VIDEO: Tony Fratto on MSNBC – Sequester Showdown
| March 1, 2013 | 10:24 am | Uncategorized | No comments

Visit NBCNews.com for breaking news, world news, and news about the economy

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Troy & Capretta: Obama’s Sequester Scare Tactics
| February 27, 2013 | 2:42 pm | Tevi Troy | No comments

Published for NRO, February 27, 2013

The White House has argued that the March 1 sequester of federal spending — a cut of approximately 5 percent from the domestic-spending programs covered by the sequester requirement, along with 8 percent cuts to defense programs — will bring about the most dire of consequences. According to the president, “this meat-cleaver approach . . . will jeopardize our military readiness [and] eviscerate job-creating investments in education and energy and medical research.”

Maybe more alarmingly, the White House’s Office of Management and Budget issued a press release earlier this month claiming that the cuts in federal spending “could” force reductions in food inspections, which “could” lead to outbreaks of more food-borne bacteria, such as E. coli. Administration officials and their allies are making similarly alarming claims regarding what “could” happen to workplace safety, law enforcement, and education.

It seems clear that the administration has the capacity to make sequestration’s impact excessively unpleasant, and these statements could make one wonder whether the administration is determined to do so. But does a sequester have to be disastrous? Could the White House wield the scheduled cuts in such a way as to minimize the impact felt by the American people? Our experience inside the executive branch suggests that this is indeed the case: The administration could have prepared for the sequester in ways that would steer cuts toward less sensitive programs and activities. In fact, it still has the capacity to adjust some, although certainly not all, of the ways in which the sequester is applied.

Let’s start with the big picture. The total amount of the sequester’s cuts — $85 billion in 2013 — is just 2.4 percent of a $3.6 trillion budget. Even with the cuts, total spending in 2013 will exceed what was spent in 2012. Indeed, federal spending has been roughly $600 billion higher during the last four years than it was in 2008, and the sequester will hardly offset that overall increase. The size of the sequester barely exceeds the $80 billion or so of new spending that was recently appropriated for Hurricane Sandy relief.

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Feaver: Atlantic trade accord could be boom or bust for U.S.
| February 22, 2013 | 3:33 pm | Peter Feaver | No comments

Published for Foreign Policy, February 22, 2013

President Obama’s surprise announcement in his State of the Union address that he plans to start talks on a free trade deal between the United States and the European Union could serve as a boon to the nation’s economy or a bust for the nation’s competitiveness. Though reaching any sort of deal will be difficult, leaders in the United States should avoid a proposal that could make American markets more like their European counterparts and should instead seek a plan that helps introduce the best of the American labor markets to the EU in order to boost growth on both sides of the Atlantic.

A successful free trade agreement (FTA) will achieve the following: expand U.S./EU trade, renew the Atlantic political/economic alliance, improve competitiveness in both markets, and set a benchmark for future trade accords.

In order to walk across the finish line together, the United States and the EU must effectively resolve their differences on two key economic policies.

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Wehner: An Interesting Time to Be Alive (If You’re a Republican)
| February 22, 2013 | 9:12 am | Pete Wehner | No comments

Published for Commentary Magazine, February 22, 2013

In his appearance on MSNBC’s “Morning Joe,” Democratic strategist James Carville was asked what the Republican Party has to do in order to recover. Mr. Carville pointed out that “It’s hard when you’re a congressional party.” What he meant by that is that without a titular head, a party is relatively undisciplined and often sounds cacophonous. The press will focus on the most outrageous statements made by backbenchers, which leads to responsible members of the party often finding themselves with “a fist in your forehead.”

That’s a fair point. At the same time, a period like the Republican Party is in right now can also lead to some intellectual creativity, with good ideas being generated by governors and members of Congress. Wilderness years can help a party that has become ideologically rigid and somewhat out of touch with the changing nature of America. As Rod Dreher pointed out in a recent symposium in COMMENTARY, in the short run political cohesion and effectiveness have their advantages, but this can be “a disaster for a party that needs–as every party does–to have its intellectual base replenished by fresh, creative discussion and argument.”

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Levin: A Tax By Another Name
| February 21, 2013 | 5:28 pm | Yuval Levin | No comments

Published for National Review’s ‘The Corner’, February 21, 2013

Andrew, many thanks for the characteristically thoughtful and generous post. A couple of brief points in response.

First, in writing that the starting principle of means testing the entitlements should be “give less to the wealthy rather than take more from them” I meant only to say that the means testing itself (in the case of Medicare, as noted) should take the form of reduced benefits rather than of higher premiums. Almost all proposals for means testing Medicare (from both parties) involve imposing even higher premiums on the wealthy. This is largely because Medicare is a defined-benefit system which makes it difficult to alter the benefit for differently situated people. This would be much easier if Medicare were (as it should be for many other reasons) a premium-support system, and indeed the Ryan premium-support proposal does envision a means-tested benefit. In today’s Medicare system, though, means testing usually amounts to higher premiums, which basically just turns Medicare into an inefficiency machine—taking more money from certain people and then giving it back to them in the form of a poorly designed benefit. Adjusting the age of eligibility is one of the few ways you can modulate the benefit itself in today’s Medicare, which is why I proposed doing so on a sliding scale on the basis of lifetime earnings.

