As anyone who has used a passport recently knows, infrastructure in the United States has fallen well below world standards. Decades of underinvestment have taken their toll, fiscally hard-pressed states are cutting back, and the current system of federal appropriations for infrastructure projects precludes a coordinated approach that matches the scale of the problem and reflects national priorities.

There’s a solution, which Barack Obama advocated during his presidential campaign: a National Infrastructure Bank. A bipartisan commission co-chaired by Felix Rohatyn and former Senator Warren Rudman developed the proposal a few years ago, and bills to establish such a bank have been introduced in both the House and the Senate.

While the details vary, the general idea is this: The bank would be established with an initial infusion of federal capital--$60 billion is a frequently cited figure--and an independent board of directors. All projects seeking federal support over a fixed amount ($75 million in the 2007 Dodd/Hagel version) would have to be submitted to the bank for approval. The governors would employ an explicit and rigorous template for evaluating projects’ benefits and fundability. Projects surviving this test would be eligible for a range of financing options.

Beyond reducing the influence of local pork-barrel considerations on infrastructure investments, the bank would offer two other advantages. First, it could mobilize additional capital by reselling the loans it makes in the private market. This would enable the bank to make more loans without additional appropriations, multiplying the bank’s impact on the direction and level of investment. Second, it could help smooth over some short-term political problems. Rather than forcing current taxpayers to bear the entire burden of investments from which the next generation will also benefit, revenue bonds would enable all users over a period of decades to pay a fair and affordable share.

We have an urgent need--a growing gap in providing public goods that improve economic efficiency as well as the quality of social life. We have massive unused resources, in the form of idle plants and equipment and sky-high unemployment. Infrastructure investment creates high-quality jobs here at home, and it produces tangible results to which politicians can point with pride.

So what’s not to like? Or more precisely, who doesn’t like it? Congressional appropriators, for one, are likely to because a bank with an independent board would clip their wings. And it is rumored that some senior members of Obama’s economic team are opposed as well. It is, however, an idea that Barack Obama has repeatedly endorsed. And it’s a natural centerpiece for any agenda that emerges from the White House’s December “jobs summit.”

So will the president have the courage of his campaign convictions? Will his advisors suspend their disbelief? Will we become once again the country that created the interstate highway system? Or are we too divided and dispirited even to try? Stay tuned.

Rahm Emanuel to The New York Times, 11/10/2009: "Let's be honest. The goal isn’t to see whether I can pass this [health care reform] through the executive board of the Brookings Institution. I’m passing it through the United States Congress with people who represent constituents.”

Dear Rahm,

It may surprise you to learn that many of us here at Brookings like politics as much as you do, and some of us even know something about it. But we don’t understand it exactly the way you do.

Yes, politics is the art of the possible. But leadership is the art of expanding the possible. Leadership without politics is futile. But politics without leadership is blind. 

If you define “success” as a bill—any bill—you (and by implication, the man you serve) are telling your former colleagues in Congress that they are free to do whatever suits their short-term political convenience. This all but guarantees that their work product will duck the hard issues. In the case of health care, it means that they won’t embrace real, guaranteed, and substantial long-term cost reductions throughout the entire system, private as well as public, without which universal coverage will quickly become unsustainable.

It’s time for the White House to step in and speak out. That means publicly specifying the essential elements of meaningful health care cost containment. And it means insisting that they are included both in the Senate bill and in the conference report. I think you know what they are. If not, call Peter Orszag.

Sincerely,

William A. Galston, Senior Fellow

The infamous den of useless utopian thinking known as the Brookings Institution

UPDATE: Since Rahm also took a dig at the Aspen Institute in that Times article (“I’m sure there are a lot of people sitting in the shade at the Aspen Institute—my brother being one of them—who will tell you what the ideal plan is. Great, fascinating. You have the art of the possible measured against the ideal.”), TNR asked Walter Isaacson, its director, for a comment. Here’s what he had to say: “He's absolutely right. But the dirty little secret about Rahm Emanuel is that he knows and cares about policy substance more than anyone in Washington.”

