…because I’m an economist and a mom–that’s why!


January 30th, 2010 . by economistmom


Taking a little break with my oldest kid, Allie, this weekend–a combo belated 18th birthday and early graduation present. She’s been through a really busy and stressful few months with all of her college applications and finishing the last grading period that will really matter–with the self-imposed pressure to keep up perfection. Me?  I’m just “free-riding” by being her mom, and just getting started with the busiest season in my work–budget season… So what the heck, maybe this will put me in a good, laid-back frame of mind so I don’t just totally give up on hopes for fiscal responsibility in Washington. I come to you from Jamaica today, where “mon” means (from the “speak Jamaican glossary”):

Perhaps the single most important Jamaican word, “Mon” can represent every person in Jamaica—man, woman, and child. Yes mon! (Yes man, woman, or child!)

…So yes, “moN” can refer to a “moM”:)

I’ll still be here for half a day on Monday when the Administration’s budget comes out–and believe it or not, will be perusing its pages from my laptop on the beach before we pack up to head home.  So even if you don’t hear from me right away on Monday, you can expect my take on the budget by Tuesday. Yeh, mon — mos def!

Unipartisan PAYGO Lite

January 28th, 2010 . by economistmom

An Inconvenient Tax - Official Trailer from Life Is My Movie Entertainment on Vimeo.

The Washington Post’s Lori Montgomery reports on today’s Senate passage of the required increase in the debt limit:

The Senate agreed Thursday to raise the legal limit on government borrowing to $14.3 trillion, a historic high that would permit the Treasury Department to cover the nation’s bills through early next year.

The vote fell along party lines, with all 60 Democrats supporting and 39 Republicans opposing a plan to increase the cap by a record $1.9 trillion. The 40th Republican, Sen. Mike Enzi of Wyoming, said his no vote was accidentally unrecorded. If lawmakers had approved a smaller increase, Democrats would have had to revisit the deeply unpopular topic of the soaring national debt before facing voters in November.

Along with the debt limit increase, however, the Senate passed a statutory version of pay-as-you-go budget rules, which in general is a good way to promote bipartisan fiscal discipline, except that this endorsement of PAYGO was far from bipartisan, and this form of the PAYGO rule far from highly disciplined:

Even as they extended Treasury’s authority to borrow, Democrats moved to rein in large budget deficits that are projected to drive the debt to dangerous levels by the end of this decade. As part of the debt limit bill, the Senate voted again along party lines to revive pay-as-you-go budget rules that bar lawmakers from increasing future deficits through tax cuts or new entitlement spending. The House is expected to take up the legislation next week.

A similar rule helped the nation balance its budget in the 1990s, but the new version would carve out $1.6 trillion in exceptions so Democrats could extend tax cuts for the middle class and avert a scheduled pay cut for doctors who treat Medicare patients without finding ways to offset those costs.

Why didn’t any Republicans support the PAYGO provision?  As Sam Stein explains, it’s probably mostly because the PAYGO rule would apply to tax cuts as well as mandatory spending increases.  Both would have to be paid for with offsetting tax increases or spending cuts…. well, unless you’re talking about the ever-deficit-financed Bush tax cuts–or the “doc fix” which proliferated during the Bush Administration as well.

So much for a renewed concern for fiscal responsibility bringing the parties together to meet in the center.  As I spoke of in this NPR story today, until President Obama starts leveling with the American people and talking with them about the tough choices that need to be made on both the tax and the spending sides of the budget, none of the members of Congress are going to work that hard at compromising and coming together with the other side.  And why should the Republicans have to give up their deficit-financed tax cuts when President Obama himself is proposing to continue them?

No policymaker likes to admit that tax cuts are no better than spending programs–well, because they are better to a politician, because they don’t get scrutinized the way direct spending programs do, they look like they reduce the economic burdens on current Americans, and if deficit-financed will merely shift the economic burden onto those future generations who don’t yet vote.  The naivety that most people have about tax policy is a big problem and is the motivation for the new documentary featured above (to be released on April 15th).  This naivety encourages the President to avoid talking about (let alone proposing) fiscally responsible tax policy, which I believe in turn leads to the sort of (”lite”) PAYGO rule and (”unipartisan”) vote we’ve seen today.

