How Can We Fight Poverty in This Age of Austerity?

Aug 8, 2011Georgia Levenson Keohane


In a week-long series, prominent thinkers will look at ways to harness the private sector or extract more from a recalcitrant public sector in order to combat poverty and inequality. In the first post, Roosevelt Institute Fellow Georgia Levenson Keohane reminds us that while the government should be tackling these problems, there are practical and potentially exciting ways to get things done without it.


In a week-long series, prominent thinkers will look at ways to harness the private sector or extract more from a recalcitrant public sector in order to combat poverty and inequality. In the first post, Roosevelt Institute Fellow Georgia Levenson Keohane reminds us that while the government should be tackling these problems, there are practical and potentially exciting ways to get things done without it.

If there is any silver lining to the debt ceiling fiasco, it is that it has reshaped the contours of our national debate. No longer are we simply concerned with fiscal, economic or credit rating calamity; the crisis has gone existential.

Facts, it turns out, are stubborn and occasionally inconvenient. A budget deal that shreds the fabric of our social contract cannot ignore the following: that the recession has severely exacerbated poverty in the U.S.; child poverty remains shamefully high; inequality soldiers on; record and persistent unemployment -- either by official or more sobering measures -- has made life for millions of Americans scrambling to stay out of poverty cruelly hard and stressful. And all this before an unprecedented round of cuts to basic programs and services that comprise our safety net that will worsen, rather than improve, matters. The best route out of this mess, to say nothing of long-term prosperity, is jobs. Full stop.

On the question of employment, one does not need to be a student of history, Keynes, or a host of recent examples to face up to reality. Just take a look at the current British experiment in slash and burn austerity, the successes of the U.S. stimulus package (and in particular the tax credits, food stamps, unemployment insurance, and other social welfare provisions) that kept poverty from getting a whole lot worse, the basics of cost benefit (investments in things like early childhood education or healthcare for everyone, and for poor people especially, yield positive returns) or the basic levers of public policy (budgets have two sides, expenses and revenues). Job creation will require government spending. Full stop number two.

It’s free! Sign up to have the Daily Digest, a witty take on the morning’s key headlines, delivered straight to your inbox.

When it comes to fighting poverty, it is critical that we continue to wage these ideological and political battles. Yet at the same time, we must also embrace a pragmatic approach to policy formulation that recognizes the harsh realities of austerity: government sorely lacks the resources -- cash and political will -- to meet the surge in human needs. In the coming days, a series of posts will address issues of poverty and equality of opportunity in exactly these terms, illustrating important 'social innovations' that allow us to do more with less. Broadly speaking, we will hear about two kinds of approaches: initiatives that enable us to do a better job with the government funds we already have, and those that help attract new sources of capital to bear on social problems. Topics will include recent efforts to improve measurement and evaluation of critical social services, new programs designed to help poor people access benefits for which they are already eligible, experiments in designing 'social finance' instruments that aim to monetize the value of raising people out of poverty, and others. These are collaborations between non-profit organizations and their allies in local, state and the federal government to harness new sources of philanthropic or other private investment in improving social welfare.

The progressive project would be wise to remember that these social innovations are in no way a capitulation to our current and fractured tail-wagging-the-dog politics. Rather, they represent a forward looking recognition that economic recovery and sustained, shared prosperity will require practical, cross-sector and creative solutions to our most pressing problems.

Georgia Levenson Keohane is a Fellow at the Roosevelt Institute.

Share This

Thomas Paine's 'Common Sense' is the Cure for Cynical Citizens

Jul 27, 2011Harvey J. Kaye

american_colonial_flagPaine's pamphlet is portable and jam-packed with potent messages.

american_colonial_flagPaine's pamphlet is portable and jam-packed with potent messages.

Need refreshment from the summer heat? A respite from the debt-ceiling debacle? A break from the sense that all the hope was for naught? Read the book that turned America's colonial rebellion into a revolution, the work that transformed British subjects into American citizens, the pamphlet that imbued American life with democratic imperative and impulse. Read Thomas Paine's Common Sense.

Paine's first great work not only inspired the founding generation to make history. It also encouraged generations of progressives from freethinkers, abolitionists, and suffragists to labor unionists, populists, and socialists to redeem America's exceptional purpose and promise and carry on the fight to extend and deepen freedom, equality, and democracy.

It’s free! Sign up to have the Daily Digest, a witty take on the morning’s key headlines, delivered straight to your inbox.

Common Sense will remind you of what it means to be an American. Lines such as "The sun never shined on a cause of greater worth" and "We have it in our power to begin the world over again" will give you the strength to deal with both rightwing rants and "creeping cynicism." Plus, at just under fifty pages it is not only guaranteed to be low priced in these trying economic times, it is also easy to take along to the beach...

Of course, then you'll want to read more of Paine's words. So, you might want to pick up an anthology of his writings. That way you can also read:

The Crisis: "These are the times that try men's souls..."

Rights of Man: Paine's attack on Britain's political and social order that outlines a pioneering plan for a social security system.

The Age of Reason: A devastating critique of the power of clerics and organized religion.

Agrarian Justice: Avisionary plan for taxing the propertied rich to provide stakes for young people starting out and pensions for the elderly.

The more you think about it, Paine's work should be read not only by vacationers and beach-goers, but year-round by citizens, students, and especially the folks in the White House and up on Capitol Hill.

Harvey J. Kaye is the Ben & Joyce Rosenberg Professor of Democracy and Justice Studies at the University of Wisconsin-Green Bay and the author of Thomas Paine and the Promise of America. He is currently writing The Four Freedoms and the Promise of America: FDR, the Greatest Generation, and Us. Follow him on Twitter:

Share This

What Conservatives Don't Want You to Know About Government's Role in the Economy

Jun 28, 2011Jon Rynn

fdr-we-need-you-200If we don't learn the lessons from the Great Depression, our infrastructure will crumble, the recovery will stagnate, and our economy will be left behind.

fdr-we-need-you-200If we don't learn the lessons from the Great Depression, our infrastructure will crumble, the recovery will stagnate, and our economy will be left behind.

The current conventional wisdom for many in the U.S. is that the less government is involved with the economy the better. But this is precisely the moment in history when more government is needed. Without government intervention, the recovery will continue to stagnate, the economy as a whole will remain off balance, and we won't be able to meet the challenges facing the country.

I have been proposing a different way of looking at an economy than the traditional, neoclassic one. In my view, each industry fits into a wider system, as say trees or deer or bears fit into a wider forest ecosystem. In the same way, goods manufacturing, machinery industries, service industries, infrastructure, and the myriad other parts of a functioning society -- including the health and education systems -- have to work properly in order for the economy as a whole to function, with manufacturing functioning as the central sector. All industries are co-evolving, dynamically growing, concentrated within discrete geographical regions. And it is the responsibility of government to help orchestrate this interaction, or else it can turn into an ugly riot.