Last Saturday’s debate on the Stupak anti-abortion amendment to the House health reform bill provides an X-ray of the complex interplay between region and religion within the Democratic coalition.

When it comes to social issues, religion matters among Democrats, not just Republicans. Of the 64 Democrats who supported the Stupak anti-abortion amendment, 35 (55 percent) are Catholic. In the Democratic caucus, by contrast, Catholics make up only 38 percent of the total. Put differently: 36 percent of House Democrats who are Catholic supported the amendment, versus 18 percent of non-Catholic House Democrats.

Although we lack district-by-district breakdowns of religious affiliation, data from the Pew Forum on Religion and Public Life indicates that a majority of the Catholics who supported the Stupak amendment hail from states with above-average Catholic populations, and the ethnic composition of their districts suggests that they have large numbers of Catholic constituents.

Region matters as well. Of the 29 non-Catholic Democrats who voted for the Stupak amendment, 20 hail from conservative southern districts, and two from heavily Catholic districts in Texas and New Mexico. The remaining seven represent conservative-leaning districts in Indiana, Utah, West Virginia, Minnesota, North Dakota, and Ohio.

No Democrats from the western-tier states of Washington and Oregon or the mid-Atlantic states of New York, New Jersey, and Maryland voted for the amendment; of the 21 New England Democrats, only four--all Catholic--supported it.

Although the religious and regional balance of the Democratic Party has changed in recent decades, the need to manage a diverse coalition has not. It’s a reality that Democrats angry about compromises that congressional leaders make would do well to keep in mind.

Click here to read Alan Wolfe's argument that the vote actually illustrates the waning influence of Catholicism in politics.

While Congress slogs through the final months of the health reform debate, the American people remain focused on the economy. With good reason: We’re in a very deep hole, and it’s not clear how we’re going to get out. 

As Christina Romer, chair of the president’s Council of Economic Advisors, pointed out in her recent testimony before the Joint Economic Committee, “The shocks that hit the U.S. economy last fall were, by almost any measure, larger than those that precipitated the Great Depression.” And despite unprecedented government action, the labor market has reflected these shocks. Since the current recession began in December of 2007, the economy has shed 7.6 million jobs—5.2 percent of the prerecession total. By contrast, only 1.45 million jobs (1.9 percent) were lost in the 1973-75 recession and 2.64 million (3.1 percent) in 1981-82. And Bureau of Labor Statistics data reveal a stunning fact: In the past ten years, for the first time since the Great Depression, there has been no net job generation in the private sector. As of the end of September 2009, non-farm private employment stood at 108.5 million; in September 1999, the comparable figure was 108.7 million. Otherwise put, the current recession has already nullified all the employment growth of the previous 8+ years, and we may not have hit bottom yet. 

Romer predicted that economic growth and job generation between now and the end of 2010 will barely be high enough to keep unemployment from getting worse. And there are, she stressed, important downside risks, including unusually tight credit conditions and larger than expected productivity gains. As Paul Krugman pointed out yesterday, “At current growth rates we’d be lucky to see the unemployment rate fall by half a percentage point per year, meaning that it would take a decade to return to something like full employment.” And that’s if growth continues at the most recent quarter’s rate without interruption until 2019, which hardly anyone expects. 

Krugman’s proposed response is more government stimulus as far as the eye can see.  But Romer appears to believe that the long-term fiscal situation places limits on the government’s ability to continue fiscal stimulus beyond the near-term: “The Mid-Session review released in August predicted ... substantial structural deficits even once the recession is over and the economy is fully recovered. Such long-term deficits are unacceptable and need to be dealt with. Over the long run, sustained deficits crowd out private investment and reduce long-run growth.” Although Romer holds out hope that health reform could “improve the long-term fiscal situation dramatically,” the CEA’s own report issued last June undercuts that hope, as I pointed out in a previous TNR column. 

So which is it to be—unending stimulus, regardless of the deficit and debt, or temporary stimulus followed by fiscal restraint? That is the debate Democrats need to have and cannot indefinitely postpone. But the advocates of restraint, in whose camp I count myself, must ask themselves a question: What are we proposing in place of open-ended stimulus to save the American people (and especially young Americans just starting out) from a lost decade of constricted opportunity?

