A Forecast for the 2013 State of the Union Speech

Feb 11, 2013Bo Cutter

This is not the moment to give the same economic speech, but to be bold and long-term.

This is not the moment to give the same economic speech, but to be bold and long-term.

Inaugural addresses are about poetry and vision; State of the Union speeches are about prose and governing. (I acknowledge the inaccurate theft from Governor Mario Cuomo.) But they can and should be about more than a simple listing of policy and budgetary goodies, which is more often what they have become, or the inevitable, and politically necessary, announcement that the state of the union is "good." President Obama should raise the level of the genre and his own game in Tuesday night's speech. Because second term presidencies are two real years rather than the constitutional four years, the president has a lot at stake in making this his best State of the Union.

The president's advisors have told the media that this speech will reflect a "pivot" back to the economy after the Inaugural Address's focus, largely, on inequality. That would be very welcome. But he still has a choice.

He can give the standard, dull, plain-vanilla generic presidential speech about the economy. This would have three major themes: (1) the economy is not in good enough shape, but it's getting better; (2) everything my administration has done to date is the reason why the economy is getting better; and (3) here is my list of actions we intend to take that will immediately make the economy even better. That last point invariably emphasizes job creation, immediate job creation, immediate American job creation, and immediate American good job creation. The generic speech always has a number of good things to say about infrastructure spending. This is all always said with the implicit assumption that the economy of tomorrow will be much the same as the economy of yesterday and today and that no one need worry too much about change. You have to remember that State of the Union speeches are drafted by political advisors and consultants who, across all political parties and all times, share two views about the American people: they go into catatonic states at the prospect of any change and their time horizon is at most a couple of weeks. This speech would disappear without a trace.

Or he could decide to give a far better economic speech. It would have the following themes:

First, a discussion of long-run economic growth, not the next six months - which matter, but not as much as the long term. 

Second, a focus on a particular kind of growth: long-term, equitable, and sustainable. I mention the "sustainable" point in particular because it is always part of any rhetorical flourish but mostly disregarded when the time comes to do anything. 

Third, a conversation about change. As is obvious to anyone, and as is detailed by the fascinating ebook by McAfee and Brynjolfsson, The Race Against the Machine, we are in the middle of a huge, long-term period of enormous dislocating technological change, and that's only one aspect of the change we are going to see. The American people need this president to tell them this and to say clearly this change will fundamentally alter many of the givens of jobs, work, companies, education, etc.

Fourth, an outline of a practical vision. The impending change is real, but so is America's immense capacity for innovation and reinvention. The president can show how down-to-earth, sensible policies will put the country on the right side of this change.

I haven't mentioned the omnipresent issues of budgets, deficits, and debt. These issues have to be resolved if we want to establish a strong basis for the economy of the future and if we want to make this economy safer. These issues should be put in this economic context. Resolving them will require movement from both Democrats and Republicans. There is no movement today. In this speech, President Obama should make a thoughtful and genuine proposal to break today's complete deadlock. 

The probability of this second speech being given is well below 10 percent. But the president would be better off if he gave it and if he established a different kind of context for that portion of his second term that really matters. This is a use-it-or lose it moment; this is what second terms are about.

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 Inaugural Address and a Vision of America

Jan 28, 2013Bo Cutter

President Obama's second inaugural had soaring language but fell short of a transformational vision of the future.

President Obama's second inaugural had soaring language but fell short of a transformational vision of the future.

Inaugural addresses are poetry and vision. They are not about governing and programs. Judged this way, President Obama's second inaugural speech was wonderful poetry. The president excels at these big set pieces and he delivers them magnificently. In these moments he is magnetic, and it would take a very crabbed spirit not to acknowledge this. To quote Newt Gingrich, it was a good speech. But the vision of America in the speech is disappointing -- not because it is wrong, but because it isn't sufficiently penetrating and insightful. It is far too incomplete. It does not rise to the quality of his mind or of his poetry.

Some thoughts about the president's speech itself before expanding on my concerns about the president's vision:

The headline instant analysis of the speech all said this was a defiantly progressive statement. Maybe history will see it that way, but I doubt it. This was a very, very conventional restatement of progressive thought and values. It can only be thought of as some sort of signature statement because of how far toward the right debate in Washington shifted after the arrival of the Tea Party.  

I'm not a "progressive" in today's terms, but nevertheless I'd argue that the values the president emphasized have become conventional because they are right. And after a completely unedifying and at times ugly presidential campaign, and then a really dispiriting congressional lame duck session, some of these values needed to be reasserted. We do face problems requiring government and collective action, as the president discussed. The nation is not divided neatly into givers and takers as Governor Romney believes. Equal opportunity for every American ought not to be a question we debate. And even in the middle of a bitter immigration dispute about who are or can become Americans, we have to act decently. We ought to be able to resolve our immigration problem without seemingly taking delight in making good and decent men and women miserable, even if they are here "illegally."

I even found the president's statement of support for Medicaid, Medicare, and Social Security completely traditional and unexceptional. The statement that "The commitments we make to each other – through Medicare, and Medicaid, and Social Security – these things do not sap our initiative; they strengthen us" is hardly a call to the barricades. Who out there expected the president, after winning a second term, to say anything differently? Who put the odds very high above zero that the president would suddenly acknowledge that Paul Ryan was right after all?

