Two analyses released late last week underscore the rising importance of debt, both private and public, to average Americans. On Thursday, the Fed reported that after nearly doubling to $13.7 trillion between 2000 and 2008, household debt fell in 2009 for the first time since record-keeping began in 1945. Because household debt rose so much faster than disposable income during that period, debt soared from 90 percent of disposable income to a stunning 130.6 percent before falling back to 122.5 percent at the end of 2009. Much of the decline results from the forced liquidation of debt through housing foreclosures and credit card terminations; the rest reflects the use of higher household savings to pay down debt.
While this is a good start, households have a long way to go before reaching a sustainable balance between debt and income. With normal interest rates, many economists believe, the average household can afford debt totaling about 100 percent of disposable income. If so, the household sector has worked off only one quarter of the excess debt it accumulated during the past decade, and the economy faces another few years of foreclosures, stringent credit, and higher household savings. While laying the basis for renewed growth down the road, these trends suggest the continuation of a below-average recovery for some time to come.
As citizens begin to recover from their own debt binge, they are becoming increasingly concerned about the government’s. A Gallup survey out Friday showed that 31 percent of Americans think unemployment is “the most important problem facing the country today,” with the economy in general in second place at 24 percent and health care at 20 percent. The federal budget deficit was a distant fifth, at 8 percent. But when Americans were asked what they think will be “the most important problem facing our nation 25 years from now,” more (14 percent) named the federal budget deficit than any other issue. Gallup notes that “[t]his is the first time the federal budget deficit has topped the list of future problems, and indeed the first time it has exceeded 5 percent.”
For decades, the conventional wisdom has been that concern over public-sector budget deficits and debt was confined to a handful of elected officials and policy wonks. Although Ross Perot challenged that belief in the early 1990s, the consequences of his insurgency soon faded. But now, the massive spending and debt accumulation the government has used to save the financial system and stabilize the economy are in the process of effecting a sea-change in public attitudes. While President Obama’s fiscal commission may well deadlock, the problem that called it into being isn’t going away, and neither are the public’s concerns. The party that masters the emerging new politics of deficits and debt will seize the mantle of national leadership.
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This past Friday, without much fanfare, CBO submitted its analysis of President Obama’s proposed FY 2011 budget. The bottom line is worse than we thought. Despite sustained economic recovery, the budget deficit under the president’s proposal never falls below 4 percent of GDP over the next decade and rises to 5.6 percent by 2020. The aggregate deficit during that period is $9.761 trillion—close to $1 trillion each year on average. Not surprisingly, debt held by the public rises steadily and reaches 90 percent of GDP by 2020. If the historical study of financial crises conducted by Kenneth Rogoff and Carmen Reinhart is correct, that level of debt is enough to reduce our long-tem growth prospects by about a percentage point each year.
Unfortunately, the much-ballyhooed alternative to Obama’s budget—Representative Paul Ryan’s “Roadmap for America’s Future”—is equally flawed. Despite drastic reductions in both discretionary domestic spending and entitlement programs whose wisdom and political viability is questionable at best, the roadmap contemplates budget deficits of 5 percent as late as 2037 and produces its first balanced budget in 2063. Not surprisingly, it runs the debt up to 100 percent of GDP before the curve turns down. And these mediocre results rest on a leap of faith—namely, that Ryan’s proposed tax reforms would actually produce revenues equal to 19 percent of GDP, in line with CBO’s assessment of current policy. (The CBO analysis notes dryly that while the proposal “would make significant changes to the tax system … as specified by your staff, for this analysis total tax revenues are assumed to equal those under CBO’s alternative fiscal scenario.”)
Ryan’s roadmap does have one incontestable virtue: It demonstrates that even with draconian spending cuts, there’s no way of achieving fiscal sustainability during the next three decades without additional revenues. And the president’s budget has the mirror-image virtue: Even with health reform and tax increases for upper-income Americans, spending shoots ahead much faster than politically feasible and economically prudent revenues possibly could.
In her testimony before the Senate Budget Committee last month, former CBO director Alice Rivlin stated that “the widening gap between projected spending and projected revenues is too large to be closed by either spending cuts or revenue increases alone.” As we can see, that’s not just her opinion; it’s a political fact. How long will it take for our reality-denying political system to catch up to it?
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“With the passage of time,” former Bush administration official Pete Wehner writes today, “President Bush’s decision to champion a new counterinsurgency strategy, including sending 30,000 additional troops to Iraq when most Americans were bone-weary of the war, will be seen as one of the most impressive and important acts of political courage in our lifetime.” Wehner may turn out to be right. And his argument has broader implications that deserve our attention.
Wehner tacitly defines political courage as the willingness to go against public opinion in pursuit of what a leader believes to be the public interest. Fair enough. And unless one believes—against all evidence—that democracies can do without courage, so defined, it follows that there’s nothing necessarily undemocratic about defying public opinion when the stakes are high. After all, the people will soon have the opportunity to pass judgment on the leader’s decision. And they will be able to judge that decision, not by the claims of its supporters or detractors, but by its results.
Note that to accept this argument, as I do, is to deny that President Obama and the Democrats are acting high-handedly—let alone anti-democratically—in moving forward with comprehensive health insurance reform. They genuinely believe that the public interest demands it—and that the people themselves will eventually agree. And they know that the people will have the last word.
