How to Make Government Work
Posted Monday, Jan. 7, 2013, at 2:57 PM
President Obama returns to the White House on Dec. 27 in Washington, D.C., under pressure to forge a year-end deal with Republicans to avoid the tax hikes and spending cuts of the fiscal cliff.
Photo by MANDEL NGAN/AFP/Getty Images
Didn’t we go through this debt ceiling travesty in 2011? And didn’t we swear that the White House would never again do a so-called mega-deal without resolving the debt ceiling as part of it? Here is what I wrote in a Slate column on July 25, 2011: “So why, as a condition for extending the Bush tax cuts … did he not require the Republicans to raise the debt ceiling?” Why are we seeing headlines stating that Senate Minority Leader Mitch McConnell has already rejected the idea of more taxes, and that the Republicans will only negotiate over cuts? Why are we back to square zero on our fiscal future?
The Republicans have already accomplished most of what they wanted. Government spending as a percentage of GDP has been encumbered by permanent enactment of over 90 percent of the Bush tax cuts. They have long sought a government starved for revenues and a public focusing on the deficit, not the need for investment, and now they have them.
It would have been better to have gone over the fiscal cliff, to have required that a debt ceiling increase be part of the deal, and to have negotiated with the new Congress than to do what the White House has to do now.
Posted Friday, Jan. 4, 2013, at 4:48 PM
Photo by Chip Somodevilla/Getty Images.
As we jump from one cliff to the next, we are not doing enough thinking about how to move to smoother ground. The debt-ceiling debacle awaits, with the president saying he will refuse to negotiate, and the Republicans waiting breathlessly to take revenge for the deal to avoid the so-called fiscal cliff.
The Republican argument that raising the debt ceiling encourages additional future spending is logically irresponsible. The debt ceiling has to be raised to authorize spending already approved by Congress. Despite that fallacy, the GOP has been able to score political points with its argument.
That’s why I’m interested in a proposal floated by Rep. Peter Welch (D-Vt.) to reinstate the “Gephardt Rule” that eliminated debt-ceiling votes between 1979 and 1995. Under that rule, Congress doesn’t wait until we are approaching the debt ceiling to grant the Treasury Department the authorization to borrow what it needs. Instead, when Congress passes a budget resolution authorizing spending, it simultaneously approves raising the debt ceiling to cover any borrowing the budget requires. For instance, when the defense budget is passed, the same bill would require that the debt ceiling be raised. The two issues would be linked in voting and timing. Imagine the conundrum faced by Republican legislators: They want of course to vote for outsized defense spending but would be forced to recognize at that moment that the spending requires additional borrowing. No more having it both ways: voting for the spending and then sanctimoniously pretending to be against the increase in the debt ceiling.
How to effectuate this shift I leave to legislators, but linking the debt ceiling to the spending bills would be a great step.
An idea from Rep. Jerry Nadler (D-N.Y.) to simply eliminate the debt ceiling would be even better. As he argues and logic dictates, once Congress has voted for spending, the Treasury should be authorized to do what is needed in the capital markets to turn Congress’ law into action, even when Congress has not provided enough revenue through the tax code.
Neither of these ideas is likely to become law soon. Instead, another cliff ride awaits us.
Posted Thursday, Jan. 3, 2013, at 3:09 PM
Photo by SAUL LOEB/AFP/Getty Images
The 113th Congress was sworn in today, leaving to the harsh critique of historians the 112th Congress. It likely to be remembered as among the least useful in memory. Rabid voices in both chambers were able to stop everything from confirmations to treaties to meaningful negotiations on taxes and spending and the debt ceiling.
Two changes are needed, one in each chamber, to restore the legislative branch to its useful role as a deliberative body rather than a forum for hostage taking. In the Senate, filibuster reform is the key. We will know by the end of January if Senator Majority Leader Reid is willing to push for genuine reform. While the needed rule changes would ordinarily have to be made in the first few days of the new Congress, Sen. Reid has kept the window open until late in the month. I am not pleased at the delay. It signals that there may not already be enough votes for reform immediately, or that Reid is keeping filibuster reform as a card to play in the month of debt ceiling negotiations with Senate Minority Leader McConnell. Either way, I am not comforted.
In the House, the filibuster equivalent has been the Hastert rule, an informal Republican principle under which the speaker permits to the floor for a vote only bills that have majority support of the majority party. This has empowered the extreme right wing of the Republican Party. Speaker John Boehner ignored the Hastert rule in permitting the legislation that overcame the “fiscal cliff” to get to the floor. The bill passed with only 85 Republican votes, drawing most of its support from the Democratic side of the aisle. Boehner was then barely re-elected as speaker.