And I'm delighted that the president finally returned to climate change -- although it is very, very late. I'll acknowledge a high degree of self-interest here. I chair Resources for the Future, a 65-year-old economic think tank that is one of the world's leading centers of thought on climate, energy, and the environment. I believe there are more and less effective ways to approach climate and environmental issues, but I think the problems are real and have to be addressed. It is depressing that much of the Republican Party -- once again never missing a chance to miss a chance -- has decided, immediately after the president's speech, that the whole climate issue is a ruse, part of a deviously clever plot by the president to expand the regulatory state. I guess I'm glad for the human species that there are climate deniers like Holman Jenkins and George Will who are so awesomely smart that with 1,000 words and a few anecdotes they can disprove a quarter century of climate science. But I don't take a word of any of this as serious commentary. Since we are, right now, trashing the planet, I hope forging a long-term creative approach to this central question is how the president chooses to be transformational.

But this brings me to the incompleteness of the president's vision. America is a great deal more -- and is entering times more challenging -- than today's conventional progressive vision suggests or the president said in his speech. I'd underline three subjects the president left out: change, business and economic growth, and our decentralized society.

To start with, we are facing immense simultaneous changes in our economy, the world economy, technology, the diversity of our population, the nature of work, and our environment. Any vision you choose to have about America has to be put in the context of these changes.

But we are experiencing a very low rate of economic growth, and we cannot cope with these big changes unless our economic growth rate rises. The only way that can really happen is through business and the private sector. We have the most dynamic and innovative private sector in the world. Unless it stays that way, as a nation we won't be able to afford all of that collective action the president wants. However, the president never mentions the private sector and it seems conspicuously excluded from his insistence that we have to work together. To have the only mention of the private sector focus exclusively on rules and regulations just isn't remotely appropriate.

More broadly, we have the richest and most diverse civil society in the world, strong state and local governments, and an ethos that is insistently individualistic and decentralized. These are mostly strengths. Big government and big companies really do have a strong tendency to take all of the air out of the room, to homogenize everything, and to relentlessly oppose innovation and change. It is our decentralization and diversity that makes us a uniquely dynamic nation.

We are a very complicated mosaic and much more of it should be celebrated than the president chose to in his speech. I wish he had put his insistence on the timeless quality of the values he underlined in the context both of the need to retain the dynamism of American society and the American economy and in the context of the immense changes we are facing. How to keep these values fresh in the midst of the changes we have to navigate -- that's a topic made for a second inaugural.

Finally, a brief specific point. The president said, "[W]e reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future." Great. But that's exactly the choice we are making now, and there is no sign we are changing. Our national government is already mostly about defense, transfer payments to the elderly, and the cost of our (growing) debt. On current trends we will spend all of our tax revenues on those three functions in the year 2020. And the president's speech was decidedly lukewarm about resolving the state of our fiscal health. If I were in the generation that "will build America's future," I'd be gratified by the sentiment and all, but I'd worry a lot more about the numbers.

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 Fiscal Cliff Post-Mortem, Part 1: Putting the Deal in Context

Jan 15, 2013Bo Cutter

The weakness of the fiscal cliff deal reflects the lack of direction coming from the White House.

The weakness of the fiscal cliff deal reflects the lack of direction coming from the White House.

I haven't written for a month largely because I thought it was one of those times when everything possible had been said about the fiscal cliff but not everyone had said it. Moreover, absolutely no one actually knew anything. Negotiations like this are "unknown unknowns" to everyone, including the participants. But with the fiscal cliff deal now done, I intend to write three brief pieces: The context of the deal, the deal and its immediate results, then the deal and its long-term results.

I'll get to the deal later. For now, suffice to say that -- even granting its one big positive, a more progressive income tax system -- the deal represents something close to a new standard for the smallest amount above nothing it is possible for intelligent people to accomplish in a negotiation.

But the most surprising and disappointing aspect of the post-election lame duck period was not this deal itself but the absence of a framework for any deal. This was a point on which I was simply wrong. I wrote in a number of places that I hoped a newly re-elected President Obama would quickly endorse Simpson-Bowles-Rivlin-Domenici. While I never predicted or expected this endorsement (I continue to believe the president has missed a huge opportunity here), I very clearly expected that he would create a framework, a road-map for where he wanted to go and what he wanted to do during his second term.

He didn't. As a result, we do not have, and the president doesn't have, anything close to such a framework right now.

The campaign and the election did not provide a framework. I've never really believed that campaigns were learning opportunities, and as I've come over decades to understand campaign consultants, I've realized that the last thing campaign managers want to do is have "teaching moments." And this particular campaign was even less of such a moment. Democrats wanted to tax whomever they defined as wealthy, but had no other ideas. And they faced a deeply flawed opposition candidate who was incapable of pushing them to develop any ideas. The Republican campaign from beginning to end was so completely incoherent that it is impossible, at least for me, to distill any organizing ideas or philosophy.

So we entered the post-election period absent any overall sense of direction. And I find it impossible to understand why the White House did not then provide such a sense of direction -- call it a governing philosophy -- immediately after the election.

What would such a philosophy be? I think it's obvious.

The second term of President Obama has to be focused on what is required to build the foundations for higher, more equitable, more sustainable economic growth. The difference between being caught for a long time in a two percent growth environment, as many predict, as opposed to a three percent to three-and-a-half percent growth rate -- which I think is possible -- is profound in terms of the health of American society.

Clearly a necessary but completely insufficient condition of the path toward higher sustainable growth of this kind has to be a long-term solution to the debt/deficit trap in which we are caught. But there is much more we must do, and the debt issue cannot be the whole of President Obama's second-term governing philosophy. But only President Obama can say what that governing philosophy is -- and he hasn't.

In the absence of such a philosophy or framework, it was completely inevitable that any fiscal deal would be the paltry, lowest common denominator result we ended up with.

