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Preventing the Collapse of Democracy with the Interactive Voter Choice System

6:35 pm in Uncategorized by letsgetitdone

By

Nancy Bordier and Joseph M. Firestone

Overview

The two of us met recently at an AmericaSpeaks event in Fairfax, VA, on June 26th. We decided independently to attend the event, but for the same reason. We wanted to protest the undue attention being given the federal budget deficit compared to the far more critical need to restore job-creating economic growth. Increasing tax revenues by getting the unemployed into new jobs is a more effective way to reduce the deficit than self-defeating cuts in entitlement expenditures. We also wanted to protest the bias built into the event, which Joe later analyzed in a seven part series, The Procrustean Democracy of AmericaSpeaks.

After the AmericaSpeaks event, we discussed the problem of powerful special interests that mislead the public, distort U.S. priorities and deform public policies. A prime example is the billionaire deficit hawk who is advocating entitlement cuts and funded the event. We agreed that the increasing enfeeblement of the electorate is part of the problem. Voters’ influence over the agendas of the Democratic and Republican parties and their elected representatives grows weaker as the influence of the business and financial interests that finance the parties and the campaigns of their candidates grows stronger.

Corporate-funded mainstream media have joined forces with the compromised parties and their elected representatives to put special interest priorities in the limelight, and create a political climate conducive to the enactment of public policies they favor, to the detriment of the public interest. Governing officials who should be protecting the American people from predatory special interests have joined forces with them to further their depredations.

They have facilitated the bloating of the financial services sector at the expense of the real economy, the job base and working Americans’ share of national income. The result is a sharp increase in the upward redistribution of public and private wealth to those who are already wealthy, especially those in the financial services sector, and the increasing impoverishment of middle class and working Americans who cannot find jobs that pay living wages.

The recent Supreme Court decision in Citizens United v. FEC has now set the stage for a complete collapse of democracy by giving corporations free rein to spend unlimited amounts of corporate funds to elect pro-business candidates. They can put hundreds of millions of dollars into a single campaign to dominate every messaging channel and use slick, emotionally-tinged political advertisements to dupe undiscerning, low information voters into voting against their own interests for politicians who will ignore them once they are in office, to do the bidding of their special interest campaign financiers.

At this point, Nancy mentioned her patent pending invention, the Interactive Voter Choice System. Its mission is to empower voters across the political spectrum to get control of political parties, elections and legislative decision-making by leveraging the collective action power of the Internet.

The invention, a web-based application, provides voters free tools and services for setting their policy agendas across the board, in writing, for the first time in history, in order to re-set the nation’s priorities from the grassroots, and build trans-partisan voting blocs and electoral coalitions around their agendas that can elect representatives who will enact them into law.

The invention’s consensus-building tools and services empower voters to use their voting blocs to form broad-based electoral coalitions that have the voting strength needed to run and elect candidates to office, on existing party lines or new party lines. They enable the members of voting blocs and electoral coalitions to negotiate common agendas among virtually unlimited numbers of voters of diverse political persuasions. They can use their blocs and coalitions to get control of existing parties so they can run their candidates on party lines, or create new parties.

Nancy also expressed the view, and Joe agreed, that none of the current strategies for ousting special interests and the elected representatives they control will make much of a difference in the near term, either singly or in combination, especially since it is unlikely that campaign finance laws and the Supreme Court’s Citizens United v. FEC decision can be reversed in the foreseeable future. The power of corporate cash fused with the electoral clout of the two major political parties and the legislative clout of party-backed elected representatives has created a political juggernaut which has repeatedly demonstrated its capacity to outmaneuver efforts to replace incumbents and reform the system.

Karl Popper thought that the primary virtue of democracy is that it provides people with a peaceful way to change their leaders when they no longer approve of their leadership. The U.S. political system, however, is falling way short of this core virtue. The large majority of elected representatives are re-elected time after time even though polls show that a majority of Americans are dissatisfied with their performance and want to see most representatives defeated. They are especially adamant about replacing Congressional representatives whom they believe are more interested in serving special interests than the people they represent.

Yet these rogue legislators cling to office despite widespread popular opposition. They can do so because the party-engineered gerrymandering of the boundaries of electoral districts have created "safe seats" for most representatives, who use their corporate-funded campaign war chests to mislead and even dupe their constituents about their intentions and track records when they are on the campaign trail. They also benefit from campaign finance laws and federal and state election laws that make it virtually impossible for most insurgent candidates and third parties to win elections.

Evidence that the parties have deliberately skewed electoral processes to prevent the election of candidates who genuinely represent the people can be found in the anomalous fact that there are only two Independent elected representatives in Congress even though approximately 40% of the electorate has been comprised of Independent and non-affiliated voters for many years.

If Independents held 40% of the seats in Congress, they could break the stalemate between the Democrats and Republicans. They could also revoke rules like the Senate’s filibuster, which enables a single member representing a tiny minority of the electorate to bloc legislation and prevent the democratic rule of the majority of American voters.

Even in the rare instances when incumbents are replaced, newcomers backed by the two major parties typically follow in their predecessors’ footsteps and betray their campaign promises by enacting legislation that favors the special interests that financed their campaigns and those of their predecessors. The process essentially puts these interests beyond voters’ reach, which is especially harmful to the public interest when they possess massive global financial and economic power.

Nancy argued that since corrupted lawmakers routinely block attempts to change the laws that provide them and their financial backers "safe seats" from which to control legislation, voters must change the system from below. With her invention, voters can leverage the collective action power of the Internet to remedy the failure of representative government in the U.S. without changing any laws.

When Joe expressed interest in Nancy’s invention, she invited him to go to the prototype website built around it and share his thoughts about its capacity to engender a voter takeover of U.S. electoral and legislative processes. After a month of exchanging emails and phone chats, and a long lunch in Arlington, the two of us appear to be largely in agreement that the invention, in combination with Web 2.0 applications that facilitate social networking and online collaboration, and eventually Web 3.0 and 4.0 technologies, has a unique capacity to empower voters to create popular political coalitions that can achieve electoral accountability and grassroots control of government.

Self-organizing voting blocs originating and maintaining themselves through the Interactive Voter Choice System could replace special interest, corporatist, and minority rule in Congress with majority rule in just a few election cycles. They could break the stalemate between Democratic and Republican representatives who have demonstrated their inability to legislate solutions to the severe crises plaguing the country that serve the public interest.

The purpose of this post is to share the results of our exchanges. We’ll summarize the premises and diverse capabilities of the IVCS web application, and show how it empowers U.S. voters to prevent the pending collapse of democracy in the U.S. by joining forces to elect representatives who will enact voters’ policy mandates into law.

Premises

The core premise of the Interactive Voter Choice System (IVCS) is that voters who want to get control of government will embrace the system because it is the only way they can get control of government, once again. U.S. voters across the political spectrum are so dissatisfied with their elected representatives that they will take advantage of the first effective mechanism that is made available to them at the local and national levels to oust these representatives from office.

Assuming that polls like the recent CBS News-New York Times poll are correct that 80% of voters want to see most representatives defeated, what dissatisfied voters in a typical Congressional district need to do so, is an application like IVCS that enables them to get control of elections, namely, by setting a common policy agenda and creating a common slate of candidates that attracts enough votes to elect them to office. They can run their slate on the ballot lines of existing parties or create new parties. It is important to keep in mind the fact that incumbent Democrats and Republicans in Congress are often elected to the U.S. House of Representatives with less than 100,000 votes in a typical Congressional district, especially in gerrymandered districts. (Each district comprises a total population of approximately 600,000.)

To get elected, a candidate needs only a plurality of votes cast, i.e. the most votes cast rather than a majority of all votes cast. With polls showing that 80% of Americans want to see their elected representatives replaced, most typical districts are likely to have at least a plurality of discontented voters who will oust their representatives if they have an effective mechanism for doing so. We believe the IVCS application is that mechanism.

The Internet and IVCS make it relatively easy for voters to take the reins of U.S. electoral processes, which we believe they will, based on surveys showing that the Internet has become the primary channel for popular participation in elections. According to a recent Pew Research Center survey, 125 million people used the Internet to participate in all phases of the 2008 presidential election, a number approaching the 131 million people who actually voted in the election. Web savvy voters who use the IVCS application are numerous enough to replace most elected representatives.

The gateway to this usage is already well-traveled and the access tools well-known, thanks to the fact that the IVCS application enables all 125 million Internet users to employ the same social networking technologies as Facebook, which now has 500 million members worldwide. Voters who use IVCS will be able to add friends, family, neighbors and co-workers to their politically-oriented social networks just as they do on Facebook, as well as like-minded voters with similar policy priorities whom they meet for the first time on the IVCS website.

A key related premise of the IVCS application is that people can and will self-organize around specific policy preferences and priorities. Despite the elitist argument that voters are only capable of expressing broad value preferences but lack the capacity to set legislative agendas or formulate policies, voters have consistently demonstrated they are entirely capable of articulating specific policy priorities even in complex and highly technical legislative battles.

A majority of U.S. voters did so recently during the complicated health care debate by persistently supporting the single payer option in the face of the concerted opposition of their Congressional representatives, who refused to put it on the table. Despite the complexity of the fraudulent Wall Street practices that brought down the nation’s banking system and economy, a majority of the population has steadfastly opposed lawmakers’ bailouts of the banks and financial institutions that were responsible.

Moreover, voters are capable of scrutinizing an intricate array of policy options, as demonstrated by thousands of people across the country who participated in the recent AmericaSpeaks event. They selected their preferred policy options from a list of 42 options for cutting the federal budget deficit that organizers were projecting (and the two of us were opposing). Voters are also capable of formulating their own options (as the two of us tried to do during the event, though without much success given the highly structured and, we think, biased nature of the proceedings).

Based on the outcome of Barack Obama’s presidential campaign, another premise of the IVCS application is that the online organizing that will be fostered by the application will be a determining force in future elections. The Obama campaign used online social networking technologies similar to those used by the application to mobilize millions of Millennial generation voters, who were reported to have given him 90% of his victory margin. Thanks to the Internet and social networking technologies, voting blocs that use the IVCS application will be able to perform all the functions of political campaigns and political parties. In addition to recruiting new members on-line, they will also be able to form broad-based trans-partisan electoral coalitions that can acquire the voting strength to take over existing parties, or create new ones, to elect coalition-backed candidates.

How the Application Works

One of the most important functions of the application is to enable U.S. voters across the political spectrum to make their voices heard without the interference of manipulative politicians who claim to speak for voters. It enables voters who use the IVCS application to identify, debate and resolve their differences by themselves in arenas that are not controlled by the mass media or dominated by attention-grabbing pundits, politicians or party officials trying to ignite controversies in order to keep themselves in the limelight.

Surveys show that a majority of Americans share largely consensual policy preferences, suggesting that the acclaimed polarization of American public opinion is more likely to be an artifact of the two parties’ electoral machinations and manipulation of public opinion, than an accurate reflection of voters’ actual stances. One such survey, conducted just after the 2008 presidential election, demonstrates that this consensus remains intact. A majority of Americans across all demographic and political lines, by a greater than 2:1 majority, want government to ensure that everyone has at least a basic standard of living and level of income — even if it increases government spending. They prefer a government that actively tries to solve the problems facing society and the economy rather than one that stands on the sidelines.

The failure of the nation’s elected representatives to enact this emerging policy consensus into law has led to a voter revolt in which a majority of Americans want to throw their elected representatives out of office. The IVCS application is designed to enable them to defeat these representatives, and run and elect candidates who will implement voters’ legislative priorities. Here’s how:

Step 1. Setting Agendas, Resetting the Nation’s Priorities and Building Voting Blocs.

Unlike other voter mobilization applications such as those of the Tea Party and the Coffee Party, the IVCS application is a bottom-up organizing tool, designed to enable voters and voter mobilization groups to build consensus across voting blocs, and negotiate common policy agendas that they can use to form broad-based electoral coalitions. These coalitions will give them the voting strength they need to win elections against major party candidates they oppose. We believe the application can play a unique and unprecedented role in enabling voting blocs and voter mobilization groups taking on the two major parties to avoid fragmenting the dissatisfied majority of the U.S. electorate into political splinter groups too small to win elections, especially at the presidential level.

The IVCS application is unique in its capacity to empower voters to set their agendas across the board and use them to build trans-partisan voting blocs, political parties and electoral coalitions with common agendas which can run candidates and elect representatives who will enact them into law — without fragmenting the electorate into splinter groups that are too small to win elections. Indeed, IVCS tools and services enable voters and voter mobilization groups to build voting blocs, political parties and electoral coalitions of virtually unlimited size around negotiated trans-partisan policy agendas.

It does so by providing voters and voter mobilization groups across the political spectrum a comprehensive Policy Options Database from which they can set an agenda comprising the policies they wish to see enacted into law. (Click here to view a prototype of the database.) The options cross party lines and advocate divergent and even diametrically opposed policy choices. (Voters can add additional options and update their agendas at any time.)

The trans-partisan comprehensiveness of this database is in sharp contrast to the policy platforms of typical voter mobilization groups, and political parties. Most options in the IVCS database do not refer to a specific political party, due to the application’s mission of encouraging voters across the political spectrum to find common ground across political party lines. Moreover, voters are not asked to identify their political party or ideological stance (e.g. conservative, liberal, etc.) since research shows that when voters can freely choose their preferred policy options and are not restricted to a limited set of options, those they choose cut across party lines and ideologies. This contrasts sharply with the limited choices provided by most voter mobilization groups, such as the Coffee Party and the Tea Party.

Unlike IVCS, such organizations leverage the Internet and social networking technologies to recruit members and build an electoral base around a specific set of priorities. They invite people who are interested in the organizations’ priorities to create accounts on their websites so they can communicate with other members, participate in local events sponsored by the organizations and even attend national party conventions. They require prospective members to provide their email address in order to register. This contact enables the organizations to email them newsletters and simultaneously solicit donations of money to run the organizations, get their message out and influence elections. The precipitous rise of these web-based voter mobilization organizations shows that they recognize the potential of the Internet to enable them to perform all the functions of national political parties.

In contrast to this centrally organized approach, the IVCS application is a bottom up organizing tool designed to enable individual voters at the grassroots to create their own voting blocs around their own policy priorities. While organized voter mobilization groups can also use the application, it is nonetheless designed first and foremost to encourage and facilitate voter self-mobilization and the formation by individual voters of self-organizing voting blocs.

The application is also designed to facilitate the formation of consensus among diverse voting blocs and the creation by them of winning electoral coalitions — in contrast to voter mobilization groups that seek to differentiate themselves and their membership from each other, and, if possible, lure away each others’ supporters. While the Coffee Party is on record as espousing civility and eschewing divisiveness, the Tea Party, and other more aggressive voter mobilization groups, tend to focus on controversial and divisive issues. They use them to criticize and even caricaturize the positions of competing organizations in order to attract new supporters, reinforce the loyalty of current supporters, and convince the supporters of competing organizations to come over to their side.

To help voters who use the IVCS application weigh their policy alternatives, all options contain links to online sources of information describing the pros and cons of the options from a diverse array of vantage points. Voters can propose additional links, which are updated continuously.

Voters can select any number of priorities, rank order them, if they wish, from most to least preferred, define different agendas for different purposes, update their agendas whenever their priorities change and save all their agendas in their own personal archive on the website for future reference. They can display all their priorities, or preferred clusters of priorities, on their personal web pages on the website. They can also email their agendas to whomever they wish, such as their elected representatives.

Once voters have set their agendas, they can compare them to the agendas set by other voters. They can make these comparisons by entering their priorities into the IVCS Policy Priorities Database. Once they have entered their priorities, they can then query the database to find out how many voters have agendas that contain priorities that are statistically similar to their own and how many voters share with them clusters of similar priorities, or even a single priority.

They can ask for the ZIP codes of these voters so they will know in what states, counties, and electoral districts they live. They can also ask for the usernames and internal email addresses of voters whose policy priorities are similar to their own, based on the information they provided when they registered. In response to their query, inquirers will receive a list of the usernames of voters who share their policy priorities, their ZIP codes and their internal email addresses so they can contact them directly via internal email.

It should be noted that by contributing their priorities to the IVCS Policy Priorities Database, voters will be joining with other voters throughout the country in resetting the nation’s policy priorities, since statistical reports summarizing voters’ priorities will be published periodically on the IVCS website. This unprecedented voter-initiated survey of policy priorities will be uniquely free of special interest or party bias and external constraints. IVCS users can take advantage of the published reports to see how their priorities compare with those of voters nationwide.

In addition to identifying and contacting like-minded voters, IVCS users (and voting blocs they establish) can also request database information of interest to them showing persistent patterns of policy priorities chosen by voters nationally and by ZIP code, as well as emerging trends and shifts in priorities that may result from political factors, such as lawmakers’ statements related to pending legislative proposals and actions that voters favor or oppose; media coverage involving politicians and pundits; changing economic conditions, such as employment rates, etc.

Voters can send the results of their database queries to the news media, elected representatives and candidates to publicize the degree to which voters’ preferences converge with, or diverge from, those espoused by representatives, candidates, political parties, advocacy groups, special interests and pundits, or those attributed to voters by these individuals and groups.

When media attention is focused on clashes between voters’ policy priorities and elected representatives’ statements and legislative track records, they will be pressured to change course if the divergences appear severe enough to raise doubts about their electability in the future.

Voters will be able to increase their political clout not only by publicizing their views and priorities in the media but by joining forces with like-minded voters to create voting blocs and electoral coalitions that can get their priorities enacted into law. If they join forces to influence the political process, their relationships will be unique among those of the 125 million Americans who use the Internet to exert political influence because they will owe their origin to initially shared policy agendas chosen from the same database. While many of the 346,000,000 people globally who use the Internet to post their views on blogs do so to contrast their views and debate their differences, IVCS users can create relationships around already shared policy preferences.

Voters who query the Policy Priorities Database to find and contact other voters with similar policy priorities can add these voters to their personal networks on the IVCS website, and vice versa, just as Facebook members add "Friends" to their networks so they can use social networking tools for one-to-one and one-to-many messaging. They can then access each others’ networks, if allowed, and begin to expand the number of voters in their personal networks who share their priorities.

