We know now that the Great Shutdown of 2013 has been a catastrophe for the GOP. It caused historic levels of across the board brand damage. It prevented the GOP from drawing attention to the early, probably soon-to-be-fixed problems with the fall rollout of the ACA’s insurance exchanges. And perhaps what is most perilous for the GOP, it puts the Party in grave danger of being blamed for an economic slowdown if one comes this fall and winter, something the new disappointing jobs report out today made a bit more likely.
This last point could have a major impact on budget negotiations this fall, and again next year. If the economic damage caused by the shutdown comes to be seen as event triggering slower growth, or even a mild recession, the GOP will be blamed. Adding job loss and a slow down to the already decimated Republican brand could very well be enough to cause the House to go Democrat in 2014, while also creating even more lasting brand challenges.
Thus, the Republican Party now has a major incentive, for arguably the first time in the Obama Presidency, to pursue policies that create immediate growth. From a classical economic standpoint, this means taking threats of default and government shutdowns off the table to reduce “uncertainty;” avoiding large spending cuts which take money out of the economy and cause further job loss; and looking at, dare I say it, short term stimulus to prevent further slippage. This path, of course, means abandoning their current party-wide obsession with spending cuts.
Assuming that the Republican leadership is reading these events as I am, this new political landscape dramatically weakens the GOP’s negotiating position going into the current budget talks, making the final product likely to look a lot more like the Obama than the Ryan budget. Of course, an agreement on such a budget would trigger a brutal internal budget fight between the GOP pragmatists and the Tea Party government cutting absolutists, causing even greater friction inside an already battered GOP (recognizing that it was internal tension over the budget which caused the govt shutdown in the first place).
For Democrats, this new landscape offers two very important opportunities outside of prevailing in the coming budget talks. First, it allows the Party to do lasting damage to the fallacious and damaging theological argument undergirding much of the radical right’s current economic approach – that reducing government spending is a necessary pre-condition for growth. Weakening this argument in the public domain will not just weaken the power of the Republicans in Washington, but allow better and more appropriate economic policies in future years.
Second, it forces the system to look for deficit reduction measures in other places other than through contractionary economic policy. The best idea hanging out there right now, one that the CBO says will add 3-5% to GDP and reduce the deficit by almost a trillion dollars over the next 20 years, is the recently introduced House version of the Senate immigration reform bill. The current landscape may indeed make the passing of a good immigration reform bill more likely now.
Of course, Congressional Republicans may not see the current landscape this way. They have been far too prone to ideologically-driven delusions this year. But if the economy slows now, it will be hard to escape the conclusion that the reckless and highly unpopular pursuits of the GOP these last few weeks got us there. And adding the prospect of a GOP-induced economic slowdown to the already devastated brand may force a degree of pragmatism into the GOP that would be welcome by all Americans.
Update - For more on the potential economic impact of the GOP's brinksmanship, see this excellent new analysis by Rob Shapiro.
By Morley Winograd and Michael D. Hais. October 19, 2013.
For centuries, explorers searched for the legendary golden city of El Dorado, seeking instant wealth in the jungles of South America. But today’s treasure trove may be found much closer to home; cities like El Dorado, Arkansas, for example, that have successfully linked their economic development strategy to improving the educational attainment of their residents.
El Dorado, a city of about 20,000 people that was at the heart of Arkansas’s oil boom in the 1920s has been hard pressed to reprise that economic growth experience in this century. Instead of chasing after the fool’s gold of becoming cool, it has found a way to attract new residents and increase its economic vitality by promising its public school students a free college education if they graduate from high school with good grades. That promise has the potential to provide the critical glue in holding together a broad based economic recovery not just for cities such as El Dorado but for entire states or even the country.
The El Dorado Promise is a scholarship program established and funded by Murphy Oil Corporation, the town’s largest employer. Modeled after a similar program in Kalamazoo, MI, It provides graduates of the city’s high school a scholarship covering tuition and mandatory fees that can be used at any accredited two- or four-year, public or private, educational institution in the US up to an amount equal to the highest annual resident tuition at an Arkansas public university.
