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).
For good measure, he has further manacled himself by putting his name to the Americans for Tax Reform’s pledge that would prevent him raising taxes. If you thought George H.W. Bush’s “Read my lips. No new taxes” was rash, Romney has gone one further. Not only has he solemnly promised not to raise taxes in any circumstances but he will make the George W. tax cuts permanent, end capital gains taxes for those earning less than $200,000, and abolish estate taxes. By now, even Harry Houdini might be excused for feeling a little constricted.
The problem with the draconian austerity package Romney has in mind come January is that it is likely to tip the fragile American recovery into recession, as similar measures have done in Britain and, save Germany, in the euro zone. In the past, Romney has pointed to Europe with distaste, as if it were Soviet Russia. Obama’s public spending, he said, “takes us down a path to becoming more and more like Europe. And Europe doesn’t work in Europe.”
He is right to be wary of Europe’s example, but for the wrong reasons. The fiscally conservative policy of the euro zone, the product of a conservative alliance between German Chancellor Angela Merkel and former French President Nicolas Sarkozy, insists on governments paying down deficits quickly, even though, for countries like Spain, Italy, and Greece, this means perhaps a decade of penny-pinching, high unemployment, low growth and short rations.
The result, as predicted, has been a revolt against austerity at the ballot box and a rise in extreme politics. In recent elections, the Greeks and French have seen small radical parties trounce their moderate rivals, prompting political turmoil that is frightening away investors. So far, 11 European governments have fallen thanks to austerity, the biggest shock being Sarkozy’s ouster by the Socialist François Hollande.
Who truly speaks for small businesses?
Everyone knows that small businesses hate President Obama’s historic healthcare reform law, right? At least that’s what the nation’s leading small-business advocacy group would have you believe.
Joining 26 states, the National Federation of Independent Business challenged the law all the way to the U.S. Supreme Court in March. It claimed the “individual mandate” is unconstitutional and would bankrupt small businesses with unnecessary costs.
Yet while the NFIB claims its multimillion-dollar lawsuit is on behalf of job creators and small businesses everywhere, it’s unclear whether small businesses genuinely support the NFIB position. A close look at its record suggests that the NFIB uses the politically valuable mantle of small business to pursue an agenda that may take its cues from elsewhere.
For one thing, many of its 340,000 members, most of whom employ 20 or fewer workers, have already benefited from the law. According to a March report in the Wall Street Journal, members have seen costs go down thanks to tax credits that were built into the law. Small firms in industries like advertising have also been able to compete with large national companies for talented employees. As one member told the WSJ: “[The NFIB is] doing a very big disservice to their members” by opposing the healthcare law.
For another, the NFIB has a record of lobbying for issues that benefit big businesses, not necessarily small ones. Consider a widespread state tax loophole that lets big-box retailers like Wal-Mart and Home Depot transfer income to out-of-state subsidiaries. This loophole often allows the chain retailers to pay no state income tax, while small businesses do. Yet the NFIB has fought against closing such loopholes.
Moreover, small businesses generally favor some kind of regulation, because such standards often make them more competitive with big companies. The NFIB is opposed to regulation on principle, but it also claims, as many Republicans do, that the threat of regulation on entrepreneurs and job creators – they have a habit of calling it “regulatory uncertainty” – has kept businesses from hiring and thus from stimulating the economy. But observers across the political spectrum say this is a canard. Regulation isn’t preventing businesses from hiring. Poor sales are.
Perhaps it is no surprise that the NFIB fights for issues that the Republican Party as well as big corporations also fight for: deregulation, lower taxes and tort reform. According to the Center for Responsive Politics, the NFIB’s political action committee has raised over $20 million since 1998. In 2010, nearly 94 percent of contributions went to Republicans. This year it’s 98 percent. It spent $9.5 million lobbying against the healthcare reform bill in 2010. And last year, the NFIB received $3.7 million from Crossroads GPS, according to Bloomberg. Crossroads GPS is a non-profit with close ties to Karl Rove, the political adviser of George W. Bush.
CaptnCrunch, as a card carrying left wing “liberal” Democrat who believes your guns would make an excellent artificial reef, you are what I miss the most about the real Republican party – a thinking mind with a sensible opinion.
I’m sure that after a passionate exchange of ideas while having a couple of beers, you would leave understanding my views and I would leave understanding yours.
Please take back your Party… please!
