Time to come back onshore from Haiti to our own profound problems of governance and governing. The good news is that we're not facing a giant life-threatening disaster with no resources. The bad news is that we're facing a set of prosperity threatening and self-inflicted crisis that require as much structural change, in their own way, as fixing Haiti will require. Their problems were inflicted on them by history, bad leadership and nature while ours were, believe it or not, largely our own choice. America, having survived its own major crisis of the last two years is not out of the woods yet but the more important questions are where do we go from here and how do we get there? But the central question is can we face reality and make the choices that will get us there? In other words is American governable - and what will it take to make it so?
Last week after a long and convoluted exchange with a conservative (self-id'd libertarian) friend of mine a discussion that was intended to be evidence-based turned into a null set stoppage. At the end of the day there was no data, evidence, argument or other form of persuasion that was acceptable. Things were broke, it was the fault of the Administration, which had screwed everything up, nothing had worked or would work and Barry was a screaming socialist radical who would destroy the country. This despite a chain of analysis, data and so forth both stretching back (literally) for years which had been used to defend some of Bush's agenda! So what's going on here - and btw all this talk about unconscious decision-making and the lizardbrain is just nonsense and insulting to boot. The catch is my friend is far from alone for reasons we've discussed before and will re-review later. But if we don't figure out to hang together then we will surely all hang separately! My friend would likely disagree vehemently with everyone of these cartoons as being pejorative and distortionate. Yet each one, aside from our own biases, reflects evidence we've presented before and propose to carry forward.
Jon Stewart and Bill O'Reilly: Framing the Naysayers
One of the more interesting exchanges we've heard recently is the full interview between Jon Stewart and Bill O'Reilly of Fox News. Ironic isn't it when two entertainers are some of the better sources. This takes a few minutes but is well worth your time to listen to frame the situation out. You really do need to listen to this and make your own judgments but what we heard from Stewart was a reasonable man in difficult and complex circumstances trying to figure out what's going on. Admittedly from a left of center position but willing to inquire, test and engage in civil discourse. What we'd argue we heard from O'Reilly was someone with a hard position who led with "quit beating you sheep" questions, cut them off when he didn't like the answers, sidestepped any counter-evidence, contradicted his own position several times and seemed more interested in his position than in any facts. And he is, as Jon noted several times, what passes for the King of Reasonableness and Moderation on Fox and among similar venues. The problem of course is that ideology is no substitute in the long run for being right - it just disguises the real problems with a high fever and makes you feel better until you get blindsided by that selfsame reality.
A Balanced View of Reality: Brooks on Rose
As you might have gathered our favorite right of center pundit, with whom we more than occaisionally disagree, is David Brooks of the NYT. In this hour long interview on Rose however we found ourselves agreeing with him on all his major points even when we'd disagree on relatively minor ones, e.g. the structure and effectiveness of the stimulus package. Our sustained argument for months now could be summarized as saying that the Administration has pursued a policy agenda that was precisely correct (based on our analysis dating to 2004 at least), focused on the Big Five (Economy, Finance, Healthcare, Energy and Education), had one of the most successful legislative track records since the New Deal despite what you hear, was virulently opposed by the Rips on each and every initiative, that that opposition was based on partisan political advantage, who based their appeals on popular fear and anger which was and is driven by the profound uncertainties of the time, and has cumulatively succeeded in stoking those fears until they are metastasizing. And that the Administration was eloquent and elegant (especially in the person of the President) in presenting its plans but didn't reach the popular mind and badly needed and needs to find a central theme that means something to the population at large. In business we call it the elevator speech - the 60 second summary with a compelling message that organizes all the other initiatives. In fairness it's not as if they weren't facing enormous challenges, a complex and difficult political engineering problem and competing special interests focused on protecting their rice bowls. That we've gotten this far this well must be accounted something of a miracle. Nonetheless we're due for some changes.
Oddly enough Brooks, that champion of thoughtful, reasonable and constructive conservatism and civil discourse makes almost exactly those points. At one point he says that the only person in Washington really interested in governing is Obama, that all the right goals were set and the right policies pursued but the times turned out not to be right. And the major reason they are NOT right is that people are too scared. The question he then asks is American governable? And can Barry find the right messages, focus on turning around the perceptions and are the American people willing to face the harsh realities of the present and choose to do the right things? He even goes on to extensively discuss what modern brain science is telling us, in his own words of course, about the dominance of the Lizardbrain in decision-making.
Policy, Governance, Character, Messages and American Futures
America is indeed at a major crossroads. We either deal with these problems or they will deal with us. People are actually entirely correct to be angry, and not just about the current situation, but about the creeping malaise of the last three decades. We created no new jobs this decade, incomes were flat in real terms, no gains in net worth or markets were made, and in general we didn't do well. Worse we're facing a decade of severe constraints where we need to dig out of this hole, pay down our debts and re-found and re-ground the economy and American society on better foundations.The two great ironies of that problem is that 96% of it was created by the Rips and they refuse to support the Deficit Commission which they came up with to do so. Talk about cutting off your nose! Worse we're at the end of three decades of creeping malaise where incomes were more unequally distributed, the gains are more and more unevenly distributed, and American became a more stratified society (a society of hidden class advantages). People are right to be angry. They have been taken advantage off though they got their payoffs too. It really is time for changes in the way we do things if their children are to have any future.
We spent several weeks exploring those issues and the reasons for them in our series of posts on renewing America and argued that the two major problems were not goals (on which there is, despite naysayers, widespread consensus) but governance and administrative mechanism. But the two real questions are, first, can the President mobilize the population to tackle these challenges? And, second, do we collectively have the character to meet these challenges?
On the first of this our fundamental argument to the President and the Administration is KISS - keep it simple, stupid. By that we mean establish a few simple themes that organize how the public can see and grasp where you're taking them - a vision if you would. Back it up, on a small but key set of critical points on major initiatives and then boil down your message to true, authentic and demonstrable arguments. Beyond that, now that the worst of the immediate crisis is behind us and most of the major legislation is in place focus on selling what you've got with Healthcare and Finance. In fact it'd be better to let HC slide for the rest of the year and focus on selling for the rest of this year. KISS it to death. The President, with the crisis behind him, appears to be starting to do that as Brooks notes. The other thing is don't let the Rips slide by as the party of only NO - make them stand up and make sense, or at least be counted, in public. He's starting to do that as well. All points we've been making for a while now - in contrast to most of the pundits who missed all that with their inside the Beltway focus. Which is why we were so excited to hear what Brooks had to say.
But most importantly what about the People? Are they ready to hear what you have to tell them - told right? Tom Brokaw just finished and aired a wonderful special on USA on Highway 50: American Character which tells stories from Maryland to the Heartland to the West to Ca. about how ordinary Americans are facing these challenges. And the answer is they are re-discovering their roots and returning to the fundamental values of hard work, discipline and constraint that we will need to face our challenges. We found this cross-sectional sample of the "real America" to be as encouraging as anything we've heard. The people are ready to tackle these problems - what they need need now is leadership, a Washington that does it's job and a government that works. Which makes those the most important priorities.
In the readings you'll find our usual broad sampling of selected excerpts providing backup for all these points. The very top of the readings has what we think are the must-reads, especially Steve Perlstein's discussion of what workable compromise should look like. As he points out there's a lot of common ground. An argument reinforced in recent days by some recent Republican (NOTE: not Rip) proposals on HC that are much more radical than anything proposed in the current legislation. One wonders where these plans were six months ago?! You'll also find the latest ABC/WaPo poll results and we think it's well worth your time to read the whole detailed results. What you'll find, that particularly stood out to us, is three things: Americans think government is broke and don't trust it, they broadly support ALL of the major policy initiatives but aren't sure that what they've heard are workable or the right thing and that support deteriorated rapidly once the Rips mounted their lizardbrain counter-campaigns.
The wish to live in interesting times is one that really shouldn't be granted - better to be an armchair wisher than the person actually out having adventures. Unfortunately here we are. But the times will become even more "interesting" if we don't win these fights now.
