Budget

Better Know a Ballot Measure

(Flickr/radarxlove and jamelah e.)
When Oregon voted on the nation’s first ballot initiative in 1904, the idea—as high-school civics teachers have told students ever since—was to take power away from the industries that ran the state legislature through bribes and corruption and return it to the people. In those days, corporate interests dominated and corrupted state politics all across the United States. Mining and railroad companies loomed particularly large, buying off entire legislative chambers and putting lawmakers on their payroll. The emerging progressive movement thought it had found a way to fight back: Give citizens the ability to create their own legislation and put it up for a popular vote—a process known as the initiative. There was also the referendum, a tool citizens could use to veto laws at the ballot box. These ballot measures offered a way for the grassroots to make their voices heard. As your civics teacher might have told you, several states would soon join Oregon in using the new power of “direct...

Netanyahu and the Magic Marker

The Israeli prime minister waxes hyperbolic on Iran, overshadowing discussions on the solutions that exist for the Middle East's political woes.

AP Photo/Seth Wenig
(AP Photo/Richard Drew) Prime Minister Benjamin Netanyahu of Israel addresses the 67th session of the United Nations General Assembly at U.N. headquarters Thursday, September 27, 2012. H istory will show that Iranian President Mahmoud Ahmadinejad’s speech Wednesday at the United Nations General Assembly, which was the usual farrago of pseudo-historical philosophy and conspiratorial Zionist-bashing (and, mercifully, was the last by the term-limited president), was overshadowed by something even more cartoon-like: A drawing of a bomb, complete with lit fuse, used by Israeli Prime Minister Benjamin Netanyahu to show Iran’s progress toward a nuclear-weapons capability. Just to make sure his message was clear, Netanyahu used a magic marker to draw a red line showing where Iran’s uranium enrichment must be stopped. Twitter lit up with mocking references to Wile E. Coyote soon after. But it remains to be seen who will have the last laugh. “Poking fun at Netanyahu's cartoon bomb is all well...

What the Heck Is Quantitative Easing?

A look at the history behind the Fed's latest move

(Flickr/Talk Radio News Service)
Last week, the Federal Reserve announced a third round of quantitative easing, or what is referred to as QE3. This is an open-ended purchase of $40 billion a month, along with a commitment to keep rates low until “a considerable time after the economic recovery strengthens.” Many economic commentators are saying that this is a serious change in economic policy. In order to understand why this is so important to our economy now, it might be helpful to go back to an academic debate about Japan in the 1990s. The era from the early 1980s through the financial crisis was referred to as the “Great Moderation.” It was common for economists to assume that the Federal Reserve and other central bankers could control the economy effortlessly, basically picking the unemployment rate they wanted. Prominent economists who studied macroeconomics, the field created during the Great Depression to study economic crashes, thought everyone in the discipline should pack up and go home. Robert Lucas, a...

Five Things Government Does Better Than You Do

We know a lot less about how to manage money than we think.

(Flickr / Sheffield Tiger)
When Wisconsin Congressman Paul Ryan and other hard-line conservatives talk about cutting the government’s budget, their primary rationale is that individuals can make better decisions with their own money than the government can. As Ryan himself said to an audience at Georgetown University, “We put our trust in people, not in government. Our budget incorporates subsidiarity by returning power to individuals, to families and to communities.” It sounds reasonable—of course we want individuals to have power, and of course we want communities to take care of their neediest members. And since conservatives have done a fine job of portraying the government as full of heartless, inept bureaucrats, allowing people to make their own decisions sounds better than the alternative. The conservative approach to government stems from a basic tenet of free-market economics: that people always act rationally to maximize their own benefits, and that from this rises a general state of well-being for...

Medicare Myths, Debunked

(Flickr/Ann Lobb)
At the moment, the hot issue of the 2012 presidential campaign is Medicare, with the Obama and Romney campaigns trading charges and counter-charges over the health-insurance program for the elderly. Since we at the Prospect love clarifying the muddy and making the complex understandable, we thought we'd unpack the arguments the two sides are making and provide some context so we can all grasp this a bit better. We'll start with the campaigns' claims. Does Mitt Romney actually want to "end Medicare as we know it"? That's the charge Democrats are now making; here's a video the Obama campaign just released: Is it true? The answer depends on your definition of "as we know it." There is no question that Romney would fundamentally transform the Medicare program from what it is now—a single-payer insurer that guarantees coverage to all American seniors—into a "premium support" program in which the government gives seniors vouchers they can use to buy private insurance or stay in traditional...

