AEI » Latest Content http://www.aei.org American Enterprise Institute: Freedom, Opportunity, Enterprise Fri, 21 Nov 2014 16:18:47 +0000 en-US hourly 1 Lessons from the 1995 strategyhttp://www.aei.org/publication/lessons-1995-strategy/ http://www.aei.org/publication/lessons-1995-strategy/#comments Fri, 21 Nov 2014 15:42:48 +0000 http://www.aei.org/?post_type=publication&p=822122 ...]]]> The Republican victory in the midterm election was decisive. Now the victors must chart a sensible course for the next two years—one that demonstrates they can be trusted as America’s governing party and sets the table for 2016.

The landscape is more treacherous than it looks. The Republican majority is strong in the House but surprisingly thin in the Senate. Even with 54 Republican senators (if Rep. Bill Cassidy is victorious in his runoff against Mary Landrieu in Louisiana), there will be precious little room for maneuver, as a few defections on any given vote would give Democrats the upper hand. Moreover, Democrats are sure to hold together at least 41 senators, and probably more, on critical votes. That gives them the power to filibuster most legislation pushed by Republicans, which can only be overcome with a supermajority of 60 votes. Then there is the problem of the presidential veto. If Republicans somehow manage to get a piece of legislation through both chambers, the president can still kill it. Rounding up enough votes for a congressional override under these circumstances would be the longest of long shots.

At the same time, there is much pent-up frustration among conservatives that is already turning into high expectations for the incoming Congress. The GOP’s core supporters have watched with increasing dismay and alarm as the president has implemented his agenda, often with arguably unlawful executive actions, and they will expect a Republican Congress to put a stop to it. Complaints about the limited power of one branch of government are unlikely to go over well.

So a Republican Congress will have to balance the need to make tangible progress in rolling back the Obama agenda against the very real obstacles it will face in trying to achieve that goal.

To navigate this difficult terrain, it will be important for Republicans to clearly set expectations and articulate their goals at the outset. The first temptation for the new Congress will be to follow the 1995 road map. After the Republican sweep of 1994, the House spent the first months of 1995 passing the legislative provisions of the Contract With America. Although important symbolically, these bills were not consequential in terms of reforming government. The real work in early 1995 was taking place behind the scenes, as House speaker Newt Gingrich, House Budget Committee chairman John Kasich, and the key committee chairmen plotted out a balanced budget plan that incorporated just about every feature of a conservative vision for governance: tax cuts and reforms; major changes in entitlement programs; welfare reform; elimination of scores of programs and agencies; and significant spending reductions.

The idea was to lay out a comprehensive agenda that contrasted sharply with the plans of President Bill Clinton, precipitate a confrontation of some sort, and then use the power of public opinion to force the president to accept a substantial part of the Republicans’ program. It was also important that the budget process, and especially budget reconciliation, allowed this plan to move forward in the Senate without any supportive votes from Democrats.

The 1995 strategy did not work as planned, to put it mildly. It took nearly a year for the Republican leadership to draft and pass its agenda. During that time, very little else was considered in Congress, as the entire GOP agenda was wrapped up in the budget process. Democrats spent the year regrouping and attacking the politically weak points of the Republican approach. In the confrontations with the Clinton administration that ensued, it was the Republican Congress, not the president, that suffered the most in public opinion. President Clinton’s standing with voters improved dramatically as the confrontation dragged on into 1996, and he won reelection handily over Sen. Bob Dole.

In the end, Republicans did secure enactment of welfare reform in 1996—a major achievement. But little else from the 1995 reconciliation effort made it into law, save for the creation of child tax credits.

In 2015, Republicans should resist the temptation to pursue a 1995-style maximalist agenda, which would very likely squander valuable time and ultimately put the party in a worse position heading into the critical election of 2016.

A better approach would be to start with politically sensible first steps, and build from there. At the beginning of the year, Republicans should identify straightforward legislation that is targeted, understandable, achieves an important objective, and is a clear political winner. The prototype is legislation repealing the employer mandate in Obamacare. Democrats included this mandate in Obamacare out of an anticorporate, populist impulse. But now, even many liberals are realizing that imposing new costs for “full-time” employees (those working at least 30 hours per week) is a recipe for fewer jobs and lower pay. Bringing up repeal of the employer mandate for a vote early in 2015 in both the House and the Senate would put Democrats and the administration on the defensive. In fact, such legislation would likely garner some bipartisan support. And if it were ultimately filibustered by Senate Democrats, Republicans would benefit from forcing the issue and holding the Democrats accountable for blocking it. Other candidates for early action include rolling back costly and ineffective regulations, restoring fast-track trade authority, authorizing (again) the Keystone XL pipeline, and allowing Americans to reenroll in the insurance plans canceled by Obamacare.

Rather quickly after scoring some legislative victories, however, Republicans in Congress will need to lay out a plan for passing a budget. Virtually all Republicans have called for a balanced budget, so a GOP-led Congress will need to pass a plan that reaches fiscal balance within the next decade. And that plan will need to be built on a foundation of broad-based tax and entitlement reform. Those are the pillars of conservative governance.

