Wednesday, March 28, 2012

Lessons from the Debt Ceiling Crisis: Bipartisanship in the Tea Party Era

(originally published September 6, 2011)

On the day that the bipartisan debt ceiling deal was announced in August 2011, the flurry of comments from lawmakers included two that stood out, both for their candid assessments of the agreement, and for the stark contrast between them. While Speaker John Boehner (R-OH) declared that, “I got 98% of what I wanted; I’m pretty happy”, Rep. Emanuel Cleaver (D-MO) lamented that the deal amounted to a “sugar-coated Satan sandwich”. The two views could not be more diametrically opposed.

They illuminate the disequilibrium within the final deal, despite President Obama’s determined efforts to craft a balanced solution. They show the absence of bipartisanship in the content of the deal, even though the looming consequences compelled bipartisan votes for final passage.

This outcome was principally due to the obstinate position of the Tea Party faction in the House (rather than Republicans in general). Their actions also troubled many Republicans who were concerned about the consequences of inaction. The Tea Party’s role displays the power of a sizeable extremist faction to reject bipartisanship and impose its demands at any cost, in this case jeopardizing the nation’s credit rating and overall economy, with ominous future implications.

How could such an outcome have occurred in the era of President Obama’s tenacious emphasis on bipartisanship and post-partisanship as cornerstones of his Administration and its policies? Does this mean that bipartisanship and post-partisanship are antiquated concepts? What does this portend for the prospects of bipartisanship in the future, starting with the “super committee”?

Factionalism Surpassed Partisanship in the Evolution Toward a Deal

Among the many twists and turns leading up to the resolution of the crisis, a few dynamics which curtailed bipartisan efforts were paramount in the evolution of the final deal:

• The Tea Party faction in the House Republican Caucus took an extreme position, maintained uncompromising allegiance to that position, used their leverage as a voting bloc, and refused to negotiate on anything that wasn’t in their wish list, even refusing to consider compromises proposed by Senate Minority Leader McConnell, the Simpson-Bowles Commission, and the conservative Republican Senators in the “gang of six”.

• In contrast with battles between opposing policies (which lead to compromises among policy options), the Tea Party faction shifted the terms of debate to a battle between Democratic policy and the Tea Party’s unwillingness to negotiate at all. Their notion of compromise was to require total capitulation by the Democrats on the substance of the bill in exchange for the procedural concession of allowing a bill to proceed. They simply did not care if there was no action on the debt ceiling, and, regrettably, those who don’t care have a tactical advantage.

• The Tea Party House-members co-opted the agenda of grass roots Tea Party activists to advance a different agenda. Whereas the objective of the grass roots movement is to get the government’s fiscal house in order by reducing the debt and eliminating borrowing for deficit spending, the objective of many in the House faction is to minimize – some would say deconstruct – the federal government. Rep. Cantor’s call for FEMA disaster aid to be offset by cuts in other programs exemplifies this. The objective of the grass roots activists can be achieved through balanced solutions (combining spending reductions and revenue enhancements), while the House faction’s objectives are thwarted by this approach.

• Speaker Boehner and Minority Leader McConnell understood the importance of raising the debt ceiling, and the dire consequences for the country and the economy if it were not raised. Although McConnell’s workable solution and Boehner’s negotiations with the President did not come to fruition, their influence was vital in reaching the eventual agreement. Yet, in the months leading up to the August 2nd brink of disaster, they utilized the Tea Party members’ intransigence to strengthen their own bargaining leverage, which intensified the impasse.

• Once it was clear that Tea Party faction was not willing to negotiate or compromise on any elements that were critical to a balanced solution, Speaker Boehner faced a choice between advancing legislation that could be supported by a coalition of (a) the Tea Party members and the rest of the House Republican Caucus (many of whom recognized the perils of an extended crisis), or (b) the majority of House Republicans and the House Democratic Caucus (as well as the Senate Republicans and Democrats).

• Speaker Boehner chose to advance legislation with a coalition of Tea Party members and the other House Republicans, even though he knew it wouldn’t pass the Senate. His bill (prior to the final deal) met all of the Tea Party members’ escalating demands, from the inclusion of a balanced-budget amendment to the exclusion of any revenue increases, without any compromises. Yet, in the Tea Party’s eyes, it was a compromise, simply because it included a rise in the debt ceiling, which is normally non-controversial.

• The net result is that the Tea Party members first caused the problem and then castigated President Obama for presiding over a problem. The Tea Party faction entered an arena that was always governed by certainty, injected uncertainty into the process, and then wailed about businesses facing uncertainty. Their rebukes are disingenuous at best, since the Tea Party faction created the problems which it claims to abhor.

Lessons Learned for Future Bipartisanship

Some suggest that the prospect for future bipartisan / post-partisan efforts (both procedurally and substantively) has been debilitated, since the politicization of the debt ceiling sacrificed problem-solving in favor of ideology. But that view disregards the evolving nature of bipartisanship, the lessons learned, and the opportunity for progress. Bipartisanship remains possible, following adjustments that have been necessitated by the Tea Party faction’s tactics.

Bipartisanship based on rational policy, pragmatic problem-solving, and a spirit of goodwill should give way to a revised practice of bipartisanship based on the exertion of strength and strategic leverage. In the new incarnation, the fundamental tenet of collaboration – that all parties will be sensibly motivated by mutual benefit to negotiate toward pragmatic results for some of their desired outcomes – should be replaced by a real politik principle – that political power must be used to pressure parties to negotiate in good faith. At that point, benevolent negotiations can ensue in which parties relinquish some ground to achieve bipartisan prioritized objectives.

The lessons learned from the debt ceiling debacle include the revised approach to bipartisanship and a number of mechanisms that could enhance bipartisan outcomes, even when legislative efforts are obstructed by the intransigence of the Tea Party or other factions:

1. When the Tea Party politicizes or intensifies an issue, the President could develop and publicize a purist solution of his own that could be implemented by Executive Order, which he keeps in his back pocket in deference to bipartisan solutions. Doing so will show the Tea Party what could happen if they do not join bipartisan negotiations in good faith. It will motivate their participation and minimize their intransigence. Since those who do not care about inaction have a tactical advantage, this approach will give the Tea Party faction an incentive to care and negotiate meaningfully.

2. When the Tea Party faction makes an issue contentious, others should link the issue’s underlying policy and values with the grass roots Tea Party activists’ principles. By linking the two, the Tea Party House-faction’s obstruction of progress on the issue would make them vulnerable to criticism from Tea Party activists that they are violating their own principles. The inherent inconsistency would also illuminate ulterior motives.

3. When Tea Party members are intransigent, Democrats should welcome other Republicans, whose goals or values are obstructed by Tea Party positions, as negotiating partners. Focus should be on areas of potential common ground, where a failure to act would pose tangible risks). This could isolate Tea Party members, transcend their opposition, encourage them to come to the negotiating table, and achieve substantive results where consensus is possible.