If the House is to permit reasoned centrist bills to move forward, it must get comfortable with ignoring the Hastert rule. That would permit a centrist coalition of Democrats and Republicans to circumvent the Tea Party wing.
If the filibuster and the Hastert rule are not overcome, the 113th Congress will begin very quickly to look like the 112th, and we will all lose.
Posted Wednesday, Jan. 2, 2013, at 6:11 PM
President Obama gives a press briefing about the fiscal cliff negotiations at the White House on Dec. 28.
Photo by Win McNamee/Getty Images
Second guessing is oh so easy, and I always looked askance at those outside the negotiating room who had wisdom after the fact. But having said that …
Why did the president agree to a deal without the debt ceiling being lifted? Didn’t we play this script out once before? And didn’t the president, since he needs to be reasonable, in the end cave to Republicans who used the debt ceiling to extract concessions that shouldn’t have been granted?
This was the president’s moment of greatest leverage. The White House could have said to the House: Take us over the fiscal cliff, go ahead and have all taxes go up. You will suffer the wrath of the public—and for what? All we are demanding is that you eliminate a negotiation that will do enormous harm to the nation, a negotiation about the debt ceiling that merely authorizes us to borrow to pay for the expenditures you have voted for.
Having won the rhetorical debate about raising taxes on the wealthy, the president could have framed the debt-ceiling argument in an equally compelling way. All eyes would have been on the House of Representatives.
Now we will face a much tougher moment. The House will demand a series of deep entitlement cuts in return for lifting the debt ceiling, and the president will have little to offer or demand in return. It is hard to imagine that even he thinks he will get the House to raise taxes again.
So what did we get that was worth leaving the debt-ceiling issue unresolved? Very little. Thin soup at best: little revenue, no grand bargain sufficient to calm demands for deeper cuts in entitlements, and a payroll tax increase that will still lead to a net increase in taxes for the middle class.
We should savor the brief moment of perceived victory that the cliff deal has created, because there is going to be much pain in the coming weeks over the debt ceiling.
Posted Friday, Dec. 21, 2012, at 5:31 PM
President Barack Obama on Wednesday in Washington, D.C.
Photo by Win McNamee/Getty Images
What are the most important political lessons of 2012?
First, we saw the end of the electoral power—at the national level—of the Republican Party's theologically rigid agenda. Mitt Romney's primary season embrace of the social and economic agenda of the more rabid elements of his party doomed him, especially the shrill immigration rhetoric and the harshly insensitive theory that no additional sacrifice or contribution should be sought from those at the top. When he tried to move away from the sharpest edges of this during the general election, the public didn’t trust him.
Romney's defeat was not simply the arithmetic of voting blocs; it was the larger statement that "We all did build this." The sense of community in our politics and society re-asserted itself against the hard individualism of the right. Hence the near certainty that Congress will enact immigration reform and tax rates that require the wealthiest to pay more. The two theologians of the Republican Party—Grover Norquist on taxes and Wayne LaPierre on guns—are now struggling. This is good for our politics.
Second, the president did best and crafted his majority when he spoke to true progressive values. During much of his first term he was quite tepid in his embrace of those values. And his poll numbers were flat, the public disengaged from his efforts. But when he finally spoke up on the agenda that the public cares about—from same-sex marriage to immigration reform to a fair distribution of the tax burden—the public responded. The lesson is clear: The timorous politics of so many Democrats who feel compelled to rush to the middle, to be meek, to shy away from the agenda of change that is needed, is not only wrong substantively, it is wrong politically.
Third, revolutions are messy things. The initial euphoria of the Arab spring—the most important foreign policy event of the past several years—has now been replaced by the grind of upheaval that has no clear direction. Yet the move toward secular society does seem to have traction, the desire for freedom as we understand it seems to be real. There are countervailing forces—the Islamists' desire to impose an intolerant theology. Yet in Egypt and elsewhere the foundation of democracy is visible, if under threat. Whether the state of Egypt ends up replicating Pakistan (we hope not) or Turkey (we hope so), it surely will not be Iran. The Middle East is still a mess, from Syria to Iran. Yet it does appear to be moving in the right direction.
Fourth, just because I can't resist coming back to this issue at least briefly, our financial system is still fraught with structural problems. From insider trading to LIBOR bid-rigging to analysts still shilling for IPOs they have an interest in, the problems continue. It is part human nature, part our failure to sanction properly when we need to, part our government's failure to have the backbone to restructure a system that is clearly unstable and flawed.
