Politics Archive


A Depressing Story You Need to Read

Friday, July 1st, 2011

If President Obama's health reform, the Affordable Care Act, backfires politically, one reason will be the staggering political power of the drug industry. If, for example, the health reform had used the bargaining power of the federal government to lower the cost of prescription drugs bought by Medicare and Medicaid, instead of the current system in which the government pays sticker price, there would have been far less need to find savings in Medicare and far less political backlash among voters.

But there would have been a huge political backlash on the part of the drug industry, whose benign neutrality the administration sought and got. So bulk purchase of drugs at negotiated prices was a non-starter politically.

The drug industry has also very substantially captured the Food and Drug Administration, which is far too quick to approve new, "me-too" drugs of dubious clinical value and far too slow to remove dangerous or ineffective drugs from the market or at least condition them with clear limitations and warnings. The Obama FDA is only marginally better on this front than George W. Bush's.

If you want to get a sense of just how damaging the drug industry is, you need to read Dr. Marcia Angell's blockbuster two-part article in the June 23 and July 14 New York Review of Books. Here is the punch line of part one, "The Epidemic of Mental Illness: Why?" The current generation of anti-depressant drugs, which change the way the brain absorbs a neurotransmitter called serotonin, are probably no more effective than placebos.

Yet these widely prescribed and hugely profitable drugs produce major changes in brain chemistry, are often difficult to kick, and patients can find themselves on a whole cocktail of drugs to counteract each other's effects. As Angell writes: in positing that depression was caused by too little serotonin, "instead of a developing a drug to treat an abnormality, an abnormality was postulated to fit a drug." As she adds, "Or similarly, one could argue that fevers are caused by too little aspirin."

Angell draws on three books, most notably, The Emperor's New Drugs, by Irving Kirsch. As Angell explains the system, a drug company may submit any number of clinical trials to the FDA in seeking approval for a new drug. No matter how many trials prove duds, as long the drug maker can produce two trials that show some clinically significant difference between the drug and the placebo, it generally gets the drug approved. This is rather like a student doing over exams until the right answer pops up.

Studies that show benefit are of course published and publicized. Studies that show no benefit are kept quiet. But the duds remain on file with the FDA. So Kirsch used a freedom of information request to review all of the trials that drug makers had submitted. He found that the vast majority of 42 clinical trials submitted to the FDA between 1987 and 1999 for such best selling selective serotonin reuptake inhibitor drugs as Prozac, Paxil, Zoloft, Celexa, Serzone, and Effexor, showed no improvement compare to placebos. And if you averaged all the studies, the improvement was marginal.

But then Kirsch adds another twist. Since anti-depressant drugs generally have side effects, patients often guess correctly whether they are receiving the placebo or the drug because of the presence or absence of side-effects. That, of course, ruins the "double blind" nature of the clinical trial, in which no subject is supposed to know whether they are getting the drug or a placebo.

But in some trials, according to Kirsch, scientists use "active" placebos that include a harmless drug that produces a side effect such as a dry mouth. That way, both the group receiving the drug and the group receiving the placebo believe that they are getting the drug. Guess what? In trials using an active placebo, with "side effects," there was no difference between the patient response to the drug and to the placebo.

Angell argues that much of the huge increase in reported mental illness is the result of the development and marketing of drugs.

In part two of her piece, citing another recent book, Unhinged, by Daniel Carlat, Angell observes that psychiatrists consistently take more money from the drug industry than any other medical specialty. Psychiatry, working in tandem with the drug industry, keeps inventing new diagnoses for which new drugs are needed. Or perhaps it's vice versa. In the research work for DSM-V, Angell reports, fully 56 percent of the members of working groups disclosed significant industry interests.

My friend Dean Baker has long argued that if all pharmaceutical research were publicly financed and placed in the public domain, conflicts of interest would be wiped out, research would be guided by medical need rather than profit, and taxpayers could actually save money because more than half of all drugs are now purchased (at patent-protected prices) by Medicare, Medicaid, the VA, or some state agency.