Just to make it more interesting and get you to skim on we've embedded our usual analytical charts in the readings. One set shows us the economic realities we'll be dealing with and two other sets deal with Healthcare. This week for example it was announced that HC costs grew faster than at any time in history, government is going to be 50% shortly (so much for avoiding socialized medicine) and costs will be 17% of GDP shortly. And oh yeah, without the reform packages the Industry is about to get whopped big time. Happy reading.
READINGS
Introductory Readings
The myth of bipartisanship and the art of true compromise The most common misconception is that bipartisanship means finding common ground and focusing on the things most everyone agrees on. In reality, that turns out to be a pretty small set of ideas and proposals that, taken together, would not address the major challenges before us. Certainly, that is the obvious place to begin, and it would be an improvement over the current gridlock, but it won't add up to effective governance. After all, if the only things the party in power can accomplish are those that the minority power can agree with, then what is the point of having an election? No matter which side won a majority, "common ground" -- the things they all agree on -- would still be the same. The only way a democratic system like ours can work is if the majority party acknowledges that winning an election means winning the right to set the agenda and put the first proposal on the table, though not the right to get everything it wants. By the same logic, if members of the minority party want to influence that policy, they have to understand that it will require them to accept some things they don't like to get some things they do. All this is rather elementary stuff, but trust me when I say that until recently, you'd have trouble finding anyone who seemed to understand it. For years, the reigning philosophy from both sides has been "It's our way or the highway." It has reached the point where people don't know how to hammer out a compromise even when they might be so inclined, as we saw during the charade put on by the "gang of six" trying to negotiate a health-care compromise in the Senate. That dynamic is unlikely to change until the voters get so disgusted that they are willing to indiscriminately turn out all incumbents, irrespective of party and ideology. Perhaps we have finally reached that tipping point. Contrary to conventional wisdom, the loss of a 60-vote supermajority in the Senate does not doom health-care reform or financial regulatory reform, or even a new stimulus bill. It is not the filibuster, per se, that is likely to prevent passage of important legislation, so much as its use in combination with other parliamentary tactics to prevent the Senate from even taking up legislation. And that's where Joe Biden comes in. The vice president needs to step up to his constitutional duty as presiding officer of the Senate and begin overturning those age-old parliamentary precedents that now allow partisan obstructionists to eviscerate all semblance of majority rule. Until that's done, Republicans will have no incentive to agree to any real compromises, Democrats will continue trying to pass legislation without them, and everyone will come out a loser.
Frozen Phase: Invite Won’t Thaw Health Care Politics Maybe it’s just as well that this is the week that Washington froze solid. And yes, excessive amounts of snow fell, too.We’re stuck in a rut of frustration. Deep mistrust for institutions, unease with an administration’s wheel-spinning, no real basis (or, perhaps, incentive) for two bitterly divided sides to even talk -- we may as well stay at home. As the new standoff over the summit that may never happen plays out, you can’t separate the politics from the policy -- so long as both sides are comfortable that they’re playing the politics right. Bipartisanship doesn’t just happen, and it doesn’t get moving with an invitation alone. And politics in 2010 still looks like a zero-sum game. (There were winners and losers when President Obama visited Republicans for question time last month, and losers who want to make sure they come off as winners next time around.) That means ... maybe not so fast: “If the starting point for this meeting is the job-killing bills the American people have already soundly rejected, Republicans would rightly be reluctant to participate,” House Minority Leader John Boehner and Minority Whip Eric Cantor wrote in a letter to White House Chief of Staff Rahm Emanuel late Monday. Answered before it was asked: “A lot of people ask if this is starting over [on a health overhaul], the answer is absolutely not,” HHS Secretary Kathleen Sebelius said at a conference in Washington Monday. Why play if you’re afraid you’re going to get played? "Even as Republicans publicly welcome President Barack Obama's call for a bipartisan confab on health care, some privately worry that he might be laying a trap to portray their ideas as flimsy,” the AP’s Chuck Babington writes. Why try to play in the first place? “For Obama, it fits neatly into his post-Massachusetts strategy of painting the GOP as do-nothing obstructionists. The Republicans have spent the year almost uniformly opposing Obama’s agenda -- and being rewarded by voters for doing it,” Politico’s Carrie Budoff Brown and Patrick O’Connor write. “Now Obama wants to use the meeting to call them out in public, to question whether they have any plans to fix the nation’s health care system and any willingness to help him do it.” You think, maybe? “It is not clear that Republicans and the White House are willing to negotiate seriously with each other, and Mr. Obama has rejected Republican demands that he start from scratch in developing health care legislation,” Robert Pear and David M. Herszenhorn report.
Why Politics Is Stuck in the Middle In fact, there is a dynamic that pushes politicians to embrace the preferences of the typical or “median” voter, who sits squarely in the middle of public opinion. A significant move to either the left or the right would open the door for a rival to take a more moderate stance, win the next election and change the agenda. Politicians will respond to this dynamic, whether they are power-seeking demagogues or more benevolent types who use elected office to help the world. When it comes to the big issues, voters at the midpoint usually get the policies, if not always the exact outcomes, they want. In the federal budget, the largest line items include Social Security, Medicare, Medicaid and military spending — all very popular programs. The interest on the national debt is mounting because we don’t like paying higher taxes now for all those benefits, so our government borrows to postpone the pain. Upon his election, President Obama stepped into a world already full of political constraints. He won the White House and significant Democratic majorities in both the House and the Senate — yet even if American voters were tired of the Republican Party, it’s not clear that their underlying opinions had changed very much. Correctly or not, most Americans have failed to embrace the Democratic health care plans. Of course, the median voter theorem is far from a complete explanation of politics. Sometimes politicians lead public opinion and talk voters into accepting new ideas, as when President Bill Clinton promoted Nafta. And voters often favor conflicting or contradictory policies, like wanting to pull troops out of Iraq but also not wanting Iraq to explode into chaos. Finally, most people aren’t very well informed about politics and can be downright irrational or stubborn, which is another reason that political competition isn’t always as beneficial as economic competition.
Californians Push Budget Reform The prospect of more California-statehouse dysfunction this year is adding momentum to two efforts to overhaul California's budget process—including one that could rewrite much of the state's constitution. California legislators are heading this month into what promises to be another season of bickering over the state's big budget shortfall for the current fiscal year, ending June 30, and the next. Last year, they passed two austere budgets after impasses that forced California to delay payments and issue IOUs to creditors. Credit agencies cut the state's rating to the lowest in the nation, and the California statehouse became the butt of jokes nationwide. Two groups are pushing ballot initiatives they say would purge that chaos from Sacramento's budget process. A bipartisan group, California Forward, is pushing a reform to let legislators pass budgets by a simple majority instead of the current two-thirds threshold. Repair California, which is affiliated with a pro-business group, is gathering support to hold a constitutional convention to rewrite state laws. Such a convention could alter the budget process and other facets of governance in California. Statehouse Republicans will fight California Forward's initiatives, said Tony Strickland, the state Senate's Republican assistant minority leader. If the budget-approval threshold is lowered, then Republicans would lose their outsized influence in the statehouse because Democrats could pass budgets without GOP votes. The California "Central valley, the farmers, agriculture"—constituencies typically represented by Republicans—"will lose their voices," Mr. Strickland said. The antitax Howard Jarvis Taxpayers Association will oppose any effort that would ease local governments' ability to raise taxes, said Jon Coupal, the group's president. He and Mr. Strickland said they will also oppose Repair California's constitutional convention because it could result in a repeal of Proposition 13, a 32-year-old law that caps property-tax rates. John Grubb, Repair California's campaign director, acknowledged the challenges, but said there is now a window of opportunity for major reform. "All the easy answers have already been exhausted,'' he said.
