Meetings On Endless War

The President abruptly summoned Congressional leaders in both parties to the White House for a meeting tomorrow about Afghanistan. This is the first bipartisan White House meeting in months, and considering that Republicans support the war far more strongly than Democrats, that stands to reason.

The White House does want everyone to know that they're not leaving, however.

Obama may take weeks to decide whether to add more troops, but the idea of pulling out isn't on the table as a way to deal with a war nearing its ninth year, White House press secretary Robert Gibbs said.

"I don't think we have the option to leave. That's quite clear," Gibbs said.

Of course we can't leave. We can't seem to leave anywhere. US troops still live in Germany and Japan and Korea. America is the house guest that overstays its welcome by 50-60 years.

Maybe instead of the Congresscritters, Obama could invite Peter Galbraith to the meeting. He was the UN official who witnessed the fraudulent Afghan election and got fired for having the temerity to want to address the situation realistically instead of handing the country to Hamid Karzai. Maybe lawmakers could benefit from his experience in the country. He certainly has some settled views:

GALBRAITH: In the absence of having a credible Afghan partner…it makes no sense to ramp up. On the other hand we cannot afford to pull out. … At this point, no surge. … [W]e also don’t have unlimited resources and unless those troops can secure an area in a way that then Afghan partners, the government, the Afghan army, the Afghan police can come in and fill in after them, we’re going to be there as an occupying force for a very long time and that to me doesn’t make sense [...]

Unfortunately, there is no analogy between what happened in Iraq and what’s going on in Afghanistan. In Iraq in the Sunni areas of the country, the al Qaeda element, the fundamentalists, moved from attacking the Shiites to attacking the tribal sheiks themselves so this was a matter of their self-defense.

In Afghanistan the tribal elders, many of them are supporting the Taliban, they are the Taliban or and this is the more common situation, they are neutral. They see no reason to choose a government which they experience as inexperienced, corrupted and abusing power.

Galbraith isn't advocating an immediate withdrawal, but his logic inevitably leads you to the conclusion that we cannot have an open-ended commitment to fight a war where we have no partner to defend.

Rep. Barbara Lee has introduced a bill to block the escalation. It's HR 3699. There's one problem, however:

However, something she told me at the meeting yesterday put me on DefCon-5 alert. The House has already passed (with Lee in opposition of course)-- and the Senate is considering-- a bill that will exempt Department of Defense from coming under the budgetary pay-go strictures. Let me explain why that is so dangerous for those eager to end the deadly and catastrophic U.S. occupation of Afghanistan.

Bush funded his wars with supplemental budgets which meant he just printed money-- trillions of dollars-- to pay for them without having to worry about raising taxes (on current voters) or about cutting services directly. One result has been the worst economic disaster since the Great Depression. Obama campaigned on a promise not use supplemental budgets but to ask Congress for money through established budgetary procedures. That would kick in pay-go and a member of Congress voting for funds to escalate expensive occupations of other countries would have to agree to either raise taxes on his or her constituents-- what do you think Boehner, Cantor, Pence, Ryan and other leading GOP warmongers will think of that?-- or cut back on social programs, a prospect none too attractive to many of the conservative and moderate Democrats who have gone along with Bush's outrageous supplemental budgeting and are thereby complicit in the economic disaster that has ensued.

I really thought "pay-go" was our ace-in-the-hole to stop the war in Afghanistan. Not even a political thug like Rahm Emanuel could bully and bribe enough Democrats and Republicans to go for this, especially not at a point when the war is as increasingly unpopular as it is. If the Senate doesn't kill the legislation that the House passed, it is, in effect, a vote for a war that will last until Obama is voted out of office.

It's not surprising that Congress would willingly constrain itself when it comes to helping provide health care to all or strengthen the social safety net for the needy, but has no problem waiving those constraints when it comes to permanent war and occupation. This is just dangerous. The money will inevitably flow to war as a kind of stimulus package. It's got to be stopped.

GoOPer: We're Not Going To Cry "Emergency" Every Time There's An Emergency!

