WORD ON THE STREET

Fannie falls further from its ’10 Percent Moment’

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When Fannie Mae and Freddie Mac were bailed out by the U.S. Treasury, which bought enough of the firms’ senior preferred stock to bring the net worth of each up to zero, the original deal was that the Treasury, on behalf of taxpayers, would get a 10 percent return on that investment.

For some time now, Fannie, Freddie and their supporters have ballyhooed how many dollars they have paid the Treasury in dividends on that stock, but that is an incomplete statistic. The question is whether those dollars add up to a completed 10 percent return. For that to happen, the payments have to be the equivalent of retiring all the principal plus providing a 10 percent yield; this is what I call that the “10 Percent Moment.” We can easily see if this has been achieved by calculating the internal rate of return (IRR) on the Treasury’s investment. Have Fannie and Freddie at this point provided a 10 percent IRR to the Treasury or not?

The answer is that Freddie has, but Fannie, by far the larger of the two, has not.

Freddie’s net loss in the fourth quarter of 2017 means the Treasury has to put $312 million back into it to get Freddie’s capital up to zero again. This negative cash flow for Treasury will reduce its IRR on the Freddie senior preferred stock, but only to 10.7 percent. Freddie has still surpassed the 10 percent hurdle return.

On the other hand, Fannie’s fourth quarter loss means the Treasury will have to put $3.7 billion of cash back into it, dropping the Treasury’s IRR on Fannie from 9.79 percent in the fourth quarter of 2017, to 9.37 percent. That’s not so far from the hurdle, but the fact is that, as of the first quarter of 2018, Fannie has not reached the 10 Percent Moment. Fannie and its private investors need to stop complaining about paying all its profits to the Treasury until it does.

When both Fannie and Freddie achieve the 10 Percent Moment, it would be reasonable for the Treasury to consider declaring its senior preferred stock in both fully retired, in exchange for needed reforms. At that point, Fannie and Freddie’s capital will still be approximately zero. They will still be utterly dependent on the Treasury’s credit and unable to exist even for a day without it. Reforms could be agreed to between the Treasury and the Federal Housing Finance Agency (FHFA)—as conservator and therefore boss of Fannie and Freddie—and carried out without needing the reform legislation, which is so hard to achieve. There will be a new director of the FHFA in less than 11 months.

Surely a restructured deal can emerge from this combination of factors.


Image by mspoint

 

Crippled Congress = expanded executive powers

Congress is unquestionably polarized. Many of the nation’s most pressing issues are mired in gridlock. These facets of our politics are understood, but the consequences of our current circumstances rarely receive the attention they clearly warrant.

Indiana University political scientists Edward Carmines and Matthew Fowler address why these consequences matter in their recently published paper, “The Temptation of Executive Authority.” The authors thoroughly detail a specific outcome of our current political environment that many on the congressional capacity bandwagon have warned of for years: when Congress doesn’t have the capacity to legislate, the president will.

Citing a perfect storm of increased polarization, contentious elections for congressional majorities and the White House, and regular instances of divided government, the authors argue that recent presidents of both parties have taken advantage of the inability and/or unwillingness of Congress to craft and pass legislation and have done so themselves. These reinforcing influences “have led to the expansion of executive authority at the expense of a diminished legislature.” In short, the mantra of three co-equal branches of government is becoming less accurate as the executive gains strength.

According to Carmines and Fowler, “Congress, in a nutshell, no longer seems up to the challenge of taking effective action to deal with the major problems facing the country.” The authors back up their argument with five indicators of decreased legislative productivity, including fewer bills passed by Congress, the declining percentage of bills going to conference, and even the increase in cloture votes taken to end debate on pending bills. By all measures, Congress’ capacity to legislate has taken a serious hit, giving the president an opportunity to take up the slack.

Important to keep in mind

We know Congress has cut its own resources, from technology, to support agency expertise, to staffing resources within its own offices. But, let’s remember an essential point: Congress can fix this. In fact, Congress can act alone to fix this.

In each of the instances where Carmines and Fowler highlight presidents making use of, and even expanding on, their executive authority, they often couch the action as a response to congressional inaction. For example, they write presidents have chosen to use executive authorities because they faced a “recalcitrant and uncooperative Congress,” or a Congress that “has become ideologically bifurcated and unwilling to compromise,” or a Congress that “lacks the capacity and perhaps the will to play a coequal role.”

And that’s the point. The policy vacuums filled by executive actions only exist because Congress creates them.

When we talk about legislative capacity we should be aware of the likelihood that the current environment exists because enough members of Congress want it to exist. Legislating is hard; there are uncertain outcomes, unintended consequences, and often politically dangerous consequences given that bipartisan compromise is almost always necessary for bills to be signed into law. Many members have made the calculation that it is politically advantageous to let the president lead.

