Obama Failed to Defend Government from Romney's Bluster

Oct 4, 2012Jeff Madrick

Obama failed to defend his policies or the positive role of government. But next time he'll be ready.

President Obama lost the dabate. A night’s bad sleep did not change my mind about that. But let’s be clear that, if more relaxed and clear, Romney was the same as ever. There is no new Romney. He dissimulated, did not address details, and refused to answer what few charges Obama brought up.

Obama failed to defend his policies or the positive role of government. But next time he'll be ready.

President Obama lost the dabate. A night’s bad sleep did not change my mind about that. But let’s be clear that, if more relaxed and clear, Romney was the same as ever. There is no new Romney. He dissimulated, did not address details, and refused to answer what few charges Obama brought up.

He opened with a brilliant debating tactic—really a war tactic: open a second front and retreat on the first one. Romney tacked to the middle. No, he won’t cut any taxes he can’t pay for. No, it isn’t a $5 trillion plan. Obama wasn't ready and didn't seem able to adjust. But what is the Romney policy? He never said. More upsettingly, Obama noticed but never truly pressed him on it. 
 
In fact, Romney's is the same old George W. Bush policy, and it didn’t work then. Obama got to this point, too, but didn’t bring it home strongly enough. Job growth was the slowest under Bush of any other postwar president. Obama said it. Doesn’t anyone remember his saying it? But Romney dissimulated again, because he can’t pull this grand four or five point strategy off, just like he couldn't pay off his original tax cut program. Obama could have asked him how much he plans to cut tax rates. He would have dodged it, but in dodging it he would have looked more like the old Romney than the new, bold Romney. Obama could have pressed harder on the details of closing loopholes. He didn’t.
 
Romney ignored the facts time and again, a tried and true debating technique. Obama pointed out that in a Medicare voucher program with choice, the insurance companies will steal the elderly who are healthy and raise costs for Medicare, jeopardizing its future. Romney simply ignored the point and went on to say, as if Obama said nothing, that Medicare would still be there under his voucher program and if it worked better, it would stand. 
 
In his attacks on the role of government, he persistently said the private sector can do better. But private sector health care costs have risen faster than Medicare. Why is that? He pushed the old ideological sticking points. Government is bad, private enterprise good. No facts, mind you. Just shibboleths. Keep the federal government out of health care. Give it to the states. Should we keep the federal government out of Social Security and Medicare, too—both very popular programs?
 
But if Romney’s bluster was strong, Obama lost the debate more than Romney won it. He seemed incapable of defending Obamacare. He couldn’t even counter the alleged Medicare theft of $716 billion well. He didn’t defend his green investments. Ninety billion dollars is not much when you consider Japan will probably spend nearly $500 billion on renewables. He only passingly defended his stimulus bill, repeating the error of neglect he has made for most of his administration. In fact, he hardly defended his record at all, for fear it reminds people that unemployment is stil high, as is the deficit. The point is they'd both be higher under a Romney plan.  
 
And what of the policies for 2013? Where was talk of Obama's American Jobs Act? Why not say that Romney’s policies will bring you a recession, sure as you’re sitting there?
 
And what about bipartisanship, of which Romney bragged during his governorship in Massachusetts? Could Obama have pointed out that he couldn't deal with Republicans who proclaim their first priority is to stop his reelection? Did any prominent Massachusetts Democrats threaten Romney that way?
 
Now, the media will start analyzing the Romney promises, and therein will lie some justice. He won’t be able to defend them except in the same general, non-detailed ways. The Democrats have to counter-attack. There will be plenty of room to do so. 
 
And one other point: I think Obama will be ready next time. He went into the ring cold. Every boxer knows you have to warm up and break a sweat before the first bell. I think he learned. He almost got knocked out in the first round. Not again, I don't think. 
 

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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FDR's Debate Lesson for Obama: It's About Capturing Americans' Imaginations

Oct 4, 2012David B. Woolner

President Obama spent too much time picking apart the details of his opponent's plans instead of attacking the underlying philosophy as FDR did.

President Obama spent too much time picking apart the details of his opponent's plans instead of attacking the underlying philosophy as FDR did.

Let me warn you and let me warn the Nation against the smooth evasion which says, “Of course we believe all these things; we believe in social security; we believe in work for the unemployed; we believe in saving homes. Cross our hearts and hope to die, we believe in all these things; but we do not like the way the present Administration is doing them. Just turn them over to us. We will do all of them—we will do more of them we will do them better; and, most important of all, the doing of them will not cost anybody anything.”

But, my friends, these evaders are banking too heavily on the shortness of our memories. No one will forget that they had their golden opportunity—twelve long years of it.

Remember, too, that the first essential of doing a job well is to want to see the job done. Make no mistake about this: the Republican leadership today is not against the way we have done the job. The Republican leadership is against the job's being done. — Franklin D. Roosevelt, 1936

From the moment he took office in the New York State Senate until his death as president roughly 35 years later, Franklin D. Roosevelt relished the toss and tumult of the political arena. As he once told a reporter in the midst of his early struggle with New York’s Tammany Hall political machine, “there is nothing I love as much as a good fight” – and FDR was brilliant at it.

