On a Grand Bargain to Avert Debt Crisis

Note: It's been eight months since I last wrote on Election Eve. I had the engaging of Chrissy to take care of immediately after the election and have been rather busy since then. I look forward to writing more frequently as Election 2012 comes into focus. It's only 487 days away! In the meantime, follow my political thoughts on Twitter, @PearceGodwin.

Ongoing discussions taking place between the White House and both parties in Congress aimed at finding a solution to raise the debt limit, which America will breach on August 2nd, and returning to fiscal sanity by reducing out of control federal spending have taken an optimistic turn in recent days. As per usual, politicians only get serious and truly come to the table at the 11th hour with their feet to the fire. Reference the deal to avert government shutdown in April. This is true of any opposing parties involved in high stakes negotiation. With their backs to the wall, a compromise tends to result. We see this playing out again as the President reported Thursday that Democrats and Republicans are now coming to the table "in a spirit of compromise" and had "a very constructive meeting" realizing that "there is going to be pain involved politically on all sides." There is no bigger issue facing the U.S. today. If we don't solve this debt crisis and reign in our spending binge, we won't have an economy worth being employed in, never mind one that leads the rapidly evolving and globalizing world.

In light of these developments, I sent the following message in a series of tweets Thursday.

@PearceGodwin: Hoping for a grand compromise in order to take bold and decisive action to pull our country off the financial precipice of our national debt. As much as I favor slashing spending to raising taxes, afraid ruling out half of the balance sheet equation won't cut it. All remedies must be on the table to avert true economic crisis which could cripple America's financial stability and global stature.

Reaction from my conservative Republican friends was swift and provoked a great discussion on spending, taxes and debt. This is exactly the kind of honest and comprehensive discussion I hope is taking place on Capitol Hill and in the White House now. Read the discussion below and then weigh in. Offer your thoughts in the comments section or on Facebook and Twitter, where it has played out thus far. This is what collective problem solving is all about. In this case, the future of America depends on it.

Hill Republican:

Come on, bro. We can't be raising taxes during a recession! Federal budget increases of 20% or more for each of the past two years is simply not sustainable. Just go ahead and say it...you're supporting tax increases.

Larry Shoemaker:

I can tell you from the business side if you raise taxes on business or business owners, businesses will not increase hiring. Will likely decrease employment. Until businesses have some assurance about taxes and regulation, they are not going to expand-too much risk. Texas created more than half of all new jobs. Look at their taxes, tort reform, etc.

Pearce:

Hill, you know I would cut every last ineffective, inefficient and unnecessary government program before even thinking about tax increases. Drastically slashing spending must be priority #1. I just think trying to solve a problem this dire and of this magnitude will unfortunately require looking at both sides of the balance sheet rather than taking an unequivocal hard line to solve our debt problem with one hand tied behind our back. Any way you slice it, tax increases, first via efficiency reform and closing loopholes rather than rate increases, will get us to fiscal solvency faster when added to the X that is the amount cut. We must balance the need to turn the ship around fast with the deleterious effects we know any tax increase will have during a recession. We absolutely should not raise rates on job producers, including the "millionaires" who represent many small business job engines, at a time of such high unemployment. My point is that given the practical reality that we can work both sides of our red ink to reduce the debt faster, it is a conversation worth having.

Pearce:

Larry, agreed, can't punish the job creators, must find any new revenue elsewhere. Excellent example of a conservative vision promoting real growth and job creation. Obama should notice that fact.

Hill:

You can't balance the budget over night, but meaningful, incremental progress will avert a disaster. Can you tell me what is or how you define "tax loophole"?

Pearce:

When I say tax loophole, I'm not taking the negative connotation of an unintended escape hatch. I'm talking about exemptions, deductions and subsidies, some hardened on the books due to robust lobbying and archaic logic. We should take a fresh look at these and only give such breaks when it advances our economic and national interest. They are an important incentivizing and market shaping tool but should be wielded carefully under such a debt crunch. Eliminating some of these out of date or unwise tax breaks would increase our revenue without raising rates at all, especially in sensitive areas critical to recovery, which of course in and of itself will increase tax revenues.

The GOP was right to anchor our negotiating position at the hard line of no tax increases, period. I understand tactical negotiation. However, we all know that neither side is going to lay down and die. Dems have the Senate and White House so must get enough out of the deal to win over Obama and four Democratic senators (or three plus Biden), unless of course we're talking about a supermajority to break filibuster. Therefore, changes to the tax code can't be dismissed out of hand as part of an honest and comprehensive discussion of the issue. If the President is genuine in pushing his caucus to go big in putting entitlements, the biggest components of this crisis which cannot remain untouchable if we are to solve it, on the table, it is fair for us to consider the appropriate level of taxation and subsidy as well. Whatever it is now, isn't perfect, so we should seek to make improvements that will expedite budget balance, promote recovery and strengthen overall economic health.

Hill:

While I appreciate the fresh, centrist tone you posit, I'm afraid the policies you're advocating will have a similar effect on the economy as raising taxes during a recession--which you defacto support. Unfortunately the unemployment rate ticked back up to 9.2% today, a rate that should have been, at the very least, sub-8.5% by now according to our Vice President. That said, the word "subsidy" is just another way of saying "tax credit" as you note and millions of businesses and individuals, both parents that send their kids to college and homeowners that write off their home mortgage interest use these "loopholes" as you refer to them, which incent certain economic activities our government has historically said it supports. Sure we should take a look at them when our economy is back on track, as we should do for every regulation on the book to ensure we don't impede job growth and business activity, but make no mistake about it, eliminating most of these "loopholes" will translate into higher costs for consumers as you learned in Econ 101. If the Dems pass cap-and-trade, then you can expect your electric company to pass the additional costs along to you the consumer in the form of higher electricity rates. The same holds true for most other federal cost-raising activities. I am not certain our economy can handle a fresh impetus for rising consumer prices, especially considering inflationary pressure from the record spending sprees of the past is really starting to take hold and will suppress consumer spending and thus broader economic growth. Let's just be carefule for we aren't out of the woods yet. We can and must pay down the debt without raisng taxes on job producers and consumers.