If the relationships among IVCS users with similar priorities who contact each other endure, and if, after examining their representatives’ legislative track records they decide that the incumbents are not exerting their best efforts to enact their priorities into law, they can join forces to influence forthcoming elections to elect representatives who will, by transforming their personal networks into groups hosted on the website that can function as voting blocs. They can

1. Give their group a name

2. Create a registration process for new members

3. Establish a mailing list so they can email messages to all their members simultaneously, to send newsletters and invite members to participate in online and face-to-face events sponsored by the group as a whole, or by individual members.

4. Post their agenda on the group’s home page on the website, if they wish

5. Decide how much access to their group and its activities they want to give non-members.

6. If they wish to recruit new members to their group, they can post its name and a link to it on the IVCS website’s homepage. They can also add links to their group’s site from external sites.

Group members can take advantage of the website’s chat and forum features to discuss their agenda, consider proposals to update them to take account of major events and changing conditions, and plan how they can use their agendas to put pressure on their representatives and influence upcoming elections.

They can add links to their group’s web pages connecting their members to websites that provide information about elected representatives of interest, including their legislative votes, sources of the campaign funds they receive, speeches, public statements, press releases and stories about them published in the media. The IVCS website itself will provide all its members an exhaustive set of links to websites that they can use to zero in on specific legislative issues, documents related to these issues, and the actions of legislative committees and voting bodies affecting these issues.

It is in this context of direct interaction with elected representatives that the policy agendas which voters create using the IVCS application can truly transform U.S. electoral and legislative politics. For the agendas, backed by the voting blocs formulating them, create an unprecedented lever of individual and collective control over the entire U.S. political process, by serving as a written mandate that voters can use in a quasi-contractual sense to set the terms and conditions according to which they will vote for or against any electoral candidate, or put any candidates on the ballot, and vote for them in primary and general elections.

Agendas can thus serve not only as mandates, but rating tools for evaluating announced candidates and recruiting prospective candidates, as well as monitoring tools for tracking and overseeing elected representatives’ legislative actions. The agendas can also be used to structure online, as well as face-to-face, debates among candidates that are run by, and for the voters, rather than reporters and journalists, who typically let candidates weasel out of giving clear, unequivocal answers to voters’ questions. Voting blocs can request that candidates discuss particular policy priorities, how they envisage getting support from their Congressional colleagues to move them through the various stages in the legislative process, and their analysis of the prospects for getting them enacted.

In effect, voters can use across-the-board agendas to wield real clout in negotiating with their representatives and candidates, specific policy-based terms and conditions for giving them their votes at the ballot box, instead of wasting time writing ineffectual letters to compromised representatives about single issues; or signing petitions launched by voter mobilization groups to influence representatives who have already sold their votes to special interests. If incumbents cannot provide tangible proof that they have exerted their best efforts to implement specific policy priorities contained in voters’ agendas, they will not get their votes.

Incumbents and first-time candidates will no longer be able to get elected just by talking through their hats. They will have to have credible IVCS agendas in hand that converge with voters’ agendas, supported by concrete evidence showing they can be trusted to do their best to enact them into law.

To institute such unprecedented voter-representative relationships based on written policy mandates, IVCS-enabled groups can request that elected representatives and candidates state and email them their policy agendas, using the IVCS Policy Options Database, accompanied by tangible evidence of prior support of voters’ policy priorities. Then voters can compare their own agendas with the agendas of representatives and candidates, and their track records. If the agendas converge and the track records reflect best efforts, the group can pledge to vote for them in the next election.

On the other hand, if their respective agendas diverge, or the group is dissatisfied with the representatives’ track record, the group can decide to transform itself into a voting bloc aimed at ousting them and running and electing their own representatives. Such a course of action is feasible, since voting blocs can put candidates on existing parties’ primary and general election ballots, with or without the support of organized parties, and get them elected if they can mobilize enough voters behind their candidates.

Once the group has decided to move from dialogue to action and transform itself into a voting bloc that becomes a major player in targeted elections, members may wish to create an organizational structure, if they have not already done so, to divide up and share the various tasks involved in electoral campaigns.

To help them plan and execute their campaigns, the IVCS website will partner with organizations that have developed state-of-the-art, cost-effective tools for raising funds online, putting candidates on the ballot, and mobilizing voters behind slates of candidates. They can also use IVCS tools and services to build broad-based electoral coalitions that have winning electoral bases, as described below.

Step 2. Building Electoral Coalitions, Debunking Political Disinformation, and Defusing Hate-Based Politics

Voting blocs using the IVCS application can be built around any set of policy issues and priorities and target elections at any government level and any number of states, including all 50 states.

We anticipate, however, that many blocs with significant clusters of members in specific states will initially decide to focus their attention on influencing elections in a single state, e.g. elections of the state’s representatives in Congress. By focusing attention on electoral races where their current members are clustered, they can potentially exert a direct and decisive influence over the most fundamental and decisive electoral activity of all — the nomination of candidates to run for office.

Even though most media attention in U.S. politics is focused at the national level, especially on the interactions between the president and Congress, none of these elected officials can get elected unless enough local voters sign nominating petitions to meet state requirements for putting them on the ballot and then vote for them in primary and general elections.

Moreover, despite all the hype, Congressional elections are no less important than presidential elections, because Congress holds the purse strings and the president is dependent on their authorizations to implement his legislative proposals.

As we have seen, in the case of the number of signatures required to put a candidate for Congress on the ballot, the number is small compared to the number of votes cast, which is also small compared to the number of eligible voters. Moreover, the growing number of dissatisfied voters identified in recent surveys makes it much easier for insurgent candidates to receive a plurality of votes cast once they get on the ballot.

At the outset, IVCS users who create voting blocs to influence Congressional elections in their state may not have enough members to put candidates on the ballot and elect them without undertaking concerted efforts to increase their numbers by creating electoral coalitions with other voting blocs, voter mobilization organizations and, possibly, existing political parties.

To build popular coalitions that can win Congressional elections, whether they are transient or long lasting, emerging voting blocs are likely to find it necessary to negotiate with prospective coalition partners shared agendas that attract broad cross-sections of voters, agendas that comprise trans-partisan sets of policy priorities that cut across traditional ideologies and party lines.

Parenthetically, it should be noted that the IVCS application enables voters not only to build broad-based consensus among disparate groups and voting blocs, but simultaneously to shift the locus of political debate from the national level to the local level, where the critical issues facing the nation can be solved by fair-minded citizens, rather than left to fester in the hands of conflict-fomenting lawmakers.

To build coalitions that can oust these dysfunctional officials from office, voters may decide that the most effective course of action is to devise among themselves pragmatic compromises to the burning political controversies that politicians keep stoking in Washington, D.C. to increase their re-election prospects. These controversies include, in particular, those relating to the relationship between government and the private sector and the extent to which government should regulate the practices of businesses, banks and financial institutions; or transfer public funds into private hands, whether they are banks, automobile manufacturers or insurance companies.

The IVCS application intertwines the processes of conflict resolution with coalition building, by providing voters eight outreach mechanisms for simultaneously building consensus about policy priorities and expanding the number of voters belonging to trans-partisan electoral coalitions to give them the voting strength needed to elect their candidates. All of them take advantage of the application’s unprecedented outreach tool for engaging U.S. voters of all political persuasions in an entirely new consensus-formation and coalition-building political activity; namely setting their policy agendas across the board, in writing, and building voting blocs and electoral coalitions around shared agendas. Significantly, they will be assisted in this endeavor by the IVCS Voting Utility, which enables the members of existing voting blocs and prospective coalition partners to vote on any issue, including which priorities they want to include or exclude from common agendas.

IVCS voting blocs seeking to increase their membership and form electoral coalitions can invite prospective members and allies to set their policy agendas using the Policy Options Database, to provide them a basis of comparison, and see how much convergence there is with respect to the policy priorities they have each selected. If their stances are sufficiently similar on issues they mutually regard as fundamental, so as to indicate that they might be able to agree on common slates of candidates who share their agendas, they can proceed to create a formally organized coalition through which they can join forces to screen and select candidates, put them on the ballot, and elect them in primaries and general elections. They can then use IVCS tools for creating a single group on the IVCS website which includes all their members and provides the leadership of the coalition, and all members, one-to-one and one-to-many messaging tools.

On the other hand, if they are in agreement on fundamental priorities, but disagree strongly on other priorities that are part of each other’s agendas, they will have to figure out whether these discrepancies are a deal-breaker with respect to forming a coalition. If necessary, they can put the matter to a vote by their respective memberships using the IVCS Voting Utility. The members of the two blocs can vote separately on which priorities they want to include in a common agenda, and which ones they are willing to drop in order to join forces to obtain the voting strength that coalition candidates will need to defeat their opponents in the election. If a majority consensus emerges on which priorities to include and exclude, the coalition can come into existence and move to the next set of strategic and tactical decisions, including decisions on a common slate of candidates, and collecting the signatures required to get them on the ballot.

Below is a list of eight IVCS outreach mechanisms through which voting blocs can attain the numerical voting strength they need to win elections. They can:

1. Search the list of existing IVCS-enabled voting blocs that the blocs have elected to post on the IVCS website, to identify prospective coalition partners and contact those with priorities similar to their own. If they are willing, they can open negotiations to create shared agendas using the IVCS Policy Options Database. If a consensus emerges, they can proceed to see if they can select common slates of candidates.

2. Contact external voter mobilization groups with similar agendas and, if they are willing, open negotiations to create shared agendas using the IVCS Policy Options Database. If a consensus emerges, they can proceed to see if they can select common slates of candidates.

3. Contact labor unions with state and local chapters. If they are willing, open negotiations to create shared agendas using the IVCS Policy Options Database. If a consensus emerges, they can proceed to see if they can select common slates of candidates.

4. Recruit new non-IVCS members by advertising their voting bloc, its agenda and action plans in venues outside of the IVCS website. Invite prospective members to set their policy agendas using the IVCS Policy Options Database. After submitting their priorities to the IVCS Policy Priorities Database, the prospective members can then query the database to compare their agendas with the bloc’s agenda. If they find that they share a sufficient number of shared priorities with bloc members, they can opt to join the bloc.

5. Invite like-minded friends, family, neighbors and co-workers to set policy agendas, using the IVCS Policy Options Database, submit them to the IVCS Policy Priorities Database, and then query the database to see whether their agendas comprise a sufficient number of shared priorities to motivate them to join the voting bloc.

6. Invite newly registered IVCS members to join their bloc by continuously querying the Policy Priorities Database, to locate and contact new voters in their electoral districts who have recently submitted policy agendas with policy priorities that are statistically similar to those of the voting bloc.

7. Query the IVCS Policy Priorities Database for IVCS members whose agendas are statistically dissimilar but comprise enough shared policy priorities to motivate the individuals to join the voting bloc in exchange for the addition or deletion of objectionable options.

8. Join forces with existing political parties, or start new parties. Voting blocs seeking to expand their membership can contact existing local political parties to see whether they are interested in forming a coalition. Since the Democratic and Republican parties have been losing supporters in recent years, on the whole, they may welcome the opportunity to reinvigorate their electoral base.

To put the negotiations on a concrete plane, the IVCS voting bloc can invite party officials and interested party members to set their policy agendas using the IVCS Policy Options Database. Officials and party members can then submit their priorities to the IVCS Policy Priorities Database for tallying under the party’s name. The members of the voting bloc and the party can respectively compare their agendas to see whether there are a sufficient number of shared priorities to form the basis of a coalition. If so, they can proceed to a vote using the IVCS Voting Utility so their members can vote on which priorities their members wish to place in a common agenda and what slate of candidates they wish to run.

If a consensus emerges, according to whatever procedures and rules they decide to adopt, their coalition can pool their resources to mobilize their members to go to the polls to vote for the slate of candidates they jointly agree to endorse.
Strategically and tactically, IVCS-enabled voting blocs may decide that they will be more effective in getting their candidates elected by working within existing political parties, and eventually getting control of them, than to divert their resources to starting new parties, state by state. The new party route will leave the Democratic and Republican parties intact, and permit them to continue to use their unfair advantages in gerrymandered districts and special interest fund-raising to run and elect party-backed candidates to office.

This strategy of working within existing parties prevents the fragmentation into losing splinter groups of the majority of voters who want to see most Democratic and Republican candidates replaced. However, IVCS consensus-building tools enable broad-cross sections of voters to build voting blocs and coalitions that can win elections, whether they work inside or outside an established party.

The splintering of the majority of U.S. Voters, who want to oust the nation’s Congressional lawmakers, into a whole raft of small political parties is not a formula for success in running winning candidates against the candidates of the Democratic and Republican parties, particularly at the presidential level. In the long run, agile and malleable IVCS voting blocs will become more important than political parties. We believe that they, not political parties, will become the driving force in elections and legislation, especially since these blocs can easily gain organizational control of established parties once they start winning elections on party lines and register enough bloc members in the party to elect them to a majority of party positions.

The fact of the matter is that IVCS-enabled voting blocs can perform all the functions of a political party without actually having to form a party, especially since they can run their candidates on existing party lines on the ballot by collecting the number of signatures required by the state to get them on the party’s lines. Moreover, IVCS blocs have unique mechanisms that parties do not have for building ever larger trans-partisan electoral bases, by merging with other voting blocs and forming electoral coalitions with voters across the political spectrum.

By running their candidates on existing party lines and building winning electoral coalitions that have the voting strength needed to beat party candidates in primaries, they can avoid the time consuming efforts involved in collecting the signatures needed to create new political parties from scratch. Moreover, once they start electing their candidates to Congress carrying the banner of the two major parties, they will have access to the pivotal leadership and committee positions that are traditionally divided up between the major parties, positions that have the authority to decide which policies will and will not move through the legislative process and be enacted into law.

Representatives who owe their election to IVCS-enabled voting blocs, and truly represent the best interests of the American people, will be free to revoke anti-majoritarian rules and practices like the Senate’s filibuster and secret holds, which have permitted a minority of elected representatives representing a minority of the American people to decide which bills will and will not be enacted into law.

Working within existing parties at the outset does not prevent the eventual establishment of one or more IVCS-enabled third parties in all 50 states, similar to what Ross Perot attempted to do back in the 90′s. IVCS-enabled voting blocs will have members in all 50 states who can easily use IVCS tools and services to bring together around common agendas decisive numbers of large cross-sections of voters under a minimal number of party umbrellas.

IVCS voting blocs will be well-equipped to proceed on this front, since they will not only have enough members to gather the number of signatures required by the state to establish a political party, but they will also be familiar with the legal ropes, having worked with state election authorities within state legal guidelines for running candidates on the ballots of existing parties.
These blocs can use IVCS agenda-setting and consensus-building mechanisms to enable their members to determine the parties’ policy agendas. Since the members of the party can update their agenda at any time by using the IVCS Voting Utility, the party will not be plagued by internecine conflicts over its platform since they can resolve divergent views by holding on-line votes to determine the preferences of the majority.

Moreover, they can use the platform to screen prospective candidates by comparing the party’s platform with the candidates’ platforms. By using IVCS agenda-setting and consensus-building mechanisms, and analyzing past election results and current polls, they can also determine how they might wish to customize their agendas to enhance the election prospects of their candidates in particular states and counties.

Unlike the present situation where candidates of both major parties espouse policy options that fall well outside the confines of the preferences of rank-and-file party members, IVCS-enabled third parties and their state-based supporters can prevent candidates from running on their lines, in the event that they espouse policies that are clearly inimical to those of the party.

The important point to keep in mind is that the goal of the IVCS application is to enable voters to fundamentally alter the entire political system so that they run the government, not political parties, compromised politicians, special interests that fund their campaigns, or lobbyists whom special interests fund to sit at the table with lawmakers and dictate the legislation they pass.

Whether IVCS-enabled voting blocs opt to get control of the Democratic and Republican parties or create new parties is merely a means to this end. In either case, IVCS-enabled voting blocs will be more powerful than parties, because they will dominate the political landscape from coast to coast by engaging the newly empowered U.S. electorate in setting its agenda and deciding who will be elected to enact it into law.

Moreover, it will be the members of IVCS-enabled voting blocs who will shape public opinion, not political parties or politicians. Since voters will be running the government and sharing their political views over the Internet at the speed of light, their influence will dwarf that of the political pundits, political parties, politicians and their special interest campaign contributors who have limited the parameters of public debate for decades in order to promote and protect their private interests.

IVCS-enabled voting blocs, due to their size, ubiquity and capacity to continuously build consensus among voters across the political spectrum, will also dwarf their influence in deciding which candidates run in primary and general elections and win. This is because IVCS-enabled voting blocs will possess a nimbleness, flexibility and fluidity that enables them to continuously reshape and resize themselves in response to voters’ changing policy priorities so that they can create whatever electoral bases they need to run and elect bloc candidates to office at any level of government and in whatever states they choose.

IVCS-enabled voting blocs of any size can join forces and recombine into larger blocs within states and, eventually, across any and all 50 states, virtually overnight. All they have to do to launch these expanding blocs is to take advantage of the Policy Options Database, the Policy Priorities Database and the Voting Utility to determine what policy priorities are preferred by how many voters. At every turn, they will be able to build consensus among ever larger numbers of voters and gauge whether they have an appropriate mix of policy priorities to obtain the voting strength they need to elect their candidates in upcoming elections. Any shortfalls can be overcome by forming electoral coalitions with other voting blocs, voter mobilization groups, unions and political parties around shared policy agendas.

What matters most is that it will be U.S. voters at the grassroots who possess the exclusive power to run elections and decide who will represent them in government, and what policies their representatives will be instructed to enact in their name.