This passion for the art of politics—and for the basic principles that underpinned his political philosophy—served FDR extremely well over the course of his public life. In fact, few politicians in the 20th century, with the exception of Ronald Reagan, Bill Clinton, and his cousin Theodore Roosevelt, ever came close to FDR’s ability to master the nation’s political discourse.

What fueled FDR was his fundamental belief in the power of government to create a more just and equitable society, and his deep knowledge—from personal experience—of the forces of wealth and privilege that had little if any regard for the plight of millions upon millions of Americans who struggled day by day to provide for their families. FDR never forgot that it was these “malefactors of great wealth,” as his cousin TR labeled them, who brought the country to ruin in 1929, and he spent the better part of his presidency in battle against the forces that wanted to return the United States to the so-called Gilded Age of unfettered capitalism.

The American people understood this, in part because they had lived through the economic collapse that brought on the Great Depression, but also because of the clear and unequivocal message that FDR delivered time and time again about the nature of struggle between those who sought to exploit the free-market system for their own ends, and those who believed, as he did, that the only way to make capitalism work in the long run was to make sure that it provided a basic measure of economic security and opportunity to all Americans, not just those at the top.

It was this conviction that led the Roosevelt administration to initiate Social Security and unemployment insurance, to guarantee bank deposits through the FDIC, or to protect investors—both small and large—through the establishment of the Securities and Exchange Commission.

The aim here was not to create “trickle-down government,” or a generation of dependents, as Governor Romney would have us believe, but rather to use government to ensure that the millions who toiled in the nation’s farms and factories might receive a decent wage and a small measure of economic security against what FDR called “the hazards and vicissitudes of life,” such as the loss of a job or poverty-ridden old age.

We now take many of these programs for granted, but in FDR’s day they aroused fierce opposition, particularly from the well-heeled conservative elite, who did everything they could to try to discredit both the president and his ideas. In their view, FDR’s philosophy of government was tantamount to socialism, an un-American attempt to subvert the Constitution and rob the nation of the individual initiative that stood at the core of its—and their—success.

But FDR would have none of this, and in a series of withering attacks on what he called “a generation of self-seekers” he implored the American people to join him in abandoning “our tolerance of the abuse of power by those who betray for profit the elementary decencies of life.” Indeed, as he reminded the American people in the summer of 1936, it was critical that the nation reject a system of governance where “for too many of us the political equality we once had won was meaningless in the face of economic inequality,” where “a small group had concentrated into their own hands an almost complete control over other people's property, other people's money, other people's labor—other people's lives.”

For Roosevelt, the great issues of his day were not simply about whose “plan” might deliver more jobs for the American people, or provide a greater chance at reducing the deficit, but about the fundamental moral and economic structure of our society -- a society where government must remain determined “to make every American citizen the subject of his country’s interest and concern; and [where] we will never regard any faithful law-abiding group within our borders as superfluous.”

Like FDR in 1936, President Obama now faces the same sort of “powerful influences” that in Roosevelt’s words “strive today to restore that kind of government with its doctrine that that Government is best which is most indifferent.” But judging from last night’s debate, one would hardly know it. Instead of attacking the underlying philosophy behind Governor Romney’s call for the restoration of the types of policies that led to the Great Depression and the Great Recession—policies that in Romney’s words would rid the country of what he calls “the web of dependency” among the “47 percent”—the president spent too much time trying to explain the differences between the two men’s various “plans.” Given Governor Romney’s penchant for leaving out the details of his various proposals to reduce the deficit and grow the economy, perhaps this is understandable, but in doing so the president failed to capture the imagination of the American people.

This is unfortunate, for Governor Romney is correct when he says this election is about choosing very different paths for our nation. Will we embrace the type of society that was built in the New Deal? A country where the reforms of the 1930s helped the middle class flourish in the decades after World War II? Or will we embrace the philosophy of government that has become increasingly dominant in the past 30-plus years -- a philosophy of government where, as the Census Bureau recently reported, the average male worker is making the same hourly wage adjusted for inflation that he was making in 1978, while the average CEO’s pay over the same period has sextupled and the income of the people in the top 1 percent has grown by 600 percent?

For Roosevelt, the answer was obvious, and he was not afraid to state it “boldly and plainly.” As he said in his speech to the 1936 Democratic Convention:

The defeats and victories of these years have given to us as a people a new understanding of our government and of ourselves… It has been brought home to us that the only effective guide for the safety of this most worldly of worlds, the greatest guide of all, is moral principle…

We cannot afford to accumulate a deficit in the books of human fortitude.

In the place of the palace of privilege we seek to build a temple out of faith and hope and charity…

Governments can err, presidents do make mistakes, but the immortal Dante tells us that Divine justice weighs the sins of the cold-blooded and the sins of the warm-hearted on different scales.

Better the occasional faults of a government that lives in a spirit of charity than the consistent omissions of a government frozen in the ice of its own indifference.

There is a mysterious cycle in human events. To some generations much is given. Of other generations much is expected. This generation of Americans has a rendezvous with destiny.

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.

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Republicans are Pro-Choice (on Paying Taxes)

Sep 28, 2012Tim Price

Instead of establishing a fair baseline for rich taxpayers, House Republicans want to let the rich chip in whatever they want.