Chris Mike:

Compromise = lose.

Pearce:

Chris, I disagree that compromise = lose. The Constitution set up a system of government that, because the American people prefer and vote for split government between Democrats and Republicans, requires compromise to pass legislation. There are certainly core principles which should never be compromised, but there is often a vast playing field between the two sides' core endzone positions ripe for bargaining towards a mutually agreeable-enough-to-pass solution. I prefer to think compromise = progress. A stagnant, paralyzed federal government incapable of promoting national interest (i.e. something akin to what we have now) = losing.

Hill:

Yeah, but remember that Republicans only control one chamber of Congress and not the White House. It's not exactly a level playing field, yet at least.

Pearce:

Hill, sounds like our only point of disagreement is the timing of said fresh look at tax credits. Many such credits are prudent and wonderful tools which encourage the invisible hand of incentives among "selfish actors" in the economy, promoting positive choices such as college, home ownership and business expansion. That said, I'm quite sure there are some which are out of date or otherwise unnecessary that are keeping dollars out of our federal account which could be used to pay down our debt and reduce dependency on foreign nations.

Unfortunately, it seems Washington only acts when our feet are to the fire. Right now, our feet are to the fire on the debt limit. Therefore, I see this as a perfect time to pursue every opportunity for correcting and improving the financial mess we've created, including in the bloated tax code. We should not leave any stone unturned at this rare moment of receptivity to bold action on both sides of the aisle.

Any direct or indirect increase in taxes will indeed have an adverse impact on the affected consumers thus depressing economic growth to some degree. That is a cost to reform, a particularly high one in a time of recession toward fragile recovery, but it must be weighed against the long term benefit of tax reform at a moment of possibility to take such action which we may not see again for a very long time.

Hill:

There's little we can do to ensure these spending cuts are adhered to in the future, given annual consideration of appropriations bills. Once the President gets his tax increases, those are much harder to roll back. Any way you want to message it you're advocating for using this "perfect time" to raise federal revenue on the backs of businesses, consumers and other "selfish actors" as you call them during a recession. I know your message has probably polled well in a Facebook focus group, but be careful about who your audience is. We can eliminate our debt without increasing costs to consumers.

Pearce:

Important point on the permanency of the remedies proposed and potentially accepted by each side. Constitutional amendments to balance the budget have been discussed but, as you know, would only become an excuse for raising taxes rather than cutting spending down the road. We cannot raise any tax, including the elimination of credits, with any hope or expectation that the move will be reversed in the future. Therefore, such moves should only be supported if we believe they are good permanent fiscal policy. We cannot fall for the ruse of a temporary tax increase to address the deficit. Not only is this the worst possible time as we "tread water at the bottom of a very deep hole," but, as you point out, there is no more a temporary tax increase than there is a temporary spending increase. That's how we got into this mess. Taxing and spending gone mad over the last decades. And yes, Republicans are rightly blamed for part of this plague, however nothing in comparison to the way in which Obama has floored it towards the cliff.

To be clear, I am not advocating for raising federal revenue. I am advocating for allowing the idea to be part of a comprehensive and exhaustive conversation to avert a debt crisis and promote growth. The reality is that their are two numbers which combine to determine our debt, revenue and spending. There is no doubt about what must be done with spending, and it must be drastic and it should hurt. Any serious discussion will also include the issue of revenue; this is that discussion. There are innumerable problems with raising revenue, especially now, that anyone with an understanding of Econ 101 should get. Therefore, it's entirely possible that after considering the revenue side of the equation, we would rightly determine that it should not be increased in any way, in order to promote rather than depress growth. My objection is to a dismissal out of hand of even considering revenue. That is irresponsible and dishonest. Thoughtful individuals on both sides consider all elements and then draw firm conclusions, not the other way around. You, of course, have a full understanding of both revenue and spending in all of its many forms and implications, but I'm concerned that some are more interested in rhetoric and partisan pride than fully assessing and solving this problem.

Chris:

The real compromise would be to pass some deep spending cuts before we even start discussing anything else. After all, the Republicans did just win a historic election eight months ago. Let's see the conservatives in action! And by the way, you're forgetting Art Laffer and the fact that tax cuts will boost the economy and raise fed government revenue anyway.

Pearce:

I love Laffer. His curve is genius yet so logical. Under the premise that we are at a state of general over-taxation, you're right, leaving more money in people's pockets will increase spending and thus tax revenues. That's why the Christmas deal to extend the Bush tax cuts was positive. Conversely, raising taxes beyond the optimal point will actually depress revenues as Americans stop spending and producing to generate the wealth that is taxed. Not forgetting him. Laffer's concept should be a major component of this comprehensive discussion.

Health Care Bill Signed Plus Odds & Ends

Democrat health care reform legislation, aka Obamacare, has been like a cat hanging on to its ninth life by one whisker, yet last week, on March 23, 2010, President Obama signed the landmark bill into law. As Joe Biden so eloquently put it, "this is a big * deal." That date, indeed, may go down in history along with August 14, 1935 (Social Security Act) and July 30, 1965 (Medicare Bill) as a pivotal moment in the evolution of America's political/social/economic culture.

However, evolution and "change" do not always move us in a positive direction as a nation. The historic nature of this milestone is unquestioned, but whether it will help cure the many ills of our health care system and mitigate our dire financial straits or simply push down the accelerator on an already unsustainable and perilous path will be the subject of rampant debate for the foreseeable future. A key distinction between this historic legislation and the two before is that those enjoyed significant bipartisan support, this bill had none.

