Dartmouth – Change? The 2008 Elections: Outcomes, Consequences, and Next

– Welcome to the Rockefeller Center, and our Post-Election panel
titled Change: The 2008 Elections, Outcomes,
Observations and Next Steps. This is a bit of a different
format than we’re used to, and hopefully it will work well for us in that we can hear from 10 scholars instead of just one or two at a time. It’s my pleasure to welcome you here to the Rockefeller Center, this is part of our 25th anniversary celebration, and our centennial anniversary of Nelson Rockefeller’s birth. Particularly I’d like to acknowledge the board of visitors for
the Rockefeller Center, who is here today as part of
their semi-annual meetings, with the Rockefeller Center, so thanks for coming, appreciate it. The way this is going to work out is that I’m going to talk
briefly about the outcomes, and just actually what
happened during the election. Then we’re going to move to look at institutional perspectives, so we’ll see the impact of this on the executive branch, on the
congress, and on the courts. And then we’ll move into the policy realm, and hear from a number of scholars who have specific expertise in various areas of public policy. We’re going to try to stick
to a five minute limit for each of us, now that’s a hard task for academics but we’re
going to try to live by that. So without further ado, I’m going to talk about the election results, and a bit of exit poll results that were posted online
in various outlets. The obvious numbers that we have, the outcome being Obama winning with 52.5% of the vote, and
65 million votes overall. And up until today we
have 364 electoral votes. Missouri is still out and undecided. On the McCain side, we had 46.2% and 57 million votes,
and 163 electoral votes. On the congressional side of the ledger, again as of this morning so we added the Oregon numbers to this, we’ve got now 55 democrats, 40
republicans, 2 independents, and pardon the spelling, Bernie Sanders and Joe Lieberman still
sitting as independents. And Joe Lieberman might
be very independent as of the next couple
days, we’ll find out. (laughter) In Minnesota, Georgia, and Alaska, we still have the three
republican incumbents battling for their seats, and
we’ll see what happens there. On the house side, a net
gain of 20 seats there. We’ve basically gone back 20 years, these are virtually the exact numbers that George W. Bush had
when he took office in 1989. So we’ve seen a long strange trip that we’ve taken ourselves
on over the last 20 years, to get back to a congress that, although the composition of the congress looks quite different
than it did 20 years ago, the numbers are the same but who they are and where they represent
is quite different. As we now know, we have
a total blue New England, with no republicans from
the New England states in the House of Representatives right now. Gubernatorial races, we had 11 going on. Basically status quo, six
of the races were democrats and they’re still held by democrats. Four were republican, held by republican. And the one seat that did switch is Missouri, a republican
was replaced by a democrat. So we now have 29 democratic governors, and 21 republican governors. There were 44 states which held
state legislative elections, in their houses and senates,
or upper and lower houses. Of the 4,758 house races,
net gain is 63 seats for the democrats, and on the senate side of the 1,700 or so that did battle there was a net gain of 8 seats. So pretty much of a status quo election. Which is interesting when you go back and look at prior to the 2006 elections, these numbers were virtually identical. That is they were
virtually the same number of democrats and republicans
of the 5,400 seats that were in play, over the 50 states. It was virtually tied in the
houses of all the legislatures. So we saw a big gain in 2006 and 2007. So the 44 states that had elections also had elections in ’06,
and then the six states held elections in ’07,
we saw a 240 seat swing in the ’06 and ’07 cycles,
and only a 63 seat swing here in the 2008 cycle. So the way it began
earlier at the state level, then we saw at the national level. Some of the propositions,
the ban on gay rights, the ban on gay marriage,
was on in three states, and it lost in all three states. That is the gay rights side lost, that is, the bans were upheld
in Arizona, California, and Florida, and in Arkansas they passed an initiative that bans gay couples from adopting children,
and that passed with 57%. There were two affirmative
action initiatives, or amendments, on the ballot. And the Colorado one is still undecided, and the Nebraska one actually
was passed, 58 to 42. Limits on abortion rights,
those all went down to defeat. In California, Proposition
4, in South Dakota, and Colorado was basically a language that basically said human life begins at the moment of conception,
and that was voted down, rejected by 73% of the voters out there. So, what happened? The exit poll results, to this point, haven’t been terribly challenged as they were last time around, so there’s a sense that there’s some credibility of data
that was available out there. I’ve highlighted some of the things that are rather interesting. It’s obviously not an exhaustive
list of what happened, but just some of the key areas. When you look at males,
it was basically a draw. They represented 47% of the respondents in the electorate, if they weighted it. Women, obviously the
gender gap was there again. The interesting thing is
looking at married females, versus unmarried females, I
mean that’s just startling. To see those numbers
(laughter) how different. Interestingly, married
overall men and women was 52 to 47 in favor of McCain. And when you look at married mothers, so the overall married figure for women was 48 to 51 in favor of McCain. Married mothers were
51-47 in favor of Obama, so you know some rather
interesting things. Then when you look at the white vote versus the non-white vote, again, it’s startling the difference there. Where McCain won by 12
points among white voters, and Obama received 80%
of the non-white vote. I highlighted the African-American votes, since that was the most clearly defined constituency for Obama. Among Asian-Americans it was roughly 66%, and among Hispanics it was also in the mid-60’s in favor of Obama. So overall it was at 80%. And then when we look at the age factor, again, 18% of the electorate
was under the age of 30, and they voted 66 to 32 in favor of Obama. A huge gain for him. I simply split the income at $50,000. If you made under $50,000,
60 to 38 in favor of Obama. A virtual tie when you looked at those that made over $50,000 a year. By party, no one would have found any trouble with those kinds of numbers. 89 to 10, and 89 to 9, in favor
of republicans and democrats but the independents
broke in favor of Obama, and they constituted
29% of the electorate. And then touching on a
theme that we pursued here at the Rockefeller Center back in June, moderate voters were the
telling of the tale here. Where liberals went 89 to 10, or 88 to 10 in favor of Obama, interestingly enough 20% of conservatives voted for Obama, but 60% of moderates to 39% favored Obama. First time voters, another key block for the Obama campaign,
those were 68% for Obama and only 31% for McCain,
virtually a dead heat when you took those out of the equation. So that’s what happened, that was some quick explanations as to what went on in the elections,
and now we’re going to move onto the presidential, so I’ll jump ahead a couple slides here. To professor Dean Lacy,
who’s going to talk about the presidency,
so we’re going to hear first about the presidency
and the executive branch and what’s going to be going on there in the next weeks and
months, then we’ll hear about congress from Linda Fowler, and then Sonu Bedi will talk about the impact on the federal courts, so Dean. – Thanks. Well thanks, Ron, and thank
all of you for attending and especially thank you to all the voters who turned out in this historic election. Barack Obama and the democrats do not, as most presidents don’t, have mandate from the election. The only mandate from this election was the repudiation of the
republican administration, and a desire for change. Obama and the democrats
must forge a mandate early, by appealing to the center,
focusing on problem solving, and avoiding the mistakes
of past presidents. Three mistakes to avoid early
in the administration are, first of all, satisfying the base before satisfying the center. Both Clinton in ’93 and Bush in 2001 sought to satisfy their base
before reaching to the center. For Clinton, this ended in a disaster in 1994 in the midterm elections. The same may have happened to Bush in 2002 had it not been for the boost in approval he got after 9/11. The second mistake to avoid is failing to coordinate with one’s own party. Barack Obama enters with many of the same congressional resources that
Jimmy Carter had in 1977. Carter failed to talk with and coordinate with his own leadership in
the House of Representatives and the Senate, and as a
result stalled his transition, couldn’t get his policy
agenda off the ground. Obama would be well-advised
to avoid Carter’s mistake. The third mistake to avoid
is planning too long. Bill Clinton entered office in 1993, hoping to institute
broad healthcare reform. He studied the issue
for three, four months before getting any bill before congress. And if you miss that first
100 days of opportunity, then chances are you’re not going to be able to get your most
important initiatives passed. Despite the fact that Barack Obama enters office with the worst hand dealt to a US President since 1932, when Franklin Roosevelt
faced the Great Depression, and the prospects of
Fascism rising in Europe. Obama has several opportunities not afforded recent presidents. First of all he won a clear majority of the popular vote, which doesn’t happen much in American presidential elections. Over one third of our presidents have entered office without a
majority of the popular vote. Second, his opposition is
fractured, very fractured if you’re paying attention to the news. And third, he has a high role, he has a roll of high-quality
democratic candidates for executive positions, who served in previous democratic administrations, yet left office with
