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Archive for the ‘Congress’ Category

The Senate spent last night—all night—focusing attention on climate change and the need for new legislation. As The Hill reports, Senate Majority Leader Harry Reid used the opportunity to attack the Koch brothers:

“It’s time to stop acting like those who ignore this crisis — the oil baron Koch brothers and their allies in Congress — have a valid point of view,” Reid said Monday evening. “But despite overwhelming scientific evidence and overwhelming public opinion, climate change deniers still exist. They exist in this country and in this Congress.”

The implication, of course, is that the “un-American” Koch brothers (and those who Senator Reid has described as “addicted to Koch”) are responsible for the failure to move forward on climate change (and all other things pure and good).

Of course, the House did pass a climate change bill (Waxman-Markey) in 2010, only to have the bill declared DOA by…Senate Majority Leader Harry Reid. As the New York Times reported (July 22, 2010):

Bowing to political reality, Senator Harry Reid, the Nevada Democrat and majority leader, said the Senate would not take up legislation intended to reduce carbon emissions blamed as a cause of climate change, but would instead pursue a more limited measure focused on responding to the oil spill in the Gulf of Mexico and tightening energy efficiency standards.

“We know where we are,” Mr. Reid told reporters after reviewing the state of energy legislation with Senate Democrats and administration officials. “We know that we don’t have the votes.”

(more…)

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A few days ago, I gave the theoretical logic for why the availability of the government shutdown results in growing government spending. Advocates of smaller government should advocate a default budget rule that is far milder than shutdown. Now, I have come across academic research by David Primo finding just this at the state level. States with an automatic shutdown provision actually spend on average $64 more per capita than states without such a provision.

As Tea Party Republicans approach the final denouement of their humiliating, destructive defeat on the latest budget battle, it bears thinking about how U.S. fiscal institutions essentially predestined this outcome.

HT: Matt Mitchell

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Following Marc’s great post on congressional dysfunction, I’d like to point how political science tells us that the availability of government shutdowns actually causes the growth of government spending. The analysis follows the 1979 spatial analysis of zero-based budgeting by Thomas Romer and Howard Rosenthal.

Suppose that there is one dimension of politics: the size of the federal budget. There are a fiscally conservative party and a fiscally liberal party. For simplicity, assume the median, electorally decisive American voter is somewhere between the two. We could plot the parties’ and median voters’ positions on this dimension like this, where “C” is the conservative party, “M” is the median voter, and “L” is the liberal party:

Federal budget

 0|----------------------------------|--------|-----------|------------------------------------------| 100% of GDP
                                    C        M           L

Now suppose that there is a need to pass a budget. If the budget doesn’t pass, the government partially shuts down (S). Once the government shuts down, the median voter M perceives the outcome as being more favored by the conservative party, with ideal point C. The liberal party with ideal point L can make a budget proposal that must get approval from both parties, so conservatives have the opportunity to accept or reject it – in the latter case, the government stays shut down. After the budget is approved or rejected, there is an election, and the median voter M votes for the party with the closer budget position. Parties care most about winning election, then secondarily obtaining their preferred budget.

In this example below, once the conservative party gets associated with S, causing the shutdown, then L is able to propose its ideal point (L). Conservatives accept the budget, because otherwise they would remain associated with S, and the median voter prefers L to S, so would turn conservatives out at the next election.

 0|----------|-----------------------|--------|-----------|------------------------------------------| 100% of GDP
            S                       C        M           L

The median voter will only be willing to vote for conservatives who reject a liberal budget proposal if S is closer to their ideal point than the liberal budget proposal. Knowing this, L will propose something close enough to the median voter to prevent that outcome – and conservatives will accept it. Take the following example, where P is the proposal liberals make:

 0|----------|----|-----|----------|----------------------|------------------------------------------| 100% of GDP
            S    C     M          P                      L

P is infinitesimally closer to M than S is, so M votes for the liberal party, unless the conservatives also vote for the budget.

So once a shutdown happens, a bigger budget than the median voter prefer (let alone the conservative party) looks inevitable. Knowing this, conservatives won’t want the government to shut down to begin with. But that still means liberals have a lot of bargaining power, and the budget will tend to grow.

In real life, of course, shutdowns happen very occasionally. Why? (more…)

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The federal government has been running by continuing resolutions for some time—a product of the inability of Congress to execute one of its prime constitutional functions: authorizing and appropriating funds. The textbook version of the budget process is quite simple. It is also largely irrelevant given that Congress rarely passes the twelve appropriations bills by the beginning of the fiscal year (October 1). As the Office of Management and Budget’s FY 2013 Analytical Perspectives notes (p. 127):

Since 1977, when the start of the fiscal year was established as October 1, there have been only three fiscal years (1989, 1995, and 1997) for which the Congress agreed to and enacted every regular appropriations bill by that date. When one or more appropriations bills has not been agreed to by this date, Congress usually enacts a joint resolution called a “continuing resolution,’’ (CR) which is an interim or stop-gap appropriations bill that provides authority for the affected agencies to continue operations at some specified level until a specific date or until the regular appropriations are enacted. Occasionally, a CR has funded a portion or all of the Government for the entire year.

