Congress

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?

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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...

Marco Rubio Commits to Immigration Reform

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Florida Senator Marco Rubio has been involved with immigration-reform talks since the beginning of the year, but there’s always been a question of his commitment—does Rubio want to pass a bill, or does he just want the political benefits of advocacy without the substantive trouble of legislating? If this sounds cynical, recall that—at almost every turn over the last few months—Rubio has threatened to derail talks over a series of non-issues, accusing Democrats of supporting amnesty and rushing negotiations, though neither has happened. But with the announcement of a bill from the Senate “Gang of Eight,” Rubio has moved from wavering critic to straightforward ally. As Pema Levy reports for Talking Points Memo , Rubio took center stage on several talk shows yesterday, making a full-throated pitch to his fellow Republicans on the need for a comprehensive bill, and the advantages of the one on the table: To Sen. Lee’s preference for a piecemeal approach, Rubio argued that the...

Bi-Partisanship We Don’t Need

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John Boehner, Speaker of the House, revealed why it’s politically naive for the president to offer up cuts in Social Security in the hope of getting Republicans to close some tax loopholes for the rich. “If the President believes these modest entitlement savings are needed to help shore up these programs, there’s no reason they should be held hostage for more tax hikes,” Boehner said in a statement released Friday. House Majority Leader Eric Cantor agreed. He said on CNBC he didn’t understand “why we just don’t see the White House come forward and do the things that we agree on” such as cutting Social Security, without additional tax increases. Get it? The Republican leadership is already salivating over the president’s proposed Social Security cut. They’ve been wanting to cut Social Security for years. But they won’t agree to close tax loopholes for the rich. They’re already characterizing the president’s plan as a way to “save” Social Security—even though the cuts would undermine it...

Closing the Gun Show Loophole: Better Than Nothing?

Flickr/Brittany Randolph
Ah, bipartisan compromise, just what the country is yearning for. We saw some yesterday, as NRA favorite Pat Toomey and NRA favorite Joe Manchin got together to see if they could come up with a plan for universal background checks, which as everyone knows are supported by 90 percent of the public in just about every poll that's been taken on the subject. What they produced, however, wasn't anything like "universal." Is it better than nothing? Sure. Should it be celebrated? Eh. Toomey and Manchin's proposal would close the "gun-show loophole," meaning if you buy a gun at a show you'll have to submit to a background check. It also covers sales over the Internet. What it doesn't cover is private sales between one person and another. You've probably heard the figure that 40 percent of gun sales happen outside licensed dealers, and while the evidence for this figure is thin , nobody really knows if it's too high or too low. Furthermore, nobody knows what proportion of that 40 percent...

The New Deal That Could Have Been

Courtesy W. W. Norton and Company
I nvoking “dysfunction” is now the basic black of punditry about American politics. As the British political theorist David Runciman recently observed in the London Review of Books , “Commentators find it almost impossible to write about American democracy these days without reaching for the word ‘dysfunctional.’” Consider the lowlights of our political culture in just the past 15 years: a puerile impeachment; the subsequent president elected via a Supreme Court filled with political allies; a radicalized Republican Party, convinced that taxation and domestic government spending are a form of socialism; a failure by bipartisan elites even to prioritize, let alone tackle, continued high unemployment and the looming catastrophe of climate change. As Runciman’s editors titled his own essay on America’s lumbering democracy, “How can it work?” Courtesy of W. W. Nortn and Company It is one measure of the power of Ira Katznelson’s important, overstuffed new book, Fear Itself: The New Deal...

Is Gun Control Out for the Count?

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Crashmaster0007/Flickr I mmediately after the shooting in Newtown, Connecticut, the conventional wisdom was that Congress would act to pass new gun-control laws. How else, after all, would you respond to the massacre of 20 children? But while Sandy Hook galvanized gun-control supporters—including President Barack Obama—to act, it didn’t dissolve opposition. The National Rifle Association (NRA) and its allies in Congress have had great success in intimidating lawmakers and weakening proposed regulations. It’s because of the NRA that an assault-weapons ban is off the table, as are proposals that would place limits on magazine sizes. As of yet, however, the NRA hasn’t been able to kill a proposal for universal background checks. It’s the centerpiece of the Obama administration’s push for gun control, and the main point of the president's activism on the issue. What’s more, as reported yesterday by The Washington Post , several lawmakers are working on a deal to move forward with the...

Obama Pleads for Empathy on Guns

Throughout his presidency, Barack Obama has portrayed himself as Washington's last reasonable man, pleading that we can find some common ground on almost any issue despite our disagreements if we just listen to each other and open our hearts a little. Republicans complain that it's all just an act—he's just trying to look like the reasonable one, to make his opponents look more intransigent and stubborn and gain the upper hand politically. That may be partly true, even though they don't need his help to look unreasonable; they do a fine job of it all by themselves. The latest narrative on the gun issue is that the prospects for meaningful legislation are slipping away as the tragedy of Newtown fades from our ridiculously short memories and members of Congress feel little of the public pressure required for them to stand up to the NRA. So Obama has been campaigning for his favored legislation, and yesterday he gave a speech in Colorado, the centerpiece of which was a plea to both sides...

