The Blast will be on a medical leave hiatus Thursday and Friday. It is scheduled to return Sunday.
AROUND NEW HAMPSHIRE
1. Executive Council Report
by Councilor Colin Van Ostern, December 2, 2015
Friends,
November was a busy month for the Executive Council: calling the legislature into special session to accelerate solutions to the opioid crisis; confirming five judges (and rejecting one on a 3-2 vote; and approving 123 individual items (see below for key projects by region).
This Monday, the Council held it’s second to last meeting on the state ten year transportation plan. Still in draft form, a vote is scheduled on 12/16 to send to Governor Hassan and then the legislature, the plan includes:
Positives:
- More road resurfacing planned in each of the next three years than in 16 of the past 17 years.
- Several key projects have moved from the ‘unfunded priority’ list to the actual plan (such as a feasibility plan to study a new exit 10 on the Spaulding Turnpike, now scheduled for 2023)
- We have successfully accelerated some large scale high priorities, such as the Hinsdale bridge replacement (now scheduled to begin in 2019 vs 2021 in the prior plan) and Exit 4A on I93 (now drafted for 2019 vs 2023).
Negatives:
- Councilors voted 3-2 to remove the Capitol Corridor rail project as an identified priority.
- Numerous needed projects (such as moving to overhead tolling, expanding I-93 in Bow & Concord and Rt 3 north of Nashua) are still years away from beginning.
For more detail, visit: http://www.nh.gov/dot/
Below, see links to the full Council agenda considered in November, and below that, key projects I’ve highlighted by region, as well as key statewide initiatives & appointments. In December, the Council meets on 12/2 and 12/16.Sincerely,
Colin
Executive Councilor, District 2
(or follow the links below for documentation of each item)
KEY PROJECTS PASSED BY REGION
1. DETAIL: CENTRAL NH
#A. Authorized the Bureau of Highway Design to amend an agreement with McFarland-Johnson Inc., Concord, NH and Binghamton, NY (originally approved by G&C on 11-20-13, item #123), to prepare the second phase of the preliminary engineering design for the section of Interstate 93 passing through Bow and Concord from I-89 through I-393, by extending the completion date from December 31, 2015 to June 30, 2017. No Additional Funding.#26 Authorized to enter into a sole source contract with Community Action Program Belknap-Merrimack Counties Inc., Concord, NH, for the Senior Energy Assistance Services Program, in the amount of $9,801. Effective November 18, 2015 through August 31, 2016. 100% Other Funds (NH DHHS).
#37 Authorized to enter into a contract with Scott J. Rubin, Bloomsburg, PA, to provide expert testimony, Litigation assistance, and other services related to representing the interests of residential utility customers in dockets at the NH Public Utilities Commission, in an amount not to exceed $21,000. Effective upon G&C approval through June 30, 2016. 100% Public Utility Assessment Funds.
2. DETAIL: MONADNOCK REGION
#B. Authorized the Bureau of Highway Design to amend an agreement with Jacobs Engineering Group Inc., Bedford, NH (originally approved by G&C on 8-10-11, item #135), for the final design for the reconstruction and widening of a 2.7 mile section of NH 12 in the Towns of Walpole and Charlestown, by extending the completion date from December 31, 2015 to December 31, 2016. No Additional Funding.
#C. Authorized to amend a lease agreement with Brady Sullivan Properties d/b/a Brady Sullivan Keene Properties LLC, Manchester, NH (originally approved by G&C on 8-26-15, item #45), to adjut the occupancy date and rental payment schedule to commence two (2) months and seventeen (17) days later on November 17, 2015 and expiring ten (10) years later on November 16, 2025. No Additional Funding.
#29 Authorized to enter into a sole source contract with Southwestern Community Services Inc., Keene, NH, for the Senior Energy Assistance Services Program, in the amount of $6,760. Effective November 18, 2015 through August 31, 2016. 100% Other Funds (NH DHHS).
#42 Authorized to amend a Grant Agreement with the City of Keene, NH, (originally approved by G&C on 3-26-14, item #52), to complete the project involving the restoration of approximately one acre of emergent/scrub-shrub wetlands previously disturbed at Woodlawn Cemetery, by extending the end date to June 30, 2017 from December 31, 2015. No Additional Funding. 100% ARM Funds.
#43 Authorized to award an Aquatic Resource Mitigation Fund grant to The Monadnock Conservancy, Keene, NH, in the amount of $140,000 to acquire a conservation easement on two parcels of land totaling 552 acres in Keene, Swanzey and Chesterfield. Effective upon G&C approval through June 1, 2016. 100% Aquatic Resource Mitigation Funds
#16 Authorized the Bureau of Population Health and Community Services, Oral Health Program, to exercise a renewal option and enter into a retroactive amendment to an agreement with Sullivan County Oral Health Collaborative Inc., Claremont, NH (originally approved by G&C on 7-10-13, item #48), to provide access to preventive and reparative oral health treatment for individuals participating in the statewide community and school based oral health program, by increasing the price by $47,896 from $47,896 to $95,792, and by extending the completion date from June 30, 2015 to June 30, 2017. 44.7% Federal, 55.3% General Funds.
#32 Authorized to enter into an agreement with the Cheshire Conservation District, Walpole, NH, to create and conduct a program to help expand farmer access to wholesale markets in and around Cheshire County, in the amount of $36,041. Effective upon G&C approval through June 30, 2017. 100% Federal Funds – Specialty Crop Block Grant.
3. DETAIL: STRAFFORD COUNTY
#A. Authorized the nomination of Captain Peter D. Eshenour, Dover, NH, for promotion to the rank of Major, NH Air National Guard. This officer meets all prerequisites for the grade, having been found to be physically, mentally, morally, and professionally qualified.
#12 Authorized to add Frisbie Memorial Hospital, Rochester, NH to a list of licensed medical providers, with the ability to expand to include additional licensed medical providers to provide necessary outpatient visits, labs, diagnostic tests, and outpatient procedures for clients enrolled in the NH Ryan White CARE Program. No Maximum client or services volume is guaranteed. Accordingly, the price among all agreements is $100,000. Effective upon G&C approval through June 30, 2016. 100% Other Funds
#28 Authorized to enter into a sole source contract with Community Action Partnership of Strafford County, Dover, NH, for the Senior Energy Assistance Services Program, in the amount of $3,149.20. Effective November 18, 2015 through August 31, 2016. 100% Other Funds (NH DHHS).
#26 Authorized the Bureau of Aeronautics to award a grant to the Pease Development Authority to design, permit and bid the rehabilitation and expansion of taxilanes and the associated drainage system at the Skyhaven Airport, in the amount of $123,105.22. Effective upon G&C approval through October 31, 2019. 90% Federal, 5% General, 5% Local Funds.
#45 Authorized to enter into grant agreements with the entities as detailed in letter dated September 25, 2015, totaling $24,006 to fund Household Hazardous Waste collections. Effective upon G&C approval through June 30, 2016. 100% Hazardous Waste Cleanup Funds.
Authorized the Division of Homeland Security and Emergency Management to retroactively enter into a grant agreement with the City of Rochester, for the purchase of approved emergency management tablets, software and user fees for a total amount of $9,335. Effective August 28, 2015 through September 30, 2016. 100% Federal Funds.