Instead of establishing a fair baseline for rich taxpayers, House Republicans want to let the rich chip in whatever they want.

Last October, President Obama introduced the so-called “Buffett Rule,” a tax provision that would require multimillionaires to pay a minimum 30 percent effective tax rate. It was named for the Oracle of Omaha himself, Warren Buffett, who famously complained about paying a lower tax rate than his own secretary. The idea garnered a great deal of public support, with one CNN poll from April 2012 finding as many as 76 percent of Americans in favor. Last week, bowing to popular demand, House Republicans passed the Buffett Rule Act of 2012, which naturally has nothing to do with any of that. Instead of establishing a baseline of fairness, it encapsulates the conservative notion that wealthy Americans shouldn’t be asked to contribute any more to society than they’re willing to volunteer.

The Republicans’ version of the Buffett Rule, which is not actually a “rule” in the sense that you or I or Webster’s Dictionary might understand the word, would allow taxpayers to check a box on their tax forms if they want to contribute more than they owe in order to help pay down the deficit. But, you may ask, can’t taxpayers already choose to pay more than they owe? Why yes, they’re free to send a check to the Treasury Department. So what does this bill actually do? Well, it would add a box they can check to send it to the IRS instead! The Joint Committee on Taxation projects that this bold innovation would help raise $122 million in additional revenue over the next 10 years. That’s slightly less than the $47 billion that Barack Obama’s version of the Buffett Rule would raise, but combined with more tax cuts for the rich and corporations, it puts the hard-nosed deficit hawks in the GOP on track to balance the budget some time around the heat death of the universe.

There’s a fundamental ideological divide between progressives and the modern conservative movement, and it concerns how much they buy into the concept of the social contract. That divide is reflected in the GOP’s fallback response to President Obama’s Buffett Rule proposal: “If Warren Buffett thinks he doesn’t pay enough taxes, why doesn’t he just volunteer to pay more?” Mike Konczal effectively dismantles this pseudo-logic here, and on a rhetorical level, it’s on par with “If you love the government so much, why don’t you marry it?” On the other hand, it makes a certain amount of sense if you think of society as something we can choose to opt out of once it’s outlived its use to us instead of an ongoing support system that we’ve all bought into. If you see the rich as the people who have benefited the most from our tax-funded social structure, it only seems fair to ask them to give back more in tough times. But if you think the rich are noble martyrs who are doing the rest of us a favor by choosing not to “go Galt” and withdraw from society, it’s clearly unjust to ask any more of them unless they volunteer it out of the goodness of their hearts.

Unfortunately, the GOP approach presents an obvious collective action problem, which is why it’s expected to raise so much less money than Obama’s mandatory minimum rate. The reason we have a tax code in the first place is that we determined it was impossible to fund the essential functions of government by having the president busk for tips. We don’t set the federal budget by passing a basket around and adding up the loose change we’ve collected. Congress establishes tax rates, we pay our taxes, and in exchange we get schools, roads, police, firefighters, health care, clean air, safe food, and so on. That’s how it works – except for the wealthiest Americans. With Republicans’ help, they have a few extra steps, like hiding their money in tax shelters, benefiting from all those government services anyway, and then complaining vociferously about how unfairly they’re treated.

Case in point: during last week’s Friday news dump, Mitt Romney released his 2011 tax returns, which showed that he had overpaid his taxes to avoid dropping below a 13 percent effective rate. At first blush this might seem like an example of the Republican Buffett Rule in action: look at this guy, giving until it hurts! Never mind the fact that he once said anyone who did that was some kind of moron who didn’t deserve to be president. But this was pure campaign strategy, not altruism. Having made $13.7 million last year, he paid only a 14.1 percent effective tax rate even after fixing the numbers. The problem is, he’d previously said he’d never paid less than a 13 percent rate in the last 10 years, and if he had taken all the deductions he was entitled to this year, he might have wound up paying as little as 9 percent. To put it another way, if Romney had taken full advantage of the breaks offered to him by the current tax code, he would have paid so little as to embarrass himself. And he’s not alone. According to the Congressional Research Service, one quarter of millionaires pay an effective tax rate of less than 26.5 percent, while 10 million middle-class Americans pay a higher rate.

As former Reagan administration official Bruce Bartlett has noted, the ineffectual nature of the GOP’s Buffett Rule is a feature, not a bug. He writes, “The political reality is that Republicans don’t really support taxation at any level. Of course, none will go on the record saying that they favor abolition of all taxation; they just support every single tax cut and oppose every single tax increase.”

In the extreme Ayn Rand-inspired worldview that Republicans like vice presidential nominee Paul Ryan have embraced, non-voluntary taxation is essentially theft. In reality, it’s the only way to provide vital public goods. As I wrote in the wake of the Aurora shootings, an equitable society depends on a strong and reliable social safety net, not the kindness of strangers. The same holds true for other government functions. If we want the services we’ve determined government can most effectively provide, and if Republicans are serious about wanting to rein in the budget deficit, we need to set rules that establish a steady stream of revenue, not hope that Bill Gates is in an especially good mood when he fills out his 1040.

Tim Price is Deputy Editor of Next New Deal. Follow him on Twitter @txprice.

 

Tax forms image via Shutterstock.com. 