Marsha Blackburn (Oblivious-TN) probably could have chosen a better example:

BLACKBURN: Let’s agree that we’re going to have PAYGO enforcement. That we’re not going to cry ‘emergency’ every time we have a Katrina, every time we have a Tsunami, every time we have a need for extra spending, that we don’t go call for a special appropriation that allows us to circumvent the PAYGO rules.

Well, I'm sure Blackburn will hold herself to that. I'm sure that any time a disaster threatens her state of Tennessee, she won't cry emergency and bother to get federal funding to help people in need. I'm sure that-

The President today declared a major disaster exists in the State of Tennessee and ordered Federal aid to supplement State and local recovery efforts in the area struck by severe storms, tornadoes, and flooding on April 10, 2009.

Federal funding is available to State and eligible local governments and certain private nonprofit organizations on a cost-sharing basis for emergency work and the repair or replacement of facilities damaged by the severe storms, tornadoes, and flooding in Benton, McMinn, Rutherford, and Sequatchie Counties.

Well, OK, fine, but that's the President, I'm sure Marsha Blackburn HERSELF never requested emergency funding for her state of Tennessee--

Members of Tennessee Delegation Urge Disaster Declaration for Five Counties Affected by Flooding

WASHINGTON, D.C. U.S. Senators Lamar Alexander (R-Tenn.) and Bob Corker (R-Tenn.) and U.S. Representatives Lincoln Davis (D-Tenn. 4), Bart Gordon (D-Tenn. 6), and Marsha Blackburn (R-Tenn. 7) have joined Governor Phil Bredesen in requesting that Agriculture Secretary Tom Vilsack issue a federal disaster declaration for five counties in Tennessee "to help farmers who have suffered crop losses and damage to farm equipment and structures as a result of excessive rain and extensive flooding that occurred in May." The five counties are Bedford, Hickman, Lewis, Moore and Perry.

According to their letter to Secretary Vilsack, a declaration would allow qualifying farmers "to apply for a variety of federal farm disaster programs - including supplemental farm revenue payments, livestock assistance and low-interest emergency loans - through their local U.S. Department of Agriculture (USDA) Farm Service Agency office."

OK, one time, fine, but there's no history of this---

Title: Letter to The Honorable Mike Johanns, Secretary, U.S. Department of Agriculture

Date: 07/12/2007

Alexander, Corker Join Tenn. Delegation In Requesting Disaster Declaration For Drought
from the Office of Senator Bob Corker

U.S. Senators Lamar Alexander and Bob Corker joined other members of the Tennessee Congressional Delegation Tuesday in asking U.S. Agriculture Secretary Mike Johanns to issue an agricultural disaster declaration for all 95 Tennessee counties due to the results of the ongoing drought.

Marsha Blackburn
Member of congress

What's your point? That Marsha Blackburn is a rank hypocrite whose statements don't match her actions?

Oh, that is your point?

Well, OK, I agree with you, then.

The Interview With Fred Hiatt

I guess the President made more news last night in this interview with Fred Hiatt than at his press conference. Reporters should have been briefed on it.

First, the President basically confirmed that expansion of MedPAC, to have an independent body of experts determine reimbursement rates and reforms to Medicare, would be a component of the House and Senate bills. I was initially skeptical of this idea, but I think the Speaker's addition of Congressional input on appointees makes it a nice compromise, and taking the complicated business of delivery system reform away from parochial interest makes sense as well.

At this point, I am confident that both the House and the Senate bills will contain what we've been calling MedPAC on steroids, the idea that you continually present new ideas to change incentives, change the delivery system, understanding that because this is such a complex system we're not always going to get it exactly right the first time, and that there have to be a series of modifications over the course of a series of years, and we have to take that out of politics and make sure that an independent board of medical experts and health economists are providing packages that are continually improving the system. So I think there's general consensus that that is one of two very powerful levers to bend the cost curve.

Second, the President endorses some modified version of the employer deduction, along with John Kerry's idea of taxing insurance companies' highest-cost benefit plans as a way to get at the same pot of cash:

Obama: Now, the second idea, which is the one that got more attention, even though Elmendorf, I think, has emphasized the benefits of a MedPAC board, as well, was the elimination of the tax exclusion [on employer-provided health insurance]. And I've been very clear on my position that I think to add additional costs to families right now when they're already seeing their premiums doubled is not the kind of health reform that I'd like to see, but I believe that there may be ways of getting at the same principle.