Congress can curb the use of executive action by taking action themselves, but they have to want to. Though Congress can and should increase their own institutional capacity via hiring more, and better compensating staff, the will to take back legislative superiority must come first. As R Street Governance Senior Fellow James Wallner argues, and as you will read in much of his upcoming work, active congressional participation is best thought of as “the politics of effort.” And as Carmines and Fowler conclude, the executive, in the absence of effort from the legislature, will not hesitate to take and expand on his authorities to implement his policy preferences.

 

What is going on with WHOIS?

WHOIS” is a database administered by the Internet Corporation for Assigned Names and Numbers (ICANN). It contains data such as who owns and operates a domain name and how to contact them. There has been much public chatter about WHOIS recently thanks to Europe’s General Data Protection Regulation (GDPR), which is slated to take effect on May 25, 2018. GDPR has heightened standards for what personal information may be made publically available online meaning that some of the data in WHOIS will likely run afoul of the new regulation. This, therefore, both necessitates and provides an opportunity to reevaluate the disclosure and use of WHOIS data.

ICANN President and CEO, Göran Marb recently laid out three models for how to change WHOIS in order to bring it into compliance with GDPR. “Model 1” would apply only in the European Economic Area (EEA) — the area affected by GDPR. This model would withhold personal information from the public but allow access to anyone who self-certifies they have a legitimate interest in the data. This model is only a modest change from a completely publically available WHOIS since there is no verification mechanism to see if a party’s interest is indeed legitimate. For this reason, it is questionable whether Model 1 is GDPR compliant.

“Model 2” has received significantly more interest. It would create a layered system in which most data are non-public, but certain, predefined groups would be able to gain more access after a formal accreditation process. This proposed model has two variations: 2A, in which the new process applies only to the EEA, and 2B, which applies to the whole WHOIS system.

A Model 2 approach seems to be akin to ICANN’s ongoing efforts to replace WHOIS altogether with Next-Generation Generic Top-Level Domain Registration Directory Services (RDS) which will likely extend some kind of layered access to classes of certified users. The main drawback of implementing this model now is the clock: there is not enough time to thoughtfully complete and implement a fully developed and layered approach by the time GDPR takes effect in May.

That brings us to “Model 3,” which makes most data non-public and does not release it to anyone except to comply with a court order. This model most clearly complies with GDPR by closely tying access to the purpose of WHOIS. It would still allow the intended functions of WHOIS as a repository of data necessary for administrative functions, without making those data publicly available. Domain registrars need to be able to keep track of transfers of domain names and back up ownership records, but the registrars can do their jobs even if the data are not available to the public. Other interested parties, such as law enforcement, may want access to the data, but their goals must be considered separately from the purpose of WHOIS itself. Additionally, they would still be able to access the data if they get a court order. This model is supported by groups like the Electronic Frontier Foundation and the Internet Governance Project.

As a long term solution, Model 2B, in the form of a new RDS, is preferable as it will account for the legitimate interests of all parties without publicly disclosing everything to everyone. 2B is preferable to its model 2 counterpart because it to provides a uniform, international standard rather than carving up domain name policy along political borders.

We also should not rush the process; a slapdash layered approach to WHOIS would likely create more problems than it solves. Therefore, in the meantime, ICANN should work diligently to complete the new RDS and adopt Model 3 as a stopgap measure in order to comply with GDPR.

The intersection of WHOIS and GDPR highlights the ways in which Internet governance is increasingly bumping into traditional regulation by nation-states. If it ever was, the Internet is no longer a domain outside the reach of governments. It is still a global ecosystem, but, as in this case, global policy can be swayed by regulations in a particular region. Maintaining the legitimacy of private Internet governance rather than government intervention is likely to become an increasingly difficult but important struggle.

Too Organic for the Government

One just can’t make this stuff up. Earlier this month, the U.S. Environmental Protection Agency (EPA) got a stay until May 1 of a court mandate requiring farmers to report government-declared “dangerous gasses” released by decomposition of manure.

Under the U.S. District Court of Appeals ruling, these so-called “hazardous substance releases” – which have been occurring since livestock appeared on earth – will have to be reported to first responders. The only question is when.

I take it back. There are some obvious additional questions: How will the first responders protect us from these dangerous agricultural releases?  What emergency response protocol springs into effect when they get notified – not of a sudden release happening after a train wreck or a plant explosion – but of a constant release that can’t even be quantified except by a formula taking into consideration the number of animals, the weather, the climate and the geographical area that manifests the hazard? Because “[t]he purpose of the notification is for federal, state, and local officials to evaluate the need for an emergency response to mitigate the effects of the release to the community.”

