Political Dysfunction and the Filibuster
Republican brinkmanship over the raising of the debt ceiling nearly drove the United States to default last year, creating panic in financial markets and resulting in the first ever downgrade of the nation’s AAA credit rating. After failing to resolve the crisis, Congress was forced to accept a stopgap measure that was equally odious to both parties: the debt ceiling would be temporarily raised, but the budget for defense and social programs would both take a hit unless another compromise could be negotiated. The American people were not impressed: by the end of 2011, Congress’s approval rating had plummeted to 11 percent, with Republicans taking the brunt of public criticism.
Sadly, last year’s debt ceiling debacle may pale in comparison to this year’s dysfunction. Once again, the debt ceiling needs to be raised, and already Republicans are doubling down on their 2011 hostage-taking tactics, threatening a default unless Democrats accept spending cuts greater than the size of the increase. At the same time, Congress also has to confront the expiration of the controversial Bush tax cuts (which would raise taxes on all Americans, especially the rich) and the end of Obama’s payroll tax holiday (which would hurt the working class), not to mention the across-the-board spending cuts that neither party wants to see happen.
The intense partisanship surrounding these issues may be already taking a toll on the economic recovery. According to the Washington Post, businesses are slowing hiring and planning for layoffs in anticipation of a “taxmageddon” scenario, in which a deadlocked Congress fails to defuse the fiscal bomb of higher taxes, spending cuts and another market-roiling debt ceiling standoff. “How do you plan for chaos?” one industry lobbyist asked the Post, between meetings with lawmakers. “It’s almost a unique moment in government because there’s so much at stake. And there’s nothing that inspires confidence that this will get done.”
Congress hasn’t always been so polarized and dysfunctional. Filibusters, for instance, were rare until the 1960s, when they became a commonly-used tactic for delaying civil rights legislation. To end a filibuster, a three-fifths supermajority of Senators must vote to invoke cloture, bringing the debate to a close. Today, according to Senate Majority Leader Harry Reid, “60 votes are required for just about everything.” As a result, businesses have little certainty as to whether Congress will be able to move forward on legislation to mitigate the automatic tax hikes and spending cuts that will go into effect at the end of the year. And without a compromise of some kind, economists warn, the economy could easily head back into recession.
Amending the filibuster would not by itself resolve the myriad dysfunctions that currently plague Congress—not least among them ideological polarization and the influence of lobbyists—but it would be a significant reform for a procedural rule that is more overused with each passing year. And, in the end, that may be the silver lining of the 112th Congress’s maddeningly partisan gridlock. Last week, Harry Reid indicated he was finally ready to move ahead with filibuster reform, which he has opposed in the past. “If there were anything that ever needed changing in this body, it’s the filibuster rule, because it’s been abused, abused, and abused.”
Graph of the Day: Is the ‘Great Recession’ Really a Household Debt Crisis?
By Benjamin Landy
“Why is everyone still referring to the recent financial crisis as the ‘Great Recession’?” asks Harvard economist and former IMF chief Kenneth Rogoff, in a recent article for Project Syndicate. “The phrase ‘Great Recession’ creates the impression that the economy is following the contours of a typical recession, only more severe – something like a really bad cold,” he adds. “But the real problem is that the global economy is badly overleveraged.”
Unfortunately, the American household is no exception. While political discourse has been dominated in recent months by arguments over our enormous national debt, climaxing with the tense mid-summer negotiations over the debt ceiling in Washington, the problem of household debt has gone largely unmentioned in the media. Now that is beginning to change, as a consensus develops among economists, pundits, and policymakers that Americans’ paralyzing mortgage and credit card debt is the main factor holding the economy back from recovery.
The facts are these: although household debt peaked at $116,457 per household in 2008—nearly 100 percent of GDP at the time the financial markets collapsed—mortgage and credit debt has decreased merely seven percent as of 2010. The average American household would have to deleverage an additional 97 percent to return to 1976 levels. And while no one is arguing that household debt needs to be at those levels to restart the economy, it is generally understood that consumption will not increase adequately until Americans’ debts are significantly reduced.
When we last experienced a deep recession in 1982, the household debt-to-GDP ratio was about 45 percent, or $17,286. So when the government adjusted its monetary policy, the economy was able to recover quickly. Today, with the average household still holding over $100,000 of debt, a more ambitious program will be required to return demand—and thus unemployment—to pre-recession levels.