4. Speaker Boehner has relented to the Tea Party faction to hold his caucus together, both for party unity and to solidify his position at the helm. Yet, he also has an interest in Republicans not being seen as extremist, retrogressive, and dogmatic, which could alienate Independents and swing voters. When facing Tea Party extremism and intransigence on major issues, he should craft bipartisan coalitions rather than allow the Tea Party faction to drag other Republicans into precarious positions. By reaching across the aisle instead of succumbing to Tea Party demands, he can advance solutions and sound policy with broader benefits.

5. In addition to a legislative or “inside” strategy, a public opinion or “outside” strategy can focus public attention on the risks to individuals, families, and businesses of relenting to Tea Party recalcitrance. Outside-strategies could target the districts/states of key legislators and clearly communicate the benefits of stymied legislation, especially when bipartisan values are at stake. Public support can urge Republicans to repel policy and political risks of inaction and obsequiousness to Tea Party agendas. Democrats and Republicans can even collaborate when Tea Party members threaten basic principles or vital programs. Tea Party members may not need the support of independents and swing voters, but many other Republicans do.

6. The outside-strategy can also expose the motives, extreme positions, and intransigence of the Tea Party faction by drilling down to granular explanations of their underlying goals, and the short- and long-term consequences that their policies would cause. Critiques should impose transparency and accountability on the Tea Party faction, enhance scrutiny of its judgment, and increase pressure on others for bipartisan, balanced solutions.

7. The Senate leadership sometimes foregoes floor votes due to the likelihood of Tea Party-led filibusters (and insufficient votes for cloture). Yet, deferring floor votes sends the wrong message. Senate leaders should bring legislation – especially when crafted with bipartisan input – to a vote, even if there will not be enough votes to proceed. In the debt ceiling crisis, doing so would have shown: (a) the efforts being made to find bipartisan common ground, (b) the policy solutions that could be adopted if intransigence were overcome, (c) which Senators are willing to take action, and (d) the Tea Party’s hold on Republicans, forcing them into obstructionist roles as “the Party of No”. The McConnell-Reid and Gang Of Six proposals could have been advanced in this way, intensifying pressure for a bipartisan solution.

8. Once the Senate brings up legislation, if it is halted by a filibuster, then its opponents will be identified and their motives will be on full display, facilitating an outside-strategy to mobilize public support. A filibuster is not a failure, but rather a speed-bump en route to the next stage of the process. If legislation reaches a vote and passes in the Senate but the House refuses to pass a bill that can send the legislation to a conference committee, then the Senate’s passage of its preferred policies still strengthens the President’s position, enabling him to convene a bipartisan group of Senate and House leaders to negotiate a solution.

The “Super Committee” for Debt Reduction

The “super committee” for debt reduction is an unusual construct with unique rules and incentives for action. The trigger will be a “sword of Damocles” that encourages its twelve members to find common ground for bipartisan solutions. Numbers 2 through 6, above, could play an important role and foster mutual respect. An outside-strategy, by which public support urges balanced bipartisan policy choices and illuminates the Tea Party’s objectives, can reinforce the need to choose options that distribute the fiscal pain of debt reduction fairly. As the “super committee’s” work product will affect every American, it is essential for their work to reflect the public’s sensibilities for fairness and not impair those who are lower on the socio-economic ladder.

The Challenge of Bipartisanship Going Forward

The debt ceiling crisis exemplified the challenges faced by those who seek to instill a bipartisan or post-partisan ethic of cooperation. Despite the set-back, prospects for bipartisanship remain, and may be more necessary now than ever before. It should, however, be viewed through a different lens. In contrast with bipartisanship motivated by Republicans’ and Democrats’ good faith cooperation to advance shared values for the common good, the Tea Party’s tactics necessitate the use of power politics to soften recalcitrance, compel bipartisan negotiation, and, at that point, collaborate to advance vital mutually-held objectives.

In essence, instead of starting off on a bipartisan path based on mutual respect and trust, given the current political climate, it seems necessary to work up to it.

Sunday, October 17, 2010

The Tea Party’s 4 Themes and Their Antidotes For the November Election

Widespread frustration among Americans is sure to play a major role in the November midterm election. The lingering recession and intensified partisanship in Washington have created rancor and concern which, in many cases, was effectively harnessed in primary elections by Tea Party candidates. Many votes were cast to protest the status quo, and many voters have become susceptible to the most extreme positions that candidates are willing to offer.

Although a spirit of bipartisanship is vital to effective government, it is put on hold for elections, when differences between candidates are illuminated and messages are crafted accordingly. In that context, it is necessary to understand the underlying motivations and themes that led to primary election victories for Tea Party candidates, address those themes with vision instead of anger, and urge the electorate to cast their votes for balanced judgment and pragmatism.

The Tea Party’s 4 Major Themes

The Tea Party has four major characteristics, two of which were central to its inception, and two others which emerged as the primaries became “open season” against the government and the Tea Party attracted people who had other agendas.

1. Fiscal Responsibility: The Tea Party was born out of concerns about Federal spending, the national debt, deficit reduction, taxes, and capital infusions for banks and automobile manufacturers. Although the financial supports for banks and auto makers were effective in staving off a much deeper economic crisis and have largely been repaid to the Federal government, they caused resentment among many because large corporations were given greater assistance than that which was given to families facing personal income or mortgage problems. Fiscal responsibility remains a major theme – both for the Tea Party and the country as a whole – as the US will continue to face deficit, debt, spending, and tax policy choices during and beyond the current recession. These issues were the policy cornerstone of the movement, and are legitimate topics for a national debate on the priorities of government.

2. The Role of Government: Dovetailing with fiscal issues, the ideological cornerstone of the Tea Party is its belief that the scope of the Federal government should be severely reduced. Its wrath was aimed at financial support that kept banks and auto makers in business, the planned sunset of tax breaks, and legislation to reform our health care and financial industries. Many in the Tea Party would like the Federal government to limit its focus to defense and international issues, relegating the rest to the states. Yet, this is just the latest chapter of the debate on Federal versus states’ rights which dates back to our nation’s inception. The Tea Party objects to two of the government’s fundamental social responsibility roles that have increased since the 1930s: providing a social safety-net, and regulating industries which have national impacts on health, safety, the environment, consumer protection, fairness, and the economy. This philosophy is also reflected in the Republicans’ recently released “Pledge to America” document.

3. Anger: Many Tea Party votes were cast to protest the status quo, rejecting Republican office-holders who were not stridently opposed to TARP (even though it was crafted by a Republican president), the economic stimulus, and health care and financial industry reforms. The common denominator among Tea Party candidates who rode anger to victory was that they did not hold offices which would have saddled them to the ugly economy of the past three years, even if that resulted in nominees who are inexperienced, have shortcomings that usually inhibit electability, or hold views that are far outside of the mainstream. The “rejectionist” atmosphere also welcomed radical proposals that conflict with fundamental tenets of American society, which were marketed as dramatic departures from the status quo and a means to limit the scope of government. They include the elimination or draconian constriction of Social Security, Medicare, Medicaid, Unemployment Insurance, civil rights laws, reproductive rights, the Environmental Protection Agency, and the Departments of Education and Energy. Tea Party candidates have grasped for positions to differentiate themselves from the mainstream, despite consequences that even they would probably abhor if their proposals were to be enacted.