Playing Defense on the Sequestration Battle

As January 1 draws near, expect doomsday predictions about big national-security cuts to ramp up. 

(AP Photo/Steve Helber)
(AP Photo/Patrick Semansky) I f you’ve been following the news, chances are you have heard of “sequestration” by now. Everyone in national security—from the Pentagon to Congress to industry to the think tanks—seems to agree that the spending cuts would be a menace that deserves to be squelched. But is it? Sequestration is an automatic spending cut inserted into the Budget Control Act of 2011. The cuts were designed to light a fire under the Supercommittee to agree on specific cuts, because failure would mean a blanket slashing of many areas of the federal budget, gutting both parties’ spending priorities. The Supercommittee didn’t accomplish its given task and the cuts remain, so we might theoretically see the first chunks of the $1.2 trillion in cuts (over ten years)—including $55 billion per year in reduced defense spending—take effect in January. Unless the national security establishment stops it first, that is. At about $676 billion (in FY2012), U.S. defense spending accounts for...

Don't Hold Your Breath for a Romney Budget that Makes Sense

If you missed it, Mitt Romney gave a long interview to CNN Money in which he explained his plans for dealing with taxes, cutting the budget, and juicing the economy. The interview is boilerplate Romney—vague declarations about policies he won’t detail—but he does comment on the recent analysis from the nonpartisan Tax Policy Center (TPC). In short, the Center found that Romney’s goal—across-the-board tax cuts that don’t affect revenue—is impossible without raising taxes on most Americans. Romney calls this a “garbage conclusion”: I indicated as I announced my tax plan that the key principles included the following. First, that high-income people would continue to pay the same share of the tax burden that they do today. And second, that there would be a reduction in taxes paid by middle-income taxpayers. Those are the key principles of my plan that the Tax Policy Center chose to ignore. Instead they made various assumptions about what they thought I would do which are not in fact...

Phony Hawkery

Definitely not Paul Ryan. (Flickr/contemplicity)
This is something that other people have mentioned, and Jamelle brings up in his extremely helpful post about Paul Ryan, but it really needs to be emphasized: Paul Ryan is not a "deficit hawk." No matter how many times the news media tell us, it doesn't make it true. As I've said before , you can't call yourself a deficit hawk if the only programs you want to cut are the ones you don't like anyway. Show me someone who's willing to cut programs he favors (Ryan isn't), and would actually take potentially painful measures to balance the budget (Ryan wouldn't), and that's a deficit hawk. Ryan, on the other hand, is a conservative ideologue who couches what Newt Gingrich appropriately called "right-wing social engineering" in a lot of talk about making tough choices. But I've never actually seen Paul Ryan make a "tough" choice, at least one that was tough for him. There's nothing "tough" about a conservative Republican who tells you he wants to slash Medicare and Medicaid, increase defense...

Will Lobby for Food

The farm bill is set to expire, which is bad news for anyone who eats.

Flickr/cordery
Something happened today that, chances are, you know little about yet care about very deeply. It helps pay for the lovely farmers market you frequent every weekend. It’s behind all those corn-syrupy soft drinks you’ve been taught to avoid. It’s the reason you started hiking to that one artisanal shop for grass-fed beef after you read The Omnivore’s Dilemma . It helps feed America’s hungry, because it authorizes the federal food-stamp program, which feeds 46 million people. It’s the farm bill, usually the concern of only the corn, wheat, cotton, peanut, and soy-bean lobby, but it really should be called the food bill, and it has to be reauthorized every five years. The House Agriculture Committee debated and passed the reauthorization of the law this morning—and it includes $16 billion in cuts to food stamps and an amendment that will kill a program designed to help small chicken farmers. Now, the bill will likely die. Most observers don’t expect House Majority Leader John Boehner to...

Tom Corbett's Scary Plan for Pennsylvania Welfare

(Flickr/401K 2012)
Pennsylvania Governor Tom Corbett's first stab at a budget for this year left the education community shaking. The Republican had balanced the budget in part through deep cuts not only to the state's colleges and universities but also to school districts. That's terrifying news for a state where some districts are already considering ending kindergarten to balance budgets. Miraculously, thanks to unexpectedly high tax collections, the state's schools have been spared the chopping block. But Corbett's other proposal, major funding cuts for human services, still looks alive and kicking. State lawmakers only have until Saturday if they want to pass a budget on-time. Over the weekend, according to The Patriot News , the governor and GOP leadership agreed to spend $26.66 billion —$1.5 billion more than Corbett's initial draft. But the governor is pushing the legislature to approve a proposal that would combine several human services programs into single block grants. The change also come...