For example, you could conceivably set up an index of some sort that makes sure that health care inflation -- or to make sure that the exclusion only accommodates a certain amount of health care inflation -- as opposed to 8 percent or 9 percent, or what have you -- without burdening current plans, but over time assuming -- if we're assuming that health care inflation is going to continue to be a problem, that you could get at the problem in that way.

Hiatt: A kind of cap, but one that doesn't hurt anybody --

Obama: Currently.

Hiatt: -- at the current level?

Obama: Exactly. You're also seeing, I think, some interesting discussions in the Senate Finance Committee about a variation that goes after the insurance companies, as opposed to directly taxing the benefits.

Because this is Fred Hiatt he was talking to, the conversation was consumed with long-term costs and entitlements. Hiatt is practically the king of the fiscal scolds. The President still wants universal access and lower costs for individuals, which is separate from lower budget costs. But I agree that you can do both at the same time, and that now is a great time to do that. As Obama said in this interview, "I think it's important for us to make sure that 46 million people who don't have health insurance get it. And I think it's important for us to bend the cost curve, separate and apart from coverage issues, just because the system we have right now is unsustainable and hugely inefficient and uncompetitive."

And both go hand in hand. Removing the hidden tax of the uninsured visiting ERs will lower costs, and the mechanism is expanding access. Offering a public plan will expand access, and by forcing competition, in the process lower costs. There's a lot in health care reform that can be symbiotic, just as there's a lot that works at cross-purposes.

On long-term budget issues, I think it's important to recognize this:

Obama: We have a structural gap that has to be closed.

Hiatt: So can I ask you how you think about the timing and politics of closing that structural gap?

Obama: What I think has to happen is if we can show that we have a disciplined health care reform package that is serious about cost savings and is deficit-neutral, you combine that with the pay-go rules that we have been promoting and I believe that we can get through Congress, and you are imposing some discipline on the appropriations process -- and I thought that the F-22 victory yesterday was a good example of us starting to change habits in Washington -- then I think we're in a position to be able to, either at the end of this year or early next year, start laying out a broader picture about how we are going to handle entitlements in a serious way.

It may start with Social Security because that's, frankly, the easier one. And I think that it's possible to also look at tax reform and think about are there ways that we can maybe even lower marginal rates but eliminate all the loopholes and have that a net revenue generator. I think there are going to be a bunch of things that we can take a look at, but I think health care reform combined with pay-go, combined with how we deal with appropriations bills over the next six months will help lay the foundation for us to be able to make some of these broader structural changes.

The challenge I've got, Fred, is that obviously -- our biggest problem right now in terms of short-term deficit is the recession. And nobody -- no economist I've talked to thinks that it would be wise for us to start early, start now, in reducing government outlays, when states are already cutting back drastically, and you'd have a hugely destimulative effect on the economy. But we have to begin to prepare on the midterm and the long term. And that's why I think health care reform is so important.

The House actually passed paygo legislation yesterday. And I get from this that Obama is open to reducing the defense budget over time - he checked himself at one point, saying that non-defense discretionary spending cannot be lowered to bring us in line on the budget. But people might go nuts about his fleeting mention of Social Security. The only way Social Security changes are "easy" is through raising the cap. Anything else will be met with howls of disapproval from Obama's own base. And they won't pass Congress. I think the tax reform idea in the main, lowering rates but broadening the capture by getting rid of loopholes, is a good one as well.

There can be a lot of minefields in talking to Fred Hiatt, but I think the President did well. He held firm against deficit reduction at a time of near-Depression, and he forced Hiatt to live up to his rhetoric and recognize that the main reason our long-term budget outlook is bleak right now is due almost entirely to health care.

The Magic Deficit/PAYGO Yo-Yo

We're told that, in public polls, people are truly and significantly worried about the federal budget deficit. We're usually told that by the same people who want to use the deficit to foreclose on options for progressive governance, something they never do when a Republican is at the helm. And in fact, the signal-to-noise ratio, as it were, on the deficit is pretty much in line with who sits in the White House. Check out these charts:

If public worries about the nation’s fiscal health were perfectly related to the nation’s actual fiscal health, these two charts should be nearly mirror images of each other.