4. STATEWIDE PROJECTS AND POLICIES
#32 Authorized to award a sole source grant to the University of NH, Sponsored Programs Administration, Durham, NH, in the amount of $134,301 to assess the costs and benefits of a family leave insurance program in NH. Effective upon G&C approval through September 30, 2016. 100% Federal Funds.
#49A Authorized to enter into a sole source contract with the Regional Greenhouse Gas Initiative Inc., New York, NY, to provide technical and administrative services for continuation of the NH Carbon Dioxide Budget Trading Program, in an amount not to exceed $375,000. (2) Further Authorized to make annual advance payments upon invoice by RGGI Inc. Effective upon G&C approval through December 31, 2018. 100% CO2 Trading Funds.
#50 Authorized the Bureau of Assessment and Accountability to enter into a sole sourceagreement with the College Board, New York, NY, to administer the SAT assessment in grade 11 to ensure a continuation of assessment services to meet federal and state law, in an amount not to exceed $613,272.45. Effective upon G&C approval through June 30, 2016, with the option to renewal for up to one additional fiscal year. 27% State, 73% Federal Funds.
#C. Authorized to amend an agreement with the City of Dover, NH (originally approved by G&C on 6-5-13, item #135), for the Berry Brook / Cocheco River Watershed Management Plan Implementation Phase III Project by changing the completion date to December 31, 2016 fromDecember 31, 2015. No Additional Funding. 100% Federal Funds.
#17 Authorized to accept and expend Treatment Drug Court federal funds from the Substance Abuse and Mental Health Services Administration in the amount of $324,997. Effective upon G&C approval through June 30, 2016. Fiscal Committee approved.
#18 Authorized to accept and expend NH Partnerships for Success Initiative federal funds from the Substance Abuse and Mental Health Services Administration in the amount of $2,231,951. Effective upon G&C approval through September 29, 2016. Fiscal Committee approved.
#36 Authorized to enter into a contract with The Liberty Group, Quentin, PA, for the conduct of a management and operations audit of EnergyNorth Natural Gas d/b/a Liberty Utilities, in an amount not to exceed $299,940. Effective upon G&C approval through June 30, 2016. 100% Utility Assessment Funds.
#53 Authorized the Division of Homeland Security and Emergency Management to accept and expend Hazard Mitigation Grant Program funds from the Federal Emergency Management Agency for DR-4026 T.S Irene, DR-4095 Hurricane Sandy, and DR-4105 February Snowstorm in the amount of $1,200,143 for the implementation of cost-effective mitigation projects. Effective upon G&C approval through June 30, 2017. 100% Federal Funds. Fiscal Committee approved.
#65 Authorized to accept and place on file the October 2015 quarterly report of the project to construct a new Marine Patrol facility in Gilford, NH (approved by G&C on 1-1-15, item #37).
5. DETAIL: APPOINTMENTS AND NOMINATIONS
( * = District 2 Resident)
New Nominations by Governor Hassan:
Assessing Standards Board
Richard A. Vincent, Hill
Connecticut River Atlantic Salmon Compact
Duncan McInnes, Merrimack
Director of the Division of Program Support at the Department of Education
Scott J. Mantie, Sanbornton
Land and Community Heritage Authority
Harold Janeway, Webster*
Director of Marketing, Merchandising, and Warehousing at the Liquor Commission
Nicole Brassard Jordan, Manchester
Manufactured Housing Installation Standards Board
Gary Francoeur, Hudson
Milk Sanitation Board
Martha C. Crete, Boscawen*
Bethany L. Hodge, Hinsdale*
Bonnie Hurley, Colebrook
New Motor Vehicle Arbitration Board
Robert F. Hamel, Manchester
Telecommunications Planning and Development Advisory Committee
Rodney A. Bouchard, Alstead*
Robert D. Ciandella, New Castle
Ingo F. Roemer, Dover*
Waste Management Council
Stephen R. Crean, Goffstown
Confirmed by the Council:
Deputy Adjutant General
Warren M. Perry, Bow
State Committee on Aging
Norma J. Brettell, Glen
Governor's Commission on Alcohol and Drug Abuse Prevention, Treatment and Recovery
Monica L. Edgar, Meredith
Compensation Appeals Board
Timothy S. Wheelock, Portsmouth
Dental Hygienists Committee of the Board of Dental Examiners
Mary Duquette, Hopkinton*
Electricians Board
Jack Grube, Londonderry
Genetic Counselors Governing Board
Katarzyna J. Bloch, Lebanon
Board of Nursing
Kathleen Ferguson, Windham
Rivers Management Advisory Committee
Roger F. Noonan, New Boston
Board of Court Reporters
Denise Cascio Bolduc, Hooksett
Susan J. Robidas, Manchester
Family Mediator Certification Board
Candace F. Dochstader, Hollis
Health Exchange Advisory Board
Nancy Clark, Intervale
Executive Director of the Land and Community Heritage Authority
Dorothy Tripp Taylor, Hopkinton*
Midwifery Council
Carolyn E. Drake, Gilford
Board of Psychologists
Catherine E. Shanelaris, Merrimack
Retirement System Board of Trustees
Hershel D. Sosnoff, Silver Lake
Volunteer NH Board of Trustees
Craig T. Saltmarsh, Boscawen*
Christine Williams, Bedford
2. Funding Proposals
Task force begins wading through initiatives, funding to curb drug abuse
by Allie Morris, concordmonitor.com, December 1, 2015
On the heels of a bruising budget battle that dragged on through the summer, a special task force is now deciding whether the state should spend an additional $12 million combating New Hampshire’s drug crisis.
More than 320 people died of drug overdose in 2014, a record high, and the state is expected to break that record in 2015. Politically, Republicans and Democrats say tackling substance abuse is a top legislative priority.
On Tuesday, members of the task force began meeting to review a slate of spending bills that range from funding statewide drug courts to purchasing 27 new cruisers for state police.
The lawmakers have until mid-December to make recommendations about which proposals should be fast tracked by the Legislature when it reconvenes in early January.
However, it’s not yet clear how much spending the substance abuse task force is willing to approve, or exactly how much money is even available.
A key report on the state’s finances is slated to come out this month. The document will reveal how much money the state has leftover from the last budget cycle, a figure that could be as high as $73 million, according to preliminary estimates. Lawmakers could decide to put some of those dollars toward substance abuse initiatives.
Republicans argued Tuesday that without that information it will be difficult to make spending decisions or bill recommendations.
“Part of doing our work is having the credible information,” said Sen. Jeb Bradley, a Wolfeboro Republican. “That is required to make decisions that are realistic.”
At the daylong meeting, the task force heard requests to upgrade the state’s prescription drug monitoring system, funnel $5 million into a substance abuse treatment fund, and put $3.5 million into new cruisers and a policing initiative meant to crack down on drug dealers.
Next week, the task force will hear a proposal to spend roughly $3 million on a statewide drug court program, which aims to treat addicted offenders instead of incarcerate them.
In all, the proposed spending totals $12 million, Bradley said.