This approach has the firmest possible roots in our constitutional traditions. The Framers deliberately established a republican form of government that is representative rather than plebiscitary. And Alexander Hamilton explained why in Federalist #71: “[T]he people commonly intend the PUBLIC GOOD. … But their good sense would despise the adulator who should pretend that they always reason right about the means of promoting it.” In a republic, the people are always the ultimate source of legitimacy. They are not always the proximate source of wisdom.
Many conservatives don’t seem to understand this distinction. In response to the health care proposal President Obama released prior to the bipartisan summit, Senate Minority Leader Mitch McConnell said, “It’s disappointing that the Democrats in Washington aren’t listening, or are completely ignoring, what Americans across the country have been saying.” House Minority Leader John Boehner responded in the same vein: “The president has crippled the credibility of this week’s summit by proposing the same massive government takeover of health care based on a partisan bill the American people have already rejected. And today’s lead Wall Street Journal editorial accused the Democrats of scheming to pass health reform “merely because they think it’s good for the rest of us”—as though pursuing the public interest were a suspect motive for legislating.
So today’s conservatives have a choice: They can contest health reform and the rest of the Democratic agenda on its merits, or they can go down the populist road that Sarah Palin and her followers represent. But let’s call that populism by its rightful name—namely, shameless flattery of the people and the manipulation of public fears and prejudices for short-term political advantage. Honorable conservatives such as Wehner know better. We’re about to find out how many of them there are.
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In a superb speech at the Brookings Institution this afternoon, House Majority Leader Steny Hoyer called on the United States—elected representatives and average citizens alike—to “rededicate ourselves to the painful, unglamorous, and indispensible work of fiscal discipline.” Drawing on the studies of leading economists and historians, he warned that failing to do so would be committing ourselves to national decline. What is happening in Greece, he declared, can happen here: “If we don’t change course, it will happen here.”
While rejecting the ideologically-driven belief that “our budget deficit snapped into existence at noon on January 20, 2009,” he was ecumenical in his criticism:
“When it comes to budgeting, what is politically easy is often fiscally deadly. It is easier to pay for tax cuts with borrowed money than with lower spending; easier to hide the true costs of war than to lay those costs before the people; easier to promise special cost-of-living adjustments than explain why an increase is not justified under the formula in law; easier to promise 95% of Americans that we won’t consider raising their taxes than to ask all Americans to contribute for the common good.”
These words will evoke heartburn among the leaders of both political parties, and at both ends of Pennsylvania Avenue. They happen to be true.
As the earliest leader of either party to endorse a bipartisan fiscal commission, Hoyer had no difficulty endorsing the commission President Obama created by executive order after the effort to create one through legislation collapsed (regrettably, in Hoyer’s view). But he went on to do something much more difficult than calling for bipartisanship—namely, putting some concrete options on the table:
“On the side of entitlement spending, an agreement might recognize that Americans are living longer lives and raise the retirement age over a period of years, or even peg the retirement age to lifespan. Another option is to make Social Security and Medicare benefits more progressive, while strengthening the safety net for low-income Americans. That could preserve those programs as a central part of our social compact, while protecting their ability to help those of us in the greatest need.
“On the side of revenues, President Obama was correct in refusing to take any options off of the commission’s table. No one likes raising revenue, and understandably so. But if you’re going to buy, you need to pay. In 1993, President Clinton proposed an economic plan aimed at accomplishing fiscal balance, and he paved the way for the greatest American prosperity in a generation. The bipartisan tax compromise in 1986 also showed the importance of a simplified, more efficient tax code. If need be, and I hopeful that both parties will agree to look at revenues as part of the solution—not as a gateway to higher spending, but as part of a compromise that cuts spending and balances the budget.”
Hoyer praised Republican Paul Ryan’s program as an honest effort to tell the public exactly what he’d cut to restore fiscal discipline without raising taxes. Indeed, Hoyer commented, “As much as his party’s leadership tries to distance itself from his plan, Paul Ryan’s program, or something very much like it, is the logical outcome of the Republican rhetoric of cutting taxes and deficits at the same time.” Indeed it is, unless Republicans are serious about cutting taxes but unserious about cutting deficits—a proposition for which it is easy to mobilize three decades of evidence, unfortunately.
In the end, Hoyer argued, Congress and the American people will prefer a balanced approach to one that either tries to stabilize taxes while gutting Medicare or that tries to preserve the Medicare status quo at the cost of huge tax increases. I think he’s right about that. Still, as he conceded, there’s no guarantee that our badly polarized system can reach a reasonable result. The only certainty is that our failure to do so will be a self-inflicted disaster.
This is, Hoyer concluded, much more than a policy issue. It is a measure, and test, of our character: “If we are unable to raise our heads even for a moment above the daily partisan fight, if the collapse comes—we will deserve it.” Amen.
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Because Congress failed to adopt a bipartisan deficit commission on its own, President Obama created one through executive order on Thursday. This comes as a disappointment to members of both parties who had endorsed the Conrad-Gregg bill: that proposal would have forced the Congress to vote on the commission’s recommendations, while the administration’s initiative does not.
The failure of Conrad-Gregg was surprising as well as troubling. By last December, the bill had garnered almost three dozen cosponsors across party lines and seemed to be gaining momentum. Although Senate minority leader Mitch McConnell had not formally signed on, he had made a number of favorable public statements. (Last May, for example, he proclaimed on the Senate floor that the Conrad-Gregg proposal was “the best way to address the crisis” and that it “would provide an expedited pathway for fixing these profound long-term challenges.”) And just days before the vote, President Obama endorsed the bill.
