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Former McCain Advisor Doug Holtz-Eakin Calls for Bipartisanship in Health Care Reform

May 18th, 2009 . by economistmom

It’s uplifting to follow former campaign advisors after they leave the campaign trail.  McCain campaign economic advisor Doug Holtz-Eakin (also former director of the Congressional Budget Office and former chief economist for the Bush Administration’s Council of Economic Advisers) is a case in point.  Now Doug is free to say what he really thinks is necessary to come up with wise fiscal policies (in this case, in health care reform): working with the other side, not against them.  His policy paper contains lots of good ideas that most economists (whether Ds or Rs) agree on, such as engaging in comparative effectiveness studies and sharply reducing the tax exclusion for employer-provided health care (which is the largest tax expenditure in the federal budget).  In his conclusion, Doug argues that now the politicians need to come together on ideas like these just like the economists (who are no longer working on campaigns) have:

Republicans should work with Democrats to demonstrate bipartisanship of the outcome at every stage. When a bill is considered in committee, at least one prominent Republican should be willing to vouch that the bill, while perhaps not perfect, represents the kind of compromise that bipartisan efforts require. If not, Republicans should depart the process.

The strategy should involve engagement with all stakeholders, especially the states. States have made numerous efforts at significant reform. “Blue” states such as Massachusetts and “red” states like Utah have passed bipartisan reform. The agreement of these stakeholders will raise the legitimacy of any federal reform as well as avoid undercutting their own efforts.

Each side should be permitted a key objective at the outset. Republicans should veto any new federal government insurance plan and demand fiscally responsible reforms to existing programs. In return, they should acknowledge the need to expand coverage in the near term and include a path to broad coverage.

The United States is in need of deep reforms to the health-care sector of its economy: it spends too much, covers too few people, and gets too little for the money. Bipartisan reforms that stress a reformed delivery system, better value in care, respect for state-level reform efforts, more efficient insurance markets, and better tools can address the deep problems of our health-care system in a fiscally responsible way. These reforms should be in the interest of Democrats and Republicans alike.

Can We Build Bridges to a Better Place?

December 14th, 2008 . by economistmom

photo of construction of new bridge in Minneapolis, from a New York Times story earlier this year

This week’s Economist magazine, and this morning’s (Sunday) Washington Post both discuss whether it’s possible to do massive amounts of infrastructure spending both promptly (for stimulus/recovery) and wisely (for longer-term economic growth).  Can “quick and easy” also be “smart” from a “transform-the-economy” perspective?  From the editorial column in the Economist:

Done correctly, a big public-works programme can do two valuable things at once: deliver a useful stimulus and at the same time boost the economy’s long-run rate of growth…

The danger comes when these two objectives conflict. Given that stimulus is likely to be regarded as the primary aim, a premium will tend to be placed on actions that yield the most rapid results. America’s governors are already falling over each other to submit their lists of “shovel-ready” projects to Washington, DC. But quick and easy is not necessarily good.

The federal government is not good at discriminating between infrastructure schemes. Too much cash has gone into encouraging sprawl or keeping senators from small states happy with showy projects; too little into building things that are harder to get approved but encourage economic growth or control congestion, such as light railways or road-rail freight systems. Obviously each project should be measured on its merits. But a good broad test will be where the money goes. The 100 biggest metropolitan areas account for 65% of America’s population and 75% of its output. That is where the infrastructure is needed. But if “bridges to nowhere” start springing up in the boondocks, it will probably be money wasted.

And this article in the same issue of the Economist magazine explains why just throwing more money to the states for infrastructure projects is not likely to bring much “change” and “transformation” to what we build and how we do it:

The greater problem [with infrastructure spending, above even lack of funding] is the lack of a strategy. No federal office oversees spending on infrastructure. Congressmen appropriate money for individual projects, a few of which are ludicrous (Alaska’s “bridge to nowhere”) and most of which bear no relation to each other. Cash for roads is given to states with few strings attached. “It is as close to a blank cheque as the federal government comes to writing,” says Robert Puentes of the Brookings Institution, a think-tank…

The lack of federal cash has…provoked states to think boldly about how to manage demand and recoup infrastructure investments. There is growing interest in public-private partnerships, although America still lags well behind Europe. Oddly, the corruption-tainted state of Illinois has been unusually forward-looking. In 2005 Chicago became the first city to lease a toll road to a private company.