Conclusion

The Interactive Voter Choice System is a web application designed to support the creation of self-organizing voting blocs and popular political coalitions that become the driving force of U.S. electoral and legislative processes. We see people using the IVCS website to formulate policy agendas comprised of prioritized policy options and then forming cohesive voting blocs around these agendas. IVCS will create the potential for so many policy agendas and voting blocs to form that it is virtually certain that new and powerful blocs and even political parties will emerge to reshape the political landscape. They will grow rapidly and begin to acquire local, state and national influence once they figure out how to develop the right mix of policy agenda, collaborative modes of interaction, leadership, marketing savvy, and, no doubt, luck.

The blocs will at first have only a virtual identity, but the social ties formed will be real. When bloc members start to transform their blocs and electoral coalitions into competing forces with which the two major parties must contend because the majority of angry voters will be driving them, the transition will be made from virtual to political reality. IVCS tools and services will support agenda formation in ways never imagined by legacy parties. The collaborative tools will be better than the meager fare offered by legacy parties. State-of-the-art content management tools will enable voters to get into the nitty-gritty of policy analysis, formulation and advocacy to a degree that political parties never intended, or wanted to afford their members. IVCS social networking tools will enable individual voting bloc members to grow their blocs by leaps and bounds, virtually effortlessly, as infuriated voters realize that they no longer have to tolerate their political impotence at the hands of political parties that have betrayed their trust.

The IVCS application will support an unprecedented degree of openness, transparency, and political inclusiveness within IVCS-enabled voting blocs and coalitions. Because of these characteristics, they will more effectively solve disagreements and conflicts, and adapt with far greater agility to the non-stop political crises overtaking America.

Of course, there is no guarantee that the application will work as we’ve envisioned it. But the likelihood that new national blocs, popular coalitions and even political parties transcending state and local boundaries will form and maintain themselves is great, because of the richness of the application, the potential for many, many groups to form and fail, while giving up their members to those that survive, and also because of the yearning in America for change. Most Americans want to do something about the mess that we’re in. They’ll respond to an application like IVCS that enables them to prevent the looming collapse of a democracy that once provided inspiration to democracies everywhere.

(Cross-posted at Re-inventing Democracy, All Life Is Problem Solving, and Fiscal Sustainability).

Which Would You Rather Cut: Social Security, or Interest for Foreign Governments and Rich Bondholders?

12:01 am in Uncategorized by letsgetitdone

Alan Simpson and Erskine Bowles, the Co-Chairs of “the National Commission on Fiscal Responsibility and Reform,” would have us believe that a deficit and debt crisis threatening the fiscal future of the United States is upon us, that "This debt is like a cancer,” and that unless we begin to make across the board cuts in expenditures, and also raise taxes in a way that distributes the pain across all segments of the population, there is no way we will return to fiscal sustainability. This view is false and also alarmist for many reasons. One is that Bowles’s view that: "We could have decades of double-digit growth and not grow our way out of this enormous debt problem”, is ridiculous, even if one thinks there is “a debt problem.” I’ve shown elsewhere, that all the US needs to do to “grow our way out of the problem” is to return to the historical average decade-long growth rate we experienced between 1940 and 2000 to begin producing surpluses by 2017 and bring the public debt-to-GDP ratio down to 37% by 2020.

A second reason is that there is no “debt problem,” if someone means by that, that our debts can grow so large that there is a solvency risk for the US Government. As I and others, have written before, there is no solvency risk, and so there is no “debt problem.” A third reason why the views of Simpson, Bowles, and other deficit terrorists on the “Catfood Commission,” are false and alarmist is that their conclusion that we are in a crisis, is based on assumptions, that will only be true if we choose to make them so. There are two kinds of assumptions, that, if true, would account for large deficits, and, also, the “debt problem” that is scaring our co-Chairmen out of their wits sufficiently that they want to take a hatchet to Social Security and other entitlement programs, such as Medicare and Medicaid. The first kind of assumption relates to revenue projections. The second kind relates to interest costs.

Revenue assumptions first. Revenue projections are a function of assumptions about future US GDP growth and also the percentage of projected GDP that will be tax revenues. The “Catfood Commission” seems to be relying on CBO’s assumptions used in its recent projections of the Federal Government’s fiscal state from 2010 – 2020. The Commission is then extending projections based on these assumptions out further to 2025, and probably even further to 2050. I’ve pointed out numerous times in previous posts that such long-range projections are just a fairy tale. However, it’s still worthwhile to show how the ending of this fairy tale is dependent on assumptions that have no basis in evidence or valid economic modeling.

CBO’s annual GDP change ratios (not adjusted for inflation) between 2010 and 2020 ranged from a low of 1.027 to a high of 1.060 and averaged 1.044 over the period. These are considerably below historical averages over the decades since 1940 which are about 1.07 – 1.08. So, the CBO economic growth projections are very conservative, taken in historical perspective. Also, tax revenues taken as a proportion of GDP, from 2011 to 2020, vary from a low of 0.164 to a high of 0.196, and are either virtually the same, or increase by a small amount throughout the decade, with an average increase from 2010 to 2020 of 0.003. That is, the CBO projections of tax revenue as a percent of GDP constantly increase from 2011 to 2020.

Now, even though the “Catfood Commission’s” own projections haven’t been released yet, it’s pretty clear, given their limited budget, and their reliance on the Peter G. Peterson Foundation for staff funding that they’ll have to rely on extensions of CBO projections already calculated by staff from other Peterson organizations, such as AmericaSpeaks. However, we already know something about the projections AmericaSpeaks has made because they used these in their recent “Our Budget, Our Economy” national event.

AmericaSpeaks, claiming its projections are an extension of CBOs and are based on them, projects a deficit of $2.46 Trillion in 2025, and says that is 9% of GDP. This means that their GDP projection is roughly $27.33 Trillion, compared to CBO’s 2020 projection of $22.544 Trillion. In turn, interpolation of the intervening year GDP projections between 2020 and 2025, yields estimates of $23.423 T, $24.337 T, $25.286 T, $26.297 T, and $27.331 T. This projects an average annual GDP growth ratio of 1.039 from 2020 – 2025, which is a bit more conservative than the 1.044 that CBO projected from 2010 to 2020. This small difference translates to an expectation of about $125 Billion more in revenue in 2025, improving the deficit picture a bit relative to the $2.46 Trillion projection.

Why does AmericaSpeaks project an average annual growth rate slightly less than CBO’s own very conservative average? I don’t know. But I do know that they claim their projections are based on CBO’s, so they ought be explaining any deviation from the CBO pattern. They don’t explain this one, of course.

When we look at tax revenues as a percentage of GDP, we find that there, also, the AmericaSpeaks projections deviate from CBOs in a direction that makes the projected deficit and national debt worse in 2025. Specifically, the CBO ratio of tax revenue to GDP in 2020 is 0.196, if we were to continue the trend of increase in this ratio to 2025, we’d get something like 0.198, 0.200, 0.202, 0,204, and 0.206 in 2025, an average increase 0.002 per year. Using the AmericaSpeaks GDP projection at $27.33 T, the 0.206 ratio translates to revenue of $5.63 T in 2025, a difference from the AmericaSpeaks projection of $870 Billion in revenue in 2025. When we interpolate the revenue ratios that AmericaSpeaks must have developed for the years 2021 – 2025 in order to get their very low estimate of $4.76 T in tax revenue in 2025, the picture looks something like this: 0.191, 0.187, 0.183, 0.178, and 0.175 for 2025. This means that their estimates of the tax revenue as a proportion of GDP declines over the 5 year period and the decline is an average of 0.004 per year, a much larger average decline than the CBO average increase of 0.003 during 2010 – 2020, and a much larger decline than my assumption that the average increase in the tax revenue proportion would be 0.002

What accounts for this change in both the magnitude and direction in the proportion of tax revenue collected? AmericaSpeaks doesn’t say, but it is clear that this difference in assumptions needs to be explained because 1) it departs from CBO’s projections, and 2) this departure results in an $870 Billion increase in the deficit projected for 2025 than would otherwise have been the case if they had followed the CBO pattern. Also, the higher deficits resulting from both deviations from the CBO pattern I’ve covered, total nearly $ 1 T in projected revenue in 2025, meaning that if AmericaSpeaks had followed the CBO pattern strictly, it would have projected a deficit of roughly $1.465 T, rather than $2.46 Trillion, which, of course, would make those 2025 projections look a lot better than they do now. Also, even though I haven’t troubled to compute the annual deviation of the AmericaSpeaks projection from a CBO-based projection during 2021 – 2024, it’s also pretty clear that the sum of these deviations would total about $2 T, added to the $1 T for 2025, that’s a total of $ 3 T. The Peterson Foundation allied organizations including AmericaSpeaks have been using a national debt to GDP ratio of 114% in 2025 to underline the seriousness of the US’s debt problems. However, taking the $27.33 T estimate for GDP and multiplying by 1.14 gives us a projected national debt figure of $31.15 T, and subtracting $3 T from that gives us a new debt-to-GDP ratio projection of 103%, somewhat less scary than the earlier figure, I think.

So, in short, this analysis suggests that a sizable part of the big “debt problem” the ”Catfood Commission” and its allies see for 2025, is due to assumptions that, without explanation, depart from the pattern of CBOs projections. Whether these are due to errors, or to a deliberate bias toward pessimism even greater than CBO’s, I cannot say. But when the leaders of a National Commission are so committed to the idea that there is a “deficit problem,” one has to assume that any analysis produced by allies of that Commission is likely to make assumptions that produce the kind of results that those leaders want to hear. That, in fact, is what has happened here.

Now, let’s move on to the question of interest costs. CBO estimated that interest costs from 2011 – 2020 would total $5.64 T, extending its projection to 2025 using an annual rate of increase of 1.1, roughly the rate used by CBO in 2019 and 2020, we get AmericaSpeaks projection that interest costs will be $1.49 T in 2025. We also get total interest costs from 2011 to 2025 of $11.8 T. Without these costs, and assuming we take into account the roughly $3 T difference resulting from using CBOs assumptions rather than AmericaSpeaks‘s, the projected national debt in 2025 would be projected at: $16.35 T in 2025, not $31.15 T, or even $28.15 T. And even assuming the very pessimistic GDP figure of $27.33 T, we come out with a public debt to GDP ratio of about 60% in 2025, not very different from what we have now. Also, the projected deficit of $1.465 T in 2025 is completely wiped away and turns into a small surplus if we have no interest costs at all. So, where’s the “deficit problem”?

Well, of course, this analysis has shown that it is partly in shading the CBO assumptions so that they are even more conservative than CBO’s, without even telling people that’s what you’re doing. And it has also shown that the heavy majority of the problem is in the interest costs the US would pay on its debt instruments. So how do we get rid of this ‘deficit problem.” Well, first, we need to quit making assumptions that shade the CBO’s assumptions in an even more pessimistic direction simply because we want to believe that there really is a deficit problem. And second, the Federal Government must stop issuing debt instruments when it spends money. If it does the latter, Federal interest costs will approach zero percent of GDP in a very short time, and we can avoid spending that $11.8 T over the next 15 years.

Alan Simpson, Erskine Bowles, Alice Rivlin, and our other deficit terrorist friends are fond of talking about how we all have to make sacrifices to solve our “deficit problem,” and that entitlements, among other expenditures, will have to be cut in order to solve our problem. But, even if we believe (which I don’t), along with them, that there is, or may one day be, a deficit problem that we need to bring under control, there is no need to solve that fantasy problem either by raising taxes, or by cutting entitlement programs like Social Security, Medicare, and Medicaid. If you insist on believing in either the fantasy of solvency risk, or the fantasy of the bond markets imposing high interest rates on the United States, then the solution to both of these fantasies is the same. It is to stop issuing debt instruments, and, consequently, paying foreign nations and rich investors needing a safe harbor for their funds, interest that we need not pay on debt that a country, sovereign in its own currency, like the United States need not incur.

If you believe that cuts must be made to bring the deficit problem under control, then see clearly the real choice here. Would you rather cut Social Security and other entitlements, as well as other valuable Federal programs, and also raise taxes; or would you rather take care of the whole “crisis” by ceasing to issue debt and stopping interest payments to the wealthy, the Chinese and other foreign creditors who are parking their USD in Treasury Securities rather than spending them on American products? Whose side are you on — the side of the American people who need their social safety net programs to remain in place for themselves, their children, and their grandchildren, or the side of the wealthy, and the foreign nations who want us to continue to pay them interest?

(Cross-posted at All Life Is Problem Solving and Fiscal Sustainability).

The Procrustean Democracy of AmericaSpeaks: Part Seven (Conclusion)

11:49 pm in Uncategorized by letsgetitdone

In my last post, I continued my analysis of the June 26th AmericaSpeaks Community Conversation event I attended in Falls Church, VA, focusing on Step Five in the decision process used in the meeting. In that post I presented the specific option choice frameworks AmericaSpeaks presented to participants in the categories of Non-Defense and Defense spending, and revenue raising, and also analyzed the biases inherent in the way they were structured. In this post, I’ll wind up this analysis of the AmericaSpeaks event, the materials provided to participants, and the biases in their process as I saw them.

Remaining Step 5 Process

For the deficit reduction workbook options exercise, the community conversation group split into two groups. One much smaller group of perhaps 25% of the attendees, listened to the web-streamed introduction to the exercise. They then, filled out their worksheets selecting options and left perhaps 15 minutes to a half hour before the rest of us. Since they weren’t included in the larger discussion, I cannot report on the views of the individuals in this group at all. Most of the other participants, including my daughter and I, gathered around a very large table with one of the two facilitators, and without much introduction, got right to the task of making our choices of options for reducing expenditures and raising revenues. After we made our choices, the facilitator asked us to report them, and moved around the table receiving reports form everyone. Once again, I tried to introduce the option of ceasing to issue debt and saving nearly all of the projected interest costs by 2025. This option wasn’t recorded in any notes, nor was it presented to the group for serious discussion. One woman talked about wanting to cut defense spending by much more than the 15% allowed in the worksheet and also talked about much more progressive taxation than represented in the options work sheet. She claimed she could save much more than the target amount of $1.2 Trillion, but as far as I could see her proposals were not noted for reporting to AmericaSpeaks either.

Two people in the group were very aggressive in both their spending cuts and their revenue raising. They believed that deficits must be stopped and that the Government’s budget, like any household budget, must be balanced. The lack of discussion prevented them from hearing any criticisms of the idea that the Government is like a household. Most people in the group however, seemed to concentrate their savings on having FICA extended to 90% of earnings. Four or five people favored raising the age for full Social Security eligibility to 69, and some favored raising FICA rates to 14.4% by 2025. A majority were for cutting Defense Spending by 10%, and also for cutting Medicare and Medicaid by 5% by 2025. Two or three were for tax reform and saving as much as $642 Billion that way, a small minority of the group. New taxes were somewhat popular, but not the Value-Added Tax (VAT) which had only one or two supporters. In contrast, a securities transaction tax had majority support, and a carbon tax had appreciable table support, but seemed short of 50% of the people at the table. In all, the majority of people around the table favored a broad combination of cuts and taxes to raise revenues, but the average view seemed quite a bit short of the 1.2 Trillion target and clustered at around $900 Billion. This number has to be viewed as a loose estimate, because I was not in as good a position as the facilitators to get a clear figure of total savings from everyone in the panel. I did have the impression however, that there was not a lot of enthusiasm for Social Security and Medicare cuts, but that people would grudgingly select these options if they believed in the idea that there really was a deficit crisis.

The process leading to the many judgments made by participants about options and the above results was, in my community conversation, remarkably devoid of discussion. Once our facilitator, very briefly, introduced the exercise, we made our judgments and then reported on them to the group. There was hardly any discussion of what people reported. Everyone gave reasons for some of their judgments, but there wasn’t time to discuss them, since the big table had about 18 -19 people, and there was only about an hour for the whole options workbook activity, and everyone had to report on their choices and reasons during that time.

When the reporting period was over, the facilitator provided a narrative of what the participants, taken as a whole, thought about spending cuts and revenue measures. But there was no time for discussion of this narrative either.

This part of the process brought us to 3 PM and it was nearly time to adjourn the meeting. The facilitators then ended the meeting with step 6, which, once again, is:

Conduct End of Day Survey and close the meeting.

In our case, this survey was very truncated compared to the exercises outlined in the worksheets, another casualty of the abbreviated process. It became a request for the participants to record the most important message they wanted to send to AmericaSpeaks. There were diverse messages expressed. To the extent there was a common message, a number of people expressed the view that they thought it was important that those who were most responsible for creating the economic disaster resulting in our economic mess, should be the ones to pay for it, and there was support for taxes that would recoup money lost to bailing out the banks and the financial industry. Finally, the facilitators thanked everyone for participating and called the end of the meeting. Then people took another 15 minutes to discuss the activities among themselves, to socialize a bit and to help the primary facilitator clean up the room we were using, and carry her materials outside the building.

The List of Biases

In my analysis of the various steps in the AmericaSpeaks process, along with the materials they used to direct and guide participants through the process, I focused on the various places where bias could be found and on identifying these biases. Altogether, I found 32 instances of bias distributed across every major step in the event process. I think it’s important that all of the biases I found be available in one place. So I’ve listed and summarized them below. For a full description of the biases see the previous posts in this series.

1. The very selection of the problem, along with the characterization that we face a deficit crisis, indicates a bias. The US is in the midst of its most severe recession since the Great Depression, and a recession that we were far from out of on the date of the meeting. It’s clear that “the deficit problem” has been imposed by AmericaSpeaks, and was not selected as the problem that most merited examination based on a national poll.

2. The group attending the meeting was biased demographically, and also was characterized by disproportionate representation of professionals and highly educated participants. In addition, the meeting was truncated to 3.5 hours, leaving no time to question the problem frame of the meeting and reduce its bias toward deficit reduction.

3. An opening discussion questioning the problem frame of the meeting and the facilitator’s reaction to it, showed that the facilitator intended to drive the group according to the pre-planned agenda and orientation to provide information that would be structured in the way that AmericaSpeaks wanted. Not only was the topic pre-selected to fit the preferences of AmericaSpeaks, but participants in the event would not be allowed to revise it in any serious way to fit their needs, and they would also be run through an agenda of exercises, designed to produce results within a certain range, and in a compressed time.