But it wasn’t enough. On January 26, the bill went down to defeat: 53 senators voted in favor, but it needed 60 to pass. Democrats assembled a solid majority of 37 votes, while Republicans could muster only 16. As has been widely reported, seven of the bill’s Republican cosponsors ended up voting against it; had they remained resolute, it would have passed. Reversing his earlier position, the minority leader also voted against the bill.
So what happened between December and January? Put simply, the forces within the conservative movement who oppose any and all tax increases mobilized against legislation that might have produced the long-sought grand bargain—significant entitlement reform coupled with additional revenues.
On December 9, Grover Norquist of Americans for Tax Reform sent a letter to Conrad and Gregg expressing his opposition to their proposal. “Despite the appearance of protection for taxpayers,” he wrote, “this commission would guarantee a net tax increase. … In order to make this commission acceptable from a taxpayer perspective, language must be included that explicitly removes tax increases and/or new taxes from commission consideration.” The substantial anti-tax coalition Norquist leads then swung into action with a steady drumbeat of op-eds and open letters to elected officials.
Even more significant was a lead editorial in The Wall Street Journal on December 29. After issuing a thinly veiled warning to Republicans who might go along with the plan and denouncing past bipartisan efforts--including the 1983 Greenspan Social Security commission and the 1990 Andrews Air Force Base summit--the Journal launched a preemptive strike against the kind of deal it feared a Conrad-Gregg commission would reach: “Democrats would agree to means-test entitlements, which means that middle and upper-middle class (i.e., GOP) voters would get less than they were promised in return for a lifetime of payroll taxes. … In return, Republicans would agree to an increase in the top income tax rate to as high as 49% and in addition to a new energy tax, a stock transaction tax, or value added tax. The Indians got a better deal for selling Manhattan.”
In short, the Journal opposed not only new taxes, but also progressivity in spending cuts. The only remaining alternatives to national bankruptcy (although the editorial writer wasn’t candid enough to say so) are draconian cuts imposed on those Americans who can least endure them.
In the few weeks following the editorial, the intensifying pressure proved too much for many Republicans. The seven Conrad-Gregg deserters included Robert Bennett, Kay Bailey Hutchison, and John McCain, all of whom are embroiled in tough primary campaigns, along with Sam Brownback, who’s running for governor of Kansas, and John Ensign, who’s already in more than enough trouble.
Also of interest is the roster of 16 Republicans who stood up to the pressure and held their ground. In addition to four senators who are retiring and have little to lose, the honor roll includes a dozen who will have to answer to the forces that Norquist and the Journal represent: Lamar Alexander, Saxby Chambliss, Susan Collins, Bob Corker, John Cornyn, Mike Enzi, Lindsey Graham, Johnny Isakson, Mike Johanns, Dick Lugar, David Vitter, and Roger Wicker. (Olympia Snowe is conspicuous by her absence, yet another in a lengthening list of disappointing performances.) Whatever their substantive views on fiscal policy, these are public servants who at least take the responsibility of governance seriously and understand that no single party—whether today’s Democratic majority or a possible future Republican majority—can discharge this responsibility on its own.
And that’s the issue: Will the Republican party remain beholden to the forces that Grover Norquist and The Wall Street Journal represent? Does the party just want to mobilize popular grievances in the effort to regain power, or is it willing to help govern our country and address its mounting problems? Beyond undermining campaign finance legislation, Mitch McConnell is interested in only one thing—winning elections—an outlook apparently shared by two-thirds of his colleagues. The question is whether the minority of the minority party can ever get together with the majority of the majority to find real solutions—and then level with the people about what these solutions will mean. The alternative to a new governing coalition is the intensification both of our problems and of public contempt for its elected representatives.
One of the few benefits of being snowed in is the chance to read long documents more carefully than the normal pace of work allows. The 462-page economic report that the Council of Economic Advisers (CEA) released today is worth the time it takes.
On one level, it paints a clear and cogent picture of the path that economic recovery and growth over the next decade will have to take. The principal drivers of growth in the decade prior to 2007—construction and personal consumption—will both lag between now and 2020. Savings and investment will rise, as will net exports. This is more than national accounting arithmetic: Savings had fallen to unsustainably low levels in response to misleading economic cues (more on this a bit later), and investment sagged below trendline for much of the past decade. For their part, exports tend to decline more rapidly than GDP during recessions and to grow more rapidly during recoveries. So the story makes sense, at least qualitatively.
The CEA report offers an illuminating account of the savings rate. It turns out that three factors—the wealth/income ratio, credit availability, and the unemployment rate—explain most of the variation. Much of the decline in the savings rate since the early 1980s is attributable to the proliferation of credit; the near-collapse of saving during 2005 and 2006 is correlated with what turned out to be illusory increases in household wealth. Looking forward, it seems likely that the wealth/income ratio will stabilize below its peak, that credit will remain tight for quite some time, and that unemployment will decline only slowly.
Indeed, the labor market outlook over the next decade is not especially bright. The CEA is projecting above-trendline growth in GDP over the next eight years. Nonetheless, the unemployment rate will decline only slowly. It is projected to average 10.0 percent this year, 9.2 percent in 2011, 8.2 percent in the year President Obama will run for reelection, and 6.5 percent during the midterm election year of 2014. This is not the formula for a contented electorate.
