Normative Narratives


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Much Ado About a “Do Nothing Congress”

A recent NYT article cast a gloomy picture for those hoping for a Democratic super-majority after the 2014 Midterm Elections.

History says President Obama should brace for another round of midterm election losses next year — and be grateful for the opportunity.

Unlike presidents who never got the same chance, Mr. Obama is in line to become only the fifth president since Harry S. Truman to serve long enough for a second midterm election, and the possibility that his party might hold or gain ground in Congress in his sixth year in office. But the unhappy record of his two-term predecessors — none of whom gained control of either legislative chamber — offers scant comfort about his prospects.

However, there is reason to believe the Democrats may retake the House. Two forces in particular are working in their favor.

1) The Democratic Party is more popular than the G.O.P (Gallup Poll):

The two parties’ favorability ratings are at the lower end of the range Gallup has measured for each, although the GOP has the lower absolute rating. The Democratic Party’s current favorability rating of 42% is similar to what it was during most of 2010 — a year in which the Democrats lost 63 House seats and majority control in that chamber.

Moderates More Likely to Prefer Democratic Party Over Republican Party

While the two parties rely on their ideological soul mates for support — Republicans depend on conservatives, while Democrats lean on liberals — both parties also need at least some support from the political center to win elections. Self-described moderates are more likely to have a favorable image of the Democratic Party (47%) than of the Republican Party (27%), which may prove problematic for the GOP next year in the congressional elections. It is worth noting, however, that moderates typically lean more Democratic than Republican.

Parties' Favorability, by Self-Reported Ideology, December 2013

The Republican Party can hardly claim to have locked up its support among conservatives, who are as likely to have a favorable (47%) as an unfavorable (46%) image of the GOP. Liberals, by contrast, are more unified in their support for the Democratic Party, with 71% viewing the party favorably.

2) People don’t like a “Do-Nothing” Congress:

Trend: Do you approve or disapprove of the way Congress is handling its job?

And the 113th Congress is a “Do-Nothing” Congress.

This Friday, the 113th Congress will end its 2013 session with a less-than-distinguished title: one of the least productive ever.

Halfway through its term, Congress has passed 56 laws. By comparison, 10 years ago, the 108thCongress passed 504 laws between 2003 and 2004. A decade before, the 103rd passed 473 laws, according to GovTrack, a site that monitors legislation.

The current Congress’s predecessor, the 112th — thought to be the least productive ever — managed to pass 284. The 113th Congress is on track to underperform even that cohort.

The original “Do-Nothing” Congress, the 80th U.S. Congress, enjoyed a Republican super-majority. By the time the 81st Congress was sworn in, Democrats had taken over the majority in both the House and the Senate.

Now, the fact that Congress is currently split–Democrats have the majority in the Senate, while the G.O.P controls the house–paves the way for much more finger-pointing than in the 81st congressional election. The experts believe only 20 something seats are truly “up for grabs”, and the Democrats need to win almost all of them (17) to take a majority in the House. However, given the relative unpopularity of the G.O.P (both among conservatives and moderates), it would appear that Democrats primed to take many of the undecided seats.

Lots of time still remains before the 2014 midterm elections, and the political landscape can change drastically between now and then. If there is one things you can predict in democratic elections, it is unpredictability.

“I don’t think there are any formulas” for midterm election results, said Ken Khachigian, a former Reagan speechwriter. “We underplay the fact that elections are elections with individual candidates.”

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Economic Outlook: The Do-Nothing-GOP Vows to Do-Nothing

I took particular interest in a recent Politifact article highlighting House Speaker John Boehner’s assessment that “There’s no plan from Senate Democrats or the White House to replace the sequester.” This statement should not seem right to anybody who follows politics, the news, or simply has not been living under a rock for the past few months (years?). Have the democrats really dropped the ball, or is this more political jockeying by the Do-Nothing GOP? Unsurprisingly, it is the latter. The President and Senate democrats have proposed plans, just not the plans their opponents agree on. Politifact gave Boehner’s comment its worst possible rating “Pants on Fire”.

Democrats, both in the White House and Capitol Hill, have proposed alternatives to the sequester that involve cutting bloated programs and closing tax loopholes to raise revenue. The “Sequester”, as most know by now, cuts programs indiscriminately of their importance to overall economic and social security and without taking into consideration whether the program runs efficiently or not. This undesirable result was meant to be undesirable in the hopes of forcing congress into passing a more acceptable deal. Unfortunately, Congress was unable to envision its own incompetence, and the sequester became fiscal policy starting last Friday.  

But how could Boehner openly deny Democrats having offered alternative plans, when they clearly have (you can go on the White House website and “click a prominent button that says “SEE THE PLAN.” It leads to a page titled “A Balanced Plan to Avert the Sequester and Reduce the Deficit.”?”)

The answer given by Boehner’s representative would be comical, if it did not represent such a high ranking U.S. government official:

“A plan must demonstrate it has the ability to pass a chamber of Congress to be worth anything. We’ve twice passed a plan. We’re still waiting for the Senate to pass something, anything,” Buck told PolitiFact in an email.”

So the Do-Nothing-GOP has decided the democrats have not offered an alternative plan because they have made it their party’s goal to strike down any plan the Democrats offer. This sounds more like self-fulfilling economic suicide than two sides working towards an agreement that will work for the American people.