What a year it has been. And while 2013 will not see a major national election, we can be sure that most Republicans will obstruct and some Democrats will appease. We can be sure that the Middle East will continue to be a source of vexing questions that need
solutions. And we can be very sure that Wall Street will not fix itself. Which is why we will have loads to discuss.
Have a wonderful holiday and New Year.
Posted Tuesday, Dec. 18, 2012, at 1:54 PM
Photo by Brendan Smialowski/AFP/Getty Images.
Perhaps it is not a surprise that Cerberus quickly decided to sell the Freedom Group, its collection of gun companies, including Bushmaster, the firm that made one of the weapons used in the Newtown, Conn., massacre. Cerberus has been notoriously secretive about its finances, and the adverse press it has attracted in the aftermath of Newtown forced a hasty retreat. This should be very encouraging to those of us who wish to shift the debate about guns: A few critical articles, some whispers from major investors questioning their investment in Cerberus, and decisions were instantly made that could cost the company hundreds of millions of dollars.
So there is a significant message here: Ownership matters. Ownership can be more powerful than regulation. The capacity of pension funds and endowments to act collectively and use their rightful interest in having their funds invested in a way that reflects their core values is something we have largely forgotten. It is too easy when things go fundamentally awry to call for more legislation or blame failed regulators. And surely we shouldn’t diminish the pressure we apply to Congress now to enact real gun control. But at the end of the day, it is those who own the shares and invest the dollars who can and must be held to account. And if those investors awoke to this responsibility and possibility, they could make enormous improvements in American life.
Imagine if investors in Wal-Mart really cared about bribery at that company’s overseas operations or safety standards at its overseas manufacturing plants. If investors pulled their capital, corporate leaders would have to respond.
Imagine if the pension funds and endowments that own much of the equity in our financial services companies demanded that those companies revisit the way mortgages were marketed to those without adequate skills to understand the products they were being sold. Management would have to change the way things were done.
And to return to guns, imagine if the shareholders pressured large retailers to cease the sale of certain semi-automatic weapons or risk having their shares sold? You can bet that those retailers would reconsider their gun sales.
Shareholders have the right and obligation to set the parameters of corporate behavior within which management pursues profit. The speed with which Cerberus said it was getting out of the gun business shows how easy it could be to change corporate behavior, if only shareholders set their minds to it.
Posted Monday, Dec. 17, 2012, at 2:19 PM
A Bushmaster rifle on display at the 135th National Rifle Association annual convention.
Photo by JEFF HAYNES/AFP/Getty Images
Maybe this time really is different, and the legislative wheels will begin to turn, producing simple and sensible progress on gun control. The conversions of Joe Scarborough and Sen. Joe Manchin make me think this is finally a possibility.
But if Congress doesn’t act, here are two other ways to approach the issue. First, let’s bring pressure to bear on the owners of the gun companies—Cerberus Capital in particular. Cerberus is a $20 billion private-equity firm that has acquired several of the top gun manufacturers over the past years, bundling them together into one entity called the Freedom Group. (See Natasha Singer’s excellent story in the New York Times.) What Cerberus hope to gain from the concentration of ownership is a bit unclear but irrelevant. Cerberus gets its capital from traditional sources, institutional investors such as pension funds and endowments and a few select wealthy individuals. While Cerberus, whose array of holdings is vast, is generally immune to public pressure and the opprobrium of trafficking in products that while legal may be marketed in a loathsome way, Cerberus would not be immune to pressure brought by its own investors. The irony is that it was tougher to rent a car from Cerberus when it owned Alamo than to buy a semi-automatic. To rent a car, one had to provide ID, a drivers’ license, and get insurance coverage. To buy a gun? Cash and carry, from the back of a station wagon at a gun show. No concerns about downstream liability or risk.
Cerberus’ investors are indirect owners of Bushmaster, the company that made the weapon that brought evil to Newtown, Conn. It is time to determine pension fund by pension fund who has invested in Cerberus and bring pressure on those investors either to get out of Cerberus or have Cerberus change the way it runs the gun industry. If a major union pension fund or university endowment has an investment with Cerberus, it surely doesn’t want to be tarred as a passive owner of the company that sells semi-automatic weapons with no background checks or concern for the use of the weapons. Those investors have enormous leverage over the Cerberus. And all those investors collectively, if they spoke with one voice to the management team at Cerberus, could wield vast power. Ownership has both responsibility and power. It is time for every comptroller and pension fund manager with an investment in Cerberus to use that power.
And it is time for those of us on the “outside” to find out who those investors are, so that we can prod them to act. Every student at a university should ask the university if it is invested in Cerberus. Every member of a union should ask their pension-fund managers if they are invested. Information is the key first step. From there, action will quickly follow.
