National Christmas tree costs almost $1.8 trillion

Did you see the national Christmas tree lighting? No, not the gift-free ceremony on the White House lawn.

The real Christmas tree is a bill enacted by Congress last Friday and promptly signed by the president. There were gifts for almost everyone under that tree.

Most of the almost $1.8 trillion pays for the entire federal government for a year. About a third of it cuts taxes for many, from racehorse owners to retirees.

Who paid for all these gifts? Partly, current taxpayers. But much of the deal depends on what is likely to be hundreds of billions of new debt, a gift from our grandchildren who must later pay the bill.

The tax piece is entitled, “Protecting Americans From Tax Hikes.” The “Americans” involved do not include children.

Congress knew what it was doing. Though it had pledged never to increase spending without finding the offsetting revenues, it simply overcame this so-called “Paygo” by passing the “Motion to Waive All Applicable Budgetary Discipline.”

Also broken was an agreement to fund defense and non-defense programs equally. More money appears to go to the military than to civilian activities.

The gifts in the deal were the reason why the legislation passed. To get enough Republicans to support the bill, many had to be granted funding for their constituents or campaign backers. The New York Times reported that Sen. Susan Collins got $1 billion for a destroyer not requested by the Defense Department. It's likely to be built at BIW.

House Speaker Paul Ryan seemed to do much better than John Boehner, his predecessor, but he didn’t. He still lost the votes of many GOP representatives. He gained passage only because they did not entirely block the legislative process as they might have. Ryan got to enjoy his congressional honeymoon.

It is unlikely that many senators or representatives even read the 2009 page bill they passed. Still, the pages were double-spaced with wide margins and big type. The complex bill was literally only a day’s work for most in Congress.

Instead of there being a separate bill for each agency of government that could have been carefully reviewed, all of the government was piled into a single bill. While that eliminates detailed review, it allowed narrow provisions that may only be understood months later. And it’s no way to cut spending.

Throughout the document, so-called “riders” were used to do a lot more than the bill might have seemed to cover. For example, the ban on exporting U.S. oil was lifted and some of Affordable Care Act funding was dropped.

The president’s victories were highlighted as being no defunding of Planned Parenthood and no ban on Syrian refugees.

In reality, President Obama won a major victory . To get out of the recession, he had wanted more government stimulus to push job creation. But, after one round, Congress refused him any more.

That left everything to the Federal Reserve. The only thing it could do was lower interest costs, promoting borrowing for investment and pumping more money into the economy. The Fed’s policy worked, but far more slowly than if there had also been a tax and spending element of the federal effort.

Early last week, the Fed decided that its low interest policy had done just about all the good it could and that it was now time to begin raising interest rates. Some investment leaders worried that it was moving too soon and the economy still needed help.

Though providing such help through increasing spending and reducing taxes had been opposed by many congressional Republicans, that’s just what a majority of them agreed to do in the Christmas tree legislation.

Without even a backward glance at their previous opposition, the GOP gave Obama just what he had wanted: increased debt financed government spending that would permit business and industry to hire more people and pay them more. Getting the effect may take time, perhaps allowing the next president to take the credit.

The Fed may now get the small amount of inflation it says is good for the economy, thanks to the Christmas tree bill. If that doesn’t boost the stock market, making investors happy, it’s reasonable to wonder what would.

The media generally congratulated Congress and the president for their display of bipartisanship just when most people were frustrated with partisan gridlock. When Washington powers agreed to act generously in the spirit of Christmas, it turned out to be easy.

Happy holiday. Some of your best gifts may not be the ones found under your tree.

Moderates: the disappearing middle in American politics

Where have all the moderates gone?

A recent survey, from a reputable source during a time of doubtful polls, found that 35 percent of voters consider themselves moderate. Some lean toward each major party, while 19 percent say they are truly independent.

Who is a moderate? There’s clearly no moderate political philosophy. Instead, a moderate is a person who sometimes agrees with conservative policies and sometimes agrees with liberal policies.

Maine Republican Sen. Susan Collins is widely regarded as a moderate, one of a vanishing few in the U.S. Senate. Her voting pattern proves the point.

