Grasping Reality on TypePad, by Brad DeLong

You both have [long] been heroes of mine. I came to Washington as an adult at the start of 1993 to work for the [Clinton-Bentsen-Rubin] Treasury. I remember[—I think it was—] the first day I went in to the Treasury. Jack de Vore, who was Bentsen’s [press secretary] and left hand said: “Be very careful what you say to Al Hunt’s people. They're very honest. And they're very, very, very good. I don't understand how he runs that bureau in such a way that it's so head-and-shoulders above all the others.”

He had the office next to me during my first year in the Clinton administration. Boy, was it an education!

Al Hunt: He was press secretary for Lloyd Bentsen for years. We were having drinks. I said: “Jack, you've got a great reputation. You know, what do you do?” He says: “I never lie. Never, never lie. That sounds so basic and so fundamental. A lot of people in Washington need [to have] learned that lesson, particularly today.

Brad DeLong: And [back in 2000, I was one] of us who thought that George H.W. Bush was in there for eight years, and that the “Reagan Revolution” would [then] be totally solidified. Then, in 1992, Bill Clinton showed up with James Carville by his side. And:

it wasn't an election. It was hell among the yearlings and the charge of the light brigade and Saturday night in the backroom of Casey's saloon rolled into one and when the dust cleared away there was just Bill Clinton with his hair in his eyes and his shirt sticking to his stomach with sweat and he had a meat ax in his hand and was screaming for blood and in the background under a purplish tumbled sky flecked with sinister white like driven foam was James Carville...

James Carville: Okay.

We tried to appeal to a broad section of people. We knew we were not going to get a single Republican [lwegislator], and as evidence for that the [1993] Budget Act and then came 2009. What state's [senator] provided the deciding vote in both the Clinton Budget and Obama Health Care?

Brad DeLong: No, I do not know...

James Carville: It was Nebraska: [First Bob] Kerrey [and then Ben] Nelson. Right now. I don't think we got them because [the policies needed to be] more Democratic. We got what accomplishments we've had in this country over the last 25 years [only] when [we have] built the Democratic coalition sufficiently broadly to get Democrats [from Nebraska] on board. You seem to be saying what we need to do is: "to hell with that! Let's just solidify all of the, the, the Berneie-bots..."

Brad DeLong: I wouldn't go that far.

This started out with me on Twitter.

And on Twitter you should never do nuance.

Nuance just doesn't work.

Nuance is death on Twitter.

But I would say we've learned three things over the past 25 years:

First, we've learned that the, call them the [standard] centrist-Democratic policies, don't work as well as we thought they would work back up the start of 1993. [Back then] Bob Reich was saying: we need to worry more about income inequality, and we need to worry a lot more about cutting off financial [wealth plutocratic] power over the economy and the polity. That looks wise now, much wiser now than it appeared to me back in 1993. So we need to shift the policies we advocate for.

Second, we now see a big problem of implementation...

James Carville: Oh no! The 93 Budget Deal worked great...

Brad DeLong: [Yes.] The 93 Budget Deal was, among other things, the largest—at the time—expansion of the social insurance state to make the lives of relatively poor Americans easier. That came through this massive expansion of the Earned Income Tax Credit that Gene Sperling [and Bob Reich and company] kept plugging and plugging and plugging away at until the Treasury and OMB said "uncle" left it in the 1993 Reconciliation Bill. It [was seriously pro-growth.] It actually did trigger a 4% of national-product dumb—in today's terms an 800 billion dollar a year—boost to investment in America. That made us a much richer country.

The Republicans were claiming their tax bill in 2017 would do it. [It didn't.] We did it...

James Carville: And that thing, ObamaCare. Oh it was rushed through, [but it is] great. We had a hell of a lot more people insured. Now we're supposed to apologize for that too?

Brad DeLong: But, second, we now [see we have a big problem of implementation ]. Neither of them worked nearly as well as they could have, or in some sense ought to have. It would have been so very nice to have gotten the BTU tax in 1993 rather than getting whippedsawed—making the conservative Democrats in the House vote for it, and then gotten our knees cut out from under us by trading it away to that idiot [senator] from Oklahoma, Boren.

James Carville: Yeah.

Brad DeLong: And Obamacare would have worked much, much better if we hadn't given so much implementation authority to states to mess up the exchanges when they wanted a mess them up. And of course, if we hadn't had a lawless chief justice of the Supreme Court [making up fake legal doctrines to give] states politicians to nullify it...