4. A biased event narrative was created focused on the deficit crisis as a very serious problem demanding action to avoid fiscal disaster in the long term, along with a failure to consider alternative views that there is no crisis at all, or that deficits don’t matter at all in nations having non-convertible currencies owing no debts in foreign currencies, because they have no solvency risk. This bias was reinforced by a slick Federal Budget 101 booklet and web streamed introductions and speeches.

5. AmericaSpeaks used an extension of CBO projections of the fiscal and economic future without questioning, or developing, alternatives to these that better reflect historical growth rates in the United States, and without considering that economic projections like CBO’s even a few years out, and certainly 15 – 35 years out, are frequently subject to massive errors. The bias towards CBO-based projections is a big factor in supporting the case that there is a deficit problem. Alternative projections, depending on assumed growth rates might well project surpluses, rather than severe deficits, debts, and debt-to-GDP ratios. In focusing on CBO-based projections alone, AmericaSpeaks is telling people only one fairy tale, the one, among a very large number, that will scare the pants off them.

6. AmericaSpeaks commits to the view that growth in the national debt, if not controlled, risks that one day ”lenders” (the bond market) will be unwilling to lend US Dollars to the United States, or failing that would require higher interest rates from the Government. This ignores the alternative view that 1) the US doesn’t have to borrow money in the bond market and 2) the US can structure its debt issuance so that interest rates can be driven down to zero. The bias is not a matter of its accepting the bond market risk view and presenting it to participants, but its failure to present the alternative suggesting that there’s no solvency or sustainability problem, and also that there’s no interest problem, since interest costs could be going down to near zero very soon, if the Government chooses not to issue debt after spending.

7. There’s also bias in making the assumption that the national debt is the sum of deficits and surpluses since the founding of the country. This equates debts and total deficits, and conflates Government spending with Government debt issuance. They’re not the same, so total deficits may not equal total debts. If the Government stops issuing debt, but keeps on deficit spending, total debts and total deficits will vary greatly. Neglecting to inform participants of this possibility biased the decision process since participants were led to accept the AmericaSpeaks view that spending must be accompanied by debt, which, of course, probably led them to suggest cuts in Government spending, they otherwise would have not have suggested.

8. The constant emphasis on the desirability of balancing the budget, if possible, and achieving surpluses is another instance of bias. In the absence of inflation, surpluses are bad, not good, for the American Economy. The historical record shows that they always precede serious recessions or even depressions. By not considering the view that surpluses may be bad for the economy, and not educating the participants about this view, and by also constantly driving home the message that surpluses are good and deficits, while they may be necessary during recessions, are somehow negative and less than moral, AmericaSpeaks introduced still more bias into the the Town Meetings and Community Conversations. The ratings made by people in the various meetings might have been very different, if they had been informed about the historical correlation between surpluses and recessions or depressions.

9. Presenting rising health care costs as just due to the aging of the American population, with the implication being that we ought to control these costs by cutting Medicare and Medicaid is another instance of biasing the process. What about considering other factors in rising health care costs over time? How much are rising costs due to health insurance company behavior and provider behavior? Both insurance costs and provider costs are far lower in other wealthy nations than they are in the United States. So why didn’t AmericaSpeaks discuss these factors and their role in rising costs? Is it because they’re trying to suggest solutions that ask working Americans to sacrifice, but not insurance companies or providers?

10. AmericaSpeaks tells us that the corporate bailouts were one-time events and will have no impact on future deficits. But clearly this view neglects the cumulative political effects of the bailouts. The bailouts have created a moral hazard and an expectation that the Government will bail out companies that are “too big to fail.” Why isn’t this recognized as a cumulative effect? Was this an attempt by AmericaSpeaks to persuade people that corporate bailouts aren’t so bad because, according to AmericaSpeaks, they have little to do with long-term fiscal problems, and, consequently, participants should not select workbook options that increased corporate taxes too much?

11. The assumption that we can’t grow our way out of the deficit crisis, assuming also that there is a crisis, is an indicator of bias because it wasn’t accompanied by presenting the possibility of a return to growth patterns of earlier decades, which would produce much more tax revenue and either end high deficits, or cut into them deeply enough that “the problem” could be solved with savings in interest costs produced from new debt issuance policies. Did AmericaSpeaks push the “we can’t grow our way out of it” view on participants because of its bias against the possibility than restoring very active Government intervention in the economy could raise growth rates enough to eliminate or partly eliminate the perceived deficit problem?

12. There’s more bias in the framing of a pre-survey suggesting that deficits could only be cut by raising taxes or cutting spending. Neither increasing economic growth and reaching full employment, nor ceasing to issue debt after Government spending, were included among the six propositions provided in the pre-survey.

13. In a question about sources of deficits, failing to mention continuing to issue debt instruments following Government spending, continuing foreign wars, and recurring recessions or depressions, is another instance of bias. And, in asking that question the way they did, implying that corporate bailouts don’t create a moral hazard that can increase deficits in the future, is yet another.

14. Asking people to “share your greatest hope for the future of the country that your children, grandchildren and future generations will inherit,” without making clear that the idea that our children will have to pay down the national debt is a highly controversial statement which many economists think is not true.

15. Asking a question to get people to think about projecting the future in the context of their feelings about the present, without asking them to exchange views about why they felt one way or another about the recovery and its importance relative to deficit spending, and whether there is a deficit spending problem or not, is another instance of clear bias in framing the decision process.

16. Asking the question: ”What are the core values that should guide decisions about our country’s fiscal future?” and then structuring the reply by imposing three value dichotomies imposing a conservative values framing in order to maintain the bias in the proceedings toward deficit reduction and self-sacrifice, is another very obvious way of directing the process to create the desired outcome.

17. The failure of AmericaSpeaks to include growth-oriented policies in the options workbook, such as a full employment-oriented Federal Job Guarantee (FJG) policy option, due to denial of the possibility that the US could possibly grow its way out of its deficits, reinforces the framing that deficit reduction is necessary.

18. AmericaSpeaks’s selection of the year 2025 as the target year for deficit reductions realizing $1.2 Trillion in Federal budgetary savings when projections of conditions 15 years out are known to be entirely unreliable suggest bias in design of the process. And failure to provide several equally likely alternative projections embodying other than the pessimistic growth scenario based on extension of CBO projections through 2020, confirms that bias.

19. Perhaps the most important aspect of bias in the AmericaSpeaks options workbook and ensuing discussion, and in the whole design of the decision process, was excluding the topic of whether an activity aimed at choosing revenue raising or spending cut options for the purpose of reducing the deficit is a legitimate exercise at all. In not asking this question, AmericaSpeaks implicitly takes a policy position. It is saying that an important aspect of Government activity must always be to manage the deficit, the national debt, and the debt-to-GDP ratio and that this is the meaning of fiscal sustainability and fiscal responsibility.

There is a counter to that policy position. It is that for a government that is sovereign in its own non-convertible fiat currency, in the sense that it has the constitutional authority to issue an unlimited amount of it without the need for any commodity backing and also that it has no external debt in foreign currencies, there is no solvency risk from the simple fact of Government expenditures. And also no Governmental Budgetary Constraints (GBCs) that are not self-imposed — beyond constraints that arise from the effects of Government Spending such as employment levels, economic growth, price stability, environmental and climatological outcomes, national security outcomes, education outcomes, etc. The deficit, national debt, and debt-to-GDP ratio are not important in themselves, and should not viewed as policy concerns or policy targets. They are not indicators of anything that ought to be managed, or constrained, or otherwise influenced. They are a distraction from the real issues, the real outcomes of Government spending such as those listed above.

This policy position was not considered in the supposedly neutral, non-partisan, and unbiased decision process run by AmericaSpeaks. Had it been, the option conversation wouldn’t have been about options for reducing the deficit in 2025. Instead it would have been about options for creating a new economy by 2025, and options for creating greater equality of opportunity in American society, or options about creating a new energy foundation for our economy. In other words, it would have been an entirely different conversation.

20. Participants are constrained by the options workbook from considering options relating to either premium support or single-payer approaches to health care reform. In particular, the single payer approach is the most important one, since there is much survey evidence suggesting that 2/3 of the population prefers Medicare for All to any other approach. The excuse given for this is that America doesn’t seem ready to support fundamental reform including single-payer. However, the exercise asks the participants to suggest options that would save $1.2 Trillion by 2025. So what is politically feasible right now in 2010 isn’t really relevant to this task. The mood of the nation could easily change by 2011, 2012, or by 2014, and certainly by 2020, in ample time to save substantial Federal expenditures on Health Care through single-payer. By constraining participants from considering single-payer options, AmericaSpeaks hews to the orientation of the President’s Fiscal Commission and their narrow and false notion of fiscal responsibility.

21. Due to very limited information provided about the impact of health spending cut options, participants are largely flying blind in selecting options, and when they are further constrained by the workbook about selecting other options whose consequences they may understand much better, the exercise in selecting options departs even farther from either objectivity or reasonableness.

22. A major assumption underlying the workbook structure is the view that Government can only pay its Social Security obligations by bringing in more revenue, reducing benefits, or borrowing more, and adding to the debt, and these are the only ways for Social Security to avoid insolvency, so that’s why hard choices have to be made by the participants in the workbook exercise and by the US Government itself. The only problem with this argument is that Government doesn’t have to either raise more revenue, or reduce benefits, or borrow to pay its Social Security obligations. It can just spend, and even though this will increase the deficit, it won’t increase the national debt, unless it insists on continuing its practice of issuing debt after it spends money. However, this alternative view of how Government can spend was never presented to the participants in the community conversations or the meetings in 19 cities. So no one had an alternative view of how to meet Social Security obligations other than by raising revenue through taxation, cutting spending, or borrowing. As a result they entered the process of selecting options relevant to the future of Social Security with a limited and biased perspective.

23. The option, “create personal savings accounts within the system,” was included among the revenue options relating to Social Security. According to the scorecard distributed at all the meetings, the potential deficit reduction attached to this proposal by 2025 is negative $61 Billion. That is, it adds to the deficit, a very clear indication of bias in the decision process. Peter G. Peterson whose foundation is a major supporter of AmericaSpeaks has advocated privatization of Social Security for many years. What can this option be except a concession to a funder’s pet notions, and a concession that is totally inconsistent with the avowed purpose of cutting deficits in this exercise?

24. Together the Social Security options in the workbook add up to a projected total of $92 Billion in savings by 2025. Considering that the projection of GDP for that year is $27.3 Trillion, the savings are less than 0.3 of one percent of GDP, and only 1.3% of the projected Federal Budget for that year. The question is: why bother? Why get people angry for such a small saving, especially since the Government has no solvency risk in continuing to pay all benefits at the present level forever? Surely, including Social Security in this scorecard is nothing but an ideological bias of right-wing funders who have always been against that program.

25. A conservative bias is also visible in the option calling for raising the limit on taxable earnings to 90% of all such earnings. On its face that seems like a concession to progressivism, but there are two glaring questions about this. First, why are any taxable earnings exempt from FICA taxes? If the deficit problems are so serious, then why have any exemptions? And secondly, why not make FICA contributions progressive? If we’re really so much in need of revenue because Social Security is becoming insolvent then why shouldn’t everyone pay their fair share according to their income as in progressive taxation? I’m not so much advocating these options as asking why they’re not among those considered. They’re obvious options, and the decision to exclude them suggests ideological bias in the process.

26. The option to increase spending across all Non-Defense categories, and to do so on a detailed scorecard was not provided to participants. It was assumed that the task was to cut spending in Other Non-Defense areas. The counter assumption that much heavier spending is needed in these areas was not represented. Why not? Republicans and Blue Dog Democrats have been starving non-defense Federal programs since the days of Jimmy Carter to pay for tax cuts and, more recently, expensive wars, so these programs have been short-changed in every category, and there is also a need for new programs, not even conceived here.

27. There’s a not so subtle bias against the sub-categories within the Non-Defense category, relative to the other major categories, because it’s assumed for example that Health Care, Social Security, and Defense, are important enough to get their own category, while, for example, Energy, the Administration of Justice, and Education are not.

28. The options workbook presents a choice framework that is far too narrow to accommodate the possibilities inherent in reality. It has the kind of conservative bias we saw in economic projections prior to 2008 which could not envision the existence of a housing bubble and the possibility of a crash of the global economy. The thinking underlying the AmericaSpeaks options framework, which it imposed on participants is completely devoid of Black Swan considerations, and hedges to guard against Black Swans. To take account of these in Defense Spending, their framework had to be much broader and participants had to be allowed a much greater range of choices with respect to the defense budget and both increases and deeper cuts had to be allowed.

29. The way AmericaSpeaks channels its bias into the options decision process is through its selection, or lack of selection of options for decision, and also through its wording of options. Here, the most obvious bias is in the exclusion of options for decreasing taxes. This would not necessarily lead to declining revenue, because in the past it has often led to the opposite result. In addition, however, the assumption being made is clearly that the Government needs to collect revenue from citizens in order to fund its spending, and that the more revenue it collects the more it will reduce both the size of the deficit and the growth in the national debt. I’ve already pointed out that deficit increases are not the same as debt increases, and that they need not be accompanied by debt issuance. Also, however, the US Government has no need to collect revenue from its citizens to fund its spending, since the Government can just spend and in the process create money. So, participants in the AmericaSpeaks process should not have had their choices framed as either raising taxes or making no changes. They also should have been given options about how they might have cut taxes if they preferred to do that.

30. Why aren’t there options for creating new tax brackets? Setting the top two brackets at $209,250 and $373,650, is a vast concession to wealthy people, which is way, way, outdated given the recent size of incomes we’ve seen produced in various industries. Specifically, why aren’t $500K, $1,000,00, $2,500,000, $5,000,000, and $10,000,000 and over tax brackets, with marginal tax rates set at 45%, 50%, 55%, 60%, and 65% respectively, specified as options for people to select? Also, why were the options for raising personal income taxes phrased as percent increases from present levels? Was it because a 20% increase over present taxes sounds like a much larger increase than an increase from 35% to 42% in marginal tax rate? Earlier when talking about increases in the payroll tax rate, the increase was expressed as 12.4% to 14.4% and not as 16% increase. Was AmericaSpeaks trying to make the proposed income tax rate rise seem large and the Social Security tax rise seem small?

31. The option selection seems arbitrary and biased toward reducing marginal tax rates, something more well-off people would dearly love to do. Also, what is the basis for selecting VAT, Carbon, and Securities Transaction taxes for the new tax category? Why not other taxes? Why a 0.5% tax on securities transactions? Why not a 1.0% tax, or even a 1.5% tax? Is it because larger tax rates would place too much of a burden on well-off traders like Peter G. Peterson?

32. Since the treatment of options in my community conversation was limited to an hour and roughly 18 people were involved, there was no time for any meaningful discussion of the views of participants. Since any criticisms of the structure or introduction of new options was dependent on this discussion, its brief duration biased the process against introducing new options, or even making people think very deeply about their own choices of options. This bias in the process is certainly reflected in a bias in the results, which were constrained by the choices in the workbook and scorecard-like worksheet

Conclusions

Let’s recall what AmericaSpeaks claims about itself and its orientation to its processes and events.

AmericaSpeaks takes pride in its reputation as an honest and neutral advocate for public participation. We play a unique role in the policymaking process by serving as a non-partisan convener of forums that provide the public with an opportunity to make decisions about important issues without fear of manipulation or bias. Our ability to help citizens and elected officials come together around tough public issues is dependent on our commitment to maintaining this neutral role. . . .

AmericaSpeaks does not take positions on policy issues. AmericaSpeaks strives to ensure that only balanced and neutral facts are used to inform discussions on policy issues. We stand by these basic principles that protect the integrity of our process and the faith that participants and decision-makers place in our work.”

AmericaSpeaks raises the issues of its honesty and neutrality in advocacy, its use of “balanced and neutral facts,” and “the integrity of our process.” My attempt to analyze its biases in this series is an attempt to evaluate these claims.

I think the list of biases shows that AmericaSpeaks was neither neutral nor honest in the design of its process for its “Our Budget, Our Economy” event. With one exception, which itself reflected ideological bias, it seems that whenever AmericaSpeaks had a choice about how to introduce a segment of the event, to create a video, to structure a set of options, to construct an instrument, or to facilitate a discussion, it chose to do so in such a way that the process would be constrained and and the participants directed toward making choices to either cut Government spending, or raise taxes. In addition, a very important area for possible deficit cutting, namely interest costs, was completely left out of account by AmericaSpeaks, and within each area, options for choice that would have been uncomfortable for certain interests including one of its prominent funders, simply never appeared. The list of biases covers nearly every part of the AmericaSpeaks process; there was no part of the process that was free of bias. There was no part of the process that was neutral and honest.

In addition, AmericaSpeaks, rather than using “balanced and neutral” facts, in fact used very few facts, and instead relied on projections about a future it developed from CBO projections that are both, based on past performance, subject to the likelihood of severe errors, and also very biased in a pessimistic direction when it comes to projecting economic growth and tax revenues, and therefore likely deficits or surpluses. AmericaSpeaks’s projections are little better than a gloomy fairy tale, that will never have any chance of coming true unless the United States makes the mistake of implementing the austerity programs that the funders and allies of AmericaSpeaks favor.

AmericaSpeaks and its allies are bent on creating a self-fulfilling prophecy of slow growth, austerity, and unmanageable deficits of their own making, and they’re not using “balanced and neutral facts” as their way of making that happen. We’ve been seeing over the past decade that organizations claiming to be “fair and balanced” in the stories they tell, are often exactly the opposite. And like Fox News, AmericaSpeaks, is doing exactly the opposite of what it claims to be doing.

It doesn’t have a neutral and honest process, and opinion generating instruments, and it doesn’t provide “balanced and neutral facts” to its participants. Instead, it designed and implemented the “Our Budget, Our Economy” event to so all it could to elicit results that would support the case for deficit reduction. The event was not a process of free democratic interaction, but a procrustean bed that tried to compress participants into a deficit terrorist mold and manipulate them into regurgitating deficit terrorist talking points.

(Cross-posted at All Life Is Problem Solving and Fiscal Sustainability).