Frightened, clueless or uninformed? In the face of significant change and opportunity, people are often one of the three. If you're going to be of assistance, it helps to know which one.Uninformed people need information and insight in order to figure out what to do next. They are approaching the problem with optimism and calm, but they need to be taught. Uninformed is not a pejorative term, it's a temporary state. Clueless people don't know what to do and they don't know that they don't know what to do. They don't know the right questions to ask. Giving them instructions is insufficient. First, they need to be sold on what the platform even looks like.And frightened people will resist any help you can give them, and they will blame you for the stress the change is causing. Scared people like to shoot the messenger. Duck. The worst kind of frightened person is one with power. Someone in a mob of other frightened people, someone with a gun, someone who is the CEO. When confronted with a scared CEO, time to run. Before someone can change, they have to learn, and before they learn, they have to cease being scared. One reason so many big ideas come from small organizations is that there is far less fear of change at the top. One mistake board members and shareholders make is that they reward the scared but hyper-confident CEO, instead of calling him on the carpet as he rages at change. When I first encountered surfing, I was scared of it. It looks cool, but an old guy like me can get hurt. A patient instructor allayed my fears until I was willing to get started. When you first start out, the things you think are important are actually irrelevant, and it's the stuff you don't know is important that gets you thrown into the ocean. Finally, and only then, was I smart enough to actually learn. I'm bad at surfing now, but at least I know why.Comfort the frightened, coach the clueless and teach the uninformed.
Washington's 'Deficit of Trust' What a difference a year has made for conservatism. By the end of 2008, the wars and scandals of the George W. Bush years had turned the public against the Republican Party. The financial crisis had invalidated central assumptions of neoclassical economics and even the hottest of culture-war conflicts was cooling off. But somehow the right's single greatest idea—the essential villainy of government—came through the deluge unscathed. The triumphant Democrats, wary of getting on the wrong side of public opinion as they made their way toward the White House, pretty much let that issue pass. They believed their victory was foreordained by the irresistible arithmetic of demographic change. Why get bogged down in a profitless assault on their opponents' ideological strong point? Once in office, the strategic thinking went, Democrats could slowly brighten the antigovernment mood by setting up various transparency and accountability programs. And they could turn that frown upside-down simply by doing what Democrats do, namely, by using government to solve big public problems, beginning with the grotesquely expensive health-care system. But as the drama played out, these clever flanking maneuvers failed. Now it seems unlikely that Democrats will ever get their chance to change the public's attitude toward government in this indirect way; the antigovernment animus struck first, bringing the health-care debate to an end with a summer of unanswered town-hall protests and a voter revolt in Massachusetts.
Both parties viewed negatively Two-thirds of Americans are "dissatisfied" or downright "angry" about the way the federal government is working, according to a new Washington Post-ABC News poll. On average, the public estimates that 53 cents of every tax dollar they send to Washington is "wasted."Despite the disapproval of government, few Americans say they know much about the "tea party" movement, which emerged last year and attracted voters angry at a government they thought was spending recklessly and overstepping its constitutional powers. And the new poll shows that the political standing of former Republican vice presidential nominee Sarah Palin, who was the keynote speaker last week at the first National Tea Party Convention, has deteriorated significantly.The opening is clear: Public dissatisfaction with how Washington operates is at its highest level in Post-ABC polling in more than a decade -- since the months after the Republican-led government shutdown in 1996 -- and negative ratings of the two major parties hover near record highs.
Snow-blind: What a winter storm tells us about our broken politics Here's a little thought experiment:My guess is that, given the benefit of hindsight and several days of house arrest, "snow insurance" sounds tempting.Now imagine that the mayor of the District and the governors of Maryland and Virginia got together and declared that in our interdependent 21st-century regional economy, there is no reason less than a foot of snow should be allowed to disrupt work and school, and no reason anything more than a foot shouldn't be cleaned up within 36 hours. To pay for the extra manpower and equipment, the politicians proposed raising taxes and fees by an average of $25 per household each year, and $2,500 for the average business. Although the politicians' offer would be the effective equivalent of "snow insurance," I can assure you that the reaction to it would be quite different. Republicans would immediate call it "the biggest tax increase in history" and declare unequivocally that it would send the economy into a tailspin while radically expanding the government. Chambers of commerce would issue news releases warning that the tax would particularly hurt small-business owners, who as we all know create every new job and would now be forced to cut their payrolls or close their doors. Virginia's House of Delegates would move immediately to kill the proposal, thereby dooming consideration by all the other jurisdictions.It is a measure of the dysfunction of our political system that we can no longer rationally debate whether it is penny-wise and pound-foolish not to spend a little more to try to keep the Capital of the Free World from grinding to a halt every time a snowflake descends from the heavens.I realize there are lots of problems that cannot be solved just by throwing money at them, but snow removal is not one of them. We have the know-how, we have the technology and we have the money and economic self-interest to do it right. What we don't seem to have is the leadership or political will.
Is It The Process, Stupid?Much of the media seems to be missing the point or the cause of the election. On the right they want to believe it was anti-Obama or anti-healthcare. On the left they try to spin the idea that it was just about the poor performance of Coakley. Having been to at least 20 of Scott's campaign events I can tell you it was none of those reasons. The most consistent attitude was that people wanted to slow down the process. There was a natural reaction even in the most liberal of states to not want anything forced on them the way the healthcare seemed to be. People up here were not anti anything except the healthcare process. They saw it as sneaky and underhanded. Even in Massachusetts, people did not want something that unknown forced on the country. Either way I am glad the process will slow down some but I will not put even a good friend like Scott on that political pedestal like some people are trying to do.
Politics and Posturing
Sen. Richard Shelby of Alabama holding up Obama nominees for home-state pork Sen. Richard C. Shelby (R-Ala.) announced that he would block administration nominees from Senate votes in an attempt to secure funding for two defense-related projects for his state. The use of the holding tool is often wielded anonymously. But Majority Leader Harry M. Reid (D-Nev.) complained publicly about Shelby's effort to win tens of millions of dollars in federal money by delaying dozens of nominees from taking up government positions, including some in national security agencies. In his State of the Union address, Obama identified Washington's partisan dysfunction as a key concern of economically distressed voters, and he has raised the issue at nearly every turn in recent days, although Obama's own party has used Senate delay tactics to hold up GOP nominees. The president himself signed a $447 billion omnibus spending bill in December that included more than 5,000 of the kind of earmarks that Shelby is seeking. Nonetheless, senior administration officials spared little time in pointing to Shelby's move as a sign of GOP intransigence, and the Democratic National Committee released a Web video Friday suggesting that the Alabama senator's "blanket hold" is a threat to national security. In a meeting with reporters, White House press secretary Robert Gibbs said, "If that's not the poster child for how this town needs to change the way it works, I fear there won't be a greater example of silliness throughout the entire year of 2010." "It boggles the mind to hold up qualified nominees for positions that are needed to perform functions in a government because you didn't get two earmarks," Gibbs said. Shelby's tactic was just one sign Friday of Washington's enduring partisanship. Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate banking committee, announced that negotiations with Republicans on financial-reform legislation had broken down. And House GOP leader John A. Boehner (Ohio) informed the administration that his party would not participate in Obama's proposed commission to examine ways to close the $1.6 trillion budget deficit unless half the panel's 18 members are Republican. According to data provided by Reid's office, three of President George W. Bush's nominees during his first year in office waited more than three months to be confirmed. During Obama's tenure, 46 nominees have waited at least three months and nine have waited at least twice that long.
- Shelby to U.S.: hold everything! Shelby’s ploy is simply the logical continuation of the Republicans’ legislative strategy, which is to obstruct every act, large or small, consequential or trivial, of the Obama administration and its Democratic legislative colleagues. This commitment to opposition transcends such ephemera as longtime Republican principles. Shelby, for instance, hails from a party that has yowled against earmarks for many years, yet it is precisely an earmark that he seeks for his home state. As yet, however, not one of his Republican colleagues has called him out for flouting Republican principles -- perhaps because the only principle to which the GOP currently adheres is to show that Obama and the Democrats are incapable of doing anything.
