The Libertarian Party has a historic opportunity in this year’s presidential election. The two major political parties appear to be settled on candidates who are each disliked by a larger share of the electorate than any other nominee in recent American history. With no significant independent candidacy on the horizon, Libertarians are the best organized alternative available to voters, including having ballot access in all 50 states. Merely as a result of these conditions, the Libertarian Party will far surpass the record 1.3 million presidential votes it garnered in 2012. On top of that, by nominating Gary Johnson and Bill Weld, two former Republican Governors with good track records governing in blue states, Libertarians seem to be embracing their chance at relevance. There is a non-trivial chance that they could be included in this fall’s nationally televised debates.

And yet, to this point, there is a sense that Libertarians are missing their moment. In almost all of Johnson’s recent television appearances, he seems intent on broadcasting two messages to the electorate: (1) “Hey, I exist!” and (2) “You may not realize it yet, but you might agree with our bundle of policy preferences—which are fiscally conservative and socially liberal—more than with the other candidates’ preferences.” This is offered up in an arch, almost jocular tone—as if Libertarians are hoping to win voters who look at politics and just want to lighten up. The (admittedly funny) faces that Johnson made on Samantha Bee’s Full Frontal illustrate the dominant note:

Unfortunately, 2016 is not a funny year for politics, and so Johnson’s “aw shucks, you just might like our policies” routine is squandering his adopted party’s best chance to build itself into a serious political force. The Libertarian Party always runs the risk of seeming like an expressive vehicle for the quirky and quixotic—the Libertarian convention, in May, featured a strip tease, and if you happen to live in Arkansas State Senate District 26, you can vote for Libertarian candidate Elvis Presley—rather than an organization that aspires to be a serious participant in the political process. Johnson’s recent performance plays right into that image.

Creating an alternative image would be quite straightforward in the current political moment. The Libertarian message to voters in these troubled times should be: “Our two main parties both subscribe to philosophies of government that don’t solve problems and lead to frightening stagnation, resentment, and abuse—a fact that should be more and more obvious each day. If elected, our party would forge a different path, one truer to our nation’s constitutional tradition of limited constitutional government; one better able to cope with the fiscal challenges facing our country in the coming decades; and one that offers fresh, incisive thinking about how to move America forward.”

(One benefit of emphasizing the importance of limited government, rather than Libertarians’ social permissiveness, is that doing so will help the party draw more voters from the ranks of Republican voters than from Democrats. While Libertarians might or might not want to adhere to that strategy over the long term, in the short term it would ensure that Johnson avoids becoming the Ralph Nader–style spoiler who puts Donald Trump in the White House.)

Beyond outlining these general commitments of libertarianism, Johnson needs to do a better job helping voters imagine how Libertarians can fit into the worlds of American politics and policymaking as we find them today. Are voters for Johnson supposed to think of themselves as completely rejecting the administrative state and its many functions, or are they supposed to think of Libertarians as offering a governing agenda that would focus, discipline, and even improve the federal government, even as it aims to shrink it? Will Libertarians’ penchant for ideological consistency make it impossible for them to function in a country where very few citizens hope for minarchy?

In this vein, I agree with Shikha Dalmia, who argues: “Johnson's pledge that as president he'd veto any budget with a deficit just doesn't cut it. It won't persuade voters that he's serious and it won't affect the terms of the debate.” Johnson and Weld need to paint Libertarians as capable of being more than naysayers. Johnson sometimes quite reasonably emphasizes that much would hinge on what Congress would do, but he needs to give a sense of how he would seek to work with a House and Senate that would include not a single member of his own insurgent party.

Thinking beyond Johnson’s current campaign, which is obviously unlikely to end with an outright victory in November, Johnson and Weld should also think about the future of the Libertarian Party as a party. Politico reports that it has just 13,000 dues-paying members nationally, although it has succeeded in increasing its national registration to 411,250 over the last decade. That is a start, but only a small one in a country with nearly 220 million eligible voters. Will Libertarians go beyond saying that people might like casting a presidential ballot for their candidates and try to make the sale that their party can become a durable, workable vehicle for improving our public life?

There is just as much room for growth when it comes to candidate recruitment and support. Right now, the Libertarian Party website tells aspiring candidates: “If you think you have a chance of winning an election, or if you would at least enjoy trying, please do that.” That is…not a terribly effective way to try to field a slate of candidates across the country who can educate voters about the party’s positions and eventually gain access to the levers of governmental power. The party needs to use its moment of national exposure to build up its organizational structure and fundraising capacity, but it isn’t clear whether it can reconcile that necessity with its free-wheeling self-image.

Libertarians must decide: will they take the steps necessary to allow their party to mature, such that they might eventually follow the UK’s Liberal Democrats in becoming serious players in national politics, or do they prefer to stay on the Peter Pan path?

      

 

 

Where there are markets, regulations, and money, special interests and self-serving behavior will not be far away. So argue Philip Wallach and Jonathan Rauch in this new paper that examines how special interests are likely to shape marijuana legalization and regulation in the United States.

Why did legalization of marijuana break through in the face of what had long been overwhelming interest-group resistance? In a post-disruption world, how might key social and bureaucratic actors reorganize and reassert themselves? As legalization ushers in a “new normal” of marijuana-related regulation and lobbying, what kinds of pitfalls and opportunities lie ahead? In this paper, Wallach and Rauch address those questions through the prism of what political economists often call the theory of public choice—the study of how interest groups and bureaucratic incentives influence policy outcomes. Their conclusions include:

• For many years, the marijuana-policy debate was dominated by an “iron triangle” of anti-legalization interests: moralists and public-health advocates who believe marijuana use is wrong or harmful; commercial and gray-market interests with stakes in drug treatment and medical marijuana; and law-enforcement and quasi-governmental entities whose budgets and missions are sustained by the war on drugs. Those interests’ combined firepower stunted change even as public support for marijuana prohibition softened.
• To make possible the wholesale disruption that has happened with marijuana legalization, public opinion change was necessary, but it was not sufficient. Also required was the disruption of the iron triangle. That was accomplished in the late 2000s through a shrewdly crafted campaign of “asymmetric warfare” that aimed money and argumentation at the incumbent coalition’s weakest points. In particular, reformers shifted the public’s focus from harms of marijuana use to harms of marijuana criminalization.
• The rise of commercial marijuana interests and a potentially controversial “marijuana lobby” may impede legalization’s momentum as its opponents change the subject once again, from harms of criminalization to harms of corporate predation.
• The present disrupted regulatory environment is unlikely to last. Old prohibitionist interests are discombobulated and new commercial-marijuana interests are still getting organized, giving legalizing states a degree of regulatory freedom which is exceptional but probably not durable. Over time, multiple interests will coalesce and colonize the regulatory process.
• Despite widely touted concern that one or more disproportionately powerful players will dominate the regulatory system, regulatory incoherence should be a greater concern than regulatory capture. As policymakers increasingly need to navigate complex and conflicting interest-group politics, the result is at least as likely to be overregulation and misregulation as it is to be systematic underregulation.

Ultimately, Wallach and Rauch conclude that the emerging model of state-level regulation provides valuable insulation against interest-group depredations in the marijuana industry. Even if the federal government eventually legalizes marijuana, they argue, it should leave marijuana regulation primarily to the states.

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Four states and D.C. have legalized recreational marijuana, and more may do so this fall. But legalization is just the beginning of policy development. After legalization come commercialization and regulation—processes sure to be influenced by corporations and interest groups. How will lobbying and corporatization affect the structure and regulation of the licit marijuana market? And how should policymakers respond?

On June 16, the Center for Effective Public Management at Brookings released two papers examining these issues. Authors and Brookings Senior Fellows John Hudak, Jonathan Rauch, and Philip Wallach were joined by experts from government, private industry, the non-profit sector, and academia to assess the papers' findings that state-level regulation can help rein in special interests and that big corporations can bring benefits as well as risks.

• Worry about bad marijuana—not Big Marijuana
• Bootleggers, Baptists, bureaucrats, and bongs: How special interests will shape marijuana legalization

Join the conversation on Twitter at #BigMarijuana and @BrookingsGov

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• Bootleggers, Baptists, bureaucrats, and bongs: How interest-group politics will shape marijuana regulation
• Worry about bad marijuana—not Big Marijuana

Audio

• Big Marijuana: How corporations and lobbies will shape the legalization landscape

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• Transcript (.pdf)

Event Materials

• 20160616_big_marijuana_transcript

      

 

 

Editor's note: This post is a review of Fergus Bordewich, The First Congress: How James Madison, George Washington, and a Group of Extraordinary Men Invented the Government (Simon & Schuster, 2016). 

In his 2004 biography of Alexander Hamilton, lately of even greater renown, Ron Chernow writes, “If Washington is the father of the country and Madison the father of the Constitution, then Alexander Hamilton was surely the father of the American government.” Hamilton (everyone now knows) got a lot farther by working a lot harder—and one of the many great accomplishments of Chernow’s book was to show us what that meant, in terms of mundane, toiling administrative work.

The achievement of Fergus Bordewich’s new book, The First Congress, is to show us that, Hamilton’s lately much-sung labors notwithstanding, the work of creating an effective federal government in America was shouldered as much by legislators—including some workhorses whose contributions in the first Congress are often forgotten.

To be sure, much of Bordewich’s story is spent with familiar characters who themselves possessed legendary work ethics: James Madison, the constitutional architect who as a member of the House became Congress’s informal leader; President George Washington, the towering figure whose willingness to treat Congress as “the paramount branch of government” was indispensable; and Hamilton, Thomas Jefferson, and Henry Knox, each of whom played formative roles as the first heads of the original federal executive departments. But each of those departments had to be created by Congress. Washington could not be sworn in until members of Congress assembled to count electors’ ballots. And while Madison took the lead, his lesser known colleagues would be the ones to concretize his sometimes-theoretical constitutional vision and ensure it survived first contact with reality.

The need to do so quickly was pressing. “Confidence in government was abysmally low…contempt for politicians was rife, … [and] many political men held an equally low opinion of the voting public.” There was anything but widespread confidence that the United States were destined for survival, let alone greatness. At the same time, expectations were very high: if the new nation, until then hobbled by its feeble government under the Articles of Confederation, was to find its legs, this was the time.