The Procrustean Democracy of AmericaSpeaks: Part Six

9:55 pm in Uncategorized by letsgetitdone

In Part 5, I continued my analysis of the June 26th AmericaSpeaks Community Conversation event I attended in Falls Church, VA, focusing on Step Five in the decision process used in the meeting. In that post the specific option choice frameworks AmericaSpeaks presented to participants in the categories of Health Care and Social Security spending, and analyzed the biases inherent in the way they were structured. Here once again is a statement describing step 5.

Working through the Options Workbook and arriving at decisions about what cuts in Federal Expenditures or tax increase to make in order to cut the projected Federal Budget. Reporting to the group about the choices made by each participants and something of the reasoning behind these choices. Summing up by facilitator highlighting the most popular choices of options for reducing the deficit.

Other Non-defense; and Defense Spending are the two remaining categories of Government spending presented to participants in the community conversation and national meeting processes. In the Other Non-defense spending category, AmericaSpeaks provided a very short summary description of 14 categories of spending and the projected amounts to be spent on them in 2025, including: Administration of Justice ($71 B); Agriculture ($ 20 B); Commerce and Housing Credit ($6 Billion); Community and Regional Development ($21 B); Education, Training, Employment, and Social Services ($159 B); Energy ($3 B); General Government ($39 B); General Science, Space, Technology ($42 B); Health (other than Medicare and Medicaid) ($44 B); Income Security ($552 B); International Affairs ($68 B); Natural Resources and Environment ($37 B); Transportation ($117B); and Veteran’s Benefits and Services ($180 B).

”The following options include reductions in spending of 5%, 10%, or 15% or no reductions at all. For each of the first three options, you could assume either across-the-board cuts (e.g. every program is cut by the same percentage) or that cuts will fall primarily on a smaller number of programs. If the latter, spending on other programs could either stay the same or even increase (though, of course, by smaller amounts than the overall cut). By targeting the reductions, policymakers could preserve funding for higher-priority programs. But they also would have to choose more carefully where to spend fewer dollars and look for ways to meet their goals more efficiently. The deeper the cuts (5%, 10%, or 15%), the more likely that policymakers would have to eliminate some lower priority programs altogether.”

There are two very salient aspects of this set-up for the options exercise. First, only the most cursory summary description was given for each of the 14 areas, so it was very hard for a participant to be able to evaluate the value of each of these 14 areas. That is, the exercise is calling for cuts in programs that the participants know very little about in terms of their impact on people, so how can they rationally decide among the four choices provided? Moreover, no choice is provided for people who want to increase spending across all non-defense categories. Why not? My own reaction to the projected 2025 budget figures was that Other Non-Defense spending ought to be increased over the projections. It’s not that I had any clear picture of the details of programs in any of the areas. But I know that Republicans and Blue Dog Democrats have been starving non-defense Federal programs since the days of Jimmy Carter to either avoid deficits, or pay for tax cuts and, more recently, expensive wars, so I’m sure that these programs have been short-changed in every category, and that there is also a need for new programs, not even conceived here. For example, our infrastructure has been deteriorating for many years, and now we have a backlog of renewal work that will cost $2.4 Trillion to accomplish. Where is that in the projections? I didn’t see where it would fit. In the area of energy, the spending projections given were pitifully small. In Education they were also much too small. Regulatory expenses are sadly in need of expansion for obvious reasons. The natural resources and climate budget is far too small. Even the Administration of Justice is ridiculously small in my view. I don’t know how many other participants felt the way I do, but I do know that the option to increase expenditures, and to do so on a detailed scorecard was not provided to participants. And therein lies one type of bias in the exercise and the workbook. It was assumed that the task was to cut spending in Other Non-Defense areas. The counter assumption that much heavier spending is needed in these areas was not represented.

In addition, the scorecard allowed only gross judgments about cutting or remaining at the same spending level across all programs in the Other Non-Defense category, and there was nothing else in the workbook or scorecard that allowed a participant to evaluate the priority of the public purposes represented by each of the areas, both absolutely and relative to each other. Also, there was no way presented to allow participants to provide judgments about the relative importance of each of the major categories of expenditures. The scaling methodology in this part of the decision process was totally inadequate for measuring relative or absolute priorities, even though that kind of scaling methodology is well-known.

Also, there’s a not so subtle bias against the sub-categories within the Non-Defense category, relative to the other major categories, because it’s assumed for example that Health Care, Social Security, and Defense, are important enough to get their own category, while, for example, Energy, the Administration of Justice, and Education are not.

Moving to Defense Spending, the workbook again provides very little guidance to participants about what choices to make about this category. Here is some historical context provided in the workbook.

”Defense spending has ebbed and flowed dramatically over the years, largely due to whether the nation was at war, where defense ranked as a national priority, and other factors. Over the last half-century, defense spending has fallen as a share of the budget more or less gradually from nearly 50% to today’s 19%. As a share of the economy, it has ranged from nearly 10% to 3% around the year 2000. Today, boosted by the wars in Afghanistan and Iraq, defense stands just below 5% of the economy, although it will fall in the coming years as those wars end.”

The workbook also makes very brief statements about an approach to defense based on a commitment to world leadership, and the opinion of some that we have gaps in our defense that need to be filled by spending the Administration is not planning, and others who think that substantial cuts can occur without affecting our war fighting capability or performance. These general statements pale in significance beside the above quote which suggests that the level of defense spending is subject to change without notice depending on 1) events over which we have little control, and 2) the general orientation we have toward leadership. Given the combination of the two, we can be drawn into very expensive war efforts unexpectedly, and find our projections for defense spending completely superceded by events, and our desire to respond to them as a world leader with special obligations should.

The question is: in such a context how can AmericaSpeaks possibly project that only 12% of the Federal Budget in 2025 would be devoted to Defense Spending? And how can participants in the options exercise make meaningful decisions about cuts in Defense Spending while having very little basis for imagining what the world will look like in 15 years, and what events may have occurred that will call for expensive military interventions? Moreover, AmericaSpeaks asked the participants to choose among 1) 5%, 2) 10%, 3) 15%, cuts in spending and 4) no change at all? But how can a person do that when events might require a 100% increase in Defense Spending, or more, by 2025, or even by 2016 or earlier, if current economic conditions grow still more serious and begin to spawn multiple militarily aggressive regimes? Still further, what if the US changes its overall orientation toward foreign policy, and decides to consider itself not as the leader, the sole superpower, but as the first among equals within a group of major powers, having overwhelming influence in their respective regions of the world, but having to deal with other over worldwide issues. Such a re-orientation might imply a far larger decrease in spending than envisioned in the choice framework presented by the workbook. Military spending could suddenly decrease by 50% within a few years, and could easily come in at 6% of the budget in 2025.

These admittedly speculative thoughts show once again that the options workbook presents a choice framework that is far too narrow to accommodate the possibilities inherent in reality. It has the kind of conservative bias we saw in economic projections prior to 2008 which could not envision the existence of a housing bubble and the possibility of a crash of the global economy. The thinking underlying the AmericaSpeaks options framework, which it imposed on participants is completely devoid of Black Swan considerations, and hedges to guard against Black Swans. To take account of these in Defense Spending, their framework had to be much broader and participants had to be allowed a much greater range of choices with respect to the defense budget and both increases and deeper cuts had to be allowed.

The options workbook dealt with options for raising revenue as well options for cutting spending. Here’s the overall framework of revenue raising options:

”There are at least four general approaches to raising revenues that are explored in the following pages. First, policymakers could raise rates on existing taxes. Second, they could eliminate or reduce many current deductions and credits. Third, they could eliminate enough deductions, credits, and exclusions to generate enough revenue not only to reduce the deficit, but also to lower income tax rates. Finally, they could establish new taxes.”

Within this framework, AmericaSpeaks lays out the following options. Raising taxes: 1) Raise personal income tax rates by 10% for everyone; 2) raise personal income tax rates by 20% for everyone; 3) raise personal income tax rates by 10% for taxpayers in the top two tax brackets; 4) raise personal income tax rates by 20% for taxpayers in the top two tax brackets; 5) Create an extra 5% tax for people earning more than one million dollars a year; 6) Raise the tax rate on capital gains and dividends; 7) raise the top corporate income tax rate to 40% from 35%; and 8) make no changes.

Reduce Deductions and Credits: 1) limit the value of itemized deductions to 28%; 2) convert the mortgage interest deduction into a credit; 3) limit the deduction for state and local income, real estate, and personal property taxes to 2% of a person’s adjusted gross income; 4) limit the corporate depreciation for equipment; 5) end the business deduction for producing goods in the United States; and 6) make no changes.

Tax reform eliminating enough deductions, exclusions and credits to both raise substantial revenues, and lower tax rates: 1) use 90% for lowering tax rates, and 10% for reducing the deficit; 2) use 80% for lowering tax rates and 20% for reducing the deficit; 3) use 70% for lowering tax rates and 30% for reducing the deficit; and 4) make no changes.

Establish new taxes: 1) Create a 5% Value Added Tax (VAT); 2) Create a Carbon Tax; 3) Create a Securities Transaction Tax; and 4) make no changes.

As we’ve seen previously, the way AmericaSpeaks channels its bias into the options decision process is through its selection, or lack of selection of options for decision, and also through its wording of options. Here, the most obvious bias is in the exclusion of options for decreasing taxes. This would not necessarily lead to declining revenue, because in the past it has often led to the opposite result. In addition, however, the assumption being made is clearly that the Government needs to collect revenue from citizens in order to fund its spending, and that the more revenue it collects the more it will reduce both the size of the deficit and the growth in the national debt. I’ve already pointed out in this series that deficits are not the same as debt increases, and that they need not be accompanied by debt issuance. Also, however, the US Government has no need to collect revenue from its citizens to fund its spending, since the Government can just spend and in the process create money. So, participants in the AmericaSpeaks process should not have had their choices framed as either raising taxes or making no changes. They also could have been given options about how they might have cut taxes if they preferred to do that. As it was, however, everyone who participated in the revenue raising exercise through taxation was given a lower bound of zero revenue, and was constrained from selecting tax cuts as better options for the economy. This is not just a theoretical possibility. Warren Mosler, independent candidate for The US Senate in CT, advocates a payroll tax holiday, along with other measures to quickly end the recession. That kind of choice was excluded from the options exercise, and if participants favored that kind of option it would have been very hard to integrate it into the proceedings

Even ignoring the selective presentation of options for only raising revenue or making no changes, the options are still restricted in scope. For example, take the raising taxes category, why aren’t there options for creating new tax brackets? Setting the top two brackets at $209,250 and $373,650, is a vast concession to wealthy people, which is way, way, outdated given the recent size of incomes we’ve seen produced in various industries. Specifically, why aren’t $500K, $1,000,00, $2,500,000, $5,000,000, and $10,000,000 and over tax brackets, with marginal tax rates set at 45%, 50%, 55%, 60%, and 65% respectively, specified as options for people to select? Also, why were the options for raising personal income taxes phrased as percent increases from present levels? Was it because a 20% increase over present taxes sounds like a much larger increase than an increase from 35% to 42% in marginal tax rate? Earlier when talking about increases in the payroll tax rate, the increase was expressed as 12.4% to 14.4% and not as 16% increase. Was AmericaSpeaks trying to make the proposed income tax rate rise seem large and the Social Security tax rise seem small?

Other seemingly arbitrary choices presented to the participants include the option to limit the value of itemized deductions to 28%, the option to limit the deduction for state and local taxes, real estate, and personal property taxes to 2% of a person’s adjusted gross income, and the options used under the category of tax reform. Why limit those to 10/90, 20/80, and 30/70 splits between raising revenue and lowering tax rates? Why not include 50/50 and 60/40, for example, or even 0/100, for matter. Of course, I’m holding out no brief for these alternatives, but just pointing out that the option selection seems arbitrary and biased toward reducing marginal tax rates, something more well-off people would dearly love to do. Also, what is the basis for selecting VAT, Carbon, and Securities Transaction taxes for the new tax category? Why not other taxes? Why a 0.5% tax on securities transactions? Why not a 1.0% tax, or even a 1.5% tax? Is it because larger tax rates would place too much of a burden on well-off traders like Peter G. Peterson?

I’ve nearly reached the end of my detailed analysis of workbook options and how I think they biased the decision process of AmericaSpeaks meetings and community conversations. But I think there is one more important point to make about bias and the probability of easy misinterpretation of the results from the workbook options process, and that is that participation in the process may not mean what AmericaSpeaks is likely to suggest it means. That is, AmericaSpeaks sees the process as one in which people are making choices with the intention of reducing the deficit, but some who participated in the process, such as myself, may have done so to express our preference for certain options that we wanted to see enacted because they created a greater measure of social justice, or because they accomplished other things, rather than because of any money they saved.

For example, I chose only one item in the Social Security category: “Raise the limit on taxable earnings so it covers 90% of total earnings in America.” I did that because I have always despised the regressivity in the FICA system, and I thought this would make FICA less regressive. I also selected the 30/70 Tax Code Reform option, not because I cared about saving the money, but because I wanted to create more progressivity in the tax system. I couldn’t make any choice about military spending, but if I had made a choice it would not have been because I wanted to save money. Finally, I tried to add an option to the process, namely ending most Federal debt issuance, resulting in projected interest savings of $1.4 Trillion in 2025. I didn’t advocate this to save money, however. I just didn’t want to make interest payments because I felt such payments contribute to income and wealth inequality in America and that we have far too much of that already.

I don’t know of course, how many other people participated in the process and made choices based on other intentions than a desire to cut the deficit. And I doubt that AmericaSpeaks knows that either. Had these people and myself been provided options for increasing spending and lowering taxes for the middle class, however, or if we could easily have added such options, we might well have selected those, and ended the process with no deficit reduction savings at all to report. This is very likely in my case, because my Modern Monetary Theory (MMT) approach to economics tells me that our deficits are, generally not large enough to offset the private sector’s desire to save, and that the result of that has been higher unemployment and underemployment than we need to have in the United States, for 40 years now.

So, I have no doubt that AmericaSpeaks will report the results of its meetings in terms of some large number of people who voted for deficit cutting options averaging so many dollars of projected savings in 2025. So, yet another aspect of bias in such a result is the truncation of options that wouldn’t allow people like myself to come up with results that reported negative savings and a desire to increase deficits.

That brings me to the end of today’s post. In Part Seven, I’ll briefly discuss step 6, the final one in the process, and then I’ll summarize this series and provide some conclusions about the supposedly neutral and unbiased process used by AmericaSpeaks

(Cross-posted at All Life Is Problem Solving and Fiscal Sustainability).

The Procrustean Democracy of AmericaSpeaks: Part Five

10:23 am in Uncategorized by letsgetitdone

In my last post I continued my analysis of the June 26th AmericaSpeaks Community Conversation event I attended in Falls Church, VA, focusing on Step Five in the decision process used in the meeting. In that post I was critical of the overall bias in the general orientation toward the options workbook and the choices to be made in the process. In this post I’ll continue with my examination of step five of this process, shifting my attention to the specific option choice frameworks and the bias inherent in the way they were structured by AmericaSpeaks. Here once again is a statement describing step 5.

Working through the Options Workbook and arriving at decisions about what cuts in Federal Expenditures or tax increase to make in order to cut the projected Federal Budget. Reporting to the group about the choices made by each participants and something of the reasoning behind these choices. Summing up by facilitator highlighting the most popular choices of options for reducing the deficit.

There were four categories of Government spending that organized the items in the options workbook: Health Care; Social Security; All Other Non-defense; and Defense Spending. The workbook provides an introductory discussion of each category giving the line of reasoning used to arrive at the options for cutting spending offered to participants in the options exercise.

In the health care category, AmericaSpeaks provided a summary of the background of the current situation of Federal expenditures, with brief descriptions of how Medicare and Medicaid work. The workbook goes on to describe rising health costs and opines that rising health care costs and the aging of the population will greatly increase Federal spending on health care from 5.1% of GDP, to 7.5% of GDP by 2025, and then says:

”Federal health care costs are closely tied to cost trends in the overall health system, so the key to controlling federal health care spending over the long term is to bring overall health care costs under control. The new health care reform law includes measures that could help move in the direction. In this exercise, however, we are not asking that you reopen or revise that law. Instead, we ask that you focus on how to reduce Medicare and Medicaid spending. Some of the options outlined below hold the promise of encouraging wider reforms across the health care system that could help to tame overall health spending. Others may reduce federal costs but increase private costs. . . .

”Generally, the nation could fundamentally change the health care system in at least three basic ways. Each of them could slow the growth of health care spending, but none of them is guaranteed to do so. First, we could replace the current system of employer-provided coverage and public programs with one known as premium support – in which the federal government gives Americans a certain amount of money each year to cover their health care costs, but allows them to choose their insurance coverage from carriers that meet minimum federal requirements. Second, we could replace the current system with one known as single payer – in which the federal government pays for health care in a similar fashion to which it currently runs Medicare. Third, we could maintain the current system but achieve savings through more regulation – relying on policymakers to achieve savings by regulating the system more heavily. . .

”At the moment, the nation does not seem prepared to consider fundamental reform of the kind suggested in the first two approaches above – premium support or single payer. As a result, the options outlined below would enable you to achieve savings through changes within the existing system.”

And right there is the bias in the set-up of the health care cost-cutting options. The participants are constrained by the workbook from considering options relating to either premium support or single-payer approaches to health care reform. In particular, the single payer approach is the most important one since there is much survey evidence suggesting that 2/3 of the population prefers Medicare for All to any other approach. The excuse given for this is that America doesn’t seem ready to support fundamental reform including single-payer. However, even assuming this is correct (and it seems much more likely that only Congress and the President are not ready for single-payer) the exercise asks the participants to suggest options that would save $1.2 Trillion by 2025. So what is politically feasible right now in 2010 isn’t really relevant to this task. The mood of the nation could easily change by 2011, 2012, or by 2014, and certainly by 2020, in ample time to save substantial Federal expenditures on Health Care through single-payer.