First to the policy objections. I have written extensively over the past year addressing many of the pivotal issues and hidden burdens embodied in the 2,000 plus page legislation, so let's take a big picture view. In fairness, there are good and bad features of the legislation. Now that the bill is law, I can only hope it works to slow or reverse our current trajectory of higher cost and higher deficits, but I'm afraid such a hope finds little grounding in reality and rational expectation. For example, it is "politically inconceivable" that future Congresses will show more courage than this one mustered and actually implement the spending cuts and tax increases critical to the cost projections of the bill. I do fear that this bill, focused on more government to fix the problem and more spending to reduce the deficits, will only exacerbate the problem in the midst of already record deficits and out of control spending. When the "doc fix" is included (adding $371 billion) and deceptive double counting eliminated, the deficit actually increases by an additional $260 billion over ten years.

Even with half a trillion dollars in new taxes and another half trillion in Medicare cuts, this legislation does not bend the cost curve down, a cost curve that, if not reversed, will break a lot more than our health care system. Instead it drives up cost and over time could actually reduce access to health care as rationing will likely become our last best hope of staying off the financial precipice. The "disagreeable absence of a free lunch" strikes again. Despite the many budget gimmicks and dodges cleverly built into the package, which paint a deceptively rosy picture of overall cost, it will push our health care costs and deficits only higher. We cannot fail to drastically and boldly reduce health care costs that are crippling an already weak economy. This law fails. It it a "fiscal time bomb" waiting to explode as the revenue will never come and costs soar ever higher.

In light of this already grim outlook, we all, Democrats and Republicans, agree that our health care system is in desperate need of reform, but Republicans tend to believe, rightly in my view, that this brand of reform will only make our current problems exponentially worse and pile new ones on top. The Republican solution is, broadly, to increase consumer choice and competition as a means of immediately reducing costs while correcting a system of perverse incentives and opaque costs by emphasizing tax incentives and state innovations. Viewed through the prism of the philosophical dichotomy between the parties, Democrats favor a solution predicated on increased government involvement and control while Republicans favor greater individual liberties and a free-market approach to the problem.

Now, because nothing that happens in Washington is without wide-ranging and often complex political implications, to the political fallout of Democrat health care reform. Yes, Democrats achieved a goal of paramount importance to the party in pushing through Obama's top legislative priority, but could it do more harm than good for majority and haunt them in November and beyond?

From raucous town halls during the summer months to demonstrations on the Capitol steps in the final hours of the sausage making, Americans of all political stripes have passionately and repeatedly expressed their displeasure with the Democrats' proposals. The will of the American people, expressed in polls from sea to shining sea, notwithstanding, Democrats tirelessly pushed their liberal agenda for health care through the halls of Congress. This seemingly blind and ideological pursuit could cost them dearly at the ballot box and prove to be a "colossal miscalculation." The year-long, tumultuous debate has inflicted significant damage on Obama and the Democratic Party.

As I recently outlined, 2010 is shaping up as the year of the Republican elephant. It's hard to see how the passage of Obamacare, which voters did not want, ameliorates what is looking like an electoral disaster for Democrats in November. Many analysts believe they have now dug the hole deeper, pointing to the voter backlash in 1994 following the failure of Hillarycare. The twenty Democrats hailing from John McCain won districts who voted in favor of the bill have earned bright red targets on their backs, with Sarah Palin and other national Republicans pouncing.

While we're all tired of legislative process stories, it's worth acknowledging voters' distaste for the kind of arm twisting, backroom dealing, logrolling, rules changing and raw politicking they witnessed from Democrats in a no-holds-barred effort to see their will done on a straight party-line vote, not to mention the broken promises. The use of reconciliation to push the legislation through the Senate on a simple majority vote after Democrats lost their 60th seat to Scott Brown in Massachusetts was only the tip of the iceberg.

Following passage, the public is very divided but hardly undecided about Obamacare, less than 10% without an opinion. In the immediate aftermath, Republicans are predictably unhappy, Democrats are happy and Independents are divided but favor Republicans on the ballot. The economy will almost certainly remain voters preeminent concern in November, but both sides will attempt to use health care to fit their own narrative. An improved perception of health care among the electorate is only one leg of the stool Democrats must build between now and November to avoid an unmitigated walloping that could cost them control of one or both houses of Congress. For starters, they need Obama's popularity and the sluggish economy to make marked improvements.

The President has certainly gotten a lot of positive press following the signing, but how long will the afterglow last and will any real bounce show up in the polls? Some polls indicate a slight post-signing bounce while others indicate no real change since the battle lines were drawn last summer. If anything, the Democratic base has ticked up a notch in enthusiasm, something they have been sorely lacking since electing Obama in 2008. Whether any positive bounce is lasting on transient will depend on "salesmanship and implementation" by Obama, his fellow Democrats and the administration. We'll have to wait until November to see how this saga ultimately plays in the minds of the only ones who matter, voters.

PG Poll: Do you support the passage of Democrat health care reform? Vote on the left side of the page.

Texting and driving has been in the news a lot over the last several months, and as someone who has been guilty from time to time, I find it interesting. Unless you're the rare "supertasker," the practice does impair your driving. From distracted driving forums to Senate legislation to an executive order from Obama, lawmakers are cracking down. The practice has even been dubbed a "menace to society." Society agrees. Ninety-one percent favor a ban. In my home state of North Carolina, DWT (I want a patent on that acronym) is now illegal and punishable by a $100 fine. Over a dozen states have passed such laws. Lest we paint texting with too broad a negative brush, remember that soft-hearted texters sent over $20 million to Haiti in one week. Political candidates are now wondering if they can leverage the technology to their benefit. Regardless of why you're punching away at the phone keyboard, make sure you steer clear, ha, of the banned words of 2010. Oh, and watch out for cell phone induced brain cancer.

While we're on technology, see the next generation of must have electronics. To make these gadgets run faster, the FCC is launching a "visionary" plan to expand broadband access across the country, something Google and everyday users have anxiously awaited. Speaking of Google, the behemoth of all things internet played a major role in Scott Brown's stunning victory in Massachusetts. Meanwhile, the White House has been all aTwitter of late, even Obama tweeted, and the GOP has launched a hot new BlackBerry app for congressmen. Check out these two fascinating videos on the power of social media. Finally, after years of rumor, it looks like the iPhone really is branching out from AT&T.

