Wednesday, October 22, 2008

Evidence-based governing?

Obama's Pragmatism

Ideologues chatter, local Dems cower but the consensus is winning

As chairman of the Federal Reserve, Ben Bernanke is America’s most powerful banker. He is nonpartisan. He’s known as a very cautious person, extremely reserved in his public remarks—a scholar of the Great Depression of the 1930s who is thoroughly non-ideological, unlike his predecessor, Alan Greenspan, whom many blame for legitimizing the anti-regulation mindset that the world now regrets.

Barack Obama

The news this week is that Bernanke has just endorsed the ideas of Senator Barack Obama. Bernanke says that now is the time for government to spend to stimulate the economy—even if such spending causes a temporary increase in George Bush’s record-setting deficits.

This is a remarkable change of course in response to difficult economic events.

Some people don’t like what Bernanke did. The Wall Street Journal editorialized that “[w]e can remember when tougher Fed chairmen used to refrain from adjusting interest rates close to an election for fear of seeming to be political; they would never have dreamed of meddling in campaign tax and spending debates.”

Yes. But it is truly remarkable how quickly a consensus has formed among so many of America’s smartest and most powerful decision-makers, who also embrace the Obama policy.

But that consensus—which indicates just how mainstream Obama really is—has apparently not been adopted here in Upstate New York.

It’s especially weird that, while the national Democrat ticket is explicitly running on a program of building new infrastructure and targeting tax increases for the well-off, Democrats here are mum—only days after the 12 Democrats of the 15-member Erie County Legislature received the first budget from the Republican county executive of Clarence.

Could it be that the old pre-crisis anti-government politics will live on in a region that, as so many of America’s distressed regions do, really needs some fiscal stimulus?

The local disconnect

Here in Erie County, where the Clarence mindset of greenfield development, cost-shifting to the old settled areas, and unmet infrastructure needs are once again a way of life, Democrats have not yet become Democrats again.

No one has heard a peep of protest about the county executive’s plan to cut the library, stop tending city parks, shift costs to the all-but-bankrupt City of Buffalo, reduce cultural spending that leverages philanthropy on a 10 to one ratio, and that undermines regionalism while choking off investment in sewers, roads, bridges, and parks—except those in Republican districts.

This would all be par for the course of partisan politics, were it not for the new fact that the county executive, a Republican, has already pledged to raise property taxes.

One would think that having a presidential campaign, the chairman of the Federal Reserve, and the county executive of the other party all endorsing economic stimulus through public spending would be enough to embolden local Democrats to join in.

Perhaps an Obama mandate of more than 300 electoral votes will yet embolden local leaders, who have all of November to deliberate whether their constituents would be able to stomach another dollar or two a month in county property taxes (and some high-end surcharges, a real-property transfer tax, and a few other nickels and dimes) in return for opened libraries, regionalized parks management, working bridges, and support for the older, settled parts of the county rather than subsidy for the next equity-killing cornfield development.

Theories versus policies

Stimulus is an old, tried and true policy. The cautious, mainstream nature of the Obama version seems lost on everybody but the ideologues of Fox News, the Wall Street Journal editorial page, and Governor Sarah Palin.

Should Obama win, the Left will probably be sorely disappointed—just as it was when Bill Clinton was elected in 1992. That’s because what will triumph in 2008 is not an ideological alternative to the rants of the neoconservative Right, but a scholarly, centrist, evidence-based approach.

I don’t know what unit of measure one should use to tot up the volume of intellectual energy that has poured into designing the policies that undergird Obama’s presidential campaign, but it’s a lot. The good news is that a great many smart and hard-working people have produced lots of written material—books and studies, and endless op-ed pieces and letters to the editor—that demonstrate a thorough re-thinking of our national policies on international affairs, energy, cities, healthcare and other difficult subjects.

The American tradition is, frankly, to let theorists hold forth while engineers await their turn. The anonymous essayists of The Federalist Papers got the tradition of argumentation on principles going back in the 1787 and 1788, when the subject was getting the Constitution ratified.

