President Obama Just Lost His Leverage on the Debt Ceiling
January 03, 2013
Second guessing is oh so easy, and I always looked askance at those outside the negotiating room who had wisdom after the fact. But having said that …
</div><div class="text parbase section"><p>Why did the president agree to a deal without the debt ceiling being lifted? Didn’t we play this script out once before? And didn’t the president, since he needs to be reasonable, in the end cave to Republicans who used the debt ceiling to extract concessions that shouldn’t have been granted?</p></div><div class="text parbase section"><p>This was the president’s moment of greatest leverage. The White House could have said to the House: Take us over the fiscal cliff, go ahead and have all taxes go up. You will suffer the wrath of the public—and for what? All we are demanding is that you eliminate a negotiation that will do enormous harm to the nation, a negotiation about the debt ceiling that merely authorizes us to borrow to pay for the expenditures you have voted for.  </p></div><div class="text parbase section"><p>Having won the rhetorical debate about raising taxes on the wealthy, the president could have framed the debt-ceiling argument in an equally compelling way. All eyes would have been on the House of Representatives.</p></div><div class="text parbase section"><p>Now we will face a much tougher moment. The House will demand a series of deep entitlement cuts in return for lifting the debt ceiling, and the president will have little to offer or demand in return. It is hard to imagine that even he thinks he will get the House to raise taxes again.</p></div><div class="text parbase section"><p>So what did we get that was worth leaving the debt-ceiling issue unresolved? Very little. Thin soup at best: little revenue, no grand bargain sufficient to calm demands for deeper cuts in entitlements, and a payroll tax increase that will still lead to a net increase in taxes for the middle class.</p></div><div class="text parbase section"><p>We should savor the brief moment of perceived victory that the cliff deal has created, because there is going to be much pain in the coming weeks over the debt ceiling.</p></div>
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The Four Most Important Political Lessons of 2012
December 25, 2012
What are the most important political lessons of 2012?
</div><div class="text parbase section"><p>First, we saw the end of the electoral power—at the national level—of the Republican Party's theologically rigid agenda. Mitt Romney's primary season embrace of the social and economic agenda of the more rabid elements of his party doomed him, especially the shrill immigration rhetoric and the harshly insensitive theory that no additional sacrifice or contribution should be sought from those at the top. When he tried to move away from the sharpest edges of this during the general election, the public didn’t trust him.</p></div><div class="text parbase section"><p>Romney's defeat was not simply the arithmetic of voting blocs; it was the larger statement that "<em>We</em> all did build this." The sense of community in our politics and society re-asserted itself against the hard individualism of the right. Hence the near certainty that Congress will enact immigration reform and tax rates that require the wealthiest to pay more. The two theologians of the Republican Party—Grover Norquist on taxes and Wayne LaPierre on guns—are now struggling. This is good for our politics.</p></div><div class="text parbase section"><p>Second, the president did best and crafted his majority when he spoke to true progressive values. During much of his first term he was quite tepid in his embrace of those values. And his poll numbers were flat, the public disengaged from his efforts. But when he finally spoke up on the agenda that the public cares about—from same-sex marriage to immigration reform to a fair distribution of the tax burden—the public responded. The lesson is clear: The timorous politics of so many Democrats who feel compelled to rush to the middle, to be meek, to shy away from the agenda of change that is needed, is not only wrong substantively, it is wrong politically.</p></div><div class="text parbase section"><p>Third, revolutions are messy things. The initial euphoria of the Arab spring—the most important foreign policy event of the past several years—has now been replaced by the grind of upheaval that has no clear direction. Yet the move toward secular society does seem to have traction, the desire for freedom as we understand it seems to be real. There are countervailing forces—the Islamists' desire to impose an intolerant theology. Yet in Egypt and elsewhere the foundation of democracy is visible, if under threat. Whether the state of Egypt ends up replicating Pakistan (we hope not) or Turkey (we hope so), it surely will not be Iran. The Middle East is still a mess, from Syria to Iran. Yet it does appear to be moving in the right direction.</p></div><div class="text parbase section"><p>Fourth, just because I can't resist coming back to this issue at least briefly, our financial system is still fraught with structural problems. From insider trading to LIBOR bid-rigging to analysts still shilling for IPOs they have an interest in, the problems continue. It is part human nature, part our failure to sanction properly when we need to, part our government's failure to have the backbone to restructure a system that is clearly unstable and flawed.</p><p>What a year it has been. And while 2013 will not see a major national election, we can be sure that most Republicans will obstruct and some Democrats will appease. We can be sure that the Middle East will continue to be a source of vexing questions that need solutions. And we can be very sure that Wall Street will not fix itself. Which is why we will have loads to discuss.</p></div><div class="text parbase section"><p>Have a wonderful holiday and New Year.</p></div>
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Cerberus’ Exit From the Gun Industry Shows How Public Pressure Can Shame Companies To Do Right
December 19, 2012
Perhaps it is not a surprise that Cerberus quickly decided to sell the Freedom Group, its collection of gun companies, including Bushmaster, the firm that made one of the weapons used in the Newtown, Conn., massacre. Cerberus has been notoriously secretive about its finances, and the adverse press it has attracted in the aftermath of Newtown forced a hasty retreat. This should be very encouraging to those of us who wish to shift the debate about guns: A few critical articles, some whispers from major investors questioning their investment in Cerberus, and decisions were instantly made that could cost the company hundreds of millions of dollars.
