Tuesday, December 28, 2010

Obama Should Go Nuclear

This whole talk of compromise is bogus. President Obama was able to pass the tax cuts, don't ask don't tell, and START, because the public was on his side. Polling consistently showed the American people were in favor of these two issues, and Republicans didn't want to look like they were not representing the people before they official gained power. But it will be a lot tougher the next two years and it will be important for Obama to pick specific issues that he can claim victory on.

Controlling the White House gives Democrats the ability to set the agenda and control the conversation. That means it is even more important to pick issues that they know they can win political points with since there will be so few of them coming up. By Obama saying he received a shellacking in this election cycle, he down played any new victories that may occur in the future, that way when he does get his initiatives passed through Congress, it is a bigger victory.

If the Republicans goal is to make Obama a one term president, there is no reason to give them an inch of breathing space. The energy legislation that passed the House this past term isn't going anywhere. While the bill received bipartisan support, it was still a close vote and very contentious. But there are a lot of elements in it that both sides can vote for. One of them is the expansion of nuclear energy.

Obama has consistently said he is in favor of creating more nuclear sites in the United States, and many Republicans have had this on their agenda. The list includes John McCain, Mitch McConnell, and soon to be the Chairwomen of the Senate's Energy and Natural Resources Committee, Lisa Murkowski. There will be plenty of quotes that can be used to contradict what these Senators will be saying if Obama decides to push this issue. But it is one that he needs to use the bully pulpit in order to get what he wants.

The microphone is going to be set on high for this one too. There are a lot of Not In My Back Yard issues when it comes to nuclear power. People either think of Chernobyl or Three Mile Island and do not want an instance such as that to effect their communities. Both of these accidents were caused by human error, unlike the BP oil spill which was caused by human error. That's why the Department of Justice is suing BP believing the disaster could have been avoided. More regulation will be needed for the new nuclear plants, but it is hard to make an argument that current plants and refineries don't need it either.

One of the factors involved with using nuclear technology is where to store the waste that comes from using the material. But while there are currently 104 nuclear power plants operating in the United States, the amount of material that would have to be stored would cover seven yards on a football field. The technology for storing this material has been improved insurmountable since the last two nuclear accidents.

While building new nuclear plants are expensive, there is still plenty of money to be made from building them, particularly with the right incentives that the federal government can provide. In the meantime, the money that is being spent will create jobs. That's why other countries like England are planning to build more of them. And I haven't gotten into the environmental benefits of using more nuclear power.

One of the reasons Obama had such a hard time with the media is because he was not specific enough in what he wanted. The public option was the prime example. The official position was "I'm in favor of a public option, but it does not have to be in the final bill for the bill to be effective." While policy junkies or people who work in the health sector may have understood what he was saying, it was confusing. And it didn't allow him to own the issue and take credit for the pieces of legislation that will benefit people.

The White House needs to keep it short and understandable. Not everyone is a physicist and kept up on the news coming out of the nuclear sector. Next year Obama is going to have to stop trying to teach, and needs to preach instead.


 

 

Tuesday, December 21, 2010

No More Filibuster?

There are some very legitimate questions being asking right now, but the one that has me stunned is, how has the Senate managed to get so much done after an election cycle where the party in power received a shellacking? I guess we forgot that mache eventually dries.

First, there was the infamous tax cuts. When President Obama made a deal with the Republicans three things were said 1) Obama gave up again 2) Obama won the political battle and 3) the tax cuts amounted to another stimulus. The first argument was made by the left who were upset that the people who earned the most will have their taxes further reduced. That money could have been used to subsidize the cost from the Social Security cut that was also made in the deal.

Pundits believe Obama won the political battle because he appeased the middle. The tax cuts were not a left, or right issue. Opinion polls repeatedly showed that the vast majority of people wanted to see the cuts go through, and because it was an issue the White House pushed, Obama won.

Now, everyone knows what I think about the stimulus argument. The short answer is that they will help, for the short term (but barely), but a lot more could have been done.

What made the extensions even more surprising was that it didn't look like they would pass. The White House did not want to extend those cuts for the rich. But the Republicans insisted on it, and would not have voted for the bill otherwise. The area that put the victory in Obama's corner though was the deficit. After all the talk about reigning in government spending and the wind at their backs, the GOP did not insist on one policy that would reduce the deficit, in fact, they only insisted on increasing it.

