Obama and Simpson-Bowles: Don’t Panic. Yet.

The Washington Post today says that Obama’s “deficit reduction” speech will do so by “promoting a bipartisan approach pioneered by an independent presidential commission.”  The Shrill One rightfully eviscerates this idea.  But let’s not panic.  Yet.

Krugman says that the President will “more or less endorse” Simpson-Bowles.  But that’s not what the article says; in fact, it’s not quite clear what the article is saying.  One of its alleged reporters is Peter Wallsten, formerly of the Los Angeles Times and co-author of possibly the worst article in the entire 2008 Presidential news cycle, which argued that basically Obama and McCain agreed on all the major issues.  He seems committed to High Broderism, even after the death of The Master.

The article is lazy in general, arguing, for example:

Independents abandoned the party last year as concern grew about government deficits and spending. But Obama also must worry about his liberal base, which views protecting entitlement programs central to Democratic Party orthodoxy.

There is actually no evidence for the first assertion; it is essentially recycled Beltway orthodoxy.  What happened last year was a supercharged Republican base.  And Social Security and Medicare are not “central to Democratic Party orthodoxy”: they are fabulously successful and fabulously popular programs among the entire US population. 

I have no confidence that Obama won’t sell Democratic Party principles down the river; Congressional Democrats heard about his plans for the speech from David Plouffe on the Sunday shows.  Trinagulation is alive and well at 1600 Pennsylvania Avenue.

But it’s going to take more than this article to persuade me that it is happening here.  Ezra Klein says that the White House tells him that it is not endorsing Simpson-Bowles, and that “this will make sense tomorrow.”  We’ll see.

Annals of Fiscal Responsibility Chutzpah

Via Sullivan, someone named James C. Capretta says that in light of the Republicans’ attempt to end Medicare:

with a Republican plan on the table, the media will surely start to ask Democrats, “Hey, where’s your plan?” This will force them to either come clean with their tax-hike vision, or become the party that pushed the country toward a debt-induced economic crisis. Either way, with more clarity about where the parties actually stand, Republicans can win the public fight.

So who is this James C. Capretta, anyway?  Turns out, at least from his bio at the Ethics and Public Policy Center (a right-wing fake think tank that came to prominence in the 80’s for urging greater sympathy to right-wing torture regimes), he is basically a Republican functionary, who worked for Capitol Hill Republicans, went to the George W. Bush Administration, and now is the grateful recipient of wingnut welfare.  But this is really the highlight of his resume.  Capretta

was an Associate Director at the White House Office of Management and Budget (OMB) from 2001 to 2004, where he was the top budget official for health-care, Social Security, education, and welfare programs.

So the Associate Director of OMB during the first three years of the Bush Administration, which took a huge surplus and turned it into a series of crushing deficits, is now lecturing the Democrats on fiscal reponsibility.  We don’t let convicted felons vote: an equivalent rule should be to deny credibility on budgetary matters to anyone who worked for George W. Bush.

In any event, it shows how little Capretta appears to know about the health care debate that he seems to know nothing about the good ideas to reduce Medicare costs.  No doubt, it is a very hard job, but if you were going to name two ideas, they would be 1) comparative effectiveness research, so that Medicare doesn’t pay for expensive yet ineffective treatments, and 2) providing funding for seniors to voluntarily write advanced directives, in order to start trimming the grotesquely expensive and ineffective treatments in the last three months of life.

Well, guess what?  Those are precisely the things that the Right mendaciously attacked as “death panels”, to which Politifact gave its coveted Lie Of The Year award. 

So there’s your Republican strategy: lie about the other side’s genuine efforts at cost control, attempt to end Medicare, and then whine about your opponents don’t have a plan.  All in a day’s work for your typical right-wing apparatchik.

Moment of Deceit

A few years ago, Mark told me that it’s easy to be a blogger on the west coast: wait until 9 pm Pacific time, look at David Brooks’ column, and point out how idiotic it is.  He was right; it IS easy.  But today, it’s necessary.

