Saturday, July 30, 2011

Compromise on the Horizon?

Boehner and McConnell are talking optimistically about a compromise. Ed Morrissey suggests one possible shakeout:
My prediction is that we will see a deal structured in two installments of the debt-ceiling hike using the McConnell mechanism, which combined will hit the amount Reid wanted, and with the cuts and assumptions built into the Boehner proposal (with possibly a few changes, which should be checked), with a commitment for a balanced-budget amendment vote in the Senate included.

Reid's Proposal---A Move Against Bush Tax Cuts?

Sen. Jeff Session (R-AL) lays out the case (via an interesting story on Reid's proposal in The Daily Caller):
Second, Reid’s amendment would “deem” a budget resolution for fiscal years 2012 and 2013 (through the next election). Contrary to the requirements of law, the Senate has refused to adopt a budget for 821 days. Reid’s amendment would give the Democrat majority in the Senate an excuse to not pass a budget for another two years, or 626 days. Without any hearings or debate, section 102 of Senator Reid’s amendment would deem budget allocations for all Senate committees. For most committees, the budget allocation would be set at the CBO baseline. This means none of the authorizing committees would be encouraged to look at the automatic spending increases in their areas and root out inefficiencies and ensure value for the taxpayer dollar. On the revenue side, the deemed budget resolutions would assume the tax increases associated with the expiration of the tax cuts in current law. That means that legislation to extend any of the tax cuts would be harder to enact because it would face a point of order under section 311 of the Budget Act for reducing revenues.

Friday, July 29, 2011

What Kind of Compromise?

The Boehner bill has failed in the Senate. The Reid bill will fail in the House. Right now, Republicans and Democrats are negotiating to forge some kind of consensus for a bill that could pass the Senate and the House.

These, it seems to me, are the big points of contention:

  • How big a raise in the debt ceiling? How many steps? Boehner's committed to a two-step process, in which an immediate increase in the debt ceiling would be followed by another vote in 6 or so months that would require the passage of a Balanced Budget Amendment. Reid's bill would offer enough of an increase to carry the debt past 2012.

  • Role of a Balanced Budget Amendment? Boehner requires Congressional passage of one before a "second tranche"; Reid doesn't.

  • Where are the cuts? How frontloaded are they? This is perhaps the most flexible and opaque part of discussion (as projected saving/spending often is).

  • Power of appointed committee? Both proposals would have expedited review, but Boehner's proposal demands a certain threshold of savings before the passage of the "second tranche."
The exact placement of cuts is perhaps where Republicans can demand the most (because they might have to give elsewhere), especially in their insistence that they be more front-loaded and substantive.

I'm doubtful that Republican leadership (especially Boehner and McConnell) really want to see the debt-ceiling battle redux, so both Republicans and Democrats might have something to gain by avoiding a "second tranche" two-step. Both parties could split the difference perhaps by not allowing a second increase in the debt ceiling to take place without a vote on the recommendations of the savings committee; once the vote took place (yea or nay), the ceiling could be raised. Yes, that compromise would be mostly cosmetic.

A solid requirement that a BBA be passed before a second increase in the debt ceiling is likely a non-starter for a whole host of reasons. But demanding a vote on the BBA before a second debt-ceiling hike might be an appeasing gesture.

Negotiators might also find it helpful to demand concessions on issues beyond the budget in order to provide cover to various Republicans. Senate pledges to change Obamacare or light bulb bans or other conservative bette noires might help keep the support of House Republicans. Procedurally, some of those moves could be hard to execute, but they might provide a helpful avenue.

If Republicans want to reinforce the chances that an ultimate debt-ceiling reconciliation will pass, Senate Republicans might be wise to put forward a measure that gets more than the 7 or so Republican votes that would be needed to override a filibuster. A bill that comes out of the Senate as a RINO bill will have a harder time getting through the House (assuming any Senate-approved bill can avoid that stamp). Some Democratic defections in the Senate would likely make it easier for any compromise to be passed; it would increase the perception that the bill was "tough."

Update: The Hill has some specifics on one line of compromise: a two-step borrowing from the McConnell plan.

On to the Senate

By a narrow margin, the Boehner bill has passed the House. Now, it's on to the Senate. The Hill gives a helpful summary of the possible schedule:

According to guidance from Reid's office, the majority leader is looking at the following possible schedule.

The House will vote on House Speaker John Boehner's debt ceiling plan on Friday evening, and it is expected to approve it. [It did approve it---FB]

The Senate is then expected to approve a motion to table the measure, as early as Friday evening. That motion only requires a majority vote for approval.

The tabling motion will allow the Senate to use Boehner's measure as a vehicle for a possible Senate compromise bill that would be worked out by Democrats and Republicans in the upper chamber.

If the two sides can reach such an agreement, Reid will file a cloture motion on the amendment to the Boehner bill on Friday night.

Reid's motion would set up a vote as early as 1 a.m. Sunday to end debate on that amended measure. Sixty votes would be required to end the debate.

If that vote succeeds, it would set up a possible final vote on passage of the new measure at 7:30 a.m. Monday, according to the guidance.