Congress began its work in the temporary capital of New York City, then a fast-growing and chaotic shipping hub of 30,000, and its first days were hardly auspicious. When shots were fired on March 4, 1789, to signify the beginning of the new government, there was nowhere near the majority quorum needed to do business in either house. Bordewich vividly paints the predicament that most members then faced, making journeys through an almost unimaginably harsh and untamed landscape; to make the journey from Boston to New York required “a six-day journey by sleigh tumbling from one rock to another riding over the Ice for miles down a river & pushed in a wherry across another.” What little there was of the holdover government had the humblest of trappings: John Jay “ran the Confederation’s Department of Foreign Affairs from his law office, and Henry Knox…presided over the War Department from rented rooms at a Water Street tavern.”

Finally the House achieved a quorum of twenty-nine members on April 1 and the Senate followed on April 5, and both chambers got down to the work of considering the legislation that would give the new government its shape. Proceedings in these Federalist-dominated chambers were far less structured and rule-bound than our familiar image of a legislature, which is perhaps unsurprising considering the relative smallness of these bodies (by the end of the first Congress, 65 Representatives and 26 Senators, none of whom had professional staffs).

But if they started haltingly, they managed to work their way through a remarkable number of issues, both prosaic and explosive. In spite of a complex interplay of competing interests, especially the manufacturing-heavy north and agricultural, slavery-dependent south, they worked through a tariff that would provide the federal government’s main source of revenue, a Coasting Act to register ships in coastal waters, and a Collection Act that established the system of customs collectors and port officials who would enforce the tariffs. After a difficult debate about presidential removal authority, they created the first three executive departments (Foreign Affairs, Treasury, and War).

With the leadership of “the prodigiously hardworking Senator Oliver Ellsworth” of Connecticut, they gave birth to a powerful federal judiciary, structured along entirely novel lines, and later provided work for that system by establishing the first federal crimes and passing a copyright act. The Senate staked out its power of “advice and consent” over appointments and treaties (including one with the Creek nation) as a substantive one by refusing to simply ratify Washington’s choices without debate, even when he came to the Senate chamber in person to press his case. Bordewich also nicely covers their rancorous debates over the future of slavery instigated by Quaker abolitionist petitioners, which ultimately failed to budge the status quo, in large part because of fears that the new constitutional union could still easily fall to pieces over the issue.

Bordewich’s telling of the debates around what we think of as the Bill of Rights is especially illuminating. He makes it clear that Federalist legislators thought of them not as a legislative priority, but rather as an “amendment problem” pressed by the small Anti-Federalist minority to be expediently managed and minimized. When Madison first broached the subject of amendments in June of 1789, he was rebuffed. As Representative John Vining (Federalist – Del.) put it, “The people are waiting with anxiety for the operation of the Government. Have they passed a revenue law? Is not the daily revenue escaping us? Let us not perplex ourselves by introducing one weighty and important question after another, till some decisions are made.” Eventually, in September 1789, 39 amendments did receive meaningful, if rather brisk, debate. As important as passing the 10 that were ratified (plus the wandering 27^th Amendment) was the rejection of others that would have imperiled a strong and independent federal government, including endowing voters with a right to give legislators binding instructions and a limitation of federal powers to those “expressly” provided by the Constitution. Bordewich brings these debates to life with fascinating and sympathetic portraits of men who mostly found themselves on the losing side of these early congressional debates, including Anti-Federalist Representatives Elbridge Gerry of Massachusetts, James Jackson of Georgia, and Aedanus Burke of South Carolina.

Perhaps the narrative center of the book is the maneuvering that surrounded two debates that became entangled: where the nation’s capital should be permanently situated and whether the federal government should follow Alexander Hamilton’s plan to assume state debts (which Madison opposed). What is passing into the current collective memory as a behind-closed-doors bargain between Hamilton and Madison and Jefferson, Bordewich ably illuminates as the culmination of a series of intricate congressional offers, counter-offers, and betrayals, in which the young country’s different regions felt each other out and embraced the need for horse-trading as a way forward. Philadelphians beat out advocates of a capital on the Susquehanna or in Baltimore for the government’s immediate future, and southerners were enticed to consent to assumption of state debts with the promise of a permanent capital on the Potomac. As Bordewich puts it, “An American tradition of bare-knuckle compromise had been born.”

The third session of the First Congress, which convened in the new temporary capital of Philadelphia in December 1790, took up “a small mountain of legislation” it only partially worked through before permanently recessing in March 1791. It passed laws to adopt Hamilton’s plan for a national bank (again over Madison’s opposition), set up the structure for payment of executive branch officials, recruit a new regiment to fight Indians on the northwest border, reduce the public debt, and collect duties on tea, among others. As Bordewich puts it in summation, “From a piece of paper, the members of the First Congress had made a government.”

That is an achievement worth dwelling on more often than we do, and one with some obvious lessons for the present moment. Our first Congress was filled with members who perceived their own principles and their constituents’ interests to be sharply at odds with those of their colleagues, but they “shared a common fear of failure and a determination to make government work even if it meant compromising on matters of deep principle.” Today, the stakes are no doubt somewhat lower—we have a vast federal government that keeps on going, for better or for worse, whether our representatives in Congress compromise or not. But Congress is the first branch for a reason, and the prospects for our government’s legitimacy are poor if our legislators are mired in a pattern of reactive sniping rather than constructively compromising on the dominant questions of the day. Let us hope that current legislators will be inspired by Bordewich’s chronicle of their forbears, who made Congress the essential institution to forging a strong nation.

      

 

 

As the 2016 presidential campaign makes clear, Americans today are bitterly disappointed with their government. People have begun to doubt not only its recent performance, but its basic legitimacy: its claim to be a uniquely representative institution working on the public’s behalf. Anxiety about our administrative state—broadly speaking, “bureaucracy,” which includes controversial agencies like the EPA and IRS—and its compatibility with our ideals of self-government is at the heart of our contemporary legitimacy crisis.

In this paper, Philip Wallach explores the origins and implications of this legitimacy crisis and offers a possible path toward overcoming it. He argues that both major camps fighting over the role of the administrative state fail to provide a viable means of securing effective and legitimate government. On one side are technocrats who largely deny the importance of current anger at the administrative state and are confident that people will be best served if our dysfunctional legislature allows experts in the executive branch to take the lead in providing for the public’s best interests.  On the other side are populists urging a “Jeffersonian cleansing of our institutional stables meant to repudiate elite corruption, return America to its republican roots, and install citizen statesmen who will better serve the people through obedience to common sense and old-fashioned American morals.”

Wallach explains the shortcomings of both the technocratic and Jeffersonian responses to America’s legitimacy problem. Technocrats believe that existing processes such as notice-and-comment rulemaking ensure adequate representation of all viewpoints, but such limited outreach on the agencies’ own terms fails to achieve broad democratic legitimacy. The administrative state’s critics see its legitimacy problems, but their solutions tend to require the election of a new citizenry. Far from offering a viable path to self-government, their insistence that the people can govern directly leads to further disappointments and cynicism.

Wallach sketches the outlines of a realistic, workable middle way, in which statesmen lead with the guidance of experts and are made accountable to those parts of the public capable of meaningfully judging their results.  This is a vision of republicanism consistent with the actual capabilities and engagement of our citizens, rather than one that depends on idealized notions of citizenship unlikely to be realized in contemporary America.  It is characterized by compromise, intermediation, and incrementalism. And while he acknowledges that “our current political environment gives us plenty of reasons to be pessimistic about the chances of incremental reforms,” Wallach ultimately concludes “it should also make us realize why they are indispensable.”

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In my new Center for Effective Public Management paper, “The administrative state’s legitimacy crisis,” I argue that Americans’ anxieties about our sprawling, largely impenetrable bureaucracy pose a major challenge to the effective working of our government. This work is largely critical in orientation, contending that technocratic defenses of our current arrangements are complacent about citizens’ sense of alienation while at the same time insisting that populists’ efforts to simply shake free of the administrative state produce only more disappointment and cynicism. I try to sketch out a sensible middle way that values coping, competence, and compromise and functions through intermediation and incrementalism.

When it comes to the institutional reforms these values might imply, I offer four broad types: localism when possible, greater administrative state attention to justification, exposing agencies to better and more reliable scrutiny, and building congressional capacity. Why should the last of these, directed at the legislature, be thought of as fundamentally responsive to the administrative state’s legitimacy crisis?

It is because intermediation between citizens and government is vital to legitimating the administrative state’s work. Self-government is a mere fantasy if it means that citizens are supposed to actively and knowledgeably generate policy choices across the whole spectrum of federal policy—and this isn’t because they are poorly educated, or apathetic. Our government embodies an extensive division of labor that makes it impossible for even the most knowledgeable to have a clear grasp of most issues. It is almost entirely nonsensical to think of the public as having well-formed views that could somehow be immediately realized.

For self-government to be a meaningful ideal, it must work through some process of intermediation, in which citizens’ concerns are absorbed and transmitted by some kind of trusted representative. Legislators, who must hustle for votes in their communities, are naturally suited for this work, but our Congress has gotten worse at it in recent decades. Information about citizen needs is not so much as absorbed and transmitted into open-ended political dealing as it is occasionally picked up and weaponized for zero-sum ideological sparring.

That is perhaps mild hyperbole, but the situation is plenty dire. In 2015, Gallup registered a remarkably low eight percent saying they trust Congress “a great deal” or “quite a lot”—scarcely more than the five percent who volunteered the answer “none.” Whereas successful intermediation produces a sense that the outcomes of the system should be accepted even when they seem unfavorable, when Congress manages to effectively steer policy today you almost get the sense that it makes the legitimacy problem worse. Denizens of the executive branch may well begin to think that they are better off openly circumventing Congress and appealing directly to the public to justify their work—but because of the conflict that creates with our constitutional framework, because Congress cannot be simply wished away, that is unlikely to be effective.

We find ourselves, then, in a difficult position: Congress needs to be made to do the work of an effective intermediary institution, but it shows little sign of being either willing or able to do so.