This is not the same issue as manure management to protect groundwater quality, which is a serious and widely-supported policy much more in line with the purposes of critical environmental protection. A 2005 spill in Lewis County, New York, for instance, is estimated by the state’s Department of Environmental Conservation to have killed 375,000 fish in the Black River and was judged instrumental in hastening promulgation of state waste management rules.

The EPA, lately much-criticized for mission creep, ruled that emergency releases of agricultural ammonia and hydrogen sulfide – which have been byproducts of farming since farming was a thing – were not something they needed to be especially concerned about under either the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as “Superfund,” or the Emergency Planning and Community Right-to-Know Act (EPCRA). Thus, agricultural releases were exempted from the final rule when it was adopted in 2008.

The EPA was subsequently sued by environmental and animal rights groups who are on a mission to wipe out livestock farming and were disturbed that agriculture got a pass on reporting these discharges. The final rule was struck down last year after several years of litigation. When the court’s ruling takes effect, the EPA’s regulatory exemption will no longer apply.

In 1978, President Jimmy Carter declared a landfill near Niagara Falls, New York, known as “Love Canal” a “federal emergency area.”  William T. Love was an entrepreneur who wanted to dig a canal to join the two levels of the Niagara River that were separated by Niagara Falls. The original project failed after a mile of digging, which produced a trench 10 feet deep and 15 feet wide. The U.S. Army apparently buried some waste from chemical weapons experiments there, and then from 1947 to 1952, Hooker Chemical and Plastics Corporation filled it up with toxic waste. Eventually hundreds of homes and a school were all built on several layers of dirt sitting on top of 21,000 tons of toxic waste poured into the spot. When the school building foundation punctured the copper liner, people began to get sick, and around 800 families were relocated over the next couple of years.

CERCLA was enacted two years later to authorize the government to compel responsible parties to remediate toxic sites. Fees were instituted on chemical and petroleum industries to pay if the responsible parties could not, or failed to, clean up. In the aftermath of the worst industrial accident in modern history – occurring at the Dow Chemical /Union Carbide pesticide plant in Bhopal, India, in 1984, which left thousands dead from the gasses leaking out of the plant – the CERCLA law was expanded by the Superfund Amendments and Reauthorization Act (SARA). Title III of this Act, signed in 1986, is the community right-to-know law.

These laws provide important protections to the public and tools to mitigate some extremely damaging assaults on the natural environment. The need for these laws was widely-appreciated at the time and to this day. These fundamental environmental protections and remediation efforts brought back Lake Erie, cleaned up Superfund sites, reclaimed strip-mined areas and made thousands of river-miles swimmable and fishable. These real accomplishments are just not comparable to tweaks in deference to people who just don’t like the idea of farming livestock. The comparison makes this latest skirmish all the more pernicious.

I can’t blame the EPA because this is not their doing. In fact, they seem to be doing everything they can to be helpful, including allowing an annual report of “continuing emissions” instead of daily reporting. They are not requesting that producers monitor or reduce emissions.

A bipartisan group of senators including Sens. Joni Ernst, R-Iowa, Deb Fischer, R-Neb., Joe Donnelly, D-Ind., John Barrasso, R-Wyo., Mike Rounds, R-S.D., Pat Roberts, R-Kan., Heidi Heitkamp, D-N.D., Chris Coons, D-Del., and Tom Carper, D-Del., introduced a bill on Valentine’s Day to protect farmers, ranchers and livestock markets from these additional EPA reporting requirements. In press releases describing the introduction of the Fair Agricultural Reporting Method (FARM) Act, the words “common sense” were used repeatedly.

In the meantime, you will not be shocked to hear that while the EPA estimates that only 44,900 producers will meet the reporting threshold, the U.S. Poultry and Egg Association estimates that 141,000 poultry farms will have to report, and the National Cattlemen’s Beef Association thinks that over 68,000 of its members will be filling out the forms once released. But have no doubt that there will be an inevitable dilution of real environmental warnings to the community that are lost in the noise when you start notifying first responders that there is sometimes a lot of manure on farms with hoofstock or poultry.

 

Cryptocurrencies and blockchain: Techno-gold or fool’s gold?

A group of economic policy experts met at AEI on Monday to discuss the regulatory challenges that bitcoin and other cryptocurrencies pose.

Alex J. Pollock of the R Street Institute started by providing the historical context in which cryptocurrencies have gained popularity. Clemson University’s Jerry Dwyer explained key trends in global bitcoin exchanges and outlined several recommendations for cryptocurrency regulations.

