For those trying to take stock of US politics, last night’s elections confirmed what recent polls have indicated – Democrats head into 2014 in a somewhat stronger position than the degraded Republicans.
But there is also a sense that the current climate is very unsettled. Recent stumbles by President Obama raise questions about whether the Democrats can retain their advantage into next year. While polls have Republicans at historic lows, the President is at the lowest recorded level of approval of his Presidency. A bad shutdown influenced November jobs report is likely to add the pressure to see better outcomes from Washington
It is my assessment that the 2014 landscape, and perhaps the landscape for the rest of the Obama Presidency, will be determined by how well the President Obama’s very ambitious agenda fares in the months ahead.
Consider what is in front of him, and the country now: an important debate about how to create growth and jobs in a more competitive global economy, deficit reduction, the implementation of the Affordable Care Act, the Farm Bill, immigration reform, a fast-changing MENA region slipping further into chaos, enormous trade pacts in the Pacific and the Atlantic and post Snowden fallout both abroad and at home. Of course there are many more critical issues, but even this partial list is daunting, huge, consequential.
These many challenges present the President with a great opportunity to re-affirm a narrative of modern problem solver, uniquely qualified to understand the great challenges in front of us and with the courage to offer a set of solutions as big as the moment, and the skill and grit to see it through.
I hope the President reaches back to his 2011 State of the Union Address, my personal favorite of his speeches to the Joint Sessions of Congress, to inform these next few months of his Presidency. In that speech he seemed much more comfortable about leveling with the American people at how the world was changing, and how America needed to “up its game.” It was a mature speech by a responsible leader, explaining while the world and our own country are going through deep, structural change, he had a big, thoughtful plan to ensure our success in transformative times.
This narrative is the very opposite of the “you can keep what you have” meme so present in the current debate over health care, or the nostalgic economic themes voiced in the President’s summer Knox College speech. The truth is that in a time of great change, you can’t keep what you have. There is no going back. You/we are going to have something different. And it is up to the President to make sure that these new times are better, not different, and certainly not worse, for the American people.
I think the President has to return to some version of “upping our game” in the months ahead as it provides a much needed public rationale for his ambition. Rather than these issues being seen through the divisive prism of Dem vs. Rep, his approach would be just to be doing what a leader does for his people in time of great transformation. It is a political antidote to the politics of shutdown, and makes the Republican’s desperate nostalgia for times gone by more favorable to their approach look even more irresponsible and reckless. It is “forward vs. backward” redux.
These next few months will be among the most consequential of the Obama Presidency. If Obamacare gets back on track, the economy continues to improve, our investments in the Middle East seem to be paying off, the President will be in a strong position to propose and fight for the rest of his appropriately ambitious agenda. But even if these outcomes are undetermined in the days ahead, I think the President needs to adopt a different strategic approach to selling his agenda. America is not going to have a smooth transition to a new, global age. It is going to be a difficult one, one that requires sacrifice, risk, investment and honesty. Mistakes are going to be made. But the rest of the world is upping its game, and we, more than anything else, must up ours to retain our position in the world. The choice about forward vs. backward, progress vs. decline needs to be made clearer, starker for the American people. This is no ordinary moment in our history, and the political elites in the US need to stop pretending it is. It is our responsibility to level with the American people, and have them participate as full partners in building this better America of the 21st century.
The success of the President’s second term might very well come down to what happens with his bold agenda in the next several months. To succeed, I think the President needs to take a step back from the day to day, create more of a national rallying cry for where we need to go, and to challenge Congress and the American people to come along with him. Together, we can raise our game, and meet the challenges of a new day.
One of the main reasons significant progress on immigration is still possible in coming months is the long history of Republican leadership and support of the issue. With support from Republican voters, important elements of the Republican coalition and many important Republican leaders, immigration reform does not resemble far more divisive issues like health reform and the budget. A strong Senate framework , coupled with a few modest changes being discussed in the House, provides Republican Members of Congress a powerful legislative package that they should be able to take home and proudly sell to their constituents.