Sen. Lou D’Alessandro, a Manchester Democrat on the task force, thinks the increased spending will be a tough sell in the Republican-controlled Legislature.
“There’s a lot of money on the table,” he said. “This whole thing is going to cost a lot of money and that is how you deal with a crisis, you have crisis intervention.”
Republicans and Democrats agree on many of the policy items, but could diverge when it comes to money.
Bradley is proposing a multifaceted bill to increase penalties for selling and distributing the powerful painkiller fentanyl, require prescribers to take exams and mandates physicians submit information to the state’s prescription drug monitoring program.
That last piece requires a $100,000 investment, Bradley said, to upgrade the system’s technology so it can handle increased traffic.
Gov. Maggie Hassan proposed adding $5 million to the Governor’s Commission on Alcohol and Drug Abuse Prevention, Treatment, and Recovery. There hasn’t been a bill filed to do that yet, but commission Chairman Tym Rourke on Tuesday said increased funding could help expand treatment capacity and recovery supports.
Sen. Jeanie Forrester, a Meredith Republican, is proposing the state spend nearly $3.5 million in a grant program to dedicate more police officers to the state’s drug problem, and to buy 27 new cruisers for state police.
The grant program would cost $2.25 million over the next two years. According to Director of State Police Col. Robert Quinn, the grant would add roughly 2,500 extra eight-hour patrols in a year, about 10 full-time officers. Local law enforcement agencies could access the money, meant to put more officers on the street and to crack down on drug dealers.
Forrester’s bill would also allot $1.2 million to the Department of Safety to purchase 27 new state police cruisers. The department had requested the vehicles during the regular budget process, but was turned down, Forrester said.
“It was something we wanted to fund, we just didn’t have the money,” said Forrester, who added cruisers are needed to get troopers on the road and to support the proposed grant program. “There is support for it. It’s going to be finding out what the numbers are, what money is there to spend?”
3. NH's Kids, and the Candidates
from Growing Up Granite, Granite State Rumblings, by MaryLou Beaver, everychildmatters.org, December 2, 2015
Many New Hampshire kids are doing fine – but many are not.
Learn why we need to #VoteKids!
- Equal Opportunity: 1 in 8 New Hampshire children lives in poverty, and the gap between the haves and have-nots continues to grow.
- Family and Work: 67% of children under the age of 6 have all available parents in the labor force, and in New Hampshire child care costs about $984 per month for infants and between $788 (New Hampshire State Fact Sheet, 2015) for toddlers and young children.
- Access to Education: 46% of New Hampshire’s 3- and 4- year olds did not attend preschool from 2011-2013. A year of tuition at the University of New Hampshire costs $16,986 plus room, board, books and incidentals $28,000+. The maximum Pell grant award covers only $5,775.
- Children’s Healthcare: 12,000 New Hampshire children were without health insurance in 2014 and 85,055 New Hampshire children were enrolled in Medicaid/CHIP in 2013.
- Children’s Safety: In New Hampshire, 822 children were confirmed victims of child abuse and neglect in 2013.
Family and Work. Stagnant incomes and workplace practices that pit being a parent against being a provider strain families and harm kids. Working and having a family shouldn’t be so hard. Paid sick and family medical leave, access to affordable childcare and better incomes can help provide the economic security and flexibility that parents need to build their careers and support their families
Access to Education. Research demonstrates that 80 percent of a child’s brain development occurs between the ages of zero and five. Yet little is invested at the federal level in early childhood education. All kids should have access to high-quality preschool regardless of parental income or where they live. Later in life, a teenager willing to work hard in college to get skills needed for success should not be blocked due to race and should not be burdened with a level of debt more crushing than that endured by any previous generation.
Children’s Healthcare. More children have access to health care than ever due to the State Children’s Health Insurance Program (S-CHIP) and children’s protections in the Affordable Care Act (ACA). While not perfect, these laws prohibit insurance company discrimination against children with pre-existing conditions, require insurance companies to cover child preventive care, and help ensure families won’t go broke when their child gets sick. Proposed policy changes must detail how children’s protections will be maintained or enhanced.
Children’s Safety. Every child needs a safe environment in their home, school and neighborhood. Preventing child abuse and neglect, as well as minimizing gun violence, a leading killer of children and teens, are top priorities for voters.
WE NEED YOUR HELP TO MAKING CHILDREN, YOUTH, AND FAMILIES A NATIONAL PRIORITY.
As Granite Staters, we have the unique opportunity to engage with presidential candidates as they make their tours of our first-in-the-nation primary state. This is your opportunity to ask them how they plan to support our kids!
Need help preparing your #VoteKids question for the candidates?
Here are a few examples.The opportunity gap is identified as the difference between the have and the have-nots. This gap affects a child’s ability to be successful later in life.What will you do to close the opportunity gap facing children so they have the ability to achieve the American Dream?
Child abuse and neglect costs America $124 billion a year and contributes to poverty, crime, and alcohol and drug abuse.What will you do to ensure all children are safe in their homes and their communities?
High-quality preschool increases a child’s chances of success in school and life. Children who attend are less likely to be held back a grade or need special education.What will you do to ensure that every child has access to high quality early learning opportunities?
We know the after-school hours are peak hours for kids to smoke, drink, do drugs and engage in sex; to become victims of crime; and to commit crime.What will you to do ensure children have access to safe, supervised afterschool opportunities?
12,000 New Hampshire children were without health insurance in 2014.What will you do to ensure every child has access to the best available medical, mental health and dental care?
Quick Tips on Raising Children’s Issues with Candidates
- Find an event. Check out our calendar on our website.
- Bring some back-up. While one person can make a big impact at these events, it’s good to have some reinforcement. With more people there, the chances are greater that you’ll get your question(s) asked and even be able to follow up on each other’s questions. But spread out, because if you’ve been called on, it’s unlikely the person sitting next to you will be.
- Write your question in advance and practice asking them.
- Arrive early to get good seats or places to stand. Up front is always best.
- Get the speaker’s attention. If you can, make eye contact with the speaker or the person calling on the audience members for the speaker. Get your hand up first, fast, and high! Don’t wait for the second or third opportunity.
- Record! Make sure to get you and your back-up’s questions on record for full quote usage. Videos are great, but sound recordings work just as well.
- Get in the handshake line. This line represents yet another opportunity to ask your question. Don’t let go of the candidate’s hand until you have an answer. Use the handshake as a photo op.
- Get quoted. Talk to the media and get them to cover your question(s) and the answer(s). Prepare your quote just as you prepared your question. Go to them; they generally won’t come to you. Keep them focused on what you want to talk about.
- Let us know what happened! Make sure you let us know what you asked and what the candidate/officeholder answered. If you were interviewed by press, send us a link to coverage or let us know when it’s scheduled to appear.
4. The Statewide SBA Test Results
Statewide testing has good and bad
Editorial, nashuatelegraph.com, December 2, 2015
When it comes to evaluating test results given to students in our schools, it's important not to overreact.
It's equally important, however, not to under-react.
The state Department of Education last month released the results of the Smarter Balanced Assessment tests, the first official round of testing using the new test that is tied to the controversial Common Core standards.