That is, when the deficit represents a higher percentage of G.D.P. (i.e., the red bars pointing downward get longer), you should see more people naming the federal budget as the country’s most pressing issue (i.e., the blue bars going upward should also get longer). Though, of course, you can’t have a negative percent of people complaining about the budget when the country is running a surplus.

In any case, the two measures do look somewhat related, but there are clearly other factors at work.

Americans were concerned about the budget deficit during the 1930s. Nobody particularly likes budget deficits. They sound icky. But harping from fiscal scolds on the deficit clearly impacts the debate, as does proper wording of the polling question.

At any rate, whether people really give a crap about the deficit or whether they are just reacting to selective hyping, this expression of "concern" has produced at least one tangible policy on Capital Hill - a push for "PAYGO," mandating that every new spending program have an offsets of spending cuts or tax increases. I'm somewhat ambivalent on PAYGO; it could force new revenue into the system, or it could stop progressive priorities because the same fiscal scolds demanding "discipline" refuse to cut worthless programs like outdated weapons systems that would pay for the new spending. These suspicions aong liberals are bubbling to the surface:

Most critics cite concerns that the budget ax would fall hardest on the programs needed by their most needy and vulnerable constituents, and not their frustration with Blue Dogs.

“I certainly don’t think anyone should vote against it for that reason,” said Rep. Jerrold Nadler (D-N.Y.). “If they want to use it as a bargaining chip, that’s a different story.”

That’s what Rep. Steve Rothman (D-N.J.) did last week. He proposed a deal at the Democratic Caucus meeting: He’d vote for the pay-as-you-go spending bill, he told the Blue Dogs, if “each and every one” of them would support a government-run healthcare plan for the country.

“I was being playful but somewhat serious,” Rothman said.

Some liberal members have reminded Blue Dogs that they didn’t object to going deeper into debt to pay for tax cuts or to fund the Iraq war, hindering efforts to fulfill what many saw as the mandate from the 2006 election — ending the war [...]

Rep. Emanuel Cleaver (D-Mo.) says CBC members are worried about the deficit, too. But they also feel that their districts bear the brunt of budget cuts.

“We get hurt at every turn,” Cleaver said. “We get fewer earmarks because they say we’re in safe districts. With pay-go, the programs that get cut the most are the ones our districts need the most.”

PAYGO worked decently enough during the Clinton Administration, but the Blue Dogs running things today seem to have it out for those programs that benefit the most vulnerable elements of society. In addition, we had a surplus in the 1990s and a robust economy, so hard choices rarely needed to be made.

PAYGO as a rule doesn't bother me and can even be positive. It's how it's used that bugs:

Something that pure budget analysis doesn’t get at on this subject is just the pure politics of it. A lot of people look around and see a world in which we had PAYGO rules in the 1990s and we declining budget deficits and then a small surplus. Then we had a Republican President and suddenly hugely expensive tax cuts—tax cuts that all Republicans and many Democrats voted for—didn’t need to be paid for. We also had a hugely expensive war that all Republicans and many Democrats voted for that didn’t need to be paid for. And PAYGO rules were suspended. Now there are progressive majorities and PAYGO is magically coming back. And aspirations for universal health care are being constrained by the need to pay.

Now, I think it’s a good thing that the administration has committed to pay for its health care proposals. But ultimately it takes two to tango here. And somehow we’ve gotten into a dynamic where not only Republicans, but also a certain number of moderate Democrats, seem to believe that conservative ideas don’t need to be paid for but progressive ideas do. That’s not a sustainable situation.

Exactly. And the same dynamic can be applied to public opinion on the deficit. When a Republican is in power, practically nobody talks about runaway spending and the public concern about it goes down; when a Democrat succeeds, all of a sudden everyone goes wild about the deficit and public concern expands. It's a sham.

Intra-Partisan Gridlock

It is kind of fascinating that the President's budget sailed through Congress without one Republican vote, and that fact caused barely a ripple among the commentariat.