But a distinction needs to be made that wasn’t in 1995. It is possible for a Republican Congress to lay out a vision for governing in a budget plan and not proceed to consider all of the component parts in actual legislation. The budget plan will be considered in the form of a budget resolution, which does not get sent to the president for approval. Consequently, the House and Senate can write a general budget plan, and it cannot be vetoed. In 1995, Republicans followed up the budget resolution with implementing legislation—called a reconciliation bill. Reconciliation bills are critically important legislative vehicles because they cannot be filibustered in the Senate and thus can pass with a simple majority vote. The 1995 reconciliation bill became the centerpiece of the GOP’s agenda, and the main target for Democratic attacks.

It does not have to be that way in 2015. Among other things, the Republican budget plan could assume structural reform of the Medicare program, along with other entitlement reforms, but there’s no reason these changes have to be taken up and passed as part of a reconciliation bill. The president would engage in his usual demagogic attacks, and the issue would become highly politicized again. It is very likely that the Republican nominee in 2016 will embrace at least the concept of structural entitlement reform, and so it would be better to allow the debate to occur during the presidential campaign—without the baggage of a specific proposal considered in Congress serving as an easy target for Democrats.

Republicans instead should use the reconciliation process to advance targeted budgetary items that constitute fiscal progress, but also pose more political risks for Democrats than Republicans. For instance, reconciliation could be used to make targeted changes to Obamacare that lay the foundation for repeal and replacement of the law. Among other things, excessive subsidies for insurers could be eliminated, the tax on going uninsured rolled back or eliminated, the Independ-ent Payment Advisory Board (IPAB) repealed, and states could be freed to pursue creative reforms without the need of a waiver from the Department of Health and Human Services. All of these changes unite Republicans and divide Democrats.

It will be particularly important for a Republican Congress to approach Obama-care rationally. It will not be possible to repeal and replace Obama-care without a Republican president. Moreover, moving a full repeal bill without an accompanying replacement plan is politically risky for the GOP. The public is not interested in returning to the pre-Obama-care status quo, which was flawed. But repeal without a clear replacement plan implies returning to just that, in addition to removing insurance protection from several million people now on Medicaid or enrolled in insurance plans offered on the Obama-care exchanges.

It will be far more effective for Republicans to use the reconciliation process to begin rolling back Obamacare as much as possible and to enact aspects of a replacement plan that have broad support, such as enabling the cross-state purchase of health insurance or giving states greater freedom to fashion creative health care solutions that lower costs and expand coverage.

Beyond their efforts on the budget and Obamacare, Republicans should also use the next two years to demonstrate their depth in policy areas that traditionally haven’t been the focus of the party’s attention. That includes passing legislation to make higher education more accessible and affordable, enhancing choice in K-12 education, particularly for kids in failing schools, and reforming the federal government’s approach to antipoverty programs. The impending exhaustion of the Social Security Disability Insurance Trust Fund in 2016 presents another opportunity for Republicans to advance systemic reforms that will benefit the party’s nominee in the upcoming presidential election.

These legislative initiatives are not a substitute for action on the core economic concerns of middle-income Americans, particularly job growth. That must remain the top focus for Republicans going into 2016. But a robust agenda that addresses other top concerns of middle-class families will go a long way toward convincing voters that Republicans can govern effectively and with an eye toward helping working families improve their standing.

Republicans won a resounding victory in the midterm election in November 2014, but that was just the beginning of their work. To be trusted with control of the White House in 2017, Republicans will need to demonstrate that they have the strategic vision, tactical skill, and ability to execute on a coherent agenda between now and the next presidential election, which is less than two years away.

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The disappointment of President Obama’s executive actionhttp://www.aei.org/publication/disappointment-president-obamas-executive-action/ http://www.aei.org/publication/disappointment-president-obamas-executive-action/#comments Fri, 21 Nov 2014 15:28:36 +0000 http://www.aei.org/?post_type=publication&p=822069 President Obama’s supporters and opponents are likely to be disappointed by his executive action on immigration, albeit for different reasons. His supporters may be disappointed that the action does not cover more unauthorized immigrants and falls far short of a pathway to citizenship. Meanwhile, his opponents may be disappointed—or more accurately outraged—by a blatant sidestepping of Congressional authority and disregard of most voters’ expressed desire that he not take such action. Both of these disappointments miss the bigger picture.

The real disappointment is that this executive action distracts Congress and the American public from the far more important issue of the need to reform the entire US immigration system. Instead of focusing on unauthorized immigrants, who are less than 30% of all immigrants in the US, the US should rethink how it admits legal immigrants. The US needs to change its legal immigrant system to increase the number of visas available to workers and to reduce chain migration based on family ties.

