2 Parties in 2 Worlds

Ezra comments on how the 2 parties view health-care reform efforts.

In a world where the two parties' top priority on health care was providing answers for the uninsured and cost control, an argument over the best way to do health-care reform would be a very healthy thing. But that's not what we've got. We've got the Democratic Party, whose top priority is to try and solve our health-care problems and who've shown their commitment to that by moving steadily rightward over the last century in a bid to pick up Republican support for some sort of solution, and the Republican Party, whose top priority is that we shouldn't do whatever the Democrats are proposing and have proven their commitment to that by abandoning previously favored policy proposals as soon as the Democrats demonstrated any interest in adopting them.
 
And that's the fundamental problem here: It's easy to compromise when both sides are committed to solving a problem, because the appeal of solving the the problem is enough to persuade both sides to make concessions. That's why Democrats gave up on single payer, on an employer mandate, on a public option. But it's impossible to compromise when one side is uninterested in solving the problem, as they lack the incentive to make any concessions. That's where the Republicans are on this, and it's why they've not been interested in joining onto a bill even when Bill Clinton moved to the right and adopted the core of Richard Nixon's plan and Barack Obama moved even further to the right and adopted the core of Mitt Romney and Bob Dole's plan.

The Level of Reality in DC

Ezra on what passes for reality in Washington.

There's a political consultant I know who likes to illustrate the cynicism and dysfunction of our political system with an anecdote from his days as a congressional staffer. He was sitting behind his boss during a hearing when one of the other members -- a well-respected member, no less -- turned to them and gestured at the witness, who was earnestly presenting her case. "Can you believe that?" He laughed. "She thinks this is all on the level!"
 
Sometimes, I think the biggest analytical mistake I make in my writing is pretending too much of this stuff is on the level. My impulse, when presented with an argument about the cost and deficit impact of the Affordable Care Act, is to launch into a long explanation of why the numbers add up, or at least add up given what we know now. But perhaps it would be better to just show this graph:
 

That graphs shows the 10-year cost, and the total deficit impact, of a couple of different pieces of legislation. First, the extension of the Bush tax cuts that Republicans supported last year. It would've cost $4 trillion over 10 years, and not a dime would've been offset. So it would've also cost the deficit $4 trillion over 10 years. Then the tax deal that we actually passed, which cost $850 billion and charged it to the country's credit card. Then the 2003 Medicare Prescription Drug Benefit, which is the last major health-care law the Republicans passed. It was projected to cost $394.8 billion over 10 years, and Republicans managed to offset 0.5 billion of that.

Then there's the Patient Protection and Affordable Care Act. It's projected to cost $938 billion over 10 years. But the final legislation included $1.2 trillion in spending cuts and tax increases. So it actually cuts the deficit in the first 10 years. And in case you think that's a trick, CBO projects that it'll cut the deficit by even more than that in the second 10 years. So it's fiscally responsible and getting more so. Indeed, there's not another major law passed in last 10 years that did close to as much to pay for itself. You can be skeptical about certain provisions, or want to see the bill do more, and still admit that.

And yet I turn on C-SPAN or open the paper and watch the legislation's opponents -- most all of whom voted for or supported one of the other bills on that graph -- say things like "repeal is the logical first step toward restoring fiscal sanity."

It's just not on the level.

Repeal is Easy, Reality is Hard

Ezra on the Republican House and its vote to repeal health-care reform.

As expected, House Republicans have voted to repeal the Patient Protection and Affordable Care Act. Three Democrats voted with them, which is substantially less than the 13 currently serving Democrats who voted against the bill in the first place, and many less than prominent Republicans had been predicting. On health-care reform, the two parties are moving further apart rather than closer together.
 