Obama is now demanding to be judged on legislative results, not process ones, and the media is playing along. The only reason it ever gave a damn about the unified Republican front against Obama's stimulus and budget bills was because Obama made bipartisan cooperation a marker for success. When he failed at that, the media dutifully reported on that failure.

But what matters in the end is legislation, not roll calls. And with Obama's team no longer forced to water down legislation in a fruitless quest for irrelevant Republican votes, we'll see much better policy in the end.

I call that progress.

Jeffrey Toobin highlighted this best yesterday when he said, "On this whole issue of bipartisanship, can I just ask, who cares?... The public cares about results."

However, I have to quibble with the idea that Obama's team is "no longer forced to water down legislation." Because the enemies still reside inside the Democratic Party, not just in the GOP. For instance, in that same no-Republican-vote budget, the Blue Dogs got their PAYGO resolution.

Leaders of the fiscally conservative Blue Dog Coalition stood shoulder to shoulder with House leaders on Wednesday and rallied around a $3.5 trillion budget agreement that also paves the way for an eventual pay-as-you-go law — a provision that became a prerequisite for Blue Dog support of the budget document [...]

“The Blue Dogs have been focused on restoring fiscal responsibility and accountability to the federal government for many years, and we’ve fought for a return to the statutory pay-as-you-go rules of the ’90s as a way to accomplish that goal,” Blue Dog Co-Chairman Rep. Charlie Melancon (D-La.) said.

Yet they acknowledged that they might have to settle for a codified version of the Democratic pay-go rule that allows for offsets to be found five or even 10 years after new spending is enacted.

PAYGO isn't totally bad, in that it forces Congress to find a revenue source instead of borrowing or running deficits. I actually don't have a huge problem with that in normal times (not during a recession, however). And tweaking it so you can find offsets multiple years down the road neuters it somewhat. But this is but one example. The banksters stopped cramdown today. They have their sights set on stopping credit card reform in the Senate. There are plenty of bad actors trying to torpedo meaningful climate change legislation. There remains a two-party system in this country, but both of them reside in the Democratic Party. I completely agree with the President when he says that bipartisanship cannot be framed as "give me everything I want or else." I do understand politics as the art of the compromise. But Obama - and his supporters - may be guilty of looking at this through too partisan a lens. Just because the Republicans have been sent off to the sidelines doesn't mean that powerful forces aren't at play to disrupt Obama's agenda. Here's Matt Yglesias:

I largely agree with this, but in many ways it still strikes me as far too optimistic. To take just one example, climate change. The administration and the congressional leadership have ruled out the use of the reconciliation process to pass their energy/climate agenda. Since it’s completely inconceivable that you could get 60 votes in the Senate for the sort of cap-and-trade proposal that Barack Obama outlined during the campaign, this means they’ve preemptively surrendered on an agenda that they ran and won on during the course of a two-year presidential campaign. And that campaign-season plan, though excellent, fell somewhat short of what scientists say is necessary to prevent a potentially irreversible catastrophe. As I wrote in my hundred days roundup that’s a very significant failure.

On health reform, it seems certain that a bill will pass and be signed into law that’s called “Obama’s health care bill.” But it remains very unclear to me and to everyone how much the bill will actually do to tackle either the social injustice or the fiscal instability of our current health care system. Meanwhile, on the banking sector the debate about the administration’s policies is essentially between people who think they’re screwing up because they’re corrupt (Simon Johnson, Joe Stiglitz, Paul Krugman) and those who think they’re doing close to their best when faced with objective political constraints (Felix Salmon, Brad DeLong).

Matt attributes this to partisan gridlock, but I think he's wrong on that. It's intra-partisan gridlock, between those Democrats bought off by big money interests or fundamentally conservative-thinking versus the rest of the caucus. Eventually, Obama - and more to the point, Harry Reid - needs to get his caucus under control. He has some tools at his disposal.

And Also, A Budget

Aside from everything else, we could see the FY2010 budget passed this week, in time for the 100 day festivities.

House and Senate Democrats reached a budget deal on Monday night that will allow both chambers to vote on budget resolutions this week.

Budget negotiators, after hours of negotiations on Monday, put finishing touches on the resolution, which Democrats hope to approve by President Obama's 100th day in office Wednesday.