This would give the House two full days to consider that measure before the deadline at the end of the day on Aug. 2 is reached.

Technically, according to a Democrat aide, a compromise amendment could be filed Saturday and still allow a final vote on Aug. 2 but this would cut things very close.

The big question here is what compromise could pass the Senate that could also pass the House?

BBA + Boehner = ?

A few thoughts on the implications of Boehner adding a "Balanced Budget Amendment" to his debt-ceiling bill (which would now require that Congress pass a BBA before a second debt-ceiling increase could take place early in 2012):

Adding the BBA makes the bill very likely to pass the House. This addition appeases Tea Partiers, who had denied Boehner the majority he needs to pass it.

The Boehner bill as it stood on Thursday night might not have been able to pass the Senate; the Boehner bill of today definitely can't. The very thing that makes the bill likely to pass the House---its Tea Party pedigree---will kill it in the Senate.

If Congress is really required to pass a BBA before a second hike in the debt ceiling, prepare for the same gridlock six or so months from now.

In order for the debt ceiling to be increased, Republicans and Democrats will have to compromise. That means especially that Tea Partiers will have to compromise. In a democratic republic, you don't control less than a quarter of the votes and get to dictate policy to everyone. And threatening to bring the house down unless a supermajority of Congress agrees to the passage of a methodologically unconservative Balanced Budget Amendment is not compromising.

Beware the "second tranche." The current battle over the debt ceiling has exacted a considerable price on Congressional Republicans and has risked an economic-fiscal-financial meltdown. Going for another round about this issue, when the players will be the same, seems like it might not be the most effective. I know the existence of a "second tranche" is one of the biggest differences between the Boehner and Reid plans (the latter would raise the debt ceiling until after the next election), but I think Sen. Bob Corker (R-TN) has some wisdom here in doubting the value of a second hike so soon after the first. The debt-ceiling debate has sucked up a lot of air that conservatives could have used to advance other small-government policies.

Perhaps the biggest advantage of adding the BBA to the Boehner bill is that it gives Republicans something more to trade away. The inclusion of the BBA will give Republicans some more negotiating room if there is to be a Boehner-Reid compromise package.

The following is one possible (perhaps, at this hour, the most probable) course of events:
  1. House passes Boehner + BBA.
  2. Senate passes Reid-like bill.
  3. Some compromise measure comes out of conference. (This will very likely not have a strong BBA requirement.)
The Senate would likely pass any compromise, and Republicans will have a stronger hand in negotiations over the compromise if the caucus stays united; anything that increases the power of Nancy Pelosi in negotiations will ultimately undermine the position of conservatives, and the more votes Boehner needs from Democrats, the stronger Pelosi will be.

If the economy crashes because of a refusal to raise the debt ceiling, Republicans will be blamed. The failed vote on the Ryan plan may have damaged the ability of Republicans to attack Obamacare for its cuts to Medicare; Republicans should be wary of closing off another line of attack in 2012. Right now, Obama has increasing ownership of the economy, and Republicans have been able to creep away from the disastrous tail end of George W. Bush's economic policies. If the economy tanks and the debt ceiling is not raised, Democrats (and their allies in the media) will be pointing fingers at the "absolutists" in the Tea Party and GOP caucus who would not compromise. Those attacks will very likely work or at least muddy the waters enough to limit the effectiveness of Republican economic critique in 2012. The economy already may be slowing down; refusing to raise the debt ceiling will be a way to take partial ownership of a double-dip recession.

No matter how "virtuous" or "pure" the Tea Partiers are, an Obama victory in 2012 would very likely close the door on the kind of reforms that many conservatives would prefer. Numbers in Congress are against Tea Party-style reforms, and, in a democratic republic, numbers matter a lot. Rather than fuming or threatening or beating one's chest in self-congratulatory self-adulation, far better to engage in the hard work of rational persuasion, sober compromise, and hopeful deliberation. Will any budget "deal" be pretty bad from a conservative perspective? Probably. But we can work to make such a deal as least bad as possible. That's what conservatism---and rational governance---is about.

(Crossposted at FrumForum)

Wednesday, July 27, 2011

Best Option?

Many in the conservative establishment are starting to rally behind the Boehner plan. Interestingly, lines of defense of this plan often suggest that opposition to this plan helps Obama.

The WSJ stresses that the debt ceiling has to be raised---and that Boehner's plan is the most fiscally conservative viable path to doing so:

But what none of these critics have is an alternative strategy for achieving anything nearly as fiscally or politically beneficial as Mr. Boehner's plan. The idea seems to be that if the House GOP refuses to raise the debt ceiling, a default crisis or gradual government shutdown will ensue, and the public will turn en masse against . . . Barack Obama. The Republican House that failed to raise the debt ceiling would somehow escape all blame. Then Democrats would have no choice but to pass a balanced-budget amendment and reform entitlements, and the tea-party Hobbits could return to Middle Earth having defeated Mordor.

This is the kind of crack political thinking that turned Sharron Angle and Christine O'Donnell into GOP Senate nominees. The reality is that the debt limit will be raised one way or another, and the only issue now is with how much fiscal reform and what political fallout.