Consider the following:
National Republican Leadership – immigration reform has long been an issue championed by national Republicans. Ronald Reagan, both Bushes, and most recently 2008 Republican nominee John McCain were not just supporters of immigration reform, but national, spirited champions.
Additionally the 2000 campaign of George W. Bush was the first American Presidential campaign to make extensive use of Spanish-language advertising and free media to reach a new generation of Hispanic immigrant voters. It was in fact a Republican who pioneered these modern techniques, ones now being far more extensively deployed by Democrats than Bush’s successors.
The most graphic example of this GOP leadership legacy this year came during the immigration reform debate in the U.S. Senate. We witnessed a true bi-partisan legislative process, led by GOPers including McCain and Flake of AZ, and the final product passed with 68 votes, including 14 GOP Senators. Few issues of significance in today’s Washington have seen this kind of comfortable, successful bi-partisan result.
The Modern GOP Grew In Heavily Hispanic Parts of the United States – One of the reasons many national GOP leaders have been so supportive of immigration reform is that the modern GOP grew out of the Sun Belt, and the largest states in the Sun Belt – CA, FL, TX – have large immigrant and Hispanic populations.
The first true conservative GOP Presidential candidate, Barry Goldwater, hailed from Arizona. Nixon and Reagan came from California, the Bushes from Texas and John McCain from Arizona. All in all 11 of the last 14 GOP nominees have come from AZ, CA and TX, giving these nominees and their Party great familiarity and comfort with the growing US Hispanic populations.
Recent Polling Shows Immigration Reform Is Popular With Republican Voters – An Americans for a Conservative Direction poll reported that 79% of Republican primary voters asked said it is “very important” to fix the current immigration system, with another 17% answering it is “somewhat important,” indicating 96% of what is arguably the party’s most devoted constituency think it is something Congress should address.
Furthermore, a poll by the Public Religion Research Institute and Brookings earlier this year found 53% of overall Republicans favor an earned path to citizenship, while 13% favor at least a path to legal residency. A more recent survey by the PRRI showcases that a path to citizenship aligns with traditionally Republican values. A strong majority of all Americans think immigration reform would benefit the economy by allowing illegal immigrants to pay taxes (84%), that illegal immigrants would work hard to earn citizenship (76%), and that they would only take jobs that Americans don’t want (64%).
This polling is consistent with polling on the issue going back to 2005. There has been broad majority support for CIR, and deep support in the Republican Party itself, since this debate began almost a decade ago. There is also, of course, passionate and deep opposition. But it is a minority, even of Republican voters, in most polls.
Large Parts of the Traditional GOP Coalition Support Immigration Reform –Unlike the current debates over Obamacare and the budget, large parts of the GOP coalition support immigration reform and want the GOP to work with the Democrats. The Chamber of Commerce, High-Tech, Ag groups, anti-tax/pro-business leaders like Grover Norquist, Catholic and Evangelical leaders all support reform, and are aggressively lobbying their GOP representatives. There are few other issues championed by President Obama that will ever attract this kind of broad-based support from traditional Republican groups.
For years, the “divisiveness” of the immigration issue has been overstated. There are few issues in Washington with such a bi-partisan history, and which enjoy so much support with voters of both parties. The Senate gave the House a good bi-partisan framework to work from. The House GOP has leaned into the issue much more than is understood right now, having passed five CIR related bills out of committee. The House Democrats signaled their willingness to deal by grafting the House GOP’s border proposal onto their new CIR bill, HR 15. And just this weekend we saw a House Republican, Rep. Jeff Denham, sign on to the House Democratic immigration bill, saying more of his colleagues would soon follow.
While of course there is opposition coming from certain Republican circles, we are in fact closer to a deal today than any point since Senators McCain and Kennedy introduced their original legislation in 2005.
The current Senate/House bill gives House Republicans a lot to take home to their voters. It grows the economy and reduces the deficit by a trillion dollars. It strengthens border security and interior enforcement. It invests in border infrastructure and adds more customs agents, allowing more job producing trade and tourism. It makes our immigration skills-based and much more business friendly. It helps resolve issues with visas for agricultural workers, something agribusiness has been clamoring for. And the path to citizenship for the 11m undocumented immigrants is likely to be so arduous that those Republicans wanting to make sure they “don’t reward bad behavior” should be satisfied.
