Rediscovering Government

Despite a Strong Debate, Obama Remains Vulnerable on the Economy

Oct 18, 2012Jeff Madrick

The president found his voice in the second debate, but he still needs to make a clearer case for the progress he's made.

There has been entirely too much celebrating about President Obama’s debate performance on Tuesday. He did very well, without a doubt. He won hands down. He didn’t get into the ring cold, and he showed that he knew his stuff—and that Romney really didn’t.

The president found his voice in the second debate, but he still needs to make a clearer case for the progress he's made.

There has been entirely too much celebrating about President Obama’s debate performance on Tuesday. He did very well, without a doubt. He won hands down. He didn’t get into the ring cold, and he showed that he knew his stuff—and that Romney really didn’t.

But the economy remains the ace in the hole for Romney and Ryan. We haven’t nearly recovered in terms of jobs, and that’s a tough fact to slide by. The unemployment rate rose rapidly in Bush’s last term to around 8 percent, then peaked in 2009 at 10 percent and slowly came down to its current level. So we are only back to the start of the Obama term. No one ever won the presidency with a 7.8 percent unemployment rate. And we know, as Romney keeps reminding us, that median family income is awful and that poverty is up.

Everyone knows this, and yet Obama did not have a good enough explanation of how much progress has been made. He sounded defensive. So Obama needs a strong, non-defensive explanation of his achievements, and one way to put it is what would have happened had Romney won the presidency in 2008. You’d have a 10 percent unemployment rate with Romney as president. Poverty would be way up. He’d be blaming Social Security and Medicare for all his problems, and he’s find economists to claim he was right. They might already be cutting these programs forever “in order to save them.” It’s triage -- throw the elderly out of the boat and let everyone else eat the rations. People would be poorer. They would get less health care. Those in poverty would have fewer benefits. Is that the kind of America you want?

Odds are that Romney, if he put the Romney-Ryan plan into effect, would create a bigger deficit, too. That’s actually what we need, but a deficit based on tax cuts will create few jobs. (EPI ran some numbers based on Mark Zandi's multipliers.) And if Romney did close the many tax holes he promises to, recession is almost guaranteed even as your taxes rise.

This concept is tough to communicate in a credible way. It just sounds like economists bickering. But there is a record out there: George W. Bush’s. His central economic policy was tax cuts for the rich, and he produced the slowest job growth of any president since the Depression. Romney will do that again. Promise.

Obama has to be clear: He stopped a depression. He is getting the housing market to come back after the worst devastation since the early 1930s. Employment stopped falling. But he shows hesitation in critical areas. Will he protect Social Security and Medicare? If so, then say so. The other guys will cut it, even gut it. But is he vacillating too much here. The talk about Dodd-Frank doesn’t win him many points because most of America thinks the banks got away with murder. He needs a better way of talking about that. As for Obamacare, he is talking about its good points, but he needs to be bolder still. List them all, and list them fast.

And when he says Romney is lying, which is a deliberate motif of the Republican game plan, don’t say he lied with a smile. Say, "It makes me very sad and disheartened when the governor misleads the American people. It is unfair to you voters. And when challenged, my opponent will come back and tell you again, that’s not what his program is, or he never said that. Be proud of your claims, Governor Romney; don’t back off them to win over some in the middle of the pack. Tell them where you really stand."

Finally, it is critical to be constructive about the uses of government. Tell America the only way the country will succeed and the economy will remain prosperous is if we bring everyone with us. Every American must be able to contribute to the economy with a good education and good health. Every region must have good, dependable transportation. Every part of America must breathe clean air. Government can do that.

Unfortunately, there is no third debate about domestic matters since the next one is on international events. But I bet we get back to the economy in the third debate. I hope so. Democrats have to realize that every time Romney says "just look at the record," they are behind the eight ball. Obama needs a very clear, persuasive statement about how bad the economy was in 2009 and how much he did. He stopped the bleeding. The patient was in the hospital. Who put him there? The Republicans, with the same plan Romney is offering today. The patient is resuscitated. Jobs are coming back. The housing market has turned the corner. Everyone is still getting Social Security and Medicare. And now 30 million more will have health insurance. 

Oops, I've already said all this. Sorry, readers. But why do I have to keep repeating it?

Roosevelt Institute Senior Fellow Jeff Madrick is the Director of the Roosevelt Institute’s Rediscovering Government initiative and author of Age of Greed.

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In the Debate Over Government, We Don't Practice What We Preach

Sep 27, 2012George Lodge
Americans hold our system of government up as a model for other nations, but we show contempt for it at home.
 
Americans hold our system of government up as a model for other nations, but we show contempt for it at home.
 
In this electoral season, the role of government in the United States has become an important issue. Surveys reveal that most Americans don’t like government, especially the federal government. (State and local governments seem more acceptable.) And yet they want the things that government provides, such as defense, law and order, safe food and drugs, clean air, pure water, education, flood relief, health care, etc.
 