So a wiser approach to public works is slowly taking shape. Unfortunately, it is now in danger of being washed away by a torrent of money. Speed in spending is prized above all; but this is no way to build something that lasts as long as infrastructure. 

And today’s front-page story in the Washington Post shares this worry:

Most of the infrastructure spending being proposed for the massive stimulus package that Obama and congressional Democrats are readying, however, is not exactly the stuff of history, but destined for routine projects that have been on the to-do lists of state highway departments for years. Oklahoma wants to repave stretches of Interstates 35 and 40 and build “cable barriers” to keep wayward cars from crossing medians. New Jersey wants to repaint 88 bridges and restore Route 35 from Toms River to Mantoloking. Scottsdale, Ariz., wants to widen 1.5 miles of Scottsdale Road.

On the campaign trail, Obama said he would “rebuild America” with an “infrastructure bank” run by a new board that would award $60 billion over a decade to projects such as high-speed rail to take the country in a more energy-efficient direction. But the crumbling economy, while giving impetus to big spending plans, has also put a new emphasis on projects that can be started immediately — “use it or lose it,” Obama said last week — and created a clear tension between the need to create jobs fast and the desire for a lasting legacy.

“It doesn’t have the power to stir men’s souls,” said David Goldberg of Smart Growth America. “Repair and maintenance are good. We need to make sure we’re building bridges that stand, not bridges to nowhere. But to gild the lily . . . where we’re resurfacing pieces of road that aren’t that critical, just to be able to say we spent the money, is not what we’re after.”

Minneapolis Mayor R.T. Rybak is proud that his city was able to quickly rebuild the Interstate 35 bridge that collapsed into the Mississippi River in 2007 while making sure to include capacity for a future transit line on it. But he worries that many of the road and bridge upgrades around the country will not be done in a similarly farsighted way, given the time pressures.

“The quickest things we can do may not be the ones that have the most significant long-term impact on the green economy,” he said. “Unless we push a transit investment, this will end up being a stimulus package that rebalances our transportation strategy toward roads and away from [what] we need to get off our addiction to oil.”

Mayors say there would be a better chance for a long-term impact if the money were focused on metropolitan areas where investments could make the most difference in reducing congestion and lessening dependence on cars. They doubt that will happen if infrastructure funding goes directly to state capitals.

And meanwhile, what to do about the Big Three automakers still hangs over us, and this week’s Economist also points out the uniqueness of the Detroit situation, compared with other parts of the country that also produce automobiles:

Michigan remains the most dependent on the Big Three, even more so than the BEA’s numbers suggest. The BEA’s classification does not include headquarters and research facilities, most of which are clustered in the state, according to Donald Grimes, an economist at the University of Michigan. The BEA also groups together foreign and domestic carmakers. Ohio and Indiana have lured more foreign carmakers than their northern neighbour. The day before Rick Wagoner, GM’s chief executive, first visited Congress with his hand out, Indiana’s governor applauded the dedication of a new Honda factory.

Michigan, by contrast, has risen and fallen with the fortunes of the Big Three. The state’s concentration of Big Three workers is 12 times the national average, explains Mr Grimes. This year’s annual forecast from the University of Michigan charts how the state gained almost 800,000 jobs between 1991 and 2000, and then proceeded to lose more than half of them, 415,000, from 2000 to 2007. A main reason, according to the report, is that the firms’ car sales fell from 11.5m units in 1999 to 8.1m in 2007.

The outlook remains dismal. The report predicts that Michigan will have a net job loss of 674,000 from 2000 to 2010. The university’s economists have long made a plaintive request to their state: diversify. That plea is suddenly more urgent.

So could at least part of the infrastructure spending we’re talking about do a thoughtful job of putting Detroit autoworkers back to work (as quickly but as thoughtfully as possible) while helping Detroit diversify and transform?  And could we repeat that strategy over and over again, in all of the infrastructure spending we pursue all over the country over the next couple years?  Instead of just digging deeper holes and building “bridges to nowhere,” could we build them to a better place?

DirectorDad on HuffingtonPost re. I.O.U.S.A.’s Relevance Even In This Recession

December 6th, 2008 . by economistmom

So, now that Patrick Creadon (”DirectorDad”) has appeared on HuffingtonPost, will he ever come back to the mere EconomistMom blog?… An excerpt:

I.O.U.S.A.’s objective is driven by the most basic premise that we must learn from our mistakes in order to move forward. And the desire to learn is very real, based on the hundreds of educators, students, and good-government groups around the country who have requested to hold private showings of the film–and on the Academy members who have put the film on the short list for an Oscar nomination.

