Election Results–It’s About Government

Election Resuts–It’s About Government
November 7, 2014

Huffington Post Headline. This pretty much sums it up for us Democrats. We suffered a big defeat. Congratulations to the Republicans.  Congratulations for their effective campaign. I wish all of us the best under their next two years controlling Congress, but honestly, I’m not expecting much. And I can’t sincerely congratulate Republicans for their ideology or the substance of their campaigns.

In the press conferences by McConnell, Boehner, and others, there was a frustrating litany of statements claiming “the American people have shown that:”

  • They want the Affordable Care Act (Obamacare) repealed
  • They want the Keystone pipeline
  • They do not want immigration reform
  • And, a number of other things claimed to be what the American people have shown by this election

None of these were on the ballots. The American people have in no way sent these messages to Congress and the President. I am an American. I do not favor repeal of the ACA, unless we replace it with a single payer system operated by the government, something far from the Republican wish list. If the election was a mandate against Obamacare, was the 2012 re-election of Obama a mandate for Obamacare?

And the constant theme that the American people are calling for change! “Change I intend to deliver,” says McConnell. Never mind the 30 years I have already served in Congress and didn’t manage to effect change. Exactly what change is it that you’re referring to, Mitch?

Even the President’s interpretation of the message, “get stuff done,” is not helpful. This is what both parties have been parroting, both claiming the other party is the obstacle. Reference is made to the fact that only 185 laws have been enacted by this Congress, the lowest number in decades.

But Obama has vetoed only 2 bills in 6 years. Bush vetoed 12. And, it is not true that the problem is an unusual number of bills passed by the Republican House but blocked from vote by the Democratic Senate. The Washington Post uses GovTrac data showing there have been a number of prior Congress’s with more unaddressed bills backed up. And does anyone really believe that if a few hundred bills do get approved by this new Republican Congress and the President, definite proof of “getting stuff done,” Americans will be happy?  Not necessarily.  Doubtful. It would be an insult to American intelligence and diversity to believe this would make a dent in Americans desire for “change.”  True change is going to require approval of hotly contested proposals, which is not likely. Compromise on the pipeline, foreign trade, and campus sexual assaults will not solve the problems weighing on Americans.  On the important stuff which might effect change, the parties are more divided than ever before.

So much rhetoric (“Change and Reform”), so little specificity as to exactly what is meant by those catch-all words. For example, I want serious attention to equal opportunity and inequality. Others wants the Keystone pipeline. Other voters want legalized marijuana. I favor increased taxes on the wealthy and those with high incomes, provided we use the proceeds for the improvements I favor. Many others favor reduced taxes on the wealthy. So what “change” or “reform” is the politician referring to? I resent any politician claiming to know what I want, worse yet that we all want the same thing. I want leaders with the judgment to propose specifics, with the courage to come out from behind meaningless phrases.

So, what do we, the American people, mean in terms of wanting change or for things to get better? Is there any universal message from our highly diverse electorate? One likely near universal demand is about jobs. How can that be the issue? Unemployment has declined significantly (now under 6%, down from 10% in 2008).  We have added jobs at a rate above 200,000 for a number of months now, with 2014 YTD up 17% from 2013, and 2014 representing the largest jobs increase in 15 years. The economy is growing steadily (3.1% GDP growth in 2014’s 3rd quarter, up from a low of -4.9% when Obama inherited the economy from Bush, and close to  the 3.24 average growth since 1948). That’s pretty good economic accomplishment and pretty good jobs growth.  

In fact, Obama has not been unfriendly to business. The Economist reports that the tax code expanded by 50% under Reagan and G.H.W. Bush and only 10% under Obama. Corporate non-financial taxes paid were 32% under Reagan and are only 25% under Obama. Corporate profits are at record highs.

If so much progress has been made in the economy and in jobs, why so much concern about jobs? Why did the Democrats get thrown out? A good guess is that while corporate profits are at record levels, available jobs pay less than before, new skills are needed to achieve decent pay, there has been no wage growth for the middle class and lower, and there is substantially more risk in employment in recent decades than before. Unemployment rates do not capture those who have simply given up, nor does it count those who took lower paying jobs while still hoping for better–there are lots of these nowadays. We have 50% more people in part time jobs on an “involuntary” basis–they want full time work, but can’t find it.  That’s 7 million people. There is also more risk of getting laid off or fired without protection. Plus, our ideology of equal opportunity is fading.  The wealthy are sending their kids to private schools, gateways to the most prestigious colleges, and the funding of public schools is declining. 2/3 of Americans in 2014 feel their children will be worse off than their parents. These aspects of work life and opportunity for the middle class and below did not originate under Obama. This has been growing since around 1980.

The Republicans won largely on the basis of criticizing everything about President Obama and the government, always underscored by the popular messages of reducing taxes and getting “over-reaching” government out of local and personal affairs in which they have no business. There were no specific positive proposals for what they would do differently. Republicans have done an amazingly good job of convincing many who are hurt by their policies, that their little defined policies will solve the problems–will improve the jobs situation. How? By restraining immigration? By removing regulations on businesses? By building the Keystone pipeline? If that’s it, the results will fall far short of American expectations.