4. Demonization: As the Tea Party gained traction, it became an outlet for resentments and malevolence that scorn 2010 America. The movement was hijacked by those emboldened to use it to spread anti-immigrant, racist, anti-gay, and anti-Islamic sentiments and policies. The demonization of demographic groups was certainly outside of the original scope of the Tea Party, and yet, its electoral value insulated it from rebuke by usually responsible leaders. Vitriol was focused on President Obama (e.g., the “birther” movement, venomous placards at Tea Party rallies, and Newt Gingrich’s recent rants), immigrants (e.g., Arizona’s law that countenanced racial profiling), and Muslims (e.g., the castigation of the Islamic Cultural Center in New York City). Such vilification exhumes the baneful and destructive pattern from our nation’s past when the disenchanted seek scapegoats and turn their frustration into pernicious demonization. Even the Tea Party itself acknowledged this (laudably) by expelling one of its leaders, Mark Williams.

Antidotes to the Tea Party’s Themes

Candidates who ignore the Tea Party’s main concerns and message do so at their peril, since frustration is not the exclusive domain of the Tea Party. Candidates can address the four underlying themes while staking the territory as the effective, sensible, pragmatic choice.

1. Fiscal responsibility can – and must – be directly addressed, as it is a major issue for the overall electorate. Instead of amorphous slogans about spending cuts, the discussion should focus on jobs, economic growth, tax rates, and deficit reduction to help people at the local level.

Job creation and economic growth are very likely to accelerate due to initiatives by President Obama and Congress, such as small businesses financing legislation, economic stimulus projects, and the effort to double exports within five years. There are at least two other initiatives which would further bolster jobs and the economy. First, job skills training can be made widely, conveniently, and inexpensively available through e-learning. Unallocated stimulus funds could be used by for e-learning programs that would bridge the gap between the jobs that are available and the skill sets of displaced workers who seek employment. Second, a network of localized business parks throughout the US could add jobs and accelerate key high-growth industries by co-locating numerous companies that are in the same emerging industry to facilitate leveraging of each other's research, skills, resources, patents, and manufacturing and fulfillment capabilities. Each park would become a hub for job and economic growth with synergistic benefits for all involved (please see “Development of Industry-Specific Technologies for the Future Economy via Business Parks” for more detail).

Tax rates will remain reduced for the first $250,000 of annual income for all families. For the highest income earners, the decision on tax rates above that level must be balanced with another focus of fiscal responsibility: deficit reduction. Since the planned sunset of the tax breaks already gave certainty to high-income earners (i.e., that tax rates would return to their prior levels after 2010), any additional tax breaks must consider the economic and political factors. (Please see “Bush Tax Cuts: The End of a Tax Holiday or the Start of a Tax Hike?” for further discussion.)

Deficit reduction is important to all – from Tea Party voters to liberals – to ensure the long-term sustainability of our economy. The bipartisan National Commission on Fiscal Responsibility and Reform will recommend ways to reduce the debt and deficit. Americans of all ideologies will be called upon to accept tough measures, possibly including means-testing for Medicare benefits, reductions of military spending, phasing out spending for certain programs, returning to the tax rates of the 1990s, increasing taxes on health insurers that impose excessive premium hikes, and increasing taxes on corporations with excessive executive compensation.

2. The role of government is an issue on which Republicans and Democrats historically and currently disagree. It is a legitimate topic for debate, and can best be addressed by specifically identifying what the American people would lose if government were limited as advocated by Tea Party candidates and the Republicans’ “Pledge to America” document. The electorate would not take kindly to the prospect of Social Security and Medicare being privatized, Unemployment Insurance being dismantled, severe reductions in low-income assistance causing homelessness to skyrocket, education programs being dismantled, companies polluting the environment at will, oil companies jeopardizing our energy security, health insurers radically raising premiums, financial companies taking advantage of consumers, civil rights laws being eliminated, and reproductive options being directed by the government.

3. Anger that leads to a protest vote is based on the illusion that the views of one candidate matter less than those of another. It can be countered by urging voters to demand specifics from the candidates, evaluate them, and choose wisely. Voters must know that, whoever they choose, that person will bring a wide span of views, not only the few that they reiterate during the campaign. It is not enough for a candidate to be against something, or to offer banal platitudes like “It’s time to give government back to the people” which don’t offer any clue as to what they would actually do. Not all incumbents are the cause of problems, just as not all outsiders are the cure. In this sense, each race should be localized, with a focus on the choice between the particular candidates, rather than on national trends.

Radical proposals which stem from anger can be countered with sound policies toward shared objectives. President Obama and Congress instituted sound policies and programs to resurrect our economy from the fiscal epidemic, but hopes for a quick cure were inflated, as impacts need more than 21 months to work through the economy. Since these efforts are very likely to bear fruit in the coming months, voters would benefit by letting the policies take their full effect without causing a course correction. Conversely, if all of the Tea Party candidates were elected, their proposals on health care, education, environmental protection, senior citizens, low-income assistance, and energy security that would be destabilizing, inimical to societal needs, and detrimental to consumers in deference to corporate interests. Most Americans would soon regret the deconstruction of sacrosanct programs and policies. In this sense, the election should be nationalized, with full attention to what Tea Party candidates say they would do. This ominous specter would bridge the enthusiasm gap, even among independents and moderate Republicans.

4. Demonization is destructive of the social fabric which unites us as Americans, is based on distrust or prejudice, has neither a factual nor ethical basis, and obstructs responsible policies. Anyone seeking a more harmonious society should reject hateful and antagonistic rhetoric, and insist on civility. Decency and civility are hallmarks of American culture that eschew venomous or slanderous comments aimed for political manipulation. Recent comments about the President by Newt Gingrich created a “straw man” with false and baseless allegations, and then attacked it with vitriol that denounced the falsified characteristics. Americans of all political stripes should condemn such tactics, and insist on sticking to the issues. Civility enables bipartisanship, which bolsters the people’s faith in their government, enhances voter enfranchisement, and improves legislative outcomes. Those who claim that bipartisanship is impractical, na├»ve, or undesirable usually lack either the mutual respect to find common ground or the desire to put forth effort in good faith toward pragmatic, non-ideological solutions. We should all honor President Lincoln’s decree to act “with malice toward none, with charity for all”.

The debate on the Islamic Cultural Center in New York showcases both the harm of demonization and the opportunity to find common ground. Through collaboration and civility, a compromise might be reached. Proponents do not want to move to another site, but are open to interfaith access. Opponents do not want an Islamic facility at that site, but don’t mind other faiths having a facility there. One scenario might begin by renaming the project the “Institute for Teaching of Religious Understanding and Social Tolerance” (a.k.a., “I-TRUST”), with two or three areas for diverse religions to hold prayer services, a program of interfaith study, interfaith collaboration on community-oriented projects, and a cultural center with sports facility that is open to all people.