Whether or not there is much hope on this front, I am far from the only one angling for a strengthening of Congress leading to better democratic accountability and ultimately legitimacy for the administrative state. There is a good deal of Congress-oriented ferment among those concerned about the inadequacy of our current arrangements on both sides of the political aisle. Notable efforts include:

• Lee Drutman and Steve Teles’ reform agenda emphasizing the need for Congress to strengthen its own analytical capabilities in order to be less reliant on information provided by corporate lobbyists. In my terms, to strengthen its ability to function as a trusted intermediary.
• Senator Mike Lee’s (R – UT) Article I Project, which brings together a number of conservative lawmakers to attempt to revive legislators’ own sense of their institutional prerogatives, and focuses especially on Congress’s inability to effectively oversee the work of the executive.
• Various regulatory reform proposals that would seek to bolster Congress’s abilities and opportunities to independently evaluate regulations.
• The newly formed Legislative Branch Capacity working group, formed by Drutman and Kevin Kosar, which seeks to operate as a central hub for this kind of thinking, and has urged congressional leadership to form a Joint Committee on the Capacity of Congress.

Tackling the problems of the administrative state via rebuilding congressional capacity is unlikely to be the most effective political rallying cry ever devised: it is far easier and more emotionally satisfying to simply call for throwing the whole thing overboard, as with Ted Cruz’s call to disband the IRS. But the road to effective and legitimate government almost certainly runs through these parts.

      

 

 

My Brookings colleague Sarah Binder and her coauthor Mark Spindel have an important new paper out today: “Independence and accountability: Congress and the Fed in a polarized era.” They ask who in Congress seeks to alter the Fed’s structure or responsibilities and when they do it. They provide answers backed up by an impressive new dataset encompassing 879 bills introduced by 333 lawmakers in the House and Senate between 1947 and 2014 that address the power, structure, and governance of the Federal Reserve.

For Binder and Spindel, the Fed should be understood as a political institution, which is not equivalent to a politicized or partisan one. What this means is that although the Fed prizes its removal from everyday politicking, as an institution it has been repeatedly reshaped by congressional action, and it can expect to enjoy its vaunted independence only when it maintains the respect of political actors and their constituents.

When does Congress make serious efforts to alter the Fed? Intuitively, legislators should do so when the political rewards are largest, which will be when the economy is in trouble and citizens want their representatives to take dramatic action to set things right. The data bear this out: during good times, Congress leaves well enough alone and often hails the importance of central bank independence to long-term prosperity. When conditions worsen (as measured by the misery index, which sums unemployment and inflation), members introduce more bills targeting the Fed, sending a clear signal to the central bank that short-term economic anxieties may outweigh fine-sounding theories of independence unless it delivers growth.

One of the paper’s most intriguing sections looks at the politics around the specific issue of auditing the Federal Reserve System. Far from being a novelty in the wake of the recent financial crisis, over the past half century there has been a steady drumbeat of bills seeking to implement and then widen the scope of GAO audits of the Federal Reserve. In the mid-1970s—not coincidentally as the country began to suffer stagflation—many members in Congress pushed for audits of all of the Fed’s activities. Since 1978, a compromise has remained in place in which all of the Fed’s activities other than its monetary policy functions are subject to annual GAO audits, but plenty of Fed critics on both sides of the aisle have found this arrangement too forgiving of the insulated central bank and pushed for more comprehensive audits.

Binder and Spindel characterize the lawmakers who have supported intensifying scrutiny of the Fed as “odd bedfellows.” They mean “odd” in that very conservative Republicans and very liberal Democrats have often joined forces on Fed transparency issues, which is difficult to understand in the terms of partisan polarization that dominate so much of our recent politics.

I’d submit that this group isn’t quite as odd as the partisan lens makes it seem, however. Orientation toward the Fed is perhaps the clearest marker of a new divide now becoming prominent in our politics, in which the two sides are those that trust our central governing institutions and those who strongly suspect them of being corrupted. The media’s favored terminology now seems to be “establishment” vs. “populist,” but for banking issues in particular “Hamiltonian” vs. “Jacksonian” would be especially fitting.

When we look at the audit bill sponsors in the figure above, we see a varied cast of characters, but there are a few stand-out groupings. The largest group is of southerners, with sponsors from Alabama, Georgia, Kentucky, Louisiana, Missouri, South Carolina, and especially Texas, which produced three of the most persistent Fed critics, Democrats Wright Patman and Henry Gonzalez and Republican Ron Paul. Next largest comes from the rural Midwest: Indiana, Iowa, Michigan, North Dakota, and Wisconsin. Both of these regions are home to deep suspicions of the moneyed interests of the industrial northeast, and so it is not entirely surprising to see members of both parties representing this strain of thinking.

A few of the other audit sponsors shown clearly share this bank-skeptical outlook, even if not for geographic reasons: in recent years Carolyn Maloney (NY), Dennis Kucinich (OH), and Bernie Sanders (VT). Earlier geographic outliers also tended to strongly distrust the Fed: Brooklyn Democrat Abraham Multer, who apparently had plenty of zeal to expose the Fed as corrupt; Queens Democrat Benjamin Rosenthal, who made his name as a consumer advocate; Toledo, Ohio, Democrat Lud Ashley, an advocate of public housing; or on the Republican side John Rousselot of California, an avowed Bircher, or the hyper-conservative-before-it-was-hip Phil Crane of Illinois.

Political scientists and lay observers alike ought to begin putting the trust-distrust orientation front and center in their analyses of politics surrounding the Fed, which tend to be more polarized along this axis than along our familiar partisan spectrum. Through this lens alliances between, say, Representatives Alan Grayson (D-FL) and Paul Broun (R-GA) don’t look nearly so strange: though in many ways they are ideological opposites, there is little daylight between them in thinking that the Fed is out to rip off Main Street on Wall Street’s behalf.

Where does this framing leave us? Well, Binder and Spindel make it clear that nothing about the Fed’s current institutional configuration is set in stone. As my book emphasizes, for a number of reasons the Fed has faced a political legitimation problem since the crisis, and it has been surprisingly slow in overcoming it as our economy has healed. If distrust of the institution becomes the dominant position, transcending its normal geographic strongholds, we should expect significant changes, and probably not ones that would be to the Fed’s liking. The politics of monetary policy—illuminated by the Binder and Spindel paper in far more ways than I’ve noted here—are going to be very interesting in years to come.

      

 

 

With Donald Trump’s historic Super Tuesday wins now in the books, it is getting quite difficult to see a path to someone beating him for the Republican nomination—indeed, if he were a normal candidate who performed similarly, we might well see him as the presumptive nominee.  So now it is time to start thinking seriously about what a Trump presidency would mean.  Anyone who cannot imagine relatively benign outcomes simply lacks imagination.  Here are three paradigmatic scenarios viewed from the end of Trump’s first term.  The question for voters as they begin to weigh Mr. Trump as a general election candidate is how they view the relative probabilities of each.

1. America made great again: Trump succeeds as figurehead and negotiator

As Donald Trump steamrolled his way to the Republican nomination and then the presidency, many wise men warned of the end of the republic. The truth has been less sensational but more surprising: the Donald has been a success.

Trump’s famous bark is much worse than his bite. Yes, his crudeness is excessive, and yes, his forays into racism are an unfortunate misstep in our country’s long, slow struggle for meaningful equality. But, as the man himself says, lighten up! By leading Congress to build the Great Southern Wall and sharply restrict low-skilled immigration, Trump has restored a sense of national solidarity bigger than any racial differences. Just as restricted immigration from 1920-1965 strengthened America’s sense of itself, assimilation in the 2020s and beyond will be about growing together. Cosmopolitan elites are disappointed America won’t be all things to all people, but our newfound appreciation of American greatness is good news for ordinary working class people of all races.

On domestic policy, Trump has taught America the art of the deal. He scrambled seemingly immovable partisan lines of conflict and forced seemingly unattainable compromises. Obamacare is dead, long live Trumpcare! Hardly diametric opposites, of course, but Trump’s version can adapt with support from both parties far better than its predecessor. We have an overhauled tax code, and if it doesn’t solve our long-term fiscal problems, well, Mr. Trump never claimed to be a miracle worker. Reasonably balancing the needs of business and low-income households is nothing to sneeze at. Across the administrative state, Trump has used a light touch and left the details to an able crew of pro-market economists, with fine results.

Trump’s foreign policy record has been the biggest surprise for the naysayers. He has substituted epithets for drone strikes wherever possible, and the sky hasn’t fallen. Precisely because other world leaders judged him crazy, our allies have done more to provide for global defense and containment of ISIS—just as Trump said they should. Trump’s swaggering engagement with Putin and others has sustained widespread peace, at least for now.

As President Trump likes to frequently remind us, “Haters gonna hate.” And our dear, unconventional leader gives his detractors plenty to pick on. But as he launches his reelection campaign, it seems hard to believe that anyone can mount a serious challenge. It’s morning in America again—a Great, Huge morning, if we’re being honest. Despite the smart set’s lingering reservations, we shouldn’t look a gift-horse’s ass in the mouth.

2. Congress made great again: Trump’s failure and the return of America’s first branch

As Donald Trump rolled to victory over what seemed to be the corpse of the old Republican Party, he promised that nothing would slow him down in his quest to remake the country: no party, no faction, no intransigent Congress of losers. As Trump’s reelection bid is overshadowed by his impeachment trial, the dominant mood is, understandably, schadenfreude. But, more importantly, the resurgence of the GOP and of America’s Congress as forces to be reckoned with should inspire a renewed appreciation for the genius of America’s Constitution, which has proven far stronger than even Trump’s braggadocio.

From his Inauguration Day onward, Trump’s willingness to flout the limits on executive power proved too brazen for even the notoriously divided Congress to ignore. Whereas Presidents Bush and Obama at least offered fig leafs for their executive power grabs, Trump thought that his unconventional base of support put him above all that.

The First Branch begged to differ. Partisan differences took a back seat to institutional prerogatives—and, wonder of wonders, Congress rediscovered its spine, passing a bevy of laws over Trump’s vetoes and thereby diminishing his ability to dictate the agenda. Members of both houses made it clear they were ready to meet unlawful actions with impeachment, and we will soon see whether they make good on that threat. Whatever the result, Trump is now a wounded animal.

Historians will rightly rank Trump among the worst of America’s presidents, alongside Andrew Johnson and John Tyler—the only previous incumbent to try and fail to win his party’s nomination, who will soon be glad for Trump’s company. But as we look ahead to the 2020s, it is hard to avoid feeling that he has done America a great service by unjamming a stagnant government and providing an object lesson in the dangers of our past trajectory. Congress is great again, and that will last well beyond the failed reign of King Donald.