It does seem that what “the American people” most want is for government to fix the jobs problem. Fixing this problem will mean increasing economic growth. That’s the one thing the right and the left can agree on. Economic growth is critical for increased jobs prospects. But that might be where it stops for the Conservatives–i.e., reducing regulation and giving companies more “flexibility” as it is called, regarding employment. Translation: Less protection for workers. That plus more foreign trade, more “open borders” for underdeveloped foreign countries–a prescription that has generally not inured to the benefit of those countries, but has benefitted big global industry.

If we can’t even agree on fiscal stimulus dedicated to our vast aging infrastructure, we won’t be able to do much to stimulate growth. With no fiscal help, the Federal Reserve has done about as much as it can. Growth is already pretty strong, and that hasn’t solved the wage and safety problems of workers. Growth alone is not enough. This period of stagnant wage growth for our workers has been the case for a long time, during cyclical periods of both stronger and weaker growth. Fixing jobs is going to involve significant and effective investment in public education and new methods of assisting with job training. And it is going to require some rebalancing of the power of industry vs. the protections and power of labor, because capitalism left uncontrolled has insufficient motivation to protect the workers–except for the “C Class” workers, of course. The median pay of S&P CEO’s is up 43% since 2009, while median household income has declined by 3%.

I think we can help reduce this “jobs” frustration with some gradual redistribution. To some extent, the protest is about inequality, which has risen to historic highs. I am personally in favor of higher taxes on the wealthy and using the revenues to pay for some of these critical needs. I have said before that I will give up my social security and my mortgage deduction if we do that in a fair and progressive way, across the board.

What should we expect of our lawmakers? I don’t expect them to read my mind or to provide only for my needs. They need to listen to all the voters who care enough to express themselves. They will certainly get a lot of conflicting requests. We’re trying to elect wise and intelligent leaders who can take all of that and use their own judgment to pursue things which are in the long term best interest of citizens–all citizens. And, we expect them to do their best to assure the effective management of government. I don’t expect to agree with all they do, but I will certainly push and vote for what I believe is the right general direction.

But I imagine at any town hall meeting these days, the major complaint has to do with jobs–good jobs, good wages, job security. Republicans claim the obstacle is government–get government out of it–the private sector will then flourish and good jobs will be plentiful.  I agree some regulations on government should be eliminated or streamlined, but I strongly disagree that the private sector left alone will solve the problem. Government has to play a strong role.

There are two problems with our government being able to provide the major fix regarding jobs. The first problem is that government is incredibly difficult to manage. The second problem is that the Conservative view of a very small government does not provide for the actions and services needed to fix the problem.

On the difficulty of government (regardless of which party is in power), consider this summary statement by George Bridgeland (Assistant to George W. Bush) and Peter Orszag (Director of the Office of Management and Budget under Barack Obama): “Based on our rough calculations, less than $1 out of every $100 of government spending is backed by even the most basic evidence that the money is being spent wisely.” They studied professional evaluations of government programs and found that the federal government — “where spending decisions are largely based on good intentions, inertia, hunches, partisan politics, and personal relationships — is not effective, compared to industry. “

There are many reasons government is hard to manage. The Brookings Institution hosted a discussion on Halloween 2014 with authors of two recent books on government–one calling for more government and the other finding fault with government. Here is the introduction Brookings provides:” In We Are Better Than This: How Government Should Spend Our Money (Oxford University Press, Oct 2014), Edward Kleinbard reframes US budget debates and finds that short-sighted decisions to starve government can be ultimately detrimental to citizens’ happiness, health, and wealth.  In Why Government Fails So Often: And How It Can Do Better (Princeton University Press, March 2014), Peter Schuck considers why the federal government is in disrepute and argues that Washington’s failures are not due to episodic problems or partisan bickering, but to structural flaws that undermine every administration.”

And, I would add that there are also structural changes underlying the jobs problem. Primarily, these are associated with advancing globalization (e.g., outsourcing), technology (e.g., robotics), and environment (e.g., moves toward clean energy). These changes impact jobs and will require new solutions

Just consider this: The House Budget Committee has identified 93 separate anti-poverty programs administered by the US Federal Government, many overlapping and terribly inefficient in the aggregate. Even as one in favor of federal government anti-poverty engagement, I would certainly join the Conservatives in wanting this melange to be substantially reduced, streamlined, re-organized, consolidated where possible. So, I’d be aggressively in favor of management change and administrative cost reduction, but probably not in favor of less budget directed to the poor.

Schuck finds these six categories of problems in democratic management of government: Elected officials goals are not consistent with those electing them–they are pushed to offer short term benefits and hide long term costs; information is hard to obtain and interpret and changes in Congress are frequent, changing the direction of government entities; officials routinely underestimate the impact of markets and the actions necessary to control them; social engineering schemes are cumbersome and officials and interest groups push them in different directions; law has been extended way too far into minutiae, making it impossible to effectively manage; then the size issue–layers of bureaucracy, poorly paid and politically appointed managers, restrictions on ability to fire and discipline, vast amounts of work contracted out with loss of control, etc. Our government reflects the world’s largest economy, our diverse population, our undertaking to protect our citizens, and to some extent to protect the world.

