If a baseball player was on a hot home run streak, and faced a pitcher who threw nothing but fastballs straight down the plate, wouldn't you be upset if the slugger let two perfectly good pitches go without swinging for the fences? If the batter struck out, would you walk out in disgust, or wonder which bookie paid off that batter?

The two issues dominating the "fiscal cliff" discussion have been the left's push to end the Bush tax cuts for the wealthiest 2 percent, and the right's push to cut Social Security and Medicare benefits, which they and the mainstream media punditocracy dubiously refer to as "entitlements." But the Democrats are whiffing on the biggest issue that hasn't gotten any press -- corporate tax loopholes and Wall Street speculation. The only "entitlements" we should be talking about cutting are the billions of dollars in corporate profits we're allowing to be offshored to tax-free bank accounts in the Channel Islands, and Wall Street traders making risky, tax-free speculative bets. Whatever bad deal this lame duck Congress makes, can and should be undone by the 113th Congress.

It would be a home run for Democrats like Alan Grayson, or independents like Bernie Sanders, if they were to introduce a bill called the "Entitlement Reform Act of 2013," which could bring in the $1.5 trillion in corporate profits booked offshore but held in American banks and tax a third of it, and institute a $0.03 sales tax on risky Wall Street trading like the kind done in the derivatives and mortgage-backed securities markets. The first reform would be a $500 billion revenue boost over a ten-year period, the second would bring in between $350 billion and $1.5 trillion in a decade. And the best part would be that both of those reforms would only affect the top 1 percent of the top 2 percent while simultaneously providing enough money to both shore up the deficit and create new jobs.

Some pragmatists are arguing that the Republicans' expected caving on the Bush tax cuts for the wealthy means that the Democrats will have to "give" them something in return. Since the expected "gift" is entitlement reform, the Democrats can simply answer with their dubiously-named legislation that targets the billions in corporate welfare that we give out to corporate tax dodgers and Wall Street speculators. If the Republicans are expecting us to cut back health care and pensions that people have been paying into their whole lives with each paycheck, in return for agreeing that the richest among us should pay a proportional share of their income in taxes like everyone else, then we should rightfully say, "tough luck."

When someone says "entitlement," I immediately think of the spoiled 15-year-old son of a Wall Street banker walking around a Bentley dealership, eagerly picking out their own birthday present. What I don't think of is a meager check that retirees need to meet their basic living expenses, which greedy CEOs and Wall Street bankers want for their own benefit.

If Democrats want to prove to us that they aren't the bought representatives of Wall Street and corporate America, they need to not only hold fast on Social Security and Medicare, but they need to stop whiffing on the word "entitlements," make that word synonymous with corporate and financial greed, and knock this "fiscal cliff" fastball out of the park.

If Republicans want their political opponents to promise them something, the only promise we should make is this -- the Republican Party won't be rendered completely irrelevant until after the 2014 midterms. Deal?

A BROAD COALITION OF DONORS -- including casino giant MGM, Delta Airlines, a Washington nightclub and thousands of individuals across the country -- together gave nearly $6 million to the campaign to legalize same-sex marriage in Maryland, providing a financial advantage that supporters say was critical to the effort's success.

Marylanders for Marriage Equality, the main group working for approval of Question 6 on this month's ballot, raised $5.9 million -- more than twice as much as opponents of the measure, according to campaign finance reports filed this week. The money paid, in part, for a stream of television ads credited with helping to build support for the measure.

Voters approved the law 52 percent to 48 percent, and marriage certificates will be issued to same-sex couples in January.

"Donations came from a cacophony of places," said Fred Sainz, a spokesman for the Human Rights Campaign, a national gay-rights group that helped in Maryland. "Small donors. Donors via mail. Donors via the Internet. Our opponents do not have that momentum."

Supporters of the measure reported nearly 15,000 checks from individuals and organizations. Opponents drew a fraction of that, with about 2,300 donations. Each side received some six-figure checks, but proponents relied less heavily on large gifts. The average contribution on behalf of gay marriage was $402, while the average check from opponents was $1,037.

The large number of contributions -- on both sides -- distinguishes Question 6 from the gambling expansion measure also on the Maryland ballot. In that case, two huge casino companies with a financial stake in the outcome funded most of a $93 million battle, won by supporters of expansion. It was the most expensive political campaign in Maryland history. Unlike contributions to candidates for office, gifts to ballot campaigns are not limited by law.

All of the state's ballot committees were required to file their final campaign spending reports Tuesday night.

Supporters of the same-sex marriage measure raised almost half their money from Maryland donors -- with thousands of small house parties held nightly in September and October. Opponents relied more heavily on out-of-state giving, with 30 percent of their funds coming from the Free State.

"We knew that we were going to have to do a lot of this on our own," said Josh Levin, campaign manager for Marylanders for Marriage Equality. "We went out with an eye on developing the donor base in the state -- reaching out to folks who had a personal interest -- and did very well that way."

Frank Schubert, a consultant who managed the campaign against legalization of same-sex marriage in Maryland and three other states, blamed the fundraising gap on what he called a "sustained campaign of intimidation and harassment" against those who support "true marriage."

"It takes no courage to contribute to our opponents -- it's the most politically correct thing imaginable," Schubert said.

Contributors in support of same-sex marriage included Baltimore lawyer Peter Angelos, who gave $50,000. Angelos drew national attention for his contributions in this year's election, donating $1.5 million to support President Barack Obama and other Democratic lawmakers.

MGM Entertainment, which hopes to build a casino in Prince George's County, gave $75,000 to support same-sex marriage in Maryland. A spokesman for the company described the check as a "modest contribution" and noted that MGM has given previously to gay-rights causes.

The 9:30 Club, a concert venue in Washington, contributed $25,000 in support of the measure. The owners also held a fundraiser in September featuring "American Idol" star Adam Lambert.

"Although we historically don't get involved in political causes, I cannot stand by and watch discrimination be disguised as politics," said co-owner Seth Hurwitz.

Delta Airlines gave $1,000. Ebay, the auction website, sent $2,000 -- a spokeswoman said the check was "consistent with our core values of nondiscrimination, diversity and inclusion."

The Maryland-based biotech firm United Therapeutics Corp. gave $100,000. The company's founder, Martine Rothblatt, is transgendered.

Several unions contributed big dollars in support of the measure. The Service Employees International Union gave $200,000. The American Federation of State, County, and Municipal Employees and the American Federation of Teachers gave $100,000 each.

Politicians also offered support, with Rep. Chris Van Hollen giving by far the most. The Montgomery County Democrat wrote a $30,000 check from his Van Hollen for Congress account. Gov. Martin O'Malley, who sponsored the same-sex marriage legislation in Annapolis, gave $1,000 from his new superPAC. Many of the House and Senate co-sponsors of the legislation also donated.

Top Annapolis lobbyists and key staff members contributed, too, underscoring the deep personal support the same-sex measure had from the state's political elite. Checks came from top aides of O'Malley and House Speaker Michael E. Busch and from those of Senate President Thomas V. Mike Miller, who voted against the measure in the Senate.

State Sen. Bryan Simonaire was among the few Maryland lawmakers who donated to the effort opposing the measure. The Anne Arundel Republican was a leading opponent of the same-sex marriage measure when it was before the state legislature this year.

National advocacy groups contributed heavily on each side. The Human Rights Campaign donated $1.1 million to the effort to pass the measure. The National Organization for Marriage gave $1.2 million to the Maryland Marriage Alliance, which opposed Question 6.

Major contributions for opponents came from Roman Catholic groups, including $350,000 from the Knights of Columbus and dioceses in Arlington, Va., and Wheeling, W.Va.

William E. Lori, the Archbishop of Baltimore, gave $2,000 from his personal account. He gave "as a citizen of Maryland, a taxpayer and a believer in upholding marriage as between one man and one woman," said spokesman Sean Caine.

The donations by those who opposed the measure were not enough to get their message out, said the Rev. Derek McCoy, head of the Maryland Marriage Alliance. "A little bit more money, for sure we would have won," he said.

He said the national donor base was spread too thin because of gay marriage-related initiatives in three other states. He said his group's message was drowned out by ads for the other ballot questions in Maryland and that his side faced a formidable opponent in O'Malley.

"The governor was behind it," McCoy said, referring to the campaign in behalf of the law, a top O'Malley priority in Annapolis. "He did fundraising calls. He was calling people."

The total raised -- about $8.3 million by the main groups on both sides of the marriage issue -- paled in comparison with that spent by the opposing sides of the gambling expansion measure. That question attracted more than $93 million, mostly from two warring casino companies. The total is more than was spent on the past four Maryland gubernatorial races combined

MGM put up $41 million to support the gambling expansion proposal, while Penn National Gaming -- which owns a West Virginia casino that stands to lose customers to Maryland -- spent $44 million to oppose it.

Supporters of Maryland's Dream Act, a measure giving illegal immigrants access to lower in-state tuition, raised $1.7 million in their successful effort. The measure, Question 4, passed with nearly 60 percent of the vote and drew no formal opposition.

Contributors in support included Domino Foods, the Baltimore-based sugar company, which gave $100,000.

Stu FitzGibbon, the company's refinery manager, said: "In a nation of immigrants and a company that has grown in that tradition, we believe that an education is the one thing we give our children that cannot be taken away."

annie.linskey@baltsun.com

twitter.com/annielinskey

Baltimore Sun reporter Michael Dresser contributed to this article.

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Lest F.D.R. rise up from his grave and begin to haunt me, allow me to begin by putting that headline in the proper context. Correct capitalization should really be "the new deal" -- so as to not cause confusion with historical references. The words are capitalized above merely because they are in a title, and for no other reason.

By this point, even "scare quotes" are not necessary for talking about the upcoming fiscal cliff. The term has been repetitively bandied about in the media world so thoroughly that it is (at least for the time being) self-evident. However, what is lacking from the inside-the-Beltway crowd is some sort of snappy moniker for the (lower-case!) new deal that Congress and President Obama are now working towards. Whether the deal eventually happens or not, it's time to give it a name. I'm going to begin using a rather mundane name for this deal, in the hopes that it goes viral: the "Grand Bargain II" or (for those with an itchy Twitter finger) "GB2." The original "Grand Bargain," a year and a half ago, did not actually happen between John Boehner and the president but it got named all the same, so I think it'll be fine to just recycle it. But I do not write today merely to speak of political branding. Just wanted to get it out of the way so I have something to use for the rest of this article, that's all.

Instead of focusing on whether a GB2 deal will be struck between Obama and the House Republicans, or even when such a deal might be finalized, I think far too few pundits are focusing on what the deal might contain. So I thought I'd peer into my cracked and foggy crystal ball and make an attempt at predicting which way the GB2 chips are going to fall. Please note, though, that I'm not endorsing (or condemning, for that matter) any of the following outcomes, I'm just attempting to read the political language emanating from the principal negotiators involved and draw some likely conclusions of what is likely going to be in such a deal. With that caveat firmly in place, here's how I see things working out.