Here's an assortment of particularly interesting pieces:

Turns our jerks are bad decision makers. Tall people are happier than short people. The 50 best YouTube videos of all time or the best and worst in four minutes. Nobody trusts congressmen or car salesmen but give nurses and doctors hight marks, would hope you trust your doctor. Scientific evidence points to life after death as 59% of Americans are "absolutely certain" there is a God. Basic arithmetic illustrates why the enemy of my enemy is my friend. The Toyota crisis has demonstrated the "price of modernity." Your race may determine your nighttime and sleep habits. The President has a Facebook feed, sorta. In honor of a midterm election year, brush up on your political lexicon.

I'll end with what we all know is the most important thing gripping our nation this month, March Madness! Even as his health care reform was in its final hours and he was sharpening his 22 pens for the signing, the President was "examining the rubble of his bracket." He filled out a tourney bracket for the second year, but isn't seeing the success he enjoyed last year. With Duke in the Final Four, I (on the right in this ESPN pic) and my fellow Cameron Crazies are boiling over with excitement and anticipation, excitement that brain researchers at Duke and UNC have recently studied. Lest you hate, these Dukies "should be cheered" and are "worth rooting for." Heck, even UNC coach Roy Williams, sweating through an NIT Final Four game as I type, is picking Duke! Senate candidates in Kentucky are actually attacking each other on their Duke ties, love it! Turns out sports viewers generally and college basketball fans in particular are largely Republican, and most of the Final Four teams have GOP fan bases. If you don't quite get what the big * deal is (thanks Biden), see this guide on bluffing your way through the Dance... or follow the hilarious name bracket instead. If you do get it, Let's Go Duke!!

2010: The Year of the Elephant

In American electoral politics, the great pendulum that is the balance of power between the two major parties inevitably swings from side to side as voters grow weary of ineffectual or excessively ideological rule by the party in power. As we approach the 2010 Midterm Elections, the pendulum, having moved far left in 2006 and 2008, is poised to make a dramatic swing back towards the right. Over the past two elections, Democrats picked up 54 seats in the House of Representatives and 14 seats in the Senate. In 2006, Democrats swept to majorities in both houses of Congress. In 2008, the party stretched its majorities in Congress and elected Barack Obama to the White House.

Only one year ago, Barack Obama was on top of the world and riding a wave of hope into the second decade of the 21st Century. Analysts predicted Democrats would add seats to their supermajority in the Senate, and, while the historic norm of the President's party losing House seats in his first midterm election was expected, no one dreamt that the party's 77-seat majority could be in danger. That was then; this is now.

In the months sinse, three Senate Democrats have announced retirements, Byron Dorgan of North Dakota, Chris Dodd of Connecticut and Evan Bayh of Indiana, joining 16 in the House, including one more today, which hands Republicans another solid pickup opportunity. These retirements, with the exception of Dodd, only exacerbate what is already becoming a potentially disastrous cycle for Democrats, and many think the exit number will go higher.

The generic congressional ballot has swung 13 points towards Republicans, from a eight point Dem advantage in 2008 to a five point lead for the GOP. Democrats also fell below the majority support enjoyed since 2005 and saw their affiliation shrink in 39 states. The net favorability of the two parties has converged as Democrats have watched an 18 point positive become a 10 point negative. A full 40% of Americans now describe themselves as conservative, the highest number in years and twice the liberal ID of 20%. There has unquestionably been a significant political climate change across the country, yet Democrats in power haven't seemed to notice.

In his first year, the President's approval has rapidly fallen from 68 to below 50, a record decline. He's suffered an approval index dive of 41 points. Obama's approval in December was the lowest ever recorded 11 months into a president's term. His standing is even worse on major issues with Republicans now trusted more than Democrats to solve many of the nations most salient problems. Much of this drop is due to broken promises, the substance of his policies and what some see as a bait-and-switch operation. Even in the White House press room, the laughter has ended.

The swing has been most dramatic among the ever-critical Independent bloc of voters. This group supported Obama 64-16 in January 2009 but now disapprove of his performance 51-38. They approve of his performance on only one issue, international affairs. Democrats are understandably alarmed as Independents desert the party, due in no small part to the protracted fight for Democrat's health care reform. Independents now give Republicans a 16 point advantage on the generic ballot. What's more, there is a significant intensity gap with Republicans far more interested in November's midterm elections than Democrats. In midterm elections, where turnout is key, this intensity gap could portend the kind of wave Republicans hope for.

At the ballot box, Republicans have swept three state-wide elections. November saw Republicans take over the governor's mansions in Virginia and New Jersey. In January, a cataclysmic shock went across the political world as Republican Scott Brown won the Kennedy Senate seat in Massachusetts. That defeat cost Democrats their supermajority in the Senate, a result applauded by most Americans. Independent voters in these elections resoundingly supported the Republicans, 66-33 in Virginia, 60-30 in New Jersey and 65-34 in Massachusetts, after supporting Obama in 2008.

As the election calendar turns towards the midterms, most analysts are predicting Republican gains of around 25 seats or higher in the House and as many as 7 or 8 in the Senate, leading many to speculate that we could be seeing the landslide of 1994 all over again. Indeed, Stan Greenberg, a top Democratic pollster, acknowledges that his polls are eliciting a feeling of panic as it's beginning to look like that epic election cycle. Indeed, the polling looks remarkably similar. To regain control of Congress, Republicans must flip 40 seats in the House and 10 in the Senate. Senate control is not yet in play. However, top political handicapper Charlie Cook has gone so far as to say it is "very hard to come up with a scenario where Democrats don't lose the House." He added that you could triple the Republican Party's problems and they'd be better than those currently facing Dems. He blames the White House for "fundamental, total miscalculations from the very, very beginning" about the direction to take the country.