Only 14% of permanent resident visas, or green cards, are awarded on the basis on employment, and half of those are to accompanying dependents of workers. Two-thirds of green cards are awarded on the basis of family ties. We limit every country to at most 25,620 green cards a year across numerically-limited categories, resulting in some skilled immigrants from India and China waiting years for a green card. Many give up or never even apply. The number of H-1B visas for skilled specialty workers is capped at 85,000 per year, and so the US ran out of them within a week after they become available the last two years. The number of H-2B visas for temporary non-agricultural workers is capped at 66,000 per year, also less than the number desired by employers and potential workers. And the H-2A visa system for temporary agricultural workers remains filled with bureaucratic red tape that leads farmers to turn to unauthorized workers. The system discourages high-skilled workers from trying to enter or remain in the US while encouraging low-skilled workers to enter illegally or overstay visas.

This executive action, as well as the earlier Deferred Action for Childhood Arrivals program, does nothing address these fundamental flaws in our immigration system. The few changes that the executive action makes regarding legal immigration, such as increasing some temporary visa holders’ ability to switch employers, are steps in the right direction, but they are only baby steps. Worse yet, the outrage over the action makes it even less likely that bigger steps will occur in the next Congress, which seems likely to instead spend its time arguing about whether to block funding for carrying out the executive action. Congress and the White House would better serve the American public by adopting changes that would boost immigration’s economic contribution. Such changes would include increasing the number of green cards available to workers, particularly the high-skilled, and streamlining and expanding temporary worker programs.

Dealing with the large number of unauthorized immigrants in the US is a challenge. The unauthorized population has grown so large—and, in the case of the Dreamers, so vocal—that some action may be required. And a population that has worked so hard in the US for so long may have morally earned the right to stay here. But surely any action should consider the incentives it creates. The executive action creates an incentive for more people to come here illegally and have children here. Coupling legal status for some 5 million people with increased border enforcement is not enough. If the US wants to get serious about reducing future illegal immigration, it needs to require all employers to participate in E-Verify while also providing a legal way for more temporary workers to enter the US The executive action does neither of those. Instead, it seems doomed to just worsen the problems created by current policy by delaying true reform for even longer.

I sometimes remind my children, just because you can doesn’t mean you should. President Obama would have been wise to follow such advice.

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Long live the Maidan!http://www.aei.org/publication/long-live-maidan/ http://www.aei.org/publication/long-live-maidan/#comments Fri, 21 Nov 2014 14:27:22 +0000 http://www.aei.org/?post_type=publication&p=822063 The Ukrainian revolution, which began a year ago, started with no more than 150 people deciding to stay on Independence Square (also known as the Maidan) to protest the decision of former President Viktor Yanukovich to turn away from signing an Association Agreement with the European Union and, instead, accept $15 billion from Moscow, on top of a 30% discount on the Russian natural gas.

Yet what was truly remarkable and inspiring about the unfolding protests —in addition, of course, to the heroism of the people who stayed, day and night, in an open square in freezing temperature, beaten and, toward the end of the three month vigil, even killed by the “anti-riot” police — was how quickly it evolved into a movement that at its finest could serve as a prototype for a kind of mature democracy that they hoped Ukraine may one day become.

To begin, unlike the previous anti-authoritarian mass protests, including the 2004 Orange Revolution, the people were not predicating their hopes on a particular party or an individual. Instead, they were counting primarily on themselves: their own determination, their own wisdom. “Vlast —eto my!” (“We are power!”) was the chant that became the leitmotif of the protest.

Very quickly, the demonstrators began to exhibit another key feature of successful democracy: an active,  self-organizing and responsible civil society. Feeding and, if only sporadically, warming up tens of thousands of people every day required a sustained, daily and nightly, voluntary effort of hundreds of men and women, donating their time and money to a cause they deemed morally imperative.

Unlike the Orange Revolution (or the Winter 2011-2012 mass protests in Russia), the Maidan movement was not about a flaw in the current regime, but about the national purpose, the country’s strategic direction. “Ukraine is Europe!” and “For a European future for Ukraine” were key slogans, whose cyber symbol was #EuroMaidan.

And the Maidan was European, at least in the ideal sense, in the unity of ethnicities and religions represented on the square: Ukrainians and ethnic Russians (at least 30% of the protesters were Russian speakers), Jews and Muslims, Ukrainian Catholics and Orthodox froze and fought and sang and danced together to forge a new Ukraine.

Now, by the decree of President Petro Poroshenko, November 21 is declared a national holiday, the Day of Dignity and Freedom.

Kiev – the cradle of the Russian state and its Christianity – is suddenly showing Russia the way toward dignity in liberty and democratic citizenship.

No wonder Vladimir Putin is mortally afraid of this Ukraine.

Follow AEIdeas on Twitter at @AEIdeas.

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Executive disorderhttp://www.aei.org/publication/executive-disorder/ http://www.aei.org/publication/executive-disorder/#comments Fri, 21 Nov 2014 13:38:35 +0000 http://www.aei.org/?post_type=publication&p=822057 ...]]]> The executive order on immigration announced by President Obama on Thursday night has Republicans in Congress so mad they can’t think straight. But when they can, they will realize that the president cannot give effect to his words without their consent. Indeed, his speech will be remembered for making it harder to fix our immigration system so that it serves our economic interests, secures our borders, and offers recourse to millions of illegal aliens who are part of our communities.