There seem to be three theories as to how we reached this dismal point. They are not mutually exclusive.

First, the Obama covert socialist conspiracy, as promulgated by any number of conservative columnists: President Obama wants to make America into a new version of socialist Europe and this deal is step one. I give this about a 1 percent weight -- President Obama clearly did and does want a more progressive income tax system. But that's as far as it goes.

Second, the we are doomed hypothesis. America has become hopelessly polarized and ungovernable, and none of those poor members of the House or Senate could do anything of any scale or scope because they would be "primaried" and lose their jobs. There is considerable truth to this. The left and the right have mutually exclusive views of America and the Republican House in particular has lurched its way into an impossible corner. This polarization clearly limited the freedom of movement President Obama or anyone else had to reach an agreement. I give this a 45 percent weight.

But I think the third theory, the "if you don't known where you're going you'll get there" hypothesis, is at least as big a factor. This deal is the most a lame duck Congress -- indeed any Congress -- could conceivably ever come up with on its own. As we have learned time and time again, Congress does not make big policy, or establish major directions, or make trade-offs. It wasn't built to do any of this and it can't. The only possible source of intentional energy in our system is the presidency. If there is to be any sense of direction whatsoever, a president has to provide it. In this case, the president did not provide a sense of direction, Congress spun its wheels uselessly for a while, and inevitably the range of possible deals rapidly diminished until we reached this deal.

This cliff deal has one substantial positive feature: it creates a more progressive tax system. In fact, it creates the most progressive tax code since 1979. In my view, given the increase in earnings inequality the country has experienced, this is an unqualified good direction.

But it probably is very close to the last drop of new revenues that can be squeezed from this source. It is easy to be in favor of taxing someone else, which is why I never found it particularly interesting that the polling showed majorities in favor of taxing the wealthy. The next revenue increases will be much harder.

Beyond this achievement, the deal solves no known problems. It does not raise enough revenues. It does not cut or even reduce the growth of any expenditures. It leaves an immense long-term debt problem. It does not resolve the sequestration problem that last year's Super Committee left us. It does not solve the debt limit problem. It leaves the nation's public finances in a state of high uncertainty. It reduces the 2013 rate of economic growth by about one-half of a percentage point. And it almost guarantees a series of completely unproductive fights throughout this coming year.

If this is what you get when you try really hard, then a possible total closure of government in a few months looks pretty good.

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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Using the "Nuclear Option" for Filibuster Reform Endangers Cooperation

Jan 7, 2013Joe Swanson

Filibuster reform is increasingly important, but just as important is the way it's achieved.

Filibuster reform is increasingly important, but just as important is the way it's achieved.

In recent years, Congress has achieved several unprecedented failures. Since 2007, an estimated 391 filibusters forced cloture votes. Compare that to only 49 cloture votes between 1919 and 1970. In the 112th congress alone, members of Congress have accomplished the passage of a mere 219 bills, many of which were housekeeping measures such as naming post office buildings or extending existing laws. This output has set the record as the least productive Congress in record keeping history, including the 80th congress in 1947, infamously known as the “Do Nothing Congress.” In addition, they have won the reproach of the people with a 10 percent approval rating earlier in the year, the lowest approval rating Gallup has reported in its history. These statistics not only document the abuse of the filibuster and its consequences, but also demonstrate that the reasons behind our legislative gridlock reach beyond the filibuster or even Senate rules.

Our lawmakers have lost the ability to compromise. While the filibuster was once a tool designed to increase the space for debate, it now has the polar opposite effect. However, changing the rules may only exacerbate the inability to compromise. If done through fundamentally uncompromising partisan political tools, the very goal of reforming the filibuster to increase debate and the functionality of the Senate will both be at risk.

Filibuster reformers have so far offered three solutions. First, Senate Majority Leader Harry Reid proposed eliminating the filibuster on the steps necessary to go to House-Senate conference and has given his support to Senator Tom Udall’s proposal to eliminate the filibuster on the motion to proceed. Senator Jeff Merkley has also authored the “talking filibuster” proposal, which requires senators seeking to filibuster to debate the issue they are blocking.

If our goal is to center the Senate’s focus on debate rather than mindless obstruction, the first two proposals are common sense and moderate changes that get us there. They neither seek the destruction of the filibuster nor obstructionism. Sarah Binder, a political scientist at George Washington University, notes that eliminating the filibuster on the motion to proceed would make it easier for the majority to set the legislative agenda and bring bills to the floor for debate. But it wouldn’t stop the minority from filibustering a bill’s final passage. Rather than eliminate obstructionism, “it might shift it and put focus elsewhere.” This change in focus would be a shift toward debate, thus cultivating the Senate’s true purpose.

Though the “talking filibuster” proposal’s attempts to return the filibuster to the days of Mr. Smith Goes to Washington is intuitively appealing, it comes with several pitfalls that would need to be resolved in the final proposal. For example, one of the fundamental problems in the proposal is that it does not take into account the possibility of the existence of a minority greater than two or three senators. Today, our senate has become subject to such partisanship that most filibustering minorities carry around 40 votes, if not more. Therefore, under the current provisions of the “talking filibuster,” filibusters would, as Richard A. Arenberg puts it, “become merely a scheduling exercise.”

Though reforms are absolutely necessary given the unsupportable gridlock currently choking our legislative process, and the reforms suggested by Senators Reid and Udall are moderate and viable, the manner in which these reforms will be enacted should be the focus of any reform efforts.

