Posts Tagged ‘ Ezra Klein ’

Explaining the Politics of the Tax Compromise

Tuesday, December 7th, 2010
Ed Kilgore



Ed Kilgore is a PPI senior fellow, as well as managing editor of The Democratic Strategist, an online forum.

by Ed Kilgore

The tax deal cut yesterday between the White House and congressional Republican leaders will have a complicated legacy that’s a bit difficult to anticipate at the moment.

That’s assuming it’s approved by Congress.  Bernie Sanders is already promising a Senate filibuster on the deal, whose very existence is offensive to many progressives, and RedState’s Erick Erickson is calling for opposition from conservatives.  But it will probably get through these obstacles, if only because about the only political force that actually supports the alternative—the expiration of all the Bush tax cuts along with a major lapse in unemployment insurance benefits—is the deficit-hawk Democrat contingent, who have limited clout in Congress at the moment.

The revolt against this deal on the left will likely generate more heat and noise than actual votes. Many progressives are already furious at Obama for telegraphing his willingness to cut a deal before it was necessary, and for his generally uncombative pubic stance, which they interpret as evidence the President didn’t learn much from his first two years in office.  Others simply want to register as strongly as is possible their rejection of the ideology supporting the Bush tax cuts, including the estate tax reductions that are incorporated into the compromise.

As scrutiny of the deal sharpens, however, the extension of increases in refundable tax credits aimed at the working poor in last year’s stimulus package may get some attention as well.  These are benefits that Republicans have been increasingly denouncing as “welfare,” so this is perhaps a victory-in-principle for progressives.

Ultimately, the political impact of the deal will probably be measured by its impact, if any, on the economy.  Will the payroll tax holiday provide some critically timed stimulus?  Will investors be impressed by the bipartisanship of it all?  And would the alternative of letting the tax cuts expire and work in Washington grind to a halt have guaranteed the much-feared “double-dip recession”?

Matt Yglesias stresses these short-term economic consequences in his own reaction to the deal:

[T]his has partially set my mind at ease about the prospects of a GOP strategy of economic sabotage. The tax policy the right wants, though in general bad for the country, is not bad for short-term economic performance. And the concessions they were willing to give Obama in exchange for boosting the incomes of rich people are expansionary in the short-term. So the terrain here exists well within the range of “normal” politics where conservatives want lower taxes on rich people. This is kind of nutty in my view, but it’s a deeply held article of faith on the right and not some ad hoc effort to sink the economy or anything.

Ezra Klein,  however, notes the limited stimulative effect the deal is likely to have:

Most of the money just keeps programs that are currently in effect from expiring, so in some ways, it would be more accurate to say that this money is anti-contractionary rather than stimulative. It’s important that the White House doesn’t repeat the mistake it made in the original stimulus and overpromise how much this will do for the economy. What you can say about this policy is that, for the moment, it doesn’t make things much worse, and it probably makes them a bit better. This is not the government making a major new commitment to the recovery. It’s the government not getting in the way, and maybe doing a bit to help, the horribly slow recovery that’s happening anyway.

A collateral benefit, of course, would be the enactment during the lame-duck session of the Defense Authorization bill, which includes an end to DADT, and Senate ratification of the START treaty.  The deal seems to have eliminated the most immediate obstacle to action on these measures; we’ll soon know if progress is now possible.

More generally, the deal guarantees another and perhaps truly definitive battle over tax principles in 2012, adding to the high-stakes nature of that year’s presidential election.

Photo credit: id3

The Politics of Travel, Corn, and Health Insurance

Tuesday, November 23rd, 2010
Ed Kilgore



Ed Kilgore is a PPI senior fellow, as well as managing editor of The Democratic Strategist, an online forum.

by Ed Kilgore

As we head into the Thanksgiving weekend, the preeminent public concern with government appears to be TSA airport screening, with polls showing a majority of Americans supporting new and more intrusive security measures, but with a very unhappy minority, including more frequent travelers making a lot of noise (Nate Silver of Fivethirtyeight has a very detailed breakdown on polling data, trends, and past experience with tightened airport security).  Opponents of full-body screening are probably not going to help the popularity of their cause by slowing down TSA operations during tomorrow’s so-called Opt-Out Day.