high approval ratings. In filling his White House and cabinet, he can choose from some experienced veterans from the Clinton administration, perhaps even the Carter administration, and some new faces. Obama’s already named Clinton strategist and member of congress Rahm Emmanuel as his Chief of Staff. Forget the cries in the media that this demonstrates that Obama is not going to reach out to republicans. The Chief of Staff
position is not typically a position where one expects a PR machine, rather it’s an organizational
and strategic office. And in that sense Emmanuel
was a very good choice. Also having served in
part with the Israeli army in 1991, he was rust proofing breaks on Israeli army equipment,
satisfies some concerns that maybe the Israeli
government had about Obama. And also has some foreign
policy experience. So Emmanuel in that sense is a good pick. Now I can only speculate
about what’s going to happen with some of the high-level
secretarial positions. For Secretary of Treasury,
there’s a possibility we’ll have a Dartmouth
grad, Timothy Geithner, an ’83, imagine a second Dartmouth grad at that treasury in such a short time. Unfortunately the
circumstances could be better, but that would still be nice to have another Dartmouth grad in the office. Others who are mentioned
are Lauren Summers, who served in the Clinton administration, and was president of Harvard. Jon Corzine who’s governor of New Jersey. And former federal reserve
chair, Paul Volcker, who was appointed by Jimmy Carter and served under Ronald Reagan. All four of those would
make excellent appointments. For Secretary of State, maybe John Kerry is at the top of the
list, though I suspect that Bill Richardson will be Obama’s pick. And that’s because Bill
Richardson endorsed Obama early, and also would be a Latino in the cabinet, and the Latino vote was very
important for Obama’s election. For Secretary of Defense, look for Obama maybe to pick a republican,
continue with Robert Gates or maybe pick former member
of congress Chuck Hagel. For Attorney General, the
favorite right now is Eric Holder, who was a deputy attorney general under the Clinton administration and would be an
African-American appointee. The only group that Obama could not have afforded to lose in the 2008 election and still capture the electoral college was the African-American vote. Without the latino vote,
without the youth vote, without married or unmarried women, Obama would still have
won the electoral college. But without the African-American vote, Obama would not have won
the electoral college. So expect his cabinet to be centrist, pragmatic, problem solving oriented, and maybe include a republican or two. And I’ve heard recently
for Secretary of Education, perhaps Colin Powell’s
name is in consideration and he’d like that post. I’ll turn the floor over now
to Frank Reagan professor of policy studies, Linda
Fowler, to talk about congress. (applause) – Okay, well I think to understand what’s going on between the
new president and congress, you have to start with figuring out whether the seats that were picked up in the house and senate, had anything to do with Obama’s election. And I think the answer is no, basically, the same national ties
that lifted Obama’s vote also lifted the congressional vote. And certainly last spring before Obama even had the nomination, it was pretty clear to those of us who follow congressional elections, that the democrats were going to pick up at least 20 seats, maybe more. And we were all predicting
five senate seats, and it could end up being more than that. So, there are a couple
of people in the senate who probably owe their election to Obama. And that would probably be
Kay Hagan in North Carolina. – [woman] Excuse me, could
you please use the microphone? People in the back of
the room can’t hear you. – Oh, I’m so sorry, well
did they hear anything? Shall I start over? – [woman] Yes, please. – Okay, well now I have to cut my time. At any rate, we were talking about whether the members of congress owe their election to Obama,
and the argument I was making was that that’s not the case. What was really driving
the congressional outcome was the fact that there were so many vacant republican seats,
in the house there were a lot of strategic retirements, and the same was true in the senate. So the reason why people thought that the democrats would do so well, is that it’s always
easier to win an open seat than to defeat an incumbent. And there were just a lot of vulnerable, a lot of open seats that
fostered these opportunities. It’s also the case that doners who give to the congressional
campaign committee funds, had pretty much decided
that this was going to be a democratic year and they were giving their money to the
democratic congressional campaign committee and the
senatorial campaign committee. And the republicans, for the
first time in a long, long time had a huge financial
deficit in both races. And what that meant was that at the end of the campaign season, when candidates like Kay Hagen in North Carolina started to look like she was coming on, the democrats were able to go and dump a million dollars in her state in the last two weeks. And the republicans couldn’t do that. So, the reason why that’s important is that they’re not a lot of democrats sitting in congress who think they owe either their majority
or their individual seat to Barack Obama. And many of them have been there, they lived through an
enormously frustrating period in the minority, their
two years in the majority were a time of extraordinary frustration because they had only a
51-49 vote in the senate. And that meant that the
initiatives that they were passing in the house were
floundering in the senate because of the filibuster. So there’s a lot of pent
up energy in the senate, and you couple that with the fact that the congress, generally, went through a period of extraordinary quiescence as a policy making body, and I think there’s a sense that congress is ready to reassert itself after
basically being prone for the last eight years. So this is going to be a
scrappy, feisty congress. And I don’t think Obama has any illusions about the fact that he’s going to be hailed as the conquering hero when he gets to
Washington, I think you see that recognition in the
appointment of Emmanuel. So the question is, what are the democrats going to do with their majority? And will they make the mistake of thinking that they have a mandate for progressive policy making? I think Dean has already suggested that that’s not the case
and I agree with that. That the democrats were
given an invitation. Come in here and see if
you can fix this mess. That’s not the same thing as a mandate for a particular set of
progressive policies. And the complex interactions of health, and energy, and the economy,
coupled with huge deficits. That are going to get worse
as the recession deepens. Means that the kind of
jocking of whose priorities are going to be at the top of the list is going to be quite aggressive, I think. So the question, I think, is really how can the new president work effectively with this congress. I think both Carter and Clinton made the mistake of not understanding the kind of political pressures that members of congress end up under. I remember Louise Slaugther, who’s now Chair of the Rules committee
telling me this story of the first couple of
months of Bill Clinton’s first term, and she said
to me “we’ve been BTU’d.” I said what does that mean? She said well we had to
take this really hard vote on the floor of the congress
to raise energy taxes in order to cut the budget deficit and promote conservation,
and after we’d voted for it Bill Clinton basically
caved into the senate. So we’d taken this really
hard, costly vote to us and then in the end it
didn’t mean anything. So the most important thing
presidents have to remember is don’t push members to do
things that are hard for them, unless you really are prepared to fight for those kind of
initiatives and make sure that that hard vote was successful. Another vote in the first
year of the Clinton, was on the balance budget resolution. Marjorie Medvillas, I can’t
even remember her last name. Yeah, first year, freshman
from Pennsylvania. She cast the tie-breaking
vote on the budget resolution, and as she walked back
from casting her votes the republicans said, “bye, bye Marjorie.” And in truth, she was defeated in ’92. So that’s the kind of
thing that presidents have to be very careful about. In terms of husbanding not only their own political
capital, but not squandering the votes of their supporters. And lastly I think that there’s going to be a real challenge,
the center of gravity in the republican party
has shifted to the right. Because of the departure of
people like Smith from Oregon. And so there are going to
be very few republicans for a democratic president to work with. I just did an interview right
now, a couple minutes ago, with a reporter from Lewiston. It’s Susan Collins, Olympia
Snowe, Arlen Specter, and then after that you
start to run out of names. (laughter) And so what that means
is that the democrats are going to have to
pass their legislation pretty much on their own. There aren’t a lot of people
they can reach out to. And I think that means that
the blue dog democrats, the democrats who are from
conservative districts, that were elected in
2006 and again in 2008, are going to have a very strong influence on what actually gets passed. Now that might be good, because Dean has just told you that this president is going to need to
govern from the center. Before he starts pleasing the base. And the blue dog democrats may
make sure that he does that. So let me turn this over to Sonu, (applause)
and you are there. – Great, thanks Linda, and thanks Dean. So if you sort of think about it, Dean discussed Article
2, the executive branch. Linda, Article 1, and so
I’ll be discussing Article 3. One thing to note is that
unlike those other two branches, those that serve under,
judges, the Article 3 serve for life, so change
in the federal judiciary is a glacial, it’s not so quick. And so there are three
levels of federal courts. District levels, circuit
levels, and of course the United States Supreme Court. Barack Obama with the now majority of the democratic senate