When Republicans go home to make their case for why they voted to reform our antiquated immigration system, they know that while there are Republican voters and coalition partners who will decry them for taking this tough vote, there are far more voters, and far more powerful members of their coalition ready to reward their courage. For after all, immigration reform has been as much a Republican as a Democratic issue over the past two generations of American politics. And this history, and its legacy, is one of the main reasons we remain optimistic that Congress can overcome a nasty period and pass immigration reform in the months to come.
As part of the agreement to re-open the government, the House and Senate have finally agreed to form a budget conference committee and pass actual appropriations bills for the next fiscal year. While the top-line funding numbers are important, the details of how the foreign affairs budget is reconciled are also critical. The foreign operations bill provides funding for nearly all of the non-defense functions of U.S. foreign engagement. The need for American engagement is as urgent as ever, but the version that came out of the House Committee earlier this year made deep and dangerous cuts to our diplomatic toolkit and sequestration is systematically starving key programs. Legislators who understand the vital role of American leadership t need to fight hard for robust and funding in the coming weeks and months as critical accounts like the Middle East Partnership Initiative and the MENA Incentive Fund hang in the balance.
Programs like these need to be grown as they represent the best and most effective approaches to international support. We need to be doubling down on region-wide tools that can help our policy become less reactionary, investing in long-term U.S. interests, and building up the capacity of populations through health, education, and active civil society.
This type of assistance is not simply foreign charity; it is a vital component of American leadership and economic growth. Then- Secretary Clinton laid out the basic ingredients earlier this year, encouraging governments to “ view civil society not as a threat but as an asset. A genuine democracy is like a three-legged stool. One leg is responsive, accountable government; the second leg a dynamic, job-creating private sector; and the third leg is a robust and vibrant civil society.” The U.S. has the tools and expertise to help developing countries construct this three-legged stool, but our diplomats and partners can’t do that work while being forced into robbing Peter to pay Paul. The importance of maintaining a strong defense is without questions, but the country is weaker if we allow our military to be our primary actor on the global stage. If we wish to see a world comprised of more modern, inclusive, and open countries – we need to invest in strategy designed to do just that.
Too many politicians believe their constituents are too shortsighted or un-engaged to see the value of these investments, but that is simply not the case. After hearing that foreign assistance makes up merely 1% of the Federal budget, only 24% of Americans believe we spend too much while 36% believe that we don’t spend enough. With another 30% saying that 1% is about right, the last thing we should be doing is cutting back. The Better World Campaign recently commissioned a nationwide survey finding that over 85% of Americans support funding programs which help women and girls in foreign countries achieve better health, education, and economic opportunity as well as being overwhelmingly supportive of efforts to eradicate extreme poverty and hunger around the world. When it comes to fully funding the foreign operations budget, politicians have a much easier case to make than many of them think.
 Hillary Clinton, US Secretary of State (Strategic Dialogue with Civil Society 2012 Summit, Washington DC: US Department of State)
A surprising number of recent media reports declare once again that immigration reform is dead- surprising because numerous House Republicans are signaling the exact opposite. It is true that responsibility for action lies with the House GOP after the Senate passed its bipartisan comprehensive immigration reform bill in June, House Democrats have introduced both CIR ASAP and H.R. 15 (now with 184 cosponsors), and President Obama has declared immigration reform a legislative priority. However, the House GOP passed five separate bills out of committee, and this week members have affirmed they are still working on more related to legalization of undocumented immigrants. As long as a contingent of the House majority is willing to keep moving on meaningful pieces of legislation, immigration reform is very much alive.
Immigration Reform Is Definitely Undead, Greg Sargent, Washington Post, October 30, 2013
Rep. David Valadao (R-Calif.): “By supporting H.R. 15 I am strengthening my message: Addressing immigration reform in the House cannot wait. I am serious about making real progress and will remain committed to doing whatever it takes to repair our broken immigration system.”