Meanwhile, prospects for a harmonious lame-duck session seem as remote as ever.  While some observers perceive an increased possibility of a consensus proposal by the Deficit Reduction Commission, acceptance of any such proposal by Congress still remains extremely unlikely.  The one bipartisan deficit-reduction idea that is gaining steam at the moment is an effort led by Tea Party favorites Jim DeMint and Tom Coburn, in conjunction with environmentalists, to block extension of tax subsidies for ethanol production, a proposition that will create problems for Republican presidential wannabees who will soon be spending a lot of time in Iowa.  Meanwhile, more and more conservatives appear to be eager to sign onto a “no” vote on increasing the public debt limit, which could force an government shutdown early next year.

Another contentious issue hanging fire is the pledge by Republicans in both chambers of Congress to pursue a repeal of health reform legislation.  Ezra Klein has a succinct summary of the political and substantive problems this effort will run into:

For now, Republicans have been talking about which policies to repeal. They want the 1099 tax gone, or the individual mandate reversed. But when they actually have to repeal anything, they’re going to have to talk about what functions they want repealed. Repeal the individual mandate, for instance, and you make it possible for the irresponsible to freeload on the system, and impossible for the responsible to get insurance at low rates. You also make it impossible to end discrimination based on preexisting conditions. And do Americans really want that repealed?

The answer lies somewhere between “no” and “hell, no.” And as Klein notes, Republican claims that they have other ways to protect the uninsurable (mostly involving the old chestnut of state-run high-risk pools, which typically offer bad policies at very high premiums) may not look too good when fully explained.  Meanwhile, absent some national policy on pre-existing condition exclusions, another Republican hobby-horse, allowing interstate sales of insurance products, could actually erode existing state protections by creating a “race to the bottom” of insurers to low-regulation states.

Indeed, whatever else happens, the repeal effort could produce the sort of public awareness of the realities of health reform that pro-reform education efforts have so far failed to generate.

Three weeks after Election Day, the 2010 cycle refuses to end.  Joe Miller continues to seek a way to block a formal declaration of victory for Lisa Murkowski in the Alaska Senate race, even as Republicans begin to pull the rug from beneath him.  Tom Emmers lost a key court battle in his fight to prevent final certification of Democrat Mark Dayton as winner of the Minnesota gubernatorial race.  And the number of unresolved House races is now down to four (two in CA and two in NY); if the current leaders win those races, the final count of House GOP gains will be 63.

Turning to the 2012 cycle, the University of Minnesota’s Smart Politics web page has unveiled a study demonstrating that party control of governorships has (at least since 1968) had virtually no impact on which party wins a given state in presidential elections.  The write-up of this study is amusingly sprinkled with election-night quotes from media pundits claiming that Republican gubernatorial wins would have a massive impact on the outcome in key states in 2012.

And for those who can’t wait for the presidential election to get fully underway, I’ve done a fairly elaborate piece for TNR on the GOP presidential landscape coming out of the midterms. Long story short, no prospective candidates did that much good for themselves during the midterms, with the main impact being the erosion of conservative activist willingness to accept candidates they don’t like on electability grounds.  This could be bad news for Mitt Romney, or for any establishment cabal determined to pre-select a nominee or veto someone like Sarah Palin.

Speaking of Palin, tonight we will learn if her daughter, Bristol, will win the annual competition on the top-rated network TV show Dancing With the Stars, despite relatively low marks from the show’s professional judges, thus creating a brouhaha over Republican ballot-box-stuffing and probable cries of persecution from both Palins and their fans. 

Lessons From Political Science

Wednesday, September 15th, 2010
Lee Drutman



Lee Drutman is a senior fellow and the managing editor for the Progressive Policy Institute.

by Lee Drutman

Does political science matter? On Sunday, Ezra Klein, one of the rare journalists who seems genuinely interested in what political scientists have to say, wrote a column distilling some key lessons from political science, all of which revolve around the fact that most of what politicians do doesn’t actually make much of a difference, at least in the face of broad underlying forces: Presidential speeches don’t matter. Elections are determined by underlying economic conditions. Lobbyists aren’t as important as people think.

Over at the Monkey Cage, John Sides, who is also quoted in the article, argues that this lack of control should be good news to politicians: “Political science really does empower politicians. It tells them to ignore a lot of gossip and trivia. It tells them not to sweat every rhetorical turn of phrase.”

I must admit, I’ve been asking myself this question of whether political science matters ever since I started a Ph.D. program six years ago (and completed it a month ago). And I have a few quibbles with the conclusions that both Klein and Sides draw, and a few warnings for politicians and journalists lest they over-extrapolate from the received political science wisdom.