The president has insisted more than a dozen times in the last several years that he has no legal authority to act unilaterally to suspend deportations. Last night, he made a far less convincing argument that he could not wait six weeks to work with a new Congress to fix a problem that he has not addressed in six years.

To many observers — not just Republicans — his actions are not nearly as aggravating as his cynicism. His decision to go it alone is a transparent provocation to Republicans who just won a sweeping electoral victory. It may be asking too much for the new Congress to be magnanimous and do the hard work on immigration that the president has left undone.

Most Americans who support reforming our immigration system and offering some recourse to illegal aliens probably wish that President Obama had made his impassioned appeal to a new Congress, as part of a genuine strategy for seeking comprehensive, lawful solutions to this national problem. If the president’s primary objective was fixing our broken immigration system, he should have been willing to wait until the Republican-led Congress takes power in a few weeks and challenged it to act on a series of practical reforms.

For example, the steps he announced to strengthen the border should be matched with a vigorous strategy to prevent employers from hiring or exploiting illegal aliens. He could have proposed extending visas to scientists, mathematicians, engineers, and entrepreneurs who have much to offer our country. He could also have advocated a workable plan for addressing the status of all undocumented aliens, not just those covered by his ill-conceived decree.

It may be asking too much for the new Congress to be magnanimous and do the hard work on immigration that the president has left undone.

By waiting, the president would be effectively answering the call of a majority of Americans who agree that our immigration system must be fixed and our border made more secure. However, by attempting to bypass Congress, Obama has made it harder to reach those objectives. For most Congressional Republicans the president’s measures destroyed what little was left of his credibility and proved that he cannot be trusted to enforce our immigration laws, let alone draft new ones.

As Democrats in Congress dutifully line up to back the president’s action, they too will forfeit some of the trust of their colleagues. Although a few hearty advocates in both parties might continue to speak out for “comprehensive immigration reform,” the likelihood of meaningful legislation has diminished greatly. So any serious effort to change the crazy quilt of overlapping laws that is our immigration code may have to wait until Obama has left the White House.

The president’s decision to grant lawful residence and work permits to about 4 million aliens with children who are US citizens or legal US residents cannot be implemented without funding, and, starting in January, a Republican Congress pulls the purse strings. Even if funds were forthcoming, about 8 million aliens are not covered by Obama’s order. So, the White House decision has merely sown more confusion and anxiety among these illegal aliens.

In the meantime, as word spreads in Mexico and Central America that President Obama is doling out green cards and work permits, more immigrants might take their chances at an illegal crossing. At a time when Mexico is beset by its own domestic security crisis, authorities there are unlikely to divert resources to stop a wave headed to our border.

President Obama’s executive order — quite unlike related actions by presidents Ronald Reagan and George H.W. Bush — is in defiance, not furtherance, of the law. Many doubt that it will stand up to judicial scrutiny. In addition, the president and his party may pay a political price if a border crisis ensues and after it becomes clear that they tried to create more work permits for foreigners than they have jobs for unemployed Americans.

The president may have forgotten that, under the Constitution of the United States, his full and equal partners in governing are the Congress and the courts. With only two years left in his term, now is as good a time as any for him to learn.

Roger F. Noriega is a visiting fellow at the American Enterprise Institute. He served for more than 10 years on House and Senate staffs and held senior foreign policy posts in three Republican administrations. His firm, Vision Americas LLC, represents US and foreign clients.

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Have changing household composition and retirement caused the decline in median household income?http://www.aei.org/publication/changing-household-composition-retirement-caused-decline-median-household-income/ http://www.aei.org/publication/changing-household-composition-retirement-caused-decline-median-household-income/#comments Fri, 21 Nov 2014 04:15:02 +0000 http://www.aei.org/?post_type=publication&p=822044 ...]]]> earners

One of the most frequently reported economic trends is the gradual decline in US real median household income from its 1999 peak of about $57,000 to below $52,000 in each of the last three years (see blue line in top chart above). We hear a number of reasons from politicians and pundits for the decline in median household income over the last decade, mostly reasons that involve a narrative about economic stagnation and growing inequality caused by the progressives’ usual suspects: gains in worker productivity, income and wealth going to corporations and “the rich” instead of being shared by average workers; failure to increase the minimum wage or pass “living wage” laws; the combined effects of globalization, free trade and outsourcing putting downward pressure on middle-class incomes in America, and other variations of economic pessimism. Former President Bill Clinton recently offered his three reasons for stagnant median household income that include not raising the minimum wage and excessive corporate greed.

But there are some other very obvious, but mostly overlooked, factors that could easily explain why median household income has declined over the last decade that have nothing to do with economic stagnation: demographic changes in the composition of US households. AEI’s Alex Pollock addressed this issue recently in his essay “If income is going up, can median household income go down? It’s possible.” Here’s how Alex frames the issue:

One of the most commonly cited numbers in discussions of inequality is the trend in median household income, often used as if it settled the issue. Using median household income poses a fundamental problem, however. It conflates two measurements — changes in the composition of households and changes in income — and thus can easily mislead us.