Under that system, scientists could then go back to doing science, rather than trying to cash in as handmaidens of the drug industry.

Dr Jonas Salk, who created the polio vaccine, was asked in a TV interview whether he planned to patent his discovery. He responded, "The people own the patent on this vaccine. There is no patent. Could you patent the sun?"

Today, industry is patenting, if not the sun, applications of solar energy, and the drug industry is patenting folk medicines long used by indigenous peoples. Corrosion of the public spirit of scientists and the distortion of scientific inquiry is one of the many costs of this pervasive commercialization. Not to mention the creation of bogus illnesses that require bogus drugs with little medical benefit but real side effects.

That's truly depressing.

Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos.

Read the original article on The Huffington Post.

A Presidency in Peril Robert Kuttner is the author of A Presidency in Peril.

A Double Dip Recession for 2012?

Tuesday, April 26th, 2011

Economists are painting a pretty bleak picture of the economic outlook between now and the November 2012 election. Will this hurt President Obama's re-election chances? Or will voters blame the Party of No?

That, of course, partly depends on what kind of campaign Obama runs and partly on the Republicans. But first, let's take stock (actually, maybe let's sell stock).

The Federal Reserve has been buying up lots of bonds to keep interest rates very low. The Fed disguises what it's doing with the antiseptic and mystifying term, "quantitative easing," or QE for short. This is the second time the central bank has tried this trick, hence the coy nickname, QE 2. The problem is that very low interest rates only take you so far in a depressed economy.

For the most part the Fed's policy has been good for large banks and good for the stock market. Ordinary borrowers, businesses and homebuyers have trouble getting credit.

But other factors are starting to limit the effectiveness of very low interest rates.

For one, the very low rates in the US are depressing confidence in the dollar. That means we start importing inflation. For another, rising commodity prices worldwide — partly the result of the Fed's policy, partly due to rising demand in India and China — means increasing prices of consumer goods at home.

Five-dollar-a-gallon gas is not good for President Obama. Nor is the practice of food processing companies shrinking the size of standard packages to disguise price increases. And in the one part of the economy that might benefit from a little inflation, low interest rates have not worked to levitate depressed housing values.

The time-tested remedy, when cheap money ceases working, is expansive fiscal policy — government deficits and public investment. Now there's an idea.

Oops. Forget it.

There is, of course, huge pressure from the nation's opinion elites to cut the deficit, long before the economy is out of the woods. It comes from four potent sources.

Wall Street deficit hawks have been banging these drums for three decades, even during the late 1990s when the budget was in surplus.

The elite media buys this story, hook, line, and sinker. Big deficits are seen as proof of partisan gridlock and government irresponsibility. The six bipartisan horsemen of budget apocalypse, Senators Warner, Chambliss et. al. are widely depicted as fiscal heroes. The pundits seem to forget where these deficits came from.

Republicans since Ronald Reagan have pursued a strategy of cutting taxes and then expressing shock at the ensuing deficit and demanding program cuts accordingly. We were already having historically high deficits when the recession began, because of the Bush tax cuts of 2001 and 2003. Today's even more extreme Republicans would cut taxes further, slash outlays to their lowest level since before FDR, invoking the gods of deficit reduction.

President Obama, for his part, has fanned these flames with his appointment of the Bowles-Simpson commission, and his premature shift, as early as the 2010 State of the Union Address, from the theme of economic recovery and job creation to that of deficit reduction. His recent address at George Washington University was terrific at holding the line on Medicare, Medicaid and Social Security, but bought into the premise that we need deficit reduction more than we need job creation.

Why is Obama pursuing this strategy? Partly because his conservative economic advisers buy it, and partly because his political advisers look at polls that tell them voters care about deficits, especially political independents. But that current of public opinion exists only because opinion leaders — including Obama himself — have made such a fetish of deficits.