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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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A Tale of Transitions: What Mitt Romney Could Learn from Walter Mondale

Sep 27, 2012Bo Cutter

Romney's chances of becoming president are dimming, but if he changes his message, he could still lose gracefully.

Every presidential campaign reaches a moment when the two main candidates have to start their transition planning. 2012 is no different, and we've reached that moment. President Obama has to begin planning the transition to his second term. Governor Romney has to plan his return to private life. I'll focus on President Obama in several commentaries; this is a brief reflection on Mitt Romney. 

Romney's chances of becoming president are dimming, but if he changes his message, he could still lose gracefully.

Every presidential campaign reaches a moment when the two main candidates have to start their transition planning. 2012 is no different, and we've reached that moment. President Obama has to begin planning the transition to his second term. Governor Romney has to plan his return to private life. I'll focus on President Obama in several commentaries; this is a brief reflection on Mitt Romney. 

First, what's the evidence that we've reached this point? FiveThirtyEight gives President Obama a 79.7 percent chance of winning reelection. Real Clear Politics shows a widening Obama lead in the polls, with an average margin of 4 percentage points. A significant break occurred approximately around the end of August. The Iowa Election Market is currently predicting that President Obama will win approximately 54 percent of the national vote, and the Intrade prediction market is currently pricing a 76 percent chance that President Obama wins reelection.

These are all just probabilities, but it's hard to avoid the conclusion that we now mostly know where this election is headed. And no matter what gets said externally, this is what is being privately concluded by many in the Romney campaign also.

This means that Governor Romney has a difficult gauntlet to run -- one that is psychologically hard to confront. He has to run as hard as he can; he can't just stop. He will see growing dissension within his own campaign, increasing second-guessing from the Republican Party elders, public debates about his campaign strategy, and a growing lack of interest on the part of Senate, House, and gubernatorial candidates in being seen with him at all. Through this he has to act every moment as though he knows he will win. You cannot know how hard this is unless you've seen it close up. And Romney then faces the inevitable post-election ritual bloodletting and blame game, particularly because his party, in its soul, thought this election was a layup for them.

Governor Romney has to maneuver through all of this and retain his own self respect and the respect of others. But he also faces a bigger test -- one that may not yet have occurred to him. He has a genuine responsibility to show a decent respect for core elements of the American philosophy and system of governance.

It's hard to explain what I mean by this without seeming to make a partisan point, which in this case I'm trying to avoid. In my view, Mitt Romney seems to have been an admirable, effective leader with a genuine commitment to private virtue. But in his campaign he has allowed himself to be seen as an unprincipled opportunist, presented a thoroughly unpleasant caricature of conservative thought and an appalling view of his opinion of everyone less fortunate than he is, and at times shown remarkably little concern or respect for some of the complexities of American governance. He has acted as though "there is no there there," as though he sees this presidential campaign as just another campaign, just another deal to close. 

I'll quote at length from a conservative columnist I respect, Michael Gerson:

Yet a Republican ideology pitting the “makers” against the “takers” offers nothing. No sympathy for our fellow citizens. No insight into our social challenge. No hope of change. This approach involves a relentless reductionism. Human worth is reduced to economic production. Social problems are reduced to personal vices. Politics is reduced to class warfare on behalf of the upper class.

A few libertarians have wanted this fight ever since they read "Atlas Shrugged” as pimply adolescents. Given Romney’s background, record and faith, I don’t believe that he holds this view. I do believe that Republicans often parrot it, because they lack familiarity with other forms of conservatism that include a conception of the common good.

But there really is no excuse. Republican politicians could turn to Burkean conservatism, with its emphasis on the “little platoons” of civil society. They could reflect on the Catholic tradition of subsidiarity, and solidarity with the poor. They could draw inspiration from Tory evangelical social reformers such as William Wilberforce or Lord Shaftesbury. Or they could just read Abraham Lincoln, who stood for “an unfettered start, and a fair chance, in the race of life.” Instead they mouth libertarian nonsense, unable to even describe some of the largest challenges of our time.

About a decade ago, I was part of a conversation with former Vice President Walter Mondale, a man I worked for a long time ago and greatly admire. Vice President Mondale said that while he was still bothered by the extent of his loss in 1984, he had to his surprise also come to a parallel realization: the role of presidential nominee of one of the two major parties is a distinct public role and job by itself, one that brings both substantial privileges and real responsibilities. The role cannot simply be a political campaign in that way that almost all other campaigns can be. A presidential candidate is given the right to speak to the American people, and they care what a presidential candidate says in a way they care about no other campaign.

Mitt Romney is almost certainly not going to have a presidential legacy, but he could still have a good presidential candidate legacy. Sometime soon, in the quiet of the night, he might want to call Walter Mondale.

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. He has also served in senior roles in the White Houses of two Democratic Presidents.

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The War on Crime as a Conservative (and Progressive) Assault on Liberal Philosophy

Sep 21, 2012Mike Konczal

In case you didn't see, Aaron Schwartz just had an absurd level of felony charges brought against him for allegedly trying to mass download JSTOR by prosecutors. You can support him here. Meanwhile Twitter turned over the account records of Malcolm Harris to the New York criminal justice system.