Candidates, especially Republican ones, therefore have a hard time clarifying their own positions. Romney promises “strong leadership,” but leaves us in doubt about where he would take us or how he would get there. He shies away from his Massachusetts health care law mandating insurance for all, even though he seems to feel it was a good idea. One is reminded of the Tea Party supporter who said, “Don’t let big government take away my Medicare.”
 
For many years I taught about the role of government in different countries at Harvard Business School. Many of my students came from outside the United States. They were perplexed by the disdain, indeed disrespect, for government displayed by their American classmates. “It seems odd,” they said, “that you Americans loudly proclaim to the world the virtues of your political process, urging the rest of us to copy you, while at home you deplore the government which that process produces. And it’s not so much the policies that you decry as it is the institution itself.” 
 
It was with Jimmy Carter in the 1970s that this ambivalence became particularly noticeable. He ran for president proclaiming himself an “outsider,” unfamiliar with and uncontaminated by the ways of Washington. We loved him for it. After about two years in office, however, he realized that he was indeed the captain of the ship and he had to know how to navigate. Ronald Reagan was more forthright. After trying to shut down the EPA, he said, "Government is not the solution to our problems; it is the problem.” And speaking of the institution he had been elected to lead, he said, “Government is like a stray pup. If you feed it when it comes to the back door, it just comes back for more.” He deregulated far and wide, leading to the collapse of the Savings and Loan industry in the late ‘80s and to subsequent government bailout. This was the first of many financial catastrophes, culminating in the meltdown of 2008, spawned by the anti-government climate.
 
The irony is that whatever the rhetoric, the size and cost of  government have risen to record levels during the past 30 years, causing an unsustainable deficit. To reduce the deficit – which we must – requires making government more efficient and setting strict priorities. That means more and better planning. We can, however, only imagine the negative poll numbers that would flow from the question, "Do you want more government planning?" But without it, we get visionless flailing, guided by the heavy hand of special interests. With that comes more anti-government chatter, perplexing the foreigners and confusing the rest of us.     

George Lodge is professor emeritus at Harvard Business School.

 

Tea Party rally image via Shutterstock.com.

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Mitt Romney's 47% Remarks: Wrong on the Facts, Not Just the Rhetoric

Sep 18, 2012Jeff Madrick

Americans who rely on government programs aren't "takers." They're people who have been left behind by our economy.

Americans who rely on government programs aren't "takers." They're people who have been left behind by our economy.

Mitt Romney’s “off-the-cuff” remarks that nearly half of Americans are “dependent” on government and believe they are “victims” who are “entitled to health care, to food, to housing, to-you-name-it,”  were widely publicized. This is in fact old saw for a certain kind of anti-government conservative. I have given talks deep in conservative territory where courteous memebers of the audience would come up to me afterwards and say they agree we should pay taxes for infrastructure but not for giveaways “to those people.”

But coming from a presidential candidate of one of the major parties, such remarks are stunning. Moreover, Romney later claimed he stood by them. He insulted half the American people; at least the people who spoke to me were talking about perhaps only one quarter of them! Romney also used the once-ubiquitous claim by conservatives that only half of Americans pay income tax. 

There was widespread criticism of Romney's rhetoric, but the stronger case against his condescending and elitist remarks is to present the facts, of which he seems happily unaware. Fortunately, the Tax Policy Center and the Center on Budget and Policy Priorities have pointed out that the large majority of Americans pay federal taxes when payroll taxes for Social Security and Medicare are included. The only Americans who don’t pay taxes are some of the elderly, the poor, and the young.
       
But it is the dependency issue that requires real information. Income for the lower half of American earners has been growing very slowly since the late 1970s -- more or less when Ronald Reagan took office. Compared to economies overseas, the wage performance has been just plain bad. 
        
Why? The declines of unions, the refusal to raise the minimum wage with inflation, and the increased pressure by Wall Street to minimize expenses in the short run -- typically labor expenses -- have all contributed. So have rapidly lost manufacturing jobs and globalization in general. Finally, on average economic growth was slow in the 1980s until the mid-1990s. Only in the late 1990s did growth push the unemployment rate down adequately to boost incomes for the lower half. In the 2000s, we had adequate growth but little job or wage growth. Without social programs like the Earned Income Tax Credit, the lower half would have hardly seen incomes grow at all.
      
Was dependency a cause of low incomes? This is easily refuted nonsense. Had social programs hurt rather than helped Americans, poverty rates would have been low in the 1950s. As Michael Harrington alerted America, the poverty rate was probably 30 percent in the 1950s. Finally, the U.S. government computed a poverty line -- a low one, mind you. It found the poverty rate at about 22 percent. 
      
Why? Couldn’t have been dependency. The War on Poverty had not yet begun. By the 1970s, however, the poverty rate was down to 11 percent. As Social Security expanded, elderly poverty rates fell from 50 percent to about 10 percent. And so on. These are the purposes of government, Mitt.
      
