Mark Schmitt

Roosevelt Institute Senior Fellow

Recent Posts by Mark Schmitt

  • Mark Schmitt on How to Move Past the Myth of the Job Creator

    Mar 19, 2012Mark Schmitt

    In last week's episode of "Fireside Chats" on Bloggingheads, Roosevelt Institute Senior Fellow Mark Schmitt chatted with Eric Liu, co-author of the new book The Gardens of Democracy. In the clip below, the two discuss the tired meme of the job creators and that "the economy should revolve around a tiny number of rich people," as Eric puts it. That's not why people go into business, Mark points out, paraphrasing a lapsed job creator. "If they're successful they may create jobs, but that's not what they're setting out to do," he says.

    In last week's episode of "Fireside Chats" on Bloggingheads, Roosevelt Institute Senior Fellow Mark Schmitt chatted with Eric Liu, co-author of the new book The Gardens of Democracy. In the clip below, the two discuss the tired meme of the job creators and that "the economy should revolve around a tiny number of rich people," as Eric puts it. That's not why people go into business, Mark points out, paraphrasing a lapsed job creator. "If they're successful they may create jobs, but that's not what they're setting out to do," he says.

    Even after the lessons of the Great Recession, Eric points out, we still seem to believe that "it is from [rich people] that wealth and jobs and employment and prosperity spring," so we have to do what it takes to protect them. In reality, job creators should realize "we succeed because theere's demand for our products" from the middle class, Mark says. Yet they both agree that this trope is alive and well.

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    How do we get past it? "We have to think about a way of working beyond anger," Mark says. "I think anger burns out." If we can get to a calmer place, we can "bring it back to solutions."

    Watch the full video below, in which they discuss the complex system that is our economy, the dangers of inequality, and how to reinvigorate citizenship:

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  • Can the Right and Left Have a Real Conversation About Entitlements?

    Feb 9, 2012Mark Schmitt

    Democracy can't function unless both sides are willing to debate the actual proposals on the table instead of trying to change the subject.

    Democracy can't function unless both sides are willing to debate the actual proposals on the table instead of trying to change the subject.

    I got hit with something of a one-two punch Tuesday on National Review Online. In two different articles, I'd referred to William Voegeli's book, Never Enough, which argues that liberalism's aspirations for the welfare state are essentially boundless. Both Reihan Salam and Voegeli himself take issue with my argument, but both seem to me to be changing the subject.

    Let's take Salam's post first. (He's an old friend and one of the smartest young conservatives I know.) He's responding to the column I wrote about Mitt Romney's "I'm not concerned about the very poor" comment. I treated Romney more generously than anyone else (including Romney himself, who took it back). I took the gaffe, along with Romney's speeches about the "entitlement society," to indicate that he's aligned with House Budget Committee chair Paul Ryan and Voegeli in arguing for a safety net carefully limited to the very poor, rather than a more expansive set of supports for those moving out of poverty.

    I've got Ryan and Voegeli all wrong, Salam says. (No word on Romney.) They aren't about cutting programs for the near-poor at all. Rather, it's that they are concerned "that the U.S. public sector isn't doing a good job of putting taxpayer dollars to good use." After a long digression about a McKinsey report on public sector productivity, "Baumol's disease," K-12 education, and various other topics, he claims that the "core idea" of Ryan and Voegeli is this: "We need to do a better job of imposing fiscal discipline on the public sector, but...we also need to give public sector managers the tools they need to impose organizational discipline."

    That's it? All this huffing and puffing about the "entitlement society" and slashing spending is just about helping bureaucrats do their jobs better? In his piece, Voegeli accuses me of depicting liberalism as "meek and earnest." I would say the same about Salam's depiction of conservatives. I'd also note that he doesn't cite a single word from Ryan or Voegeli to support this benign interpretation. He's arguing that Ryan's changes to Medicaid (turning it into a block grant) and Medicare (turning it into a Groupon to buy private insurance if it's available) are really just a better way to "align incentives" to reduce overall health costs, a goal we share. The Medicaid block grants are just a way to give states incentives to cut costs, because they can keep all the money they save, rather than sharing the savings with the federal government, as in the current system.

