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Archive for December, 2013

Can States’ Rights Work for Liberals?

December 5th, 2013

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Can states’ rights work for liberals? It has always been a conservative cause. Conservatives use states’ rights to resist federal policies that protect civil rights, voting rights, and abortion rights. Today, however, federal action is often blocked. So progressive states are passing laws that bypass gridlocked Washington and advance the liberal agenda on their own.

In his famous keynote address at the 2004 Democratic convention, Barack Obama criticized pundits who “like to slice and dice our country into red states and blue states.” His rejoinder: “I say to them tonight, there is not a liberal America and a conservative America — there is the United States of America.”

Obama was wrong. Americans have become more and more politically segregated over the past 50 years. Since the 1960s, politics has come to reflect lifestyle and values, and people often choose to live among others who share their lifestyle and values. And therefore their politics.

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EPA’s New RFS Proposal Turns Clarity Into Confusion

December 4th, 2013

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Consistency. Certainty. Clear expectations.

These are critical elements of any successful regulatory policy implementation. The Environmental Protection Agency’s proposed rule on the Renewable Fuels Standard (RFS) could unravel them all.

In only 6 years, the RFS has driven billions of dollars in private capital toward the development of low-carbon advanced biofuels, and propelled these fuels out of the lab and into the market. This level of investment in emerging technologies requires long-term regulatory and market certainty, and the RFS has provided just that.  It has also provided a consistent idea of what is expected of regulated industries.

The RFS was carefully designed to encourage production of increasing amounts of biofuels, without making demands of industry that are not technologically feasible. A perfect example of this flexibility is EPA’s statutory authority to reduce volumetric requirements for cellulosic biofuels annually, to reflect anticipated production.  EPA has used this authority multiple times in cases where production has lagged behind the volumes envisioned by the statute.

But EPA’s proposed rule uses a new and very…creative…interpretation of the RFS statute to expand this authority and reduce the required blending levels of a fuel that is in abundant supply. EPA’s interpretation has struck many as counter-intuitive at best, and inconsistent with the law at worst. As market analyst Ben Salisbury explained in a recent Third Way briefing, the RFS offers little certainty to investors if it is implemented in such an unpredictable way. According to Salisbury, “…that has a chilling effect on not just biofuels but all environmental control investments.”

If inconsistent rulemaking has a chilling effect on investment, then legislative adjustments might as well be a meat locker. The odds of passing thoughtful and productive legislative adjustments to the RFS are about as high as getting Congress to gently reopen Obamacare. And if the existing law were simply “eliminated”, it’s difficult to envision some new and improved renewable fuels bill getting signed in the Rose Garden any time soon.

The bottom line is that the RFS has performed as it was intended to. Most importantly, it has driven investment toward technologies that offer exceptional greenhouse gas emissions reductions compared to petroleum fuels, and that are now starting to enter the market. Creating instability, either by regulation or legislation, will only halt this progress at a critical juncture.  By continuing to implement the RFS consistently, EPA can provide the certainty investors need to maintain this level of support and help drive further innovation in critically-needed advanced fuels.

This piece was originially published via National Journal

Economic Populism Is a Dead End for Democrats

December 3rd, 2013

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If you talk to leading progressives these days, you’ll be sure to hear this message: The Democratic Party should embrace the economic populism of New York Mayor-elect Bill de Blasio and Massachusetts Sen. Elizabeth Warren. Such economic populism, they argue, should be the guiding star for Democrats heading into 2016. Nothing would be more disastrous for Democrats.

While New Yorkers think of their city as the center of the universe, the last time its mayor won a race for governor or senator—let alone president—was 1869. For the past 144 years, what has happened in the Big Apple stayed in the Big Apple. Some liberals believe Sen. Warren would be the Democratic Party’s strongest presidential candidate in 2016. But what works in midnight-blue Massachusetts—a state that has had a Republican senator for a total of 152 weeks since 1979—hasn’t sold on a national level since 1960.

