Opinion

The Great Debate

Democracy for sale – or billionaires’ folly?

It was said of Andrew Carnegie that he gave money away as quietly as a waiter falling down a steel staircase carrying a tray of tall-stemmed glasses. Not so the sotto voce superrich donors who are spending so much to keep Mitt Romney from declaring himself the winner of the Republican nomination.

With their chosen candidates out front, swinging at each other as they glad-hand from state to state, the multimillionaires and billionaires a mere million is nowhere near enough to join this exclusive club – keep themselves out of sight, sitting around in a smoke-filled back room playing high-stakes hold ’em for the soul of the GOP. Not literally, of course, though many of them made their fortunes gambling everything on their hunches.

It is the common view, heard nightly around dinner tables of liberal-leaning citizens, that democracy is being bought and sold in front of our noses and that the Founding Fathers – most of whom, by the way, were comfortably well off and happily paid their way into politics – would be spinning in their mausoleums if they knew how the monarchy they defied has been replaced in the brave republic they founded by an aristocracy of the super-wealthy they never could have imagined.

Yet recent evidence suggests that Citizens United and related relaxations on campaign spending have done little more than allow the ultrarich to waste their money. Consider A. Jerrold Perenchio, the former CEO of the Univision TV network, who sank $2.1 million into the short-lived bid by Jon Huntsman Jr. to storm the White House. Perenchio’s losses match those of Jon Huntsman Sr., father of Jr., who gave a total of $2.2 million in 10 easy payments to bolster his son’s forlorn ambitions. Money can’t buy you love, perhaps, but in the Huntsman family it has surely bought eternal devotion.

The same sense of loss, both political and financial, could be said of Harold Simmons, the Texan chemicals and metals magnate, who poured $1.1 million into Rick Perry and his five-point – or was that four-point – plan for shrinking the federal government. Oops. But Simmons is not done. He made an each-way bet, backing not just the forgetful Perry but Rick Santorum and Newt Gingrich, too.

Ryan’s budget frames 2012 election around Medicare

This week, House Budget Committee Chairman Paul Ryan released what amounts to the most substantive roadmap for fiscal policy that any Republican is likely to offer in 2012. Many political pundits and policy analysts, especially those on the left, are eager to dig into the details to alert the public about the potential (negative) impacts of a budget that slices off $5 trillion in total federal spending compared with the plan offered by President Obama in February.

Providing 100 pages of budget and policy detail in an election year is considered political suicide by many. Democrats fully intend to use the plan to campaign against Republicans in the fall, hoping to gain an advantage not only in select House or Senate races but also in the presidential contest.

Ryan, though, sees this as the only responsible path forward: So what if his plan won’t get enacted into law this year. Should Ryan’s House colleagues, or the candidates for president, avoid taking a detailed position on our country’s fiscal future? As Ryan explains: “If we simply operate based on political fear, nothing is ever going to get done.”

Trayvon Martin, Obama, and the persistence of bias

By now the facts are well-known: Trayvon Martin was a 17-year-old young black man who, on Feb. 26, 2012, was walking home from a 7-Eleven in Sanford, Florida, with a bag of Skittles and a bottle of iced tea. George Zimmerman, a neighborhood watchman of white and Latino heritage, though advised by police not to pursue Trayvon himself, got out of his car carrying his 9-millimeter handgun. Allegedly after some confrontation, Zimmerman shot Trayvon dead.

Should we think about this horrendous incident as a random encounter, or does it teach us something about the politics of race and the persistence of racial bias in America today?

When Zimmerman first called the police about Trayvon Martin, he said: “There’s a real suspicious guy. This guy looks like he’s up to no good, on drugs or something. It’s raining, and he’s just walking around looking about.” Writer E.J. Graff termed this “Walking While Black.” In other words, Trayvon was presumed to be guilty of something nefarious simply because of the color of his skin.

Obama’s first foreign policy blunder

This is an excerpt from The Emergency State: America’s Pursuit of Absolute Security at All Costs, published recently by Penguin Press.