The Congress must present these CRs to the President for approval or veto. In some cases, Presidents have rejected CRs because they contained unacceptable provisions. Left without funds, Government agencies were required by law to shut down operations—with exceptions for some limited activities—until the Congress passed a CR the President would approve. Shutdowns have lasted for periods of a day to several weeks.

This shutdown may prove more interesting than the last 17 shutdowns because of the failure to pass any appropriation bills. The House passed but 4 of the 12 appropriations bills for FY2014 while the Senate passed none at all—the norm for the Senate since fiscal year 2011 (see the record at the Library of Congress).

To state things in simple terms, if the Congress executed its constitutional responsibilities and passed the necessary appropriations bills, we would not have government by continuing resolution.  This, in turn, would eliminate the ability of any party to use the CR to promote policy goals. One might fault the House GOP’s strategy of using the CR to magnify its influence over policy outcomes, but the larger problem is the failure of Congress as an institution.

Any surprises that the approval rating for Congress has fallen to a record low of 10 percent?

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As we all know, if a continuing resolution (or CR) is not passed by the end of the day on September 30, the government will shut down. Senator Ted Cruz (R-TX) has threatened to filibuster the House CR because if debate is suspended, the provisions defunding Obamacare will be eliminated via majority vote. If Senator Cruz is successful–or if he is not, and the House refuses to pass a revised CR–then the government will shut down. But ironically, this will have little impact on Obamacare. As Timothy Carney explains in the Washington Examiner:

But for the most part, no CR will fund Obamacare, even if Obama wrote it himself. You know what funds Obamacare? A bill called HR 3590, also known as the Affordable Care Act.

Obamacare funds Obamacare.

The reason is simple: most of the Affordable Care Act does not depend on annual appropriations. The House CR, in contrast, could defund Obamacare (“Notwithstanding any other provision of the law, no Federal funds shall be made available to carry out any of the provisions of the Patient Protection and Affordable Care Act”). All the House GOP needs to do is convince the Senate majority and President Obama to follow its lead.

So here are the possible outcomes in the next few days:

  1. The Senate strips the defunding language from the House CR, the House approves it, the government shutdown is avoided, and Obamacare is left untouched.
  2. Senator Cruz succeeds in mounting a filibuster, the debate on the CR is not suspended, the government shuts down temporarily, and Obamacare is left largely untouched.
  3. Senator Cruz fails, the Senate strips the defunding language, the House rejects it, the government shuts down temporarily, and Obamacare is left largely untouched.
  4. The Senate accepts the House CR and with the President’s approval, Obamacare is defunded.

Does anyone think that the last is a live option? If it is not—and recall: a government shutdown will not have a significant impact Obamacare—what is the larger strategy? Is this simply a means of throwing red meat to the rubes and preventing primary contests from the Right? Or, if you are Senator Cruz, are the goals to maximize face time on the Sunday talk shows, attract donations, and build a mailing list for the 2016 presidential race?

Any insights would be appreciated.

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Ezra Klein has an interesting piece (Wonkblog) on the collective-action problem facing the GOP with respect to Obamacare. Stated concisely:

Here’s the Republican Party’s problem, in two sentences: It would be a disaster for the party to shut down the government over Obamacare. But it’s good for every individual Republican politician to support shutting down the government over Obamacare.

These smart-for-one, dumb-for-all problems have a name: Collective-action problems.

As Klein correctly notes, ideally,  party leadership plays a critical role in managing these problems through the use of various carrots and sticks (“Threats, flattery, fundraising money, and plum committee assignments are all deployed to keep members of Congress from undermining the group in order to help themselves”). But the GOP leadership appears to lack the power to control the behavior of its members, particularly those who are aligned with the Tea Party.

It should prove interesting to watch the collective-action problem unfold in the next few weeks as Congress turns to the continuing resolution and the debt ceiling (not to mention broader issues like immigration reform). (more…)

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Following the defeat of his amendment that would give Congress the right to vote to verify border security as a condition of permitting the path to citizenship for illegal immigrants to go forward, Senator Rand Paul has decided to oppose the immigration reform bill.

While the immigration bill has many flaws, it is certainly a pro-liberty bill on balance (and I am not quite the open-borders absolutist that some libertarians are, but the current state of immigration control is deeply illiberal and contrary to the best American values). Moreover, the bill’s bad aspects are almost entirely the result of the demands of “border security hawks” like Paul and his fellow right-wingers. Even if Paul really is, deep down, a libertarian of sorts, it seems he is likely to stick with whatever the right wing of his party wants. That bodes poorly for any future Paul presidency. Presidents tend to adapt to the culture of the executive bureaucracy: witness Obama’s u-turns on civil liberties issues. Paul’s actions on the immigration bill suggest that he lacks the courage to buck his party even for a popular cause. As Will Wilkinson put it at economist.com,

The energetic ideological base of the Republican Party is a nationalist, identity-politics movement for relatively well-to-do older white Americans known as the “tea party”. The tea party is interested in bald eagles, American flags, the founding fathers, Jesus Christ, fighter jets, empty libertarian rhetoric, and other markers of “authentic” American identity and supremacy.

