Opinion

The Great Debate

An election Democrats can win

Obamacare versus Ryanomics. That’s the battle line for 2014. It’s also a battle Democrats can win.

Why? Because most Americans are pragmatists. Pragmatists believe that whatever works is right. Ideologues believe that if something is wrong, it can’t possibly work — even if it does work. That’s the Republican view of Obamacare: It’s wrong, so it can’t possibly work.

But it now looks like Obamacare may work. More than 7 million people signed up for health insurance by the March 31 deadline, meeting the Obama administration’s original goal. Senate Majority Leader Harry Reid (D-Nev.) said, “The Affordable Care Act, whether my Republican friends want to admit it or not, is working.”

Republicans admit nothing. “Even though the Democrats are trying to take some victory lap, it’s very short term,” Senator John Thune (R-S.D.) told the New York Times. “The bad news continues. The hits keep coming.”

Do they? The Affordable Care Act continues to be unpopular, though some polls show a slight uptick in public support. “House Republicans will continue to work to repeal this law,” House Speaker John Boehner (R-Ohio) promised last week. (They have already voted to repeal all or parts of the law 55 times.) The Republican view is simple: It’s wrong, therefore it can’t possibly work.

America is not broke

“We’re broke.” House Speaker John Boehner (R-Ohio) and Tea Party groups have repeated that phrase so frequently that it must be true, right?

But America is not broke. Our short-term budget outlook is stable, and our long-term challenges are manageable if both sides are willing to compromise. So why would politicians falsely claim that we’re broke? To justify radical changes to our nation’s social contract that Americans would never accept any other way.

This may be surprising, given how much we hear about a looming “debt crisis.” But annual budget deficits have fallen by almost two-thirds over the past five years. The total national debt is actually projected to shrink in each of the next three years as a share of the economy.

from Reihan Salam:

The one budget proposal worth seizing

President Obama’s new budget for fiscal year 2015 is almost entirely free of surprises. The Obama administration supports a number of large tax increases, most but not all of which target high-income households, and so the budget assumes that revenues will grow faster than expenditures over the coming decades and that debt levels will decline. One key reason the White House is able to paint so rosy a picture is that its economic assumptions are different from those of the more buttoned-up Congressional Budget Office. Specifically, the Office of Management and Budget, which is responsible for crafting the president’s budget proposal, maintains that the U.S. economy will be 2 percentage points bigger in 2024 than it will be in the CBO’s projection.

This might not sound like a huge difference. But it matters more than you might think. The CBO has devoted considerable time and effort to understand why its 2010 prediction of a robust economic recovery failed to materialize, and it found that the post-crisis recovery really has been as dismal as it feels. Sluggish capital investment has contributed to sluggish productivity growth, and the labor market recovery hasn’t been strong enough to draw the long-term unemployed back into steady jobs.

With this sobering picture in mind, the CBO has lowered its estimate for America’s economic growth potential over the next decade to a mere 2.5 percent, far lower than the 3.3 percent that’s been the average growth rate for the U.S. economy since 1950. CBO projects that real GDP growth will actually fall to 2.2 percent in the second half of the next decade, which is to say they assume things will get worse rather than better. It turns out that even quite small changes, on the order of a 0.1 percentage point difference in the average annual growth rate, can have enormous fiscal consequences. So it’s very noteworthy that between 2010 and 2014, the CBO’s forecast for average real GDP growth over the next decade has gone from 3 percent to 2.5 percent.

from Reihan Salam:

The ‘grand compromise’ that wasn’t

One of President Obama’s defining convictions is that he is the most reasonable man in our nation’s capitol. He seems to view opposition to his agenda as a reflection of intellectual or moral failures (my opponents don’t understand the underlying issues well enough, or their hearts aren’t big enough), or as a product of naked cynicism (my opponents are dishonest, and they will do anything to defeat me). To prove his point, the president will occasionally tout an idea from the other side of the aisle, or rather an idea he imagines to be from the other side of the aisle. And when his political opponents don’t embrace the idea, well, that means that they are acting in bad faith.

So I was delighted by the news that the Obama administration is changing its tune on Social Security in its forthcoming budget proposal. Last year, the president included a Social Security reform compromise in the budget proposal he presented to Congress. This year he has decided not to do so. But the truth is that the president’s Social Security compromise wasn’t a compromise at all. His decision to jettison it is a refreshing change of pace. And while the reforms aren’t officially part of the 2015 budget proposal, they remain relevant because Obama is treating them as a concession he’ll make if Republicans agree to raise taxes.

According to the president and his allies, the White House was only willing to compromise on Social Security, by cutting benefits, if Republicans were willing to give a little too, by agreeing to higher taxes. The problem is that his idea for cutting Social Security benefits is actually pretty bad, and it would also raise taxes. In other words, the president’s offer to the GOP is, “Hey, why don’t you share the blame for this thing that will make Social Security worse for seniors and raise taxes, and in return for my generosity you’ll let me raise taxes even more?” You will be shocked to learn that Republican lawmakers were not thrilled by this idea.

from David Rohde:

A new Paul Ryan?