It’s a mistake to put too much weight on the results of any single public opinion survey. That said, Peter Hart and Bill McInturff are an unusually experienced and fair-minded bipartisan team, and I’m inclined to take their work for NBC and the Wall Street Journal seriously. Their latest results offer little encouragement for the president, either political party, or the political system as a whole.

Let’s begin with the political system. Trust in government now stands at 23 percent—the lowest level in at least twelve years. A stunning 76 percent of Americans believe that the government in Washington will do the right thing only some of the time, or never. These statistics confirm the findings from a recent CBS/New York Times poll, and they suggest that proponents of government action must overcome deep skepticism. The Obama administration inherited a public sector most Americans regarded as broken, and nothing since the inauguration has fundamentally altered that perception.

One illustration: I recently had the opportunity to help design a survey of public attitudes towards health reform. The results, published jointly by Brookings and WorldPublicOpinion.org, showed broad public support for a range of reform options, including both Democratic and Republican proposals. Nevertheless, fully 53 percent of the respondents expressed the fear that if government gets more heavily involved in health care, it will just make matters worse. Similarly, the NBC/WSJ survey found 51 percent more concerned that government will end up “going too far and making the health care system worse than it now is in terms of quality of care and choice of doctor” versus only 44 percent concerned that the government will not do enough to lower costs and cover the uninsured.

These concerns may be related to the recent surge in the activities of the federal government. In the month after Barack Obama took office, 51 percent of Americans believed that government “should do more to solve problems and help meet the needs of people.” Today, the figure stands at 46 percent. Meanwhile, the percent who believe that government is “doing too many things better left to businesses” and individuals has risen from 40 to 48 percent. The shift has occurred in tandem with increased concern about our fiscal situation. According to Hart and McInturff, only 31 percent of respondents believe that the president and Congress “should worry more about boosting the economy even though it may mean larger budget deficits” versus 62 percent who say that the president and Congress “should worry more about keeping the deficit down, even though it may mean it will take longer for the economy to recover.”

This wariness about increased government spending does not mean people believe that the economy is on the mend. Fifty eight percent believe that we still have a way to go before we hit bottom (up from 52 percent just last month), and 63 percent believe that unemployment will continue to get worse.  Only 42 percent expect things to get better in the next twelve months, down from 47 percent just last month.

Congress and the major parties can draw little comfort from the Hart/McInturff report. Overall approval of “the job that Congress is doing” stands at 24 percent—down from an already anemic 31 percent shortly after President Obama’s inauguration. But while approval of the Democratic Party has declined from 49 to 42 percent during that period, public perceptions of the Republicans hasn’t improved either—26 percent approval in February, 25 percent today. “A plague on both your houses” may be the best summary of current public attitudes.

Finally, President Obama. His overall approval has fallen from 68 percent in January to 56 percent today. Only 44 percent both like him and approve of most of his policies, down from 55 percent. Only 56 percent see him as having strong leadership qualities, down from 70 percent. Compared to nine months ago, far fewer American see him as firm and decisive, or as willing to work with people whose viewpoints are different from his own. While 63 percent continue to believe that the economy is a situation Obama inherited, that’s down from 84 percent in February. If that trend continues, the president will own the economy by next spring. While 38 percent of Americans now think his health care plan is a “good idea” (up from 33 percent in April), the number who think it’s a “bad idea” has risen much more, from 26 to 42 percent. And the reasons are clear: many more Americans believe that the quality of their health care will get worse rather than better and that costs will rise rather than going down. In a similar vein, the Brookings/WorldPublicOpinion.org found that despite the president’s repeated assurances, most Americans expect his plan to increase the budget deficit and raise their taxes.

This bad news does not warrant the conclusion that the president’s program has been misguided. It does suggest, however, that the bold actions he has undertaken have taken a toll in public confidence and support. As he and his advisors plan for the second year of his administration, they would do well to ask themselves how much more the people will bear. The man who famously called for l'audace, et encore de l'audace, et toujours de l'audace" ended his life at the guillotine.