There is a whole politics that just isn't on the table: massive public investment to create jobs and growth — which then increase revenues and bring down the deficit. The political scientist Walter Dean Burnham refers to this sort of dynamic as "a politics of excluded of alternatives."

But wait, isn't the deficit a real problem? Yes, and no. Eventually, deficits at the 2011 level are not sustainable. However, the current accumulated debt held by the public of about 60 percent of GDP is not dire.

We could have two or three years of bigger deficits, very major public investment, let the debt ratio peak at 100% of GDP; and then stronger recovery, lower unemployment, and higher taxes on the wealthy would bring the debt ratio slowly down, as occurred after WW II.

Japan's debt ratio, for comparative purposes, is over 200 % of GDP — and Japan is increasing government outlay to repair the damage of the earthquake and tsunami. Britain's, after World War II, was over 250 percent, and Britain went on to enjoy a postwar recovery.

Why can't we have massive public reparation with war or natural disaster? Because politicians lack the vision and nerve.

Austerity will only slow down the recovery. The idea that a steeper path to deficit reduction will somehow restore business confidence and thus more than offset the hit to purchasing power is just blarney. And with both parties committed to some version of austerity, we could easily have the worst of both worlds — increasing inflation coupled with persistent stagnation.

However much the Republicans are at fault–for creating the financial collapse, blocking a stronger stimulus in 2009, and looting the Treasury with tax cuts for the rich, causing much of the deficit problem in the first place — an incumbent president tends to take the blame for hard economic times. Obama's talk of having a kinder, gentler brand of deficit reduction is no match for rising fuel and food prices and persistent worries about basic economic security.

Can the president shift to a rhetoric and policy that emphasizes the need for more jobs and a stronger recovery, and soon? Let's hope so. There is nothing like an election hanging to concentrate a politician's mind.

Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His latest book is A Presidency in Peril.

Read the original post on Huffington Post.

A Presidency in Peril Robert Kuttner is the author of
A Presidency in Peril.

My Private Obama

Tuesday, July 6th, 2010

This originally appeared on The Huffington Post on July 4, 2010

We in the progressive community have projected our own visions onto Barack Obama ever since we first noticed him as a remarkable political novice. It was clear from the 2008 campaign that he was a basically a centrist and seeker of common ground. But sometimes a crisis makes a presidency. And history has seldom delivered a more graphic, teachable crisis than the one that Obama inherited. So we voted our hopes that events could compel Obama to govern as a progressive.

We are still waiting, and we are a cheap date. Throw us a few bones and we brim over with gratitude:

On health reform: a brave speech to the House Democratic Caucus and some rare hands-on leadership with two outs in the ninth inning — and hey, we knew he had it in him. Finally, the real Obama! (But it didn't really last.)

Or a seemingly tougher line on BP, and the company meets Obama's demand for $20 billion to pay claims (though the small print reveals that BP limits what it considers fair claims.)

Or a reluctant firing of Gen. Stanley McChrystal (with a denial that it was for insubordination and a preservation of the general's four-star retirement benefits).

And some nice, isolated one-liners about the callous Republican refusal to extend unemployment insurance or support financial reform (oddly divorced from a larger narrative or strategy.)

But even a dire economic crisis and a Republican blockade of needed remedies have not fundamentally altered the temperament, trajectory, or tactical instincts of this surprisingly aloof president. He has not been willing or able to use his office to move public opinion in a direction that favors more activism. Nor has Obama, for the most part, seized partisan and ideological opportunities that hapless Republicans and clueless corporate executives keep lobbing him like so many high, hanging curve balls.

None of this has stopped the progressive community from trying to put words in Obama's mouth. A superb example is William Pfaff's short piece in the current New York Review of Books, "What Obama Should have Said to BP."