The underlying math shows why it will take the job market so long to climb out of its hole. Recent estimates revealed that the economy has lost a staggering 8.4 million jobs since the Great Recession started in December 2007. In addition, the economy needs to generate about 100,000 jobs per month just to stay even with the natural growth of the labor force. In short, we are nearly 11 million jobs short of where we need to be. But the CEA estimates job growth for 2010 at 95,000 per month—just about enough to keep the hole from getting even deeper, but not enough to begin digging out. My calculations based on the CEA projections show that we will not recover the missing 8.4 million jobs until the spring of 2013, more than five years after the recession began. And we won’t reach full employment (defined as 5 percent unemployment) until nearly the end of the decade.
Suppose you have only five minutes to spend on this report. What are the five most illuminating pages? Here are my nominees, back to front:
The late lamented Daniel Patrick Moynihan once remarked to the effect that, while every man is entitled to his own opinions, he’s not entitled to his own facts. How quaint that sounds today. But we can’t have a serious discussion of our problems—especially across party lines—if we don’t jointly acknowledge a common base of evidence. I’m not holding my breath.
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Our political debates, our public discourse—on current economic and domestic issues—too often bear little or no relation to the actual problems the United States faces.
What is at stake in our economic decisions today is not some grand warfare of rival ideologies which will sweep the country with passion, but the practical management of a modern economy. What we need is not labels and clichés but more basic discussion of the sophisticated and technical questions involved in keeping a great economic machinery moving ahead.
The national interest lies in high employment and steady expansion of output, in stable prices and a strong dollar. The declaration of such an objective is easy; their attainment in an intricate and interdependent economy and world is a little more difficult. To attain them, we require not some automatic response but hard thought.
--John F. Kennedy, Commencement Address at Yale University, June 11, 1962
We deliberate, not about ends, but about means.
--Aristotle, Nicomachean Ethics III. iii
Harvey Mansfield, the well-known conservative professor of political philosophy (and—full disclosure—a longtime friend) has penned a serious and civil critique of what he takes to be the animating impulse of the Obama administration. The nub of his argument is that Obama is a “progressive” whose purported non- (or post-) partisanship is designed to put certain issues “beyond political dispute” so that arguments are about means, not ends. And once the argument is about means, the door is opened wide to “rational administration” and the rule of experts.
Take health care. Mansfield interprets Obama’s statement that "I am not the first president to take up this cause, but I am determined to be the last" as an effort to take the issue out of politics once and for all—to decide, by side-stepping, the fundamental issue of principle. In his view, that issue is: “Should the government take over health care or should it be left to the private sphere?” The question precedes, and trumps, the myriad technical issues that transform the reform impulse into impenetrable, trust-destroying 2,000-page bills. By pursuing reform without dwelling on that question, he writes, Obama's worldview “wants to put an end to politics. It considers its measures to be progressive, and progress to be irreversible.” The problem with progress, so understood, is that it is at war with political liberty, rightly understood. One cannot seek to place matters of principle beyond politics without wanting “an imposed political solution.” Some human beings—and by implication, political parties—love progress more than they love liberty; others reverse the hierarchy. Mansfield stands with the party of liberty, the republican principle, against the party of progress, the party of rational administration, which is “more suited to monarchy than to republics.”
Where to begin? Mansfield offers an elaborate argument in defense of the proposition that Obamacare represents a government takeover. I disagree and could offer an equally elaborate rebuttal. I could argue, as well, that Obama’s appeal to transcend the division between red and blue America reflects not a desire to end partisan argument, but rather most Americans’ disgust with the contemporary hyper-partisanship that thwarts effective governance and allows problems to fester indefinitely. These are hardly trivial matters. But because they would divert us from the questions Mansfield raises, I shall pursue them no farther.
As Mansfield knows very well, he does Democrats no favor by framing current disputes as conflicts between progress and liberty. In American politics, the defenders of liberty always occupy the rhetorical high ground. If there really were a contradiction between progress and liberty, progress would surely lose—and so would the party of progress. So there are two questions. First, is there such a contradiction? And second, if there isn’t—if what we really have is a dispute between two competing understandings of liberty—which should we prefer?
I can dispose of the first question quickly: There is no inherent contradiction between progress and liberty. Simply put, removing issues from the political agenda—placing them beyond dispute—often promotes liberty. After political contestation and a bloody war, we decided that slavery was impermissible, and we reordered our laws and institutions accordingly. A century later, we made a parallel decision about racial discrimination, with similar consequences.
I suppose we could view these questions as permanently open to debate. But we don’t, and rightly so. In that sense, there is a “progressive” component to our political history: While some questions remain open, others don’t. And there’s nothing wrong with that. Settling questions neither ends politics nor denies liberty.
Mansfield might reply that, while some disputes raise such fundamental issues, most don’t, and it disserves political liberty to place the latter beyond the bounds of ordinary political contestation. Fair enough. So what is Obama actually saying—about health care, for example?