Does Rand Paul really want to go down in history as a standard-bearer for that ilk? It seems so.

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Last week I noted, with some frustration, that the revelations about the NSA were not attracting the attention of much of the public (only 33 percent of Americans over 50 and only 12 percent of those between the ages of  18 and 29 were following the coverage of the NSA actions closely).   Apparently, the Senate has received the message. Only a minority of our senators attended thursday’s closed door briefing with National Intelligence Director Clapper and NSA Director Keith Alexander.

The Hill quotes Danielle Pletka from the American Enterprise Institute:

“If members were more diligent about attending briefings they would be far better informed about what’s going on, and they would also be far more willing to challenge the intelligence community on the conclusions that they come to,” she said.

“The truth is that members always come in at the end of the game, and as a result they take as gospel the assessments that they receive from the intelligence community,” she added.

Fundraising, Father’s Day, democratic oversight of the NSA’s surveillance programs…so much to do, so little time. And to schedule such things on a Thursday (i.e., the weekend).

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John Bresnahan and Jake Sherman (Politico) report (unsurprisingly) that those who brought us the Affordable Care Act are scurrying to create exemptions for Capitol Hill. The big concern: the costs of insurance on the exchanges will lead to the rapid exodus of legislative aides—a policy-induced brain drain.

The talks — which involve Senate Majority Leader Harry Reid (D-Nev.), House Speaker John Boehner (R-Ohio), the Obama administration and other top lawmakers — are extraordinarily sensitive, with both sides acutely aware of the potential for political fallout from giving carve-outs from the hugely controversial law to 535 lawmakers and thousands of their aides.

They continue:

The problem stems from whether members and aides set to enter the exchanges would have their health insurance premiums subsidized by their employer — in this case, the federal government. If not, aides and lawmakers in both parties fear that staffers — especially low-paid junior aides — could be hit with thousands of dollars in new health care costs, prompting them to seek jobs elsewhere. Older, more senior staffers could also retire or jump to the private sector rather than face a big financial penalty. Plus, lawmakers — especially those with long careers in public service and smaller bank accounts — are also concerned about the hit to their own wallets.

Nancy Pelosi famously assured her audience “we have to pass the bill so that you can find out what is in it.” Now that lawmakers have found out what is in it, it appears they are not too pleased.  Or should we interpret their actions differently?

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President Obama’s budget proposal supports entitlement reform, in part, through the introduction of the chained CPI (rather than the current CPI-W) for calculating cost-of-living adjustments. This change has been part of various reform proposals over the years, although it has often been discussed as part of progressive indexing (i.e., maintaining the CPI-W for low wage workers, thereby increasing their Social Security payments relative to those with higher incomes).  This proposal has usually attracted the ire of those on the left, who view it as a cut in Social Security rather than a reduction in the trajectory of growth.

You would think that the President’s proposal would attract the unified support of the GOP. After all, many Republicans have made this proposal before, seeing it as one of several reforms that could address the long-term entitlement problem. But with the 2014 midterm elections quickly approaching, some Republicans may see the short-term political benefits of blocking reform to be irresistible.  Consider National Republican Congressional Committee Chairman Greg Walden (R-OR), who has presented the chained CPI as Obama “trying to balance this budget on the backs of seniors.”   A piece by Alex Roarty (National Journal provides an extended quote from Walden’s interview on CNN:

“When you’re going after seniors the way he’s already done on Obamacare, taken $700 billion out of Medicare to put into Obamacare and now coming back at seniors again, I think you’re crossing that line very quickly here in terms of denying access to seniors for health care in districts like mine certainly and around the country,” Walden said. “I think he’s going to have a lot of pushback from some of the major senior organizations on this and Republicans as well.”

Although the Club for Growth is not pleased with Walden’s critique, at least he has gained the support of the AFL-CIO, as the National Journal reports.

“Walden’s quote underscores what we knew,” said Mike Podhorzer, the AFL-CIO’s political director. “Obama’s chained CPI proposal is terrible policy that only makes political sense to Washington insiders who don’t get outside the Beltway often enough. Obama beat Romney because working people care more about jobs and fairness than the deficit, and Democrats risk losing their political edge on the issue if they stick with this Beltway gambit.”

The GOP leadership may discipline Walden. But if Walden’s comments signal the GOP’s intention of opposing reform in hopes of winning some additional seats in 2014 and undermining the Democratic Party’s claim of protecting seniors, one can predict that entitlement reform will be kicked down the road once again.