One day in early December, she voted against a bill to prevent people on the government’s terrorism no-fly list from buying guns. On the same day, she voted against a bill to gut Obamacare and defund Planned Parenthood.

On the first vote, she aligned with GOP conservatives, and on the second, she lined up with Democratic liberals. That’s what gains her the moderate label.

But her willingness ever to oppose GOP positions may impose a political price. Though she has much greater seniority than many of her fellow Republican senators, she heads a much less influential committee than some of them. Perhaps she sees her Committee on Aging as being important to Maine, the oldest state.

Her position on the two bills reveals a problem for moderates. Instead of following a set policy menu, they deal with issues a la carte. That makes it more difficult to assemble a reliable moderate voting group.

The current Republican presidential campaign emphasizes the ineffectiveness of the moderates. In the unusually large field, possibly only two candidates – Ohio Gov. John Kasich and former Florida Gov. Jeb Bush – could position themselves as moderates.

If the polls are remotely close to accurate, Republicans are not connecting with either. Bush has moved to the right, repositioning himself as a conservative. Kasich is perhaps the only outlier from the field, apparently betting that he will pick up support as the GOP comes to recognize that he’s their best bet to win the general election.

It is widely believed that the nominee selection process in both parties is dominated by their extremes, hardcore conservative or liberal. Republican conservatives reject any candidate straying from complete loyalty to their positions, which may explain why Kasich is not catching on.

Why can the extremes take control of the process? After all, they probably do not account for a majority of party supporters.

The answer is the indifference of the majority. Whether people believe that nothing they do matters or simply don’t care about their government, most people do not participate in the caucus and primary process to select nominees.

The absence of most party supporters in the process leaves the opportunity for well-motivated, ideology driven extremes to capture control of the choice of the party nominee. In short, moderates don’t show up and total turnout remains small.

The process itself may sometimes favor participation by only small numbers. Take the Iowa caucuses, scheduled for February 1. Relatively few voters will participate in these caucuses, and their choice is far from certain to be the ultimate nominee. Still, the caucuses can provide candidates a big public relations splash.

The process in the Democratic Party seems less likely to be controlled by an extreme liberal element this time. Vermont Sen. Bernie Sanders wants to galvanize enough liberals to dominate the selection process. But most Democrats support former Secretary of State Hillary Clinton, who may come across as more of a moderate.

The general election is considered the great corrective to the faults of a nomination process that pays little heed to the supposed moderate center. While voters may not be enthusiastic about their options, they might support a candidate who seems closer to the center.

That could explain why Clinton, with lukewarm support by many Democrats, looks like a winner when compared with leading GOP hopefuls. And it may explain why Kasich and perhaps Bush hang on, hoping to emerge as the winning alternative to Clinton.

The success of Donald Trump and hardcore conservatives might indicate all of these calculations are wrong.

Suppose discontent with government and fear of terrorism have driven large numbers of voters to the right. If that were happening, then the country would shift from center-right policies to hardcore conservatism.

In that case, we could discover the moderate ranks in American politics have shrunk to near invisibility. And, if that is not true, the moderates’ influence depends on their showing up to participate in the political process.

Democracy undermined by ranked-choice elections

Ranked-voting is the flavor of the day. And it will turn out to have a bitter taste.

Its advocates want to replace real democracy, in which a majority picks the winner, with something akin to a game show method of selection. The result could be more like “Family Feud” than a decision on one of the most important choices people can make.

The problem, its advocates say, is that our political system is based on a choice between two candidates, but we frequently have several more in the race.

There are three possible solutions. One is to let the candidate with the most votes, even if not a majority, be the winner. It is done that way in federal elections and the great majority of states.

Or you could hold a runoff election between the top two vote getters in the initial election. That’s done in 11 states.

Then, there’s the ranked voting election in which people rank their choices the first and only time they vote. If there is no majority winner, votes in lower tiers are redistributed until there is a winner.