The current state of American politics presents a paradox. On the one hand, survey after survey testifies to the rock-bottom standing of the Republican Party. Fewer Americans identify with the party than in the past, and fewer trust it to deal with the country’s problems. On the other hand, there are hard-to-ignore signs of a conservative resurgence. A 15,000 person Gallup survey out today shows that 40 percent of Americans now identify themselves as conservative (up from 37 percent at the time of Obama’s election), while only 20 percent regard themselves as liberal (down from 22 percent). Far more independents (35 percent) consider themselves conservative than was the case a year ago (only 29 percent).

These findings would be less compelling if they were not linked to conservative shifts on specific issues--but they are, and the Gallup organization enumerates a considerable list. Among them: increasing opposition to government regulation of business and gun ownership; an uneasy feeling about the influence of labor unions; increasing support for immigration restrictions and government promotion of traditional values; and diminished support for strong action on climate change. The percentage of Americans who believe that government is trying to do too much stands at its highest level (57 percent) in many years. Trust in government is near all-time lows, and Americans believe that 50 cents of every federal tax dollar is wasted--the highest level ever.

It is hard to avoid the conclusion that unified Democratic government has sparked a conservative counter-mobilization. Because we cannot rerun history as a controlled experiment, we will never know whether this could have been avoided had the Obama administration and Congressional Democrats adopted a different strategy. In any case, it’s too late to reverse it.

Still, Democrats must ask themselves whether there’s anything they can do over the next year--for example, a meaningful shift toward fiscal restraint--to reduce the intensity level of the conservative assault. If not, the combination of an energized opposition and an electorate battered by high unemployment, slow growth, and the perception of out-of-control spending could set the stage for an ugly outcome. This wouldn’t mean that Republicans had regained credibility as a governing party; odds are that it will take more than two years to erase the public’s sour memories of the Republican congressional majority and George W. Bush’s presidency. It would mean that a substantial portion of the electorate wanted to send Democrats a message that they had gone too far.

The Clinton administration (in which I served) was derailed by the results of its first midterm election, and it took Democrats a decade to recover. While there are reasons to believe that Republicans won’t do as well this time, Democratic leaders should take seriously the possibility of a significant electoral reverse and act strategically to make it less likely.

With all the focus on a  handful of high-profile items, many important features in the House and Senate health reform proposals are being overlooked. And some of these neglected items bear on the fiscal soundness of whatever reform is eventually adopted.

Consider the proposed new federal long-term care program (the “CLASS Act”), which is included in both the House and Senate HELP Committee bills but not in the Finance Committee’s version. Enrollment in the program would be voluntary and open to all active workers and their spouses. In return for monthly premiums, enrollees would be guaranteed cash payments if they become unable to perform certain basic activities—such as feeding and dressing themselves--without assistance. Enrollees would have to pay premiums for a minimum of five years, after which benefits would be paid out of a trust fund consisting of accumulated premiums plus interest earned on its balances. The proposed legislation would give the HHS secretary wide latitude to adjust premiums and benefits to ensure solvency over time.

So far, this sounds like an insurance program, albeit one run by the federal government. But there’s a catch. In a July 6 letter to Senator Kay Hagan, CBO director Douglas Elmendorf estimates that “the proposal’s net effect on the federal budget would be to reduce the budget deficit by about $58 billion during the 2010-2019 period.” And he explains why: “The estimated reduction in the federal budget deficit over the next 10 years is chiefly the result of the five-year vesting requirement; the payout of benefits would not begin until 2016, five years after the initial enrollment in 2011.”

In a normal insurance program, the fund created by accumulating premiums is set aside as a reserve against future claims by beneficiaries. Technically, the HELP Committee’s bill does establish such as fund, often called a “lockbox.” But here’s the catch: the CLASS Act savings as scored by the CBO are counted against the costs of the overall health reform effort. There are only two possibilities. If the funds are really sequestered for long-term care, then the rest of health reform is underfunded by $58 billion over the next decade. If the funds are not sequestered and are in effect used to finance the overall reform package, then the CLASS Act is underfunded by $58 billion, mostly in the decade after that. You can’t spend the same money twice. So in either event, the government would have to find the money someplace else or allow the deficit to increase by an additional $58 billion.

