25 February 2013
Ezra Klein makes a really important point that's often overlooked during the budget debates.
Democrats and Republicans have confused themselves with the word “taxes.” Typically, when we think about increasing taxes, we think about raising marginal tax rates. But that’s not what Democrats are proposing. They’re talking about cutting subsidies we give wealthier people to buy bigger homes or donate to charity or live in high-tax states or get health insurance from our employers. All of that, as any economist will tell you, is spending. But because the spending comes in the form of tax deductions, cutting it counts, in a narrow budgetary sense, as increasing taxes.
No one has worked harder to disabuse Republicans of this misconception than top Republican economists. Harvard’s Martin Feldstein, who served as President Ronald Reagan’s chief economist, says “the distinction between spending cuts and revenue increases breaks down if one considers tax expenditures.” Former Federal Reserve chairman Alan Greenspan says they should be “viewed as cuts in outlays rather than a reduction in revenues.” Greg Mankiw, who led President George W. Bush’s Council of Economic Advisers, calls them “stealth spending implemented through the tax code.”
The piece was especially timely considering I'd just finished Suzzane Mettler's The Submerged State which illustrates the ways in which government programs have become less visible and transparent in recent decades. More and more public services are provided by third parties or directly subsidised through the tax code. The problem, as Mettler explains, is that the public frequently fails to understand the benefits government is providing to them and are less capable of evaluating the efficacy of these programs.
Here we have the same confusion over taxes. Allowing people to deduct various expenses from their taxes is functionally equivalent to leaving the tax system unchanged and simply handing them the money after the fact. These aren't minor costs either. The home mortgage interest deduction costs nearly $100 billion per year and 69% of its benefits go to filers earning over $100,000. By comparison, in 2007 the Supplemental Nutrition Assistance Program (ie food stamps) cost roughly $38 billion.*
*The program costs were substantially higher in recnet years due to the global financial crisis.
19 February 2013
The New York Times has a good article on the ways in which high incarceration rates-particularly amongst African Americans-create poverty traps and exacerbates economic challenges. The piece details the strain that harsh sentences place on the families left behind:
Epidemiologists have found that when the incarceration rate rises in a county, there tends to be a subsequent increase in the rates of sexually transmitted diseases and teenage pregnancy, possibly because women have less power to require their partners to practice protected sex or remain monogamous. When researchers try to explain why AIDS is much more prevalent among blacks than whites, they point to the consequences of incarceration, which disrupts steady relationships and can lead to high-risk sexual behavior. When sociologists look for causes of child poverty and juvenile delinquency, they link these problems to the incarceration of parents and the resulting economic and emotional strains on families.
As such, it seems prison reform could appeal to social conservatives. Having 2.27 million Americans behind bars-25% of the world's prison population-is inevitably going to take its toll on nuclear families. And I guess I wasn't the only one thinking this way. A Wonkblog piece Jonathan sent me explains that a number of Republicans such as the late Chuck Colson have taken up the cause. I'm not sure how I feel about being on the same side of an issue as Nixon's Hatchet Man but politics makes strange bedfellows.
19 February 2013
Imagine an alternative universe where after the stimulus President Obama made carbon pricing instead of health care reform his top legislative priority. Let's say the bill passed but provoked a backlash similar to that of Obamacare-causing Dems to lose the same number of seats as they did in 2010. And imagine that currently the law holds approximately the same levels of public support and chance of repeal as Obama care does. Is this an alternative universe you'd want to live in?
19 February 2013
So the WaPo has a Presidents Day editorial devoted to James Garfield because, well, why not. Or, as they quite reasonably, though perhaps hyperbolically, explain:
He was James A. Garfield, who may have been the best president we never had, or hardly had ... “The elevation of the negro race from slavery to the full rights of citizenship is the most important political change we have known since the adoption of the Constitution of 1787,” he said. “NO thoughtful man can fail to appreciate its beneficent effect upon our institutions and people. It has freed us from the perpetual danger of war and dissolution. It has added immensely to the moral and industrial forces of our people. It has liberated the master as well as the slave from a relation which wronged and enfeebled both. It has surrendered to their own guardianship the manhood of more than 5,000,000 people, and has opened to each one of them a career of freedom and usefulness. It has given new inspiration to the power of self-help in both races by making labor more honorable to the one and more necessary to the other. The influence of this force will grow greater and bear richer fruit with the coming years.”
There was more along those lines, and it bears reading. Moreover, Garfield appointed four black men, among them Frederick Douglass, to posts in his administration. We are left to wonder today what a president of conviction and conscience such as Garfield might have done to rouse the country and lead it against the vicious new institutions of repression and virtual re-enslavement that were taking hold in the American South, with the silent acquiescence of the North.