Today (or tomorrow?), Brooks, who favored the extensions of all Bush-era tax cuts, and opposed the Affordable Care Act because it didn’t cut costs enough although he also opposed its cost-cutting measures, now hails Paul Ryan’s new budget in a column ironically entitled “Moment of Truth.”  The column praises Ryan as “courageous” and “setting the standard for seriousness.”

Where do you start?

How about in the first paragraph, which lauds the Simpson-Bowles plan and conveniently neglects to mention that Ryan opposed it.  Then:

The Ryan budget will put all future arguments in the proper context: The current welfare state is simply unsustainable and anybody who is serious, on left or right, has to have a new vision of the social contract.

No, that is not the proper context.  The proper context is 1) that if we ended the Bush tax cuts, bringing us back to the socialistic 1990’s; and 2) stopped fighting wars in Iraq and Afghanistan, we could get a great deal of the budget under control.  Moreover, every other advanced democracy is able to cover its entire population and control costs better than we do.  That is the proper context.  Then:

He would reform the tax code along the Simpson-Bowles lines, but without the tax increases.

Wrong again: Ryan’s roadmap increases taxes on the middle class and guts Medicaid and Medicare in order to pay for further cuts in taxes for the very rich.  Then:

It’s amazing that a budget chairman could include tax policy in his proposal, since it’s normally under the purview of the Ways and Means Committee.

Well, no, it’s not amazing at all: this was specifically designed by the Republican leadership to allow Ryan to propose whatever he wanted with special rules greasing through the budget process.  Then:

Instead of assuming open-ended future costs, the government will give you a sum of money (starting at an amount equal to what the government now spends) and a regulated menu of insurance options from which to choose.

From which to choose from whom?  Private insurers, of course; and we know how easy the individual health insurance market is for seniors.  Then:

The Ryan budget will please governors of both parties by turning Medicaid into a block grant — giving states more flexibility.

No it won’t, if any of those governors actually would like to, you know, ensure that their populations are insured.  If states actually want more flexibility, then they can get waivers from HHS.  So far, there are 451 such waivers.  What these will do is allow those governors who want to cut people off to be able to do so more easily. 

Even Brooks’ supposed concessions are mendacious.  Thus:

The Republicans still have no alternative to the Democratic health care reform.

Yes they do: it’s called increasing the number of uninsured and underinsured people in this country by several tens of millions.  For Republicans, having health insurance is like having any other commodity: if you can afford it, you do, and if you can’t, you can’t.

Enough.  Finally:

Paul Ryan has grasped reality with both hands. He’s forcing everybody else to do the same.

Here, Brooks is finally right.  Ryan has grasped that reality, and shoved it into Ayn Rand’s wet dream.  Apparently, David Brooks is already there, waiting for him.

Question to readers: How have your views changed over the past three years?

Over the past three years, we have experienced an amazing number of political, economic, and legislative trials. Have your views changed on anything important?

I don’t do a very good job of tapping the collective intelligence of our readers. I will try to do better. Hence the below query. I have more, too.

Over the past three years, we have experienced an amazing number of political, economic, and legislative trials. It’s human nature, I think, to respond to such events by doubling down on our own prior strongly-held beliefs. Health care reform/TARP/stimulus whatever proves that I am even more right than I thought I was!

That’s really too bad. We’ve been through some hard trials in both the biblical and the clinical sense. We’ve been tested by difficult times. We’ve also had the opportunity to see many of our own beliefs tested through admittedly-imperfect real-world experiments that should challenge our ideological, strategic, and policy views. Anyone active and attentive should be thinking differently about something important after having witnessed so much history being made so quickly on so many different fronts. Tell me–Have your own views changed on any basic issues of domestic policy? Continue reading “Question to readers: How have your views changed over the past three years?”

The Easy Way to Cut the Federal Deficit

There is any easy way to reduce federal spending by $47 billion a year — it’s so easy, in fact, that no one can consider it.

One can debate the political pros and cons of President Obama’s proposed budget: Jonathan Chait does an excellent job here debating with — himself!  But in fact there is a quite simple way to reduce federal spending by $47 billion a year as a conservative estimate: that old public health care option.