This may strike some readers as a detail, or worse, as a diversion. I don’t think so. We’re already facing an unsustainable fiscal future. The least we can do is to honor the political version of the Hippocratic oath and do no harm. That’s what President Obama has promised. Serious legislators shouldn’t use accounting tricks—such as pushing deficits outside CBO’s scoring windows--to sidestep this pledge.

There are signs that the appeal of such tricks is growing rapidly as Congress begins to focus on the real cost of fiscal integrity. Senate Majority Leader Harry Reid has apparently decided to address the issue of Medicare physician reimbursement--a $247 billion item--outside of health reform and without paying for it. And just today, Al Hunt floated the idea of including the CLASS Act in the final health legislation, largely on the grounds that it raises revenue that could be used to pay for reform. All this while the dollar is in free-fall and foreign countries are beginning to discuss ways of ending its role as the world’s reserve currency.

Health reform is important, but so is the long-term health of the U.S. economy. President Obama’s official position is just right: no reform is acceptable that digs our fiscal hole even deeper. Between now and the end of the year, we’ll find out whether he means it.

I’m grateful to Michael Cohen for challenging my views on General McChrystal, because it invites me--indeed, compels me--to say more about how I reached my conclusion. (Click here to find out why Joe Biden flipped on Afghanistan.)

Let’s begin with some propositions about which I suspect there’s little disagreement: Entering or expanding a war is the gravest decision a political community can make. Lives, scarce resources, and honor are at stake, and the consequences of mistaken judgments are both large and lasting. Whatever may be the case for other regimes, a democracy cannot sustain the decision to enter or expand a war without the people’s informed assent.

I was a junior in college when LBJ made his fateful choice to escalate the war in Vietnam after assuring the American people that he would do nothing of the sort and winning the presidency in part on the basis of that assurance. The people were shut out of the process, and Congress lacked the information to object. It was not until years later, largely through leaks, that we learned about the doubts and dissent that attended that decision. Would it have made a difference if we had known? Who knows? But the fact is that we didn’t, with consequences that have persisted down to the present.

Liberal pundits, Defense Secretary Robert Gates, and National Security Advisor James Jones are in agreement: General Stanley McChrystal, commander of U.S. and NATO forces in Afghanistan, was wrong to give public voice to his views about the best way forward in that beleaguered country. Yale law professor Bruce Ackerman accused McChrystal of “a plain violation of the principle of civilian control.” Washington Post columnist Eugene Robinson put it most bluntly: "The men with the stars on their shoulders … need to shut up and salute." Some are even drawing parallels between McChrystal and Douglas MacArthur. All these critics are wrong.

Of the more than 500 amendments offered to Senator Max Baucus's "chairman's mark," one of the most important is surely Senator Ron Wyden's proposal to allow everyone access to the plans offered in health insurance exchanges. Under his plan, employers offering group health coverage would have two options. They could choose to offer their workers two or more plans, at least one of which would have premiums no higher than those of the most affordable high-quality plans in their area. If they don't want to do that, they would be required to offer all eligible employees a voucher equal to the amount they contribute to their employees' coverage under the plan they sponsor. Workers could either return the voucher to the employer and remain within the sponsored plan or use the voucher to purchase coverage through the local health exchange. Workers who select plans costing less than the value of the voucher would be able to keep the unspent amount as cash.

Wyden's plan would offer more choice for both workers and employers, and it would encourage cost containment by encouraging consumers to select lower-cost options. CBO scores the plan as roughly deficit-neutral; the Lewin Group believes that it would actually lower the deficit by reducing the amount of revenue the federal government foregoes because of the tax exclusion for employer-provided health benefits.

On March 27, President Obama announced a new strategy for Afghanistan and Pakistan. This, in part, is what he said:

Many people in the United States--and many in partner countries that have sacrificed so much--have a simple question: What is our purpose in Afghanistan? After so many years, they ask, why do our men and women still fight and die there? And they deserve a straightforward answer.