On our Rediscovering Government website you can find a set of charts and an important summary paper by Lane Kenworthy on this issue.
 

Roosevelt Institute Senior Fellow Jeff Madrick is the Director of the Roosevelt Institute’s Rediscovering Government initiative and author of Age of Greed.

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Central Banks Are Saving Democracy From Itself

Sep 17, 2012Jeff Madrick

We may want more democratic control over the Federal Reserve, but its independence is allowing it to push back against austerity.

We may want more democratic control over the Federal Reserve, but its independence is allowing it to push back against austerity.

The Federal Reserve's recent announcement of aggressive new policies is more than a little welcome. It involved a new round of quantitative easing focused on mortgage-backed securities, but more importantly, a statement that the Fed would keep rates low for a long time, even if the unemployment rate begins to fall markedly. In other words, the Fed will be more tolerant of rising inflation. A couple of points are clear and have been widely discussed:
 
First, more inflation is what this economy needs. It will reduce “real” interest rates down the road. It will also reduce the level of debt, which will now be paid off in somewhat inflated dollars. Lenders will pay the price; borrowers will benefit.
 
Second, the Fed is at last accepting its dual mandate, which is not only to keep inflation in check but also to keep unemployment in check as well. Inflation got almost all the focus since Paul Volcker’s reign in the early 1980s.
 
Third, inflation targeting as almost the sole purpose of any government policy is now either not applicable to current circumstances or never really was the answer to our prayers. The main claimant on the uses of either hard or soft inflation targeting was none other than Ben Bernanke himself. He was the champion of the Great Moderation, which held that less GDP volatility and low inflation were admirable ends in themselves -- proof of a nearly perfectly managed economy.  
 
Never mind that growth in the late 1990s was supported by high-tech speculation in the stock market, or that growth in the early 2000s was supported by a housing bubble and crazy, risky practices on Wall Street. And forget that job growth was the worst of the postwar period under George W. Bush, even before the 2008 recession, and wages had been performing poorly for 30 years. It was all really great, said Bernanke, and only a few mainstream economists disagreed.
 
But there is another point that needs emphasis and is being passed over. This one is about democracy. Bernanke is acting aggressively because the American Congress and president are locked in an austerity embrace. Fiscal stimulus is now turning into de-stimulus. Even the president’s budget calls for fiscal restraint. The deficit bugaboo is strangling the world.   
 
Those who want to make the Fed more subject to democratic control – and to a degree, I am sympathetic -- should heed a lesson here. Democracy -- that is, a democratically elected Congress and president -- is choosing a damaging course of austerity. In Europe, it is far worse. 
 
Needed policies are coming from America’s central bank, which was deliberately created as an independent entity. Note that it is Romney who is saying he wants Bernanke out of there and crying wolf about inflation. Bernanke, not subject to the whims of democracy, has had the courage to change his own thinking. He knows the consequences of tight policy now.
 
So what do we do? We should be a little modest about the universal benefits of democracy. For example, I think democracy may yet work to end the severest levels of austerity in Europe. People are mad. Governments are changing for the better. Demoracy in America is the only answer to an ever-richer and more powerful oligarchic class in the U.S., which wants to lower taxes, limit regulations, and cut government into ever smaller pieces.
 
But we must also deal with the disturbing fact that one of the least democratic of our institutions, the Fed, is the only one saving the day now. The same is true in Europe, where the European Central Bank is now acting intelligently, in contrast to the fiscal hawks dominated by the German policymakers and apparently supported by a majority of the German people. This issue is not simple.
 

Roosevelt Institute Senior Fellow Jeff Madrick is the Director of the Roosevelt Institute’s Rediscovering Government initiative and author of Age of Greed.

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What Does Obama Really Stand For: Community or Small Government?

Sep 10, 2012Jeff Madrick

The president's convention speech focused on the power of community, but the details of his future policies remain sketchy at best.

The president’s acceptance speech in Charlotte last week emphasized his new theme of community and "being in this together." For all its mushy sentiment, this is a major victory for those like us at Rediscovering Government who have been talking about the need to revitalize the discourse about government for quite some time.

The president's convention speech focused on the power of community, but the details of his future policies remain sketchy at best.

The president’s acceptance speech in Charlotte last week emphasized his new theme of community and "being in this together." For all its mushy sentiment, this is a major victory for those like us at Rediscovering Government who have been talking about the need to revitalize the discourse about government for quite some time.

Obama hesitated to sound such a theme in the past. He seemed to run from potential charges of class warfare or favoring big government. He failed to boast about his stimulus plan and some of his investment programs. He hardly talked about his health care program. The conversation in America has changed, of course, partly because of the vice presidential nomination of an extremist, Paul Ryan, who wants to cut government spending to 16 percent of GDP. That’s about the 1950s level. 

But Obama has been moving in this direction for quite a while now. He still avoids the word "government," preferring "community." But he also nicely introduced the word "citizenship." Among Ronald Reagan’s most damaging legacies was, I think, that he undermined the meaning of being a citizen in America. To him, we did not belong to a nation. We belonged only to ourselves. It would be nice to bring the concept of citizen back.