The political problems of liberal populism are bad enough. Worse are the actual policies proposed by left-wing populists. The movement relies on a potent “we can have it all” fantasy that goes something like this: If we force the wealthy to pay higher taxes (there are 300,000 tax filers who earn more than $1 million), close a few corporate tax loopholes, and break up some big banks then—presto!—we can pay for, and even expand, existing entitlements. Meanwhile, we can invest more deeply in K-12 education, infrastructure, health research, clean energy and more.

Social Security is exhibit A of this populist political and economic fantasy. A growing cascade of baby boomers will be retiring in the coming years, and the Social Security formula increases their initial benefits faster than inflation. The problem is that since 2010 Social Security payouts to seniors have exceeded payroll taxes collected from workers. This imbalance widens inexorably until it devours the entire Social Security Trust Fund in 2031, according to the Congressional Budget Office. At that point, benefits would have to be slashed by about 23%.

Undeterred by this undebatable solvency crisis, Sen. Warren wants to increase benefits to all seniors, including billionaires, and to pay for them by increasing taxes on working people and their employers. Her approach requires a $750 billion tax hike over the next 10 years that hits mostly Millennials and Gen Xers, plus another $750 billion tax on the businesses that employ them.

Even more reckless is the populists’ staunch refusal to address the coming Medicare crisis. In 2030, a typical couple reaching the eligibility age of 65 will have paid $180,000 in lifetime Medicare taxes but will get back $664,000 in benefits. Given that this disparity will be completely unaffordable, Sen. Warren and her acolytes are irresponsibly pushing off budget decisions that will guarantee huge benefit cuts and further tax hikes for Gen Xers and Millennials in a few decades.

As for the promise that unrestrained entitlements won’t harm kids and public investments like infrastructure, public schools and college financial aid, haven’t we seen this movie before? In the 1960s, the federal government spent $3 on such investments for every $1 on entitlements.

Today, the ratio is flipped. In 10 years, we will spend $5 on the three major entitlement programs (Social Security, Medicare and Medicaid) for every $1 on public investments. And that is without the new expansion of entitlement benefits that the Warren wing of the Democratic Party is proposing. Liberal populists do not even attempt to address this collision course between the Great Society safety net and the New Frontier investments.

On the same day that Bill de Blasio won in New York City, a referendum to raise taxes on high-income Coloradans to fund public education and universal pre-K failed in a landslide. This is the type of state that Democrats captured in 2008 to realign the national electoral map, and they did so through offering a vision of pragmatic progressive government, not fantasy-based blue-state populism. Before Democrats follow Sen. Warren and Mayor-elect de Blasio over the populist cliff, they should consider Colorado as the true 2013 Election Day harbinger of American liberalism.

This piece was originally published via The Wall Street Journal. 

Don’t Waste This Free Trade Opportunity

December 2nd, 2013

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Within the next 20 years, the Asia Pacific region will need 12,820 new airplanes, valued at $1.9 trillion. Who will build them?

With half of the world’s air traffic growth revolving around the Asia-Pacific region, there are massive opportunities for American manufacturing and middle-class jobs in this one sector alone. But opportunity is not destiny. In the last decade, America’s share of exports to key Asia-Pacific markets fell by 43 percent. Our performance was last among our major trade competitors in the region.

We do not have to idle on the runway, however, as other foreign countries fly by. If we can regain our historical share of these export markets – which are set to approach $10 trillion by the end of this decade – it would add $600 billion to our economy and 3 million jobs by 2020 alone. The first step to seizing this growth opportunity rests with Congress and passage of a tool called Trade Promotion Authority.

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GOP on Obamacare: Divide and Conquer

December 2nd, 2013

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“Remember the strategy for stopping Obamacare we laid out to you back in July,” Speaker John Boehner (R-Oh.) told the House Republican conference last week. “Targeted legislative strikes aimed at shattering the legislative coalition the president has used to force his law on the nation.”