The Smarter Balanced Assessment, which replaces the New England Common Assessment Program - commonly known as the NECAP test - is supposed to measure proficiency in math and English language skills for students in grades 3-8 and high school juniors.
"A statewide assessment provides the public with an annual benchmark indicating how well New Hampshire schools are doing in preparing students to be college- and career-ready," Department of Education Commissioner Virginia Barry said in a statement.
The results in the Granite State ranged somewhere between mixed and disappointing.
Across the state, 58 percent of New Hampshire students met or exceeded the proficiency level in language arts. That's pretty good, we think.
In math, only 46 percent of the state's students demonstrated proficiency, a figure that should trouble parents, teachers, school administrators and taxpayers, because it means more than half of the state's students didn't meet the standard.
Critics of the test - mostly opponents of the Common Core - say it's flawed.
We hope they're right, if only so we could blame the test.
Proponents of Smarter Balanced Assessment say we shouldn't read too much into the first year's testing, since it just establishes a baseline that shows educators where they need to focus to bring about needed improvements.
We hope they're right, too, though the idea that more than half of the state's students aren't making the grade shouldn't be easily dismissed.
The good news, such as it is, is that there is lots of room for improvement. There is also evidence that progress is possible. In 2003, only 42 percent of New Hampshire students taking the NECAP test scored proficient or better, but 56 percent had reached that level by 2009 and it was up to 65 percent by the 2013-14 school year.
They are different tests, of course. New Hampshire School Boards Association Executive Director Mark Joyce pointed out that the NECAP test was multiple choice, while the Smarter Balanced is more involved.
"It measures our students' ability to solve complex problems rather than just how well they can remember certain facts," Joyce said. "It's a big step forward."
To Joyce's point, the goal is to produce students who not only have facts at their disposal, but also the reasoning skills to use them in ways that allow students to excel in the classroom and when they enter the workforce.
If we have to take a few steps backward in the first year of the Smarter Balanced test to take that big step forward, so be it, but parents and taxpayers should expect consistent improvement and be ready to hold educators accountable if that fails to materialize in short order.
5. Yup, She'll Do It Again
DÉJÀ VU ALERT: Once Again, Kelly Ayotte Vows to Vote to Defund Planned Parenthood and Repeal Health Coverage for More Than 40,000 Granite Staters
by Mmiller, nhdp.org, December 2, 2015
In Midst of Substance Abuse Crisis, Ayotte-McConnell Plan Would Also Hurt Access To Treatment by Ending Medicaid Expansion
Concord, N.H. – Last night, WMUR reported that Kelly Ayotte has vowed to support Senate Majority Leader Mitch McConnell’s plan by voting yet again to end health coverage for more than 40,000 Granite Staters provided through the state’s successful bipartisan Medicaid expansion.
The Ayotte-McConnell plan also defunds Planned Parenthood.
This will be Ayotte’s fifth partisan vote to repeal the Affordable Care Act, a move that would also end New Hampshire’s successful
“The announcement that Kelly Ayotte will be voting to repeal the state’s successful Medicaid expansion plan and its lifesaving substance abuse treatment coverage, while also defunding Planned Parenthood in one fell swoop is typical of Kelly Ayotte’s long history of siding with special interest backers and her party’s far-right leadership against New Hampshire’s women and families,” said New Hampshire Democratic Party Press Secretary Melissa Miller. “It is extremely disappointing — though not surprising in the slightest — that Ayotte would sacrifice the health of her constituents and Granite State communities to follow her party bosses in Washington, D.C.”
For more on Kelly Ayotte’s real Washington record, visit AyotteFactCheck.com.
6. The Circular Firing Squad Party
by William Tucker, miscellanyblue.com, December 2, 2015
Conservative activists are demanding the GOP state party chair resign after she publicly criticized Donald Trump for running a “shallow campaign” that depends “on bombast and divisive rhetoric.” And that’s just one front in the ongoing battle between warring party factions.
In an phone interview with the Boston Globe, Republican chair Jennifer Horn downplayed Trump’s chances of winning the state’s first-in-the-nation presidential primary. “Shallow campaigns that depend on bombast and divisive rhetoric do not succeed in New Hampshire, and I don’t expect that they will now,” she explained.
Horn’s Republican critics claimed the comments violated GOP bylaws, which require party officials to remain “strictly neutral” in primary contests.
Trump supporters fired the opening salvoes. State Rep. Steve Stepanek (R-Amherst), Trump’s state campaign co-chair, blasted Horn and said the remark was “an obvious slanted and slanderous comment.”
“[F]or her to criticize any candidate is totally unacceptable and should be considered grounds to call for resignation,” Stepanek told WMUR’s John DiStaso. “Her actions jeopardize the primary process and the first-in-the-nation primary if candidates believe the party chairperson is going to pick winners and losers.”
Trump’s Rockingham County co-chair, former state Rep. Lou Gargiulo (R-Hampton Falls), echoed Stepanek’s criticism. “Jennifer Horn comments aretotally inappropriate!” he wrote on Facebook. “As the NH Republican Party Chairperson her role is to remain neutral… Enough is enough she needs to go!”
‘Donald Trump is not a credible candidate for President’
Horn denied her comments violated party restrictions on taking sides in a primary. Before she became party chair, however, she was anything but strictly neutral regarding Donald Trump. When the billionaire real estate mogul briefly toyed with launching a presidential campaign in 2011, Horn publicly expressed her disdain in a Union Leader op-ed.
“Donald Trump is like a cat with a length of yarn, who keeps jumping instinctively at the thread trying to grab it,” she wrote. “Trump can’t stop himself from reaching at the media attention that has erupted as a result of one well-placed birther comment.”
“Now it has grown into a firestorm of attention so fierce that he’s practically giddy, unable to stop himself from spouting outrageous comments and placing himself ever more often in front of the cameras,” Horn continued.
“Donald Trump is not a credible candidate for President, and if the GOP allows him to hijack the primary process then they deserve exactly what they get,” she concluded.
‘This is wrong’
Following the resignation calls from Trump supporters, conservative activists supporting other presidential candidates smelled blood and joined in the attack. One-time GOP gubernatorial candidate Andrew Hemingway, who competed against Horn for party chair two years ago, spoke out. “This is not about Trump,” he explained on Facebook. “This is about the state party chair bashing the party front runner and his supporters. This is wrong.”
Free State Project chair Aaron Day, who also leads the Republican Liberty Caucus of New Hampshire, launched a social media campaign with anonline petition calling for Horn’s resignation that drew over 1000 signatures from all over the country.
It is not the first time Day has criticised Horn. In February, 2014, Day told James Pindell he was launching a campaign to run against Horn in her re-election bid for party chair. Day cited Horn’s support for the Medicaid expansion compromise approved by Republican lawmakers as the impetus for his decision. Day, however, eventually dropped his bid to oust Horn and she was unanimously reelected by the Republican State Committee.
A ‘misogynistic indecent assault’
Day and Horn recently clashed over a comment Day left on Sen. Kelly Ayotte’s Facebook page, an exchange captured by Union Leader reporter Dan Tuohy. Day had responded to Ayotte’s posting of photos from a Veterans Day speech by posting a link to a Vice story about a porn star giving sexual favors to veterans “to thank them for their service.”