The November Election in a Nutshell

There are lessons to be learned from the traction that the Tea Party gained in Republican primaries. Yet, there is an antidote for each of the Tea Party’s four main themes. The election should be nationalized with regard to the constructive policies that are beginning to take hold, and the proposals offered by the Tea Party while, at the same time, localizing each race as a choice between the policies of specific, identified candidates. The widespread frustration and anger is understood and acknowledged. But the solution is found in the vision for pragmatic, balanced, sound policies, not turning over the keys to those who would reverse America’s progress.

Tuesday, August 10, 2010

Would the Sunset of the Bush Tax Cuts Be the End of a Tax Holiday or the Start of a Tax Hike?

As Republicans resurrect their favorite mantra in seeking to reduce taxes for the wealthiest Americans, the debate on the Bush tax cuts is escalating. It includes the economic debate over the impact of the tax reductions for high-income earners, and the political debate over the message that would be sent by either extending the cuts or allowing them to expire. Proponents must prove that the tax cuts will achieve their intended economic impact, and the tax cuts must not be mischaracterized for political purposes. With the midterm elections upcoming soon, there is a partisan overlay to this issue which deflects bipartisanship, and the issue must be addressed in this context.

The Economic Debate: Are Tax Cuts For the Wealthy Effective?


The economic debate is essentially an anachronism, the latest progeny of the “trickle-down” principles of Reaganomics. Republicans suggest that high income earners need the tax cuts to feel financially comfortable enough to invest in business, which then creates jobs and stimulates the economy. But this view is inherently flawed, and there are better alternatives to achieve the desired impact.

First, these tax cuts are based on a self-serving argument that was concocted years (maybe generations) ago – by the wealthy, for the wealthy – to justify their accretion of largesse. The “indirect benefit” notion is a messaging smokescreen, rooted in elitist ideology, which asserts that giving cake to the wealthy will enable others to gather some crumbs. If the ultimate objective is to help the non-wealthy, then such support should be provided to them directly.

Second, with or without tax breaks, high-income earners will invest where they find a good return-on-investment, which is driven by the business sector’s ability to attract investment through sound business practices. High-income earners already can accelerate the economy through investment of their vast resources, and their desire for good investments is not dependent upon a tax cut. Putting more tax cut dollars in their hands does not mean that they have to invest their money at all, thus negating the “trickle-down” assumption. They make their choices based on what is best for them, not what is best for the economy.

Third, a tax break for the wealthiest 2% of people is not the same – and not as effective – as a tax break for businesses. The proposal is for personal tax cuts, to individuals, and most high-income recipients do not personally own a business. If the goal is to stimulate business and economic growth, then the tax breaks should be directed to small and medium sized enterprises (SMEs) which fuel local economies, and which would then be able to hire more employees and grow their business. For even greater impact, Federal stimulus dollars can be applied to infuse capital much more directly into businesses and the economy.

Fourth, the suggestion that the Bush tax cuts for the upper 2% of earners cause sustainable economic growth is absurd. If they did, then our nation would not have faced economic collapse in 2008.

Tax cuts for the middle class and low-income Americans have a much more salutary effect on the economy. They boost consumption and broad-based consumer confidence, directly bolstering economic growth, which is why President Obama seeks to extend these tax cuts. Continuing tax breaks for the middle class would also spur investment, including in the business sector, with an economic impact like investment from high-income groups (i.e., less investment per capita, but from vastly more people), and more families would reap the benefits directly, rather than scavenging for crumbs.

Tax cuts for SMEs would also have a much more direct impact on economic growth than tax cuts for the wealthiest 2%. The latter would accrue to individuals who may or may not invest any of the money, and may or may not invest it in American-owned companies. A tax break for SMEs would directly accrue to businesses that could then hire employees, purchase capital goods, extend the reach of their marketing efforts, and take other actions that would directly grow the economy.

In short, the Bush tax break for high-income earners is bad economic policy that does not achieve its stated objectives. There are more effective means toward economic and job growth.

The Political Debate: Would It Be the End of a Tax Holiday or a Tax Hike?

The Bush tax cuts were designed to expire. Even many Republicans realized it was bad policy to make them permanent, causing President Bush to institute them through Budget Reconciliation, which limited their duration to ten years. So, since they would need to be reauthorized in order to continue, would the decision not to continue them be sound fiscal policy and social fairness, or a tax hike?

Republicans suggest that a decision not to extend the tax cuts for high-income earners would amount to raising taxes. Democrats suggest that the tax cuts were designed to expire, and that their expiration is merely the end of a tax holiday.

First, since these tax cuts were only a temporary benefit, arguing that they must be extended is tantamount to trying to create a de facto entitlement for high-income earners. The proposition of creating an entitlement for those who need it the least is prima facie unfair, unnecessary, and presents a stark irony (some might say inconsistency) in light of pervasive Republican aggression against entitlement programs for disadvantaged Americans.

Second, the business and investment communities quest certainty for planning and fiscal management. As Mayor Bloomberg put it recently, “…uncertainty is not good. You don't make spending decisions, investment decisions, hiring decisions…when you don't know what's going to happen.” Yet, the tax cuts for high-income earners provided such certainty, i.e., that the tax cuts would expire at the start of 2011. This was clear in the law that created them, and it enabled the beneficiaries of the tax cuts to plan accordingly Belief that the tax cuts would continue beyond 2010 is somewhere between wishful thinking and pure fantasy. Thus, it is a fallacy to suggest that not extending them equates to a tax hike.

Third, many who are calling for the extensions of the tax cuts for the upper 2% of earners are the same people who object to rising government spending by agencies that have their budgets increase but never decrease. They complain that a new, temporary budget increase does not entitle the agency to expect the same level of funding (or more) in the future. Yet, when it comes to tax cuts, they violate their own principles, by arguing that a temporary tax break should create an expectation of permanence.

Fourth, the Bush tax cuts triggered the decimation of the 2000 budget surplus and the upward spiral of the annual deficit, surpassing a trillion dollars by the end of the Bush presidency. Many opponents of the Bush tax cuts cited the impact that such an enormous giveaway would have on the national debt, and hence, on the American economy over the long term. With debt reduction being so urgent now, continuing to drain the Federal treasury by giving tax cuts to the highest income earners – which would necessitate borrowing to pay for them – would be irresponsible at best. In fact, it could destabilize our economy for decades to come, as an exorbitant share of Federal dollars are allocated to paying the debt service, rather than providing services to Americans. Even the proponents of these tax cuts recognize the debt problem and call for deficit reduction. Their call for tax breaks is inconsistent with their own stated priorities, thus illuminating the purely political objectives of alleging a tax hike.

Therefore, it is illusory to suggest that honoring an intended sunset of a tax break would amount to a tax hike, and a claim to the contrary is a mischaracterization. A tax holiday was given to high income earners, and insisting that it be extended is like requiring Macys to extend their Presidents’ Day sale.

The Bottom Line

Congress may still choose to offer new tax cuts to high-income earners. But it must first be fully satisfied that doing so would stimulate the economy in the manner and to the extent that its proponents allege, and that there are not other alternatives that would be more effective in achieving the desired results. This is a high bar to hurdle. If the economic and political factors are applied objectively, these tax cuts will fall short.