Thirty-nine House Democrats – one in five — voted for the measure. Democratic leaders breathed a cautious sigh of relief. Earlier last week, they feared that 100 or more anxious Democrats might defect. President Barack Obama’s “fix” for the Affordable Care Act, announced on Thursday, held back what might have been a tidal wave of defections.

Republicans want the old Democratic Party back.

That was the deeply divided party that fought over everything — wars, civil rights, spending, taxes. What happened during Obama’s first two years was something of a miracle. The Democratic Party held its majority together. They governed. We experienced something that is routine in a parliamentary system but rare in the United States — party government.

Democrats held similar majorities in Congress during President Bill Clinton’s first two years, 1993-94. Back then, however, the party could not hold together to pass healthcare reform.

By the time Obama took office 15 years later, however, everything had changed. In 2010, Democrats passed the Affordable Care Act on a strictly partisan vote. Not a single Republican in the House or Senate voted for it.

Republicans are determined to kill it. They can’t do that as long as Obama is in the White House. So their new strategy is to make the law unworkable.

That was what the House vote was all about on Friday. Representative Henry Waxman (D-Calif.) called it “another vote to repeal the Affordable Care Act” — something House Republicans have already voted to do 46 times.

What held Democrats together in 2010 — unlike 1994 — was indignation. The Tea Party had taken control of the GOP and driven it to extremes. The last straw came in September 2009, when Representative Joe Wilson (R-S.C.) shouted “You lie!” at the president while he was addressing a joint session of Congress.

In politics as in physics, for every action there is an equal and opposite reaction. In 2010, Republican contempt produced Democratic solidarity.

If Democrats are becoming the nation’s new majority party — as last year’s election suggested they are — Republicans want them to be a divided and ineffective majority.

Last week, Republicans managed to peel off more than three dozen House Democrats. What split them off was terror. Most of those Democrats represent congressional districts where Republicans pose a real threat in next year’s midterm. They are terrified that they will have to defend Obama’s pledge that Americans who like their insurance policies will be able to keep them.

If the House bill isn’t going anywhere, where’s the threat to Obamacare coming from? From the one defection that matters: Obama himself. He, too, is threatened. Not by Republicans — Obama never has to face the voters again — but by the prospect of congressional Democrats abandoning him. That’s why he had to reverse course and offer the “fix.” It’s supposed to give Democrats political cover.

Congressional Democrats don’t seem especially happy with the president’s fix. They are trying to put together their own legislative remedy. Senator Mary Landrieu (D-La.) is proposing a bill that would allow people to keep their old health insurance plans — not for one year as Obama has proposed, but indefinitely. Several other Democratic senators have signed on, including some, like Landrieu, who face difficult re-election prospects next year.

The threat to Obamacare is clear. Allowing people to keep cut-rate, shoddy policies that do not meet the standards of the Affordable Care Act will create two separate risk pools. A lot of young, healthy Americans will stay with their old, cheap policies, while older and sicker people, desperate for coverage, will enroll in Obamacare.

That will cause insurance premiums to skyrocket next year. “Cancellation today, sticker shock tomorrow,” Representative Fred Upton (R-Mich.), chief sponsor of the House Republican bill, predicted.

Obama is trying to limit the risk by allowing people to keep their old policies for one more year. The president’s expectation is that the old plans will simply die out and everyone will end up in Obamacare. But the old plans won’t die if people are allowed to keep them or if companies are allowed to keep selling them.

Angry liberals see what’s going on — and are furious. They are furious with the president for going wobbly. And with Republicans for trying to kill Obamacare piece by piece.

Liberals “don’t want to see this law eviscerated by death by a thousand cuts,” the executive director of MoveOn.org Civic Action told Politico. “The answer is not to undo Obamacare or to undo major provisions of it like allowing those junk plans to continue.”

But that is precisely the game plan Boehner described to his party. So far, everything is going according to plan.

This piece was originally published via Reuters.