In case you didn't see, Aaron Schwartz just had an absurd level of felony charges brought against him for allegedly trying to mass download JSTOR by prosecutors. You can support him here. Meanwhile Twitter turned over the account records of Malcolm Harris to the New York criminal justice system.

How can we theorize innovations in criminal justice policy over the past decades as a reaction to liberalism? Not liberalism like the New Deal or the Great Society, but liberalism as in the philosophical theory of the modern era. Let's start with the policy innovation driven by neoconservatives, and then examine how the progressive assault on classical liberalism also functions in the war on crime.

The Conservative Assault

One part of liberalism is about formal equality--liberty to participate as well as equal freedom from government interference. The War on Drugs and aggressive quality of life initiatives, beyond filling our jail cells, are about getting a lot of low-level charges and convictions on as many people as possible. From 1994-2000, arrests for smoking marijuana in public view (MPV) were up 2,670%. Why does this matter? They interact with three-strike laws to build to large sentences out of minor charges. This also allows for the creation of hierachy through a law ostensibly dedicated to equality and liberty. Once people have been prisoners, they face serious legal impediments, such as limits on access to voting, public housing, public employment, and public assistance. Tens of thousands of legal restrictions regulate the ability of ex-convicts to function and exist in society. There are also certain presumptions against individuals, especially felons, that deny any type of formal equality before the law. When Michelle Alexander talks about a New Jim Crow system of segregation through the legal code and policing, this is the dynamic she is discussing.

Another part of liberal philosophy is that if the state wants to use its power to act against an individual, say for violating a crime, they need to make their case through an institution that is skeptical of that power. In the United States, that means trial by jury, under the supervision of a judge. The judge and a jury of one's peers are supposed to be the key agents in a court.

Another key policy innovation of neoconservatives is attacking the relative independence and power of judges. There have been a host of conservative policies designed to reduce the power of judges, of which mandatory minimums are one of the most important. As judges lose power, prosecutors gain it. Prosecutors are now the major presence in the courtroom, overseeing the overwhelming majority of cases that are run through plea-bargains.

When the evangelical Harvard law professor William J. Stuntz writes that the American criminal justice system has collapsed, this focus on the prosecutor as the arbiter of justice in the courtroom, rather than the judge and the jury, is what he means. Stuntz: "Prosecutors now decide whom to punish and how severely...To a degree that had not been true in America's past, official discretion rather than legal doctrine or juries' judgments came to define criminal justice outcomes....criminal law does not function as law. Rather, the law defines a menu of options for police officers and prosecutors to use as they see fit."

Notice how the prosecutor overseeing Aaron Schwartz's case just decided to charge him with 13 felonies, mostly for violating the Terms and Services "terms of service" of a website. At 13 charges, it looks like the prosecutor is trying to stack the deck on overreaching and arbitrary charges so they can have as much leverage as they can get when it comes time to go to court. That isn't a rule of law, it's a rule of prosecutorial discretion as justice. This is what a collapsed criminal justice system looks like.

The Progressive Assault

Part of the progressive assault on the laissez-faire of classical liberalism was creating the idea that there is no pre-political distribution in the economy. Property is a creation of government, and therefore the distribution of that property is also created by the government. Governments must balance conflicting boundaries of property, and must do so democratically, because appeals to "natural rights" or "economic liberty" will ultimately be empty. Matt Bruenig has several recent posts - one, two, three - spelling out this "myth of ownership" argument over distribution and property rights that are worth checking out.

This progressive approach to property and the state is absent in contemporary talk on economic policy, but it is being theorized and applied in the most avant-garde ways when it comes to criminal justice policy. Let's talk about dogs that do drug searches. If the police wanted to search your suitcase, or look through it with hypothetical x-ray goggles, they'd need a warrant. That would be an illegal search of your property, which is protected by the Constitution. However if a drug dog sniffs your suitcase and smells drugs, that doesn't count as a search.

Why? As Justice Stevens argued in United States v. Jacobsen (1984), "Congress has decided -- and there is no question about its power to do so -- to treat the interest in 'privately' possessing cocaine as illegitimate; thus governmental conduct that can reveal whether a substance is cocaine, and no other arguably 'private' fact, compromises no legitimate privacy interest." Since the dog can only "see" contraband such as cocaine when it sniffs, that sniff doesn't count as a search of your property, because you have no right to contraband.

You have a legitimate privacy interest in your property, except when you don't, because the government doesn't recognize your property as "property." Even though drugs are excludable, rivalrous, and have their price determined in large part by supply and demand, they aren't property the government recognizes, so the bundle of rights that go with property don't apply. The distribution of property outcomes is overwhelming determined by the government here.

People have talked about property this way in the past, but less so now. We talk about inheritance as almost a right now, but John Stuart Mill, for instance, argued in Principles of Political Economy that while "the right of bequest, or gift after death, forms part of the idea of private property, the right of inheritance, as distinguished from bequest, does not." Your right to receive inheritance doesn't exist outside of political framework, which can be held democratically accountable. (For those who think the war on drugs should be stopped and that you receiving an inheritance should be thought of as a type of quasi-contraband, the current policy framework is very backwards.)