Has the composition of households in America been changing? Obviously, it has. The percent of married couple households has fallen from more than 60 percent in 1980 to less than 50 percent in 2010. One-person households have risen from 23 percent to 27 percent of households in this period. Shifting from two-earner households to one-earner households lowers the median household income, even if everybody’s income is the same as before [or rising].

Alex provides a series of hypothetical examples showing how simple household demographic changes can result in rising individual incomes while at the same time the median household income is falling. For example, if there is a shift from two-earner, married households to one-earner single households as a result of divorce, the overall median household income could fall even when income is increasing for all individuals in the new mix of households with a greater share of single households.

Alex’s key point is that when demographics and household composition are dynamically changing, individual income and median household income can naturally move in opposite directions. The most frequent mistake, according to Alex, is to look at median household income over time assuming that household demographics are static. And that is precisely the mistake made in almost all of the discussions about median household income, and that leads to a distorted and inaccurate conclusion about why median income is falling.

One example of a major dynamic change in household composition is the significant increase in the share of US households with no earners, from fewer than 20% of all US households in 1980 to 23.7% of households in 2013 (see blue line in bottom chart above, Census data here from Table H-12). Likewise, the share of single-earner households has also increased from 33.2% in the early 1990s to above 37% for the last five years (see red line). In contrast, there’s been a decrease in the share of US households with 2 or more earners from above 46% of all households in 1989 to fewer than 40% of US households in every year since 2010 (see brown line in bottom chart above).

In summary, over the last several decades, there’s been an increasing share of no-earner, single-parent and single-earner households and a decreasing share of married and two-or-more-earner households. That major demographic shift has likely depressed median household income significantly in the last decade, even though it’s possible, as Pollock shows, that the income of individual working Americans could be rising.

Another key demographic shift is the increasing number of retired Americans as a share of the adult population based on Social Security data. As the red line in the top chart above shows, US retirees represented a pretty stable 15% share of the US population from 1990 to 2008. Starting around 2008 when the early “baby-boomers” – those born in 1946 — reached early retirement age of 62, the share of retirees started increasing from less than 15% of the adult population in 2007 to more than 16.6% in 2013.

In the five year period between 2008 and 2013, the number of retired Americans increased by 5.6 million, which was the largest five-year increase in US history, and more than double the 2.5 million increase in the previous five-year period. Given that wave of recent retirements, there have been millions of older, experienced, highly-paid workers going from their peak earning levels to a much lower retirement income that would typically include Social Security payments, pensions, and distributions from retirement accounts. As those millions of retirees are replaced in the workforce by younger, less experienced, lower paid workers, median household income could be falling even though the average income of working Americans could be rising.

It’s probably no coincidence that the recent increase in retirees, both in absolute numbers and as a share of the adult population, along with the other demographic changes described above, has naturally coincided with a decline in median household income. It would be hard to imagine that an aging population with a significant increase in the number and share of retirees, wouldn’t depress median household income, for purely demographic reasons.

Bottom Line: Most explanations of the recent decline in US median household income are based on some variation of a narrative of economic stagnation, rising inequality and pessimism. But what is almost always overlooked are the very significant demographic changes that have taken place in the composition of US households over time that would significantly impact the income of the median US household. Taken together, a) the increase in the share of no-earner, single-earner, and single-parent households, b) the increase in the number and share of retirees, along with c) the decline in the share of two-earner and married households, would logically and necessarily depress the income level of the median US household.

In summary, the composition of US households is not static, fixed and permanent; rather it’s dynamic, evolving and ever-changing. Discussions on changes in median household income over time that ignore the changes in household composition over time will always be incomplete, distorted and misleading. Perhaps the decline in median household income this century is not a narrative of economic pessimism and stagnation after all, but a more upbeat story of a greater number of Americans living longer lives, and enjoying periods of time in retirement that were never possible until this century.

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Capitalism and compassion: Why morality matters in a market economyhttp://www.aei.org/events/capitalism-compassion-morality-matters-market-economy/ http://www.aei.org/events/capitalism-compassion-morality-matters-market-economy/#comments Mon, 17 Nov 2014 17:53:20 +0000 http://www.aei.org/?post_type=event&p=821328 ananta-AEI-logos_800px

Please note this event is Indian Standard Time.

In much of the world, including India, the free enterprise system has come to be associated with material greed, or wealth creation for its own sake. AEI President Arthur C. Brooks believes that supporters of the free market system need to develop a new way of addressing the big human questions of our time. Based on both empirical research he conducted as an economist and his interactions with some of the world’s leading spiritual figures — including the Dalai Lama and Sri Sri Ravi Shankar — Brooks argues that supporters of free enterprise must make not just an economic but also a moral case for their ideas.

During this event at the Ananta Centre in New Delhi, India, Brooks and acclaimed Indian author and commentator Gurcharan Das will discuss the dynamic between making money and doing good.

Full video of this event will be posted 2-3 business days after.

Email admin@anantacentre.in or click here to RSVP.

