Are Dems Growing a Brain?

Greg Sargent reports:

Steny Hoyer, the number two in the House Dem leadership, told Democrats at a caucus meeting this morning that they would get to vote this year on just extending the Bush tax cuts for the middle class, a senior Dem aide tells me, signaling support for a confrontational move towards the GOP that liberals have been pushing.

I don't believe this. It's too smart. Not like Democrats at all.

Chart of the Day: Conservative Economists

I'm not sure what to say about this one. Mike Konczal recently surveyed a random selection of conservative economists who had signed a Cato letter opposing the stimulus bill in early 2009 to find out what they were thinking these days. It was totally unscientific and he ended up getting 29 responses. But unscientific or not, it's enlightening. According to these economists, neither low consumer demand nor an overvalued dollar really has much to do with our economic woes. By far the biggest problem, in their view, was regulatory uncertainty, closely followed by concerns over the budget deficit and Barack Obama's hostility toward the business community. Seriously. That's what they think. The mind reels.

NPR's Nazis

Fox News chief Roger Ailes goes off the reservation about NPR executives:

They are, of course, Nazis. They have a kind of Nazi attitude. They are the left wing of Nazism.

Come on, Roger. Sure, NPR executives are Nazis. That goes without saying. But the left wing of Nazism? Don't you know that Jonah Goldberg long ago demonstrated that Nazis were actually liberals? This means that NPR executives are the Nazi wing of Nazism. Please clear this up with your staff ASAP before something like this gets on the air.

A Closer Look at Domenici-Rivlin

I got pretty burned out on deficit blogging after spending nearly a week writing about the Simpson-Bowles plan, which I continue to think is a poor starting point for a serious discussion of deficit reduction. So when the Domenici-Rivlin plan (henceforth D&R) came out, I only wrote one post based on their Washington Post op-ed and then couldn't work up the energy to say much more.

Which is too bad. To the extent that long-term deficit reduction is something we should try to address now, D&R is really a much better starting point. So here are some selected bullet points and comments about their plan:

  • One-year payroll tax holiday in 2011 to stimulate the economy. In one sense, this has nothing to do with deficit reduction. In fact, it increases the deficit. But as with tax reform, the argument here is that near-term stimulus is good for long-term growth, and long-term growth is good for deficit reduction. In any case, it's a good compromise idea for trying to get our stagnant economy moving again.
  • NOTE: Throughout the rest of this, keep in mind that my comments are strictly academic. I don't expect Republicans to even pretend to take any of this stuff seriously. In that spirit, a payroll tax holiday is a "good compromise idea" in a theoretical sense, but since in the real world Republicans are solely interested in tax cuts that permanently benefit rich people, there's no actual chance that this will gain bipartisan support. With that caveat out of the way, onward.
  • Cut tax rates, eliminate most deductions and credits. This is similar in spirit to Simpson-Bowles. One oddity of D&R is their endorsement of a reduction in the number of tax brackets to two (15% and 27%). I've never understood the infatuation with this idea. The complexity of the tax code has nothing to do with how many brackets we have, it has to do with how income is calculated and how many different loopholes there are for reducing your taxes. So the whole thing is pointless. What's more, although the D&R tax plan is more progressive than Simpson-Bowles, I suspect that it still gives a considerable break to the very highest earners. For that reason, I'd propose, at a minimum, a third bracket of 40% that kicks in at some very high level. Perhaps $1 million and above.
  • Add a VAT. For some reason D&R call their new tax a Debt Reduction Sales Tax instead of just calling it a VAT. I'm not sure why, but basically it's a 6.5% VAT. I don't have any big problem with this, though I'd probably prefer a carbon tax, which accomplishes much the same thing and helps reduce energy use. In any case, the DRST is basically an acknowledgment that an aging population is going to require higher spending levels than we're used to, so we can't pretend to cap spending forever at 21% of GDP. It's a welcome concession to reality.
  • Rein in the growth of Medicare. D&R do this by phasing out the employer tax break on health benefits, raising Medicare premiums, reducing prices paid to drug companies, bundling payments, medmal reform, and — of course — capping benefit growth to GDP + 1%. I'm beginning to think that this last provision has become the equivalent of "And may God bless America" at the end of presidential speeches: sort of a rhetorical flourish that everyone expects and you can't leave out. And who knows: maybe something like this will actually work. I have my doubts, though. If you say you're going to cut something, I want to hear concretely how you're going to cut it. Telling me instead that you're going to artificially cap growth is a cop-out. That said, D&R do have some useful ideas on Medicare, though they're just a starting point. We'll need much more before this is all done.
  • Fix Social Security. This part of their plan is almost eerily identical to Simpson-Bowles, but it doesn't raise the retirement age. I've already commented favorably on the Simpson-Bowles Social Security plan, and I think D&R is even better. I'd still tweak it a bit, but it's a perfectly fine starting point.
  • Freeze discretionary spending starting in 2012. I'm not a big fan of across-the-board freezes, and I doubt you can make something like this stick in any case. I'd rather see concrete proposals for program cuts, if that's what you think needs to be done. (D&R do make a few specific proposals, but they don't add up to much.) As I've said before, discretionary spending is pretty clearly not a big part of our long-term deficit problem; cuts would almost certainly come from weak claimants, not weak claims; and the political fight it would take to save a small amount of money just isn't worth it. Frankly, I'd jettison this part of the plan entirely, though I realize that by Beltway definitions of "serious," you have to have something like this to be taken seriously as a deficit cutter. Too bad.

That's the nickel version of D&R. As these things go, it's not bad, and unlike Simpson-Bowles it's fairly balanced between spending cuts and tax increases. It also doesn't assume a fundamentally conservative frame from the start by pretending we can limit federal spending to 21% of GDP forever. And the full plan includes a lot more serious detail than Simpson-Bowles, which should make it easier for tax experts to score.