Even in our political system, in which change is the only constant, the seismic shift in the political landscape we've witnessed over the last year is remarkable. Cook notes, Democrats dominated Congress for four decades until the Republican Revolution of 1994. Then Republicans held the House for 12 years before being ousted in 2006. That seems like a lifetime compared to the current outlook for Democrats. Says Cook...

The trajectory of this election looks horrific for Democrats. In this kind of environment, days that go by without some "game-changing" development benefiting the GOP in a state or district are the exception, not the rule...

Whether or not Democrats hold onto their House majority by a sliver -- say, five or six seats -- and hold their Senate losses to five seats or so, the fact is that after just four years in power, congressional Democrats are in trouble.

There seems to be a new impatience among the electorate as voters sour on DC and the politicians, for the time being Democrats, who run it. Members of Congress earn the worst honesty and ethics score of any profession tested by Gallup. Voters see very little "we" in the political process and are sending a strong message to Washington that they've had enough of the perpetual dysfunction that grips the city. Eighty-six percent of Americans believe government is broken and 71% give Congress poor ratings. Some blame the President, pointing out that the US is far from ungovernable, while others blame Republicans. We are seeing a new populism, some call it a peasant revolt. In this environment, all incumbents should beware of the widespread sentiment, but Democrats, as the party holding all levers of power, will bear the brunt of voter backlash, just as they did in Massachusetts.

Fortunately for the majority, congressional popularity has little correlation with midterm election results. Unfortunately for Democrats, presidential popularity is of great import. Despite Obama's attempts to reassure fellow Democrats that the "big difference" between 2010 and 1994 is "you've got me," history tells us that the President will only drag his party down in November. No president has ever gained in approval between the beginning of a midterm year and the November elections. While Obama says the "buzz saw"of opposition won't stop him, it may well end the political careers of his friends, leading some to keep their distance.

While the outlook is quite rosy for Republicans, Cook reminds the GOP that, as I wrote in my last post, the voter discontent and outright anger now aimed at Democrats and elevating Republicans can easily turn on the GOP, particularly if we take control of the House and fail to move the country in a positive direction. If, however, Republicans are faithful stewards of voters' trust, we stand to make many more gains in the years to come. In 2012 and 2014, Democrats must defend a combined 43 Senate seats as Republicans defend only 22. The recent electoral imbalance which helped Democrats achieve a short-lived supermajority will afford Republicans an advantage in the next two cycles. This makes the odds of Republicans regaining the Senate majority in the not-to-distant future very good.

As for the elections in our immediate future, Michael Barone, author of "the bible of American politics," sums it all up saying,

What we have here are the makings of an epic party disaster. Whether it comes to pass is still uncertain. But it certainly could.

Will November, nine short (long?) months away, bring an epic disaster for the Democratic Party and see previously laughable Republican dreams realized or will these next months prove as tumultuous and unpredictable as the last, allowing Democrats to mitigate their own impending demise? While the GOP has all the momentum, alarms are sounding much earlier in the cycle than they did in 1994, which gives Democrats time to try a course correction. The smartest analysts in the business see little hope for such a turnaround, but remember, change is the only constant when talking about the individual political sentiments of 200 million unique voters and a political world in which new developments happen not by the week but by the minute. Here's to Republicans capitalizing on Democrat's failures, not just for the sake of renewed power but for the sake of the American people and a more prosperous future. Republicans must stand ready to govern, to bring the real change and progress we so deeply desire.

PG Poll: Put on your political prognosticator hat. Do you thing Republicans will regain control of the House of Representatives this November? How about the Senate by 2012? Vote on the left side of the page and leave your comments below!

Senate Shock: Voters Voted & Everything Changed in Washington

This just in: elections matter! Last week, Massachusetts voters went to the polls and sent a message to Washington that shocked the political world. The message sent was in the form of Senator-Elect Scott Brown. A largely unknown state senator, one of only five Republicans in the 40-member body, became the "Scott heard around the world," drastically altering the political landscape in Washington, the presidency of Barack Obama and the course of national policy for years to come, most immediately with regard to health care reform.

In what has been cleverly dubbed a "Mass-acre" and many consider the biggest upset in modern political history, Republican Scott Brown defeated Democratic Attorney General Martha Coakley by five points in a state that, just over a year ago, supported Obama by 26 points over John McCain and had not elected a Republican to the U.S. Senate since 1972. Whats more, there are 3 times as many registered Democrats in the state as Republicans! As recently as November, Coakley held a 31 point lead over Brown in the race to replace the late Ted Kennedy in the United States Senate. The seat had been in the Kennedy family almost every year since 1952. Coakley's election was to be nothing more than a formality as no one gave any Republican a snowball's chance in Hell of taking "The Kennedy Seat."

With only three weeks to go before the January 19th special election, all of that changed. With a Rasmussen poll showing Coakley's lead down to only 9, the media began to wonder if the Senate race is Massachusetts was somehow getting closer, and Democrats grew anxious. With a week to go, everyone realized the "people's seat" was up for grabs; with five days to go it was deemed a toss-up. Democrats launched a full court press, investing millions upon millions of dollars in a state everyone had taken for granted. Despite their best efforts to save the sinking ship, Scott Brown was favored on Election Eve. Even Democrats seemed to be breaking for Brown at the last minute.

On January 19, 2010, the seemingly impossible happened in Massachusetts and everyone was left to do a few double takes then try to digest it all, sorting out fact from myth. Democrats, even before the polls closed were pointing fingers at each other, engaging in a self-defeating blame game. For his part, the President blamed the loss on a failure of his own economic plans as well as voter anger and frustration. It was revealed that the NRSC saw the possibility early and had launched a stealth operation to catch the Democrats with their... well, on Christmas vacation. At the end of the day, there were exuberant winners and stunned losers. One of the winners, Brown's pollster Neil Newhouse (a Dukie I might add) wrote a tongue-in-cheek memo to Democrats, IDed the twelve keys to Brown's victory and unpacked the broader lessons of the recent GOP wins to lay the groundwork for continued success in the Midterms.