There's not enough space here to really dive into it, but there's a mind-blowing legal realist seminar on the "Myth of Ownership" taking place in the realm of "asset forfeitures" criminal justice policy right now. The government sues property and money for being illegitimate under civil law; the government can seize the proceeds of the trade of contraband as well as property instrumental to that transaction. If you drive a car solely to sell contraband, and use the surplus of those sales to buy a home, what property claim can you have to own that car or that house? Here the government is actively creating and policing the boundaries and relationships of property through denying its existence as legitimate "property," all done under criminal law.

This brings us to Malcolm Harris' Twitter account. Who owns a tweet? Who has the ability to turn it over to a third party, and who has the ability to block it? The property claim of a tweet is now being determined through the ability of the government to take it for criminal justice purposes.

A New York criminal court had demanded Twitter hand over Malcolm Harris' tweets, and Twitter did so last week under extensive pressure. The court argued that "Here, the defendant [Malcolm Harris] has no proprietary interests in the @destructuremal account’s user information and Tweets between September 15, 2011 and December 31, 2011...While the Fourth Amendment provides protection for our physical homes, we do not have a physical 'home' on the Internet." They are determining that Harris has no legitmate property claim on the tweet and no right to prevent a search of his account on Twitter's mainframe.

It is fascinating, though problematic, to see the idea, boundaries and relationships of online "property" being determined through the criminal justice system. Here the "property" of online records are carved out and created based on where it will be easiest for cops and prosecutors to access them. Hence all the more reason to have Congress re-establish baselines on what our privacy expectations are online, in the opposite way it has been dissolving privacy and property claims under the banner of the War on Drugs.

 

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Making Telecom Central Again: Our Economic Future Depends on High-Speed Internet For All

Sep 20, 2012Susan Crawford

Expanding high-speeding Internet access to all Americans is as essential now as the Rural Electrification Act was in the 1930s.

Expanding high-speeding Internet access to all Americans is as essential now as the Rural Electrification Act was in the 1930s.

The basic facts are familiar: of a nation of 314 million Americans, 100 million of us lack high-speed access to the Internet. We're behind 15 other countries when it comes to that high-speed access; none of top city hubs for fast, affordable access are in the United States. Speeds are slow, prices are high, and a third of us are being left behind. Most people who make less than $20,000 a year don't have access; everyone who makes more than $75,000 a year does. Almost every part of life today, and every policy area you care about, depends on a reliable, affordable, high-speed connection. For everything from finding a job to accessing online classrooms, those without access are at a distinct disadvantage. And our country as a whole is at a disadvantage, as new developments that require working collaboratively with massive amounts of data will happen elsewhere.

Why did this happen, and why do I care?

It happened because of policy. We're being squeezed by a deregulated and enormously powerful industry that has no incentive to build a fast, affordable, level digital playing field for Americans.

This narrative is really just like the electricity story. In 1920 in America, unregulated private companies controlled electricity. The result? 90 percent of farmers didn't have it, at the same time that all rich people in New York City did. And it was wildly expensive in many places. Although it's now considered an essential input into everything we do, at the time electricity was seen as a luxury; the companies served the rich and big businesses, and left everyone else out. The electricity business, after all, involved very high up-front costs. If you could make that initial investment, it served as an extraordinarily effective barrier to entry -- who needed two electrical lines? -- and you could pick off the rich customers, making life difficult for any second comer, because they'd be stuck with serving people who were more spread out and not as wealthy. Then, once your lucrative business was in place, you could raise prices with impunity. You didn't have to expand. You could just harvest.

We did something about that problem at both the local and national level. It took tremendous leadership by Franklin Roosevelt, who went to swim in Warm Springs, Georgia and was horrified by the expense of the scarce electrification there. Although a rich and privileged man, he instinctively understood that the success of the entire nation depended on having a large marketplace for electricity -- both for people to thrive and for American industry to sell new goods to. And so he mounted enormous rural electrification efforts in the 1930s and regulated these companies, making sure that they received a fair profit for a world-class and universally provided service.

Today, the U.S. is falling far behind when it comes to the 21st century version of electrification: the country's upgrade to fiber connectivity, the global standard. Although our U.S. telephone system was the envy of the world when it was built, and served every American at a reasonable price, we're apparently unable to think of fiber as a utility. We've seen enormous consolidation and monopolization of both wired and wireless access in America by the companies to which we've entrusted our daily lives of information. This isn't good for any part of American society, and it is, or should be, a truly bipartisan issue.

It's also, like electricity, both a local and a national issue. There are bright spots across the country where communities are coming together to commission fast, cheap fiber networks. We need to make it possible for every community to make that choice. That will require federal legislation to block state laws that lock up localities and keep them in the incumbents' hands. We need to make sure that there are rules in place to protect competition and allow for oversight at the federal level as well.

Finally, it's an urgent issue. Right now, a tsunami of state-level deregulation is sweeping the country. Right now, Verizon is telling the D.C. Circuit that it is a First Amendment "speaker" and that therefore any regulation of its activities is unconstitutional. Right now, the regional cable monopolies are buying up former competing telecom companies, strengthening their grip on wired access across the country.