I can’t overemphasize how useful it was for Obama to lay out this old but now new vision. Bill Clinton, who had proudly proclaimed the end of big government in 1996, also said similar things. There is now a distinct us versus them as the election season begins. “Us” is those who want to work together. "Them” is those who treat community as a drug we'll become dependent on. It is probably no accident that the Republican ticket is composed of men descended from rich parents. Lots of rich kids become effective leaders, but many don’t understand how tough it can be to have no one to lean on, to borrow from (as Mitt now famously suggested), or even to be taught by.

But having listened closely to the Obama speech, I am still hungry for more candor. Even a few days later, I have no idea what Obama plans to do over the next four years. We know he will care, and we know he will not take a pound of flesh from the poor or strivers to the middle class if he can help it, but what do we know about his future programs?

He was about as careful as Romney and Ryan were in Tampa to avoid any specifics. Will he propose a new stimulus if the economy teeters, or will he remain dedicated to a narrow deficit-cutting plan even during a weak economy? Does he think there is anything truly commendable about the Simpson-Bowles deficit-cutting plan he had sponsored (if then mostly ignored)? The plan disastrously aims to limit federal spending to 21 percent of GDP, its 40 year- average, even as the population ages, health costs rise, and we know pre-K education is urgently needed. It would cut Social Security sharply. But Obama mentioned it in his speech, and it has become the widely cited “bipartisan” model for fiscal responsibility. The public relations program in its favor is a stunner. It is not really bipartisan at all, of course. Both the Democrat Bowles and the Republican Simpson are devoted and extreme deficit hawks.

What line will Obama hold on Social Security? Will he significantly upgrade his proposals to invest in infrastructure? How about a higher minimum wage? Better labor laws? Is there a potential jobs program in the works? Serious education reform? Will he encourage a lower dollar to help manufacturing and propose ways to create a more level playing field in global trade? Will he propose a serious tax increase to pay for needed public investment and buttress entitlements programs once the economy is righted?

I can’t say it’s bad politics to ignore the details for now. The best case for Obama is that as his health reform law helps more people, he will build American confidence in government. Mitt Romney has already conceded as much, saying he will retain some of Obamacare. With some proof that governmnet helps under his belt, perhaps Obama can move forward. He can add to his health care program with a true public option and perhaps expansion of Medicaid reimbursements to providers, which are too low. He can also adopt more rigid cost controls, drug negotiating procedures, and firmer preventive medicine incentives. A more positive attitude toward government might awaken fresh ideas about educational reform. Perhaps we can put art and music programs back into schools and tackle universal access to the web. Maybe we can even build a universal pre-K system that is cheap and good, one of our most important needs.

I know Romney has only one major idea in his head: tax cuts. If at first they don’t succeed, try again. But of course, tax cuts did succeed for the wealthy, just not for the “community” of America.

What’s really in Obama’s head? Is he a limited government man at bottom, just another Third Way New Democrat? Or is he really a community government man? I don’t know, and that bugs me. Moreover, I am not sure we will find out before Election Day.

Roosevelt Institute Senior Fellow Jeff Madrick is the Director of the Roosevelt Institute’s Rediscovering Government initiative and author of Age of Greed.

 

Barack Obama image via Shutterstock.com.

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The New New Deal and the Little-Known Transformation of American Government

Aug 31, 2012Mark Schmitt

The New New Deal isn't just another book about the White House or Congress. It tells the story of what happens when laws are passed and governing begins.

The New New Deal isn't just another book about the White House or Congress. It tells the story of what happens when laws are passed and governing begins.

What's the best book about the Obama administration, particularly on domestic policy? A few months ago, I would have recommended Noam Scheiber's The Escape Artists, but The New New Deal, by Michael Grunwald of Time, is not only the best book about the administration and its immediate challenges, but perhaps the only one that will (and should) continue to be read long after 2016. This post isn't a full review of the book (for that, I recommend Michael Cohen in The Guardian, but others are forthcoming) – rather, I want to highlight two aspects of the book that both made me feel a little guilty and got me thinking.

The narrative takes place in three locations: at the White House, in Congress as it interacts with the White House over the stimulus, and deep in the executive branch of government. Grunwald is very good on the drama in the White House, as economic advisors including Larry Summers, Christina Romer, and Jared Bernstein struggled to find a formula to contain the economic disaster that was also politically viable in an environment where neither politicians nor the public fully appreciated the depth of the crisis or the logic of Keynesian stimulus. If his book has none of the contrived Oval Office melodrama of Ron Suskind's Confidence Men, it's because Grunwald understands the subject, and thus knows that the range of options – and the range of real disagreement -- was not that wide.