Since its inception in 2007, 1239 students have taken advantage of the offer. Over 90% of them have completed at least one year of college. The first high school class to enjoy this benefit has graduated after five years from college at a rate almost 40% greater than the state’s higher education student population. These gains in acquiring the skills necessary to be competitive in today’s global economy have been achieved by virtually all of the city’s high school students, over 90% of whom graduated from high school last year.
Furthermore the culture of a college-bound student population is now permeating throughout the school district, with a recent study finding that students in grades three through eight in the city scored significantly higher than their matched peers in nearby school districts in both math and literacy. The greatest gains have come from those who were the youngest when the Promise was announced.
The goal of the El Dorado Promise was not just greater educational attainment, however. The visionaries who established the program also wanted to use this program to improve the community’s economic vitality and quality of life. They have clearly done that. Enrollment in the city’s schools was up 5% in just the first four years of the program’s existence. As the Promise website says, “the prospect of an increasingly educated workforce gives economic development leaders new tools to attract businesses to the region.”
The first such Promise was made in Kalamazoo, Michigan in 2005 by still anonymous benefactors seeking to restore the reputation of a city made famous in 1942 by the Glenn Miller Orchestra’s hit tune about a “gal” who lived there. Rather than raise taxes to balance the city’s budget, those who established the Kalamazoo Promise offered a fully paid four-year scholarship to any public institution of higher education in Michigan to any student who went to the city’s high schools for all four years. Under the terms of the Kalamazoo Promise, students have no obligation to repay the money or even to reside in Kalamazoo after they graduate from college.
The results are very similar to those of El Dorado. Kalamazoo’s student population is up 17.6% and dropout rates have been cut in half. Ninety percent of the city’s female African-American high school graduates have gone on to college. On the economic front, the proportion of residential construction in the city rose sharply from around 30% to nearly 50% of all permits issued in the greater Kalamazoo area. The community’s careful tracking of the results has identified 1600 families who say they are living in the city because of the Promise.
The economic challenges that caused El Dorado and Kalamazoo to up their game in getting local residents to graduate from high school and go on to college are no different than the challenge facing the country as a whole in trying to create a competitive workforce in today’s increasingly global and technology driven economy. For example, the Georgetown University’s Center on Education and the Workforce estimates that 62% of the jobs in the United States by the year 2018 will require at least some college education – for example a certificate for a specific skill – and that more than half of those jobs will require a bachelor’s degree. Unless the nation wants to fill those jobs with immigrants from other countries, it will have to do a much better job of giving each American who graduates from high school a chance to pursue a two year skill certificate or a baccalaureate degree.
A promise that rewards good academic performance in high school with a scholarship that pays for four years of college tuition has demonstrated it can make a major difference in achieving our educational and economic goals. Now it’s time for the rest of the country to find the gold that Kalamazoo and El Dorado have already discovered. Just as the country, as part of its overall economic development strategy, once expanded access to a universal free education first for primary schools and later for high schools, it must now find ways to make these two pioneering cities’ promise to their young people America’s Promise to all of its youth.
Now that the government is getting back to work, President Obama said immigration should be next on the agenda, and we agree.
This Monday, join us as Simon gives an updated version of our presentation, “The Border Is Safer, The Immigration System Is Better, and Mexico Is Modernizing and Growing.”
This fact-filled presentation highlights the Obama Administration’s success in managing the complex US-Mexico border, recent improvements in US-Mexico relations and vital economic ties that have paved the way for comprehensive immigration reform that includes a 21st century approach to our southwest border.
We will discuss the outlook for the immigration reform debate and possibilities for a bipartisan bill- please join us!
When: Monday, October 21, 2013. 12-1:30pm Lunch will be served at 12noon, presentation will begin at 12:15, followed by Q&A
Where: NDN Event Space, 729 15th Street NW, 1st Floor
For more of our analysis about the border and immigration reform, visit this page on our site, which includes a link to an earlier version of this presentation and related materials. Also see Simon’s op-ed in on how the two parties are closer to a deal than ever before.
We hope you can join us for this timely and informative discussion. And please don’t be shy about forwarding this information, which is so important to the current debate, to others you think might be interested.