More importantly, Obama owned the issue. Maybe it was because he gave Bill Clinton the mic. But in the past Obama has always been trying to explain and level with people on why he made his decision. This time, he blamed the Republicans of holding the middle class hostage in favor of the rich. All the democrats were saying this, every time, they went on television. And it worked.

I wasn't going to say anything, and you have to promise not to tell anyone, but another victory also came when the Don't Ask Don't Tell law was repealed. Those who have been pushing for the repeal were wondering what happened to the guy who said he would repeal the law. After all the challenges in the courts, those hard core Obama supporters were wondering why they had to do so much more work after the 2008 election. For the people on the left that were upset about the tax deal, this may have made up for it. Two years from now Obama can go straight to his base and say he got this done. Unlike the tax cuts, which may or may not help the economy, the repeal of don't ask don't tell is a substantial change that a lot of people wanted out of him.

Also now thanks to the Senate, we can eat meat without fear of mad cow disease. In a late night sessions the Food Safety and Modernization Act was passed. You would think after we had so many close calls with food imports the last couple of years this is something that would have been done. But this is the first time food safety regulations has been improved in almost one-hundred years.

One of the bigger items which looks like it will be passed this week is the START Treaty. A post Cold War agreement between the U.S. and Russia that every Secretary of State (Republican and Democrat), says needs to be passed, and Senator Kyle is holding it up. This was the wrong issue to try and score political points with. This treaty has always had bipartisan support and has reduced the number of nuclear weapons around the world. The situation has become so bad that Russia is weighing in on the Senate. This did not have to be a political victory for Obama, it will only become one because some members of the GOP were so outspoken against it.

One piece of legislation that did fail was the Dream Act. It is a shame because it made the process for immigrants to come into this country easier and they would have had less of an excuse to try and sneak in. It's also a way to reduce the deficit. The new immigrants coming in could have been taxed, and there were provisions making it easier for current illegal immigrants to get green cards. Now billions of dollars will be sent back to countries of immigrant families. Just more proof no one really cares about the deficit.

And it looks like the federal government will shut down this year! After the House passed a short extension for the start of the new year, Senator Reid announced the Senate will do the same. I'm OK with this, I loved the 90's.

What has helped get these pieces of legislation passed is the election being over. There is a full two years before the next election, and most public officials figure what they do now won't hurt them down the road. Especially if you are a Senator who only runs every six years. The rest of the time you are looking out for your state and helping your colleagues when you can.

Most of the legislation being passed this week was held up because the Republicans were filibustering it. When you hold up one piece of legislation it takes a longer time for others to come up and dealt with, especially in the Senate. But with a divided Congress next year it is hard to tell if compromises will be made.

It is a good sign that legislation is finally moving through. We just learned today that one of every seven Americans is now on food stamps. Needless to say, people need government to work. But as soon as the new year starts, the next election cycle will begin, making it important to pick battles carefully.


 


 

 

Thursday, December 9, 2010

Tax Cuts Don’t Stimulate The Economy

I hate leaving things for the last minute. Having something hanging over my head just bothers me to no end it always get to the point where I can't sleep until it's done. The political problem for the tax cuts was that the White House waited until the last minute to deal with it, but probably for the right reasons. President Obama has had major legislative victories which will help a lot of people. Making sure women are paid equally, allowing students to stay on their parents insurance after college, and expanding scholarship opportunities to pay for college, just to name a few. As we've all seen those victories didn't just come over night, and unfortunately for Mr. Obama, there was still one last thing he had to get done.

The latest round of tax cuts which will soon be passed by the Senate is being sold so that it will help everybody, the middle class, working class, and of course the rich. The Center for American Progress is defending the tax cuts and claim it will create 2.2 million jobs. What their analysis assumes though is that businesses will spend money and there will be a demand for their products. But if you look at recent experiences, you should know there is no guarantee that businesses will spend more money just because they have it. In these uncertain times, they are more likely to keep it in case the economy goes even more down hill, just like the banks are doing since they received the bailout money. The business cuts aren't even targeted anywhere which proves there is no strong demand for anything right now. Otherwise, policies could be enacted to create more of a demand to help a strong area grow even more, which could help overall growth. That absence is just more proof the economy is really up in the air.

The Center got these numbers from the Congressional Budget Office (CBO) and used their numbers to create their analysis. The CBO however, assumes that the tax cuts will be offset by increasing taxes later so we won't have to worry about deflation. And it does not even take into account that Social Security taxes are being lowered.