Second, the message sent by such reforms is to my mind a key part of the appeal of greater means testing. Of the (few) politically plausible entitlement compromises at this point, it is the one that best qualifies as an incremental step in the direction of the sort of reformed entitlement system that conservatives envision, because it begins to move away from the myth of universal earned benefits and address the entitlement programs as what they really: massive transfer programs that serve an important purpose but need to serve it more effectively and at a lower cost. Medicare and Social Security have of course always been massive transfer programs moving money from the young to the old. They are not savings programs, and their “trust funds” do not actually put money aside to be spent on benefits. As older Americans have grown wealthier over the years, moreover, Social Security and Medicare have also become particularly perverse transfer programs because they now generally move money from a less wealthy cohort of people (younger workers) to a more wealthy one (retired people). In fact, because workers with lower incomes generally only pay the payroll tax and not the income tax, the only federal taxes that these workers pay go to fund benefits for people who are on the whole wealthier than they are. That’s perverse social policy and it’s also of course unsustainable fiscal policy. The more we come to see these programs as part of the safety net, rather than imagining they are earned universal benefits, the better equipped we will be to think rationally about how to reform them.

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Troy: The Great Exchange War of 2013
| February 21, 2013 | 11:37 am | Tevi Troy | No comments

Published for Commentary Magazine, February 21, 2013

ObamaCare survived both the Supreme Court challenge to its constitutionality at the beginning of 2012 and the election close to year’s end. With these obstacles to its existence vaulted, the health-care plan can not be repealed before its full implementation begins in 2014. Even so, this disastrous piece of legislation is actually facing its greatest challenge yet. The Obama administration must now begin putting the practical pieces of its byzantine law into effect.

ObamaCare, all 2,700 pages of it, is being activated in two phases. First is the imposition of new rules and regulations on insurers, a process that has already begun. It is now clear that the law will not curb rising health-care costs, as its advocates heatedly and repeatedly promised during the year leading up to its passage in 2010. Led by the president, they claimed the new law would reduce health-insurance rates by $2,500. Since its passage, rates have instead gone up by more than $3,065—a spread in excess of $5,500 per family. Even more requirements will mean even higher costs. And more requirements are coming.

The second phase is more troublesome. The law calls for the establishment of 50 health-care “exchanges,” one per state. The battle over the development of these exchanges will dominate the health-policy debates in 2013, and the ultimate disposition of that battle will tell us most of what we will need to know about the future of innovation and access to medical care in our system.

What is an “exchange”? Exchanges are, quite simply, organized marketplaces aimed at facilitating the purchase of insurance. While the ObamaCare law calls for them to be state-run and regulated heavily by the federal government, they could also be quasi-governmental or nongovernmental. Exchanges are not insurers themselves, but they work with private insurers and give insurers a platform for selling their products while making it easier for individuals to purchase insurance.

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Levin: The Sequester in Proportion
| February 20, 2013 | 1:30 pm | Yuval Levin | No comments

Published for National Review’s ‘The Corner’, February 20, 2013

Sequestration is certainly not a smart way to manage federal spending. Some programs are more important than others, some programs are better able to sustain spending reductions than others, and any cuts should be prioritized accordingly. The sequester doesn’t do that. It was proposed by the White House and accepted by Congress precisely to avoid a debate about specific prioritization and just pass the debt ceiling deal in 2011. They hoped the “supercommittee” might agree on some kind of prioritization (and perhaps especially on entitlement reforms that could add up over time). But that didn’t happen, and here we are. This was the only way the parties could agree on to implement modest cuts.

Now that we’re facing these cuts, there’s a concerted effort, particularly by the administration, to suggest that they are not modest at all—indeed that they are so severe that our economy (if not our very society) simply cannot sustain them.
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Wehner: More on the GOP’s Intellectual Unfreezing
| February 20, 2013 | 12:45 pm | Pete Wehner | No comments

Published for Commentary Magazine, February 20, 2013

In reaction to my post on the intellectual unfreezing of the GOP, I received an e-mail from Grover Norquist of Americans for Tax Reform.

His argument to me (which he said I am free to share) is that the Republican Party and the conservative movement has in fact developed sound policies without a president pushing and pulling it and that we’re beyond waiting for the next Ronald Reagan, having developed many Jack Kemps.

What Norquist means by that is that there are exciting and encouraging developments that are occurring in the House (see especially Representative Paul Ryan’s last two budgets) and in the states, where Republican governors are advancing reforms dealing with taxes, pensions, education and more. Mr. Norquist’s broader point is that Members of Congress, governors, and state legislators are making real progress in the “new ideas” department, and that deserves to be recognized.

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Wehner: Entitlement Reform and Common Ground
| February 20, 2013 | 11:52 am | Pete Wehner | No comments

Published for Commentary Magazine, February 20, 2013

In a New York Times op-ed, my Ethics and Public Policy colleague Yuval Levin offers a simple, excellent idea that offers a way out of our current political impasse on entitlements.

He argues that Medicare and Social Security should be means-tested (e.g., allocating benefits according to need) and explains, with typical intelligence and clarity, why that’s something both Democrats and Republicans should be able to agree on. He writes:

Some on the left might complain that curtailing our entitlement programs’ universal character would undermine their social purpose and political support. But targeting benefits to those who most need them is surely better than reducing payments to providers (many of whom will drop out of Medicare), as President Obama’s 2010 law does. Some on the right might complain that such reforms would punish success. But surely rewarding achievement with government aid is no one’s idea of conservatism.

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VIDEO: Tevi Troy on Fox Business – CBO: Medicare Spending to Rise Rapidly Over Next Decade
| February 20, 2013 | 10:00 am | Tevi Troy | No comments

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