Unfortunately, there is talk from the leadership in the reform movement of the use of the constitutional/nuclear option. The use of this option would eliminate the need to speak to, or compromise with, any senators in opposition to the reform, because the nuclear option would only need 51 votes to change the rules (as opposed to the two-thirds majority vote that would be needed to change Senate rules on any other day than the day the Senate opens in the new year). According to Udall, reformers already have the 51 votes needed to impose the nuclear option. Not only will the neglect of nearly half of the Senate further aggravate partisan tension, many in opposition fear where the nuclear option may lead the Senate.

If the nuclear option is used at the beginning of the 113th congress, it will stand as a dangerous new precedent. Many claim the move could fundamentally change the Senate, an institution designed to protect the rights of the minority, into a body annually altered to create the roads necessary for majorities to pass legislation while minimizing any need to compromise with minority parties, thus creating a tyranny of the majority.

If the nuclear option is not used, then reformers must find a 67-vote majority to change Senate rules. However, many would ask how they could possibly find the 67 votes if a majority often cannot even scrape together 60 votes to file cloture. The answer is simple: senators would learn to compromise as they have in the past.

In 2005, former President George W. Bush’s presidential nominations were subject to heavy filibustering and, just as today, obstructionism became so damaging it came to the point that Republicans were threatening to reform the filibuster via the nuclear option. To avoid setting this dangerous precedent, senators created the “Gang of 14,” seven Democrats and seven Republicans who came together to negotiate. They produced a signed agreement whereby the seven Democrats would no longer filibuster judicial nominees except in “extraordinary circumstances.” In return, the seven Republicans would not vote to enact the “nuclear option.”

It is worth noting that in 2005, many of the statements surrounding the argument seemed to have flip-flopped as the minority in 2005 now stands as the majority in 2012 and vice versa. Therefore, reformers threatening to utilize the nuclear option should understand that they will be playing by the same precedent when they become the safeguards of minority rights.

The obstruction in 2005 may be the closest example we can cite of a debilitating gridlock that nearly resulted in the utilization of the nuclear option to reform the filibuster. However, the current state of uncompromising politics that has plagued our legislative branch is unprecedented. As David Waldman points out at Daily Kos, the entire argument surrounding filibuster reform in 2005 addresses an entirely different aspect. Moreover, in January 2011 an attempt to curb abuse of the filibuster and avoid the nuclear option through a “Gentleman’s Agreement” between Senate majority and minority leaders Reid and McConnell quickly fell apart. This all demonstrates that the chances of any compromise, and especially one that will amount to a 67-majority vote, are very slim. Nonetheless, the Senate must take that chance.

We must begin to reward senators belonging to the minority who maintain the ability to compromise, even if they are few. There are currently no proposals that suggest the complete elimination of the filibuster, so even if reform is enacted, Democrats are still going to have to work with Republicans, even if only to achieve a successful cloture vote. Therefore, reformers cannot burn bridges as they would with the nuclear option. Breaking a filibuster can be a matter of persuading only one or two senators. With Democrats on the brink of a 55-vote control of the 113th Senate, only five Republican votes are necessary. Perhaps refusing to use the nuclear option would lead to the political capital necessary to persuade these Republicans and set a precedent of compromise and cooperation.

Thankfully, talks have already begun between Senate reformers and opposition leaders to avoid the nuclear option. Senators from both sides, led by McCain and Levin, have recently offered a counter proposal that would last two years and give the majority leader two new methods to block a filibuster on starting debates, going to conference with the House, and some presidential nominations.

Though Senator Merkley is not satisfied with the counter proposal, claiming, “The heart of the current paralysis, the silent, secret filibuster, is not addressed by the Levin-McCain proposal,” the offer demonstrates the signs of bipartisan support and openness to reform needed to render the nuclear option unnecessary. In exchange for not going nuclear, both sides should agree to work together to make formal, reasonable, and viable rule changes that will curb filibuster abuse and reestablish our Senate’s paramount ability to compromise.

Joe Swanson is a junior at Wake Forest University where he is co-president of the Wake Forest Roosevelt Institute | Campus Network and a member of the chapter's Equal Justice Policy Center.

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The American People are Ready for Leadership in the Wake of Obama's Victory

Nov 7, 2012David B. Woolner

The election results could encourage the bipartisan cooperation we need to solve our country's greatest challenges.

The election results could encourage the bipartisan cooperation we need to solve our country's greatest challenges.

Today we re-consecrate our country to long-cherished ideals in a suddenly changed civilization. In every land there are always at work forces that drive men apart and forces that draw men together. In our personal ambitions we are individualists. But in our seeking for economic and political progress as a nation, we all go up, or else we all go down, as one people.—Franklin D. Roosevelt, 1937

Tonight, more than 200 years after a former colony won the right to determine its own destiny, the task of perfecting our union moves forward. It moves forward because of you. It moves forward because you reaffirmed the spirit that has triumphed over war and depression, the spirit that has lifted this country from the depths of despair to the great heights of hope, the belief that while each of us will pursue our own individual dreams, we are an American family and we rise or fall together as one nation and as one people.—Barack Obama, 2012

With the 2012 election now over and President Obama returning to the White House, many Americans are asking themselves, will the next four years be any different? Or will we see more of the same gridlock, bickering, and obstructionism that so dominated the Washington political landscape of the past few years? Much will depend, of course, on the temper of the Congress, where the Republicans still hold a majority in the House of Representatives and where, despite their minority status in the Senate, Republicans can still use the filibuster to block or delay the president’s—and the country’s—agenda.

It was roughly two years ago that Senate Minority Leader Mitch McConnell famously remarked that “the single most important thing” the Republican Party wanted to achieve “is for President Obama to be a one-term president.” But now that the Republicans have failed in this effort one would hope that the party leadership would be more willing to work with—rather than against—the president and his Democratic colleagues.