Meanwhile, Bill Kristol takes aim at "purist" opponents of the plan:

This isn’t some bad bipartisan establishment deal of the sort conservatives have sometimes opposed in the past. Then conservatives were opposing Democrats as well as Republicans, and could plausibly explain why doing so was in conservative interests. Now, Heritage Action and the Club for Growth are siding with and strengthening Barack Obama and Nancy Pelosi and Harry Reid. They’re working to produce a policy and political defeat for John Boehner and Eric Cantor and Paul Ryan and the Republican majority in the House. This isn’t principled conservatism. This is self-indulgence masquerading as principle, sectarianism masquerading as conservatism.

Tuesday, July 26, 2011

Of Downgrades and Ratings Agencies

The suggestion that the US needs to cut $4 trillion in projected debt over the next ten years in order to avoid a downgrade in its debt rating, posed here in an S&P report, has gained significant traction among many on the right. Erick Erickson, when he's not denying "absolution" to the falsely faithful in the GOP, has emphasized this cut of $4 trillion as crucial to avoid a downgrade.

However, digging into the S&P report reveals some details that might be more problematic for many seeming "deficit hawks." Though this report does suggest that $4 trillion in cuts/increased revenue over the next ten years would be enough to keep an AAA rating, it also says that its baseline for savings assumes the expiration of the Bush tax cuts in 2012. Will many of these "deficit hawks" abandon those tax cuts in order to appease S&P and keep an AAA rating?

This report also makes an interesting---and perhaps unwarranted---logical jump (emphasis added):
Congress and the Administration might also settle for a smaller increase in the debt ceiling, or they might agree on a plan that, while avoiding a near-term default, might not, in our view, materially improve our base case expectation for the future path of the net general government debt-to-GDP ratio. U.S. political debate is currently more focused on the need for medium-term fiscal consolidation than it has been for a decade. Based on this, we believe that an inability to reach an agreement now could indicate that an agreement will not be reached for several more years. We view an inability to timely agree and credibly implement medium-term fiscal consolidation policy as inconsistent with a ‘AAA’ sovereign rating, given the expected government debt trajectory noted above.
Really? Right now, we have had a House filled with new members who have a radical antipathy to the sitting president, his party (which controls the Senate), and (Democratic) deficit spending. I would think now might be one of the times when a long-term agreement was least likely. Things could be radically different 2 years from now. If Obama wins reelection, the Republican majority in the House would likely be quite diminished, if not destroyed. Meanwhile, the Senate, a more consent-run institution, would likely have a narrow Democratic or Republican majority. Wouldn't that situation be more likely to have a bipartisan agreement? Likewise, a Republican victory in November 2012 could very likely lead to Republicans controlling both houses of Congress and the presidency. Surely that scenario would also be likely to pass a long-term debt-decreasing strategy---or at least more likely than the present. S&P might be guilty here of setting a false deadline. This is not the first time S&P has made mistakes in its analysis.

Moreover, it's worth noting that S&P does seem not overly concerned about the current amount of US debt as a percentage of GDP. After all, many countries (such as Germany and France) have debts that are greater fractions of their economies than the USA does by many estimates (S&P currently estimates that the US debt-to-GDP ratio is close to 75%). Moreover, US bonds constitute nearly 60% of AAA-traded government bonds. And interest rates on long-term government bonds are very low, indicating that investors feel quite safe buying US treasuries. Much of the market seems to believe that US debt is a safe investment.

What S&P is concerned about---and we should be concerned with---is the trajectory of debt as a percentage of GDP, which has shot upwards in recent years. One of the biggest drivers of our debt problems in the short term is the poor economy (Medicare is one of the biggest in the long term). And S&P warns that refusing to raise the debt ceiling could lead to a worsening of the economy and further degrade the US debt outlook. This S&P analysis suggests that raising the debt ceiling without $4 trillion in savings and the repeal of the Bush tax cuts might lead to a downgrade (nowhere does it say that it will downgrade US debt if cuts are less than $4 trillion), but refusing to raise the debt ceiling would very likely lead to a downgrade.

The miserable employment picture and resulting diminished tax revenues probably accounts for at least half (and perhaps much more) of the current deficit---over $700 billion dollars a year. Getting back to a fully functioning economy would shave trillions off the debt over the next decade. Anything that gets in the way of a real economic recovery would likely worsen, not resolve, our debt crisis.

(Crossposted at FrumForum)

Monday, July 25, 2011

Moving the Goalposts

Jill Lawrence at The Daily Beast takes a hatchet to Mitt Romney's jobs record as governor. Along with quoting an ex-Dukakis staffer, Lawrence makes the following point:
Like Obama, the former Massachusetts governor took office during a severe recession, struggled to boost job growth, and spent perhaps too much time trying to solve the riddle of health care. Now his economic record is under scrutiny in an unforgiving campaign environment, and it’s as flawed as Obama’s.
Flawed as Obama's? Early in Romney's term, in June 2003, the state unemployment rate had climbed to 6%. By the end of his term in early 2007, it had sunk to 4.6%. For most of Romney's term, the Massachusetts unemployment rate was below the national average.