“Aaron Day your post is insulting and offensive and the suggestion is beyond the pale,” Horn wrote. “You should be ashamed of yourself - and btw, the veterans for whom the original post was written share the offense. Take your trash elsewhere.”
“No matter how deep your disagreement may be, there is never - NEVER - a circumstance where referring to a woman as ‘whore’ or a prostitute or even suggesting that somehow her political differences with you makes her a ‘political prostitute’ is acceptable,” Horn continued. “This sort of misogynistic indecent assault on a successful, professional, intelligent woman is grossly inappropriate and completely unacceptable.”
“My comment was simply a link to an article,” answered Day. “Nowhere in the link did I make any reference to Kelly Ayotte at all. I encourage you to actually read the article… This seems like an extremely poor attempt to manufacture a ‘war on women’ defense in order to deflect from Kelly’s poor voting record.”
‘On cusp of a civil war’
Day has vowed to wage an independent, third-party campaign against Ayotte, handing the closely contested seat, and maybe the U.S. Senate, to Democrats – if the Republican-led legislature reauthorizes expanded Medicaid. “Why even have two parties if the Republicans are going to cave on an issue like this?” he explained to Truth in Media.
Day holds Ayotte “singularly responsible for Medicaid expansion.” As he sees it, lawmakers would not have approved the program if arch-conservative Bill O’Brien had been Speaker of the House and O’Brien would not have lost his bid for the speakership if Ayotte had not “meddled” in the contest andendorsed O’Brien’s Republican opponent.
“I think we’re on cusp of a civil war in the Republican Party.” Day told Truth in Media. “This isn’t just me running for the U.S. Senate. I could have people running for Congressional District 1, Congressional District 2 and governor. It could be a rout of the Republican Party. So this is a huge issue and an important time to determine whether the Republican Party has a soul and stands for something and has principle or it doesn’t.”
AND NATIONALLY
7. Yes It IS Changing
“Bad News For The Planet,” Says The World Meteorological Organization
by Joe Romm, thinkprogress.org, November 25, 2015
CREDIT: WMO
The World Meteorological Organization (WMO) reports that 2015 will set (or already has set) a variety of worrisome climate records due to manmade carbon pollution:
- 2011-2015 “have been the warmest five-year period on record, with many extreme weather events – especially heatwaves – influenced by climate change.”
- 2015 is set to be the hottest year on record by far, with the highest ocean surface temperatures ever monitored.
- It’s “probable” that total global warming since the industrial revolution will cross the 1°C (1.8°F).
- The 3-month average of Northern Hemisphere CO2 levels “crossed the 400 parts per million barrier for the first time.”“This is all bad news for the planet,” noted WMO Secretary-General Michel Jarraud. In particular, crossing the 1°C (1.8°F) means we are halfway to the 2°C (3.6°F) threshold that world’s top scientists and governments have identified as the defense line past which climate impacts become very dangerous and then catastrophic.Last week, NASA data made clear that 2015 was going to crush the record for hottest year. On top of the underlying human-caused warming trend is the short-term warming caused by a very strong El Niño. As the top chart shows, global temperature records tend to be set in El Niño years, and those records just get higher and higher over time because of carbon pollution.Indeed, last month was not merely the hottest October — by far — in the 135-year temperature record of NASA. It was the highest divergence from the mean temperature ever recorded in the 1,600-month temperature record of NASA. NOAA reported that October 2015 bear the previous record set in October 2011 by a whopping 0.31°F (0.17°C).As this NOAA chart shows, the warming since January is so high that it is now a certainty 2015 will smash the record for hottest year set just last year:CREDIT: NOAAFinally, the WMO notes that all this warming is having an affect on our weather: “Scientific assessments have found that many extreme events in the 2011-15 period, especially those relating to extreme high temperatures, have had their probabilities substantially increased as a result of anthropogenic climate change – by a factor of 10 or more in some cases – with more than half the events scientifically assessed showing an anthropogenic climate change signal of some description in their risk.”The hotter we let it get, the more extreme everyone’s weather will become.
8. Getting It Right
Getting Beyond Rhetoric on Corporate Tax Reform
by Alexandra Thornton, americanprogress.org, November 20, 2015
It seems that corporate tax reform is perpetually in the news, but the debate never seems to move beyond rhetoric. This was reinforced when new Speaker of the House Paul Ryan (R-WI),acknowledged this week that congressional Republicans would take up corporate tax reform next year for purposes of positioning Republicans for the 2016 election.
The Center for American Progress has for years tried to move the debate over tax reform, including corporate tax reform, beyond political hyperbole and common myths. In October, CAP published an issue brief debunking seven of those myths, including the claim that taxes are crushing America’s corporations. In 2013, CAP presented its thoughts on what progressive, pro-growth corporate tax reform could look like. In 2014, CAP tried to show how muchconsensus actually exists beneath the rhetoric and this year, waded into the discussion aboutpatent, or innovation, boxes.
That’s why it was refreshing to hear Sen. Elizabeth Warren (D-MA) so clearly communicate in her speech at the National Press Club this week some important points that policymakers must agree upon if there is to be progress on corporate tax reform.
First, the corporate income tax must raise more revenue than it does now. The Joint Committee on Taxation publishes a table—Table A-3 here—in its annual “Overview of the Federal Tax System” that shows the revenue raised by the corporate income tax as a percentage of gross domestic product, or GDP, since 1950. Aside from a few fluctuations, corporate tax receipts have declined fairly steadily over the past several decades as a percentage of GDP, from a high of 32.1 percent in 1952 to 10.6 percent in 2014. As Sen. Warren made clear, in the early 1950s, corporations contributed about $3 out of every $10 in federal revenue, but today, they only contribute about $1 out of every $10.
Second, a point that is frequently lost in the corporate tax reform debate is that corporate tax receipts are an important means of funding the very public investments that U.S. businesses rely upon—such as investments in an educated workforce and a robust legal system. Those public investments are essential to a smoothly functioning marketplace. They are part of the reason why, as Sen. Warren stated, the United States has “the deepest and most liquid capital markets” in the world. Without a corporate tax, a significant number of those profiting from business would pay little to nothing toward the cost of the government’s contribution to the success of their businesses.
Third, almost no company pays the statutory corporate income tax rate of 35 percent, as manystudies have demonstrated. Yet the debate gets stuck on the statutory rate, despite the fact that there are many ways to bring the statutory rate down while still increasing corporate tax receipts overall. For example, lawmakers can reduce or eliminate the tax breaks that currently allow very large multinational corporations and certain tax-favored industries to pay effective tax rates that are far lower than the average rate. Without those tax breaks draining revenue out of the system, the corporate income tax would raise more revenue, some of which could be used to lower the rate. Another possibility to consider is whether to require large businesses currently not required to pay a separate corporate entity level of tax, such as limited partnerships and S corporations, to pay corporate income tax if they exceed a specified size. These organizational forms were never intended to be mechanisms for large businesses to avoid taxes, but large companies have increasingly switched to these corporate organizational structures over the past few decades due to changes in the tax code that lowered the individual tax rates relative to the corporate rate.