will appoint judges to all those three levels. Currently, sort of to give you a sense of what the current state
of the federal judiciary is, 60% of all sitting federal judges, that’s at all three of the levels, were appointed by republicans. And so 40% appointed
by democrat presidents. And so this percentage
also holds in the circuits, in the 13th circuits, in
fact in the 13 circuits in the United States, and these circuits are scattered geographically
throughout the United States, most lean republican. Most lean republican, in fact, George W. in the last eight years has appointed about one third of all
sitting federal judges. So while Obama will get to appoint new federal judges at all these levels it is not an understatement to say that ideologically, most
of the federal judiciary will stay where it is for a while. Let me then sort of talk about the Supreme Court, obviously that’s what most people think about when they think of the federal courts. And here too, I’m
suggesting that there won’t be immediate ideological change. The two justices that are the oldest, Justice Stevens and Justice Ginsburg, those are the two that
are most likely to retire. And so Justice Souter,
actually, he’s not the oldest but would like to come
back to New Hampshire and so has sort of expressed
intentions to retire. And so, if Obama in his first term gets to appoint, let’s
say, three new judges those three new judges would all be on the liberal side, so it’s not really going to change the makeup of the court. And so, hence, there’s
not really going to be an immediate ideological
change to the left. So, what does that mean? Decisions such as abortion, decisions such as affirmative action, that are all 5 to 4 decisions,
upholding those two practices will stay the same. Now there is an issue when Obama does select these judges, is he
just going to appoint liberals or is he really going to
appoint crusading liberals? Sort of in the mold of Chief
Justice Warren, Marshall, and Brennan, and so there’s evidence to suggest he’s praised those
crusading liberal justices. But also he’s applauded, for example, the recent Heller second amendment case that struck down DC’s handgun regulation. And he’s criticized the
court in invalidating the death penalty for child rapists. So it’s unclear whether he is going to select crusading liberals
or just liberals. It should be noted that in his own right, Obama is a constitutional scholar, he taught constitutional law
at the University of Chicago, so it’s the first time in a long while that we have a president
that he himself actually would have been someone
that could sit on the court. Second then let me talk about
who he’s likely to appoint to the Supreme Court, whom
he’s likely to appoint. And here I’d like to say that
his first two appointments will probably be a woman and/or a Latino. And so as we heard from
Dean, and as you know from the sort of
demographics of the election, Latinos especially in that southwest area of the United States are a particularly important demographic. 19% of all federal judges are women, only one obviously sits
on the supreme court. And 5% of all federal judges are latino, and none sit currently
on the supreme court. And so let me just give you a quote that Obama made to the Planned Parenthood conference last year in
July, suggesting whom he thinks should sit on the court. He said, “we need somebody
who’s got the heart, the empathy to recognize what it’s like to be a young teenage mom. The empathy to understand what it’s like to be poor or African-American, or
gay, or disabled, or old. And that’s the criteria by which I’m going to be selecting my judges.” We do know he voted
against Roberts and Alito in their confirmation hearings. And so look, you know,
people always speculate who are the people that
he’s going to nominate. And so it’s always a dicey business to suggest who it could be. We don’t really know, but let me sort of hand out some possible contenders
that have been floated. In terms of sort of appointing a woman and a Latina, the two
names that come to mind are Sonia Sotomayor,
on the second circuit, a very well respected jurist there. Kim Wardlaw, who’s on the ninth circuit. There’s also Diane Wood,
that’s one the seventh circuit. And also Elena Kagan, who’s currently Dean of Harvard Law School. It should be pointed
out that Wood and Kagan actually worked alongside Obama when he taught at the University
of Chicago Law School. So that could be something
that may be relevant. Anyway, I will leave it at
that and it’s my pleasure to call up Denise Anthony
from the Sociology Department to talk about healthcare.
(applause) – Thanks, Sonu, and thank you to Andrew and the Rockefeller Center,
it’s my pleasure to be here. When we talk about healthcare, there are three big issues:
access, quality, and cost. And I’m going to talk
just about access today. But we often interchangeably
start talking about access, and we really want to talk about quality. So, anyway, I just want
to make that distinction. So Obama has said that
some of the key elements in his proposal for healthcare is to expand coverage, expand
insurance coverage in the US. And he has a couple of different policy ideas for doing that. One is to mandate insurance
coverage for children, so the parents would be responsible for having insurance for the children. In many ways this is a smart idea, Howard Dean actually had
this as part of his platform a number of years ago
when he ran for president. Children, I think everyone can agree, that they don’t, they
shouldn’t necessarily be subject to the choice
to, if you believe that healthcare is a
choice, they shouldn’t be exposed to that choice. Children are also
relatively cheap to cover, because they are healthy, they don’t use that much healthcare,
and there’s a big payoff. Because getting them preventative care, getting them immunized and vaccinated and preventative care has a big payoff. Because that prevents a lot
of disease among children. So that’s a smart move, and would expand coverage pretty dramatically because many of the people who
don’t have insurance in the United States
are, in fact, children. The second way that Obama is proposing to expand insurance
coverage is what he calls the pay or play for employers. You either play by
offering insurance coverage to your employees, or you have to pay into a fund that is really number three, the national health
plan, to offer insurance or make insurance available to those who can’t access insurance
through their employer. So if you’re a small business
and it’s too expensive, or you decide that it’s too expensive to offer an insurance
plan to your employees, then you have to pay a fee or a tax into a plan, into a pool that will then go toward supporting
a national health plan for the uninsured, for people who work in small businesses and don’t
have access to insurance through their employer. The national health plan, then, is a way to set up a plan that would be available to anyone who doesn’t have access to insurance, and this is a way to try to capture those adults who fall outside of the mandate for the children and get everyone covered. The goal is universal coverage, for all Americans, without the mandate and so Obama is trying to sort of finesse that political
problem a little bit. By mandating for children, and then offering a plan for those adults who currently don’t have insurance. One more element to the
plan for expanding coverage is to create a reinsurance program for high-cost medical cases. Sometimes for employers
who want to offer insurance to their employees, especially if they are relatively small
employer, a small business with few employees, if
they have one very sick employee, the insurance
costs for insuring that group are very high, and so
one person with diabetes in your small company can mean that the average premium to everyone in the company goes way up. If we had a separate insurance program that would insure the
high-risk, high-cost cases that would lower the premiums on average for everyone else in
these employer groups. Large employers aren’t subject to that because they’re insuring the risk over a much larger population. So they aren’t as subject to the change or the high-costs that
come from one sick patient, or one sick employee,
and so this would help to reduce the costs of insurance for those small businesses. So it might mean that
more small businesses might be able to offer insurance to their employees,
thus expanding coverage. For those who still can’t, they
will contribute to this fund that will establish the
national health plan to offer insurance at a
relatively low cost to others who don’t get access
through their employer, or who are self-employed
and the individual insurance market is too expensive. So the idea is to get
to universal coverage without a mandate, but to expand the opportunities for insurance for all Americans and the 45 million who are currently uninsured. Now the reason this is related to access is because insurance coverage contributes to access to care, not
surprising, we all know that if you don’t have insurance coverage, you are much less likely to be able to access healthcare in the United States. So access depends on coverage. It doesn’t depend entirely on coverage, because even if you don’t have coverage you can get treated in an emergency room. Thus contributing to the
high-cost of healthcare in the United States, so
ultimately there may be a way to address cost issues
by addressing coverage in order to get more
people access to care. However, the last bullet is
something to keep in mind when we talk about
coverage, insurance coverage in the United States,
coverage does not mean access to care, coverage
may be a necessary condition to get access to care, but coverage alone is not access to care. And there are a lot of
other aspects of healthcare that need to be addressed to provide full access to high-quality,
affordable care. Coverage is one of those steps. Coverage allows the Obama team, and maybe the United States, to begin to address quality and cost issues. But coverage is just one piece of that puzzle, and won’t
alone increase access. But it’ll get us much
further along that path to access to high-quality care
at a lower, affordable price than we currently are
with 45 million Americans. Thank you.