It includes these choice lines:

I have…given orders that the American functions of this company be provisionally seized or placed in temporary receivership…In no circumstances will company, proprietary, or stockholder interest be given priority over measures to terminate this emergency and to safeguard the assets or interests of the United States public or government.

Pfaff adds:

He then could have concluded his speech by saying to his political opponents that any Republican or Democrat who wishes to run for office in November as an opponent of these Obama Administration crisis measures - and as a defender of BP corporate and stockholder interests - as against the national interest of the United States and redress of the damage that continues at this moment to be done to the United States and its citizens, would be more than welcome to do so.

Quite so. As Drew Westen keeps observing, the voters admire leadership and toughness, especially in a crisis. They certainly don't admire Obama's feeble trademark, "If someone has a better idea, I'm happy to listen to it." As presidential declarations of resolve go, this is on a par with taping a sign, "Kick Me," to your rear end.

In my imaginary speeches, Obama gets serious about the jobs crisis — and then dares Republicans to try to block his efforts to put Americans back to work. But Obama and his political advisers have convinced themselves that economically vulnerable people somehow care more about the abstraction of the public debt than the immediate threats to their livelihoods.

Even if relentless conservative propaganda had moved public opinion in that direction, which in fact it has not, the job of a president is to educate. For the definitive refutation of the elite misreading of the public views of the deficits and debts, see the fine testimony of Larry Jacobs and Ben Page, two scrupulously insightful political scientists and public opinion scholars.

But despite our hopes, Barack Obama is unlikely to offer bolder policies or give tougher speeches any time soon, even as threats of a double-dip recession and an electoral blowout in November loom. This is just not who he is. If the worst economic crisis in eight decades were going to change his assumptions about how to govern and how to lead, it would have done so by now.

Come November, as Republicans break out champagne, the usual commentators will offer the usual alibis and silver linings.

The party of the newly elected president always loses Congressional seats. Not always: viz. Roosevelt, 1934, or Bush II, 2002. The two men shared nothing, except resolve in a crisis. That should tell you something. Where's Obama's resolve?

Having a smaller majority will force the Democrats to be more disciplined. This is delusional. Do you really think, with the loss of a working Democratic majority, that corporate New Dems and fiscally hawkish Blue Dog Dems will be more inclined to support their president? If anything, they will be emboldened to freelance at his expense.

Losing one or more house of Congress will compel Obama to realize that he tried to govern too far to the left and to move closer to the Republicans. Too far to the left? Only in Limbaugh-land. And we've seen that there is no compromise with the Republicans. Unless you embrace their whole program, they vote you down.

Even with big losses of House and Senate seats, there is plenty of time for Obama to recoup and win re-election in 2012. Maybe, but at the rate we are going, we face a long period of high unemployment, weakening defense of much that progressives hold dear, and a presidency increasingly under siege. The more protracted the economic slump, the easier it will be for even a lunatic-fringe Republican candidate to beat Obama.

Now, who am I to second guess the cleverest politician to come along in decades? Well, I am old enough to remember the Vietnam era when the Best and the Brightest were just dead wrong, and the kids had a surer sense of American foreign policy than the experts. I have also watched Obama's loyal opposition — people like Joseph Stiglitz, Paul Krugman, Elizabeth Warren, Sheila Bair — be proven right by events, again and again. So there are alternative paths, as there always are. But the White House has disdained them.

And I've noticed that it is the populists among Democratic elected officials who are best defended against defeat in November. That tells you something, too. Why should the project of rallying the common people against elites in Washington, on Wall Street, and in the media, be ceded to the far right? But that is what this White House is doing.

Progressives by nature are optimists. We believe that things could be better than they are, and that a decent society is worth fighting for. We're hopeful, sometimes bordering on wishful. A counsel of despair is not our thing. We tend to look for the best in people. That's why we keep playing Charlie Brown to Barack Obama's Lucy.

Obama was consistently underrated during the 2008 campaign. Nothing would make me happier than to say in six months that I was underrating him on July 4th, 2010, and to eat a big helping of crow.