As I understand the president’s argument, it goes something like this: Our current health care system’s costs are rising at an unsustainable rate, threatening businesses, households, and our public finances. At the same time, nearly 50 million people go without health insurance—some by choice, to be sure, but most out of necessity. The only way to deal with all these problems effectively is to get nearly everyone into the insurance system, with a mix of subsidies and mandates, while creating a more competitive market among insurance plans. He may be right about this, or he may be wrong. But the key point for my purposes is that he is putting forth his plan as the means to an ensemble of ends—universal insurance coverage in a system that reduces the rate of cost increases—that he takes to be both desirable and essential to the long-term common good.
This is a political argument, pure and simple. The president never intended to side-step politics, and he certainly did not succeed in doing so. He hoped that his articulation of the good to be achieved through his plan would outweigh the objections—such as cost and complexity—that he knew would be arrayed against it.
There are several ways to disagree with the president’s proposal. One is to say that while his ends are defensible, his means are defective. This is the line that Representative Paul Ryan takes, as the president has acknowledged. But note that this debate lies squarely within the arena of deliberation as Aristotle defines it. Nothing apolitical or liberty-denying about that--unless deliberation itself suffers from these defects, which would be an odd contention.
Another way of disagreeing with the president is to say that his ends are less important than he thinks—otherwise put, that we can better serve the public interest by giving priority to competing ends. In this vein, many Republicans contend that because even people without insurance get care when they need it, through emergency rooms or charitable organizations, it is unnecessary to use either legal coercion or public funds to universalize insurance coverage. And many fiscal hawks argue that the mechanisms the president uses to fund his proposal—tax increases and Medicare cuts—should be used instead to reduce the long-term federal budget deficit, which is projected to soar unsustainably. Again, a classic political debate, of the sort Aristotle analyzed in the Rhetoric, and the president has done nothing to short-circuit it.
Mansfield gives short shrift to both these sorts of disagreements, focusing instead on a third, which is (to repeat) whether government or the private sphere should take the lead. He describes this as a question of “principle.” Is it? No doubt this question frames a major disagreement between the two political parties, and among Americans. And, as I’ve argued repeatedly, public mistrust of government has done more than anything else to weaken the president’s health reform effort.
The deeper question concerns not public sentiment, but, rather, the basis on which government may legitimately act under the Constitution. In 1933, FDR argued that that only the powers of government could be adequate to the exigencies of the moment. If so, he said, it could not be the case that our Constitution had disabled us from meeting a grave threat to the general welfare, and potentially to constitutional government itself. He won that argument: We live today in the legacy of his victory, and (I say this at the risk of sounding “progressive”), we’re not going back.
The alternative formulation of the dispute--Mansfield’s, I think--is that the issue isn’t the relation of means and ends, but rather the right of government to act in certain ways. If government doesn’t have the right, then considerations of efficacy are irrelevant. Even if government could bring about a good result by acting ultra vires, doing so would be an invasion of liberty, which is the most fundamental good. Rather than invade liberty, we should be prepared to live with the consequences of government forbearance. (I note for the record that if Abraham Lincoln had accepted this view, we’d probably be presenting passports at the Virginia/Maryland border.)
This brings me to the second question: If the issue is liberty, what is the nature of liberty, rightly understood? And does the Obama health care plan invade liberty, so understood?
To begin, experience gives us no reason to conclude that government is the only, or always the gravest, threat to freedom; clerical institutions and concentrations of unchecked economic power have often vied for that dubious honor. The unchecked market, moreover, regularly produces social outcomes at odds with the moral conditions of a free society. Capitalism does not reliably produce, or reward, the good character a free society needs: Perceptive observers from Charles Dickens to Tom Wolfe have given us ample evidence to the contrary. And, while it may be that long-term dependence on government saps the spirit of self-reliance that liberty requires, there are other forms of dependence---economic, social, and even familial---that often damage character in much the same way.
At the heart of the conservative misunderstanding of liberty is the presumption that government and individual freedom are fundamentally at odds. At the heart of any liberal understanding of freedom is the proposition that public power can advance freedom as well as undermine it.
In the real world, there is no such thing as freedom in the abstract. There are only specific freedoms, which differ in their conditions and consequences. FDR famously enumerated four such freedoms, dividing them into two pairs: freedom of speech and worship; freedom from want and fear. The first pair had long been recognized and enshrined in the Constitution. The second were a new formulation, and Roosevelt made them concrete when he signed Social Security into law, justifying it as a way of promoting freedom from want: "We have tried to frame a law which will give some measure of protection to the average citizen and to his family ... against poverty-ridden old age." Three years later, he declared that Social Security payments will "furnish that minimum necessary to keep a foothold; and that is the kind of protection Americans want."
The conservatives of his day dismissed the second pair as "New Deal freedoms" rather than "American freedoms." But those who have experienced the freedoms made possible by the New Deal are not so dismissive. It is often observed, rightly, that Social Security has virtually eliminated poverty among the elderly. But this noble achievement has an equally profound flip side. Throughout human history, those who reached the age where they could no longer work have typically depended on their children or on charity for their basic subsistence. Social Security broke this age-old dependency by giving the elderly a minimum degree of economic self-sufficiency, expanding their range of effective control over the conditions of their post-retirement years.
"Freedom of" and "freedom from" have distinctly different structures and implications. "Freedom of" points toward spheres of action in which individuals make choices--for example, which faith to embrace, or whether to endorse any faith at all. The task of government is in part to secure those spheres against interference by individuals, groups, or government itself.