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As I argued, this is what he set out to do with his filibuster:

A year ago, as the presidential race was taking shape, The Washington Post’s pollster asked voters whether they favored the use of drones to kill terrorists or terror suspects if they were “American citizens living in other countries.” The net rating at the time was positive: 65 percent for, 26 percent against.

Today, after a month of Rand Paul-driven discussion of drone warfare, Gallup asks basically the same question: Should the U.S. “use drones to launch airstrikes in other countries against U.S. citizens living abroad who are suspected terrorists?” The new numbers: 41 percent for, 52 percent against.

The lede of the poll is even kinder to Paul, finding as high as 79 percent opposition to targeted killing in the United States. But that’s a new question. On the old question, we’ve seen a real queasy swing of public opinion.

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There is an interesting piece by John Bresnahan (Politico) on Countrywide Financial’s VIP Program, which provided loans to members of Congress, staffers, and executive branch officials who were responsible for shaping regulatory legislation.

More than a half a dozen current and former lawmakers, including Senate Budget Committee Chairman Kent Conrad (D-N.D.) and House Armed Services Committee Chairman Buck McKeon (R-Calif.), obtained mortgages through the Countrywide VIP program, in some cases saving thousands of dollars, according to the Issa report, set for release Thursday….

Other lawmakers who received Countrwide VIP loans include former Sen. Christopher Dodd (D-Conn.), Rep. Edolphus Towns (D-N.Y.), Rep. Pete Sessions (R-Texas), Rep. Elton Gallegly (R-Calif.) and former Rep. Tom Campbell (R-Calif.). Dodd, who chaired the Senate Banking Committee, was identified as a Countrywide VIP going back to 1999, and he even referred an aide to a former GOP senator to the same program, Issa’s probe found.

No real surprises here for anyone acquainted with public choice, but the piece is nonetheless worth a read, particularly for those interested in how Countrywide worked with the GSEs to shape (and derail) reform legislation that might have limited the magnitude of the collapse and the subsequent contagion.

Thankfully, many of the recipients of Countrywide’s munificence were involved in framing Dodd-Frank.

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It seems that all we have heard of late is about the sharp partisan battles in Congress that have placed it in a gridlock and prevented it from working in a bipartisan fashion to “do the nation’s business.” Yes, the “do nothing Congress.”

But there are exceptions to this description.  Given the depth and severity of the financial collapse, it is good to see bipartisanship in addressing the issue of financial regulation, or more correctly, providing exemptions when there are mutually beneficial exchanges to be made.

As John Bresnahan reports, the prospects look good for a “one sentence bill worth $300 million to a bank owned by a politically connected family that has doled out hundreds of thousands of dollars in campaign donations.”

The bill would allow Emigrant Bank to avoid meeting the requirements for Tier 1 capital by allowing it to base capital requirements on what its assets were on March 31, 2010, before it broke the Dodd-Frank threshold of $15 billion. Of course, the argument is that the bank only broke the $15 billion mark for a brief period of time. By tweaking Dodd-Frank, Congress could allow the bank to free up funds, thereby allowing it to make additional loans, largely in New York.

Although the bill was sponsored by a Republican (Rep. Michael Grimm, R-NY), it has strong bipartisan support from members of the Financial Services Committee (success in the Senate remains uncertain). Why the support? Howard Milstein, owner of Emigrant Bank, was “a bundler for President Barack Obama’s 2008 campaign.”  Bresnahan provides some additional details on Milstein:

He is a force in New York state politics. Aside from his fundraising for Obama four years ago, Milstein has been a prominent financial backer of Gov. Andrew Cuomo. The Democrat tapped Milstein last year to head the New York State Thruway Authority despite complaints by watchdog groups that having a real estate mogul run the agency would be a conflict of interest.

Even Diana Cantor, wife of House Majority Leader Eric Cantor (R-Va.), worked for a Milstein-owned trust that catered to the needs of high-income customers.

The Milsteins, along with business associates and other family members, have donated hundreds of thousands of dollars to both GOP and Democratic lawmakers over the past decade. Along with Grimm, New York Democratic Reps. Carolyn Maloney, Carolyn McCarthy and Gregory Meeks — all co-sponsors of the bill — have received $11,500 in donations from the Milsteins this cycle.

According to a statement by Emigrant Bank, “H.R. 3128 is all about credit availability in underserved communities throughout New York City.” Perhaps. But one might also note that so many of the poor decisions leading up to the recent collapse (e.g., regarding relaxed underwriting standards, securitization, and the GSEs pumping liquidity into the low and moderate income segments of the market) were given the same justification, often by members of the House Financial Services Committee.