The defining mistake of Obama’s first-term foreign policy was his decision to escalate American military operations in Afghanistan. There were 35,000 American troops in Afghanistan when Obama was inaugurated. By the summer of 2011 there were roughly 100,000. The main national security rationale for their presence was to prevent the Taliban from regaining sufficient strength to invite Al Qaeda back to the Afghan training camps and sanctuaries they had operated from before 9/11. But since early 2002, seven years before Obama became president, Al Qaeda and Osama bin Laden himself — until he was tracked down and killed by U.S. commandos in May 2011 — had been based in Pakistan, under the protection of a Pakistani army that continues to receive billions of dollars in American military aid.

Long before his presidential bid, Obama had called for an increased American military effort in Afghanistan. He repeated that position frequently during the 2008 campaign. Obama’s strong opposition to the Iraq War led many supporters to imagine that he rejected the idea of defending America against terrorism by waging conventional military conflicts in distant Islamic lands. Some of the more philosophical passages in Obama’s autobiographical books, writings, and speeches elaborating on his opposition to the Iraq War fed that misimpression.

Will conservatives embrace a consumption tax?

Headlines over the past couple of weeks have been dominated by reactions to President Obama’s new proposal for corporate tax reform. The optimism stems from the realization that practically all the major plans by Democrats and Republicans would move the U.S. tax code in the direction of a territorial-based system (in which a corporation is taxed on domestic, not foreign, income). Moreover, these plans all accept the premise that to make the U.S. code more competitive globally, the tax base must be broadened, and that means cutting deductions and preferences in exchange for lowering the top-line rate (i.e., down to between 25 percent and 28 percent from today’s 35 percent rate).

Even with this apparent consensus, however, it seems inevitable that actual reform will not occur until 2013. Perhaps more important, the way these issues play out in the coming months could very well shift the reform discussion from how to tax income to how to tax consumption for both individuals and corporations. Here are three developments to watch.

The politics require more “tax winners.” To get the corporate tax rate down to the new target range, Congress might have to cut both accelerated depreciation and the expensing of research and development. The difficult truth is that any revenue-neutral tax reform proposal would likely create as many (and maybe even more) losers than winners. In essence, a rate reduction to 28 percent might help a few industries, but slashing the deductions for capital spending or investment could end up raising the effective tax rate for even more companies.  The net effect could be a slightly smaller economy relative to its full potential, as new investment and the growth of the available capital stock could be restrained. In an effort to broaden the coalition and create more winners, Congress will probably have to consider cutting the top rate even further, then redefining what’s actually counted as corporate income.

from Lawrence Summers:

Time nears for an American tax overhaul

However the U.S. presidential election turns out, the trifecta of the Bush tax cut expiration, the debt limit ceiling on the horizon once again, and the Congressionally mandated sequesters – cuts in domestic spending – will force the president and Congress to wrestle with fiscal issues either in a lame duck session after the election or in early 2013. The decisions they make will have profound impacts on America’s fiscal future.

For many observers, the central question on the table is about entitlement programs: What will be done with them? Growth in entitlement spending associated with our aging population and its rising health care costs is the major factor in overall federal spending growth. But the capacity of near-term policy changes to have large impacts on that spending is less than many would suppose. The rising ratio of retirees to workers means that Social Security benefits at current levels will not be sustainable without some kind of tax increase. Sooner or later, revenue will have to rise or else outlays will have to be curtailed. While it is surely better to act sooner, the reality is that, out of necessity, action on entitlements is inevitable.

While almost everyone agrees on the desirability of containing federal health care spending, this is likely to be more difficult than we'd like to believe. Certainly beneficiaries can bear more of the cost of their government insurance than others, and there are steps like malpractice reform and the further encouragement of preventive medicine that should be taken. Yet without intrusions into the private health care system that are unlikely to be politically acceptable, there are severe limits on what can be done. Otherwise the result will be unacceptable cuts in the availability of care for the clients of federal programs. Given all the uncertainties associated with new technologies, changing lifestyles, and ongoing changes in the private system, health care reform will and should be a continuing project.

How Ron Paul may have won — and lost — Maine

Washington County, Maine, is the easternmost point in the continental United States. This region of rocky shores and pinetree forests is populated by proudly independent — and defiant — citizens.

The Republicans in Washington County have supported such radical and underdog candidates as Ross Perot and Patrick Buchanan in the past.

Too bad they didn’t get to participate in the Maine caucuses last weekend.