Overthrowing the overthrowers of the Republican establishment
Is there such a thing as a Republican establishment? Yes, if you trust Ann Coulter, and she thinks she knows exactly who they are – “political consultants, The Wall Street Journal, corporate America, former Bush advisers and television pundits” – which is a sly way of boasting that she is a member of this select band of behind-the-scenes power brokers.
To the American Spectator’s Steve McCann, the GOP establishment consists of: top lawmakers past and present “whose livelihood and narcissistic demands depends upon fealty to Party and access to government largesse”; “the majority of the conservative media … whose proximity to power and access is vital to their continued standard of living”; conservative think-tank staffers “waiting to latch on to the next Republican administration for employment and ego-gratification”; and donors and consultants whose businesses would benefit from a Republican in the White House.
George Will, surely an archbishop in the GOP establishment if it exists, takes a suitably contrary line, declaring without cracking a smile that “the Republican establishment died at the Cow Palace in San Francisco in 1964, when Goldwater was nominated against their frenzied wishes.” “Google the Republican establishment, you’ll get 20 million hits,” he explained. “Google the Loch Ness monster and you’ll get a whole bunch of hits. They’re both dead or never existed.”
But if the Republican establishment doesn’t exist, so many believe it does that it might as well. So let me suggest why the Tea Partyers and so many conservative pundits of all stripes agree it’s real. Like all parties, the GOP divides between those who sit atop the heap and those who aim to take their place. Since 1964, Republican Party moderate conservatives have endured a persistent, endless, aggressive assault from social conservatives and libertarians rallying behind such inspirational figures as Barry Goldwater and Ronald Reagan.
Every radical movement needs a lost leader, like Goldwater, and an unimpeachable savior, like Reagan. There is a persisting myth among non-establishment Republicans that Reagan was not seduced by the Beltway and the comforts of office. Once in the White House, however, the Gipper often acted more like a conservative than a libertarian and, thanks to his tax cuts and borrowing for military spending, presided over, as J.K. Galbraith quipped, “involuntary anonymous Keynesianism.” But no matter.
The old corporatist conservative Republicanism of Big Businessmen like Nelson Rockefeller, who posthumously gave the last-gasp burst of the old-school establishment its name, has been defeated by successive waves of entryists such as the Christian Right, out-and-out libertarians, and the Tea Partyers, whose borrowers’ remorse transformed into a surprisingly potent political force. George H.W. Bush was the last Northeastern blue blood in the Oval Office, if you do not count his faux hick son George W., who talked the Hayekian talk with a Texas twang, but facing financial meltdown, smartly walked the Keynesian walk.
The distressing thing for the entryists is that no sooner do they manage to get one of their less frightening number into Congress than the once rebellious radical becomes a cozy establishment pussycat. Hence the solemn signed pledges, from not raising taxes to outlawing abortion, that bind the hands of Republicans and attempt to prevent them sliding into Washington’s wicked, wicked ways.
Anyone who dreams a dream of there not being a Republican Establishment cannot read, or does not want to.
A simple biographical fact check can confirm the social class origins of prominent Republicans from the past. The Bush family all come from old money and power. So does Romney. Reagan was, in many, many ways, a Republican oddity. Compare the social origins of Obama and Clinton and Carter. The contrast is informative.
The rich take care of the rich and no one else. People who believe otherwise are just willfully blind, as peasants and serfs have been for millenia. The system depends on it.
The gay-rights cause Obama can actually do something about
On Wednesday, President Obama declared his evolution complete. In an interview with ABC News he said: “At a certain point I’ve just concluded that for me personally it is important for me to go ahead and affirm that I think same-sex couples should be able to get married.”
Gay-rights groups rejoiced; conservative groups scolded. But what the president thinks about gay marriage is, ultimately, symbolic. There is a different issue on which Obama could achieve real, tangible results for gays and lesbians, and gain electoral advantage over Mitt Romney: employment discrimination.
Obama has already done everything he can on gay marriage. His administration has declared the federal law banning gay marriage, the Defense of Marriage Act (DOMA), to be discriminatory and declined to defend it in court. He has extended spousal benefits to the domestic partners of federal employees. Marriage laws, on the other hand, are written at the state level. Even a constitutional amendment to define marriage as between a man and a woman, which Romney supports and Obama already opposed, is not actually signed by the president.