(applause) I’m happy to introduce
economics professor Doug Irwin. – I want to put trade policy in context. First of all, this is not a high-priority, top of the agenda issue. The economy is not doing well, financial system is very weak, we have a major fiscal deficit, these are important priorities
for economic policy. Trade policy is a medium
to longer term issue. In fact, I suspect the Obama team would like to do nothing on trade policy, and have a complete time
out on trade agreements. And that’s for several reasons, first of all the democratic party is completed divided over the issue, it’s domestically very sensitive, there’s no political payoff to pushing trade liberalization at this point, and the economic payoff
to trade liberalization is years down the road. And finally, there’s only economic grief if you succumb to protectionism. So the status quo, doing nothing, is certainly an option. That said, the issue is to
some extent unavoidable. Congress has to make a decision about pending free trade agreements with Columbia and South Korea. And that’s why I’ve put
up this slide about NAFTA. Because this happened 15 years ago, many of the undergraduates were about three or four years old at that time, but we are still having a
national debate about NAFTA. When Obama went to Ohio he said that he would want to renegotiate NAFTA. Hillary Clinton in Ohio
said NAFTA was a mistake, and I’m sure that’s not the first time she’s said that to her husband. (laughter) But Bill Clinton, pardon
me, Barack Obama’s position is actually formally a bit
more nuanced than that. He says that he’s in favor
of these trade agreements, but he wants stronger environmental and labor provisions in them. And so we really don’t know what exactly the administrational policy will be. In fact I see both the administration and the congress as being divided, between the internationalists
and the labor movement. And a lot depends upon
who wins that battle in terms of what sort of
trade policy we’ll see. The internationalists will say that we ought to continue to pursue these free trade agreements,
perhaps have a few more qualifications in them
unlike the Bush administration. But it is a worthwhile
endeavor to try to open up world markets and expand
the demand for US exports. The labor movement, however,
sees these agreements very differently, they
seem them as a pro-business type of policy that harms
workers in the United States, reduces wages and what have you, and I think they would
put up a very strong stand against further trade agreements, and perhaps even try to
renegotiate old agreements or enact new legislation
that makes it easier for import-competing
industries to impose tariffs against foreign countries. So if the internationalists
are to win this battle, within the administration
and within the congress, I think we might see small
incremental progress. In terms of moving trade policy forward. If the labor movement wins, I
think we’ll see a dead stop, and possible legislation that
might even restrict or raise the possibility of restricting
imports in the future. Now the mood among congressional democrats is that they don’t want to
touch these things at all. And so I think that’s another reason why we just may not see
anything going on here. Two other issues regarding
trade policy that will come up. One is what to do with the WTO, the World Trade Organization. There have been talks
going on for seven years, they could easily go
on another seven years. There’s no urgency, no rush in terms of that at the particular moment. The last one would be China trade, and I think think really hinges upon whether there are demands domestically for relief from imports from China. We have not seen that recently, the dollar’s been relatively weak. And that’s promoted exports, in fact, exports have been sort of keeping the economy above sort of the zero growth level for some time, it obviously is not going to continue to do that. But the question is what
should the administration policy be towards China, and I think they’ll have to be largely
reactive there and not proactive. And with that I’ll turn it over to talk about energy policy and Lee Lynd. (applause) – So, energy, Doug began his comments saying that this might
not be a high priority. I think it’s fair to say that
more than has been the case in probably ever in the presidency and likely the congress,
this now is a high priority. So I thought I’d look at three things, just observe that in spite of the economy the statement has been made several times in the press that in an
Obama administration, building the new energy economy will be the top priority. I don’t think that a president-elect has ever said that
before, to my knowledge. What does this mean as a practical matter? And what will be different
in an Obama administration? And the funny thing,
just a story on myself, when I originally wrote
that I was sort of thinking versus the McCain administration, and I realized you know
what, you’re a little bit too enmeshed in the election. Because what really matters is compared to what’s happened in the past, not compared to what would have been. So, I would just comment on item one here, that in my view this
emphasis is very appropriate and indeed it’s about time. I will save you the long sermon, but I think a very good case could be made that energy is a dominant determinant of some basic prerequisites
for healthy human society. Like peace, prosperity,
and sustainability. And that not only that, but
that is not true just now. It’s always been true and
likely always will be. We do at our point in history, though, have an especially critical
set of considerations relative to energy that makes this arguably the defining
challenge of our time. As far as what is, depending
on how you look at it, either needed or likely to happen, I think that–not sure
who’s view I’m recommending. Either my view or the
Obama administration, which I think align pretty
well on the needed side. In any case, one of them is
accelerated technology creation through enhanced supportive R&D, the Obama administration,
president-elect Obama is speaking of an Apollo
project in energy R&D. And although at times
there hasn’t been anything remotely close to that ever, except maybe in the Carter administration when the Solar Energy Research
Institute was founded and energy R&D dollars
did go up dramatically. Since then the trend has been declining in both public and private sector funding for energy R&D for the
last quarter century. Accelerated technology deployment, which is somewhat different,
once something’s created getting it out into the marketplace. Placing a value on
carbon, I think is likely to happen in this administration. In my opinion, and people frankly who are more deeply versed
in energy policy than I am, it would have been likely to have occured in a McCain administration. I think it’s certain that
energy would have gotten more attention in a McCain administration compared to a Bush administration. Frankly if the term
limits had been repealed, and president Bush would
have been reelected, we would have had more
attention on energy. It’s just that it’s this
rising tide of concern. But then the fourth
component is increased energy utilization efficiency,
one can show fairly quickly on the back of an
envelope that the world’s energy challenges cannot be provided on the supply side alone. What will be different in
an Obama administration compared to what we’ve seen? Number one, a higher overall priority given to energy, but as I mentioned, I don’t think that’s just reflecting this administration’s priorities. I think it’s reflecting the time in which this administration is taking office. I think it’s fair to
say a greater openness to public sector investment,
and indeed regulation in the energy economy than we have seen. And then finally I speak
here on this last bullet about energy capital versus energy income. By energy capital, I mean fossil
fuels and uranium basically these are things that we
can potentially run out of. I think we will see a greater
emphasis on energy income in an Obama administration
than we have seen, and in this case than we would have seen in a McCain administration. Keep in mind, we’re coming
from an administration whose vice president, to
some extent the point person on energy said, and I think
I can summon this quote, that while conservation
may be a personal virtue it is no substitute for an energy policy. I think we’re going to
see more of an emphasis in an Obama administration
on not only the supply side, but also increased energy
utilization efficiency. And with that, it’s my pleasure to hand the podium and and
microphone to Annelise Orleck from the history department to talk about social welfare and poverty. (applause) – I wanted to start by saying that when I was challenged to think about how I could talk about
this policy in five minutes it began to become clear to me that Obama is feeling very much the same kinds of pressures. I fully agree with Dean
that he is interested in moving quickly, by all accounts his transition team is, the
words that I read in one account are scouring histories
of FDR’s first 100 days. Because of his concern
about this lack of mandate, and because Nancy Pelosi has already said they plan to govern from the center, I would suggest that what Obama is going to try to do immediately is build on existing legal
and social welfare frameworks. Both from the New Deal and
later from The Great Society. Now Obama has been very pleased of course with all the discussion
of the New New Deal, and then comparisons
to Franklin Roosevelt. He has not commented on
it, but it has come out in a rather positive fashion. Comparisons to Lyndon Johnson, of course, and The Great Society, are ones that he is less likely to respond