James Carville: I don't know what Bob is saying. You don't do it without the votes. You talked about what you should do. You don't have the votes, you can't do it. That's what is the reality of politics.

Brad DeLong: Well, Obama and—was it daschle?—were not especially clever. I showed up at the Treasury in 1993 with Jack de Vore in the office next to me on one side and Lloyd Bentsen's [right hand and] legislative tactician, Michael Levy, on the other. Michael Levy said: the only things [that are the President's priorities] that will pass are things that are also Republican prioirities, and things that pass either via Reconciliation or under the [imminent] threat of reconciliation. [Nobody in the Obama administration with power recognized that.]

You know what the Democrats on January 21st, 2009 ought to have done? Pass a carbon tax, Medicare-for-all, and three rounds of fiscal stimulus through Reconciliation on day one. Then bargain back to [better-working[ regulatory policies. Make the Republican's very anxious to bargain—as opposed to very anxious to block.

Al Hunt: Brad. Brad, let me ask you two questions. One, suppose I'm a Democratic nominee in 2020 and I run on a something that is more liberal than Rubin Democrats. Take health care. I'm going to do something about drug pricing—[let] Medicare [bargain on] drug prices, and cost controls on healthcare. Uh, I'm going to expand the exchanges. [I'm going to add more [to the] subsidy [pools]. I'm going to adopt Elizabeth Warren's proposal that tells insurance companies that if you want to participate in the Medicare supplement programs, which they do, then you got to be on the, on the exchanges. And after four or five years were will then see if we want to go for Medicare-for-all. And we guarantee that preexisting conditions are covered.

That strikes me as something some Republicans will support. [It will be hard for them] to oppose that.

And on taxes. What I think is the alternative: we're going to increase your top but not right to 70%. We're going to really tighten up the estate tax. We've going to treat capital gains like ordinary income.

That is legislatively possible—as opposed to going for Medicare-for-all, free college tuition, and a wealth tax.

Brad DeLong: Right. I think that the first round of healthcare things should also include the ability of anyone who wants to to buy into Medicare. Medicare-for-all, at least as I understand it, doesn't mean you have to take Medicare. It means you can [get Medicare] if you want. Medicare is the backstop. If private health insurance companies want to play they need to produce something that's better for consumers than Medicare...

James Carville: We political people say: you know these policies people, they sit there and they say, 'well, we should have done this, yeah, this would have been better there and the GDP would have been way up and stuff that", but we're down to the last God Damned vote...

Brad DeLong: If we're down to the last God Damned vote...

James Carville: We couldn't get the public option. I think it would have been better. Yes, but so what? You can't do anything if you don't have the votes. We come up with guests—they think we need to have Medicare for everybody. We need to have job guarantee for everybody. Great. Let's go do it. As long as you can do that [with the votes].

And 18% of the country elects 50% of the Senate. That is the political reality on the ground. You can't change it.

Brad DeLong: This is going to be a difficult problem for America for the next 30, 40, 50 years. We have a Senate that is, by the Constitution, gerrymandered in a way as bad as British legislative districts were back in the early 19th century, before the First Reform Bill...

Al Hunt: The Great John Dingell, who passed away a couple of months ago, right? Last time I interviewed him, Brad, I said: What's the one thing, based on your 55 years, that you would do, you really think would make a difference. He said: "It's simple—abolish the Senate".

That's not going to happen.

I think James [Carville] makes a good point. Look, these things were tough to get through. Medicare-for-all [is], some say, do[ing] away with private insurance. That's what Kamala Harris proposed in her initial speech, Free college tuition for most everybody in public universities. How are you going to get any Republicans on that? How are you going to get any of those red state Democrats, which you need to have a maturity in the senate?

Brad DeLong: [Governor] Earl Warren had free college education for everyone in California [in the 1940s and 1950s]. Earl. Warren. A Republican Albeit a very different kind of Republican than we have now.

Earl Warren was a Republican for Republicans who believed that they were the party of enterprise, upward mobility, and America's future—[Republicans who wanted to] go out and get stuff done. [They are] opposed to [today's] party of people who think they have a little bit, but stand to lose from [any] change.

Free college [for those who wanted to go] was something that we had [here in America], at least for those of us who were lucky enough to be white and male and native born, in the 1950s.