The fast track to a balanced budget

The state of the union, fiscally speaking, is perilous. Despite record deficits and dire warnings from Europe as to the consequences of sustained fiscal imbalance, our leaders have been unable to find common ground. The Simpson-Bowles Commission in 2010, the Gang of Six last summer and the misnamed Super Committee of this past fall were all bipartisan efforts to cut through the Gordian knot of budgetary gridlock. And all of them failed. Miserably.

Yet despite these failures, Congress now has the opportunity to move us onto a path toward prompt national consensus on fiscal reform. Congressional leaders are this week debating legislation to extend the payroll tax cut. If they are smart, they will include in that bill a small, but important, provision that grants the winner of the 2012 presidential election something called fast-track authority. This authority would allow the president — whoever he is — to submit fiscal reform legislation for an up-or-down vote in both the House and Senate on Jan. 21, 2013, the day after Inauguration Day. Indeed, fast-track authority would be a worthy quid pro quo for members of Congress reluctant to sign off on extending the payroll tax cut without some assurance of future progress on deficit reduction.

What’s promising about this proposal is not just what fast-track authority might deliver in 2013, but what its very existence could do to the presidential race. With fast-track authority granted, President Obama and his Republican challenger could each be expected to put forward during the presidential race a coherent and credible plan to move toward a balanced budget.

What is American exceptionalism?

Newt Gingrich and Mitt Romney, although they spend a lot of time these days at one another’s throat, appeared on the night of the South Carolina primary to agree on at least one thing: Each believes in “American exceptionalism,” and, they say, Barack Obama does not. Gingrich has already devoted an entire book to the topic, and in an interview with my colleague David Rohde, a top foreign policy adviser to Romney made it clear that American exceptionalism is a theme that Romney intends to stress throughout the campaign.

It’s easy to see that these candidates view their own ideas about American exceptionalism as a strong opportunity to contrast themselves with the incumbent. It’s harder, though, after sifting through the various ways the term is used, to establish what it actually means. Far from being a simple concept that one can easily endorse or reject, American exceptionalism is a loose skein that uneasily unites many different strands of thought, faith and ideology.

Like so much in the discussion of American history, the phrase is often traced to Alexis de Tocqueville’s Democracy in America. But that doesn’t explain much, because when de Tocqueville wrote that “the position of the Americans is therefore quite exceptional,” he was referring primarily to the development of a practical — as opposed to literary or artistic — worldview, stemming from the American landscape and the lack of an aristocracy. More to the point, Gingrich seeks to ground the term in the American Revolution: “The ideals expressed in the Declaration of Independence, and the unique American identity that arose from an American civilization that honored them, form what we call today ‘American Exceptionalism’,” he wrote in A Nation Like No Other, published last year. But that explanation, too, is inadequate; after all, the authors of the Declaration of Independence went out of their way to universalize the values underpinning the American experience (“when, in the course of human events…”), not to cleave that experience off from the rest of the world.

Mr. 1 Percent versus Mr. 1 Percent

Listening to a newly populist President Obama or to Mitt Romney, who touts his CEO past at every turn, it is tempting to imagine a 2012 election that unfolds as textbooks imagine, with Republicans speaking for business and Democrats standing up for the little guy. Don’t be fooled. A more accurate reading of the contest features two elite candidates who represent different wings of the 1 Percent – a group increasingly divided over economics and the role of government.

Look closely at Obama’s rhetoric and you see that he’s not channeling Occupy Wall Street as much as a pragmatic tax-and-invest liberalism. Obama speaks for highly educated, affluent Americans who want government to do more, not less, on a number of fronts – like education, infrastructure, scientific research and clean energy. These folks don’t envy Europe; they envy China, which is deploying a muscular statism to compete economically and dominate the future.

Yes, Obama has made some strong statements lately about inequality and raising taxes on rich people. But most of this goes over just fine in Malibu or Manhattan. Many of the rich are ready to pay higher taxes – with polls showing, for instance, that a majority of millionaires support the Buffett Tax. And many agree that inequality has gone too far, seeing the growing wealth divide as a threat to America’s economic dynamism and social cohesion. The things that liberal rich people don’t like – unions, protectionism, and regulation, etc. – Obama doesn’t like much either.

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