- "Forward or Backward?" October 25th, 2012. Simon Rosenberg. In a flashback to 2012, we revisit Rosenberg's analysis that a new coalition of progressive leaders must rise to address the political, cultural, social, and demographic changes affecting our nation in response to an aging, reactionary American right.
In my 20 years in Washington, I’ve seen some remarkable things. But what is happening this month, right now, feels like it may be the most important battle I’ve participated in since arriving here with the Clintons in early 1993.
Why? Because the stakes are higher than any other battle I’ve been part of. The Republican House, after passing a deeply ideological, feckless budget framework, have boycotted budget talks with the Senate for five months now, and failed to pass even a single appropriations bill. Then, after agreeing to a temporary funding bill at their budgetary levels, they rejected their own agreement, shut the government down and have refused to open it back up despite a clear House majority who want it to re-open.
First, the House Republicans failed to do their job; then they refused to work with the other chamber; now their tactics are doing grave harm to the United States; and, to make it all that much worse, they are now demanding to be rewarded for this history-making recklessness with a new Constitutional arrangement to give them, the minority, more power in our time tested political system (for more on the GOP’s demands see my recent essay).
So, while we’ve seen this behavior from the modern GOP before – previous shutdowns, a highly political Impeachment, threats of debt ceiling breaches, abuse of the filibuster, new restrictive voting laws, a court appointed President in 2000 – this current crisis is the most serious of all these moments. The House GOP is creating fiscal, economic and Constitutional crises all at the same time. And for what exactly? The answer changes every day. This behavior is so reckless, so childish, so dangerous, so counter to the American tradition that we cannot treat this moment as just another nasty partisan struggle. This behavior is of a different order of magnitude in its destructiveness, and ambition.
I have offered my thoughts in other venues about what has happened to the once proud party of Lincoln and Reagan, and why the crazy virus that has entered its politics has grown more virulent in recent years. However we got here, it is more important than ever before for those of us who aspire to something better to ensure that groups like NDN/NPI – smart, sensible, forward looking and effective – have the resources needed to its job. Despite all the gains and successes of recent years - and there have been many – the new recklessness of our opposition requires us to not stand pat, but to raise our game.
I’m proud of the role this NDN/NPI has played over the past in decade in ushering a new and better politics for the country. From immigration reform to new economic policies, to a new day in the Middle East to a new understanding of our rapidly changing domestic demography, from the power and potential of a world wired together to fashioning a new national energy policy, from a new approach to Cuba to modern policies towards our Southwest border and Mexico itself, NDN/NPI has been at the cutting edge of our most important debates here in DC. We’ve ignored the momentary obsessions of an inward looking town, and tried to identify the next debates, the next understandings, the next strategic battles, the next solutions critical to bringing in a better politics for our country. But am mindful that for us to keep doing our part, and to ensure this new, more reckless brand of conservatism does not win the day, we need your support. Please consider making a contribution to NDN for any amount -$10, $25, $100- today and help us keep bringing forth quality work.
Sitting in DC today, it is hard to be optimistic. The conditions that created this ugly October aren’t going away any time soon. But optimistic I remain. For I know that together we’ve done a lot of good over many years and helped usher in a new and better political era. It is just very very clear today that our work isn’t done. We have a lot more to do. So let’s get to it, together….
The budget and debt end games are still playing themselves out on Capitol Hill; and judging by its current behavior, Congress has developed the political equivalent of a brain tumor. A toxic byproduct of an ongoing power struggle inside the Republican Party, the cancer has caused incapacitating seizures that have virtually crippled the national government’s capacity to take care of the most elemental aspects of governance. Even if House Republicans finally agree today or tomorrow to fund the government and raise the debt limit, the tumor they have spawned will continue to damage our economy — and the longer term prognosis is not encouraging.
Congress’s recent reckless behavior may not directly affect those aspects of the economy that make the United States so productive — but it does threaten access to the low-cost capital on which the economy depends. The current fight will not diminish the education and skills of American workers, or erode the technological and organizational assets of the businesses they work for. The rash demands of the radical right also won’t lessen the competitive pressures that drive our businesses to develop new goods and services, and to adopt the innovations of others. And whatever Congress does this week, the United States will remain the world’s largest market. The catch, however, is that all of these strengths also depend on steady streams of low-cost capital, which the House GOP has now put at risk.