Such things, however, cannot be discussed in polite company, so let’s just reduce Pell Grants, maternal and child health, and food safety inspections instead.  Whew!  Glad we dodged that bullet.

Who Owns the Green Bay Packers? And Why Should Congress Care?

The Pack has become of the world’s greatest franchises while rejecting traditional ownership models. Congress should look into replicating it for other teams.

If you ever get tired of your local wingnut’s paeans to corporate capitalism and threats to “Go Galt,” you might try a four-word answer: the Green Bay Packers.  They aren’t owned by some vampire squid.  But who does own them?

At the New Yorker, Dave Zirin thinks he knows about The Pack’s owners:

They have a hundred and twelve thousand of them. The Packers are owned by the fans, making them the only publicly owned, not-for-profit, major professional team in the United States. The Pack have been a fan-owned operation since the primitive pro football days of the nineteen-twenties, when N.F.L. teams could be won in card games and no one foresaw the awesome power this sport would hold over both the American imagination and the American wallet.

Legally, though, this raises more questions than it answers.  The vast majority of “not-for-profits” in the United States do not, strictly speaking, have owners: they are, in California state law parlance, “nonprofit public benefit corporations”, which do not have shareholders. 

In any event, if they have shareholders, then how are they different from any other public company?  A few years ago the evil Boston Celtics became a public company for awhile, and Globe sportswriter Bob Ryan would always end his weekly column with the closing Celtics stock price.  Nobody made a big deal about that.

Looking very briefly through Section 501(c) of the Internal Revenue Code, which classifies more than 20 sorts of tax-exempt nonprofit organizations, it’s not clear whether any of them qualify, because a requirement at least of the most popular forms (I didn’t look at all of them) is that they forbid what we normally think of as shareholders: no one is allowed to get personal financial benefit from the organization’s profits.  Maybe that’s why, as Zirin says, “shareholders get no dividend check and no free tickets to Curly Lambeau Field” — that would be illegal, or at least deprive The Pack of a tax exemption.  In any event, it’s still not clear to me how a firm can be 1) a nonprofit while 2) having shareholders who 3) don’t get any of the benefits of holding shares.

In the end, I agree with Zirin’s conclusion: this is an ownership form that should be replicated.  Fans are tired of being blackmailed by owners who threaten to move: Seattle’s loss of the Sonics was a crime.  As Zirin notes, current NFL rules prohibit more teams operating like the Packers, but given the league’s own tax exemption under 501(c)(6), and the corruption of the current system, this deserves a Congressional response.  I don’t expect the GOP to initiate anything, given its coziness with the super-wealthy, but the Senate Commerce Committee, which has jurisdiction, should begin hearings.  I wonder whether some committee members, such as Minnesota Vikings fan Amy Klobuchar and Seattle Sonics fan Maria Cantwell, both of whom are up for re-election next year, might have some interest in spending some time on the matter.

Recess Appointments and Filibuster Reform

Ending filibusters of executive branch appointments is such an obviously a good idea that no one is pushing it.

I’m delighted that President Obama used his recess appointment power for several key administration posts (and the government printer – WTF?).  He should do it more often, and I suspect will have occasion to if Senate Republicans continue the most egregious abuse of the chamber’s rules in US history.

But there is a way out of this mess, which really should not be a partisan issue — really.  That is to end the filibuster for executive branch appointments.  Many Senate Democrats are pushing for more far-reaching rules, such as ending the “silent filibuster” (which I also support), but getting out of the confirmation mess really is a no-brainer, and hasn’t received the attention it deserves as a common-sense reform.

Alexander Hamilton said it most succinctly in Federalist 68: “the true test of a good government is its aptitude and tendency to produce a good administration.”  The ability of individual senators to stymie specific executive branch nominees significantly undermines any President’s capacity to develop sound administration.  That was in fact probably the Republicans’ goal, although many of the filibusters were just using positions as bargaining chips.

