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 94% 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.
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.
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 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.
“NDN applauds the new immigration reform bill introduced by Representatives Grijalva and Vela today. If we are to pass immigration reform this year, it is time for the House to get going. Our hope is that this thoughtful bill can help jump start the House process, and help produce a good immigration reform bill by year’s end.“
“Aplaudo esta nueva ley de reforma migratoria presentada por los congresistas Vela y Grijalva. Si vamos a pasar una reforma migratoria este año, es tiempo de que la Cámara Baja se empiece a mover. Esperamos que esta ley bien pensada pueda ayudar a arrancar el proceso legislativo del congreso en la Cámara de Representantes y que se cristalice en una buena ley de inmigración para finales de este año.”
Be sure to see my recent op-ed arguing the two parties are much closer to a deal on immigration reform than many realize.
Tue AM Update - News reports indicate House Democratic Leadership is planning to introduce their own bill next week. See this piece from the Greg Sargent of the WaPo, and this one from Politico. Possible that the demise of the Gang of 7 makes a broader debate in Congress more possible now. Dems are leaning in. Rs promising October votes. Things seem to moving now.
The basic thrust of our discussion last week with immigration reform experts Frank Sharry and Tamar Jacoby - where we discussed the state of play, and what was possible this year - looks even more spot on.
I have a new op-ed running on the Huffington Post home page. It is cross-posted here:
GOP to Hispanics: Drop Dead Again, ACA Edition
For those Republicans worried about getting their party right with the new American electorate, I would be more than a bit concerned about the current attack on the Affordable Care Act. No group will benefit more from the ACA than Hispanic Americans. Estimates are that as many as 10 million Hispanics could gain health insurance in the coming years due to the new American health care system.
The Republican narrative to them this week, just days before the ACA kicks in? We are so committed to denying you health insurance that we are not just opposed to the ACA, but are willing to shut the government down, default on our obligations, and throw the US and global economy into chaos to make sure you don’t get it.
The ferocity of the GOP’s opposition to the ACA will be long remembered by tens of millions Americans whose families directly benefit from our modernized health care system. For Hispanics, the most underinsured portion of the US population, the material gains in health and well-being from the ACA will be greater than for any other demographic group. Estimates suggest 10 million Hispanics will be eligible for health insurance in the coming years. To put that in perspective, these 10 million are about 20 percent of the total US Hispanic population, and millions more than the 7-9 million Hispanics who could gain legal status under the proposed immigration bill.
This suggests that as the act kicks in over the next few years, and millions of Hispanic families sign up for insurance, the damage to the GOP’s brand for opposing this commonsense and powerful health care reform could equal or surpass the damage done by the GOP’s opposition to immigration reform. The math is simple here. More Hispanics are likely to benefit from the ACA than immigration reform. Most polls taken in recent years show that Hispanic voters care more about health care issues than immigration reform. Not a big surprise as the ACA will have a much bigger effect on the families of Hispanic citizens than immigration reform will. The potential for long term damage to the already damaged GOP brand with Hispanics here is huge, and lasting.
There is a precedent for House Republicans dramatically impacting the political alignment of thenational Hispanic electorate. In 2005 the House GOP passed the Sensenbrenner Bill, which called for the direct deportation of the 11 million undocumented immigrants in the US. This harsh bill directly led to the rallies and demonstrations we saw in the spring of 2006, some of the largest civil rights demonstrations witnessed in US history. Polling NDN conducted at the time found a huge shift in sentiment against the GOP because of their harsh anti-immigrant actions. In the fall elections, the Hispanic electorate broke dramatically against the GOP, going 70-30 for the Democrats even without the Democrats mounting any campaign at all at any level geared towards the Hispanic electorate.
George Bush’s able campaigns began a re-alignment of the Hispanic electorate towards the GOP. The Republican share of the Hispanic vote jumped from 21% in 1996 to 35% in 2000 to 40% in 2004. These gains were essential in flipping states like FL, CO, AZ and NM carried by Bill Clinton in 1996, and arguably the single most important component of the only GOP Presidential wins since 1988. These gains were undone by the virulent anti-immigrant politics of 2005 and 2006, when the Hispanic electorate shifted to about a 70-30 structural advantage for the Democrats, a margin we first saw in 2006, and one replicated in each of the last three elections.