But at the root of the neoclassical world view is the idea that the economic system is self-regulating, that is, if the economy is pushed off course by "external" forces, then it will become stable by itself -- without government interference. And yet we know that economies are constantly growing and changing -- that is, they are not stable -- and they are often under threat of recession and depression. That is why governments always have to be part of the solution. They are needed in order to support economic growth, maintain the right structure of the economy, and intervene when the economy goes bad.

FDR's presidency is the perfect example of this. When he became president, Herbert Hoover had just spent several years trying to reverse the Great Depression with market-based solutions, but FDR championed a set of governmental policies that turned the country around. To deal with unemployment, FDR established the Works Progress Administration, or WPA, which was not only designed to employ one fully able member of each household in which no one could find work, but also to build up the country's physical infrastructure. Building infrastructure is what governments do best. In fact, one could say that civilization started when the first governments constructed the irrigation and drainage systems that enabled agriculture to flourish. The United States, like every successful country, has a long and rich history of infrastructure building, without which the country would have very likely stayed poor. From canals like the Erie Canal before the Civil War, to the railroads after, from the dams that even conservative Republicans like Calvin Coolidge initiated, to the WPA that built libraries, schools, airports, roads, and other structures in virtually every town, to the Interstate Highway System championed by a Republican president, the United States has kept itself at the forefront of the global economy by making the building of transportation, energy, communications, water, education, and other systems the foundation of prosperity.

Sign up for weekly ND20 highlights, mind-blowing stats, and event alerts.

Partly as a result of his interventions into the economy, FDR was able to lead the nation into World War II by fundamentally transforming the economy to produce military equipment. At its height, one third of the country's GDP was devoted to the war effort, with millions fighting overseas. That's five trillion dollars in today's economy. In other words, even assuming the continuation of a one trillion dollar military budget in the face of no wars of necessity, the economy has four trillion dollars left over to remake itself while providing for a comfortable standard of living for its inhabitants.

Instead of learning this lesson of history, however, our current political class seems determined to follow Herbert Hoover, not FDR. Meanwhile, the long-term domestic problems we face are worse than what FDR confronted. In the 1930s, the US was by far the leading manufacturing power and the top producer of oil; now the manufacturing sector is sinking fast, and not only do we import almost two-thirds of the crude oil we process, the global supply of oil is becoming harder to produce and is shrinking. In addition, we desperately need to eliminate the use of fossil fuels and transform agriculture and forest management in order to avoid the worst of global warming. The path forward is clear: we need an electric transportation system based on high-speed rail for long-distance travel, electric rail for freight, transit and small electric cars for intra-city movement, wind and solar power for electricity generation, recycling on a serious and massive scale, a densification of urban areas, and a more labor-intensive, localized, organic agricultural system. And these could provide the market for a revived manufacturing sector.

Only the government can build all of these systems in the time needed to both save the economy and save the environment. Incentives can go part of the way, but not fast or far enough. Taxing carbon or trading rights to carbon won't solve global warming or decrease the use of oil as quickly as we need them to; lowering taxes or reducing the deficit won't bring the manufacturing sector back. Government-as-builder does not mean government-as-warrior or government-as-Big-Brother. It is possible to have a strong government that is peaceful, democratic, and not beholden to our economic royalists, as we currently are. But maintaining democracy is never easy; the political system is no more a self-regulating system than is the economy. At least we can have a clear vision of where we are heading.

History doesn't care if the political conversation of the United States won't allow for talk about large-scale government intervention into the economy. The path to economic and ecological collapse is paved with "realistic" intentions. If the conservatives can be audacious enough to threaten policies that will further destroy the middle class and poor for the sake of the superwealthy, why can't progressives draw on a rich American history, from before FDR and after, to rebuild a once mighty nation and help the rest of the planet move toward a sustainable future?

Jon Rynn is the author of the book Manufacturing Green Prosperity: The power to rebuild the American middle class, available from Praeger Press. He holds a Ph.D. in political science and is a Visiting Scholar at the CUNY Institute for Urban Systems.

Share This

Goolsbee's Gone: Another Top Obama Econ Advisor Exits

Jun 7, 2011

A Monday night announcement has shaken things up in Obama's economic team. Austan Goolsbee, chairman of the Council of Economic Advisers, is packing his bags, heading back to Chicago to resume his teaching gig. What does the exit of a man central to the crafting of Obama's economic policies for the past two-and-a-half years really mean? Roosevelt Institute fellows weigh in.

A Monday night announcement has shaken things up in Obama's economic team. Austan Goolsbee, chairman of the Council of Economic Advisers, is packing his bags, heading back to Chicago to resume his teaching gig. What does the exit of a man central to the crafting of Obama's economic policies for the past two-and-a-half years really mean? Roosevelt Institute fellows weigh in.

"Anyone who is a good economist does not want to be associated with the policies of this Administration that has turned a blind eye to idle resources and tragic levels of unemployment."
-Robert Johnson, Senior Fellow, Roosevelt Institute

"There shouldn't be a wet eye in the place. Goolsbee's legacy is wretched: He approved of bailing out the banks, insisted that prosperity was just around the corner, and recently kept repeating that the private sector must drive recovery, in the face of overwhelming evidence that recoveries from financial crashes take years if the government does not move vigorously to offset private sector deleveraging and caution. But it's an ill wind that blows no one any good: Now the President has yet another vacancy to fill; at least there is a chance that somebody who takes to heart the great lesson of the New Deal -- that government can stimulate the economy if it doesn't lose its nerve (as in 1937 and, it appears, now) -- can find a place in the White House."
-Thomas Ferguson, Senior Fellow, Roosevelt Institute and Professor of Political Science, U Mass, Boston

"Goolsbee is another champion of the 'fiscal austerity lite' ideology that continues to wreak havoc on the US economy. As one of the President's main economic spokesmen, he has championed the Administration's Wall Street-centric approach, notably in regard to the bailouts. These programs have fostered the impression that there is already plenty of fiscal related stimulus, though virtually all employment measures indicate that full recovery is far from accomplished and many needs that are more pressing remain unaddressed. He won't be missed."
-Marshall Auerback, Senior Fellow, Roosevelt Institute

"Austan Goolsbee is a well-trained and by all accounts affable economist. But these have been unusual times and he seemed unequal to them. The current administration policy is a wish and prayer that GDP will grow at 3 to 4 percent a year. It is construed that this will be sufficient to get the president elected as the unemployment rate, if high, starts to fall consistently.

As I have noted before, the risks to that forecast are very high. This seems lost on an administration, and perhaps on Goolsbee. They are unwilling to take the action needed, despite the political obstacles, to keep the economy growing. To the extent Goolsbee contributed to this, he wil not be well-remembered and his leaving may be useful. This of course depends on his replacement, about which there is no reason to be optimistic.