 

Sequestration

This is really the gorilla in the room that everyone seems to be ignoring. While there is much talk of taxes and entitlements, few are addressing the budget-cutting trigger which was the only pathetic result of the earlier congressional "supercommittee." These cuts are known in Washington-speak as "sequestration."

I'm predicting that this can is going to be kicked down the road (in some fashion or another) to the incoming Congress. While some spending cuts may be part of GB2, most of the military and social program cuts (other than entitlements, which I am addressing separately, below) will quietly be shelved for a period of months, if not a full year. Oh, sure, there'll be talk of "triggers" and dire consequences, but my guess is that they'll be about as substantial as swamp miasma.

Both parties will decide that punting on the sequester cuts is the right thing to do politically, and they will hand the problem off to the next Congress. Which will bring up talk of a "Grand Bargain III," of course, but we're getting ahead of ourselves.

 

Debt ceiling

This is a much more immediate problem. President Obama and the Democrats obviously want a debt ceiling raise to be part of the GB2 deal. Republicans, equally as obviously, do not. The reason Republicans are fighting against it is that they know that it'll just force all the budgetary issues to be discussed all over again in the next few months. The debt ceiling will officially be reached some time around the first of the year, but with Treasury accounting tricks, the real crisis won't hit for at least a month or two down the road. Republicans will want another bite at the budget apple after GB2, because they think they will have more leverage in this fight.

They're right, too. Right now, if Congress does nothing, the Bush tax cuts (more on them in a moment, too) will go up automatically -- which gives Democrats lots of leverage to get something done. But with the debt ceiling, if Congress does nothing, then Obama will (the Republicans figure) be the one to pay a political price. Whether they're right or not, it's hefty political leverage to wield.

But I remain optimistic. Obama is going to use a giant threat -- in private, most likely -- to force the Republicans to accept a debt ceiling hike. The president will calmly explain to the Republican leaders that have two -- and only two -- choices: either raise the debt ceiling as part of GB2, or Obama will personally declare the debt ceiling itself null and void and utterly meaningless (using what has been called "the Fourteenth Amendment option"). So Congress can either raise the debt ceiling as part of the deal, or the entire issue will be taken away from them permanently. Republicans may seethe (this is why this bargaining chip will likely be played in private, to allow Republicans to save face in public), but they will in the end swallow this pill. The talking point from the White House will be: "We're not going to do this all over again, a month from now."

 

Taxes

There are quite a few details in the tax portion of the fiscal cliff. Most of the attention has been on the Bush tax cuts expiring for the wealthiest earners, but there are a lot of chips to bargain with that haven't received as much media or public attention.

The Alternative Minimum Tax problem will be solved -- but only short-term, for a year or possibly two. This is an enormous lie that both parties are complicit in foisting on the public, for the purposes of making the 10-year budget deficit projections look much smaller than reality. Neither side's going to want to open up this can of worms. Instead they will both agree to do what they always do on the issue -- fix it for a year, and kick the can down the road one more time. This is a shame, because honestly fixing this tax would truly be the way to solve the problem of taxing upper-income folks fairly. But it's not going to happen.

One big victory for Republicans will be raising a tax (yes, you read that correctly). For the past two years, Obama has gotten a "payroll tax holiday" for all American workers which (unless you make six figures a year) has meant an automatic two percent raise in your paycheck. This is going to end on New Year's Day. Even though it is a tax cut for everyone, Republicans hate it because Obama's for it (that's as near as I can figure), so Obama will allow them to claim victory on the issue. This will mean the "holiday" will be over, and everyone will get hit with a small tax hike beginning immediately.

What Obama will get out of this phase of the bargain will be the continuation of all the minor parts of the "Bush tax cuts" -- increased credits and deductions, for instance. These may be limited to those making under $250,000 a year, but they will continue. The other thing Obama will get is a big rise in the estate tax (what Republicans call the "death tax") -- which was one of the gifts Bush gave to the stratospherically-wealthy in his original tax cut package. Estate tax rates will go back to what they were under Clinton. Taxes on dividends could go either way. If the Bush tax cuts expired, taxes on dividends would go up by five percentage points. If this tax break is continued, it may be phased out for the over-$250K folks.

The big question on taxes, however, is what to do about the Bush tax rate cuts. This is currently the central part of the argument, at least in the media. Obama wants the Bush tax rates to continue for 98 percent of earners, and have the top two percent revert to the Clinton-era rate. Republicans seem adamant about not raising anyone's tax rate, and instead limiting deductions and loopholes for the wealthiest earners.

The 98 percent will be taken care of -- that's as close to a sure bet as you can make about GB2. Whether it happens before or after the first of January is still an open question, but when the deal is struck, it will continue the Bush tax rates for everyone's income, up to $250K.

Both sides in this fight have drawn rather bright and well-defined lines of battle. Obama has repeatedly issued veto threats for any bill which does not raise tax rates on the top two percent. Republicans have made what Harry Reid calls "happy talk" about "raising revenues," but they appear to have dug in their heels on "raising tax rates." Especially in the House. This is going to come down to the question of what John Boehner can sell to enough House Republicans to pass a bill. I could see a compromise being worked out on this one, something along the lines of "the tax rate for the top incomes will rise -- but not up to where they were under Clinton -- while deductions for the over-$250K set will be limited in some way." There's going to be some awfully creative accounting on this question, no matter how it gets resolved -- that's my guess. This way, both sides will be able to claim minor victories on the issue to their base.

 

Entitlements

Republicans are pushing hard for large cuts to the big three social programs -- Medicare, Medicaid, and Social Security. Democrats are pushing hard to exempt all three from any cuts whatsoever.

Social Security will not be touched. This round goes to Obama. If it changes at all, the only change will be raising the "cap on earnings" far above where it stands now (only roughly the first $110,000 anyone makes is taxed currently -- which is an enormous tax break for the wealthy, right there). However, I don't really expect even this to change. Obama will stand firm on Social Security, and Republicans will give up fighting on the issue.

Medicare and Medicaid are another story, however. Chuck Obamacare into that category, as Republicans are insisting. And there's always the yearly "doc fix" (see comments above, on A.M.T. yearly "fixes"). This is where Republicans are going to get some concessions from the Democrats. Hopefully, Democrats will be the ones to write the terms of the cuts, so that benefits to beneficiaries are not impacted, but in some way or another health care spending is going to be cut. Perhaps Democrats can get creative, and demand that Medicare Part D (the Bush "prescription drug benefit") be allowed to negotiate volume discounts from drug companies -- which would be a minor Democratic victory, in the midst of a Republican win. I do think these cuts will stop short of raising the eligibility age for Medicare, but I could easily be wrong about that.

Republicans are going to have to have something in GB2 that they can sell to their House members, and to enough senators to get the bill passed. This is where Obama's going to cave, and allow cuts to be made. This will allow Obama to say he has compromised and position himself as cutting a "centrist" deal. Perhaps he'll get one final bargaining chip out of the deal and continue unemployment benefits, but most likely not.

 

There's going to be pain all around in whatever deal is struck. Most Americans are going to be directly impacted in one way or another by whatever bargain is made between President Obama and congressional Republicans. Obama's got most of the leverage on his side, including the fact that he just won a rather impressive election victory and he currently has a higher job approval rating than he's had since Osama Bin Laden died. The biggest leverage is the deadline of New Year's Day, but I still think it's too early to tell whether a "Grand Bargain II" will be struck before or after the fiscal cliff is reached.

Perhaps the GB2 will be finalized before Congress goes home for the holidays. Perhaps America will go through a "Wile E. Coyote moment" where we dash off the cliff and stand in midair for a moment before realizing that there's nothing under our feet but air. Perhaps the GB2 deal won't be struck until we're on our way down. However it plays out, I've laid out what I consider to be the most probable outlines of such a deal. Once again, I'm not advocating any of these as solutions, I'm merely predicting which outcome is most likely, given the facts on the ground and the way the players on both sides are talking about things in public at the moment.

 

Chris Weigant blogs at:

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Charter schools are about to get a reality check.

As someone who has observed the breakneck pace of the growing charter school movement up close, Greg Richmond, who leads the National Association of Charter School Authorizers (NACSA), is taking a step back.

"We didn't start this movement in order to create more failing schools, but that's what we have," Richmond told The Huffington Post. "Hundreds of them."

On Wednesday morning, Richmond will join New Jersey Schools Commissioner Chris Cerf and California charter schools advocate Jed Wallace at Washington D.C.'s National Press Club to announce a new campaign, "One Million Lives," that aims to crack the whip on the duds.

The campaign will focus on getting states to adopt rules that make failing charter schools close automatically, hold charter authorizers accountable for their schools' performance, and revamp their authorizing bodies so they become more professional. Initial allies include organizations and philanthropies that have, until now, focused on growth -- rather than quality -- in the charter sector.

Charter schools are publicly funded but independently run, and often admit students via lottery. Proponents such as the Obama administration advocate for charter schools in the belief that educational opportunity should not depend on zip code, and that running schools without regulations -- without district-imposed curricula or mandatory union representation -- gives schools more room to innovate and succeed, unencumbered by bureaucracy.

But critics have long claimed that the schools siphon money away from public schools, and a steady stream of evidence has shown that, on average, charter schools do not outperform traditional public schools. NACSA found that between 900 and 1,300 charter schools are performing within the lowest 15 percent of schools within their state.

Because of results like this, some say an initiative like One Million Lives is long overdue. About a year ago, several charter school supporters told HuffPost that the movement needed to check itself, since it would be hard for politicians to continue advocating for funding these schools without definitive results, and with so many underperforming schools continuing to operate.

"We've been talking about this for a number of years and still there are hundreds of failing schools in the country," Richmond said. "We have to switch gears from the rhetoric and make it reality."

Most recently, he added, education policymakers have been concerned with low charter school closure rates. According to his organization's survey, two years ago, 12 percent of charter schools up for renewal were shuttered; the next year, that number fell to 6 percent. These numbers were particularly startling because they indicate that charter schools aren't holding up their end of the bargain: namely, increased flexibility in exchange for more accountability. New survey findings released Wednesday, it should be noted, show that the rate increased the following year.

Most notably, philanthropic groups that have attracted citicism for supporting massive charter growth -- a move that often has them accused of "destroying public education," as Richmond put it -- are getting behind the cause. Richmond said the initiative has significant support from the Gates, Walton, Robertson and Dell foundations.

