The conventions are all about having fun, but if Obama wins reelection, he has to get serious about his governing strategy.

Nowadays, you have to see both parties’ conventions as theme parks or Three Stooges humor. As a viewer, you’re Dorothy in Oz or Alice through the looking glass. Conventions used to be about making a choice of nominee. Then, for a while, they were about making a choice and marketing. Now they're only about marketing. They are not about truth; heck, major campaign spokespeople for Romney have directly rebutted the notion of truth. They are not about policy, and they certainly have nothing to do with governing. They are about wearing funny hats, having some fun, and insulting the other guy. For me the high point of the whole Republican convention was ol’ Clint Eastwood talking to the chair.

Until Bill Clinton showed up, the Democratic convention wasn't a lot different. To alter slightly a phrase President Clinton has used, he "put the corn where the hogs can get to it." No one from the Obama campaign, including President Obama, has ever put the arguments for a second Obama term or against a Romney term so well, or even come close. Having worked for President Clinton, I start out liking the man and in awe of his capacity to hold an audience. But his abilities go beyond that; he takes policy and governing seriously, he deals with his political opponents rather than simply dismissing them, and he respects his audience. His arguments are never simple or trivial. He made this convention by himself, and he made Mitt Romney look small.

Now it's President Obama's turn. I hope he takes a risk and talks about the realities of his very likely second term. The almost entirely substance-free Republican convention gave him the license to do it, and Bill Clinton gave him the political space. We'll see. But in any case, the odds are high that President Obama is going to have to talk for real about his second term in about 60 days.

What we know generally is that conventions rarely affect elections; the average "bounce" is two to four points and even that goes away within days. Romney's bounce looks to have been on the very low end of that range and to have gone away. President Obama will probably see roughly the same result. The truth is there are very, very few truly undecided votes out there to move one way or the other.

And in the absence of a big, sustained bounce, the various oddsmakers say this election is heading toward an Obama win. The New York Times’ FiveThirtyEight blog gives Obama a 75 percent chance of winning, with 307 electoral votes. Nate Silver's analysis says there wasn't any Romney bounce. Election market sites Intrade and Iowa Election Markets give Obama a 59 percent and 64 percent probability of winning. And Real Clear Politics in its "no toss-up states" projection gives the President 332 electoral votes. All of the same sites suggest that Republicans easily hold the House and have a marginally better than 50 percent chance of winning the Senate (in almost any scenario, the Republicans gain seats in the Senate).

Results could be different; if you toss an unbiased coin a million times, there are long runs of either heads or tails. But this doesn't feel like a "change" election to me. We're probably in for another four years of (very) divided government. So we move to reality. How will President Obama choose to manage his presidency under the circumstances he will surely face? More to the point, how will he, from the start of his second term, convince his audience that he intends to manage his presidency?

As I've said a number of times, I do not think this administration has been good at strategic management. Harold MacMillan was right when he said that events were the biggest factor in the success of any prime minister, but there are still choices to be made. There were in President Obama's first term, and there will be in his second. In this administration's first term, there were four critical points at which I see little evidence that a hard-eyed strategic choice was involved: (1) an early over-interpretation of his mandate, (2) the decision to go for health reform and, in essence, drop ownership of the economic story, (3) a decision not to pick a fight with Congress in March 2011 over shutting down the government -- a fight he would have won, and (4) a decision not to endorse some version of Simpson-Bowles or Rivlin-Domenici.

If the president is to accomplish anything, his administration has to be better strategically and harder-edged from the start of the second term. If it is better in these ways, I would argue that the chances of a successful second term are much higher than generally believed for two reasons. First, after the Republican far right indulges in a post-Romney-defeat ritual bloodletting, the party as a whole is going to realize that it has been taken down a blind alley and has to find a way back. Republicans will have to make some sort of deal. Second, the U.S. economy is about to start performing better than we expect.

The basic choice the president faces is either to clear the underbrush and set the stage for focusing on our real future, or continue today's protracted standoff between the current left's and right's version of the 1950s as the ideal society. The current squabbling about debt, deficits, taxes, spending, and entitlements is mostly about the underbrush and is preventing us from looking at the future. And the squabbling is occurring mostly around the contours of an agreement everyone knows has to be reached.

I do not in any sense mean these issues are unimportant, and I certainly do not mean they aren't hard. But we are not Spain or Greece; reasonable solutions exist, and we have time if we act. If we put ourselves on a path that plausibly solves these problems -- within the range of what "solve" means in politics -- over a decade, then we can move on. But we have to start. The president would do himself -- and us -- a big favor if he put these issues in his rear view mirror by endorsing Simpson-Bowles, or something as close to it as he can get, on November 7. To generalize that point, the president needs a strategy to win during the impending post-election lame duck session of Congress and to avoid looking like just another creature in that zoo.

If he does this -- which is undeniably difficult -- he can then spend his entire second term focusing on another truth that becomes increasingly apparent: America has a very bright future if we can somehow avoid snatching defeat from the jaws of victory.

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.

The Republican platform calls for repealing student loan reform so private lenders can get a bigger piece of the pie.

Since health care reform was passed in March 2010, Republicans have railed against the individual mandate and imaginary death panels. But they’ve also been seething over a lower-profile part of the package called the Student Aid and Fiscal Responsibility Act (SAFRA), which made the government the sole originator of federally backed student loans. Critics have called it a government takeover, with Paul Ryan claiming that “they had the federal government, the Department of Education, basically confiscate the private student loan industry.” (For the record, you can still go get a private student loan whenever you want. You won’t be pulled off the street and tossed into the back of an FBI van.)