The President’s SOTU Speech: Specific on Tax Cuts, Not So Specific on How to Reduce the Deficit

January 27th, 2010 . by economistmom


The President said some good things tonight about fiscal responsibility, and he endorsed the fiscal commission as well as statutory PAYGO budgeting.  He just didn’t get very specific about the types of tough choices the commission would have to recommend (that we will have to reform our entitlement programs and raise taxes), or exactly which tax cuts and spending would have to be paid for under PAYGO and which would not.  And I definitely heard more bipartisan applause for all the tax cuts he mentioned (especially the capital gains tax cuts) than for any part of his fiscal responsibility talk.

Some of these fiscal policy highlights from the President’s speech (emphasis and notes added to the CNN transcript):

That’s why we…passed 25 different tax cuts.

Let me repeat: We cut taxes. We cut taxes for 95 percent of working families. We cut taxes for small businesses. We cut taxes for first-time homebuyers. We cut taxes for parents trying to care for their children. We cut taxes for 8 million Americans paying for college.

I thought I’d get some applause on that one… [and he did]…

So tonight, I’m proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat. I am also proposing a new small business tax credit — one that will go to over one million small businesses who hire new workers or raise wages. While we’re at it, let’s also eliminate all capital gains taxes on small business investment; and provide a tax incentive for all businesses, large and small, to invest in new plants and equipment…

To make college more affordable, this bill will finally end the unwarranted taxpayer-subsidies that go to banks for student loans. Instead, let’s take that money and give families a $10,000 tax credit for four years of college and increase Pell Grants. And let’s tell another 1 million students that when they graduate, they will be required to pay only 10 percent of their income on student loans, and all of their debt will be forgiven after 20 years — and forgiven after 10 years if they choose a career in public service…

[I]t is precisely to relieve the burden on middle-class families that we still need health insurance reform.

Now let’s clear a few things up — I did not choose to tackle this issue to get some legislative victory under my belt. And by now it should be fairly obvious that I didn’t take on health care because it was good politics…

[E]ven as health care reform would reduce our deficit, it’s not enough to dig us out of a massive fiscal hole in which we find ourselves. It’s a challenge that makes all others that much harder to solve, and one that’s been subject to a lot of political posturing.

So let me start the discussion of government spending by setting the record straight. At the beginning of the last decade, America had a budget surplus of over $200 billion. By the time I took office, we had a one year deficit of over $1 trillion and projected deficits of $8 trillion over the next decade. Most of this was the result of not paying for two wars, two tax cuts, and an expensive prescription drug program. On top of that, the effects of the recession put a $3 trillion hole in our budget. That was before I walked in the door.

Now if we had taken office in ordinary times, I would have liked nothing more than to start bringing down the deficit. But we took office amid a crisis, and our efforts to prevent a second Depression have added another $1 trillion to our national debt. That too is a fact.

I am absolutely convinced that was the right thing to do. But families across the country are tightening their belts and making tough decisions. The federal government should do the same. So tonight, I’m proposing specific steps to pay for the $1 trillion that it took to rescue the economy last year.

Starting in 2011, we are prepared to freeze government [non-security discretionary] spending for three years. Spending related to our national security, Medicare, Medicaid, and Social Security will not be affected. But all other discretionary government programs will. Like any cash-strapped family, we will work within a budget to invest in what we need and sacrifice what we don’t. And if I have to enforce this discipline by veto, I will.

We will continue to go through the budget line by line to eliminate programs that we can’t afford and don’t work. We’ve already identified $20 billion in savings for next year. To help working families, we will extend our middle-class tax cuts. But at a time of record deficits, we will not continue tax cuts for oil companies, investment fund managers, and for those making over $250,000 a year. We just can’t afford it.