Senate Budget Committee Chairman Kent Conrad (D-N.D.) called the budget "a major accomplishment."

"We are meeting President Obama’s goals of reducing our dependence on foreign energy, striving for excellence in education, reforming our healthcare system, and providing middle-class tax relief – all while still cutting the deficit substantially," he said.

It looks like the price of reconciliation instructions for health care was a codifying of PAYGO rules, which basically mandates that all new spending find an offset in funding. That can be good, because it forces Blue Dogs to pay for spending with taxes on the wealthy, for example, or it could be bad, as it constrains lawmakers from deficit spending, particularly in a recession.

More from the AP. The serious issues of health care and climate change will be put off until later in the year; this budget is more of a framework. Fortunately, conferee Rosa DeLauro says that no deal to tinker with Social Security was offered as an exchange for the reconciliation instruction on health care.

A Taxing Problem

This is the time where the Administration leaks an unpopular proposal to gauge public reaction, gets their head chopped off, and retrenches. At least that's how I hope this goes:

WASHINGTON — The Obama administration is signaling to Congress that the president could support taxing some employee health benefits, as several influential lawmakers and many economists favor, to help pay for overhauling the health care system.

The proposal is politically problematic for President Obama, however, since it is similar to one he denounced in the presidential campaign as “the largest middle-class tax increase in history.” Most Americans with insurance get it from their employers, and taxing workers for the benefit is opposed by union leaders and some businesses.

It's more than politically problematic, it undermines the entire point of health care reform, which is to reduce costs for the consumer. Any reductions would be offset on the back end by increased tax rates. Not to mention it smacks of hypocrisy because it's what McCain proposed during the campaign, and it gives conservatives a "tax and spend liberal" talking point. It's a terrible idea on just about every score. That said, Christina Romer refused to rule it out on Meet the Press yesterday.

However, I'm going to take a bright-side approach. Lots of bad ideas like this have been floated and subsequently retracted. Not to mention the fact that there's this very interesting letter from the Blue Dog caucus saying that they wouldn't demand that health care reform use PAYGO budgeting rules. In other words, they're willing to float an up-front deficit.

In its letter to budget legislators, Blue Dogs stress that they want to be convinced of the long-term savings of health reform: “While we agree that reforming our healthcare system will eventually lead to savings, it would be irresponsible to take on additional large-scale deficit spending in the short-term without the ability to definitively quantify future savings.”

To the dismay of Republicans and Democrats alike, the Congressional Budget Office has been conservative in assessing the savings of preventative health benefits. Proponents of health reform, most notably Senate Finance Committee Chairman Max Baucus (D-Mont.), have urged CBO to modify how it puts pricetags on healthcare bills.

Blue Dog spokeswoman Kristen Hawn said that Rep. Charlie Melancon (D-La.), the Blue Dog co-chair for communication, misspoke when he told The Hill on Thursday that the letter was being written to ask Obama to consider an alternative health care proposal that would be “revenue neutral.”

According to the healthcare plan Obama proposed in his budget, hundreds of billions of doallars would have to be spent up front but savings would be realized eventually, yielding a deficit neutral plan over the long term.

That's a big deal, and it could be that the Administration floated a big tax increase that the Blue Dogs would choke on so they could extract this pledge to spend up front and save down the road. The problem is that Max Baucus is the one pushing the taxation of health benefit in the Senate Finance Committee. In addition, nobody's actually talking about taxing all health benefits, but capping them to encourage lower-cost health care plans from employers. This could start a fight with unions.

Congressional liberals and, in particular, older labor unions, are dead-set against this idea. Two types of workers, after all, can negotiate high-end employer-based health care benefits: Wealthy workers and union employees.

At last month's White House Health Care Summit, Wyden suggested taxing benefits during one of the breakout sessions. "This idea of taxing benefits," shot back Teamster president Jimmy Hoffa, "that was the McCain idea. That was shot down during the election. … That’s insane. That discourages what’s working.”

At the least, it discourages what's working for the Teamsters.

This is of course why health care reform is so tricky under a Rube Goldberg grafting onto the current system. The stakeholders are going to want to keep what they have. And they're all willing to fight for it.

