sure. Planned Parenthood is axed. So is NPR and PBS. Home heating oil subsidies for poor people? Massively cut. Health care implementation funds? Forget it. Interestingly, Amtrak funding somehow survived the bevy of amendments that were debated in the House.
The final product passed the House 235-189 with all 186 Democrats who were present voting against the bill, joined by 3 Republicans, with the balance of the GOP members of the House voting in favor.
The bill has been essentially labeled a non-starter by Senate Democrats, who, in spite of a weakened majority in the Senate, are still strong enough to block bills they don't like.
Congress is in recess this week, which means it won't reconvene until February 28th. The current continuing resolution expires on March 4th, which means that Congress has one week to work out some sort of deal. I see three possibilities:
(1) Democrats and Republicans come to a fast deal
This seems unlikely and would almost certainly have to involve Democrats giving most of the ground on proposed GOP cuts. The GOP isn't in the mood to give too many concessions, given the strength of their showing in the past election and their belief that their charter is to cut spending. Democrats might give a lot of ground in order to prevent a government shutdown (look how fast they caved on extending the Bush tax cuts) but this scenario seems unlikely.
(2) Agree to pass another temporary measure
Fund the government for another month while they work something out. This seems like the most likely scenario and one that the GOP appears somewhat open to, although they are unlikely to agree to an extension at current levels of spending unless they had firm commitments on what the final budget might look like.
(3) Shutdown the government
While some on the far right seem to be itching for a government shutdown, they would be wise to remember the battles the GOP lost with President Clinton over government shutdowns. This scenario seems more likely than a fast deal for the whole year but less likely than a temporary funding measure.
Also looming is the need in late April to raise the debt ceiling. Some of the tea party loyalists want the debt ceiling hike to be voted down. But they have offered no credible plan for how the government could continue operating without continuing to accrue debt, at least in the short-term (are you going to cancel Social Security for current recipients tomorrow? Lay off all of the military? No good short-term options), so in all likelihood, the debt ceiling hike will pass fairly easily, assuming a deal is struck on the budget -- hard not to vote for the debt ceiling if you voted for the budget that caused it to need to be raised.
At least we are finally having a debate about deficits and spending. That was my hope with the divided Congress.
2012 - A Tough Senate Map for the Democrats
Every Senate election cycle is an echo to the cycle 6 years earlier -- that is, each party has to defend the seats it gained 6 years prior. 2006 was a great year for the Democrats, which makes 2012 a tough year on the map. Here is a preview of the key races.
Likely Democratic Holds (10)
California - Diane Finestein is up for re-election and even in a cycle as strong as 2010, Republicans have shown no capability to win at the statewide level in Cali.
Delaware - Tom Carper is up for re-election in another state the Dems held in 2010. Maybe if they nominate a Mike Castle, they could have a shot, but if you are Mike Castle, do you want anything to do with a state GOP that bumped Christine O'Donnell ahead of you in 2010?
Hawaii - Daniel Akaka is an institution in the Senate and in the liberal state of Hawaii. His seat should be safe.
Maryland - Ben Cardin has not yet announced his intentions, but either way, Maryland is not exactly a hotbed of conservatism, with Cardin winning fairly easily last cycle and Barbara Mikulski winning in a near walk in 2010.
Michigan - While Michigan has historically been more purple than pure blue, Debbie Stabenow has the advantage of incumbency and the benefit of demographic shifts in the state that will likely make it more liberal by 2012.
Minnesota - Could be in play in a big GOP year, but more than like Amy Kloubachar is safe in the home of Walter Mondale.
New Jersey - sure we elected Chris Christie to the state house, but in the arena of national politics, New Jersey is still a reliable blue vote. Bob Menendez should win fairly handily, especially with the only state GOP star in the Governor's mansion.
New York - Kirsten Gillebrand has to run for a full term, since the election she won last November was a special election for the last 2 years of Hillary Clinton's term. She won easily in the GOP-dominated 2010, so there is no reason to think that she won't again, especially being buoyed by victory on the 9/11 first responders bill and Don't Ask, Don't Tell repeal.
Rhode Island - Sheldon Whitehouse toppled liberal Republican Lincoln Chafee 6 years ago. Rhode Island hasn't gotten any more conservative and Whitehouse is now an incumbent.
Washington - Maria Cantwell should be safe in the home of the green movement. Washington is a fairly reliable Democratic state.
Wisconsin - Herb Kohl got 67% of the vote in the last cycle. Even assuming that 2012 won't be as good a year for Democrats as 2006 was, he should win handily.