On the other hand, Kleinbard argues for more government. But he asks for only 2% more GDP, dedicated to such things as improved equal education opportunity. He points out that our health care system costs us 18% of GDP, while the next most expensive developed country system costs less than 10% of GDP, all being one form or another of single payer systems–operated by governments–something the conservatives do not want to see here. Obamacare is not a new health care system. It’s just a structure that has been placed on top of a private insurance system that we have had for decades. It’s just an enhancement providing for a certain amount of redistribution or protection for the elderly and unhealthy of us–folks private insurance would not otherwise insure at rates they could afford. 

Kleinbard reports that discretionary government spending (as he defines it) under Reagan amounted to 10% of GDP, whereas under Obama it has been under 4.5%, so in that sense, government spending has not increased, provided we agree that it is appropriate to measure spending as a percentage of GDP, not in absolute dollars. 


Both of these authors/scholars of government agree that Americans are misguided if they fall prey to arguments that taxes simply should be reduced. The first question Americans should ask is what services we want from our government, and then figure out whether the answer dictates more or less taxes. Some people see social security and medicare as examples of bloated government. They are really insurance programs designed to deal with the fundamentally risky nature of our lives here–and both the above authors think these are examples of good government. Some Americans have been quoted as demanding, “don’t let the government dare touch my social security or my medicare,” as if to suggest these are not government programs, but certainly suggesting they are valuable. Indeed, neither party has shown the courage to attack these. Even the Conservatives recognize that would be political suicide.

There is certainly much that should be done to improve government–programs which should be discontinued, laws and regulations that are out of date and ineffective, and entire activities government should not be involved in. Scholars of government have argued for sunsetting every government program after say 15 years–put it up for examination and a new vote. But re-engineering government is a herculean task that no President or Congress in the last 50 years has been up to.

The second problem is that Conservatives do not want government to do much more than its original role–defense and rule of law. Even health care and education are at risk to Conservative agenda. Republicans have not been courageous enough to say what they would offer to replace the ACA, but Paul Ryan has suggested a move toward private industry to handle education, through vouchers. Private industry has not been effective in dealing with issues like affordable housing. Who believes leaving civil rights to private industry will suffice? 

Conservatives have succeeded at the ballot box by continuously proposing reduced taxes, without explaining what services will be cut. Kleinbard likens this to a doctor asking an elective surgery patient, “how much pain would you like?” before asking “what benefits are you seeking to obtain from the surgery?” Without the benefit, the answer will always be, “not very much, please.”


At the root of all this are deep seated ideological differences. Are we a bunch of individuals, or are we a collective society with the willingness to look out for each other? Both views have value, both have a place. I’m just hoping for a little more of the collective recognition, given our 30 years of drift in the other direction. I don’t believe our individual fates are entirely determined by our own merits. 

For these reasons, I’m not very optimistic for the near term.  Government has to fix the problems and Republicans don’t like government. I’ll vote for any Republican who is able to find ways to effectively streamline government, remove activities we don’t need, simplify burdensome regulation, streamline the tax code, etc. But, fixing the “jobs problem” is not something private industry alone can fix–it’s going to require government intervention and investment. Government is often inefficient, but the alternative is worse. And government does not appear to be something the Republicans are prepared to engage in. 



Postscript See Brookings Inst. Article Nov 10, 2014: “Yes, the Jobless Rate Fell. Here’s Why Americans Are Still Gloomy.”
 http://www.brookings.edu/research/opinions/2014/11/07-jobless-rate-fell-wessel?utm_campaign=Brookings+Brief&utm_source=hs_email&utm_medium=email&utm_content=14835239&_hsenc=p2ANqtz-8w5GfF88Hs_OTQlcYvkZl1-mIMNpngZVzpMnEGwFbWADjBS5miJSE_8HFduYFKbS9CRFUwIKfcBwV9JTlHoYuroFhFWw&_hsmi=14835239

References:

http://www.brookings.edu/events/2014/10/31-can-we-make-government-work
history of bills unaddressed by Congress: http://www.washingtonpost.com/blogs/the-fix/wp/2014/08/08/yes-the-senate-is-ignoring-hundreds-of-bills-passed-by-the-gop-house-but-its-always-that-way/
History of bills passed by Congress: https://www.govtrack.us/congress/bills/statistics
Orzag and Bridgeland: http://lockerroom.johnlocke.org/2013/06/19/more-evidence-of-problems-linked-to-government-spending/
Berkowitz review of Schuck’s explanation of the weaknesses of government: http://www.realclearpolitics.com/articles/2014/03/25/peter_schucks_rx_for_big_governments_ills_122035.html
The economy under Obama: http://www.economist.com/news/united-states/21627659-big-business-angry-small-firms-are-even-angrier-fury-makers
Part time worker count: http://online.wsj.com/articles/post-recession-legacy-elevated-level-of-part-time-employment-1415808672

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