But the main issue is that this Administration has never evinced a passion about the loss of jobs in this economy and the suffering and confusion of tens of millions of Americans. Goolsbee was in a position to make this clear to the president. Apparently, he did not. There is no jobs program, no outrage about levels of unemployment, no anger at nonsense written about structural unemployment. Goolsbee seemed to be one of those people who didn't want to rock the boat much. We need a boat rocker."
-Jeff Madrick, Senior Fellow, Roosevelt Institute

"I hope he has a few million apologies ready for the foreclosure victims he did nothing to help."
-Matt Stoller, Fellow, Roosevelt Institute

Share This

Why Liberals Need to Take a Page from (Classical) Republicanism

Apr 28, 2011Ned Resnikoff

flag-150Progressives need a unified set of principles when reclaiming the politics of freedom.

flag-150Progressives need a unified set of principles when reclaiming the politics of freedom.

America's founders baptized her in the rhetoric of personal liberty. Jefferson, when listing the rights of all people in the Declaration of Independence, put liberty second only to life. Nathan Hale and the state of New Hampshire declared that liberty was actually worth more than life. And ever since, freedom and liberty have been central concerns in American public discourse.

That might help explain why, as Professor Corey Robin writes in the most recent issue of The Nation, "conservative ideas have dominated American politics for thirty years." The right has virtually monopolized the rhetoric of freedom, and the left has failed to offer up a single competing vision.

Robin's article, called "Reclaiming the Politics of Freedom," is a proposal on how best to correct this. And the left-wing schematic of liberty he offers up isn't a bad start. He writes:

We must develop an argument that the market is a source of constraint and government an instrument of freedom. Without a strong government hand in the economy, men and women are at the mercy of their employer, who has the power to determine not only their wages, benefits and hours but also their lives and those of their families, on and off the job.

It is, as I said, a start. The challenge for left-leaning political philosophers and theorists is to convert Robin's rhetoric into a fully fleshed out theory of freedom and governance. On the face of it, this would seem to be a daunting task, because Robin's conception of freedom represents a clean break from the tradition of classical liberalism that looms so large in modern philosophy.

Classical liberalism, a distinct entity from American political liberalism, most often defines liberty as non-intervention, which would seem to make its closest political ally libertarianism. (The Republican Party, and especially those Republicans who identity as members of the Tea Party, tend to talk about freedom in a way that makes them sound superficially like classical liberals. But on social issues in particular they apply the classical liberal's standard of freedom as non-intervention inconsistently at best.) Not even the forms of classical liberalism more closely associated with the left, like Rawlsianism, truly satisfy Robin's demands. Whereas Rawlsian liberalism conditions freedom as non-intervention with certain restraints, Robin insists that government intervention can actually promote freedom.

It’s free! Sign up to have the Daily Digest, a witty take on the morning’s key headlines, delivered straight to your inbox.

Lucky for us, there is a philosophical tradition -- less fashionable than classical liberalism -- that supports Robin's claims. It is called republicanism. (No relation to the philosophy of the modern Republican Party.)

The best introduction to modern republicanism is likely "Republicanism: A Theory of Freedom and Government" by the Australian philosopher Philip Pettit. The book largely consists of the sort of academic philosophizing that laypeople might find hopelessly esoteric, but it also contains some thoughts on the intellectual history of republicanism that help explain most of the key concepts. Pettit writes that the fundamental principle of over two millennia of republican thought is this: no citizen is a slave, either of the state or any other entity. (Of course, many republics have had slaves. But they were not considered citizens in the formal sense.) Putting this principle in modern analytic terms, he describes it as the conviction that freedom constitutes non-domination, not non-intervention. A slave is still a slave, even if his master is benevolent and does not interfere with him. The point is that the master still has the right to reverse his policy without warning and arbitrarily project his own interests onto the slave. This, Pettit says, is domination: the ability to arbitrarily interfere in the affairs of others without being constrained by their interests or stated preferences.

Already we can see how closely this idea of freedom as non-domination tracks with the vision of freedom laid out by Robin. When he argues that a "strong government hand" is needed to ensure that employees are not put "at the mercy" of their employers, he is actually saying that the state must promote freedom by encouraging non-domination. This is, in fact, the sole aim of the ideal republican state, and Pettit strenuously encourages a "strong government hand" when he thinks it will serve that end. Whereas, in strictly classical liberal terms, any sort of government interference represents a constraint on liberty, Robin and Pettit both agree with the republican notion that, in Pettit's words, "the properly constituted law is constitutive of liberty." He takes that logic further than even many orthodox republicans, arguing that the state must "seek to reduce the influence of factors like handicap and poverty and ignorance," which condition freedom.

But republicanism, at least as articulated by Pettit, is also a relatively conservative doctrine. After all, he argues, America was founded on republican principles. And indeed, Pettit ends up building on those republican principles to advocate for a lot of things we already have: separation of powers, for example. Thus do we find that republicanism has exactly that "deep immersion in a wellspring of American political thought" that Robin wishes for.

I've only had the room here to give a crude schematic of republicanism, but hopefully it's enough to pique the interest of some fellow lefties. For too long now, the American left has had very little in the way of an articulated set of unifying first principles. Republicanism could be what we have been missing; not only does it satisfy the policy intuitions of most liberals, but it integrates them into a system that is logical, humane, and deeply American.

Ned Resnikoff is a researcher at Media Matters and a freelance writer. The above piece is not intended to represent the views of his employers.

Share This

Happy Tax Day, Alexander Hamilton!

Apr 18, 2011William Hogeland

american_colonial_flagHamilton is revered for putting America on sound financial footing, but he couldn't have done it without federal taxation.

american_colonial_flagHamilton is revered for putting America on sound financial footing, but he couldn't have done it without federal taxation.

The annual drop-dead moment when Americans must file tax returns or face unpleasant consequences has become an opportunity for the Tea Party, protesting what it sees as crippling taxation and overactive federal government, to rally its supporters. Extending this year's filing deadline from April 15 to today, April 18, the IRS gave Tea Partiers a big weekend, and all over the country, tax-day events hymned unregulated markets, excoriated federal programs like the health-insurance reform bill, and defended anti-labor governors. Anti-Obama leaders from Sarah Palin to Donald Trump urged the faithful to oppose evils summed up for them in the annual requirement to file federal tax returns. For the Tea Party, "Tax Day" represents all that's gone wrong with America since the founding.

So as we stand on long lines at the post office hoping to avoid the midnight axe, we might spare a moment to consider the father of federal taxes, Alexander Hamilton. Our first Secretary of the Treasury, Hamilton is celebrated by both establishment liberals and establishment conservatives: The Hamilton Project is an economic effort of the liberal Brookings Institution, and former Obama budget director Peter Orszag hung a Hamilton portrait in his office; on the right, the writer David Brooks and former Bush Treasury Secretary Henry Paulson are two of Hamilton's biggest fans. It's not surprising. Hamilton is rightly said to have put the new nation on sound financial footing and secured its creditworthiness. He gave us our first comprehensive national finance policy.