Finally, policymakers must come together on the goal of leveling the playing field to reduce the harmful economic distortions that occur when certain industries are favored or when companies make decisions based on tax avoidance rather than on activities and investments that will spur innovation and long-term competitiveness. Tax breaks for one industry or another, as well as outright loopholes that were never intended to be tax breaks in the first place, all create more distortions in business behavior and unfairness between businesses, not to mention complexity for tax administrators. Many of these tax breaks have no rational basis, such as the billions of dollars spent through the tax code each year for the oil and gas industry. Tax administrators must devote huge amounts of staff time developing regulations to clarify how each tax break will be applied in practice, and businesses spend top dollar on tax advisors to help them find every opportunity to lower their tax bills through these tax breaks—which in turn requires tax administrators to spend even more time creating anti-abuse regulations.
Committing to a level playing field also means shoring up the tax code as it applies to multinational corporations, which use a variety of cutely named techniques to reduce their effective tax rates well below those of most domestic businesses, especially small ones. Sen. Warren wisely avoided technical descriptions of these intentionally complex maneuvers and instead highlighted some glaring evidence of their existence—for instance, the large number oftax haven subsidiaries of U.S. companies. CAP has further recommended addressing a related problem: the tax code’s preferential treatment of debt over equity, which underlies earnings stripping techniques used by multinationals and encourages excessive levels of debt in U.S. companies.
At some point, the corporate tax reform debate may focus on how the tax code actually could support business investments in human capital, as well as in innovation that leads to a sustainable business environment and economy in the long run. But getting to the point of achieving these types of reforms will never be reached if the conversation remains fixated on the misleading claims that have dominated the debate over corporate tax reform.
9. The Lizard Brain
Terrorism in the Age of Trump
by Jonathan Chait, nymag.com, November 25, 2015
In the aftermath of mass murder in Paris, Establishment Republicans posited hopefully that now, finally, their voters would get serious and support a presidential candidate who had professional experience in the field of politics. A few days after the attacks, Politico reported the firm convictions of party stalwarts, who confidently asserted, "The reemergence of foreign policy atop the Republican agenda will force voters to reevaluate the outsider candidates, particularly as both [Donald] Trump and [Ben] Carson display a lack of knowledge about national security and the terrorist threat."
But that, it turned out, was wishful thinking. Far from sobering up the Republican electorate, the attacks served instead to intensify its state of frothing rage. A poll showed that the candidate Republicans trusted most to handle terrorism, and the candidate who found his overall lead in the polls rising again after an autumn sag, was none other than Donald J. Trump. And, indeed, this development may have been predictable. From the standpoint of a Trump skeptic, it makes no sense to entrust the task of addressing large policy problems to a buffoonish demagogue; post-Paris, it makes even less sense to entrust one with solving problems now revealed to be even larger.
From the standpoint of a Trump fan, however, things look quite different: The country desperately needs a strong leader who can assure it of victory and who will look after its people without being held back by diplomatic niceties or moral decency, goes the thinking. Gazing upon the bloody streets of Paris and the hordes of suspicious-looking foreigners desperate to take refuge in the United States, his supporters see the allure of a Trump presidency now more than ever.
The enveloping climate of fear extends far beyond Trumpian knuckle-draggers, however. A CNN reporter at a press conference asked President Obama, “Why can’t we take out these bastards?” Polls conducted days after the Parisian atrocities showed substantial majorities in favor of sending ground troops to fight ISIS and against allowing more ISIS-fleeing refugees into the U.S. America is relying on its lizard brain.
The atmosphere after Paris provided the nearest approximation to the mix of dread, rage, and suspicion that pervaded American politics after 9/11. And once again, a Bush responded by instinctively proposing to send ground troops to occupy a Middle Eastern country. This time it was Jeb, characteristically blind to the prospect that American ground troops would allow ISIS to refashion itself as the authentic local resistance to a Western invasion. At a recent campaign event, one voter asked if the Middle East was safer with or without Saddam Hussein ruling Iraq. Bush replied, “We can have a history lesson or we can talk about the fact that I’m running for president.” (This is the closest Bush has come to openly acknowledging that his election would require voters to forget everything that happened in the recent past.)
France, the target of the attacks, responded somewhat like our country did after 9/11: striking back at the enemy militarily. (President François Hollande vowed to wage a “pitiless” war.) But the United States has changed since the last time it had a Bush in office—in large part because it had a Bush in office. The current president, elected in no small part owing to widespread disgust with the Iraq War, has no ready-made policy response to sate the public’s anger. The Obama administration had an anti-ISIS strategy in place before Paris: air strikes, limited use of special forces, aid to proxies on the ground, and the use of intelligence and law enforcement to ward off threats. The attacks in Paris were a horror but not a revelation; the administration already knew ISIS wanted to murder enemy civilians, including Westerners, indiscriminately.
Because Obama — unlike Bush in 2001 and Hollande today — had no change of action in response, the nationalistic impulses unleashed by the attacks have flowed into different channels from the ones 14 years ago. The American backlash has taken on a wildly xenophobic character this time around. Despite the fact that the Paris attacks were not carried out by Syrian refugees, that France itself vowed to continue its refugee program following the attacks, and that the United States was taking a fraction of the exiles that its (much smaller) European allies were, American fears settled on the possibility that refugees might replicate the horrors of Paris on American soil.
In theory, ISIS could certainly plant terrorists among refugees. In practice, refugees undergo a screening process that lasts an average of two years, and officials dismiss the risk as minimal. Anne C. Richard, the assistant secretary of State for population, refugees, and migration, told a House committee, “The odds of a refugee becoming a terrorist are very, very small.” No risk can be eliminated, of course. Alcohol, pizza, automobiles, not to mention millions and millions of guns, all pose risks. One might even wonder why the risk that deranged men loyal to ISIS might gun down civilians should terrify a country already inured to these sorts of slaughters carried out by men afflicted by different derangements. A rational or even semi-rational approach to the situation might balance the danger of terrorists’ hiding among the refugee population against the humanitarian benefits of saving innocent people from the horrors of civil war and ISIS’s medieval barbarism.
No such reasoning has cooled the feverish response, however. Obviously, every country gives the interests of its own people more weight than the interests of others. The essence of nationalism is to disregard the interests of other countries completely. “We are a compassionate nation,” announced House Speaker Paul Ryan, employing the usual lead-in for endorsing uncompassionate policies, “but we also must remember that our priority is to protect the American people.” And by “priority,” Ryan made clear, he really meant “only consideration.” Specifically he said, “We should not bring Syrian refugees into this country unless we can be 100 percent confident that they are not here to do us harm.” A 100 percent certainty is an extremely high threshold. This is the immigration-policy analogue of Dick Cheney’s One Percent Doctrine, which held, in the wake of 9/11, that even a one percent chance of terrorists’ obtaining weapons of mass destruction must be treated as a certainty.