    This is an argument worthy of a very long separate response, but in short, it's just wrong. States have plenty of incentives to cut costs and there are 84 Medicaid waivers for states that manage their programs more effectively. Unless the block grant is extremely generous (and thus more expensive than the current system), states, which have little ability to control health costs, will respond by simply cutting Medicaid eligibility. Likewise, Ryan's Medicare plan will, as the CBO has shown, increase total health care costs, the opposite of what Reihan claims is the "core idea."

    Then Reihan reverses and admits that Ryan and Voegeli are about cuts, not just better management, but only cuts to invisible programs that serve the well-off. Ryan and Voegeli are really "allies," he says, of Suzanne Mettler, whose book The Submerged State calls for reconsideration of invisible and regressive programs like the mortgage-interest tax deduction. I consider myself an ally of Mettler as well, in every way, so maybe we can all just get along. Ryan has "emphasized the importance of 'broadening the tax base,'" Salam claims, which is true, but his budget didn't offer any specifics and he would give the savings from unnamed tax-expenditure cuts away in even more regressive tax cuts. Likewise, Voegeli's book never mentions the mortgage tax deduction or any of the other big tax expenditure giveaways in his definition of the welfare state. The vision Salam's describing -- of an efficient, well-managed public sector with fewer tax breaks for the well-off -- may be his own, and I could live happily in his world. But it has nothing at all to do with the new conservative consensus represented by Romney, Ryan, and Voegeli.

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    Voegeli himself weighs in to take issue with a different article, part of a debate with Stephen Hayward, who drew heavily from Voegeli to make the claim that liberals want essentially a limitless welfare state. Again, this is an argument adopted by Romney, so it's not purely academic. I didn't think that was an accurate description of liberalism, which I argued is all about finding the right limits or boundaries between public and private, government and market. If sometimes those limits are not based on an abstract principle, but on living in a democratic society and paring our aspirations to reality, those contingent limits are no less real than "principled" ones. I used as an example single-payer health care, which I'm not for, and never have been for, even though I've never had a good answer for people who point out that it would be fairer and more efficient. I just think pursuing it is a waste of effort.

    Voegeli sees a "gotcha" -- the actual liberal principle is "whatever we can get away with." So if I'm setting aside single-payer in part for political reasons, "conservatives have every reason to go on Fox News and rant about socialized medicine, but zero reason to sit down for an edifying, collegial seminar that hammers out the details of the next incremental expansion of federal authority and spending."

    I don't see how that follows at all. If, say, I were president and proposed a market-based expansion of health coverage, it is what it is and not something else. It's not a secret incremental plan to get to single-payer. "Ranting about socialized medicine" in this case would simply be dishonest. (And, obviously, this is not hypothetical, except for the fact that I'm not the president.) And refusing to sit down and negotiate about an actual proposal on the table, especially one similar to what conservatives had advocated for years, is simply a defection from democracy. The fact that some supporters of the actual proposal on the table might have trimmed their original aspirations is no justification for treating them as if they had not.

    In plenty of cases, the limitations to my liberalism might be "principled" (which is to say, I could articulate a principle), but other people might have different principles. That's politics in a democracy -- an unending effort to balance various people's principles and aspirations and find what John Rawls called the "overlapping consensus" that works for most of us.