Meanwhile, it is still legal in 29 states to discriminate against gays and lesbians in hiring and firing employees, and in an additional five it is legal to discriminate against transgender people. There has been a Democratic bill floating around Congress called the Employment Non-Discrimination Act (ENDA), which would extend the federal protections of the Civil Rights Act to outlaw discrimination on the basis of sexual orientation. Thus far Obama has said he supports the legislation, but has not called much attention to it.
Instead he’s spoken out on gay marriage, which may come with some political costs in November. It is preposterous to assert, as many political pundits do, that black voters will be receptive to attacks on Obama over gay marriage. Polling shows blacks have become roughly equal to whites in their acceptance of gay marriage. Obama enjoys high approval ratings among black voters, and they agree with him more than with Romney on every other issue. They are also accustomed to voting for more socially liberal politicians, just as wealthy pro-choice Republicans have accepted that they must vote for anti-abortion-rights candidates.
But perhaps it could hurt Obama at the margins among certain key demographics that lean against gay marriage, such as working-class white voters in the Midwest or Mexican-Americans in the Southwest. Meanwhile Democrats in socially conservative states who face a tough re-election fight, such as Senator Joe Manchin (D-West Virginia), are surely seething at the attack ad Obama just handed their opponents.
@ raylinx: Do you have even a shred of empirical evidence that God is judging anyone? I know you believe what you say but what facts, what data do you have to support your claims? Many studies have shown that True Believers, such as yourself, further entrench themselves in their belief system the more facts to the contrary are presented. True Believers do not present facts because they have none. Yes, it is your absolute right to believe what you want to believe. You do NOT have the right to foist your beliefs on anyone else without hard data to support those beliefs. “Extraordinary claims require extraordinary evidence.” You have no evidence.
Republicans could join Obama on same-sex marriage
In finally evolving to support marriage equality, President Obama has not only placed himself firmly on the right side of history with respect to an issue of fundamental rights and justice but he has also thrown down the gauntlet for Republicans, especially his presumed challenger, Mitt Romney.
In his comments to ABC News, the president said his attitude toward gay marriage has been shaped over time by voters and members of his own staff “who are in incredibly committed monogamous relationships, same-sex relationships, who are raising kids together” – who are clearly in love. In other words, the president let the human reality around him shape his personal views and will now lead accordingly – a stark contrast, say, with Mitt Romney, who seems to have little grasp of the struggles and experiences of actual voters and instead rotates his political viewpoints as often as he rotates the cars on his vehicle elevator. In President Obama’s “evolution,” America saw a leader who is not afraid to be wrong and not afraid to change his mind. It’s refreshing.
And now it’s the Republicans’ turn. As Fox News anchor Shepard Smith suggested in reporting the president’s shift, Republicans are “on the wrong side of history.” Indeed. But they have plenty of time to make amends. Republicans should be ashamed enough that theirs is the party that stood in the way of interracial marriage and civil rights. Is that really a legacy the GOP wants to continue into the 21st century? It seems to me the GOP has a choice between courting the open-minded next generation of voters, or continuing to be marred by scandals in which anti-gay Republican after anti-gay Republican is embarrassingly outed and shamed. Apparently this is a tough choice for the GOP, which would rather keep implicitly firing up bigotry than stand firm for equality.
In our exceptionally and often disgustingly hyper-partisan political environment, it can be difficult to remember that political decisions affect real people – and that the politicians who make those decisions are people, too. People can make mistakes. People can change. The same goes for presidents. I believe the president genuinely did evolve on this issue. Sure, it’s easy to be cynical that the same Obama who has been conflict-averse since day one of his administration was merely letting his opinion on gay marriage sail with the winds of political pressure. As the New York Times editorialized, the president “dampening the enthusiasm of allies without gaining the support of equality’s opponents [is] not an unfamiliar place for this president to be, unfortunately.” Unfortunate but accurate. But he deserves our praise now for coming out on the right side of marriage equality and having the decency to call his shift a shift rather than maneuver like Romney, who plainly flip-flops on issues like gay marriage for political gain while trying to feign consistency. Not only should the gay community (including gay Republicans) be thoroughly fed up with being political pawns, but voters in general should be fed up with politicians who refuse to do what’s right and merely, cautiously do what they think is popular.
The great leaders in history were not the ones who did what was popular, but those who did what was difficult – yet ultimately right. In standing up for marriage equality, President Obama showed that he has the capacity to be that kind of leader. Here’s hoping Republicans will follow his lead.