- Hostages on the Hill Sen. Richard Shelby holds up 70 nominees until Alabama gets more from D.C. Liberals scream that Republicans have gone too far.
Dodd Says Financial Overhaul Legislation Is at an ‘Impasse’ The senator who is shepherding the Obama administration’s package of Wall Street reforms through Congress said on Friday morning that talks with his Republican counterpart had broken down.The senator, Christopher J. Dodd, indicated that Democrats would forge ahead with their own bill, following months of talks that had been aimed at reaching a bipartisan consensus. Mr. Dodd, a Connecticut Democrat who is chairman of the Senate Banking Committee, has led closed-door negotiations since November over the regulatory overhaul. Throughout the week — which included two hearings on the White House’s latest proposals to rein in the size and activities of banks — Mr. Dodd had one-on-one talks with the committee’s senior Republican member, Richard C. Shelby of Alabama. Mr. Dodd’s statement left many questions unanswered over the path ahead for regulatory restructuring. With their majority in the Senate reduced to 59 seats — one short of the margin needed to overcome Republican filibusters — the Democrats will have to secure at least some measure of support from across the aisle. Democratic leaders have repeatedly warned that they do not want a repeat of last year’s bruising fight over the health care overhaul, but Mr. Dodd’s statement makes a fight more likely. Popular anger over the bailout of big financial institutions, the high unemployment rate and Wall Street bonuses could work to the advantage of Democrats as they head into the midterm elections, particularly if they manage to portray Republicans as obstructing reform.
Where's the maverick? I was an original McCainiac, riding with him in his SUV through the back roads of New Hampshire in '99. Even as other McCaniacs drifted away, I tried to find excuses for him. When he endorsed his former rival George W. Bush in 2004 and when he spoke at Jerry Falwell's Liberty University in 2006, I chalked it up to the exigencies of Republican politics. I convinced myself that his lurch to the right and his fear mongering in the 2008 presidential campaign was really the work of his Bush-trained handlers. When he continued on his hard-right course after the election, I figured he was bitter about the loss. Now, the most generous explanation is that McCain needs to protect his right flank because he's facing a primary challenge in Arizona from a "birther" Republican, the radio broadcaster and former congressman J.D. Hayworth. But each time it gets harder to hold on to the hope that there's still an iconoclast in there somewhere. At Tuesday's hearing, Joint Chiefs of Staff Chairman Mike Mullen did just that, saying he thought lifting the ban was the "right thing to do." Colin Powell later said the same. But McCain was enraged, hectoring the admiral at the witness table and challenging his integrity. A week earlier, the topic was the national debt, another traditional McCain issue. He had been a co-sponsor of a bipartisan plan for a debt commission. But just before it came up for a vote, he pulled out and aligned himself against the proposal. On a full range of issues, McCain has switched to reflexive opposition. His presidential campaign expressed "full confidence" in Fed Chairman Ben Bernanke; McCain voted against confirming Bernanke to another term. During the Bush years, former POW McCain fought against abusive interrogations; last week he scolded the Obama administration for inadequate interrogation of the underwear bomber. On immigration reform, another signature McCain issue, the senator has lost his tongue.
Boehner rejects deficit commission The top Republican in the House is rejecting White House efforts to create a deficit commission, casting doubt on whether Republicans will participate in what is supposed to be a bipartisan effort to rein in the deficit. House Minority Leader John Boehner (R-Ohio) spoke with Treasury Secretary Timothy Geithner on the phone Friday to express his concern that the commission was partisan and created as part of a backroom deal between the White House and Hill Democrats.“The president’s fiscal commission proposal is nothing more than a partisan Washington exercise rigged to impose massive tax increases and pass the buck on the tough choices we need to be making right now,” Boehner said in a statement. “The Obama administration should scrap this partisan fiscal commission proposal immediately and start over on a process that includes Republicans and the American people.”It is unclear whether Boehner would appoint Republicans to a commission if the Obama administration does not heed his advice. Boehner’s resistance to the Obama administration’s plans represents a complete reversal by Republicans, who initially touted such a commission as a way to bring down debt. Republicans, however, wanted such a commission to be created by Congress and empower the commission to make binding recommendations. More broadly, Republicans say that the president’s plan is a charade because the suggestions it produces will not automatically be subject to a vote in Congress. If the Senate had passed legislation creating such a panel, its recommendations would have most likely been subject to and an up-or-down vote in Congress.
Cornyn: No thanks to Obama Q & A Senate Republicans don’t have much of an appetite to give President Barack Obama their version of question-and-answer time — not after seeing how Obama handled House Republicans last week. “We’re always happy to hear from the president, but I don’t really feel any compelling need to do it [on camera],” Texas Sen. John Cornyn, the Republicans' chief campaign strategist, told POLITICO. The White House has suggested that it would like Obama to address the Senate GOP Conference, with TV cameras present. Obama administration officials are eager for voters to see Obama operate in a format he relishes — and handle his former Senate colleagues the same way he did last week to House Republicans at their annual retreat. Asked about the White House invitation to Senate Republicans, Cornyn said: “For what purpose? Was it for photo op or is it serious? The president can invite Mitch McConnell, John Boehner or anybody he wants for a serious talk about issues.” White House spokesman Robert Gibbs said this week that Obama had been planning to meet with Senate Republicans and that he "wouldn't have any problem with it being open [to cameras] if we spoke to the Senate Republicans, too."
Republicans -- Not Obama -- More Often on Wrong Side of Public Opinion One of the more commonplace assertions among pundits on the center-right -- made rather carelessly by Victor Davis Hanson and more thoughtfully by Jay Cost, is that agenda put forward by Obama and the Democrats is overwhelmingly unpopular and that Democrats are simply getting their comeuppance for having pushed such a liberal set of reforms forward. These claims, however, rely on selective evidence, invariably citing policies like health care and the GM bailouts which are indeed unpopular (strongly so, in some cases), while ignoring many other issues on which Obama has been on the right side of public opinion. In fact, a more objective and equivocal evaluation of public opinion on more than two dozen specific issues finds that the Republican Congress has far more often been on the wrong side of it. Attempting to be as comprehensive as possible, I've identified 25 issues that Obama and the Democrats have made an affirmative effort to push forward since taking office a year ago, and summarized public opinion on each of them.
Tea Party Looks to Move From Fringe to Force But at the inaugural National Tea Party Convention here this weekend, gone were the placards that protesters carried last year with Mr. Obama’s face wearing a Hitler mustache or superimposed on the Joker. Gone, really, were any placards, unless you count the poster of Sarah Palin in her signature red jacket that hung from one of the wrought-iron balconies of the Opryland Hotel and Convention Center. Organizers said that anyone “looking too crazy” would have been tossed out. They had a goal that turned out to be shared by pretty much everyone here: to turn the Tea Party into a serious political force, rather than the angry fringe group they say it had been branded as. “The movement is maturing,” said Judson Phillips, the founder of Tea Party Nation, the social networking site that sponsored the convention. “The rallies were good for last year, because that’s what we could do last year. This year we have to change things. We have got to win.” The goal is a electing a conservative Congress in 2010 and a conservative president in 2012. To that end, organizers announced the formation of a political action committee that they say could steer $10 million to conservative challengers this year. And the convention tried to channel anger into what Mr. Phillips called “Electioneering 101.” “What we want people to do is to leave here connected with other activists so they can recruit good candidates, get candidates exposed to the voters and get voters to the polls,” he said. “If we just go out and hold signs and protest, that’s not going to win the election.” Despite the convention and its neat PowerPoint presentations, the movement that began a year ago to protest government bailouts and health care legislation showed signs this weekend that it is still inchoate, diverse and almost defiantly leaderless.
