Friday, March 25, 2011

Attributes for 2012?

Any Republican contemplating running for president in 2012 has two formidable obstacles: November 2012 and what happens starting January 2013.

For the first obstacle: Republicans should not underestimate Barack Obama. He’s a vicious political fighter who seems to get a thrill from the campaign for power. His political team proved itself a master of media narratives in 2008, and many in the media will be willing to give Obama an assist against any Republican opponent. The president has already somewhat turned around his poll numbers from the nadir of November 2010; Republicans should keep an eye on that trend continuing. Moreover, recent polling shows him with a significant lead over a generic Republican in 2012.

Obama's approval rating may still be under 50%, but Republicans would be premature in expecting a cakewalk in 2012. One of the big lessons of 2010 is that candidate quality does matter. There were numerous statewide races in 2010 that, by many metrics, Republicans should have won---but ended up going Democratic. If a Republican candidate cannot close the deal with voters, Barack Obama could end up being reelected, even with a sub-par economy and middling approval ratings.

If a Republican does win the presidency in 2012, he or she will have a host of problems to face. A Republican president in 2013 would likely inherit the longest-running economic stagnation since the Great Depression. The administrations of George W. Bush and Barack Obama have witnessed a massive expansion of the federal government; if a Republican president is serious about paring this government back, a lot of work lies ahead.

In the past, I've suggested some avenues for a rethinking of Republican policies, and what follows are some thoughts (in no particular order) about qualities a Republican candidate should possess, for both a successful campaign and a successful administration.

Articulate a vision. John McCain struggled to articulate a comprehensive vision for his campaign or a McCain presidency, a weakness Obama eagerly exploited. The "vision thing" is often crucial for successful presidential campaigns. This vision may not be enough (see Goldwater, Barry), but it is important, especially if a president wishes to build a longer-reaching legacy. There's a fine line between a vision and a mere slogan, and it was not always clear on what side of the line George W. Bush's notion of "compassionate conservatism" stood. Still, Bush was able to conjure some kind of purpose to his campaign. A successful Republican candidate in 2012 will have to do the same thing.

Take on the map. A candidate who has to reach for the "Bush" states is probably a candidate the party would be better passing by. Yes, a candidate could win with those states in the end, but those states should more be viewed as a last-ditch firewall than a goal. And it's worth noting how fragile the Bush coalition of the 2000s was: the loss of one closely contested state (Florida in 2000, Ohio in 2004) would have cost Bush the White House. One of Obama's greatest electoral strengths in 2008 was his ability to open up the map for Democrats; this led to an Electoral College victory greater than any Republican has enjoyed since George HW Bush in 1988. The actual contours of the new GOP coalition might vary depending on the eventual candidate. But there's no reason to write off states such as Pennsylvania, Michigan, Oregon, Minnesota, or Wisconsin. Some of these states recently elected a Republican senator in 2010. And the GOP also needs to keep its eye on states Bush barely won (or didn't even win in both elections): New Hampshire, New Mexico, Iowa, Colorado, and Nevada, to name a few.

Lower the temperature of social issues. This is not the same thing as surrendering on social issues. Social conservatives are a key part of the Republican coalition; many socially conservative positions are among the more popular parts of the GOP platform. Moreover, there is, I think, an often undervalued theoretical affinity between social conservatism and fiscal conservatism. But one can argue for socially conservative positions without sneering at those who disagree with them. Dualisms like “Heartland Real Americans” vs. “Coastal Elitists/Fake Americans” (or suggestions that Republicans don't deserve the freedoms of the Constitution) are probably better left behind. A game-changing Republican presidential candidate will need to be able to show that he or she respects the views of a variety of other Americans, even if he or she doesn't always agree with them.

Remember managerial competence. Unfortunately, the challenges that face this nation cannot be dissolved with a few easy votes or executive orders. Repealing Obamacare will not be enough to stabilize the nation's health-care system; cutting earmarks will not restore the nation's fiscal health. In order to be successful, a Republican president has to have the ability to recognize and promote competent bureaucrats. The White House must be part of the "reality-based" community if it is to succeed.

Be willing to experiment. Government policy is often less about blind obedience to absolutes and more about being able to muddle through. Contrary to the wishes of some, the president---even at the peak of power---does not have a totally free hand to write policy. Various Congressional factions, public interests, and bureaucratic inertia all shape policy. Moreover, many policies can lead to effects completely unanticipated by their designers. All these facts will require an administration to be fluid, resourceful, and flexible. It's worth noting, though, that flexibility in means need not require an empty faith in political ends. One can still have deep principles and be flexible in applying them.

Fight the big battles, even if they cause you to lose the small ones. Barack Obama did not win every news cycle as a candidate in either the primary election or the general. Yet some of these daily losses led to his overall victory. Consider, for example, the flap about his willingness to meet with the leaders of countries like North Korea and Iran without preconditions during the primary battle of 2007/2008. The Clinton people hit Obama hard on this, and he endured some rocky coverage in the media, but this admission also illustrated Obama’s break with some of the rhetorical tendencies of the Democratic past, at least during that part of the campaign. This break in turn helped solidify his image as the "change" candidate in a cycle in which "change" was very hot. A candidate, Republican or Democrat, must be willing to take the heat of taking a strong stand at times. This willingness to face criticism can strengthen the image of a candidate’s inner fortitude and also can allow the candidate to push the parameters of public debate.