Other initial allies include Cerf, who, in a statement, said the focus on closures "is precisely what the exchange of autonomy for accountability means -- the core idea inherent in charter schools."

Michelle Rhee, a former Washington, D.C. schools chancellor, also praised the campaign.

"If we are going to really help kids succeed, every school entrusted with public money ... must be held accountable to the families they serve and the taxpayer for high standards and achievement," Rhee said. "We need to promote better authorizer practices and stronger state policies to achieve a higher quality of charter schools and, at the same time, set clear protocols for closing chronically failing schools."

But even as the campaign launches, some states appear to be continuing down a path that prioritizes charter school growth over quality, threatening to create legions of new underperforming schools. The Michigan state legislature is currently weighing a bill that would expand charter schools further by allowing basically anyone to start one of these schools, with few safeguards for quality or experience.

"It provides no assurance of quality," said Amber Arellano, who heads the nonpartisan advocacy group EdTrust Midwest. "This is a reckless gamble that threatens the very future of our students."

Mona Charen, NRO
Post-election season is a time for healing, for putting aside the rancor of a long campaign and rediscovering what unites us. It has not been that way this year.Prudence, one would think, if not generosity of spirit, should impel Democrats to be magnanimous in victory. Romney did receive about 48 percent of the vote. A little modesty among the winners would seem to be in order.Instead, the gloating has been extravagant. Worse, liberals have gorged themselves on the same junk food they enjoyed during the campaign and cannot seem to resist under any circumstances -- slandering their opponents....

On Nov. 6, the American people overwhelmingly voted for a vision of equity and shared responsibility, and for continuing the progress that we, as a nation, have made. How we got in this economic mess is no longer up for debate. Who leads us toward prosperity is no longer up for grabs. The resounding message from voters this election has been compromise -- and whether they can avoid the impending "fiscal cliff" will be the first test for our policymakers.

Last August, Congress tried to tackle the runaway national deficit and passed the Budget Control Act of 2011. That law required Congress to develop a plan to reduce our deficit, but that if legislators failed in this task, the law triggers automatic spending cuts and increases in federal taxes. That's where we are today. If Congress doesn't come together over a plan to reduce the nation's deficit by Dec. 31, 2012, draconian cuts in domestic and defense programs will kick in -- cuts so painful that no policymakers in their right minds would allow the American people to endure the economic hardships that are sure to follow.

Numerous economic projections, including reports by the Congressional Budge Office and the Tax Policy Center, have concluded that the fiscal cliff will mean higher taxes and fewer services for almost every American family. It will mean skyrocketing unemployment rates and a severe slow down in economic growth that will undo any progress made in recent years.

Low- and middle-income families, many of them Asian American, who are already struggling in this recession will have no choice but to face more financial ruin. After all, nearly 11 percent of Asian Americans live below the federal poverty line, and 14 percent of Native Hawaiians and Pacific Islanders are straining to make ends meet.

To do nothing is not an alternative. American families will suffer too much. Without a compromise, most households will see a tax hike for the first time in sixty years. Imagine a family of four that makes less than $25,000 a year, having to pay nearly $1,250 in new taxes. Or a small business forced to pay nearly 40 percent in new taxes. Both scenarios are unthinkable. Nearly 1.5 million Asian Americans are business owners, and many have benefited from the tax cuts made by President Obama in the last four years. Additional taxes will only lead to layoffs and furloughs just when small businesses are recovering and the economy is gearing up.

As Congress stares down the fiscal cliff, I hope its members can finally put politics aside and in the spirit of compromise demonstrate true leadership in our country's time of urgent need.

Both sides have signaled that there is common ground to build on, such as making some spending cuts to reduce our deficit and raising revenues that will help grow our economy. The solution falls on the side of a compromise that raises revenues, recaptures the essence of government efficiency and protects America's safety nets for our most vulnerable communities. Communities like the elderly, the poor, children and people with disabilities need access to government programs and other social services to get by.

Congress has 30 days left to act, to find a balanced solution that helps all American working families and requires those in the top percentages of the country's income bracket to pay their fair share. It is time for Congress to listen to the nation's pulse -- a pulse that was taken on Nov. 6 by Americans who voted for policies that balance opportunity with fairness and restraint. Now every American is watching as members of Congress make their decision on the national deficit -- and waiting to see whether Congress will pass this first test on compromise and come up with a real solution.

Rep. Tom Cole (R-Okla.) on Tuesday pressed his fellow Republicans to go along with President Barack Obama's plan to raise taxes on the wealthiest Americans for the time being in order to avoid the so-called "fiscal cliff."

In an interview with Politico, the Republican said he has encouraged his colleagues in the House to extend the Bush tax rates for incomes below $250,000 immediately, after which they could push for an extension of the cuts for incomes above that level. Without any congressional action, all of the Bush tax cuts will expire on Jan. 1.

"I think we ought to take the 98 percent deal right now," Cole told Politico. "It doesn't mean I agree with raising the top two. I don't."

Cole expressed his position during a meeting of the House GOP whip team on Tuesday, arguing that voting for an extension on the cuts for all but the top 2 percent would stop an increase for most Americans and put Republicans in a better position to fight higher rates for the top earners down the road.

His statement caught several Republican offices off guard on Tuesday night, with aides saying that they hadn't heard of his comments until they were posted online.

A top Republican aide told The Huffington Post that leadership continued to hold the belief that tax rates should not be raised as part of a fiscal cliff deal and that, instead, lawmakers should look toward raising revenue by closing tax loopholes and limiting deductions.

Senate Democrats, who earlier this year passed a bill extend the Bush tax cuts for incomes under $250,000, were pleased with the comments.

"We agree with Congressman Cole," said Brian Fallon, a spokesman for Sen. Chuck Schumer (D-N.Y.). "Speaker Boehner should take up the Senate-passed bill to extend the middle-class tax cuts right away."

The position is a shift for Cole, who has served as a Deputy Whip for the party's House conference and once chaired the National Republican Congressional Committee. The Oklahoma Republican penned an editorial earlier this month warning about the potential dangers of increasing taxes on the wealthy.

"Allowing taxes to rise for just the top brackets may seem like an acceptable middle ground by comparison, but this path would be enormously damaging to the economy," he wrote.

Cole said Tuesday that he doesn't see his proposal as a violation of Grover Norquist's anti-tax pledge, which many of his Republican colleagues have nevertheless disavowed in recent days.

President Barack Obama's reelection has awoken great expectations among big sectors of the population, especially among the Hispanics. After the great deception that was Obama's broken promise to spearhead a comprehensive immigration reform during his first administration -- not to mention he had promised to present it during the first year of his administration -- many now believe that due to the enormous support that the Hispanics granted him last 6th of November, there will be no valid excuse for not embarking on the reform.

Beyond the great blow suffered by the Republicans because the minorities, particularly the Hispanics, overwhelmingly favored President Obama -- to the point that now there are many Republican leaders that insist in the need to erase that anti-immigration image left by the bloody battle sustained during the primary elections and the wishy-washy position assumed by its candidate with respect to the illegal immigrants -- truth is that the conditions to obtain a comprehensive immigration reform are now not much better than four years ago. And they aren't because in the current circumstances, President Obama's power is fenced-in.

Obama's triumph on November's elections could not be clearer. According to the Exit Poll conducted by Edison Research, cited in a recent article on the Urbancincy webpage:

"President Obama earned approximately 69.4 percent of the vote in cities with more than 500,000 people, and 58.4 percent of the vote in cities with 50,000 to 500,000 people. Furthermore, with the exception of Jacksonville and Salt Lake City's home counties, President Obama won the plurality of votes in every major American city." And this is not all. According to the same research, "President Obama earned the vote of 92.7 percent of black voters, 70.6 percent of Hispanic voters, 73.2 percent of Asian voters, and 57.7 percent of all other non-white voters."

Mitt Romney bet on the support from the white population and obtained, according to the same source 58.7 percent of their votes. Given the demographic changes that the country has undergone during the last few years, this was not enough for Romney to win to the presidency. But it was enough for his party to obtain the majority in the House of Representatives. According to an article by Emily Bazelon in Slate, "even though Obama won Pennsylvania by 5 points, Republicans took 13 of 18 House districts. In Ohio, Obama won by two and the GOP kept 12 of 16 House seats." And the same happened in other states: Obama won and the Republicans were left not only with the majority in the House of Representatives but in the states legislatures.

Although many voters divided their vote -- the president from one party and the Congressmen from another -- the apparent incongruence is mainly product of the so-called gerrymandering, a practice by which the limits of an electoral district are manipulated to favor a particular party or candidate. And, as is clearly explained in the All About Redistricting blog by professor Justin Levitt of Loyola Law School of Los Angeles:

"In most states, the state legislature has primary control of the redistricting process, both for state legislative districts and for congressional districts. 37 state legislatures have primary control of their own district lines, and 42 legislatures have primary control over the congressional lines in their state (including five of the states with just one congressional district)."

According to Bazelon, "Gerrymandering is an American game both parties play because the courts allow it and the voters don't punish them for it." Sometimes it's played by Democrats, other times by Republicans. In this occasion, the turn was for the Republicans, who took advantage of their winnings in the last legislative elections of 2010, "which, happily for them, was also a giant redistricting year because it followed the latest census."

Citing Columbia Law Professor Nathaniel Persily, Bazelon says:

"The upshot, in light of population distribution, is Democrats control the line drawing for 44 congressional seats and 885 state legislative seats, while Republicans control the line drawing for 210 congressional seats and 2,498 state legislative seats. No wonder the House stayed safely in Republican hands even though the presidency and the Senate did not."

And that division of powers has implications that go further than internal politics. According to a recent article by the respected Professor Paul Kennedy, "the foreign policies of the number one power are those of drifting slowly downstream, with little sense of destination." And when venturing into the reasons for this, he asks himself:

"Why not admit that the world's number one power is constitutionally flawed and inadequate when it comes to handling foreign-policy issues? (...) Since the U.S. president comes from one party, and the Congress may often be in the hands of the rival party, how can one expect firm decisions being made on tricky matters such as a policy towards the Palestinians or ways of cutting the defense budget? Often, the president seems less like the commander in chief than a latter-day Gulliver tied down by Lilliputians."

Kennedy states that it's not strange that because of this "most of the Earth's democracies have adopted a parliamentary rather than a presidential form of governance." I do not believe that such a radical change is needed. The more checks and balances, the merrier. But I do believe that it's necessary to pay more attention to the infamous gerrymandering. With things as they are -- and even though there are several districts that will be redefined during the next few years -- it will not be easy for the Republicans to lose their majority in the House, at least during the current administration. And that will make things difficult for President Barack Obama to keep all his promises. Specially the one of a comprehensive immigration reform, unless the Republicans, defeated during the last elections by minorities that are very interested in the issue of immigration, moderate their attitude and consider that said reform has become essential to keep their current bastions of power.

