Politics, wonkery and everything in between.
As part of his latest offer on the debt ceiling, House Speaker John Boehner has proposed a ceiling on future federal revenues, reports John McKinnon for the Wall Street Journal. The ceiling would limit total revenues to $36.2 trillion over the next decade, or $800 billion more than the amount that would be produced if current policies, including the Bush tax cuts, were set in stone. As McKinnon notes, Republicans hope that savings would come from “higher economic growth stemming from a streamlined tax system, rather than any policy changes that would be involved in a tax overhaul.”
In essence, this proposal is an attempt to match the administration’s earlier goal of $800 billion in new revenue without raising taxes and invoking the ire of right-wing House Republicans. Think of it as the lowest common denominator for Republicans. Of course, this makes it a terrible deal for the White House, especially given the alternative —next year, if the president does nothing, the Bush tax cuts will expire and taxes will return to Clinton-era rates. Over the next ten years, this would provide $4 trillion in additional revenue, cut the deficit in half, and stabilize the debt.
If President Obama is willing to go back on his campaign promise to freeze taxes on the middle class, then he doesn’t actually need to raise revenue as part of a deal on the debt ceiling. He could take a package of cuts now, and look to revenues when the Bush tax cuts come to an end.
Insofar that progessives should be worried, it’s because of Obama’s steadfast opposition to a middle-class tax hike. The progressive agenda is unsustainable without a return to Clinton-era tax rates; anything less requires cuts to the social safety net. Republicans understand this, hence their frantic effort to lock tax rates in at the Bush level or lower. Progressives have zeroed in on Obama’s poor negotiating as evidence of his betrayal, but if they’re really concerned with the viability of the progressive project, they’ll turn their attention to that dangerous campaign pledge.
With twelve days left before debt default, lawmakers are rushing to hash out a deal that cuts long-term spending and raises the debt limit. As of today, President Obama and House Speaker John Boehner are mulling this “compromise,” a deal focused on sharp cuts to discretionary spending and regressive changes to entitlement programs, aimed at saving $3 trillion over the next decade. In addition, the deal would include tax reform that would lower income tax rates while reducing or eliminating tax breaks and expenditures. The actual legislation to lift the debt ceiling wouldn’t include tax increases, and the tax rewrite would be postponed until next year.
Even for those who respect President Obama, this looks like capitulation. Right-wing Republicans will get a grab bag of painful cuts to the social safety net, as well as lower income tax rates on individuals and corporations. Other than the satisfaction of saving the country from a second economic collapse, Democrats get nothing. It’s possible that Obama will let the full Bush tax cuts expire next year, thus raising trillions in additional revenue, but given his unshakeable commitment to middle-class tax cuts, it’s more likely that we lose the tax cuts on the rich, while maintaining the unsustainable tax cuts on middle-class Americans.
Not only is this a deal a disaster for liberal interests, but it’s impossible not to notice the extent to which this process is profoundly undemocratic. In short, the Obama administration and Congressional Republicans have provoked an economic crisis to force unpopular policies that voters would otherwise reject. Indeed, if healthcare reform required nine months of continuous debate, then certainly these cuts—which are three times the size of the Affordable Care Act—warrant more than a few weeks of discussion.
Of course, with a little less than two weeks before default, that’s not possible. Instead, Congress will pass a “deal,” Washington pundits will cheer it, and President Obama will sign the largest cuts to the welfare state in history. So much for liberalism.
It suffices to say that the last several months have been frustrating for liberals. Unemployment hovers at 9 percent and economic growth is anemic, but all of Washington is obsessed deficit reduction and fiscal “austerity.” What’s more, because the Republican Party refuses to compromise—and has actively held the economy hostage to the debt ceiling—the entire policy debate has moved sharply to the right. Moderate ideas, like Senator Kent Conrad’s proposed 50-50 split for deficit reduction ($1 dollar in cuts for every $1 in new revenue), have been pushed off of the table, and liberal ideas, like additional stimulus or a more active Federal Reserve, have been shunned by nearly every participant.
