The Pivot from Stimulus to Deficit Reduction

Another thing that came out of my day trip to Washington for the West Wing progressive roundtable on the economy was a reconciling of the seemingly dissonant message of extolling the virtues of Keynesian stimulus while at the same time advocating for a new commission to address the deficit. How can deficit spending be bad if it's also good? 

The answer actually is not as complicated as one might imagine. In the short term, says the administration, deficits were necessary. The economy was on the brink, shedding jobs at a rate unseen in decades, and something had to be done. Supply-side economics clearly not the answer, a Keynesian stimulus package that included significant deficit spending was required to reboot the economy. 

Yet looking further down the road, to the medium and long terms, deficits can pose problems. It's worth noting here that a major portion of the medium and long term deficits stem not from Obama administration policies but rather result from the eight years George W. Bush was in office -- unfunded legislative enactments (the 2001 and 2003 tax cuts, Medicare Part D, and the wars in Iraq and Afghanistan) and a plunging economy (that brought with it not only plunging tax revenues but also skyrocketing needs for programs such as unemployment insurance, food stamps and COBRA). Regardless, the theory is this: Once the economy is up and moving at brisker pace, any gains made could be wiped out down the road by the negative effects of large deficits. Deficits, while good and necessary for the economy in the short term, can turn deleterious in the long term.

There is a great extent to which the administration is already addressing these deficits. Wrapping up the wars in Iraq and Afghanistan means ending a massive government expenditure that at present is not being accounted for by dedicated revenue. Beyond that, economic growth brings with it increased tax revenue and decreased need for governmental services. These deficit-reducing mechanisms are aspirational, no doubt, but nevertheless do represent a meaningful was to draw down long term debt problems. 

But these measures are not enough. That's where the deficit commission comes in. The commission is tasked with coming up with answers to the medium and long term deficit problems facing the country. Their conclusions will not effect short term spending, which is still needed to turn the economy around. 

My biggest question -- one in which I was not entirely convinced there is a genuine answer -- is if a bipartisan commission can actually work. Others, including The Christian Science Monitor, are asking the same question. Specifically, what's to say that the Republicans will actually go along with this effort. A bipartisan group of even greater stature than the President's deficit commission came together to propose healthcare reform compromise that looked a whole lot like the eventual Senate legislation. Despite the fact that that group included four former Senate Majority Leaders, including one who ran on the GOP's national ticket on two occasions (Bob Dole) and another who later served as Chief of Staff to Ronald Reagan (Howard Baker), the Senate legislation that looked a great deal like this compromised garnered all of zero GOP votes in the chamber. It could be that the President's imprimatur on the panel will help, as would congressional Republicans' ability to appoint commissioners without whose support the body would be unable to report conclusions (though it is yet unclear if the GOP will go ahead and make appointments). That said, I'm still unconvinced that this commission will succeed where other efforts in other areas have not in the past. 

[UPDATE by Jonathan]: For those interested, here is a blog post on the commission from OMB Chair Peter Orszag.

My Take on Yesterday's White House Progressive Roundtable on the Economy

Yesterday, the White House invited a group of nine progressive bloggers, journalists and radio hosts to the West Wing for an on-the-record session with Jared Bernstein, chief economist to Vice President Joe Biden and a leader in the implementation of the stimulus, on the one-year anniversary of the Recovery Act.


Click image to enlarge

From left to right: Jonathan Singer of MyDD, Duncan Black of Eschaton, Oliver Willis of OliverWillis.com, Chris Hayes of The Nation, unknown administration staffer, Thom Hartmann of the Thom Hartmann Show, Matthew Yglesias of Think Progress, Erin from BlogHer, Tim Fernholz of the American Prospect, White House economist Jared Bernstein. Not pictured, John Aravosis of AmericaBlog. (Photo credit: John Aravosis)

The basic thrust of the event was to present a case for the efficacy of the Recovery Act as a part of the broader effort to convince the American people that the administration's efforts to restore the economy have been successful. To this end, Bernstein provided some stark numbers: While the economy had been contracting at an annualized rate of about 6%, last quarter saw GDP growth of nearly that amount (while conceding that this number isn't necessarily believed to be sustainable in the long term); and that while the economy was once losing 700,000 jobs per month, job losses have been nearly staved off, falling to just 20,000 per month over the past quarter.