Friday, July 23, 2010

Anger vs/ Vision at the November Midterm Election, and a Containment Cap for the Tea Party

(Editorial Note: Although the Bipartisan Bridge is committed to advancing bipartisanship, post-partisanship, and collaboration in government, elections are the exception to this principle, as stated on the Bipartisan Bridge website. It is very important, however, to confine the partisan combat of elections to a narrow period of time preceding an election. Thus, the following blog post is offered in that context, as the focus on the November 2010 election begins to elevate, prior to the September / October shift to a predominantly electoral mode.)

The November midterm elections will come at a challenging time for the US. The economy is still troubled, the BP oil spill will still be inflicting damage to the Gulf, the national debt is mounting, and the Tea Party is fomenting social rancor with racial, anti-immigrant, and anti-gay rhetoric. At the same time, the reforms that President Obama was elected to provide are being implemented and are having a positive impact toward revitalization of the economy, and increasing stability, sustainability, and security for Americans.

It is understandable that many Americans are frustrated and impatient. Our national temperament and the fast pace of 21st century lifestyles lead many of us to feel that even deep-seated problems and structural crises should be fully resolved by the time we check our email. We have become accustomed to instant results in this age of fast food, broadband, and high-speed transportation. Yet, just as an aircraft carrier cannot turn on a dime, the economy cannot instantly resurge after years of mismanagement and inattention that destabilized its foundations.

The Choice for the Midterm Elections

Progress would be imperiled if Americans were to flail and change Congressional direction simply out of frustration. The midterm election should be seen as an opportunity to advance the national strategy that Americans sought and which is well en route to being achieved. The election should be cast as a choice between (a) vision and actions for long-term US prosperity and economic growth, and effective use of government to solve entrenched problems, versus (b) anger over unreasonable expectations not having been fulfilled, and disengagement from forward-looking initiatives in favor of wistful notions of a 1950s-like economy and society. This would then invite debate on the vision which drives the parties, and mitigate the Tea Party's ability to proliferate anger.

Vision and Actions for US Prosperity and Effective Government

The Obama Administration and Congress have taken many major steps to put the country back on track toward long-term economic and social stability and success, most notably through health care reform, financial industry reform, and the economic stimulus bill. The Administration is also leading a number of other major initiatives which would improve our economy and social fabric, including legislation to bolster clean tech renewable energy and energy security, bolstering our economy by doubling exports within five years, education reform, and immigration reform.

Taken together, these efforts will revitalize our economy, ensure our stability and sustainability for decades to come, and enhance both our personal and national security. But they do take time to implement and for their effects to be felt, just as it took time for the effects of the previous Administration's policies to be fully felt in the form of a crisis. There is every reason to be confident that President Obama, who is doing what he said he would do when we elected him, is leading the country to improved quality of life, and pre-eminence in the global economy.

Anger and Disengagement

While prompt resolution is sought for the challenges which face us, the Tea Party has been trying to capitalize on the frustration. Although it was initially focused on fiscal responsibility issues, the Tea Party has morphed into an umbrella group for the resentful, being hijacked by those with other issues and agendas. It reflects other historical efforts to "get government off our backs" by minimizing federal government, favoring states' rights, enabling local control, and ultimately letting individuals act without regard for adverse societal impacts. The Tea Party has been co-opted by some to dismantle laws (e.g., Rand Paul on civil rights), by some to promote xenophobia and antipathy (e.g., J.D. Hayworth on immigration), and by others to oppose government generally (e.g., Sharron Angle on who knows what) in ways that its instigators did not intend. In each case, they seek to tap anger and disaffection with anything that they think is wrong in America. The Tea Party ultimately seeks to turn the clock back to an era that they preferred in terms of demographics, influence in society, and the need for regulation.

The Tea Party's strength is also its weakness. By being an expansive umbrella --- albeit for societal malcontents --- it consolidates a vocal minority of people and issues that most Americans do not support. The more that the Tea Party's blemishes are illuminated, the more people will gravitate back to a message of hope, vision, and progress. The Tea Party's "ideocracy" revisits the unglamorous and destructive tendency that we have seen at other times in US history when those who are disenchanted seek scapegoats and turn their frustration into venomous demonization. This has manifested in the Tea Party with increasingly racial, anti-immigrant, and anti-gay rhetoric which even the Tea Party itself acknowledged (laudably) by expelling one of its leaders, Mark Williams.

A more mainstream attempt to foster anger has been engaged recently by some Republicans who have embraced the moniker of "the party of NO" (e.g., Sen. Mitch McConnell declaring "we are proud to say no"). The virulent rhetoric of other Republicans has illuminated a propensity to catalyze anger (e.g., Rep. John Boehner's description of health reform as an "apocalypse" and of financial reform as "killing an ant with a nuclear weapon"), and opposing rather than engaging on policy (e.g., Sen. Jim DeMint saying "if we're able to stop Obama on [health reform], it will be his Waterloo", and that "It will break him"). The handful of Republicans who are willing to negotiate across the aisle for progress rather than promote anger are surely a constructive force; but they are the exception, rather than the norm.

Opposition without willingness to engage, influence, or compromise is corrosive, irresponsible, and self-defeating. It ignores the reality that Republicans are able to influence and gain compromises on legislation that is moving forward by matching the President's efforts toward bipartisanship, and it reflects the desire of some to make the federal government ineffective. Recent Republican opposition has been driven by a mix of devotion to protecting corporate interests, promoting the interests of the wealthy, and dismissing the needs of the majority of Americans. These core objectives are seen in their uniform opposition to health reform, the opposition to financial reform by all but a few, their opposition to extension of unemployment benefits, their crusade to make the Bush tax breaks permanent, and comments such as Boehner's and Rep. Joe Barton's infamous apology to BP.

The Impact of the Midterm Election

Elections are inherently partisan, and are the time when bipartisanship must be placed on hold while the core objectives of each party are illuminated. However, bipartisanship remains a vital objective and component for effective government, and members of both parties should strive for it in policy making. Thus, voters should be encouraged, when electing their representatives, to consider whether a candidate will be willing to work with and accommodate other views and positions. If candidates are elected out of anger, to provide opposition and intransigence, then it dooms the prospects for future bipartisanship. Thus, it is in the best interests of the electorate to choose candidates who are committed to governing effectively, in bipartisan collaboration, by instituting policies that will ensure America's success for decades to come to achieve positive results for the broadest base of Americans.

The Future: Results or Obstructionism

Neither party has an inherent monopoly on sound policies for the long-term prosperity of the American people. However, candidates who are propelled by anger to obstruct government and diminish its effectiveness clearly do not share a vision for progress. As we approach the midterm election, efforts should be made to highlight this distinction, encourage commitment to policies and legislation that will put the US in position for long-term economic and social stability and sustainability, and urge the electorate to vote for candidates who embody vision rather than anger. An election that is cast in these terms will blunt the derisive effect of the Tea Party and like-minded candidates.

American voters opted for hope and change in 2008, and have not forgotten that. They may just need to be reminded that revitalization and prosperity cannot be microwaved into achievement.