It is also to police the boundary between actions that principally affect individual agents and actions that impose costs and restrict the liberties of others. Suppose a healthy young man making a good living chooses to go without health insurance and then, while speeding helmetless on his motorcycle, incurs a severe injury that is treated at vast public expense. Because his choice imposes costs on others and restricts their liberty to use their resources as they choose, government has the right—and in some circumstances the duty—to intervene.
So when the Tea Partiers complain that a government health insurance mandate invades their liberty, they reveal a defective understanding of the logic of liberty in a modern society. Individuals who choose to go without health insurance could try to resolve the contradiction by signing a document foreswearing all reliance on health care they didn’t pay for themselves. But, because our medical norms don’t permit us to leave injured accident victims at the side of the road, such a document couldn’t be enforced. To be a citizen of the United States today is to live in a community where individual health care choices can have social consequences, a fact to which government can legitimately respond.
The other face of freedom--"freedom from"--points toward circumstances that (it is presumed) we all wish to avoid. In such instances, the task of government is, so far as possible, to immunize individuals against undesired circumstances. Here, government acts to protect not individual agency and choice, but rather an individual's life circumstances against outcomes that no one would choose, or willingly endure.
It follows that the "right to choose" is but a part of freedom in the fuller sense. As a motorist, I am rightly free to choose my own route and destination. But government correctly infers that I also wish to be protected from smashing into other cars, and so restricts which side of the road I and others can drive on. My desire to avoid an accident is no less real than my desire to drive where I please. Similarly, the desire to avoid want and fear is no less real than the desire to speak and worship without interference. The point is that any society that takes freedom from want and fear seriously has made collective decisions: Certain conditions are objectively bad; its citizens should not have to endure them if the means of their abatement are in hand; and individual choice is not a necessary component of, and may be a hindrance to attaining, these freedoms. The current debate over health care only underscores these truths.
None of this is to deny that government can, and often does, overstep its bounds. And when it does, the friends of liberty must resist. Nor is it to deny that the progressive impulse Mansfield criticizes can go too far. In his June 11 commencement speech at Yale, JFK was surely wrong to claim that government’s role in a modern economy reduces to “management” based on “technical” issues. It is that, but it is more than that. No wonder that the end of ideology Kennedy reflected and celebrated quickly gave way to a rebirth of deeper disagreement. To the extent that the managerial ethos evades or suppresses these disagreements, it does a disservice to politics in a free country.
Still, when Kennedy declared in 1962 that “the national interest lies in high employment and steady expansion of output, in stable prices and a strong dollar,” he elicited little disagreement. Nor would anyone making that statement today. Modern politics is in part technical, a matter of fitting means to undisputed ends. When Democrats assert, and Republicans deny, that last year’s stimulus package is boosting output and employment, they are not arguing about goals. They are arguing about means and about facts. And, more than that, they are arguing about competing understandings of how the world works. Liberals are more apt to focus on the good government can do and to fasten on the inadequacies of markets. For Republicans, it is just the reverse.
The debate over health care reform reflects this competition. How could it not? But to say, as Mansfield does, that the president’s belief in the ability of government to improve our health care system reflects a preference for progress over liberty only obscures what is really at stake. The president’s stance threatens neither political liberty nor individual liberty. His argument does not remove—and was not intended to remove—the issue of health policy beyond the bounds of political argument. It seeks, rather, to ground his proposals in considerations that most citizens would regard as weighty if not dispositive. And his proposals reflect an understanding of individual liberty in the modern state that has far more to commend it than does the understanding to which Mansfield appeals.
William Galston is a former policy advisor to Bill Clinton and current senior fellow at the Brookings Institution.
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In his State of the Union address, President Obama executed his well-advertised double pivot toward job generation and fiscal restraint. Almost lost in the pundits' babble was the release of a CBO report, “The Budget and Economic Outlook: Fiscal Years 2010 to 2020,” coupled with CBO director Doug Elmendorf’s testimony to the House and Senate budget committees. CBO’s analysis makes it clear just how daunting the employment and fiscal challenges are over the next decade . . . and how perilous the political terrain will be for the Democratic Party.
Let’s start with jobs. For a variety of structural reasons, despite the severity of the recession, CBO predicts a slower-than-average recovery, with fourth-quarter to fourth-quarter GDP growth of only 2.1 percent in 2010 and 2.4 percent in 2011. This means that unemployment this November is likely to be about where it is right now—namely, 10 percent. At the end of 2011, it will stand at 9.1 percent. As growth accelerates in 2012, unemployment will decline more quickly, but it will still be high by historical standards—between 7.5 and 8 percent—on the eve of the next presidential election. Assuming no new recession, we won’t return to full employment until 2016.
“The problems we inherited were far worse than most inside and out of government had expected; the recession was deeper that most inside and out of government had predicted. Curing these problems has taken more time and a higher toll than any of us wanted. Unemployment is far too high. Projected federal spending—if government refuses to tighten its own belt—will also be far too high and could weaken and shorten the economic recovery now underway.
“We’re witnessing an upsurge of productivity and impressive evidence that American industry will once again become competitive in markets at home and abroad, ensuring more jobs and better incomes for the nation’s work force. But our confidence must also be tempered by realism and patience. Quick fixes and artificial stimulants repeatedly applied over decades are what brought us the ... disorders that we’ve now paid such a heavy price to cure.