Certainly the American public would welcome such a move, and thanks to the recent behavior of Governor Chris Christie of New Jersey and Governor Andrew Cuomo of New York, we now have a precedent upon which such a bi-partisan spirit might be built. For most Americans, Republican Governor Christie’s willingness to “extend the hand of friendship” to the President and “to say ‘thank you sir,’ for providing good leadership in a crisis and for helping the people of New Jersey” was a long overdue antidote to the harsh negativity of today’s “political discourse.”

Moreover, the same might be said for Governor Cuomo, who, despite his status as New York’s governor and leading Democrat, took the highly unusual step of endorsing Republican State Senator Stephen Saland’s bid for re-election thanks to the latter’s decision to support the governor’s legislation legalizing same-sex marriage last year. Senator Saland’s decision to vote in favor of the bill, in what he said was a personal vote of conscience, was not popular among his party’s right wing. So the governor, in a move he said was motivated in part by his desire to counter “extremists on both sides of the aisle,” came out strongly in favor of Saland, much to the chagrin of the senator’s Democratic opponent. (The winner in that race has yet to be called at this time.)

Like Governor’s Christie’s willingness to work with President Obama to meet the crisis caused by Hurricane Sandy, Governor Cuomo’s willingness to work with Republican legislators in Albany has been enormously popular among the New York electorate, where he has consistently enjoyed an approval rating of roughly 70 percent. Given all of this, and given the extremely low regard most Americans hold for Congress, one would hope that these examples of bi-partisan cooperation might prove infectious and that our representatives in Congress might summon the courage to work together to meet the enormous challenges we face today.

Nearly 80 years ago, at a time when our nation faced an even graver economic crisis, Franklin Roosevelt reminded those who were concerned “with the problems of government and economics” to never forget that “devotion to the public good, unselfish service, never-ending consideration of human needs are in themselves conquering forces.”

We expect this sort of devotion in the face of natural disasters like Hurricane Sandy, but is it too much to expect the same “consideration of human needs” in the face of the economic disaster we are grappling with today? If government can and must play a major role in rebuilding areas ravaged by nature’s fury why shouldn’t the same government do more to help those American citizens ravaged by the scourge of unemployment?

Last night in his acceptance speech, President Obama echoed Roosevelt’s first inaugural when he noted that the American people “voted for action, not politics as usual.” While the Speaker of the Republican-controlled House, John Boehner, remarked that the election represented “a mandate for both parties to find common ground and take steps together to help our economy grow and create jobs.”

After years of partisan gridlock, the American people are hungry for that elusive but all-important quality they expect from their elected officials and which was on rare display for a brief moment as a president and a governor from different parties came together in a moment of compassion for those suffering hardship through no fault of their own. That quality is called leadership. Let us hope that the moment has finally arrived when those we have placed in positions of power, both in the White House and in Congress, will now have the courage to exercise it.

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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In the Last Debate, the President Shone Under the World's Biggest Spotlight

Oct 24, 2012Bo Cutter

The last debate wasn't just about foreign policy. It was about the diverse and difficult responsibilities of being president of the United States.

"Bullfight critics ranked in rows crowd the enormous plaza full, but he's the only one who knows, and he's the man who fights the bull."

The last debate wasn't just about foreign policy. It was about the diverse and difficult responsibilities of being president of the United States.

"Bullfight critics ranked in rows crowd the enormous plaza full, but he's the only one who knows, and he's the man who fights the bull."

For me, that sums up the debate. The president won. He was the commander-in-chief and he played a strong hand well. This isn't a foreign policy blog, but if you step back from the absurdities of the charge/counter-charge of a campaign, he and Hillary Clinton and Defense Secretaries Gates and Panetta have carried out foreign policy well in an incredibly difficult and confusing time.

Governor Romney did not do badly, but he is like a pilot: there are old pilots and there are bold pilots, but there are no old bold pilots. He doesn't have any particularly new ideas, and the ones he hints at having are either profoundly wrong, profoundly dangerous, or both.

"Hint" is a good verb. He hints at deep disapproval. He'd be stronger, firmer, altogether better. Events would be less disorderly, and the world would dance to his commands. But he actually wouldn't do anything differently. Stay in Iraq or Afghanistan? Divorce Pakistan? Invade Iran? Put troops in Syria? Really show China what's what? On all of these issues you get the impression that he actually doesn't have a different policy; he is depending on his strong jaw and magnetic personality to command events. Should he actually win, his policy would be exactly the same, except he might actually get himself bullied into a hasty bombing campaign against Iran. Does anyone think "Bibi" wouldn't be over in a heartbeat to collect his receivable?

The major preoccupation of that alternate universe White House would be attempting to demonstrate constantly that there was some sort of difference from the Obama policies. Heck, maybe the world really will sit up and do right with a President Romney. But trapped as he is between the neo-cons who have learned nothing and President Obama's mostly successful policies, he was reduced to throat-clearing and ankle-biting. And if his whole approach depends on the argument that he'd do the same things but somehow better, you have to remember that this is man who managed to insult the United Kingdom over the management of the Olympics. (Yes, they used to be enemies, and we all remember the unpleasantness of 1812.)