Thursday, June 17, 2010

BP’s Egregious Conflict of Interest is Wreaking Havoc on the Gulf

(June 8, 2010)

For every barrel of “free oil” discharged into the Gulf, the Clean Water Act establishes fines of at least $1,100 per barrel, and possibly as high as $4,300 per barrel, if the discharge is the result of gross negligence. These fines, and BP’s overall financial liability, have been skewing BP’s actions throughout the first 50 days of this crisis, necessitating action from other oil companies to stop the leak.

The Entrenched Conflict of Interests

BP’s dual roles – as the financially responsible party and as the principal party that is trying to stop the leak – have been on a collision course. BP’s financial liability has been directing its judgment throughout its many attempts to stop the free flow of oil. The result is a conflict of interest of monumental proportions and extreme consequences. BP’s inherent conflict of interests emphasizes the need to sideline BP, and instead turn to a combined effort of the other major oil companies to develop strategies and get the work done.

Obviously, the Federal government itself cannot do the undersea work to contain the leak, since the Federal government does not engage in undersea oil drilling and remediation, nor own the necessary equipment. Initially, the government reasonably relied on BP to solve the problem, partly based on the “you break it, you fix it” maxim, and partly based on the assurances that BP gave in its filings for permits, in which it claimed to be prepared to contain any leaks. But now that BP’s conflict of interests has eroded trust, and has been incapable of stopping the leak, it is time to call upon other oil experts to implement a fix.

Oil Discharge Estimates & Its Consequences

Initially, it was BP that claimed that the leak was allowing just 5,000 barrels of oil per day (BPD) to flow into the Gulf. That estimate was grossly inaccurate, and has been supplanted by much higher estimates from multi-party evaluators in recent weeks. It has been widely perceived that the earlier estimates had been deliberately deflated by BP in order to minimize its liability.

The earlier minimalistic estimates damaged the Gulf profusely, and cost its residents dearly. Had the initial estimates been even close to realistic, then the attempted solutions would have been gauged and scoped to meet that challenge. Instead, the containment dome, top hat, junk shot, hot tap, and top kill were developed as remedies to a much smaller problem than what actually existed. These stopgap measures were not sufficient to curtail a flow of 20,000 to 25,000 BPD, nor withhold the force that propelled such volume. They were destined to fail, or, at best, have only minimal impact.

Oil Dispersants Also Disperse The Truth

BP’s use of dispersants has been especially misguided and troubling. As the name implies, dispersants merely disperse the problem, spreading the oil around more broadly to minimize its appearance and mitigate its impact on any single location. In so doing, dispersants expand the area that is harmed by toxic oil, such that the Gulf is now confronting “a massive collection of smaller spills” and “an aggregation of hundreds or thousands of patches of oil that are going a lot of different directions” (Admiral Thad Allen, June 7, 2010).

The more sensible approach would have been to do the opposite. BP should have done – and could still do – everything possible to limit the reach of the oil, concentrate it, apply coagulants to the oil to make it gel or solidify, and then collect it from the water’s surface before the oil could dissipate and infect marshlands and beaches. But BP’s conflict of interest came into play again. Collecting the gelled or solidified oil would have communicated the volume of oil that was leaking from the wellhead, establishing BP’s liability.

The Conflict of Interest Spawned Bad Options

In light of the leak’s actual volume and the force behind it, efforts to plug the leak (e.g., top hat and junk shot) and smother it (e.g., top kill) were misguided. From the start, BP should have aimed to capture the oil, preventing it from infecting the Gulf habitat and the shoreline, and even retaining it as useable petroleum product. But BP did not do so, ostensibly because that would have illuminated the volume of oil jettisoned into the Gulf prior to the onset of the effective capture, and impacted its liability.

BP should have disclosed the leak’s actual volume and its early work should have been to place a wide-mouthed vertical pipeline over the point(s) where oil was escaping, tighten the mouth at some point below the escape point, and run the pipeline up to the water’s surface. A vacuum could have been created at the water’s surface to stimulate the upward flow of the oil, just like when using a straw in a carton of milk. The oil that spewed into the Gulf in recent weeks could have been channeled into tanker-vessels, presenting a win-win-win solution. But BP’s conflict of interest gave priority to not exposing the volume of oil involved.

The Containment Cap’s Math Doesn’t Add Up

The latest efforts to capture the oil have exposed BP’s aversion to transparency. Over the past two days, it has been reported that 11,000 BPD of oil have been captured by the latest containment cap, estimated to be 40% to 80% of the total leak. There are also aspirations to soon capture 20,000 BPD, which is acknowledged to be still less than the total flow (optimistically estimated as 90% of the total flow). However, the aspiration to collect 20,000 BPD indicates that the current capture of 11,000 BPD is only, at best, about half of the total flow (not up to 80% of the total, as BP still claims). This rudimentary math – comparing the current and anticipated barrel estimates with the corresponding percentage estimates – makes it obvious that BP is still not willing to acknowledge that the actual volume of the leak is higher than its publicized estimates. Again, BP’s conflict of interests is driving its lack of transparency and distorting its conduct.

What Is Meant By “All Legitimate Claims”?

If it were not amply clear that financial liability is the primary driver of BP’s actions and decisions, one would find confirmation in BP’s consistent mantra that it will pay all “legitimate” claims. That word raises questions about which metric BP will use to determine legitimacy. Will BP try to be the arbiter of what it determines to be legitimate? Will BP submit to guidelines from a Federal government office? Will BP insist upon the legitimacy of a claim being determined by court verdicts, following extensive litigation? BP should be required to immediately clarify – in very tangible, effective, operational language – what it means by “legitimate” so that claimants can have guidance, and so that federal, state, and local governments can influence that interpretation, or challenge it, if necessary.

Disaster Spawns Opportunity

As appalling as it may be to acknowledge it, the Gulf oil leak will probably not be the last of its kind. Off-shore oil drilling occurs in many parts of the world, by many companies. Although the Gulf calamity will hopefully encourage stricter regulation and enforcement to prevent any other tragedies of this type, it certainly is possible that more deep-sea leaks might occur. The companies that devise effective solutions to our current problem will instantly become the world leader in oil crisis response services. Since it is clear that BP has no special knowledge in this domain (based on its scattershot tactics, none of which has been effective), this is an opportunity for US oil companies to devise a solution and develop the competency to address future problems of this type, regardless of where on the globe they may occur. Although it is a skill set that will hopefully never need to be deployed, US pre-eminence in addressing tragedies of this type would further solidify our nation’s leadership in environmental remediation services.

Most importantly, by immediately convening a group of US oil companies, their combined expertise would be more likely than BP alone to develop a solution that completely stops the Gulf leak. Naturally, the US companies’ joint operations to stop the leak must be fully financed by BP, as it would be a very legitimate claim.

Eliminate BP’s Conflict of Interests

BP absolutely must remain the financially responsible party. But it should not continue to be the principal actor in stopping the leak. It is now obvious that BP does not have the capacity to fully stop this leak on its own, and that its conflict of interests is affecting both its options and its judgment along the way.