Lockheed Martin's Creative Lobbying

Lockheed Martin federal contracts.
When the Supreme Court handed down the Citizens United decision, many people predicted that big corporations would start buying elections, now that they were allowed to spend as much money as they wanted on campaigns. While that certainly might happen in the future, it hasn't happened so far, probably because they're worried about the PR backlash that could result from too much partisan activity. Instead, the ones donating millions have been extremely rich individuals, most of whom are Republicans. But that doesn't mean corporations don't have clever ways of playing the political game. To wit : Lockheed Martin is contemplating a pre-election move that could shake up the political landscape. Right before Election Day, the company is likely to notify the "vast majority" of its 123,000 workers that they're at risk of being laid off, said Greg Walters, the company's vice president of legislative affairs. Walters's comments are some of the most specific threats yet from an industry that's...

Tax Reform Silliness

Flickr/401K 2012
Barack Obama did a bunch of big things in his first term—passed health care reform and ended the war in Iraq, most notably. If he wants to do something big domestically in his second term (especially since he seems to have lost any inclination to do anything about climate change), one natural area to try would be tax reform. It might actually be possible to arrive at something both Democrats and Republicans could live with, if we put aside Republicans' desire to make sure he never accomplishes anything, ever (which will continue into his second term). Republicans already have their own tax plan, which lays out some goodies they'll give people (especially wealthy people, you'll be shocked to learn) while conveniently avoiding any specificity on how the goodies will be paid for. Some analyses have been done on the Republicans' plan, and they don't look too good : The tax reform plan that House Republicans have advanced would sharply cut taxes for the wealthiest Americans and could leave...

Sabotage Makes Sense!

Over at Talking Points Memo, Sahil Kapur reports that Senate Majority Leader Harry Reid has pulled the “sabotage” card on his House counterpart, Eric Cantor: “You have heard, as I’ve heard, that there’s a battle going on between Cantor and [House Speaker John] Boehner as to whether or not there should be a [highway] bill,” Reid told reporters. “Cantor, of course — I’m told by others that he wants to not do a bill to make the economy worse, because he feels that’s better for them. I hope that’s not true.” Cantor’s office made a speedy response, calling the charge “ridiculous and patently false,” and John Boehner’s office was even more succinct: “That’s bullshit,” said his spokesman Michael Steel. It’s impossible to know whether Republicans have a strategy to sabotage the economy ahead of the election, but it’s hard to fault Democrats for their suspicions. Not only is the GOP obstinate on the question of stimulus—despite wide agreement among economists that the economy needs an...

The Austerity Experiment

(Press Association via AP Images)
BRUSSELS—Depending on whose narrative you believe, the deepening economic crisis in Greece proves (a) that the dysfunctional and dissolute Greeks just couldn’t get their act together and keep the reform commitments that they made in exchange for debt relief from the European authorities; or (b) it only proves that austerity breeds more austerity. Cut public spending and wages, and raise taxes in a recession, and you just dig yourself a deeper hole. Since only about 20 percent of the Greek economy is exports and less than 40 percent of export costs are wages, slashing wages just doesn’t produce much of a bounce, especially when the rest of Europe’s economy is contracting too. Greece is a lousy test of the austerity-as-cure hypothesis, because left, right, and center agree that Greece has an encrusted system. When I recently interviewed former Prime Minister George Papandreou, he referred to Greece as a “clientist” state—meaning government by crony constituency. When the right governs,...

In Texas, Incumbents Suffer for Not Being Extreme Enough

(Flickr/daverugby83)
Yesterday I asked whether Texas voters would punish those incumbents who approved billions in state education cuts . I didn't even mention the billions of dollars in cuts to health and human services—or that despite these cuts, critical structural revenue problems remain in the state, which means this coming session will be worse. I just wondered whether incumbents would suffer for the session's austere approach. Well several incumbents suffered—but not in a manner you might expect. Take Rob Eissler, the Republican chair of the Public Education Committee who pushed for some of the big budget cuts. He lost his primary Tuesday night in a big upset. But he didn't lost his seat to a candidate pushing back against cuts. Nope. Eissler lost his seat to a Tea Party insurgent because—get this—Eissler had been too moderate and was too closely aligned with House Speaker Joe Straus. Nationally the focus may be on the Cruz-Dewhurst Senate race, but it seems insurgencies are alive and well when it...

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