positively to publicly. However, what I wanted to begin by saying is that despite the negative press that The Great Society has gotten for the past thirty years, if not forty, if not, you know, from the moment that the war on poverty
was announced in 1964. Most or many of the programs
that were established are still in place in one form or another. They’ve been changed,
allocation strategies and systems have been reorganized during the presidencies that
followed Lyndon Johnson, but many of these programs
are still on the books. And so that allows Obama to work on a variety of issues that
I’ll talk about in a moment, through the budget negotiation process. Rather than through the
very difficult, and painful, and dangerous politically,
the dangerous process of attempting to pass new legislation. The other issue that I want to raise is that you can’t really talk about poverty and social welfare without talking about jobs policy. I’m not going to talk
about that very much, except to say that both FDR
and Martin Luther King, Jr. are both quoted as saying
that a strong labor movement and strong unions are the
best anti-poverty policy. Obama has referred to those quotes in his sponsorship of the
Employee Free Choice Act. Which I suspect we will see again on the floor of congress as an attempt to allow workers greater opportunity to form and join unions
in today’s workplace. I also think that Obama
is going to look toward job creation and this gets
back to Lee’s comments earlier he has promised this,
I’ve heard him call it an Apollo project and a Manhattan project. For alternative energy,
he’s talking about 5 million jobs that they expect to create somehow with government intervention. The specifics are fuzzy,
but just this afternoon he in his speech about the kinds of things he’s going to do, very
quickly, on the economy he commented that if there is aid to the ailing auto
companies, and I suspect this discussion took place this afternoon with his economic advisers, who included the governor of Michigan
Katherine Granholm, that that aid would come in the form of incentives to create
more fuel efficient cars and build them here in the United States. Something that he’s talked about extensively in the campaign. Obviously with estimates last night that the collapse of
one of the major three American car companies could affect as many as 3.3 million
jobs in the United States, this is going to be a priority and something that he’s going
to speak about very quickly. The other job creation program that he has talked about,
is really very much out of the New Deal Model, and that is a job creation program to
rebuild crumbling infrastructure in the United States and he has talked about creating jobs to rebuild roads, bridges, dams, and schools, in particular that would require there is no longer a New Deal program of
that kind on the books. However I think allusions to the New Deal made carefully and strategically might create enough
positive political good will to pass such a program. Obviously in this moment
of tremendous deficit and collapse in economy, that
could well be a hard sell. But you’re already hearing from economists including Paul Krugman in
The New York Times today. That increasing the deficit slightly during this time of tremendous economic despair and collapse, that may be an okay strategy to pursue. Next off, in building on
the New Deal policies, he has promised to
protect social security. If there has ever been a moment when the dangers of
investing social security even voluntarily on the stock market, have been clear this is it. He also is likely to remind Americans that social security reduced poverty among the single longest
lasting impoverished group in the American population
and during the time before Franklin Roosevelt’s presidency, the largest poor group, the elderly. And that’s not a road
we want to go back down. Nor will the American
Association of Retired Persons, and other well-organized senior lobbies, allow that to happen I don’t think. He has already called for ending the taxation of seniors
who make under $50,000. And he has reiterated that promise. Just this afternoon he also turned back to another of the New Deal
social safety net mainstays, unemployment benefits, and called for expanding and extending the period. Exapanding the benefits and extending the period during which
workers can claim them. I would argue that, again,
as someone who seems to be somewhat of a student of history, he is aware that the high foreclosure rate in certain parts of the country, the loss of over a million jobs I think as of today, in this year, could result in the kinds of scenes, perhaps, that were seen during the depression. And certainly all he needs to do, I think, is evoke those images to
create some support for that. And finally he’s talking about a National Service Program, which evokes both I think the New
Deal and the Kennedy era, and early Johnson Great Society eras. But he’s tying this
national service program to money for college, so all of these are dimensions I think
of the poverty policy. The second piece that he intends to do, I think will perhaps be less public. And that is to build on existing
war on poverty programs. Robert Rector, the Heritage
Foundation welfare analyst, said rather wistfully during
the 2005-06 budget negotiations that there were only 12
republicans in congress who would vote to get rid of all of the remaining war on poverty programs. Indeed, during budget negotiations in those years, attempts by President Bush to zero out funding for
social services block grants and community development block grants was met with strong
opposition from his own party. Some of those moderates,
as you’ve pointed out, are no longer there
including Norm Coleman, of Minnesota, well he may
be there we don’t know. But who was one of the leading opponents of this attempt to get rid
of community development block grants and indeed
the republican senators from the state of Maine pointed out that in contrast to this image of these block grants
going to all of those undesirables, you know code
word for people of color in urban centers, in fact,
community development block grants were doing things like providing potable water
in rural places in Maine. So I think what we will see is an attempt to expand funding
for community development and social service block grants. He knows already from
his time in the senate that there is some support in
the republican party for that. A more dangerous political move would be to return to the
war on poverty mandate for maximum feasible participation
by the poor themselves. The much-maligned line in
the Economic Opportunity Act of 1964 that local politicians
and local governments ran from because it tended to organize the poor in protest against
those very governments. Nevertheless, some of the articles today talking about the “community
organizer in Chief” suggest that there is still an interest in local grassroots network building in the Obama administration. He’s also keenly aware
that those networks exist. Because they were mobilized all across the country in an unbelievably
get out the vote machine. And I think that that
get out the vote machine, along with his labor get
out the vote machines will remain groups that he is
to some extent beholden to. We’ll see if that happens. I would argue that there will be some call for expanding the
community health center program, which was cut about 25% in
the Reagan and Bush years. It’s literally extended life expectancy in many poor communities
across the country. There’s a good deal of evidence for its strengths, and I also have heard some discussion of tying that
to an expanded public health service medical school
loan forgiveness program. We’ll see if any of this happens, but it’s certainly a possibility. Head Start, the controversial program that provides daycare and job training, day care for poor children in a way that’s supposed to improve results once they reach kindergarten
and elementary school, has been on the chopping
block for many years. Again I would predict that it’s a program that has staying power,
and that you will see in the budget some
expansion of this program or attempts to expand the program. Because it does also
provide low paying jobs, but jobs for poor women in the communities where Head Start centers are located. I would argue that they’ll be an expansion of both nutrition and
prenatal/postnatal care dimensions of the women
and infant children nutrition program, which has been extremely successful in
cutting what is still a shameful infant mortality
rate in this country. And having very positive
effects on child health. I think you’ll see greater
funding for food stamps and school lunch and breakfast programs. Although the latter is a
politically safe thing to do, the former is tagged with a
negative image of welfare. And so we’ll see whether
it’s possible to do it. But staving off hunger at this moment of economic collapse and foreclosure, I predict will be a priority. Okay, one last quick line, one more line. I believe that some of
the policies overseas in creating microfinance loans for small businesses, particularly for women and children, will come home. And you’ll see public-private
partnerships around that. And with that,
(applause) I introduce Daryl Press of
the department of government to talk about foreign defense. (applause) – I called Ron Shaiko yesterday, and asked him for just a
little bit more clarification about what he wanted today,
and he said it’s simple. He said describe for us the most serious national security problems
facing the United States, and what the solution to it is, and you have five minutes.