    As Voegeli notes, sometimes the range of political possibility, or the overlapping consensus, changes. Fifteen years ago, gay marriage seemed as unlikely as single-payer health care and even most liberal politicians voted for the Defense of Marriage Act. Within a few months from now, a quarter of the population might live in states that allow them to marry the person they love. But Voegeli uses this to change the subject entirely, to what he regards as liberals' commitment to "rigging or nullifying" the democratic process through court decisions. That's not something I'd written about, but it doesn't seem to help Voegeli's argument at all. First, it has nothing to do with the "welfare state" or expansion of public benefits. Second, the democracy card cuts both ways. The Ninth Circuit did just throw out a California constitutional amendment banning same-sex marriage that had passed with 52 percent of the vote, but by the same token, the constitutional provision would have barred the democratic process in California from ever recognizing same-sex marriage -- and the legislature has twice passed same-sex marriage. And as Jeff Toobin points out, liberals for at least twenty years have been very wary of making gains in courts that they can't achieve through other democratic means. Almost everyone who favors gay marriage (with the interesting exception of Ted Olson, apparently) was gratified that the decision did not go further and actually declare a constitutional right to marry.

    But I'm not sure what Voegeli's point is here. Does he object to judicial review in all cases? Citizens United was no less a nullification of a democratic decision. Possibly, like Newt Gingrich, he objects only when the decision goes against his own political preferences. That's hardly principled, though I hope he doesn't go so far as Gingrich, who would eliminate entire circuits if he didn't like their rulings. (Talk about no limits!)

    I should conclude by saying that I engaged with Voegeli because I found his book fascinating and challenging. It's far more worthy of your time and money than, say, Charles Murray's latest bit of hackwork. In a sense, my frustration with Voegeli when he says liberals and conservatives have "nothing to talk about" is that it is such a potentially interesting conversation, whether in the form of an "edifying, collegial seminar" or something more raucous.

    Mark Schmitt is a Senior Fellow and Director of the Fellows Program at the Roosevelt Institute.

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  • SOTU Name Checks Tax Reform and Campaign Finance but Misses Key Points

    Jan 25, 2012Mark Schmitt

    President Obama raised some very important issues but still isn't focused on the real roots of the problems.

    President Obama raised some very important issues but still isn't focused on the real roots of the problems.

    President Obama's third State of the Union address was certainly a masterful performance, delivered with a sense that he'd finally gained command of both the political and policy demands of the office. (Ryan Lizza's brilliant article yesterday on the early decision making around economic stimulus struck me as a sharp reminder of how far Obama was from that mastery in 2009. But, not to make excuses, nobody arrives in the Oval Office knowing how to do the job of President of the United States.) It also contained a wonderful statement of the social contract, the idea that people who acquire skills and work hard should be assured of the basic economic security that allows them to take advantage of opportunity.

    Plenty of praise will be heaped on the speech, so instead of layering on, I have two small gripes. First, it goes without saying that Obama's reaffirmation of the "Buffet Rule" -- that millionaires shouldn't pay a lower tax rate than salaried employees such as Warren Buffet's secretary, who sat in Michelle Obama's section of the gallery -- resonated brilliantly with Mitt Romney's tax returns, released the same day. Mitt Romney's effective tax rate is not only lower than Buffett's secretary, it's probably even lower than Buffet's, at just 13.9 percent.

    But Obama's focus on millionaires misses the big lesson of Romney's returns. They're not different just because the numbers are bigger. (Although they are very big -- even the trivial numbers that make an ordinary upper-middle-class tax return seem complex, like the credit for foreign taxes paid by a mutual fund, is in the high six figures for Romney.) But the real difference in Romney's return is that it doesn't look like mine or yours. There are no 1040s badly stapled onto the front page. It's an entirely different world, comprised of capital gains and more capital gains, a few dividends, and some interest.

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    And that should be the point. It's not that Romney's a millionaire, or multi-millionaire. There are surely other millionaires who make as much money as Romney or more but pay a far higher tax rate because all or part of it is in salary and none of it moves through the Cayman Islands. The real "Buffet Rule" should not be focused on the amount of income at all. It's not, as Obama put it last night, that millionaires should pay at least 30 percent. It's that all income should be taxed at the same rate, whether it comes from wages, salary, capital gains, dividends, interest, carried interest, or some new form just being invented by the rocket scientists.

