I find the graph in this report to be very revealing...
Turns out "convervative" to "very conservative" Americans actually like big government:
Very few conservatives said they favored reducing (or cutting out altogether) spending on any program. The least popular program proved to be childcare -- with a grand total of 20 percent of conservatives saying they'd slash it. The most popular is highways; only 6 percent want to cut spending there. Even bugaboos like welfare and foreign aid fare well, attracting the ire of only 15 percent of conservatives. Amazingly, the survey found that, on average, 54 percent of them actually wanted to increase spending.
Not a surprise, actually. It's fun to trash "big government," call for "reduced wasted spending," but it's another to actually go ahead and do something about it.
Of course, the mainstream conservative movement is hopelessly befuddled when it comes to policy.
Number one suggestion..stop spending money on failed stimulus. Tax relief!!
A full third of the ARRA was tax relief. That's why payroll withholding dropped last year. It is why there's a $400 or $800 Make Work Pay tax credit on people's returns this year.
Beyond that, the spending in the stimulus didn't fail, unless our Congressman is advocating for cutting short COBRA subsidies or unemployment insurance. Hilariously, Congressman Rehberg tweeted this yesterday, around the same time he was touring the stimulus-funded Northern Hotel renovations:
When the two reached Nelson's basement office, Rehberg's work began. The congressman inquired about what the government could do for the Northern, promising to have a staffer look for grant options and Department of Energy assistance.
A year ago, by cooperating with the city of Billings, the Northern was able to sell $20 million in tax-free "stimulus bonds" to pay for the hotel's remodeling. Investors like the government-backed, tax-free bonds, which were made possible through the American Recovery and Reinvestment Act of 2009.
Rehberg is looking into government grant options and DoE assistance for private projects? Sounds like government spending to me.
Even worse, our Congressman is apparently aware that he's full of it:
In an interview with The Billings Gazette editorial board Tuesday, Rehberg, who opposed the ARRA and is advocating a shift toward tax cuts, said the construction projects funded by the ARRA had merit....
If Denny Rehberg thinks COBRA benefits, food stamps, unemployment, and local business projects like Northern renovation are failures, he should say so explicitly. He's trying, as always, to have it both ways.
And keep in mind when Rehberg rails about government spending that his office repeatedly calls for higher spending on numerous programs. This guy is absolutely all over the map.
Fresh in the inbox, a Congressional newsletter from Montana's junior Congressman Dennis Rehberg:
Congressman Denny Rehberg
HAS A SOLUTION TO OUR DEBT PROBLEM:
STOP SPENDING AND BALANCE THE BUDGET!
Already, Cappy McShout, let's see your solution:
Congress can decrease the deficit and decrease the debt by:
* Freezing non-defense discretionary spending
* Reforming "entitlement" spending
* Increasing tax incentives for small businesses
* Lowering taxes for hard-working Americans
Low-hanging fruit first: Items 3 and 4 will increase the deficit, not reduce it. Cutting taxes means slashing revenue. Budget deficits by definition amount to expenditures minus revenues. If revenues get smaller, deficits go up.
Obviously, some practitioners of voodoo economics will argue that resulting improvements in economic growth will make up for any loss of revenue, but the math here is quite fuzzy and, at the tax rates currently levied in the United States, almost certainly inaccurate. There are policy arguments for cutting taxes and accepting the deficits, but we're almost certainly on the wrong stretch of the Laffer curve to have tax cuts actually increase revenue.
But let's look at the other two proposals, starting with the discretionary non-defense spending freeze. First, this is an Obama proposal. Second, in terms of the budget, it's virtually meaningless. Check out this interactive budget graphic from The New York Times. Look at the overall budget, then click on the "Hide Mandatory Spending" button. Now, pretend that the National Security and Veterans Benefits (I'm presuming Rehberg isn't advocating freezing spending on Veterans). Look at what a small share of the budget is left. Now remember that we're not slashing this, we're freezing its growth.
So, not really a big deal.
What's the last proposal? Entitlement reform.