He amply demonstrates that the great alternative-universe fantasy -- in which the stimulus could have been much, much larger and only political malpractice held it back – is exactly that, a fantasy. The miracle is that the economic stimulus, even if inadequate to fully restore the economy's lost output, was as large as it was, and managed to contain such a multitude of new ideas. Nonetheless, Grunwald acknowledges and digs deeply into the errors that the White House made, such as asking Romer and Bernstein to put forth a projection of unemployment rates with and without the stimulus – which may have been accurate in estimating the difference between the two, but not the overall employment picture.

The New New Deal also shines in its accounting of the legislative response, particularly the Republican opposition to the stimulus -- or, more correctly, to Obama. Grunwald offers a good model for journalists that it's possible to do more than just transcribe something like, “Senator X said he opposed the stimulus because it didn't contain enough tax cuts and infrastructure spending.” When a politician's stated positions make no sense and are glaringly inconsistent, a real journalist can say just that. His parsing of Senator Judd Gregg's shifting logic on the stimulus as he flirted with becoming Obama's Secretary of Commerce is masterful, as is his interview with former Delaware Rep. Mike Castle, a moderate Republican whose amiable rationales make even less sense than those of conservatives.

But The New New Deal made me feel guilty in two big ways. First, I've on occasion made the argument that progressives don't really have an adequate set of new ideas, especially about the future of the economy. But as Grunwald shows, not only are there ideas, but many of them are being put into place as we speak, from the Race to the Top education reforms to the birth of an American solar energy and battery industries to the mundane work of weatherization of millions of homes and businesses to save energy. I didn't fully appreciate the scope of the changes to the Unemployment Insurance system, for example. It's far from sufficient to offset the lost potential from the recession; there's a lot more to be done to rebuild the foundations of a broad and secure middle class, and some of it can't be done by government. But the germ of the ideas that will build the future are there.

Why has it been so easy to overlook that? That's the second point on which I feel guilty. Like most writers about public affairs, I tend to focus somewhat on electoral politics and on legislative politics and policy. Most media coverage is grossly overweighted toward electoral politics – that's why there are 15,000 reporters in Tampa to cover a fully scripted non-event. But even those of us who try to focus more on policy and legislation often overlook the big third dimension, which is government. Virtually nothing is written about the actual implementation of policy in the executive branch or in the states. Newspaper coverage is limited to a watchdog role that seeks out stories like the failed loan to Solyndra, which is how that one failure (which Grunwald shows was already underway in the last days of the Bush administration, under an existing loan program) could become the proxy for the entire stimulus, or as they call it in Tampa, the “failed stimulus.” Most federal agencies have no journalists at all covering them on a daily basis, other than reporters for specialized publications and industry newsletters.

While there are books comparable to Grunwald's about legislation (The Bill, by Steve Waldman, about the early Clinton public service and education initiatives, Showdown at Gucci Gulch, about the 1986 tax reform, and the classroom classic, The Dance of Legislation, by Eric Redman, which is about the 1970s), very few continue to look at what happened in government after the legislation passed. The richest sections of Grunwald's book open up the internal politics of government: one great set piece tells the story of the Department of Energy's office responsible for administering weatherization assistance for low-income families, one that had been a “turkey farm” (a term commonly used in public administration to refer to an unimportant office to which useless employees are assigned) and couldn't even get funds out the door. Given an impossible assignment in the stimulus – to weatherize 600,000 homes – an entepreneurial young leader, Claire Broido Johnson, turned the office around and exceeded the goal.

Such stories, along with accounts of the ARPA-E clean-energy research program and the Race to the Top education program, show that the Obama administration is changing government in ways that go much further than the “Reinventing Government” initiatives of the Clinton-Gore era, which focused mainly on government's relation to citizens, who would be treated more like customers. Creative, ambitious leadership is encouraged, and real competitions, like Race to the Top, are replacing the formula- or earmark-funded programs of the past. It took a while to get started (which is why some of it was ineffective as short-term Keynesian stimulus), but its long-term effects on both government and the economy are likely to be profound.

To restore confidence in government, it is necessary to do all these things – to make government more responsive, imaginative, tough on failure but supportive of promising ideas. But it won't do any good if people don't know about it, and the phrase “failed stimulus” goes unchallenged. The New New Deal is not only one of the two best books ever written about government (the other is Cadillac Desert by Marc Reisner), but an acute reminder to every journalist, political writer and political analyst to pay more attention to real stuff of government, which doesn't happen at either end of Pennsylvania Avenue.

Mark Schmitt is a Senior Fellow at the Roosevelt Institute.

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Yesterday's Wind? Paul Ryan's Speech Was Full of Hot Air.

Aug 30, 2012Jeff Madrick

Paul Ryan may have a reputation as a truth-teller, but his convention speech was far from the truth.

Paul Ryan may have a reputation as a truth-teller, but his convention speech was far from the truth.

Honest? Intellectual? Neither quality was on display last night when Paul Ryan gave his first major national speech to America and provided red meat to his fellow Republican conventioneers. Profoundly sarcastic about Barack Obama, taking one rhetorical swing after another about how the administration failed, he promised in soaring language that Mitt Romney and he would do far better, put America back to work, and save Medicare. How? Not a word. No mention of a plan, not even in broad strokes.