(laughter) So here we go, but I’ll do it by speaking in somewhat broad terms,
but I’m happy to speak more in specifics in question and answer. I guess what I would
say is that in my view the overarching problem for
US national security policy is a broad mismatch between
the societal resources we have available for
national security problems, and the missions and the obligations that we’ve decided to take on. That mismatch is the big problem. The problem is exacerbated by the too long and very difficult wars
we’re currently fighting. But those wars are not
the root of the problem. The root of the problem
is much deeper than that. And let me try to explain, in order to get a sense of the magnitude of the problem, let me just try to describe to you using a couple different lenses, the scope of US military
policy around the world. So let me start with a geographic lens, and say imagine the parts of the world, the parts of the globe,
where the US military is asked to be prepared for what might be potentially demanding missions. And the answer is,
that’s the entire world. It’s asked to be prepared
for demanding missions in the periphery of Europe,
on the Korean peninsula, in the Taiwan straight,
patrolling the world’s oceans, and protecting access
to oil, and protecting against instability in
major oil producing areas. Now switch lenses for a second, and ask what are the types of operations that the US military is asked to prepare for at any given time. The possibility of
counter-proliferation attacks, for example against Iran, the possibility of large-scale stability
operations, for example, in case the North Korean
government collapses. Humanitarian interventions
wherever they might occur. Anti-terror operations around the world. Operations to prevent
attacks on oil producers, or oil flows, particularly
in the Persian Gulf. And many, many more. The bottom line is the
obligations and the missions we’ve set out for ourselves,
that we’ve decided are very, very important to
the United States, are massive. They’re truly massive. That’s point number one. Point number two, the
strains that that definition of interest, that definition of priorities is placing on the US government, and the US military in particular, are not likely to go away any time soon. Even if we can scale back US
military operations in Iraq, Afghanistan isn’t going
away any time soon. Both, well I guess I don’t have to say both candidates anymore,
president-elect Obama has made it very clear that he is still deeply committed to pursing, and in fact, intensifying US efforts in Afghanistan. Furthermore, there’s a
whole separate problem which was to a large part, the weapons that US military forces have
been using in these wars are the weapons that were procured in the 1980’s and the 1990’s. It was the last round of major
procurement from the Cold War those weapons are getting old, they’re also wearing out,
partly because of these wars, and as you probably can guess, replacing them and
especially replacing with their more modern counterparts is going to be a very,
very expensive undertaking. And then lastly in this environment there are suggestions for new
obligations and new missions. For example, there are suggestions to undertake a major military intervention in the Darfur region,
there are suggestions that the United States should support NATO expansion eastward. And so when I look at
all this, I have to say, I don’t want to be flip
but part of me thinks that the way we’re thinking
about military policy and foreign policy these
days is a little bit like the way we’ve been thinking
about our economic policy. In the sense that we’re
taking on obligations without asking questions
about our ability to pay. You know, to carry the
analogy one step further, some of these alliance
commitments we’re issuing feel a little bit like
credit default swaps. Which I have to admit, I knew
nothing about four weeks ago, and unfortunately many of us now know a little bit too much about them. But in the following sense, is you issue these alliance commitments, you issue these credit default swaps, and they don’t feel costly when you issue them. Because it actually
doesn’t cost you anything on that year’s, you know, bottom line. And they might not cost
anything for the next year, or the next year, but
suddenly if something comes out very badly in the world, you’re left holding the bag and the cost to you can be enormous and
difficult to contain afterwards. That’s the danger of extending
alliance commitments, and it’s something we should be weighing every time we’re considering this. So problem number two is I don’t see the strains that we’re
placing on ourselves, on our military, as
declining any time soon. Point number three is I don’t think there’s a simple solution of throwing lots and lots and lots of new
resources at this problem. Because I don’t think
those resources exist. As all of you know the federal budget is in a state of substantial deficit. And there are also lots of additional claims on the US treasury that are coming right down the pike, there’s
the healthcare program that it seems most
Americans are in favor of, there’s actually meeting the commitments to current and future
recipients of social security and medicare, there’s now
possible an Apollo program for energy, or maybe
it’s a Manhattan program for energy, or both, and so the point is is that I don’t think that the gap that exists between the resources required by this current strategy
and the strategy itself is going to be solved by just throwing, increasing the defense budget by 50%. Point four is I think that the solution to the extent that there is one, is basically trying to rethink the commitments, rethink the obligations, and rebalance US foreign policy, and place less emphasis
on the military tool and more emphasis on other tools. Acknowledging, acknowledging openly, that there are some things in this world that we’d like to have
happen that we won’t be able to get to have happen. And there are some things in this world that we’d like to prevent that we won’t be able to prevent, but nevertheless reblancing US foreign policy. And let me give you five semi-specifics. Number one is phasing out some of the anachronistic alliances that are holdovers from the Cold War. So we didn’t do a lot of hard thinking at the end of the Cold War about which of our Cold War alliances
will continue to make sense and which ones no longer make sense. That hard thinking is due, and I think if we do that thinking
we’ll come up with a list of some of those alliances which once made perfect sense,
which now are obligations that don’t have a lot of
payoff for the United States. Number one. Number two, powerfully resist
new defense obligations. People will always come to you with a new mission that sounds appealing on its merits, you know, just like in these tough economic
times you might really want a new big screen TV or a new suit. The bar ought to be very, very high as to the importance of the mission before you take on any new additional foreign policy and defense commitments. Number three, take a non-military approach to humanitarianism,
and what I mean by this is most people, myself included, believe that US values should play a big role, not an exclusive role, but a big role in US foreign policy. But it is almost always a mistake to think that the most efficient, let alone the cheapest tool,
of promoting our values and advancing humanitarian
causes is with military power. Military power is good for some things, but in terms of advancing
our values around the world and promoting humanitarianism, it’s almost always inefficient, and it’s always a very
expensive way of doing that. And we can usually get
more bang for the buck in terms of promoting our
values through other tools. Number four, return to what was actually both a Reagan and a Carter era approach to the Persian Gulf, basically focusing on an over the horizon,
offshore military presence. To protect the most important things to us in the Persian Gulf, but not to be so deeply embedded in the politics and the strife in that
rather war torn region. And the last piece of the puzzle is to give US intelligence organizations, rather than the US military, the lead in what people are calling
the Global War on Terror. Let me conclude by saying
this basically means, it’s not a call for pacifism, it’s not a call for isolationism, it’s a call for a much
more discriminate approach to the use of military
power, more discriminate than the previous George
W. Bush administration. Frankly, more discriminate than
the Clinton administration. And then the good news, and there are not many people these days saying that they’re going to talk about US
national security policy and that they have good news, but the good news and
I believe this is true, is that I actually think
that in the long run this approach would not only save us some money and help us close the gap, and allow us to spend
money on the Apollo program or the Manhattan program,
but I honestly think it’ll actually in the long
term leave us more safe. Let me leave it with
that, and I will introduce our next speaker, which is
professor Andrew Samwick who is a professor in
the economics department and also director of
the Rockefeller Center. (applause) – Okay, I’d like to thank all
my fellow faculty panelists for their concise
statements, the over-under for when I would start
talking was eight o’clock. (laughter) So I get the enviable job of talking about fiscal policy, and this is something where there was a lot of rhetoric but not a lot of
understanding in the campaign. The thing you heard most about was making the so-called
2001, 2003 tax cuts permanent. And most of that discussion focused on the top marginal tax
rates on ordinary income. Which, under Obama’s plans would, those reductions would
be allowed to lapse, and the top rates of 36 and
39.6 would be reinstated. Senator McCain was campaigning that those like the rates for lower incomes, those tax rates should be
kept at their lower levels. They both were going to
reinstate the estate tax, to smooth out that little blip. And Obama would do it
with the lower exemption and a higher rate above the exemption. McCain would have done it with
a somewhat higher exemption and a much lower rate above the exemption. There were also some differences about the capital gains tax rate. Obama proposed a fairly small increase for higher income
workers, McCain would have kept it where it is or tried to lower it. It’s very important to
note that Senator McCain, as president, would have gotten
approximately none of that. When confronting a democratically
controlled congress, he probably would have been able to do some horse trading,
one because you can always do horse trading, and two he really liked to do horse trading when he was a senator. There are some problems
common to both candidates approaches, namely that
over the last several years, the congress has been working in collusion with the White House to make permanent the set of tax rate reductions on everybody but the highest income folks. And so, as a society, we have
to confront this question. Why in 2008, 2009, 2010,
should the tax rates for a given amount of income be lower for middle class people
than they were 10 years ago? That’s a question we’ll have to answer in the days coming ahead. Because the government,
given what it wants to spend money on, has
dramatically less in resources. The second point I’d like to make, is what about those below-the-radar things that candidates talk about seeing if they’ll drum up any interest. There was one that candidate Obama, now president-elect
Obama was talking about. It’s called the Making Work Pay credit. It was a refundable credit
of 6.2% of earnings, up to a maximum earnings
of $8,100 per worker. What is that 6.2 number? That is half the social
security payroll tax. Obama, in the campaign, made no secret of the fact that he thought
that was a regressive tax and he would be willing
to see other sources of funding come in and replace that. And I think, in the spirit
of some of the other things that were talked about in the campaign, he might be leaning
toward a green tax swap. What’s the green tax swap? Well you have gasoline,
something that we all know that we need to conserve on. And you have a tax that
you currently apply to it. What if you raised the tax on gasoline, and to demonstrate that
you are not doing this to plug the hole in the federal budget that was created through a
rather sordid set of activities, you got rid of the revenue
by lowering the payroll tax at the margin by a couple
of percentage points. That is the so-called green tax swap, and I think it’s a winner
because you tax more the thing you want to discourage, and you tax less the thing
you want to encourage. So if I had any optimism about what we might see, I
would place a small bet on the green tax swap. A lot of the healthcare
proposals are very interesting, but I thought professor Anthony went through thatin good detail. The big question on everybody’s mind is whether the financial market meltdown has put all of this on
hold, and you will see if you know that I am kind
of a right-of-center person, how I get to outflank a lefty on this one. So it’s going to make me feel good. Here is a quote from one
of president-elect Obama’s more left-leaning economic advisers. “We can’t tackle healthcare until we get the economy working,
if the economy is weak, how can you make good on
the promises you made?” Well I don’t actually see
why that’s a question at all. Suppose we had already had a program, which accomplished some
of the increasing coverage that professor Anthony was describing. Suppose miracles upon miracles, that that program had been implemented in the last year, we’ll just say it had been implemented last year. And now we come upon
our economic hard times. Do we really think that a President Obama would look through the
massive federal budget and say you know which program I want to get rid of, I want to get rid of that program that expands coverage for low income and
difficult to insure people. That would be ridiculous,
he would get laughed out of his own cabinet meeting. So why is it that the
fact that that program was not a priority to his predecessor, should determine whether it’s a priority that he pursues in his first
weeks or months in office? I mean, that’s ridiculous,
that’s what elections are for. It’s to help you determine what your priorities are going to be. So I think that would
be a colossal mistake. And so I get to outflank somebody on his economic team.