Where to begin with this one? Entitlement reform is GOPese for "cutting Medicare and Social Security," often through privatization. Depending on the particular privatization scheme with Social Security, there's a good chance that Rehberg's proposal would actually increase costs.
But let's just keep in mind that any savings on the Social Security front are likely to be minimal. The real driver of costs within the long-term budget is Medicare (which is one of the big reasons I favor health care reform). Rep. Paul Ryan, the House Republicans' point person on the budget, solves this problem by voucherizing Medicare and freezing its spending, a proposal that has the virtue of balancing the budget solely through spending cuts. Of course, Rehberg has also played politics by pretending to oppose any reduction in Medicare services. Instead, he'll just destroy the program in wholesale fashion.
One last point, despite Paul Ryan's ability to balance the budget solely with spending cuts, it is worth knowing that he had to instruct the CBO to assume no revenue reductions, which means no tax cuts.
In short, Montana's Congressman is pushing fiscal snakeoil. No surprise there. As Tyler Gernant put it a few weeks ago:
While Rehberg claims that fiscal responsibility is at the core of his being, Gernant said he voted for "a massive tax cut for the wealthy that completely eliminates our budget surplus and returns us to deficits."
Gernant said Rehberg voted to put two wars on the country's credit cards and voted for a pharmaceutical drug plan that lets the big drug companies charge the U.S. government whatever they want.
Rehberg doesn't give a shit about the deficit. He's either an idiot or a liar on this stuff. What he really wants is to destroy government, except when he can have a press conference to take credit for it.
Sadly, politicians rarely explain the federal budget to constituents. Neither, really, does anyone else. That means we're left with misleading crap like this being peddled instead.
Oregon voters bucked decades of anti-tax and anti-Salem sentiment Tuesday, raising taxes on corporations and the wealthy to prevent further erosion of public schools and other state services.
The tax measures passed easily, with late returns showing a 54 percent to 46 percent ratio. Measure 66 raises taxes on households with taxable income above $250,000, and Measure 67 sets higher minimum taxes on corporations and increases the tax rate on upper-level profits.
Turnout was over 60% and voters in initiative-heavy Oregon hadn't passed a tax hike in close to 80 years...so this vote is huge.
The message out of Oregon, like the message out of Massachusetts, is resonating: Voters are in a populist mood right now -- not an anti-government one, necessarily, but a populist one nevertheless. The progressive brand of populism that resonated with Oregonians this month is slightly different than the one that rang true in Massachusetts. Yet the message is just as clear.
The real question now is whether DC will listen, or if instead it will continue to cling to its common wisdom.
Additionally, let me vouch for the Oregonians behind this campaign. Kevin Looper is hella smart and one of the best field minds in the country. From what I can tell, their campaign pulled out the stops. They registered and re-registered voters, knocked hundreds of thousands of doors, and made something like a million phone calls.
You want to win? Hone your messaging, mobilize your base, and even in a recession, we can hike taxes on the rich to pay for necessary services.
Brian Schweitzer recently announced a contest to save money in Montana. They're asking for ideas to be submitted through the state website. I proposed providing rewards to agencies that come in under budget to get away from the use-it-or-lose-it mindset that current budget rules inspire (my understanding, possibly exaggerated). One of my coworkers proposed moving the state's email systems over to Google Apps, which seems to run far more efficiently and easily than the current Department of Admin setups.
Mike Jopek is proposing moving a lot of state money into local banks in order to free up capital for Montana small businesses. This is less of a savings idea and more of a combination of economic development/fuck you to Wall Street.
What else can the state do? What should they consider?
You have to hand it to the Governor; he is fit for any challenge.
He's ready to cut the budget to make sure the state's checkbook is balanced.
He says he is looking high and low for ways to save money. (And, yes, a news release pronounces each one he finds.)
He'll continue to give it his best, but in the end, it won't be enough.
And, guess what?
Special session time.
My bet is that it will occur in mid-April.
That will be after the end of the first quarter of the calendar years. Revenue will continue to stagnate and decline. Couple that with larger than estimated tax refunds for 2009 and you have the makings of a first rate fiscal disaster.