Now, even after paying for what we spent on my watch, we will still face the massive deficit we had when I took office. More importantly, the cost of Medicare, Medicaid and Social Security will continue to skyrocket. That’s why I’ve called for a bipartisan fiscal commission, modeled on a proposal by Republican Judd Gregg and Democrat Kent Conrad. This can’t be one of those Washington gimmicks that lets us pretend we solved a problem. The commission will have to provide a specific set of solutions by a certain deadline. [NOTE: No mention of cutting Social Security or Medicare benefits or raising taxes.] Yesterday, the Senate blocked a bill that would have created this commission. So I will issue an executive order that will allow us to go forward, because I refuse to pass this problem on to another generation of Americans. And when the vote comes tomorrow, the Senate should restore the pay-as-you-go law that was a big reason why we had record surpluses in the 1990s. [NOTE: No mention of PAYGO exemptions.]

I know that some in my own party will argue that we can’t address the deficit or freeze government spending when so many are still hurting. I agree, which is why this freeze won’t take effect until next year, when the economy is stronger. But understand — if we don’t take meaningful steps to rein in our debt, it could damage our markets, increase the cost of borrowing, and jeopardize our recovery — all of which could have an even worse effect on our job growth and family incomes.

From some on the right, I expect we’ll hear a different argument — that if we just make fewer investments in our people, extend tax cuts for wealthier Americans, eliminate more regulations, and maintain the status quo on health care, our deficits will go away. The problem is, that’s what we did for eight years. That’s what helped lead us into this crisis. It’s what helped lead to these deficits. And we cannot do it again.

Rather than fight the same tired battles that have dominated Washington for decades, it’s time to try something new. Let’s invest in our people without leaving them a mountain of debt. Let’s meet our responsibility to the citizens who sent us here. Let’s try common sense.

To do that, we have to recognize that we face more than a deficit of dollars right now. We face a deficit of trust — deep and corrosive doubts about how Washington works that have been growing for years…

Incidentally, if we follow the suggestion that we can keep cutting taxes and yet manage to reduce the deficit to a more sustainable (or even zero) level, we’re liable to end up with a proposal like Rep. Paul Ryan’s (R-WI) “roadmap” plan, which CBO released their analysis of today.  Ryan holds federal revenues at 19 percent of GDP going all the way out to 2080, yet he manages to completely pay down the federal debt.  How does he do it?  By cutting Medicare spending from its projected 14.3 percent of GDP in 2080 down to just 3.5 percent of GDP (see Table 1 on page 6)–a cut of more than three-fourths and 10.8 percent of GDP! (Medicaid gets a similar percentage cut.)  This is “bending the health cost curve” all the way down to flat-lining it–an outcome I have publicly proclaimed as “impossible” if our society is a “compassionate” one.  (Wow.) But I’ll have more to say on the tax-side versus spending-side approaches to deficit reduction–using CBO’s baseline and Ryan plan analysis–in a later post.   Now I’ve got to hear what all the late-night talking heads have to say about the SOTU speech.

Proud of My Senators for Their Votes on the “Fiscal Responsibility” Amendments

January 27th, 2010 . by economistmom


The amendment to the debt limit increase calling for the Conrad-Gregg fiscal commission (designed to encourage deficit reduction) was “defeated” yesterday by failing to garner the filibuster-proof 60 votes, although a majority of the senators (53) did support it (and Senator Conrad said at his press conference it would have been 54 had Senator Murkowski (R-AK) been there to vote).  Stan Collender points out that it was an “absolutely bipartisan” “defeat”–in fact a downright (bipartisan) “deficit smackdown” (I think he means “deficit reduction smackdown”).  Well, I prefer to see the glass as (more than) half full:  there were 53 senators who voted “yes” on the commission, and there were both Democrats (36) and Republicans (16) (and one Independent, Lieberman) in that column.  Since Stan already reproduced the “Nays” list that he seems to be honoring, I’d like to highlight the “Yeas”:

YEAs —53
Alexander (R-TN)
Bayh (D-IN)
Begich (D-AK)
Bennet (D-CO)
Bingaman (D-NM)
Bond (R-MO)
Boxer (D-CA)
Carper (D-DE)
Chambliss (R-GA)
Collins (R-ME)
Conrad (D-ND)
Corker (R-TN)
Cornyn (R-TX)
Dorgan (D-ND)
Durbin (D-IL)
Enzi (R-WY)
Feingold (D-WI)
Feinstein (D-CA)
Franken (D-MN)
Gillibrand (D-NY)
Graham (R-SC)
Gregg (R-NH)
Hagan (D-NC)
Isakson (R-GA)
Johanns (R-NE)
Johnson (D-SD)
Kaufman (D-DE)
Kerry (D-MA)
Klobuchar (D-MN)
Kohl (D-WI)
Landrieu (D-LA)
LeMieux (R-FL)
Leahy (D-VT)
Levin (D-MI)
Lieberman (ID-CT)
Lincoln (D-AR)
Lugar (R-IN)
McCaskill (D-MO)
Menendez (D-NJ)
Nelson (D-FL)
Nelson (D-NE)
Pryor (D-AR)
Reid (D-NV)
Schumer (D-NY)
Shaheen (D-NH)
Tester (D-MT)
Udall (D-CO)
Vitter (R-LA)
Voinovich (R-OH)
Warner (D-VA)
Webb (D-VA)
Wicker (R-MS)
Wyden (D-OR)

My problem with Stan’s seeming praise for the “Nay”-sayers is that I don’t believe the “bipartisan” objections to the commission represent “bipartisan” support for any other way out of our fiscal state.  Many of the senators who voted against the Conrad-Gregg commission were not just objecting to the process of having to vote on the commission’s recommendations; they were objecting to the inevitable recommendations themselves–that we might actually have to raise taxes or reform the Medicare and Social Security programs (and possibly cut someone’s benefits).

That’s why I’m proud of my senators from Virginia, Mark Warner and Jim Webb, who were the only two senators who both voted for the Conrad-Gregg commission and refused to support the Baucus amendment (despite being of the same party as Baucus).  I think the Baucus amendment is a prime example of how far from bipartisanship we actually are when it comes to fiscal responsibility and deficit reduction; it basically says “hands off Social Security”–which directly contradicts the notion (which I think the Conrad-Gregg commission supports) that the only way we are going to solve the deficit problem is to work together and put “everything on the table.”   Here is the key passage from the text of the amendment (emphasis added):

(a) LIMITATION ON CHANGES TO THE SOCIAL SECURITY ACT.–Notwithstanding any other provision of law, it shall not be in order in the Senate or the House of Representatives to consider any bill or resolution pursuant to any expedited procedure to consider the recommendations of a Task Force for Responsible Fiscal Action or other commission that contains recommendations with respect to the old-age, survivors, and disability insurance program established under title II of the Social Security Act.

Yet the Baucus amendment received the support of all of the senators except Senators Warner and Webb, who both abstained from the vote.  The amendment passed with 97 “Yeas”, 0 “Nays”, and 3 “not voting” (Senator Murkowski was not present).

I would have preferred to see some “Nays” on this, but frankly, I’m just puzzled why there was so much “bipartisan” support for the Conrad-Gregg commission itself and yet so much willingness (via the Baucus amendment) to do the very thing the commission is intended to avoid: taking options off the table that one side or the other doesn’t like.

[**ADDENDUM 1 pm:  And speaking of sincerity about the kind of "bipartisanship" that might actually work to reduce the deficit, here's a nice op-ed by Senator Warner that was published last week in the Richmond Times-Dispatch.  I found this on his Facebook page, where I was already a "fan."  And how about his "tweet" from yesterday:  "Disappointd by Sen's rejectn of biprtsn panel to tackle fed budget deficits. Neither party will make hard choices on its own"]

What a Potentially Sustainable Budget Outlook Looks Like

January 26th, 2010 . by economistmom


This is a chart from CBO’s new outlook report.  Note that deficits get down to the 2 1/2 to 3 percent of GDP range within five years.  Note that revenues rise and spending falls, but that revenues do most of the heavy lifting (5 percent of GDP out of the 7 percent of GDP reduction in the deficit).  Note that this assumes CBO’s “current law baseline” where tax cuts expire as written in current law.  Hold that thought.


[**UPDATE 6 pm Tuesday:  Here's Concord's press release reacting to the CBO report.  More to say tomorrow, but here's the one-minute version:  to get to sustainability, within the first five years it's all about revenue policy and avoiding the deficit-financed extension of tax cuts, and beyond that (but still, ideally sooner rather than later), we'll have to figure out how to bend that darned health cost curve, because even with a reformed tax system, we won't be able to keep up with health spending on its current path.]