It would be one thing if our closest neighbor was upset about us not mowing our lawn, but when it comes to Mexico, our southern friends have had it with our failed drug war and they want us to do something about it.

But like a good neighbor that doesn't want to stir things up, since they have to live next door to us, blunt criticism comes from their elder past leaders who don't have to live in a world of political niceties.

"This situation of being in between has brought in war here in Mexico, that we are, that I don't understand why did we assume this war. That war should be done only in the United States," says ex-President Vicente Fox about the position Mexico has had to endure -- and he's had it with not only us, but also our stale government's solutions.

With our unworkable prohibition stance, it's a troubling experience for the decades of generations caught between the cheap supply in southern countries and high paying consumption in the United States.

And while U.S. politicians debate the issue then go back to their safe, cushy existences at home, people in Mexico are being slaughtered. "It's extremely bad, it's extremely violent, it's extremely costly, it's extremely harmful, and more than anything it goes right against the hope of youth in Mexico," says Fox.

If crushing the hope of the youth of Mexico isn't enough, the money spent trying to combat the violence and stem the flow of drugs is crippling the Mexican economy, ensuring that those hopeless youths will also be saddled with an incredible amount of debt and bleak prospects when it comes to bringing their country back to life. "In the case of Mexico the budget is very limited," President Fox tells us, "so unfortunately every cent, every dollar that has been increased in this useless with no results war, is against the budgetary education of the project for promoting jobs or else. So, it's a war, but it's taking us nowhere, it's a war, but is totally useless, a total failure, like the war convoked by the United States in the government of President Nixon. 40 years has gone by, and entire war is also a total absolute failure."

Many in Mexico feel, and with good reason, that while most of the blame for prohibition violence belongs to the U.S. government and their policies, it's innocent people in Mexico who are made to pay the price. This is simply not fair, says President Fox. "This game is not even. Big change has to come about. But legalization becomes a strategic, social, positive and a real solution to the problem."

The U.S. government is not a fan of "big change" and usually has to be led kicking and screaming down the path of "incremental change." This is what happened last week with the recreational legalization victories for cannabis in Colorado and Washington. But how long can the people of Mexico continue to endure unprecedented levels of violence? Many south of the border simply will not survive our incremental changes.

But it doesn't have to be this way. "[The] President, [and the] U.S. government is way behind its public opinion," Mexico's former President points out. "And the legal public opinion, because of the referendum in California, 44 percent of Californians now accept, and are for legalizing for the use of marijuana. At national level, the last Gallup poll shows that 50 percent of public opinion, 50 percent of U.S. citizens agree to [marijuana being] legalized. So, the only one who sustains the prohibition, the criminalization, and the penalization of drug control is U.S. government, and it's totally incapable of enforcing the law.

"You have in the United States personalities like President Clinton," President Fox continued, "like President Obama, who also tried a drug once; if even it's once, it's a crime. Personalities, the Einstein of the 21st century, Steve Jobs, who in his book confessed that he used drugs for a period of ten years, so how come the nation that sustains, the government that insists in prohibition and criminalization is not capable of reducing consumption, and holding the drug on the border, and eliminated the cartels that openly operate in that nation?"

A good question, and one that the politicians who support prohibition in The United States cannot give an honest answer to. That's because the truth is that we know our policies won't reduce drug supply and consumption and our officials don't want people to stop using drugs. If everyone stopped using drugs then the drug war would not be profitable and there would no longer be a point.

And countries like Mexico can talk until they are blue in the face about legalization, but the sad reality is that The United States forces prohibition on many countries in exchange for monetary aid and other considerations. "Unfortunately we, very few remaining nations, that are still hold a total prohibition to the consumption of drugs, that is led by USA and just a few other nations. The majority of nations, including Mexico, we do not penalize consumption. In Mexico, in Portugal, in Spain, in most of Europe, using drugs, consuming drugs, it's not a crime, it's a crime to sell to distribute and to produce. So, the U.S. government holds the past. And it does not listen [to the] the voice of its own history."

In this way, Fox continues, "...you solve the problem of violence, and then you remain only with a health problem. This is what happened in Portugal, in Holland, and other nations, the Netherlands that has legalized the use of drugs.

"Prohibition [doesn't] work, let's move ahead, away from the paradigm, from the dogma. And let's put our feet to the ground. U.S. public opinion has already done that. I don't know why U.S. government is so narrow on this issue."

But is there any hope of change from newly reelected President Obama? Will he attempt the legalization path?

"I don't think he would even try. I don't know why this dogma sustain by U.S. government, and the Republicans say [the] same, it's a dogma for them. And prohibition don't work. The prohibition of alcohol didn't work."



"It's clear that marijuana harm is much less than cigarettes harm. It kills much more people smoking cigarettes, than smoking marijuana. It's not so harmful to your health. Now, this product you're mentioning yet, but that's consequence of using marijuana, and yes, you're losing kids the opportunity to be in school because the government sustain at this prohibition. I want to appeal to parents, fathers and mothers, to school teachers, to school deans and directors, it's our responsibility, of us teachers, of parents, to educate their kids on how harmful drugs are, and why they should not use them. But in the very end according to the founding fathers of the United States, government does not have the right to interfere in our moral, in our ethics, in our conscious."

"We need the minds in a new paradigm," Fox says, "without a prohibition, [where we] see that it is not difficult to move on."

Can the U.S move on? Can we break from the ways of the past and seek a new path, a path to less violence? Will those who profit from prohibition be defeated and common sense and freedom restored to "the land of the free?"

Will we continue to doom thousands of Mexicans to die every year in a drug war that shouldn't even be fought?

As a man who cares deeply about the people of his homeland, former Mexican President Vicente Fox certainly hopes that officials in The United States turn down a different path, and that they do it soon.

After pausing to cook their turkeys, America's senators and representatives are once again teetering and tussling on the edge of that infamous fiscal cliff.

And from the blogosphere to public affairs radio shows, the news media are once again atwitter with talk of tax hikes and entitlement cuts and which side will get what.

Conspicuously absent from the all the speculation, however -- and likely from the negotiations, too -- is any mention of a potential solution that could restore both tens of billions of dollars in taxes to the coffers of the U.S. Treasury and some semblance of fairness to our crippled tax system.

That money could be raised if Congress would clamp down on the widespread and growing practice of major corporations stashing hundreds of billions if not trillions of dollars in overseas bank accounts. They're in essence legally laundering this money to keep it out of the hands of the tax collector. And the rest of us pay the price.

That's what I learned this weekend by watching the documentary We're Not Broke, a film shown a half dozen times at this year's Sundance Film Festival but not widely distributed since. I borrowed it from a classmate in a course I'm taking, then interviewed the man behind it, her husband.

Charles Davidson, publisher of The American Interest magazine and the executive producer of Onshore Productions, described the secreting of corporate assets overseas this way: "The numbers are huge. ... It's sort of a gangrene in our society."

Those are strong words from a former venture capitalist.

We're Not Broke begins with a film clip of Republican House Speaker John Boehner announcing: "We're broke. We're broke. America's broke."

That, the film suggests, would not be the case if the country's largest corporations paid their fair share of taxes. Instead, such powerhouses as Exxon, Bank of America and GE paid zero taxes -- that's right, zero -- on billions of dollars in profits in 2009, 2010 or, in the case of GE, 2005 through 2010.

Nor are they alone. According to the FACTCOALITION of the Tax Justice Network, on whose board Davidson serves, 30 of the top 100 American corporations paid zero income tax in at least one year between 2008 and 2010. Though Republicans during the recent election campaign kept complaining about the 35 percent tax rate American corporations are supposed to pay, no one mentioned that the actual percentage corporations pay in taxes on domestic profits averages 12 percent, the coalition says, citing the Congressional Budget Office.

And that is considerably less than many middle-class Americans.

Just how much corporate and individual money has been shipped offshore is exceedingly difficult to decipher, Davidson said. But he referenced a report this year by James Henry, an author, figure in his film and former chief economist at the McKinsey consulting group. It estimates that across the globe, rich individuals alone have shipped a mind-boggling sum -- at least $21 trillion-- into secret offshore accounts.

Davidson said We're Not Broke focused on major multinational corporations because the U.S. taxes they avoid are somewhat easier to trace. He acknowledged these taxes alone wouldn't pay off America's debt. But they would make a serious dent in it, he added. And their payment would restore faith in and fairness to American tax policies.

"Tax rates are going to go up," Davidson said. "You need more revenue. But if we also can collect revenue that's been evaded ... that makes a huge difference in helping with the inequality issue. And the offshore thing is a huge element of that. .. [It's] just undermining government. It's a complete breakdown and it's systemic."

How systemic? The FACTCOALITION estimates that U.S. corporate tax revenue as a share of this country's GDP (Gross Domestic Product) has declined from 7.2 percent in 1945 to 1.3 percent in 2011.

That translates to big, big bucks that have been lost. It's money the federal government could use, for example, to pay down the debt -- or fund state grants used for essential services from public safety to fighting fires. It's also money, the film notes, that when not paid in taxes gives multinational corporations an unfair and sometimes crippling edge over the small businesses that do pay -- the same small businesses both parties extol as the true backbone of the U.S. economy.

So before Congress negotiates ways to cut more programs, it should buck the bipartisan largesse of lobbyists trying to buy it and start enforcing existing tax laws -- closing some of the loopholes riddling America's 72,000-page code along the way. It should, but it won't. Not unless the American public hollers.

What Democrats in Congress should not do is give Republicans more than $2 in revenue cuts for each $1 in tax increases, a formula the president and Boehner came close to agreeing on before negotiations collapsed last year.

The president won this year's election, and he won it by several million votes. If he has to lead us over that this much-hyped cliff to demonstrate to Americans just how greedy the wealthy and corporate backers of the Republican Party are, then so be it. The public's howl eventually will force the GOP to accept a fairer resolution. If you want ammunition for the fight ahead, We're Not Broke is a good place to start.

MIDDLETOWN, N.J. -- New Jersey Gov. Chris Christie plans to spend the next year leading efforts to rebuild his home state after Superstorm Sandy – and running for re-election.

Christie announced his intention to seek a second term Monday, after telling his campaign treasurer to file papers so he can begin hiring campaign staff, selecting a headquarters and raising money toward his re-election. A formal announcement is expected in January.

"It would be wrong for me to leave now. I don't want to leave now," Christie, 50, said Monday. "We have a job to do. That job won't be finished by next year."

"The public needs to know that I'm in this for the long haul, that the person who has helped to lead them through the initial crisis wants to help lead them through the rebuilding and restoration of our state," he said at a news briefing at a fire house in Middletown, where he had come to thank first responders and volunteers.

