Bush / GOP

Is Meghan McCain the New Face of the GOP?

San Francisco Chronicle

NDN fellow Morley Winograd says the younger McCain's growing following underscores an "underlying conflict" in the party - between opposing forces and generations.

San Francisco Chronicle Front Page

Keep People in Their Homes

A decade of reckless deregulation, mismanaged regulation and equally reckless private mismanagement has now brought the American and global economies to a crisis point. Investment banks, hedge funds and other financial institutions have borrowed hundreds of billions of dollars to sink into securities widely recognized to entail extraordinary risk, passing that risk along to millions of Americans whose retirement plans, pension funds and money market accounts found their way into funds set up by such mismanaged financial titans as Lehman Brothers, Bear Stearns, Merrill Lynch and AIG. Through it all, the White House, Treasury and Federal Reserve have practiced their own reckless regulatory mismanagement, allowing the gradual accretion of the biggest financial house of cards in history. Now it has caught up with them and the rest of us, and those who let it happen are asking taxpayers to spend hundreds of billions of dollars to clean up this mess.

This crisis is far from over, and its effects are still spreading. We need a broad plan that will actually work to restore financial and economic stability. But those who have had little or no hand in it – America’s taxpayers and most Members of Congress – should not be steamrolled into giving a blank check to those in the Administration who failed to head off this crisis. First, the check they want us to write is unlike any ever written before during financial crises. When Washington last took over the failing assets of private institutions, during the savings and loan bailout, taxpayers first took over the institutions themselves and then sold the assets, while the regulation of the remaining S&Ls was tightened and reformed to preclude another round of the same problems down the road. This time, Congress is being told that it must use taxpayers’ money to buy up the degraded assets of hundreds of financial institutions while they continue operating as private entities and without any guarantee of regulatory changes that will prevent it from happening the next time. That’s a bad bargain and terrible policy.

Second, it’s doubtful that the plan will even work in its own terms. If the Paulson Treasury plans to buy the deteriorating securities at their current, low market values, it may help the institutions holding them to avoid further deterioration, but it won’t reduce the losses they’ve already taken. Consequently, this bailout cannot actually lead us out of the crisis – unless the Treasury plans to pay these institutions above-market prices for the tanking securities they now hold, which would produce the largest direct transfer of money from taxpayers to shareholders and executives ever seen.

Third, the plan does not address the forces which continue to drive this crisis. At the base of the pyramid scheme that has infected our financial markets – underneath the credit default swaps and collateralized debt obligations created with borrowed money to “guarantee” mortgage-backed securities created with more borrowed money, in a housing market swollen by a historic bubble — lies the only real assets in the picture, the mortgaged homes of tens of millions of Americans. On that critical score, the Administration plan offers nothing. The only way to stop the cascading financial crisis consuming not only investment banks, investment funds, mortgage lenders and insurance companies, but also pieces of most Americans’ retirement security, is to stabilize the housing market from which all of the rest arises. The Treasury and the Administration propose to use taxpayers to bail out the institutions which speculated in the securities based on that market. Given the system’s current precarious position, a bail out of some kind cannot be avoided. But our government owes at least as much attention to homeowners facing foreclosure. If the Treasury and Fed had been willing to spend $85 billion on loans to strapped homeowners, as they did to AIG last week, the crisis might never have crested into the conditions that now require a system-wide bailout.

These mortgages are at the root of the crisis. It’s their mounting defaults driving down the overall housing market which has brought venerable banks like Lehman Brothers and Bear Stearns. Before Congress leaves this week or next, it should enact legislation that either provides a mechanism for direct loans to people to avoid foreclosure or allows them to renegotiate their mortgages. This single step will keep untold numbers of people in their homes, help stabilize the housing market, help contain the crisis at one of its critical origins, and thereby help shore up the financial system. Paired with a program to provide more liquidity to financial institutions and an orderly way to write down their failing holdings, this step could finally take us past this crisis.

Even so, only a small share of the costs of this historic mismanagement are apparent today. This financial shock, on top of the housing and energy shocks that preceded it, have almost certainly pushed our economy into recession. That will further reduce the value of the assets held by tens of millions of American through their pension funds, retirement accounts, money market and mutual fund investments. The squeeze will be hardest on the rising numbers of Americans who will also lose their jobs. The need to help these people and millions of others keep their homes is urgent, then, for a host of economic and social reasons.

When Congress returns in December or next year, it will find itself with far fewer resources to finance badly-needed new initiatives in health care, climate change and tax policy. One urgent order of business, however, will be entirely within its capacity: adopt and apply strict and appropriate transparency, capital and other regulatory standards to all financial institutions. And the politicians who hailed the hands-off attitude that enabled this crisis to fester and break out, and who now blame greed instead of their own negligence, must be held accountable.