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Good policy, good politicshttp://www.aei.org/publication/good-policy-good-politics/ http://www.aei.org/publication/good-policy-good-politics/#comments Thu, 20 Nov 2014 22:56:52 +0000 http://www.aei.org/?post_type=publication&p=822040 ...]]]> After years of playing defense, apologizing for while doubling down on his lies about the Affordable Care Act, President Barack Obama has chosen to go on offense. Not against the junior varsity terrorists of the Islamic State group in any sort of new, more meaningful way, but on the domestic front, by finally taking action to shield large numbers of illegal immigrants from deportation. Later today, in a prime-time address, the president is expected to announce that he will grant millions of undocumented aliens, seemingly mostly those with close family ties to U.S. citizens (often their children), reprieve from deportation and some sort of permission to work legally.

These actions appear to be wise ones, both on political and on substantive grounds. What the president is doing, in effect, is going from not enforcing federal immigration law (much like his predecessors) to announcing that he is not enforcing federal immigration law, and detailing more of the specifics of this non-enforcement. In other words, he’s gone from not deporting 11 million people to not deporting 5 million or 3 million people. For a number of reasons this is, along practically all dimensions, good and helpful public policy.

You can read the rest of the article at the US News & World Report. It will be available here on November 27, 2014.

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Obama mows down separation of powers and limits on executive powerhttp://www.aei.org/publication/obama-mows-separation-powers-limits-executive-power/ http://www.aei.org/publication/obama-mows-separation-powers-limits-executive-power/#comments Thu, 20 Nov 2014 22:34:15 +0000 http://www.aei.org/?post_type=publication&p=822074 President Obama, brandishing the same chainsaw as his predecessors, continues to clear-cut limits on executive power. Obama has been a one-man legislature when it comes to reshaping the Affordable Care Act into something less dysfunctional than the law he signed in 2010, and now he presumes to rewrite immigration law from the Oval Office.

Obama on Thursday night plans to announce an amnesty for about 5 million immigrants in the U.S. illegally. His order is based on no statutory authority, but is instead an expansion of the idea of “prosecutorial discretion” — the notion that federal government can’t catch all scofflaws, and so it must set priorities.

Republicans, and even much of the mainstream media, have sniffed out Obama’s likely true motives here, and they are nakedly political.

Obama is, above all, trying to provoke the GOP with his executive amnesty. He knows that his Caesarism infuriates the Right. He remembers how the 1998 Republican impeachment of Bill Clinton hurt the GOP and helped Democrats.

Liberal writers are salivating over the possibility of a government shutdown spurred by the immigration order. The government is currently funded through Dec. 11, and many conservatives want any new continuing resolution to include a provision blocking Obama’s actions. The Senate, of course, would reject such a CR, and Republicans would have another shutdown hung around their necks.

Obama would love a GOP overreaction like that, especially because his allies in the media would solemnly explain that conservative objections to Obama’s overreach are nothing more than racist gripes by old white men who can’t accept a black president.

Also, a Republican reaction to Obama’s amnesty would give Democrats a chance to argue that the GOP hates Hispanics. Democrats tend to paint all GOP policy positions as bigotry against someone — women, black people, immigrants. On immigration, Republicans sometimes provide an assist by behaving as if they really do dislike Mexicans.

If Obama can provoke just one back-bench GOP congressman — or even a conservative talk-radio host — into saying something racially charged, his order will have been a success. The media will make every Republican politician answer for the comment. (Democrats, in contrast, are never forced to answer for the outrageous statements or actions by their party-mates, even the man they keep electing to lead them in the Senate.)

If there remains any doubt Obama’s action was about partisan positioning, look at which senators he invited to the White House to finalize this plan. Eight senators — including four Democrats — represent states on the Mexican border. None of them were invited. If you look at the three states with the most Hispanics — measured by percentage or raw numbers — Obama invited zero senators from those states.

The last four chairmen of the Democratic Senatorial Campaign Committee — that is, the top fundraisers for Senate Democrats — are all invited: Michael Bennet, Patty Murray, Bob Menendez and Chuck Schumer. The other invitees include top party leaders Dick Durbin and Harry Reid. This is about Democrats’ efforts to retake the Senate in 2016.

Of course, Obama and some of his allies in the media will claim that Obama has the right to act unilaterally. The strangest justification may be that the GOP-run House refuses to act. Rep. Luis Gutierrez, D-Ill., said Obama’s action was prudent “given the intransigence of the Republicans.”

Another word for “intransigence,” is “disagreement.” This argument boils down to this: Because voters, in three straight elections, have elected a Republican House majority and have now chosen a Republican Senate, the president ought to unilaterally create the laws that Republicans oppose.

This reasoning is perverse. It’s not merely undemocratic, it’s anti-democratic.

At the New Republic, writer Danny Vinik hung Obama’s authority on a different hook. Obama wasn’t really making his own law, Vinik argued, he was merely carrying out a standing congressional mandate of “making the immigration system fairer….”

This, like many of Obama’s legal arguments, is a justification with no limiting principle.