OK, so perhaps he was a pretty awesome guy? Also, In other news about potentially fantastic presidents America never got to experience, the footnote that is William Henry "Tippecanoe" Harrison ("I died in thirty days!") was taken out of school by his father while he was a teenager because he had taken to running around with an anti-slavery crowd. He won the 1840 election by 234 electoral college votes to 60, and also with help from a campaign chant that required the singer to periodically spit tobacco juice. The 1840 campaign was the kind of friendly one that saw Harrison and his Whig buddies give incumbent Martin Van Buren the nickname "Van Ruin" and Democrats responding with an accusation that Harrison was a coward as a general — they dubbed him Granny Harrison, the petticoat general, and said if elected president, he'd sit around in a log cabin and drink hard cider all day instead of governing the country. Harrison subsequently adopted the log cabin and hard cider as totems for his campaign, probably reckoning that voters thought such things were pretty neat. Harrison was far-sighted enough to want to introduce paper money and wanted to clean up the spoils system — that is, jobs for the boys. Then he caught pneumonia and died.
Anyway back to Garfield — but keep the spoils system in mind. The guy who killed Garfield was a man named Charles Guiteau, and though I don't mean to glorify anyone who assassinates a democratically elected leader, I'd like to take a moment to talk about how thoroughly batshit insane Guiteau was. As would-be assassins go, his madness approaches that of John Hinckley, Jr., the guy who shot Ronald Reagan because he thought it would impress Jodie Foster. (Though, according to the courts, Guiteau's insanity wasn't of the legally exculpatory kind.)
Guiteau was a big admirer of President Ulysses S. Grant, and showed it by writing a speech in his favour called "Grant vs. Hancock." When Garfield showed up on the scene, Guiteau rejigged the speech (pretty much by subbing in references to Garfield and removing ones of Grant), renamed it "Garfield vs. Hancock" and then decided that his efforts were pretty much the reason Garfield won the election of 1880.
As such, he figured Garfield should make him ambassador to either Paris or Vienna. When Garfield decided that request was not a reasonable one, Guiteau figured the best way to deal with his disappointment would be to assassinate the president.
To do so, he purchased a gun, favouring one with an ivory handle because he figured it would look better when displayed in museums as the murder weapon.
After he shot Garfield (who probably only died because doctors kept prodding his wound with their dirty fingers), Guiteau was put on trial. He insisted he was sane and spent much of the trial cursing and insulting the judge, the witnesses, the prosecution, and his own lawyers. Also, he delivered his testimony as a series of epic poems, and spent the trial period dictating his own autobiography, which ended with a personal ad seeking "a nice Christian lady under 30 years of age." He figured he would escape conviction and began laying plans to run for president in 1884.
The jury had other ideas though and he was convicted and hanged in 1882.
17 February 2013
A major complaint amongst those on the left about the fiscal cliff deal was that it simply postponed the fights over the debt ceiling and budget sequester until a point at which Republicans would have more leverage. Even if Democrats had won the battle they could end up losing the war if the Obama administration ended up surrendering to Republican hostage taking in the next round of conflicts.
This criticism has largely disappeared in the wake of Obama's deft handling of the debt ceiling showdown. The President remained true to his pledge that he wouldn't negotiate over raising the borrowing limit-dismissing potential loopholes such as the trillion dollar coin-and instead staring down the Republican leadership until they blinked.
But while Obama's recent track record is encouraging his fiscal cliff strategy is yet to be fully vindicated. The sequester is still on the table and the ultimate outcome of this conflict is very much up in the air.
As I wrote last week decoupling the tax increases that were set to take effect on January 1st from the budget sequester makes the latter significantly more difficult to avoid. No one is happy that $1.2 trillion in spending cuts are scheduled to take effect on March 1st. But there's a very real possibility that Republicans decide that such an outcome-while unfortunate-is preferable to agreeing to any revenue increases.
The fact that half of the cuts come are to defence has made many liberals less worried than they should be. Yes, military spending is greatly bloated-but pushing the country back into recession in exchange for defence austerity is a really horrible trade off. And the other half of the sequester will sap funding for crucial programs such as job training and food safety.
We'll have to wait and see how this all plays out. Maybe Republicans will budge on taxes again and some sort of balanced deal to replace the sequestration cuts will be reached. Maybe the two sides will just agree to kick the sequestration down the road again or even get rid of it altogether.