The Governor is allowed only to make funding reductions on about 65 percent of the general fund. That total does not include monies distributed by the state to local school districts, all 438 of them. This total amounts to hundreds of millions of dollars annually. After the first week in May, it would nearly be impossible to change the total number of dollars each district would otherwise receive.
Without dipping into the basic state aid for school districts, the Executive cannot fix the state's checking account problem without practically shutting down the state's human services and corrections programs.
As the fiscal picture continues to deteriorate, there will be more and more pressure to spread the pain.
The Governor will be forced to bring is his pals with the temperament and knives to forge a fix during weeklong session.
The question remains: Can he work with another 150 fellow Montanans fix it? And, how?
The Montana Budget and Policy Center, a fiscal think tank based in Helena, has a new report out looking at how to cut spending to maintain Montana's balanced budget. They conclude that the state currently needs to enact about $15 million in cuts. The Governor has prepared for as much as 3 times that.
MBPC has some other suggestions, including warnings that excessive cuts may cause negative ripple effects as well as some guidance as to where to target initial cuts.
A bad week for Republicans. First, despite the insistence by Republicans that Brian Schweitzer doesnt know what he is doing, the Wall Street Journal wrote an editorial praising the Governor's solid fiscal management as a national example of how states can operate frugally while still fulfilling important obligations. No response yet from Republican leader Bob Story, who recently argued that Judy Martz is responsible for Montana's current fiscal strength.
Then, a new chapter in Tennisgate. You'll recall Republican Bozeman Mayor Jeff Krauss got into trouble recently when he chose to spend stimulus money on a new rubber-tiled tennis court. Schweitzer publicly chided this expenditure, and the Mayor ended up having to defend himself on Fox 'News'. This past Monday the volume was amplified when Schweitzer decided to attend, as a citizen, the weekly City Commission meeting in Bozeman.
According to several observers, Schweitzer was first accosted outside of the meeting room by Commissioner Chris Mehl, who cursed at him, saying:
"what you are doing is bullsh**, Governor."
(Mehl obviously takes his tennis very seriously).
When the meeting came to order, Schweitzer waited in the back of the room as six or seven proponents of the tennis court project gave their testimony. Then it was Schweitzer's turn to speak. The only opponent present, Schweitzer said that he, as a property owner in Bozeman and a tennis player, supported fixing the courts, but believed such a project was inappropriate use of federal stimulus funds. The house was packed mostly with Krauss partisans, and there was some hooting and hollering as Krauss and Mehl tried to razz the Governor, questioning him from their perches. Whatever you think of Schweitzer, this much can be said: not many gunfighters would walk into a saloon like this one.
Krauss and Mehl, in what a number of people saw as disrespectful behavior toward a Governor, started interrupting Schweitzer and attempting to pepper him him with spicy one-liners. But Schweitzer, who did not interrupt the commissioners, hushed the crowd when he said:
"Just because somebody puts a chocolate cake in front of you, doesn't mean you have to eat the whole thing,"
in response to Krauss' argument that Bozeman has the legal right to spend the funds on tennis courts.
Personally I think Krauss has picked a stupid fight. The Governor's position on this issue is very popular, even in Bozeman where the Chronicle online poll of over 900 respondents shows a 74-26% vote against the tennis project. Plus, it turns out that the tennis court contract was awarded to a Minnesota firm, meaning no Montana jobs would be created.
Finally, if Krauss has aspirations beyond city council, he is going to have a tough time. As of now, the notable items on his resume are 1) spending stimulus money on tennis, and 2) a city policy that required all job applicants to hand over their passwords to their e-mail and facebook accounts.
That resume won't get you very far in a Republican primary.
Center on Budget and Policy Priorities, among the most respected budgetary think tanks in the country, has a new report out on how to merely stabilize the federal debt. I think there's too little in the way of hard understanding of the federal budget.