Thankfully, a recent New York Times report indicates that the Obama administration may be planning just that. According to the article’s sources, who would not be named, White House officials are currently weighing a variety of proposals to allow millions of homeowners to refinance their homes with government-backed mortgages at current low interest rates of about 4 percent, saving those homeowners $85 billion a year and creating a strong stimulus to the economy.
The Washington Post’s Ezra Klein, for one, is not optimistic that this kind of government-backed refinancing scheme could work in the current political climate, but at least it proves that the administration is paying attention to the household debt problem and trying to come up with creative solutions to stimulate demand. Until we find a way to do that, millions of Americans will remain jobless, and the economic recovery will continue at its anemic pace. At the very least, the administration’s recognition that the “Great Recession” is really a household-debt crisis sends the positive message that Obama’s “pivot” to job creation is more than just hot air.
Michele Bachmann’s first answer [in the debate] was “I wish the federal government had defaulted.” Had defaulted, a week after Americans had lost—some of them perhaps lost half of their pensions. Lost half of their 401(k)s, when trillions of dollars went down the drain [pounds the table] with Americans suffering, she said that and got applause, and if anybody thinks that guys like my dad are going to be voting that way when this rolls out of Iowa and New Hampshire and South Carolina, in the early stages, and really gets going, they are out of their mind and they are too stupid not only to prognosticate, they are too stupid to run Slurpee machines in Des Moines. I’ll let you go now. I got it off my chest.
Michele Bachmann is a joke. She is a joke. And now I will pass it on to you. Her answer is a joke, her candidacy is a joke, and anybody that sits here and says she has any chance of winning anything is out of their mind. Take your straw poll, take your caucus, but Iowa, if you let her win, you prove your irrelevance once again.”
Reblogged:The Progressive Crisis
BY WALTER RUSSEL MEAD
Originally posted at Via Media.
The debt ceiling compromise is the end of the liberal dream that the Obama presidency would do for the left what Ronald Reagan’s time in office did for the right.
Stanley Greenberg, one of the best pollsters anywhere and a leading intellectual light of the Democratic party, has a must read in the NY Times on the mysterious inability of Democrats to turn widespread public support on individual issues into a stable governing majority.
It’s perplexing. When unemployment is high, and the rich are getting richer, you would think that voters of average means would flock to progressives, who are supposed to have their interests in mind — and who historically have delivered for them.
Yet they don’t. Why, Greenberg asks, do so many voters tune the Democrats out. And what can the Democrats do to win them back?
That he’s asking these questions at all is a testament to the colossal failure of Democrat hopes in the aftermath of the 2008 presidential election. The “transformational President” failed to bring about the Great Realignment Democrats thought they saw. Healthcare was a poisoned chalice; the debt ceiling bill was a disaster. The electorate keeps trending right and the Democratic establishment, more than thirty years after Ronald Reagan’s inauguration, is no closer to solving the problem of the New Right than it was when Jimmy Carter turned the White House over to the Gipper.
Ronald Reagan (Wikimedia)
Greenberg, a man who studies American voters with great care and who combines a deep knowledge of American politics with decades of experience interpreting the nuances of voter opinion, lays out a clear though incomplete vision of the Democrats’ problem. The difficulties he finds in outlining even superficially plausible ways for the party to recapture the political high ground illustrate the depth of the Democrats‘ crisis.
Greenberg diagnoses the problem as a crisis of legitimacy:
Just a quarter of the country is optimistic about our system of government — the lowest since polls by ABC and others began asking this question in 1974. But a crisis of government legitimacy is a crisis of liberalism. It doesn’t hurt Republicans. If government is seen as useless, what is the point of electing Democrats who aim to use government to advance some public end?
Voters like Democratic ideas and policy proposals, notes Greenberg, and on a wide range of issues, the public prefers Democratic positions to Republican ones. The problem is that they don’t think the Democrats can or will make their ideas work. The rhetoric inspires; the reality disappoints.
Government operates by the wrong values and rules, for the wrong people and purposes, the Americans I’ve surveyed believe. Government rushes to help the irresponsible and does little for the responsible. Wall Street lobbyists govern, not Main Street voters. Vexingly, this promotes both national and middle-class decline yet cannot be moved by conventional democratic politics. Lost jobs, soaring spending and crippling debt make America ever weaker, unable to meet its basic obligations to educate and protect its citizens. Yet politicians take care of themselves and party interests, while government grows remote and unresponsive, leaving people feeling powerless.
Greenberg is right to call this a crisis of legitimacy for liberal and progressive thought. A strong and active federal government is the cornerstone of progressive politics. If voters lose faith in the power of more government to better their lives, the progressive era has come to an end.