That policy depended on exercising certain economic powers that finance nationalists like Hamilton and his mentor the rich financier Robert Morris, as well as planter nationalists like James Madison, had been striving to achieve for the federal government throughout the 1780's, and which came to fruition at the Constitutional convention in 1787. While Hamilton and Madison would arrive at dire odds over whether the Constitution gives the federal government the right to form a central bank (Hamilton yes, Madison no), all nationalists had long agreed that a national government, unlike a confederation of states, would have a right to tax its citizens directly, throughout the states. And unlike what they saw as state governments' susceptibility to the American popular-finance movement's riot and noncompliance, a national government, nationalists hoped, would have both the will and the police resources to enforce and collect taxes.

So whereas Tea Partiers sometimes associate their objections to federal taxes with a desire to "get back to the Constitution," federal taxation is one of the Constitution's central purposes. And we can thank the wunderkind Alexander Hamilton for proposing the legislation by which the first U.S. Congress imposed the first federal tax ever on an American product.

It’s free! Sign up to have the Daily Digest, a witty take on the morning’s key headlines, delivered straight to your inbox.

Hamilton wasn't messing around. Empowered by the new government to do what he and Morris had long been frustrated in trying to do, the young, charismatic, brilliant, diligent Secretary worked up a full-blown plan for connecting national wealth, and even more importantly national credit, to ambitious national aims. Like Morris, though to a far more sophisticated degree, Hamilton wanted the United States to become an economic powerhouse and financial empire to compete with England. And he'd been tireless in figuring out how to do it.

The key, as Morris had always suggested, was to combine a big public debt with vigorously enforced taxes earmarked for funding that debt. That is: sell U.S. bonds to the small, rich merchant lending class and, as Morris had put it, "open the purses of the people," collecting taxes from the American people, in metal, not paper, and earmarking revenues for paying the bondholders their 6% interest in hard, cold cash -- 6% untaxed interest, that is. Federal power would thus shift national wealth upward and consolidate it. Yoking national credit to national interest, government would serve as an economic pivot between the creditors and the people and thus be in a position to finance roads, canals, wars, and other national projects.

Morris had fought hard during the confederation period for a simple federal tariff on imports, known as an "impost," and opposition even to that measure had always been stiff: states wanted to retain their sovereign power to tax. But he'd also schooled his supporters in what a real federal tax slate would look like. Once people had become inured to paying a federal tariff, Morris had predicted, the federal government would be able to impose taxes on domestic products too, taxes known as "excises." Continuing to expand tariffs alone would hit too hard the very people Morris and Hamilton wanted to encourage: the merchant financiers, who also engaged in international trade (that's where they got the gold). Fully consolidating wealth, and fully connecting it to high national aims, meant collecting revenue for finding bonds from people who would never own a bond. Hence the importance, to Hamilton, of imposing domestic taxes.

And Hamilton pulled his whole plan off, pretty much on his own. He is often portrayed as having faced down and tamed a huge public debt that had been run up, somehow, to unfortunate proportions during the war and now needed to be paid off. Nothing could be farther from how Hamilton himself saw the situation. Swelling the public debt had been a project of his and Morris's for many years -- for all the cogent reasons of national credit described above -- and now as Secretary, his plan was hardly to pay the debt down (many of his biographers to the contrary) but to fund it. Which as those of us with credit cards know, is another thing altogether.

In that context, Hamilton further persuaded Congress to assume all the states' debts in the national one, swelling the public debt to the nth degree at last and placing it all in federal hands. That took a tough political fight. Hamilton won it in part because his Madisonian opponents were nowhere near as finance-savvy as he, and partly because empowering the federal government to enact a top-down national finance plan had all along been a chief purpose of the Constitution under which Hamilton acted.

So state debts were nationalized, and a law for funding the domestic public debt was passed. Hamilton couldn't get his bondholders their full 6%, but they were happy enough. Investing in the U.S. looked safe and lucrative.

Funding and assumption: those were Hamilton's great twin achievements, and they did secure the credit of the nation in just the way he and Morris had always wanted. But they depended on a third leg of the finance program, rarely discussed but utterly essential: federal taxation of the American people, with a full-fledged collection service, inexorably spreading federal power to collect, audit, and prosecute throughout the country, from state to state, town to town, and village to village. To Hamilton, taxes weren't an unfortunate necessity. They created a nation, pulling the country together through a network of federal officers opening offices and banging on doors. Running every last detail of that widespread, growing, and powerful federal agency, Hamilton came into his own.

Next week: How Hamilton constructed and calibrated his first federal tax -- the excise on American distilled spirits -- to achieve his and Morris's longstanding goal of quelling the popular finance movement. Also: How the finance populists fought back. In the meantime: Happy Tax Day!

William Hogeland is the author of the narrative histories Declaration and The Whiskey Rebellion and a collection of essays, Inventing American History. He has spoken on unexpected connections between history and politics at the National Archives, the Kansas City Public Library, and various corporate and organization events. He blogs at

Share This

What Actually Happens When the Government Shuts Down (And Other Things You Don't Know About the Budget Fight)

Apr 6, 2011Bryce CovertBo Cutter

Bryce Covert sat down with Roosevelt Institute Senior Fellow Bo Cutter, who was Director of the National Economic Council and Deputy Assistant to the President from 1992-1996 during the Clinton Presidency and the last government shutdown. He explains why the current shutdown is small potatoes compared to the looming battle over the debt ceiling and other things you need to know.

Bryce Covert: What are the odds of a total government shutdown?

Bryce Covert sat down with Roosevelt Institute Senior Fellow Bo Cutter, who was Director of the National Economic Council and Deputy Assistant to the President from 1992-1996 during the Clinton Presidency and the last government shutdown. He explains why the current shutdown is small potatoes compared to the looming battle over the debt ceiling and other things you need to know.

Bryce Covert: What are the odds of a total government shutdown?

Bo Cutter: It looks like we'll have one but it isn't clear yet what kind it will be. It may be that we have one that's purely procedural in the following way: The House Republicans have put in a requirement that a piece of legislation be available for public view on the internet for 72 hours. So if they come to a deal say on Wednesday, they can't meet that commitment and they've made an avoidable showdown. And I think they said three working days, so weekends don't count. Let's say they came to a deal on Wednesday afternoon and the resolution has to be voted and in place, signed by the President, by close of business on Friday. They couldn't make it unless they waive that requirement, and they don't want to waive it. So you would in fact be shut down Saturday, Sunday and Monday. But it wouldn't have much effect because there would already be a deal in place. It looks to me like the highest odds are that's what it's going to be. So going down that track, the results wouldn't be particularly substantial.

But there's every possibility that it could be real. There are a whole series of riders attached to the resolution that Democrats and the President have said not only no but hell no, and the tea party has said they won't accept anything that doesn't have them. I don't believe the tea party, so we'll see. As I understand it and as friends at the White House have said to me, all of the discussions to date between the members of Congress have been about the numbers and they've kind of put the riders to the end. If the riders wind up being the sticking point, you could have a real shutdown.

Bryce Covert: If it shuts down over the weekend, what effects will we feel?

