Regular Order is a Mistake for the Farm Bill

October, 2017

Washington and Lincoln -- Ordinarily I agree with agriculture expert and commentator Alan Guebert and would be commending his views to any readership. But his recent column "Regular Order" is shortsighted and downright wrong.

He praises the House and Senate agriculture committees for their hearings and deliberations over the 2018 Farm Bill, apparently for the purpose of contrasting how these committees go about their agriculture work, against the legislative chaos surrounding health care and taxes.

The 2018 Farm Bill, however, is headed toward ever more disintegration and destruction of rural America. If you like $2.95/bu corn (current price around Lincoln, Nebraska), by all means praise the committees for following Regular Order. If you accept "food deserts" across the country, as described so well by Barbara Soderlin of the Omaha World-Herald, then you will like more of the same being offered up by the House and Senate agriculture committees. If you like the fate of the American heartland being in the hands of foreign countries' commodity demands, then you will agree that the 2018 Farm Bill should follow the path of its 2014 predecessor, with just a bit of tinkering here and there. If you make no connection between the Farm Bill and the nation's diabetes epidemic, praise the Regular Order.

There is another way. The Farm Bill should be as contested as any legislation now before Congress. Production agriculture (Ag 1.0) should evolve into nutrition agriculture (Ag 2.0) through new provisions in the next Farm Bill. (See my earlier post about the distinction.) A realistic market basis for this evolution has now been outlined in a new report from the Federal Reserve Bank of St. Louis and the USDA. Entitled "Harvesting Opportunity," it should be a constant reference work for drafters of the Farm Bill.

Elected officials who care about rural America, and all who care about a healthy citizenry, need to be as fierce on the Farm Bill as they are on health insurance or taxes, if not more so. This means using all the legislative tools at hand – including throwing a wrench or two – even if they push beyond the niceties of the Regular Order.

Coalition Governments and American Exceptionalism

October, 2017

Berlin -- After recent elections with no clear winners in Austria, the Czech Republic, and Germany, coalition governments are being formed to proportionately reflect voting outcomes in each country. This is not easy when the top vote-getting parties have major policy differences.

In Austria and the Czech Republic, new parties and leaders on the right have emerged with pluralities. They may be able to form governments with other parties not distant ideologically. In Germany, however, the center-left SPD has pulled out of its previous coalition with the center-right CDU and will now become the leader of the opposition. Although the CDU and the centrist FDP have ruled before in coalition, after the most recent elections they now need Green Party participation to form a government.

One idea under consideration in Germany is to create two vice-chancellors under Chancellor Merkel of the CDU, one for the FDP and one for the Greens. But there is no authority and no precedent for this, so there may have to be other solutions. The process may take the rest of the year.

Meanwhile, shortly after pulling out of the national coalition, the SPD scored impressive gains in the subsequent elections in the state of Lower Saxony. It is as though the SPD discovered new backbone and voters responded accordingly.

All of which is a contrast to the situation in the United States. American exceptionalism does not provide proportional representation at the national level, so there is not much structure around which coalitions can be formed. With an increasingly polarized American electorate, the result is either gridlock or, with a president having no experience in government and no skills to bring people together, dangerous misrule.

American state and local governments, by contrast, have diverse ways of avoiding polarization: non-partisan elections, proportional representation, even non-partisan unicameral bodies, as in Nebraska. It is not always fully appreciated that in the United States, election laws are under the authority of state govenments, including authority over congressional districting. States could do much to apply correctives to the sorry state of the national government. This is a feature of American exceptionalism that needs urgently to be exercised.

The Allied Museum and the Berlin Brigade

October, 2017

Berlin -- Truman Plaza, the heart of the American military and diplomatic community in Berlin during the Cold War, is long gone. It was the center of U.S. Army life for the Berlin Brigade, some 14,000 troops who trained daily to repel a surrounding Soviet and East German army of 500,000, should the Soviets try to take West Berlin by force. The idea was for the brigade to sacrifice itself by ferocious fighting, to buy time for reinforcements to arrive.

When the U.S. Army left Berlin in 1994, the Truman Plaza PX, the shops, the dependent schools and recreation centers, were all sold off or repurposed. A Berlin developer has since built contemporary, white-cube housing around a pond where the PX and commissary parking lot once stood. A new "Truman" pedestrian-access shopping area, with several indoor-outdoor cafés, serves the new local population. It's nice to see the history of the site honored through the retention of the name Truman.