Maine has used the first method effectively. There were at least three serious candidates in nine of the past 10 elections for governor. And nobody complained until Republican Paul LePage was twice elected without a majority. It’s easy to understand that ranked-voting advocates believe he would have lost under their system.

Lewiston has just used the runoff system in the election for mayor. In effect, the first race served as a primary for the second, and the turnout in each was about the same. Voters got the chance to consider the real alternatives each time with an indisputable majority decision at the end.

Ranked voting is only used in a relative handful of municipalities. In Portland, where it has been used once in 2011, ballots were counted 15 times. In Minneapolis, the 2012 mayor’s race caused 33 recounts.

Perhaps the biggest problem was the result was not transparent. Voters could not easily understand the process or know how votes were counted. In a traditional election, it’s easy to know who got the most votes.

And the ranked voting system can produce the election of a person who received fewer first place votes than another candidate. That may not seem fair to many voters, creating just the kind of discontent our already stressed system doesn’t need.

The ranked voting system can be gamed, literally. Just don’t select anybody but your favorite candidate. That’s called “bullet voting,” and it could help a candidate who is the second choice of other voters.

None of this amounts to majority rule, despite its advocates claims. A majority, by its very definition, means more than half. Ranked voting cannot assure that.

Does it eliminate “spoilers?” A spoiler costs another candidate so many votes that he or she loses an election. But how do you know a spoiler before an election?

Does ranked voting favor issues over candidates? There’s no indication that was true in Portland or Minneapolis.

Ranked voting encourages “respectful campaigns” according to its advocates. Promises, promises.

Ranked choice proponents dislike primaries, because fringe candidates can win, producing an unhappy choice in the general election. That sounds like the position of philosopher-kings who really don’t trust democracy and certainly want to see the end of political parties.

If there’s something wrong with primaries, find a way to get more people to vote. But don’t manipulate their voting.

Perhaps better arguments would be that it is loss costly and easy. But why should real democracy be easy or cheap? It’s worth doing right.

Maine now uses a system that has produced acceptable results, both easily and cheaply.

If we want decisions guaranteed to be made by a majority, then a runoff is a better idea, because it allows voters to make a clear choice rather than the muddled, computer-run outcome of ranked-choice voting.

Massive tax deal undermines hopes for tax reform

Politicians promise tax reform. If we make the system fairer, they say, we will also be able to cut taxes.

Politicians oppose tax reform. They enthusiastically create breaks for special interests, though few for average taxpayers.

In short, there’s a huge gap between promise and performance, and it will probably grow even larger, thanks to this year’s tax handouts.

The national debt, regularly attacked as being too large, obviously results from deficits when spending exceeds revenues. Many Republicans see the solution in cutting spending, not raising taxes, and Democrats increasingly go along.

Government spending takes two forms. Usually, money is appropriated for specific programs. Current policy says that such spending should not be allowed to outstrip revenues. The recently passed budget bill finds money in some unusual places, but it balances income and expense.

The other form of spending is a bit more complicated. To promote certain programs or industries, Congress creates special exemptions from taxes, allowing those who are favored to keep their money and use it for approved purposes.

Are these tax expenditures covered by revenues as in the budget bill? No, their cost is financed by new government debt, pushing up the total owed. So much for the claim that Congress is working to cut the federal debt.

These exemptions are called “tax expenditures.” They are much larger than mere “loopholes.”

Because the same ones are renewed periodically, their advocates say they really don’t impose new costs on other taxpayers. They overlook the costs carried forward every year following the introduction of tax breaks and the impact of the new breaks added each time.

Congressional dealmakers will produce this month a massive “tax extenders” bill. The title may make it seem like the bill continues some taxes, but it extends tax breaks that have become a part of tax policy. This bill could authorize tax expenditures of possibly as much as $800 billion.

Some of the tax breaks can only be accomplished by using tax expenditures. Perhaps the leading example is the Earned Income Tax Credit, intended to help low- and moderate-income workers makes ends meet.

But many are aimed at reducing the tax burden on specific business sectors. Some of this activity may deserve government encouragement. The cost of that help could become part of the federal budget, ensuring there were revenues, not more debt, to cover the spending.