Big Bang explodes on Dems Moderate Democrats, coping with the electoral fallout of President Barack Obama’s grand and ground-down legislative ambitions, have a message for their leaders: Stop supersizing us. If the first year of Obama’s term was dominated by the so-called Big Bang push for enormous, politically risky initiatives — the stimulus, cap and trade and health care — Year Two is fast shaping up to be year of small ball, retrenchment and backlash. “I’ve always maintained that I thought that they were doing too much, too fast,” said Rep. Mike McMahon (D-N.Y.), an endangered freshman who represents a Staten Island district long occupied by Republicans. “Without question, the biggest complaint I’m hearing from constituents is that there were too many things being tackled all at once, and they didn’t have time to understand and digest all of them,” he added. The Big Bang, made famous by Obama’s chief of staff, Rahm Emanuel, is giving way to a wary brand of incrementalism. It’s not the small-bore, Clintonian agenda of V-chips and school uniforms but an admission that expectations are diminished — not dashed — and a determination to attack the same huge problems in smaller, smarter ways. Former Senate Majority Leader Trent Lott (R-Miss.) believes Obama still has time to adjust, but he says he’s put moderate Democrats “in great jeopardy” because he hasn’t been able to match his aspirations with the same levels of toughness and legislative know-how possessed by Hill veterans like Presidents Lyndon Johnson and Richard Nixon.
Condescending liberals Every political community includes some members who insist that their side has all the answers and that their adversaries are idiots. But American liberals, to a degree far surpassing conservatives, appear committed to the proposition that their views are correct, self-evident, and based on fact and reason, while conservative positions are not just wrong but illegitimate, ideological and unworthy of serious consideration. Indeed, all the appeals to bipartisanship notwithstanding, President Obama and other leading liberal voices have joined in a chorus of intellectual condescension. This condescension is part of a liberal tradition that for generations has impoverished American debates over the economy, society and the functions of government -- and threatens to do so again today, when dialogue would be more valuable than ever. Liberals have dismissed conservative thinking for decades, a tendency encapsulated by Lionel Trilling's 1950 remark that conservatives do not "express themselves in ideas but only in action or in irritable mental gestures which seek to resemble ideas." During the 1950s and '60s, liberals trivialized the nascent conservative movement. Prominent studies and journalistic accounts of right-wing politics at the time stressed paranoia, intolerance and insecurity, rendering conservative thought more a psychiatric disorder than a rival. In 1962, Richard Hofstadter referred to "the Manichaean style of thought, the apocalyptic tendencies, the love of mystification, the intolerance of compromise that are observable in the right-wing mind." Perhaps the most important conservative insight being depreciated is the durable warning from free-marketeers that government programs often fail to yield what their architects intend. Democrats have been busy expanding, enacting or proposing major state interventions in financial markets, energy and health care. Supporters of such efforts want to ensure that key decisions will be made in the public interest and be informed, for example, by sound science, the best new medical research or prudent standards of private-sector competition. But public-choice economists have long warned that when decisions are made in large, centralized government programs, political priorities almost always trump other goals. Even liberals should think twice about the prospect of decisions on innovative surgeries, light bulbs and carbon quotas being directed by legislators grandstanding for the cameras. Of course, thinking twice would be easier if more of them were listening to conservatives at all.
- Will the Base Abandon Hope? But it would be hard to overstate just how demoralizing this particular sequence of events has been for base Democrats. And when people get demoralized, they tend to dig in and make their problems worse. That holds for voters, certainly, but unfortunately it also seems to hold for Democratic members of the Congress.
Obama need not wait to change relations with Congress The session in Baltimore, which followed the shock of the Democrats losing the Kennedy seat in Massachusetts, has produced some signs of a changed tone in Washington. But to my surprise, Roskam told me that he has had no word from anyone in the White House since his overture to Obama. This tells me that, even after Baltimore, the president and his people may not realize the degree to which Republican frustration with Pelosi's management of the House has created opportunities for Obama -- if he is willing to engage as directly as he did in his Illinois Senate days. Roskam recounted to me the story of two of his own minor amendments to the health-care bill that were rejected by his Ways and Means Committee along with dozens of others he deemed reasonable and bipartisan. That is a common experience for Republicans and a source of grievance."It's really up to Obama," Roskam said. "He's at a crossroads. My question to him was not an admonition. It was an invitation" to govern differently in this second year. Looking at the campaigns in Massachusetts and Illinois, the first two states to vote this year, it is clear as can be that voters are trying desperately to figure out how to change the dynamics of Washington. They will support candidates in either party who offer hope of stifling the poisonous partisanship and addressing the real-world problems of jobs, deficits and health care. But Obama does not have to wait for the voters to change Congress -- which they will do, come November. He can, as his friend from Springfield days reminded him, start that change now by being himself.
The House of Tranquillity The surprisingly smooth relationship between the administration’s top two officers is part of the broader White House culture. This is a fraught political climate. Liberals are furious. Moderates are running for their lives. Republicans believe, with much evidence, that an unprecedented wave of public rage is breaking across the land, directed at Washington. The uninformed float rumors that Rahm Emanuel is on the outs. Yet the atmosphere in the White House appears surprisingly tranquil. Emanuel is serving as a lighting rod for the president but remains crisply confident in his role as chief of staff. It’s true that several top administration officials did not want to attempt comprehensive health care reform this year. But they are not opening recrimination campaigns. It’s no secret that many think the president needs to be more assertive with Congress, yet administration officials still talk about Obama in awestruck tones, even in private. Some would say the administration is underreacting to the incredible shift in the public mood. Some would say they need more voices from the great unwashed. But no one could accuse them of panicking, or of scrambling about incoherently. In their first winter of discontent, they are offering continuity and comity. Whatever their relations with the country might be, inside they seem unruffled. The bonds of association, from the top down, seem healthy — especially for a bunch of Democrats.
Policy vs. Politics
The price of hindsight One can always come up with fixes that appear to solve the most recent incident. The latest bombing attempt will be no exception, even with the Obama administration’s remarkably bland first “corrective steps” — a testament to the paucity of new ideas in either counterterrorism or intelligence. But a larger lesson is that maybe, just maybe, this assumption is wrong. Maybe these incidents are within the normal range of shortcomings of even extensively reformed bureaucracies, by even skillful and diligent officers. People are not infallible. Our reluctance to accept this lesson is largely due to the habitual use of hindsight. What appears inexcusable when looking backward and knowing what happened, appears far different when viewed in real time. It is politically inconvenient to say these truths. Woe to the politician or government official who does not join the recriminatory chorus. He or she will be branded an apologist for a broken bureaucracy, as not serious about combating terrorism — or worse. The blatant partisan exploitation of the Christmas incident only exacerbates this problem. Republicans have milked it for all of its political worth. President Barack Obama has responded by dropping his Mr. Cool persona long enough to express indignation over the performance of the intelligence and security agencies. The political indulgence of castigating the latest failure plays off the public’s psychological indulgence of believing that, with the right fix, Americans could be completely safe from terrorism. Such indulgences have costs — including ones that make the public more, not less, vulnerable to terrorism. The principal cost is to encourage feckless “reform” that slakes the thirst for doing something visible in response, but may impede the actions of government agencies. A mark of political courage — so far sorely lacking — would be to recognize these costs, to refrain from indulging in hindsight and to speak uncomfortable truths about what can, and cannot, be fixed.