(laughter) What should we be looking for, to know whether we’re on track? Well, as Joe Biden’s dad used to say, show me your budget and I’ll
show you what you value. There was a nice article by Bruce Barlett this past week, he’s a
conservative columnist who got thrown out of his think tank for being critical of
the Bush administration. The first budget a president submits show us a lot about the
president’s priorities. And this is a mad scramble,
Bruce did us the favor of going back in time and giving us the release dates of new
presidents’ first budgets, and the title that they put on the cover. So Ronald Reagan, February 18th, 1981, America’s New Beginning. George H.W. Bush, February 9th, 1989, see his was a little
earlier, because he was sort of already in place,
Building a Better America. Bill Clinton, A Vision
for Change for America, February 17th, 1993. And George W. Bush, A
Blueprint for New Beginnings, February 28th, 2001,
you see he wasn’t able to hit the ground running there. So sometime around the middle of February, we’re going to see that budget. And we’re going to get
a lot of information about what’s in the
budget, that will tell us whether President Obama is on track to deliver on campaign promises. I would just close with two other remarks. So this looming recession, what’s looming is only the formal declaration of it, is going to induce many more
so-called stimulus packages. I confess I’ve been confused,
and I’ve done this publicly, on radio and in op-eds, it seems to me that the word stimulus now means I’m going to issue debt to finance the purchase of things that
people don’t really need just to be able to say
that I’m spending money. (laughter) And in fact it’s not even their money, it’s their kids money, I think
that’s a bad habit to be in. Not everything that you
would spend money on has no benefits for your kids, and so it’s encouraging to see things like attention to a
new energy infrastructure. Something that we heard
about at our panel yesterday. Or the crumbling infrastructure, that anyone who drives, or flies, or many other activities, can see. It would be very nice to see
the next stimulus package be one in which we’re making investments rather than just trying
to prop up the consumption of the American consumer. And lastly, we haven’t
heard much about it, because it has been the third rail, it still is the third rail,
but entitlement problems. Medicare, medicaid, and social security continue to be a very
politically challenging activity. That does not mean that they have magically resolved themselves, while we were busy not talking about them. The demographic change that’s
underway in the country, every year brings one more cohort of our more senior workers
across this threshold, which is at or near retirement. And thus, in a sense,
exempted from sharing in the fiscal burden of
putting these programs on a more sound footing. Everyone who works at Dartmouth got, over the last couple of weeks, the news that the cost of health insurance has gone up for us at a rate that is more than the rate of inflation. Those problems about the costs of providing healthcare,
those affect medicare like they affect healthcare
elsewhere in the economy. And so that’s a problem,
and in order to know whether we’re on track,
we’re going to have to resume those discussions, perhaps
with a very different tone on them but we’re going to have to resolve them in short order. Or at least begin to
have those conversations. And with that I will end,
I will extend my thanks to my faculty panelists,
and we will open up the floor for questions. Since we’re recording this, please wait for the microphone to get to you. And then ask your question
of any of the panelists. I’ll ask the panelists to come up here, so it’s easy to do that.
(applause) Thanks very much. – [Woman] Please step up to the microphone when you answer a question, okay? – Okay, we’ll see how this part works. (laughter) – [Monitor] First question? – [Man] Can you hear me okay? I was sort of anxiously awaiting any discussion of housing, housing played obviously a key element in getting us into the situation we have. And there was a lot of discussion that seemed to peter
out on how you, quote, solve the problem and I just wondered if any of you think that will be an important ingredient in either a stimulus package or a
new legislation proposal from the administration, and if so, how are they going to structure it? – I guess that was me. Yeah I don’t think that there’s been enough progress made in the thinking of either campaign or anybody
inside the beltway or out, as to what single thing
the government could do that would avoid the
heavy transactions costs of renegotiating all of these mortgages if they are not to go into foreclosure. And so I don’t know that the election tells us much about that, we will continue to see declines in house prices. And we will continue to see more pressure on financial institutions to now become owners as opposed to financiers. I don’t think there is an answer that would could affirmatively state. This is what’s coming, I think we’re going to continue learning. – [Man] At the risk of coming back to the same question I
asked you the last time. I didn’t think that was the right forum, but we’re clearly getting evidence that there’s a flight from the dollar. You’re clearly getting
evidence that long rates, both investment grade bonds and the government bonds themselves, are increasing in rate,
mortgage rates have increased. There’s clearly a great
fear about inflation. I know the last time you felt that was something that short rates and some of the other indicators said was not going to be a problem. But the short rates are really a reflection of the flight of fear. Everybody running at the treasury bills. Can you give me another
holler on this subject? I don’t see how you spend all this money, print all this money, and we still stay away from a real inflation danger. – Yeah, as I recall our last conversation, what we could assert was
that by the Fed’s actions in pushing the fed funds rate so low, it was clear that they were not particularly worried about inflation. I think at that time I shared my fear that this is eventually, you know, the last straw in any country trying to get a hold of it’s
financial problems of this sort is to simply monetize its debt. And I don’t think we’re
out of the woods on that. I just don’t really have a glide path to describe what will happen between now and the moment that that could begin. That would tell you whether we’re on the track to see that. I think inflation does
remain that sort of a risk. I’d like to see what the
decline in oil prices is going to mean, whether
that could be sustained over the course of a year, that’d be the next indicator I’d look at. – [Man] I’m wondering about how easy it might be for Obama
to get his initiatives passed in congress and
whether 60 really would make a huge difference, or regardless, whether it’s 56, 57 democrats, 58, will congress give him
a really large window, not a large window, but a window at least in the beginning to sort
of pass his initiatives to see if they work. – That one sounds like it’s for me. I think we’re all conditioned
to think about the 100 days. And Annelise’s references to Roosevelt simply accentuate that. Many people who think
that the 100 days mantra is a trap for presidents,
and the most important thing for Obama is to have a few priorities and follow through on them, so I think the important thing for him to do is to consult with congress. And anticipate, of these three priorities, which one has the greatest likelihood of passing easily and quickly? So a lot of whether congress
gives him what he wants depends on whether he’s
able to frame priorities in a way that congress wants to go along. A famous presidential scholar said the power of the presidency
is the power to persuade. And what presidents are really doing is engaging in extensive bargaining about what the priorities of
the government are going to be. So it’s not, we came to
think of the relationship between congress and the presidency, during the Bush years, as a rubber stamp. President comes up with something, he goes to Capital Hill,
he actually doesn’t go to Capital Hill, he brings
Capital Hill, a few people, up to him and says here’s
what we’re doing, stamp it. Congress isn’t going to go for that. Even though they’ve got the majority, and they want to support their president, but as I indicated in my opening remarks there are a lot of
people who are frustrated who want to exercise power they want to reclaim some of the prerogative. So Obama will get what
he wants from congress, if he frames it in a way that his interest and their interest coincide. – In the United States auto industry, among other places, I think that it will happen in academia, it will happen in national labs, it will happen in large and maybe, perhaps
especially small companies. Just going back to the auto case, in the Clinton administration, who actually was rather ineffectual at moving forward aggressive energy R&D, they did have a several
hundred million dollar program entitled the partnership for,
it was alternately called next or new generation vehicles, which targeted making a
Ford Taurus equivalent that got 70 miles per gallon,
that program was promptly scuttled at the end of the
Clinton administration. And one can only wonder
how much better off the auto industry would
be had it continued. So I think that the
research infrastructure with respect to R&D specifically, and all of its components, can absorb something of the size
that’s being proposed. And that size may be diminished somewhat from imagination to implementation. Which will make the absorption easier. – [Man] I’d like to ask a question, this might require two
professors to answer. One possibly being you again, so anyway. I’m really curious to know about how long it would take to implement
and get fully working a system of cabin trade on emissions. This is something that
both possible presidents McCain and Obama endorsed,
and it is something that we literally cannot
wait much longer on if we are to avoid the largest consequences of climate change. That said, I’d like to consider the economic principle as well, that we would effectively if
we just restrained ourselves in our country we would
export our pollution to China and India where they won’t have the the same cabin trade standards. So how do we made this economically viable on the international sense,
and how do we implement it how would you see Obama
doing that, quickly? – Yikes!