The Recovery Act, Bernstein explained, was not only about bringing the economy away from the precipice, but was also about making meaningful investments to prepare the economy for the future. While year one was about bringing the economy off the brink, year two was about expansion (and specifically a type of expansion that ensures the middle class reaps benefits). This latter effort is focused on planting the seed money for priorities such as clean energy, a smart grid, health IT, universal broadband access and high speed rail -- just as earlier economic revolutions sparked by the development of the internet and a nation-wide rail system a century before that required government investment to leverage private capital, so too do the engines of future economic growth need private-public cooperation.

During the question-and-answer period, I asked Bernstein a question related to a series of posts I wrote here at MyDD that had gotten some traction in the Beltway press: Specifically the notion that progressive populism is beneficial on both a policy and political level. Bernstein responded first on the policy level, explaining that the administration was focused on addressing issues of income inequality -- which is now approaching levels unseen since 1928 -- ensuring that the middle class reaps any benefits from economic growth. On the political level, Bernstein was less receptive, saying that there's a difference between rhetoric and policy, while also noting that the President has expressed indignation. When I followed up by pointing to a quote from President Obama as to the effect that he "[does not] begrudge" the multi-million dollar compensation being received by some on Wall Street -- a quote I agreed that did not necessarily sum up all of the President's views, even if that's the way it was perceived by some -- Berstein sought to clarify that what the President was trying to say was that he, like other Americans, believes that people deserve to be compensated for their hard work. Pivoting again to policy rather than language, Berstein stressed the importance of restoring balance to the tax system, helping create better jobs, working to ensure that unions are able to organize fairly (though the Employee Free Choice Act), focusing on the middle class (he mentioned increased child tax credits, as well as tax credits for paying off college debts, paying for elder care, and other provisions), and, more broadly, reconnecting economic growth with the middle class.

I may write up some more thoughts on the meeting later today or tomorrow (I still have a good deal of notes from the pen-and-pad session, but I have to run to class now). But if you're itching to read more now, you can read others' accounts of the meeting from AmericaBlog, Eschaton, Tapped, Matt Yglesias, Matt Yglesias, and Oliver Willis.

Alan Simpson Revisited

According to The Wall Street Journal, President Obama will tap former Clinton Chief of Staff Erskine Bowles and former Republican Senator Alan Simpson "as co-chairmen of a bipartisan commission to tackle the mounting federal debt."

With Simpson's name in the in the mix, I thought it worth revisiting another interview I did about five years ago -- specifically the portion of my conversation with Simpson relating to his views on tackling long-term deficits:

Jonathan Singer: Looking at Social Security, the problem with Social Security, if you take the President's number the program's trust fund will be bankrupt in 2040 or so, at which point benefits will be cut by about a quarter. Medicare, on the other hand, the trust fund will run out within about the next decade. Is it time to focus on Medicare and Medicaid rather than Social Security?

Alan Simpson: No. That would be a real grave mistake. You'd better cure the lesser one before you go for the cancer. Go for the one that is lesser, because the figures are huge. Guys your age will be eaten alive in regard to money. So if they can't resolve Social Security, then don't even try to help Medicare if you haven't done anything on Social Security.

It's not clear whether Simpson's views today are similar to what they were in 2005 when we spoke -- that is, whether he believes it makes more sense to tackle smaller bore problems before addressing the more difficult issues -- but it might be worth it for the White House press corps to ask the question. Presumably Simpson does still agree with with his earlier sentiments on appointing a Commission to take on challenges Congress has been unable to successfully tackle. Here's Simpson on a Social Security Commission:

Alan Simpson: I said [to the House Financial Services Committee], "gentlemen and ladies, you'll never get that done on this end. You'd better appoint a commission and take the heat off yourselves, because you're never going to make it yourselves."

Again, it's not clear that Simpson believes today exactly what he believed five years ago -- but it's nevertheless interesting to get a sense of the perspective with which he approaches his role as co-chairman of President Obama's deficit commission.

Birch Bayh Revisited

Five years ago this month, I had the chance to speak over the phone with Birch Bayh, the father of retiring Democratic Senator Evan Bayh and a former Democratic Senator in his own right.

The elder Bayh was a progressive lion and a legislative heavyweight. The list of bills he penned is too long to detail here, but it includes two constitutional amendments (the 25th, on Presidential succession, and the 26th, lowering the voting age to 18), Title IX (mandating gender equality in higher education), and the Bayh-Dole Act (amending the nation's patent laws).