Most importantly, though, executive branch filibusters are relatively negligible in terms of the parties achieving their policy goals.  One could at least argue that the minority should be able to filibuster, say, President Palin’s nomination of Joe Miller or Sharron Angle to the Supreme Court.  If she wants them as Interior Secretary, that would be a horrific policy decision, but it’s a decision that can be reversed as the voters throw her out of office.  Yes, there are consequences to terrible executive officials, see, e.g., Donald Rumsfeld and Alberto Gonzales, but they are temporary.  Justice John Bolton would have been a disaster; former UN Ambassador Bolton is busy foaming at the mouth on Fox News and not doing anyone any harm.  (In fairness, Gonzales was actually a pretty decent state judge).

If there is a truly bad presidential appointment, any future Democratic minority should be able to get enough Republicans to join them and reject the appointment outright, although I admit that the GOP’s flight from reason makes this less likely.

Ironically enough, failure to move on this issue will in fact provide less accountability for the executive branch officials.  Presidents will start using more and more recess appointments, avoiding hearings and scrutiny altogether.  Perhaps that’s what the royalist faction of the GOP wants, but the rest of us should not have to put with it.

We’ve had lots of talk of late about the decline of the American Empire.  Maybe the US government can’t police the world, and if the Republicans have their way, it won’t even be able to run the country.  But it should be able to run itself.

National ethanol intoxication stays at DWI levels for another year at least

Bob Dineen, chief flack for the US biofuels industry, is delighted with the extension of the ethanol and biodiesel tax credits that ex-Illinois senator Obama didn’t filter out of the tax compromise.  No, the Brazilians aren’t going to be relieved of the import duty that’s preventing us from using the one biofuel (their sugar cane ethanol) that may be genuinely green.  Dineen’s remarks included the following notable admission about the credit: “It is the foundation upon which this industry was built.”  In other words, after twenty years of trying to make it a business, fuel ethanol from corn is a losing proposition that destroys value rather than creating it, and can only be sustained by reaching into the pockets of taxpayers for $6B a year, or about one in every seven dollars of all corn sales.  On top of the $4B in plain old corn subsidies.  It’s payable to those “family farmers” whose average operation in Illinois (for example) is worth $1.5m just for the land, and the nice folks at Archer Daniels Midland, Cargill, and the like. Average farm household income, by the way, is about 15% higher than the US average.

There are losing businesses that should be subsidized with public money, like education, parks, public transit, policing, and the military.  They are called market failures.  But there is no market  failure associated with growing corn and making automotive bourbon out of it, except the negative externalities like the dead zone in the Gulf of Mexico created by fertilizer runoff into the Mississippi, which should occasion a tax, not a credit.  The Investor’s Business Daily deplores the credit extension, but you know what kind of  commie lefty rag IBD is.

How the tax deal debate is shaping up—and why we should remember our real opponents

Positions on the tax-cut debate are dividing across three separate dimensions. And on all of them, the differences among Democrats are slight compared to those between us and Republicans.

As far as I can tell, the furious debate over whether the tax deal is good or bad reflects disagreement among Democrats and liberals across three separate dimensions (which is why it will get complicated):

1. Idealists vs. Pragmatists. David Kurtz thinks the main news of Obama’s press conference yesterday is that Obama has finally declared that he’s a pragmatist, not an idealist.  I think that anyone who didn’t know that already was ignoring Obama’s entire biography, let alone his governing style, in favor of a few speeches.  In any case, those who look to a President primarily to articulate their political identity or defend their core principles clearly have reason to be more opposed to the deal than those who see the White House’s job as getting the best outcome in terms of legislation and regulations. In my book Ruling Passions I propose a division of moral labor: idealists should stick to citizen activism—and have a huge and genuine role to play there—while leaving legislation to the pragmatists.  But not everyone thinks that.  Of course, there are plenty of reasons pragmatists might, and do, oppose the deal, but the idealists will likely oppose it more bitterly.