If Republicans get their way, this dark age of sensible reform and efficient lending practices will soon come to an end. Their 2012 platform declares, “The federal government should not be in the business of originating student loans; however, it should serve as an insurance guarantor for the private sector as they offer loans to students.” In other words, they want taxpayers to assume all the risk and banks to enjoy all the upside. Their big idea for student loan reform is to roll back change and restore a status quo that already wasn’t working.

Most students can’t afford to pay soaring college tuition rates out of pocket, so the government has a vested interest in making higher education more accessible given that it’s a public good and the key to a more productive workforce. Even the Republican platform concedes that much by stating that the government should continue to back private lenders instead of pulling out of the student loan market entirely.

But there’s no obvious reason why this goal is best accomplished by funneling money through third-party lenders instead of issuing loans directly. Before SAFRA was passed, federally backed student loans were administered through the Federal Family Education Loan Program, or FFEL, a public-private partnership in which the federal government subsidized and guaranteed student loans that were originated by private lenders. This meant that banks received taxpayer money as an incentive to keep interest rates low. The government also guaranteed that it would pay back up to 97 percent of the loan principal if the borrowers defaulted, meaning there was little need for lenders to worry about credit risk. That proved an inefficient way to provide loans, but a great way to prop up banks and waste a bunch of money.

In a rare victory for common sense and genuine fiscal responsibility, SAFRA changed the system by cutting banks out of the loop and establishing the government as the sole originator of federally backed student loans. Proponents of the new system have described it as “a plan as simple as the cheesiest local television commercial: The president will cut out the middle man and pass the savings along to you.” This is projected to save $68 billion over 11 years, which should put a smile on deficit hawks’ eternally frowny faces. The bill also caps student loan interest rates and uses some of the savings to invest in community colleges and provide $36 billion in additional funding to expand and increase Pell Grants. Though we still have a long way to go toward tackling the student debt crisis, these are all important steps that will help make college more affordable and accessible to Americans from all walks of life.

Aside from being smart policy, this new approach to providing student aid has the added benefit of making the relationship between that aid and government action explicit. This counteracts the effect described by Suzanne Mettler in The Submerged State in which government-provided benefits are “hidden” by turning them into tax expenditures or laundering the money through private entities. The result is that people often fail to realize that the government is doing anything to help them. Direct lending helps to ensure that “Get your government hands off my Medicare!” doesn’t find a more youthful counterpart in “Get your government hands off my federally backed student loans!”

All of the above explains why SAFRA was a step forward, but it also explains why Republicans want to take two steps back. Their dark warnings of government takeovers and “Soviet-style customer service” are identical to the arguments they’ve used to attack the broader health care reform package and just as dishonest. For one thing, as Valerie Strauss notes, they’re “conveniently forgetting that the government already pays for it so, by definition, it already IS a government program.” For another, anyone who’s had any interactions with private student lenders isn’t likely to miss the warm and welcoming customer service experience. If there’s a problem with one of your loans, working it out isn’t like popping over to the Genius Bar at the Apple Store. It’s more likely to involve making a lot of phone calls and swigging Pepto Bismol while waiting on hold. The government could do a worse job in theory, but it would probably have to work at it.

Other complaints focus on the fact that switching to direct federal loans has forced private lenders like Sallie Mae to cut jobs, but as noted, those people weren’t really doing anything particularly useful. If Republicans want to do a complete 180 and argue that the government should provide make-work jobs, there are far more useful things we could have them doing. If not, these private lenders sound an awful lot like those moochers conservatives like Paul Ryan complain so much about.

Though the Republicans’ desire to repeal SAFRA is sandwiched into a section of their platform labeled “Addressing Rising College Costs,” their solution would benefit banks while providing no help at all to students. In fact, they’d make things worse by slashing Pell grants and increasing spending on the Department of Defense so that we can send more young Americans off to war instead of college. If the GOP wants to style itself as the teller of hard truths, it should start by acknowledging that having private lenders act as middlemen for student loans is pointless and stop trying to backtrack on what little progress has been made on student loan reform.

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

Student debt image via Shutterstock.com.

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

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

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

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

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

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

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

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

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

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

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

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

This week's numbers: $360 billion; $86 billion; 20%; $175,000; $130

$360 billion... is an unpaid number. That’s how much Romney’s tax plan would reduce revenue in 2015, according to a Tax Policy Center analysis. Maybe rather than running for president he's just trying to engineer a leveraged buyout of the country.

$86 billion... is a shifted number. That’s how much more of the tax burden would have to fall on the middle class and poor for the plan to be deficit-neutral. Since there's only so much room on their shoulders, Romney has dropped his plan to have them carry the rich around in litters.

20%... is a flat number. That’s how much Romney’s plan would cut from all individual tax rates, with the highest dropping from 35 and 28 (time to buy that yacht!) and the lowest dropping from 10 to 8 (time to buy that sandwich!).

$175,000... is a saved number. That’s how much less the average millionaire would pay each year under Romney’s plan, though some have tried to compare it to how much they usually pay and gotten a divide-by-zero error.

$130... is an expired number. That’s how much more the average person earning less than $30,000 would have to pay due to the end of Obama's tax cuts. The GOP always said he would raise taxes; little did they know he'd trick them into doing it themselves.

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