The Laziness of Simpson-Bowles 2.0

Ezra Klein points out that Simpson-Bowles 2.0 is right in the middle of the current Obama and House Republican bargaining positions:

This isn’t meant to be an update to Simpson-Bowles 1.0. Rather, it’s meant to be an outline for a new grand bargain. To that end, Simpson and Bowles began with Obama and Boehner’s final offers from the fiscal cliff deal. That helps explain why their tax ask has fallen so far: Obama’s final tax ask was far lower than what was in the original Simpson-Bowles plan, while Boehner’s tilt towards spending cuts was far greater than what was in the original Simpson-Bowles.

As he also describes, the actual policies used to achieve these targets haven't been revealed (other than Chained-CPI).

There is a lot to be frustrated with about this type of proposal. As Greg Sargent notes, this will be referred to as a "centrist" position even though it is far to the right of their initial "centrist" proposal. This moving of the goalposts punishes the Democrats for being more willing to compromise, while rewarding the Republicans for being less willing to. But I think one thing worth mentioning is the sheer lazyness of the proposal.

There is room in our political debate for a group that outlines a proposal that falls roughly in the middle of the two major party's bargaining positions. But the role of the group needs to be actually outlining the proposal. Simply naming the middle adds no value whatsoever. Naming actual budgetary changes is difficult work, and legislators would benefit from non-partisan groups identifying and scoring these changes. Similarly, identifying different potential budgetary changes and computing and publicizing their distributional impact would help the public recognize what these changes would actually mean. But Simpson-Bowles does none of this. They simply point out "the middle" and then go on Sunday shows and scold politicians.



 

Thomas Friedman is Uncertain About Uncertainty

Thomas Friedman thinks he knows why the economy isn't growing:

Apple is currently sitting on $137 billion of cash in the bank. There are many reasons Apple has not spent its cash horde, but I’ll bet anything that one of them is the uncertain economic and tax environment in this country.
...
Message: There is no doubt our economy is primarily being held back by the deleveraging and drop in demand that resulted from the 2008 financial crisis. But they are being reinforced today by uncertainty and worry that we do not have our political house in order and, therefore, our tax, regulatory, pension and entitlement frameworks are all in play. 

I think companies are uncertain about demand, and I think the best way to fix this would be for the federal reserve to target NGDP. But even if you thought Friedman was right, and that a big problem was regulatory uncertainty, why would this be your solution:

Therefore, [Obama] owes it to himself and to the country to make one more good shot at a Grand Bargain on spending, investment and tax reform before he opts for a strategy of trying to pummel the Republican Party, hoping that he can win the House for the Democrats in 2014 and then push through his second-term agenda unencumbered.

If you are concerned about regulatory uncertainty, a grand bargain is a terrible idea. Putting tax reform on the table would mean months and maybe a few years of bargaining over tax loopholes and rates. Right now, businesses can be fairly certain that the House and Obama won't agree on much, especially not on taxes. They can be fairly certain that taxes won't really change over the next four years. Friedman's solution isn't going to happen, and according to his logic it would make things worse.

The House Republican Victory

A lot of liberal bloggers are posting this graph as a retort to claims that Obama is a big spender:

http://research.stlouisfed.org/fredgraph.png?g=eSY

Fair enough. But I think one thing that is under appreciated is how successful House republicans were at getting the government to cut spending.

They came in on the platform of reducing spending. They threatened to not raise the debt ceiling unless an agreement was made to cut spending. Spending was cut. Success!

The problem is they can't really celebrate their victory without admitting that spending is no longer out of control. So everyone just kind of pretends gridlock prevented anything from happening last congress, but something did happen! Spending was drastically curtailed!

House agrees to extend debt ceiling

Last Friday, the House leadership convinced their caucus to raise to the debt ceiling for three months. In order to do this, the house will require a budget resolution from the Democrat-controlled Senate.

Obviously a three month fix is less than ideal, but I think this is a HUGE step in the right direction. Previously, Boehner was claiming that all raises to the debt ceiling would have to be matched by 1:1 spending cuts. This was a toxic rule that lead to the U.S. narrowly avoiding defaulting on its debt, and put in motion a series of high-stakes budgetary showdowns.

The new plan returns the debt ceiling to its rightful use--attempting to embarrass the other party and score political points. Hopefully in a few cycles Congress will fully return to its 2010 equilibrium--doing nothing to help the economy. This would be a huge improvement over the 2011-12 dynamic of setting up fake crises that actively harm the economy and delay the recovery. 