Compare that with Obama's record: in February 2009, the national unemployment rate was 8.2%. Unemployment jumped to over 10% later that year and has lingered above 9% for most of Obama's term.

It's true that both Romney and Obama had economic inheritances and dealt with economic contexts that they could not and cannot completely control; it would take more than a dose of partisanship to blame Obama entirely for the 10%+ unemployment rate in the fall of 2009. But Obama cannot avoid the burden of responsibility, either, especially since his party controlled Congress with overwhelming majorities for his first term (Romney, on the other hand, had to deal with veto-proof Democratic majorities in the Bay State). The stimulus measure in which the president invested so much political capital performed well below expectations, and the current national ship is only being kept afloat by massive deficit spending.

Cutting the unemployment rate by about 25% (from 6% to 4.6%) or never getting the unemployment rate near the number it was when you started? You can bet that, if Obama's record were as "flawed" as Romney's, numerous heads in the White House would be resting a lot easier.

Sunday, July 24, 2011

Time Machine: The Debt Ceiling

A little while ago, Joshua Green outlined how Congress dealt with the debt ceiling during the Reagan, Bush, and early Clinton years:
Gephardt realized that the easiest way to fix the problem and impose some rationality on the process, was to do away with the second vote. He consulted the parliamentarian. "I asked if there was a way that when we pass the budget [the debt ceiling] can be deemed 'raised' to accommodate the budget people are voting for," Gephardt said. "He said, 'Yeah, we think we can work that out.'"

Thus was born the "Gephardt rule." For a period thereafter, the adoption of the conference report on the budget resolution would trigger the Gephardt rule and "deem to have passed" legislation raising the debt limit to accommodate the spending and revenue levels approved in the budget. Presto! Problem solved.
A Congress dominated by resurgent Republicans scrapped this rule in 1995.

(H/T: David Frum)

Friday, July 22, 2011

What happens in 2015?

Consider this scenario: President Palin (or Romney or Perry or Pawlenty or whoever) is sworn in with great jubilation among movement conservatives in January 2013. Voter distaste with Democrats also led to the crushing defeat for Democratic Congressional incumbents, leaving Republicans with hefty majorities in the House and Senate. In a paroxysm of celebration, Republicans pass the Ryan budget, slashing taxes and putting major reforms in Medicare years down the road. However, the growth promised by advocates of this budget does not materialize, and (as the budget estimates) the federal government runs huge deficits for the first two years of the new president's term. Frustrated with a series of broken economic promises, voters turn Republicans out in massive numbers in the 2014 midterms. Though Republicans cling to a narrow majority in the Senate, they are wiped out in the House, and an exultant Nancy Pelosi reclaims the title of Speaker.

In passing the Ryan budget, Congress also upped the debt ceiling by a trillion or so, but perpetual deficits mean that the ceiling is coming awfully close, and federal spending is due to break it in early August 2015. So now, in May, the president must go on bended knee to Speaker Pelosi, who demands tax increases as the price for her caucus supporting an increase in the debt ceiling. As the Speaker tells the press after the tenth of her many meeting with the president:
Since 2000, we have cut taxes for the wealthiest ten percent of Americans to record lows and have nothing to show for it but exploding deficits and a stagnating economy for the lower ninety percent. Polls show that Americans support an increase in taxes on the wealthiest, who have the most to give and who have gained the most from our economy. It would be irresponsible to increase the debt ceiling without increasing our ability to pay for our spending. I hope the president will compromise for the sake of our nation's future.
And what could Republicans say to this? Again, there is the wailing and gnashing of teeth in markets across the globe about America's ability to pay its debts. Again, the Washington summer dissolves into rancor and cut-throat battle. Welcome to the Battle of the Budget Part II (of many, many parts).

The above scenario may very well not happen, but a Republican president will, at some point in the future, face a Congress wholly controlled by Democrats. Every Republican president since Eisenhower has faced at least one Congress totally dominated by Democrats. On the other hand, Bill Clinton is the only Democrat after Truman who has dealt with a Congress totally controlled by Republicans. Jimmy Carter is the last president who never faced any house of Congress controlled by the opposing political party. And every president in the living memory has increased the debt in raw dollars, requiring increases in the debt ceiling.

If dynamic of the current debt ceiling debate continues into the future, we could easily find the country grinding into a kind of financial-political paralysis every few years that one party controls one branch (or two branches) of Congress while another controls the White House. The Founders believed in certain kinds of brakes on governmental power, but I'm not sure that this specific kind is the most helpful (or even if it would not increase government power in the long run through increasing dysfunction). Under this current dynamic, Congress votes for, and the president signs, budgets demanding certain kinds of spending only to later fight about how to pay for this spending (via borrowing, tax increases, future spending cuts, and so forth). Normal prudential politics would seem to suggest that you agree (implicitly or explicitly) to agree paying for some spending before you agree to that spending.

Republicans and Democrats, conservatives and progressives, will have to weigh the implications of the current debt-ceiling discussion tactics for future administrations and Congresses. These implications might be problematic for the functioning of government and conservative goals.

(Crossposted at FrumForum As usual, there is no endorsement of or responsibility for the headline and accompanying picture.)