For these reasons, of course, this means that it's a nonstarter with conservatives. It really is pretty balanced, and because of that I expect it to be pretty roundly denounced by all the same righties who denounced liberals for not loving a fundamentally conservative deficit plan.

California, Bellwether for the Nation

This comes from the LA Times, but I think it could be the lead story in pretty much any newspaper in the country:

Californians object to increasing taxes in order to pare the state's massive budget deficit, and instead favor closing the breach through spending cuts. But they oppose cuts — and even prefer more spending — on programs that make up 85% of the state's general fund obligations, a new Los Angeles Times/USC Poll has found.

That paradox rests on Californians' firm belief that the state's deficit — estimated last week at nearly $25 billion over the next 18 months — can be squared through trimming waste and inefficiencies rather than cutting the programs they hold dear. Despite tens of billions that have been cut from the state budget in recent years, just a quarter of California voters believed that state services would have to be curtailed to close the deficit.

Well, there you have it. This is America in a nutshell.

Of course, one might well wonder just why voters are so convinced that nearly a quarter of the state budget is waste and inefficiency. Certainly some of the budget falls into that category, but a quarter? Where could voters have gotten that idea? Any guesses?

The Rescue of Ireland

Here is your unsurprising news of the day:

Irish officials acknowledged for the first time Thursday that the country was seeking aid from international lenders to end the debt crisis that has hurt confidence in its long-term finances and renewed doubts about the stability of the euro....“We’re talking about a very substantial loan for sure,” Patrick Honohan, governor of the Central Bank of Ireland, said earlier in a radio interview on the Irish state broadcaster RTE, and such a rescue would be “in the tens of billions” of euros.

Gee, who could have guessed that Ireland was going to take a bailout even though they kept saying everything was fine? My only real question at this point is whether anyone actually believes this loan is ever going to be paid back. I'm pretty skeptical. Then again, a few weeks ago I read that the final debt payment from World War I had finally been paid off, so I suppose maybe this stuff should be thought of on a century-long timescale. Perhaps by 2110 we'll all be pure energy creatures and won't care about money anymore. That should solve Ireland's problem nicely.

Quote of the Day: Partisan War

From Thomas Mann, not exactly a partisan diehard, on the next two years:

There is simply no basis for meaningful bipartisan leadership meetings today. Republicans are determined to defeat Obama in 2012; they have no interest in negotiating with him in order to provide him any sort of victory. This is a partisan war and the Republicans are playing to win. The only question is how long it will take Obama to accept this reality and act accordingly.

Good question! My guess is....about 21 months.

Sarah P. and the Left

This is a genuine question. Robert Draper has a long profile of Sarah Palin in the New York Times Magazine this week, but although it's interesting here and there, I can't make sense out of this passage:

I brought up her past efforts at bipartisanship [as governor of Alaska] to Palin. “I was so innocent and naïve to believe that I would be able to govern for four years and if I ever moved on beyond the governorship I could carry that with me nationally,” Palin said. “And it was proven when John McCain chose me for the nomination for vice president; what it showed me about the left: they go home. It doesn’t matter what you do. It was the left that came out attacking me. They showed me their hypocrisy; they showed me they weren’t willing to work in a bipartisan way. I learned my lesson. Once bitten, twice shy. I will never trust that they are not hypocrites until they show me they’re sincere.”

What does this mean? Wouldn't you expect the left to attack a Republican vice presidential candidate? Bipartisanship isn't really a factor in a political campaign. Do you suppose she's referring just to attacks from Democrats that she had worked with in Alaska? Or to all Democrats? Or just certain bloggers? Or what?

DADT Not Dead Yet

Greg Sargent reports that repeal of DADT is still possible:

Very plugged in staffers who are actively involved in counting votes for Senators who favor repeal tell me [] they've received private indications from a handful of moderate GOP Senators that they could vote for cloture on a Defense Authorization Bill with DADT repeal in it — if Dem leaders agree to hold a sustained debate on the bill on the Senate floor.

Here's why this is important: It throws the ball back into the court of Senator Harry Reid and the White House. It means the onus is on them, mainly on Reid, to agree to a two-week Senate debate on DADT, including allowing amendments....The GOP Senators who are in play, according to these staffers, are Richard Lugar, George Voinovich, Olympia Snowe and Susan Collins. A spokesman for Lugar, Mark Helmke, tells me that Lugar would vote for cloture if Reid staged "ordered debate on a number of issues in the bill."

There are, obviously, lots of things that are potential agenda items for the lame duck session. And I'm no vote counter. Still, I favor trying to do a deal on DADT because I think it's achievable. As Greg reports, there are several senators willing to deal on DADT, though the price is high. Conversely, I suspect that the DREAM Act simply doesn't have the votes to pass. The same may now be true of New START following Jon Kyl's entirely unsurprising decision to withdraw his support. Ditto for a tax bill.

But DADT is achievable. There may be other ways to cut a deal, but if a two-week debate turns out to be the only avenue open to us, then that's the avenue we should take. Call Harry Reid and tell him so.

Professional Humiliation

Via Andrew Sullivan, Seth Masket makes a pretty good point about the backlash over TSA's new airport scanners. He's not especially opposed to the backlash per se, but:

Passengers are not being hauled out of their homes or tortured or placed in prison without access to legal counsel — things that actually have happened to American citizens in recent years in the name of security. Nor are people being turned away from the polls or told they can't unionize or being beaten by police officers — also things that have happened to real live Americans in recent years. What's going on in the airports is simply a form of government humiliation that has hit the professional class.

Italics mine.