But I reluctantly conclude that whatever progressives might desire in our private visions of who Obama could yet be, he is who he is. It is like watching a needless accident in slow motion. Without a drastic and abrupt course correction, the missed opportunities will continue to accumulate this summer and fall. The whole country, not just the progressive movement, will pay dearly.

Robert Kuttner's new book is A Presidency in Peril. He is co-editor of The American Prospect and a senior fellow at Demos.

It's the Jobs, Stupid

Monday, June 28th, 2010

This originally appeared on the Huffington Post.

The Americans wrapped up their meetings at the Toronto summit in an oddly contradictory posture. With much of the world afflicted with austerity fever, President Obama's team found itself in the awkward position of pushing the Europeans not to abandon economic stimulus — while Obama himself is unable to get the U.S. Senate to approve even modest sums to extend expiring unemployment insurance for upwards of a million workers, or his $23 billion request for emergency aid to the states to spare 300,000 schoolteacher layoffs.

The British, Germans, and Canadians, meanwhile were giving priority to deep budget cuts in their own countries — while smaller European nations were being made to extract even more severe cuts in exchange for guarantees of their government debt. Obviously, if every nation is cutting back, then economic recovery falters. But this seems far from obvious to the world's leaders.

In part, this general outbreak of austerity is the price that Obama is paying for giving too much attention to deficit-reduction at home, and not enough to jobs. The administration's own embrace of austerity, in the form of a freeze on domestic spending after this fiscal year, as well as Obama's fiscal commission, not only undercuts his credibility with the G-8. It gives ammunition to Senate Republicans and Democratic deficit hawks who refuse to appropriate another dime for jobs measures that are not "paid for" by tax increases or other spending cuts (which of course undercuts any stimulus effect.)

One good piece of news is the departure of OMB director Peter Orszag, the leading deficit hawk inside the administration. Orszag was the architect of the fiscal commission and the domestic spending freeze, and the foe of even modest increased outlays on jobs.

It's not clear that his successor will be a great deal better, though some of the names leaked to the press — notably Laura Tyson or Gene Sperling — are less hawkish.

If the Republicans make massive gains this November, the main reason will be the lingering economic slump, which now belongs to the incumbent Democratic administration.

You could spin recent events to suggest that President Obama finally had a pretty good week. He showed presidential resolve in getting BP to part with $20 billion. He fired the insubordinate General Stanley McChrystal. And he persuaded Congressional Democrats to put aside House and Senate differences and agree to a conference bill on financial reform.

But in all of these cases, the back story doesn't reflect so well on Obama. McCrystal's policy, which will continue, is a fantasy. He should have been fired for insubordination several months ago when he was trying to back the president into a corner with his public pronouncements.

Had the new administration cleaned house at Dick Cheney's Interior Department early on, and not given BP safety waivers, the spill probably would not have occurred.

And Obama hardly participated in the final deliberations on financial reform. For lack of progressive presidential leadership, the banking lobby gained back some of what it had lost on the Senate floor, in weaker provisions on derivatives, big loopholes in banks' ability to continue risky trading activities, and looser limits on banks' ability to invest in risky hedge funds and private equity.

Polls show a continuing erosion in the public's confidence in Obama and the Democrats. And none of the recent cases of presidential leadership touches on the real issue that is killing the Democrats, namely high unemployment.

Speaking of polls, one of the oddities of the Administration's reticence on the jobs issue is the reported counsel of the White House political staff that the public cares more about deficit-reduction than about jobs. In this account, the public sees deficit reduction as a sign that government is out of control and doesn't believe that more government spending will help solve the jobs crisis.

Political advisers who take such results at face value are fools. Yes, you can get poll respondents to say that the deficit is a serious concern, but it's a far less salient one than worries about losing your job, your health insurance, your pension, or the value of your home. If Obama can persuade the American people that he is their champion on these immediate pocketbook issues, the abstract worry of the deficit evaporates.