3. Just sad: How Trump exploited American democracy’s weaknesses

Summer 2015 was an innocent time: many of us were outraged that media would give Donald Trump the time of day, so obvious was it that he was beneath even the degraded dignity of American politics. Now we know: if it screeds, it leads, and not only in irrelevant TV ratings. The country was hypnotized by Trump’s showmanship, and he has been the ringmaster of American politics ever since. Nobody has yet discovered a way to dislodge him.

During the Trump years, most of us have learned H.L. Mencken’s definition of democracy by heart: “Democracy is the theory that the common people know what they want, and deserve to get it good and hard.” The humor has drained away as “the common people” turn their anger toward a growing list of scapegoats when things go wrong. We all get it now, in both senses.

Over and over again, Trump has proved capable of wielding his unconventional base of support to run over institutional barriers we previously thought sacrosanct. He has brought the trend of executive branch consolidation of power, which was clearly present during his predecessors’ terms, to its logical end, and few of history’s absolute monarchs could hold a candle to the power he now wields. Even as he has performed this evisceration of our constitutional structure, he has continued to nostalgically sing the praises of America’s founders. Anybody who expected that he’d eventually have to start making sense to retain his support has been sorely disappointed.

As Trump goads his supporters on in their occasional bursts of hatred and even violence, the Founders’ fears that unmediated democracy would turn into mob rule ring in our ears. Any day now, our right to criticize the government may become just another parchment barrier to fall in the wake of Trump’s overgrown FBI or his legions of unhinged supporters. Four years on, it isn’t too late for America to wake up from this nightmare and return to its constitutional roots, but it’s getting harder and harder to imagine how to do it.

      

 

 

Event Information

In August 2015, the Environmental Protection Agency (EPA) finalized its state-specific emission guidelines for carbon dioxide emitted from existing fossil fuel-fired electric generating units. On February 9th, the Supreme Court ordered the Obama administration not to take any steps to carry out its Clean Power Plan, a development that may delay progress on the rule until after the president leaves office next January. In addition, the court’s stay may indicate legal hurdles facing parts of the rule. EPA, states, and utilities must decide how to proceed. EPA has given states significant flexibility in how they achieve their targets, and states can continue work on implementation plans that balance the objectives of compliance, reliability, affordability, cross-state coordination, safety, and efficient long term low-carbon capital investment in the sector. States’ nearer term strategies could influence the evolution of the electricity sector for decades to come, well past the targeted 32 percent reduction in 2030 emissions from the sector relative to levels in 2005. This raises the question of how states should keep the potential for deeper decarbonization post-2030 in mind as they make plans for the next decade or so.

On February 22, Economic Studies at Brookings hosted an event to discuss theses issues. Presenters and panelists took questions from the audience.

Video

• States’ implementation of EPA’s Clean Power Plan: What are the prospects and options?

Transcript

• Uncorrected Transcript (.pdf)

Event Materials

• 20160222_epa_cpp_transcript

      

 

 

Water cooler talk today is naturally, and justifiably, focused on the stunning New Hampshire primary victories of Donald Trump and Bernie Sanders. But another momentous piece of news that came out Tuesday evening should not be neglected: a divided Supreme Court stayed the Clean Power Plan, the Environmental Protection Agency (EPA) rule that is the centerpiece of the Obama administration’s climate plan. That means that no part of the plan, which the EPA formally finalized in October, will come into effect until after all of the legal challenges to it have been resolved.

If the Clean Power Plan is ever to become effective, the EPA will now have to win in the D.C. Circuit and then, it is safe to assume, at the Supreme Court. Even if expedited, that process will take enough time to push back the rule’s first deadline scheduled for September 2016. Most likely the Obama administration can no longer realistically hope to take responsibility for much of the plan’s implementation before it leaves office in January 2017.

The stay comes as a surprise, in large part because in its final rule the EPA delayed the effective date of the Clean Power Plan’s substantive emission reduction requirements until 2022 (back from 2020 in the original proposal). Commentators thought that delay was largely added to make it difficult for states bringing legal challenges to argue that they would be irreparably harmed by leaving the rule in place as the rule worked its way through the legal process, thereby rendering a stay unnecessary.

The D.C. Circuit bought that argument, but the five conservative justices of the Supreme Court did not. Their brief order does not elaborate on their thinking, but the result in another recent environmental case probably weighed heavily on their minds. Last summer, a divided Supreme Court decided in Michigan v. EPA that the EPA had been unreasonable in treating costs as irrelevant to its decision to regulate power plants’ emissions under a particular section of the Clean Air Act. The headline from the ever-reliable SCOTUSBlog: “Opinion analysis: Power plants stymie smokestack controls.” Except they hadn’t, because it turned out that having the Supreme Court hold that the procedure that produced the rule was fatally flawed was not enough to get the rule vacated: the D.C. Circuit ruled that, given the advanced state of implementation and the likelihood that EPA may have been able to justify it properly, simply leaving the rule in place was the appropriate course. As Michael Greve noted before Tuesday’s case, the state and industrial challengers to the Clean Power Plan pointed this out in the “Chief-they’re-laughing-at-you opening paragraph” of their request for a stay.

More generally, the Supreme Court’s granting of a stay comes as a major shock to those who thought that, at the end of the day, all of the talk of the Clean Power Plan’s legal defects would turn out to be a minor and passing distraction along the way to realizing America’s destiny as a global leader in tackling climate change. As I wrote back in August, that attitude did not ever make much sense: even with some modifications to make the final rule less tenuous than the proposed version, the Clean Power Plan still rested on some extremely creative—and many would say dubious—legal interpretations of the Clean Air Act. As a result, there have always been dark legal clouds hanging over the rule, and yesterday’s decision can be thought of as the first drizzle from them, making it harder to believe that they will simply blow over without incident.

That means advocates and policymakers committed to addressing climate change must shift their emphasis toward political sustainability. No climate policy is worth the paper it is printed on if it does not have political support broad and deep enough to withstand some buffeting. The chances that America could commit itself to a climate policy, not just for a single presidency but for many decades, without a clear congressional mandate to do so has always been hard to believe, and today it is harder. Pens and phones are nice, but they are no substitute for hard-won compromise forged in the messy politics of the legislature. That is not a message that our presidential candidates are eager to embrace, and not one that many Americans seem to want to hear—up to and including members of Congress themselves! But, inconvenient as it may be, it is loud and clear enough for those willing to face up to recent developments.

      

 

 

Long ago, back in October 2015, as John Boehner was finding his way out the door to the cheers of the right wing of his conference, he shepherded through a budget deal that included a suspension of the debt ceiling through March 2017. That was the right thing to do for both his country and his party: it meant that the new Speaker could begin his tenure without having to fight a losing and possibly disastrous battle, and it meant that 2016 would bring a welcome respite from our strange national debt ceiling bloodsport, letting both parties focus their energies on our presidential political bloodsport instead.

But like a sports team front office, signing free agents and making trades to improve their positioning in the offseason, Representatives Jeb Hensarling (R-TX) and Sean Duffy (R-WI) have done a bit of maneuvering while the nation’s attention has turned to the presidential race. The Chairmen of the House Financial Services Committee and its Oversight subcommittee, respectively, they released a non-committee-approved staff report this week, “The Obama Administration’s Debt Ceiling Subterfuge: Subpoenaed Documents Reveal Treasury Misled Public in Attempt to ‘Maximize Pressure on Congress.”

The headline finding is that the Treasury Department and Federal Reserve Bank of New York (FRBNY) have been engaging in coordinated contingency planning for a cash flow emergency caused by a failure to raise the debt ceiling since March 2011. Hensarling and Duffy aren’t saying that this planning was inappropriate—far from it, actually, they think it is clear that the Treasury ought to be ready to prioritize debt service payments should we run hard up against the debt ceiling. Rather, their complaint is that the Treasury has obfuscated and misled Republican congressional leaders about the state of these efforts so as to be able to claim that utter disaster would ensue if the debt ceiling goes unraised and the Treasury runs through all of its operating cash.

This is far from a petty complaint. I have argued that in any debt ceiling impasse, close and honest communication between congressional leaders and the administration would be crucial in the effort to transform the incident from a blow-up to a hiccup. To the extent that Treasury misdirection has eroded its credibility in the eyes of congressional leaders, it may have created an obstacle to safely working through debt ceiling impasses, and for that it deserves some real blame. All the more so if, as the document says, it not only failed to be forthcoming itself but also actively suppressed communication between the FRBNY and Congress.

But, supposing the report’s charges are correct, the implications are nevertheless rather ambiguous. Defenders of using the debt ceiling as a bludgeon in inter-branch budgetary hardball, like the Mercatus Center’s Veronique de Rugy, assert that the upshot of Hensarling and Duffy’s report is crystal clear: Republicans should feel free to take a hard stand on the debt ceiling without any fear that doing so will blow up the global financial system. If the government has to seriously tighten its belt in such a situation, all the better.

That is a serious over-reading. Just because the Treasury has done some planning that it hasn’t allowed Congress to fully observe, that doesn’t mean that it is perfectly prepared to deal with the exigencies that would arise should we run hard up against the debt ceiling. Saying so is like assuming that North Korea must have a functional nuclear triad because it has prevented outside inspectors from overseeing its weapons programs.

As I have previously noted, this debate about the Treasury’s ability to prioritize features a strange inversion of the usual roles for Democrats and Republicans arguing about the federal bureaucracy. Democrats, usually defenders of administrative competence, aver that both our civil servants and the technology available to them are woefully inadequate to ensure any smooth response to hitting the debt ceiling and warn that even debt service is far from a sure thing. Republicans, usually quick to scoff at the idea of Washington bureaucrats doing their jobs efficiently and effectively, apparently have supreme confidence that the Treasury Department would perform flawlessly in such an unprecedented situation and dismiss any worries about tragic malfunctions.

The stakes of this positioning are straightforward enough: the less we think debt ceiling hardball is likely to bring true financial or constitutional disaster, the more acceptable it is as a tool for forcing spending cuts a la summer 2011. This same dynamic is at work when Republicans try to take debt default completely off the table through the Default Prevention Act, which passed the House but has not yet been taken up by the Senate. Arguably, the Republicans’ offseason moves marginally improve Congress’s negotiating position by making it slightly more embarrassing for the administration to invoke the specter of apocalypse in rejecting debt ceiling negotiations.