This week, Representative Paul D. Ryan (R-Wi.) may have made himself a leading Republican presidential contender in 2016. By proposing an end to the budget impasse that did not include one word -- Obamacare -- Ryan may have outmaneuvered Senators Rand Paul (R- Ky.) and Ted Cruz (R- Texas).

Multiple proposals are under consideration in Washington. If Ryan's plan becomes the basis for a bipartisan budget agreement, it will boost his standing and be a body blow to the Tea Party.

Ryan is clearly trying to position himself as a fiscal conservative who is serious about addressing the country’s deficit problem -- without destroying the U.S. economy in the process. He is trying to win the support of the moderate Republicans and mainstream business leaders increasingly exasperated by the Tea Party’s flirtation with default.

The route to a real budget deal

There are glimmers of light in our battle to put America’s finances in order. New hope for a long-term budget deal has come in the form of two ideas, both from outside Congress, that many of our elected officials have embraced:“No Budget, No Pay” and “No Deal, No Break.”

The critical matter now is whether these two initiatives will lead to serious negotiations, or just be rhetorical weapons in Washington’s political warfare.

Both these campaigns speak to substantive needs we have as a nation. “No Budget, No Pay” is a signature campaign of No Labels, a national coalition of Republicans, Democrats and independents advocating that Washington should focus on progress not partisanship. I am a co-founder of this group.

Obama must surprise in State of the Union

President Barack Obama stirred with an unexpectedly powerful inaugural address – a second effort that far surpassed his first. He summoned great themes of American history to argue cogently for his second-term agenda. Now he has a chance to deliver a State of the Union address that improves on those of his first term, too.

The key to success? Presidents still have the power of surprise. Franklin D. Roosevelt once said, “I am like a cat. I make a quick stroke, and then I relax.” As in his inaugural, Obama should surprise us – this time with new policies and sharp specificity. On the budget, democracy reform and immigration, the president stands well positioned.

Forget the Super Bowl, or even the Oscars. For us policy wonks and ex-speechwriters, this is the biggest event – the time to crack open a beer, microwave the Buffalo chicken wings and settle down in front of the TV for a siege of viewing.

Key fiscal questions nominees must answer

 

We can only hope the final presidential debate Monday provides less heat and more light than the previous two. Especially with regard to fiscal matters, the debates have so far not provided the substance and solutions that voters need and deserve to hear.

Our nation’s escalating deficits and debt represent the biggest threat to our national security, as I said in early 2007. Admiral Mike Mullen, former chairman of the Joint Chiefs of Staff, said much the same in 2010. So the topic of the third debate, foreign policy and national security, needs to include a frank discussion of fiscal issues.

For, as our economy weakens, so does our position in the world. It will eventually compromise both our national security and domestic tranquility if not effectively addressed. Both our allies and adversaries recognize this, and we need to take action.

It’s shortsighted for Congress to eliminate census data

As America’s national leaders get ready to tackle the country’s serious challenges, they will need solid information on which to base their decisions.

Unfortunately, with its recent vote to defund the American Community Survey, the U.S. House of Representatives has undercut the most dependable source of information they should be relying upon.

The House voted to cut all funding for the Census Bureau’s annual collection of data on the economic, demographic and housing characteristics of U.S. households. Backers of the plan called the annual survey of 3 million random households “unconstitutional” and “an invasion of privacy” and balked at the relatively modest price tag of $2.4 billion a decade. This action, along with a current move in the Senate to enact “compromise” legislation that would make the American Community Survey (ACS) voluntary, works against laudable efforts by Congress to eliminate ineffective programs and curtail government waste.

Is Mitt Romney the last true believer in austerity?

There is something oddly retro about Mitt Romney. He appears to have sprung from a nostalgic fifties “Hairspray” world where women sported beehives and cars had fins. Nor has his economic thinking kept up with the times. Although he backed Obama’s $787 billion-dollar Keynesian stimulus, as soon as the borrowers’ remorse that sparked the Tea Party took hold, he turned on a dime and embraced austerity and paying off the national debt.

As he declares on his website: “The only recipe for fiscal health and a thriving private economy is a government that spends within its means.” He signed the “cut, cap and balance” pledge that will tie his hands if he makes it to the White House. Not trusting himself, perhaps, to remain fiscally continent, he favors an amendment to the U.S. Constitution, obliging Congress to put balancing the budget before all other measures. He would cap federal spending at 20 percent of GDP, a feat that would entail about $500 billion in cuts. On day one of his presidency, he says he would send Congress a bill that would cut non-security discretionary spending by 5 percent.

His proposed economies include (his estimates in parentheses): repealing Obama’s healthcare plan ($95 billion); privatizing Amtrak ($1.6 billion); reducing federal payments to the National Endowment for the Arts, the Corporation for Public Broadcasting and the Legal Services Corporation ($600 million); eliminating family planning subsidies ($300 million); cutting foreign aid ($100 million); capping Medicaid (more than $100 billion); replacing only half those who leave the federal workforce ($4 billion); ending the Davis-Bacon Act ($11 billion) and paying federal employees lower wages ($47 billion); and that old elusive crowd-pleaser, reducing waste and fraud ($60 billion).

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