The political team also reportedly argues that Obama can't get serious jobs measures through the Senate in any case, and therefore a major effort would only make him look ineffectual. But this is also the wrong reading.

As I argued in a recent piece for The American Prospect, adapted from A Presidency in Peril, Obama needs to learn from the example of Harry Truman. In the summer and fall of 1948, when Republicans controlled both houses of Congress, and Truman was widely given up as a goner, Truman responded by deliberately sending "the do-nothing 80th Congress" legislation on housing and jobs that he knew they would defeat — to dramatize the difference between his own program and the Republican one.

Truman not only won re-election in November 1948 in American history's greatest
electoral upset; his coattails were so attractive that 75 House seats went from Republican to Democrat, and the Democrats took back both houses of Congress.

If today's Republicans are blocking aid to spare 300,000 school teacher pink slips, and over a million unemployed workers who are losing their unemployment insurance and Cobra health coverage, Obama should be hanging that callous behavior around their necks, Truman style.

And in that respect, there is one surprising piece of news on the polling front from a most unlikely quarter — the Peter G. Peterson Foundation.

The Peterson Foundation, bankrolled at a billion dollars, is spending a small fortune to persuade the American people that the deficit is a more serious menace than economic collapse, and that Social Security and Medicare need to go on the chopping block. I have rebutted this view in a paper for the Scholar's Strategy Network.

One of the Foundation's grantees is a closely linked organization called "America Speaks," which is supposedly a representative sounding of public opinion on the Peterson Foundation's favorite causes.

The "national town meeting" just completed June 26th, involving thousands of Americans by satellite link. You have to read the press release very carefully to find these results, but after extensive deliberations, the America Speaks poll included these findings:

  • 85 percent wanted to raise the cap on earnings subject to Social Security taxes–far more than the percent that wanted to reduce benefits or raise the retirement age.
  • 85 percent wanted to cut military spending.
  • 64 percent wanted a carbon tax.
  • 61 percent wanted a financial transactions tax.
  • 58 percent favored a new higher tax bracket for millionaires.

And these surprisingly progressive conclusions came, despite the fact that the exercise was heavily funded by the nation's most powerful propaganda organization that works to frighten Americans into believing that Social Security and Medicare are bankrupting the country! See Dean Baker's terrific new analysis of what the public understands and misunderstands about deficits, Social Security, and Medicare.

The people are often ahead of the leaders and the pundits. If the administration paid attention to where public opinion really is, we'd be hearing a lot more about jobs and a lot less about deficits.

Robert Kuttner's new book is A Presidency in Peril. He is co-editor of The American Prospect and a senior Fellow at Demos.

The Stealth Attack on America's Best-Loved Program

Friday, June 18th, 2010

Re-posted from The Huffington Post

As Obama's Fiscal Commission prepares for its June 30 hearing, the Roosevelt Institute's New Deal 2.0 blog invited me to participate in its Social Security's Fiscal Fitness series, which examines the soundness of the program, its relationship to the federal deficit, and the vital role it plays in America's economic future.

Washington bipartisan elites have been working to weaken Social Security since the mid-Clinton Administration. Clinton, prodded by his Treasury Secretary Robert Rubin, was on the verge of cutting a deal with Newt Gingrich to partially privatize America's most successful retirement program.

The intermediary was Clinton's White House chief of staff Erskine Bowles. The same Bowles is now the co-chair of Obama's fiscal commission — which also has designs on Social Security. Corporate Democrats keep turning up, like bad pennies.

As I reported in my 2007 book, The Squandering of America, liberals can thank Monica Lewinsky for saving Social Security from that earlier bipartisan deal. Why? Because when the frisky Clinton was being impeached, and Congressional liberals were holding their noses and reluctantly saving him from ouster, they were in no mood to have him trash Social Security. New details have been reported in the recent book, The Pact, by Steven Gillon, about Clinton's dealings with Gingrich.