Democrats on the Hill were meeting even as Massachusettians were still voting, rethinking their entire strategy, trying to chart contingency plans for their health care reform bills which suddenly seemed to be gasping for last breath. The bill on which Obama has spent so much (all?) of his political capital seems to have dragged down everyone in his party. His decision to go all in on health care is beginning to look like a "disastrous gamble." Indeed, exit poll data in MA revealed that health care legislation was the most salient issue for voters last Tuesday. He has since considered paring down his goals for the bill, which Senate leadership says is on the House as moderate Democratic Senators, ready to move on or take a breather, refuse to use reconciliation to pass the measure with only 51 votes. However, putting it on the House may not bear any fruit for Democrats as Pelosi has declared that she does not have the votes to pass the more moderate Senate bill. Meanwhile, a majority of Americans want Democrats to suspend work on the bill and consider alternatives Republicans would support. Nevermind that, Democrats are now attempting to unite around their "last, best hope" for a strictly Democratic overhaul, using reconciliation to alter the Senate bill enough to garner majority support in the House. Despite these last ditch efforts, many observers believe Obama's top legislative priority is truly dead this time. We shall see.

Who could have imagined that exactly one year after millions of Americans flocked to DC to witness, with fervent hope and excitement, the historic inauguration of our new President, Republicans would be the ones hardly able to contain their jubilance? On that day last winter, President Obama enjoyed sky-high approval among the electorate, but a year is an eternity in politics. Of Democrats' year, Charlie Cook says, "their celebration has turned into a nightmare." In a few short, tumultuous months, a man who once seemed immortal has quickly come down to Earth as he and his party have overreached in their expansion of government and pursuit of a liberal policy agenda which runs counter to the will of a center-right nation. And yes, this downward trajectory for the President, which began in earnest over the summer, was of enormous consequence in Massachusetts this past Tuesday. The President made a last minute visit to the state, a risky gamble, in a desperate attempt to avert political catastrophe for his party. This visit had no tangible impact on the election results. While Obama excited the base, he was unable to move the dial in Coakley's favor. This from a man who regularly brought adoring supporters to tears throughout the 2008 presidential campaign, winning over Democrats and Independents alike.

The Obama magic has left the building. After failing to inspire voters and avoid embarrassing defeats in Virginia, New Jersey and now Massachusetts, it is abundantly clear that the electorate, particularly Independents, have rapidly soured on the President. This is why politics is so fascinating and exciting! No matter how strongly and decisively expressed at a moment in time, individual voter sentiments and collective national mood are stubbornly dynamic. Many voted for "change" in 2008 but have been disheartened by the slow progress on some fronts and the type of change pursued on others. Voters are looking for results when they cast their ballots, and if they aren't seeing the kind of results they hoped for, they'll be back in the ballot box before you know it to vent their discontent. Thank God for democracy!

Americans prefer checks and balances in Washington, each political party acting to temper the excesses of the other. If voters sense that the party to which they have entrusted the levers of power is overreaching, irresponsibly wielding the power granted it for its own narrow, idealogical objectives, those same voters will snatch it back, or at least, as in the case of Massachusetts, ensure that the power goes unchecked no longer. By installing Scott Brown as the 41st Republican senator, voters in the bluest of blue states single-handedly broke the Democrats' filibuster-proof supermajority, putting the emergency breaks on the leftist agenda which Republicans were previously powerless to thwart on their own.

Let's not forget one of the key truths realized in Massachusetts and already noted in relation to the President. A few months is an eternity in politics, and neither party is immune to the shifting winds. The thumpings Republicans took in 2006 and 2008, after seeing George W. Bush elected to a second-term only 2 years before, are still fresh memories. The mood of the national electorate could hardly be moving in a more favorable direction for the GOP, which currently holds all of the momentum heading into the Midterms as Democrats have badly damaged their brand, but pride cometh before the fall. It would be a fatal mistake for Republicans to begin taking the favor of voters for granted and assuming the inevitability of the monumental Republican wave which appears to be taking shape towards November 2010. When I asked a veteran GOP aide in the House how Hill Republicans were feeling in the aftermath of Tuesday's astonishing result, he said all were thrilled but not taking anything for granted or resting on their laurels.

There is much work left to rebuild the Republican brand and, much more importantly, put the country back on a prosperous course. Republicans must do all they can with their newfound influence on the Hill to lead a course correction for the good of all Americans, Republicans and Democrats. The same independent voters who came out against Democrats in Massachusetts will have very little patience with obstructionism for obstructionism's sake over the coming months. There are fundamental differences in principle on which Republicans should not waiver, but when prudent for the country, the two parties must learn to work together toward shared objectives such as economic recovery. One thing that became clear this past Tuesday is that voters in every state, even the bluest, have had enough and want a change... change, where have we heard that before?

2009 Roundup: Health Care, Afghanistan & The Economy

UPDATE 12/24/2009: The United States Senate has passed its version of the Democrats' health care bill on a 60-39, strict party-line vote which took place Christmas Eve morning. Democratic leaders in the House and Senate will now work to merge the Senate bill with the much more liberal House bill. Senators Lieberman (I-CT) and Nelson (D-NE) have vowed to veto the final bill if it moves left of the version they supported this morning. With their more moderate interest on one side and disenchanted House liberals on the other, the Conferencing of the two bills promises more drama, deal-making and a still uncertain fate for President Obama's top legislative priority.