Americans Want a Path to Citizenship

Jens Schott Knudsen/Flickr
Jens Schott Knudsen/Flickr Sign in favor of immigration reform are on display outside Judson Memorial Church on West 4th Street in New York CIty on June 5th, 2010. The most important takeaway from the latest Washington Post poll is its news on immigration. Among all adults, 57 percent support a path to citizenship for unauthorized immigrants, one of the most contentious elements of the framework for comprehensive immigration reform. Forty percent are opposed, and of those, 24 percent have a “strong” opposition to the measure (on the other side, 31 percent are strongly supportive). Among registered voters, the spread is smaller but the result is the same; 54 percent support a path to citizenship while 43 percent are opposed. Indeed, support for a path to citizenship holds strong across income groups (55 percent of voters with incomes under $100,000, and 65 percent of voters with incomes over, are supportive), gender (men and women are equally in favor), race (51 percent of whites and...

Gun Control Moves to the States

Teknorat / Flickr
The United States hasn’t passed significant national gun laws in more than a decade, and despite urging from President Obama and other lawmakers, there’s little sign we’re close to new legislation. A large part of this has to do with the continued influence of the National Rifle Association, which has announced its complete opposition to new gun control laws. As The Washington Post reports , the NRA is now opposed to universal background checks—which it formerly supported—and as well as bans on “straw purchases," which is when someone with a clean record buys a gun for someone who can’t pass a background check. What’s more, later this morning, the NRA will unveil its proposal for putting armed guards in more schools, illustrating the extent to which its position is more guns, everywhere. But that doesn’t mean there isn’t good news on the gun-control front. While Congress remains paralyzed by the grasp of the NRA, various state legislatures have made moves to strengthen their own gun...

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...

The Dead End That Is Public Opinion

If you want to produce change, make politicians as terrified as this sandwich. (Flickr/Sakurako Kitsa)
As the effort to enact new gun legislation hobbles along, liberals have noted over and over that in polls, 90 percent or so of the public favors universal background checks. In speaking about this yesterday, President Obama said, "Nothing is more powerful than millions of voices calling for change." Then Jonathan Bernstein explained that opinion doesn't get political results, what gets results is action. I'd take this one step farther: what gets results is not action per se, but action that produces fear . I'll explain in a moment, but here's part of Bernstein's argument: See, the problem here is equating "90 percent in the polls" with "calling for change." Sure, 90 percent of citizens, or registered voters, or whoever it is will answer in the affirmative if they're asked by a pollster about this policy. But that's not at all the same as "calling for change." It's more like...well, it is receiving a call. Not calling. Those people who have been pushing for marriage equality? They were...

The IRS Threat to Turbo Tax

Flickr/401K 2012
As a general matter, I think the best reason for government not to go around competing with private industry isn't that doing so inherently diminishes our freedom, but because it's just not worth the effort, and much of the time it isn't going to provide any benefit to consumers. It wouldn't be tyrannical for the federal government to produce its own brand of cola, but it would be pointless, since they're unlikely to make something people will like better than Coke or Pepsi, and consumers seem to be perfectly happy with their current cola options. On the other hand, there are some areas where the market has clearly failed—health insurance for senior citizens, for instance (and, I'd argue, everyone else too, but that's a separate topic)—where it makes sense for the government to step in. But what about areas where the market in question involves private companies helping consumers interact with the government itself? And where there isn't a particularly egregious market failure, but...

Have the Politics of Gun Control Changed?

Flickr/White House
At The Washington Post , Greg Sargent reports that five red-state Democrats—Kay Hagan of North Carolina, Mary Landrieu of Louisiana, Mark Pryor of Arkansas, Joe Donnelly of Indiana, and Heidi Heitkamp of North Dakota—have been unwilling to voice support for expanding the background-check program—"the centerpiece," he writes, "of President Obama's package of gun reforms." Their rationale is straightforward: Supporting this policy might hurt us in our states, or leave us vulnerable to Republican attacks. This, despite the fact that expanded background checks have wide support from the public. It's hard, at this point, to make predictions on the status of the policy, but if this is any indication, the situation doesn't look good—if Democrats have backed away from an assault-weapons ban, and are skittish over expanded background checks, then what hope is there for meaningful gun control policies? Indeed, it's tempting to argue— as Chris Cillizza does —that national outrage notwithstanding...

Battle of the Budgets

AP Photo/Alex Brandon
For the next year, at least, Republicans will have one less talking point to turn to when they want to hit Democrats on the budget. Over the weekend, Senate Democrats came together to pass their first budget since 2009, a comprehensive package that calls for additional stimulus and modest deficit reduction, stretched over the next ten years. Under Senate rules, lawmakers can’t filibuster a budget resolution, allowing Democrats to pass it by a vote of 50 to 49 , with four Democrats—Mark Pryor of Arkansas, Kay Hagan of North Carolina, Mark Begich of Alaska, and Max Baucus of Montana—voting against the bill. Unlike the House budget—crafted by Republican Paul Ryan—the Senate plan isn’t meant to restructure the federal government or redefine its obligations. Nor does it try to balance the budget or order dramatic and controversial changes to the tax code. Instead, it’s a modest package responsive to the economic needs of the moment. It includes $100 billion in immediate infrastructure...

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