New Politics

Over the years, NDN has been among the leading analysts of American politics, arguing that new tools and technology, shifting demography, and 21st century governing challenges are creating a new politics in America.


Thoughts on President Obama's First 100 Days

Yesterday, as we marked the passage of President Obama's first 100 days in office, I recorded some of my thoughts on how the new administration is doing so far:

The Honeymoon Isn't Over Until the Public Sings

While noting that President Barack Obama has higher job approval scores than any president in the past three decades, some in Washington also wonder how long this honeymoon can last and how much Obama can get done before it ends. The answer to those two questions lays in placing both Obama's performance and the questions themselves in historical context. 

As the late V.O. Key, the founder of modern political science research, pointed out in his masterful 1960 book, The Responsible Electorate, voters make their decisions in retrospect. Specifically, the public's judgment about how well a president is doing is based in part on how it evaluates his predecessors, especially the president who immediately preceded the current president. There is no doubt that at least a part of Obama's appeal is simply that he is NOT George W. Bush, the most poorly evaluated president in polling history. Similarly, President Jimmy Carter had slightly higher numbers than Obama at this point in his presidency, presumably because his style was so different than that of Richard Nixon, the only president forced to resign because of his malfeasance in office.

But positive attitudes toward Barack Obama are based on far more than negative attitudes toward his Republican predecessor. Outside of Carter, President Obama's approval score is higher than for any president since Dwight D. Eisenhower and John F. Kennedy, two Presidents who served toward the end of the last civic era in American history, a period that ended with the election of Nixon in 1968. In civic eras, Americans have much more positive attitudes toward political institutions than in politically divided and gridlocked idealist eras such as the Baby Boomer-dominated one we just left. In civic eras, the public wants and expects governmental action. By contrast, in idealist eras, presidential approval ratings tend to fall fairly quickly in a President's term, signaling the end of the honeymoon. This happens as soon as the President begins to take action that is bound to offend at least one half of the divided electorate.

Civic eras begin when a generation, such as today’s young Millennials, enters the electorate with an overwhelming preference for one party’s presidential candidate and his policy agenda. This causes the President’s popularity to go up or remain stable at a high level, not down, as the newly elected candidate takes steps to implement his campaign pledges. For example, Franklin Roosevelt, who kicked off America's last previous civic era in 1932, never really did see an end to his honeymoon in terms of decreasing popularity, at least not until well into his second term. FDR's Democrats even gained seats in both the House and Senate in 1934, the only time in U.S. history that the party of a newly elected president has ever gained seats in the mid-term elections that followed his winning the presidency. And, of course FDR won reelection to a second term in 1936 by an even larger margin than he did in 1932.

As long as Democrats in Congress support Obama’s blueprint for change, he should continue to accomplish big things, which will have the effect of reinforcing, not decreasing, his popularity. While many inside the beltway may not recognize that we have entered a new era in American politics, both the President and the public do.  Barack Obama should have the popularity to prove it for some time to come.

Dr. Rob Talks About the GM Rescue Plan on Fox News' "Happening Now"

Rob Shapiro, the Chair of NDN's Globalization Initiative, has a great essay today on the Administration's GM rescue plan. He hit similar notes yesterday on Fox News' "Happening Now." Check it out below:

Monday Buzz: Pragmatic Pessimism, Polarizing 'Pubs, Public-Private Partnerships?, More

Despite the President's more optimistic tone of late, many people remain gravely worried about the state of the U.S. and global economies. Rob was quoted in an exellent Huffington Post piece by Sam Stein criticizing Treasury Secretary Geithner's bank plan. From the article:

...But for many economists, the invitation for risk inherent in Geithner's plan is simply too great. Indeed a second critique being forcefully raised by economists is that the system Treasury is putting in place can easily be gamed.

In his Monday column, Sachs outlined this very prospect: Citibank, theoretically, has a toxic asset on its books with a face value of $1 million but no probability of payout. The bank sets up a Public-Private Investment Fund (PPIF) to bid the full $1 million for that worthless asset. That PPIF borrows $850,000 from the FDIC, gets an additional $75,000 from Treasury, and puts up $75,000 of is own money to make up the bid. In the end, Citi gets a profit of $925,000 (the $1 million it receives of the bid minus the $75k its related entity had to put up).

Such a scenario is indicative of the flaws in the Geithner plan, argued former senior Clinton commerce official Rob Shapiro. There is, in fact, a guarantee.

"The Feds guarantee the 5/6 leverage used to buy the assets," he said, "so if the assets tank and the buyer defaults on the loan (no $ to pay it back, since the assets really were worthless), the feds (taxpayers) make it up to the lender."