Perhaps Ryan was told to leave the plan to Romney during his acceptance speech. But of course, neither Romney nor Ryan has told us much about their plan at all. They will cut taxes, but will they close the deficit they so deplore and blame on Obama? The CBO says Ryan’s plan won’t do that for decades, and even that forecast relies on spending cuts and the closing of tax loopholes neither Ryan nor Romney will specify. This is honesty?

At the very least, Ryan could have told us why he believes in small government, not simply that he believes in it. He could have tried to present some evidence, theory, or even conjecture about how it limits growth. He could have sought a historical example or two of a better America. Of course, this would have been difficult. The facts don’t back him up.

Ryan said Obama was trying to sail on “yesterday’s wind.” The Republican chant about making the poor personally responsible for their own good is truly “yesterday’s wind.” Before Social Security, when workers were largely “responsible” for their own retirement, about half the elderly lived below the poverty rate. American policymakers paid too little attention to poverty until Michael Harrington wrote his book, The Other America, documenting how many poor there were. In the 1950s, before Lyndon Johnson’s War on Poverty, the poor had to get by on their own, as Republicans would have it today. The poverty rate then was 22 or 23 percent, but now America’s official poverty line is lower compared to median incomes than in most other rich countries.

If Ryan is what passes for intellectual in Republican circles, the party is in serious trouble. He is an ideologue. He espouses faith in a small government dogma, not theory or evidence. And we have heard this chorus for a century or two. Good thing the nation ignored it and built a set of social programs that were central to the development of a middle class -- civil rights for black people and women, free education, major transportation systems, and protection from workplace abuses, old age, and the scourge of being born into poverty.

As Ryan said about Obama, his facts are merely true because he states them. Last night, Ryan took two big cheap shots. He had the audacity to suggest Obama was to blame for an auto plant that GM closed before he took office, when in fact Romney was opposed to the Obama bailout of GM. And of course there was Obama's $700 billion “raid” on Medicare in order to provide coverage for others, mainly the poor and the young. Obama is cutting back reimbursements to providers and a subsidy for Medicare advantage. It won’t affect senior benefits. But the honest and intellectual Ryan did not explain this to us.

The Ryan charade is about to end. Ryan showed himself last night to be a politician willing to distort the facts and cynical enough about his audience’s intellectual capacity to provide no evidence, theory, or history to support his points even if he had them at his disposal. The Republicans’ rising star turned out to be a breath of stale air. 

Roosevelt Institute Senior Fellow Jeff Madrick is the Director of the Roosevelt Institute’s Rediscovering Government initiative and author of Age of Greed.

 

Paul Ryan image via Shutterstock.com.

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Memo to RNC Delegates: You Didn't Build It, But Feel Free to Pay Up

Aug 28, 2012Jordan FraadeSarah PfeiferJeff Madrick

“We built this” is the phrase ringing throughout the (largely publicly funded) Tampa Bay Times Forum this week at the Republican National Convention. Though it is meant as a rebuttal to President Obama’s remarks earlier this summer emphasizing that government is the dynamic foundation and support system upon which all Americans rely, its use as a theme of the RNC is actually a critical illustration of the president’s point.

“We built this” is the phrase ringing throughout the (largely publicly funded) Tampa Bay Times Forum this week at the Republican National Convention. Though it is meant as a rebuttal to President Obama’s remarks earlier this summer emphasizing that government is the dynamic foundation and support system upon which all Americans rely, its use as a theme of the RNC is actually a critical illustration of the president’s point. To be clear, Obama was saying that “there are some things (like fighting fires or building infrastructure) that we (the government and its people) do better together,” such as constructing a multi-million dollar professional sports facility in downtown Tampa or, say, rebuilding the infrastructure and restoring public services to an entire city in the wake of a (relatively small) hurricane to the tune of millions of dollars. But if the 50,000-plus people visiting Tampa for the RNC this week really want to take credit for these enormous feats of collectively funded and supported work, we have helped them figure out just how big a check they’ll need to write.

As Media Matters pointed out last week, the Tampa Bay Times Forum was built in 1996 by the Tampa Bay Sports Authority, a public entity. Of the $139 million construction cost, 62 percent, or $84 million, was paid with public money – bonds backed by the City of Tampa and Hillsborough County, paid back through sales taxes, tourist development taxes, and ticket surcharges. More recently,  the Republican National Committee, which received over $18 million from the federally supported Presidential Election Campaign Fund, shared costs of over $500,000 with the Tampa Bay Lightning just to upgrade the arena’s sound system.