Next, Bert Ely of Ely & Company Inc. highlighted the role that the blockchain technology plays in propagating cryptocurrency and what it means for policymakers. He also discussed the role that speculations play in driving the market value of cryptocurrency and the current flaws in cryptocurrency mechanisms, pointing out that there is no argument for central banks to issue cryptocurrencies.

AEI’s Paul H. Kupiec described the function that currencies have played historically, from ancient Croesus to colonial America. He pointed out that, although cryptocurrencies might represent a financial bubble, such bubbles are in fact frequent in financial history.

 

Congressional Testimony of Paul Rosenzweig: Data Security in the Modern World

The Subcommittee on Financial Institutions and Consumer Credit called a hearing to examine the issue of data security in the financial sector. Senior Fellow Paul Rosenzweig testified in favor of a “light touch” that was based on standard setting and guidance rather than hard regulatory mandates.

Podcast: Grading California’s Wildfire Response

In the wake of California’s recent and devastating wildfires, the state’s legislature has responded with a slew of proposals that would insulate homeowners from the true cost of living in high-risk areas. R Street’s Adams discusses these proposals, and the Golden State’s uniquely problematic system of insurance regulation, with scholars at the Pacific Research Institute.

The Fed as a Piggy Bank?  Of Course!

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The Bipartisan Budget Act passed last week had a little item in it to help government revenues by confiscating $2.5 billion of the retained earnings (they call it “surplus”) of the Federal Reserve Banks.  When they found out about it, the commercial banks, which own all the stock of the Federal Reserve Banks, weren’t happy.

“Critics say the plan is yet another example of Congress turning to the Fed as a source of funding,” the American Banker reported.  It is now “common to use the Fed as a piggy bank,” complained the Independent Community Bankers association.

The Fed as a piggy bank?  Of course, what else?  According to the Federal Reserve’s own press release, the Federal Reserve Banks paid $80.2 billion of their 2017 profits to the Treasury.  In other words, 99 percent of their estimated net profit for the year of $80.7 billion goes to the government to help reduce the budget deficit.  To confiscate another $2.5 billion only increases the aggregate take by 3 percent.

The Federal Reserve Banks have the highest rate of profitability of any bank, with a 2017 return on equity of about 195 percent.  Of course, they are also astronomically leveraged, with assets of about 107 times equity, or a tiny capital ratio of a 0.9 percent.  Almost all of that leveraged profitability goes right into the Treasury, every year.

The Federal Reserve Banks paid aggregate dividends to their shareholders of $784 million in 2017, or less than 1 percent of what they paid the government, which is a greedy business partner, it seems.

The Federal Reserve System is many things, but one of them is a way for the government to make a lot of money from the seignorage arising from its currency monopoly.  The Fed creates money to buy bonds from the Treasury, collects the interest, then gives most of the interest back.  It also uses its money power to buy mortgage-backed securities from Fannie Mae and Freddie Mac, which are owned principally by the Treasury, collects the interest on them, and then sends most of it to the Treasury.

As my friend and banking expert Bert Ely always reminds me, it is easier to understand what is going on if you simply consider the Treasury and the Fed as one interacting financial operation, and consolidate their financial statements into one set of books, clarified by consolidating eliminations.  Then you can see that on a net basis, the consolidated government is creating money instead of borrowing from the public in order to finance its deficits and in order to generate vast seigniorage profits for itself.  The Fed makes a very useful front man for the Treasury in this respect.

The first congressional confiscation of Federal Reserve retained earnings was in 1933.  Then they were taken to provide the capital for the newly formed Federal Deposit Insurance fund.  So as usual in financial history, taking the Fed’s retained earnings is not a new idea.  The Federal Reserve Banks are a politically useful piggy bank, to be sure.

The struggle between objectivity vs. neutrality continues at the Congressional Research Service

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Recently, leadership of the Congressional Research Service and the Library of Congress were presented with a memorandum. It expressed concern that the agencies’ analysts, attorneys, and reference experts were being muzzled a bit.

“We are concerned that CRS risks falling short of its mission if it holds back the independent analysis that Congress has directed us to provide. Sparking our concern, CRS has appeared to avoid reaching conclusions in some topic areas with high potential for political controversy. In some such topic areas, CRS operates as a neutral compiler of facts and opinions, with little of the expert analysis, appraisal, and evaluation of their credibility that Congress requires. CRS also seems to have avoided a few topics or facets of topics almost entirely. Yet these risk-avoidant strategies, while certainly understandable, could in fact increase other risks such as under-utilizing CRS’s valuable personnel; contributing to polarization; and, ironically, inviting a perception of partisan bias. Perhaps worse, given the mission of CRS, is the risk of a slow slide into irrelevance.”