PHOTO: President Barack Obama gestures during the Asian Pacific American Institute for Congressional Studies (APAICS) 18th annual gala dinner in Washington, May 8, 2012. REUTERS/Yuri Gripas
How dare you speak of human beings this way? Homosexuality is not a disease or disorder, or anything you ignorant people call it. Please educate yourselves.
The real reason Romney is struggling with women voters
Back in February, things started to look dire for the Romney campaign’s ability to attract female voters. Every day brought another story about Republican attacks on reproductive rights: attacks on insurance coverage for contraception, transvaginal probes, all-male panels called in Congress to discuss contraception, attacks on Planned Parenthood’s funding, and the candidate himself increasingly afraid to say a positive word about contraception when asked directly in the debates. A gender gap opened up between the candidates in the polls, with Obama outpacing Romney with women by 19 points. The Romney campaign responded by trying to change the subject, to jobs and the economy. But if Romney wants to close the gender gap, he should rethink that strategy. After all, the polling data suggests that his stance on economic issues – specifically the size of the safety net and amount of economic support the government provides to citizens – is what’s really hurting him with female voters.
The real war between the sexes may not be over feminism or sex so much as whether or not our tax dollars should go to social spending. Research conducted by Pew in October 2011 showed women support a strong, activist government in much larger numbers than men. On the question of whether the government should offer more services, women said yes by 9 more percentage points than men. The gender gap on social spending remained when pollsters asked about specific interest groups. Women wanted more spending on the elderly than did men by 11 percentage points, more spending on children by 10 percentage points and more spending on the poor by 9 percentage points.
Female voters respond much more strongly than male voters to government providing pragmatic solutions and real-world support for ordinary citizens, which helps explain why women flock to Obama and to the Democrats in general. In fact, with college-educated white voters, the gender differences are nothing short of astounding. In this group, female voters prefer Obama 60 to 40, and male voters prefer Romney 57 to 39.
As the lingering downturn puts economic issues front and center in the election, a ballooning gender gap was entirely predictable. Voters cite healthcare and economic issues as their top concerns, and with all the discussion of the student loan crisis of late, that will likely become part of the larger concerns about jobs and the economy. Knowing this, Romney wants to keep talking about these issues.
Support for healthcare reform remains low, at 43 percent, but as the public learns more about what the Affordable Health Care Act provides, the polling numbers have been creeping up a bit. With female voters, the uptick has been swift, with 47 percent of female voters supporting the new law in late March, 10 percentage points up from November. Student loan debt is another issue where women lean more to the left than men. In a recent Daily Kos/SEIU poll conducted by Public Policy Polling, more women than men – by 6 percentage points – supported legislation to keep student loan rates low, a policy that, because of congressional Republicans’ protest, voters strongly associate with Democrats, not Republicans.
Not that reproductive health issues don’t matter to female voters, but women voters have a more expansive view of what meaningful contraception policy looks like. They don’t just want the government to protect the legal right to use contraception; they also want it to enact policies that make sure birth control is affordable for all women, regardless of income. Fifty-five percent of women cite government contraception policy as an important issue for them, compared with 35 percent of men, according to Gallup. By requiring insurance companies to cover contraception and by protecting Planned Parenthood’s funding, the Obama administration appealed to female voters’ preference for a government that offers services as well as ensures reproductive rights.
There are two types of Republicans:
1) The rich
2) The gullible
Pledging ourselves out of democracy
If anyone were to suggest that members of the House and Senate should abandon their own judgment and instead follow a strict dogma laid down by an outside body, we would be appalled. And if it were proposed that the president should be little more than a rubber stamp to sign any and all legislation presented to him by Congress, we would throw up our hands in horror.
Under the Constitution, members of Congress are representatives of all their constituents, and they are expected to weigh the value of legislation, discuss it, then vote according to their conscience. It is, after all, the House of Representatives, not the Supreme Soviet or the Chinese National People’s Congress. The Founding Fathers, in their wisdom, didn’t intend congressmen to be mere delegates or toe a line drawn by others.
Since 1978, however, when California passed Proposition 13 to reduce property taxes, this essential element of our democracy has been compromised by those who have tied the hands of lawmakers by having them sign solemn and binding “pledges.” By far the most successful is the “Taxpayer Protection Pledge” promoted by Americans for Tax Reform (ATR), in which congressional candidates agree in advance of election to “oppose any and all efforts to increase the marginal income tax rates” and “oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.” It was Ronald Reagan who in 1986 urged Grover Norquist, president of the ATR, to administer a no-tax-increases pledge, though as president he went on to raise taxes 11 times.