AmericaSpeaks rightly calls out rising costs in health care at a rate much greater than general inflation as a major problem, but it says nothing about the fact that rising costs are being driven by the private sector insurance companies and providers. Medicare for All would take the insurance companies out of the health insurance picture for basic and necessary health care services and would leave the Government in a position to see to it that costs do not exceed the rate of inflation. Just as importantly, a national Medicare program could regulate practices in health care to greatly increase both efficiency and effectiveness. Right now there is little incentive for providers to adopt “lean” process practices well-known in other industries to decrease the frequency of medical errors and the costs associated with those, since those costs are passed on to the insurance companies and consumers. But a Government program regulating medical practices and also keeping cost increases at the general rate of inflation would provide incentives for everyone in the Medical system to improve practices and reduce costs.

While all nations have had problems with increasing medical costs, since the 1960s cost increases in other nations with tightly regulated or single-payer systems have proceeded much more slowly than in our system. With the effect that the nation that spends the most on health care other than the United States spends only 2/3 of what we do for health care systems that are more effective than ours, as measured by the most important indicators of health care quality. Some performance rating systems put the United States down as low as 37th in the world in the effectiveness of our system and some of the top rated systems are spending only half as much as we are, measured as the % of GDP they spend on health care.

By the way, I’d be remiss here, if I didn’t mention that the AmericaSpeaks projection that Federal Health care expenditures will be 7.5% of GDP is dependent on their 2025 projection of GDP at roughly $27.3 Trillion. A projection that assumes more historically normal rates of growth for the economy in the next 15 years puts the projected GDP at $42.1 Trillion. Assuming, that the level of projected Federal health care spending remains at $2 Trillion, without any cuts in the amount projected, that figure would be about 4.8% of GDP or less than it is now. This suggests that the so-called emergency in rapidly rising Federal health care expenditures is due much more to GDP projections based on CBO models than it is the rising Federal health care costs themselves.

Moving back to the workbook and its framing biases, by constraining participants from considering single-payer options, AmericaSpeaks hews to the orientation of the President’s Fiscal Commission and their narrow and false notion of fiscal responsibility. In the short run, single-payer would increase our budget deficits, because it would probably increase Federal health care costs to as much as $1.8 Trillion annually from the present level of about $745 Billion. On the other hand, single payer would also increase FICA revenues by creating 2.4 million new jobs according to an econometric study conducted by the California Nurses Association.

Even in 2025, assuming general inflation is at 2% per year, Federal expenditures for Medicare for All would probably be at $2.5 Trillion. But that expense would be less than 10% of GDP in 2025 even using the pitiful GDP level projected by AmericaSpeaks for that year, and that will be nearly all of our health care expenses, whereas if we stick with the present system, as much as 25% of GDP could be consumed by both private and public health care expenditures, again assuming the AmericaSpeaks GDP projection in 2025. So, real fiscal responsibility here, lies in Government spending to create a health care system that will be more effective and will not eat up so much of our economic activity, not in figuring out how to cut Government health care expenditures, while doing very little to contain the rapidly accelerating increases in the cost of health driven by the financialization of the health care industry.

In any event, the approach to health care expenditures taken in the workbook and the community conversation I attended considered four options for Government cuts in health care spending: 1) cut by 5%; 2) cut by 10%, 3) cut by 15%, and 4) no change from what the cost would otherwise be in 2025. That cost was estimated at: $2 Trillion. How would the cost be cut, if at all? The workbook suggests this would happen by: a) raising the Medicare premium for higher income beneficiaries; b) raising deductibles, or coinsurance, or both for Medicare beneficiaries; c) increasing the Medicare eligibility age; d) replacing the Medicare program with a voucher for beneficiaries
to buy insurance; e) limiting eligibility for Medicaid; and f) using Federal block grants to states for Medicaid, rather than matching payments. This is a very limited framework within which to think about options and it provides no way for participants to evaluate the impact of any cuts they select on American society and public purposes. But this is characteristic of the workbook’s approach to all categories. AmericaSpeaks starts by assuming that deficit and debt statistics must be controlled, and it directs participants toward choosing particular options which it assumes will do that. But, it provides no way for participants to assess the real costs to Americans of the choices they are making about spending cuts, except for brief and very abstract arguments for or against costs in the workbook. So, participants are largely flying blind in selecting options, and when they are further constrained by the workbook about selecting other options whose consequences they may understand much better, the exercise in selecting options departs even farther from either objectivity or reasonableness.

The second expense category of the workbook is Social Security. The workbook provides a historical context for Social Security, and then claims that it has a problem of solvency. It puts the problem this way:

”The surpluses that Social Security has been generating over the past two decades have been invested in Special Issue Treasury Bonds. The bonds represent the debt that the United States owes to its citizens and which it must pay back, with interest, when the funds are needed to pay benefits. Although the bonds cannot be sold on the open market, they are backed by the full faith and credit of the United States, just like bonds sold to private investors.

”As the baby boom generation begins to retire, Social Security will need to redeem the bonds in order to pay benefits. Because the government is spending more than it brings in from revenue, policymakers will need to find the money by raising new revenue, reducing benefits, or borrowing more, which will add to the deficit. Ensuring the solvency of the system is the core challenge of Social Security reform.”

Of course, here is the bias of neo-liberal economic thought, once again. Government, it contends, can only pay its Social Security obligations by bringing in more revenue, reducing benefits, or borrowing more, and adding to the deficit, and these are the only ways for Social Security to avoid insolvency, so that’s why hard choices have to be made by the participants in the workbook exercise and by the US Government itself. The only problem with this argument is that Government doesn’t have to either raise more revenue, or reduce benefits, or borrow to pay it Social Security obligations. It can just spend. And even though this will increase the deficit, it won’t increase the national debt, unless the Government insists on continuing its current irrational practice of issuing debt after it spends money.

However, this alternative view of how Government can spend was never presented to the participants in the community conversations or the meetings in 19 cities. So no one had an alternative view of how to meet Social Security obligations other than by raising revenue through taxation, cutting spending, or borrowing. As a result they entered the process of selecting options relevant to the future of Social Security with a limited and biased perspective, which was very likely the intention of the designers of the process, or a measure of their lack of qualifications to carry it out in the first place.

Here are the options that were offered to the participants at the meetings: 1) for future beneficiaries, gradually raise the age for receiving full benefits to 69 by 2028; 2) for future beneficiaries, limit increases in starting benefits for all but the lowest earners; 3) For current beneficiaries, change the formula for raising benefits each year to reflect a lower measurement of inflation; 4) raise the 12.4% payroll tax gradually to 13.4% by 2025; 5) raise the 12.4% payroll tax gradually to 14.4% by 2025; 6) raise the limit on taxable earnings, so it covers 90% of total earnings in America; 7) create personal savings accounts within the system; and 8) make no changes. Now, the first thing that strikes one about these options is why option 7 is offered here at all. According to the scorecard distributed at all the meetings, the potential deficit reduction attached to this proposal by 2025 is negative $61 Billion. That is, it adds to the deficit. This is a relatively minor matter in the whole picture, but it is a very clear indication of bias in the decision process. Peter G. Peterson whose foundation is a major supporter of AmericaSpeaks has advocated privatization of Social Security for many years. What can this option be except a concession to a funder’s pet notions, and a concession that is totally inconsistent with the avowed purpose of cutting deficits.

The second striking thing about these options is that taken together they add up to a projected total of $92 Billion in savings by 2025. Considering that the projection of GDP for that year is $27.3 Trillion, the projected savings are less than 0.3 of one percent of GDP, and only 1.3% of the projected Federal Budget for that year. The question is: why bother? Why get people angry for such a small saving, especially since the Government has no solvency risk in continuing to pay all benefits at the present level forever? Surely, including Social Security in this scorecard is nothing but an ideological bias of right-wing funders who have always been against that program.

Third, that same bias is also visible in the option calling for raising the limit on taxable earnings to 90% of all such earnings. On its face that seems like a concession to progressivism, but there are two glaring questions about this. First, why are any taxable earnings exempt from FICA taxes? If the deficit problems are so serious, then why have any exemptions? And secondly, why not make FICA contributions progressive? If we’re really so much in need of revenue because Social Security is becoming insolvent then why shouldn’t everyone pay their fair share of taxes according to their income, just the way they pay taxes? I’m not so much advocating these options as asking why they’re not among those considered. They’re obvious options, and the decision to exclude them suggests ideological bias in the process.

This completes my discussion of workbook biases in the health care and Social Security categories. In my next blog I’ll cover the remaining workbook categories and also analyze the dynamics of the community conversation occurring around the workbook.

(Cross-posted at All Life Is Problem Solving and Fiscal Sustainability).

The Procrustean Democracy of AmericaSpeaks: Part Four

12:18 pm in Uncategorized by letsgetitdone

In my previous three posts analyzing the June 26th AmericaSpeaks Community Conversation event I attended in Falls Church, VA, I presented the steps in the decision process used for the event, and discussed the pre-conference phase and the first four steps. These reflect a strong and consistent bias toward socializing participants into the idea that there is a deficit problem and that it has to be treated by cutting expenditures and/or raising taxes. The bias was reflected in many little ways in the materials used for the meetings and in the way the first four steps were carried out. The framing of exercises in the decision process continually restricted choices to ones that bring participants back to the supposed problem of a deficit and debt crisis. The web-streamed talks about national conference proceedings and orientations, and the brief constricted discussions of major values issues all worked to fit participants’ thinking to the ideas and frames presented in worksheets and the Federal Budget 101 presentations. Lines of discussion that would have led outside of the intended framing were politely aborted by the facilitators, pleading limited time, and the need to get through the agenda, and give everyone a chance to speak, so that any person developing counter-themes to the major narrative did not have a chance to develop these counter-themes and counter-narratives in the context of the supposedly unbiased process. In this post I’ll continue with my examination of step five of this process.

Working through the Options Workbook and arriving at decisions about what cuts in Federal Expenditures or tax increase to make in order to cut the projected Federal Budget. Reporting to the group about the choices made by each participants and something of the reasoning behind these choices. Summing up by facilitator highlighting the most popular choices of options for reducing the deficit.

The options workbook continues the process of fitting participants to the framing of AmericaSpeaks. The introduction says, in part:

”This workbook is designed to provide a wide array of revenue and spending options for reducing the federal budget deficit. These options represent the types of decisions facing policy makers and their implications for the American people, although they surely do not encompass all of the options that policymakers could consider. Participants in the national discussion will have the opportunity to add additional options as part of the process . . . .”

And later it says:

”Your challenge is to focus on the year 2025, when the annual deficit of 9% of GDP will translate into $2.46 trillion, and choose spending or revenue options, or both, to reduce it by $1.2 trillion. The year 2025 is a good one on which to focus – it is far enough into the future to show how much the gap between projected revenues and spending will widen, but not so far as to seem unthinkably far away.”

And a bit later:

”Reducing our deficit to a sustainable level is a long-term challenge that will not take place all at once. When our nation last eliminated its annual deficits in the late 1990s (smaller than the deficits of today), our leaders had to repeatedly cut spending and raise taxes in order to turn those large deficits into record surpluses.

”In that spirit, we will ask you to choose a series of policy changes that begin to take effect in a few years – after the economy has fully recovered from the recent recession – and that will significantly reduce the deficit by the year 2025.

So, that’s it. The task for us was to choose options for reducing spending, or raising revenue, by introducing new taxes or changing the tax structure, in order to reduce the projected 2025 deficit by $1.2 Trillion. We could choose any of 42 options to do this, and theoretically we could add new options. But in my community conversation, it was difficult to include any additional options. When they were introduced there was no space for them on the sheet provided to record the choice of options. There were no blank lines on “the scorecard” where a participant could name an option and put a savings number on it, so that others in the group could become aware of the option and vote on it themselves. It would have been easy to provide additional space on the scorecard to make it easy to add new options. But since this wasn’t done by AmericaSpeaks, it’s not surprising that not a single new option was included in the final results that were going to be reported to AmericaSpeaks. New options were listened to by the facilitators in the conversation I attended, but they were not acted upon. It was as if they didn’t count.

On the specifics, in my own community conversation, many people were dissatisfied with the choices provided in the list of options. One person suggested 50% cuts in defense spending for example, while the workbook provided for a maximum of 15%. Another suggested that for purposes of FICA taxes all caps on earnings be removed, while the workbook proposed caps including only 90% of wage earners.

Also, the options workbook community conversation made much of the four categories in which options for spending cuts were presented fell: Social Security. Medicare and Medicaid, non-Defense spending and Defense spending. However, a fifth category, interest expense, which was 21% of the 2025 projected expense summary was very conspicuously left out of consideration. I repeatedly suggested that money could be saved by stopping debt issuance, and pointed out that this would save roughly $1.4 Trillion, almost all Federal interest expense in 2025, meeting the “challenge” with only this one change. But my proposal wasn’t included as an option for people to vote on or discuss along with the other official options.

Nor, again, was a sixth category of options on “growing our way out of the deficit” included in the options workbook. The Federal Budget 101 booklet and video both discouraged this idea by saying that most experts on the economy thought it was impossible to do that. Nevertheless, the dismissal of this as a category of options was peremptory and shows a clear bias. First, because all economic experts don’t agree on whether it’s possible to grow our way out of projected deficits, and historical data shows that there is every reason to believe that we can. Second, because “most experts” have been wrong about major aspects of economic forecasting very frequently in our history, and they are quite likely to be wrong again this time. Third, whether we can grow our way out of the deficit is not an all or nothing question, or, at least, phrasing it that way glosses over the issue of how much of the projected deficit we can grow our way out of. If the challenge is to save $1.2 Trillion by 2025, perhaps this can be achieved by cutting $600 Billion in interest expenditures and raising $600 Billion more in tax revenue by growing the economy, for example, without changing anything in the remaining categories. Or alternatively, if we saved $1.4 Trillion on interest expense, and increased revenue by $1.1 Trillion with growth-oriented and full employment policies, that would create a projected surplus in 2025. This shows that any substantial amount of additional revenue that might be raised through policies that will facilitate growth between now and 2025 is just as important, and perhaps more important in reducing projected deficits, as savings and revenue raised in the categories included by AmericaSpeaks included in the workbook and in the meetings? Could it be that AmericaSpeaks isn’t interested in having its participants consider full employment policies because its major financial supporters prefer policies that remove all possibility of demand-pull inflation regardless of the effect such policies have on working people

What about the selection of 2025 as the target date for option selection? AmericaSpeaks claims it selected 2025 because that year “. . . is a good one on which to focus – it is far enough into the future to show how much the gap between projected revenues and spending will widen, but not so far as to seem unthinkably far away.” In other words, 2025 was a good year because AmericaSpeaks’s projections show a very large deficit that will persuade people of the seriousness of the deficit problem, yet it’s not so far off in time, that people would say why worry about this now. Does this choice indicate bias? I think it does, because there’s a very good reason to have selected a date that is much more proximate in time.

That reason is that a projection of deficits 15 years out is certainly going to be subject to huge errors. CBO knows this because it doesn’t even claim reliability for its ten-year projections, much less for any 15 year projections based on them. On what basis does AmericaSpeaks think that its own projections of expenditures and revenues for 2025 which are just extensions of CBOs are at all realistic. Has CBO even been able to accurately project 3 years out? If the answer is no, as I think it is, how can we accept the projections provided to participants as anything but very bad science fiction? But the issue here, is not even the unrealistic nature of the projections 15 years into the future. Rather it is that AmericaSpeaks, did not warn participants about that unreliability, and provide alternative projections that might be just as likely for 2025. I’ve talked about an alternative here. Why didn’t AmericaSpeaks talk about alternatives and let participants discuss them during the proceeding?

Perhaps the most important aspect of bias in the options workbook and ensuing discussion, and in the whole design of the decision process, was excluding the topic of whether an activity aimed at choosing revenue raising or spending cut options for the purpose of reducing the deficit is a legitimate exercise at all? In not asking this question, AmericaSpeaks is implicitly taking a policy position. It is saying that an important aspect of Government activity must always be to manage the deficit, the national debt, and the debt-to-GDP ratio and that this is the meaning of fiscal sustainability and fiscal responsibility.

However, there is a counter-position to that policy position. It is that for a government that is sovereign in its own non-convertible fiat currency, in the sense that it has the constitutional authority to issue an unlimited amount of it without the need for any commodity backing and also that it has no external debt in foreign currencies, there is no solvency risk from the simple fact of Government expenditures, and no Governmental Budgetary Constraints (GBCs) that are not self-imposed, beyond constraints that arise from the effects of Government Spending such as employment levels, economic growth, price stability, environmental and climatological outcomes, national security outcomes, education outcomes, etc. The deficit, national debt, and debt-to-GDP ratio are not important in themselves, and should not be viewed as policy concerns or policy targets. They are not indicators of anything that ought to be managed, or constrained, or otherwise influenced. They are a distraction from the real issues which are the real outcomes of Government spending such as those listed above.

This policy position was not considered in the supposedly neutral, non-partisan, and unbiased decision process run by AmericaSpeaks. Had it been considered, the option conversation wouldn’t have been about options for reducing the deficit in 2025. Instead it would have been about options for creating a new economy by 2025, and options for creating greater equality of opportunity in American society, or options about creating a new energy foundation for our economy. In other words, it would have been an entirely different conversation. And its message for The National Commission on Fiscal Responsibility and Reform would have been:

“Fiscal Responsibility is about Government spending money and taxing to create good outcomes. In recent years, the Government of the United States has spent and taxed in such a way that it has benefited a relatively small proportion of Americans and disadvantaged almost everyone else. You are viewing your job as one of figuring out how we can meet certain debt-to-GDP ratio targets by reducing deficits and perhaps even reducing the national debt. This is not fiscal responsibility. It is fiscal irresponsibility. What you need to be doing, instead, is examining Government programs assessing their impact and making recommendations to expand those that are achieving public purposes, and you also ought to be considering new policy options that are likely to achieve public purposes. The test of fiscal responsibility is whether Government is achieving public purposes. Not whether it is meeting some abstract standard, ungrounded in any coherent economic theory, about what level of public debt-to-GDP ratio ought to be maintained. Here are some options we have come up with to help recommend new options.”