    I was also a bit disappointed by the section of the speech on money in politics. As we see the emergence of Super PACs and a full return to the Watergate-era culture, the beginning of this election is a teachable moment, as they say, an opportunity to lay out an alternative vision in which public financing, broad participation, and reasonable regulation offset the Super PACs. Instead, Obama focused on two minor, distracting issues. He called for a ban on insider trading by members of Congress, responding to claims by Jack Abramoff, Peter Schweizer of the Hoover Institution, and an ancient, dubious academic study. There's nothing wrong with prohibiting members of Congress from using inside information, but it really isn't a significant element of corruption, in part because Congress is still a fairly open institution. If as an ordinary member you know that some bill or amendment is going to pass, chances are that lots of other people do as well. (The real corruption has been members being given early access to initial public offerings, but that has nothing to do with information and wouldn't be affected by an insider trading ban.)

    Getting more directly at the reality of money in politics, Obama called for prohibiting "bundlers" of political money from lobbying "and vice versa" -- that is, banning campaign contributions from lobbyists. A federal circuit court recently upheld North Carolina's ban on contributions from lobbyists, but this will still, if it passes, pose an interesting constitutional question about whether either donating (in regulated amounts) or lobbying are protected rights. Still, the focus on lobbyists, which has been the hallmark of the Obama administration's ethics agenda from the beginning, is far too narrow. As the example of Newt Gingrich's work for Freddie Mac and pharmaceutical companies shows, the real influence peddlers never bother with the proletarian business of "registering" as lobbyists. And most of the money that corrupts and distorts politics comes from wealthy individuals who aren't lobbyists, but who can certainly make their interests known to the politicians they support.

    What Obama's version of the Buffett rule and the two congressional ethics proposals have in common is that they are interesting ideas but far too narrowly focused. In all three cases, they are targeting people -- millionaires, lobbyists -- when they should instead be focused on the thing: money.

    Mark Schmitt is a Senior Fellow and Director of the Fellows Program at the Roosevelt Institute.

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  • Liberalism Unlimited? Finding the Boundaries of Policy is What We're All About

    Jan 13, 2012Mark Schmitt

    Liberals aren't seeking a limitless welfare state, but the right balance between competing approaches.

    Liberals aren't seeking a limitless welfare state, but the right balance between competing approaches.

    Breakthrough Journal, which I predicted would offer a significant contribution to the political debate when it launched last summer, has doubled down on expectations by publishing a companion to their challenging  "Modernizing Liberalism" article from the first issue with "Modernizing Conservatism" by the Reagan biographer and AEI scholar Steven Hayward. The path forward for the country won't be found just by identifying some middle ground between two unyielding ideologies or some magical third way. It will be found by creating some real conversation among people who are fully engaged in reevaluating the future of their own assumptions.

    The editors of Breakthrough invited my comments on Hayward's essay, which I tried to offer in a respectful spirit, although of course I'm not a conservative and conservatives don't need my advice. Hayward's main point was that conservatives should back down from the "starve the beast" strategy of cutting taxes and hoping that government will shrink as a result and acknowledge that they aren't going to crush liberalism forever. But before conservatives can make those compromises (which seem more like common sense than compromise), Hayward insists that liberals would have to back down from our aspiration to extend the "welfare state" to infinity.

    I had a couple of comments on Hayward's first points, which you can read at the site, but the main point of disagreement, particularly in his reply to me, had to do with the question of whether liberalism's aspirations for the welfare state are limitless. This is worth digging into at length because it's quickly becoming a major theme on the right. William Voegeli of the Claremont Institute has written an entire book, which Hayward draws on extensively, contending that liberalism knows no limits, that for us progress is "Never Enough." It's the central premise of Mitt Romney's new stump speech, which argues that Obama's "entitlement society" economic policies have as their goal "equality of outcomes," rather than "equality of opportunity," and won't stop until they (we) achieve that radical leveling. This is the central charge in the economic culture war: As Hayward puts it, "the absence of any principled limit to the reach of egalitarianism is implicit -- and occasionally explicit -- in modern liberalism. The insatiable egalitarian impulse is only held in check by practical politics, not by any discernible principle."