Congress doesn’t want to use the budget to support some favored enterprises. Such support could cause a tax increase. That move is politically unacceptable, because the aid to the private sector might face the public spotlight of a congressional review.

Tax expenditures are stealth spending that largely escape public scrutiny. See if this year’s bill gets more than a sentence in the evening news.

This annual tax extenders bill has been negotiated by a small group in Congress and has provided a field day for lobbyists. If they bring home a tax cut for their clients, they can more than justify their fees for the year.

Why do the lobbyists have so much clout with the lawmakers? They and their clients are among the largest contributors to political campaigns. If you traced the dollars circulating in political contributions, lobbying expense and tax breaks, they would all flow back to the taxpayers who pick up the tab on government debt service to cover the benefits.

House Speaker Paul Ryan says he wants tax reform, but he’s unlikely to get it. Because members of Congress depend on the political contributions of those seeking preferences, tax reform depends on campaign finance reform.

Real tax reform would amount to a political earthquake. But some of today’s beneficiaries don’t want equal treatment for all, even if their taxes were lower. They like their preferred positions. And lobbyists could lose much of their business if they weren’t needed to bring home tax breaks.

There is a simple answer to the problem created by most tax expenditures. If those breaks in the tax extenders bill and hosts of others were eliminated, the government could raise the same revenues with lower rates. Taxes could be simplified with fewer and lower tax brackets.

The U.S. has some experience with this approach, which was at the center of the 1986 tax reform law. But it took little time for new tax expenditures to be created and the public debt to climb.

Even as the tax extenders bill passes, the political talk of tax reform will continue. Among the many empty promises in politics, the promise of tax reform may be the most meaningless.

Beware of political polls

Polls are rolling out almost daily. They persistently show Republicans Donald Trump at or near the top of his party’s contenders and Democrat Hillary Clinton running away with the Democratic race.

But the polls are probably wrong. In fact, they may be so far off the mark that we will have to wait for the primaries to know the real frontrunner. Unfortunately, beliefs about candidate strength, based on dubious polling, could influence voter turnout and preferences.

One of the major factors strongly influencing the value of a poll is the ability of the polling organization to develop a sample of people that validly represents the “universe” of people whose opinions are being measured.

The best way to achieve this goal is the purely random selection of participants from a large number of people. For example, picking every tenth name from a list of 1,000 people would produce a “random sample” of 100 people.

But let’s say that of the 100 people called, 90 refused to be questioned. The polling organization would then have to pick 90 more and so on until it had 100. But its sample would not be nearly as truly random as the first 100 selected.

While refusing to participate in a survey used to be rare, the example of only 10 percent of the original selection agreeing to be questioned is reportedly not unusual these days.

Most surveys are conducted by phone. Some people don’t have phones. Some people won’t answer the phone except for calls from known callers. Many people primarily use cell phones, which by law cannot be automatically called randomly. All this makes it more difficult to get a fair sample.

And pollsters typically give some people interviewed more weight than others. For example, if the 100 people happen to include 60 women and 40 men, the value of any person may be changed to produce a result better reflecting the proportion of women and men in the survey universe.

Increasingly, polling depends on people, like those with cell phones, volunteering to participate and the pollster later weeding out answers until it gets to the correct number and type of people for the sample. That would hardly pass the traditional “scientific” survey standard.

And, in the case of the 2016 presidential contest, the matchup between candidates assumes the election takes place today. What’s missing is the key final and usually heated phase of the campaign when many people decide whether they will vote and, if so, for whom they will vote.

It’s likely that many people have not yet paid much attention to the campaign. Those that have followed it have heard more about campaign tactics than the issues. That could cause them to decline to respond to polls or give answers that will change as they approach the election.

In addition to all of the weaknesses of polling, which are increasingly undermining their accuracy, this year in the Republican race, there is a major complicating factor: too many candidates.

Trump may be leading in the polls, but about 70 percent of those surveyed favor somebody else. The rest of the field is split among more than a dozen others. The race might look different, if it Trump faced only one or two others.