Imagine a Republican president in 2015 failing to pass through a Democratic Senate a tax holiday for U.S. companies repatriating their foreign earnings. Invoking the notion of “selective enforcement,” President Christie could then play the fairness card: “I’m simply executing Congress’s mandate that the corporate tax code be fair, and declining to collect some taxes from these companies.”

Is it fair to force people to buy private health insurance they don’t want? It is fair to tax the son who inherits his dad’s family business? Is it fair to require nuns to provide contraception insurance? Just wave that magic fairness wand, invoke selective enforcement, and voila, the law says something other than what it says.

This wouldn’t be a very functional government, but it is the one Obama is threatening to create.

Timothy P. Carney, a senior political columnist for the Washington Examiner, can be contacted at tcarney@washingtonexaminer.com. This column is reprinted with permission from washingtonexaminer.com.

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Remembering Bill Frenzel, institution-builder, bridge-builder, and just a prince of a manhttp://www.aei.org/publication/remembering-bill-frenzel-institution-builder-bridge-builder-just-prince-man/ http://www.aei.org/publication/remembering-bill-frenzel-institution-builder-bridge-builder-just-prince-man/#comments Thu, 20 Nov 2014 22:25:43 +0000 http://www.aei.org/?post_type=publication&p=822037 The news that Bill Frenzel had died hit me hard, in many ways. First was the personal. I met Bill fairly early in his congressional service, became friends with him in part because he represented my home district and in part because I was close to his mentor in the House, Barber Conable of New York. He was just a prince of a man, thoughtful, kind, nice, smart as hell and someone who cared as much about the process and about the institutions as he did about his policy preferences, his party and his ideology.

That part was a key for me; I looked for legislators who cared about the legislature, about what we call the “regular order,” about a process designed by the Framers to focus on debate and deliberation, on finding broad coalitions via the art of compromise and a relentless search for common ground. Which also meant a primacy for solving nettlesome national problems over gaining political or partisan advantage.

That set of traits defined Bill Frenzel, through his service in Congress on the Ways and Means Committee, through his efforts on behalf of a series of Republican and Democratic presidents to find ways to pass and implement trade agreements, through his coalition building on taxes, entitlement programs, deficits and debt in and out of Congress. Make no mistake: Bill Frenzel was a strong, free-market-oriented fiscal conservative, and a proud and strong partisan Republican. But those qualities were trumped by the others.

Frenzel saw his service as an honor
One of the many things Bill loved to do was appear with his wonderful wife, Ruthie, at freshman orientation every two years for the new members of the House, where both would stress to the members and their spouses what a remarkable honor it was to serve their constituents in the Congress of the United States, and what a shame it would be if the new members left their families back home in the district so they could not share in the special experiences that come with service in Congress. It was a message that began to fall on deaf ears just a few years after Frenzel left the House, starting with the Newt Gingrich-led sweep in 1994.

When Bill left Congress, he settled at the Brookings Institution in its Governmental Studies program — a place where I have tended to hang out a lot because of my many decades of collaboration with Tom Mann. So I would see Bill there, and we would talk about Minnesota, about Congress, about our deteriorating politics.

I saw him more when he took on, six years ago, a new burden of public service, on the independent Office of Congressional Ethics, which Tom and I helped to create and midwife through a suspicious and hostile House. I feared that Republican leader John Boehner, who strongly opposed creation of the office, would appoint members who would either try to block any action by OCE, or turn it into another polarized battlefield for ethics complaints and investigations. But Boehner stepped up to the plate, choosing a solid institutionalist, former Rep. Porter Goss of Florida as a co-chair, and picking other solid people, including Bill Frenzel, to round out the group.

Characteristically, Bill became both an institution-builder and bridge-builder, seeing the office as a key place to build confidence in Congress and protect its standards — in what is a thankless and non-remunerative task where one faces vilification and condemnation from members and staff facing an allegation, who see any independent ethics body as a threat to them. Even during a period as an alternate for purposes of voting, Bill threw himself into making sure that OCE would work, do its job fairly and thoroughly, and would do everything as much as possible with unanimity, including members spanning every ideological and party spectrum. I would huddle with him whenever the office was under attack, from the existing House Ethics Committee, which resented anyone intruding on its turf, to members and their lawyers facing a probe. His integrity and reputation was almost like an invisible shield protecting OCE from the most outrageous assaults on it.

He represented a mindset that is so rare today
More broadly, I lament the loss of Bill Frenzel because of what he represented — a set of characteristics, and a mindset, that are extraordinarily rare to find in today’s Congress, especially among Republicans. Caring about their own institution and its processes, valuing the regular order and compromise, are now trumped by the tribal impulses of the permanent campaign and the shrinking center on the Hill. At the same time, I miss the kind of Minnesota Republican that I grew up watching and admiring — from the late Doug Head to Arne Carlson to Bill’s successor, Jim Ramstad. All people of the broad center, all men of integrity, all individuals who put solving big problems ahead of partisanship, facts ahead of ideology, measured words ahead of overheated rhetoric.

Bill Frenzel may not be the last of a breed. But the numbers like him are vastly diminished, and those with his personal and public qualities are rare at any time.