Republican leaders have struggled, with mixed results, to suppress the xenophobic undertones on the right for fear that their party will alienate the growing share of Latino voters. The Muslim voting bloc — being smaller, harder to measure, and not as politically useful — has no such leverage. Thus this new iteration of the immigration debate has subjected its targets to unrestrained savagery. Rand Paul vowed to “end housing assistance to refugees.” Ted Cruz and Jeb Bush both proposed to let in only Christian refugees, untroubled by the legal and practical obstacles to attaching a formal religious test to government policy.
The terms conservatives used to explain their reasoning served only to confirm their cruelty. “If there’s a rabid dog running around in your neighborhood, you’re probably not going to assume something good about that dog, and you’re probably going to put your children out of the way,” said Ben Carson about Syrian refugees. “It doesn’t mean that you hate all dogs, by any stretch of the imagination, but you’re putting your intellect into motion.” Marco Rubio, meanwhile, objected to Hillary Clinton’s denial that the United States is at war with Islam like so: “That would be like saying we weren’t at war with the Nazis, because we were afraid to offend some Germans who may have been members of the Nazi Party but weren’t violent themselves.” In Carson’s analogy, terrorists are like rabid dogs, and Muslims like all dogs. In Rubio’s analogy, terrorists are like violent Nazis, and regular Muslims are like nonviolent Nazis. Trump insisted, falsely, that he had seen thousands of American Muslims cheering the 9/11 attacks. (Confronted with the fact that there’s no evidence of such a thing: “I have the world’s best memory.”) This time around, the right-wing mind has come to fixate on the imagined enemy at home rather than the real one abroad.
It is Trump who has set the pace. His talent for manipulating the darkest emotions of the conservative id, while minimizing specific policy commitments, has been on full display. In every public appearance, he emitted new, authoritarian-sounding warnings. “We’re going to have to do things that we never did before. And some people are going to be upset about it, but I think that now everybody is feeling that security is going to rule,” he vowed. “We’re going to have to look at the mosques. We’re going to have to look very, very carefully.” Every new sound bite set off a profitable fervor of media speculation, forcing other candidates to raise the bidding or be left behind. “It’s not about closing down mosques,” insisted Rubio, placing himself rhetorically to Trump’s right, “it’s about closing down anyplace — whether it’s a café, a diner, an internet site — anyplace where radicals are being inspired.”
The tea-party movement had initially fashioned itself as wildly anti-statist. Now its advocates have veered into wild authoritarianism. None of this requires intellectual justification in lizard-brain America, and Trump, for now, is the Lizard King.
10. Some Perspective on the Federal Debt
Don’t Sweat the Debt: Why the Federal Budget is Not Really Out of Control
by Ed Dolan, economonitor.com, December 1, 2015
The GOP primary has become an orgy of fear mongering, and not just about immigrants and terrorists. The candidates regularly portray the federal debt, too, as a dire threat to America’s future. Some samples:
Marco Rubio: “We have a $19 trillion bipartisan debt and it continues to grow as we borrow money from countries that do not like us to pay for government we cannot afford. . . The time to act is now. The time to turn the page is now. If we — if we don’t act now, we are going to be the first generation in American history that leaves our children worse off than ourselves.”
Chris Christie: “We have $19 trillion in debt. . . And we’re talking about fantasy football? Can we stop? . . . Are you concerned like I am that the debt and deficits of Washington, D.C. are endangering America’s future?”
Mike Huckabee: “I do not want to walk my five grandkids through the charred remains of a once great country called America, and say, ‘Here you go, $20 trillion dollars of debt. Good luck making something out of this mess.’ ”
Rand Paul: “You know, I left my medical practice and ran for office because I was concerned about an $18 trillion debt. We borrow a million dollars a minute. Now, on the floor of the Congress, the Washington establishment from both parties puts forward a bill that will explode the deficit. It allows President Obama to borrow unlimited amounts of money. I will stand firm. I will spend every ounce of energy to stop it. I will begin tomorrow to filibuster it. And I ask everyone in America to call Congress tomorrow and say enough is enough; no more debt.”
An exploding debt certainly sounds scary, but are federal finances that far out of control? Not really. If we look at the numbers, we can see that the debt is far from the dire threat the Republican candidates make it out to be.
Which numbers.?
First of all, forget about the $18 trillion, $19 trillion, and $20 trillion numbers the candidates like to talk about. Those refer to the government’s gross debt, a large part of which is issued by the Treasury but held by other government agencies, especially the Fed and the Social Security Trust Fund. Those interagency transactions create no burden on the public, because what the Treasury pays out in interest and principal goes right back into another government account. The only thing that matters from an economic point of view is net debt, also known as debt held by the public. That came to a little over $13 trillion at the end of 2015. You would think $13 trillion sounds like enough without exaggerating, but, evidently, presidential candidates are pledged never to pass up a chance to overstate their case.
Four key numbers determine the long-term growth of the government’s net debt.
The debt ratio, that is, the debt stated as a percentage of GDP. A larger economy can support a larger debt. The important thing is whether the debt grows faster than or slower than the economy as a whole.
The growth rate of potential GDP, that is, the growth of the economy’s productive capacity when operating at full employment. The faster the economy as a whole grows, the more debt the government can take on without raising the debt ratio.
The interest rate on the debt. Once it borrows, the government must make promised interest payments. The higher those interest payments, the less is left to fund programs people want—roads, warplanes, or benefits for kids and seniors.
The budget surplus or deficit. More specifically, for tracking long-term trends, we need to look at the primary structural balance, that is, the surplus or deficit after removing interest payments and short-term cyclical effects like the tendency of tax revenue to rise in a boom and unemployment benefits to rise in a recession.
We can use either nominal (current dollar) or real (inflation-adjusted) values for these numbers, provided that we are consistent. In what follows, we will use nominal versions of all variables.
To understand intuitively how these four numbers fit together, consider a simple example: Suppose that nominal GDP is $10 trillion and the federal debt is also $10 trillion, so that the initial debt ratio is 1.0. Suppose further that the interest rate and growth rate are equal, for example, that both have a nominal value of 3 percent. Finally, suppose the government borrows exactly what it needs to pay the interest on the debt, that is, $300 billion, no more and no less. If so, the debt at the end of the year will be $10.3 trillion and GDP will also have grown to $10.3 trillion. The debt ratio will not change. In this case, then, the debt ratio is stable over time when the primary structural balance is zero.
Note that a primary structural balance of zero does not have to mean that the overall budget is in balance. In our example, the overall structural balance, including interest, is in deficit by 3 percent of GDP. If the economy were operating below full employment, the current annual deficit would be even larger than that because outlays would be higher than they would be at full employment and tax revenues would be less. The overall federal budget does not have to be in balance each year to hold the debt ratio stable over time.
If the numbers are different from those in our example—say, the debt ratio is larger or smaller than one, or the interest rate and growth rates are not equal—then the value of the primary structural balance that is needed to hold the debt ratio constant may be greater or less than zero. Specifically, in order to hold the debt ratio steady over time, the primary structural balance must be equal to the initial debt ratio multiplied by the difference between the interest rate and the growth rate. In equation form:
PSB* = DEBT (INT-GRO)
Where PSB* is the steady-state value of the primary structural balance, DEBT is the debt ratio, INT is the interest rate on the debt, and GRO is the growth rate of potential GDP growth, all expressed consistently in either nominal or real terms.