But what is it with Democrats like Bowles, Rubin, and Rubin's protégé Peter Orszag, now director of the Office of Management and Budget and another of the deficit hawks who would weaken Social Security in order to cut the deficit? Don't they get that Social Security, along with Medicare, is one of the Democrats' crown jewels? Don't they appreciate that two-thirds of elderly Americans depend on Social Security for at least half their income?

As Nancy Altman pointed out earlier in this series, the argument that Social Security is adding to the federal deficit is a bum rap. Ever since Congress in 1983 acted to anticipate the retirement of the baby boom generation by raising Social Security taxes and pushing back the retirement age from 65 to 67, Social Security has contributed trillions of dollars to a government surplus. The intent was to pre-fund the additional cost of the boomers. George W. Bush pilfered that surplus for his wars and his tax cuts for the rich, but even so, Social Security is still in great shape for at least 30 more years.

Social security taxes wages. Get wage growth back to historic postwar norms, and Social Security is in surplus forever. Restore the traditional fraction of wages that are taxed, so that affluent people do not get a free ride on part of their income, and the proclaimed crisis disappears. There is no need to further cut benefits, or further raise the retirement age, or raise taxes on working Americans. If only Citigroup's balance sheet were as healthy as Social Security's!

So why the continued political threat to America's best loved and most successful government program?

The main reason is that Wall Street looks at all that money and imagines the fees that could be collected if it were diverted to private accounts. It's no wonder that Democrats like Robert Rubin (Goldman Sachs and Citigroup) and Republicans like Peter G. Peterson (Blackstone Group) are the mainstays of the bipartisan crowd proclaiming a crisis of Social Security and promoting a cut in benefits, or privatization — both of which would produce more reliance on Wall Street products.

These are the guys who brought us the financial collapse, with its devastating effect on pension savings, 401k's, home equity, and other private resources on which retirees depend. Now, with no sense of shame, they are going after the one part of the system that was not undermined by the calamity — public Social Security.

This is appalling economics, but happily it is dumb politics.

Politicians relying on superficial poll results may think the American people care more about the abstract goal of budget austerity than the very real one of protecting Social Security. They are in for a big surprise.

Remember the voters who, with no appreciation of the contradiction, warned the government not to mess with Medicare? Just wait till the government tries to mess with Social Security.

If the Obama fiscal commission, as reliably reported, comes in with a grand scheme to cut social spending, including Social Security, and raise taxes on working Americans, the commissioners will be rewarded with a resounding Bronx Cheer.

Cross-posted from New Deal 2.0.

Progressive Hardball

Wednesday, February 17th, 2010

If Democrats can start sounding like Democrats again, they'll have a better shot at holding onto their majority in Congress next November. And if they do keep their majority, they should do two things to turn themselves into a legislative party that can actually do the people's business.

First, scrap the filibuster rule. It isn't written into the Constitution, and in its modern form it only dates to 1975, when the Senate changed the rules to permit a single senator to require a supermajority of 60 votes on a given measure simply by threatening to hold the floor indefinitely, even if the senator couldn't be bothered to show up.

Before that rule change, you actually had to keep talking and tie up the Senate in order to filibuster. Today, you need only to declare your intent to filibuster, and any measure can be made to require 60 votes. As a consequence, the number of filibustered bills every session has risen from around 7 before 1975 to about 100.

And second, dump committee chairmen who are laws unto themselves. One good candidate would be Max Baucus, who just did it again, with a pitiful bipartisan $85 billion "jobs" bill, which is mainly a tax cut bill that will produce scarcely any new jobs. Its proposed $15 billion payroll tax holiday for newly created positions would create precious few new jobs because the incentive is too small. Employers would mainly get a tax break for jobs they planned to fill anyway.