2. Civic republicans vs. non-republican liberals. Civic republicanism (small “r,” of course) is an awkward label for a common position: that the fundamental issue of our time is the ability of the rich, and corporations, to game the political system and prevent the rest of us from exerting true self-governance.  (Roger Hodge’s The Mendacity of Hope, which I haven’t read yet, sounds from what I’ve heard like a pure instance of this view.  Richard Trumka’s angry statement opposing the deal, with its stress on income inequality and “moneyed interests,” is, perhaps surprisingly, another instance.)  In contrast, a non-republican liberal position is that giving material sustenance to the poor is more important than whether the rich get paid off, however regrettable and undeserved that is.  Randi Rhoads has been pushing this position hard on her show and her blog.  And Obama has explicitly taken it as well.

3. Immediate results people vs. repeated game players. Many of the deal’s supporters (Steve Benen, Ed Kilgore) have started to ask opponents what they propose as the next move if it’s voted down.  We opponents, frankly, don’t have a great answer so much as a different question: how can we change baseline expectations so as to achieve progressive outcomes in future negotiations?.  Everybody, of course, thinks that both the short and the long term are important to some degree.  But the deal’s supporters largely rely on the argument that results now are very important, either because in a recession those who lose benefits will face great and immediate hardship (see James), or because stimulus now will crucially boost Democratic prospects in 2012 (which is, to fill in the minor premise, an unusually important election because of the Affordable Care Act).  Most of the policy wonks, by the way, are lining up behind the deal because their professional deformation is to solve the immediate problem rather than looking at the future negotiating situation it sets up.  As professional biases go, this one’s honorable and functional—but still a bias.

My own all-things-considered opposition reflects my being a pragmatist (with respect to legislative negotiations, not politics as a whole), mostly a liberal but with growing sympathies for republicanism, and a fanatical repeated-gamer.

BUT we have to remember something.  Both sides of these debates have immeasurably more in common with each other than with the Republicans—who want to sabotage Democrats tactically and also destroy them ideologically; dislike the welfare state passionately and on principle while wanting as a matter of principle and practice to give the rich and corporations more money and power, not less; and are excellent players, on the oligarchical side, of both one-shot and repeated games.  Steve is dead right on this.  We should vigorously criticize one another.  But we should save our real outrage for its proper target: Republicans who callously and deliberately held the most vulnerable members of society hostage to the interests of the wealthiest.  Instead, I fear that the humane cop who wants to negotiate with the kidnapper and the tough-minded one who doesn’t will forget who the criminal is.

Update: “Non-republican liberal” seems a bit unfair to the category, since that label defines the school of thought in terms of what it’s not.  With some worries, since the usage is common in social-philosophy debates but can mean something quite different (and pejorative) in American political discourse, I propose calling these kinds of liberals welfarist liberals because their/our main concern is how people’s lives go, not how power is distributed.

Quick thoughts on the tax compromise

Assessing the tax deal: distribution, memes and focal points, public revenue, politics.

Since one of the things I supposedly teach is the ethics of compromise, I guess I should take a crack at discussing The Deal (as far as we know about it from the Times so far).

There seem to be at least four (and a half) main issues.

1. Vulgar Rawlsianism. The Times says the President’s first priority was the extension of unemployment benefits, and I believe it.  Obama said as much himself at his press conference yesterday.  There’s something intuitively attractive (as well as crudely Rawlsian) about caring more about the jobless than about how much those at the top have, and some will say that this factor alone makes the deal worthwhile.  But the deal does nothing for the ninety-niners, those who have been jobless for more than that many weeks, who are even worse off. And it does nothing to prevent the Republican House from hammering the poor on the spending side.  So I think this is vulgar Rawlsianism indeed.