The 70% top tax rate. You are talking about a 70% top tax rate, [and calling that the Rubin Democrat position]. That indicates that I am right—because back in the 1990s we [in the Rubin Treasury] were arguing that we really did not want to let the top income tax rate, federal, state and local combined, get above 50%. I was there carrying spears for the Rubin Treasury on that position. And Medicare-for-all was [Harry S Truman's]...

James Carville: Yes, yes. Well we passed that [1993 Reconciliation Bill] by one vote.

Al Hunt: [I remember] being there with [???] in the Oval Office. Yeah. Phone calls. The whole administration was an active TV...

Brad DeLong: I know...

James Carville: It's a picture people should have [to remember how we passed] the big one...

Brad DeLong: Yes, I remember that well.

I remember being—I think it was in Marjorie Margolies-Mezvinsky's office—when we had to tell her [based on numbers I had calculated] that she was one of seven Congress members who had more constituents who would pay higher income tax rates than would get an expanded EITC. There were only seven districts in which the tax bill was a clear and immediate apparent loser for their constituents. And her constituents were one of those seven.

And yet she walked the walk. [She voted for the 1993 Clinton Budget.]

Admittedly, in return Bill and Hillary offered up to her their first-born child, whom they lovest...

Al Hunt: But still we got to run [senate races in] North Carolina and Georgia, Alabama, Texas, Colorado, Arizona. Do you think that these candidates are going to want to run [with] the most progressive liberal [presidential-candidate] person that we can find? [Not[ in [those] states...

Brad DeLong: No. No, no, no. But.

It was, I think. the very smart Norman Ornstein [who] puts it [thus]: Someone like Susan Collins. In the end, her first allegiance is to the Republican Party. Her second allegiance is to good policy [for the country]. And her third allegiance is to their constituents in Maine. She is a Republican first, and everything else later.

[By contrast,] you remember 1993 and 1994. How very many of the Democratic congressional barons were interested in themselves first and policy second and the success of the Democratic Party third. [Plus] how very many people wanted to take that Hick from Arkansas [Bill Clinton] and his [cornpone-talking] friends [like James Carville] down a peg or two.

I remember you, [James,] begging them, [the Democratic congressional barons], not to do so [and to back President Clinton] on the grounds that their seats were at risk if the president of their party was not a but [reather merely] perceived to be a failure. Then they might well lose their jobs. And indeed a great many of them did lose their jobs in 1994, because the Republicans were quite good at painting Bill Clinton as a failure. And a great many of them did lose their jobs in 2010 because at the time recovery was so slow that Obama did [indeed] look like a failure.

Al Hunt: Brad, your critique is brilliant. I don't think almost anyone could really quarrel with [your] critique of what happened and the problems and the difficulties. I have and James ha enormous respect for you. You are, you know, not [jut] one of the great economist, but I mean you talk in English, which gives you an advantage over a lot of your [peers]...

Brad DeLong: Thank Jack de Vore and Michael Levy for that...

Al Hunt: Your solution that worries me. Turn it over to the left, and then try to make their proposals slightly more palatable. I don't see how that becomes in any fashion a winning coalition, legislatively or politically.

Brad DeLong: I said: pass the baton, right? I said: pass the baton.

And yet as the thing spreads out into the Internet, it gets turned into "surrender", "abandon my beliefs", "bend at the knee", all kinds of other things. [It was pass the baton.]

You pass the baton for a lap in the race. [It is a long race.]

What will be possible legislatively in 2021 depends on a lot of things. We cannot now forecast them. I've given up forecasting what the American political system will do. I gave that up in December, 2000.

[The American political system is] simply not rational at all. It will do whatever it does, in whatever crazy way. And we don't really know what the state of things we'll be at the start of 2021. [We cannot yet knw] what we should not do, what we should not do, [for that lap]...

Al Hunt: Yeah, you're right. I guess what you're saying is that despite all the Republicans being what they are—like with Norman's analysis of Susan Collins—I think Olympia Snowe is different by the way—That's not going to change.

I guess I would say that incrementalism, whether it's the Clinton Budget Act, which as you say, played a huge role not only in ushering in the prosperity of the 1990s but also in social programs like expansion of he EITC. Or the Affordable Healthcare Act, which for all of its imperfections and it was enacted in a really sloppy way because they had to enact it in a sloppy way. They lost their supermajority. We're a lot better off on health care in 2019 then we were in 2009. [We are] not as well off as we'd like. You can build on it.