There was early hope that President Obama might use this as an opportunity to take command of the conversation and stress the importance of job creation, but that was discarded as soon as the White House joined the bargaining table. Far from talking about jobs, Obama has emerged as a leading advocate for austerity, adopting conservative rhetoric and chastising liberals for their refusal to join the program, while ignoring their contributions to the debate. As he said in a press conference two weeks ago, in an attempt to explain his position, “If you’re a progressive who believes in the integrity of Social Security, Medicare and Medicaid, then you have an obligation to make those programs sustainable in the long-term.” Likewise, “If you’re a progressive who believes in Head Start and college assistance, we’re not going to be able to do that if we don’t have our fiscal house in order.”
Obama’s commitment to conservative austerity measures might infuriate the left, but most Americans are huge fans. According to the most recent Wall Street Journal/NBC News poll, 58 percent of Americans prefer Obama’s proposal for deficit reduction—a solution that would cut federal spending, increase taxes on corporations and the wealthy and reduce the level of spending on Medicare—to the Republican proposal, which would slash spending without raising new revenues. Likewise, by a 52-to-38 margin, people say that Democrats shouldn’t compromise on cuts to Social Security and Medicare. By contrast, a whopping 62 percent of respondents say that Republicans should compromise on tax increases. That the public is on Obama’s side is a fact that will help as he works through the poor economy and begins his uphill struggle for re-election against a dangerous and radicalized Republican Party.
Even still, win or lose, we will have to live with a status quo that has moved sharply—and maybe irrevocably—to the right. Even the “moderate” proposal for deficit reduction, produced by the Senate’s bipartisan “Gang of Six,” calls for immediate cuts to discretionary spending, long-term spending caps, tax reform with a focus on lower rates and cuts to entitlement benefits. This isn’t a great time for progressive politics, and it’s hard to see how it gets better.
Last night, several news outlets broke stories saying the same thing: President Obama is willing to make a deal on Social Security. Contrary to liberal hopes, this isn’t a deal to raise Social Security benefits or lower the eligibility age—a reasonable idea when unemployment is high and growth is sluggish. Instead, Obama has reportedly offered to expand the scope of spending cuts, including major changes to Social Security, Medicare and Medicaid, in return for $1 trillion in new revenue and an increase in the debt limit.
At the moment, it’s far too early to say anything about the viability of this deal. Neither John Boehner nor Eric Cantor or Mitch McConnell are on the record as accepting the terms of this proposal, and it’s hard to imagine that Congressional Democrats would want to sacrifice parts of Social Security and Medicare for deficit reduction, particularly those running for re-election next year.
In light of the size of the White House proposal and its limited palpability to members of both parties, it’s hard to see it as anything but political theater; an attempt to demonstrate President Obama’s willingness to go “big” on deficit reduction. Even still, it’s extremely disheartening; it demonstrates that, as always, Obama is willing to cater to the center-right in a huge way (entitlement cuts) for the sake of a small political advantage.
Moreover, this proposal is further evidence that the debt ceiling negotiations were an intentional decision on Obama’s part. The president genuinely believes in deficit reduction, and chose to use the debt ceiling as an opportunity to cut spending with significant bipartisan cover. Obama hasn’t been fooled into these negotiations, nor is he playing rope-a-dope or a complex game of eleven-dimensional chess. This is what he wants.
What does this mean for liberals? Well, they can complain and attack Obama—they’ve already begun—but criticism from the left has yet to budge the president, and it’s doubtful that this time will be any different. Demonstrations sound great, but they don’t actually carry a high chance for success; if your only option for changing the political calculations of a president is protest, then you’re probably too late to the game. Likewise, a primary campaign against Obama sounds like it might work, but outside of activist circles, there is little appetite for a challenge. The Democratic establishment is satisfied with President Obama, and will work to ensure his reelection.
Indeed, given the importance of presidential elections, Obama will be able to count on organization and support from every member of the Democratic coalition. Moreover, if a deal comes through, it will probably help him with independents, who support modest reductions in entitlement spending.
Simply put, liberals don’t have much leverage over the Obama administration, which, unfortunately, makes our concerns—and our anger—a second-order consideration at best.