For nearly 70 years, the United States has been the world’s number one place to invest and lend to. The economic reason is straight-forward — with considerable consistency, American businesses generate stronger returns than their counterparts in other advanced economies. But another factor is at play here as well, one especially important to foreign lenders and investors — namely, confidence that the United States will preserve and maintain the political conditions required to protect those healthy returns.
Investors and lenders, both foreign and domestic, have long seen the United States as the most reliable country for enforcing contracts, respecting intellectual property rights, maintaining generally low taxes and light regulation, and applying the rule of law fairly. The result has been an unusually low level of political risk attached to the economic returns expected by lenders and investors. That’s why U.S. Treasury securities have long been the world’s lowest-risk financial instrument. For the same reasons, the political “risk premium” for private-sector loans and investments — the additional return required to offset any risk that political forces will reduce an investor or lender’s returns — has been negligible for decades.
But a country that finds itself unable to fund its government and unwilling to honor its government’s debts has to expect that lenders and investors will demand a considerable risk premium on any future loans and investments. In short, our current war over government funding and the debt limit is raising interest rates — and the costs could be huge. For example, a one percentage-point increase in the interest rate paid on Treasury securities will cost the government (and taxpayers) some $1 trillion in additional debt paymentsover 10 years — enough to wipe out the savings from a decade of sequester cuts.
A combination of this new risk premium, plus new wariness by foreign lenders and investors, should also push up interest rates on private loans and the required returns on private investments. Interest rates normally rise during booms, when the demand for capital expands faster than its supply. When interest rates rise without an accompanying increase in demand, however, they directly depress demand and growth. For example, a one percentage-point increase in mortgage rates today is expected to depress housing starts, housing sales and demand for related goods and services by 11 percent — and reduce GDP growth this year by 0.4 percent. Across the economy, the same increase in interest rates in the absence of strong demand could take 2 percentage-points off real GDP growth. Even if the House radicals agree to a cease fire this week, it could cost Americans $300 billion in foregone goods and services over the next year, and the 2.75 million jobs required to produce them.
The damage to growth and jobs could be long-lasting. House extremists nearly pushed the economy off the cliff over the same issues in 2011 — and they could be back for another round in a few months, when any agreement this week runs out. Such a sustained pattern of political dysfunction could lower growth for a decade and cost Americans as much as $3 trillion in lost income and wealth. And that assumes that Tea Party Republicans, in the end, will not force the government to default on its debts, a development that would likely cost the American and global economies as much as the 2008-2009 financial collapse.
This Post was originally published in Dr. Shapiro's Blog
Due to the current federal goverment shutdown, we regret to inform you that this event is currently postponed. Please check back, we look forward to rescheduling this important conversation.
Posted September 27, 2013
As Vice President Biden said during his recent trip to Mexico, “there is no reason why our partnership, the U.S.-Mexico partnership, should not be among the strongest that we have.” Mexico is now the US’s second largest export market and third ranked trade partner, with two-way trade worth over $500 billion in 2012. Recent announcements on security collaboration as well as the first meeting of the US-Mexico High Level Economic Dialogue indicate that this crucial bilateral relationship is deepening, broadening and improving.
On October 8th, NDN and the New Policy Institute are pleased to welcome DHS’s Assistant Secretary of International Affairs Alan Bersin to offer his reflections on the improving binational relationship. He is one of the administration’s experienced Mexico hands, and accompanied former Secretary of Homeland Security Janet Napolitano on her July trip to Matamoros and Mexico City. A/S Bersin will share his thoughts about our improving relations, and then take your questions.
Our event will take place at NDN, 729 15th St NW, 1st floor, from 10:30am to Noon. Coffee will be served.
Please RSVP here to ensure a good seat. We look forward to seeing you on the 8th!
NDN applauds the introduction of H.R. 15, the “Border Security, Economic Opportunity and Immigration Modernization Act,” yesterday by members of the House Democratic caucus. At a time when Congress is doing little to endear itself to the American public, this proposed legislation shows a desire to work together for the wellbeing of not only the eleven million undocumented immigrants in this country but also the entire US workforce and economy.