Washington struggles to act On a day when the Dow may dip below 10,000 and the unemployment rate drops to “only” 9.7 percent, the Senate is struggling to agree to the smallest-bore jobs bill. The House just raised the debt ceiling by $1.9 trillion on a pure party-line vote, and Speaker Nancy Pelosi is talking about a piecemeal approach to jobs, realizing that a massive jobs package has little shot in this political environment. But Republicans aren’t exactly trying to soothe disenchanted voters. Moments after the jobs report was released Friday morning, the Republican National Committee seemed almost celebratory about the drop in payroll, blasting out a press release with the subject line “STAGNATION!” — despite the fact that the unemployment rate dropped slightly from 10 percent in December. Meanwhile, virtually no nominations can move in the Senate because Republican Sen. Richard Shelby has issued a “blanket hold” on President Obama's nominees to get leverage for projects in his home state of Alabama. Republicans who have tied up the historically large Democratic majority in knots are talking up bipartisanship — even as they celebrate the swearing in of “Mr. 41,” the filibuster-breaking senator from Massachusetts, Scott Brown. There is actually a bipartisan jobs bill in the works in the Senate, with Sens. Chuck Schumer (D-N.Y.) and Orrin Hatch (R-Utah) aligning on a modest job creation program. But behind the scenes, other Republicans have been hesitant to sign on — and it’s not because they dislike the bill. In another example of how Washington takes a twisted approach to getting things done, sources say some Republicans don’t want to sign on to any jobs bill being heavily promoted by Harry Reid, believing his imprimatur on legislation is now toxic. But outside of the all-important jobs issue, there are other signs that Washington is disconnected from reality. A large group of liberal House Democrats is trying to restart a real debate on the public health insurance option — an idea that’s been dead since early December. And rather than duck controversies over backroom deals, Sen. Mary Landrieu (D-La.) went straight to the Senate floor this week to defend the so-called Louisiana Purchase — $300 million in Medicare money for her home state. She insisted there was nothing wrong with the deal and that she’d do it again. While they watch their legislative agenda flounder, Democrats have become much better at another Washington tradition: the circular firing squad. According to a wide range of media reports, Senate Democrats let loose on White House officials once the cameras left Wednesday’s televised meeting with Obama.
Policy vs. Politics: Economy
Gut-wrenching stuff FINANCIAL crises are often described as stomach-churning. For Hank Paulson that was literally true. Horribly sleep-deprived as he struggled to stop the world financial system falling apart in 2008, America’s then treasury secretary succumbed regularly to the dry heaves. In one meeting, he pretended to need to relieve himself of his last Diet Coke so he could get out into the corridor to retch. If finance was on the brink, so was the health of at least one of those tasked with saving it. There is the occasional jaw-dropping revelation: for instance, that Russia urged China to sell its Fannie and Freddie bonds to force a bail-out of the mortgage agencies. Equally compelling is the picture of imaginative, seat-of-the-pants policymaking that emerges as the tale progresses. Supported by the real heroes—a phalanx of bleary-eyed staffers—Mr Paulson, Ben Bernanke, the Federal Reserve chairman, and Tim Geithner, head of the New York Fed (and now Mr Paulson’s successor as treasury secretary), rushed to string together loans, guarantees and whatever else was needed, interpreting the law creatively to get things done. It helped that the three worked well together.
Inside the meeting where Obama called McCain's bluff Now it looked as if McCain had no plan at all—his idea had been to suspend his campaign and summon us all to this meeting. It was not a strategy, it was a political gambit, and the Democrats had matched it with one of their own. Boehner said he was trying to find a way to get House Republicans on board. "I am not talking about a totally new deal, but we do need to tweak the core part of the program," he said. Decorum started to evaporate as the meeting broke into multiple side conversations with people talking over each other. [Sen. Richard] Shelby [R., Ala.] waved a sheaf of papers, claiming they were from more than 100 economists who all thought TARP was a bad idea. The president jumped in to say, "No, this is a situation where we need to act. We don't have time to have hearings with a bunch of economists." Finally, raising his voice over the din, Obama said loudly, "I'd like to hear what Senator McCain has to say, since we haven't heard from him yet." The room went silent and all eyes shifted to McCain, who sat quietly in his chair, holding a single note card. He glanced at it quickly and proceeded to make a few general points. He said that many members had legitimate concerns and that I had begun to head in the right direction on executive pay and oversight. He mentioned that Boehner was trying to move his caucus the best he could and that we ought to give him the space to do that. He added he had confidence the consensus could be reached quickly.As he spoke, I could see Obama chuckling. McCain's comments were anticlimactic, to say the least. His return to Washington was impulsive and risky, and I don't think he had a plan in mind. If anything, his gambit only came back to hurt him, as he was pilloried in the press afterward, and in the end, I don't believe his maneuver significantly influenced the TARP legislative process. leadership. Staffers filled the chairs lined up along the walls and in front of the French doors that opened out onto the Rose Garden. The room descended into chaos as the House and Senate members erupted into full-fledged shouting around the table. Barney Frank started to loudly bait McCain, who sat stony-faced. "What's the Republican proposal?" he pressed. "What's the Republican plan?" It got so ridiculous that Vice President Cheney started laughing. Frankly, I'd never seen anything like it before in politics or business—or in my fraternity days at Dartmouth, for that matter.Finally, the president just stood up and said: "Well, I've clearly lost control of this meeting. It's over."
The Worst of the Pain There is a great tendency in this country to refuse to see what is right in front of everybody’s eyes. While there is now, finally, a great deal of talk among the politicians and in the news media about unemployment, there is still almost a willful refusal to focus on just who is suffering the most from joblessness and underemployment. When it comes to employment, there are roughly three broad categories in the United States. The folks in the upper-income group are not suffering much, if at all, from the profound reversals in employment brought about by the Great Recession. Those in the middle have been hit hard. The job losses there have been severe and long-lasting. But for those in the lower-income groups, the scale of the employment crisis has been mind-boggling. What you’re not hearing from the politicians and the talking heads is that the joblessness and underemployment in America’s low-income households rival their heights in the Great Depression of the 1930s — and in some instances are worse. The same holds true for some categories of blue-collar workers. Anyone who thinks this devastating problem is going away soon, or that the economy can be put back on track without addressing it, is deluded. There has been talk about income inequality over the past several years, but what is happening now is catastrophic.
AP analysis: US economic stress hit a peak in Dec. Weakness in Western energy-producing states helped raise the average U.S. county's economic stress in December to its highest point since the recession began in December 2007, according to The Associated Press' monthly analysis of conditions in more than 3,100 U.S. counties. States such as Alaska, Wyoming and Montana lost jobs related in part to a drop in energy and mining exploration. Those states in the past had generally defied the national economy's weakness. Economic strains in the final month of last year were evident throughout the nation. Foreclosure and bankruptcy rates rose even as the national unemployment rate held steady. The spillover to Western states was inevitable, some economists say. "It's hard to stay above water when much of the rest of the country is going down around you," Sean Snaith, an economist at the University of Central Florida, said of those states. The AP's Economic Stress Index found that the average county's score in December was 10.8. That's a sharp jump from the 10.2 reading in November. The previous worst reading since the recession began in December 2007 was 10.3 in March 2009. The index calculates a score from 1 to 100 based on a county's unemployment, foreclosure and bankruptcy rates. A higher score indicates more economic stress. Under a rough rule of thumb, a county is considered stressed when its score exceeds 11. Nearly 45 percent of the nation's 3,141 counties were deemed stressed in December. That compares with less than 39 percent in the previous month. AP Interactive Economic Stress Map
Comparing This Recession to Previous Ones: Job Losses The economy lost 20,000 jobs in December, worse than most forecasters had expected. The consensus forecast on Thursday had been for a slight gain in net payrolls. The chart above shows job losses in this recession compared to other recent ones, with the blue line representing the current downturn. Since the recession began in December 2007, the economy has had a net loss of about 6.1 percent of its nonfarm payroll jobs. Thanks to revisions of the last year’s worth of data, the portion of prerecession jobs lost is higher than previously reported. The unemployment rate (measured by a different government survey, and based on how many people are without jobs but are looking for work) dipped slightly to 9.7 percent, after staying at 10 percent the previous two months.