Bo Cutter: The obvious public things that aren't matters of life and death, if there's no money to run the government then you have to shut them down. One of the things that governs this is something called the Anti-Deficiency Act that says there are actually personal, criminal penalties to officials who consciously direct that work be done when there's no money to do it. So one of the things we found when I was there during the last shutdown was that in the absence of legal authorization to do work, people in the civil service are very reluctant to expose themselves and the people who work for them to penalties. And it's not that they're trying to avoid work. As I said previously, I think that one of the real strengths of the American system is our civil service. In both my times in government I've had lots of civil servants who worked with me and for me and I thought they were incredibly good. So I'm not saying civil servants are lazy or trying to avoid work, I'm simply saying that they face legal sanctions. Once the hammer goes down and there is officially no money, while it may sound like a funny formality, they can't work. So you begin to see some of the obvious things close down like the Washington Monument, the Air and Space Museum, the Smithsonian. Which, if you have the bad luck to have taking your three kids and your wife to Washington for that weekend, is not going to be a good thing.

Bryce Covert: What else happens in a real shutdown?

Bo Cutter: Let me take it the other way around and say what doesn't happen. There is an agreement, and it's legal, that life and death stuff continues. So the military continues to function, although there are functions of the military and the civilian side of the defense department that have to begin to stop. The veteran's hospitals continue. Walter Reed, that has the wounded from Afghanistan and Iraq and now maybe Libya, continues to function. Social Security checks do get mailed out. A lot of the stuff that is really immediate and involves immediate transfers of critical services like health or income will continue.

Every agency has a plan. Employees are distinguished between those who are critical and essential and those who are not, and there's a process that involves the legal counsel of each agency. The distinction is people who are required to keep the basic infrastructure of government going and people who aren't. The critical people work without pay. If I were running a part of the White House, which I was, and I had people that had officially been deemed critical and essential, I could then ask those people to come to work. Now, they could say no because they're not being paid. It's forced volunteerism. I was in that status. But I wouldn't be subject to legal sanctions for doing it. On the other hand, I would be for those people who aren't deemed critical and essential -- I can't ask them and they can't come. And the reason for that is the lawyers and court cases decided that it could be too easily a subterfuge -- you could tell somebody I know you're not critical but you better damn well volunteer or I'm going to be unhappy when the government's back in force.

Bryce Covert: How is it decided who is critical and who is not?

I remember one of the big fusses, and it is a very awkward problem, is how do you draw the line between who is and who isn't critical. We have about 1,300,000 civilian employees. Let's say 60,000 to 70,000 of them are critical. You have around 1,200,000 people who suddenly aren't working. And the people who aren't considered critical, how is it you explain to them they aren't critical? The State Department had a terrible problem. Let's say it has 160, 170 ambassadors. They're not all critical, and they had to determine which were the 50 or 60 where you absolutely had to keep country operations going and which were the ones that weren't. People had hurt feelings and were angry and friendships were disrupted because there were ambassadors who were told they weren't critical. In a much smaller way I had the exact same problem. Everybody kind of does.

On the civilian side of the government, domestic side, a skeleton force is immediately put in place in the forests and the parks. You can't visit. But maintenance also stops. In the granting operations of the government, whether it's HUD or HHS, their grants all stop. The part of HHS that oversees Social Security checks will continue, but that's all it'll do. There isn't going to be anybody there to answer questions. If you have a question you're not going to get an answer while the government's shut down. Places like the Department of Education basically shut down entirely because it's hard to argue that it's critical in the sense that I mean the word. The Department of Commerce, which has the National Oceanic and Atmospheric Administration, shuts down, so you're not getting the temperature of the ocean monitored. On the other hand, the Coast Guard will stay in operation. Almost all regulation will shut down, so there isn't anybody doing meat inspection during those periods. Ultimately most of the EPA would shut down. I was in the discussions that were occurring in the White House every night with the members of Congress, and every day there are pleas coming in saying, "Well you couldn't possibly mean we have to close down this," and the thing is legally yeah we do mean it. If you're having a trade negotiation, the negotiators have to go home because it's not crucial immediately. Congress shuts down. I don't know what they do but they can't come, and they can't get paid and their staffs can't get paid and they go through the same thing about who's critical and who's not.

If you think of the things I've been talking about, time matters. Yeah you can close down inspection for a day, but do you really want to close down mine safety inspection for a month? No. And you wouldn't, you'd still have a critical infrastructure. But most of the mine inspectors would be told they're not critical, not for this moment.

Bryce Covert: Are shutdowns just political theater?

The shutdowns are real. People think that this is all a subterfuge sometimes. And particularly I always thought that the Republican Congress basically thought none of this was real and therefore they could have it both ways. They could politically posture by saying that by god they were going to shut the government down and they were rough and tough and all of that, but in their hearts they kind of knew nothing would happen. So some of them were the most surprised people of all when actual things actually happened and when their constituents suddenly didn't get services because the government was shut down. It is quite real.

When we were there during the shut down, President Clinton had done a superb job of positioning before the fact, of saying to people, "I'm not going to give in to outrageous requests just because people think that I'm unwilling to go through this. But I will warn you in advance that it has effects and you won't like them. And this is not the way adults should negotiate." So by midway through the shutdown, the polling had shifted to being very, very substantially in the favor of Clinton, and I think the same thing would happen here.

Bryce Covert: What does the average American feel when the government shuts down?

Bo Cutter: First of all, there's the disappearance of all of the things that are really visible like forests and parks. I don't mean the forests disappear, obviously. But people who'd planned trips are the ones who get hit first. The TSA will be there, but that proverbial family that is in Washington really can't go to the Air and Space Museum and they don't believe it. They think this is crazy, why would anybody close down the Air and Space Museum? So they yell and scream, and they're right, they should be mad.

The second thing you notice is a real slowdown in everything. There's no place to call and find out what's happening to a particular grant. If you're Caterpillar and you sell heavy earth moving equipment and you had a contract in competition with others being considered by the Department of Transportation, your contract isn't going to get looked at. So the people whose jobs depended on that work lose their jobs.

So the first effect is on the people who were planning to do something that depended quite directly on the provision of government services.

Sign up to have the Daily Digest, a witty take on the morning’s most important headlines, delivered straight to your inbox.

Bryce Covert: Will there be job losses?

Yes, the second effect is people beginning to lose their jobs. And that surprises people. It happens in two ways. One is the federal employees. People are very funny about that. The vast majority of federal employees don't work in Washington. They work out in the real world. When people yell and scream about government in Washington, they don't really think that about Joe who lives next door and works for the Department of Transportation's regional office. What Joe is frequently in the business of doing is providing services to his neighbors, providing information about grants and contracts and all of that. They don't really think that Joe's one of those people in Washington that they don't like, Joe's a neighbor who's got a job like everybody else and suddenly he's out of work. Then all the people whose contracts, grants, etc. suddenly can't get done, they feel it. It's a progressive thing that you first feel the direct absence of things, then you see people aren't working, then everything starts to slow down and stop.

Bryce Covert: Given the unemployment crisis, do you think that people losing their jobs from a shutdown will have greater reverberations this time around?