ORIGINAL POST: As the pre-teens draw to a close, let's look at the big issues dominating our collective consciousness and political discourse, issues that set the stage for the 2nd decade of the 21st Century and will determine the course of politics and the balance of power for years to come. 2009 began with a monumental event in history as America saw the first black citizen assume the office of the presidency. Most Americans met this milestone with enormous hope, hope that far out-sized any one man's ability, even the most powerful man in the world. Hope has turned to frustration as President Obama has struggled to unite political factions, quickly repair the economy or pass his landmark legislation, health care reform, to this point. The President has three years to recover; Democrats on the Hill have 10 months. Both have seen their fortunes turn rather dramatically since sweeping wins in November of 2008.

Democrats' health care reform legislation remains bogged down in flying sausage, though an end is potentially within site as Democrats desperately fight to give Obama a landmark 1st-year achievement and pass a bill before Christmas. I've written 8 posts on health care with a good bit of background and plenty of my views on the issue. In sum, health care reform is of critical importance to the longterm sustainability and decency of the country we all love, BUT, unlike Americans, all health care reform is not created equal and is not by definition a positive step forward for the nation. Health care reform which fails to address the fundamental issues underlying our health care crisis of costs, quality & coverage and only adds more people, programs and taxpayer dollars to a quickly failing system will only exacerbate the problem and send us faster into the abyss. This type of legislation is indeed far worse than doing nothing. This is not to say that all Democrat ideas embodied in their bills fit this profile, but those which do are a grave concern. Indeed there is room for hope that with some of the pilot projects in the Senate bill aimed at controlling costs, current legislation will be a first step in a long process of getting the system under control. Forgive me for being skeptical and believing Democrats have put the cart before the horse, expanding coverage with very little real effort to first control exploding costs. With all of that said, let's see where we are with 17 days remaining in 2009.

For months now, public opinion has been trending against Democrats' health care reform, with no momentum following passage in the House. The latest CNN poll shows 61% in opposition to the bill. Also, a majority disapprove of the President's handling of the issue. Americans' believe health care coverage is not the government's responsibility and that their costs will increase. They think it is the wrong time for health care reform in light of the economy, unemployment and the growing deficit, which most believe these bills will increase. Perhaps surprisingly, much opposition is from the left.

This has made health care reform an excruciatingly tenuous issue for Democrats facing voters in only 10 months. The fact that they are sitting on a very different political timeline than that of President Obama is causing much concern. These lawmakers are trying to figure out how a vote for health reform against the will of voters will be anything less than a death sentence for their political careers. Despite being the Senate Majority Leader, Harry Reid is in

more political trouble over health care than most members of his caucus as his state stands firmly against his bill. One idea is to push benefits up to 2010 in order to show tangible, positive results before voters head to the polls. Stu Rothenberg wonders Democrats are trying to walk off a cliff as those most likely to vote in 2010 are against the Democrats' reform.

The bills passed by the House and the one currently at play in the Senate are being decried by smart observers and activists on the right and left. The left complains that the bills do not contain a "robust" public option, aka quick trojan horse to single payer care, that they still leave millions uninsured and that the House bill restricts government subsidies of abortions. The right is incensed by the expansion of government control over patients' decisions and treatments, the fact that the bills bend the cost curve up instead of down as confirmed by the director of the Congressional Budget Office and the CMMS, the increase in individual insurance premiums, that they fail to block illegal immigrants from receiving coverage, that millions will lose their coverage, that they include potentially unconstitutional individual mandates, and that the Senate bill slashes Medicare, an arguably hypocritical stance. Some Democrats and liberals are also raising alarms over the costs of the bills and demanding the ban on taxpayer funds for abortion. These bills indeed send several of the President's promises down the river.

The dean of Harvard Medical School penned a must-read piece in the WSJ saying he gives the current bills a failing grade. In Dean Flier's words,

Our health-care system suffers from problems of cost, access and quality, and needs major reform. Tax policy drives employment-based insurance; this begets overinsurance and drives costs upward while creating inequities for the unemployed and self-employed. A regulatory morass limits innovation. And deep flaws in Medicare and Medicaid drive spending without optimizing care...

The various bills do deal with access by expanding Medicaid and mandating subsidized insurance at substantial cost—and thus addresses an important social goal. However, there are no provisions to substantively control the growth of costs or raise the quality of care. So the overall effort will fail to qualify as reform...

In discussions with dozens of health-care leaders and economists, I find near unanimity of opinion that, whatever its shape, the final legislation that will emerge from Congress will markedly accelerate national health-care spending rather than restrain it. Likewise, nearly all agree that the legislation would do little or nothing to improve quality or change health-care's dysfunctional delivery system...

In effect, while the legislation would enhance access to insurance, the trade-off would be an accelerated crisis of health-care costs and perpetuation of the current dysfunctional system—now with many more participants. This will make an eventual solution even more difficult. Ultimately, our capacity to innovate and develop new therapies would suffer most of all.

As Harry Reid frantically tries to round of the 60 votes needed to pass his health care bill, even inserting $100 million dollars for Louisiana to get Landrieu's support, Joe Lieberman has become the biggest thorn in his side. Lieberman was one of the Democratic Senators (yes, I know he's technically an Independent following his 2006 loss in the Connecticut Democratic primary, but he caucuses with Democrats) to demand scrapping the public option from Reid's bill. They succeeded. Yesterday, Lieberman announced that he would vote against the current bill, due to its expansion of Medicare (a "compromise" many, including the Washington Post, believe is a faster route to single-payer than the public option). Democrat Ben Nelson is also against the compromise. With only 60 votes in his caucus, including Lieberman, and no Republicans likely to support the bill, Reid has zero room for error. Politico is reporting that Obama has told Reid to give Lieberman what he wants (a report the White House denies), but Reid is holding on as the Senate is in hurry up and wait mode for the CBO score of the latest compromise deal due in the next day or two. Meanwhile, in the House, Speaker Pelosi proclaims she is ready to do "almost anything" to pass reform this year, setting up a potential showdown with her liberal wing who won't like the watered down Senate version. Needless to say, these disputes among Democrats pose a grave threat to the self-imposed imperative of passing reform in 2009. Obama has summoned the entire Senate Democratic caucus to the White House tomorrow for a meeting at this "make-or-break" moment for his health care overhaul.

