Expanding an already bloated federal government

(PNI) President Barack Obama's State of the Union address illustrated what a dead letter federalism is among Democrats. Not that further illustration was necessary.

Federalism holds that the national government should limit itself to things of truly national scope. Things that are primarily of local concern should be left to state and local governments.

Federalism was a big deal to the founders. They wanted an energetic national government, but one that was confined to enumerated national functions. The founders also envisioned a bright line between the federal and state governments, each sovereign within their own spheres.

We are a long way from that. Today, the Democratic Party sees virtually nothing as outside the purview of the federal government. The Republican Party talks a good game about federalism, but usually ends up undermining the principle when it acquires national power.

Today, the lines between the federal government and state and local governments are hopelessly blurred. The federal government spends over $600 billion a year on grants to state and local governments. Arizona state government receives more in federal funds than it raises in general-fund taxes.

Today, state governments operate principally as service delivery mechanisms for federal social-welfare programs. This means that there is no real political accountability for the programs, which is why they grow and function like a blob.

If Medicaid costs are spinning out of control, who's to blame and who should do something about it? The federal government that provides most of the funding and sets up the basic rules, or the state governments that actually administer the program? The food stamp program has grown astronomically of late. Purely a function of a bad economy, or is there something else going on? Whose job is it to figure that out?

President Ronald Reagan wanted to sort out the blob with his new federalism initiative, clearly making some functions, such as Medicaid, fully federal, while making other functions, including most welfare programs, fully state and local. There were some Democratic governors at the time, including Arizona's Bruce Babbitt, who were also interested in a sorting out of responsibilities.

But agreement was never reached, nothing of significance happened. So, the blob endured and grew.

Obama proposes to feed it even more. The federal government should establish manufacturing innovation institutes in economically distressed areas and provide incentive grants to states to increase the energy efficiency of homes and businesses.

The federal government should fix 70,000 bridges and create a federal fund to modernize ports and pipelines. The federal government should have a new grant program to get high-school graduates better ready for high-tech jobs. And, according to Obama, the federal government should make sure that every kid has access to high-quality preschool.

The federal government, however, does not have a greater interest in the recovery of economically distressed areas than the states in which they are located, or greater insight into how to turn them around. Every bridge in America is located in a state and local community that has a greater interest in its condition than the federal government.

Every port and pipeline in the United States is located in a state and local community. If there are gains to be had from modernizing them, local governments have a greater incentive to get it done and done right than the federal government.

Every kid in America lives in a state and local community that is more interested in his education and workplace preparedness than the federal government. What do we really have to show for the increased federal involvement in education, under George W. Bush or Obama?

The federal government is broke, and broke in a way that threatens the American economy. Proposals that it do even more are surreal, even if they are supposedly paid for. If there's loose change to be had, the federal government should use it to reduce the deficit, not further expand its reach.

It's nowhere on the horizon, but a revival of Reagan's new federalism discussion is badly needed.

Reach Robb at robert.robb@arizonarepublic.com.

Copyright 2012 The Arizona Republic|azcentral.com. All rights reserved.For more information about reprints & permissions, visit our FAQ's. To report corrections and clarifications, contact Standards Editor Brent Jones. For publication consideration in the newspaper, send comments to letters@usatoday.com. Include name, phone number, city and state for verification. To view our corrections, go to corrections.usatoday.com.

Posted

View the original article here

Presidential Race Pits Government Against Business

An Obama campaign video shows the president’s national political director, Katherine Archuleta, tearfully crediting Mr. Obama with having saved her daughter’s life. She portrays the president as a hero of government whose health care law assures her daughter, a cancer survivor, insurance coverage forever.

A video by a political committee backing Mr. Romney follows a nearly identical tack: evocative music and a tearful description of Mr. Romney as “the man who helped save my daughter.” But the testimonial, from a former partner at Bain Capital, depicts Mr. Romney as a hero of business who once shut down his firm to aid search efforts until the partner’s missing teenager was found.

Those competing stories are rooted in more than the biographies of the Democratic incumbent, a former professor and community organizer, and his Republican challenger, a onetime financial industry titan. They also reflect the divergent ideologies and core constituencies of the two parties.