But the argument to kill Obamacare and come up with a whole new system—I traveled to a lot of suburban districts last fall, and I want to tell you [that] if you tell those suburban voters who voted Democratic and we'e terribly important in that new house majority, that you're going to lose your health insurance and we are going to give you a government program instead... That is what some of our [candidates]—Bernie's argued for that, [and] Harris walked it back but that's what she started off. Right—they are going to suddenly not become as enthusiastic for the Democratic Party,Brad DeLong: But if you offer them the ability to join Medicare as an option if they prefer it to what the private insurance companies are offering, [they will be enthusiastic]. The ability to join Medicare as a backstop...

Al Hunt: The public option [as] a Medicare Supplemental or Medicare Advantage...

Bfrad DeLong: Let's drag on the Obama administration.

When it became clear there weren't 60 votes for the public option in ObamaCare, then the right thing to do was [not to drop the pubic option and proceed].

[The right thing to do was] to back up, pass Medicare-for-all through Reconciliation, and then say to the Republicans: now that [our Reconciliation Bill means we give] people a choice between their current insurance and Medicare, are you sure you wouldn't rather vote for this exchange system that is [called] RomneyCare? We were pushing [it] because we thought it would get a bunch of Republican votes, [and it was better to do this on a bipartisan basis].

With respect to getting the recovery [going], was it not incredibly "premature" in December and January of 2010 for Obama to say [that the government has] spent too much money on recovery and now we need a big spending freeze?

Was it not a mistake [not] to say: if you won't come on board with cap and trade, we'll pass a carbon tax through Reconciliation and then bargain back to a better regulatory system?

James Carville: I don't disagree with much of what you said. You go back to February and March of 2009. This country was [in] the worst economic [condition] since the Great Depression. That's not an exaggeration, as you know better than that. Right. And the stimulus package should have been bigger.

But it couldn't get there. You couldn't have the votes. I got to tell y'all something—hat world that you live in with the 50 votes for Reconciliation with the economic plan. Hauling politics is hard, man. It's hard to put this stuff together. You can always come to [a better] idea in the after action report.

I get the BTU tax. We should have done that. It would have been night. It wasn't going to happen.

I mean, look at the Senate in 1993. I mean Sam Nunn.

I'm just, I love you guys. Smart Democrats. You are great teachers. Yet inspiration isn't the point in a world where the rubber [has t ] hit the road.

Brad DeLong: That from [James was] an excellent rant. Truly an excellent rent. It's the kind of rant he can do. It's very effective and very powerful.

But I'd like to draw a distinction between three things:

1. what legislative sausage you actually make come 2021 and thereafter.

2. what you run on in the 2020 campaign as what the Democratic Party will try to accomplish.

3. what our vision of a good society is going to be as we listen and talk to our base and try to educate the world as a whole.

For Barack Obama, a lot of the time, a good society was one in which the Democratic Party would give up kind of 3 dollars of entitlement spending in 2040 in return for each extra dollar of tax revenue ecause the first priority was to get the budget balanced. Well, [that did not cut it then and won't now...]

James Carville: I just want to say something. I want to come out to Berkeley...

Brad DeLong: Please do. We'll a discussion. We'll have you for dinner...

Al Hunt: I want to get a tape of that. James Carville at Berkeley. I think Netflix might pick that up. James, do you have to run?

James Carville: Yeah, I gotta run. I'm sorry, Brad, thank you so much.

Brad DeLong: Thank you very, very much for having me on. It's greatly appreciated. James Carville is a Great American, who has done an immense amount to make the country a better place. People should strew flowers before him wherever he walks...

Al Hunt: Oh my gosh. I don't know if Mary Matalin will go along to that...

Brad DeLong: No one thinks their husband is a Great American...

Al Hunt: Which of those Democratic candidates that you're watching much more closely than most academics at Berkeley—your blog, it's fascinating, some of the stuff did you put at, even when I disagree with it—which of those Democratic candidate do you think fits the bill you're talking about right now best?

Brad DeLong: I think it's too early to say. If you want to know someone who has impressed me, it's Mayor Pete from South Bend, Indiana...

Al Hunt: A Rhodes scholar, a successful mayor, openly gay. Full of new ideas. He wants to be the first millennial president. I'm not quite sure he's talking about all the things you're talking about, however...