But at the end of the day, it’s hard to imagine that tweaking either the law, if the Default Prevention Act should pass, or the public’s understanding of Treasury’s capabilities will really turn the debt ceiling into a winning device for fiscal restraint. The uncertainty around what would happen if the ceiling goes unraised remains too high, even if there are some glimmers of hope that things wouldn’t be a total disaster. And that means that the president’s hand is just too strong in debt ceiling confrontations to make them anything other than moments of empty speechifying for Congress.

We now return you to your regularly scheduled 2016 politicking…

     

 

 

So it’s come to this: time to seriously consider the possibility of Donald Trump winning the Republican nomination. What happens then? Here’s a doozy of an idea: a viable third-party candidate…or even a wholesale shakeup of what we mean when we say “Republican” and “Democrat.”

Crazy, right? Well, neither possibility is as far-fetched as you might think.

No candidate outside of the major parties has broken one percent of the popular vote in the last three elections, but four of six presidential elections from 1980 to 2000 featured impactful outsider candidates:

• In 2000, Ralph Nader infamously played spoiler to Al Gore by garnering 2.7 percent of votes, including nearly 100,000 in pivotal Florida where Gore lost by the tiny margin of 537. The effectiveness of Nader’s campaign in convincing significant numbers of voters that the two parties were doppelgangers, especially when it came to the treatment of big business, put Democrats on notice that they needed to attend to their left flank.

• Speaking a businessman’s outsider language that somewhat resembles Trump’s, H. Ross Perot became a phenomenon in 1992, winning almost 19 percent in November. He partially reprised his earlier run in 1996, establishing the Reform Party and winning 8 percent. Perot probably did not swing either election (since his supporters were largely irregular voters and he did not “steal” disproportionately from either party), but his participation changed the tenor of those campaigns, and perhaps even helped lay the groundwork for the dramatic, anti-Washington Republican victory in the 1994 midterms.
  
  
• Most germane to a Trump 2016 scenario is John B. Anderson, the moderate Republican Illinois House member who broke from his party in April 1980 to run a “National Unity Campaign.” Anderson, who had run a surprising but hopeless third place in the early Republican primaries behind Ronald Reagan and George H.W. Bush, rejected Reagan’s doctrinaire, ideological conservatism and sought to occupy the political center. By June Anderson was polling at 26 percent and looked genuinely viable. His high-minded, detail-oriented political style favorably contrasted with the cynical, partisan feel of normal campaigns, and, at his peak, he was the top choice of college graduates, professionals, and suburbanites. But the campaign wore off Anderson’s shine. Given the heights of Anderson’s promise, it seemed a disappointment when he finished with just 6.6 percent of the national popular vote—though clearly that level of support would be more than enough to swing many elections.

So who might take up an independent run in 2016—and would they have a chance at actually winning, Duverger’s law notwithstanding?

The greatest object of speculation along these lines is Michael Bloomberg, whose wonkish and nonpartisan success as Mayor of New York from 2002-2013 endeared him to America’s business community and to many self-identified centrists. Bloomberg’s immense wealth, impressive record as an executive in both business and politics, and ability to attract socially liberal but fiscally conservative Democrats would make him a formidable third party force to reckon with. Bloomberg (soon turning 74) has consistently deflected suggestions that he run, saying he doubts that a “short, Jewish, divorced billionaire” could be electable. He has a point. Then again, he’s apparently been taking the electorate’s temperature, so it’s not out of the question.

Could one of Trump’s former rivals for the Republican nomination challenge him as an independent, a la John Anderson, claiming that Trump’s demagoguery effectively hijacked the party’s primaries while betraying its historic ideals? To have any traction at all in this effort, a candidate would probably need to perform fairly well in early primaries while emphasizing his un-Trumpiness. Could John Kasich or Chris Christie play that role? One could imagine either governor styling himself as the true Republican standard-bearer even as much of the party has succumbed to madness.

A more intriguing (and more unprecedented) possibility would open up if Trump’s anti-Latino rhetoric continues to escalate and makes his candidacy strongly alienating to non-white voters. A Trump candidacy could move the party decisively toward being anti-establishment, anti-intellectual, and race-oriented.

At that point, a Hispanic Republican might be in a position to offer a forward-looking, inclusive brand of center-right politics as an alternative to Trump. A rising star (e.g., Carlos Curbelo) or second-tier figure (e.g., Brian Sandoval) might try this maneuver to stand for important principles and raise their profile. But most exciting would be if, a few primaries in, Senator Marco Rubio sees a Trump victory coming down the pike and decides to peddle his relatively sunny vision of a renewed America as an independent. Many factors make this unlikely: Rubio’s hopes of waiting out an overdue Trump implosion would push against risking defection and might make it impossible to time the daunting logistics of an independent campaign, and the man himself seems like a devoted partisan with a bright Republican future even in defeat. Still, it would make a remarkable story if he forsook his image as an earnest team player, started going off script, and ran full speed toward a working-class-focused moderate platform, professing his optimism about America’s multicultural future against Trump’s insistence that all Americans do is lose. Even in defeat, an independent Rubio bid could show the futility of defining the GOP exclusively as an anti-establishment, anti-intellectual, and race-oriented coalition and force the party in 2020 to take a very different tack.

Could Trump’s extremism, coupled with Hillary Clinton’s steadfast (and recently amplified) liberalism, create a centrist political vacuum in 2016, causing a real shakeup in our current partisan alignments? What it meant to be a Republican or a Democrat was very different in 1860, 1910, and 1960, and there is no reason to expect the shape of our party system to remain stubbornly fixed throughout America’s third century.

Any three-way race for the presidency would raise the specter of a sweeping realignment. If an independent bid helped Trump to win the White House, those who found themselves yearning for the old ways would have to think seriously about how the surviving party establishments should cooperate to cabin and eventually defeat him.

In the presidential scramble of 2016, who knows but we might catch a glimpse of a truly unfamiliar political future.

     

 

 

Editor’s note: On Friday, Brookings published the fourth installment of its Paris Climate Conference series, featuring Philip Wallach. Along with the audio, the text of his remarks is reproduced here.

Hello, I’m Philip Wallach of the Governance Studies Program and Center for Effective Public Management here at Brookings. Several of my colleagues who have long experience studying climate negotiations have given big-picture looks at what the Paris climate talks are intended to accomplish, and what they’re likely to accomplish. What I want to do is give a comparatively parochial view by thinking in terms of U.S. domestic policymaking, which is my area of expertise. Looking across the Atlantic from the banks of the Potomac tends to make me somewhat more skeptical about the prospects for success, or at least to focus more on the challenges that will have to be overcome.

That’s because our country’s policymaking process has historically not led us to take international leadership on the climate issue. Why not? Well, many people might summarize the issue as: Republicans. The Republican Party denies the reality of global climate change, which means it is going to obstruct any costly efforts to mitigate it through emissions reduction. That’s obviously a big obstacle, but I’d say it’s often overstated. Republicans have supported in the past and could support in the future plenty of policies that would line up with their other priorities and would productively get at global climate change, maybe all the way up to a carbon tax if it could be included as part of a pro-growth tax reform package. The GOP doesn’t necessarily need to have a moment of truth in which they decisively repudiate all of the dubious assertions about the non-existence of anthropogenic global climate change to become productive players. Yes, as long as Jim Inhofe, the cantankerous senior Senator from Oklahoma remains the Chairman of the Environment and Public Works Committee, it is hard to see Republicans executing a turn, but there are already murmurs of a new direction at various levels of the party.

More generally, I’d say America’s problem is: Congress. Remember, even when Democrats controlled both chambers and the White House back in 2009 and 2010, they couldn’t find their way to putting in place an overarching climate policy, and it’s hard to make the case that Republican obstructionism was the crucial barrier. Back in 1997, the Senate voted 95-0 for a resolution disavowing any intention to ratify the Kyoto Protocol if it would impose significant and binding costs on the U.S. So Congress as a body has neither provided well-targeted climate legislation nor has it shown much willingness to concede any American sovereignty to an enforceable international climate treaty. And Congress has control over a number of constitutional levers that are hard to imagine working around: the power of the purse, the Senate’s ratification of treaties, and of course the power to craft new legislation.

Considering the magnitude of the Congress problem, it is actually remarkable how much the Obama administration has been able to do to address greenhouse gas emissions. The main way they’ve done that is by teaching an old law a new trick: with the blessing, or at least the acquiescence, of the Supreme Court, the Environmental Protection Agency has interpreted the Clean Air Act to support far-reaching regulation of carbon emissions from automobiles (now a done deal); trucks and airplanes (now in progress); and power plants. That last one, in the form of the Clean Power Plan, is the centerpiece of American climate policy headed to Paris. Using the Clean Air Act—and therefore proceeding without any new congressional help—the EPA will superintend a system of state-by-state emission reduction plans. That plan will have teeth from 2022-2030, but its formal finalization this past October was followed by a bevy of lawsuits, not to mention angry political rhetoric from governors around the state. Some of the legal and political complaints are facile, but many of them have some real merit, and so they are going to hang over the Clean Power Plan like a dark cloud for at least the next couple of years—as will the possibility that the 2016 election will produce a Republican President determined to reverse the EPA’s progress one way or another.

The Obama administration has by and large put those concerns out of mind, proceeding under the assumption that the Clean Power Plan will stick (or perhaps, in the alternative, that they should get as much leverage out of it as possible before it gets knocked out). It is the single largest component in the country’s promises in Paris, and negotiators convey unshakable confidence in America’s willingness and ability to follow through on it. All this while various Republican legislators, including Senate Majority Leader Mitch McConnell, have addressed foreign leaders with the message that Congress is not on board with the Obama administration’s plans.

What are the implications of having U.S. political leaders courting open conflict even as the country ostensibly makes a decades-long commitment? This American conflict is shaping the whole architecture of the Paris agreement, because the core of the negotiated structure must be able to function without U.S. Senate approval unlikely to be forthcoming. But President Obama has said that he thinks some parts of the agreement will need to be binding—and it isn’t yet clear how he will square that with circumventing the Senate. Senator Inhofe, for one, is not going to go quietly; he issued a declaration stating that “The U.S. Senate will not be ignored. If the president wishes to sign the American people up to a legally binding agreement, the deal must go through the Senate. There is no way around it.” On the key issue of providing direct financial support for developing countries’ investments in renewable energy, it is hard to see how Congress could be cut out of the process. Somehow, America will have to find its way to a climate policy that has at least minimal bipartisan support that allows it to weather changes in the political winds.