This was all sort of fun. But I did have a somewhat deeper thought -- a profound appreciation for America and for how tough being president is. A really long time ago, I was in a small group of appointees with President-elect Carter a month or so before the inauguration. (I know the fashion now is to be contemptuous of President Carter, but I'm not. I revered the man, loved working for him, and still revere him.) Anyway, I was mostly in such awe that I was even there -- how did someone from Loudoun County High School get here? -- that I couldn't talk. But I could think, sort of. What I thought about was the two faces of the president's job. On the one hand, he had to grapple with the actual issues, facts, and arguments as they affected the most important nation in the world, and then he had to turn around and persuade a nation of 225 million people (at that time).

I felt the same way 37 years later watching President Obama and this debate. You grapple with the most difficult possible issues of foreign policy, some completely unpredictable -- at least, I haven't seen the Romney crowd claim yet that they knew all about the Arab Spring. All of them are confusing, information is never particularly good, and most of the time getting the right thing done in one event runs right into the players and calculations involved in some other event. All you can do is approach each calmly, try to keep a larger framework intact, and live every time with the thought that you didn't do it perfectly.

Then you have to turn around and debate your opponent, in front of millions, on the details of these policies. Your opponent doesn't have to deal with all of them at the same time, as you do, and he makes it clear that he would have done everything perfectly. There is a lot you can't say. Every syllable you utter is going to be parsed by every head of government in the world. And any big misstep can both screw up something big and cost you the presidency.

I could tell that President Obama was both frustrated and, at times, angry about being in this position. But you know what? It's part of the deal. It's what we do in America, and our presidents better be good enough to handle it. I thought President Obama more than met that test. I also thought again as I looked around the bar where I watched this debate en route, a bar that was packed full with maybe half of the audience foreign-born, how proud I am to be a citizen of the country that holds these debates and doesn't think they are anything special. 

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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A President Should Run the Country Like a Household, Not a Business

Oct 22, 2012Minjon Tholen

Romney and his conservative colleagues have made it clear that they care more about bottom lines than investing in people's lives.

Romney and his conservative colleagues have made it clear that they care more about bottom lines than investing in people's lives.

In last week’s presidential debate, Governor Romney said he will make a great president because he is a businessman and has run companies. He might know how to make a profit and possibly balance a budget like he promises. But running a country is not just about balancing the budget – which, by the way, he likely wouldn’t be able to do any better than President Obama – and it is definitely not about making a profit.

President Obama is not trying to run America like a company. He has a background in community organizing and is trying to run the country like a community, like a family, a household. A nation is not just a material system of capital, investment, and revenue. It directly affects the human lives of each and every American. Households are invested in every family member, as their shared living space, culture, history, and lineage binds them together for life. In companies, on the other hand, employers and employees are generally tied together by monetary relationships.

A few years ago, I met a member of the Pan-African Parliament at the United Nations Commission on the Status of Women. We had a conversation about how to encourage women to participate in politics. She said she talks to women living in the villages in her country, and they typically respond that politics is not for them, as they “only” know how to run a household. The member of Parliament then told them that if they can run a household, they can run a country. Think about it: you have to work together and negotiate with your spouse or partner to make decisions and get things done (bi-partisanship), understand and respond to the needs of the various family members (constituencies), and do so strategically with limited resources (budgeting, redistribution, long-term investments).

This is President Obama's strength. Sure, he hasn’t been a perfect president – if such a thing exists. But I trust him as a leader. I believe he truly cares about all constituencies, especially those who have traditionally been disenfranchised. He understands the strategic, long-term social and economic benefits of investing in quality education, efficient universal healthcare, healthy lifestyles, fair distribution of resources, and respect and equal rights for every individual. He understands that a country is only as strong as its weakest link and that leveling the playing field for everyone facilitates equal opportunity and empowerment for individuals as well as for the entire country. He understands that creativity, innovation, and progress are promoted by leveraging our rich diversity. His commitments and policies regarding healthcare, gender equality, poverty, education, and immigration, for instance, give us the feeling that he is everyone’s president.

Governor Romney, on the other hand, recently made it very clear that it is not his job to be concerned about 47 percent of Americans. He implied that almost half of the country does not take responsibility for itself and that he won’t be able to convince it otherwise. But most people want nothing more than to be economically independent, and the fact that some are not is more a reflection of social inequalities than of their characters. As most parents know, to raise your children to be self-sufficient and productive members of society, they need to develop skills and gain knowledge. They need to be invested in; they need opportunities for personal and professional development.

David Brooks argues, "People are motivated when they feel competent. They are motivated when they have more opportunities. Ambition is fired by possibility, not by deprivation." Deprivation of opportunity -- an unleveled playing field -- does not create self-sufficiency and actually fosters dependency on others, including on the government. For all the conservative rhetoric about economic self-sufficiency and individual freedom, President Obama seems to get this logic better than his opponent, with a long-term plan to empower all Americans and with strategic budget decisions that will set us on the road to economic recovery, deficit reduction, and a more equitable society. Republicans say they so greatly value “the family as the cornerstone of society,” yet they disregard the factors that promote economically independent, educated, healthy, and thriving individuals and families.

By not raising taxes, cutting capital gains, and reducing the corporate income tax, Governor Romney is catering to big business and the wealthy and their interest in making a profit. Like companies, Republicans are focused on their own bottom line and the bottom lines of those they consider stakeholders in the conservative political ideology, rather than on the empowerment of all the American people. I’m sure Governor Romney is a wonderful husband and father. It just doesn’t seem like he would be a true family man when it comes to 100 percent of the American family.

Minjon Tholen is a Roosevelt Institute | Pipeline Fellow and the Training & Development Specialist at Cook Ross Inc.