    Here's Hayward's killer piece of evidence: That liberals once talked about "comparable worth" -- that is, a system to adjust pay scales to reduce discrimination based on job classifications. "The idea almost made the 1984 Democratic platform," he says. That's it? An idea that didn't make it into a party platform 28 years ago proves that we're boundless egalitarians? (Actually, it was endorsed in the 1984 platform, and several states were implementing comparable worth standards for public employee job classifications without controversy. But it died such a quick death that most people under 40 have probably never heard of the idea.)

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    It's really a pretty good example of where liberalism finds its limits, and why the process of finding those boundaries makes liberalism such a vital and adaptive political philosophy. Employment discrimination was and is a real problem, and formal job classification systems that systematically underpaid women were part of it. The market wasn't getting rid of this discrimination any more than the market eliminated racial discrimination before the Civil Rights Act of 1964. A number of ideas were on the table, some of which worked. (Collective bargaining turned out to be a good way to fix discriminatory job classifications.) Ultimately, most liberals decided that a formal, government-mandated system of classifying the "worth" of different occupational categories across the private sector would be a solution worse than the problem. (I remember that being my view, even as a naïve college student at the time.) Liberalism is always about finding the right boundary between market and state, public and private, fairness and liberty. The process of considering and rejecting an idea like comparable worth is the process of finding that boundary.

    Hayward would say that's not a "principled" limit. A principled limit presumably would be obvious and not argued about. But what's the principled limit to libertarian conservatism? Is it the minimal "watchman state"? I know that in practice most conservatives don't go that far, but why not? Part of the answer is "practical politics," as Hayward says of liberalism. But what's wrong with practical politics? In a functioning democracy (which ours, in which money plays a huge role and institutional quirks such as the filibuster play an outsized role, is not), ordinary politics -- elections, debates, fights over values, legislative struggles -- are a perfectly valid or even ideal way of defining the limits of the governing party's philosophy. We even internalize the limits of practical politics. For example, I've never been a supporter of single-payer health care, and most of the liberal wonks I know haven't been either. If pressed on the point by one of the few single-payer supporters I know, I can't give a very good answer on policy grounds. I understand that single-payer would be fairer, more efficient, and would lift the burden of health insurance costs from employers. But it's never going to happen and so I don't waste much time or energy on it. That's a limitation on my aspirations imposed by practical politics, but it's no less real a limit.

    Egalitarianism (of opportunity) is one element of liberalism, but it's not the only one. Democratic practice is part of it, too, so the limits of practical politics are real -- not just the way we achieve other social goals, but an end in themselves. It's why making democracy work better is more than just a process concern. At the end of my comments on Hayward's essay, I suggested that the key to "modernizing conservatism" would be for conservatives to rejoin the democratic process, to get over the all-or-nothing impulse that led them to opt out of the health care debate entirely, or to attempt "nullification," to use James Fallows' word, of laws already passed. Hayward, like Romney, is basically saying that no real debate or compromise will ever be possible, that we face a pure clash of irreconcilable worldviews. That's simply not true of modern liberalism, and it shouldn't be true of conservatism either.

    Mark Schmitt is a Senior Fellow and Director of the Fellows Program at the Roosevelt Institute.

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  • Super PACs Keep Zombie Candidates Alive

    Jan 11, 2012Mark Schmitt

    Candidates used to worry that their funding wouldn't match their support. Now money keeps them shambling forward long after the voters have fled.

    Candidates used to worry that their funding wouldn't match their support. Now money keeps them shambling forward long after the voters have fled.