I care because I think we face a choice between two fundamentally different visions of the future. Today's free marketers seem to be content with a second-class network that only rich people can afford. They're pushing for even fewer regulations on the giant telecommunications companies who have the power to control everything we learn and create. Think about that: they want to give the richest and most powerful companies in our country even more riches and more power to serve as gatekeepers over everything we do. To harvest us. And at the same time, they want to make sure that basic high-speed infrastructure isn't a priority for the country. Their vision is simple: "Communicating is a luxury for the rich." I don't think that's right, and most of our peer nations don't either.

I'm thrilled to be invited to be a Fellow at the Roosevelt Institute. One of the high points of this year for me was meeting members of the Roosevelt Institute | Campus Network at their summit at Hyde Park. They are so smart, so focused, and so energetic. This generation understands how essential fast online access is, and how important it is for local communities to protect their ability to communicate at a reasonable cost. What's unique about Roosevelt is that it operates on both a local, decentralized level and on the national level -- just like the Internet itself. I'm looking forward to taking on this issue with the Roosevelt team. 

Susan Crawford is a Fellow at the Roosevelt Institute.

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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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Should We Stop Referring to Student Loans as "Financial Aid"?

Sep 14, 2012Mike Konczal

Students who take out loans aren't receiving special favors. They're making financial transactions like any other.

Do we make both a conceptual and analytical mistake when we refer to student loans as a form of "financial aid"? Should that term be something to be resisted? Demos' Tamara Draut brought up this point in a conversation recently, and I think it needs to be explored further, because it frames how we speak about student loans.

Students who take out loans aren't receiving special favors. They're making financial transactions like any other.

Do we make both a conceptual and analytical mistake when we refer to student loans as a form of "financial aid"? Should that term be something to be resisted? Demos' Tamara Draut brought up this point in a conversation recently, and I think it needs to be explored further, because it frames how we speak about student loans.

The government records and documents student loans as a form of aid. Here's a list of the "amount of financial aid awarded to full-time, full-year undergraduates, by type and source of aid," and loans are listed right next to grants. When pundits say that "student aid" has exploded over the past decade, and argue that aid is driving increases in tuition, it disguises that the aid that has exploded is a signficant amount of debt for young people.

I've taken out loans and received gifts. When I've signed up for, say, a car loan, I never went "oh you shouldn't have" afterwards, like when I've received a really nice birthday gift. I understood that the creditor wanted to lend me a certain amount of money at a certain rate, and I wanted to borrow it. Full stop. Unless the interest rate charged is purposely manipulated for some reason [1], there's no reason to think of this as aid at all.

Student loans are an economic transaction, the same as if the government contracted out to build a bridge, or hired a person to serve in the military or police force or be a teacher. The money spent here isn't "aid." Hiring someone to build a bridge exchanges labor for cash. Student loans exchange cash now for cash later plus interest. Those student loans would be underprovided without the government, certainly, but in the same way that bridges and law enforcement and other goods would also be underprovided if they weren't done by government.

I think this clarifies some of the issues and responses I'm seeing in the discussion about whether or not higher education is driven by increases in so-called "aid." Megan McArdle wrote in Newsweek, "In a normal market, prices would be constrained by the disposable income available to pay them. But we’ve bypassed those constraints by making subsidized student loans widely available." Let's leave aside the issue that the vision of education constrained by disposable income is Mitt Romney's vision that students should get "‘as much education as they can afford." There's a bigger issue.

I'm not sure what "normal market" means here, but many kinds of markets, perhaps even all of them, aren't constrainted by disposable income. Major, long-term debt fuels all kinds of important purchases, from houses to cars to health care to big-ticket durable goods. Events like retirement or having kids are dictated by longer-term savings decisions. Much of your monthly spending, like your rent or your cell phone, is in a contract that stipulates some future payments must be made regardless of your disposable income. There's a reason economists talk about spending as influenced by lifetime incomes.

Student loans are a way of mitigating a credit constraint, which is different than providing aid. Here it reflects not subsidized demand, but actual demand smoothed over a long time period. That's going to put a lot of demand into play. It shouldn't surprise us that demand is very high when credit constraints are removed. Higher education is one of the most important mechanisms of social and economic mobility we have, and it is also one of the primary ways we have for people to fully develop their talents and capabilities.

If actual demand overwhelms the supply of the system, that's a problem of supply, not demand. And the obvious solution is to increase the supply. Throughout our country's history we've done that in landmark bills that do it through public provisoning paid for by taxation, bills like the Morrill Act and California Master Plan. Now, as that system is left to crumble, we are looking to the private, for-profit sector to fill that gap. I fear that will only exacerbate the cost problems we've seen so far, and the data is looking that way too

But if not as a form of financial "aid," how should we refer to student loans?

[1] There's a narrow, though important, question about whether or not student loans are a "subsidy" because their interest rates are too low or too high. The Department of Education found that (R-10) for ”Direct Loans, the overall weighted average subsidy rate was estimated to be -13.91 percent in FY 2011; that is, the overall program on average was projected to earn about 13.91 percent on each dollar of loans made, thereby providing savings to the Federal Government.” What's a good word for the opposite of a subsidy? Whatever it is, student loans are that. Others argue that there needs to be a higher discount rate used to calculate this, and then you would see a subsidy. Let's assume for this post that the interest rate is seen to be fair by all parties.