“The permanent recovery in employment, production, and investment we seek won’t come in a sharp, short spurt. It’ll build carefully and steadily in the months and years ahead. In the meantime, the challenge of government is to identify the things that we can do now to ease the massive economic transition for the American people.”
In the wake of Massachusetts, President Obama faces two urgent decisions. One concerns his agenda for 2010 and beyond. I offered my advice on this last week, have not changed my mind, and won’t repeat myself.
The president must also decide how to proceed with health care legislation. Here I find myself in a paradoxical position. In this publication and elsewhere, I have argued since October of 2008 against beginning the new administration with an ambitious agenda that included comprehensive health reform. Nonetheless, I believe that the president and congressional Democrats would be ill-advised to shelve the effort at this point. Here are my reasons.
First: At the most basic political level, turning tail and running for the tall grass is bound to fail. Democrats who have already voted for health reform (and that’s most of them) can’t take their votes back. Whatever they do between now and November, they’ll be called on to defend what they’ve done. Are they going to say that they’ve changed their minds? Who would believe them?
Second: The American people won’t support representatives they don’t respect. The people respect sincerity, consistency, and strength of purpose. It is often the case that constituents will respect positions with which they disagree—if they think their representatives really mean it. One thing is clear: They won’t respect vacillation and weakness. Does anyone?
Third: The president and congressional Democrats have spent the past year arguing that health reform is in the national interest—that it will broaden coverage, begin to contain costs, increase disposable income, and help improve the government’s long-term fiscal outlook. Which of those arguments ceased to be true between Monday and today?
Fourth: The Founders designed a representative republic, not a plebiscitary democracy. Officials are elected to make judgments on behalf of the people, and the people get to judge those judgments. Large changes are always more uncertain than is the status quo, which is why change is so hard. At some point, elected officials have to tell their constituents, “I’ve done my best to think this issue through, and this is the conclusion I’ve reached. Now it’s your turn.”
There are two cogent arguments against the position I’m defending. The first is that there’s not nearly enough trust in government to sustain comprehensive health reform, and ramming it through in the face of public disapproval will only intensify mistrust and make matters worse. The shortage of trust was a compelling reason not to go down this road in the first place--especially in the context of necessary but expensive and unpopular measures needed to ward off a second Great Depression--but it doesn’t resolve the question of what to do now. It’s a judgment call: Are you more likely to begin rebuilding trust by sticking to your guns--or by in effect saying that you weren’t really that serious about the most important piece of social legislation in decades?
The second counterargument is that elected officials have involved the people in a year-long discussion about health reform, and the people have rendered their judgment, first in public opinion surveys, then in Massachusetts. Proceeding in the face of this judgment, the argument goes, is a gross violation of small-d democratic norms. This brings us back to the issue of the nature of our political system and the principles of conduct it embodies. One might argue that by the fall of 2006, the American people had rendered a negative judgment on the Iraq war and that George W. Bush’s decision to double down with the troop surge was undemocratic. Well, speaking as someone who publicly opposed that war well before we entered it, I have to say that I respect President Bush for making the decision he did ... and that it was probably right on the merits. Yes, it’s one thing to be the chief executive, another to be a member of the House. But that difference doesn’t mean that it’s always wrong, or undemocratic, for Congress to exercise independent judgment.
So what is to be done? President Obama’s opening post-Massachusetts gambit--his interview with George Stephanopoulos--was not helpful. Consider the following statement: “I would advise that we try to move quickly to coalesce around those elements of the package that people agree on.” Which people? If he means the American people as a whole, I’m not sure what that proposal amounts to. Sure, everyone would like restraints on insurance companies and constraints on costs increases (the two areas the president cited), but you can’t get them without other things that many people don’t like, such as costly coverage expansion and increased regulatory bureaucracy. If he means Democrats and Republicans in Congress, the zone of agreement is near zero and likely to remain there until November. Given the success of their obstructionism so far, why would Republican leaders change course? And after the failed negotiations in the Senate Finance Committee last year, who believes that Republican moderates would break ranks now? As for focusing on areas of agreement between House and Senate Democrats, I thought that’s what the discussion up until Monday was all about.
If the president sounds such an uncertain trumpet, who will follow? If he still wants legislation, he should invest the full authority of his office to persuade the House to endorse the Senate bill, accompanied by a package of amendments to be considered separately under the reconciliation process. If he has concluded that he has no choice but to take the issue off the table, he should say so. If he continues to utter hopeful banalities devoid of concrete meaning, the fragile reform coalition will collapse within days, with consequences that will endure for decades.
In his forthcoming State of the Union address, President Obama has an opportunity to reset his administration and regain the initiative. What follows is the domestic policy portion of a speech he could give if he decides to do that. The alternative is some version of steady-as-you-go. This would reflect a judgment on his part that he’s doing just fine, or at least well enough—the B+ he awarded himself a few weeks ago. Unfortunately for him and for his party, this is a judgment with which an increasing share of the electorate disagrees.
My fellow Americans,
In a ritual hallowed by tradition, I come before you tonight to discuss the state of our union. I wish the news were better. You know as well as I do that the condition of our economy is not good; that millions of Americans are out of work, underemployed, or too discouraged even to look for jobs; that the course of the war in Afghanistan forced me to commit more of our sons and daughters to battle; and that international terrorism continues to threaten our lives and our way of life.