Foreign Policy Accountability

Conor Friedersdorf has a good post about mission creep and Mali. But one section struck me as off:

I don't know what's going to happen in Mali. But I know that the Libya intervention can't be fully evaluated until we find out (and until we see what else happens in Libya itself in coming years). I also know that America's role in Mali is more likely to reflect the will of the people if Congress determines it. Sadly, the legislature isn't yet willing to assert its Constitutional prerogatives, and the political press doesn't see fit to cover the news as if they have an important role. (emphasis mine)

If Congress had to sign off on military action/assistance, its likely that the U.S. would involve itself in fewer wars. I suspect that Conor would prefer this (as would I). However, I don't think this would make America's foreign policy more closely reflect the will  of the people. I also don't think that it would make government officials more accountable.

Congressional approval almost always requires some form of antidemocratic supermajority support. This is good if your goal is to slow legislative action and require greater consensus. Its bad if you want government action to reflect the will of the people. 

Similarly, vesting war-making powers in a single executive produces greater accountability. Despite the general unpopularity of the Iraq War, Congressional supporters of the war--Kerry, Hilary Clinton, Hagel--are still given the chance to serve in important positions of authority in the foreign policy arena. Its hard to imagine George W. Bush being given a similar opportunity. Presidents are the ones who receive the majority of the national security briefings, who oversee the execution of the war, and who ultimately will end up taking the blame when the war goes badly. 

Likewise, Presidents can actually be expected to carry out their foreign policy pronouncements. Candidates can talk all they want about repealing Obamacare or reforming the tax code, but the Madisonian system means that their rhetoric won't end up matching policy outcomes. This is not the same for foreign policy--to the extent that Obama strayed in his first term from his foreign policy declarations, he can, and should, be held accountable. Its much harder to blame him for not providing more stimulus or failing to introduce a carbon tax/cap-and-tade, as he had far less control over these outcomes.

The GOP's Immigration Problem

The New York Times published a piece this morning on immigration reform. Essentially, Obama and the Democrats are pushing for a broad immigration reform bill, while GOP senators--including Marco Rubio--are working to break up the bill into a series of smaller measures:

Mr. Obama and Senate Democrats will propose the changes in one comprehensive bill, the officials said, resisting efforts by some Republicans to break the overhaul into smaller pieces — separately addressing young illegal immigrants, migrant farmworkers or highly skilled foreigners — which might be easier for reluctant members of their party to accept. 

I'm skeptical of the argument that all the GOP needs to do is moderate its stance on immigration to win over the hispanic vote. I think the economic policies of the Democrats are clearly more attractive to Hispanic voters. In addition, even though Hispanics are more pro-life than the average American, I don't think the GOP's version of cultural conservatism squares well with most Hispanics.

But what makes the plan to use immigration reform to woo the Hispanic vote so dumb, is that the Democrats are going to endorse polices that are more liberal on immigration than the GOP.  In any negotiation the Democrats will be pushing for comprehensive reform that grants more visas and a more clear and easy path to citizenship. The GOP will try to moderate its tone but will be working to undermine the complete overhaul of the system by replacing it with smaller measures and making things contingent on "border security". It will also face vocal and ugly opposition from more conservative house members and constituents--further alienating Hispanic voters. A clear political loser.

Anti-Semitism and the Israel Lobby

Ali Gahrib and James Kirchick discussed the Chuck Hagel nomination on bloggingheads last night. It was generally a good conversation and I recommend it. However, as tends to happen with these types of conversations, the "Anti-Semitism and the Israel Lobby" argument arose. This argument involves one side attributing foreign policy or domestic political outcomes to the actions of a pro-Israel Lobby, while the other side responds with vague non-accusations along the lines of "i'm not calling you an anti-semite but . . ." and then proceeds to argue that the pro-Israel lobby is treated differently from other lobbying groups and is discussed in terms that are arguably anti-semitic. Eli Lake and Robert Wright had the same argument a few months ago.

Anti-semitism has historically involved the charge that a small group of elite Jews use money to disproportionately influence global events in the service of a narrow interest. The accusation is almost always one that is vague and conspiratorial--involving references to an unspecified pressure and influence.

It strikes me that it is more or less impossible to discuss how lobbying works in American politics, without accidentally tripping over an anti-Semitic dog-whistle. This is because lobbying is a partially veiled activity that involves a small group of individuals coordinating and using pressure to influence policy outcomes.

I don't have a good solution for this problem. Racial and anti-semetic dog-whistles aren't acceptable and should be called for what they are. But in this particular area it is hard to imagine someone discussing the influence on the U.S. government--of those who explicitly try to influence the U.S. government--without inadvertently leaving themselves exposed to the charge of anti-semitism. This is why you get the type of discussions I posted above, where both sides know that neither is anti-semite, yet the conversation returns to anti-semitism.