There is a powerful public choice argument regarding some of the factors that contributed to the financial collapse. In the election cycles leading up to the financial collapse, the securities and investment industry and real estate industry contributed tens of millions of dollars to the campaign chests of the Financial Services Committee and its Senate counterpart. Regardless of the party in control, the committee members prevented and/or gamed any attempts to impose regulatory reforms that might have had lessened the severity of the impending financial collapse. Certainly Congress responded in the aftermath of the collapse, albeit it ways that were far from sufficient.

But now that attention has turned elsewhere, normal practices appear to have resumed. The days of reform have run their course and Congress appears ready to return to its standard mud farming, imposing new regulations only to relax when a mutually advantageous deal can be struck.

At least we know that in 2012, gridlock has its limits and bipartisanship is still a possibility.

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Political scientist John Sides has contributed an interesting guest post to FiveThirtyEight, in which he reviews the evidence that social class influences the way Congresspeople vote. In particular, Congresspeople are unlikely to come from working-class backgrounds, and class seems to affect voting at the individual level. If Congress had the same mix of class backgrounds as the general American public, they would in general be slightly more liberal.

My first reaction was: I wonder how much of this reflects IQ. Intelligence makes people think like economists and also increases people’s income and probably shifts class background toward mentally intensive occupations.

My second reaction was: Assuming the result stands, do we want Congress to reflect the same background as the American public? Should everyone be represented equally? It’s not obvious to me that they ought to. I’m on record here as supporting limiting in some way the right of government employees and contractors to vote. Even if you don’t share my libertarian proclivities on public policy, however, a slightly upper-class-tilted public policy regime might be desirable for straightforward reasons of stability. In a pure democracy that is strictly responsive to the median voter, businesspeople and professionals might become alienated from democracy itself. That may sound like a bit of a stretch for the United States, but not for many countries around the world where upper-class opposition to democracy has entrenched electoral fraud, clientelism, or military supervision of civilian authority.

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Few in power find it convenient to notice inconsistencies in their own conduct. Alas, but President Madison was no exception. Federalism and decentralization exist precisely because free constitutions should not depend on the good graces of those in office, but on the checks necessary to harry them back under the law.

Seeking the financial means to carry on his war, Madison did not appreciate New England’s opposition to his measures or her refusal to lend. As the enemy bore down from the north at various points along the Canadian border, Madison attempted to impose conditions on the New England militias, not trusting them, as he did the other states, to staff and command their own forces.

In these efforts, the fourth president was roundly rebuffed by the governors and legislatures of Massachusetts, Rhode Island and Connecticut. They correctly pointed out that the Constitution reserved to each state the right of officering her state militias: The president could certainly call those units into service according to the constitutional powers that authorized Congress to declare war, but he could not reorganize those units without a state’s permission. Unable to get his way, Madison refused to mobilize New England’s forces and subsequently refused to pay any expenses for her defense.

Governor Caleb Strong of Massachusetts organized and raised his own force of some 10,000 men at a cost of 1 million dollars, which was a considerable sum in that day. Facing such staggering costs and outraged by what they considered to be the unconstitutional and dangerous manner in which their region had been treated, the New England states elected to protest in the same spirit as they had done against the embargo, but this time they went a step further: Coordinated state action.

Under the inspiration of Harrison Gray Otis and Theodore Dwight (the brother of Timothy Dwight of Yale), Connecticut, Rhode Island, Massachusetts, and several counties of New Hampshire and Vermont sent representatives to meet in Hartford Connecticut between December 15, 1814 and January 4, 1815. There they formed a list of grievances and a call for constitutional amendments, concluding with a threat to organize another convention should these proposals not be taken up by the other states in the Union.

The men who attended this gathering tried to moderate the more extreme elements calling for secession and outright resistance to the national government (see Justin Winsor, Narrative and Critical History of America, vol. VII, Houghton Mifflin, 1888, p. 321 and notes) but the prospect of a convention sent shivers through the administration. It is not difficult to see why.

In “A Short Account of the Hartford Convention to which is Added an Attested Copy of the Secret Journal of that Body” (1823), Theodore Lyman, noted that Massachusetts was quite open about her aims, and “the sense of her citizens was at that time well known, and in relation to the Hartford Convention, she adopted without delay that course of conduct, of which an eminent example had been given less than half a century before, and which, in this juncture of affairs, was especially judicious, from the vast magnitude of the subject and occasion.” (p.8) That example was Madison’s own call at the end of the Annapolis Convention for the convention that followed in Philadelphia, which of course ultimately put an end to the Articles of Confederation.

When the Hartford Convention got down to business on its second day, it considered, according to the Attested Copy of the Secret Journal, the two constitutional grounds of New England’s grievances just mentioned: “The [unconstitutional] powers claimed by the executive of the United States, to determine, conclusively, in respect to calling out the militia of the States into the service of the United States; and the dividing the United States into military districts with an officer of the army in each thereof, with discretionary authority from the executive of the United States, to call for the militia to be under the command of such officer.”