Brad DeLong: But he's from Indiana. If you think that the ideal Democratic candidate is an unknown southern governor, [he's close]. Indiana joined the Confederacy in the 1920s with the revival of the Klan, with my great-great uncles from Indiana [who] belonged to the Klan in the 1920s, and the only excuse they ever had to say was there weren't any Black people, we were just anti-Catholic.

Pete as a mayor from Indiana will speak to the center and to the cultural right of America the way Bill Clinton did, which is a big plus. Yet Pete's policy proposals look to me to be if not solidly in at least close to the Alexandria Ocasio-Cortez line.

Al Hunt: I don't think he's talking about a 70% top rate. He's not talking about free college. A number of states and cities are doing about about community college tuition for anybody. I think that is a great starting point. But I think AOC and Bernie and others go far beyond what most voters are willing to accept it.

Brad DeLong: But [the free college] they go back to [and present to] voters [ we had in] the 1950s and 1960s.

Al Hunt: On a healthcare plan in 1947, you probably would have adopted something along the lies, of the Canadian or the German or even the British plans. But that was 70 years ago. And it's harder to do that now with a huge country like this.

Al Hunt: Yeah, you're right. I guess what you're saying is that despite all the Republicans being what they are—like with Norman's analysis of Susan Collins—I think Olympia Snowe is different by the way—That's not going to change.

I guess I would say that incrementalism, whether it's the Clinton Budget Act, which as you say, played a huge role not only in ushering in the prosperity of the 1990s but also in social programs like expansion of he EITC. Or the Affordable Healthcare Act, which for all of its imperfections and it was enacted in a really sloppy way because they had to enact it in a sloppy way. They lost their supermajority. We're a lot better off on health care in 2019 then we were in 2009. [We are] not as well off as we'd like. You can build on it.

But the argument to kill Obamacare and come up with a whole new system—I traveled to a lot of suburban districts last fall, and I want to tell you [that] if you tell those suburban voters who voted Democratic and we'e terribly important in that new house majority, that you're going to lose your health insurance and we are going to give you a government program instead. That is what some of our [candidates]—Bernie's argued for that, [and] Harris walked it back but that's what she started off [with]. [The suburban voters] are going to suddenly not become as enthusiastic for the Democratic Party...

Brad DeLong: Why is it harder to do sensible things? I was talking to my podiatrist last Friday. He tries to deal with the infected [corn] on my second toe and demands that I tell him about economics. We talk about how pharmaceutical companies [don't] want to make new antibiotics—because you'll take seven antibiotic pills and then you'll be cured and for seven pills you can't charge that much. They want a chronic disease that is not cured but alleviated by something expensive and that rich people care about a lot. Male impotence, male pattern baldness—these are the things that are [private] pharmaceutical system is set up to focus its effort on. There's a very large place for a government to take over a much broader role in drug research and discovery, given that the incentives the market produces [are] all wrong...

Al Hunt: When you're on a show called "Two Old White Guys", [recognize that] we are very skittish about talking about impotence and things like that.

Uh, look, you have been terrific. This is really been interesting even when we have disagreed with you, as we have.

I think you've laid out some, some interesting ideas. I would, anyone who's listening you ought to go to

Go to Brad's blog site because there's always extra stuff.

And I want you to promise me that if Carville comes to Berkeley that I get to see the Carville-DeLong...

Brad DeLong: Oh, definitely, definitely. I [will start by asking] Carville: wouldn't it have been much, much better to design an Affordable Care Act that did not assume that Republican governors would be enthusiastic about it and wouldtry hard to make the system work in their states? Wouldn't it have been much, much better to pass something narrower through Reconciliatio—something that did not give Governor Sam Brownback of Kansas [and his ilk] the opportunity to nullify it? And [something that] was not complicated enough for an illegitimate supreme court decision by John Roberts to come close to nullifying it as well.

Al Hunt: We will leave it at that, but I would say maybe that's a good, very arguable point. If you could have gotten 51 votes, which of course is the key to everything...

Brad DeLong: We had 53 back in the spring of 2009, but that's for another time...

Al Hunt: Yeah, that's for another day. Thanks a lot. Welcome [for coming]. Enjoy this day, and thank you for listening. and we'll be back next week.

Brad DeLong: Okay. Here's looking at you. Thank you. Goodbye.

---

#highlighted #politicaleconomy #politics #publicsphere