Will the field thin out? Often by this point in previous races that had happened, as poor polling results discouraged contributors from supporting candidates who appeared to have little or no chance.

Now, thanks to the Supreme Court’s Citizens United decision, immensely wealthy people can contribute unlimited sums to support their candidates. So long as one billionaire sticks with one hopeful, that candidate can stay in the race. Of course, Trump bankrolls himself.

Because several candidates have political sugar daddies, they stay in the race despite low poll numbers. That reduces the likelihood of any of them emerging as the alternative to Trump. Facing a divided field, Trump has remained the frontrunner.

In other words, big money, most of it going to other candidates, serves to keep Trump at the top of the race.

The voters themselves may have to weed out the field. Recently, in the Canadian elections, when the anti-Conservative vote appeared to be split, which would have allowed the Conservatives to stay in power, voters defied the polls and just before the election settled on one of the two alternatives, giving it a big victory.

The weakness of polling and the misleading influence of money suggest that just who is the frontrunner may be a lot less clear than it seems.

Politics of fear spreads after Islamic State attacks

Suppose a small war-like country attacked a larger one in the belief that it would expand its territory while the larger country, demoralized and panicked by the attack, would react only with fear. Instead, the larger country, motivated more than frightened by the attack, counterattacked, leading to its victory.

Something like that is the story of the Japanese 1941 attack on Pearl Harbor and the American response. The rest, as they say, is history.

Much the same could be true of the U.S. and the Islamic State. There can be no doubt: the Islamic State sees itself as a new country (the Caliphate) in formation and not merely a terrorist group. It has declared war on the U.S. and other countries.

The answer should be a response appropriate to the times. Committing massive American forces to ground and sea combat, as was done in response to Pearl Harbor, is almost certainly not the right response now to the Islamic State. But neither is fear.

In his famous First Inaugural address in 1933, Franklin D. Roosevelt spoke of fear. He described it as “nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.” In other words, a fearful response to terrorism could be “unjustified terror,” not defiance.

The attacks in Egypt and France and elsewhere, sponsored by the Islamic State, have brought out far more appeals to fear than leadership in developing a strategy to defeat it. In short, until now, more of the American response has been about the politics of fear than of national resolve.

Donald Trump, a man seeking the presidency with little background in international affairs and little apparent understanding of the purpose and history of the American republic, has lashed out at an entire religious group, revealing his fear of it and apparently trying to gain the support of other fearful people.

He has made recent statements calling for singling out Muslims. He would place their mosques under surveillance and perhaps even dismantle some of them. Without the least bit of evidence, he claims Muslims in New Jersey cheered the 9/11 attacks on the World Trade Center.

There’s no evidence that most American Muslims are anything other than completely loyal to their country. There’s no evidence of support for the Islamic State or terrorism by most of the 1.6 billion Muslims in the world, who mainly live outside of the Middle East.

Such a broad-brush attack on any group could serve to alienate Muslims. But the U.S. needs and wants good relationships with countries where Muslims are the majority. Of the top 10 countries in population, three have Muslim majorities, are not in the Middle East and are larger than either Russia or Japan.

Trump goes too far. President Obama and some GOP presidential hopefuls have objected to his remarks. But it seems to remain politically acceptable for the GOP to advocate clamping down on admitting Syrian refugees, because one of them might be a terrorist.

Republicans make it a practice to reject virtually any Obama position. If he’s for allowing a small number of Syrian refugees, they must oppose it. That has resulted in polls saying that a vast majority of Republicans are against admitting Syrian refugees and a vast majority of Democrats are willing to admit them after serious screening.

GOP governors, including Maine’s Paul LePage, (plus one Democrat) quickly climbed on the “no refugees” bandwagon. They must know that no state can exclude a person lawfully admitted to the country. That makes their statements pure politics.

But Obama’s approach raises some real concerns. The world expects the U.S. to lead in putting down the Islamic State. After the Paris attacks, French President Franois Hollande has been trying to rally a unified response, but the world looks to the Americans for leadership.

