Budget

Patty Murray in 19 Takes

Steve Moors
AP Photo/Carolyn Kaster No. 1: The Fixer Patty Murray may be the dullest, most unremarkable member of the United States Senate. Two decades in, she lacks any major legislation to her name, isn’t associated with an issue, rarely appears on television, almost always speaks in gray generalities, and seems to have spent the bulk of her time focused on sending earmarks back to Washington state. As one staffer puts it, the most interesting thing about Murray is how uninteresting she is. She’s also the most important politician you’ve never heard of. As conference secretary, she’s the fourth-ranking Democrat in the Senate, which makes her the highest-ranking woman in the chamber. Last year, she chaired the Democratic Senatorial Campaign Committee (DSCC), spearheading the party’s surprising string of victories in the November elections. Thanks to her efforts, the Senate now has 20 women, the most ever. And as chair of the powerful Budget Committee, she is going up against Paul Ryan, the...

It’s All about the Primaries

AP Photo/Rainier Ehrhardt
He’s already given political culture one of the great euphemisms ever for having an affair. And now the Appalachian trail walker, Mark Sanford, has become a terrific example of one of the core ideas of political parties and democracy: It’s all about the primaries. Sanford won back his old House seat in a special election on Tuesday. Smart liberal commentators noted that Republicans had little choice. Paul Krugman : Given their preferences, this was the right thing to do. Look, we have an intensely polarized political system, and in Congress, at least, party affiliation is basically all that matters. Kevin Drum concurs : “For all practical purposes, we live in a pseudo-parliamentary system of governance, and the only thing that matters in Congress is what party you belong to.” Party affiliation is so important that indeed, in almost all circumstances voters are smart to support their party’s nominee in general elections, who will represent their interests in a predictable and...

You've Got Sales Tax

flickr/Chris_Hancock
flickr/ Mr. Boger I n 1984, CompuServe launched the first “Electronic Mall,” a Pleistocene-era Amazon with which owners of a TRS-80 personal computer could browse and buy goods over the Internet. Such modern retailers as “The Record Emporium” and “The Book Bazaar” were given prominent virtual storefronts. A full page ad in the May 1984 issue of Online Today boasted, “By the year 2000, the world may catch up with the way CompuServe’s new Electronic Mall lets you shop today.” The world took less time to catch up than that: By 1995, eBay and Amazon had been incorporated; in Amazon’s first two months as an online bookstore, it averaged $20,000 per week in sales. Americans would go on to spend around $700 million online in 1996, and by 1999 sales had grown to $20 billion. Figures released earlier this year by the Commerce Department revealed that Americans spent $225 billion online in 2012—a 400 percent increase in only a decade. That number represents about 5 percent of the $4 trillion in...

Bad Flight Plan

Flickr/vmarta, Kent Wein
Flickr/vmarta T he decision by Senate Democrats last week to restore funding to the Federal Aviation Administration (FAA)—money that was cut when the “sequester” took effect in March and led to flight delays that angered a wide swath of Americans—was a clear loss for Democrats in the ongoing budget wars. Rather than cave and reverse the cuts, Democrats should have used the public discontent as leverage to pressure Republicans. They squandered this opportunity. Unlike cuts from sequestration that affect the poor or will be felt down the line—cuts to Head Start or infrastructure, for example—the FAA cuts were both highly visible and affected wealthier and middle-class voters whom members of Congress tend to listen to. Sequestration was designed to slash programs important to both Democrats (broadly speaking, social programs) and Republicans (mainly, defense spending). By cutting bluntly, sequestration would force cuts to high and low-priority programs even if everyone agreed on which...

A Crossroads for Hillary

Titanic Belfast / Flickr
Titanic Belfast / Flickr H illary Clinton is making all the early moves of someone preparing to run for president, though she has given herself plenty of time to rest, rejuvenate, and review a final decision. Now, however, President Obama’s ill-conceived plan to cut Social Security benefits via a “technical” change in the inflation index will force Clinton to make an awkward choice. Most Democrats in both houses of Congress are not happy with this backdoor cut in Social Security. It is both fiscally unnecessary and spectacularly bad politics. Republican leaders are already bashing Obama for selling out retirees. After Obama released his budget, Republican Congressional Committee Chairman Greg Walden of Oregon went on CNN to accuse the president of "a shocking attack on seniors." Resolutely defending Social Security in the face of periodic Republican forays at cutting or privatizing America’s most popular program has always been one of the Democrats’ great appeals. Obama gave that away...