(Disclosure: I was shown the memorandum and signed it.)

This debate is not a new one at the agency. I first saw it erupt back in 2004, when nationally renown senior specialist Louis Fisher was taken to task for expressing his concerns about executive branch encroachments on legislative branch authorities. CRS leadership produced a memorandum directing analysts to produce work that gave the appearance of neutrality, as opposed to objectivity. The former standard amounts to saying “On the one hand X, on the other hand Y.” The latter standard says, “Here are what the facts and analysis indicate.”

Plainly, this dispute within CRS continues. Analysts want to be respected experts who can convey objective analysis to Congress while agency managers fear cuts to the agency’s budget and people losing their jobs. Yet as the January 12, 2018 memorandum makes plain, the stakes are no mere tempest in a Beltway teapot:

“As you know, the current climate of ‘alternative facts,’ ‘fake news,’ conspiracy theories, and declining trust in a common reality poses problems for the United States’ political system. While technological and social trends increase the need for information literacy, people across the political spectrum do not know where to turn for reliable information. Many end up in polarized ‘bubbles.’ These trends threaten democracy, in part by eliminating shared factual grounds on which people and their legislators can debate, compromise, and seek consensus. In this climate, CRS’s mission has never been more vital.”

Legislative support agencies occupy a particularly difficult position these days. The agencies, which include the Government Accountability Office, Congressional Budget Office, Library of Congress Law Library, and CRS, were established to add knowledge to the political process. Make Congress smarter — who could object to that?

As it turns out, plenty of folks can. Knowledge can be threatening. Facts can undermine arguments being made for or against a policy. It is a problem as old as politics. Remember what happened to Socrates when he employed reason to question Athenian conceptions of justice?

The problem of knowledge in politics becomes more acute in the era of hyper-partisanism. Anything one writes might be used by one faction or another as a club to pound the other. Politicians tend to feel besieged and want to control the narrative. So they sometimes lash out at anyone who writes or says anything to contradict that narrative. Last year some members of Congress advocated outsourcing the Congressional Budget Office’s budget scoring duties to private sector think-tanks. Why? Because they were upset about how the CBO tallied an Obamacare repeal bill. Whether this particular score was right or wrong can be debated, but gutting a legislative support agency over a single score is inarguably a gross overreaction.

Exacerbating the challenge further are the perceived stakes: namely, partisan control of Congress. Party control of our national legislature has switched back and forth rapidly since the early 1990s. We have not seen swings like this since the post-Civil War period, notes political scientist Frances Lee. Democrats are out, Republicans are in, then the GOP is out, and later back again. Now the focus is on whether Democrats will reclaim control of Congress after November 2018. One effect of this peculiar state of politics is that each party tends to view nearly everything through the prism of the next election. Which means legislative support agencies’ work too often gets viewed less for its intrinsic value and more as a bother or even a threat.

All legislative support agencies feel the threat of legislative retribution. In the 1990s, GAO had its budget cut 25 percent. The Office of Technology Assessment was zeroed out by Speaker Newt Gingrich in 1995, and its staff let go. By virtue of running Congress’ think-tank, CRS leaders feel especially vulnerable. CRS analysts and reference specialists interact with congressional staff every day. In FY2016, there were:

“more than 62,000 requests for custom analysis and research. The Service hosted more than 9,200 congressional participants at seminars, briefings, and training; published more than 3,500 new or updated reports; summarized more than 6,300 bills; and maintained nearly 10,000 products on its website for Congress, CRS.gov, which received over 1.7 million views. Overall, CRS provided confidential, custom services to 100% of Member and standing committee offices.”

When the Internet began becoming ubiquitous two decades ago, CRS reports went from being hard copies that were read only by a small number of folks on the Hill to the subject of stories in the New York Times. The arrival of the World Wide Web, smartphones, and the bitterly contentious environment on the Hill, as I described elsewhere, slammed CRS. The once insular agency found its staff being trashed by legislators, media, and bloggers. All for doing their jobs. It was never enough for external critics to write, “CRS’s analysis is fair but falls short for the following reasons.” Instead they couched their critiques in terms of CRS being biased or in the bag of one party or the other.

Agency management struggled to respond to this development, which meant anything the agency wrote or said risked setting off a political firestorm. Over the past two decades, CRS leadership has confronted the hyper-partisan, Internet-connected world mostly by trying to hide staff from it. Once upon a time CRS’s experts regularly appeared on panels at academic conferences, wrote for journals and other public media, and spent long stretches working as detailees in the House or Senate. These days, such activities occur much less frequently. As management sees it, the less visible staff are, the less vulnerable the agency is.