Tuesday, July 19, 2011

The Pitfalls of a Balanced Budget Amendment

Many on the right seem to believe that the balanced budget amendment, while a good idea, may face an uphill climb in terms of being enacted. I think, however, there are considerable reasons to doubt whether this amendment has merit as a policy aim. The principle of having a balanced budget is a worthy one. Fiscal prudence and discipline are important for any authentic conservatism, but the methods to achieve the end of a fiscally sustainable government also deserve some scrutiny.

As many admit, the term “balanced budget amendment” is itself a misnomer. The “balanced budget amendment” (BBA) currently endorsed by many Congressional Republicans not only requires that the budget be balanced but also stipulates, among other things, that federal spending cannot go above 18% of GDP without a 2/3 majority vote in favor, that taxes cannot be increased without a 2/3 majority vote in favor, and that a vote of 3/5 of both branches of Congress will be required to raise the debt ceiling. A 2/3 vote can also allow the budget not to be balanced. War can allow many of these majority requirements to be waived---with the notable exception of taxes, which would still require a 2/3 majority to be increased.*

An initial practical point: for conservatives interested in changing the tax system, the BBA would very likely make tax reform harder, not easier. Most forms of tax reform would require that taxes somewhere be raised (through the closing of various loopholes, say) in order to compensate for taxes being lowered elsewhere. A requirement for a 2/3 majority on tax increases would give a grand bargain on tax reform a much higher hurdle. Moreover, the BBA seems to put in place an utterly unconservative dynamic: it makes it easier to increase spending than it is to increase taxes, the instrument for paying for this spending. Even if current federal spending were to magically drop to 18% of GDP, current tax revenue is only 15% of GDP, so we would be left with over $400 billion in deficit spending. As we are under a time of military conflict (in Afghanistan, etc.), the government can ignore the “demand” that the budget be balanced.

Because GDP is a notoriously unmoored number, the requirement that spending cannot exceed 18% of GDP is built on sand. GDP for a year is often revised numerous times, so what counts as GDP for the purposes of the BBA? In a year in which spending is 18% of GDP and the GDP number is later revised downward, part of the budget based on that year's GDP might be deemed unconstitutional. Which part? This requirement could plant a bacterial trace of chaos in the budgetary system of the United States, one that could infect the whole of the federal budget.

Moreover, 18% is an entirely arbitrary number. According to the Office of Management and Budget, 1966, before Medicare really came into effect, was the last year where federal spending was below 18% of GDP. Moreover, every presidential administration since the end of World War II had years where federal spending was greater than 18% of GDP. It is unclear why this number should be set in stone.

History has another rebuke for the BBA: almost every presidential administration since 1900 would have had budgets that would have required a Constitutional override of a 2/3 vote. The only exceptions to this would be the presidencies of Harding and Coolidge, which ran surpluses for each of their years in office---though Coolidge’s presidency was also followed by the worst economic collapse in the twentieth century. The only Republican president in the postwar era whose policies led to at least one year with a balanced budget was Eisenhower. With the exception of 2001 (which was a partial carry over from Clinton-era budgets), every year of Nixon, Ford, Reagan, Bush I, and Bush II would run afoul of the BBA.

I cite history not because the past should always be the example for the future. But the past does have a significant role to play for traditional conservatism as it considers its policy aims. Federal debt has pretty much inexorably increased from 1900 to 2000, but the United States did not become poorer or radically less fiscally sound over this period. Provided they are sufficiently small, deficits do not seem likely to break the fiscal health of this nation. Moreover, the embrace of the principles of the BBA would seem to entail the rejection of the policies of every Republican and Democratic administration in the modern era, with the possible exception of Eisenhower, the only president in the modern era who ever ran a surplus and also presided over a federal government that was less than 18% of the GDP. And even Eisenhower’s administration ultimately increased the debt in raw dollars and had years when federal spending was over 18% of GDP. (There’s some irony to the fact that Eisenhower’s administration, more than any other, conforms to the principles of the BBA; many factions within the Tea Party movement, which has advocated strongly for this measure, can trace their ideological ancestors to the Birchers and Goldwaterites who rejected Eisenhower-style conciliation.) A total rejection of historical practical standards sounds less like moderating conservatism and more like an insistent radicalism.

An obvious rejoinder to these points is that the BBA gives a ready means of escape---that 2/3 majority that can override any of its requirements. Therefore, all past presidents could comply with the principles of the BBA, as long as Congress votes for overrides. However, this rejoinder implicitly weakens the case for the BBA by suggesting the ordinariness of seemingly extraordinary measures. The normalization of overrides could easily make public finances less sound and increase governmental inefficiency, as 2/3 of all members would have to be “persuaded” by subsidies, tax breaks, and pet programs. Rather than authentically restraining spending, the BBA may present another layer of political kabuki, and history has shown that the increase in those layers is closely correlated to an increase in enrichment for the connected and a decrease in real political accountability. It is unclear what would be gained---more clear is what could be lost---by having our government’s budget policies be run by 2/3 of the House and Senate.