Lean Democratic Holds (3)
West Virginia - Joe Manchin has to run for a full term. West Virginia is a right-leaning state, but Manchin is a right-leaning kind of Democrat, who managed to win against a GOP tidal wave in 2010.
Ohio - Sherrod Brown will likely face a stiff challenge in this swing state, but he has the advantage of incumbency and is relatively well-liked in the state.
Pennsylvania - Bob Casey Jr.'s brand of socially and economically moderate policies and the brand name he has carried on from his father should make him a favorite in 2012.
Democratically Controlled Seats Likely to Be Competitive (7)
Florida - Bill Nelson is running for re-election and has already drawn three Republican challengers. There is chum in the water after Marco Rubio's resounding win in 2010 and Florida is a classic swing state.
Missouri - Claire McCaskill faces a similarly crowded GOP field...and Missouri is to the right of Florida in its politics.
Montana - Jon Tester eeked out a 1% win in the Democratically-dominated 2006 cycle, but he is running in libertarian conservative Montana and his politics are clearly to the left of the state. It'll be a tough fight for Tester.
Nebraska - Ben Nelson often separates himself out as the most moderate member of congress and the most conservative Democratic Senator. But he also cast the crucial vote for health care reform, which will no doubt be front and center in the campaign in this very conservative state.
New Mexico - Jeff Bingamin is retiring, leaving the race wide open in this swing state.
North Dakota - Kent Conrad is retiring, which probably makes this the single most at-risk seat for the Democrats. Given North Dakota's conservative politics, it is almost hard to imagine a scenario where the Democrats hang on to this seat.
Virginia - Jim Webb's retirement (possible to replace Robert Gates at Defense when he finally retires, although that is just speculation) opens the door to the man he ousted - former Governor and former Senator George Allen. If former Democratic Governor Tim Kaine runs, this race feels like a toss-up, if he sits it out, the dynamics seem to favor the GOP.
Likely Independent Holds (1)
Vermont - Bernie Sanders is an institution in Vermont. The only proud, avowed Socialist in congress, he'll likely go back for 6 more.
Independent Seats Likely to be Competitive (1)
Connecticut - Joe Lieberman is retiring, which will likely put this seat back in Democratic hands. Such a pick-up wouldn't shift the operating majority in the Senate.
Likely Republican Holds (5)
Indiana - Richard Lugar may face a primary challenge but either way, the seat seems unlikely to fall into Democratic hands. Sure Indiana voted for Obama, but it is still far more conservative than the country as a whole.
Mississippi - If Roger Wicker even draws Democratic opposition, it will be fairly token...this is probably the GOP's safest seat.
Tennessee - Bob Corker should be safe in heavily Republican Tennessee.
Texas - in spite of Kay Bailey Hutchinson's retirement, Texas is a reliably Republican state and the GOP field appears stronger than the Democratic field. Not likely to change hands.
Utah - This IS Orrin Hatch's seat and he is running for another term. He won 62% of the vote in heavily Democratic 2006.
Wyoming - John Barasso won 73% of the vote in 2008 in the special election for his seat. Given that 2008 was a pro-Democrat year, he should do about as well in election for a full term.
Lean Republican Hold (2)
Arizona - Jon Kyl is retiring, leaving the field wide open. But Arizona is still right of center and the Arizona GOP has one of the strongest organizations in the country.
Maine - Olympia Snowe is running as a Republican in a Democratic state. But she is also a moderate and has historically been popular back home, wining a whopping 74% of the vote in 2006. If she loses a primary challenge from the right, all bets are off.
GOP Held Seats Likely to Be Competitive (2)
Massachusetts - Scott Brown has to reprise his miracle win in a special election that rested control of Ted Kennedy's seat from the Democrats. Not an easy task in deep blue Massachusetts, where he is sure to draw a strong competitor.
Nevada - a swing state to be sure and John Ensign has had his share of scandal while in office, but he still holds the advantage of incumbency and has no announced challengers yet.
A very tough map for the Democrats. 2 to 4 competitive races for GOP seats and 7 to 10 seats to defend. If it's a strongly Democratic year, they might hold the Senate, if it's a strong GOP year, they could be down to 44 seats or less. In a middle of the road year, you'd expect them to lose around 3 seats, just enough to give the GOP control of the Senate.
The House is another store, because it is an echo to 2010, not 2006, and, of course, the GOP already has the majority. Also, add in the layer of complexity of redistricting, which, given population trends in the census, should give a boost to the GOP, and you have a year where the Democrats may make some small inroads, given that the GOP won virtually every competitive seat in 2010, but are unlikely to gain the majority.
Obviously, a great deal more to come. Stay tuned.
If you like this site, tell your friends.
Subscribe to:
Posts (Atom)
Posts