Baucus had asserted his prerogative that the Senate Finance Committee should take the lead in the Senate's response to the House, which narrowly passed a $154 billion jobs bill in December. But so feeble was Baucus's handiwork that last week Senate Democratic Leader Harry Reid refused to accept most of it, and turned the project of fashioning an actual jobs bill (as opposed to tax cuts) back to senators Dick Durban and Byron Dorgan.

In the next Congress, unless the Democrats lose their majority, somebody other than Baucus should chair the Finance Committee. And what's in store at the Banking Committee if the usual seniority rules apply is even worse.

There, Banking Committee Chair Chris Dodd is retiring. There is a lot to criticize in Dodd's leadership — in fashioning a financial reform package, he goes back and forth between sounding like a Democrat and trying to work out a bipartisan reform bill with the committee's ranking Republican, Dick Shelby of Alabama, a fool's errand if ever there was one. But Dodd is Franklin Roosevelt compared to his likely successor, Tim Johnson of South Dakota.

Johnson is often known as the senator from Citigroup. That's because his state, back in the late 1970s, relaxed its usury laws in order to attract back-office jobs from large banks, starting with Citi. It was a sweetheart deal made by a Republican governor. Citigroup is now the fourth largest employer in South Dakota, with some 3,200 mostly clerical jobs.

In the Marquette decision of 1978, the Supreme Court held that state anti-usury laws cannot be enforced against banks based in other states. So a bank can sell and service credit cards nationwide, relying on the laws of the state in which it is incorporated and violating the consumer laws of the states where the cardholder resides. South Dakota became to credit card companies what Delaware was to corporations generally. It led the race to the bottom, making sure that it remained the nation's worst when it comes to protecting consumers.

Johnson, in toadying to Citi and other banks, has outdone even the usual South Dakota standard. When Congress passed the rare bipartisan bill to crack down on credit card abuses last May, Johnson was one of just five senators, and the only Democrat, to vote against it. He was also one of 12 Senate Democrats to oppose giving bankruptcy judges the authority to modify the terms of mortgages threatened with foreclosure. He is flatly opposed to even the somewhat weakened Consumer Financial Protection Act which passed the house. If he becomes Banking Committee chairman, forget any serious version of financial reform.

For more detail on Johnson's long record of defending payday lenders, credit card usurers, and rapacious bankers, see Ryan Grim's definitive post from January 2009.

Unlike the more delicate case of Baucus, the Senate Democrats don't need to dump Tim Johnson because he's not chairman yet. The just need to make sure someone else gets the job next January.

But isn't this a little utopian? Not at all. Back in 1975, I was once involved in a similar progressive coup. In those years, racist southern Democratic committee chairmen still dominated House committees. The incoming "Watergate" class of Democrats was committed to small-D democratic process reforms. As part of the coup, I was hired to write a report co-sponsored by Common Cause and Public Citizen scoring how committee chairmen voted on major legislation — how often they voted against the Democratic majority position. We worked closely with the legendary Dick Conlon, then the director of the Democratic Study Group, which functioned as the progressive caucus in the House in those years.

That year, the Democrats changed the rules to provide that committee chairs should be named by a majority vote of the House Democratic caucus. Armed with the study's results, they promptly dethroned and replaced three of the leading faithless House committee chairs. If the House can elect committee chairs by majority vote, so can the Senate.

House Blue Dogs and pro-Wall Street "New Democrats" in the House, as well as individual turncoats in the Senate like Joe Lieberman, Ben Nelson, Max Baucus, and Tim Johnson, have demonstrated that they can play hardball. Progressive Democrats are actually a majority of the Democratic caucus in both houses. It's time they played a little hardball, too.

Robert Kuttner's forthcoming book on the Obama Administration is A Presidency in Peril (Chelsea Green publishers, March 2010). He is founding co-editor of The American Prospect, and a senior fellow at Demos.

 
This article originally appeared on the Huffington Post.