Saturday, March 20, 2010

Americans Want Health Security & Affordability, and Don’t Care About Myths & Legislative Procedures

As the House of Representatives prepares to vote on health care reforms that President Obama made a priority and which the electorate brought him to the presidency to enact, it is vital to focus on the big picture. The American people – and Members of Congress – should recognize the unique nature of this historic opportunity. This is a watershed moment that will define our nation’s social responsibility, preserve our economy, and improve our quality of life.

Americans Care About the Policy, Not the Process & Sideshow Issues

When facing such a transcendent turning point, it is no longer appropriate to be dissuaded by the arcane intricacies of the legislative process, nor by myopic devotion to sideshow issues. We all want enhanced health security and affordability, and, once we have it, we won’t care if it came by way of Reconciliation, the “deeming” mechanism, or some other legislative vehicle. After reforms are enacted, Americans who are protected against termination of their coverage for pre-existing conditions won’t care about targeted programs for Vermont, Florida, Connecticut, and Montana.

The same Americans who are angry now about the reform process will become much angrier in future years if reforms are not enacted and their insurance is terminated or becomes unaffordable because they are not protected. Without reform, an ardently pro-life family whose insurance stops due to reaching their lifetime coverage limits after a serious illness of their child will be much more focused on that than on their opposition to the 2010 bill due to its abortion language.

Policy That Does What Is Right for Americans

Ultimately, the benefits of substantive policy – and its improvement of our social fabric and quality of life – prevail. Abraham Lincoln did not allow projections of commodity market fluctuations to alter his drafting of the Emancipation Proclamation. Franklin Roosevelt did not withhold his leadership on Social Security legislation until the intricacies of tax treatment of deferred income for early retirees could be fully coordinated. Lyndon Johnson did not delay the enactment of Medicare until the anti-government naysayers – who today have organized into Tea Parties – were on board. Today’s America would be unimaginable without these advances.

At historic moments, such as the one that our country is currently facing, it is necessary to simply do what is right. The health care reforms that are under consideration are the right policies for America, in both the near- and long-terms, as they would have a positive impact for virtually all Americans (even including the insurance industry, which would collect premiums from millions more people, and enable the risks and costs to be spread among a much larger pool).

Myths, Misconceptions, & Deceptions Are Overcome By Facts & Courage

Doing what is right takes courage and commitment to the facts, especially in light of the many myths, misconceptions, and deceptions that have been propagated by self-focused special interests. Insurance companies fear the reforms because they will have to stop certain activities that have given them a competitive advantage, at the expense of the people who they are supposed to serve. But, since it would be unseemly and transparent for them to fight the bill on those grounds, they have instead manufactured illusory demons which fuel opposition by those who are susceptible to such manipulations.

Knowing that some percentage of the population is stridently anti-government, the myth of a government takeover of health care was created, even though there is absolutely nothing in the bill – nor even in earlier incarnations – which substantiated this. Knowing that most Americans are strongly supportive of their chosen health care providers, the myth was created that the ability to choose one’s providers and insurer would be curtailed, even though President Obama repeatedly emphasized that if you like your doctor and/or your insurer, then you can keep them, and the legislation confirms that. Knowing that everyone is worried about the cost of health care, the myth was created that the legislation would cause premiums to skyrocket, which has been debunked by economists and the Congressional Budget Office, and is patently untrue by virtue of the millions of Americans who would enter and pay premiums into the health insurance market.

In the current climate of unfounded, unsubstantiated, and even paranoid fears of change, doing what is right for the overwhelming majority of Americans requires fortitude to take action based on the facts, rather than on fears, by summoning dedication and determination. Moving the country and the people toward increased health security and affordability will depend on decision-makers’ willingness to embrace the responsibilities, ideals, and commitment to public service that are inherent in serving the greater good, rather than the good of special interests.

Policy Based on Core American Principles

The upcoming vote on health care reform is about principles. Humanism and equality are at the core of expanding coverage to those who do not have it, and preserving coverage for those who do. Fairness and consumer protection are at the core of affordability, to ensure that insurance corporations cannot price families out of the market with hikes in premiums, copayments, and deductibles. Fiscal responsibility is at the core of reforming the economics of our health care system to ensure its long-term sustainability for both the public and private sectors. Opportunity and justice are at the core of health security, which enables individuals and families to engage in “the pursuit of happiness” as they choose, without vulnerability to corporate self-interest.

The denial of these principles for the benefit of all Americans would be tantamount to giving amorphous, intangible, unsubstantiated fears priority over people. If a republic relegates the needs of its people to the back bench, it would be a foreboding sign of the unraveling of the social fabric. The deficiencies and injustices of our health care system have been so extensively evidenced and documented that it is imperative that they be remedied. Anyone who thinks that they are not vulnerable to these shortcomings is just one serious diagnosis or illness away from discovering that they are wrong. Reform is necessary to reinvigorate our core principles. The moral deficit that is being inflicted by our health care system is reprehensible and intolerable.

The health reform legislation being considered might possibly mean that each of us would pay an extra dollar for a meal at a restaurant to ensure that the cook, the waiter, the cleaning team, and their families have health coverage and the security that comes with it. But who among us would rather pay a dollar less for a nice dinner while looking at a crew that is uninsured and living in fear of illness? Moreover, if they do not have insurance, they may not have gotten treatment for an illness or disease that could be communicable to us at the restaurant. And, without insurance, if they did get treatment, it is likely that they went to an emergency room or a public health facility which was paid for by the rest of us anyway, as taxpayers and by shifting the cost to those with insurance. The waiter who serves the dinner would also like to be served well by legislators who can provide them with health security.

Rising to the Occasion to Do What Is Right

The day of reckoning on health reform is rapidly approaching. It will be one of the most important votes in the career of every legislator. It is a vote that each legislator will remember long after their retirement, either with satisfaction for having done the right thing or with dismay for having succumbed to pressure, special interests, and unfounded fears.

Some might worry that support for reform could impact their career, including their re-election prospects. But, opposition to reform could also result in their electoral defeat, both for denying their constituents the benefits of health security and affordability, and for their failure to take a courageous, principled stand that would improve the quality-of-life of those who they were elected to serve.

The legislation would advance health security and affordability in many ways, from prohibiting denials of coverage due to pre-existing conditions, to enabling millions of uninsured Americans to obtain coverage; and from limiting insurer hikes in premiums, copayments, and deductibles that price people and small business out of the market, to ensuring long-term sustainability of the health care system by containing costs for the public and private sectors. This is very tangible, meaningful progress. Yet, that doesn’t mean that the legislation is perfect, nor that it exactly reflects what any single person would most like it to contain. But that is the nature of democracy and politics as “the art of the possible” between President Obama, 535 Members of Congress, and a long list of citizen- and interest-groups. The old maxim that “the perfect must not be the enemy of the good” is perhaps more true in the context of health reform than any other issue.