Just as we must understand the past, we must face the reality of our current, critical situation. First and foremost, we must get our economy back on track. But we can take steps to ensure that the coming stimulus is temporary and targeted to long-term, sound investments in our economy–investments in our future, such as building much-needed infrastructure and creating green jobs for Americans.

Even as we stimulate the economy, we must exercise fiscal discipline and restraint if we are to set our country on a different path. President-elect Obama and his incoming administration have continued to advocate this philosophy as they unveil their plan of action for our ailing economy…

The incoming Obama Administration can combine targeted stimulus to jumpstart the economy with some key steps toward real, lasting economic reform.

We are a thoughtful and innovative nation that is capable of taking on both challenges–and taking control of our future. And as the makers of I.O.U.S.A., we are gratified to see that the film is inspiring this much-needed conversation.

Ruth Marcus on Michelle Obama as Typical Working Mom (Like Us)

November 29th, 2008 . by economistmom

I’m catching up on some material I’ve wanted to post for a few days now…  Last Wednesday, Ruth Marcus’ column in the Washington Post was called “Michelle Obama’s ‘Mommy’ Stamp”–where Ruth reacts to Michelle’s declaration that her primary role in the White House will be as a mom, albeit an important one:

“My first job in all honesty is going to continue to be mom in chief,” Obama told Ebony magazine, “making sure that in this transition, which will be even more of a transition for the girls . . . that they are settled and that they know they will continue to be the center of our universe.”…

[Michelle] Obama seems comfortable, now, in the back seat, but that seeming serenity did not come easy. In “The Audacity of Hope,” Barack Obama offers a glimpse of an earlier, more conflicted Michelle, whose “anger toward me seemed barely contained” as she struggled with the pull between work and family while her husband launched a run for Congress.

“No matter how liberated I liked to see myself as . . . the fact was that when children showed up, it was Michelle and not I who was expected to make the necessary adjustments,” Barack Obama writes. “Sure, I helped, but it was always on my terms, on my schedule. Meanwhile, she was the one who had to put her career on hold.”

Expected to — by whom? Had to — says who? I remember reading this passage two years ago, when the book came out, and thinking: Hey, buddy, she has to scale back only because you’re not willing to…

I remember hearing that passage earlier this year when I listened to the audiobook version, and thinking something quite different–that gee, I guess there are lots of other working moms like me who are their harshest critics and are always trying to be both “super mom” and “super working woman”–and hence always feeling a little inadequate.  I heard “expected to” and I knew just which Obama was doing the “expecting”…It was likely Michelle much more than Barack.

And I think Ruth realizes this, too, for she goes on to say:

And yet, Barack Obama could have been describing so many women today when he explained that, for Michelle, “two visions of herself were at war with each other — the desire to be the woman her mother had been, solid, dependable, making a home and always there for her kids; and the desire to excel in her profession, to make her mark on the world and realize all those plans she’d had on the very first day that we met.”

This is where the identification comes in. The brutal reality is that, like our president-elect, most men do not wrestle quite so strenuously with these competing desires. So when the needs of our families collide with the demands of our jobs, it is usually the woman’s career that yields…

And Ruth goes on to mention her own struggles with these competing desires–which sound just like mine, and those of many of her working-mom friends she describes.  If there’s one thing that working moms are SO much better at than working dads, it’s feeling pulled in so many different directions and feeling guilty.  I think men process thoughts and actions too linearly to even notice when there competing demands on their time… Those competing demands typically never even translate into their own competing desires, you see. (They don’t even notice them most of the time.)  Women, especially working women who are also moms, are natural multitaskers.  It’s been my observation that men, even working men who are dads, have a harder time taking in a panoramic view of the world.  They spend much less time worrying about the things on the periphery that they fail to get done, and more time focusing on the things straight ahead that they are able to check off their list.  That’s probably why men generally have much more self confidence; they set much lower standards for themselves.

Yes, I generalize and stereotype and do not have any degree in psychology, so I’m sure this will generate some angry comments from working dads out there.  Here’s the link to the lively online discussion Ruth had with readers on WashingtonPost.com on the day of her column.

And yesterday, this fun post by Ruth on what kind of dog will become the Obamas’ family dog… although having a couple golden retrievers myself (and a beagle that although smaller is far from what I’d call “girly”), I’m a little more sympathetic to the President-elect’s disdain for those “girly dogs.” 