The Bigger Economic Fish To Fry

As stocks tank today on news of terrible retail sales that may only get worse right before the holiday shopping season, the reality that the greater economy is in terrible shape is starting to sink in. The market is especially jittery so that news is being more harshly reflected, but it's at least based in some truth. We don't make anything in America, and consumer spending props up the economy, and if jobs are slashed and you can't borrow against your home or your plastic anymore, those sales are going to drop, and that's the ballgame.

As Robert Reich says eloquently today, the problem is not people "living above their means" but wage stagnation which forced people to borrow just to maintain their lifestyle.

It's not as if the typical family suddenly went on a spending binge --- buying yachts and fancy cars and taking ocean cruises. No, the typical family just tried to keep going as it had before. But with real incomes dropping, and the costs of necessities like gas, heating oil, food, health insurance, and even college tuitions all soaring, the only way to keep going as before was to borrow more. You might see this as a moral failure, but I think it's more accurate to view it as an ongoing struggle to stay afloat when the boat's sinking.

The "living beyond our means" argument suggests that the answer over the long term is for American families to become more responsible and not spend more than they earn. Well, that may be necessary but it's hardly sufficient.

The real answer over the long term is to restore middle-class earnings so families don't have to go deep into debt to maintain what was a middle-class standard of living. And that requires, among other things, affordable health insurance, tax credits for college tuition, good schools, and an energy policy that's less dependent on oil, the price of which is going to continue to rise as demand soars in China, India, and elsewhere.

In other words, the way to make sure Americans don't live beyond their means is to give them back the means.

What we need is a major stimulus program - bailing out the banks will not be enough. This is in direct contrast to neo-Hooverists like Ruth Marcus who think that a recession will somehow work itself out as long as you don't use the power of the federal government to do anything. That's blinkered thinking. Nobody will invest during a slowdown EXCEPT the government - nobody will create jobs, nobody will stimulate the economy, and nobody at all will look after poor people and give them the opportunity to succeed.

The question is whether Obama will listen to the clucking of the Neo-Hooverist chattering class or come up with a solution commensurate to the problem. He's been playing footsie with the Blue Dogs and talking about reinstituting PAYGO rules. Of course, they are already IN PLACE in the House, they just are routinely ignored, as they were during the bailout.

Did you get that part? The Senate has "more or less ignored" the few actual measures of fiscal restraint the Blue Dogs tried to keep in place. Kind of makes you wonder how such a group is still described as so powerful, if the few aspects of their fiscal retraint are "more or less ignored." In fact, one has to wonder how such a supposedly powerful group committed to fiscal responsibility has managed to co-exist with a federal government that has overseen the least fiscally responsible spending regimen in history.

Could it be that the power of the Blue Dogs is not actually in maintaining fiscal responsibility, but in threatening to throw their lot with the demographically compatible Republicans in a narrow divided Congress and pass legislation that will then be signed by George Bush? And, could it be that when that threat is no longer applicable--which it almost certainly won't be once the Congress is no longer narrowly divided and George Bush is no longer President--that their demands will go from "more or less ignored" to almost entirely ignored?

I should hope so. Austerity budgeting is not what we need right now - this is not 1993, the recession is much wider and deeper, there's still a financial crisis on Wall Street, and there are major public investments that are desperately required. We can argue about the form a stimulus package could take - I think it needs to be a lot bigger than the $150 billion dollar number being tossed around right now, and it needs to go to infrastructure like building a new clean energy grid, wiring America for broadband, high-speed rail and mass transit - but we cannot argue about its necessity.

There are of course questions about Obama. His policies are pretty middle-of-the-road and not necessarily up to the challenge of the moment. There is reason to be concerned. There is also over the last month a keen understanding that these are abnormal times. The question is how Obama will adjust. Will it be like this?