But maybe not. And if that's the case it will cast doubt on the wisdom of the decision not to insist on resolving the sequestration issue once and for all back in January.
This is not to say that Democrats should have done whatever it took to reach a deal when they had the chance before. There's worse things for the liberal cause than a dose of austerity during a recession-draconian cuts to government programs that benefit the poor and middle class being one of them.
But the Obama adminstration really did have a tremendous amount of leverage during the fiscal cliff negotiations. And they may come to regret not utlizing it more fully to mitigate a very serious threat to the economy.
15 February 2013
I awoke this morning to the sad news that legal theorist and political philosopher Ronald Dworkin had passed away at the age of 81. I was introduced to his work while writing my senior philosophy thesis on John Rawls and was immediately captivated. As such, it came as a great surprise when my Dad informed me that the man I cited approvingly in my paper was actually a neighbor. Unbeknownst to me, our families have had summer houses in Massachusetts next to one another for the past forty years. Ever since I've been hoping to get the chance to meet him but I guess it wasn't to be.
Dworkin was a true giant in his field. He's the second most cited legal scholar of the 20th century and was best known for this theory of interpretivism which insisted that moral questions were central to the creation and justification of a system of law.
Dworkin's work was thorough but there was always a satisfying simplicity at its heart. His comment that a son promising his father that he will always "play fair" is pledging to uphold a general principle not the father's subjective understanding of the phrase has always struck me as one of the most elegant rebukes of originalism.
I have my disagreements with Dworkin but he always made me think, and I owe him a great debt for influencing and sharpening my thought on a number of political and legal issues. He will be missed.
14 February 2013
I shared my thoughts on Obama's economic platform in a piece for the Conversation- tl;dr: yay infrastructure! But other people had some smart things to say as well. Not surprisingly, I agree with Ruy Texeira that Obama should put more emphasis on proposals to get back to full employment ASAP. Obviously, you don't use the word stimulus, but as I said in my piece finding a way to tack something onto a debt reduction bill would be the best bet. It's not that the President isn't taking about these things, but Obama makes investments in infrastructure sound more like just another item on the wish list as opposed to a top priority on the agenda.
I also found the universal preschool proposal intriguing and I'll be interested in seeing how discussion around it develops. If you're looking for a thoughtful conservative take on the idea start with Megan McArdle and it's also worth checking out Greg Anrig's rebuttal over at The Century Foundation.
13 February 2013
This is something worth remembering every year: don't get too excited about the State of the Union.
Don't expect a barn-burner of a speech or a pivotal political turning point. That's not the way these addresses work.
State of the Union speeches tend to be clumsy, hodge-podge affairs. They need to pack a variety of disparate things into a single address and so usually end up a bit of a mess. The president will need to do all the boilerplate of declaring the state of the Union to be "strong," then explain his priorities for the coming year (many of which won't be shared by Congress and so won't matter much), then drop in references to a dozen other interest groups who'll get upset if they're not mentioned. Climate change? Immigration? The military? Gay rights? Gun control? Foreign policy? Cram it all in so no one gets upset that their pet issue was left out.
That's not to say the address won't matter. This is the most powerful politician in America laying out his agenda for the coming year and it will be important to see what policy issues he focuses on and which he shunts to the end of the speech as dot points. (From the look of the First Lady's box guests, immigration reform, entrepreneurialism, gun control, and health care will play a prominent role.) But don't look for this to be a rhetorical feat.
- The State of the Union response: Where next big things go to die.
- Who first declared "the State of our Union is strong"?
- I'll be live-tweeting the address from 9pm US Eastern/1pm Sydney time. Follow me at @_jbradley.
12 February 2013
Congress resigns itself to the inevitability of the sequestration
Stop me if you've heard this one before. The US is facing an entirely self-created fiscal crisis which if not averted could push the country back into recession. But sure enough that's just where we find ourselves. On March 1st, unless Congress and the President can reach some alternative agreement, the dreaded budget sequestration will go into effect reducing government spending by $86.5 billion dollars over the current fiscal year and $1.2 trillion over the next ten.
The cuts were part of the 2011 Budget Control Act (BCA) which was set to take effect at the beginning of this year. However, Congress delayed its implementation by three months as part of the last minute deal to aver the fiscal cliff/austerity crisis.
The $1.2 trillion in cuts are split evenly between defense and non-defense discretionary spending and are crudely egalitarian in nature. All federal programs would be cut by an equal amount meaning that agencies couldn't pick and choose which areas of their budget to protect. This was intentional as the goal was to make the policy so unpalatable that both sides would be pressured to agree on an alternative way of addressing the deficit.