Bo Cutter: A bit. There are a couple of ways of answering the question. One is just numerically. People will be out of work and they will be counted as such, so the unemployment rate will bump up. But it's presumably pretty short. The labor force as a whole is 142 million people, and at 9% unemployment that means that we have 128/129 million Americans working. Having 1 million and a couple hundred thousand not working is less than 1% of that. So you don't see it big in the numbers because by the time you look at its year effect it's less than that. But there is some effect there. I don't think there is a lost GDP effect, therefore a bigger unemployment effect, if the shutdown is relatively short, because then you have a down month and then that just means you have a catch up.

But I do think the politics of the unemployment rate will be sharper because it feels different at 9% unemployment. When we did it, when we had to go through it, the unemployment rate was at around 4.5% so the world was in a different place. Maybe slightly higher, but it was lots less.

Bryce Covert: Which Americans are the biggest losers of a government shutdown?

Bo Cutter: Well obviously the biggest losers are people who actually lose jobs, whether it's short or long, because of it. And probably the biggest losers in terms of actual money at least at the start are all the federal employees who are furloughed. But much more broadly than that, the losers are going to tend to be the American middle class because Social Security checks get continued, so the elderly don't see as much of an immediate problem, the defense operations keep working, so it's really people outside of Washington who in their daily life depend on the government functioning. And that's contracts and grants. A second big area to feel it is probably cities because there's a lot of granting that goes directly and indirectly to cities and that stuff stops.

Bryce Covert: Does the government take a monetary hit because of a shutdown?

Bo Cutter: It does and I don't know what it is. We made an effort to figure it out but you had to make so many assumptions that your range of error was going to be so great that if you said a number you were certainly going to be wrong. The people who would argue you've way overestimated this or the people who said you way underestimated this were all going to beat on you and you wouldn't have a number you could defend. So we didn't do it.

But there are certainly real costs, not just deferred costs. We were trying to look at a couple of different sorts of things. Whenever you start something and then start it again, there is a cost of the wind down and a cost of the start up. If you think of it in terms of a factory, to bring a factory line down to a close and ensure that the equipment will stay in shape and is maintainable so that you can in fact then walk away from it involves costs you wouldn't be incurring if you didn't have to shut it down. So they're lost costs. Exactly the same is in reverse when you have to start something that you shut down. You have to go through all kinds of procedures, both safety and operational, to get to start it up again. Now the world isn't a factory, but the same kinds of things occur. If you tell people to shut down a grant making organization you have to make certain that you can start back up again at some point. You can't just walk away with a memorandum half written in Word and come back three weeks later. You have to close it down. It's hard, as you can see, to figure out what those costs are, but you know they're there. It is a vast loss of efficiency.

And then there's also the effort to figure out the real GDP loss. You know there is one, it's just kind of very hard to figure out how you go about counting it.

Bryce Covert: Are there other differences between the last shutdown and now that you foresee making this one better, worse, or different?

Bo Cutter: It's more the politics of controlling it. When we went through it, Newt Gingrich had come in with the Contract with America. The new Republicans believed, and the evidence was pretty good, that the reason they were elected was that Gingrich had managed to nationalize a whole set of local elections and it was sort of the power of his thinking that created their election opportunity. So they were with him lock stock and barrel and he had real control over his caucus. No one ever has complete control over everything and the control began to ebb, but he had it. Today the circumstances are really different in that Boehner does not have control over the Republican caucus. Large numbers of the tea party members don't have any interest whatsoever in figuring out the rational answer to all of this. So you have a really fundamentally different condition of political management. Clinton was reasonably certain, and at our lower levels in the conversations we were reasonably certain, that if the Republicans committed to do something when we finally began negotiations about how to end it, they could follow through on whatever it was they committed to. It's not clear here.

If it happens, this phenomenon could extend the shutdown. The problem is that when you get into a shutdown, like everything else you better have thought through your way out of something difficult before you kind of jump into something difficult. They rarely do. Once you're in a shutdown all kinds of motivations come into play. There is the "by god we're not going to lose to President Obama, whom we don't like anyway, so we're going to stick" thinking. On the other hand, the members who weren't terribly enthusiastic to begin with are beginning to hear from their constituents, and that happens pretty fast. There were a lot of frank conversations when I was part of it last time and Republican members were saying, you know the people back home don't really like this. And the members who weren't enthusiastic about doing it to begin with and are also being whacked by their own voters get madder and madder. So the internal dynamics of the Republican side get more and more complicated. Meanwhile, if as I suspect the polls begin to swing in President Obama's direction, his position is even harder because he doesn't want to have presided over a loss, he doesn't control the votes of the diehard tea party members, but he's got to get himself out of an untenable situation or he could easily lose the House again. So he's feeling (this is all surmise) that he's got big problems.

And all of this is occurring in real time. It's not as if it's occurring in a calm, deliberate atmosphere. It's all occurring with people shouting at each other. Exactly how you begin to move to the end game is much harder for the Congress than it is for the executive. We could meet around a table and we had a boss, the President. So our messaging was better, and Obama's messaging is and will be better than Congress', and when you have the cacophony that occurs during the shutdown it's even more so. We could think through what's the nature of the negotiations we want to have, what do we think will happen, we could role play. They can't because they have 200 plus people around the table. It's much more helter skelter for the Congress.

Bryce Covert: What's the longer term outcome of all of this?

Bo Cutter: I think for a political situation to get to the point where you shut the government down is a failure of governance and it's absolutely wrong as an outcome. I also think somewhat paradoxically that from the politics of it, shutdown would help Obama enormously. Obama does not have anything to fear from this. They have a competent White House. I think they will manage this well and will manage it with a single message. The polling already says that the public thinks the Congress looks like squabbling children. The President looks pretty good and I don't think he has any reason to give in very much. So if I were the President and I had to have one, I'd want one.

I also think that from the point of view of the management of the next fights, both the country and President Obama will be better off if there's one now. This is small potatoes. But we are about to see the debt limit debate. And there are people on the Republican side who actually believe that risking a default isn't a bad thing. I think it's an awful thing. I think it's really, really reckless. And I don't have any confidence that the Republican tea party members are going to come to that realization soon enough and they could play a real game of chicken. That's different than the shutdown stuff. The shutdown occurs gradually and it would have to last quite a while before the results really, really hit.

If you are running a deficit, and we're running a 1.6 trillion dollar deficit, and you refuse to extend the debt limit today, tomorrow you can't issue any more debt and you can't even roll over your debt. The next morning at 9:01, if you're running a deficit, in theory and in fact the deficit increases somewhat in that first minute. So you can't do anything. In that case you can't send out the Social Security checks. Since you are instantly above the debt limit and you have no money if it isn't extended, everything else about a shutdown comes into place. Instantly all of those workers can't be paid because it's against the law to pay them. They have to go home. So it's a shutdown raised to the nth degree. Now there are a couple of things a Secretary of Treasury can do that give you a little room, but it's like a week. I remember when Robert Rubin was Secretary of the Treasury, I knew him very well and I had worked for him and he and I talked about it, he said I've had all the experts, I've had everybody in on debt management, I've had all the lawyers in and we've looked at it every way around, there is some legal room but there isn't very much.