Graph of the Day: Why Aren’t Republicans Happy with the Debt Ceiling Bill?
By Benjamin Landy
“I got 98 percent of what I wanted,” Speaker of the House John Boehner told CBS on Monday night, after the debt ceiling compromise — also known as the Budget Control Act of 2011 — passed in the House. “I’m pretty happy.” But even before President Obama signed the bill into law on August 2nd, saving the United States from default, key Republicans in the House and Senate — particularly those associated with the Tea Party — took to the airwaves to explain that they could not support the bipartisan agreement.
Progressives like Daily Show host Jon Stewart were apoplectic: how could Republicans get nearly everything they asked for in the debt ceiling negotiations — nearly $2.5 trillion in planned deficit reduction and zero new tax revenues — and still be unhappy? “What are you so angry about,” Stewart asked, incredulously. “Yes, government still exists. We still have traffic lights, we’re sorry… Government isn’t perfect, but some people wish it were better, not gone.”
Ezra Klein refers to two graphs that illustrate why so many Republicans are unhappy with the final debt ceiling deal, which by most accounts they should be embracing.
74 percent of Republicans and 78 percent of Tea Partiers who were polled disapproved of the final debt ceiling deal, while a majority of Democrats supported it — even though the deal included no new revenues. The central problem, according to Klein, is that Republicans tend to dislike any form of compromise, even when it works in their favor. A recent poll shows that Republicans are about as likely to support a congressperson who “sticks to his or her principles, no matter what” as Democrats are to support one who “compromises to get things done.”
The numbers are essentially a mirror image of each other. At the end of the day, many Republicans — especially those self-identifying as members of the Tea Party — are less likely to pay attention to the details of the debt ceiling bill, which overwhelmingly favors their own agenda, simply because it had bipartisan support. Unfortunately, in today’s highly polarized Republican Party, compromise means weakness and stubbornness means strength. Perhaps Democrats could learn a thing or two from them after all.
The Debt Ceiling: When Raising Taxes is Fiscally Responsibile
By Benjamin Landy
As the debate over the debt ceiling slogs along in Washington, it’s instructive to step back and look at how the federal balance sheet has evolved since the end of World War II. Until the 1970s, tax revenues and spending levels were fairly closely aligned. Significant deficits began to arise in the aftermath of the OPEC oil shocks, which sent the economy into a period of high inflation and low growth. But deficits became much larger during the Reagan administration, caused mainly by his huge tax cuts and escalation of defense spending. Even though he was subsequently forced to raise taxes eleven times, Reagan was still unable to make a dent in the staggering $2.3 trillion debt that the United States accrued during his tenure.
Source: Office of Management and Budget, Historic tables
Large deficits persisted through the George H.W. Bush administration, despite the tax increases he approved. But after the budget deal that Bill Clinton signed into law in 1993 without a single Republican vote in Congress, which included tax increases and spending reductions, deficits began to decline. Aided by a vibrant economy in the second half of the decade, deficits actually transformed into surpluses. Contrary to what supply-side ideology predicted, real GDP growth averaged 4 percent for the rest of the 1990s.
The sizable budget surplus of the Clinton years was intentionally erased by the Bush tax cuts of 2001 and 2003, reducing revenue by at least $2.9 trillion over the last decade, according to a recent Congressional Budget Office report; another $3.5 trillion in lost revenues is attributable to slowed economic growth. The additional cost of two wars and an unfunded Medicare drug benefit combined to create shortfalls that were even wider then during the Reagan era. According to conservative economist Bruce Bartlett, the interest cost on the deficits created by the Bush tax cuts are responsible for increasing the national debt by $3.2 trillion, or “27 percent of the fiscal deterioration since 2001.” With the Great Recession, government revenues have crashed further even as spending on social safety net programs has risen, leading to even deeper deficits.
Still, the GOP continues to hammer away at the same, disproved talking-points. “There’s no evidence whatsoever that the Bush tax cuts actually diminished revenue,” Mitch McConnell (R- Kentucky) said last year. “They increased revenue because of the vibrancy of these tax cuts in the economy.” Former Minnesota Governor and Republican presidential candidate Tim Pawlently recently echoed the sentiment: “Keep in mind, whether it be the Bush tax cuts, the Reagan tax cuts, or other tax cuts, they always produce an increase in revenue.” But if that were true, you would expect tax revenues to be on the rise. Just the opposite: this year, in spite of some of the lowest tax rates in the nation’s history, the CBO estimates that revenues will be just 14.4 percent of GDP, the lowest percentage since 1950.
Reposted from my Graph of the Day Series at Taking Note.