While neutrality and invisibility might appear to be rational strategies from the perspective of the agencies’ higher-ups, it is soul-crushing to staff. Nowadays, CRS’s analysts feel pressured to frame everything as “some say this, and some say that” and to shrug in the face of legislators and staff when asked, “What do you think?” (Congressional staff hate such unresponsiveness, by the way.) Being an expert means reaching conclusions. It also means being able to write freely (but responsibly) and follow the facts and data where they lead. For these reasons, CRS has hemorrhaged talent, which is bad for the agency and bad for Congress.

There are no easy answer to this lamentable state of affairs. The Internet is not going away, and hyper-partisanism shows no signs of flagging. Hostility to facts and expert opinion is an ineradicable fact of life. Things could improve if both legislators and CRS management stepped back and took deep breath.

The next Congress would do well to adopt an internal rule that legislators and staff will not publicly berate legislative support agencies or accuse them of being biased. Certainly, civil servants can get things less than 100 percent correct. But so can legislators. That they do explains why CRS and other agencies exist to begin with. Hence, if a legislator thinks a CRS report is objectionable, then he or she should put out a press release politely taking issue with the analysis’ framing or methodology, and leave it at that. If the critique is sound, sympathetic media will report it and the agency itself will take note and do better next time. This is not rocket science, it is civility. Besides, if a legislator’s case is so weak that they fear a CRS analysis might sink it, well, they probably should rethink what they’re advocating.

CRS leadership, for its part, needs to learn to better read the signals coming from Capitol Hill. If a staffer calls to grouse about a report, there’s no reason to pull a fire alarm. Even during the budget slashing years of Speaker Gingrich, CRS’ budget was never axed. Indeed, so long as agency leadership maintains friendly relationships and an open line of communication with its authorizing committees and appropriators, there is no way one cranky legislator (or even a bunch of them) is going to hurt the agency. CRS leadership needs to be confident on this count, and to mill that confidence into a clear message to CRS staff: “We have your back.” Analysts and reference experts at CRS need to believe that, lest they continue to self-censor themselves. Finally, CRS management also should recognize that its reputation on Capitol Hill very much depends on the agency being seen as useful and objective. That means CRS experts need to be permitted to write clearly and to share their objective assessments–even if they are not neutral.

 

ICYMI: Top reads on Congress

Congressional capacity, retirements, parties

Matt Glassman, “Why Congress Doesn’t Always Do the Right Thing,” New York Times:

“Will arguments to “do the right thing” persuade lawmakers? Don’t hold your breath. Such exhortations are rarely heeded by politicians because the structural incentives of the institution usually trump policy considerations.”

James Wallner, “When hatred of Trump leads to disdain for debate,” Washington Examiner:

“By trying to delegitimize those with whom they disagree, commentators like Cohen shrink the political sphere to deny their opponents the right to participate in the first place. In the process, they conveniently sidestep the need to engage in a substantive debate over what’s acceptable presidential behavior or what constitutes good public policy.”

David A. Hopkins, “Don’t Expect Much Legislation from Congress in 2018,” Honest Graft:

“Even during normal political times, the internal operation of Congress gets much less than its rightful share of attention from the news media and public. With Donald Trump as president? Forget it. But amidst all the other drama of this eventful week, a few important clues emerged about the road ahead for Congress in 2018. They all seem to point in the same direction: to a relatively unproductive legislative year.”

John T. Bennett, “Nunes Memo Aftermath Could Stifle Legislative Agenda,” Roll Call:

“The memo’s release and the Democrats’ fiery response adds a flammable dispute to an ever-growing pile of political kindling only weeks into a midterm election year with control of both chambers in play.”

Tara Golshan, “The simple explanation for all the Republican retirements: Congress sucks,” Vox:

“But there are some overarching trends worth mentioning: Congressional leadership has increasingly centralized decision-making away from individual lawmakers, and there’s a growing understanding that House Republicans could slip into the minority after this midterm election cycle. Paired together, lawmakers are likely asking themselves the point of being in the Capitol, said Jason Roberts, a political scientist at the University of North Carolina Chapel Hill who studies Congress.”

Heather Caygle and John Bresnahan, “It will be an intraparty war,” Politico:

“A stealthy discussion is already underway within the Democratic Caucus, particularly among members whose only experience in Congress is in the minority. Assuming Pelosi either leaves on her own or is pressured to step down, her exit would trigger a messy battle between the party’s old guard, led by House Minority Whip Steny Hoyer (D-Md.), and the party’s younger members, represented by House Democratic Caucus Chairman Joe Crowley (D-N.Y.).”