Mr. Obama champions government as a linchpin of future economic growth and the average American’s protector from the excesses and failures of the free market.

Mr. Romney condemns government as a menace whose excesses and failures imperil the free market’s ability to enhance individual opportunity and make the nation prosperous.

Each has more negative than positive material to work with. Their back-and-forth is a clash between institutions reduced to equal levels of public disdain after years of economic weakness, Wall Street’s collapse and bailout, high unemployment levels and shifting election outcomes.

A Pew Research Center poll found in February that only 22 percent of Americans rated the federal government as having a positive effect on American life — precisely the same proportion who rated banks and other financial institutions positively.

“It’s clearly a standoff,” said Pew’s pollster, Andrew Kohut, though one involving coalitions of different shapes.

Blacks and Hispanics were twice as likely as whites to rate government positively, for example, and nearly four times as likely as white evangelicals. Mr. Obama’s argument draws stronger support from single women, Mr. Romney’s from white men and married women.

The contours of the partisan debate have grown familiar since Ronald Reagan called government the problem, not the solution, and the 2000 election established how closely it divides the nation.

But each side sees an opening for a breakthrough in November.

For the Romney team, it is the juxtaposition of a Democratic incumbent struggling with hard times against a Republican candidate uniquely suited to extend the arc of conservative ascendancy that began with Reagan’s antigovernment campaign in 1980.

“We haven’t had a candidate that’s been as successful from a business standpoint as Romney has been,” said Carl Forti, a strategist for the pro-Romney “super PAC” that produced the advertisement featuring his business partner. As hostile as swing voters may be toward Wall Street and big corporations, he added, “they absolutely know government’s worse.”

For Mr. Obama’s advisers, the opening lies in their ability to tie Mr. Romney to the market’s generation-long failure to deliver rising living standards to average Americans. “The country tried everything Romney says, and it brought the economy to the brink of collapse,” said Mr. Obama’s pollster, Joel Benenson. “The American people know our country has a big role to play in investing in education, in R&D to produce new industries and in infrastructure.”

That explains the Obama campaign’s recent attack on Mr. Romney’s record at Bain Capital. An Obama campaign video with sorrowful former steelworkers cast Mr. Romney as a corporate “vampire” who with his partners bought a Missouri manufacturer, siphoned away profits for themselves and bankrupted it. Mr. Obama’s defense this week of his campaign’s Bain attacks underscored the ideological clash. The president asserted that pursuit of private-sector profits was insufficient preparation for service as chief executive of government, who is obliged to consider the interests of all constituents, including workers.

The Romney campaign answered that tale of villainy with one of heroism. Its ad highlighted a different company that “Mitt Romney’s private-sector leadership team” helped start, creating 6,000 jobs.

“If that’s not the American dream, I don’t know what is,” a grateful worker concluded.

The route to the American dream sketched by Mr. Obama involves critical assistance from the government. In an interactive Obama campaign graphic, the fictional character “Julia” benefits from programs like Head Start, small-business subsidies and the new health care law. The campaign recently spent $1 million on a targeted mailing to women in swing states trumpeting benefits they would lose if Mr. Romney won a repeal of the health law.

Mr. Romney dismissed the “Julia” device as an illustration of the centrality of government to Mr. Obama’s vision. He said at a rally this year, “If you’re looking for free stuff you don’t have to pay for, vote for the other guy.”

Mr. Obama promotes the two-year-old financial regulation law as protection against the depredations of Wall Street, with all the more urgency after JPMorgan Chase’s recent multibillion-dollar trading loss. Mr. Romney insists that the law inhibits private-sector-led growth and supports its repeal.

He takes the same view of the government’s involvement in bailing out auto companies, saying it rewarded unions friendly to Democrats at the taxpayers’ expense; his campaign’s new Web video features nonunion workers complaining that Washington had not helped them. Mr. Obama says the government bailout saved the industry.

Both sides supplement philosophical arguments with practical ones. Mr. Romney casts the administration’s interventions as simply ineffective; Mr. Obama’s campaign says Mr. Romney failed to deliver on jobs and government-slimming promises as governor of Massachusetts.

Yet they consistently offer voters a fundamental contrast of outlook.