Rob also had his own essay, "Time to Face the Facts: The Economy Probably Won't Get Better For Quite a While," published in the Huffington Post last week.

Next, NDN fellows Morley Winograd and Mike Hais had a post on MyDD, which then made its way into the "Best of the Blogs" section of Real Clear Politics. Here's a quote from their piece:

...The polarization between Democrats and Republicans in the Pew survey has much less to do with President Obama's personal and political style, as they are suggesting, than it does with the inability of his own Republican Party to adapt to this new era. From the earliest Pew survey conducted in 1989, the first year of George H.W. Bush's administration, through 2005, there was near parity in the distribution of party identifiers within the electorate; no more than three or four percentage points ever separated the Democrats from the Republicans. By contrast, since 2006 the percentage of Americans identifying themselves as Democrats has risen significantly while the number saying they are Republican has fallen. In the most recent Pew study, conducted early this month, the Democrats held a clear 52% to 35% lead over the Republicans in party ID, a 13-percentage point shift toward the Democratic Party since 2004. And, only 21-percent of American voters are "pure" Republicans, a group that consists only of those willing to call themselves Republicans and does not include independents that say they lean toward the GOP. This is the smallest number of "pure" partisans for either party in any survey ever conducted by Pew.

Our good friend and NDN Fellow Joe Garcia was quoted in The Hill about Obama's plan to lift some restrictions on Cuba. From the Hill piece:

...If the younger Cuban-American voters are looking for a different approach to U.S. policy toward Cuba, as the Obama administration and Democrats think, lifting some of the travel restrictions could help Obama grow his popularity with this community.

Joe Garcia, a fellow at the NDN think tank, said Obama made it clear he would lift these restrictions and change U.S. policy with Cuba during the presidential campaign. Restricting travel and remittances by Cuban-Americans makes little sense in terms of policy or politics, said Garcia, a Democrat who last fall unsuccessfully challenged Rep. Mario Diaz-Balart (R-Fla.), one of Congress’s staunchest supporters of the embargo.

Simon was quoted in a New York Times Syndicate piece by Marcela Sanchez about perceptions of President Obama in Latin America:

...Recent polls show Obama is more highly regarded in Latin America than in the United States. With an event such as the town hall meeting in Strasbourg, France, or the roundtable discussion with students in Istanbul, Turkey, Obama could chip away at the less than casual anti-American sentiment that festers in the region.

"We haven't had a global leader with Obama's appeal in a very long time," said Simon Rosenberg, president of the center-left Washington think tank NDN, who added that the president's power to reach out is aided not only by today's communications but also by his desire to speak straight and openly to people everywhere. "The politics of the bottom up we saw in the election is going global," Rosenberg said.

Finally, Simon was featured extensively in an ABC News story about immigration and how it actually affects the job security of U.S. citizens:

Simon Rosenberg, president and founder of NDN, a Washington, D.C.-based progressive think-tank and advocacy group that is pushing for change in immigration law, also agreed. He said that letting illegal immigrants move down the path to legal work and citizenship will help all workers.

"If anything, it will help low-end workers across the country because it would remove the trapdoor under the minimum wage," he said. Right now, these workers are "driving down wages for you. They are creating unfair competition."

Rosenberg said immigration reform is not going to cause an influx of new immigrants into the country.

"You against an illegal worker, you lose that fight every time," he said. "The worst possible thing for American workers is to have a vast pool of undocumented immigrants in the United States."

There are some business owners who say immigration changes would only increase the cost of doing business and drive up prices for all.

Rosenberg says to them: "I think the idea that we are accepting illegal exploitation of workers to prop up businesses, there's a question as to whether those businesses should be in business in the first place.

Ultimately, Rosenberg believes that change in immigration law reform would be good for the country, economically and socially.

"It will take the air out of the balloon of some of the most virulent racism that we've seen in America in generations," he said. "There is publicly sanctioned racism against Hispanic-Americans in this country today in a way that is very unhealthy and morally unacceptable in the age of a bi-racial president."

Everybody's Wrong But Us

In Wednesday’s Washington Post, conservative columnist Michael Gerson, citing a recent Pew Research Center poll, says that the "polarization" between Democrats and Republicans in their approval of President Barack Obama's performance is greater than for any other president in surveys stretching back to the early days of the Nixon administration. In the Pew survey, a nearly unanimous 88 percent of Democratic identifiers, as opposed to a scant 27 percent of Republicans, approved of the president's performance, a gap of 61 percentage points. Independents (57% approve) fall precisely between the Democrats and Republicans. Overall, in that survey, 59 percent of all Americans approved of the job the president was doing, a number that rose slightly (to 61%) in the most recent Pew survey, conducted in the wake of Obama's European trip.