It’s annoying that David Brooks begins his column with effusive praise for the prospective Congressional debt deal, which massively cuts spending while providing token revenues. Thankfully, that’s only prelude to a devastating attack on today’s Republican Party:
But to members of this movement, tax levels are everything. Members of this tendency have taken a small piece of economic policy and turned it into a sacred fixation. They are willing to cut education and research to preserve tax expenditures. Manufacturing employment is cratering even as output rises, but members of this movement somehow believe such problems can be addressed so long as they continue to worship their idol. […]
If the debt ceiling talks fail, independents voters will see that Democrats were willing to compromise but Republicans were not. If responsible Republicans don’t take control, independents will conclude that Republican fanaticism caused this default. They will conclude that Republicans are not fit to govern. And they will be right.
There are two extremely frustrating things about today’s media environment as it relates to the Republican Party. The first, as the Washington Monthly’s Steve Benen described over the weekend, is the extent to which the media have simply forgotten the previous decade of GOP rule. For at least four years, Republicans governed with few obstacles to their agenda, securing tax cuts, wars, unfunded new entitlements and continued deregulation. The results were trillions of dollars in wasted spending, trillions more in lost revenue, deep dysfunction on nearly every level of government and an economic crisis of nearly world-historical proportions. Despite this, media elites continue to treat the Republican Party—and the architects of its disastrous party—as credible voices on public policy, as if 2001 to 2008 never happened.
The other is the extent to which media outlets treat current Republican behavior as politics-as-usual, despite the extraordinary nature of their actions. Simply put, this is the first time in American history that a political party has threatened to default on the nation’s debt and sabotage the global economy on the basis of narrow ideological goals. With that said, it’s refreshing to see Brooks—who is close to the apotheosis of a Beltway pundit—finger the GOP for its extremism and economic brinksmanship, rather than treating the whole affair like a particularly interesting game of polo.
Dick Gephardt, the two-time presidential candidate and former House Democratic leader, has come out against the Independent Payment Advisory Board (IPAB), which is responsible for controlling Medicare costs under the Affordable Care Act. His reasoning? We don’t want to hand medical decisions to unelected bureaucrats, oh, and won’t someone think of the seniors?
Under the current law, IPAB will be an unelected and unaccountable group whose sole charge is to reduce Medicare spending based on an arbitrary target growth rate. It will propose cuts to Medicare that Congress can override only with supermajority votes, an unnecessarily high and unrealistic bar. Just as important, these cuts are likely to have devastating consequences for the seniors and disabled Americans who are Medicare’s beneficiaries because, while technically forbidden from rationing care, the Board will be able to set payment rates for some treatments so low that no doctor or hospital or other healthcare professional would provide them.
Unfortunately for Gephardt (and others who make this argument), we already live in a world where unelected, unaccountable groups devote their energies to reducing healthcare costs based on arbitrary (or at least, obscured) targets and growth rates. They’re called health insurers, and incidentally, they are big clients of Gephardt’s consulting group, Gephardt Government Affairs, which goes unacknowledged in the piece.
In any case, yes, IPAB is mostly isolated from electoral pressures, but like members of the federal judiciary or the Federal Reserve, IPAB members are subject to Senate confirmation. By the standards of our Constitution, IPAB is thoroughly democratic, and by the standards of health insurance companies, it’s a paradise of political participation.
As for seniors, Gephardt is simply scaremongering. There’s plenty of low-hanging fruit in Medicare, and IPAB can save a fair amount of money by ending payments for dubious procedures and inefficient providers. More importantly, Medicare compromises a huge part of the current healthcare system, and even with cheaper procedures, it’s still worthwhile for doctors and healthcare professionals to take Medicare patiences. What’s more, if Medicare cost control measures trickle down to private health insurers, doctors won’t find any advantage in rejecting Medicare patients.