The current incarnation of the balanced budget amendment falls into an error about which many on the right have traditionally pilloried the left: it substitutes legalism for virtue and prudence. We can balance the budget tomorrow if we want---by spending no more than we gain in taxes. Conservatives can cut spending if they want, though they seem to find this a challenging prospect when they actually take power. The Constitution already has a mechanism for a balanced budget, if our Congress and president want it. The fact that they have so rarely wanted it, and that the lack of a balanced budget has not always led to an economic or fiscal disaster, might give those sympathetic to prudential conservatism pause. This doubt might be reinforced by noting that the existence of balanced budget amendments in various states has not saved them in any way from fiscal turmoil. Indeed, California, perhaps the paragon of dysfunctional state finances, has operated under a balanced budget amendment for years. Passing constitutional requirements, in the case of California and other states, was a poor substitute for judgement in legislative and executive branches.

The fact is that some debts are worth incurring, while others are not. Sometimes deficit spending makes perfect sense; at others, it’s equivalent to a drug addict borrowing for a good time. Sometimes, some taxes will have to be raised; sometimes, some taxes will have to be lowered. Personal judgement and principled deliberation can help us realize those times---a set of paragraphs plugged into the Constitution will not.

*Other variants of this proposal are circulating, but their features, and their limitations, have much in common with the version discussed here.

(Crossposted at FrumForum)

Monday, July 11, 2011

BULB Act Scheduled For Vote

The Better Use of Light Bulbs Act (HR 2417) is apparently scheduled for a vote today. The BULB Act would repeal part of a 2007 bill that bans the traditional incandescent bulb. This eventual ban (due to start taking effect next year) has been a flashpoint for many on the right and center.

However, this vote could face some troubles. As The Hill notes,
The BULB Act will be considered under a suspension of House rules, which means it will require support from two-thirds of voting members. This bill has the possibility of failing today: Republicans have already brought up a few suspension bills that have failed due to lack of support from Democrats.
If all members vote and all Republicans vote in favor of the BULB Act (a big if), BULB Act allies would probably need at least 50 Democrats in order to pass this legislation. With many Blue Dogs and somewhat moderate Democrats purged in the 2010 midterms, finding 50 might be a challenging enterprise.

UPDATE: House has adjourned: HR 2417 will be taken up later.

Wednesday, July 6, 2011

Partisan Optics for the "Constitutional Option"

As Matt Yglesias suggests, one of the big reasons for the left bringing up the "Constitutional option," in which the president would override the debt ceiling by invoking the Fourteenth Amendment, is as a bargaining position: it gives the White House the opportunity to say to Republican negotiators that it doesn't need them and has other options if they refuse to vote to raise the debt ceiling.

It's pretty clear why the "Constitutional option" could be good partisan politics for Democrats. If the debt ceiling stands and government budgets run into it, we could enter a period of intense economic turmoil. That turmoil could sink the president's chances of reelection (that is, if he doesn't successfully deflect blame to the Republicans for the debt-ceiling fiasco). By giving the president leverage, this "option" can also allow him to parry cuts that he or his allies find unfavorable.

However, the "Constitutional option" may also be a partisan opportunity for Congressional Republicans. One of the many dirty little secrets of the current debt-ceiling talks is the fact that many Capitol Hill Republicans are quite glad to have trillions more in national debt. The GOP has voted for budgetary measures that would bust the debt ceiling. Moreover, the Ryan budget, backed by the overwhelming majority of Congressional Republicans, adds trillions to the debt and places most of the savings (some of which are premised on fantastic economic numbers) many years down the road.

But while Republican members of Congress have de facto embraced more debt, they also face a grassroots element and certain self-anointed tribunes of the conservative "movement" who increasingly believe that any vote to increase the debt ceiling is a sign of fiscal capitulation. Many Republicans thus find themselves between the rock of fiscal reality and the hard place of political positioning.

The "Constitutional option" offers the GOP an escape hatch. If Obama used this option, the GOP could keep on voting for massive deficit spending while also not making the politically hard vote about the debt ceiling. Obama's exercise of the "Constitutional option" would also give Republicans an opportunity to rail against an "out of control" executive branch while not forcing them to do anything to rein in this executive.

The leaders of both parties certainly want the debt ceiling to be raised, but they are trying to find the least politically damaging way to do it. Republicans and Democrats may find that the "Constitutional option" is the easiest way of doing so.

Of course, the use of this "option" would very likely be a ticket to a Constitutional nightmareland and could set up a further corroding of our federal institutions and national consensus. The use of this option may be good partisanship for both parties, but it seems bad politics for the nation as a whole. It would be far better for Congressional leaders to hammer out some compromise that would allow the United States to meet its fiscal obligations over the short and long terms.