</div><div class="text parbase section"><p>So there is a significant message here: Ownership matters. Ownership can be more powerful than regulation. The capacity of pension funds and endowments to act collectively and use their rightful interest in having their funds invested in a way that reflects their core values is something we have largely forgotten. It is too easy when things go fundamentally awry to call for more legislation or blame failed regulators. And surely we shouldn’t diminish the pressure we apply to Congress now to enact real gun control. But at the end of the day, it is those who own the shares and invest the dollars who can and must be held to account. And if those investors awoke to this responsibility and possibility, they could make enormous improvements in American life.</p></div><div class="text parbase section"><p>Imagine if investors in Wal-Mart really cared about <a href="http://www.nytimes.com/2012/12/18/business/walmart-bribes-teotihuacan.html?hp" target="_blank">bribery at that company’s overseas operations</a> or safety standards at its overseas manufacturing plants. If investors pulled their capital, corporate leaders would have to respond.</p></div><div class="text parbase section"><p>Imagine if the pension funds and endowments that own much of the equity in our financial services companies demanded that those companies revisit the way mortgages were marketed to those without adequate skills to understand the products they were being sold. Management would have to change the way things were done.</p></div><div class="text parbase section"><p>And to return to guns, imagine if the shareholders pressured large retailers to cease the sale of certain semi-automatic weapons or risk having their shares sold? You can bet that those retailers would reconsider their gun sales.</p></div><div class="text parbase section"><p>Shareholders have the right and obligation to set the parameters of corporate behavior within which management pursues profit. The speed with which Cerberus said it was getting out of the gun business shows how easy it could be to change corporate behavior, if only shareholders set their minds to it.</p></div>
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Eliot Spitzer: Tax the Traders! It Would Solve Economic Crisis and Stop Reckless Activity
December 04, 2012
Both the White House and House Republicans, publicly at least, are digging in their heels deeper and deeper in the so-called negotiations over what we call, alternately, the fiscal cliff, the fiscal slope, the austerity bomb, or the cable-talk-show topic of last resort.
</div><div class="text parbase section"><p>Whatever logic either side pretends to have is irrelevant to the other side, because each is speaking a different political language and indeed a different economic language.</p></div><div class="text parbase section"><p>I agree with the White House on the substance of the debate, and I think the administration’s hand <a href="http://www.slate.com/blogs/spitzer/2012/11/28/boehner_wants_to_hold_obama_hostage_on_the_debt_ceiling_again_here_s_how.html">gets stronger over time</a>. But as anyone who has been through negotiations will tell you, sometimes you just need a new idea to change the dynamic.</p></div><div class="text parbase section"><p>This one is not so new; it has been around for a long time, supported by a wide range of economists, including Nobel laureate James Tobin, as well as advocates, including <a href="http://www.washingtonpost.com/opinions/ralph-nader-why-a-tax-on-stock-trades-should-be-part-of-a-fiscal-cliff-deal/2012/11/30/d6a1285e-3a38-11e2-8a97-363b0f9a0ab3_story.html" target="_blank">Ralph Nader in the <em>Washington Post</em></a> this weekend, and elected officials: a tax on financial transactions. It will give us gobs of revenue. It will fall on a sector that has generated enormous and unwarranted profits for a very few, who at the same time have benefited from huge bailouts and regulatory help and largely escaped any responsibility for their central role in creating the financial cataclysm that we are still struggling with.</p></div><div class="text parbase section"><p>Here is the idea: A tax of less than half a percent on every $100 of stock sales or sales of other financial instruments including bonds, derivatives, and options. The tax could raise anywhere from $170 billion to $350 billion per year depending how it was applied. Extend that over 10 years, and we are raising almost what the White House and Republicans agree needs to be raised in order to accomplish the objectives of a grand bargain.</p></div><div class="text parbase section"><p>But there is an added benefit here: Trading in the equity and debt markets has gone wild over the past few years. High-speed trading and speculation have overtaken the economically legitimate reasons for our desire to have highly liquid markets: the capacity to raise capital and then allocate it efficiently among sectors and companies. The trading that has emerged over the past few years is not serving that purpose—it is a casino enterprise driven by hidden pools and computer algorithms that do not seek to hold capital for longer than an instant.</p></div><div class="text parbase section"><p>To the extent that a financial-transfer tax drove some of those trading practices out of the marketplace, that would be another good outcome.</p></div><div class="text parbase section"><p>We are all used to paying a sales tax when we buy things—almost 9 percent here in New York City. The application of this concept to the financial sector could solve our need for revenue, bring some sanity back into the financial sector, and give us a way to raise the revenue we need to run the government in a fiscally responsible way. Maybe this is the old idea that we need folks in D.C. to pay attention to again.</p></div>
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Why Won't Romney Rescind His Endorsement from the Vile Richard Mourdock?