What's not as expected, however, is that the GOP gave up on "repeal and replace" so early. Throughout the election, that was their message. If you look at their press language, it's still their message. Being on the side of the status quo is, according to the pollsters, a bad place to be. But that's where they are. They voted for repeal despite offering nothing in the way of replacement, save for the vague intention to have some committees come up with some ideas at some future date. Barry Goldwater might have wanted the GOP to offer a choice, not an echo, but Speaker Boehner saw more upside in a shout than a choice.

There's a reason for that: Opposition is easy, governing is hard. You have to get your members to agree on a single piece of legislation. You have to make the tough tradeoffs that are the hallmark of governance. You have to explain how you'll do things, rather than merely what you want done. You have to own the popular parts and defend the unpopular parts.

Democrats did that for health care. They fought ugly fights in their own party over the public option, the financing of the legislation, the levels of coverage in the bill, the way abortion would be treated in the exchanges. They made some easy decisions, like banning discrimination based on preexisting conditions, and some hard ones, like adding an individual mandate to the bill, and paying for it through Medicare cuts rather than a tax on the wealthy. And in the end, they managed to pass their law through the House and through the Senate. They governed. They sought to move the country forward.

Boehner's GOP, in deciding against offering the promised replacement for the Affordable Care Act, ducked the hard work and highest responsibilities of governance. Maybe, in the coming months, they'll do better than that. Maybe their committees will report out serious alternatives and they'll be brought to the floor of the House. But this isn't the first time health-care policy has come up in Washington. If the GOP had wanted to offer a plan of their own, there are plenty they could've taken off the shelf. If they'd needed more time, well, there was no hurry. But they didn't take more time, or dust off an existing piece of legislation. Backwards was good enough.

Today's vote was a statement, not a policy. Like the public option and cap-and-trade, both of which also passed the House, it will die in the Senate. But unlike the public option and cap-and-trade, it doesn't tell Americans much about how the Republicans would address the nation's toughest problems After the vote total was announced, you could hear some members of the GOP clapping and cheering. And fair enough: They have a win to be happy about. But not one to be proud of.

MUSIC: Top CDs of 2010

As the sales of CDs continue to decline, music and the music industry continue to shift inexorably away from the concept of albums (much less the concept album). The search for new music now runs from online forums to videos to ad placements (no mention of radio!), making it nearly impossible for new bands to get noticed. So my 2010 list is bereft of new bands, though a new band, the London Souls, rocked my world without a CD release. A few of the names below are newish, but all the music is terrific....presenting 15 keepers from 2010.

Best 5:
The Besnard Lakes – The Besnard Lakes Are the Roaring Night – The third album and second to make my list by the Montreal band headed by a husband and wife tandem mixes psychedelic atmospherics with indie drive.
The Black Angels – Phosphene Dream – Another third release and second to make my list, out of Austin, named after a Velvet Underground song, they blend rock roots and indie flair with psychedelic highlights.
The Bluetones – A New Athens – 14 years after its first release, a favorite at the time, this London band tops the list with this sublime Britpop-survivor collection.
Dead Confederate – Sugar – Grunge meets alt-country in Athens, GA and a brilliant disc is the result.
Midlake – The Courage of Others – A band from Denton, TX that defies description, building from jazz roots, melding gorgeous harmonies, keys, guitars, even 2 flutes to create a remarkable sound that shimmers and glistens.

Next 5:
Black Mountain – Wilderness Heart – Vancouver guitar virtuoso Stephen McBean presents another great set of music.
Blitzen Trapper – Destroyer of the Void – Ethereal, light, beautiful folk rock.
Roky Erickson – True Love Cast Out Evil – Roky Erickson led the seminal psych-rock band 13th Floor Elevators, then spent years in mental hospitals and seclusion. This disc consists of songs written years ago and brought beautifully to life with Will Sheff and Okkervil River
Manic Street Preachers – Postcards From a Young Man – A perennial favorite, the Welsh alt-punk band has survived and thrived thru 10 albums.
Neil Young – Le Noise – Neil just goes on and on. Daniel Lanois produced this solo effort that showcases the breadth of sound that one guitarist can produce.