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Iran’s three thorns: Nukes, ISIS, and Israelhttp://www.aei.org/press/irans-three-thorns-nukes-isis-israel/ http://www.aei.org/press/irans-three-thorns-nukes-isis-israel/#comments Thu, 20 Nov 2014 21:29:48 +0000 http://www.aei.org/?post_type=press&p=822029 ...]]]> It is expected that the November 24 deadline for an Iranian nuclear deal will be extended, dragging on the prospect of additional sanctions and the economic problems that go with them. In a new report, AEI Iran expert Matthew McInnis explains that the Islamic Republic of Iran is in fact being challenged by much more than the objections to its nuclear program. McInnis specifically focuses not only on the implications of these talks, but on two other critical variables affecting Iran’s behavior: the threat of ISIS and Iran’s diminishing influence over the Gaza Strip. Together, McInnis argues, these three crises could threaten the regime and by extension impact the entire Middle East.

McInnis evaluates the implications of a deal with Iran:

As long as the Islamic Republic is able to easily and rapidly produce more highly enriched uranium, it can give up some of its supply with relative ease… This is also why negotiations continue to stall. Real reversals in the nuclear program’s capability to produce enriched uranium would undermine the regime’s motive to engage in talks. But reducing Iran’s capability to produce enriched uranium is exactly what the United States and other P5+1 countries have been seeking as the best way to ensure Iran cannot make a nuclear weapon.

The West will likely see greater Iranian anxiety during the final rounds of nuclear negotiations. Real concerns about Iran’s worsening economic prospects and a covert military threat could help push a recalcitrant Iran toward compromise. Perhaps we should even encourage those insecurities. Reiterating that military action may seriously be back on the table in the absence of a deal, or aiding in policies that keep oil prices low could reinforce Tehran’s uncertain negotiating stance.

McInnis on Iranian interests in the fight against ISIS:

Based on Iran’s ideological and political need to resist US policies and influence, Iran will make sure the United States does not come out of this [ISIS] crisis in a stronger position, either in Baghdad or in the region. Iran will likely tolerate or even welcome a short-term tactical engagement by the United States but will strongly resist any form of activity that could appear a resumption of a permanent American military presence or significant influence in Iraq, such as expanded government advisory and intelligence support roles for US personnel.

McInnis on Iran’s efforts in the Gaza strip:

Iran cannot afford to have another country or radical group — whether Saudi Arabia, al Qaeda, or ISIS — fill the vacuum that might be created by uncertainty in Gaza and the West Bank. A weakened Hamas leaves Gaza and the West Bank more vulnerable to greater intervention by Iran’s rivals and enemies…The United States should recognize that efforts toward Palestinian unity and a more lasting security situation between Hamas and Israel are not to Iran’s strategic benefit…[and] work with its Israeli and Palestinian partners to identify and check Iran’s attempt to spoil efforts toward political resolution among the various Palestinian factions and Israel.

Read Matthew McInnis’s full report, “ISIS, Israel, and nukes: Iran faces crises.”

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Why are some generic drug prices soaring?http://www.aei.org/press/generic-drug-prices-soaring/ http://www.aei.org/press/generic-drug-prices-soaring/#comments Thu, 20 Nov 2014 21:12:39 +0000 http://www.aei.org/?post_type=press&p=822026 ...]]]> Over the past decade, the declining cost of generic drugs has subdued the growth of health care spending in the US. Yet, while overall generic prices continue to fall, some generic drugs have soared in price, leading to attention from consumers and policy makers alike. In his testimony today at 1pm before the Senate Committee on Health, Education, Labor and Pensions, AEI’s Dr. Scott Gottlieb discusses the potential factors in rising pharmaceutical prices and their impact. Full testimony can be found below and is embargoed until delivery:

In recent years, FDA has increased its oversight of generic manufacturing. The merits of FDA’s oversight are beyond dispute. And the balance struck between safety and access by FDA’s sometimes-abrupt imposition of these new standards is beyond the scope of this discussion. But the fact remains that new standards were sometimes imposed with little notice or accommodation, leading to plant closures while facilities were remediated. Product shortages resulted. It’s reasonable to ask whether, in cases where there was no imminent risk, facilities could have been remediated under close FDA supervision while they continued to produce key medicines, reducing the likelihood of shortages. This, however, has not been the policy. The bottom line is that COGS (cost of goods sold) in this sector have gone up as a result. Higher manufacturing costs, and the tighter scrutiny applied to new manufacturing facilities, have increased the entry costs for new generic drugs and generic drug makers.

He continues:

The underlying cost pressures inside the generic drug industry are indeed changing. There is a risk that increased barriers to entry, increased cost of goods, and increased cost of regulatory scrutiny and manufacturing, can coalesce to lower the competition that this sector has long enjoyed, and the savings consumers have long appreciated. The anecdotal cases of substantial price increases that plague a subset of drug categories are concerning, but don’t themselves point to any uniform trends. Instead, it is the underlying cost pressure that should merit our policy attention.

Read his full testimony, “Why are some generic drugs skyrocketing in price?

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