Looking toward this year’s statewide elections, the Virginia Public Access Project—a nonprofit that focuses on transparency in state elections—finds that of the 100 seats in the Virginia House of Delegates, only fifteen are contested. Of the remaining 85, either the incumbents are running unopposed, or the opponents woefully underfunded. Matthew Yglesias uses this to make a point about the importance of money in politics:
People often discuss uncompetitive seats primarily through a gerrymandering lens, but I think the money is a much more important factor and one that there’s a better solution available for. If any major party nominee was guaranteed a decent amount of money, then almost every seat would be meaningfully contested. Incumbents might still be regularly re-elected (and why shouldn’t they be if they’re ideologically well-fitted to their districts) but they’d still need to hustle and try and worry that they’ll be exposed to scrutiny.
Among political scientists who study the effect of money on politics, “floors, not ceilings” is a common and easy to understand refrain: the goal of campaign finance isn’t to restrict a candidate’s ability to spend money, it’s to ensure a fair system where everyone is able to compete. The problem in Virginia, and to a large degree nationwide, is that electoral challengers are woefully underfunded. As Yglesias points out, “The quantity of meaningful elections is very driven by the imperative to raise funds and then try to allocate them ‘efficiently’ to winnable seats.” When there isn’t enough money to go around, incumbents stay untouched, challengers unsupported, and the public suffers from an impoverished debate.
Solving this problem doesn’t require anything complicated; publicly financed block grants to major party candidates—indexed to the average cost of running a competitive campaign in the area—would automatically elevate most state-level elections to something that approaches competitive. For congressional candidates, Jonathan Bernstein recommends a block grant of $500,000, with strict disclosure laws for further fundraising. I would probably include a system of supplementary public financing for those of who chose it (probably along the lines of New York City’s matching system), but the main idea is to make every race a serious contest, regardless of whether or not the incumbent wins.
The New York Times reports on the vacancy crisis in the executive branch, and the Senate GOP’s culpability due to its categorical rejection of President Obama’s nominees. To its credit, the Times recognizes that this just isn’t a matter of overzealous but reasonable senatorial prerogative; Republican senators have essentially issued a blanket rejection of all executive branch nominees, and have hijacked the confirmation process in an effort to change or overturn administration policies. It’s not that Republicans can’t see Elizabeth Warren’s qualifications for heading the Consumer Financial Protection Bureau; it’s that the institution exists and Republicans want to destroy it, or at least, weaken it to uselessness.
This is an unprecedented abuse of the Senate’s right to provide “advice and consent” to the president; it’s one thing for minority senators to hold a nominee in order to make a deal or secure a program; it’s something else entirely for the minority party to overcome its legislative minority by categorically blocking the president’s nominees. On nominees—and a whole host of other procedural issues—Republican behavior has veered into a flagrant disregard for Senate norms.
Naturally, when asked to defend their behavior, Republicans blame Democrats. “They were the first ones to break norms,” Republicans say, “we’re just trying to compensate”:
Republicans say the blockade reflects their frustration with the White House and the last Congress for passing broad policies without winning broad support. Republicans are consigned to defensive tactics because they lack the votes to pursue their own agenda.
“This isn’t about any particular appointee—Ben Franklin could come back to life and they would oppose him,” said Mr. Engelhard, a former Republican aide on the House Financial Services Committee. “There’s just very strong concerns on their side that the process, that traditional way that the Senate likes to come to bipartisan compromise, isn’t working.”
This is pure, unadulterated bullshit, and I’m disappointed by the Times’ willingness to swallow it. From the stimulus package to financial reform, President Obama and Congressional Democrats worked hard to build a bipartisan consensus. In their efforts to find Republican support, Democrats shrunk the stimulus package, scrapped the public option, and crafted a weaker set of financial regulations. It’s not that Democrats refused to build broad support, it’s that Republicans rejected every overture in a clear effort to sink the administration’s agenda. The irony of it all is that Republicans gave up greater influence on current policy when they rejected Democratic attempts at compromise.
Of course, even if that weren’t the case, it doesn’t excuse Republican behavior; in 2008, Democrats won the presidency and large congressional majorities. Insofar that mandates exist, the Democratic Party had earned a right to pursue its agenda to the best of its ability. Democrats owed nothing Republican lawmakers, and they certainly weren’t required to compromise their own interests for the sake of bipartisan comity.
