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Robert Stavins

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The Credit Downgrade and the Congress: Why Polarized Politics Paralyze Public Policy

Posted: 08/11/11 06:56 PM ET

There's room for debate about whether U.S. government deficits justify Standard & Poor's downgrading last week of long-term U.S. debt, but the more important factor cited in S&P's report is that "the effectiveness, stability, and predictability of American policymaking and political institutions have weakened..." The S&P team emphasizes that "the difficulties in bridging the gulf between the political parties ... makes us pessimistic about the capacity of Congress and the Administration" to address the crucial problems the country faces.

Although these S&P judgments were intended to refer exclusively to fiscal policy, they really apply to a much broader set of issues, ranging from economic to health to environmental policies. The key reality is this: there is a widening gulf between the two political parties that is paralyzing sensible policy action.

Political Polarization

This increasing polarization between the political parties has shown up in a number of studies by political scientists employing a diverse set of measures that place roll-call votes by members of Congress on an ideological spectrum from extreme right to extreme left. This polarization — the disappearance of moderates — has been taking place for three decades. The rise of the Tea Party movement within the Republican Party is only the most recent vehicle that has continued a 30-year trend.

Why has this collapse of the middle taken place; why has party polarization increased so dramatically in the Congress over the past 30 years? In my view, three structural factors stand out.

Three Structural Factors

First, there has been the increasing importance of the primary system, a consequence of the "democratization" of the nomination process that took flight in the 1970s. A small share of the electorate vote in primaries, namely those with the strongest political preferences — the most conservative Republicans and the most liberal Democrats. This self-selection greatly favors candidates from the extremes.

Second, decades of redistrictinga state prerogative guaranteed by the Constitution — has produced more and more districts that are dominated by either Republican or Democratic voters. This increases the importance of primary elections, which is where the key choices among candidates are now made in many Congressional districts. Because of this, polarization has proceeded at a much more rapid pace in the House than in the Senate.

Third, the increasing cost of electoral campaigns greatly favors incumbents (with the ratio of average incumbent-to-challenger financing now exceeding 10-to-1). This tends to make districts relatively safe for the party that controls the seat, thereby increasing the importance of primaries.

These three factors operate mainly through the replacement of members of Congress (whether due to death, retirement, or challenges from within the party) — that is, the ideological shifts that cause increasing polarization largely occur when new members are elected (from either party, although a disproportionate share of polarization has been due to the rightward shift of new Republicans).

To a lesser degree, polarization has also taken place through the adaptation of sitting members of Congress as they behave more ideologically once in office. Such political conversions are due to the same pressures noted above: in order to discourage or survive primary challenges, Republican members shift rightward and Democratic members shift leftward.

A recent case in point is Senator John McCain, Republican of Arizona, who evolved from being a moderate at the time of his 2008 Presidential run to being a solid conservative in 2010, in response to a primary challenge from a Tea Party candidate.

Long-Term Implications

If the increasing polarization of the Congress is due to these factors, then it is difficult to be very optimistic about the prognosis in the near term for American politics. This is because it is unlikely that any of these factors will soon reverse course.

The two parties are not about to abandon the primary system to return to smoke‑filled back rooms. Likewise, no state legislature is willing to abandon its power to redistrict. And public financing of campaigns and other measures that would reduce the advantages of incumbency remain generally unpopular (among incumbents, who would — after all — need to vote for such reforms).

Other Factors?

True enough, in addition to these long-term structural factors that have driven political polarization, shorter-term economic and social fluctuations have also had pronounced effects. In particular, significant economic downturns — whether the Great Depression of the 1930s or the Great Recession of the past several years — increase political polarization.

The 1930s saw not only the rise of American socialists and communists, but also the rise of American right-wing extremism. It took World War II to bring an end both to the economic upheaval of the 1930s and the destructive political polarization that had accompanied it.

U.S. participation in the war brought a degree of political unity at home, largely because U.S. action was precipitated by the attack on Pearl Harbor. Under conditions of less clear motivation for U.S. military action abroad — such as the war in Vietnam — the result has not been political unity, but divisiveness and polarization. The ultimate impacts on domestic politics of the wars in Afghanistan and Iraq may hinge on whether they are perceived to be patriotic responses to a foreign attack (9/11) or the latest manifestations of U.S. military adventurism.

The Future

So, it's reasonable to anticipate — or at least to hope — that better economic times will reduce the pace of ongoing political polarization. However, in the face of the three long-term structural factors I've identified above — the increasing importance of primaries, continuing redistricting, and the increasing costs of electoral campaigns — it is difficult to be optimistic about the long-term prognosis for American politics.