Why is this specific bill such an important tool for advancing the immigration reform debate?
As we have said before, we are closer than ever to a deal between our two parties. Though introduced by Democrats, this bill is constructed from bipartisan measures. It incorporates part of the Senate immigration bill S. 744 which passed out of the Judiciary Committee and the full Senate with broad bipartisan support, as well as H.R 1417, the Border Security Results Act, introduced by Chairman McCaul (R-TX) and passed unanimously out of the House Homeland Security Committee. During this government shutdown and era of extreme partisan divide, the bill sponsors have intentionally incorporated language from Republicans to demonstrate this is one issue where finger-pointing and partisanship can no longer stand in the way of action.
As we previously stated, not only will this bill “improve border security and interior enforcement, resolve the issue of the 11 million undocumented immigrants living and working here in the US, improve the legal immigration system, smartly invest in expanding our trade with Mexico – we now know that it will also help improve the US economy, create jobs and significantly lower the budget deficit.” The nonpartisan Congressional Budget Office predicts that this bill will grow the economy, increasing federal revenues by $459 billion over the first decade, decreasing the federal deficit by almost a trillion dollars over the next two decades.
The introduction of the House border security bill in place of the Senate Corker-Hoeven amendment appears to signal the end of the “border surge,” otherwise derided as “militarization” or even “candy” thrown at the southwest border. The McCaul bill is a thoughtful alternative which seeks to increase border security according to the needs determined by involved agencies and border community stakeholders, while also facilitating legitimate cross-border trade and travel.
Wednesday, ahead of the press conference, long-time immigration champion Rep. Luis Gutierrez affirmed, Democrats “are more unified than ever” around immigration reform, but they will continue to reach across the aisle to Republicans to make sure that, backed by the broadest and strongest coalition of supporters around the country, Congress can pass meaningful comprehensive immigration reform. Today, Rep. Gutierrez joined the list of 120 cosponsors of H.R. 15, and that list is expected to keep growing.
President Obama has made comprehensive immigration reform a top priority, the Senate passed its immigration bill with overwhelming bipartisan support in June, and now the House Democrats have proposed a bill incorporating bipartisan language. All that remains is for the House Republicans to do their part. We have defended the House GOP as being ready and willing to make a deal on immigration reform that will grow the national economy, shrink the deficit, and secure America’s workforce. The time is now for them to prove it.
“The introduction of this thoughtful new House immigration reform bill brings us one step closer to getting a bill signed into law in the coming months. The bill is a good one, incorporating the best of what the Senate passed, and constructive ideas from House Republicans. That the Democrats could have introduced a bill with so many ideas from the other side, at this tense and difficult moment, is itself a sign of the momentum immigration reform has in Congress right now. We are closer to a deal than at any point since Senators McCain and Kennedy began this process in 2005, and I am optimistic Congress will finish the job in the coming months.“
“La introducción de este nuevo y bien pensado proyecto de ley de inmigración nos lleva un paso más cerca a una inminente confirmación de que se convierta en la nueva ley de reforma migratoria en los próximos meses. Es una buena propuesta de ley, ya que incorpora lo mejor de lo que se aprobó en el Senado, junto con ideas constructivas de republicanos en la Cámara Baja. El hecho de que los demócratas hayan podido presentar un proyecto de ley con muchas ideas del otro bando, justo en estos tiempos difíciles, es ya de hecho una señal del buen impulso que lleva la ley de reforma migratoria en el congreso en estos momentos. Estamos más cerca a un trato de lo que estábamos cuando los senadores McCain y Kennedy comenzaron este proceso en el 2005 y me mantengo optimista de que el congreso va a terminar su trabajo en los próximos meses.”
Be sure to see my recent op-ed arguing the two parties are much closer to a deal on immigration reform than many realize. Also see our discussion two weeks ago with immigration reform experts Frank Sharry and Tamar Jacoby with insight into the current state of play.