A combined effort by major powers is complicated by Russia’s incursions into the Ukraine, conflicting U.S. and Russian objectives in Syria, differences within the Muslim world, and the Israel-Palestine conflict. These issues get in the way of needed coordinated action against the Islamic State.

It’s obvious a single and timely resolution of all of them is impossible. But it is also obvious that the Islamic State threat is immediate and affects many countries, making delay dangerous.

The politics of fear, promoted by Trump and some other Republicans, could be the only voice of America unless Obama speaks out and assumes the risks of leadership, assigning the highest priority to defeating the Islamic State, laying out a plan and heading the combined international effort.

Social Security, becoming national pension, faces crisis

Social Security is a major problem, and it needs to be fixed soon.

In 2022, just seven years from now, the program will begin eating into its reserves. When they are gone in 2034, payroll taxes won’t cover 21 percent of payments. The shortfall will grow each year.

This pending crisis means something must been done in the next few years. The next president will probably sign the law reforming the program.

Social Security payments to retirees and the disabled have always been financed by payroll contributions by employers and employees. This money goes into a federal trust fund from which the payments are made. Individuals do not have their own accounts.

A changing population, with the number of retirees growing much faster than originally planned, will cause income to be less than outlays, requiring the use of reserves. That’s because the proportion of active workers to the retired has declined.

It was impossible 80 years ago, when Social Security was developed, to forecast the underlying reasons for this change.

Medical advances have prolonged life. When the original retirement age of 65 was set, people were not expected live more than two or three years beyond that. Now lives last at least a decade longer.

Add the baby boomers, the generation born right after World War II. The birth rate had been held down by the Depression and with many men off to war, but that changed massively as the economy grew after the war. Now, the boomers are retiring.

Meanwhile, Social Security has become increasingly like a national pension plan. It provides most of the income of about two-thirds of retirees. For about a quarter of them, it is their only income. Employers are not legally required to provide pensions.

Social Security spending is not part of budget negotiations between Congress and the president. The program operates automatically to produce payments for all those who meet its eligibility requirements. That makes it one of the largest government expenditures, greater than either total defense outlays or all non-defense spending.

Most of the candidates in both parties have been coming up with their solutions. Republicans have joined Democrats in accepting that voters want Social Security to survive in something like its current form.

Candidates of both parties appear ready to deal with shortfalls by reducing payments to wealthier people. That would make Social Security even more like a progressive income tax with payment cuts as income rose. The wealthy might find payment cutbacks preferable to outright tax increases to support the program.

New Jersey Gov. Chris Christie would go so far as to eliminate payments to those making $200,000 or more, but his fellow Republicans and Democrats won’t buy that.

Other ways of reducing payments, such as raising the retirement age or changing the cost-of-living adjustment, may sound appealing but produce little increased program life.

On the revenue side, the payroll tax itself could be raised. If it went up by three percent, most unlikely, Social Security would gain 53 years.

The Bush era proposal to replace Social Security with Wall Street investment accounts, still supported by Texas Sen. Ted Cruz, seems dead. The risks are too great. And simply cutting back on payments as lives grow longer could cause a strong political backlash.

A more practical way to raise money would be to tap the wealthy by removing the cap on the salaries subject to the payroll tax. If the $118,500 cap were eliminated next year, it would extend the program by 21 years. Democratic Sen. Bernie Sanders would use the extra revenues to expand the program, hardly improving its financial health.

Of course, some combination of these proposals could work. But Washington will have to keep in mind that many Americans depend on Social Security as all or most of the money they will live on for many years in retirement.

While the outlook for a new immigration policy is so embroiled in the presidential campaign that no action is expected until 2017 at the earliest, it could be a key element in the dealing long-term with the Social Security problem.

Resolving the problem of millions of undocumented workers, some paid off the books to avoid detection, plus opening the door to more legal entries could provide a major boost to the number of payroll contributors and Social Security’s yearly revenues. That would be the old- fashioned way of financing the program.

While the political campaign may focus on taxes, terrorism and tough talk on immigration, the sleeper issue could be how to fix Social Security.