If your debt limit is 1.6 trillion, people think, okay, well as long as that's occurring it's kind of beyond that in some way. But anything above zero you've broken the debt limit if they won't raise it. It hits you broadly and it hits you fast. The other thing is the Treasury is involved in debt management all the time that is in concept unrelated to an increasing deficit. You may not like the term structure of the debt, you may want to make it a little longer or a little shorter. In the bowels of the Treasury there are constant operations that are occurring by financial technicians who aren't trying to do anything with the deficit. But you can't separate that from the deficit, so you can't do those things either. In terms of the operation of the debt it begins to hit you right away.

Bryce Covert: What does it mean to the markets?

It has big money market consequences. If people begin to think that the governance of this country is so irresponsible and reckless that we would actually risk the credit standing of the country, they're going to have a little less faith in our money. Let's say it's just trivial, it's only 10-15 basis points, you multiply 10-15 basis points all across government debt and you've paid one hell of a lot of money for a symbolic act.

That's coming up right down the road pretty soon. My theory is that it's always better if you think a hit's going to come to take it early rather than late. My own view is that the President will win a shutdown hands over, the Republican tea party will look awful, and they aren't going to have the appetite to really be reckless. But on the other hand if we don't, and this is one of the reasons I think we should have one, their view is going to be that they didn't get all they wanted but by their tactics they forced something out of the administration. So why not try again? And the next time you try is the debt limit.

Share This

Let the Government Shut Down

Apr 5, 2011Bo Cutter

Eking out a compromise to avoid a government shutdown will only play into Tea Party hands.

My negotiating instincts say that President Obama ought to want the House Republicans to shut down the Federal Government. Why? Six points.

Eking out a compromise to avoid a government shutdown will only play into Tea Party hands.

My negotiating instincts say that President Obama ought to want the House Republicans to shut down the Federal Government. Why? Six points.

First, the wrong negotiating strategy is to see the endgame as a compromise that avoids a shutdown. This is how Congress sees it; this is how Congress always sees these kinds of issues. The long run is next Friday. But the real end game for President Obama is (1) to succeed in managing a series of events well, of which a shut-down is only one; (2) to demonstrate to the American people his sense of prudence and pragmatism, contrasted to the House Republican crazies (you want them to be the Republican Party's poster children for the 2012 elections); (3) to avoid a real catastrophe -- which would be to come anywhere close to a default during the coming debate over the debt ceiling; and (4) to put forward a convincing overall economic plan, contrasted again against the Republican plan that consists of muscle flexing over a shutdown.

Second, despite what a number of "prudent" commentators have said, a shutdown now would not have any substantial effect on international perceptions and is, paradoxically, the prudent course in the midst of all the craziness. Policy does not always, or even often, move in a straight line.

Sign up to have the Daily Digest, a witty take on the morning’s most important headlines, delivered straight to your inbox.

Third, the President has, for once, some wind at his back. Recent polls are saying that by a substantial margin Americans will blame the House Republicans for a shutdown. And the recent jobs report suggests the economy has more strength than expected. The President has the upper hand now.

Fourth, if a compromise is reached the Tea Party will think they won that battle. There would be no good reason not to push the limit again in a debt ceiling fight. That fight involves very real dangers; the administration would be forced to err on the cautious side and House Republicans simply do not know enough about the issue to understand how recklessly they are behaving. The way to win the debt ceiling battle is to beat the Republican Congress like a rug in the current fight. The time to win the debt ceiling battle is right now.

Fifth, during a shutdown an administration can speak every day with one coherent message. The House and Senate Republicans will instantaneously fracture into a couple hundred voices. Your average member of Congress really does not want to explain to her constituents why the Washington Monument and the Space Museum are closed during their vacation.

Sixth, one nanosecond after winning a shutdown battle the President can put forward a full economic and budget plan. He will be saying, in effect, "Now that we have ended these childish games, let's work together to accomplish real things."

Roosevelt Institute Senior Fellow Bo Cutter is formerly a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team.

Share This

How We've Budgeted Ourselves Out of Investing in Our Country

Mar 30, 2011Bo Cutter

The way things are going, we'll have scraps -- if anything -- to spend on vital government functions.

While the Republican right carries on its budget antics in the House and the left denies there is any problem, we are allowing the most important part of the public sector to deteriorate into irrelevancy.

The way things are going, we'll have scraps -- if anything -- to spend on vital government functions.

While the Republican right carries on its budget antics in the House and the left denies there is any problem, we are allowing the most important part of the public sector to deteriorate into irrelevancy.

Let's start with some numbers, boring as that is. The Federal Government will spend $3.77 trillion in fiscal year 2011; 87% of that total -- $3.27 trillion -- will be spent on defense, the entitlements (Social Security, Medicare, Medicaid, mostly), and interest. That other 13%? The entire rest of the government? $500 billion.

Now jump forward 10 years. The President projects we will spend $5.9 trillion, or $2.2 trillion more. All of the growth will be spent on defense, entitlements, and interest. The entire rest of the government stays constant at $500 billion (no growth for 10 years) and falls to 9% of the total. This is the best overall number I can get for total public sector investment (both hard and soft). Actual infrastructure is a much smaller piece of that.

Almost everything you ever heard of involving the government is in this 13% -- going to 9% -- figure. Green technology, SEC regulation, job training, the Parks Service, the forest service, infrastructure, tsunami warnings, environmental protection, head start, the National Cancer Institute, the State Department, disaster assistance -- just to name a few at random -- are all declining or going away.

Do you think we should invest in a smart grid, or a public jobs program, or infrastructure, or public health, or healthier forests? Well, we're not going to. And my spending numbers are on the high side. The House Republicans will take my numbers down a lot.

One other set of numbers: of this $500 billion, about $190 billion is personnel costs. Over the next 10 years, these costs will grow to $230 billion. (I am assuming no increase in the number of federal employees and a 2% annual increase in pay and benefits.)

So what? This means that the total of all of our non-personnel investments is now $310 billion, or 8% of the total federal budget, and will fall to $270 billion, or 5% of the total budget. (For the record, I have no intention of dismissing the contributions of Federal employees. To the contrary, one of the great strengths of America is the quality of our public service.) G.E. employees in the 1980s called CEO Jack Welch "Neutron Jack" because when he finished fixing a company, the buildings were all there but the people were gone. This is the reverse. The people are all here, but the buildings are gone.

So what? Four questions and then four answers: What do these numbers mean? What are their consequences? Why are we in this corner? How do we get out of it?

1. These numbers mean that we will invest virtually nothing in our economy through the public sector. If you think -- as I do -- that these "rest of the government" expenditures include valuable public sector investments in our economy, then we will invest an average of slightly more than 2% annually -- and steadily falling -- for the next ten years. Just on the face of it, this is crazy. No well-run company in the world could go 10 years investing as trivial an amount as 2% annually. (And that leaves out the terminally boring issue of depreciation: if you think that is real -- I do -- then we are systematically reducing our stock of public capital every year.)