Second, we should revive an idea first raised by the late, great Sen. Daniel Patrick Moynihan: bullet control. There may be too many guns to rid the streets of guns, but there are not that many bullets, especially in the calibers needed for the types of weapons used in these shootings. Let’s create a regime that makes sale of bullets to anybody not licensed to carry a gun illegal, makes resale illegal, micro-stamps bullets so they can be traced. No Second Amendment issues here. This would have a remarkable impact on both violence and the capacity to solve shooting crimes. Let’s turn the NRA catchphrase that “guns don’t kill people” against them. Because they may be right: Bullets kill people. Regulate them and limit their sale.
It is time to go beyond the linear debate about the few minimum gun-sale limitations that Congress may agree to. Pressure the companies that own and market to change their habits and control the sale of bullets.
Posted Friday, Dec. 14, 2012, at 7:08 PM
Photo by Alex Wong/Getty Images.
“Today is not [the] day” to engage in a policy debate about gun control, according to White House Press Secretary Jay Carney. So when is the day?
The sad truth is the White House has ducked this debate over and over again, despite a litany of tragedies. We must discuss the ease of access to guns, right now. After the Aurora shooting, not a single question was asked about it at a debate mere miles from the scene. Delay now would be to shamefully disregard a pressing public issue.
In June, President Obama finally appealed to his base by taking important steps on immigration and same-sex marriage—but only when he needed to activate those voters for the election. This is not a White House that has shown a great desire to take up the tough issues.
Now is the time to push them. Now is the time for the president to realize he has the largest and loudest megaphone in the world. If he doesn’t use it now, when will he?
Posted Thursday, Dec. 13, 2012, at 1:00 PM
Michigan Gov. Rick Snyder (left) and Rep. John Boehner in Washington in 2011
Photo by Alex Wong/Getty Images.
The numbers are flying fast and furious about the Right To Work bill signed in Michigan this week. Consider this claim from Fox News:
As of October, the average unemployment rate in right-to-work states is 6.9 percent but 7.6 percent unemployment in non-right-to-work states. The national rate for that month: 7.9 percent.
These are, of course, impossible numbers. Somehow 23 states have an average unemployment rate of 6.9 percent and 27 states have an average rate of 7.6 percent, but the national average is higher than either—7.9 percent? Of course, Fox doesn’t explain how they got to those numbers—numbers that anybody can see just don't make sense.
But if you do the hard work and look at the raw data, it seems they made the rookie mistake of averaging the state percentages without accounting for the different sizes of the states involved. Which just goes to show you how careful you have to be in understanding the numbers you're using.
When you accurately study those numbers, you do find that non-right-to-work states do have slightly higher unemployment rates than states with right-to-work laws. The real question here is that of causation—or lack thereof. Any reasonable economist will tell you that it's nearly impossible to isolate the impact of right-to-work laws on a state's job growth. A multitude of other factors intervene. However, one thing the numbers can show is that right-to-work laws have a negative effect on the wages of workers in that state.
According to the Economic Policy Institute, wages for full-time, full-year union and nonunion workers in right-to-work states are about $1,500 less annually than for similar workers in non-right-to-work states.
Posted Wednesday, Dec. 12, 2012, at 2:29 PM
Photo by Justin Sullivan/Getty Images.
The conservative world's abuse of facts continues. An often-repeated line from the Romney campaign was that government doesn't create jobs—only the private sector creates jobs. But now they have replaced that job-creation myth with the opposite one. Conservative websites and commentators are saying that almost all jobs created in the past five months have been government jobs.
The claim being made—that 73 percent of all new jobs in the past five months are in government—was first reported on the conservative website CNS.com and soon made its way over to the fact-deficient folks at Fox News, where it was repeated by a Republican congressman, Pennsylvania's Tim Murphy:
Over the last five months, when you look at the upward swing now, the improvement in people being hired, in employment rate, 73 percent—according to the Department of Labor—73 percent of those new jobs is federal government, state government, and local government. We want to see it in the private sector.
While it's nice to see some on the right finally acknowledging that the government is capable of creating jobs, this 73 percent number signifies nothing. Yes, the number is accurate. In the past five months 847,000 jobs have been created, and 621,000 of those were government jobs.
However, the reason they're only tracking the past five months is because if they started in January, they'd see that government jobs are actually down for the year. And it's actually government workers who have been most affected by the recession, because state and local governments have been forced to lay off workers in order to balance budgets.
Here are some real numbers: Since President Obama took office in January 2009, the number of government jobs has dropped by 678,000, while the number of private-sector jobs has increased by nearly 1.5 million.