Ros-Lehtinen Becomes Second Republican to Back Immigration Bill, Rebecca Shabad, The Hill, October 29, 2013
“‘It's important to keep the conversation going in trying to fix the broken immigration system. I favor any approach that will help us move the negotiations forward,’ the congresswoman said in a statement that was provided to The Hill by a spokesman. ‘Other Members may soon produce a bipartisan product that may also deserve support and I'm cautiously optimistic that we can pass meaningful immigration reform.’”
Denham Co-Sponsors House Immigration Reform Legislation, October 27, 2013
“I support an earned path to citizenship to allow those who want to become citizens to demonstrate a commitment to our country, learn English, pay fines and back taxes and pass background checks. This is a common-sense solution to our broken system. I also support a faster pathway for the children who were brought here by their parents through no fault of their own, who have been raised in America and educated in our schools and have no other country to call home.”
Franks Supports Citizenship, Expects House Vote on Immigration, Rebekah L. Sanders, Arizona Republic, October 28, 2013
Rep. Trent Franks (R-Ariz.): "I believe the issue will come to the floor and I support bringing it to the floor….We are meeting one to two times a week, and I can tell you that there is a plan to bring immigration to the floor."
Rep. Joe Heck Statement on Immigration Reform, October 25, 2013
“There is a clear, bipartisan consensus among House members that immigration reform is the right thing to do both for people in this country and for our economy.”
Darrell Issa to Introduce Immigration Bill, Seung Min Kim, Politico, October 23, 2013
“Rep. Darrell Issa (R-Calif.) is planning to release legislation next week that would provide legal status for six years to undocumented immigrants in the United States, he said in an interview Wednesday.”
Speaker Hopeful of Immigration Reform This Year, Donna Cassata, Associated Press, October 23, 2013
“Reps. Mike Coffman, R-Colo., and David Valadao, R-Calif., joined immigrants brought illegally to the U.S. as children who want to join the military at a Capitol Hill news conference. Coffman and Valadao have been working with Majority Leader Eric Cantor, R-Va., and Judiciary Committee Chairman Robert Goodlatte, R-Va., on legislation that would offer citizenship to the children.”
Immigration Reform: Still Not Quite Dead, Greg Sargent, Washington Post, October 22, 2013
Rep. Mario Diaz-Balart (R, Fla.) says he is working with a number of representatives to figure out: “what to do with the millions of undocumented who are here in a way that completely conforms with the rule of law.”
House Republicans Drafting Immigration Measures, Kristina Peterson, Wall Street Journal, October 22, 2013
“Rep. Mario Diaz-Balart (R., Fla.) and a small group of other lawmakers are working on one proposal that includes elements of –but is expected to diverge from– a bipartisan plan Mr. Diaz-Balart had worked on earlier this year.”
“Rep. Darrell Issa (R., Calif.) is also working on a proposal that would offer temporary legal status to qualifying illegal immigrants, his spokesman said Tuesday.”
Is Immigration Really Dead in the House?, Fawn Johnson, National Journal, October 22, 2013
“Powerful House Republicans like Boehner, Majority Leader Eric Cantor, and Budget Committee Chairman Paul Ryan all want to see something happen on immigration.”
An Immigration Challenge for Boehner, William Galston, Wall Street Journal, October 22, 2013
“…a majority of rank-and-file Republicans, backed by evangelical leaders and business, favor immigration reform….”
Did Shutdown “Poison the Well” for Immigration Reform?, Carrie Dann, NBC News, October 20, 2013
"Another proposal being worked on by Majority Leader Eric Cantor, R-Va., and House Judiciary Chairman Bob Goodlatte, R-Va., would allow some children who were brought the United States illegally as children to obtain legal status.”
Time Running Out for Immigration Reform, Dan Nowicki, Arizona Republic, October 20, 2013
"’We're still committed to moving forward on step-by-step, common-sense reforms,’ Boehner spokesman Michael Steel told The Arizona Republic in an email. ‘The Judiciary Committee has already passed several bills that could see floor action.’"
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