The second grievance followed immediately after: “The refusal of the executive of the United States to supply, or pay the militia of certain States…on the grounds of their not having been called out under the authority of the United States, or not having been…put under the command of the commander over the military district.” These two grievances then formed the basis of the final and more damning constitutional conclusion that the national government had failed to meet its obligation as stated in the preamble “to provide for the common defense.”

In their protest the members stood on solid textual grounds. It was true that Section Eight of the First Article gave Congress the power “To provide for organizing, arming, and disciplining, the Militia, and for governing such part of them as may be employed in the Service of the United States,” but it specifically reserved “to the states respectively the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress.”

Did this “prescribed” discipline give Madison the right to reorganize the New England militias? It might have, but only if Congress had specifically formed such a policy, and had done so equally for all parts of the Union. The fact that President Madison asserted this as a matter of executive authority, and the fact that he applied that policy unequally to some of the states and not to all of them, violated both the spirit and the letter of the fundamental law. With these arguments before them, the delegates proposed their Constitutional remedies.

They called for consideration on the part of the states for amendments that would permit the state legislatures “some arrangement whereby the States may be enable[d] to retain a portion of the taxes levied by Congress, for purposes of self defence (sic), and for reimbursement of expenses already incurred, on account of the United States.” They then proceeded to request further consideration be given to certain other constitutional issues: To restrict Congress’ power to declare war; to restrain its power “to make new States, and admit them into this Union; to limit Congress’ power to impose embargoes and restrict commerce; to prohibit a president from the same state serving two consecutive terms; and finally, and perhaps most ominously of all, to eliminate the 3/5ths provisions of the Constitution “respecting slave representation, and slave taxation.”

This last provision underscored a growing cultural and political divide already evident between the northern and southern states. New Englanders had always felt aggrieved to some degree by the so-called 3/5ths compromises in the Philadelphia Convention. Already by this time, they saw it as a principal driver of western expansion, and the Southern states made little bones about their desire to move the peculiar institution westward, and to form an alliance with that region in opposition to New England.

Thus the Hartford delegates sought restrictions on admitting new states as well as the elimination of the South’s use of slaves in calculating her population numbers. It is interesting to note that at this point in time, the South’s rising star, J. C. Calhoun of South Carolina, was a strong nationalist defender of the War of 1812 and a proponent of a new national bank so that the general government could more easily finance such military ventures in the future. The irony of ironies is that this situation was about to change yet again.

As reported by Theodore Dwight, the Secretary of the Hartford Convention, in his later history of that meeting, the timing of the delegates’ report to Washington could not have been worse. It arrived just as news from England of the War’s end came along with the report of Andrew Jackson’s victory in New Orleans. While the war had not gone so well for America in general, the popular sense created by this juncture produced a patriotic fervor that was ill disposed to consider of the resolves of the Hartford delegates.

The commission attempted to quietly retire back to New England, but the popular reaction, especially among Madison’s Republican Party was to revile its proceedings as radical secessionism, and the reputation of that convention has labored under such a misapprehension ever since.

Far from secessionism, however, the Hartford Convention presented yet another means of interposition through coordinated state action, and to the degree that such coordination gathered more sustained attention (even if in the negative) from the other states, to that degree it succeeded. With the war’s end, Hartford’s issues became moot, but one could easily imagine what might have developed had the exigencies of war persisted.

The next stage of development in the ideas of interposition, however, would raise the stake higher, actually attempting what Jefferson had contemplated in the Kentucky Resolves: Nullification. Interestingly, the author of this approach was our leading nationalist of the 1810s. Calhoun had been a student of Theodore Dwight’s brother about a decade earlier at Yale. Timothy Dwight shared his brothers’ attachment to the reserved rights and powers of the states. Calhoun had resisted such thinking as his student, but when the issue of tariffs touched his own state’s interests in the next decade, he began to avail himself of Dwight’s understanding, coming to a deeper appreciation of the need to constitutionally restrain centralized power, but he did so with an interesting and novel twist that would have a profound impact on the popular perception of state’s rights.

And Calhoun’s solution would prove perhaps the most difficult and cumbersome of all…

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As Pileus readers know, the spending cuts Congress and the President agreed to in future budgets are a drop in the bucket of future deficits. Nevertheless, the cacophony of protest among partisan hacks is deafening. Jacob Weisberg has a particularly incoherent piece at Slate today. Two selections:

But for the federal government to spur growth or create jobs, it has to spend additional money. The antediluvian Republicans who control Congress do not think that demand can be expanded in this way. They believe that the 2009 stimulus bill, which has prevented an even worse economy over the past two years, is actually responsible for the current weakness. Their Hooverite approach—embedded in the debt-ceiling compromise—demands that we address the risk of a double-dip recession by cutting public expenditure now rather than later.