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A Post-Debate Interview with Glenn Hubbard on Housing Policy

Oct 22, 2012Mike Konczal

There were no serious housing questions at any of the presidental debates. Given how important the housing market is for both voters and the economy, this is surprising and disappointing. As Zachary Goldfarb noted, "here are a few words that surprisingly have not shown up through much of this debate: housing, mortgage, refinance, underwater." 

There were no serious housing questions at any of the presidental debates. Given how important the housing market is for both voters and the economy, this is surprising and disappointing. As Zachary Goldfarb noted, "here are a few words that surprisingly have not shown up through much of this debate: housing, mortgage, refinance, underwater." 

I attended last Tuesday's presidential debate at Hofstra University as press for Al-Jazeera English, providing TV commentary on economic issues. It was my first debate, so I took some time to wander around. While exploring after the debate was over, I found the Spin Alley area, which is the area where politicians and campaign people stand by to give quick media responses. Handlers held large signs advertising the people in question. I saw a "Hubbard, Glenn" sign in the air, and the Columbia economist and Romney economic advisor standing by to give spin on the debate.

I decided to get some housing questions on the table. When some people, notably Josh Barro, argue Romney has a secret economic plan, and in particular a secret housing plan, they cite Hubbard, who has been very vocal on boosting demand through interventions in the housing market. I've noted that his plans might not be that different from what Obama is currently doing.

Below is a transcript of what I got a chance to ask him:

Mike Konczal: In 2008 you co-wrote a plan with Chris Mayer on the housing market that called for mass refinancing and principal reduction through the GSE. In 2011 you released another plan with Mayer that just featured the mass refinancing. Why was there the change?

Glenn Hubbard: It wasn't principal reduction; it was setting up a Home Owners' Loan Corporation model.

There was a debt-to-equity swap in your proposal.

Right. What we focused on in 2011 was trying to give direction to the Obama administration, which was bungling the mass refinancing so badly. That's why we focused on that. I still think it would be a good idea to have a Home Owners' Loan Corporation. But the point of that piece was that the Obama administration had bungled every housing plan, so we were trying to provide some guidance.

Earlier this year, HARP, the Home Affordable Refinancing Program, was relaunched as HARP 2.0.

It's still a failure.

After the relaunch, we are seeing a large increase in refinancing on very underwater homes, particularly those with loan-to-value over 125 percent.

It's still a failure. If you compare it to the number that Chris Mayer and I had argued, it's trivial.

Compared to the number of possible refinancing?

Yes. The reason is the GSEs have stood in the way, and the Obama Treasury has not managed the GSEs in such a way as to facilitate its own policies. It's really quite sad.

But that's an FHFA problem, is it not?

I'm sorry, but you can't duck the FHFA.

So you think President Obama should have done a recess appointment [to replace Ed DeMarco] at the FHFA?

I don't manage the Obama appointments, but I do know that the FHFA has mismanaged the president's own plan.

What would a President Romney put forward in the housing market?

What Governor Romney wisely is focused on is the long term in housing. We need to wind down the portfolios of the GSEs and reassess the government's role in such a way to get more private capital back into housing.

In 2008 you argued that cramdown, or some sort of bankruptcy reform, was a bad idea because it could impact long-term growth. In retrospect, do you still think that?

Yes. I still believe that. I absolutely think that was the correct call.

Thank you for your time.


Mike here, with a few notes. According to the latest data from FHFA, there have been 118,470 refinances of mortgages with an LTV over 125 percent between February, when HARP 2.0 allows for these seriously underwater refinancings, and now. Here's a graph from Dan Green's Mortgage report:

Matt Zeitlin has more on the initial successes of HARP 2.0 at the Daily Beast. Rather than the legal issues at FHFA, it seems that the next big blockages in turning record low mortgage rates into increased consumer demand through refinancing are applications overwhelming banks, the financial sector collecting oligopolistic rents from not passing along low rates to consumers via their pricing power, and lack of competition on HARP refinances.

Hubbard is correct that Ed DeMarco is blocking principal reduction at FHFA, preventing the adminstration from pursuing their own plans. I was surprised to see Hubbard pushing for a a Home Owners' Loan Corporation (HOLC) structure now, and I wonder if he'd fight for what Senator Merkley is currently proposing. An HOLC model could bypass some of these new blockage problems we are seeing on record low interest rates, benefiting homeowners.

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A Big Banker’s Belated Apology

Jul 30, 2012Jeff Madrick

This op-ed originally appeared at NYTimes.com.

This op-ed originally appeared at NYTimes.com.

Last week, in a CNBC interviewSanford I. Weill, the former chairman of Citigroup, said that America should separate investment banking from commercial banking. This separation, of course, was the prime purpose of the Glass-Steagall Act of 1933, a piece of legislation that Mr. Weill and other bankers had successfully watered down, with Alan Greenspan’s support, before Mr. Weill helped engineer its official demise in 1999. Now, Mr. Weill, the creator of what was once the largest financial conglomerate in the world, suggests that Citigroup and others should be broken up. Banks can no longer “be too big to fail,” he told CNBC.

But what was most eye-catching was Mr. Weill’s claim that the conglomerate model “was right for that time.” Nothing could be further from the truth.

Mr. Weill’s original business concept — the justification of financial conglomeration — was to provide one-stop shopping to any and all customers. This could now include clients for investment banking, stock research, brokerage and insurance. Then, with the 1998 merger of his Travelers Group with Citicorp, it could include savers, business borrowers and credit card users, too. But few, even among his own executives, ever believed the strategy would work.

Rather, conglomeration bred conflicts of interest in Mr. Weill’s firms, and others — the very conflicts that the original Glass-Steagall Act was designed to prevent. This inevitably led to investment in and promotion of risky, poorly run and, in some cases, deceitful companies that brought us the high-technology and telecommunications bubble of the late 1990s.