Of course, this isn’t a uniquely American problem. Australia and Canada have had high-profile reversals of climate commitments when conservative governments came to power. Last weekend the New York Times had a story about how even Denmark, a world leader in renewable energy, is reeling in its green spending somewhat as a new conservative government takes power.

The bottom line: when thinking about climate change policy, one must consider sustainability in two senses. Obviously, we must consider the sustainability of the world’s energy consumption patterns given the realities of a changing climate. But we are also going to have to get serious about political sustainability: engineering policies that are robust to shifting political coalitions and that can lock into place durable commitments. For all the progress that has been made to move toward a victory in Paris, I’m not sure that we’ve adequately addressed this yet; it might well be the hardest part of climate policy.

     

 

 

Ohio’s Issue 3, which would have made the bellwether state just the fifth in the country to provide a legal market for marijuana, was decisively rejected by voters on Tuesday by an almost 2-1 margin. (For background on the peculiarities of this proposed state constitutional amendment, see my post describing the audacious business plan of its backers, united as “ResponsibleOhio.”) As John Hudak explained last night, it’s wise to resist drawing any sweeping conclusions from this vote: given the characteristics of the Ohio off-off year electorate, it was going to take an extraordinary turnout effort, especially among younger voters, to secure a win for legalization. Despite the hard work of Issue 3’s most recognizable champion, Buddie the marijuana mascot, as well as celebrity ads from the likes of NBA legend Oscar Robertson, we can now say that ResponsibleOhio made an epic miscalculation in imagining that they could control Ohio’s voter-initiated constitutional amendment process so brazenly.

Does that make Tuesday a good day for direct democracy? After all, predictions that voters in an off-cycle could be overwhelmed by moneyed interests—ResponsibleOhio was reported to be targeting $20 million in campaign spending going into the vote—turned out to be wrong. Ohioans, or at least those that turned out for this election, proved resistant to manipulation, demonstrating the integrity of the ballot initiative process.

There is something to that, but it is far from the whole story. For one thing, in spite of the clear margin of defeat for Issue 3, it is extremely difficult to say why the measure failed. Was it simply because of the composition of the voting electorate? Was it the unprecedented big-business orientation of ResponsibleOhio’s approach to legalization? Was it just that Ohioans don’t want legal marijuana in their heart of hearts, regardless of what they tell pollsters? We will never be able to say for sure, and so narratives about “voter integrity” writ large are very hard to evaluate.

There is also a case to be made that it was Issue 3’s opponents who managed to successfully manipulate the initiative process successfully. First, they managed to get Issue 2, titled “Anti-monopoly amendment; protects the initiative process from being used for personal economic benefit,” on the ballot through the legislature. Second, because the ballot board itself was hostile to Issue 3, they managed to give it a distinctly unflattering title: “Grants a monopoly for the commercial production and sale of marijuana for recreational and medicinal purposes.” Because voters have an instinctive dislike of monopolies, Ohio State law professor Daniel Tokaji argued that they were essentially faced with two questions on Issue 2 and Issue 3 respectively: “Do you like puppies?” and “Do you hate puppies?” At an event last Friday, he very confidently predicted that, given these framings, Issue 2 would pass while Issue 3 would fail, and he was correct.

Tokaji also warned that Issue 2 would effectively be empowering the Ohio Ballot Board—which is dominated by the Ohio Secretary of State, a partisan elected official—to further manipulate ballot issues in the future. With Issue 2 passed and Section 1e of Article II of Ohio’s constitution amended, the Ballot Board is now in a position to judge whether a proposed amendment would “would grant or create a monopoly, oligopoly, or cartel, specify or determine a tax rate, or confer a commercial interest, commercial right, or commercial license to any person, nonpublic entity, or group of persons or nonpublic entities, or any combination thereof, however organized, that is not then available to other similarly situated persons or nonpublic entities.” If they decide yes, then voters must simultaneously pass two ballot issues to make the change: one to certify that they would like to override the anti-monopoly provision, and one for the substance of the amendment itself. Presumably, the former would be difficult to overcome, meaning that the Ohio Ballot Board is now in a much stronger position to hinder passage of constitutional amendments it does not like.

In other words, direct democracy in Ohio just got a little less direct and more mediated. For strong believers in the ability of voters to think cogently about issues on their own and effect positive changes through direct political action, that will seem like a loss. For those of us who are skeptical of direct democracy and in most instances would prefer legislatures to be the forum for political decision-making, perhaps that doesn’t sound so bad.

The four states that have legalized recreational marijuana to this point (Colorado, Washington, Alaska, and Oregon) have all acted through voter referenda. Importantly, Colorado acted through state constitutional amendment while each of the other three used initiative processes that ended up amending their state statutory codes rather than the state constitution; as a result, it will be somewhat more difficult for Colorado legislators to make any adjustments to their policy framework if doing so becomes necessary. Ohio’s strange system under the ResponsibleOhio regime would have been similarly inflexible.

It is possible that we will soon see a legislature—Vermont’s—tackle the question of marijuana legalization head-on, rather than waiting to be forced by voters. For an issue with as many moving pieces as creating a legal and regulated marketplace for marijuana, there are good reasons to think that legislatures have some natural advantages, and we will see if Vermont’s statehouse takes the chance to become a national leader.

Regardless of whether that happens, though, marijuana legalization is deeply wedded to direct democracy mechanisms for the moment, with 2016 ballot initiatives likely to pose a critical test for the movement.

     

 

 

My paper last week on “Minimizing debt ceiling crises” inspired a lengthy, dyspeptic reply from Joe Firestone, a noted champion of the platinum coin plan to make the debt ceiling irrelevant. Though Firestone and I agree that our country’s recent debt ceiling showdowns are both fruitless and potentially destructive, a yawning chasm separates our views of America’s contemporary fiscal and monetary system. I am a fiscal conservative who thinks it is imperative that the federal government find a way to match its spending and its revenues in coming decades; Firestone, as he makes clear in a short e-book, believes that this whole way of thinking is deeply misguided and even sadistic. So I have no expectation that we will be able to bridge our gap, but I am grateful for the opportunity to clarify my assumptions that his post gives me.

Firestone criticizes my misgivings about the platinum coin option’s legitimacy as mere “conjecture,” and argues that minting trillion dollar platinum coins (or much higher values—more on that later) for seignorage purposes would be legitimate in both senses of the word: a valid and defensible interpretation of the law, and accepted by the public as a legitimate government action. Of course I must plead guilty to making conjectures—it is impossible to say with certainty what would happen if the government took such a radically unprecedented step. But it seems to me that my conjectures require much less imagination that Firestone’s.

First let’s consider the law. Whereas I characterize any strategy of minting high value platinum coins as exploiting a legal technicality, Firestone thinks “one person’s ‘legal technicality’ is another person’s plain language in the law.” The language at issue is in 31 U.S.C. §§ 5111 and 5112(k) and does, on its face, appear to give the Secretary of the Treasury basically unlimited discretion to mint platinum coins of any denomination. All members of Congress who voted for this bit of legal text have averred that it was meant to facilitate numismatic offerings rather than a fundamental shift in our monetary paradigm—but that doesn’t worry Firestone, who says, “It is of no moment that no individual Congressman intended to give the Executive such broad authority.”

One can make this sort of plain meaning textualist argument, but there is almost no serious student of statutory interpretation who would condone this level of indifference to the larger statutory context and purposes of the legislature. When the executive branch and judiciary seek to make sense of legislative enactments, they ought to do so with some sense of comity for the legislature. Finding text that can be manipulated and turned to purposes wholly alien to the legislators who enacted it is a gross distortion of our system of separated powers.

Firestone and other platinum coin proponents have a response: they say that the use being made of the debt ceiling by hardline opponents of government spending is also a distortion, and one bad turn deserves another, at least during our current era of dysfunction. But I reject this form of reasoning, which presumes things are worse than they really are, pushes us toward a downward spiral of tactical maximalism, and makes it difficult to find our way out of the cycle of dysfunction. If our founding ideals of separated powers and the rightful place of the legislature are to be meaningful, we must be willing to respect them even—or especially—when we find Congress to be obnoxious.

This brings us to the second kind of legitimacy. Even if you think that minting the coin would be legally legitimate in the sense of having a defensible statutory pedigree (on the crude plain meaning grounds advanced above), there is no reason to think that the American public would be inclined to accept it as substantively legitimate. (The divergence of legality and legitimacy, especially during crises, is a major theme of my book.) Why would they hesitate to do so? Well, to state the blindingly obvious, the platinum coin strategy is really weird. It asks Americans to reject all of their most basic intuitions about the government and money. Former Representative Mike Castle (R-DE), who played the biggest role in putting the platinum coin law on the books, nicely summed up what the reaction would be likely to be back in 2013. He said the plan is “so far-fetched and so black helicopter-ish a type of methodology of trying to resolve something like this that I think the public would totally scoff at it…It would be an artificial way of trying to create money and I think everybody will see that.”

Now, public scoffing is unlikely to persuade Firestone, since he sees widely held commonsense ideas about public finance and money as totally wrongheaded and wants to completely repudiate the idea of a budget-constrained government. And I have to be careful here, because I, too, want to reject a widely held intuition about public finance—namely, the idea that we should take a courageous stand against debt by refusing to raise the debt ceiling, an incoherent idea that is nevertheless supported by a wide swathe of the public. But even so, I have to say that Firestone’s idea for a Treasury-led transformation of our monetary system strikes me as deeply undemocratic.

As if to prove just how far-reaching a change the platinum coin maneuver is meant to effect, Firestone tells us that “if the President is wise” he will push not just for a measly $1 trillion coin, but rather for a $100 trillion coin, which would effectively declare the debt ceiling null and void for the foreseeable future. By Firestone’s lights, this move would not be at all inflationary, since that money would never circulate and could be used to support government spending only to the extent that Congress was willing to appropriate money.

That seems…extremely dubious. The idea that we would simply move some numbers around in some electronic ledgers and emerge less constrained by our debt, but without any consequences for the value of our currency does not compute, at least for me—it is a story about price inflation that never once mentions expectations. How could we enter a world in which government debt accumulation would have no negative consequences (for taxes or otherwise), but Congress would nevertheless refrain from spending money in an inflationary way?