Reinhart and Rogoff's Theory of Government Debt is Dead

NBER
Carmen Reinhart and Kenneth Rogoff wrote a wildly influential book four years ago called This Time Is Different .* The thesis of the book is that when a government has a debt-to-GDP ratio above 90 percent, it is terrible for economic growth. The authors also followed up with a couple of papers arguing the same thing. Pro-austerity forces here and elsewhere in the world have seized upon the book to push their favored policies. From the beginning, the paper was met with extreme skepticism among the left. The theory could have gotten the causation backwards: perhaps low growth drives high debt, not the other way around. The theory also seemed hard to understand within any macroeconomic frame. It would follow from it that a government that holds assets instead of selling them to reduce debt somehow caused growth to decline, which is just a very confusing idea. The conceptual problems could iterate on and on. Beyond those problems, other researchers also had a hard time replicating their...

What Does "Balance the Budget" Even Mean?

Flickr/ferntech
This is a story about the deficit scolds who substitute attitude for argument and how they use the public’s ignorance about the federal budget to their advantage. It comes from sparring over the House Republican budget, which Republicans claim will achieve a balanced budget within ten years, and Barack Obama’s budget, which he will be submitting to Congress this week. Neither gets us to a zero deficit. The White House spin has been that balancing the budget isn’t an important goal by itself—deficits, surpluses, or balance are only means to the end of a growing economy or creating jobs. In line with that thinking, last week White House spokesman Dan Pfeiffer said, “You don’t want to balance the budget for the purposes of just balancing the budget.” As Slate’s Matt Yglesias points out , the White House is correct: There's no magic economic reason to run a balanced budget every year. Reducing the debt really is only a good idea if it is done in the service of some other goal. Less debt...

Jack Lew: Obama’s Austerity Ambassador

AP Images
There is something seriously off about the mission of the new Treasury secretary, Jack Lew, to Europe. Secretary Lew has been visiting European capitals to persuade leaders there to ease up on the austerity. He has not had a good reception. Speaking at a joint press conference with the chagrined Lew in Berlin, Wolfgang Schauble, the German finance minister and uber-austerity enforcer, dressed down Lew thusly: “Nobody in Europe sees this contradiction between fiscal consolidation and growth.” Nobody among the elite, that is. Ordinary people in Greece, where output has declined by nearly 25 percent since the austerity tonic began, surely see the contradiction. So do young people in Spain, where the youth unemployment rate has reached 56 percent. Even if the cure should eventually work—which it won’t—we will have lost a whole generation. Only in the rarified power precincts of Brussels and Berlin is austerity “working.” But Jack Lew doesn’t exactly come to this mission with clean hands...

Where's the Change?

AP Photo/Lauren Victoria Burke
AP Photo/Alex Brandon, File T he Democratic Party’s long-term prospects have dramatically improved since the November election. They will control the White House for another four years. The Republicans, who lost the total vote for the House of Representatives, remain captive of an unpopular reactionary right wing. The “Obama Coalition” of minorities and single women is growing faster than the GOP’s white male base. If demography is destiny, Democrats—and the progressive interests that they are supposed represent in the two-party system—are the wave of the future. But the American dream is about upward mobility. Ultimately, “The economy, Stupid” trumps identity politics. If the Democrats are not the champions of expanding jobs and incomes for the majority of voters who work for a living—whatever their gender, color, or sexual orientation—their claim to being the natural majority party will amount to little. So it made political sense that Barack Obama began his 2013 State of the Union...

Destroying the Economy and the Democrats

AP Photo/Susan Walsh
AP Photo/Susan Walsh President Barack Obama speaks at the Police Academy in Denver yesterday. J ob creation slowed to just 88,000 in March, signaling a sluggish economy. And President Obama, with unerring timing, picked this moment to put out an authorized leak that he is willing to put Social Security and Medicare on the block as part of a grand budget bargain that will only slow the economy further. The deterioration in economic performance was all too predictable, given the combined lead weights of the March 1 $85 billion of budget cuts in the sequester and the January deal to raise payroll taxes by about $120 billion. (The tax hike on working people was almost double the much-hyped tax increase on the top one percent, which totaled a little over $60 billion.) Taken together, these twin deflationary deals cut the deficit by around $270 billion dollars this year. That’s close to two percent of GDP. And according to the Congressional Budget Office, this combined contractionary...