Mr. Obama wants government to enhance opportunity and temper inequality through investments in education, research, infrastructure and new energy technologies — paid for with help from higher taxes on the wealthy. Mr. Romney, speaking in Des Moines last week, articulated the opposite view.

“The private sector is by far the most efficient and cost-effective” at generating economic growth, Mr. Romney said. “As President Obama and old-school liberals absorb more and more of our economy into government, they make what we do more expensive, less efficient and less useful.”

“They make America less competitive,” he concluded. “You do not owe Washington a bigger share of your paycheck.”

View the original article here

House passes measure to avoid government shutdown, but Senate won’t (The Ticket)

Reid (J. Scott Applewhite/AP)

The House of Representatives early Friday morning passed a continuing resolution to fund the government and avoid a looming shutdown after the first attempt to pass a resolution failed. But Senate Democrats are strongly opposed to the new measure.

"The bill the House will vote on tonight is not an honest effort at compromise. It fails to provide the relief that our fellow Americans need as they struggle to rebuild their lives in the wake of floods, wildfires and hurricanes, and it will be rejected by the Senate," Senate Majority Leader Harry Reid (D-Nev.) said in a statement prior to the vote, which resulted in passage 219-203.

Democrats argue the new resolution includes inadequate disaster funds for FEMA, and they oppose spending cuts to programs they say are necessary to stimulate the economy.

"Wake up! Wake up! You can't kill these programs. This is the solution you are killing," Rep. Ed Markey (D-Mass.) said on the House floor, referring to cuts to environmental programs he argues are going to help Americans against natural disasters.

But Republicans who support the measure say that the proposed spending cuts are key to rescuing the economy.

"I'm not one of those people who believe that we have to offset every emergency," Rep. Mike Simpson (R-Idaho) said on the House floor. " . . . . But in the past, we have not had a 14 trillion dollar deficit!" he shouted. "That's the danger to this country--is the 14 trillion dollar deficit and the 1.6 trillion we add to it every damn year!"

The first continuing resolution that came before the House earlier this week failed when Democrats joined 48 Republican conservative fiscal hawks in the House to defeat it. So House Speaker John Boehner (R-Ohio) appealed to conservatives and made deeper cuts in the current resolution, which drew opposition from just 24 House Republicans. Six Democrats also supported the current bill.

Both parties face a time crunch. The government is currently funded through the fiscal year, which concludes Sept. 30. Democrats say FEMA may require additional funds as early as Sept. 26. And Congress is scheduled to be in recess following today's session in observance of next week's Rosh Hashana holiday.

Reid said Friday he would put the measure up for a vote this morning but that it is dead on arrival.

Update 12:47 p.m. EST: The Senate voted to table the resolution 59-36. Reid has scheduled a vote for Monday evening.

View the original article here

Portugal PSD wins vote, strong right government seen (Reuters)

LISBON (Reuters) – Portugal's center-right PSD party was expected to work fast on Monday to form a majority coalition government with its traditional allies, the rightist CDS-PP, to implement the country's bailout program.

PSD's convincing victory on Sunday -- with 39 percent of the vote -- ended months of political uncertainty following the collapse of the minority Socialist government in March when it failed to pass its latest austerity package in parliament.

Submerged in an acute debt and political crisis, Portugal received a 78-billion-euro bailout last month from the European Union and IMF, whose terms include higher taxes, spending cuts and privatizations that will weigh on the economy.

"No time to take a breath ... Today, the PSD and CDS-PP have to start working on a coalition pact and a government that would have enough quality and experience to implement and ambitious but difficult program," business daily Diario Economico said in an editorial.

CDS-PP leader Paulo Portas said he was ready to rule together with the Social Democrats.

Portuguese stocks opened higher on Monday. The 10-year bond yield rose slightly from Friday's close to 10.45 percent, but analysts expected investors to react positively.

"The biggest risk of hung parliament is out of the way, so we should have a rather safe government, a coalition government. I'd say it is as good as it gets -- there should be positive underlying impact from the election," said David Schnautz, debt strategist at Commerzbank in London.

SHOULD BE ABLE TO ACT FAST

A center-right coalition government should be able quickly to enact reforms and austerity measures included in the bailout, such as sweeping tax rises and deep spending cuts, to reduce Portugal's large deficit and debt.