So let me be clear: Al Qaeda and its allies--the terrorist who planned and supported the 9/11 attacks--are in Pakistan and Afghanistan. Multiple intelligence estimates have warned that al Qaeda is actively planning attacks on the United States homeland from its safe haven in Pakistan. And if the Afghan government falls to the Taliban – or allows al Qaeda to go unchallenged--that country will again be a base for terrorists who want to kill as many of our people as they possibly can.

The future of Afghanistan is inextricably linked to the future of its neighbor, Pakistan. In the nearly eight years since 9/11, al Qaeda and its extremist allies have moved across the border to the remote areas of the Pakistani frontier. … For the American people, this border region has become the most dangerous place in the world.

As President, my greatest responsibility is to protect the American people. We are not in Afghanistan to control that country or to dictate its future. We are in Afghanistan to confront a common enemy that threatens the United States, our friends and our allies, and the people of Afghanistan and Pakistan to have suffered the most at the hand of violent extremists.

So I want the American people to understand that we have a clear and focused goal: to disrupt, dismantle and defeat al Qaeda in Pakistan and Afghanistan, and to prevent their return to either country in the future. That’s the goal that must be achieved. That is a cause that could not be more just. And to the terrorists who oppose us, my message is the same: We will defeat you.

President Obama could not have been clearer in articulating his understanding of the fundamental national interests at stake in Afghanistan. And nothing that has happened in the past six months affects--or should affect--that understanding. That includes the controversy over the Afghan elections. If what the president said was true in March, it remains true today.

In recent weeks, senior Obama administration officials have suggested that historically high levels of unemployment could persist for many years. Indeed, the most recent OMB projections show unemployment remaining above 7 percent until 2012, and above 5 percent through at least 2019.

There are good reasons to take these warnings seriously, even if the economic recovery is more vigorous than the current consensus suggests. Since the recession began, the number of unemployed persons has risen by 7.4 million (4.8. percentage points), and a look beneath the official unemployment statistics reveals even worse news. The number of people who want full-time jobs but have been forced to settle for part-time work has risen from 5.9 million a year ago to 9.1 million today. The number of discouraged workers—people who would like to work but aren’t looking because they believe that no jobs are available—has nearly doubled. It’s not hard to see why: The long-term unemployed (those out of work for more than six months), who constituted less than one-fifth of all the jobless a year ago, now account for fully one-third.

New entrants into the labor force have been hit especially hard. During the past year, the unemployment rate among 20 to 24 year-olds has surged from an already high 10.7 percent to 15.1 percent, and from 11.7 to 16.8 percent among young men in this age bracket. By contrast, despite numerous heartbreaking anecdotes, older workers have fared better: Among 45 to 54 year-olds, unemployment rose from 4.4 to 7.7 percent; among those 55 and older, from 4.1 to 6.8 percent.

In part, the squeeze at the bottom of the age range reflects a growing tendency among older Americans to work later into their lives. The recession is boosting their labor force participation rate, which fell steadily from the end of World War Two until the mid-1980s before beginning a slow rise. Sixty-three percent of workers ages 50 to 61 say they may have to delay their retirement because of the effects of the recession, and a stunning 38 percent of workers 62 and over report that they already have put their retirement plans on hold. Although economists rightly warn against the “lump of labor” fallacy (the proposition that the number of jobs is fixed and that one person’s job comes at another’s expense), what holds true in the long run may not apply in the short term. In times of high unemployment and weak job generation, a slowdown in those leaving their jobs at the end of their careers is bound to have ripple effects throughout the rest of the system.

If OMB’s projections are correct, unemployment will average 9.8 percent during 2010 and will likely stand above 9 percent on the day of the mid-term election. After the health care debate ends, and whatever its outcome may be, the administration and congressional Democrats would be well advised to turn their attention back to the economy and ask themselves whether there is anything more to be done to jumpstart job creation. If current trends continue unaltered, the American people will suffer—and so too will the Democratic Party.