At a time when progressive legislation is stalled in the Senate, and the momentum for positive change built up during the 2008 campaign appears to be waning, I thought it worth reposting my interview with Birch Bayh -- which, by the way, includes a lengthy discussion of his son:

Jonathan Singer: When you were first elected to the Senate in 1962, your freshman class included notable liberals like Abe Ribicoff, George McGovern, Dan Inouye, Gaylord Nelson, and of course yourself. That group didn't arrive from nowhere, though. What was happening in the 50s and early 60s that helped foster your generation, and can it be replicated today?

Birch Bayh: Well, we'd gone through a period there after World War II, and some of those folks like Dan had served. I just missed it. But I think we had a spirit of optimism in the country. Certainly I think the election of John Kennedy and all he stood for was one that really was an inspiration. Of course somebody like Abe Ribicoff, he'd been doing a number of things, and Frank Church had come six years before. So I think there was a general feeling of optimism in the country that the sky was the limit.

I haven't lost that optimism myself, but I must say I'm very discouraged about it. One of the things -- you could speak to this -- if I were interviewing you I would ask you how many of the people on campus there are willing to expose themselves and do what is necessary to grind it out and get to public office and then work to serve the people while they're there. I don't know the answer to that question. I'm a little bit disturbed that there aren't as many as I would like.

But I'm also one that thinks that some of us who are older who have been around a long time and seen things come and go always tend to reflect on the "good old days" and look at our generation and the people that surrounded us, as if they were the ones that really had the energy and the idealism. I don't think that's the case.

I think we have a number of young people -- like yourself -- who want to make a difference. I'm not sure the numbers are as large because I think the burden of getting elected to public office at the national level has become astronomically expensive. That is a burden that a lot of young folks don't have the desire to, nor the capacity to really raise that kind of money. I think that's most unfortunate about our Democratic system, that you're confining it to people who are either very wealthy in their own right or have capacity to gain access to large amounts of money.

There's more...

Americans More Open to Defense Cuts than Others

Some interesting numbers out of the latest New York Times/CBS News poll:

In order to reduce the federal budget deficit, would you be willing or not willing for the government to decrease spending in areas such as health care or eduction?

Willing: 30 percent
Not willing: 62 percent 

In order to reduce the federal budget deficit, would you be willing or not willing to decrease military spending?

Willing: 45 percent
Not willing: 51 percent 

As is apparent above, there isn't a broad consensus decreasing defense spending -- but relative to spending on social programs, Americans are significantly more open to such cuts to the military. Indeed, these numbers suggest that the theory that Americans want to address the federal deficit by slashing spending on just about anything except national defense may be not only incorrect but even completely backwards.

Former President Clinton Hospitalized

A statement, via email, from Douglas Band, Counselor to President Bill Clinton:

"Today President Bill Clinton was admitted to the Columbia Campus of New York Presbyterian Hospital after feeling discomfort in his chest. Following a visit to his cardiologist, he underwent a procedure to place two stents in one of his coronary arteries. President Clinton is in good spirits, and will continue to focus on the work of his Foundation and Haiti's relief and long-term recovery efforts. In 2004, President Clinton underwent a successful quadruple bypass operation to free four blocked arteries."

More as we hear it...

Yet Another Swing District GOPer Retiring

The Miami Herald has the story:

U.S. Rep. Lincoln Diaz-Balart, a passionate defender and architect of legislation to strengthen the U.S. embargo against Cuba, is expected to announce Thursday he won't seek reelection to Congress.

With this retirement, more than 1-in-10 Republicans in the House of Representatives will not run for reelection this year -- 10.1 percent, to be precise. This kind of exodus does not occur when a party genuinely believes that it has the shot of retaking the House.

Some might try to play off this news by trying to say that the Republicans leaving the House are not endangered members, but rather that they are leaving seats that are sure to stay in the hands of the GOP. There's an extent to which this is true -- but it's far from the overall rule. Lincoln Diaz-Balart represents a district that came close to splitting its presidential vote evenly in 2008, a district John McCain carried by a narrow 51 percent to 49 percent margin. The Michigan district Republican Congressman Vern Ehlers announced yesterday he would be vacating was even more closely contested in 2008, splitting its vote 49 percent to 49 percent between McCain and Barack Obama.