Firestone and his colleagues have a correct and unusual understanding of the fact that money is a social construct. That makes their writings genuinely interesting to work through, unsettling in the best sense, because they are willing to imagine how radically different monetary systems might serve social purposes. But they seem to have little sense of how being a consensual social construct makes money a particularly delicate, even fragile, social convention. Instead, they have the sense that they can boldly manipulate the parameters of the system with great positive effects and no important backlash. They would confidently lead the public through the looking glass into a brave new monetary world, and are certain that we would all be better off for the change (with the possible exception of some privileged few well served by the current system—there is a pronounced populist edge to all of these writings, which assume the only apple carts upset by their monetary revolution-in-the-making would be those of the very wealthy).

But for better or for worse—I think better—our democracy doesn’t function that way. To say the public is not ready or willing to step through that looking glass would be an understatement; few people would even be able to comprehend the practicalities of the new regime, and most would immediately and decisively reject the change as illegitimate. America, and I think any representative democracy, is more little-c conservative than this. Firestone throws around that word as an epithet for cowardliness; to my ear, it sounds like a valuable safeguard against foolhardiness

Firestone twice quotes one of my paper’s main takeaways: “A good rule of thumb for executives in troubled times: if you can help it, don’t do anything that can plausibly be characterized as a coup.” He says that so long as Congress holds the constitutional purse strings, nothing the executive does can be regarded as seriously coup-like, and so few Americans would have a strong negative reaction, even to a $100 trillion (that’s $100,000,000,000,000…or roughly 40% of the value of all of the world’s wealth) platinum coin. All I can say is that he and I will have to agree to profoundly disagree on that question. I’m afraid that, like many others, I could not think of such a maneuver without thinking of Dr. Evil.

I’ll end on a conciliatory note. The platinum coin strikes me as just about the worst of all of the clever ideas on the debt ceiling precisely because it relies on creating a physical object that people can regard as both profane and ridiculous. And so I don’t see why other potential back-against-the-wall weird ideas need to necessarily be subject to the same analysis. As I say in a short piece over at U.S. News & World Report that runs through some other options, if Treasury were in extremis “it might make sense to consider some of the more technical ideas mentioned—the more arcane, the fewer blog posts written about them, the better.” Firestone advances one such idea: Treasury issuance of consols, or perpetual bonds. He and others think that these could bring in revenue without counting against the debt ceiling (see comments of this post for arguments to that effect). I’m not at all clear on the legal details of that proposal; my first impression is that with the current statutory architecture of 31 U.S. Code §§ 3101, 3102, and 3121 they probably don’t provide a solution without some further statutory change. But, precisely because there is a historical precedent for consols, and because they represent something far short of a total transformation, they represent a far more fruitful possibility to explore.

Happily, as I write this, it is looking more and more like we may escape the Obama presidency without a debt ceiling crackup—which I would certainly take as vindication of my belief that radical “solutions” to our debt ceiling showdowns may well be worse than the problem. We reform-minded fiscal conservatives can hope that next time around we might replace the debt ceiling with some more useful fiscal control mechanism, but in the meantime we can be glad that this episode did not provide the occasion for revolutionary and uncertain monetary regime change.

     

 

 

Once again, our debt ceiling problem is bearing down on us. As usual, there are reasons to expect a last-minute resolution to avert any kind of serious meltdown. But this time, our debt ceiling shenanigans are crossed with a chaotic leadership scramble in the Republican-controlled House of Representatives, making the safe outcome seem far less certain. Who knows what the House is capable of right now—and so perhaps now is the time for some bold action from the executive branch to end this cycle of dangerous debt ceiling confrontations once and for all? In a new Brookings white paper issued today, I argue that it is almost certainly not.

For anyone just tuning in, here’s a quick review of our current situation. After having been suspended for most of 2014, America’s debt ceiling kicked back in as of March 16, 2015. On that date, the statutory limit was reset to our current level of debt, north of $18 trillion. Since then, the Treasury Department has been funding America’s deficit spending through a series of accounting maneuvers known as “extraordinary measures.” Those are about to run out, with Treasury Secretary Jack Lew estimating the date as November 3, and warning that a failure to raise the debt ceiling before then could result in a catastrophic default.

Meanwhile, on September 25, Speaker of the House John Boehner announced his intention to resign from the speakership, and from Congress. His presumed successor, House Majority Leader Kevin McCarthy, withdrew himself from consideration for the speakership on October 8, citing his inability to bridge the growing gap between hardline conservatives and the rest of the Republican caucus. It is unclear whether anyone can bridge that gap and therefore unclear when Republicans will coalesce around a new leader. Boehner lingers as a lame duck and has sensibly indicated that he would like to address the debt ceiling before leaving. He will probably be able to cobble together a majority comprising Democrats and around 40 Republicans to raise the ceiling, perhaps as early as this week.

But should we really trust Boehner’s ability to work this out, given the unfolding and nearly unprecedented collapse of his speakership? Even if we feel sanguine on this front, shouldn’t Boehner’s departure make us worry that a future speaker might not steer clear of a crash?

Fear not, the commentariat is ready to ride to the rescue with a clever if unlikely-sounding solution: the trillion dollar platinum coin! By embracing this zany-but-legal statutory prestidigitation, political observers who fancy themselves hard-headed realists are ready to break this current impasse. And if that sounds a little too banana republic-y for you (which it absolutely should), there are some other gimmicks creative ideas at the ready. Bloomberg’s Matt Levine has become a Latin-spewing promoter of super-high coupon bonds, and for the even more esoterically inclined, there are also workarounds featuring Treasury-sponsored special purpose entities or Federal Reserve-sponsored emergency facilities a la Maiden Lane.

All this is fun, and I don’t want to say it is necessarily counterproductive, but these kinds of flashy maneuvers have a serious and largely neglected downside: reaching for any of these possibilities could instantly heat our long-simmering partisan conflict to a boil. Rather than getting the debt ceiling problem out of the way, they would instead escalate it, possibly to the realm of constitutional crisis.

Executive branch officials need a different mindset to find mundane ways to hold the debt ceiling harmless. Although they have incentives to arouse people’s fear as a means of inducing a compromise before their announced deadline, if that deadline were actually to come and pass without an increase, they should quickly change their tune to minimize the significance of the delay. Along with congressional leaders, they should consistently broadcast the Lannister-like message that “The United States always pays its debts,” characterizing any unusual development as a mere malfunction of our separation of powers, not a constitutional paroxysm.

The paper explains why this strategy of de-escalation is less far-fetched than it might originally sound, and far more realistic than the clever ideas. And it considers how it would work in practice, even in a terrible situation in which the Treasury found itself unable to pay all of the nation’s bills on time. Read the whole thing.

     

 

 

In 2011 and 2013, Americans were treated to debt ceiling showdowns that appeared to bring the nation perilously close to government default and financial implosion—not to mention a full-blown constitutional crisis. As we face another likely showdown in 2015, this chance of disaster still looms. Yet many insiders assume there is nothing to worry about and that it is a near-certainty that the debt ceiling will be raised at the last minute.

In this paper, Philip Wallach argues that with so much at stake, such a dismissive interpretation of contemporary debt ceiling showdowns is dangerous. He explains how officials should pursue ways of escaping this potentially destructive cycle—by removing the ceiling entirely, or by minimizing its riskiness if it persists.

However, Wallach contends there are no clever solutions to this complex problem. While many commentators have offered prescriptions for preemptively dissolving the whole debt ceiling problem, including constitutionally nullifying the debt limit or issuing a trillion dollar platinum coin, no such formula can offer a reliable way out of what is an extremely complex multi-player interaction.  In fact, such proposals are likely to bring on the constitutional crises they are designed to head off.

Unfortunately the ideal resolution of the nation’s festering debt ceiling problem—creating a bipartisan consensus on budgetary reform and then replacing the debt ceiling with more useful fiscal control mechanisms—is unlikely to be politically feasible in today’s climate. Thus, Wallach argues, it is essential that U.S. officials prepare for the worst and consider the possibility of a scenario in which negotiations break down and put the Treasury Department in extremis, with no ability to pay all of the nation’s bills on time while adhering to the statutory debt ceiling.

If the U.S. arrives at a situation in which the Treasury Department has no cash on hand to pay its bills coming due and no more room to issue debt under the statutory ceiling, the government must think clearly about which of its options represents the least constitutionally offensive and the least harmful path forward. Wallach explains that, though there would be no good choices, some options would be less bad than others, with the two best options being (1) prioritized debt service combined with delayed payments and (2) debt issuance above the ceiling. The paper considers what conditions might make each preferable, emphasizing that political particulars would be decisive.

Downloads

• Download the paper

     

 

 

Dear Speaker Boehner,

I was overjoyed to learn that you will be attempting to move a debt ceiling increase before you leave office. This is unquestionably the right thing to do: for fiscal conservatives, for your party, and for your country. Failing to do so would open the door to the possibility that the next Speaker’s tenure would begin with an unwinnable confrontation with the White House resulting, at best, in abject defeat and, at worst, in a constitutional crisis.

Many in the conservative wing of your Republican Party believe that any debt limit increase should be accompanied by significant spending cuts and that refusing to raise the debt limit provides them leverage to obtain concessions from Democrats that would otherwise be unattainable. In the past that was also your position, including during the explosive confrontation of 2011. But the premise behind this strategy is unsound. Though it may seem that needed increases give Congress leverage, they in fact only provide rhetorical opportunities. In the end, Congress will have no choice but to send the president a bill he is mostly happy to accept, which is likely to be a nearly clean increase.

The few instances in which deficit reduction policies were attached to debt ceiling confrontations—namely 1985, 1996, and 2011—do not disprove this point, because they came at moments in which both parties were forced to accept the need for deficit reductions. These moments of deficit reduction were possible due to a run up in interest on the national debt by 1985, and strong Republican victories in 1994 and 2010. There is a good case to be made that attaching debt ceiling negotiations to the larger fiscal debates actually limited fiscal conservatives’ effectiveness in these instances. You very wisely moved away from making debt ceiling increases the focal point for fiscal policymaking after 2011, suggesting that you and many of your colleagues learned the right lessons about the volatility and ineffectiveness of this tactic. The fact that the need to increase the debt ceiling (which your Republican colleagues resisted doing without extensive conditions) cut off fiscal negotiations in the President’s favor in October 2013 reinforces the point.