CBPP is run by smart economists, so they open the report with a giant disclaimer that near-term deficits really aren't a big problem:
Reducing deficits in the short term, however, would undercut the fragile economic recovery. Policymakers should tolerate large deficits over the next several years in order to maintain strong aggregate demand until the economy is back on its feet. Moreover, they can take comfort in the fact that temporary measures intended to aid recovery add very little to the long-term deficit problem. The increase in deficits for several years pales in comparison to the size of the economy over the long run.
But from there, things get interesting. Current projections have the federal deficit comprising 20% of GDP by 2050 and CBPP's analysis, well, I'll let them speak:
The "fiscal gap" - defined here as the average amount of program reductions or revenue increases that would be needed every year over the next four decades to stabilize the debt at its 2010 level as a share of the economy - equals 4.9 percent of projected GDP. That is a very large amount. To eliminate that gap would require a 28 percent increase in tax revenues or a 22 percent reduction in program (non-interest) expenditures over the entire 40-year period from now to 2050 (or, more realistically, a combination of tax increases and spending cuts).
Got that? Those measures would simply allow for us to maintain a public debt at the current rate.
The big problem here is not current spending areas. It is specific inflations and population growth among certain populations.
Basically, the problem is health care inflation:
Rising health care costs are the single largest cause of rapidly rising expenditures, and ongoing reform of the health care system is absolutely fundamental to any solution. The two main sources of rising federal expenditures over the long run are rising per-person costs throughout the U.S. health care system (both public and private) and the aging of the population. Together, these factors will drive up spending for the "big three" domestic programs: Medicare, Medicaid, and Social Security. Growth in those programs accounts for all of the increase in federal spending as a share of GDP over the next 40 years (and beyond).
This is why the bullshit out there about opposing the health care bill out of fear of government spending is absolutely mind blowing. Without health reform, this country goes bankrupt. The stronger the health reform, the better the fiscal state of our nation.
The current health care bill is the single biggest deficit reduction act in the history of the nation. A whole bunch of conservatives paying lip service to deficit concerns are about to vote against its final passage.
Bozeman's deputy Mayor Jeff Krauss has a history of brilliant moves, but this really takes the cake!
The Bozeman mayor is now touting an appearance on Fox and Friends in defense of a fancier tennis court in Bozeman. I guess this guy would rather see the state cut Meals-on-Wheels? Bozeman Republicans are too much!
He attempts a "defense" of his actions on 4 & 20 Blackbirds. However, his defence fails to explain how an out-of-state contractor building a tennis court in Bozeman will stimulate Montana's economy.
Krauss writes:
Bozeman's general fund budget dedicates an average of about 9% each year to parks and recreation. We have two swimming pools, many parks, baseball and soccer fields, tennis courts, ice skating and hockey rinks and miles of trails and bike lanes.
So, you don't really need the new tennis court?
***UPDATE: Wulfgar pointed out that Krauss is now the mayor of Bozeman and that he did appear of Fox News. Wulfgar also says this guy was vehement about correcting the fiasco after it happened, and if so that's good at least, though it would have been better to prevent it from happening in the first place. You can see his apology here from the article I linked to above:
"I'm sorry that we couldn't get in front of this quicker. When Thursday came around and we tried to answer the questions from the national press, before we started defending it on Thursday night, I'm sorry we missed that opportunity to apologize and by Friday much of the damage had been done. What really is needed now from us to the community and the state is that we apologize for wandering down a road that violated basic rights of our citizens and we will do all we can to restore that public trust," Deputy Mayor Jeff Krauss said.
Something that really has to chap state GOP leaders' asses is a story like this highlighting that Montana's fiscal picture, despite being imperfect, is way, way better than most states. That's a testament to the work of our Governor who has faced a tremendous amount of pressure to make permanent revenue cuts in recent years. He resisted and the state is better off for it.
Sound financial management isn't everything, but accomplishing other outcomes without it is really, really hard. Different management in this state in recent years would have put us in a place where we'd either be raising taxes right now or cutting truly core education, corrections, or health care functions (what's the old saw, state government educates, incarcerates, and medicates?). We're not being forced to do that right now. Good news for all of us.