Why Politicians Aren't Sensitive to Public Opinion on the Economy

Flickr/Alex E. Proimos
Flickr/Alex E. Proimos Who says American politics is gridlocked? A tidal wave of politicians from both sides of the aisle who just a few years ago opposed same-sex marriage are now coming around to support it. Even if the Supreme Court were decide to do nothing about California’s Proposition 8 or DOMA, it would seem only matter of time before both were repealed. A significant number of elected officials who had been against allowing undocumented immigrants to become American citizens is now talking about “charting a path” for them; a bipartisan group of senators is expected to present a draft bill April 8. Even a few who were staunch gun advocates are now sounding more reasonable about background checks. It’s nice to think logic and reason are finally catching up with our elected representatives, but the real explanation for these changes of heart is more prosaic: public opinion. The latest ABC News/Washington Post poll finds support for marriage equality at the highest in the ten...

Take That, Political Science!

AP Photo/Lawrence Jackson
AP Photo/Lawrence Jackson Senator Tom Coburn, a Republican from Oklahoma and author of legislation designed to cut off the vast majority of federal support for political-science research T his week, ten years after swearing to destroy Saddam Hussein and build democracy in Iraq, the United States took a step toward dismantling its investment in studying how democracy works. For more than 15 years, congressional Republicans have been trying to do away with federal funding for political-science research. Every time until now, political scientists successfully fought back. One reason they could: The pot designated for political science in the National Science Foundation (NSF) was a tiny percentage of overall research money—about $10 million out of a $7 billion budget. That's less than two-tenths of a percent. But it's also the majority of total grant funding for political-science research. The field provides us with much of what we know about how democracies, including our own, function (...

The Contest Over the Real Economic Problem

flickr/Starley Shelton
“Our biggest problems over the next ten years are not deficits,” the president told House Republicans Wednesday, according to those who attended the meeting. The president needs to deliver the same message to the public, loudly and clearly. The biggest problems we face are unemployment, stagnant wages, slow growth, and widening inequality—not deficits. The major goal must be to get jobs and wages back, not balance the budget. Paul Ryan’s budget plan—essentially, the House Republican plan—is designed to lure the White House and Democrats, and the American public, into a debate over how to balance the federal budget in ten years, not over whether it’s worth doing. “This is an invitation,” Ryan explained when he unveiled the plan Tuesday. “Show us how to balance the budget. If you don’t like the way we’re proposing to balance our budget, how do you propose to balance the budget?” Until now the president has seemed all too willing to engage in that debate. His ongoing talk of a “grand...

The Smart Strategy Behind Paul Ryan's Stupid Budget

Flickr/Donkey Hotey
For an ambitious politician, a spot on your party's presidential ticket is fraught with danger. On one hand, you immediately become a national figure, and if you win, you're vice president and you've got a good chance to become president. On the other hand, if you lose, you may wind up the target of contempt from forces within your own party and quickly fade away. Look at the list of recent VP losers: Sarah Palin, John Edwards, Joe Lieberman, Jack Kemp. None of them had any political future after their loss. And then there's Paul Ryan. You have to give him credit for one thing. Unlike, say, Palin, he didn't let his time on the national stage give him delusions of grandeur. Instead of proclaiming himself the leader of a movement, he went right back to what he was doing before: using the budgeting process to push an extraordinarily radical agenda, all couched in enough numbers and figures to convince naive reporters that he's a Very Serious Fellow, despite the fact that his numbers and...

When Public Is Better

Flickr/Mirsasha
L ong before we thought of founding The American Prospect in 1989, I came to know Paul Starr through a prescient article titled “Passive Intervention.” The piece was published in 1979, in a now-defunct journal, Working Papers for a New Society . As Paul and his co-author, Gøsta Esping-Andersen, observed, the American welfare state is built on terrible, even disabling compromises. Progressives often lack the votes to pass legislation to deliver public benefits directly. So they either create tax incentives or bribe the private sector to do the job, thus inflating a bloated system. “The problem is not too much government activism,” they wrote, “but too much passivity.” Their two emblematic examples were housing and health care. In housing, tax advantages became an inflation hedge for the affluent and drove up prices. Low-income homeownership programs, run through the private sector, had huge default rates. In health care, the political compromises necessary to enact Medicare excluded...

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