Honey, we bankrupted the kids! Worried that the global financial crisis combined with the Great Recession in the United States has bankrupted not just ourselves but our kids and their kids? Good. You should be worried. Maybe then we’ll do something about the problem before it’s too late. But looking out toward fiscal 2014 the budget quickly arrives in fantasy land. The budget projections assume GDP growth of 3.2% to 4.3% for six consecutive years. And this at a time when most economists—even the optimists at the Federal Reserve—are worried that this recovery will be weaker than most recoveries after a recession and that the long-term speed limit for growth in the U.S. economy is headed lower. From 1975 to 1995 full trend economic growth in the United States was about 3%. The Fed now estimates the speed limit to growth at 2.5%. Other economists, including those at the Congressional Budget Office, think it’s even lower at 2.3% annually or so. In other words the U.S. can’t grow itself out of this hole nearly as easily as the Obama administration wishes. Slower growth after the recession is one thing arguing against an easy solution—but it’s by no means the only problem. The interest rate the U.S. pays on its debt is rising—just when the amount of debt has soared. Cutting the budget looks—how shall I put it—impossible because our government, especially our wonderful Senate, is locked in gridlock. I find it hard to imagine how the Senate will even pass any kind of budget this year. And even in the best of all political worlds, cutting the budget is hard. Only 40% or so of the Federal budget is what’s called discretionary (and that 40% includes the military budget.) the rest consists of entitlements such as Social Security, Medicare, and Medicaid. These entitlements are the hardest part of the budget to cut—and the fastest growing. And we don’t have a huge window in which to act.
Fiscal Scare Tactics Let’s talk for a moment about budget reality. Contrary to what you often hear, the large deficit the federal government is running right now isn’t the result of runaway spending growth. Instead, well more than half of the deficit was caused by the ongoing economic crisis, which has led to a plunge in tax receipts, required federal bailouts of financial institutions, and been met — appropriately — with temporary measures to stimulate growth and support employment. The point is that running big deficits in the face of the worst economic slump since the 1930s is actually the right thing to do. If anything, deficits should be bigger than they are because the government should be doing more than it is to create jobs. True, there is a longer-term budget problem. Even a full economic recovery wouldn’t balance the budget, and it probably wouldn’t even reduce the deficit to a permanently sustainable level. So once the economic crisis is past, the U.S. government will have to increase its revenue and control its costs. And in the long run there’s no way to make the budget math work unless something is done about health care costs. But there’s no reason to panic about budget prospects for the next few years, or even for the next decade. Consider, for example, what the latest budget proposal from the Obama administration says about interest payments on federal debt; according to the projections, a decade from now they’ll have risen to 3.5 percent of G.D.P. How scary is that? It’s about the same as interest costs under the first President Bush.
The Debtor the World Still Bets On What explains this oddity? Why is the world betting that the United States will overcome its political deadlock and solve its problems — believing, it seems, in the truth of Churchill’s biting quip that America will always do the right thing, after exhausting every other alternative? And how long can this aura of invincibility last? Maybe a long, long time. One of the many things that makes the United States different is that it prints the world’s most important currency and can always print more — one reason investors in government debt remain confident they will be repaid, even if in dollars devalued by inflation or by changing exchange rates. There is also value in being the one nation on which the world still depends for security. That helps explain why foreign investors, including China, can denounce American politicians, Wall Street bankers and sleepwalking regulators for creating the current mess — and still buy at the next Treasury auction. This paradox of American financial exceptionalism was unusually clear last week. When the stock market shuddered on Thursday because of worries about national defaults, it wasn’t Washington’s mountain of debt that got everyone rattled. It was the plight of a handful of profligate spenders in Europe — notably Greece, Spain and Portugal — whose comparative foothills of debt suddenly made them dubious credit risks. The United States gets its AAA rating because of its track record — it has always paid, on time and in full — and because it has had a stable, comparatively transparent system of governance. Like Churchill said, it has always faced up to its problems in the end. And so, built into the rating, there is an expectation that it always will. Or, as Mr. Garten says, the outside world “is making assumptions about American political will that few on the inside will.”The assumption is that somehow, for example, Medicare costs will be controlled, or that new taxes will help pay for them. That somehow, Democrats and Republicans will join to change the trend because the trend simply cannot go on.
Experts Say Tax Incentives and Direct Government Spending Won't Be Enough The stubbornly weak U.S. employment picture is ratcheting up pressure on Washington to fix what ails the labor market, but policy makers and economists are concluding there's no magic bullet to boost jobs. Opinion is split over which, if any, of the policies in play offers the best hope of spurring employment. Even those who advocate government action say federal efforts can only reduce, not repair, the labor market. More than eight-million jobs have been lost during the recession, a deficit compounded by the fact the economy needs to add more than one million jobs annually simply to keep up with the growth of the labor force. "Don't expect the government to solve the whole job deficit we now have," said Alan Blinder, a Princeton University economist and former Federal Reserve official. Mr. Blinder said it would be a "signal achievement" if government actions could add two-million jobs. Plans to tackle job losses come in two flavors: Tax incentives to encourage businesses to hire, and direct government spending to stimulate demand and boost payrolls. Both will add to the nation's mounting budget deficit, which is expected to hit $1.6 trillion. The Obama administration has proposed a combination of tax breaks and direct spending, including a $5,000 tax credit and payroll-tax cut for companies that hire new workers, $30 billion to jump-start lending to small businesses, aid to state and local governments and programs for displaced workers. The Senate is trying to craft a bipartisan jobs bill that addresses some of these ideas. Some Republicans, meanwhile, advocate a straight cut in payroll taxes and more aid to small businesses. A report by the nonpartisan Congressional Budget Office said the policies with the biggest impact on employment include reducing payroll taxes for firms that hire new workers and increasing aid to the unemployed, which provides quick stimulus. Employers, however, say they are basing hiring decisions on business fundamentals. The most recent experiment, the $787 billion stimulus package, is widely credited with fueling growth, though opinion is split over its cost effectiveness. The CBO's most recent report estimates it boosted employment in the third quarter of 2009 by between 600,000 and 1.6 million people, while raising gross domestic product between 1.2% and 3.2% above where it would have been absent legislation. Doug Holtz-Eakin, a former CBO director and former advisor to Republican Sen. John McCain, said the stimulus likely had an impact on GDP growth but was an inefficient use of federal dollars. "I don't believe you can throw a trillion dollars at an economy and have no impact but the question is, 'is it worth it'. My gripe with the bill is it's very inefficient." He said the government should focus instead on programs that spur long-term growth. If government does anything, "it should take the role of a temporary payroll tax cut," he said.
Policy vs. Politics: Healthcare
If Colleges Worked Like Health Care As I watched this YouTube clip, my mind wandered back to the late 1980s, when I served on the Physician Payment Review Commission — now the Medicare Payment Advisory Commission, or MedPac. That commission of policy analysts and health industry stakeholders had been established by Congress to advise it on paying physicians serving Medicare beneficiaries. As we were fiddling late one night with an elaborate new fee schedule toward that purpose, an exasperated physician from Texas who served on the commission wailed plaintively: “Why are you doing this to us physicians?” “Because you insist on being paid piece-rate, Jim-Bob,” I explained. “If Princeton priced itself that way we’d be in the same soup.” Correctly viewed, a modern university is a prepaid, staff-model, pedagogic group practice – the educational analogue of a staff-model health maintenance organization, or H.M.O., like the Kaiser Permanente Health Plan. Like H.M.O.’s, which are prepaid an annual capitation for all of an insured person’s medically needed services, universities are prepaid one annual tuition fee for all the pedagogic services going into the education of the student.
Overhaul Failure Will Spur Mergers as U.S. Health Industry Pursues Savings Insurers, drugmakers and hospitals will likely slash costs and merge companies to maneuver through a U.S. health-care landscape marked by rising medical expenses and the loss of millions of potential paying customers. With Congress’ sweeping overhaul of the health system stalled, industry will seek its own answers to a push by government and the private sector to rein in costs, said Curtis Lane, senior managing director at MTS Health Partners, a New York-based equity fund. An aging U.S. population will spur demand for services and, at the same time, boost pressure to control spending, he said. One solution will be increased consolidation, with companies led by WellPoint Inc., the biggest U.S. insurer by enrollment, and Community Health Systems Inc., the largest publicly traded hospital chain, scooping up rivals unable to “spread rising costs across fewer customers,” said Paul Keckley, of the Deloitte Center for Health Solutions. The health-care market “certainly seems to favor bigger, innovative, scalable companies,” said Keckley, executive director of the Washington-based center, in a phone interview. Drugmakers facing the loss of patent protection on top-selling medicines “were looking at decelerating revenues, with or without reform,” he said.