Doing As Much As We Can Do, Now

January 26th, 2010 . by economistmom

I’m anxiously awaiting the CBO budget and economic outlook report, which will be released later this morning. [UPDATE: here it is.] I’m trying to think optimistically about how the Administration and Congress will confront the newest numbers and do their best to help both outlooks–budget and economic.

Meanwhile, there will be a vote very soon in the Senate on the debt limit, and some amendments to consider that are designed to encourage fiscal discipline.  The Concord Coalition put out this issue brief yesterday with the strong message that while these measures are far from perfect and while we would construct them differently (we being unconstrained by politics), we shouldn’t let the perfect be the enemy of the good:

This year…the debt limit vote could be a catalyst for reforms aimed at improving the nation’s fiscal outlook. With public concern growing over the sharp rise in debt, members of Congress have a strong motivation to combine the “must pass” debt limit increase with measures demonstrating a commitment to rein in future deficits.

Three such measures will likely be voted on in the Senate this week. An amendment, offered by Budget Committee Chairman Kent Conrad (D-ND) and Ranking Member Judd Gregg (R-NH), would establish a task force to make recommendations for fiscal sustainability. Another amendment, offered by Majority Leader Harry Reid (D-NV), would enact statutory pay-as-you-go (PAYGO) rules for entitlement expansions and tax cuts. A third measure offered by Senator Jeff Sessions (R-AL), would establish statutory caps on discretionary spending (appropriations)…

We recognize that the three current proposals are not perfect. The Sessions amendment could be improved by adding an enforcement mechanism, such as sequestration to protect against a breech of the spending caps, and by suspending the caps during a recession. The Reid amendment could be improved by eliminating its PAYGO exemptions for the extension of several existing policies. While some of these exemptions are time-limited, including them would still make the task of deficit reduction more difficult. The Conrad-Gregg amendment could be improved by allowing limited, savings-neutral, amendments to the task force recommendations and by requiring public hearings around the country to receive input and improve the transparency of its deliberations. These changes would mirror a similar proposal in the House sponsored by Representatives Jim Cooper (D-TN) and Frank Wolf (R-VA)…

These ideas should not be fodder for partisan bickering, which the public has clearly grown weary of. If differences on the details cannot be resolved before a vote is needed to increase the debt limit, negotiations should not be abandoned. Another short-term increase in the debt limit, while not optimal, would keep the pressure on to reach agreement. Moreover, the upcoming Fiscal Year 2011 budget process offers an opportunity to fine tune whatever flaws might be perceived in the amendments currently before the Senate.

What is most important at this point is having the political will to act. Budget process reforms can encourage, but not guarantee, positive results. Our fiscal problems do not have a partisan origin and they will not have a partisan solution. Compromise will be needed. This is particularly true for a deficit reduction task force. Already, some have suggested that limitations be placed on what the task force may recommend, such as prohibiting tax increases or changes in Social Security. These or similar preconditions would simply enshrine partisan gridlock and undermine the very purpose of the task force.

For our part, we are willing to accept something less than perfect if it will help to move fiscal policy in a more responsible direction. As the debate continues over amendments to the debt limit, we urge others to demonstrate similar flexibility. No one is going to get everything they want. If perfection is the goal, failure will be the result. We literally cannot afford it.

I expect that some fiscal-hawkish senators will still let the perfect be the enemy of the good, claiming to be voting against the amendments that they would have written differently, that they think (or claim to think) do not go far enough.  But imperfections aside, we should keep in mind that these three types of measures–caps for annual discretionary spending, PAYGO for new mandatory spending and tax cuts, and a commission for reforms to the existing entitlement and tax systems–are complementary, not competing, proposals, and that if we really want to make progress on reducing the deficit anytime in the next decade as well as sustainably over the longer run, we really need all three and then some.

…Yes, and as the lead editorial in today’s Washington Post suggests, the “then some” (namely, “political will”) is a lot.

And by the way, the Administration’s proposed (non-security discretionary) “spending freeze” reported here by Lori Montgomery is not the big deal that some of the media reaction would suggest.  (OK, I had MSNBC on last night…)  But more on that later in the context of the new CBO numbers.