The deal that President Obama and House Speaker John Boehner tentatively agreed upon in early July was far from perfect, imbalanced in favor of spending cuts over revenues by a ratio of 4-to-1. But that $4 trillion “grand bargain” would have constituted a serious down payment on the deficit, and sent a strong signal to financial markets that our political establishment took the problem seriously. Instead we got this week’s sad bargain—a much smaller, deferred, and contingent reduction in spending projections. This sends quite a different signal: that our political system cannot, in its current configuration, cope with difference between what comes in and what goes out.

So let’s get this straight: the cuts in spending were both too large and too small for Weisberg. Bigger cuts would have been better, and so would no cuts – in fact, increases! Perhaps he means that there should be increases now, bigger cuts later – a respectable position. But that’s not what he says, nor does that position correspond to any recognizable negotiating position taken by either side in the debt ceiling debate. So why does all the blame accrue to “antediluvian Republicans”? (Never mind the ignorance about Hoover’s massive increases in federal spending.)

But the reliably behind-the-curve New York Times editorial board takes the cake with their proposal to abolish the debt ceiling altogether. So let’s get this straight: Politicians in DC are such irresponsible spenders that the only thing that could force them to get together and make even small cuts in future spending growth was the risk of financial annihilation. And the solution is? Take away the very risk of financial annihilation that finally forced them to exercise a modicum of fiscal responsibility!

Of course, if you abolish the debt limit, then under divided government we’d have the same game of chicken played at budget time, when the hostage would be the operations of the federal government. And I’m sure we can count on the Times editorial board to scream about not holding our economy hostage when the federal government shuts down or comes close to it. Maybe we should abolish annual budgeting too. Just let departments set their own budgets. It’s safer that way.

The right blogosphere is little better. Looking ahead to the super-committee, the only concern on the right seems to be that – horrors of horrors – the committee might try to raise some revenue by eliminating tax expenditures and deductions! So the GOP should have forced default instead! Because if you want long-run spending cuts, the right strategy is to gain control of one house of Congress and then maintain a position of complete and total intransigence on the only thing you can reasonably offer the other branches in exchange for spending cuts! Oh, and frighten as many independents as you can before the next election.

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How quickly one year has passed. It was only one year ago this June  that the White House blogproclaimed: “This summer is sure to be a Summer of Economic Recovery.”

As reported at the time, Vice President Joe Biden marked “the Obama administration’s ‘Recovery Summer,’” with “a six-week-long push designed to highlight the jobs accompanying a surge in stimulus-funded projects to improve highways, parks, drinking water and other public works.”

When the Vice President was asked about polls that revealed a public skeptical of the effects of the Recovery Act, he responded: “The proof of the pudding is in the eating.”

A year later, the pudding has not proven quite as filling as the Vice President might have hoped. As Ben White observes (Politico), things look far different than the administration had anticipated:

A series of troubling signs for the U.S. economy threatens to dash hopes that 2011 would be a year of robust recovery — and that could prove troublesome for President Barack Obama’s reelection chances.

The Obama team has long hoped that the president’s 2012 campaign would be underpinned by an economy that was clearly accelerating out of the Great Recession, showing strong growth and job creation. But recent economic data paint a picture of an economy stuck in low gear, held down by continued high personal debt, a moribund housing market, high food and gas prices, persistent weather disasters and widespread unease about what the future holds.

This leaves the administration with the difficult task of making “the case that people are not as bad off as they might be.”  Obviously, there are a host of explanations as to why the Summer of Recovery never occurred, ranging from insufficient stimulus (Paul Krugman) to regime uncertainty. While this debate will rage on, one can only wonder what the summer of 2011 will hold.

With the extension of the debt-ceiling approaching fast and little sign that (once again) Vice President Biden will be able to deliver a negotiated settlement, the next several months might prove quite interesting.

One wonders whether the GOP will overplay its hand in weeks to come, leading to a temporary failure to pass a debt-ceiling extension and provoking a market drop comparable to what occurred when Congress balked (initially) at passing TARP. If this occurs, the GOP will give the administration a great gift.

Polls reveal that 70% of Republicans oppose raising the debt ceiling, so the Republican base could view intransigence on the part of the House GOP positively. Such an act—particularly if followed by a market reaction—could allow Democrats to argue that things are as bad as they are precisely because of the irresponsible zealotry of House Republicans. Fiscal turmoil, in short, could benefit both parties and those who are concerned with nothing more than the little arts of popularity.

Whatever the outcome, there is little reason to believe that the summer of 2011 will become a genuine “Summer of Recovery.”

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One overlooked electoral reform to decrease the power of special interests in the U.S. political process would be to expand the size of the U.S. House quite significantly, so that legislators cater to much smaller electorates. (More radically, state partition could also be promoted to expand the size of the Senate.) Accordingly, I thought today’s Daily Chart from the Economist was telling:

Of the world’s 22 most populous countries, the U.S. has the second-most people per national legislator.