The gubernatorial election is a year from now. The governor said he talked it over with his wife and four children, ages 9 to 19, over the weekend, and the decision that he should run was unanimous.

So far, no one has stepped forward to challenge him as governor. Several Democrats, most prominently Newark Mayor Cory Booker, have been thinking aloud about running for their party's nomination. Christie said he hadn't spoken with Booker other than by text in about 10 days and he didn't know the mayor's political intentions.

One recent public opinion poll ranked Booker as the Democrat who could come closest to beating the Republican governor.

But a new poll released Tuesday shows six out of 10 registered voters now support a second term for Christie, up 15 points since September.

The Rutgers-Eagleton poll also found the number of voters opposed to Christie's re-election declined from nearly half in September to about a third now.

Christie wins every hypothetical head-to-head matchup measured in the poll, including against Booker, who the poll has losing 34-53 percent with 13 percent choosing neither.

Christie carried the Democratic-leaning state by 86,000 votes in 2009, an upset win over Democratic incumbent Jon Corzine.

Christie, who has become a national figure during his first term, is riding an unprecedented wave of popularity because of how he handled the storm, which he said Friday had caused more than $29 billion in damage in New Jersey. Even Democrats have applauded his hands-on response. He appeared on "Saturday Night Live" in his trademark fleece pullover this month to lampoon his own nationally televised storm briefings.

About the only criticism directed his way since Superstorm Sandy attacked the coast in late October has come from fellow Republicans who have lambasted him for embracing President Barack Obama as the two toured New Jersey's ravaged coastline six days before the presidential election. Some even blame Christie for tipping a close election to the president.

Christie was the first governor to endorse Mitt Romney; he raised $18.2 million for the GOP nominee and crisscrossed the country as an in-demand surrogate for Republican candidates. Some are still questioning his party loyalty, however, as they did after Christie delivered the keynote address at the party's nominating convention in Tampa. Critics saw that August speech as too much about Christie and not enough about Romney.

The prospect of Christie seeking a second term became likely after he spurned overtures by Republican bigwigs to enter the 2012 presidential contest and more so when he later ruled himself out as vice presidential material with a resounding "I love the job I have now." Buzz over a Christie 2016 run has become muted since the governor boarded Marine One with Obama.

Christie's reputation for bluntness and penchant for confrontation have made him a YouTube sensation and sometimes obscured policy changes he has championed.

With the help of Democrats who control both houses of the state Legislature, Christie took on public worker unions, enacting sweeping pension and health benefits changes that cost workers more and are designed to shore up the underfunded public worker retirement and health care systems long term. He also enacted a 2 percent property tax cap with few loopholes to try to slow the annual growth rate of property taxes, already the highest in the nation at an average of $7,519 when adjusted for rebates.

Christie's education reforms have been slower to accomplish, and Democrats have refused to budge on his signature issue for this year, a phased-in 10 percent tax cut. With tax collections underperforming the administration's projections and storm rebuilding threatening to eat further into revenues, Democrats are unlikely to waver on their position that the state can't afford the cut.

Christie's handling of the state's struggling economy, a potential Achilles heel, has taken a back seat to the storm recovery. But unemployment remains a stubborn 9.7 percent, or 1.6 percent above the national jobless rate, and it's too early to tell whether tax collections will rebound to match administration projections for the fiscal year that began in July.

Scott Conroy, RCP
As his advisers spread word that Chris Christie will seek re-election in 2013, the New Jersey governor's prospects in his home state have never looked brighter.A Farleigh Dickinson University poll of Garden State voters released Monday showed that 77 percent of respondents approve of his job performance, including 67 percent of the Democrats surveyed. In the previous Farleigh Dickinson poll (released in October), just 26 percent of state Democrats and 56 percent of overall voters had rated his job performance positively. The earlier poll was pre-Hurricane Sandy, however, and it's...

With the election over, the political attention has turned to the fiscal "cliff" built into last year's budget deal. The Democrats have fixated on, and Republicans have resisted, allowing the top income tax rate to increase from 36 percent to the 39.6 percent it was at prior to the Bush era tax cuts. Speaker Boehner has signaled that tax increases but not tax rates are on the table. There is a relatively simple proposal that the president make that could raise more money than the nominal rate increase he wants, be progressive in its impact, and produce a more equitable and widely understood tax system.

People sense a fundamental unfairness in the tax code. On paper, the tax code is progressive with a top rate of 36 percent. The code, however, is so riddled with exemptions, exclusions, deductions, and bargain special rates for certain types of income that the real tax rate is highly erratic, favoring certain types of income over others. In the just-completed election, Mitt Romney was the poster child for this inequity, accumulating several hundred million dollars of wealth while paying only about 14 percent of his income in taxes. How? He was able to get his particular form of income classified as in one of these favored categories, "carried interest."

Complexity. The tax code itself is thousands of pages long. It creates all sorts of classes of income. By a perverse logic, income derived from hard personal labor, wages and salaries, is taxed at the highest rate. Several other forms of income are more sacred. Capital gains, for example, get a lower tax rate. The special status of "carried interest" was almost completely unknown outside of Wall Street, until Mitt Romney's tax return was made public. Hardly anyone yet understands what that is, except we now know that, whatever it is, it allowed him to accumulate millions while paying 15 percent tax rate on that income. Still others, such as tax free bonds are declared off limits to taxation entirely. And almost all of these benefit primarily the wealthiest taxpayers.

Then there are the myriad of deductions from income. Some of these, such as charitable deductions or the home mortgage deductions, are popular. The specter of taking these away is the first choice to refute anyone proposing tax reform: propose to eliminate "loopholes" and the defense will be to cite these two popular exemptions. And the wealthier you are, the more these deductions are worth, since they apply to income taxed at higher rates.

The more income is subject to special rates and the greater the number of deductions that are permitted the higher tax rates are required to yield the same income. Every deduction given to one group ultimately means higher rates for everyone.

No Accident. Of course, the many, many arcane provisions of the tax code are not there by accident. They were intentionally inserted by an army of lobbyists flush with campaign cash. The chance of cleaning up the tax code by attempting to find out all these carefully placed loopholes is virtually zero. That is why "tax reform" focused on "closing loopholes" is doomed to failure. These loopholes are buried in myriad of places in a tax code so complex no one can understand it. Even though many of these provisions would be instantly rejected if put to a popular vote, they are protected by the fact that they are voted in the privacy of obscure tax-writing subcommittees whose actions will never be understood or even seen by the public.

Complexity is the fundamental enemy of fairness. Any fair reform has to be simple and easy to understand.

A Simple Proposal

There is simple change in the tax code that could bypass all of these arcane details and make the code transparent and fair.

If we acknowledge that we could never ferret out all these deductions and preferences individually, simply place a low fixed dollar limit on them. The limit would include not only all deductions but would eliminate preferential rates for income earned in previously protected ways. All income whether earned through labor, capital gains, dividends, or bonds would be taxed at the same rate. The essence of fairness: income is income. Period. The lower the limit on these deductions and exemptions, the lower the tax rates could be. Indeed if the limit on preferences and deductions were set low enough, it might well be possible to allow anyone to take a certain amount of capital gains or dividends at a zero tax rate and still increase revenues, if it were within the same low fixed dollar limit.

The equity in this approach would come from the fact that the limit would be a hard fixed dollar amount, not a percentage of income. The amount could be set so that most middle class taxpayers could still receive the deductions for home interest that have been sacrosanct. (This is the realist part of the proposal: most past reform proposals have blown up when these have been threatened). But the hard dollar cap would make the wealthy pay nearly the stated tax rate, since for the wealthy a fixed dollar limit would be less significant with increased income. And a low cap on deductions and preferences for capital gains, carried interest and all of the other "preferred" forms of income should raise far more revenue than the 3.6 percent increase the president proposes.

A reasonable debate could be had about what this cap would be. The lower it is, the lower the tax rates could be while raising the same revenue. (I'd actually prefer zero, but that would incur objections noted above about home mortgage and charitable contributions). $25,000 might be a reasonable balancing of these considerations. But the logic of the proposal would work at higher levels, although too high a cap and the proposal approaches the current system and diminishes its equity benefits.

This equity would preclude spectacles like Romney's 14 pecent rate or Warren Buffet paying a lower tax rate than his secretary. And because the hard dollar cap would be widely understood, tampering with it would be politically costly. Even among wealthy taxpayers, it would be more equitable than the current system since only some of the wealthy pay preferential rates, while others whose income derives from salaries pay close to the stated rates.

The most enduring benefit would be to force transparency into the system. Everyone would understand that preferences and deductions would be limited to this fixed amount. That which is widely understood is difficult to alter.

What good is negotiating for a 39.6 percent stated rate on the highest incomes when many wealthy people are actually paying 15 percent? This proposal would get the rate actually paid by the wealthiest citizens to something just shy of the stated rate of 36 percent. Give Speaker Boehner a symbolic win on the issue of the tax rate. Let him go to his caucus and declare victory. In return, the president would get more revenue, true rather than inconsistent progressivity, and transparency.

Expanding Medicaid health benefits to everyone eligible under President Barack Obama's health care reform law would increase state spending on the program by just 3 percent while extending health coverage to more than 20 million people, according to a study released Monday by the Henry J. Kaiser Family Foundation and the Urban Institute.

The health care law seeks to enroll into the Medicaid program anyone who earns up to 133 percent of the federal poverty level, which is $14,856 this year. But when the Supreme Court upheld the law in June, its decision allowed states to opt out of the Medicaid expansion. So far, Republican governors in eight states have declared they won't participate, denying health care coverage to millions of their poorest residents.

Republican governors who are stalwart opponents of Obamacare, including Rick Perry of Texas and Bobby Jindal of Louisiana, cite the cost of expanding Medicaid as a primary reason for refusing to go along with the Affordable Care Act, also known as the ACA. But the states' share of the new costs of covering more people on Medicaid is relatively small. Combined with greater private health insurance coverage, Medicaid expansion would result in a large reduction in the number of uninsured people, and fewer unpaid medical bills that raise costs for taxpayers.

"By implementing the Medicaid expansion with other provisions of the ACA, states could significantly reduce the number of uninsured," the Kaiser Family Foundation and Urban Institute study states. "Overall state costs of implementing the Medicaid expansion would be modest compared to increases in federal funds, and many states are likely to see small net budget gains."

The total cost of the Medicaid expansion would be $1.03 trillion between 2013 and 2022, according to the study. States would pay $76 billion of that, which amounts to a 2.9 percent increase compared to what states would have spent on Medicaid if the health care reform law hadn't been enacted. Under the health care reform law, the federal government will pay the full cost of covering newly eligible people on Medicaid from 2014 to 2016, then will scale back funding to 90 percent in 2022 and later years.