A Fiscal Commission in a Parallel Universe?

January 25th, 2010 . by economistmom


If our current policymakers can’t get it together, there’s a new effort to try it from the outside which begins today.  In a story in the New York Times, Jackie Calmes explains:

WASHINGTON — Just as President Obama and Congressional Democrats are trying to create a bipartisan commission on reducing the debt, some well-known former elected officials and veterans of past administrations are announcing their own task force on Monday, underscoring the mounting concern over the nation’s fiscal future.

The timing of the group’s formation is coincidental, organizers said. Yet the outside group, including prominent Democrats and Republicans, could provide pressure and political cover for the parallel effort by the administration and Congressional leaders to consider both unpopular spending cuts and tax increases.

The blue-ribbon group of 18 to 20 members will be led by Pete V. Domenici, a Republican former senator from New Mexico who for years was the chairman of the Senate Budget Committee, and Alice Rivlin, a Democrat and former budget director for both Congress and President Bill Clinton who is also a former vice chairwoman of the Federal Reserve.

Their goal is to, by December, give Congress and Mr. Obama a multiyear plan to raise tax revenues and pare spending, especially for the Medicare and Medicaid programs, which are the biggest factors driving the projections of future high deficits, Mr. Domenici and Ms. Rivlin said in a joint interview…

I’ll be attending the group’s unveiling this morning, so more later.  It’s going to be a very busy week this week–the start of “budget season,” with CBO’s outlook report coming out tomorrow and the State of the Union speech on Wednesday, on top of the debt limit (plus amendments) vote.

[**UPDATE 11:30 pm:  check out the video of the Bipartisan Policy Center event on this page, and in particular Senator Domenici's remarks about how "everything is on the table" (including very specifically TAXES) at 23:46, and the NY Times' Jackie Calmes' question (and the Senator's and Alice Rivlin's responses) at 41:45.  I will be revisiting these points later this week, for sure.**]

If We Can’t Even Agree on the Commission…

January 22nd, 2010 . by economistmom

…then how’s the commission ever going to agree on the revenue increases and spending cuts?  The Washington Post’s Lori Montgomery reports:

Key senators in both parties are resisting President Obama’s bid to create a bipartisan commission to rein in soaring budget deficits, saying the White House has failed to deliver clear assurances that a presidentially appointed panel would have the power to force a deficit-reduction plan through Congress.

Vice President Biden, Treasury Secretary Timothy F. Geithner and White House budget director Peter Orszag went to the Capitol on Thursday to try to sell the idea to a group of moderate Democrats, who are threatening to block efforts to significantly raise the nation’s debt limit if there is no plan to restrain future spending.

Far from signing on, however, the group pressed White House officials to endorse a competing proposal to create a budget commission by law, with explicit provisions to put its recommendations to a vote in the House and Senate before the end of this year…

Meanwhile, key Republicans said they would not serve on a presidentially appointed commission, arguing that the panel would do little more than provide political cover for Democrats trying to show voters they are taking action on the deficit in the run-up to this fall’s congressional elections. They, too, urged Obama to back a statutory commission, calling it the only hope for truly bipartisan cooperation on the nation’s dire budget problems…

I still don’t understand why those in Congress who truly want to achieve fiscal sustainability would oppose this commission just because it’s not as strong as a statutory commission, which they can’t pass in Congress anyway.  In helping policymakers and the American public confront the tough choices, any fiscal commission is better than none–as long as we don’t have to deficit finance the commission itself.

Are some members of Congress perhaps not as prepared to get to the tough (and specific) policy choices as they claim to be when talking only in vague terms about the very general merits of a fiscal commission?  Is their resistance to the presidentially-appointed commission a stalling and/or distancing tactic?

It’s Not Just the Economy (Stupid)

January 21st, 2010 . by economistmom

Why did Martha Coakley lose Ted Kennedy’s Senate seat?  And why does health care reform appear to be going down in flames?

I don’t think that either one of those misfortunes for the Democrats has caused the other.  Rather, they’re both symptoms of the same problem, and I don’t think it’s (just) “the economy, stupid”–that is, it’s nothing that can be explained just by economic statistics, and neither can it be blamed entirely on forces beyond the Democrats’ (human) control.