An Historic Moment For the Country…..and For Each Legislator

If Congress does not pass health reform now, there will not be another opportunity for many years to come. And, when it does come again, the problems with our nation’s health care system will be so much more extensive, intractable, amplified, and varied, with costs having skyrocketed past the point of being able to be reined in. Reform at that time will be much more extreme and painful, and much less likely to resolve deficiencies and put our nation’s health spending on a sustainable track. It is critical that we do not miss this historic chance at substantial progress for the sake of individuals and families, businesses and economic growth, and preservation of our society and fiscal health. Now is the time to unite our diverse citizenship under the tent of health security and affordability for all, or risk further fragmentation and hardship which will be monumentally more difficult to repair.

Legislators for whom the vote on health reform is especially vexing would be well served to consider not only the impact of voting for the bill, but also the impact of voting against the bill. This vote goes right to the heart of public service. It will become increasingly apparent in the years to come that supporting this legislation was the right thing to do for America and Americans. Years from now, when looking in the mirror, a legislator will not see the insurance lobbyists, a group of Fortune 500 CEOs, nor a little room of over-heated Tea Partiers. Instead, the person looking back will be the person who voted on the 2010 legislation to increase health security and affordability for all Americans.

Tuesday, February 23, 2010

A 10-Point Program for Job Creation and Economic Transformation

Job growth is a top priority right now for most government officials, regardless of party. But recent job-growth proposals have mainly offered measures to avoid layoffs, assist those already unemployed, and induce only incremental hiring, mostly in well-established industries. Although the recent proposal by Sens. Chuck Grassley (R-Iowa) and Max Baucus (D-Mont.) was encouraging for its bipartisan process, its job-related provisions suffered from these limitations.

We have reached the point when the USA must rapidly stimulate major, broad-based job growth over a sustained period of time. The focus should be on transformative economic development in key industries that hold the promise of becoming the drivers of economic prosperity and exports for years -- and even decades -- to come. Rather than merely keeping workers and the economy afloat, we must invest in industries that will create the need for workers, both today and over the long-term, on a massive scale. When spending tax dollars on job growth, the emphasis should be on emerging industries, to invigorate the demand for workers in companies with global high-growth potential.

As President Obama stated on February 16th, "Whether it's nuclear energy, or solar or wind energy, if we fail to invest in the technologies of tomorrow, then we're going to be importing those technologies instead of exporting them. We will fall behind. Jobs will be produced overseas, instead of here in the United States of America. And that's not a future that I accept."

Starting Points for the "Jobs Bill"

The "Jobs Bill" that will emerge from Congress should include support for job retention and incremental hiring, as well as for the unemployed, both to stop our economic bleeding and to capture the "low hanging fruit." These steps include aid to state and local governments, a payroll tax credit for small businesses that hire unemployed workers, assistance to homeowners who are in jeopardy of foreclosure, and extension of unemployment insurance and COBRA benefits. The bill should also accelerate the Obama Administration's initiatives for highway and bridge construction, energy-efficiency retrofits of homes and buildings, and a seamless national broadband infrastructure.

Long-Term Job Growth and Transformation via the "Jobs Bill"

Yet, to maximize its impact in the near-term and lay the groundwork for future prosperity, the "Jobs Bill" must fully embrace President Obama's vision for economic transformation fueled by investment in innovation-intensive industries which will propel exports and economic primacy of the US economy for decades to come. The US must aggressively grab the advantage and secure the leadership role in these fast-evolving global industries. The key technologies and industries that should be designated as top national priorities include: renewable energy / clean energy, mobile telephony, broadband computing, biotech and health care, water desalinization and clean water production, transportation safety, homeland security, recycling and waste management, and environmental protection and remediation.

Although there is already considerable activity in the US in these industries, the progress is far short of positioning the US as the dominant world leader in them. The "Jobs Bill" provides a prime opportunity to galvanize our aim, commit our resources, and accelerate our activity in these transformative industries. The level of commitment and support should be akin to that given to the "Manhattan Project" in the 1940s and space exploration in the 1960s.

President Obama reiterated the case for such a commitment, and the high stakes involved, during his State of the Union address last month, in the context of clean energy and energy efficiency: "I know there have been questions about whether we can afford such changes in a tough economy... But here's the thing -- even if you doubt the evidence, providing incentives for energy-efficiency and clean energy are the right thing to do for our future -- because the nation that leads the clean energy economy will be the nation that leads the global economy. And America must be that nation."

The importance of the "Jobs Bill" in advancing US long-term leadership and economic prosperity can be illustrated by envisioning the WTO trade negotiations of 2025 and 2035. The US will seek to secure fair trade and competitive advantages in industries with maximal worldwide growth opportunities in those eras and beyond. The question will be whether the US is trying to wrest a foothold from others, or be in the driver's seat. We must work TODAY to build the competencies, technologies, infrastructure, and supportive services that enable the US to lead in the high-growth industries of the future.

10-Point Program for Job Growth Now and in the Future

A program could be included in the "Jobs Bill" to propel near-term and long-term US job growth, exports, innovation, and economic leadership in the global economy. To be eligible for government assistance and benefits under this program, a company would have to be involved in one or more of the national priority industries identified above, and need to be engaged (or seek to be engaged) in at least one of the following activities:

(a) research and development of a new technology or service for which there is a high growth potential;

(b) manufacturing of a product utilizing a high-growth potential technology in connection with a patent or patent pending;

(c) implementation of a marketing and sales plan that would reach, or significantly expand penetration into, export markets with a demonstrable high-growth potential;

(d) execution of a business model that would bundle products and/or services relating to one of the targeted industries, by partnering with at least one other US-based company, for enhanced reach, scope, and impact in high-growth export markets; and/or

(e) fulfillment, order processing, inventory management, transportation, and/or delivery services for companies engaged in one or more of the targeted industries.

For qualifying companies - including start-ups, micro-enterprises, and existing companies - government assistance and benefits under this program would include:

(1) an enhanced Research and Development Tax Credit, for companies described in paragraph "a", above;

(2) an Expedited Review and Processing of Patent Applications, in the case of companies described in paragraphs "a" and "b", above.

(3) a Payroll Tax Credit for two years for each unemployed person hired by a company of any size, if the hire is directly and predominantly for the above activities;

(4) a Loan, for companies described in "c" and "d", above (re: exports) to pay the salary of new hires for one year, with such loans being repaid over the ensuing four years (which could include a requirement to retain the employee for at least one more year);

(5) Job Skills Training assistance for employees who are directly and predominantly engaged in the above activities;

(6) Technical Assistance to start-up companies and micro-enterprises for help in formation, incorporation, and otherwise establishing their company;

(7) expedited Processing Assistance with documents and procedures to enable exports;

(8) Technical Assistance with fulfillment, transportation, and delivery of exports; and

(9) an Online Partnership Development Match-Making Directory for companies that seek to access / provide value-added services from / to other companies in their industry, and for other companies to identify market opportunities that could justify additional hires;

(10) development of a Network of Business Parks throughout the US that are dedicated to accelerating the key national priority industries by co-locating many companies engaged in the same emerging industry so that participants can leverage each other's research, resources, and manufacturing and deployment capabilities, resulting in synergistic benefits for all participants (extended discussion of this proposal is found below, in blog post entitled "Job Creation as Job One: 3 Ideas for The Forum on Jobs and Economic Growth", December 2, 2009).