Additional preparation for the RNC cost the City of Tampa upwards of $2.7 million in beautification projects and infrastructure upgrades, like improving highways, redesigning signage, planting palm trees, and bringing a locally loved fountain back into use. Commuting from up to 90 miles away, RNC delegates will surely find these upgrades to be pleasant as they are introduced to the hallowed Tampa tradition of long, grinding commutes. Some delegates may even be transported around by a fleet of 400 city-chartered buses. Those same delegates who, like Florida Governor Rick Scott, are adamant about blocking any further government expenditures on mass transit are more than welcome to walk to the Forum (although a 2007 survey of cities found that Tampa has no walkable destinations, and 50 percent of the urban core is set aside for parking).

Downtown Tampa offers delegates benefits that come as a result of public investment in the city’s urban core (unless, of course, they choose to avert their eyes out of principled opposition to wasteful government spending on things like public art and higher education). The Riverwalk, a two-mile green space along the Hillsborough River, has already enticed the Tampa Museum of Art to relocate and freed up space for public events. The city received $11 million from the Obama administration to put the finishing touches on the project, and is spending $3 million to turn downtown’s Zack Street into a pedestrian thoroughfare with benches, landscaping, and street art. Finally, along the downtown riverfront, the University of South Florida’s new Center for Advanced Medical Learning and Simulation is the world’s largest medical facility that allows medical students to practice surgery without a patient. The center was built at a cost of $38 million and was partially paid for by Build America Bonds, an Obama administration program that provides capital for infrastructure projects and issued over $100 billion in bonds in its first year of operation. More wasteful government spending!

Of course, no event in Florida in August would be possible without hurricane season preparation. In anticipation of Tropical Storm Isaac’s imminent development into a hurricane, the RNC cancelled Monday’s convention activities. Though it’s not clear yet what cleanup the storm will require, similar strength storms generally cost FEMA millions in statewide recovery. When Tropical Storm Debby hit Florida earlier this summer, FEMA spent over $15 million on individual assistance.

For the 2,286 RNC delegates eager to claim they “built this” – whether it’s the Tampa Bay area infrastructure or social services, Tropical Storm recovery included, provided by the host town – we’ve done some math to help them determine just how much money they would have to personally shell out to validate such a claim. Diffusing a $15 million cleanup cost among 2,286 delegates would lead to a total of about $6,562 per delegate—a small price to pay to make sure the party can actually nominate a candidate for president. If we ask everyone visiting Tampa for the convention to pitch in—roughly 50,000 people, according to the RNC website (and yes, 15,000 members of the press, that includes you too)—each person would pay $300 to help clean up. Natural disasters aren’t cheap. Without coordinated government efforts to manage and clean them up, they would be even less so. To cover the roughly $100 million in Tampa Bay area beautification and service and infrastructure improvements, including the construction and upgrades of the Tampa Bay Times Forum, each delegate would need to pitch in an extra $43,745, or an extra $2,000 per visitor, and that doesn’t include myriad other costs going into this week’s events, including the nearly $50 million federal grant covering RNC security.

With this $15 million tucked away and set aside for hurricane cleanup and over $100 million secured for RNC-related infrastructure and beautification, Tampa and Florida taxpayers could go back to taking care of day-to-day expenses, like improving Medicare coverage in a city and state where the need for it is acute. Florida’s health care costs are well above the national average—it ranks 18th in per-capita health spending overall—but the state rockets to second place nationwide in Medicare spending with $11,893 spent per enrollee. The state also ranks second behind California in gross Medicare spending, with just over $39 million spent on the program. And while the Tampa and St. Petersburg hospital referral regions do not contain Florida’s highest per-enrollee Medicare expenditures, nor are the cities among Florida’s most elderly, the city’s age 50-64 population grew by 40 percent between 2000 and 2010. A city whose largest-growing age group is on the cusp of Medicare eligibility is hosting the convention of a party that has dedicated itself to ending the program as we know it.

There’s a larger-than-usual chance that your average Republican delegate will be a Medicare recipient, too. While the convention does not officially release information on the age of its delegates, several states do. North Carolina, Texas, and Connecticut, for example, are all sending delegations whose median age is 57 or 58. Any delegates who require medical care during the convention, hurricane or no, will have the option of visiting Tampa General Hospital, a downtown hospital affiliated with the public University of South Florida—but not, alas, with the for-profit hospital chain managed by Florida Governor Rick Scott in the 1990s and later found guilty of Medicare fraud. Tampa General is the city’s largest hospital, with an operating revenue of $1.1 billion in fiscal year 2011—a year before it was voted the best hospital in Florida by U.S. News and World Report. No doubt at least one Republican delegate, for some reason or another, will find a reason to visit the hospital and help contribute to this nonprofit, government-funded success story.

As for the delegates who stay healthy, we hope you’ll enjoy your stay and that your cheers of “we built this!” are worth the $50,307 you’ll have to refund the government for all the work it did to prepare the city on your behalf. And remember to set a little extra aside for tourist activities!

Jordan Fraade is a former member of the Roosevelt Institute | Campus Network.

Sarah Pfeifer is Manager of Programs for the Roosevelt Institute.