Another 5:
Against Me! – White Crosses – Their first and only major label release may have alienated some of their punk base, but is a solid set of music by a terrific band.
Arcade Fire – The Suburbs – Much hyped third release by the Montreal collective that continues to explore dark and light in all its musical configurations.
Jesca Hoop – Hunting My Dress – Once nanny to Tom Waits children, this singer-songwriter uses her expressive voice to wondrous effect.
Plants and Animals – La La Land – Post-classic rock from Montreal that takes indie rock back to its roots.
Spoon – Transference – Another fine collection by the veteran indie band from Austin.

And a special mention to Bruce Springsteen for the reissue, The Promise: Darkness at the Edge of Town Story, which includes unreleased songs and live performances in a superb box set.

Deficit Dilly-Dallying

Sully eviscerates new House Budget Committee head and Republican wunderkind Paul Ryan, who summarized his plan to cut the deficit in a recent radio interview saying:

"We're gonna be reducing all domestic discretionary spending. I can't tell you by what amount and which program, but all of it is going to be going down, and the aggregate amount will be back to 2008 levels before the spending binge occurred."

Before the spending binge occurred? You mean to say that the eight years of George "Deficits Don't Matter" Bush did not include spending binges? You mean to say that emergency spending for the worst downturn since the 1930s was seriously in doubt under any president of either party?

What Ryan is doing is pretty obvious. He is trying to frame fiscal irresponsibility as somehow solely about 2008 - 2010. He's lying about the Republican past and the recession. He has no serious plans to cut entitlements now (anyone only focusing on discretionary spending is a demonstrable fraud), no plans to cut defense, no plans to raise any taxes. And he has thrown away a chance to become a real fiscal conservative in Washington, able actually to tackle the problem rather than exploit it for partisan purposes.

He is the problem with Republicanism today, not its solution. If the debt is such a threat, why do you refuse to tackle it seriously now? Why reduce yourself to the tiniest sliver of the smallest part of the discretionary spending budget ... when you could claim a serious mandate to end the debt for good? Why, after the last campaign, are the Republicans still unserious about cutting spending?

Because they're frauds.

Paying As You Go

As the GOP takes control of the House, with empty promises of deficit cutting to come, Ezra looks back on one aspect of the health-care debate - its cost.

During the Bush administration, Democrats made a big deal of the Republicans' tendency to pass big initiatives without paying for them. The tax cuts, for instance, went right onto the deficit. So too did the Medicare Prescription Drug Benefit. The Democrats promised that they'd be more responsible. They'd pay for their big projects.
 
When health-care reform came around, they made good. They cut $500 billion from Medicare, handing conservatives a potent attack line. They introduced a tax on high-value health insurance plans, infuriating their union supporters. They didn't just pay for the bill: They overpaid for the bill, packing it with enough spending cuts and revenue increases to cut the deficit by more than $100 billion in the first 10 years, and then used the momentum of the bill to get liberals to sign off on cost controls, like an independent board designed to control Medicare's costs, that they'd have never countenanced in normal times.

So what do the conservatives who style themselves fiscally responsible say about this effort? "Democrats knew that passing the health-care bill would make it harder to balance the budget, because we used up the easiest, most obvious tax increases and spending cuts on expanding health care coverage," writes Megan McArdle. Democrats "spent budget offsets needed to address our long-term spending problem" complains Keith Hennessey. Points for creativity, at least: You need to work hard to make the very act of finding ways to pay for your spending seem like a calculated plan to increase the deficit.

McArdle says Democrats "knew" what they were doing here, but having spoken to a couple of them, I assure her they didn't: They actually thought that doing the fiscally responsible thing and passing more-than-fully offset legislation that also included an array of attempts to cut health-care spending over the long term would be considered, well, fiscally responsible. Fools!

Tax Reform? Not So Fast

As talk grows in Washington about the prospects of a rewriting of the US tax code next year, Ezra throws a bit of cold water on the likelihood of success.