As I showed earlier, it is possible that the GOP’s extraordinary opposition to the ACA could have an impact on the Hispanic electorate equal to or greater than this critical 2005-2006 moment when the GOP became defined as an anti-immigrant party. For the Republicans interested in the future of their party this should be very worrying.
Fortunately, the Republicans have two ways to mitigate – not erase - what is likely to be a catastrophic and searing event with Hispanics. First, drop the ACA hostage taking and work with the President and the Senate to pass a budget. Second, work with the Democrats to pass a good and reasonable immigration reform bill this fall. As I have argued elsewhere, the two parties are much closer to a deal than many realize. Given the enormity, and futility, of the mistake the House GOP is making on the ACA – Sensenbrenner 2 let’s call it – the urgency for the Republicans to pass immigration reform has never been greater. And there will not be another chance after this fall. This is it. Or it may be the way of the Whigs for the party of Lincoln, undone by the very reactionary racial politics that were ironically the genesis of the founding of the GOP a long time ago.
Note, Update - I've updated this piece a bit from its initial version, published this morning. While we know more Hispanics will be elibigible for health insurance under the ACA than are undocumented Hispanic immigrants in the country, what we don't know is whether more will gain insurance that will get legal status. While it is likely, I have softened that sentence above a bit, as we don't really know.
None of the changes the basic argument . This debate over the ACA is going to have a very impact on the GOP brand with Hispanics, and there are ways for the Rs to mitigate this damage, including passing Immigration Reform later this year.
Update - The Washington Post's Greg Sargent references this analysis in a new piece. And what remains most remarkable is that it is two of the GOP's most important Latinos - Cruz and Rubio - leading this effort to take away something so important to the aspiring Latino community. The desire of Cruz, Rubio and Paul to gain advantage in the GOP primary has left taking a position on an issue which will cost them dearly with Latinos should they be on a future Republican ticket.
Update - Stories like this in the NYTimes showing how minorities are disporportionatiately effected in the states refusing the ACA's Medicaid expansion will not help the GOP.
Today, the Bureau of Economic Analysis (BEA) will put in place a set of critical changes in how it measures America’s Gross Domestic Product (GDP). The most important change reclassifies what businesses spend on research and development, which now will be counted as economic investments rather than ordinary business expenses. By so doing, the country’s official national accounts finally recognize that ideas play the same role in prosperity and income growth as new factories and equipment. More important, the change signals that Washington – or at least its accountants –accepts that the United States has an idea-based economy.
I was present at the creation of these changes. In the late 1990s, while overseeing the BEA as Under Secretary of Commerce for Economic Affairs, I helped them set up the first tests of how to approach R&D as an investment. Then as now, this shift was a no-brainer. Those of us who study what makes economies grow all learned as students that innovations drive growth even more than new capital investments. Based on the strict patent protections which the United States has embraced since the time of the Constitution, Americans have always known this intuitively. So for more than 200 years, the world’s most market-based economy has granted temporary monopoly rights to anyone who comes up with a new invention.
Investors clearly believe in the value of patents and the inventions they animate. A new study covering more than eight decades of U.S. patents (1926-2010) has found that when a company receives a new patent, its stock market value increases on average by $19.2 million (measured in 2013 dollars). Even setting side such blockbuster patents as the core innovations from Apple or Google, the researchers found that the medianbump in a firm’s stock market valuation after receiving a patent was $5.9 million.
In fact, intellectual property and, more broadly, intangible assets now dominate American business. Since the mid-1990s, American firms have invested more in new, intangible assets – databases, brands, worker training and competencies, as well as R&D and patents – than they have in new physical assets. That tells us that businesses now expect to earn more from ideas in their various forms than from their plant and equipment.