According to ATR, 238 representatives and 41 senators have made the pledge, though some now regret signing it. Of GOP congressmen, 95 percent have promised not to raise taxes in any circumstances. It is this unanimity among Republicans that has led to the end of give-and-take across the aisle in Washington and brought government to a grinding halt.
Other pledges that bind lawmakers include promises to oppose abortions, to ban pornography, to prevent women from fighting in the armed forces, to outlaw Sharia law, to deny gay marriages, to cut and cap public spending, to pass a constitutional amendment demanding a balanced federal budget, to remain faithful to their spouses (good luck with that), and to support “robust childbearing and reproduction” (whatever that is).
Those who dare renege on the pledge not to raise taxes can expect to be targeted by ATR, or, as Norquist so charmingly puts it, for the group to “educate the voters that they raise taxes” and “encourage them to go into another line of work, like shoplifting or bank robbing, where they have to do their own stealing.” One of those on ATR’s hit list is the Republican senator from Indiana for 35 years, Dick Lugar, hardly a liberal, who, having refused to sign the pledge, is currently defending himself from a primary challenge by a Norquist-approved alternative.
So far, so sinister. But Norquist has another adjustment to the Constitution in mind. He wants the majority in Congress to become the main driver of government. “We don’t need a president to tell us in what direction to go,” he told the 2012 conservative CPAC conference. “We just need a president to sign this stuff … Pick a Republican with enough working digits to handle a pen to become president of the United States.” His vision of American democracy is something like the British Parliament, with the prime minister backed by a majority in the Commons deciding and the monarch obediently providing.
Great op/ed Mr. Wapshott. And the truth is that it goes much further than just these pledges. The pledges are just one of many tactics being used to take over the country by the right. They are also trying to take away bargaining rights from labor unions and making it harder to for them to raise money from their members; many Republican state legislatures have passed photo id laws to reduce the number of voters that traditionally vote Democratic (if this wasn’t their primary goal, each state that passed such a law would have included in the law a simple and cost-free way for voters to obtain photo id cards. This wasn’t done in any state, because that would be defeating the purpose of the bill.); the conservative Supreme Court has ruled that money = free speech and that corporations are people. (If money = free speech than speech is no longer free, no?) The Citizens United ruling makes it easy for wealthy special interests to buy our government. And then there’s the Republicans’ organized resistance to oppose anything and everything related to Obama or the Democrats, regardless of a proposal’s merits. They won’t confirms Obama’s political and judicial appointments. The Senate filibusters everything the Democrats propose. The level of civility has fallen into the gutter, where the President of the United States is called a liar during the State of the Union and instead of being censured, the Republican Congressman is rewarded by huge campaign donations. Mediocre, has-been rocker Ted Nugent makes an implied threat on the President’s life; the numbers of rightwing militias have burgeoned like we’ve never seen before. It goes on and on and on.
And I haven’t even mentioned one of our biggest problems, the “news” media whose interests are monetary and therefore 1. must avoid offending people, so everything has to be made to appear even even when it’s not, and 2. the media, particularly radio and television, makes enormous profits from political campaigning and, therefore, we can’t expect a serious questioning of our current means of funding political campaign–and we need to.
It’s ugly and I think it’s going to get a heck of a lot worse before it gets any better. The right appears willing to sink the ship if they can’t get everything they want. They almost forced our nation into defaulting on our debt obligations and that would have been an unmitigated disaster. It’s not like things have mellowed out since then.
Kudos to Pseudo Turtle and steve778936 for your excellent comments.
What happened to ‘Yes we can’?
At this pivotal moment in the presidential race, President Barack Obama and his re-election team need to focus on a key question that could influence the outcome of this year’s election:
How do they get the “we” back?
Good question. We all remember how Obama broke new ground in the 2008 campaign by using social media as a powerful political tool. Obama’s campaign created an expansive Internet platform, MyBarackObama.com, that gave supporters tools to organize themselves, create communities, raise money and induce people not only to vote but to actively support the Obama campaign. What emerged was an unprecedented force, 13 million supporters connected to one another over the Internet, all driving toward one goal, the election of Obama.