To be fair, the neoconservatives tried to marry theory with practice starting in the mid-1970s, when Jimmy Carter’s victory sent them back to their think-tanks and seminars and conferences, with lots of trips to visit Margaret Thatcher’s privatizers and neo-Hayek operatives. With the election of Ronald Reagan in 1980, the Republicans empowered broad, sweeping notions about liberty, free markets, and freedom itself but did so in the shape of a political discourse—and policies, too—that were clothed in lofty rhetoric but which in practice amplified racial divisions, turned public space into private larders for well-connected insiders, and generally shifted the country away, in practice and in tone, from the notion of community and shared destiny in favor of private gain—and hang the cost. Thanks to the campaigns of former Congressman Jack Kemp, Western New York became a testing-ground for packaging and marketing these ideas, all summed up in one phrase for one policy: tax cuts.

For the neocons, it was all tied up in a bow: theory, footnotes, intellectual rationale, with popular magazines and influential newspapers and lots of politicians speaking from the same phrase-books.

And now the reign of ideology is about to be over.

Soon, we won’t any longer have to spend much time discussing the Republican theory, which has been disproved over and over again, that cuts in the marginal tax rates of high-income individuals will yield more revenue than raising taxes on high-income individuals.

Why? Certainly not because Obama and all the PhDs advising his campaign have an opposing theory—their own version of magical thinking. Not at all. The Obama folks are distinguished by their pragmatism—by their reliance upon evidence. They know the Brookings Institution study that found that it will take an investment of about $26 billion over the next 10 years to restore and protect Great Lakes water quality, which will be critical to the economic future of the region. They have examined independent studies of congestion, which show that inadequate roads force overconsumption of fuel by slowing the transit of people and goods. They know we need public investment in an alternative energy infrastructure, even though the recession (and some spanked-down speculation) drives oil back below $80 a barrel, because the technological shift will take time.

There’s not much Obama rhetoric that’s ideological about this stuff. What’s refreshing, though, is how the practical is so poetic—the logical so lyrical. To translate loosely from the Assiniboine, I can think of no more compelling ideology than “we do this that our children may live.”

What “fiscal stimulus” should mean: sewers

The “fiscal stimulus” part of the next president’s agenda means the spending part. Bernanke said the other day that we shouldn’t worry about the Bush deficit—which is at $700 billion and counting, or about five percent of the gross domestic product, which is bigger than at any time since Ronald Reagan was president.

Question: What should we buy?

Answer: stuff that will help us get ready for 2020.

The things that elected leaders buy with government money have a big, ongoing impact on who you buy them for, and where you buy them.

That’s why the Great Lakes states—specifically, the urban regions of Syracuse, Rochester, Buffalo, Erie, Cleveland, Toledo, Detroit, Chicago, Milwaukee, and a few other places—need a coordinated federal, state, and local investment in (drum roll please) new sewers.

That’s right. Sewers.

New York Governor David Paterson has already appointed a Clean Water Coalition of government experts, industry representatives, and engineers to advise him on how to prioritize wastewater projects. In his welcome to Senators McCain and Obama to last week’s debate at Hofstra University, Paterson asked them both to commit to infrastructure help for states in part to help “meet our water quality needs.”

The nonpartisan Northeast-Midwest Institute published a study last year—amplifying the findings of a federal Environmental Protection Agency study—that showed just how quick and direct the return on investment would be for people who live in Great Lakes cities (and suburbs) if the wastewater systems got fixed.

Regionalism will have a place at Obama’s policy table, too, because he relies on the calm, centrist, evidence-based analysis of the Brookings Institution’s Metropolitan Studies Center, which (can you tell by the title?) tends to see economic, social, and governance issues not on a town-by-town basis, but by metro area.

The closest thing we have to metro-wide or regional government around here is county government. So it would be logical that a regional infrastructure issue—such as sewers—should be part of the county legislature’s thinking, even if it’s not party of the Clarence county executive’s thinking.

Think of it. Federal, state, and county elected officials could together act responsibly, investing public funds for the long-term benefit of the environment, and the near-term benefit of the regional economy.

Could it really happen? We’ll see whether November 4 changes local elected officials’ paralysis into action.

Bruce Fisher is Buffalo State College visiting professor of Economics and Finance, where he directs the Center for Economic and Policy Studies.