(laughter) The equity issues and extent
of international obligations that are going to be necessary to be negotiated are
extremely challenging. And that’s one thing going back to your how long question, I think there’s going
to be, I would guess, 18 months worth of very
difficult negotiation with an uncertain outcome. On the other hand, John Holdren who was on campus briefly
about a year and a half ago, and is about as knowledgeable
a person as they come on this question, expressed the opinion that when the United States
indicates sincere willingness to act, that they want to be
part of this sort of thing. And it was his opinion
that the recalcitrance of the US to this has
been the limiting factor and so we will see, to some extent, the release of a dam. What becomes the limiting factor then, and how well we will do, my crystal ball is frankly not clear
and good enough to say. I recognize the challenges
implicit in your question. I think everybody recognizes, and nobody knows quite how
it’s going to come out. But for those who hope
to see the mechanisms to give an economic value to carbon, I think the thought that there will be a more universal perception of urgency is what they’re banking on. – [Man] If all of the 700
or 750 billion dollars in the bailout package
haven’t been committed by January 20th, can we expect to see any change in how the
balance will be expended? – That’s a good question, I think that there were not a lot of supporters of the troubled asset relief program as it was originally presented by the treasury secretary
among the democrats. I think they were reluctantly going along because that’s what had
been proposed to them. And not going along was the worst thing that the leadership could
have done in that case. When the UK decided that they would make direct capital injections
into their banks, then it became pretty clear that we would do the same thing here, and that met with more approval up and
down the electoral spectrum. So I suspect that if there
are any of those purchases of troubled assets directly
off the balance sheet that are still going to be done even in these last couple of
months, that those will stop. And to the extent that any money is being invested, it will be in the form of these preferred equity shares. Hopefully with more restrictions on payments to common equity holders. And hopefully at some slightly
higher rates of interest. So it doesn’t have to be such a subsidy. – [Man] On the issue of US foreign policy, it seems that the international community is much more enthused
about a President Obama than a President McCain,
and I was wondering to what extent, if any, that would affect the Obama administration’s ability to achieve its foreign policy objectives. Because it seems to me that
the Obama and McCain campaigns differed more on means than on ends when it came to US
foreign policy objectives. – It’s a good question, Brian. My sense is that the differences between the Obama administration and the Bush administration,
in their willingness and their desire for
cooperation with allies is a degree of magnitude rather than, it’s not a dichotomous
issue, it’s not that the Bush administration was disinterested in having alliance support
and having allies sign on to missions, it was that
on a series of issues the Bush administration was so certain about what they wanted to achieve that they would rather
do it with the support and assistance of allies and were willing to do it without it when necessary. My sense is the same is true
of the Obama administration, that the difference is not that as much as the fact that Obama administration probably has fewer
objectives that will run squarely against the interests
and desires of the allies. So, when issues come up and principally I’m thinking about Iran,
where the Obama administration might have to make very,
very difficult decisions about what to do if they
finally come to the conclusion that negotiations with
the Europeans and Iran, if it is the case that those
come to no useful fruition, the Obama administration is going to come to a conclusion about what it wants to do. And it’s made some tough
talk in the campaign about and Iranian nuclear
program being unacceptable. At other times people
who might have positions in the Obama administration
have taken a position which, frankly, I support, which says that a nuclear-armed Iran is highly undesirable but acceptable because we can deter them. That’s a position I support,
I ultimately don’t know because you’ve heard both things from people who are likely to be close to this administration,
what they will decide. If they decide to use military force, I wouldn’t be surprised if they have a very small coalition of the willing. So at the end of the day I’d say, I think the difference in
how both administrations are likely to approach allies
is a little bit smaller than it’s actually often portrayed to be. Because both would love to have allies sign on to make missions they want to do. There still will be some
issues where we might, we the Obama administration, not me, the Obama administration
might differ strongly from the preferences of allies. And I think in those circumstances, the Obama administration will
do what they pledged to do, which was to put their perceptions of US national interest and
US national security first. And that might lead to some of the same divisions that you see. – [Moderator] We’ll
take one more question. – [Woman] A comment and a question for professor Lynd, you indicated that auto companies might well be worked into an Apollo program on energy,
and I just wanted to comment that during World War
II, automobile companies switched to making airplanes
and they did it very fast too. But also I wondered why
have US automobile companies been so reluctant to make any increases, mandatory increases,
in MPG when they should shoot for something much bigger. I mean, they’ve been so
teensy and so incremental since 2000 I’ve been driving a car that gets 50, 60, 70 miles per gallon. And they’ve known how to make these cars for many, many years, now why don’t they mandate a big change? – Were you asking at the end why don’t the automakers mandate a big change? – Why doesn’t our congress
mandate a big change? – Well this has been a battleground issue for about 20 years, and I saw it up close when I served on a
policy advisory committee to the Clinton administration
in ’94 and ’95. We had 30 stakeholders,
including 5 car companies. We thought we were going to get somewhere after a yearlong process, and at the end the five car companies
went out of the room. They caucused, they came
back in and they said we probably haven’t made
our position clear enough. Any policy that has the four
consecutive capital letters CAFE, or any functional
equivalent attached to a numerical value of
greenhouse gas emissions, even it’s in an appendix,
we will not sign. Whereupon the environmentalists
walked out of the room. Literally, and so all I’m
saying is that this is, goes long and deep, the auto industry’s traditional arguments have been twofold. One has been based on customer demand. That they have, this is not
their chief argument anymore, but as far as how they got here. Has been that they don’t see that they, they believed they could maintain demand for larger, less fuel-efficient vehicles. And the second one has been
based on competitiveness. They basically said look, our market share is going to be in the less
fuel-efficient vehicles. Now recently none other than the chairmain of General Motors said the trend towards more efficient, smaller
vehicles is, quote, permanent. So I don’t think there is this
element of denying reality. There’s also a lot of
desperate circumstances in the auto industry that
have nothing do with, at least nothing
immediately to do with this. They have to deal with
other considerations. So there is the obviously potential for some form of federal
assistance with strings attached. How that will play out is not quite clear, but I mean, the US auto industry has never seen it, has
really clearly perceived it to not be in their competitive interest to see mileage standards
aggressively raised. And they know that’s
where the world’s going, I think they’d like to get
some help to get there. (applause)

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