And something worth keeping in mind as people battle it out for the state house. Ask them about how they want to manage the state's finances. If tax cuts is the whole answer, ask for more detail.
Some good news this morning as unemployment fell in November...at least on the initial count. National unemployment remains barely in double digits, but this is good news (and, yes, that number is seasonally-adjusted).
The news is far more mixed in Montana, where tax revenues are down and are likely not to recover fully until 2015. Some of this is economic in nature -- when people are making less money, the same tax rates will collect fewer dollars. But some of it is policy -- we've cut taxes in this state a lot over the past 15 years, although not very often for most Montanans.
So there's been a lot of hand wringing about a health care reform bill that will cost approximately $800-900 billion over ten years. To put that into perspective, let's look at defense spending in the U.S. this year:
The Senate on Thursday sent the massive 2010 Pentagon policy bill to the president's desk for signing. The Senate approved the bill authorizing $680 billion in defense spending by a vote of 68-29.
All told, every man, woman and child in the United States will spend more than $2,700 on these programs and agencies next year. By way of comparison, the average Japanese spends less than $330; the average German about $520; China's per capita spending is less than $100.
Keeping in mind that Social Security and Medicare are funded by earmarked payroll taxes that are used to underwrite the general budget of the U.S., it is worth remembering that Defense is by far the biggest portion of the federal budget.
Some of that is reasonable. Unlike Chris Preble, I'm not an avowed opponent of U.S. military domination. I think the U.S. is a relatively enlightened hegemon and I think unipolar worlds offer some useful stability.
But the Defense budget in the U.S. is wildly out of control in ways that do nothing to advance American interests. That means that we're spending a lot of money we don't have to.
Fighting to focus the defense budget on...defense instead of on it being a massive jobs program for private military contractors is one of the most underrated social justice issues of our time. Tackled properly, it could be a real game changer in positive ways for the nation.
With Max Baucus pledging to move forward on health insurance reform with or without Republican backing, the GOP may have backed itself into an interesting corner.
The strange thing about all of this negotiating has always been, for me, that the rules of the Senate actually allow for far better (and more progressive) reform with fewer votes, although you may end up having to lose some good ideas along the way. The reconciliation process, for example, actually requires a stronger public option over a weaker one, in order to get the cost savings that can justify using the reconciliation process.
In other words, the main thing the teabaggers and GOP leadership are gaining by forcing people like Grassley out of the process is a good chance that whatever passes will be even more progressive.
That also means that people like Lieberman who have threatened to oppose any bill with a public option may have some incentive now to agree to vote against a filibuster to support a bill that could include health insurance exchanges, meaningful insurance regulation, etc., as well as a weaker public option, in favor of ending up with a bill lacking exchanges but containing a Medicare-like public option.
If you're not at the table, you're on the menu. The right-wing has apparently opted for being on the menu.
I didn't quite put two and two together when I heard the story for the first time from a Forest Service Ranger that he was talking about the Chief Revenue Forecaster and Principal Legislative Fiscal Analyst for the Legislature Terry Johnson.
Then I heard it from another and another what happened, but I didn't realize who it was until I read the story about Montana's budget surplus. I now know exactly who all three people that told me this story were talking about -- one of the highest ranking Legislative employee's, Terry Johnson.
As told, the Forest Service Ranger approached an unattended camp fire. So, like any good Ranger concerned with fire safety he stopped and came upon two men, one Terry Johnson and his brother who were fishing near the fire. Upon further inquiry the Ranger ask both Johnson and his brother for fishing licenses, neither had a valid MT fishing license. Which cost's a total of $26 for a resident Montana fishing license.
I'd recommend Ryan Lizza's profile of Peter Orszag, the wunderkind (relatively speaking) heading up the White House's Office of Management and Budget. Orszag is a brilliant economist noted often for his interest in behavioral economics, that realm that applies psychology to the statistics of traditional econ.
Understanding Orszag seems key to understanding our current President. His inclusion (along with Cass Sunstein, among others) in the leadership of the Administration make me optimistic that we may see some interesting components in health care reform besides the changing of incentives around treatment reimbursement and comparative effectiveness. Might we also see default enrollment instead of penalties for failure to enroll?