October 25, 2012
I have grown increasingly mystified that a presidential candidate we know so little about is so close to winning our highest office. The much-derided Etch-a-Sketch strategy has actually worked. What began as a bad joke about a candidate without any substantial chance of victory has now turned into a path to the White House.
</div><div class="text parbase section"><p>I'm not sure whom to blame: the voters? The media? President Obama? All share some of the fault for not calling Romney out for his inconsistency. Perhaps as a nation, <em>we</em> have all failed to hold Mitt Romney accountable. We don't know who he is or what he believes because we've never forced him to tell us. Every time he opportunistically re-creates his own platform or policy, he gets away with it.</p></div><div class="text parbase section"><p>We do know who <a href="http://www.washingtonpost.com/blogs/the-fix/wp/2012/10/24/mourdock-god-intended-for-babies-to-result-from-rape/" target="_blank">Indiana Senate candidate Richard Mourdock</a> is. The Romney-Ryan-endorsed Mourdock has added to the litany of outrageous and offensively backward positions that make up the Republican War on Women. But where is Gov. Romney? The former pro-choice moderate, who all but adopted a Todd Akin-like stance on "personhood" before asking Akin to drop out of his Missouri Senate race after his rape gaffe, is trying to have it both ways—disagreeing with Mourdock's beliefs while still supporting him.</p></div><div class="text parbase section"><p>It should be the obligation of every voter to find out what Romney really believes on this issue. He has a choice. If he doesn't agree with Richard Mourdock, he needs to rescind his endorsement. He needs to ask Mourdock to stop using his likeness in campaign ads to promote views that he disagrees with. He needs to denounce Mourdock.</p></div><div class="text parbase section"><p>If Romney does not take any of these steps, it should be clear to every voter that he cannot be relied upon—that his positions are truly meaningless—that he has no core convictions he deems worthy of fighting for.</p></div><div class="text parbase section"><p>American voters are supposed to appreciate straight talk. Mitt Romney makes a mockery of this core notion of American politics.</p></div>
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We Must Defend Even the Ugliest Free Speech - Especially When There Are Riots
September 25, 2012
At the annual meeting of the U.N. General Assembly this week, plenty of voices will be heard, including that of the hateful president of Iran, Mahmoud Ahmadinejad, and not one of those voices will be censored.
</div><div class="text parbase section"><p>Rarely has the value of free speech been so threatened. The arc of the unfortunate story is now well-told: Using a perceived attack on the Quran by a private voice as a pretext to ignite anger, forces of intolerance incite riots against visible American interests and representatives, usually causing damage of some sort, and in the recent incident in Benghazi, leading to a tragic loss of life.</p></div><div class="text parbase section"><p>How should we respond, both to the initial provocation, and then to the assault on U.S. interests?</p></div><div class="text parbase section"><p>We should be clear in understanding that these attacks are the price we pay for believing in free speech, especially in a world where such tolerance is not universally accepted. We are used to dismissing as cranks and crazies the fringe voices who preach everything from anarchy to conspiracy, or who feel compelled to elevate their own religious or political views by speaking in venomous terms about those of others. Yet in parts of the world where free speech is not an accepted part of the political or social fabric, such speech can be exploited by those with multiple motives. As Bill Keller <a href="http://www.nytimes.com/2012/09/24/opinion/keller-the-satanic-video.html?hp" target="_blank">points out in the <em>New York Times</em></a>, it is often the intent of those causing the riot that tough restrictions on speech be imposed. The very violence they cause becomes the argument they can then use to stifle opposition voices.</p></div><div class="text parbase section"><p>All of which brings me to a simple point. If we appear at all queasy in our dedication to the founding principle of free speech and tolerance for that right in others, we give sustenance to those who would squelch it. We also weaken the overwhelming long-term appeal our principles have in those nations now going through a tumultuous upheaval. Of course we cannot expect the end result to be universal adoption of our vision of freedom, but if we waver in defending it as a principle, then we will give up hope that we can move toward that goal.</p></div><div class="text parbase section"><p>We have learned well that it is in defending the ugliest speech that the principle of free speech is vindicated, and that point must be articulated even in those lands where the concept may now seem foreign. In nations where the voices of intolerance are most visible and momentarily powerful, it is in our long run interests to remain firm in our clear articulation that the use of violence in response to speech is to be condemned. The rise of democratic voices and free speech in huge parts of the world is a direct consequence of the fact that we have been willing to condemn such violence. So rather than apologize for legal speech, we should say simply that legal speech within our borders is neither endorsed nor condemned by the government, and the use of violence elsewhere in response to speech will not and cannot be tolerated.</p></div>
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