Responsible long-term debt reduction would also be back loaded so as to not suck large amounts of money out of an economy still suffering from a lack of demand. But there's no such prudence in the BCA. The Congressional Budget Office estimates that GDP would be cut in half if these policies remain in effect for the rest of the year.
In some respects this new threat is more worrisome than either the first fiscal cliff or the debt ceiling negotiations. It's not that the cuts would be more damaging. Luckily, we no longer have to worry about large-scale tax increases or defaulting on debt obligations. But what's troubling this time around is that there may not be the same incentives in place to facilitate a compromise.
An inability to reach a deal to avert the January 1st fiscal cliff would have meant the total expiration of the Bush tax cuts-something both sides agreed was unacceptable. And Republicans couldn't avoid higher taxes simply by refusing to act. As such, while it was always possible that negotiations would drag on through the early part of the year it was inevitable that some sort of agreement was going to be reached.
Similarly, thee consequences of not raising the borrowing limit would have been so catastrophic that it seemed very likely-if not certain-that Republicans would come to their senses rather than be blamed for a massive unforced error.
But this time around the calculation isn't so clear. No one thinks that that the sequestration is good policy. But Republican leadership in Congress is saying that it would be preferable to any deal featuring higher taxes. By contrast, President Obama has made clear that he will not accept any alternative agreement that dosen't feature a 1:1 ratio of new revenues to spending cuts.
It's also an issue that could cause divsions within the Republican caucus. The GOP has long been a party that emphasises a strong defence and low taxes. The coming standoff is a test as to which they see as the lesser of two evils.
The simplest and best solution would be just to mutually agree to get rid of the sequestration all together. Republicans don't have to stomach higher taxes. Democrats don't have to worry about an anti-Keynesian shock to the economy. And we could focus on the most pressing problem-getting back to full employment-instead of the deficit which is decreasing faster than at any point since WWII. Then as the economy stabilises we can work on reducing the long-term debt in a fiscally responsible way.
Of course things are never that easy in Washington. And Congress' idea that this is some unavoidable problem is like Homer being unable to get his hand out of the vending machine because he won't let go of the candy bar.
12 February 2013
Tuesday's State of the Union address is President Obama's first major opportunity of his second term to offer a comprehensive defence of his legislative goals. The President's mission this speech-as well as in the years ahead-should be to offer a populist message that allows Democrats to leverage public support for a progressive political agenda.
The 2012 elections were a fairly decisive rejection of the Republican Party platform. President Obama coasted to a second term and Democrats won the popular vote in both the House and Senate elections. However, Republicans maintained controlled of the House due to gerrymandering and structural advantages and the filibuster still provides the GOP with de facto veto power in the Senate. As such, the legislative gridlock that's paralysed Washington over the last two years is likely to continue into Obama's second term.
Democrats' s best response is to avoid what John Judis dubs an "insider strategy" and "instead transfer the fight for their agenda..to the electorate where they hold the advantage." This means no more vague statements about priorities and then leaving Congress alone to work out all of the legislative details as Obama did with healthcare reform. Instead, the President needs to take a more active role in shaping bills and applying pressure to the legislature. Obama did this well during his proposal on immigration reform late last month. "If Congress is unable to move forward in a timely fashion, I will send up a bill based on my proposal and insist that they vote on it right away," he explained in his speech in Las Vegas.
The President needs to reiterate this message in his State of the Union address. And he also should make a point of reaching out directly to citizens and other grassroots organisations-explaining that he needs their help in getting Congress to take action.
It's true that political science research shows that the power of the bully pulpit is greatly overstated. The president dosen't have the capacity to bend the public or members of Congress to his will with rhetoric alone. But Obama's objective isn't to change minds; it's to marshal existing public support for many of his policy propsoals.
Ninety-two per cent of Americans want universal background checks on all gun sales, a figure that includes eighty five percent of NRA households. Fifty-five per cent support a path to citizenship for undocumented immigrants-a number that's almost certain to grow in coming years as the Hispanic percentage of the population increases. And sixty-eight per cent favour Obama's fiscal cliff proposal to allow the federal government to negotiate prescription prices for Medicare recipients with drug companies.
Democrats faces two conflicting realities. The public is largely receptive to many of their policies and favourable demographic trends mean this isn't likely to change at any point in the near future. At the same time, the American political system-and its entrenched interest groups-make it very easy for a determined opposition to stymie the majority and block change. The challenge for Democrats is to find ways of effectively utilizing their advantage in numbers in order to bring about legislative change. I don't have all the answers of how this can be done. But it should start with President Obama's speech tomorrow.