Indeed, Mr. Weill’s Citigroup was a primary underwriter of and one of the two largest lenders to the oil and futures trading firm Enron, whose accounting charade resulted in what was in 2001 the biggest bankruptcy of its time. Citigroup was a major underwriter for the telecommunications giants Global Crossing and WorldCom, which would later go bankrupt as a result of flagrant accounting deceptions. There were many other, if less visible, debacles.

Read the full article here.

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Investing In and Invigorating Head Start

Jul 11, 2012Amy Baral

Head Start is a good start to revitalizing national education but there is still room for improvement. 

Head Start is a 8 billion dollar federal grant program that provides preschool and other early childhood learning opportunities to about 1 million 3 and 4-year-old children that meet federal poverty guidelines.  When Head Start was first created, as part of President Johnson’s War on Poverty, the program was designed to help improve the child development and developmental needs of disadvantaged children.

Head Start is a good start to revitalizing national education but there is still room for improvement. 

Head Start is a 8 billion dollar federal grant program that provides preschool and other early childhood learning opportunities to about 1 million 3 and 4-year-old children that meet federal poverty guidelines.  When Head Start was first created, as part of President Johnson’s War on Poverty, the program was designed to help improve the child development and developmental needs of disadvantaged children.

While Head Start has grown slowly since its inception in the 1960s, critics have never been far behind to challenge the programs successes and budget.  Most recently, TIME’s Joe Klein challenged Head Start as a failing to “yield results” and called for the end of the program.  Klein opined that because some studies show that children in Head Start do not see sustained academic and developmental growth after they have finished the program, that the program itself was a failure and a waste of money.  Klein raises some interesting points. First, is $8 billion a year for poor preschoolers a valuable use of the federal government’s money?  Second, does Head Start actually improve academic outcomes long-term? And finally, is there a way to improve the Head Start program or should it just be scrapped as wasteful government spending?

First, is the federal government justified in spending $8 billion a year on preschool education for American’s poorest children?

America provides a system of free public education, usually Kindergarten through Grade 12.  However, most young children often attend a series of private preschool programs before starting Kindergarten.  In contrast, most European countries provide about 2 years of pre-school or early childhood development programs for all young children before the kids begin primary school.  Instead, in America, mostly all preschools are privately run, with average costs of about $3,000 - $12,000 per child per year. 

America does provide limited subsidized preschools at the state and federal levels, usually based on poverty level, and Head Start is one of these programs. But, Head Start only serves about 1 million children a year and in 2010, there were 6.3 million children in poverty.  So maybe the question is not whether the federal government is justified in spending $8 billion a year on preschool programs for poor children, but whether $8 billion is enough to serve the needs of these children.  With potentially 5.3 million children going without adequate access to preschool services every year, it is clear that America’s early childhood education programs benefit those that have the means to access these private programs and harm those without similar access.

But, America is in a recession and the federal government is struggling to allocate money for even well supported government programs, like subsidized student loans.  Before one advocates for expanding a program such as Head Start, it is important to ensure that the program actually works.  This leads to the second question, is Head Start achieving educational and development success among the children it serves?

Head Start’s successes in early childhood development and long-term academic and social outcomes for poor children are disputed.  While there are some studies that highlight the successes of Head Start in terms of keeping people out of prison and leading to higher education rates, other studies, like the Head Start Impact Study show only minimal long-term effects.

Still, many of these minimal long-term effects can be attributed to the weak schools that Head Start graduates will attend upon program completion.  Faced with failing schools, a lack of resources, overcrowded classrooms, and even bad teachers, it is of no surprise that the students targeted for Head Start programs cannot maintain their academic improvements over time because the odds are simply against them.

It’s clear that America has many poor children who go without access to quality preschool programs due to their poverty level and the limited reach of the Head Start program.  Further, poor children who do have access to Head Start often do not see sustained academic outcomes throughout their time in public education. Maybe the true issue is that early childhood education through Head Start is only one part of the process to improve educational and life outcomes for poor children in the United States.  This leads into the third question, can Head Start be improved to ensure effective program performance and long-term benefits or should the program just be scrapped?

Obviously, Head Start should not be scrapped unless the federal government and the states figure out a better way to provide access to high-quality preschool programs for our nation’s poorest preschoolers.  There are too many preschoolers in this country who go without access to early childhood development programs, and while Head Start is just one option, it’s an option that is helping 1 million of these preschoolers.

Still, as with any government program, it is necessary to ensure that federal money is being spent correctly.  In 2007, Congress passed “Improving Head Start for School Readiness,” an act that allows the government to take a stronger federal oversight role of Head Start programs and requires teachers in Head Start programs to hold associates and bachelors degrees.  The Obama Administration has already used its power under this bill to close unsuccessful Head Start programs and provide more funding for programs that were succeeding.  To ensure that federal money is being spent correctly and that children are receiving high-quality preschool education, it is essential that federal oversight of Head Start programs continue.

Finally, the federal government should work to expand access to free and reduced preschool programs for poor children.  Preschool has a profound impact on the educational attainment and development of children.  Further, because most middle-class children have the ability to attend preschool, expanding access to preschool programs for poor children could help close socioeconomic achievement gaps.  Most importantly though, gains made in preschool need to be sustained overtime through strong primary and secondary public education for all students.  American needs to work towards improving its K-12 educational opportunities for all students to ensure that all children have access to high quality education from preschool to college.


Amy Baral is a Roosevelt Institute Pipeline Fellow.

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