"The next thing to see will be obviously how quick do we get some unpopular decisions and how big is the backlash in the society," Schnautz said.

Portugal faces its highest level of unemployment in three decades and the economy is expected to contract two percent both this year and next, presenting the new government with tough challenges as disposable incomes fall.

The PSD has long defended lower government spending, which the Socialists have managed to reduce only slightly, focusing instead on higher revenues.

The PSD also advocates a smaller role of the state in the economy and privatizations of state companies. Sell-off of state properties is part of the bailout program.

Filipe Garcia, head of Informacao de Mercados Financeiros consultants in Porto, said the election results were convincing and would help investor sentiment, but economic problems will be there to stay for a long time.

"This major result will allow the right to pass more unpopular measures," Garcia said.

"The PSD has committed itself to implementing the bailout terms and that's what they'll do in the coming months ... But the pact does not solve the country's problems, does not bring growth and the success of the government's economic policy will depend very much on the Europe-wide sovereign debt crisis."

Results showed the PSD won 105 seats while the rightist CDS party obtained 24, allowing the two traditional government allies a strong majority in the 230-seat parliament.

So far there have been few strikes or protests against austerity measures in Portugal, unlike Greece and neighboring Spain, but analysts say that could change as the recession deepens.

(Additional reporting by Shrikesh Laxmidas; Editing by Sonya Hepinstall)

View the original article here

Portugal PSD wins vote, strong right government seen (Reuters)

LISBON (Reuters) – Portugal's center-right PSD party was expected to work fast on Monday to form a majority coalition government with its traditional allies, the rightist CDS-PP, to implement the country's bailout program.

PSD's convincing victory on Sunday -- with 39 percent of the vote -- ended months of political uncertainty following the collapse of the minority Socialist government in March when it failed to pass its latest austerity package in parliament.

Submerged in an acute debt and political crisis, Portugal received a 78-billion-euro bailout last month from the European Union and IMF, whose terms include higher taxes, spending cuts and privatizations that will weigh on the economy.

"No time to take a breath ... Today, the PSD and CDS-PP have to start working on a coalition pact and a government that would have enough quality and experience to implement and ambitious but difficult program," business daily Diario Economico said in an editorial.

CDS-PP leader Paulo Portas said he was ready to rule together with the Social Democrats.

Portuguese stocks opened higher on Monday. The 10-year bond yield rose slightly from Friday's close to 10.45 percent, but analysts expected investors to react positively.

"The biggest risk of hung parliament is out of the way, so we should have a rather safe government, a coalition government. I'd say it is as good as it gets -- there should be positive underlying impact from the election," said David Schnautz, debt strategist at Commerzbank in London.

SHOULD BE ABLE TO ACT FAST

A center-right coalition government should be able quickly to enact reforms and austerity measures included in the bailout, such as sweeping tax rises and deep spending cuts, to reduce Portugal's large deficit and debt.

"The next thing to see will be obviously how quick do we get some unpopular decisions and how big is the backlash in the society," Schnautz said.

Portugal faces its highest level of unemployment in three decades and the economy is expected to contract two percent both this year and next, presenting the new government with tough challenges as disposable incomes fall.

The PSD has long defended lower government spending, which the Socialists have managed to reduce only slightly, focusing instead on higher revenues.

The PSD also advocates a smaller role of the state in the economy and privatizations of state companies. Sell-off of state properties is part of the bailout program.

Filipe Garcia, head of Informacao de Mercados Financeiros consultants in Porto, said the election results were convincing and would help investor sentiment, but economic problems will be there to stay for a long time.

"This major result will allow the right to pass more unpopular measures," Garcia said.

"The PSD has committed itself to implementing the bailout terms and that's what they'll do in the coming months ... But the pact does not solve the country's problems, does not bring growth and the success of the government's economic policy will depend very much on the Europe-wide sovereign debt crisis."

Results showed the PSD won 105 seats while the rightist CDS party obtained 24, allowing the two traditional government allies a strong majority in the 230-seat parliament.

So far there have been few strikes or protests against austerity measures in Portugal, unlike Greece and neighboring Spain, but analysts say that could change as the recession deepens.

(Additional reporting by Shrikesh Laxmidas; Editing by Sonya Hepinstall)

View the original article here