Monday, July 4, 2011

Toward a Further Sunrise

(An oration on the Fourth a la Edward Everett)
It has been frequently remarked that it seems to have been reserved to the people of this country, by their conduct and example, to decide the important question, whether societies of men are really capable or not of establishing good government from reflection and choice, or whether they are forever destined to depend for their political constitutions on accident and force. If there be any truth in the remark, the crisis at which we are arrived may with propriety be regarded as the era in which that decision is to be made; and a wrong election of the part we shall act may, in this view, deserve to be considered as the general misfortune of mankind.
---Alexander Hamilton, Federalist No. 1
When Alexander Hamilton wrote those words, the citizens of a fledgling republic faced great challenges: significant debts, the aftermath of a great war, internal divisions, and a seemingly crippled government. Yet the Founders chose engagement rather than alienation and laid the foundations for a great civilization.
It would have been easier for them, perhaps, to have turned on each other. Rather than doing the hard work of drafting the Constitution, they might have rested content with blaming internal political adversaries for all political problems. Instead of negotiation and compromise, they might have drunk deep of vitriol. And, even as the ship of state sunk, a few lucky partisans could have rejoiced at having the last swallow of air.
But they didn’t do so. The Founders chose toil and struggle and deliberation over the cheap narcotic of blame. Wrath over taxation may have started the Revolution, but reason, temperance, and conciliation won the republic. The Founders did not regard government as the enemy; they instead sought to recast government to fulfill a broader vision for civilization.
The legacy of their achievements has come down to us, distilled into the annual festival of the Fourth of July. Why do we celebrate this Fourth? Is it merely a time to rest upon our laurels? To clap ourselves on the back once a year with the comforting pablum that ours is the greatest nation in the history of the world? If so, it is a day of mere self-indulgence. The Founders of this nation did not spend all their time proclaiming the greatness of their land. They did great things to make this a great republic.
In part, we celebrate the Fourth to commemorate the work of our predecessors. There were many sacrifices, failures, and triumphs. We, of course, honor those who have given through military service, and we also remember the labors of great statesmen---such as the Founders, Clay, Webster, Lincoln, Roosevelt, Eisenhower, and others. We think of those who worked to change the course of this nation’s politics, such as Douglass and Anthony and King, as well as those whose enterprises have added to the vigor of our nation---from Emerson to Faulkner, Edison to Salk. Yet we celebrate more than gilt-edged names; we rejoice, too, in the millions of dreams, labors, victories, and struggles of countless private citizens. Those who came to these shores, from the Pilgrims to the present day, who reached from the Atlantic to the Pacific to settle this land, who raised families and factories and houses, who sacrificed and strove and searched---they too have woven the fabric of this nation.
But the Fourth of July is not merely a retrospective holiday. We should also use this moment to reflect on the challenges facing the current republic. Our present trials are legion, as perhaps they always seem. Yet the intensity of these days seems to suggest a nation caught with anxiety about the prospect of its decline.
The power of “reflection and choice” for which Hamilton spoke is counterposed to that of irritation and resentment. Make no mistake: Americans have much to be angry---or at least concerned---about. The new millennium has not been an easy one for this American republic. The pillars of American self-identity have been attacked, including electoral legitimacy, national security, economic success, and sense of freedom.
November of 2000 inaugurated this new era of anxiety, with the most contentious presidential election in well over a century. Whoever had triumphed after election day would have been tainted in some way. George W. Bush, the man who did win, inherited a recession that has since blossomed into a long-term economic stagnation.
The terrorist attacks of September 11, 2001 crystallized the sense of a national identity under attack. The World Trade Center---symbol of American cosmopolitanism, modernity, and economic ambition---and the Pentagon---emblem of the American military order that plays such a role in world affairs---were both attacked by that quintessentially American invention: the airplane. The enemies of Western liberalism and wealth used the very instruments of that civilization to bring it down. For a moment, it seemed as though the nation would rally in response to this challenge---that politics would find a new direction, that the civic compact would be reinforced, that a shock of this trial would rejuvenate our democratic energies. Yet soon enough, this vital force was confronted with a deluge of glib pessimism, alienation, cynicism, and despair. Missteps in the lead up and aftermath of the ousting of Saddam Hussein, continuing challenges in Afghanistan, geopolitical turmoil, and fraught debates about coping with postmodern terrorism have deepened our public disagreements and, in many cases, called into question the capacities of the governing elite. The new homeland security state has had many excesses and numerous missteps. Even as our nation has faced new challenges of terrorism, it has also faced an international order morphing into something (what remains to be determined) at an accelerating pace.
Meanwhile, the economy stumbled along throughout much of the 2000s, fed by the thin gruel of skyrocketing debt, until it nearly fell off the precipice into oblivion during the meltdown of late 2008. Our nation’s finances have not yet collapsed, but growth over the past decade has been slower than at any other period in recent memory and unemployment remains at unusually high levels. The wages of the vast majority of Americans have stagnated even as the wealth of the richest has increased. The present administration came in with great promises, many of which have been broken, discounted, or forgotten. Its economic plans in particular have fallen far short of its own expectations (though the economic plans of the Bush administration ultimately disappointed many as well). Under the prevailing economic conditions of the past few years, our government finances are headed to ruin.
Precisely where our government was supposed to be the strongest, its flaws proved most glaring. The failures of the broader governing class were evident by 2008, though this class has remained mostly untouched by the effects of this failure.