With Republicans and Democrats on board, and the relevant players in the House, Senate, and White House interested, this should be easy, right?
 
I doubt it. If you could agree on what the words "revenue neutral" meant, you really could redesign the tax code to feature lower rates, simpler forms and less economic drag. But given the coming expiration of the Bush tax cuts, you can't agree on what revenue-neutral means, as Democrats will say it means revenue after the cuts expire, and Republicans will say it means revenue if the cuts were extended. Until that question is resolved, every tax reform conversation will break down when Republicans realize Democrats are trying to lock in the expiration of the Bush tax cuts and Democrats realize Republicans will only reform the tax code if it means the Bush cuts live forever and ever, amen.

But the bigger problem is that no one's first love is tax simplification. Politicians don't want to modernize the tax code so much as they want to change the tax code in ways that fit their long-term goals.

Conservatives want lower taxes, particularly on the rich. They want a larger percentage of Americans to pay federal income taxes, as they believe that paying federal income taxes makes you less likely to support federal spending (Question: Is there any evidence for this view?). They want major cuts in existing government programs and a high bar to creating new programs, which means total revenues have to remain below current spending and far below projected spending.

Liberals have their own concerns: They want more revenues, as they know that their programs can't survive forever unless taxes rise to meet spending. They want the tax code to be more progressive, and they want to see inequality fall. They want taxes on wealth-income brought into line with taxes on work-income. They want the social spending that runs through the tax code, like the Earned Income Tax Credit or the breaks for clean energy development, to survive, and even be expanded.

And then there are the parts of the tax code that scare politicians: The mortgage-interest tax deduction, the exclusion for employer-based health insurance, the hundreds of smaller tax breaks that the public doesn't know about but that this or that business group will fight to the death to retain.

A Washington Six Pack

Ezra lists 6 points that define Washington politics now.

1) No one really cares about the deficit. No sooner had Alan Simpson and Erskine Bowles completed their work on the deficit reduction package than Democrats and Republicans reached a bipartisan accord to add $900 billion to the debt. Republicans wanted their unpaid-for tax cuts for the rich, Democrats wanted their unpaid-for stimulus measures and both sides wanted the unpaid-for tax cuts for income under $250,000. I think it's appropriate to spend while the economy is weak and then repay when it's strong, but then, I didn't just get elected to Congress by promising to rein in spending.

2) Obama is better at the inside game than the outside game. Sarah Palin likes to ask the president "how that hopey-changey stuff" is going. The answer, it seems, is that the changey stuff is going well, but the hopey stuff is proving more troublesome. Obama might have campaigned in 2008 as the inspirational newcomer who had no patience for the broken ways of Washington, but he has governed like a Washington veteran with little patience for inspired outsiders. In health-care reform, in the stimulus, in financial regulation and in the tax-cut deal, Obama has been a tough negotiator able to move his agenda through a gridlocked Congress - but he has not been able to enthuse Democrats or inspire popular support for his initiatives. He has been prickly when questioned about it.

3) And he's not over health-care reform. Among the president's most passionate moments during the post-deal news conference was his long, impromptu scolding of dissatisfied progressives who're making this into "the public option debate all over again." Obama went on to complain that liberals were so focused on the public option that they lost sight of the rest of the health-care bill - which was much larger. And he's right about that. But it's also time for him to get over it.

4) Republicans really, really, really care about tax cuts for rich people. Many Democrats had been operating under the theory that Republicans would simply obstruct everything Democrats attempted, as that was the best way to make Obama a one-termer. At least when it comes to tax cuts for very wealthy Americans, that's not true. Republicans agreed to far more in unemployment insurance and stimulus proposals than anyone expected, and sources who were involved in the negotiations agree that the mistake Democrats made going in was underestimating how much Republicans wanted the tax cuts for the rich extended.