So regardless of the spin you hear out of the Beltway today, do realize that there is simply no way in which this is good news for the Republicans. It's just not. Instead, it's an indication that a great number of House Republicans -- those on the front lines, those actually seeing the internal polling -- don't believe their party has a legitimate shot at retaking the House in 2010.

Republicans Fleeing the House

When a party is actually bullish about its chances of returning to power -- not just as a PR stance but in actuality -- it's members don't usually flee from office

It's been a year of notable Democratic retirements, but Rep. Vernon Ehlers, the nine-term Republican from Grand Rapids, Michigan, will call it quits at the end of 2010, Hotline OnCall's Tim Sahd and Reid Wilson report.

It's the 17th open seat Republicans will have to defend in 2010 (vs. 11 open seats for Democrats), and Sahd and Wilson note that it could be an opportunity for Democrats under the right circumstances, though the race was not generally seen among the nation's more competitive before news of Ehlers's retirement. John McCain defeated President Obama in Michigan's third district by a slim 49% to 49% in 2008, but the McCain camp pulled out of Michigan early. Ehlers won reelection with 61% of the vote in 2008.

Doing the math, that's close to 10 percent of House Republicans who have decided not to run for reelection rather than stick around awaiting the possibility that their party will regain control of the chamber. Think about that for a moment. The GOP spinmeisters want us to believe that they have a legitimate shot at winning back control of the House of Representatives, and they have been successful in convincing a great number of folks inside the Beltway. Yet nearly one-in-ten House Republicans don't have enough faith in their party's chances to hold out for another term. At least from this vantage, actions speak more loudly than words -- and especially spin. 

Obama's Judicial Vacancies

Slate's Doug Kendall passes on some disturbing numbers:

By February 2002, President George W. Bush had nominated 89 judges to the lower federal courts. This week, Senate Judiciary Chairman Patrick Leahy prodded President Obama, who has nominated just 42 federal judges to date, to "get up names as quickly as possible." President Obama promised to make this "a priority." He'd better.

There are currently 102 vacancies on the federal bench. Of these, 31 constitute "judicial emergencies"—vacancies that have severely threatened a court's ability to handle its workload. Before the end of the year, there will be dozens of additional openings on the lower courts (20 have already been announced) and, in all likelihood, one and perhaps even two Supreme Court vacancies to fill. With an energized Republican Party, the loss of a filibuster-proof majority, and a scary-looking midterm election in November, Obama faces a difficult task in filling these vacancies this year. But this is it—when is he likely to have a better opportunity?

The numbers on judicial nominations are getting better -- but not at a tremendously fast rate. Back in September I pointed to numbers showing that Barack Obama had nominated more than two-thirds fewer jurists than George W. Bush had at a similar point in his Presidency. By November that deficit had fallen to 60 percent. Today, according to these nubmers from Kendall, President Obama's deficit in judicial nominations relative to George W. Bush -- who, remember, was facing a Senate in opposition Democratic hands by this time in his first term -- is down closer to 50 percent.

But with a real crisis in the judiciary in the form of dozens of vacancies, one has to wonder why this President has nominated fewer than half of the judges nominated by his predecessor. 

Another Poll Gives Blumenthal a Huge Lead in CT-Sen

For some reason the Cook Political Report still thinks the Connecticut Senate race only "leans Democratic" -- meaning that the race is now competitive, though the Democrats have an edge -- but if you look at the polling from the race, it's hard to see how the GOP has much, if any, of a chance at present. Here are the latest numbers on the race from Rasmussen:

[Democrat Richard] Blumenthal, the state’s longtime attorney general who stepped into the race when the embattled Dodd bowed out, leads former GOP Congressman Rob Simmons by 19 points, 54% to 35%. Four percent (4%) like another candidate, and seven percent (7%) are undecided.

Matched against Linda McMahon, the ex-CEO of World Wrestling Entertainment, Blumenthal holds a 20-point advantage, 56% to 36%. Just three percent (3%) prefer some other candidate in that contest, and four percent (4%) are undecided.

When you add these latest numbers to the four other surveys on the race, Blumenthal leads Simmons by more than a 25-point margin, 57.0 percent to 31.6 percent. Looking at the Blumenthal-McMahon matchup, the Democrat leads by an even larger 58.8 percent to 31.0 percent margin. How this race could be considered competitive at present, with only a slight Democratic advantage, is beyond me.

 

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