In normal times, I would discuss—as is customary—the full range of issues for which I am responsible. These are not normal times. Accordingly, I will focus my speech—and my presidency—on the two paramount challenges we confront: rebuilding our economy and enhancing our national security.
When I took office, our country was facing a global financial crisis. During the first year of my administration, I did everything I could to avert a rerun of the Great Depression. I know that many of these steps—from bailing out the banks and auto companies to enacting the economic stimulus—were not and are not popular. I understand your frustration that you have not yet seen improvements in jobs, wages, and prospects for small business—and that many of those responsible for the disaster have not been held responsible. I took these steps, not because I thought they would make my ratings rise, but because I was convinced that they were unavoidable and in the national interest.
Similarly, I addressed health reform, not from an abstract desire to do good, but because our dysfunctional health care system was dragging down the private sector, gobbling up wages, and destabilizing public budgets. I know that the legislative process was not pretty and that, understandably, many of you mistrust its results. Nonetheless, my duty to promote the general welfare left me no choice, and I am confident that when you experience the reformed system for yourselves, you will decide that it was worth it.
But the issue before us right now is no longer economic rescue; it is economic growth—the right kind of growth—growth that produces jobs, rising wages, and opportunities for advancement. That will be my administration’s principal domestic focus—for the coming year, and for as long as it takes until every American who wants work can find a job with a future.
During the coming year, that goal means, first, that we must assist states and localities so that they are not forced to fire hundreds of thousands of workers; second, that we must offer the private sector effective incentives to hire new workers; and third, that we must create a national infrastructure bank that will mobilize public and private resources to rebuild our crumbling roads, bridges, and ports . . . and boost investment in the environment and information technology as well.
As we work to raise employment this year, we must look down the road as well. While some deficit spending was necessary to avert catastrophe and remains necessary to jumpstart the economy, we cannot hope to sustain growth in the private sector if the federal government is running trillion dollar deficits as far as the eye can see. To make sure that doesn’t happen, I am announcing my support tonight for a bipartisan fiscal commission that would report its recommendations next December for a mandatory up-or-down vote in Congress early next year.
Fundamental tax reform is a key element of long-term economic health. Our current tax code is outdated in just about every way. Last year, I asked one of our country’s most respected economic leaders—Paul Volcker, the former chairman of the Federal Reserve Board—to lead a bipartisan task force on tax reform. I hope that the Congress will act favorably on its recommendations this year. And if not, I would ask the bipartisan fiscal commission to consider them for inclusion in its report.
Finally, we must make sure that our nation’s largest financial institutions use their power and privilege to help build our country, not to line their own pockets. Congress must overhaul our system of financial regulation—this year—to make sure that what happened in 2007 and 2008 never happens again. And let me be clear: These institutions owe their profitably—and their very existence—to the steps we took that put your taxpayer dollars at risk. If they choose to ignore their responsibilities to you and once again award themselves huge bonuses, I will work with the Congress to ensure that they change course. If they’re not willing to invest their profits in our country’s future, I’ll work to redirect these resources to institutions that are working, not just for themselves, but for you. Holy Scripture and common sense are at one: Greed is not good.
It is said, rightly, that to govern is to choose. I have chosen to focus my domestic agenda on the economy and jobs. Let me be frank with you: that means that many important matters must be postponed until our economy accelerates. I believe in cap-and-trade legislation to reduce the pace of climate change. I believe in a fundamental reform of our immigration laws. There will be a time for both. This year is not that time, because nothing must divert your elected representatives from acting on the measures our economy needs.
When Franklin Roosevelt delivered his first inaugural address to a nation mired in depression, he reminded us that “our common difficulties ... concern, thank God, only material things.” The same is true today. The current recession has not erased our history or undermined our spirit. Our capacity for innovation is unmatched. Our willingness to adjust, to reinvent ourselves, is as strong as ever. You need—and you deserve—policies that empower your strength, and leaders as committed to the future as you have always been. That is what I am offering tonight—not the path of least resistance and business as usual, but one that confronts our problems and rebuilds our country.
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A just-released Gallup survey illuminates the dynamics of party competition and underscores the increasing polarization of American politics. As Gallup previously reported, conservatives (40 percent of the total) have surged ahead of moderates (36 percent) to become the largest ideological group in the electorate; Republicans are far more conservative (71 percent) than Democrats are liberal (38 percent); and Republicans are much more homogeneous than Democrats. What the new survey adds is a picture of persistent change over time. Since 2000, the conservative share of the Republican Party has grown by 9 percent, as has the liberal share among Democrats. During the same period, the moderate share has declined by 7 points among Republicans and 8 points among Democrats.
The parties, in short, are significantly more polarized than they were when Al Gore and George W. Bush squared off. This doesn’t mean that inter-party cooperation is impossible, but it is noticeably more difficult than it was a decade ago, which was hardly a Golden Age of bipartisanship.
The other noteworthy development is the increased conservatism of independents. After eight years of stability, the share of conservatives among independents surged by 5 points during the past year, while the numbers of moderates and liberals both dropped. It is not clear whether this represents an ideological shift among long-time independents, the increasing inclination of populist conservatives to call themselves independents rather than Republicans, or some of both trends. But one thing is clear: Because shifts among independents contributed significantly to the Democrats’ midterm victory in 2006, this recent trend is one more indication--as if another were needed--that they will face a much stiffer challenge this year.