Where do we stand now?
Where do we stand now? Under current policies, is the federal debt out of control, stable, or on course to shrink? Here are the estimated numbers for 2015 from the latest Budget and Economic Outlook from the Congressional Budget Office:
Debt in the hands of the public equals 74 percent of GDP
Average nominal interest rate on the debt equals 1.7 percent
The growth rate of nominal potential GDP equals GRO = 4 percent (real potential growth of 2.2 percent plus 1.8 percent inflation)
Applying the formula PSB*=DEBT(INT-GRO), these numbers give us a steady-state value for the primary structural balance of 0.74(0.017-0.04) = –0.017. That means that a primary structural deficit equal to 1.7% of GDP would exactly balance new borrowing with GDP growth, so that the debt would remain stable over time.
The CBO estimates the current budget balance at –2.6% of GDP, the structural balance at –1.9%, and the primary structural balance at –0.6%. Since the current value of the PSB, –0.6%, is greater than the steady state value, –1.7% (–0.006 > –0.017), we conclude that current fiscal policies are sufficient to bring the debt down gradually over time.
Even better news
A primary structural balance greater than its steady-state value is itself sufficient to undercut the apocalyptic warnings of the GOP candidates, but in fact, the news is even better than that, at least for the time being. Take a closer look at the steady-state formula, PSB*=DEBT (INT-GRO). If the interest rate is less than potential GDP growth, then the term in parentheses is negative. As a result, any increase in the DEBT ratio decreases the value of PSB*. That little mathematical quirk turns out to have important policy implications.
Suppose that some event like a war, a deep recession, or some structural change in the economy were to cause an unexpected increase in the current deficit. The debt ratio would begin to increase, but with an interest rate less than GDP growth, the steady-state value of the PSB would at the same time begin to decrease. As the steady-state PSB caught up with the current PSB, growth of the debt ratio would stabilize at a new upper limit. Nothing catastrophic would happen. (See this slideshow for a more detailed account, including numerical examples and charts.)
Contrast that with the situation where the interest rate is greater than GDP growth. In that case, the term (INT-GRO) is positive. Anything that even temporarily increased the debt ratio would increase the steady-state value of the PSB. Unless policy changes were made to reverse the initial cause of the increase, the gap between the current and steady-state values of the PSB would continue to widen year by year. The debt ratio would then rise without limit at an ever- increasing rate. Such a scenario would truly qualify as an “exploding debt.”
Economists have long recognized that the relationship of the interest rate to the rate of GDP growth is critical for the sustainability of fiscal policy. If the average value of the interest rate over the business cycle is less than the rate of growth of potential GDP, then debt growth is inherently self-limiting. If the interest rate is higher than GDP growth, then explosive growth of the debt is at least a theoretical possibility, unless active fiscal management adjusts the primary structural balance as necessary to hold it below its steady-state value on average over the business cycle.
So which is more likely? INT < GRO or INT > GRO? On theoretical grounds, economists have long thought that interest rates will normally average a bit higher than the rate of GDP growth. However, as the following chart shows, that has not consistently been the case in the United States, at least not over the past half century.
Instead, the relationship of the average nominal interest rate on the federal debt and rate of growth of nominal potential GDP falls into three distinct periods.
From 1965 to 1981, the nominal interest rate on federal debt averaged 4.4 percentage points below the growth of nominal potential GDP. Economists who see that as abnormal explain it by noting that inflation rose steadily over the period. As inflation pushed nominal GDP growth higher, they say, unrealistically low inflation expectations held nominal interest rates down.
Then, from 1982 to 2001, nominal interest rates averaged 1.1 percentage points higher than nominal GDP growth. That looks like a return to the “normal” pattern, although underestimation of the rate at which inflation was decelerating probably provides a partial explanation for the gap between the interest rate and the growth rate in this period.
Finally, since the turn of the century, nominal interest rates have returned to levels close to or below potential GDP growth. From 2002 to 2015, interest rates averaged 0.8 percentage points less than growth rates. In the most recent five years, the gap has increased to -1.2 percentage points.
Many economists still expect interest rates to rise above GDP growth rates once again as the lingering effects of quantitative easing and the Great Recession fade away. Others, however, are beginning to wonder if a negative gap might become the “new normal.” They point to factors such as the drag on the global economy from slowing growth in China; a worldwide glut of saving from both households and corporations; and difficulties that central banks in Japan, the EU, and even the US have had in pushing inflation up to their 2 percent policy targets.
What lies ahead?
Economists at the CBO do not expect the debt to explode any time soon. Instead, as the next chart shows, they foresee a slight decrease in the debt ratio over the next three years, from the current 74 percent to about 73 percent, and then a gradual increase to about 78 percent by 2025.
The near-term decrease is consistent with our observation that the current value of the primary structural balance is currently well below its steady-state value. However, CBO forecasts suggest the current PSB will rise to or just above its steady state value by 2025.
Much of the forecast increase in the debt ratio in later years comes from the effects on taxes and revenues of the inexorable aging of the US population. Still, even major demographic changes will not touch off a debt explosion if, as the CBO expects, interest rates on the debt to remain below nominal potential GDP growth for the next decade and beyond. If that is the case, any increase in the debt ratio should be contained well within sustainable limits.
Is a debt ratio of 80 percent, even it is stable, too high in some sense? Economists disagree. By historical standards, the US debt ratio is higher than at any time since World War II. However, because twenty-first century interest rates are lower than those of the past, the total cost of servicing the debt is less than half of what it was in the 1980s and 1990s, when the debt ratio was much smaller. Perhaps the best argument for lowering the debt ratio is not that it is currently too burdensome, but rather, that a lower initial debt ratio would give more room for fiscal maneuver in case of a future emergency such as a war or another severe recession.
In any case, as our numbers show, it would take only moderate adjustments in fiscal policy to put the debt ratio on a downward course. Tax and spending changes totaling less than 1 percent of GDP would be enough. Policy changes that brought US healthcare costs in line with those of other advanced countries that offer top-quality care would be especially welcome. However, conservative proposals for radical cuts in social programs and discretionary spending can only be rationalized on ideological grounds, not by a nonexistent fiscal emergency.
Realistically, the greatest danger to fiscal stability does not come not from the policies of the current administration or the Democratic candidates now vying for office. Instead, it comes from policies advocated by the GOP candidates themselves.
Some of them have floated tax cut plans that could balance only if they accelerated real GDP growth to 4 percent or more. If the tax cuts were enacted but the promised growth did not materialize (and few serious economists think it would), structural deficits would quickly rise. If panicky austerity measures were to follow, growth could easily fall below the moderate 2 percent now forecast. That would further accelerate the rise of the debt ratio. If financial markets such developments as indicators of chronic fiscal irresponsibility, real interest rates could easily rise. As our review of budget math has shown, rising deficits, rising interest rates, and slowing growth would be just the combination needed to raise the possibility of a real debt explosion.
For a more detailed discussion of debt math, with additional charts and examples, see this tutorial on debt dynamics and sustainability.
FINALLY twins