Alexander Bolton, “Republican agenda clouded by division,” The Hill:

“The looming question, however, is whether McConnell and other GOP leaders are willing to risk a backlash from the conservative base by cutting deals with Democrats — especially with primary elections quickly approaching. Some suggest the answer is to let senators legislate on the floor, something McConnell has vowed to do on immigration.”

Jennifer Shutt, “The Appropriator in Winter: Frelinghuysen’s Last Stand,” Roll Call:

“The House Appropriations chairman is going out amid a blizzard of Republican infighting; lackluster presidential approval dragging down many of his “blue state” GOP colleagues; the increasing polarization of the electorate; and greater influence of Southern and Western conservatives at the expense of Northeastern moderates like himself. And then there is the long, slow decline of the appropriations process, which lost its sheen for many when earmarks were banned, discretionary spending was slashed to the bone and “government by CR” became the rule rather than the exception.”

Sharon LaFraniere and Nicholas Fandos, “How Partisan Has House Intelligence Panel Become? It’s Building a Wall,” New York Times:

“To committee members of both parties, the division of one room into two is emblematic of how far the panel, a longtime oasis of country-first comity in a bitterly divided Congress, has fallen since it began its Russian inquiry last year. Any pretense that committee members will come together to get to the bottom of that matter – or any other – has disappeared.”

Joe Lieberman, “We’re well beyond partisanship, our national government has lost civility,” The Hill:

“However, today we confront a more tempestuous political environment. The basic rhythms of the national legislative process — the norms that prompted Republicans and Democrats to work together in the service of the greater good — are gone. Our democracy is proving unable to meet the challenges of the moment. We face real trouble ahead.”

Sam Rosenfeld, “The Polarizers,” (podcast) New Books Network:

“Rosenfeld tracks the people—the Architects in his subtitle—who initiated changes in party rules and institutions that facilitated the development of the parties. The book is rich in historical details and meaning for our current political moment.”

GAI at Georgetown University, “Congress, Two Beers In,” (podcast)

GAI’s senior fellows discuss congressional politics on a weekly basis.

Process

Ryan Kelly, “‘It’s the Custom of the House to Hear the Leader’s Remarks’Roll Call:

“It appears John Boehner set the precedent for Minority Leader Nancy Pelosi’s remarks on the House floor today. Back on June 26, 2009, then-Minority Leader John Boehner talked for over 20 minutes and received a ruling from the chair, when Democrats tried to interrupt him, that “it’s the custom of the House to hear the leader’s remarks” during morning hour speeches. “

Jordain Carney, “Senate headed for freewheeling debate on immigration bill,” The Hill:

“The Senate will be starting from scratch next week when it begins debating immigration legislation on the floor, a key choice that could impact the outcome. Senate Majority Leader Mitch McConnell (R-Ky.) said Wednesday he will use a nonimmigration bill as the starting point for floor debate, a decision in line with a weeks-long promise that the process will be “fair.””

Dean DeChiaro, “Senate Immigration Debate to Begin With Blank Slate,” Roll Call:

“Senate Majority Leader Mitch McConnell said Wednesday he will kick off next week’s debate over the fate of 690,000 “Dreamers” with a shell bill that does not include immigration-related language. The debate “will have an amendment process that will ensure a level playing field at the outset,” the Kentucky Republican said on the Senate floor.”

David Winston, “Opinion: To Filibuster or not to Filibuster,” Roll Call:

“To filibuster or not to filibuster. That is the question and only Senate Democrats can supply an answer. The choice is clear. More uncertainty for the country and putting economic growth at risk — or a willingness to accept compromise neither side may like but both can live with.”

Rachel Bovard, “Government shutdowns are the dysfunction of new Senate norm,” The Hill:

“Shutdowns, once reserved for dramatic standoffs and last resorts, are now becoming a normal way the Senate negotiates. That shutdowns have become so predictable is a reflection of the dysfunction of the Senate itself.”

Theresa Hebert, “Working with Coalitions in Congress,” Quorum:

“In Congress, little can be done alone. Every member in the House and Senate is part of a state delegation and a variety of committees and caucuses. Here is a glimpse at the groups Rep. Karen Bass (D-CA-37) is a part of in the House of Representatives and tips for how your organization can work with the respective coalitions.”

Budget, debt limit, earmarks

Philip Wallach, “Americans would have a patriotic duty to ignore a debt ceiling crisisWashington Post:

“For either party, consciously choosing to starve the nation of needed funds to make some point (even a broadly popular one such as the undesirability of enormous government debt) would incur huge political costs, much greater than any government shutdown. Members of Congress would have to be politically suicidal to keep up a standoff in which President Trump and his administration insist on the urgency (indeed, the national security imperative) of raising the debt ceiling quickly and without strings attached, so there would be every reason to expect a quick defusing of the crisis.”