5) It's still Ronald Reagan's world, at least when it comes to taxes. The Sturm und Drang over the tax cuts for the rich obscured the Democrats' massive capitulation on the tax cuts for everyone else. Even the party's liberals had accepted Obama's argument that the tax cuts for income of less than $250,000 - which includes the bulk of the Bush tax cuts - should be permanently extended. Another way of saying that is Democrats had agreed that the Clinton-era tax rates were too high. If you put it to most Democrats that way, they'd protest vigorously. The economy boomed under Clinton, and the Democratic Party is proud of the efforts it made to balance the budget. But Democrats are so terrified of being accused of raising taxes that they've conceded to the Bush tax rates for 98 percent of Americans.

6) We need tax reform, now more than ever. The end result of this deal is going to be an even weirder tax code than we have now - and the one we have now is pretty weird. We're extending old tax cuts and credits and adding new ones. Some of those may be extended further. Businesses won't want to see deductions for investments expire, and workers won't want to see the payroll-tax cut expire, and the super-rich won't want to see the tax exemption for estates up to $5 million expire. There are so many constituencies fighting for so many breaks that the only hope we're going to have when we actually do need to reduce the deficit - which isn't yet, but will be soon - is to start from square one on the tax code.

The Tax Deal

Sully on the Obama tax deal.

And notice that Obama has secured - with Republican backing - a big new stimulus that will almost certainly goose growth and lower unemployment as he moves toward re-election. If growth accelerates, none of the current political jockeying and Halperin-style hyper-ventilation will matter. Obama will benefit - thanks, in part, to Republican dogma. So here's something the liberal base can chew on if they need some grist: how cool is it that Mitch McConnell just made Barack Obama's re-election more likely? Bet you didn't see that one coming, did you?

The mix of policies is also shrewd from a strategic point of view.

At some point, I suspect, the Congress will have to decide between extending the payroll tax holiday or keeping the Bush tax cuts for millionaires - the double-track of the current Keynesian deal. I think Obama wins on that one, and has set up the kind of future choice the GOP really doesn't want to make. What he has done, in other words, is avoid an all-out fight over short-term taxes and spending now in the wake of a big GOP victory in order to set up the real debate about long-term taxes and spending over the next two years, leading into a pivotal 2012 election that could set the fiscal and political direction of this country for decades, an election in which he may well have much more of an advantage than he does now.

This is the difference between tactics and strategy. The GOP has won again on tactics, but keeps losing on strategy. More broadly, as this sinks in, Obama's ownership of this deal will help restore the sense that he is in command of events, and has shifted to the center (even though he is steadily advancing center-left goals). It's already being touted as "triangulation" by some on the right even as it contains major liberal faves - unemployment insurance for another 13 months, EITC expansion, college tax credits, and a pay-roll tax cut.

My view is that if this deal is a harbinger for the negotiation Obama will continue with the GOP for the next two years, he will come into his own.

The more his liberal base attacks him, the more the center will take a second look. And look how instantly the GOP's position has shifted. They have suddenly gone from pure oppositionism to dealing with the dreaded commie Muslim alien, thereby proving he is not what they have made him out to be. The more often we get the GOP to make actual tangible decisions on policy alongside Obama, the less able they will be able to portray him as somehow alien to the country, and the more they will legitimize him. Their House victory means they can no longer sit out there, portraying the country as somehow taken over by radical, alien forces - which they can simply oppose with ever ascending levels of hysteria and rhetoric. And the more practical and detailed and concrete the compromises, the less oxygen blowhards like Palin and Limbaugh will have to breathe.

Now for the short-term benefits of resolving this tax-and-spend dilemma so swiftly. The president urgently needs to get the new START and DADT through the Senate. DADT would be a major boost for his base - and the country's military. Getting START through is critical to his foreign policy cred. If he can pull all this off by Christmas - and the Senate should indeed stay open for an extra week - the last Congress will indeed be viewed by historians as one of the most substantive (and liberal) in recent history. And Obama will have orchestrated it - while ending up firmly planted and rebranded in the center.