And then the options most frequently chosen by meeting participants should have been listed, along with other less popular options emerging from the meeting.

That’s enough for now. In my next post, I’ll continue analyzing step 5 and particularly the specific options in the options workbook, to reveal the biases used to try to fit the participants in the AmericaSpeaks meeting to the deficit reduction purposes of the meeting designers.

(Cross-posted at All Life Is Problem Solving and Fiscal Sustainability).

The Procrustean Democracy of AmericaSpeaks: Part Three

9:47 am in Uncategorized by letsgetitdone

In my first two posts analyzing the June 26th AmericaSpeaks Community Conversation event I attended in Falls Church, VA, I presented the steps in the decision process used for the event and discussed the pre-conference phase and the first two steps. As we saw, these steps reflected a strong bias toward socializing participants into the idea that there is a deficit problem and that it has to treated by cutting expenditures and/or raising taxes. The bias was reflected in many little ways in the materials used for the meetings and in the way the first two steps were carried out. Here I continue my account with Step Three.

Participants are given a pre-survey to fill out while the national meetings are going on, and watch results of the same survey given at those events.

The pre-event survey was called Fiscal Futures Research. It began with 6 propositions to “cut the budget deficit” by either raising taxes or cutting expenses, with 5-point rating scales ranging from strongly support to strongly oppose. Neither increasing economic growth and reaching full employment, nor ceasing to issue debt after Government spending were included among the six propositions. The six propositions themselves contained well-known options for deficit cutting on both the left and the right side of the spectrum. So, the bias was neither left nor right there, but where it existed was in the framing which implied that deficits could only be cut by raising taxes or cutting spending.

Four questions followed, designed to test knowledge about politics and the budget. One of these was a question about the sources of spending causing increases in the deficit. Respondents were supposed to identify the source out of four choices that “does NOT contribute significantly to future deficits.” The choices were: 1) rising health care costs; 2) corporate bailouts; 3) the aging population, and 4) major tax cuts. The question has clear biases. First, for example, it doesn’t contain a 5th choice of continuing to issue debt, dollar-for-dollar, after Government spending. Probably because the designers didn’t want the question to suggest that the Government had the option to cut deficits by not issuing debt and paying interest. Second, however, the suggestion that one of these doesn’t contribute to future deficits is questionable. It assumes that the recent health care reform, which many think is a continuing corporate bailout of the insurance companies, won’t contribute to future deficits by contributing to rising health care costs. Also, it assumes that past corporate bailouts haven’t created a strong propensity for future bailouts. If they have, then that will contribute to future deficits. But the biggest problem with this set of choices is that it fails to mention continuing foreign wars, and recurring recessions or depressions. The first would contribute to future deficits, and the second would just about ensure that they occur. Failing to include the choices I’ve just mentioned in the instrument involves a casual, but serious bias. AmericaSpeaks has so far exhibited an obviously limited perspective in almost every question about political attitudes they asked the participants up to this point in the process.

The pre-survey next presented a number of questions relating to political participation, competence, trust and democratic attitudes. They are background questions which will be used by analysts to see if there’s a relationship between such orientations and attitudes about spending and the deficit. The next set of questions were about eliciting information rating economic conditions in this country, whether they’re better or worse than a year ago, how things are for your family, anxiety about being able to pay rent, mortgage, or housing costs, and having enough savings for retirement, and whether one is part of a group working to achieve fiscal or monetary reform. The pre-survey ended with a set of questions on demographics, including employment status. There were no obvious biases in the above questions, but values always enters social research, and without knowing the theoretical formulation intended to guide the analyses, using data from these questions, it can’t be concluded that bias hasn’t entered into the selection of these questions also.

Discussion of everyone’s vision for America in the Future and rating of agreement/disagreement on 7-point rating scales with 3 primary “value” statements, and watching results from the meetings in various cities.

The meeting began in earnest with the facilitator asking the participants:

”Share your name, where you are from, and complete the phrase: And in a sentence, I’d like you to share your greatest hope for the future of the country that your children, grandchildren and future generations will inherit.”

Once names were shared each person gave their greatest hopes. The question served to orient everyone to think in terms of the future, and also to think of others and the country rather than of themselves. The bias in the question toward collective rather than individual concerns is palpable. But also the question connects up easily to one of the favorite arguments of deficit hawkism, namely that deficits lead to accumulating debts that our children and grandchildren will have to pay off. This proposition is a myth, but clearly, AmericaSpeaks, was trying to connect up to it here.

Once everyone gave their answers to the question, we were directed to look at a list of ground rules for meeting discussions, and asked whether anyone objected to them. These were non-controversial, and are simply civility rules. No one objected to them, and the group proceeded on to a reading of the agenda and then to demographic polling. These questions were a shorter version of the list of demographic questions included in the pre-survey. Questions about whether one was a liberal, moderate or conservative, and also whether one was satisfied about the tone of political discussion in the country were also asked. The group next listened to the web-streamed national results responding to these questions, and then moved on to provide some attitudes toward the economic recovery in a 15 minute discussion. That discussion focused on two questions:

”How have you, your family and neighbors been most affected by the recession?

What is your highest concern today about the state of our economy?”

Answers were restricted to a sentence or two from each of us. If one of us had more to say than that, the moderator intervened to invoke the civility ground rules about letting others get their fair share of time. Then a quick poll was taken about whether 1) economic conditions were getting better, or worse, or staying the same; 2) you were supportive or unsupportive of Congress spending money on unemployment benefits and preserving jobs at the state level if that meant increasing the deficit; and 3) you think that the Government should be doing more, less, or the same to strengthen the economy. This part of the program had very little discussion (15 minutes) attached to it. It was as if the organizers wanted to get people to think about projecting the future in the context of their feelings about the present, but were not interested in people exchanging views about why they felt one way or another about the recovery and its importance relative to deficit spending. This is consistent with the AmericaSpeaks biases we’ve seen so far. Their interest was in getting people to talk about the problem as they defined it for the participants. They didn’t want to provide participants with any freedom to develop their own views about whether there was a problem or not, which an extended group discussion of the recovery efforts might have produced.

So, at this point the group moved on very quickly to watch the video on Federal Budget 101 prior to a discussion of “values.” The video summarized the position and argument taken in the booklet I’ve analyzed in Part Two, so there’s no reason to say anymore about it here. Immediately afterward, the facilitator moved on to get us working on “values.” The over-arching values question was:

”What are the core values that should guide decisions about our country’s fiscal future?”

The facilitator did not allow the participants to provide their own “core values” but directed the group toward providing ratings on three 7-point scales of each of three dichotomies. The ends of the dichotomies "anchored" each rating scale. The dichotomies were: 1) Taking care of current generations/taking care of future generations; 2) Share the burden of reducing the deficit equally/Place a greater burden for reducing the deficit on those more capable; and 3) The nation’s responsibility to take care of the most vulnerable citizens/individual responsibility to take care of self. There was no opportunity for participants to add other values. We were oriented to think in terms of these value dichotomies and these alone. Discussion was restricted to sharing one’s views in one or two sentences, because of the need to move on. Most participants provided ratings that were somewhere in the middle of the scales, midway between the anchors of each dichotomy. The group leaned a bit more heavily toward taking care of future generations, but it wasn’t clear that the participants accepted that dichotomy, because some thought that making sure that this generation creates real national wealth (not financial assets) is the best way to serve future generations. They also leaned slightly in the direction placing a greater burden on those more capable of handling it; and they also leaned slightly more towards taking care of self.

A bias in the values instrument is readily apparent. How did AmericaSpeaks select only these three values? Why didn’t they ask about the dichotomy “share the burden equally/place a greater burden on those who did most to cause the recession and who have benefited most from Government bailouts”, for example. Why didn’t they ask about the dichotomy “the Government doing all that can be done to end the recession and under- and unemployment/doing all it can to balance the budget regardless of whether or not it is likely to deepen the recession”? Or why didn’t they ask about "joining together to ensure equality of opportunity/allowing to America to continue to evolve toward a more economically unequal society"? In short, why orient people by presenting conservative rather than progressive value dichotomies to the participants and preventing them from adding any? Clearly, the reason is to maintain the bias in the proceedings toward deficit reduction and self-sacrifice.

Once the values work was done we listened to the results web-streamed from the national meeting, and then heard our own facilitator summarize the results in our own meeting. The next step was to move on to the options workbook, presenting "tough choices". At this point, our facilitator polled the group to see if everyone wanted to watch presenters at the national meeting present the choices in the options workbook before we did our work on them. About 20% of the group favored watching the presentation, while the rest thought that since we were already at about 2 PM and had to leave at 3 PM, we didn’t have the time to listen to any more “propaganda,” as one participant termed it, from AmericaSpeaks. Our facilitator then had the group split into two with one table watching the presentation, and a second much larger group going right to making their choices of what things to cut using the options workbook. At this point, we need to discuss the options workbook with an eye toward its framing and the biases there. So this seems like a good place to stop. In Part Four, I’ll discuss the tough choices exercise using the options workbook, and wind up this series.

(Cross-posted at All Life Is Problem Solving and Fiscal Sustainability).

The Procrustean Democracy of AmericaSpeaks: Part Two

10:30 am in Uncategorized by letsgetitdone

In my first post analyzing the June 26th AmericaSpeaks Community Conversation event I attended in Falls Church, VA, I presented the steps in the decision process used for the event and then began a discussion of the steps. I broke off my account in the middle of my narrative of Step Two.

Primary Facilitator states the purpose of the meeting, reviews the agenda, and hands out materials for the event, including a pre-survey, short survey on basic values, Federal Budget 101, and the Options Workbook. Participants watch the web-streamed Philadelphia event, including various notables speaking about the deficit problem, and also The Federal Budget 101 video giving the AmericaSpeaks narrative about the “fiscal crisis.” (continued)

Next, we received the problem orientation web-streamed to us from the national meeting, including a number of speeches about how exciting and important it all was, from notables representing AmericaSpeaks, The Peter G. Peterson Foundation, the MacArthur Foundation, and one from Alice Rivlin, who has been pushing fiscal responsibility since her days as the first Director of CBO back in the ’70s, and who is now on the President’s “Catfood” Commission. Alice is one of the best at summarizing the argument for the deficit crisis in just a few words, and she did it again here.

The Federal Budget 101 video was also web-streamed to the group. The video was a revised and slicker version of the video I analyzed here and here. But, the argument presented in it was no different. It’s main function was to socialize people into a particular narrative regarding the debts, deficits, debt-to-GDP ratios, and their connection to fiscal responsibility and sustainability. Its purpose was to orient participants to the idea that budget cuts and tax increases would be necessary to avoid fiscal disaster in the long-term and that the participants could really do their bit to help the US avoid it by giving their opinions about the cuts to be made and the taxes to be raised in the process of restoring fiscal responsibility, once the economic recovery was achieved and the recession was behind us.

The participants were given a chance to discuss the orientation speeches and the video and were urged to use the Federal Budget 101 booklet. Objections were made that ending debt issuance and creating a robust enough recovery were not mentioned in the orientation speeches, except to assert, that this deficit crisis was something the US couldn’t grow its way out of through a really robust recovery that the Federal Government might facilitate. I again claimed that $1.4 Trillion in 2025 could be saved simply by changing our policies on debt issuance accompanying deficit spending. There was some uptake about this from others, but again time schedules, and group norms about giving everyone a chance to speak, interfered with the full airing of this and points made by others about the desirability of handling the “crisis” through appropriate progressive taxation and facilitating a robust recovery and full employment. Before long, the facilitators moved the group along to the next step.

This is the right place to make some comments about The Federal Budget 101 booklet handed out at the meeting. First the projections in the booklet are primarily based on CBO projections to 2020 and thereafter on extending spending and revenue growth at the same rate. I’ve already criticized these projections in some detail here and here. I consider them nonsense and urge you to read these other posts to see why. However, apart from my other criticisms, I think AmericaSpeaks’s decision to view the Bush tax cuts of 2001 and 2003 as getting extended is a strange assumption, since the Administration has indicated it’s going to let them expire. Insofar as their projections are based on this assumption, their presentation is certainly biased since it projects much greater deficits than will happen if the President has his way.

A fundamental assertion of the booklet is that Government deficits and the national debt can grow “to unprecedented and unsustainable levels in the coming decades . . .” But that assumes it is possible for Government deficits and the national debt to become unsustainable in a nation like the United States that is sovereign in its fiat currency. That assumption is never brought up for discussion in the booklet, and no counter-view to it is considered or evaluated. But there are well-known and respected economists who believe that nations sovereign in their own currency never have any solvency risk, so that their deficits and national debts can never become unsustainable. The failure to even consider this alternative view, which implies that there is no deficit crisis at all, is a clear bias in the decision process used by AmericaSpeaks. People attending the meetings should have been informed of this alternative, and had the opportunity to consider it, since it calls into question the legitimacy of what they were being asked to do in the meeting. Failure to give them that opportunity clearly manipulated their involvement and participation in the deficit reduction exercises.

The booklet also states the view that growth in the national debt, if not controlled, risks that one day ”lenders” (the bond market) will be unwilling to lend US Dollars to the United States, or failing that would require higher interest rates from the Government. But this view assumes that Government spending must be “financed” or “funded” and that if not funded by tax revenues can only be funded by borrowing. Again, there’s an alternative view; and it is that Government spending in nations sovereign in their own currency isn’t “financed” or “funded” by either tax revenues or by borrowing, and that the US and other nations spend independently of taxing and borrowing, and that when spending they simultaneously create financial assets in the non-Government sector, I.e. new money, in the form of non-Government savings, most of which goes to the private sector. In fact, from this point of view, the national debt is just the accumulated savings in the private sector created by Government spending since the inception of the Republic.

It’s a further implication of this view that the Government’s current use of debt instruments, and also its net interest costs on the national debt are unnecessary expenditures, hangovers from the days of the gold standard, which continue to exist today because they are a convenience for wealthy investors. The Government could, if it wishes, just stop issuing debt after it spends. As current debt instruments are paid off, net interest costs will decline, until they reach near zero, and the bond markets, of course, will have no say at all in this process and no ability to raise interest rates as this process goes on.

If AmericaSpeaks is really unbiased, then why didn’t it include this alternative view in its deliberations? It both suggests that there’s no solvency or sustainability problem and also that there’s no interest problem since interest costs will be going down to near zero very soon. In 2025, for example, this view suggests that interest costs will be at least $1.4 Trillion less that projected using the extended CBO baseline.

The booklet next assumes that the national debt is the sum of deficits and surpluses since the founding of the country. This equates debts and total deficits, and conflates Government spending with Government debt issuance. They’re not the same, so total deficits may not equal total debts. If the Government stops issuing debt, but keeps on deficit spending, total debts and total deficits will vary greatly. Again, neglecting to inform participants of this possibility biased the decision process since participants were led to accept the AmericaSpeaks view that spending must be accompanied by debt, which, of course, probably led them to suggest cuts in Government spending, they otherwise would have not have suggested.

The AmericaSpeaks also incorporated highly implausible projections about the likely deficits, debts, and debt-to-GDP ratios we will see in 2025, 2040, and 2050. I make the case here, that projections even a few years out can’t be trusted. The idea that projections from 15 – 35 years are anything but fantasy is proof of bias since it represents a choice to tell people a fairy tale, you know very well will never come true. And since, AmericaSpeaks is telling people only one fairy tale, the one among a very large number that will scare the pants off them, it’s hard to contend that there’s objectivity and unbiasedness here, rather than an agenda to scare people and get them to help you in fingering cuts to be made in the Federal Budget.

Another highly visible bias in the booklet is the constant emphasis on the desirability of balancing the budget, if possible, and achieving surpluses. However, in the absence of inflation, surpluses are bad, not good, for the American Economy. They are not something we ought to aspire to, since the historical record shows that they always precede serious recessions or even depressions. So here is another case where a bias is introduced into the decision process. By not considering the view that surpluses may be bad for the economy, and educating the participants about this view, and by also constantly driving home the message that surpluses are good and deficits, while they may be necessary during recessions, are somehow negative and less than moral, AmericaSpeaks introduced still more bias into the decision processes in the Town Meetings and Community Conversations. I dare say the ratings made by people in the various meetings would have been very different, if they had been informed about the historical correlation between surpluses and recessions or depressions.

Next, the booklet presents rising health care costs as due to the aging of the American population, with the implication being that we ought to control these costs by cutting Medicare and Medicaid. But, what about other factors in rising health care costs over time? How much are rising costs due to bad health insurance company and provider behavior? We know that both insurance costs and provider costs are far lower in other wealthy nations than they are in the United States, so why doesn’t AmericaSpeaks discuss these factors and their role in rising costs? Is it because they’re trying to suggest solutions that ask working Americans to sacrifice, but not insurance companies or providers?

AmericaSpeaks tells us that the corporate bailouts were one-time events and will have no impact on future deficits. But clearly this view neglects the political effects of the bailouts. The bailouts have created a moral hazard and an expectation that the Government will bail out companies that are “too big to fail.” Will the Government bail out businesses, both financial and non-financial in the future? If so, it will be due to a cumulative political effect of the bailouts that AmericaSpeaks would not consider in its discussions.

The booklet says that not even a return to the growth pattern of the 1990s will eliminate the deficit. But first, that assumes that the growth pattern of the 1990s was very strong, and also second, that our goal should be to eliminate the deficit. It also assumes, third, that a return to growth would be the only factor in ending the problem. Well, going back to the first point, I’m here to tell you that even though many of us fondly remember the ’90s and the ’80s as periods of strong growth, and even though they compare well with the very tepid decade just ending, they do not compare well with the growth in the American economy during the 40s, 50s, and 60s, of the 20th century, when we worried a lot less about inflation and a lot more about full employment than we do now. Of course, we also had a Government that was much more activist in its approach to the economy for many of those years. In any event, the possibility of a return to growth patterns of earlier decades is not raised in the booklet or ensuing discussions as a way of reducing deficits. Is that because AmericaSpeaks is biased against the possibility that restoring very active Government intervention in the economy could raise growth rates enough to eliminate the perceived deficit problem?