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Many pundits interpreted the 2010 midterms as an indictment of business-as-usual. Driven by the populist sentiments of the tea party, the expansion of government, and the bourgeoning national debt, the incoming congressional class was poised to be the agents of change.
At least that was one interpretation

So imagine my shock and horror when I read a piece by Kenneth Vogel entitled “Freshmen Quick to Play Cash Game.” As Vogel explains:

It’s the oldest political survival tactic in the book, and many of the House freshmen are already getting the knack of it: quickly refilling campaign coffers with cash from Washington special interests vilified on the campaign trail — this time by the tea party activists who helped elect many of them.

Since Election Day, first-term members of Congress have held more than 40 events on K Street, Capitol Hill and around town to schmooze and raise money from lobbyists, political action committees and other representatives of Washington interest groups eager to establish relationships with the new class.

All told, PACs have contributed over $444,000 to incoming members in the past three weeks. “After the midterm shake-up, many are anxious to use their PAC cash to curry favor with the congressional newcomers.”

Some freshman will undoubtedly retain fidelity to the promises made on the campaign trail. Senator Rand Paul, for example, has prepared his own budget that calls for $500 billion in cuts (including the elimination of the Department of Education). Even with the full support of Aqua Buddha, one can question whether Paul will be successful given his minority status. Regardless, my guess is that Senator Paul is something of an anomaly.

The GOP’s lack of candor in addressing the unsustainability of our largest entitlement programs (remember the Pledge to America) reflected the simple fact that these programs are quite popular (even among the tea party activists). Equally important, the incentive structure in Congress is quite powerful and, for all the populist fervor exhibited in the past few months, most of the PAC fundraisers occur behind closed doors and so many of the decisions they shape involve the minutia of government programs that rarely attract much attention from a media that is obsessed with chasing shiny objects.

The newly elected GOP majority in the House promised: “this time will be different.” My prediction, after the symbolic vote on health care, the changes will be marginal.

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Reading the Constitution

As you know, the new GOP majority in the House decided to kick things off with a reading of the Constitution. This has raised a number of hackles and interesting comments from pundits and scholars. A few interesting off-the-cuff remarks can be found on Politico today (The Arena). A few select gems:

John Michael Gonzalez (lobbyist and Democratic strategist):

Most of the House Republicans I know may not have a lot in common with their Democratic colleagues but they accept the basic premise that what is done in the legislative body is something that the Congress has every constitutional right to do.

Greg Dworkin from the Daily Kos:

They are treating a living document as if it were a poorly-run bible study class. All things done by the Congress are based on the Constitution, and if you have an issue with that, take it up with the Supreme Court. Oh, wait, that’s actually our system of government, isn’t it? Someone should tell the Republicans, who are too busy talking to listen.

As these quotes exhibit (and there are so many more), the GOP’s decision to read the Constitution has stimulated some rather sophisticated jurisprudential arguments.

My view: it is a nice symbolic act. But as Antonio correctly noted in the Merchant of Venice:

Mark you this, Bassanio,
The devil can cite Scripture for his purpose.
An evil soul producing holy witness
Is like a villain with a smiling cheek,
A goodly apple rotten at the heart:
O, what a goodly outside falsehood hath!

The real test will not be whether the GOP can read the Constitution, but whether it can take it seriously. If the past decade has offered us any lessons, we have grounds for skepticism.

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Avik Roy has an interesting piece in National Review on how conservatives (really, free-marketeers) should approach the policy and politics of health care in the age of PPACA. I largely agree with his policy prescriptions, somewhat vaguely stated as they are:

First, Republicans must foster a truly free market for health insurance by eliminating the differing tax treatment of employer-sponsored and individually purchased insurance. Second, Republicans must make dramatic improvements to Medicaid, using Mitch Daniels’s impressive reforms in Indiana as a template. Third, Republicans must move Medicare onto a sustainable path that puts financial control in the hands of seniors themselves rather than central planners.

I would also argue for repealing state-level health insurance mandates, but that is properly the role of state governments. (As noted in this blog, allowing purchase of health insurance under other states’ laws would achieve more or less the same end.)

Roy’s analysis of the political situation is insightful. Republicans and conservative Democrats are very unlikely to achieve a filibuster-proof majority after the 2012 elections. Therefore, repeal of PPACA will have to be passed through reconciliation. But since the CBO scored PPACA as reducing the deficit, a simple repeal cannot pass through reconciliation.Thus, whether they like it or not, Republicans will have to take on new spending cuts to any repeal.

And this on the presidential race is spot on:

This means that influential Republican activists must — must — coalesce around the most electable Republican presidential candidate who can articulate conservative health-care principles. This is no time for single-issue small-ball or personal score-settling. A GOP nominee who passes all the litmus tests but can’t win in November would only succeed in making Obamacare permanent. One who can win but isn’t capable of pushing for real health-care reform wouldn’t be much better.

The first criterion rules out Palin and Gingrich (and let’s be honest, Paul and Johnson too). The second rules out Huckabee and Romney. Who’s left? Mitch Daniels?

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