So what does the GOP require in a plan? It requires that tax loopholes that are closed must be met with equal reductions in government spending. In an effort to be “fiscally responsible”, the GOP has taken any proposal that will raise government revenue off the table.

“’Republicans want tax reform. We want to bring rates down for all Americans so that we’ve got a fairer tax code,’ Mr. Boehner said. ‘But to arbitrarily pull out a couple of tax expenditures and to say, ‘Well, we ought to use that to get rid of the sequester.’ Listen, every American knows Washington has a spending problem.’”

Does the U.S. really have a spending problem, or do we have a revenue problem? Let’s take a look at the numbers:

http://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=FYFRGDA188S,FYONGDA188S&scale=Left,Left&range=Max,Max&cosd=1929-01-01,1929-01-01&coed=2012-01-01,2012-01-01&line_color=%230000ff,%23ff0000&link_values=false,false&line_style=Solid,Solid&mark_type=NONE,NONE&mw=4,4&lw=1,1&ost=-99999,-99999&oet=99999,99999&mma=0,0&fml=a,a&fq=Annual,Annual&fam=avg,avg&fgst=lin,lin&transformation=lin,lin&vintage_date=2013-03-06,2013-03-06&revision_date=2013-03-06,2013-03-06

The blue line represents Federal government receipts (revenue), the red line represents Federal government outlays (spending). A number of interesting takeaways from this graph:

1)      The U.S. was running a budget surplus until Bush gave that surplus away in the form of tax breaks (notice the blue line sharply going down around 2000) and spending on the “war on terror” (notice how the red line goes up when around the same time period).

2)      Federal government receipts are at their lowest point since the 1960s. This is partially due to Bush Era tax cuts (which have expired for the wealthiest Americans thanks to “Fiscal Cliff” negotiations, which is probably what the current small uptick represents) and partially due to exploitation of tax loopholes (and other forms of tax evasion, such as moving profits abroad).

3)      Government spending peaked during the American Recovery and Reinvestment Act of 2009, and has since been on the decline since.

Government spending is supposed to rise during a recession, the only reason this is a problem is because the surplus secured under President Clinton was squandered during a period of economic prosperity by President Bush. Instead of pursuing counter-cyclical fiscal policy, (save up during the good times to spend during the bad times) Bush did the opposite. Therefore, we have had to rely on deficit spending instead of spending out of a “rainy day fund”. While not exact science, if government receipts had stayed at Clinton-era levels, it appears our deficit would be about half of what it currently is (around 40% of GDP instead of 80%).

In an ideal world, we would be able to pass another stimulus program to jump-start the economy and reduce unemployment. As interest rates remain low, the government could worry about paying back this deficit once the economy is producing at its full potential. The deficit is a manufactured problem, a legacy of “starve-the-beast” fiscal policy championed by the GOP. The problem is that starve-the-beast does not work, you can reduce the amount of resources the government has, but you cannot reduce the programs people rely on to survive (especially not during times of high unemployment). What you get instead is a large government deficit.

A balanced approach to deficit reduction would be reasonable during healthy economic times. In the current economic climate, however, the red line will continue to come down on its own as the economy recovers and less people rely on entitlement programs. The blue line is the one that requires government action.

But Obama, ever the centrist, has tried to find a mixed approach of revenue increases and spending cuts that have a chance of passing a House vote. But it seems that the more Obama offers, the more the GOP demands:

“He had written a piece suggesting that if only Republicans knew how much Obama has been willing to offer, they might be willing to make a deal. Jonathan Chait set him straight, informing him that no matter what Obama put on the table, Republicans would find a way to say that it’s not enough. And sure enough, a Twitter exchange lets Klein watch that process in real time, as a top Republican consultant, confronted with evidence that Obama has already conceded what he said was all that was needed, keeps adding more demands.

So Klein admits that Republicans just don’t want to make a deal. Their objections to the deals on the table aren’t sincere; if convinced that Obama has met their demands, they just make more demands.”

The GOP has no interest in getting a deal done if that deal involves raising revenues. This is an absurd position, as government revenue is at its lowest point in decades. A balanced approach to avoiding the “Sequester” is not what the doctor ordered; fiscal stimulus and greater government revenue is the optimal fiscal policy for the American public. But the idea that we have a spending problem, and not a revenue problem, is wrong. A balanced approach is still better than the alternative, but the GOP is refusing to consider even a balanced plan to end the Sequester.

By refusing to consider any deal increasing revenue, the GOP has doubled down on its “Do-Nothing” approach to governance, to the detriment of the American people and American economy. The GOP manufactured this deficit with “starve-the-beast” fiscal policy, now it is manufacturing a need to reform entitlement programs NOW (these are long term issues, while the Sequester and stubbornly high unemployment are immediate problems that are not being addressed). 

The GOP is the party of the 1%. and the 1% are not being hurt as badly as the rest of us by the Sequester, so why should the GOP budge if it’s constituents are happy? Hopefully in 2014 the GOP receives 1% of the seats in Congress; representation based on those it truly serves. It has become clear that the Democrats need a complete majority in the Federal government if there is any hope of reversing the high unemployment and inequality and low levels of social mobility that have come to define contemporary America.

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