In Thursday’s front page story in the Washington Post, Michael Shear seems to nail it–not by his reference to the measurable “economic pain” of the middle class, but by the psychology he describes (emphasis added):

President Obama on Wednesday blamed the Democrats’ stunning loss of their filibuster-proof majority in the Senate on his administration’s failure to give voice to the economic frustrations of the middle class, a disconnect that White House aides vowed to quickly address as they continue to work to advance the president’s agenda.

Obama said the relentless pursuit of his domestic policies — and a failure to adequately explain their virtues — had left Americans with a “feeling of remoteness and detachment” from the flurry of government actions in Washington.

We were so busy just getting stuff done and dealing with the immediate crises that were in front of us that I think we lost some of that sense of speaking directly to the American people about what their core values are and why we have to make sure those institutions are matching up with those values,” he told ABC’s George Stephanopoulos.

I think there’s an important lesson here for the Administration, not about how to construct wise policies, but how to promote them to the American people.  At first it was fine and good for Obama to be so inspirational and encouraging of great expectations, from the campaign trail all the way through the “honeymoon” period of his Administration (the first couple months?).  But when it comes to the real work of really major policymaking (e.g., health care reform), it’s not enough to just inspire and then basically tell the American people to “leave the details up to us and don’t worry your pretty little heads about them.”  In promoting their health reform agenda, the Administration’s lack of details on the hard choices left many people (those without “blind faith”) confused and feeling like something was surely being pulled over on them.  (If it sounds too good to be true, it probably is…)

Policymakers, led by the Obama Administration, have been so busy trying to get fiscal stimulus done and then health reform done that they failed to keep real Americans “in the loop” in the process.  They’ve been working on these huge public policy issues from a high altitude in a very academic manner from the top down, instead of at the grassroots level, in a plain talk manner from the bottom (the real people) up.  I think the dispassionate, disengaged campaign and even demeanor of Coakley personifies the general problem of how the (mostly Democratic) policy leaders have approached health care reform and all other big economic policies they’ve tried to sell the American public on.

This should teach us a lesson on how to approach deficit reduction, successfully.  It’s no longer going to be acceptable to the American public that the Administration and Congress “spare them” the ugly details.  They won’t have faith in the good in the policies if they aren’t clearly explained the tradeoffs (the “bad”).  And if they are “spared” the details of the tradeoffs, they are left to assume they have no say in which tradeoffs will be made.  Ask the people what tradeoffs they’re willing to make, and hear them out and work with them (not above them) to smooth out the disagreements among them, and the people become much more committed to the cause and trusting of the process and the policymakers who ultimately write and pass the legislation. It seems to me there’s no better model for this than the Concord Coalition’s “fiscal stewardship project”–which involved diverse groups of concerned citizens from across the country. If the Obama Administration is serious about deficit reduction, they’ll need to listen and talk with groups like this throughout the process of trying to reduce the deficit.  They can’t just go it alone, even with the help of some high-flying commission.  (More on that issue tomorrow.)

Please don’t take this as political analysis, because I’m not a political analyst.  It’s just that a fellow blogger friend of mine asked me today whether I thought the MA election was all about “jobs” (”the economy, stupid”)–and my first instinct was that no, I think it’s way beyond “the economy, stupid” and anything we could point to in the economic data.  I think it’s all about how the politicians have handled the economy pretty well, but still left the people feeling left behind in the process.

[**UPDATE (Sat. am):  here's the Politics Daily story by Joann Weiner (published on Friday) that got me thinking about this.]

The Debt Limit vs the Policy Choices That Really Matter

January 20th, 2010 . by economistmom

We try to explain it in this series of three short Concord Coalition-produced videos, featuring me and my colleagues Bob Bixby and Josh Gordon. (The YouTube player should automatically take you from one video to the next.)  The Concord blog further explains the context.

And in other “entertaining-videos-related-to-fiscal-responsibility” news, here’s Dave Walker being interviewed by Jon Stewart on “The Daily Show” (which aired on Monday):

The Daily Show With Jon Stewart Mon - Thurs 11p / 10c
David Walker
Daily Show
Full Episodes
Political Humor Health Care Crisis

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