In the end, as David Brooks says, health care reform rests on a values question, our values individually and as a nation. Their is no clear right answer. It is a "brutal choice." No one in this debate is evil or selfish. With all of our similarities as fellow citizens we have different values. That is as it should be, and those values inform our stance on health care reform. As Brooks explains the dichotomy,

Reform would make us a more decent society, but also a less vibrant one. It would ease the anxiety of millions at the cost of future growth. It would heal a wound in the social fabric while piling another expensive and untouchable promise on top of the many such promises we’ve already made. America would be a less youthful, ragged and unforgiving nation, and a more middle-aged, civilized and sedate one...

We all have to decide what we want at this moment in history, vitality or security. We can debate this or that provision, but where we come down will depend on that moral preference. Don’t get stupefied by technical details. This debate is about values.

The other major story as we conclude 2009 is President Obama's bold decision to send 30,000 more American troops into combat in Afghanistan. Obama rightly sees Afghanistan as imperative for our security. As he put it in March, “This will not be quick, nor easy. But we must never forget: This is not a war of choice. This is a war of necessity. ... This is fundamental to the defense of our people.” Everything is easier said than done. At West Point, the President turned those strong words into strong action, much to the relief and pleasure of conservatives, who feared weakness, and to the dismay of many liberals. Indeed, on Afghanistan, the President is dealing with reverse coalitions. The political peril in the President's decision makes it all the more admirable.

The President has tried his much discussed soft, outstretched hand approach and against challenges, reality and limited success, has been forced to move on to plan B. His decision process on Afghanistan was long, laborious and, to some, amounted to dithering. It was clouded with leaks and angry conflict between the White House and its own commanders. However, he did come to a firm decision and is moving forward. This President operates in "analytic mode," dispassionate but serious and thoughtful.

In the next sentence after announcing the troop buildup, the President stated that troops would begin withdrawing in July of 2011, an obvious concession to his base. His advisors differ on how firm that date is, but we know now this President is serious about and taking ownership of this war. I, therefore, have little concern that he will cut and run in July of 2011. He said nothing about how steep said draw-down would be.

In Oslo last week, President Obama accepted the Nobel Peace Prize. He used the opportunity to give a poignant defense of war. This was no doubt jarring to his immediate audience but encouraging to conservatives at home who have worried this man is too naive and idealistic to lead in our world in which, as he stated, "evil does exist." We learn a lot about Obama the man through his speeches and some see the most recent as a move to the center, a place of strength for an American president, and a foreign policy shift as Obama bows to reality.

The stark reality is that terrorists dreaming of and plotting for the destruction of America are still not tired. We must fight on, steadfast in our commitment to freedom and security. To prevail we must have strong allies, a major question mark in Afghanistan. I hope and pray Obama's decision was right. I hope he found the perfect balance between our national security, his most solemn duty, and the risk to our brave men and women, our most precious treasures. Obama can win in Afghanistan, and if he remains firm in his resolve, conservatives and Americans at large will stand behind him through thick and thin, all the way to victory.

The economy, the one issue in politics that voters think about every single day, every time they pull out their wallets and every time they think about the future. The economy is the top issue for voters now as it has been for most of 2009. With unemployment rising to 10.2 percent in October and the '09 deficit topping $1.4 trillion, Americans are understandably worried and skiddish. The U-6 statistic tells us that a more accurate look at total economic dislocation is 17%, which includes underemployment. For Democrats, that means it's time to put jobs first or risk enraging the struggling electorate. With every passing day, the "rubble" of the economy is increasingly at Obama's feet, and Americans expect him to fix it. Interestingly, Democrats are more likely to be unemployed than Republicans. Blacks are worst hit, with 35 percent of the young unemployed.

While there are green shoots in the economy, recovery is scarcely touching jobs. The White House is doing its best to convince voters that the stimulus package has "created or saved" thousands of jobs, but watchdogs have concluded those advertised numbers are inflated, inaccurate, temporary or just made up. Now, finally, the White House seems to be turning its attention to the deficit, hopefully in earnest. The wave of debt payments facing the government have the potential of crippling the economy, again. Voters rightly see deficit reduction as the top budget priority for Washington, well above health care. At the same time, voters worry the government will do too much for the economy, making the situation worse and hampering recovery. Only 23% of Americans trust the federal government to do what is right. 76% prefer a free market economy, and Republicans are now trusted more than Democrats to fix the economy. Mitt Romney, an almost certain presidential candidate in 2012, has outlined his plan.

Americans need economic recovery. We need a renewal of "moral materialism" and the manic energy which has taken America from the banks of Plymoth to the pinnacle of prosperity, power and influence. We've survived the shocks of a year ago, but people are truly struggling and having a hard time seeing the light at the end of the tunnel. We must unleash market power and individual innovation to ensure a bottom up recovery for America, quick, strong and enduring.

2009 LEFTOVERS

Check out the Top 10 Everything of 2009.

As you enjoy the many college football bowl games this holiday season, think about whether or not the government should intervene to push for a playoff to replace the BCS system. Principled conservatives believe this idea, by a Texas Republican, should "draw a 15-yard penalty for unnecessary roughness to the idea of limited government."

On Tiger, how utterly disappointing. Read Bill Simmons' piece on the "zoo."

As far as views on Christmas across the country, 76% believe religious symbols should be allowed on public land, 72% prefer "Merry Christmas" to 'Happy Holidays" and 77% say they've been nice this year. I'm with the majorities!

As we move into decade 2 of the 21st century, we're witnessing the end of the email era as Twitter is changing the way we live.

Consider giving cash or gift cards this year. It's better for the economy.

Finally, I'm very proud of Raleigh-Durham, NC for being ranked the smartest city in America! Let's Go Duke! And Carolina is pretty smart too.

Have a Merry Christmas & Happy New Year!!

Seeya in 2010! Midterm elections anyone?!