The Shutdown Endgame: Getting to a Budget Deal, Protecting Our Democracy
To understand how we get out of the shutdown mess, it is important to understand how we got here. The central cause of the current government shutdown is the House Republican’s inability to propose a realistic budget and pass any appropriations bills this year. The struggles they had in making their numbers add up in their budget process this spring, well documented here by Politico’s David Rogers, left the House without a fiscal consensus they could use to negotiate with the Senate. This, in turn, led the House to take the remarkable step of boycotting a budget conference committee, the normal process our government has used for hundreds of years to get to a budget which allows the US government to operate.
The government shut down on October 1st because Congress has not passed a budget to fund it for the fiscal year 2014. This shutdown really isn’t about Obamacare. Until the House drops its opposition to negotiating with the Senate to produce a budget, the current brinksmanship will continue. There is only one way to remove the threat of a shutdown – the House must return to the budget negotiating table and help provide the country with a budget to fund our government next year. Anything short of that is just political noise. And thus the President and Senator Reid are right to object to negotiations over anything other than doing what is mandated by the Constitution and funding the government.
The remarkable reluctance of the GOP to enter into serious budget negotiations to resolve the crisis can be explained in two ways. One, they know it removes their leverage, forces them to confront their own internal fiscal incoherence, and is likely to a result in a budget not palatable to many House Republicans. Second, it brings to a premature end another of their strategic goals of this conflict: to change the Constitutional arrangements of our government to give the minority party more power than it is currently allocated. The clear evidence that this is a strategic goal of the Republicans is the list of issues, which go far beyond the new health care law, Speaker Boehner floated as ones he wanted negotiated to raise the debt ceiling. None of these many proposals - environmental, regulatory, health - involve, of course, mechanisms for ending the budget stalemate (go to the end of the piece for a full list).
Every one of these proposals has passed the Republican House, and then has been rejected by the Senate. Thus in our system of governing, the Congress had rejected them, and the minority party failed to get its way. By using the threat of economic catastrophe as a way of reconsidering ideas already defeated in our democratic process, the House Republicans are attempting to create a new system of legislating which would allow their defeated ideas to pass the Senate (which had already rejected them) and be signed into law. And it was not just one issue they were trying to re-litigate but dozens – their entire domestic agenda in other words.
Given all this the responsible path for the President and the Senate is to call the House Republicans to an immediate budgetary conference committee and begin negotiating the only thing that will remove the threat of a shutdown – an actual budget for the United States government. Once the Committee convenes, the two chambers should pass a two month Continuing Resolution to keep the government open until a final budget is negotiated. All other negotiations – over partial CRs, debt ceiling, etc – are tabled.
The President has an extraordinary obligation to proceed in this way. He cannot allow one party to decide not to participate in the age old process our democracy has created for funding its government. He cannot allow a minority party to unilaterally, extra-Constitutionally, dictate the terms of how our democracy will work. He cannot allow the country to be governed this way. It weakens our democracy and our national security, is terribly expensive and unsettling to global markets. And perhaps worst of all, in a time of great global challenge it sends a signal to the world that the world’s most important democracy is itself having a terrible time making democracy work at home. In that sense it not just undermines our democracy, but undermines and weakens the global movement to bring more political freedom and opportunity to people throughout the entire world.
My hope is that the President stands firm in the coming days. There is much at stake in this fight. His focus should be clear: re-open our government, negotiate a budget deal, and protect our democracy. Reject half-steps or pointless negotiations. Do the right thing, and we will all benefit.
According to press accounts, Speaker Boehner is considering the following in his negotiations over raising the debt ceiling: a one-year delay of the Affordable Care Act, a “fast-track” tax reform authority, Keystone XL Pipeline construction, an overhaul of Dodd-Frank regulation, more offshore oil drilling, more permitting of energy exploration on federal lands, suspending the Environmental Protection Agency's efforts to regulate carbon emissions , rolling back regulations on coal ash, elimination of a $23 billion fund to ensure the orderly dissolution of failed major banks, elimination of mandatory contributions to the new Consumer Financial Protection Bureau, limiting medical malpractice lawsuits and increase means testing for Medicare, and repeal of the Public Health Trust Fund.
"Older politicians will have to get beyond their ideological blinders to recognize the opportunity waiting for any candidate or political party that can embrace both halves of the Millennial era civic ethos paradox."