The old U.S. Army movie theater, the Outpost, along with the adjacent library, has been converted into the Allied Museum. It tells the history of post-war Berlin and the role of the Allies. Between the two buildings visitors can see an aircraft from the Berlin Airlift of 1948-49, a French military rail car, a gatehouse from Checkpoint Charlie, a section of the Berlin Wall, and an East German guard tower that once overlooked the death-strip that divided the city for nearly three decades. Free and open to the public, the museum is a fascinating and sobering look at the Allied – especially American – commitment to democratic freedoms.

What does Germany think of America now, two and a half decades after the end of the Cold War? Roger Cohen, a New York Times' columnist, writes this month from Berlin:

The Bundesrepublik is America’s child. It was forged under American tutelage and inspired by high American ideals of liberty. President Trump therefore poses a particular problem for Germany, more acute than for any other European nation. If the United States has forsaken these ideals, if the nation of “We the people” is no longer a universal idea but projects only a pay-up-now mercantilism, Germany will one day have to think again.

Perish the thought. Surely not. I am too tied to the past, and to places like the Allied Museum, to think we could ever forget the Cold War, and to believe that Germany would seriously re-think its ties to America and the ideals of liberty.

It is more likely that the current retreat of the United States from our traditional ideals will be stemmed with the help of Germany and other western nations. An analogy from nature is apt: in the mid-19th century, France and other wine-growing areas of Europe lost their vineyards to a pestilence. Grapes resistant to the pest had to be brought from America to reconstitute the vineyards. So too may America have to reconstitute its democratic ideals, this time importing them back from Europe, from "America's child," as Cohen puts it.

This may be the ultimate legacy of America's Berlin Brigade.

German Gerrymandering

October, 2017

Berlin -- The world is watching the Wisconsin gerrymandering case Gill v. Whitford, as its outcome may foretell the direction of democracy in the United States.

Chief Justice Roberts has made two unfortunate statements about the case. His first was to suggest that the Supreme Court should avoid setting limits on gerrymandering for fear that it would appear to favor Democrats. Surely he knows Democrats in Maryland are among the worst offenders of gerrymandering and it is the practice of it by any party that is at issue. His second was a cheap shot at the social sciences, calling quantitative analyses of gerrymandering "gobbledegook." It is the sophisticated application of such analyses on the part of the perpetrators that is the problem; its solution will necessarily involve quantitative limits.

How inappropriate for someone in the legal profession to disparage careful measurement in the empirical sciences. Courts should welcome standards beyond their own subjective "reasonable person" or "we know it when we see it" tests.

Many countries have struggled with gerrymandering, Germany included. At the beginning of this century, the SPD gerrymandered representation away from the PDS around Berlin. The CDU won so many districts in national elections in 2009 that its representation in the Bundestag was out of proportion to the national vote. The disparity was so unfair that the federal constitutional court required changes in subsequent elections as to the calculation of the Überhangmandate.

Decisions by courts in other countries are not precedents for U.S. courts. The German top court's decision applied a remedy not available to U.S. courts, which is another reason not to draw parallels. Nevertheless, German democracy is a creature of western thought and practice (see the previous post), and its attention to fairness in matters of gerrymandering is worthy of more than out-of-hand dismissal. May our own Supreme Court likewise take the appropriate notice of fundamental fairness in its Gill decision.

A Thriving American Institution

October, 2017

Berlin -- At Mariannenplatz, huge sycamore limbs are down in the park after a hurricane swept through Berlin last week. Seven people died in the storm. But clean-up is underway and the park's huge cottonwoods are still intact.

It is a metaphor for the recent German elections. The far-right Alternativ für Deutschland (AfD) party blew through to gain seats in the German Bundestag, but the basic German social and political institutions are still functioning. A coalition government is in the making, united against the AfD. Sanity prevails in the chancellorship.

American institutions are not doing so well. Everywhere one looks our institutions are fraying -- schools; churches; universities; news media; state governments; especially the federal government. America's version of the AfD, Trumpism, is ascendant. The vaunted checks and balances of the American system may not he up to withstanding the winds of autocracy.