And second, as I’ve already said, why do they assume that we have to eliminate the deficit at all? If surpluses cause recessions, we would not want to do this, raising the possibility that a return to even Clinton era growth patterns might produce a great result for us.

But third, even if AmericaSpeaks were right about the inability of a return to growth reducing deficits to a level that would be less alarming, what if growth of that kind were combined with a policy of not issuing debt? Then for example, having no interest costs in 2025 would bring down Federal expenses to roughly $5.8 Trillion, leaving $1 Trillion or so in deficits, an amount which would easily be made up in increased tax revenues resulting from a Clinton era growth pattern. So again, why didn’t AmericaSpeaks consider possibilities like this and introduce them into the discussion? The answer is that they were not trying to foster a decision process based on consideration of a number of alternative perspectives of what the future will bring us. Instead they were just trying to get people to respond to, and to function within, the AmericaSpeaks vision of the future, a vision which is biased toward eliciting deficit hawk reactions from participants in the process.

Well, that’s enough of this analysis of the Federal Budget 101 booklet. I think that people exposed to this booklet were presented with a marketing piece, whose purpose was to "sell" the ideas that there is a deficit crisis that puts this country and its decision makers into a fiscal box, and that the only way out of this box is to make long-term plans to cut Federal expenditures. It made no attempt to present alternative views outside of this frame. So, in short, it was a systematically biased presentation creating a fairy tale about a non-existent problem. I think that’s all for now. In my next post, on the event, I hope to wind up this account of the steps in the AmericaSpeaks decision processes and their biases.

(Cross-posted at All Life Is Problem Solving and Fiscal Sustainability).

The Procrustean Democracy of AmericaSpeaks: Part One

10:59 am in Uncategorized by letsgetitdone

On June 26th, AmericaSpeaks, an organization claiming unbiased neutrality on deficit issues, but funded by the Peter G. Peterson and other Foundations who share the Peterson view that US deficits and the National Debt are something to worry about, convened some 19 Town Meetings, and more than 40 smaller “community conversations,” all tied together through web streaming, to elicit citizen views on “this problem.” Here are some claims by AmericaSpeaks about their neutrality and lack of bias.

”AmericaSpeaks takes pride in its reputation as an honest and neutral advocate for public participation. We play a unique role in the policy making process by serving as a non-partisan convener of forums that provide the public with an opportunity to make decisions about important issues without fear of manipulation or bias. Our ability to help citizens and elected officials come together around tough public issues is dependent on our commitment to maintaining this neutral role. . . .

”AmericaSpeaks does not take positions on policy issues. AmericaSpeaks strives to ensure that only balanced and neutral facts are used to inform discussions on policy issues. We stand by these basic principles that protect the integrity of our process and the faith that participants and decision-makers place in our work.”

I attended one of the community conversations, held in the library of the Congressional School in Falls Church, VA, in a neighborhood called Lake Barcroft, along with my daughter, an aspiring actor and professional web accessibility consultant. Upwards of 20 people participated in the conversation including two moderators, both doing unpaid volunteer work for AmericaSpeaks. There were very few younger people in this group, and by that I mean people under 40. I don’t believe there were any under 30. About 1/3 of the group appeared to be in their 60s or older. The rest were in the 40-50 range. There were no Hispanics, or African-American in the group, and only one person of Asian extraction. Many of the attendees appeared to be professionals or retired professionals. So demographically and educationally the group I was not representative of America.

I want to spend most of this post talking about the group process, because I think you can’t really properly understand how individuals respond to the group environment and also the content of their responses without understanding the process. Here are the steps in the community conversation process I attended

1. Welcome and Introductions

2. The Primary Facilitator states the purpose of the meeting, reviews the agenda, and hands out materials, including a pre-survey, a short survey on basic values, a Federal Budget 101 booklet, and a deficit reduction Options Workbook. I’ll discuss these materials in conjunction with the steps in the process associated with them. Participants watch the web-streamed Philadelphia event, including various notables speaking about the deficit problem, and also The Federal Budget 101 video, giving the AmericaSpeaks narrative about the “fiscal crisis,” and the basis for deficit reduction activities including the event itself.

3. Participants are given a pre-survey to fill out while the meeting is going on, and watch results of the same survey given at those events.

4. Discussion of everyone’s vision for America in the Future and rating of agreement/disagreement on 7-point rating scales with 3 primary “value” statements, and watching results from the meetings in various cities,

5. Working through the Options Workbook and arriving at decisions about what cuts in Federal Expenditures or tax increase to make in order to cut the projected Federal Budget. Reporting to the group about the choices made by each participants and something of the reasoning behind these choices. Summing up by facilitator highlighting the most popular choices of options for reducing the deficit.

6. Conduct End of Day Survey and close the meeting.

Now I’ll report on and analyze each stage with special attention to the question of bias/lack of objectivity.

Pre-Conference.

The very selection of the problem along with the characterization that we face a deficit crisis, indicates a bias. After all, by their own admission, and based on their own projections, the percentage of Federal Outlays devoted to net interest costs won’t reach 20.6% until 2025. This is a large percentage of the Budget. However, the percentage devoted to net interest costs had been quite high under Reagan and Bush 41, pushing 15%, in 1989, and only slightly less under Reagan. The interest burden didn’t cripple the Republic then, so why get excited enough about this projection now to invest in this nationwide meeting? In fact, the percentage devoted to net interest costs won’t even reach the 15% almost reached under Bush 41 until 2018, according to CBO, which gives us 8 years to prevent even that outcome.

On the other hand, we have the most serious recession on our hands since the depression of the ’30s, unprecedented levels of under and unemployment, since the Great Depression, two wars, an urgent need to re-orient and re-build the energy foundations of our economy, a health care reform, that will not materially reduce the 45,000 fatalities per year we are experiencing now, a crisis in our public education system, very serious environmental problems, a crisis in our infrastructure which needs $2.5 Trillion to repair, a world economy full of nations cutting back on public sending, and each of these problems are things we need to target now. So why no AmericaSpeaks meetings on those problems before we even begin to worry about a “crisis” that is still a number of years away. Clearly, the very selection of the problem shouts bias. Especially, since they could have polled interested people first, and asked them which of a list of problems facing America ought to be discussed in a national meeting, and then decided how to organize their meeting. Does anyone doubt that a democratic selection made by a majority of people polled would have been about the economy and the jobs crisis we are facing?

Welcome and Introductions

This a very normal thing to do in any meeting of this type. What it revealed in that most people attending were professional people with a high level of education. There were no laborers in the group, and a fair number of people were active in interest group circles in the Washington, DC area. Also, we were told by the facilitator at this point that the event would not last from 11:30 AM – 6:00 PM as planned, but would be over by 3:00 PM. I don’t know if this was restricted to our community conversation alone, and was a function of our facilitator’s commitments, or whether it was part of the nationwide program. However, as time wore on, it became clear that the loss of 3 hours of time did much more damage to the opportunity for detailed expression of their views by participants like myself and a number of others skeptical about the orientation of the event, than it did to the need of AmericaSpeaks to get the ratings it required from participants. So, the compressed time period further heightened the bias in the situation towards the frame that AmericaSpeaks had set for the meeting, and also, therefore, biased the outcomes the meeting produced.

Primary Facilitator states the purpose of the meeting, reviews the agenda, and hands out materials for the event, including a pre-survey, short survey on basic values, Federal Budget 101, and the Options Workbook. Participants watch the web-streamed Philadelphia event, including various notables speaking about the deficit problem, and also The Federal Budget 101 video giving the AmericaSpeaks narrative about the “fiscal crisis.”

When the primary facilitator stated the agenda and explained its purpose, a number of people immediately called for a discussion of the purpose of the event and questioned whether there really was a fiscal crisis. I pointed to the Government’s option to deficit spend without issuing debt and pointed out that doing this would save nearly $1.4 Trillion in interest costs in 2025, alone, and that, the cumulative effect of a no debt issuance policy would be to eliminate a good part of the deficits projected between now and then. Another participant, active, in the DC non-profit world, mentioned the continuing recession and high levels of unemployment. She pointed out that SS had no immediate fiscal problems, and that the “crisis” was caused by people in the financial industry, who are not the ones being asked to sacrifice, but who are now asking others to do so. Yet another, an economist at the Bureau of Labor Statistics, talked about most of the difficulties being due to health care cost increases and the current recession. He denied that there was any long-term fiscal problem. Still others also questioned whether the topic of the meeting was appropriate.

The meeting facilitator met these objections with apparent openness. She gave everyone a chance to state their views, but then mentioned the need to table the discussion until later, if time allowed, because of the need to keep up with the agenda of the national program being web-streamed to us.

At this point, it was apparent to me, and probably to everyone, that there really wasn’t an opportunity to question the agenda and revise it within the AmericaSpeaks process. But only an opportunity to let off some steam, while the group was being driven by the pre-planned agenda and orientation to provide information that would be structured in the way that AmericaSpeaks wanted. This was another dimension of bias. Not only was the topic pre-selected to fit the prejudices of AmericaSpeaks, but participants in the event would not be allowed to revise the topic in any serious way to fit their needs, and they would also be run through an agenda of exercises designed to produce results within a certain range, and in a compressed time.

I think that’s enough for now. I’ll continue with my analysis of the AmericaSpeaks Community Conversation Meeting in my next post.

(Cross-posted at All Life Is Problem Solving and Fiscal Sustainability).

The Deficit Crisis Is a Fantasy

8:23 pm in Uncategorized by letsgetitdone

After going to one of the AmericaSpeaks community conversations Saturday, I’m even more confident that the deficit crisis being promoted by the Peter G. Peterson Foundation, AmericaSpeaks, the National Commission on Fiscal Responsibility and Reform, and the Obama Administration, as well of much the world’s global elite is a fantasy. There is no truth to it, and it is a dangerous fantasy, because if one believes it, then that can be a self-fulfilling prophecy. The austerity they recommend for the long-term can make the slow growth and difficult times they project come true. It can catch us all in a nightmare of their making. The “reasoning” behind their fantasy is simple enough. It is:

1. Long-term projections, like the CBO’s and others that project further than 2020 based on the CBO’s projections show that the national debt is going to grow rapidly in the coming years, and that we cannot “grow our way” out of the debt as we did during earlier periods.

2. Due to the increasing debt, Federal interest costs will be increasing dramatically.

3. This will create other effects, such as driving interest rates up more generally including consumer interest rates. Increasingly heavy Federal borrowing will also “suck up private sector capital” and hurt investment in new innovation increasing productivity.

4. Over the long term, rising debt, interest rates, and sharply rising interest costs, both for the Government and for consumers, and “crowding out” of private capital, represent a problem of the highest importance that threatens to harm our economy and lower our living standards.

5. So, America must immediately take the measures needed to solve this deficit problem after recovery from the present recession.

And there are at least four reasons why this line of reasoning is a fantasy.

First, the Government can deficit spend without issuing debt instruments (“look Ma, no more rising national debt”) or committing to paying interest costs. It has the constitutional authority to spend money without offsetting its expenditure by issuing an equivalent amount of debt. The more it chooses to do that, the more it creates an oversupply of reserves in the reserve funds market, and the more it does that, the more competitive forces in that market will drive short-term interest rates on reserve funds toward zero. If the Government further decides to cease offering longer-term debt instruments, and to offer overnight debt only, it would decrease its annual interest costs to very near zero. So, there need be no rising national debt, nor rising Federal interest costs, nor rising business or consumer interest costs, nor sucking up private capital for investment. The whole deficit terrorist nightmare can go away. The Government can start refusing to issue debt now, and persist in that policy for as long as it wishes. Why doesn’t it do that?

If it did, then, for example, the roughly $31.15 Trillion National Debt projected by AmericaSpeaks in 2025, which is 114% of their projected GDP for that year, would be reduced by roughly $11.6 Trillion to 19.6 Trillion, or about 71.6% of GDP, hardly alarming even by the standards of deficit terrorism. In 2025 alone, this would reduce projected Government expenditures by $1.49 Trillion, or about 60.5% of the projected deficit for 2025.

Second, the deficit terrorist projections of GDP growth are way out of line with historical averages, and that is why they think we cannot grow our way out of hard times. In effect, they are projections from the Bush and recent Obama Presidencies. If one computes 10 year growth ratios of GDP unadjusted for inflation, the historical growth ratio norm (average) is roughly 2.0. In contrast, the very conservative CBO projection from 2010 – 2020, is 1.54, just a bit higher than the 1.50 of the decade now ending. If the Government were to forget neo-liberalism, and follow continuously aggressive stimulative policies of the kind opposed by the deficit hawks, and proposed by Modern Monetary Theory, the growth ratio is very likely to return to the historical norm, since other than in the 1930 – 40 decade, the only time it dipped below 1.69 was during the current decade. Since deficits depend on tax revenue, and tax revenue, in turn, is closely related to GDP, the conservative GDP projections of the CBO and the deficit terrorists, more generally drive up the deficit numbers, and by depressing the GDP numbers also drive up the public-debt-to-GDP ratio – a double whammy supporting their fantasy that there’s s deficit/debt/debt-to-GDP ratio “problem.”

Here’s the huge difference it makes if we assume a return to something like the historical norm, while also assuming that the Government ends debt issuance this year. a) The US incurs much smaller deficits than CBO projects from now through 2014. b) In 2015 the US gets its first surplus since 2001. c) The projection then shows rapidly increasing surpluses from 2015 until 2025. d) The total accumulated surpluses are $10.1 Trillion, and this exceeds the $7.5 Trillion public debt recorded by the end of 2009.

In short, if we quit using debt instruments and used deficit spending to drive growth up to historically normal levels, then according to this alternative projection, we’d have one big surplus crisis and not a deficit crisis at all. In fact, another way to look at this is that if we did these two things, and spent the whole $10.1 Trillion surplus, plus what the deficit hawks projected, the US Government would be able to spend $80 Trillion between now and 2025, and would still have a public debt of only $7.5 trillion, which would then be about 17.8% of GDP, and if we were willing to tolerate a debt-to-GDP ratio of 40%, the Government could spend $89.4 Trillion over the 15 year period, an average of about $5.96 Trillion, per year, a level of expenditure (not including interest costs) greater than that projected in 2025 by AmericaSpeaks, and more than $2.5 Trillion or 75% greater than the Government is on track to spend this fiscal year.

Third, of course, we cannot project either the surplus problem I projected, or the problem the deficit terrorists project. Both are fantasies; just dreamland. Economists and financial experts can’t project accurately even five years out, much less 10 or 15 years out. They cannot project even a few years out. In 2000, they were talking about surpluses as far as the eye could see. In 2006, very few recognized the problem of the housing bubble or projected the crash of 2008 and the Great Recession. Now, they are projecting slow growth over the next 15 years. Why should anyone be foolish enough to base significant public decisions on their medium and long-term projections? Why should anyone make decisions implementing long-term plans to cut any public programs that are of benefit to Americans over a period of 10-15 years, when the projections showing the need for cuts are so much like a fairy tale.

As for my own projection, of a surplus problem, that is very unlikely to happen because we know that surpluses are historically unsustainable, which is why they are a problem. Whenever, the US has experienced a few years of surplus they have been followed by either a recession or a depression. This isn’t just an empirical fact, Modern Monetary Theory indicates that surpluses in the Government sector are equivalent to deficits in private sector savings. That is, when the Government runs a surplus, it removes financial assets from the private sector, unless foreign sector exports, balance off that surplus, not a possibility anytime soon for the US. So, the longer the US runs a surplus, MMT says that the greater is the chance it will have a recession, and that the "automatic stabilizers" in the safety net will kick in and turn the surplus into a deficit. So, my projection above can’t come true. Nevertheless, it still presents a useful narrative, because it shows that even if the Government were to spend nearly $20 Trillion more than CBO/AmericaSpeaks, projects it will spend through 2025, then the result, in terms of their beloved debt-to-GDP ratio would be quite acceptable.

Fourth, the plans of the deficit terrorists to get everyone committed to a course of deficit reduction over the next 15 years are reminiscent of the kinds of five year plans that we became familiar with in the first half of the 20th century in planned economies. There too, people tried to set targets for the economy and plans to implement those targets that proved incapable of coping with political, social, and also economic realities. These plans were too rigid to adjust to circumstances. The deficit terrorists ask people to formulate plans committing to cuts to be implemented over the long term in most areas of Government expenditure without reference to the consequences of making those cuts, or to the conditions we have no way of projecting which will obtain when the planned cuts are to implemented. What if the planned cuts aren’t small enough, because a program has become obsolete? What if expansion is needed in certain areas and not cuts?

Of course, the deficit terrorists will respond by saying that everything can be adjusted if conditions require and that their plans are not intended to be a strait-jacket, but only a guide to let us arrive at fiscal sustainability over a long period of time. But the questions we must ask are: 1) why “fiscal sustainability” and fiscal responsibility should be measured by national debts, deficits, and debt-to-GDP ratios? Those are just abstractions; they do not measure real wealth or Government solvency. Governments with currency control in their own fiat monetary systems, cannot become insolvent. They have no solvency risk. So these numbers don’t signify fiscal sustainability or responsibility. Rather, they are a lot of sound and fury signifying nothing and distracting us from the real things we ought to be doing.

For 2) what are the real consequences if the Federal Government evaluates what it is doing according to its impact on these numbers and acts accordingly? Unfortunately, we are already seeing these consequences and they are not pretty. They are failure to meet our unemployment problems, failure to meet our pressing need to repair our infrastructure, or to solve our energy problems, failure to extend the social safety net to those in need, failure to educate our young, failure to rebuild the energy foundations of our economy, taking Medicare for All off the table on grounds that it could cost more than $1 Trillion over a 10 year period and would contribute to an increase in the deficit and the national debt: failure, failure, failure, and more failure; and the destruction of real wealth as our country declines into insignificance. What’s fiscally sustainable and responsible about that?

(Cross-posted at All Life Is Problem Solving and Fiscal Sustainability).