Those who consume political science research need to understand that political scientists are largely interested in finding patterns and proving that two variables are correlated (which is a necessary but not sufficient condition for proving causation, the holy grail of political science). But patterns tend to be rough patterns, and there are always other forces at work.

Figure 1 shows a typical XY scatterplot with a regression line, the most basic graphical tool of the social scientist.  While journalists tend to be interested in the dots (i.e., the real-life cases), political scientists are interested primarily in the regression line (i.e., the underlying relationship). Both are important, and ignoring one at the expense of the other inevitably leads to a limited perspective.

Figure 1: A Typical XY Scatterplot

Also notice: While there is clearly a relationship between X and Y variables very few dots (the actual real-life cases) fall directly on the line, meaning other factors are at work.  Of course, very little social science takes place at the bi-variate (two variable) level. Most published models explain outcomes with multiple factors, which account for more of the deviations from the predicted values (i.e., the regression line).

But even the best models still are often unable to explain half of the deviations.  What this means is that while large structural forces do drive political outcomes, there is also almost always room for idiosyncratic forces to operate as well, and they can often be decisive.

Sometimes candidates win victories they shouldn’t because of opponent gaffes. Sometimes lobbyists do get what they want, and make their clients very rich in the process. Sometimes presidential speeches do make a difference.  Political scientists are interested in the general case, and are fond of couching their findings in the cautionary language of ceteris paribus (all else being equal). But all else is rarely equal.

The thing is, it’s very hard for political actors to know when something they are going to do will make a difference. Often the impact hinges on unpredictable timing and unanticipated resonances. Anyone who has spent time in politics knows that you never know when something is going to “pop.”  So it’s almost always worth gambling because they pay-off could be big.

For a lobbyist, for example, even if on average you won’t win, when you do win, you might just win big enough to make it all worthwhile. A scoring system that treats all wins and losses equally ignores the fact that some lobbying wins are very big wins indeed, wins that far make up for a long strong of losses. For example, getting Medicare prescription drug coverage was a huge, huge win for pharmaceutical companies, surely worth many losses.

Additionally, one of the reasons why many political actions may seem to NOT matter is because political actors on both sides think that they DO matter. Consider the empirical conclusion that presidential speeches do not move public opinion. One reason that public opinion is unlikely to move is because there is always an opposition to respond, and so citizens who are skeptical of what the president has to say can easily latch on to messages that are critical. Thus they remain unmoved.

But say conservatives suddenly followed this wisdom, decided that speeches didn’t matter, and therefore didn’t bother to respond to anything Obama said. My guess is that Obama’s unrefuted speeches would start having more of an impact. Or alternately, say Obama decided speeches didn’t matter, and stopped giving them. He’d be leaving it to the conservative opposition to define him, without speaking up for himself and giving voice to his supporters. My guess is this would also have an impact on public opinion.

Likewise with lobbying or campaigning. These things exist in a kind of equilibrium. Given a rough balance of power, actions on each side are countered with actions on the other side, and hence drained of their perceived impact. Lobbyists on one side respond to lobbyists on the other side, thus neutralizing their efforts (this seemed to me one of the most important points of “Lobbying and Policy Change: Who Wins, Who Loses, and Why?”) Campaign contributions on one side are often matched by campaign contributions on the other side.

But were one side to decide outcomes were beyond their control and stop sweating, my guess is they’d very quickly prove the conventional political science wisdom wrong.

In short: there is a lot that political science can teach both politicians and journalists about underlying structural forces and general patterns that drive political outcomes. But politics takes place in specific cases, not general cases. Journalists and politicians ought to have a better appreciation for these general patterns, which will provide context for specific cases.

But politicians better not take political science wisdom too much to heart, lest they undermine it by upsetting the equilibrium that exists when they believe what they do on a daily basis actually DOES matter.

Myths and Realities of Regulatory Uncertainty

Thursday, August 12th, 2010
Scott Thomasson



Scott Thomasson is the economic and domestic policy director for the Progressive Policy Institute. Follow @st_ppi

by Scott Thomasson

Ezra Klein joined others this week in mocking the “uncertainty” rhetoric that Republicans and some business leaders have been parroting to argue for lower taxes and lighter regulation.  As Stan Collander, Brad DeLong, and Ezra himself have all done an excellent job of arguing, there is plenty of reason for ridicule.  Most of the talk about businesses being paralyzed by uncertainty over taxes and regulations is little more than politically-driven spin.