In addition to receiving a large federal subsidy to enroll these uninsured residents, states that expand Medicaid would be able to reduce spending on taxpayer-funded programs to help hospitals and other health care providers cover the cost of so-called uncompensated care, or unpaid medical bills. If Medicaid expanded across the country, states would save $18 billion between 2013 to 2022 , according to the study.

Expanding Medicaid in every state would add 21.3 million people to the Medicaid rolls, including 14.3 million people who will be newly eligible for the program and 7 million people who already are entitled to benefits but aren't signed up. The Congressional Budget Office previously estimated that states opting out of the Medicaid expansion would result in 3 million fewer people gaining health coverage overall under the law.

In total, the health care reform law will provide health coverage to 30 million people via Medicaid and private health insurance by 2022, the Congressional Budget Office projects.

Seven states and the District of Columbia would actually save money by expanding their Medicaid programs because they already cover some of the people who would receive benefits and Obamacare increases the federal government's share of the costs for them, according to the report.

One of the states that stands to save money is Maine, where Gov. Paul LePage (R) opposes the Medicaid expansion. LePage faces a newly empowered Democratic majority in the state legislature that may push back on his resistance to Obamacare, however.

States' costs will vary based on how many residents enroll in the Medicaid expansion. While a handful would save money, others would have to increase their Medicaid budgets. About half of states will see increases of less than 5 percent and the remainder would have to boost spending by 5 percent to 11 percent, according to the Kaiser Family Foundation and the Urban Institute.

Eleven states and the District of Columbia plan to enact the Medicaid expansion in 2014 or already have started, and the remainder are undecided, according to the Advisory Board, a consulting company.

In addition to deciding on the Medicaid expansion, states are taking different approaches to another key element of the health reform law. So far, 18 states -- most with Republican governors -- have said they won't create health insurance exchanges, the online marketplaces where uninsured people will shop for coverage and find out whether they qualify for financial assistance. The federal government will have to build exchanges in each state that declines to build its own.

Via: The Advisory Board Company

Warren Buffett, New York Times
SUPPOSE that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.”Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.” Only in Grover Norquist’s imagination does such a response exist. 

As President Obama gets closer to making his deal with the Republicans on the budget, the most important thing to keep in mind is that the fiscal cliff is an artificially contrived trap. Were it not for the two Bush wars and the two Bush tax cuts and the House Republican games of brinksmanship with the routine extension of the debt ceiling, there would be no "fiscal cliff."

Rather, there would be a normal, relatively short-term increase in the deficit resulting from a deep recession and the drop in government revenues that it produces. When the economy recovered, the deficit would return to sustainable levels. In the meantime, these deficits are necessary and useful to maintain public spending as a tonic to the economy.

In addition, there are two entirely extraneous questions that do not belong in this debate -- whether Social Security requires any long-term adjustment to assure its solvency, and if so, what kind; and how to restrain the long-term growth in Medicare spending.

In fact, if we get can get back to full employment, there is no Social Security crisis, because Social Security is financed by taxes on payrolls. In the Clinton era, when we had full employment, the crisis kept receding. If we want a little extra insurance, we can lift the cap on income subject to payroll taxes.

Medicare spending is a long-term problem that requires major structural reforms. Reducing benefits or raising the eligibility age in the heat of an artificially contrived fiscal crisis is the wrong way to proceed. Obama's Affordable Care Act will keep Medicare at roughly its present level of spending relative to GDP -- too high, but not an imminent catastrophe.

The strategy of the right-wing has been to blur these several distinct issues into a single grand fiscal crisis, the better to reduce government spending and especially to cut Social Security and Medicare. The right-wing, in this case, is a two-headed beast. The Republican right-wing is mainly interested in defending tax cuts for the rich and reducing social spending generally, while the deficit hawks of the center-right want to achieve budget balance and weaken Social Security and Medicare. And since Social Security and Medicare are phenomenally popular, so much the better for the Republicans if they can trick the Democrats into sharing responsibility for the deed.

A further piece of mischief is the premise that we somehow need a 10-year budget deal that reduces the projected deficit by something like $4 to $5 trillion. We don't. What we need is an economic recovery. If we get a recovery with something close to full employment, the deficit naturally comes down as revenues to and current levels of public spending are entirely sustainable -- especially if we go back to the pre-Bush tax levels on the wealthy.

So if we limit the debate to the real subject at hand -- namely how to avoid a massive fiscal contraction next year when all the Bush tax cuts expire, President Obama holds a very strong hand. He has made it clear that he will not tolerate extending the Bush tax cuts for the top 2 percent at a cost of cutting back valued government outlays for everyone else. But he does want to extend the lower tax rates for the bottom 98 percent.

This puts the Republicans in the position of allowing everyone's taxes to increase in order to preserve the cuts for the top two percent. Not a happy position politically. And Obama has said he is willing to play hardball -- let the economy go "over the cliff" of a general increase in rates in order to force the Republicans to back down.

The Republicans have been tying themselves in knots in order to find other sources of additional revenue to plug the budget gap so that they can keep their pledge to Grover Norquist never to increase tax rates. (Funny how the Norquist pledge is a one-way ratchet. Republicans can vote to cut tax rates on the premise that the economy needs the temporary stimulus, but then if they vote to restore the old rates they are in violation of the pledge. You can see where this leads.)

But there is just not enough money for this budget deal unless a rate hike on the rich is part of the package. Restoring the pre-Bush tax rates on the top 2 percent would raise about $1.2 trillion over a decade. Raising capital gains rates to those of ordinary income and closing other loopholes that benefited mainly the wealthy would raise at most less than another trillion.

Even with those tax hikes, Obama and the Republicans would be more than $2 trillion short of the stated goal of cutting the deficit by at least $4 trillion over a decade.

And there is where the deeper mischief of the $4 trillion goal and its relation to Social Security and Medicare comes in. Neither party wants significant budget cuts in the next year or two, when the recovery is too fragile to stand even a smaller fiscal contraction. So the Republicans, Obama and the Democratic budget hawks like Erskine Bowles and retiring Budget Committee chairman Senator Kent Conrad all want to "back-load" the spending cuts -- have them bite late in this decade.

It just happens that Social Security and Medicare cuts fill that bill perfectly. Cut social insurance several years from now, and you delay the political outcry until Obama has left office. You also delay the fiscal impact, and you leave room for a bit of other government spending.

But cutting Social Security and Medicare for the sake of an arbitrary and needless budgetary reduction of $4 trillion and as a "solution" to an entirely contrived fiscal crisis is bad policy. It is bad economic policy and worse social policy. And for Democrats, it is dumb politics. If Republicans want to be the ones to attack America's two most valued social programs, Obama should let them go right ahead -- until they march off their own fiscal cliff.

And if the president is too determined to get a deal to appreciate what a strong hand he has, then it is up Democrats in Congress and the progressive community outside Washington to make sure that Obama doesn't follow Republicans off their cliff.

Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His latest book is A Presidency in Peril.

The election of 2012 has gone from being an eagerly anticipated future event to history. The re-election of Barak Obama on November 6, 2012, was watched by people all over the globe and talked about it ever since. To look across the news media and blogosphere in the days since is to see a wide range of explanation as to exactly why the election turned out as it did. Some explain the election in terms of ethnic demographics, and the volume and venom of campaign attack ads, and even hurricane Sandy. Most everyone who is writing about the election claims to know exactly why the election turned out as it did.

The certainty of these explanations embodies what psychologists call hindsight bias -- the tendency to feel like you know it all along after an event becomes known. We recently published a scholarly review of research on hindsight spanning psychology, law, medicine, and economics. Hindsight bias usually takes the form of looking back at particular past events and inflating how probable it was for it to occur (say, going from a belief that there is a 60 percent chance of the outcome occurring before the outcome is known to an 80 percent chance after). Hindsight bias makes your memory of the past seem more knowable than it felt to you at the time.

Psychological research has shown that hindsight bias gets bigger when people feel that they have a good explanation for what has occurred. The clearer the story, and the easier it is to connect characters to plot lines, the larger the hindsight bias. Most people try to find a single, credible story to help make sense of particular big events in life, and hindsight bias is part of this quest for meaning.

In a blog that we wrote a couple of weeks before the election, we described hindsight bias in terms of the difficulty people have in recalling their prior uncertainty. At the exact moment that we wrote our blog, Romney and Obama were tied in the popular vote, and we noted that "there has probably not been such a moment of such perfect uncertainty since the start of the election season." Just a few weeks ago, it was really hard to know what would happen on November 6. But now we all know. And it's rather hard now to remember what we were so uncertain about. With all the explanations by pundits and analysts, isn't pretty obvious why Obama won and Romney lost? Hindsight bias abounds.

But there is one interesting exception, a case when hindsight bias seems not only to be absent, but even reversed. This is the case of "we never saw it coming." Faced with an event that negative -- a defeat or a failure -- a person may claim it to be completely unpredictable, that no one could possibly have seen it coming. Psychologists have studied this reverse hindsight bias, and one explanation centers on how much people feel that they were in the driver's seat. If you're driving and you get into an accident, it may be partly your fault and partly someone else's fault, but because you had your hands on the wheel, you could at least have done something. You had a bit of control over the outcome; you had a bit of room to inject your own personal initiative into the situation. The more that you felt that you were in the driver's seat, then the more you'll worry (unconsciously or not) that other people might blame you for what happened. If others can find fault in your actions, your brain works overtime to make excuses to protect you from blame. By saying that "no one" could have seen it coming, you have found one way to make it seem that you are above blame. If no one could see it coming, then no one could possibly have done anything more than you did to avoid it.

You can now see that if there is anyone who might show a reverse hindsight bias after the 2012 election, it would be Republicans in general and people in the Romney camp in particular. A Slate article appeared on November 9 entitled, quite pointedly, "Romney never saw it coming." The article quoted a Romney strategist on the strength of African American voter turnout in Ohio, which went from 11 percent in 2008 to 15 percent in 2012: "We could never see that coming. We thought they'd gotten a lot last time." Another Republican, Minnesota state representative Jim Abeler echoed, "Nobody saw it coming."

Of course, there is great variability across people in their forecasting prowess. Some people truly did not see it coming. Others, meanwhile, did a very good job of seeing it coming (just ask Nate Silver). For most of us in the middle, however, there is a general tendency to misremember our past selves as being better predictors than actually was the case. But this general tendency to feel like we knew it all along can sometimes reverse, and this is most likely to happen when a) the outcome is a defeat or failure, and b) the person in question was in a position to shape the outcome. Next time you hear a decision maker claim never to have seen it coming, you'll recognize it as reverse hindsight bias, operating in order to avoid blame.