When they chanted “Yes we can,” it wasn’t just a message of hope for the future – it was a confirmation statement of collective power. They weren’t waiting to be told what to do; they were actively engaged, calling friends to come to events, learn what was at stake, contribute ideas, and help out in some way. The power of “we” was awesome to behold. The “we” not only raised hope for people but also unprecedented sums of money for the old-fashioned campaign on the ground.
But this time, “Yes we can” has been replaced by a new modus operandi for the Obama campaign. It’s “We know you.”
The Democrats are investing heavily in what’s called Big Data to give them significant new insights into the everyday behavior of each one of their supporters. Big Data allows companies, or political campaigns, to probe and analyze information about you – your friends, your shopping habits, what type of events you go to and when, and what issues you care about. With this information, they can presumably be more accurate in sending messages out over email or in identifying the trigger points that send you to events and get you to donate money.
But whatever happened to the power of the people? Whatever happened to the “we”? We haven’t heard about it since the 2008 victory. “They built the largest online community in the history of the presidency,” says Andrew Rasiej, founder of Personal Democracy Media, which tracks the intersection of technology and politics. “But then they stopped talking to them and engaging them” – that is, until they called in recently with a pitch for money.
You did! Kash for Klunkers to buy Toyotas, failed loans to Solyndra, and the money pit Obamacare. Now every citizen has $50,094 of debt of the now $15 Trillion (seems being illegal has its advantages). How long until we riot and have a run on the banks when we have to start our own austerity measures?
Larry Summers is playing economic Jeopardy
Editor’s note: This op-ed was originally published at the Financial Times in response to the recent piece by Lawrence Summers for Reuters. It has been republished, verbatim, with the FT‘s permission.
Larry Summers’ considerable intellect suggests that he would be an excellent contestant on the popular game show Jeopardy. Of course, on the show, the question offered by the contestant must match the answer on the board. Summers and I disagree on the answer that matches the question “What is President Obama’s budget?” Let’s see why.
I asked two questions in an op-ed in Wednesday’s Wall Street Journal. (Neither question was addressed by Mr Summers, or in the simultaneous parallel critiques offered on the airwaves by US Treasury Secretary Timothy Geithner and former Council of Economic Advisers Chairman Austan Goolsbee). The first question was whether the tax increases on high-income individuals proposed by President Obama (the Buffett rule, higher taxes on dividends and capital gains, a higher top marginal rate, and so on) raised enough revenue to materially offset the country’s large budget gap or higher federal spending under President Obama. The answer, using revenue estimates from the Treasury Department and spending estimates from the President’s budget is ‘No’. The second question was what that spending growth implied for future tax rates. That is, if federal spending as a share of gross domestic product was to increase permanently as the president proposes, by how much would taxes need to rise? Answer: a lot and for everyone. This simple thought experiment presumes that we will not ratify permanently larger deficits.
Without addressing these questions, Mr Summers proposes a different one. President Obama’s budget is supposedly fiscally sound because the Congressional Budget Office (CBO) has estimated that the budget would stabilise federal debt as a share of GDP for a short while. Yet, let’s look at what the CBO said. First, while the CBO shows the debt-to-GDP ratio stabilizing for a period of time – at an uncomfortably high level – in the budget window, it is not stable in the long run. Second and more importantly, in its April 20, 2012 report, the same CBO that Summers cites so selectively observed that the permanent deficits in the President’s budget would reduce the level of economic activity. By CBO’s estimate, under the President’s proposals, the CBO estimates for the 2018-2022 period, that the nation’s real output would be between 0.5 and 2.2 per cent lower compared to what would occur under current law. This adverse effect would grow in the future, as deficits continue to mount.
The President’s budget has met with little success in Congress. The 2013 budget was voted down in the House of Representatives, 414-0. The Senate did not bring the 2013 budget to the floor, though the 2012 budget was voted down in the Senate, 97-0.
And Mr Romney? The Romney budget proposes to reduce federal spending as a share of GDP to 20 per cent (its pre-financial-crisis, long-term average level) by 2016. It is ironic that the administration has criticised Mr Romney for specific cuts (for example, block granting the Medicaid program), while Mr Summers now argues the plan is not specific. Mr Romney is also the first candidate to propose specific ways of slowing the growth of Social Security and Medicare, a subject not mentioned by the president. And Mr Romney’s call for fundamental tax reform – reducing marginal tax rates accompanied by reducing tax expenditures to be revenue-neutral and distributionally-neutralcaptures the spirit of the bipartisan Bowles-Simpson commission, which was both appointed and ignored by President Obama.