James C. Capretta, “Scrap the U.S. Debt Limit Before It’s Too Late,” Real Clear Policy:

“The federal government has a major debt problem, but the solution is not the current statutory limitation on government borrowing, which is counterproductive and could inadvertently cause permanent damage to the U.S. economy. The limitation should be scrapped immediately and replaced with a less risky modification to the budget process, one that encourages political leaders to focus on long-term deficit reduction.”

No Labels, “Stop Continuing Continuing Resolutions,” Real Clear Policy:

“Lawmakers will likely pass another short-term spending bill — the fifth since September 30 — to keep the government functioning. But there is a renewed sense of urgency that a final budget, and not just another continuing resolution, is needed. While many lawmakers have been involved in budget negotiations, a few have had an outsize influence.”

Jennifer Shutt, “Five Continuing Resolutions? Par for the Course on Capitol Hill,” Roll Call:

“Should it be signed into law, the fifth stopgap measure — introduced late Monday — would expire on March 23. At that point, lawmakers would be 174 days into fiscal 2018, with none of the 12 appropriations bills enacted on time. But the fact is veteran lawmakers like Lowey, who first entered the House in 1989, and even newer members such as those elected in the tea party wave of 2010 that ushered in GOP control, have learned to live with “governing by CR.””

Casey Burgat, “Examining the Case for Biennial Budgeting,” R Street Institute:

“Biennial budgeting has been suggested for decades as a potential reform that would help alleviate many of the ills within the broken congressional budgeting process. This policy paper takes stock of the proposed advantages and criticisms of transitioning the federal government to a biennial, rather than annual cycle. Ultimately, I argue that a biennial budgeting model may provide some marginal benefits to a clearly dysfunctional budget process, but will do little to solve the more pressing problems, such as true spending priority differences between political parties.”

Tom Schatz, “How Congress Can Restrain the Executive Branch Without Reviving Earmarks,” The Federalist:

“The answer to members’ complaints about their supposed lack of control over executive branch spending is greater oversight and renewed efforts to authorize programs, not earmarks. There is no comprehensive list of oversight hearings or their outcome, or any comparison from one Congress to the next. Oversight hearings tend to repeat the same subject matter. Joint hearings within the House are rare, and joint hearings between the House and Senate are extremely rare.”

Congress and sexual harassment

Cristina Marcos, “House passes landmark bill to overhaul sexual harassment policy on Capitol Hill,” The Hill:

“The House passed landmark legislation on Tuesday to overhaul Capitol Hill’s sexual harassment policies following a string of recent revelations that multiple lawmakers engaged in misconduct. Passage of the bill by a voice vote means it now heads to the Senate, where its future is uncertain but could be helped by momentum from the “Me Too” movement highlighting sexual harassment.”

Michael Stern, “Sexual Harassment and the Office of Congressional Ethics,” Point of Order:

“My purpose here is not to analyze CARA’s proposed reforms or take a position on the bill. I merely observe that, on its face, CARA seems to be a textbook example of how “regular order” is supposed to work. Congress identifies a problem, holds hearings, and proposes a legislative solution, preferably reflecting a broad consensus within the committee of jurisdiction. CARA in fact is cosponsored by every member of the Committee on House Administration. It also very bipartisan, with 14 Republicans and 20 Democrats listed as sponsors or co-sponsors.”

Congress and big data

Michael J. Gaynor, “Can big data predict which bills will pass Congress?Washington Post Magazine:

“In 2013, Tim Hwang and his childhood buddies Jonathan Chen and Gerald Yao came up with what they believed was a better way. The result was a company called FiscalNote, which aims to use data to shed light on the hidden components that help a bill become a law. FiscalNote’s software crawls government websites to pull data from over 1.5 million active bills across Congress, 50 state legislatures and 9,000 city councils — and seeks to predict the likelihood of each of those bills passing.”

Jennifer Victor, “Use big data to explain politics rather than predict it,” Vox:

“When social scientists use big data to engage in analyses of this type, the primary goal is to explain rather than predict. Prediction is fun but may not allow us to understand the underlying causes of a phenomenon or outcome. This is where the dissatisfaction comes in. Using the data to focus on developing a clearer understanding of how the world works, how humans interact in it, and how these interactions produce outcomes, can provide enlightenment. Ultimately, this enlightenment can arm us with higher quality information than prediction alone.”

Beth Simone Noveck, “Congress is Broken. CrowdLaw Could Help Fix It,” Forbes:

“Around the world, there are already over two dozen examples of local legislatures and national parliaments turning to the internet to improve the legitimacy and effectiveness of the laws they make; we need to do the same here if we are to begin to fix congressional dysfunction.”

 

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