But then there are some analyses I just don't get at all. The Heritage Foundation argues that only tax cuts can stimulate the economy. They try and differentiate between "Disposable Personal Income" and "Personal Spending." Now if you're a middle income family earning $150,000 a year, you have enough to go out to dinner, a movie, and keep up with your mortgage payments. But this family is not going to spend money on anything extravagant. They will not be buying a new house, car, or plan a expensive vacation in this time of uncertainty. So when they receive a tax cut, they will not be spending in the areas where it MIGHT help the businesses feel a demand for their products. And if you are working class family, you are more worried about feeding your children and keeping a roof over your head, and that's where they will spend the money. Again, not creating a huge demand for anything, and not beneficial to helping the economy. Families don't think of their money as "disposable" or "personal," and neither should economists.

Instead, programs should have been created to help families cope with the new economic realities. The best part of the package was getting unemployment benefits extended for a year. For middle class families though, there should have been money spent to pay for their children's college, or help lower their payments if the banks unexpectedly raised the interest rates. But if you don't believe me, you can listen to President Reagan's former budget director David Stockman, who helped invent trickle down economics.

The problem with both of these analyses is that they argue broadly about policies that need to be looked at in a more specific design. As I've argued in the past, current economic models do not allow economists to take into account what really matters to families. The tax cuts families receive will be spent on areas that will ensure the families stability. President Obama could have made a strong argument to raise taxes on the wealthy to ensure programs like Social Security and Medicare stay intact. Many people rely on these programs, especially the baby boomers. Who, by the way, will be retiring soon and who will vote in 2012. But by waiting this long to deal with the Bush tax cuts he had no time. The consequences, politically and economically, would have been worse if he allowed everyone's taxes to be raised. He had to let high income earners taxes stay low. It was a classic no win scenario.

All in all, no harm was done, but unfortunately not a lot of good was done either. So lesson learned, don't wait for the last minute to get your ducks in a row.


 


 


 


 

 

Monday, December 6, 2010

We Need Energy

If you want evidence that only funny characters and what they say dominate the news media, try figuring out the latest debate on taxes. The Senate "worked" this weekend on the nations taxes. But since the United States Senate requires hours of debate before a vote can actually take place, it makes it easy to waste a lot of time. So unless you are a C-SPAN2 junky (like me) you missed hours upon hours of our elected officials talking about how they were going to vote.

[Quick side note: Notice how I didn't say debate to describe what the Senate was doing this weekend. The Senate doesn't debate anymore. If you want to read a great debate, look up Second Reply to Hayne, given by Daniel Webster.]

But don't worry, Senator's don't get paid overtime. After all that talk the only agenda that was accomplished was playing politics. Only two votes were taken and both sides knew they were going to fail. Democrats said they wanted to show Republicans only support the rich, and Republican's refused to raise taxes even though they claim to want to tackle the deficit. Now it looks like all the Bush taxes will be extended. The good news is that unemployment benefits will also. The bad news is that even if Democrats somehow manage to raise some taxes, Wall Street is already trying to figure out how to not pay them.

What both sides forget though is that Americans aren't looking for a show, they're looking for things to get done. While building Noah's Arc in Kentucky may seem funny, it is a policy that will create jobs and help the economy. It shows leadership and strength, which is exactly what people are looking for.

One of President Obama's problems the past two years is that he let Republican's control the debate on all the issues. Whether it was health care or Wall Street Reform, the Obama never used the bully pulpit to the extent other Presidents like FDR or Reagan did. Even though both President's lost seats during their midterm elections, their base was ready to fight for them when they were up for reelection, and they won big.

The State of the Union speech is coming up soon. It will be a moment where the president can set the agenda and tone for the next two years he is in office. The first issue he should talk about is energy. This is an area where Republican's and Democrats can make themselves happy. Obama already came out in favor of nuclear energy, which Republican's have been pushing for years. Wind and solar energy have are already a growing industry. With the right incentives, creating new energy industries can create thousands of jobs that can't be shipped off. The best part is that the technology for these new industries is being developed in America, and that means more exports which (according to standard models) will help America's economy grow.

President Obama not only needs to create more energy, he also needs to show more energy. Letting the other side control the modern hyperbole of a debate, only takes away the victories he has already accomplished. We all know what a great communicator he can be, next year, it's time to step up and speak loud.