Finding true "fat" in the government budget proves harder than it appears at first blush. Many commonly cited sources of "waste" like the National Endowment for the Arts, farm subsidies, and even individual weapons programs are just drops in the federal spending bucket. When one gets to the big spending programs, in fact, finding true waste is genuinely hard. But there's a big, big exception: A truly useless government agency with over a half million employees and $66 billion in annual spending. It has offices in every town -- more, it says, than Starbucks, McDonald's, and Wal-Mart put together -- and it does something that nobody needs. The government agency, of course, is the United States Postal Service. While plenty of reforms seem to be on the table -- the Obama administration has called for the elimination of Saturday mail delivery and many conservatives want to go further -- there's a strong case for simply ending the Postal Service altogether. Rather than tinkering around the edges, Congress and the Obama administration should seriously consider getting rid of the Post Office as it exists altogether by selling its brand and assets to the private sector and repealing its special privileges.

There's no doubt that postal privatization can work. At least two small countries, the Netherlands and New Zealand, have actually turned mail delivery over to entirely private firms with no real loss in service quality although both did see large numbers of post offices close. Other countries like Germany UK, Sweden and Israel have also moved towards privatization in various ways. Almost all developed countries -- even heavily regulated places like France -- now allow more competition for mail delivery than the United States.

Useless is a strong word but, quite fairly, it can and does apply to the Postal Service. The bulk of the revenue comes from comes from monopolies it has on magazines, junk mail, and first class mail. (The later, under current service standards, won't be delivered overnight to most addresses any after this year.) None of these things are necessary for the overwhelming majority of people: almost all written personal messages get delivered by e-mail, well over two-thirds of bills and all sizable magazines now have pretty good tablet editions. As for junk mail, well, what possible conception of the public interest indicates that it's desirable to get unwanted, paper-wasting advertisements all the time?

And these services are easily replaceable. Even when they do more harm than good -- environment-destroying farm subsidies, dependency-creating welfare programs -- a huge percentage government programs do things that the private sector almost certainly wouldn't do on its own. On the other hand, there isn't a single major activity the Postal Service undertakes that some private company doesn't do better and on a similar scale already. Indeed, in the area where it faces real competition, parcel delivery, the Postal Service has less than 10 percent of the market, higher prices, and slower service than its private competitors.

And, if there really is a large digital divide that stops people with lower incomes from accessing the Internet, $15 billion the postal service lost last year would be enough to buy a very nice computer for the ten percent of Americans who don't use the Internet already and bring broadband Internet to the four-to-six percent that doesn't now today. (You'll see higher numbers for Internet non-users but roughly half of all people who don't use the Internet today are less than five years old, in prison/jail/mental hospitals, or seriously disabled.)

Even five years ago, it was hard to envision how some products like magazines could survive without the Postal Service. Today, with widespread tablet computers and broadband Internet almost everywhere, there's no need for them any longer.

Now, before any budget balancers get too excited, it's worth noting that, since 1970, the Postal Service hasn't directly tapped Treasury directly in a significant way. (It gets a small allocation for free services it provides to the blind and military service members overseas.) Given that its debt for pensions and other costs seems almost certain to become a public obligation, no matter what happens, stopping the bleeding now is a good idea.

There's no need to beat around the bush or talk about preserving some sort of service. The Postal Service should go. Now.

Melissa Harris-Perry criticized Obama on her Saturday MSNBC show by discussing his pardon of Cobbler the turkey for Thanksgiving.

In her signature "Open Letter" segment, Harris-Perry penned her first note to a non-human—Cobbler. Speaking to the pardoned turkey, Harris-Perry said that Obama "has been reluctant to use his pardoning power for humans," which is something that the bird might not understand.

Since Obama took office, he has pardoned 22 individuals and denied 1,019. Obama has been described as "stingy" and "unusually reluctant" on pardons. Harris-Perry compared his track record to presidents past, highlighting how "Obama has approved only 2 percent of all requests processed by the Department of Justice."

"Cobbler," Harris-Perry said, "maybe you can scratch out a letter to the White House asking the president to show as much mercy to humans in his second term as he has shown to poultry in his first."

I just read two sweeping reports on the state of income inequality in the U.S. (the second link focuses on state-level inequality) and other advanced economies. Perhaps it's because I've been so ensconced in fiscal cliff discussions, but I was struck by how much more alarmed policy makers are by the budget deficit than by the inequality situation. There are reasons for that tilt -- some good, some bad -- but based on magnitudes of the problem, it's far from clear that our current sole policy focus is warranted.

Findings:

The first link above finds the indispensable inequality researchers Piketty and Saez reflecting on the long income inequality time series data they and others have developed for the advanced economies. Their key findings are:

- The decline in income concentration in the U.S. over the great recession was due to cyclical capital losses, not a structural change in the underlying factors driving the trend. This can be seen quite clearly by a) taking capital gains out of the income data, revealing a steady upward trend, or b) by noting the increase in inequality (share of income going to the top 10% of households) in 2010, a return to trend.

- The fact that different countries hit by the same globalization and technology advances show different inequality trends suggests an important role for political economy -- policies that affect the distribution of market incomes -- in these outcomes. In France and Germany, for example, the top 10% holds about 35% of national income; in the US, it's about 50% (see figure below). "Pure technology stories based solely upon supply and demand of skills can hardly explain such diverging patterns," write the authors, who argue that tax policies are a "promising candidate."

- As I've suggested in various posts, the authors agree that higher inequality may be associated with the debt bubble and bust from which we're still recovering, though they're not sure as to what's causation and what's correlation (they take solace in the Minsky-esque conclusion that "modern financial are very fragile and can probably crash by themselves -- even without rising inequality"). Me, I think in an economy where a) inequality steers growth away from the broad middle, b) credit is cheap, under-regulated, and securitized such that there's distance between originator and final borrower, and c) as the boom progresses, risk become underpriced -- well, that's a recipe for the shampoo cycle (bubble, bust, repeat) with inequality at the core of the model.

The second paper -- from researchers at EPI and CBPP -- is also part of a valuable series ("Pulling Apart," or PA) that tracks income inequality by states over time. Some findings that caught my eye:

-The story above re credit taking the place of paychecks is partially motivated by real declines in average incomes, as the wedge of inequality diverts growth to the top of the scale. That dynamic is evident in the PA data -- see, for example:

On average, incomes fell by close to 6 percent among the bottom fifth of households between the late 1990s and the mid-2000s, while rising by 8.6 percent among the top fifth. Incomes grew even faster -- 14 percent -- among the top 5 percent of households.

In every state plus the District of Columbia, incomes grew faster among the top fifth of households than the bottom fifth. Nationally, the richest fifth of households enjoyed larger average income gains in dollar terms each year ($2,550, after adjusting for inflation) than the poorest fifth experienced during the entire three decades ($1,330).

By looking at rising inequality through the lens of state data, the authors offer up state-level policy ideas that will help, like raising and indexing state minimum wages, more progressive state taxes (e.g., by reducing reliance on sales taxes versus income or property taxes), and better coordinated safety net and health care programs. This last bit is particularly timely given the implementation of the Affordable Care Act. The states that accept and implement the Medicaid expansion and move aggressively to set up the health care exchanges will be providing a great service for their citizens on the wrong side of the Gini coefficient.

So, what does all of this have to do with the fiscal cliff and budget deficit? Since the early 1980s, deficits have averaged around -3% of GDP with a pretty big variance, -5% in the mid-80s, +2.4% (surplus) in 2000, as high as -10% during the great recession, and about -7% and falling now.

On the inequality side, since the early 1980s, according to Piketty and Saez, we've transferred 15% of national income from the bottom 90% of households to the top 10%.

Which of those is the bigger economic deal? If you ask any DC policy maker what's the most important challenge facing the nation, they'll tell you it's the budget deficit. Yet a compelling argument can be made that a shift of such magnitude in national income from the bottom 90% to the top 10%, and the commensurate problems it presents -- the growing gap between growth and the living standards of the middle class and poor -- is, in fact, at least equally, if not far more, worthy of their attention.

The deficit and the debt are highly sensitive to growth. Even in the fiscally irresponsible and not-great-growth GW Bush years, the deficit to GDP fell to about 1% in 2007. If we manage to get a balanced plan in place that includes some new revenues, once the economy begins to grow again, the near term deficit will diminish. After that, it's all a question of slowing health care spending, and that's an existential question not just for the budget but for the whole economy, meaning we have to crack that nut no matter what.

Inequality, on the other hand, can and likely will keep growing, as Piketty and Saez's data suggest, unless policy measures intervene. I've discussed such measures in lots of past posts -- see here, e.g., re full employment and the role of economic slack in growing inequality. Piketty and Saez's arguments for higher tax rates on those at the top of the income scale are clearly worth keeping in mind during our current fiscal negotiations. And the PA team's ideas about state measures would help too.

But it's hard to imagine much progress on this front if policy makers continue to obsess so exclusively on budget deficits instead of the income deficits experienced by the poor and middle class. Of course, many deficit scolds are motivated by anti-tax, anti-social insurance, and anti-government ideology, so they've got a vested interest in the status quo. And to be clear, I'm not suggesting we ignore the budget deficit. I'm just saying that here as elsewhere, a bit more balance is in order.

Source: Piketty and Saez, 2012, link above.

This post originally appeared at Jared Bernstein's On The Economy blog.

Michael Barone, DC Examiner
A funny thing happened as I was looking at the political map of this year's presidential election: It began to look like the map of the presidential election of 2004.I'm not talking about the superficial similarity, the fact that in both elections an incumbent president beat a challenger from Massachusetts by a 51 to 48 percent popular vote margin.I'm talking about the fact that the large majority of states voted just a little bit more Democratic in 2012 than they did in 2004.  

Even after his election win, many of us in the United States still know very little about Alejandro Javier García Padilla, the new governor-elect of the Commonwealth of Puerto Rico, a self-governing territory of the U.S. Here is what is known: He is a Puerto Rican senator-at-large and the president of the Popular Democratic Party of Puerto Rico (PPD). We also know he was the successful gubernatorial candidate for the 2012 election, defeating incumbent Luis Fortuño by a margin of mere percentage points.

Perhaps I can offer some insight. I met Gov.-elect Padilla when he visited the LEAP Academy University charter school in Camden, N.J., this past summer. During my time with him, I was impressed with his commitment to making education a priority in working to overcome the state of poverty on the island. Having education as a key part of his platform was welcome news in our U.S. city, where many of the children who attend LEAP live in impoverished conditions like many children in the island. In fact, as many of 50 percent of the LEAP students are of Puerto Rican descent.