In a ‘Final Jeopardy’ round, if the answer is long-term fiscal sustainability without large, across-the-board tax increases, the question cannot be “What is President Obama’s budget?”. There are important debates to be had over policy – Mr Summers is right that this is a “very consequential election”. But we first must make sure that we agree on math. Fortunately, the concept that permanently higher spending eventually requires taxes to match is not a controversial one to most Americans. And, at the levels of higher spending proposed by President Obama, higher taxes on the well-to-do won’t fix the gap.
rgrelb -
““The independent Congressional Budget Office confirms that it would stabilize the debt as a share of the economy – thus returning us to a tenable fiscal path. … ”
The rebuttal to Toby’s remarks was already in Hubbard’s comments.
“Yes, temporarily, debt to GDP stabilizes, using its own assumptions. The CBO does not say it works beyond 10 years. Given the increase in retirees, after that point, debt to GDP quickly passes 100% under the Obama Budget.”
The rebuttal to rgrelb remarks was already in remarks was already in my quote of the Summers article cited by Hubbard.
Regarding HOW “a tenable fiscal path” would unfold: “It would do that while allowing increased investments in education, research and infrastructure that are critical to stronger, shared economic growth in the years to come. By focusing on building a strong economy for the future, it expands the tax base and reduces pressures for future tax increases.”
Since we have to go sentence by sentence, I’ll repeat the crucial second sentence in advance: “By focusing on building a strong economy for the future, it expands the tax base and reduces pressures for future tax increases.”
Romney should be proud of Massachusetts health law
It’s been six years since Mitt Romney signed the Massachusetts healthcare reform law. That law was a framework for change, a values statement about what we believe in Massachusetts: that health is a public good and that everyone deserves access to affordable, high-quality healthcare.
Six years after its passage, our experiment in universal healthcare is working, expanding coverage while helping to control costs. Mitt Romney should be proud of the law he signed. As the one responsible for implementing it, I know I am. Here’s why.
More people have health insurance in Massachusetts than anywhere else in the country: 98.1 percent of our total population. Of our children, 99.8 percent are covered. While the number of people without health insurance in America grew from 2006 to 2010, more than 400,000 people in Massachusetts gained coverage.
This isn’t because government took over. Massachusetts healthcare reform, like the national Affordable Care Act, takes a hybrid approach to increasing coverage, encouraging people to get health insurance in the private market and subsidizing the cost for those who can’t afford it. Here again, it is working. More businesses offer their employees private healthcare today than did before the law was signed. The 77 percent of Massachusetts businesses that offer their employees private insurance is well above the national norm.
Most important, people in Massachusetts are healthier and getting better care. Over 90 percent of our residents have a primary care physician, and 4 out of 5 have seen their doctor in the last 12 months. Preventive care is up: More people are receiving cancer screenings, more women are getting prenatal care, and visits to emergency rooms have decreased. After we expanded coverage for smoking cessation programs, 150,000 people stopped smoking, and a recent study by the National Bureau of Economic Research documents improvements in physical health, mental health, functional limitations and joint disorders as a result of the law. While everyone is better off, women, minorities and low-income residents saw the biggest health improvements. I have met individuals whose lives have been saved by the access to good care our model made possible.
Massachusetts healthcare reform has proved to be cost-effective as well. An independent analysis by the Massachusetts Taxpayer Foundation estimated the law was responsible for about a 1 percent increase in net state spending. Spending on our uncompensated care pool – those who receive medically necessary care they can’t afford – is down significantly since the law passed. Today, the Massachusetts Health Care Connector – our version of the “exchange” created by the Affordable Care Act – announced that it will provide private health insurance to more people than ever next year, at an average per-person cost 5 percent lower than last year, the second year in a row of premium decline. Growth in premiums throughout the market has slowed from an average of about 16 percent two years ago to less than 2 percent today.
For these reasons and more, healthcare reform remains popular in Massachusetts. More than 60 percent of our residents support it. They know it is working for them.
I think the real issue is that ‘We the people’ will get the ‘affordable’ part and the politicians will get the ‘high-quality’ part.
If it was *really* high quality, why won’t the politicians be using it also and why is there an ‘exception’ list with many companies, unions, and others ‘opting out’?
I hope the government of the USA studies the case of UK’s “Railtrack” privatization and subsequent market failure/ safety fiasco, before going down this road themselves with Amtrak…