How does a liberal do these things? Well, first a liberal decides to take away the inflation problem, that whenever people get money they spend it on things that cause the demand for oil to increase. He does so by making a huge multi-hundred billion dollar investment in fuel efficiency by buying up all the least fuel efficient vehicles, by spending massively on public transit, by doing a massive fiber build-out and encouraging businesses to telecommute. He reduces the speed limit to 55 on all roads. He starts charging people for driving during rush hour. He encourages businesses to have workers work 9 hour days and take off a long weekend every two weeks. He massively invests in green energy. He sets up a program to refit every building in the US so that it uses as little energy as possible, or even produces energy. He changes the energy network so every American can sell power to the power company. In doing all these things, he actually reduces US demand for oil and increases its energy output. And all this activity creates jobs, a lot of jobs, which can't be offshored or outsourced.

And while the liberal may give a tax credit here, or a tax credit there, a lot of things he just has the government do, or has it spend the money directly. When you refit your house you don't get a tax credit, you get someone to come and do the work, then a government inspector checks it's done properly, then the company that refitted the house gets paid you get a reduced bill and share in some of the savings by actually receiving a check every month for as long as you live in the house. When new networks are set up, the government exercises eminent domain and encourages municipalities to set up their own networks. It forces large cable and phone companies to let anyone sell time on their networks, just like in the old dial up days and just like in countries like Japan that are far ahead of the US. Governments build the networks themselves, and run them themselves, since the major telecom companies have proven they wont' give the US good broadband [...]

Oh, I know all of this is a dream. Obama's not a liberal, despite all the screaming. That's not his fault, there's hardly a liberal left in America. As I like to joke, "Americans wouldn't know a liberal if he gave them universal health care". And some will say that if Obama was a liberal, he couldn't be elected, though frankly, after this campaign, I think that's a weak argument.

But, because Obama isn't a liberal, what he's going to do is do neo-liberalism, aka:Reaganomics, one more time. One more roll of the dice at the land casino. It won't work, and in a few years we'll be back here again.

And then we'll find out whether or not Obama can learn from experience. Most people can't, really, they just repeat the same mistakes over and over again. But some can. FDR did, he tried something and if it didn't work, he tried something else, and it was something genuinely different. Obama, it is said, models himself after the Kennedys, but I hope he'll learn something from FDR as well.

I'm not totally convinced of Welsh's argument vis-a-vis Obama, but he's absolutely right on the liberal response. There's a role to play for citizens who want to see a new economy, who want to grow up in a country with good paying jobs building things at home, who want advances in education and health care and the environment. There's a moment to push Obama to do what's needed.

Bad Days In The Congress

I thought that the very progressive energy bill's defeat in the Senate was actually a positive thing until I saw the roll call. To break the Republican filibuster, we need 60 votes. We got 53, with five not voting. I assumed that the Presidentials were all out on the road, with 4 Democratic votes out there. But actually, 5 Republicans didn't vote for this, preferring to opt out of a tough vote and shield themselves from criticism.

There were 5 Republicans that voted with the majority of Democrats on this bill (Smith, Snowe, Collins, Coleman, Thune), along with Joe Lieberman. This suggests that we have a decent shot at getting a less progressive energy bill passed if certain provisions are stripped out of it. Grist suggests what will go.

Republican leaders in the Senate now hope to strip out two key provisions of the bill: a Renewable Portfolio Standard mandating that utilities produce 15 percent of their energy from renewables by 2020, and a provision that would cut tax breaks and subsidies for oil companies. President Bush wants those components out of the bill too, and has said he would veto the bill if they're not removed. If the Senate does change the bill, it will need to return to the House for another vote, where advocates for clean energy won't be happy with a watered-down version.

That's depressing, but the fuel economy standards would be a step forward, and hopefully they can at least salvage the renewable energy standard, which would be a major job creator, and would make America a leader in renewable energy.

Unfortunately, this is about the best thing that the Congress has managed the last couple days. Senate leaders nixed the hate crimes bill because it included gay and transgender Americans. The House passed - by a vote of 409 to 2 - a bill that would fine anyone with an open WiFi connection up to $300,000 if illegal images are accessed through their service. And the Senate, in one of the most irresponsible votes I've ever seen, voted to repeal the AMT without using Paygo rules, essentially removing $50 billion in revenue without replacing it, pushing even more of a burden on to the next generation.

It's pretty depressing when the BEST thing the Congress has done lately is lose a filibuster fight by only 7 votes.