Living Within Our Means: Obama Budget Team Edition

November 25th, 2008 . by economistmom

Ahhh…  After a noticeable lack of any mention of fiscal responsibility over the past few days (I was trying not to “look”), a return to it with today’s announcement of Peter Orszag as the Obama Administration’s budget director.  From President-elect Obama’s remarks:

As I said yesterday, the economic crisis we face demands that we invest immediately in a series of measures that will help save or create two and a half million jobs and put tax cuts in the pockets of the hard-pressed middle class. Many of those new jobs will come in areas such as energy independence, technology, and health care modernization that will strengthen our economy for the future.

But if we’re going to make the investments we need, we must also be willing to shed the spending we don’t. In these challenging times, when we are facing both rising deficits and a sinking economy, budget reform is not an option. It is an imperative. We cannot sustain a system that bleeds billions of taxpayer dollars on programs that have outlived their usefulness, or exist solely because of the power of a politician, lobbyist, or interest group. We simply cannot afford it.

This isn’t about big government or small government. It’s about building a smarter government that focuses on what works. That is why I will ask my team to think anew and act anew to meet our new challenges. We will go through our federal budget — page by page, line by line — eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way.

More later when I can find a transcript from the Q&A.

UPDATE (8 pm):  Can’t find a transcript of the Q&A part of the press conference, but I did want to share with you Peter’s last blog post on the CBO Director’s Blog.   Having worked at CBO for five years in the mid-to-late 1990s, and with many friends still there, I can vouch for this (favorite) part of Peter’s “last post”:

Perhaps most fundamentally, CBO is a reflection of the smart and hard-working but also warm and wonderful people who work here.  (If you find it hard to believe that budget analysts and economists can be warm and wonderful, please just take my word for it.)

I wonder if the blog will go on without Peter–if part of the required skill set for the new CBO director is the ability to blog about budget issues, or if CBO might carve out that duty from the director’s job and create a new ”CBO Blogger” position.  I might apply then.  Not for the director’s job; I mean for the blogger’s job.  ;)

(A Different) $700 Billion

November 24th, 2008 . by economistmom

Seems to be the magic number these days, especially if you’re not quite sure what is needed.  Oh, a round $700 billion might do…

The front page of today’s Washington Post (story by Lori Montgomery) read:  “Democrats’ Stimulus Plan May Reach $700 Billion.”

And after today’s press conference unveiling the top of the Obama Administration’s economic team, this story on WashingtonPost.com (probably for tomorrow’s print edition):

The announcements came as Obama and his advisers made plans for a massive fiscal stimulus package that some Democrats estimated could cost between $500 billion and $700 billion. The program would be aimed at creating or preserving 2.5 million jobs over the next two years, primarily by spending billions of dollars to rebuild roads and bridges, modernize public schools and tap alternative sources of energy.

Now 2.5 million jobs is indeed a lot of jobs to create, even as a “gross” increase.  (Obama’s advisors have explained that there will still likely be a net loss of jobs in 2009, as without the stimulus we’d lose more than jobs created/saved by the stimulus.)  $500 billion to $700 billion to get there implies $200,000 to $280,000 spent per job created/saved.  If we could also get some new infrastructure out if it, I suppose that is not a bad deal, even if we have to deficit-finance it.  But if it instead fails to generate new, sustainable jobs, physical capital, technologies, and industries for our economy, and meanwhile racks up a considerable amount of new debt that will remain on the federal books for a long time (to be paid off by our children and grandchildren later), then it won’t look like such a great deal.

UPDATE (9 pm):  This Wall Street Journal article by Jonathan Weisman clarifies the NEC and CEA appointments that caught the WSJ by surprise; they incorrectly speculated yesterday that Jack Lew would be named NEC head and Austan Goolsbee CEA head.  The relevant paragraphs in today’s report:

The appointment of Mr. Summers as NEC director scrambled other posts on the Obama economic team. Jacob Lew, a former White House budget director in the Clinton administration, had been expected to take that post, but he was nudged aside.

Austan Goolsbee, a young University of Chicago economist and longtime adviser to Mr. Obama, was widely expected to be the chairman of the Council of Economic Advisers. Now, according to aides, he is likely to serve on the council but not chair it.