Gov.-elect Padilla has his work cut out for him. According to the most recent U.S. Census, Puerto Rico has become an incredibly poor place. A quarter of the population lives in poverty, and the level of education is 22 percent, which suggests that the poverty rate has increased as a direct result of an underperforming education system. For example, 80 percent of teachers in the public school system do not speak English, while 63 percent of university students do not graduate. Sixty percent of public school students do not master basic skills in Spanish. Consider that only one in five Puerto Ricans has mastered English skills, thus reducing the bilingual labor market. Furthermore, the dropout rate in Puerto Rico is jaw-dropping. Twenty percent of Puerto Rico's population has less than a ninth-grade education. Only 25 percent have completed four years of high school.

Puerto Rico's unemployment rate is almost double the U.S. mainland's rate. The labor force participation rate in Puerto Rico is one of the lowest in the world, with about four out of 10 people employed or seeking employment. This is an indication that a high percentage of Puerto Ricans find it better to depend on government benefits than to work. Even the businesses that thrive are doing very little to help the people who live in Puerto Rico. For example, U.S.-based businesses reap tax benefits as foreign investors, but their profits haven't been invested locally to fuel the infrastructure, growth and job development that were envisioned.

Gov.-elect Padilla has many challenges and barriers to overcome if he is to be successful as leader of Puerto Rico, an island that remains split on the issue of statehood. Getting past these barriers will require a well-liked, trusted, strong leader with the courage to make the tough decisions to clean government and begin to reconstruction process.

As an educator and native of Puerto Rico, I find Governor-elect Padilla's focus on transforming schools refreshing. My advice to him is this:

• Stand firm on your agenda to transform the island's educational system, and don't compromise.
• Identify a few trusted advisors who will tell you what you need to hear not what you want to hear.
• Remember, first impressions matter. Establish credibility and develop a reputation for getting things done.
• Know your job and take time to understand the mission, roles and work of the people who surround you.

Gov.-elect Padilla, helping Puerto Rico's economy in the long term means keeping your eye focused on lifting the education system from its current state of disappointing underperformance. Puerto Rican children need your leadership!

In his first news conference since winning a second term, President Obama answered a question about global warming, an issue many hoped to see addressed during the presidential debates -- and that represented the basis for Mayor Bloomberg's campaign endorsement. His message? A disappointing "let the band play on."

Mr. Obama's remarks no doubt disappointed those who had hoped for stronger leadership to reduce the carbon pollution causing global warming. While he acknowledged that he is a firm believer in climate change (emphasis mine) and admitted that "we have not done as much as we need to," he also gave voice to the obvious: Neither Republicans nor Democrats are prepared to make hay with the issue of climate change, because any solution will no doubt involve tough political choices.

After a glimmer of hope, it now seems that a price on carbon is rather unlikely in the near term, and investments in energy technology bold enough to be transformative, smart strengthening of coastlines and sequestration of carbon at scale more uncertain. (Though, as he pointed out, he did manage to double fuel efficiency standards on motor vehicles.)

The president is understandably concerned that the American public elected him with a mandate to focus on jobs, growth and the economy, and any deviation from this is, as he says, not something "I would stand for."

However, the very jobs he hopes to create and the economic engine he hopes to stoke will be influenced by the impacts of climate change.

According to a report in Time, the damages caused by Hurricane Sandy will cost from $30 billion to $60 billion. Clearly, the world cannot afford too many super-charged storms.

Meanwhile, record heat plagued most states during the summer of 2012, leading to a drought that might be the most costly natural disaster in history. There are brand-new jobs to be had in new green energy technologies. Plus, according to the respectable Stern Review, spending just 1 to 2 percent of GDP today (about $900 per person per year, or the price of a cell phone plan) will take care of current emissions. Waiting a few decades means the cost goes up to a far more painful 20 percent.

In simple terms, if we don't deal with the issue of climate change it will hurt jobs, growth and the economy, saddling not just our generation, but our children's generation as well, with debt and consequences.

If, on the other hand, we act prudently and proactively, our leadership can create jobs, provide certainty to industry and livelihoods and blunt the worst impacts of a changing climate on our urban centers and rural landscapes. Do nothing and it's going to bite us hard. Act swiftly and we could reap the benefits of being the leader of the pack.

The president is right, of course -- there is clearly no widespread appetite by leaders on either side of the aisle to tackle this issue during their tenure. But that doesn't mean nothing can be done. Far from it:

• Grassroots movements are crucial in making the voice of citizens heard -- and never more so than around climate change. When people lead, politicians have no choice but to follow, a lesson we failed to learn during the Copenhagen Climate Summit in 2010. Yes, we are worried about the economy -- but economy vs. the environment is a false choice.
• Engage corporate leaders, often beholden to data, in making the case for clarity and leadership on climate change. Unilever has joined 200 other companies in getting deforestation -- a major source of carbon pollution -- out of their supply chain by 2020. Walmart has invested heavily in energy efficiency. Insurance companies are fully aware of the risks posed by rising sea levels and back investing in natural infrastructure like reefs and marshes to protect coastlines.
• Make a payment toward the deficit or reduce payroll tax by putting a price on carbon pollution, which will take a serious bite out of the worst polluters contributing to the 90 million tons of global warming gases going into the atmosphere every year.
• Continue to invest in research and technological development that improves efficiency, develops new sources of clean fuel and helps keep American know-how relevant to a global marketplace.
• Use the bully pulpit of Office of the President to educate the American public on the risk of climate change and the rewards of investments in mitigation. In other words, lead.

Waiting for the right time to make a tough decision usually results in a long wait. On the issue of global warming, we certainly don't have that luxury. What we do have, however, is an opportunity to move our economy forward and create new jobs by addressing the largest threat to our long-term prosperity.

[Image caption: A long wait to enter a job fair. Credit: Flickr user paulswansen via Creative Commons.]

The Environmental Protection Agency estimates that the Clean Air Act (CAA) prevented the premature loss of 160,000 American lives per year in 2010. By 2020 this number is expected to rise to 230,000. This makes the Act one of the most important public health measures ever enacted. Where do these numbers come from and how likely is it that these gains will be realized?

The Act dates back to 1970, the year of the first Earth Day, the founding of the EPA, and the administration of Richard Nixon. The EPA established health-based standards for the air we breath, known as National Ambient Air Quality Standards, or NAAQS, for six criteria pollutants: lead, carbon monoxide, oxides of sulfur, oxides of nitrogen, particulate matter, and ozone. After an intense battle, the removal of lead from gasoline began with regulations that took effect in 1977. It was at about that time that Herbert Needleman reported that children who had what were thought to be relatively small amounts of lead in their teeth had significant IQ deficits, impaired attention and auditory processing, and poor classroom behavior. At that time, the average blood lead level was about 15 micrograms per 100 milliliters. By 2002 this level had dropped by almost 90 percent. Research has shown that this confers about five IQ points on each child. This gain has had enormous societal benefits: large numbers of children have been lifted out of the mentally retarded range, where they need expensive services in order to function, and a similar number have been added to the intellectually gifted category, where they will become the intellectual and scientific leaders of their generation. There is a reason why our grandchildren seem to be smarter than we are!

The CAA was amended in 1990 in order to curtail acid rain caused by the emissions of oxides of nitrogen and sulfur that were destroying lakes in the northeastern part of the U.S. Coal-burning power plants are major sources of these pollutants. In addition to acidifying lakes, oxides of nitrogen combine with organic molecules in the air in the presence of sunlight to form ground-level ozone, the primary component of smog. Oxides of sulfur, like ozone, irritate the lungs, and also react with atmospheric components, in this case to form small particles adding to the concentration of this pollutant that arises from other sources. These very small particles are inhaled deeply into the lungs where they trigger pathological reactions throughout the body. The acid rain program has been very successful. Emissions of sulfur dioxide have been reduced by about 50 percent and emissions of nitrogen oxides have been reduced by almost two-thirds. The health implications of these reductions are substantial, however there is still much more to be done.

Almost one third of Americans live in counties where the EPA's air quality standards have not been met. Ozone and small particles are the primary offenders. The 230,000 premature deaths expected in the current decade will occur primarily as the result of anticipated reductions in these two pollutants. In addition to these lives saved, the EPA predicts that each year cleaner air will prevent 200,000 acute myocardial infarcts, 180,000 exacerbations of acute bronchitis, almost 2.5 million exacerbations of asthma, 5.4 million lost days at school, 17 million lost days at work, and other health effects. As a physician, I see these gains in terms of fewer patients in emergency rooms and offices, but economists see them in terms of dollars -- huge numbers of dollars. In analyses that Congress requires of the EPA, the Agency concluded that the central estimate of total monetized benefits of the CAA between 1970 and 1990 was $22.2 trillion (range $5.6 - 49.4 trillion). Left untouched, annual benefits by 2020 are estimated to be about $2 trillion, at a cost of about $65 billion. Ten billion dollars of that cost represents modifications to coal-fired power plants. This is an astounding return on the needed investments.

A return to leaded gasoline is unthinkable. In a stark contrast, severe curtailments, even abolition of CAA regulations is a promise made by some politicians who have framed these life and health saving regulations as "job-killers." The anti-EPA lobbies are funded by those would pay the $65 billion. Those who benefit from better health, to the tune of $2 trillion, have virtually no voice in this debate.

Protecting the EPA and preserving its authority to regulate emissions, including its authority to update air quality standards, as required by the CAA, and to limit the carbon dioxide emissions, as mandated by the courts, produces a win-win-win scenario. We will win by reducing health care costs, we will win because most of those costs are borne by Medicare and Medicaid that are contributing to our national debt. Most importantly, we will all win, including those who favored roll-back of EPA regulations at the ballot box, the executives and employees of industries who would emasculate the EPA, because our health and productivity would continue to improve.

It is not enough to support the EPA. We need to back efforts to move toward a sustainable energy future. We must stop our reliance on burning coal in order to reduce pollutants that damage health and cause global warming, as I have described in my book, The Silent Epidemic: Coal and the Hidden Threat to Health. These pollutants are key contributors to the four leading cause of death in Americans: heart disease, cancer, respiratory diseases, and stroke and responsible for much of the death and disease that is costing us trillions of dollars we can't afford to spend.

In my medical school microbiology class we grew bacteria on Petri dishes. Soon after the culture was established, the bacteria flourished. However, as they used all of their food and other resources and were forced to live amidst their polluting wastes, they died. We humans are like those bacteria -- we live on a world characterized by finite resources and with a limited ability to neutralize the wastes we produce. Will we be smarter than my bacteria?

This may seem like a silly question, yet the challenges we face are real and the consequences of our actions are dire. Without a sustainable energy future that does not poison the air we breathe and lead to planetary warming, we face an uncertain future. It is past time to act. We need to use our resources wisely, to support critical energy research efforts and to support the education needed to train the next generation of researchers. We owe this to our children and our children's children.