The political pendulum has swung back and forth over the past decade, with increasing ferocity: drifting to the Republicans in 2002 and 2004, hard to Democrats in 2006 and 2008, and back with a vengeance to the Republicans in 2010. As the sense of national frustration has deepened over the past decade, the sense of urgency for each newly-empowered party has heightened. Barack Obama in 2008 was supposed to right the excesses of the Bush administration and restore the sound footing of the economic order and point the way to a brighter America. The Republicans in 2010 were supposed to right the excesses of the Obama administration and restore the sound footing of the economic order and point the way to a brighter America. The similarity here is in more than syntax.
Many partisan orthodoxies have failed, and new paths need to be found. This failure of conventional wisdom has opened up a vacuum in the public space. Scapegoating has rushed to fill it. We live in a time of many scapegoats: the rich, the unions, heartland bigots, the ruling class, faux free marketeers, crypto-socialists, Christianists, atheists, Republicans, Democrats, conservatives, progressives, anarcho-capitalists, statists, and on and on and on. The brain tires at the mere thought of that endless list of endless calumnies, and the body politic is no less exhausted by them.
In a two-party country, it is easy to see why politics has a tendency to focus on assailing one’s opponents: the ballot box is a zero-sum game, and a decline in the other party means a victory for one’s own. But societies as a whole are not themselves zero-sum. The enrichment of one’s neighbors does not imply one’s own impoverishment, nor does one’s own gain in wealth consign others to poverty. The promise of capitalism is, in part, the promise of cooperative enrichment. But there is a dire flip side to this sunny proposition---just as a community can cooperatively become richer, so too can it become poorer.
America cannot afford to cannibalize itself, as citizen turns against citizen. The crucial failure of scapegoating is in its obsession with the fate of a part in order to distract from the fate of the whole. What debilitates our country is not the fact that a union worker (in the private or the public sector) gets fair pay and good benefits; far more problematic is the fact that so many jobs have decreasing pay and winnowing benefits. Honest wealth honestly acquired should be thought of as a value to this republic and not as an injustice. Those with whom we disagree need not be enemies or existential threats to the foundation of the republic.
Instead of indulging in self-destructive antagonisms, we must enter a period of renewing reform. These reforms may have their share of pain, but we ought to use our reason to ensure that this pain is as fairly and as efficiently distributed as possible.
The strength of America comes in part from its faith in its people and in its ability to renew itself. Those who chose to come to America, from whom many of us descend, were willing to embrace change. Those who founded this nation believed in the capacities of a fresh republic, one that would be in accord with the principles of liberty. The American free market is premised on the belief in the broader wisdom of American society (at least compared to that of central planners).
The power of this nation also comes from its striving after the ideal. However troubled their actual enterprise may have been, the Puritans did not rest content with the flawed nature of man but reached for some higher city. The great ideals of the Declaration and Constitution show the ambition of the Founders to use the instruments of government in order to effect a revolution in human life. The abolitionists of the nineteenth century and civil rights warriors of the twentieth often staked their lives on the principle that our nation could go forward and wash away the stains of false bigotry and institutionalized oppression. Great accomplishments have been made not by defeatism but by perseverance and flexibility.
We have inherited both a great nation and a great government. The gleam of the potential of this government, the fruit of centuries of toil, has not, to my eyes at least, dimmed with time. Let us move from thinking of government as the enemy or as a weapon against our private enemies to thinking of it instead as a tool for advancing the greater causes of this republic: life, liberty, and the pursuit of happiness. Government is not the only tool for advancing these causes, but human society is necessarily political, so any approach that would realize these causes must consider the case of government. That very faith in the American people also applies to those citizens who are servants of this American republic; we can have faith that, somehow, politics can go forward, however recalcitrantly, in the direction of virtue.
Realizing government as a tool for advancing those purposes outlined in the Declaration need not be an endorsement in an endlessly expansive government; at times, government can be the best tool by restraining its power, by not involving itself, by not intervening in the ebullience of the private life of this republic. The rights we have may not ultimately derive from government, but government often has a role in guaranteeing these rights. There is, as ever, a careful balancing act here, but many carefully laid bricks help constitute the foundation of this republic.
There comes a time in great societies when their vital force fails. Rome’s citizens chose empire over self-discipline. The German commonwealths, a European flower of learning, diversity, and literature, succumbed to the martial and recriminative temptations of the Kaiser and the Third Reich. Our own nation nearly dissolved in the cataclysm known as the Civil War.
Yet, with great perseverance, our republic survived and broke the yoke of slavery that had weighed so heavily for so many years. Great trials can recast us and renew us---if we have the will to face them. We can either accept a bitter decline or take up the challenges of the day.
Let us not be distracted and let us not despair. The faith of the Revolution was fed by the belief that our problems are tractable. Even if we cannot solve all the challenges this nation or liberal government in general faces, we can at least cope with them.
Let the United States still be, as Benjamin Franklin hoped, the republic of the rising sun. Rather than chewing over the resentments of the past, we should instead seek the triumphs of the future. Now is not the time to surrender to resentment or despair or petty hate. Now is not the time to accept deflecting blame as victory. Now is not the moment to forswear the potential of these United States.
We can still engage in enterprises of reason and merit. However old or frail our hands, we can still reach. Rather than being dirges or complacent ditties, the songs of the Fourth of July can still call us to our higher purposes of fellowship, happiness, liberty, and virtue.