While Gerson's statement of the facts may be correct, his interpretation is dead wrong. The election of President Obama last year brought America into a new civic era, a turning point that has occurred roughly every eighty years throughout American history. Each time the country enters a civic era there is a rise in partisan identifications, a more coherent ideological divide between the two parties, and an increase in straight ticket voting. Even Gerson noted that polarization might be a good thing when it is a "decisive" and "ambitious" president like Franklin D. Roosevelt who is doing the polarizing to achieve overriding national goals. Despite Gerson's attempts to blame Obama for our current level of partisan divide, the truth is that such a division is inevitable in a civic era.

The polarization between Democrats and Republicans in the Pew and every other survey has much less to do with President Obama's personal and political style, as Gerson suggested, than it does with the inability of his own Republican Party to adapt to this new era. From the earliest Pew survey conducted in 1989, the first year of George H.W. Bush's administration, through 2005, there was near parity in the distribution of party identifiers within the electorate; no more than three or four percentage points ever separated the Democrats from the Republicans. By contrast, since 2006 the percentage of Americans identifying themselves as Democrats has risen significantly, while the number saying they are Republican has fallen. In the most recent Pew study, conducted early this month, the Democrats held a clear 52% to 35% lead over the Republicans in party ID, a 13 percentage point shift toward the Democratic Party since 2004. And, only 21 percent of American voters are "pure" Republicans, a group that consists only of those willing to call themselves Republicans and does not include independents that say they lean toward the GOP. This is the smallest number of "pure" partisans for either party in any survey ever conducted by Pew.

Quite simply, the GOP has become an ever-declining corps of conservative true believers. A recent Frank N. Magid Associates survey indicates that while Democratic identifiers are almost evenly divided between liberals or progressives (45%) and moderates (42%), among Republicans, conservatives outnumber moderates by more than 2:1 (61% vs. 26%).

As a result, Republicans see things very differently than almost everyone else. The latest Daily Kos weekly tracking poll, for example, indicates that more than two-thirds of Americans (67%) have a favorable opinion of President Obama. In that poll at least sixty percent of both women and men and all age and ethnic groups have a positive impression of the president. Only among Republicans (23%) and in the geographic center of the GOP, the South, (41%), is only a minority favorable toward Obama.

Given the distance of the Republican Party from the current American political mainstream, and the increased sense of party loyalty felt by many Americans, it shouldn't be surprising that most of the public is reticent to see President Obama compromise with Republicans on important public policy questions as Gerson suggests. In a March CBS/New York Times poll, a clear majority (56%) wanted President Obama to pursue the policies he promised in the campaign rather than working in a bipartisan way with Republicans (39%). An even larger majority (79%) wanted Congressional Republicans to work in a bipartisan way with the President rather than sticking to Republican policies.

By refusing to do so, it is the Republicans and not Barack Obama who are now polarizing American politics and, as a result, it is they who are polarized from most of their fellow citizens as well.

If Republicans like Michael Gerson truly want to see bipartisan policymaking, they will have to retreat from their position as a corporal's guard on the right wing of American politics and join the rest of the country in seeking real solutions to the major issues facing the United States at the dawn of the 21st Century.

The Republican Joke-of-a-Budget

Yesterday, U.S. Rep. Paul Ryan and his GOP cohorts in the House released their alternative budget. (This time with numbers!) The highlights are a freeze on discretionary spending, an utter absense of any common sense, and a chart from fantasy land. Here's what Senate Majority Leader Harry Reid had to say:

If you like this recession, you’ll love the Republican budget.  And if their plan sounds familiar, it’s because it merely repeats the same mistakes of the past eight years – mistakes that have cost millions of Americans their jobs and plunged our nation into the worst economic crisis since the Great Depression.

While the Democratic budget invests in health care, education and energy, the Republican budget will take cops off the streets and eliminate needed transportation projects that create jobs.  While the Democratic budget cuts taxes for middle-class families, the Republican budget continues to give tax breaks disproportionately to multimillionaires and Big Oil companies.  And while the Democratic budget is designed to help families keep their homes and get us out of this recession, the Republican budget will only make a bad situation worse.

What America needs now is a serious and responsible plan that invests in our future, cuts taxes for the middle class and cuts the Republican Deficit – which is exactly what the Democratic budget does.

In addition to Reid's statement, it's worth noting that the Republican budget proposes the sort of sustained policy error that could turn this Great Recession into an actual depression. In fact, America almost emerged from the Great Depression, only to be plunged back in by an attempt to balance the budget in the short term by cutting spending. Reid's statement may be too kind to the Republicans on one point - the GOP budget doesn't merely repeat the same mistakes of the past eight years, it's much, much worse at a time when the stakes are much higher.

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