Bills Stalled, Hospitals Fear Rising Unpaid Care For the nation’s hospitals, at least, the cost of doing nothing in Washington translates into tens of billions of dollars each year in medical bills that go unpaid by patients with little or no insurance. Nationwide, the cost of unpaid care for hospitals, which includes charity care as well as money that could not be collected from patients, was around $36 billion in 2008. It is expected to spiral higher. The number of people without insurance in this country could increase to as high as 58 million by 2014, from about 49 million now, according to an estimate by the Urban Institute. No wonder hospital systems like Park Nicollet Health Services near Minneapolis worry about their futures if the health care legislation remains stalled. “Our business model will continue to falter,” said Dr. David Abelson, chief executive of Park Nicollet, a not-for-profit system that runs a 426-bed hospital and a chain of clinics. Park Nicollet has had to cut back services and lay off hundreds of employees as its level of uncompensated care rose — to $43 million last year, up from $29 million in 2007. And when the hospital provides care under state and federal programs like Medicaid and Medicare, it is already reimbursed below its costs, Dr. Abelson said. Park Nicollet, whose revenue was $1.2 billion last year, says it expects to lose $120 million on government programs in 2010. Medicaid and Medicare are likely to see sharp budget cuts with or without the legislation — although the House and Senate bills have other provisions meant to help control medical costs over all.
House GOP may skip summit Leading House Republicans raised the prospect Monday night that they might refuse to participate in President Obama's proposed health care summit if the White House chooses not to scrap the existing reform bills and start over.In a letter to White House Chief of Staff Rahm Emanuel, House Minority Leader John A. Boehner (Ohio) and Minority Whip Eric Cantor (Va.) expressed frustration at reports that Obama intends to put the Democratic bills on the table for discussion at the Feb. 25 summit."If the starting point for this meeting is the job-killing bills the American people have already soundly rejected, Republicans would rightly be reluctant to participate," Boehner and Cantor wrote. Obama proposed the half-day summit on national television Sunday, but in their letter, the two GOP leaders offer their suspicion that the president is not serious about opening a bipartisan negotiation on health care. " 'Bipartisanship' is not writing proposals of your own behind closed doors, then unveiling them and demanding Republican support," Boehner and Cantor wrote. "Bipartisan ends require bipartisan means." White House press secretary Robert Gibbs responded by saying that Obama has sought Republican input since early last year, and the president remains interested in hearing ideas that the GOP believe will advance the cause of health care reform. But he appeared to give little ground on the idea that Obama might abandon the months of work that produced Democratic bills that passed the House and the Senate late last year.
Newt Gingrich and John Goodman: Ten GOP Health Ideas for Obama If the president is serious about building a system that delivers more quality choices at lower cost for every American, here's where he should start:
• Make insurance affordable. The current taxation of health insurance is arbitrary and unfair, giving lavish subsidies to some, like those who get Cadillac coverage from their employers, and almost no relief to people who have to buy their own. More equitable tax treatment would lower costs for individuals and families. Many health economists conclude that tax relief for health insurance should be a fixed-dollar amount, independent of the amount of insurance purchased. A step in the right direction would be to give Americans the choice of a generous tax credit or the ability to deduct the value of their health insurance up to a certain amount.
• Make health insurance portable. The first step toward genuine portability—and the best way of solving the problems of pre-existing conditions—is to change federal policy. Employers should be encouraged to provide employees with insurance that travels with them from job to job and in and out of the labor market. Also, individuals should have the ability to purchase health insurance across state lines. When insurers compete for consumers, prices will fall and quality will improve.
• Allow doctors and patients to control costs. Doctors and patients are currently trapped by government-imposed payment rates. Under Medicare, doctors are not paid if they communicate with their patients by phone or e-mail. Medicare pays by task—there is a list of about 7,500—but doctors do not get paid to advise patients on how to lower their drug costs or how to comparison shop on the Web. In short, they get paid when people are sick, not to keep them healthy. So long as total cost to the government does not rise and quality of care does not suffer, doctors should have the freedom to repackage and reprice their services. And payment should take into account the quality of the care that is delivered. Once physicians are liberated under Medicare, private insurers will follow.
• Don't cut Medicare. The reform bills passed by the House and Senate cut Medicare by approximately $500 billion. This is wrong. There is no question that Medicare is on an unsustainable course; the government has promised far more than it can deliver. But this problem will not be solved by cutting Medicare in order to create new unfunded liabilities for young people.
Having It Both Ways on Medicare One of the truly amazing things about the health care debate is the way Republicans have managed to pose as defenders of Medicare. The death panel thing has been absolutely central to their argument. For example, when I was debating Roger Ailes on This Week, his response to my Massachusetts comparison — that the Senate bill was basically the same as Romneycare — was to start blustering that Mitt Romney didn’t slash Medicare benefits. It’s all hypocrisy, of course. Remember what the 1995 government shutdown was about: it was Newt Gingrich trying to force Bill Clinton to accept, yes, deep cuts in Medicare. And it’s not just history: Republican plans to balance the budget rely crucially on … deep cuts in Medicare. Consider the “Roadmap for America’s future” released by Paul Ryan, the ranking Republican on the House budget committee. In the long run, this would convert Medicare to a voucher system and impose sharp cuts in Medicare spending as a percentage of GDP. And even in the next decade, it would involve substantially less Medicare spending than under the Obama administration’s budget. You almost have to admire the audacity: Republicans are denouncing Obama for proposing Medicare cuts, while themselves proposing much deeper Medicare cuts. And they’re getting away with it.
Health Care's Share of U.S. Economy Rose at Record Rate The recession has increased the nation’s health care bills, forcing Americans to spend 5.7 percent more for health services and drugs in 2009 than they spent in 2008, according to new projections in a report by the federal Centers for Medicare and Medicaid Services. At the same time, health care costs are eating up an ever-larger portion of family budgets and of the nation’s economic pie. With the health care tab for last year coming to $2.5 trillion, health care spending now represents 17.3 percent of the nation’s gross domestic product — a 1.1 percent bigger portion of the nation’s economy than in 2008. This represents the biggest one-year expansion of health care’s share of the economy since the federal government began keeping records in 1960. The report’s authors attribute the increase in health care spending to the recession, during which millions of Americans have lost their jobs and their health insurance, and more people were added to the federal Medicaid rolls. Without any changes to the system, the authors project that health care spending will nearly double by 2019, reaching $4.5 trillion.At that point, health care spending will consume 19.3 percent of the gross domestic product — on its way to accounting for one-fifth of the nation’s economy. It now accounts for about one-sixth of the economy.
Health Spending Projections Through 2019: The Recession’s Impact Continues The economic recession and rising unemployment—plus changing demographics and baby boomers aging into Medicare—are among the factors expected to influence health spending during 2009–2019. In 2009 the health share of gross domestic product (GDP) is expected to have increased 1.1 percentage points to 17.3 percent—the largest single-year increase since 1960. Average public spending growth rates for hospital, physician and clinical services, and prescription drugs are expected to exceed private spending growth in the first four years of the projections. As a result, public spending is projected to account for more than half of all U.S. health care spending by 2012.
the Deficit and Debt outlook seems to have gotten a lot of attention. At the center of them though, aside from technical issues and policy challenges, lies the question of do we have the will to address the problems. Our feeling is that in fact it does lie in us, if we choose. For its own sake and because there is no better sublime and stunning example of how far humankind can push itself when it desires we're going to devote this Sunday morning celebration to the Olympics.
Takahashi receive their Olympic medals. Includes the poorest example of sportsmanship from Plushenko we’ve seen throughout the game, which Putin is turning into an international incident (the Russian’s overall are doing very poorly at these games btw).