The problem I have with Ezra’s post this week is that he chose the wrong example to pick on.  He points to Derek Thompson’s  interview with Eric Spiegel, CEO of Siemens USA, who complains about the uncertainty his company faces in the wake of the failure to pass an energy bill in Congress.  Thompson and Klein both equate this position with the less policy-specific confusion and outrage Republicans are attributing to the business community at large.   Thompson sums it up with this broad conclusion:

It’s another piece of evidence that “government should remove uncertainty” is a euphemism for “government should enact the laws that make me profitable.” For some companies, “make me profitable” might mean simply slashing taxes on income and capital gains, cutting public spending and getting out of the way. For other companies like Siemens, it means government getting in the way. It means putting a new tax on carbon, giving tax money to companies building wind blades, and adding new regulations for renewables.

In this case, there is more to it than that.  The kind of uncertainty problems that Spiegel describes are actually legitimate, at least in part.  The energy industry has been holding its breath for years waiting for the EPA and Congress to decide what they are going to do about regulating carbon emissions.  With the energy bill now faded into legislative limbo, it looks like the industry will not get the resolution it needs anytime soon, which means billions of dollars worth of investment will be trapped in limbo as well.  The uncertainty is so real that several people in the industry have privately told me that they almost don’t care what Congress chooses to do with carbon pricing, as long as it does something, so they can stop waiting and start building.   Or as another energy CEO put it recently, “There’s a lot of capital sitting on the sidelines just waiting for more regulatory clarity.”

It’s worth differentiating the energy industry’s need for long-term clarity in climate policy from the standard fear and loathing Republicans are promoting.  Here’s why.  A lot of the decisions energy companies need to make are binary choices that change dramatically depending on the policy assumptions: whether a new plant should be coal or natural gas, whether a new wind farm is viable without tax incentives, whether a new nuclear plant could be approved and running within ten years.  It’s hard to make economically rational decisions when the outcomes are so dependent on unresolved political questions.  This is fundamentally different from arguments that companies are afraid to hire new workers this quarter due to taxes or health care regulations.

There is no shortage of unsupportable statements about uncertainty that belong to the realm of political fiction.  Rep. Boehner’s latest call for a moratorium on new regulations certainly qualifies, blaming the “uncertainty that’s being created by the Democrats’ agenda” for leaving every employer and investor in America “frozen” with fear.   That kind of rhetoric is obviously exaggerated, and it should either be refuted or ignored altogether.

However, we should not allow Republicans crying wolf to drown out the voices that have legitimate gripes about regulatory uncertainties that Congress needs to address.  And we should be careful not to confuse the two for each other when we hear them pleading their case.

Dealing With a Different Wheel

Thursday, June 17th, 2010
Ed Kilgore



Ed Kilgore is a PPI senior fellow, as well as managing editor of The Democratic Strategist, an online forum.

by Ed Kilgore

As we await the next step on energy legislation in the Senate, Ezra Klein makes an extremely important if fairly obvious point about the Obama administration’s apparent determination to get something passed even if it doesn’t include a cap-and-trade system or some equivalent carbon pricing mechanism. If the Senate won’t pass such provisions now, it won’t pass them later, either:

There’s nothing magic about [a House-Senate] conference that allows controversial policies that couldn’t pass the Senate the first time around to pass on the second go. The advantage of a conference report is that it can’t be amended, which means you might be able to sneak in some small concessions to the House that aren’t important enough for anyone to sink the whole bill over. But it can be filibustered. So if you add anything major to the bill that would’ve killed it on the pre-conference vote, it’s a good bet that it’ll kill it on the post-conference vote as well.

Carbon pricing almost certainly falls into that category. It’s not a side policy or a bit of pork. It’s the core of a climate bill. If it doesn’t pass in the original Senate bill, that’s because it can’t pass the Senate. Adding it in during conference won’t change that. It’ll just mean the conference report can’t pass the Senate, either. I can’t see any permutation of this in which a conference strategy for carbon pricing makes any sense.

This doesn’t, of course, mean that Congress can’t pass worthwhile energy legislation this year. But it’s not going to magically become a real climate change bill somewhere down the road, particularly with Republicans now monolithically opposing a cap-and-trade approach they once championed.

It’s fine to wheel and deal on legislation, but sometimes the only deal available is one that turns the wheel to an entirely different outcome. That’s probably where things are headed on energy this year.

Photo credit: Rob Crawley’s Photostream

This item is cross-posted at The Democratic Strategist.