For The Weekly Standard’s Jay Cost, it’s Jimmy Carter, the preferred bogeyman of conservatives and right-wingers. Cost begins on a reasonable note, pointing out the extent to which campaigns can’t overcome poor economic performance, but then goes off the rails with his Carter comparison, ignoring the actual substance of Carter’s presidency as compared to Obama’s.
Yes, Cost is right to place Obama on shaky ground for his re-election campaign. Unemployment isn’t projected to dip below 8 percent until 2013, per capita disposable income is stagnant and Obama is trailing the “generic Republican” by six percentage points, according to a recent Gallup survey. On the other hand, Obama has several advantages that eluded Carter. For starters, Obama has run a competent administration, and has signed several major pieces of legislation: the Affordable Care Act, Dodd-Frank, and “don’t ask don’t tell” repeal. These are actual accomplishments, and will help when Obama makes his case for a second term. By contrast, with the notable exception of deregulation, Carter accomplished little on the domestic front, thanks to his tough and alienated relationships with liberal activists and Congressional Democrats.
More importantly (for his re-election campaign) is the fact that Obama is still more popular than each of the Republican candidates for president, the generic advantage notwithstanding. According to a recent NBC poll, Obama leads Mitt Romney by six points in a hypothetical match-up (49 to 43) and Tim Pawlenty by 13 points (50 to 37). 49 percent of Americans approve of his job performance, making him the most popular politician among the possible choices for president in 2012.
Jimmy Carter, on the other hand, was wildly unpopular by the time 1980 rolled around, and faced a credible primary challenge from Senator Ted Kennedy. What’s more, the public blamed Carter for the poor economy of the late seventies, which isn’t true of Obama and today; more than six in ten Americans say that President Obama inherited the country’s economic problems, and 47 percent place most of the blame on George W. Bush.
Of course, none of this is to discount the problem of a poor economy. If things are bad enough, a Republican will win the White House in 2012. But if we’re working with historical analogies, this would make Barack Obama the second coming of George H.W. Bush—another president who floundered in the face of a poor economy—and not a retread of the hapless peanut farmer from Georgia.
For the federal government, Medicaid is a deal. It provides fairly comprehensive health care coverage to more than 50 million people at a significantly low cost. For states, on the other hand, Medicaid isn’t so great. On average, the federal government only covers 57 percent of Medicaid’s tab, leaving the rest for state governments to handle.
In normal economic times, states do an adequate job of covering their share of Medicaid costs, but thanks to the economic collapse, state finances are collapsing under the strain. From 2007 to 2010, eight million people joined Medicaid rolls, and according to an analysis done by the Wall Street Journal, Medicaid now accounts for more than 20 percent of total state spending in 25 states:
The problem for states is that the federal government’s supplementary Medicaid funding runs out in July, and absent that support, Medicaid becomes completely unsustainable for most state budgets. As such, some governors (mostly Republicans) are lobbying for relaxed Medicaid rules, so that they can tighten eligibility standards and lessen the strain on their budgets without raising taxes. Here’s the Washington Post with more:
There is a growing impatience among governors,” said Mike Schrimpf, communications director for the Republican Governors Association. “As the Medicaid portion of state budgets grows, the issue becomes even more pressing.”
This week, 29 GOP governors wrote a letter asking congressional leaders for greater flexibility in spending Medicaid dollars. They say that would give them much-needed control over the soaring cost of Medicaid, often the largest single item in state budgets.
This points to a major failure of the 2009 stimulus; in hindsight, the package should fully covered Medicaid costs through the recession and slightly beyond, to stabilize state budgets. Indeed, to step outside the realm of the possible for a moment, it would have been best if the permanently federalize Medicaid, removing it from state budgets and guaranteeing health care coverage for millions of low-income Americans.
The Affordable Care Act does some of the work here, in that it greatly expands eligibility for Medicaid, but it also keeps the basic structure in place. Medicaid will remain a federal/state partnership, when it really should be a federal program administered by the federal government.
Unfortunately, with massive cuts to the program looming as part of a debt reduction bill, now seems to be the wrong time to talk about making Medicaid more sensible and more robust.