Far from allowing Democrats to dictate the future course of spending, then, increasing the debt ceiling so as to withdraw it as a matter of concern from ongoing fiscal debates will actually strengthen Republicans’ negotiating position. As Republicans seek to coalesce around a budgetary path for the next decade acceptable to nearly the whole conference, an increase of the debt ceiling will allow them to focus their attention squarely on questions of spending and work to craft an appropriate spending bill ahead of the December 11 expiration of the continuing resolution just passed.

At that point, if the new Speaker is able to pass a spending bill the Senate agrees to, they may confront President Obama’s veto pen, and a government shutdown might well ensue. That would be unfortunate for the country and needlessly demoralizing to the federal workforce—and it might well be bad politics for Republicans. But with the debt ceiling out of the picture, nobody could credibly allege it would be needlessly putting the nation’s whole future at stake. The American people would be able to assess Republicans’ budget against the president’s unwillingness to accept it, and judge accordingly. If the debt ceiling remained in play, however, the White House could occupy the moral high ground by constantly raising alarms about the possibility of default.

If you find a way to pass a debt ceiling increase, it is absolutely certain that some Republicans will denounce you. After all, avoiding a debt ceiling fight is precisely what Harry Reid and the President want you to do. But having this crowd judge you harshly is already a foregone conclusion, as you acknowledged in your decision to resign. You have little to lose, and the country has much to gain. So do opponents of long-term budget deficits, if they truly want to get their act together and pass a viable plan rather than merely spouting off (which, unfortunately, is not entirely clear).

Best of all, of course, would be if you could engineer a deal that removes the debt ceiling entirely and replaces it with process reforms more likely to produce meaningful change, such as bringing entitlement spending into the annual budgeting process. Ending your time in office with such a lasting improvement to your country’s economic and political stability may be impossible this late in the day.

But it points the way: the larger the debt ceiling increase (or the longer the suspension), the better. Relieving the 114^th Congress of the burden of dealing with the debt ceiling again would be a great service, especially to the new speaker. Rather than beginning with a fight that former Speaker Gingrich called “a dead loser” and likely worsening intraparty tensions, the new Republican leadership could instead begin the work of unifying the party behind a coherent policy vision for the future.

With respect for all of your service through these difficult years,

Philip Wallach

     

 

 

Yes. And that might mean no. It’s complicated, and caught up in an intense ongoing partisan struggle, which makes it difficult for anyone to analyze dispassionately. But let’s give it a try.

Everyone is so concerned about our recent habit of debt ceiling standoffs between Congress and the President because if these tense negotiations fail to raise the statutory debt limit by the time Treasury’s ability to manipulate its accounts runs out—a result that neither side desires—it would mean that the United States would be unable to make timely payments on its debt service, to its many employees and contractors, or to the millions of Americans who depend on transfers of various sorts. The most disastrous economic consequences would come from the reputational damage to America’s creditworthiness, which would be caused most directly by a failure to make interest payments to debt holders on time. The most disastrous political consequences would come from the specter of seniors who depend on their Social Security checks finding themselves scrambling to keep the lights on.

Republicans thus have a proposal: they will remove the possibility of missed debt payments or Social Security checks. Their vehicle for this change is the very simple Default Prevention Act (H.R. 692), which the House Ways and Means Committee recently advanced. The 377-word bill would put two holes in the debt ceiling for a cash-strapped Treasury to pop its head through in an emergency, one for debt service and one for Social Security. The statutory debt limit would still remain at the same number, but the Treasury could issue debt for these purposes that would effectively not count against that limit. This would essentially be a partial rolling back of the debt limit; two of the most important areas of Treasury operations would now be subject to an alternative system of congressional control involving extra congressional oversight (the bill has heightened reporting requirements for any debt issued in this way) instead of the debt ceiling.

Republicans are eager to tout the merits of their proposal. Committee Chairman Paul Ryan (R-WI) emphasizes what a big confidence boost the economy would get from “tak[ing] default off the table,” and his committee has a shiny new page entitled, “Default? Not on our watch.” By their lights, this bill is a pure process improvement, ensuring that commitments are met but without “raising the debt limit.” Any future debt ceiling showdowns will be less hazardous than those of the recent past. What’s not to like?

A lot, say Democrats, all of whom voted against the bill in the Ways and Means Committee. Ranking Member Sander Levin (D-MI) offers a quick rebuttal entitled, “Experts agree: Prioritization is ‘default by another name.’” (That quotation comes from a not altogether disinterested party, Secretary of the Treasury Jack Lew.) Law Professor Neil Buchanan, author of a very useful exploration of the recent debt ceiling fights, is apoplectic, headlining his reaction, “House Republicans’ Deep Cynicism: Pay the Rich and Play Politics With Everyone Else.” Why are they so against this limited de-limiting of the debt?

Rather than this bill in particular, much of their ire is directed more generally against “prioritization,” which is the idea that an inability to expand the debt would force government to make some payments rather than others from its cash flow (which is somewhat erratic on a day to day basis). Many Republicans who have downplayed the risks from the debt ceiling fights have claimed that prioritization always existed as an option to ensure that vital payments could be made on time, even without any legal changes. Democrats and the Treasury Department are right to vigorously contest these assertions: logistically, prioritization would be a dicey proposition; legally, it has no basis and would thus be (or at least seem) deeply arbitrary; constitutionally, it is a monstrosity for Congress to pass a set of mutually inconsistent laws and then expect the President to just sort it all out somehow. To the extent that the Default Prevention Act codifies the idea of prioritization, then, it seems like a bad idea.

That line of argumentation is mostly incoherent. By changing the existing statutory framework, the Default Prevention Act would allow—indeed, codify—prioritization, thus removing the thorniest legal and constitutional difficulties when it comes to debt and Social Security payments. The feasibility of making debt and Social Security payments in full and on time while other payments are withheld could be addressed, not instantaneously, and perhaps not in time for this year’s crisis, but certainly before too long. It’s not as if it is logically impossible to separate these things out, just that configuring government computer systems can’t and won’t happen right in the moment of a crisis. But changing the law could set a system change into motion well in advance.

True, because the Default Prevention Act addresses only debt and Social Security payments, it would not resolve the difficult questions about what else ought to be paid for, and when, out of the government’s cash flows. To that extent the improvement it offers is a limited one, and I have argued we would be far better off if we did away with the debt ceiling altogether. But why should a limited improvement should be so offensive?

The answer is that Democrats fear that a less scary debt ceiling breakdown will be a more likely debt ceiling breakdown, with Republicans far more willing than before to hold firm in their demands attached to debt ceiling increases. Several Democratic members voiced fears that once Republicans have planted the “no default” flag, they will be ready to hurl themselves into a debt ceiling fight with renewed fervor, rather than moderating the logic of the hardline anti-spending wing of their party.

And then Democrats say that the point where we’d end up, in which debt service and Social Security recipients are able to go on as normal but everything else is still thrown into chaos, would be just “default by another name,” and we would in fact be no better off for having the Default Prevention Act in place. That strikes me as bluster. Debt market participants are mostly sophisticated (indeed, this is the basis for the rather overwrought cry that Republicans are out to ensure that “China and rich people” get paid first) and if they saw their future interest payments as no longer subject to any debt ceiling, it is hard to understand why they would think those payments were less certain to be made on time, regardless of how badly other things were going.

Even if these claims that everything would be just as bad even if debt payments got made are dubious, Democrats’ broader case makes plenty of sense given their concerns. The President is actually extremely advantaged in any debt ceiling standoff under the current “pass or total disaster” status quo; presumably that advantage would shrink if we move to a “pass or mostly disaster” regime. And maybe negotiations would be more likely to go off the rails with the reform in place, with consequences that would be plenty damaging enough to millions of normal Americans and to America’s reputation as a reliable partner.

Does that worry justify opposing a partial, imperfect reform of the debt ceiling? I wonder if anyone stands sufficiently aloof from the dynamics of the partisan budget fights to give an answer untainted by strategic considerations. For my part a world with the Default Prevention Act passed into law would not strike me as a much scarier place. Probably President Obama’s veto pen means that the symbolic rhetoric flying back and forth is more important than the substantive policy questions for now.

     

 

 

Not too much…and that’s greatly to its credit! The Washington State Institute for Public Policy (WSIPP, pronounced “wissip”), which is the official think tank for Washington’s state legislature in Olympia, has been charged with comprehensively assessing the costs and benefits of marijuana legalization for Washington’s citizens. The initiative that legalized recreational marijuana back in 2012, I-502, explicitly requires reports from WSIPP in 2015, 2017, 2022, and 2032. It published the first of those reports (authored by Senior Research Associate Adam Darnell) yesterday.

Naturally, advocates on both sides are ready to pounce on any hint of a conclusion in the report, however preliminary. WSIPP makes sure to disappoint them, declaring right in the second paragraph of the introduction: “We want to emphasize that this preliminary report does not contain findings on whether I-502 has had any effects on outcomes.” That’s a prudent concession to reality, since “effects of the law will not be detectable until several years after implementation, and it may take longer for any effects to stabilize.”

As I argued in my August 2014 report about Washington’s knowledge-sensitive approach to legalization, we can only hope that having a respected, independent research organization announce that it is too early to judge the results of legalization will help create a space for calm, evidence-based policymaking in what are still the very early days of this brave new policy regime. Advocates awaiting official results will have to wait until September 1, 2017, for WSIPP’s preliminary evaluation of outcomes.

In the meantime, yesterday’s WSIPP report is a rich resource for anyone hoping to understand the evolution of Washington’s marijuana policies. First there is an excellent narrative account of legal and regulatory developments in Washington from the passage of the state’s Uniform Controlled Substances Act of 1971 through the recent 2015 laws designed to harmonize medical marijuana with the new regulated recreational system, simplify the tax structure, and share revenue with local governments. There is also a thorough review of local government policies and the level of commercial marijuana activity in each county.

Then the report lays out a plan for studying outcomes as data are collected in the coming years. In doing so, it presents an excellent model of clear thinking about the effects of marijuana legalization. The following figure gives an appropriately complex sense of the moving parts:

Click to enlarge image

There are undoubtedly plenty of questions for WSIPP as it goes forward. Some of the most important effects of legalization may be subtle or difficult to monetize. Measurement issues will be thorny, as will the attempt to untangle causal effects of legalization from other ongoing trends—challenges WSIPP is well aware of, but could benefit from thoughtful outside perspective on. I encourage interested readers to read the whole report.