(Fiscally-Responsible) Friends in High Places

November 22nd, 2008 . by economistmom

I already wrote this on my Facebook wall, but I’m so proud to hear the close-to-official word that my friends Jason Furman, Austan Goolsbee, and Peter Orszag will be at the top of President Obama’s economic team.  From today’s Wall Street Journal story on the pick of Tim Geithner for Treasury Secretary: 

Already, the backbone of an Obama economic team has emerged. Congressional Budget Office director Peter Orszag will be Mr. Obama’s budget director. Jacob Lew, a former Clinton budget director, will head the White House’s National Economic Council. Jason Furman, the economic policy director of the Obama campaign, is likely to be Mr. Lew’s deputy. And Austan Goolsbee, a University of Chicago economist and long-time policy confidante, is expected to chair the Council of Economic Advisers.

The team represents a re-emergence of more academic economists and technocrats after a Bush administration that elevated aluminum-company and railroad executives to be Treasury secretary.

I’ve already pointed out during the campaign that Jason and Austan understand the importance of fiscal responsibility, at this post.  Jason was a member of the Concord Coalition’s Fiscal Wake-Up Tour for awhile, after all.  And Peter has written about why deficits matter many times including with none other than Bob Rubin, and of course, Peter’s had to care about this full time in his job as director of the Congressional Budget Office over the past two years.

Go, PAYGO!

November 19th, 2008 . by economistmom

No time to write much today/tonight…I have a very fragile connection while on the road… (am doing this from a train at Penn Station–stuck for the moment…)

Today the Concord Coalition issued this paper on the continued importance of PAYGO as a fiscal discipline tool, even in the current economic climate where some deficit-financed fiscal stimulus is justified.

I will highlight and write more about this tomorrow when I have a better connection!  (Will also post a photo or two from tonight’s Concord Coalition annual dinner.)

Wisdom From the Kids

November 14th, 2008 . by economistmom

As noted today on the PBS Engage blog, PBS Kids online has launched a really cool “Speak Out” site where kids can contribute to a virtual, evolving “open letter” to President(-elect for now) Obama on their best policy ideas.  From the “about” page:

SPEAK OUT encourages civic engagement among 6 to 12 year olds by prompting them to submit ideas to address prominent citizens’ issues as they most relate to kids’ lives. Community discussion and the democratic process are modeled by allowing kids to choose which ideas they like best. The ideas with the most votes are featured on pbskids.org/speakout in the form of a message to our President. This active, digital message will reflect the youth’s changing concerns and proposed solutions over time.

The categories are “The Earth,” “Our Schools,” and “Being Healthy”–i.e., environmental, education, and health policy.  This is one “blog” I really hope the Obama team pays close attention to.  With so many worthwhile, very forward-looking ideas these kids seem to have, I hope we’ll come out of the current economic crisis with enough left to be able to put some decent money where our kids’ mouths are. 

Obama Transition Team: Fiscal Responsibility Still Matters

November 12th, 2008 . by economistmom

The Center for American Progress is headed by former Clinton chief of staff, and current Obama transition team leader, John Podesta.  Today they issued this economic policy paper, “Restoring Confidence in the American Economy.”  It outlines necessary policy priorities in the areas of short-term stimulus, health care reform, climate change policy, and education.  But it also contains a section on “addressing the long-run fiscal challenge” where they say (pages 5-7 of the pdf file):

Facing the greatest financial and economic crisis since the Great Depression, we should not let short-term deficits, even large ones, prevent necessary steps to weather the storm. Yet we also have an obligation to restore budget responsibility and confidence that government is careful and uses taxpayer resources wisely and to good effect. After the period of economic weakness when deficit spending is needed to strengthen the economy, we should make the tough choices to limit the deficit so our economy is growing more quickly than the national debt, providing assurance that the federal government will be able to meet its obligations.

The federal budget is in a deep hole due to the Bush tax cuts favoring the wealthy and a costly and ill-conceived war in Iraq that consumes at least $10 billion a month. We have neglected important investments in our future, while Medicare and Social Security spending threatens our fiscal future in the coming decades. We need to reform Medicare and Social Security to make them sustainable. Those reforms should come alongside efforts to promote stronger economic growth, which would help close the programs’ financial gap. Moreover, those reforms should come within the context of broader reform of health care and the retirement security system…

Confronting these long-term budget challenges is critical, but we must be willing to make tough choices in the short term as well. In a crisis as severe as the one we face today, top priority for resources must go to investments that will promote long-term growth and competitiveness, restore America as a land of economic opportunity for all, and ensure that the benefits of our economy are widely shared…

I think this shows that “fiscal responsibility”–in the broader sense that I and Concord have talked about–will still matter to the Obama Administration.

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