1a. Stimulus.  I know this is the meme of the day—Obama abandoned progressivity for the sake of juicing up the economy (see Ezra Klein, David Leonhardt)—but I’m not going to make much of it.  This is partly because as a non-economist I don’t have a properly qualified opinion, partly because those opinions I do tend to trust seem to think the deal will be pretty ineffective as stimulus, and partly because the question isn’t whether the deal will stimulate the economy, but whether it would stimulate the economy more than any other tax cut that Obama could have negotiated in January. After all, the GOP would hardly have left the new status quo alone, and with a new baseline of Clinton-era rates, Obama might have been in a better position to take tax cuts for the wealthiest, and estate tax capitulation, off the table, or at least force major concessions on those, through credible veto threats.  (Some say that Obama isn’t the type to make such threats—but if so, that’s his fault.)  Which brings up

2. Baselines, focal points, and memes. The whole point of the ten-year sunset on the Bush tax cuts (besides gaming deficit predictions) was to trap the Democrats into “raising taxes” in the future by letting them expire.  Obama hasn’t just fallen into that trap; he’s endorsed it, by embracing the idea that letting “taxes go up increase” during a recession would be bad policy (though granted, I think he avoided the words “raise” and “increase”).  This is very bad.  There’s also a strong distributional baseline problem. The reason it’s a bad idea to “give everyone” tax breaks is that the next time one proposes clawing back on a progressive basis, doing so will be an “increase,” not the status quo—just as happened this year.  A superficial Pareto efficiency now prevents a certain subset—the progressive subset—of what would otherwise have been Pareto-efficient deals later.*

3. Revenue. I agree with Matt Yglesias that one big problem with America is that we’re taxed too little to support the public goods we need, and that this compromise moves us precisely in the wrong direction.  This consideration also adds to the distributional concern: from now on, letting tax cuts expire for the rich will be “raising taxes,” while cutting programs for the poor or other public goods (yes, lack of homelessness and unnecessary death are public goods) will be “living within our means.” That said, one should realize that Matt and I are probably in the 14 percent minority that wouldn’t mind seeing all the Bush tax cuts expire, i.e. restoring the tax code of 2000.  Our position is very unpopular, and embracing it would be an enormous political risk.

4. Politics. This is the big Kahuna.  The President’s defenders will argue that the deal will be great politics.  It will make Obama look moderate and conciliatory.  (Third Way version of the argument: he ought to be moderate and conciliatory on other subjects.  Probably too-clever-by-half double-bank progressive version: this will let him more easily say no to Boehner on other subjects.)  And, by stimulating the economy (by stipulation), it will help Obama’s reelection chances.  If it does that, it will help Obama defend his legislative achievements—especially the Affordable Care Act, the most important domestic policy achievement since Medicare and Medicaid, and much more important than anything likely to be accomplished in the next two years—and do great things through executive action. Given that Obama actually has a substantial progressive legislative record to defend—completely unlike Bill Clinton, who enacted moderate Republicanism and then ran on a platform of preserving it against radical Republicanism—this has some force.  A case could be made that triangulation now has a moral and political implications very different from those of triangulation in 1995-96.

Against this: (a) The deal also makes Boehner and McConnell look moderate and conciliatory—a shocking misportrayal of reality that will make it that much harder to run against their intransigence. (b) A better economy will not only help Obama but help Republicans retain the House (the Senate will flip regardless). (c) Embracing Republican frames on taxes makes it that much harder to make a coherent case for Democratic government.  And(d) the purse is powerful: while a Republican House and Senate might not be able to repeal the ACA, they might be able to make it work so badly as to discredit it.

On balance, then, I think this is a bad and short-sighted deal.  But it’s not quite as obviously bad, and morally disgraceful, as some—commenters, fire away—will portray it.  And my impression of its badness derives largely from my unpopular view that our taxes overall are too low.

*This is a neglected,because buried, argument in Russell Hardin’s fine Indeterminacy and Society (Princeton, 2003), pp. 9-11.

Update: Point (1) was too flip. The truth is that I’m not unemployed, nor do I move in circles where a great many people are unemployed. If I were in either of these categories, I’d probably look at the deal pretty differently. One can still oppose the deal on balance, as I do, but those of us who do should remember that the lives of some desperate people are at stake.

Second Update: Corrected to reflect the transcript of Obama’s December 6 statement: “let taxes increase for these Americans [all but the rich] right now” was his formulation for what must be avoided.