Good news in the U.S. Senate, where an agreement has been reached to keep reconciliation available as an option on health care reform.
The aggressive approach reflects the big political claim that President Obama is staking on health care, and with it his willingness to face Republican wrath in order to guarantee that the Democrats, with their substantial majority in the Senate, could not be thwarted by minority tactics.
While some Democratic senators were reluctant to embrace the arrangement, Mr. Obama made clear at a White House session on Thursday afternoon that he favored it, people with knowledge of the session said.
The reason for the reluctance is understandable. Reconciliation is not an ideal process and the Republicans are pledging holy war over the use of this tactic (such pledges are, of course, way ironic because Republicans have also used reconciliation for major policy changes).
That said, taking reconciliation off the table would be absolutely foolish. Former President Clinton said it was his biggest mistake. And taking reconciliation off the table leaves Republicans able to kill any reform bill simply by holding strong -- and they have every political incentive to kill reform.
Here's what our senior Senator had to say (in the NYT article linked above)
Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee, said Friday that he would prefer not to pursue health legislation through the reconciliation process.
"I think it gets in the way," Mr. Baucus said, explaining that his goal was to produce a health care bill that could "get significantly more than 60 votes."
"If we jam something down somebody's throat, it's not sustainable," he said.
Here's the good news for Republicans. The Senator responsible for writing the bill is wisely trying to avoid using the reconciliation process, take a broad array of input, and write a bill that can get bipartisan backing. But the Republicans can't just stonewall now, nor can they hold hostage a process and a bill demanding massive concessions that would render the bill worthless.
It is important that Republicans not be allowed to run amok on health care, especially considering their treatment of Kathleen Sebelius, the moderate Governor of Kansas nominated to head the Department of Health and Human Services. The fact that Republican Senators are proposing filibustering Sebelius is another sign of how crazy the modern GOP has become. Sebelius only got two Republican votes on the Finance Committee -- a Senator from her home state of Kansas (where Sebelius is quite popular) and Olympia Snowe, the Senate Republicans' only true moderate.
A good story I missed yesterday from the Chronicle's Daniel Person (whom I should note has generally been doing good work) on the House moving to protect CHIP. Rep. Bill Glaser takes a swing at Sen. Keith Bales, a fellow Republican:
The one Republican who voted with the Democrats was Rep. Bill Glaser, R-Huntley. Glaser caught fire from some conservative Republicans in 2007 for working with Gov. Brian Schweitzer to pass a budget in special session. He said his Republican colleagues are risking another session with no budget passed by standing firm on the education and insurance debates. "Mr. Bales is wrong. Mr. Bales thinks he can go against 70 percent of the voters. Mr. Bales thinks he can destroy schools in two years. ... I don't agree with that," Glaser said.
Disbanding the committee forces them to work in consensus rather than compromise. I like consensus," he said.
The good news for the state is that there is at least one Republican embracing common sense and working across the aisle to support education and children's health insurance. The bad news is that the history of the modern GOP in Montana means that his colleagues will clobber him for doing so.
If you see Rep. Glaser, tell him thanks for his courage.
I understand what jhwygirl is getting at when she tells the Democrats to stand firm, but honestly, watching this crap out of Helena is getting awfully old.
I think it is utterly ridiculous the lines that Bob Story and other Senate Republicans are taking -- especially given that the Democratic Governor will veto any lousy budget and that Democrats actually won more votes in legislative races (also true of the Montana Senate over the past two cycles) than Republicans. There simply is not a mandate in this state for the sort of tea party policies that the Republicans are imposing.
All that said, the idea of being forced into a special session during tight times is just utterly ludicrous. I'm not sure where the negotiating points are, but there should be some.
And the trick for progressives is not to figure out how to stand firm right now, but to elect majorities next time.
Note -- those majorities won't make everything magical. As federal politics are showing us right now, large partisan majorities still mean a lot of headaches. But it is better to have those majorities.