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Young woman paying bills image via Shutterstock.com.

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Two Issues with Megan McArdle's Piece on Higher Education

Sep 13, 2012Mike Konczal

Megan McArdle has a new cover story at Newsweek, "Is College a Lousy Investment?"  Is the benefit worth it with rising costs? Several people have addressed the benefit part, particularly Dylan Matthew here and Reihan Salam here.

Megan McArdle has a new cover story at Newsweek, "Is College a Lousy Investment?"  Is the benefit worth it with rising costs? Several people have addressed the benefit part, particularly Dylan Matthew here and Reihan Salam here.

I have a piece about higher education that I'm really excited about coming out in the next few weeks with Aaron Bady for Dissent, so I don't want to spoil it. But for now, I think there are two important things to engage with in McArdle's piece. The costs part is important, because this will likely be the center-right argument going forward, and I think it has problems in an important way. McArdle:

Vedder adds, “I look at the data, and I see college costs rising faster than inflation up to the mid-1980s by 1 percent a year. Now I see them rising 3 to 4 percent a year over inflation. What has happened? The federal government has started dropping money out of airplanes.” Aid has increased, subsidized loans have become available, and “the universities have gotten the money.” Economist Bryan Caplan, who is writing a book about education, agrees: “It’s a giant waste of resources that will continue as long as the subsidies continue.” [...]

In a normal market, prices would be constrained by the disposable income available to pay them. But we’ve bypassed those constraints by making subsidized student loans widely available. No, not only making them available: telling college students that those loans are “good debt” that will enable them to make much more money later.

This is based on something called the Bennett Hypothesis. In the 1980s Education Secretary William Bennett argued that increases in student aid largely just allowed colleges to raise their tuition, capturing all that money. If true, this would be the lowest hanging policy fruit imaginable: save money by not providing aid and lower tuition in the process.

Sadly, there's no evidence for this argument. And I mean "no evidence" not like "there's significant debate" or "reasonable people disagree," but like this has been extensively studied and the general consensus is that it is not true. I spent some time going through this research and couldn't find anything conclusive, and requests from others writing on this haven't been helpful. This could likely be true as it relates to for-profit schools -- there's a study somewhere that indicates this -- which shouldn't suprise us, as for-profits exist to suck up federal subsidies by business design. But it doesn't appear to be true for the vast majority of higher education, and to whatever extent it could be true it isn't a major driver.

 Here's a big post by David L. Warren, president of the National Association of Independent Colleges and Universities, listing all the institutions that have investigated this. Among other studies and experts quoted, here's:

“Regarding the relation between financial aid and tuition, the regression models found no associations between most of the aid packaging variables (federal grants, state grants, and loans) and changes in tuition in either the public or private not-for-profit sectors.”
 
– U.S. Department of Education National Center for Education Statistics, Dec. 2001, Study of College Costs and Prices 1988-89 to 1997-98, Vol. 1
 
“The Commission finds no evidence to suggest any relationship between the availability of Federal grants and the costs or prices in these institutions,” and “has found no conclusive evidence that loans have contributed to rising costs and prices.”
 
– National Comission on the Cost of Higher Education, February 1998, Straight Talk about College Costs & Prices
 
“After the change to the Stafford loan limits beginning in AY 2007-08, the price [of college] … increased at a rate generally consistent with prior years. [...] Overall, [previously conducted] analyses are descriptive and do not necessarily indicate a linkage between increases in the loan limits and changes in tuition or borrowing.”
 
– Government Accountability Office, May 2011, Federal Student Loans: Patterns in Tuition, Enrollment, and Federal Stafford Loan Borrowing Up to the 2007-08 Loan Limit Increase
This is important, because McArdle's argument allows her to make it seem like government action to provide for higher education is largely counterproductive. Rather than examining the decreasing support for higher education, the difficulty of finding "Baumol’s cost disease" in higher education, the growth of a "hybrid" design for our public education sector, the decrease in Pell grants relative to total college costs, the way that the for-profit industry is taking over for public institutions, or the issue of risk-shifting to the individuals and providing services out of fees instead of taxes - rather than it being a choice on how we provide the essential social good of higher education, and who benefits and who loses from those choices - McArdle can imply that if the government tried to make education more affordable it would backfire and just make the problem worse.
 
This becomes even more of a problem with the second issue, the likely transmission mechanism. Just because aid goes up doesn't mean that prices must go up - the increases in food stamps haven't caused an equivalent increase in food prices. In a follow-up post to her article, she alludes to the microeconomic issue at play: "Vedder’s theory is that, as he put it, universities are raising tuition 'because they can'."
 
In economics-speak, that means that the supply of higher education is inelastic relative to price. If that's the case, then the right course of action is for the government to provide more supply at a cheaper price; i.e., free higher education. JW Mason has argued that if supply is inelastic, "each dollar spent on grants to students reduces final tuition costs less than one for one, each dollar spent on subsidies to public institutions reduces tuition costs by more." Think of it as "the public option for higher education" argument, with the same motivations. This is not a new argument. in 1899, the president of Stanford argued that “if the State makes no provision for higher education there is no other agency on which we can depend to supply it.” That seems as relevant now, over 100 years later, as it did back then.
 

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