The political pendulum has swung fairly wildly from one party to the next in recent years. It remains to be seen how much the Republicans will be able to make good on their significant gains in 2010 for the presidential race in 2012. There is the real possibility of a major victory in November of next year, but there is also the possibility of a major disappointment---in that month and in the months after it. The GOP currently has the benefit of a wide-open field, and Republicans should welcome this opportunity for debate, trial, and exploration.

Monday, March 7, 2011

A Social Security Crisis?

In bewailing the "entitlements crisis," many have made much of the fact that the percentage of GDP expended on Social Security, Medicare, and Medicaid is growing at a fairly ferocious pace. In 2007, those three programs totaled 8.4% of the GDP. By 2050, the CBO estimates they could be 18.6% of GDP. By 2080, they could be nearing 25% of GDP. The current federal budget as a whole is 25% of GDP, and that recently spiked (it was under or around 20% for most of the past 15 years). So, if current trends do not change (a colossal if), federal spending on just three programs would be as big as a proportion of the economy as the whole federal budget is now. Those numbers would probably not be sustainable.

However, grouping those three programs together hides a significant fact: the driving force behind the inflation of those "entitlement" programs is the increase in medical spending. Social Security spending is far more sustainable than the current Medicare and Medicaid regimes.

Currently, Social Security spending is about 4.8% of the GDP. This spending is estimated to rise to about 6.1% of the GDP by 2035 and will linger around 6% for the next fifty years after that. This is about a 27% increase in Social Security spending as a percentage of GDP. That's not a small number, but it is a manageable one, especially when one considers that that period will witness the retirement of the Baby Boomers. If it gets its economic house in order, the US could conceivably afford to spend 6% of its GDP on Social Security for a very long time.

Moreover, due to reforms during the Reagan era, Social Security is more sustainable now than it used to be. According to the Congressional Research Service, the worker earning an average income who retired at 65 in 1980 drew out more in benefits than he had put in through taxes and accumulated interest in less than three years. An average 65-year-old retiring in 2002 would have to collect for almost 17 years for that to happen; the retirees of 2020 would have to collect for nearly 21 years to reach that point. (And, yes, I realize that those figures could also be used to argue for a kind of privatization, but let's focus on fiscal sustainability for the moment. I also realize that the federal government has borrowed against the Social Security "surplus" of past decades, and that a time will come, if it has not already come, when the federal government must pay back the billions and billions and billions it owes to the Social Security system.)

If there is an eventual crisis for Social Security (the status of SS crises depend upon assumptions about rates of economic growth, employment, and other factors, leading to various projections), the solutions to make Social Security more sustainable seem relatively clear cut. Raising the cap on incomes taxed for Social Security (the current max is around $106,000) and slightly changing the retirement age---to suggest two obvious choices---could extend Social Security's sustainability for a long time.

It may be Pollyannaish to suggest that a few minor changes could indefinitely protect Social Security, but it is realistic to say that those changes are minor compared to the ones needed for Medicare and Medicaid. That's where the real growth in spending is. Health-care spending has long exceeded the rate of inflation, and, with an aging population, that spending is only increasing at a faster rate.

For Medicare and Medicaid, the options are a lot harder. Because Social Security works on a fixed-benefit model, the costs are easier to project and, if needed, easier to curb. Federal health expenditures have long operated upon a blank check model, and there seems to be considerable waste in federal health-care spending. But finding strategies to identify that waste and cut it is a much more challenging proposition. I think effective savings can be found, but achieving them will acquire bureaucratic know-how and determination.

Some Republicans may find themselves in a hard place in terms of dealing with Medicare/Medicaid spending. Barack Obama's proposals to cut the rate of growth of Medicare spending were met with cries of "death panels." Over the past few years, many Republicans allied themselves with protecting Medicare funding. Yet now Republicans want to talk about seriously cutting the deficit, and photo-op cuts to the "discretionary" side would offer marginally cosmetic changes to the budget at best. (None of this is to suggest that I find the supposed "savings" of Obamacare particularly persuasive.)

There may be something to be said for various Social Security reforms. But Social Security does not seem to be ground zero for the government's fiscal crisis; the fiscal necessities for reform there are far less pressing than those for other parts of the federal budget.

Two points in closing:

The first is electoral. Social Security is one of the most popular government programs. According to a recent Wall Street Journal poll, 77% of Americans find cutting Social Security to be unacceptable. Kicking grandma off of Social Security while also advocating for ever-expanding tax cuts for the wealthiest Americans (who have been the real economic winners of the past decade) is the electoral equivalent of running into machine-gun fire.

The second is more principled. From a small-government perspective (or at least from my perspective), Social Security is far from the most invasive program or the force that most undermines the sustainability of our nation as a free-market economy. If conservatives do want to advance the cause of a smaller government, there are, I think, much bigger and more pressing fish to fry. Reckless financialization, the hollowing out of the middle class, government distortions of the market through cronyish favoritism, the decay of the family---all these things are much more dangerous to the future of individual liberty vis-a-vis the government than Social Security.

(Crossposted at Frum Forum)