Roosevelt Institute Senior Fellow Jeff Madrick is the Director of the Roosevelt Institute’s Rediscovering Government initiative and author of Age of Greed.

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Rediscovering Government

A Brief History of the U.S. Government and the Economy

Aug 15, 2012

Check out this Prezi highlighting 16 of the most significant contributions government has made to the U.S. economy over the last 200 years:

http://prezi.com/srpyvqqn8bff/rediscovering-government/

Check out this Prezi highlighting 16 of the most significant contributions government has made to the U.S. economy over the last 200 years:

http://prezi.com/srpyvqqn8bff/rediscovering-government/


Rediscovering Government on Prezi

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Rediscovering Government

Ignore the Deficit Hawks. Social Security is Easy to Fix.

Aug 14, 2012Jeff Madrick

On the 77th anniversary of Social Security, we're celebrating what has made the program so important and why it remains vital today. Jeff Madrick explains why Social Security's so-called fiscal crisis has been overblown and looks at the many simple solutions on the table. Read the rest of our coverage here.

On the 77th anniversary of Social Security, we're celebrating what has made the program so important and why it remains vital today. Jeff Madrick explains why Social Security's so-called fiscal crisis has been overblown and looks at the many simple solutions on the table. Read the rest of our coverage here.

Little is as distressing in the public discourse as the linking of the financial problems of Social Security and Medicare. It is a favorite ploy of the deficit hawks to claim we must reform our entitlement programs without distinguishing between the two. I am at a loss to explain this. It is clearly ideological -- small government no matter who gets hurt. But Social Security payouts will rise from roughly 5 percent of GDP to 6 percent at worst down the road, while Medicare will rise by much more.

Nevertheless, poorly educated pundits, willing to believe the self-proclaimed centrist view that we cannot tax our way to solvency, demand Social Security reforms from selfish baby boomers. Monique Morrisey of the Economic Policy Institute does good work on this. Moreover, there is even a detailed Senate report on the issues that requires only a little updating. Maybe journalists should read it before they write about the subject. Its title is rather self-explanatory: “Social Security Modernization: Options to Address Social Security Solvency and Benefit Adequacy from the Senate.” 

First, remember that Social Security provides nearly 60 percent of the elderly more than half of their income. Seventeen percent receive all their income from Social Security, mostly households headed by elderly women. Most remarkably, and it would be nice for young people to register this, the poverty rate measured by the federal government for the elderly was 35 percent in 1959. As Social Security became more generous, it was reduced to 10 percent, about where it stands today. This is one of the great social achievements of our time.

Now for that future financing gap. It's true that payroll taxes won’t cover all the benefits to be paid in 25 years or so, as the ratio of the elderly to workers rises and life expectancy grows. But a more important and lesser known cause of this future gap is inequality of income. Tax revenues are reduced because incomes have stagnated for so many. Due to an earnings cap above which taxes are not collected, now about $110,000 a year, combined with the rapid rise of incomes for high-end earners, some 17 percent of aggregate earnings are not covered by the payroll tax. In 1980, only 10 percent were not covered.

But the solvency gap, as we might call it, is not very large, amounting to only 2.67 percent of GDP. How can that be closed? Pretty darned easily. For example, the cap can be eliminated. This would close almost the entire gap if high-end earners do not receive higher benefits. It will still close four-fifths of the gap if they do.

Another way to close the gap would be to raise payroll taxes by 1.1 percentage points, from 6.3 percent to 7.6 percent. This would entirely close the solvency gap. Or the tax could be raised by a little more than 1 percentage point in 2020 and another percentage point in 2052, also eliminating the solvency gap.

A combination would also work. If the cap were raised to cover 90 percent of all workers, for example, it would close about 25 percent of the gap. Thus, a tax increase to close the rest would be smaller. Alternatively, the payroll cap on employees could be limited to 90 percent and eliminated altogether for employers. This would just about eliminate the gap.

There are many other options and permutations, but any claim that a pragmatic increase in taxes cannot close the gap is utterly wrong. 

Let’s also keep in mind that Social Security solvency is based on a 75-year forecast. Any increase in the rate of growth over what is expected will reduce the gap significantly. Now to really be pie in the sky, there is also the possibility of investing in the economy to enable it to grow faster—investing in infrastructure, education, and so on. More equality of income would also reduce the solvency gap. For those eager for major benefit cuts because we can’t be sure about growth, well, they can be quite modest if coupled with tax increases. But they are not necessary now!

Medicare is a different issue. In sum, the nation pays about twice as much for what it gets from health care than it should compared to other countries. This is the domestic problem of our time. I think Obamacare may start us down the road to control these costs, especially if we ultimately add a public option at something like Medicare rates. That’s where pundits and deficit hawks should focus their attention. Instead, they like picking on Social Security, our single greatest achievement. Why?

Roosevelt Institute Senior Fellow Jeff Madrick is the Director of the Roosevelt Institute’s Rediscovering Government initiative and author of Age of Greed.

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