Sign up to have the Daily Digest, a witty take on the morning’s most important headlines, delivered straight to your inbox.

2. This underinvestment probably means a lower economic growth rate, a poorer, less competitive nation, and higher unemployment. I have always thought that Ben Friedman's book "The Moral Consequences of Economic Growth" should be a central part of the true progressive canon, but unless we are lucky beyond all rational expectations, you don't get growth without investment. And I believe that sustained higher growth in our private sector is in part dependent upon higher public sector investment. But we are planning the opposite. We are planning for lower investment, lower growth of productivity, and a poorer nation. We have maneuvered ourselves into a very tough corner: our public debt and deficit levels are way too high and simultaneously our public investment levels are way too low.

3. We are in this corner because our political system is frozen into a sterile and seemingly permanent quarrel between America's left and right, which long ago departed from reality. I won't waste my energy on the right. It is owned today by a group of nihilists who actively want to wreck the public sector. (For a full description of the new doctrine, read Senator Marco Rubio's piece in the Wall Street Journal, "Why I won't vote to raise the debt limit.") But the left is almost as bad -- less mean, mostly less vicious, less irresponsible but just as empty. The left lacks a coherent economic growth strategy, it is in denial about our debt and deficit levels, and it has no overall perspective on what the role and shape of our public sector ought to be. For both the right and the left, economic and budget policy are derivative. It's what is left after you do whatever is central to your agenda. By definition, this means there is no political energy remaining to do anything hard.

4. We will only get out of this corner when an administration -- it has to be the Obama administration, we can't wait -- puts forward an economic strategy that simultaneously brings our public debt issues under control and commits the federal government to a long-term program of public investment. Doing this requires both new tax revenues and reductions in the growth of entitlements and defense. I would do roughly the following:

(a) Commit to holding public debt -- over the long-run -- to a maximum of 70% of GDP. (I would live with a higher level in the next few years -- we still have a 9% unemployment rate.) This is less onerous than the Simpson-Bowles Commission, but tougher than the administration's current track.

(b) Propose new public investment for the next 10 years of 1% to 2% of GDP annually. This makes the necessary budget policy even harder.

(c) Create a new structure for this new investment so it doesn't turn into pure pork (call it a combination of national foundation and infrastructure bank); track the expenditures and report on them annually.

(d) introduce a 2% to 4% net VAT (value added tax) to pay for the investments, maybe even tied to these investments.

Will we actually do anything remotely like this? The only honest answer is of course not. Congress won't. The two ends of our political system do not inhabit the same universe and regard compromise and bargaining as evil. And there is no center -- although in further demonstration of the triumph of hope over experience, I would love to see the gang of six in the Senate, who are working with Alice Rivlin, come up with something. The only real hope is that President Obama plays the impending government shutdown rope-a-dope perfectly, wins the battle of public opinion, and then, at precisely the right moment, gives the big economic speech I suspect he already has written.

And if not, then as the joke's punch line says, "I'm gonna go find my brother Chester, cause he ain't never seen a train wreck."

Roosevelt Institute Senior Fellow Bo Cutter is formerly a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team.

Share This

The Unfinished Business of Making the World's Women Citizens

Mar 29, 2011Allida Black

world-hand-200Recognizing Women’s History Month, New Deal 2.0 tells the surprising story of how women became citizens -- and how their economic lives have evolved along with their rights. Allida Black urges action on UN Resolution 1325, which ensures equal citi

world-hand-200Recognizing Women’s History Month, New Deal 2.0 tells the surprising story of how women became citizens -- and how their economic lives have evolved along with their rights. Allida Black urges action on UN Resolution 1325, which ensures equal citizenship for women across the globe.

The monumental elections of Presidents Ellen Johnson Sirleaf (Liberia), Roza Otunbayeva (Krygyzstan), Dilma Rousseff (Brazil), and Prime Minister Julia Gillard (Australia) and the game-changing appointments of Dr. Michelle Bachelet as Under-Secretary General of the United Nations and Executive Director of UNWomen and Hillary Clinton as Secretary of State proved that women can govern, run preeminent human rights organizations, set international policy, and place women at the center of diplomacy, development, and peace.

But the question remains -- if women can be president, why can't they be citizens? Article 1 of the Universal Declaration of Human Rights declares, "All human beings are born free and equal in dignity and in rights." Yet it took another twenty years after its signing to get the international conventions on political and civil rights and on economic, social and cultural rights -- and, in the United States, another twenty plus years for Congress to adopt legislation ensuring women's political and economic rights. It took another thirteen years for the United Nations to ratify (without the support of the United States) the Convention to End All Forms of Discrimination against Women. And in 2011, the US House of Representatives and other foreign governing bodies still toy with legislation essential to women's identities, ranging from limiting access to reproductive health services and marriage to crafting sentencing guidelines that treat girls and women as felons and charges those that have abducted and abused them with misdemeanors.

In a 1946 column, written before she joined the UN Commission on Human Rights, Eleanor Roosevelt urged women to "call on the Governments of the world to encourage women everywhere to take a more conscious part in national and international affairs, and on women to come forward and share in the work of peace and reconstruction as they did in the war and resistance." More than fifty years later, at the dawn of a new century, the UN Security Council -- pressured by a well-organized international women's lobby, Hillary Clinton, and other stateswomen and embarrassed by the rampant use of rape and genital dismemberment as tools of war -- adopted Resolution 1325. It urged "Member States to ensure increased representation of women at all decision-making levels in national, regional and international institutions and mechanisms for the prevention, management, and resolution of conflict."

Sign up to have the Daily Digest, a witty take on the morning’s most important headlines, delivered straight to your inbox.

Now ten years later, the campaign -- indeed the struggle -- to enforce this resolution rages across the United States as much as it does across Egypt or the Congo or Afghanistan.

It is tempting to construct this resolution narrowly -- to see it as a tool of armistice rather than reconstruction, as a vehicle to protect women rather than empower them. To do so, to paraphrase Albus Dumbledore, would be to do what is easy rather than what is right.

UN1325 is on the front line in the campaign for women's citizenship. It is a battle to ensure that economic, social and cultural rights cannot be divorced from, or considered separately from, political and civil rights. It is the struggle to reclaim democracy promotion away from post-Cold War politics, self-interested development and the campaign against terror and place it at the heart of citizen participation.

Just as important, it is a campaign to ensure women's rights as citizens as much as it is a campaign to force governments to act responsibly to all its citizens. While equality and human dignity have no sex, policy designed without taking stock of gender differences often perpetuates discrimination.

As Eleanor Roosevelt would say, both citizens and governments must "recognize that the goal of full participation in the life and responsibilities of their countries and of the world community is a common objective" and one "which the women of the world should assist one another" in achieving.

Allida Black is a director of the Roosevelt Institute and founded the Eleanor Roosevelt Project.

Share This