It is worth reflecting that German stability is creditable to the foresight of the U.S. government in the post-WWII era and is, in a way, itself an American institution that is still holding forth strongly. Germany's post-war constitution, drafted under the aegis of the Allied occupiers, created a parliamentary democracy in the framework of a federal system. Goverments can be dissolved and reconstituted when leadership fails. The German states are directly represented in the Bundesrat (the upper house) by their minister-presidents (governors), as a check on the power of the national government. The Marshall Plan of George Marshall and President Truman set a robust economy in motion after the war. The North Atlantic Treaty provided international security.

There is now a German Marshall Fund that reciprocates aid, in gratitude. German companies are rushing to the aid of Puerto Rico to restore power after Hurricane Maria. Germany leads the European Union in defense of democratic ideals. German news media led the fight against Russian interference in its elections.

It is the height of irony that the American institution now proving itself ready to meet today's challenges to democracy is found in Berlin.

Tax Bill Opportunity to Fix the ACA

October, 2017

Washington -- It was totally predictable that Congress would founder on repealing and replacing the Affordable Care Act, in part because the ACA was the conservative, Republican health care plan in the first place. (See the earlier post in this space at the beginning of the year: Call It HeritageCare.)

A lot of grief could have been avoided had the ACA been fixed with revenues from cuts to tax expenditures for employer-provided medical care. Beyond that, Republicans should have jumped at the chance to remove the widely-acknowledged, distorting hand of government from the employer-provided health care markets. They didn't. So much for any coherent Republican approach to governing.

There is another chance to do this, through the upcoming tax bill. Rather than cutting tax deductions for payments to state and local governments, cut them for employer-provided medical care. The revenues could be used for lowering the corporate tax rate in a trade-off, of course, but they could also be used to fix the ACA.

One of the nearly-forgotten advantages of the budget reconciliation process is that it provides a way to cross committee jurisdictions. The cost of the bipartisan ACA fixes that might be coming out of the Senate Committee on Health, Education, Labor, and Pensions could be covered by cuts to tax expenditures advanced by the Senate Committee on Finance.

Not holding my breath.

Tax Myths, Tax Dilemmas

October, 2017

Lincoln and Washington -- The President and Congress are now working on tax legislation. They would be well-advised to listen to a Reagan Administration advisor who put together the Kemp-Roth* tax cuts in that era, Bruce Bartlett. He cautions against assuming that tax cuts result in economic growth, as the record of three subsequent decades does not provide empirical evidence for it. Of course there are many excellent economic studies that make the same point, but seldom does the advice come from a Reaganite tax cut warrior.

Nebraskans should be especially wary of the federal tax provisions advanced by the Administration. Nebraska is a high property tax state; losing the deductibility of these taxes would hurt. Also, Nebraska piggy-backs its state income tax on federal income tax liability. If federal liability goes down, what does the state do, adjust its rates upward to bring in the same amount of revenue? (If anyone has asked Governor Ricketts about what he would recommend, I'm not aware of it.) Nebraska's revenue from income taxes is already taking a nose-dive because of extreme weakness in its agricultural economy. If there is even less state revenue, more pressure will be placed on property taxes to fund local governments like schools and cities.

The simplistic answer from many Nebraska politicians when faced with this dilemma will be to say "just cut spending." (By the way, we've seen what this approach does in areas like the Department of Corrections, and it is frightening.) I take a back seat to no one in advocating cuts to wasteful government spending at any level – local, state, or federal – and have a record to show for it. But sometimes waste is worst on the tax expenditure side of the budget at the federal level, in the form of tax giveaways that only increase federal debt for no good purpose and exacerbate problems at the state and local level.

The Administration's tax cut proposals are half-baked, to say the least. There is a strong case, however, for tax reform and simplification, on both the corporate and individual levels. That's where the evidence is strong, and should be the direction Congress takes.

*I was working in the Senate when Kemp-Roth was considered. Senators Bill Bradley and J. James Exon were skeptical of the claim that three years of successive tax cuts would increase revenues, but were willing to put so-called supply-side economics to the test. Accordingly, we devised the Exon-Bradley Tax Trigger Amendment. If the enacted cuts worked as Kemp-Roth proponents promised, spurring growth and revenues, all the tax cuts would go into effect as scheduled. But if after several quarters of being in effect, the Kemp-Roth theory was not working, the last of the cuts would be rescinded to avoid increasing the federal deficit. The Exon-Bradley Amendment got over three dozen votes but was defeated. However, the Reagan Administration itself soon reversed course and asked for tax increases to undo much of Kemp-Roth, as belatedly explained by Bruce Bartlett in the linked article, above.