Here, too, investors agree. In 1984, the “book value” of the 150 largest U.S. corporations – what their physical assets would bring on the open market – was equal to about three-quarters of their stock market value. So, nearly 30 years ago, large American businesses were worth about one-quarter more than the plant, equipment and real estate which generated their profits. By 2005, the book value of America’s 150 largest companies equaled just 35 percent of their stock market value. By that time, about two-thirds of their value came from their intangible assets, because those assets had become the main source of the value and profits which large companies generate.
This shift to intangible assets is not confined to popularly-recognized “idea-based” industries such as information technologies and biotechnology. A 2011 analysis by Kevin Hassett and myself found that by 2009, intellectual property strictly defined accounted for at least half of the market value of not only the software, telecom and pharmaceutical sectors, but also such disparate industries as food, beverages and tobacco, media, healthcare, professional services, household and personal products, consumer services, and autos. And when we expanded the category to all intangible assets, broadly defined, those idea-based assets accounted for at least 80 percent of the market value of all of the industries just mentioned, plus capital goods, materials, transportation, and consumer durables and apparel. That covers every major industry except retail, real estate, banking, energy, and utilities.
Now that the official accounts for the American economy finally treat the R&D that leads to most patents and innovations as economic investments, we can also better track and compare their value. For instance, we now know that U.S. businesses have spent less on R&D in recent years than they did in the 1990s – and that nevertheless, the United States spends more on R&D than all of Asia and Europe combined.
Turning to the results, we find that about 25 percent of the world’s patents are held by U.S. companies and individuals, a share close to America’s 22 percent share of worldwide GDP. America’s real advantage, however, probably lies in its outsized willingness to fund the young enterprises that often develop new, patented advances. So, while the United States claims 25 percent of all patents, the Organization for Economic Cooperation and Development (OECD) reports that we also account for roughly half of all worldwide venture capital investment.
America’s shift to an idea-based economy will shape much of our economic future. The information and Internet technologies so integral to creating and managing ideas have spread across every economic sector. Within each industry, those firms most adept at applying those technologies to their operations will, on balance, be the ones most likely to succeed. That has already become a gauge for investors to use and watch. More important, a widening gap has opened between the incomes of most Americans and the incomes of roughly the top 20 percent of workers who are already adept at creating and managing ideas, or at least operating in workplaces dense with information and Internet technologies. Finding news way to enable most Americans to prosper in an idea-based economy will be the most pressing economic challenge facing Washington policymakers over the next decade.
Time Magazine DC Bureau Chief Michael Scherer recently wrote about the impact of NDN’s work, citing a chart from developed by our team as the “most important chart in American Politics:”
"There is a single chart — three colored lines on a grid — that shapes the political reality of this country. During the 2012 campaign, one of President Obama’s senior strategists called it “the North Star” and started his internal PowerPoint presentations with it…The chart was originally created by NDN and the New Policy Institute, and it helped Democrats change the way they talked about the frustration of the American people.”
This article, and the impact it describes, is the best way to understand what we do – through powerful ideas, cutting edge analysis, and relentless advocacy. It is in this way, through these means, that the team at NDN/NPI has done much this past decade to lead the center-left to a much better day.
Our summer fundraising drive is off to a good start, having brought in close to $40,000 in our first few weeks. But our goal is to raise another $60,000 before August to bolster our programs for the rest of the year. We hope you will do your part and support us today.
“This diagnosis draws on many of the ideas bubbling away in Mr Miliband’s unabashedly academic salon of economists, politicos and philosophers. One chart in particular informs its arguments. Devised by Simon Rosenberg, the founder of the NDN, “the most important chart in American politics” shows that US household incomes have lagged behind GDP and productivity growth since the early 1990s. The same observation, reckon senior Labourites, lies at the heart of Britain’s woes, too.”
We are known for many things at NDN/NPI, including groundbreaking work on immigration, the Middle East, the role of technology in our lives and American demographics. However, I believe that it our economic work - guided by former chief economic advisor to Bill Clinton, Rob Shapiro - which has had the most impact on the politics on both sides of the pond these last few years. We can only do this work with your support, and I hope we can count on you, today to keep this essential work flowing.
"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."