    Robert Farmer, a legendary Democratic fundraiser of the 1980s and 1990s, once described how presidential campaigns ended: "People don't lose campaigns. They run out of money and can't get their planes in the air. That's the reality." Most candidates would run out of money long before they ran out of potential votes or plausible paths to victory. The winner of the nomination would often be the candidate with enough financial reserves to keep going when the others couldn't afford jet fuel, and Farmer's skill was in making sure that his candidates -- Michael Dukakis in 1988 and Bill Clinton in 1992 -- had that advantage.

    That was the reality in 1992, but it's not the reality today, especially on the Republican side. On the day after the New Hampshire primary, we now have a phenomenon in which a number of candidates who really have no possibility of winning their party's nomination will keep going only because they can -- because the money is there, either in their own campaign accounts or in a Super PAC committed to supporting the campaign, such as the pro-Newt Gingrich group into which casino billionaire Sheldon Adelson recently dumped $5 million.

    So whereas in the 1990s we had candidates who died prematurely -- they ran out of money while they still had a chance -- we now have, in effect, zombie candidates. They're alive and can spend money and attack Mitt Romney even though their actual political lives are over. Rick Perry is not going to be the Republican nominee for president. (He joins a short list of well-financed Texans, including John Connally in 1980 and Phil Gramm in 2000, who spent many millions of dollars to win one or fewer delegates to the Republican convention.) Newt Gingrich is not going to be the Republican nominee. Jon Huntsman, Ron Paul, Buddy Roemer, Rick Santorum -- same deal. But they've got money and nothing to lose, and it seems they've all developed a personal distaste for Romney, so they will throw everything they've got at the nominee -- including attacks on his "vulture capitalism" at Bain Capital -- without regard to the consequences.

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    In the old system, money really mattered. It made or broke campaigns. Mostly it broke them. But it was the lack of money that really shaped the system. It was an invisible primary in which many candidates were excluded either before it started or soon into it. In the mid-1990s, Gingrich declared in a congressional hearing, "There's not enough money in politics," comparing political spending to the much larger marketing budgets for cereal and toilet paper. It was a declaration as shocking to the right-thinking reformers as the Sex Pistols' version of "God Save the Queen," but Gingrich was right at the time. The perennial gripe about "too much money in politics," or its promise to "get money out of politics," didn't reflect reality -- lack of money shaped politics as much as money itself. This was an era when losing presidential campaigns ran out of juice on $10 million or so, and candidates failed to mount a competitive race for Congress because they couldn't raise $1 million.

    But now the cliché of the past -- that there's too much money in politics -- has become a reality. That's probably going to be true on the Democratic side as well, definitely in the presidential race but probably also in many congressional contests. In a way, money matters less -- more candidates will meet the threshold to be competitive. But it's also moved to a scale where everything changes. Money becomes an end in itself. It shapes the behavior of campaign consultants, who can now become very, very rich. It's increasingly disconnected from candidates themselves or the incentives that might make sense for them. And it reaches beyond the campaign itself -- Gingrich is just one example of a candidate who is essentially in the race for money. His renewed prominence will generate speakers' fees, and book and video sales, that will continue to fuel his lifestyle. Politics no longer comes at a cost; it's a fundraising opportunity.

    The post-Citizens United world of campaign finance obviously calls for some rethinking of solutions. My own reform preferences, which center on public financing, are best suited for a world in which lack of money matters as much as overwhelming money. And that's still important. But we also need to confront the challenges of a world in which "too much money in politics" is not just a stale cliché, but the reality. A bunch of zombie candidates attacking Mitt Romney with money to burn might be welcome for Democrats, who can use their research and language in the fall, but it's no more the ideal democratic process than was the old one, when candidates had to quit because they ran out of money, not votes. We need a campaign finance system that both limits the excesses and gives real candidates a means to be heard.

    Mark Schmitt is a Senior Fellow and Director of the Fellows Program at the Roosevelt Institute.

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