No matter how one feels about the wisdom of Standard & Poor's downgrading of long-term U.S. debt, the issue of greater concern should be their assessment of the state of the U.S. body politic.

 
 
 
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Gestas
Mountain Man
01:04 PM on 08/12/2011
Hmmm...During the Housing Bubble, your lender could buy you any Credit Score you needed..Thats how Bar Maids in Las Vegas with hardly any taxable income could own as many as 3 houses.
jhNY
Mercy.
12:14 PM on 08/12/2011
I realize that my comment will be tangential to the points made in this essay, but to my way of thinking, the most important aspect of the S+P downgrade is the downgrade's practical consequences, not its assessment of US politics.

Already municipal bonds, tied to the nation's former triple A rating, are being downgraded, which will cause issuers to scramble to put up more cash to secure their bonds. Worse rating = need for more securitizing of debt. At a time when local tax revenues are crumbling around the nation.

And the major banks' own capacity to pay down debt will likewise be downgraded, if I understand things correctly, because their ratings and solvency are likewise tied to the nation's overall credit rating. Which may cause interest rates on credit card and unfixed mortgage debt to be raised. At a time when many millions have no work, and many millions more are under-employed.

I don't mean to belittle the systemic problems of American politics. But right now, the ripple effect of the downgrade has begun. The consequences are near-immediate, and the nation is unprepared at every level to respond, beyond blaming politics and the agency which declared the downgrade.
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zogimperator
is this microbiology?
10:56 AM on 08/12/2011
Overall an excellent piece, but the fatal flaw is the generic cry of 'political polarization.' This is absolute rubbish and it is lazy at best to make such a claim.

If there was any polarization at all, we'd have social democrats like Bernie Standers running one side of the government.

The Democrats have rushed to the right, the Republicans have rushed to the right. Any difference between the parties merely reflects the time lag between D and R in adopting the extreme right-wing agenda.
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Craig Bovia
Vermont, 1791, women can vote, no slavery allowed
04:49 PM on 08/12/2011
We have been sold out like we don't even exist
10:49 AM on 08/12/2011
McGraw Hill, parent company of S&P publishes Stavins' books.
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Mark MacDonald
Pass the Scotch
10:36 AM on 08/12/2011
I am not an economist or a lawyer with a degree from an Ivy school, so my role in the recent economic meltdown was somewhat limited. That being said, I am old enough to remember two guys of divergent political viewpoints--Bill Clinton and Newt Gingrich--balancing the federal budget with a combination of spending cuts and cutting the capital gains tax from 28% to $20. Liberals fumed, the economy zoomed, and we built a government surplus. Enter Baby George and his massive outlays for war and everything else.
09:55 AM on 08/12/2011
GOOD MORNING!!! MY FELLOW HOMO SAPIENS WHICH MEANS THE SPECIES WHO IS WISE.
SHORT TAKES:
40 million was spent in the Wisconsin election to recall 6 Republican State legislators. Most of that 40 million came from outside those 6 districts from unknown donors who no doubt were America's Robber Barons and there is no way the people can consider such elections fair or right.
*****************************************************************************************************************
If Obama is wise he will warn the Israeli government not to attack Iran and if they do they will be on their own and of course Obama is not stupid enough to attack Iran!!!
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mustardhead98
Professional Fine Artist
09:40 AM on 08/12/2011
I've never seen the US as polarized politically as it is today. Obama claimed he would bring everyone together-well that didn't last long and we saw the complete opposite happen.

While we're fighting and arguing about who's right, who's left etc. those at the top are continuing to sabotage the country. Big corps/big money run the country nowadays no matter who's been elected.

The US needs a new strong, TRUE leader to rise from the grassroots. There's been alot of damage done over these past few years and the people are at their breaking point. Enough is enough. Too bad the empty suits in charge are completely oblivious the this fact. They should check out the rest of the world and see what's going on. If Obama continues to guide the ship down to the bottom, (which I suspect he is going to do) the US people just very well may say "we've had it" and throw the b.u.m.s out!
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zombie377
09:22 AM on 08/12/2011
Before making an assertion these structural factors pull Democrats to the left, it really helps your case to present evidence. Just one example of where primaries or redistricting produced a Democrat substantially more liberal than their predecessor. I can't think of any. A more reasonable hypothesis in the absence of evidence is that the gop has pulled the center so far to the right that Democrats moving right in a smaller ratio merely seem more liberal.
09:04 AM on 08/12/2011
I fundamentally disagree with the assertion that both parties have become increasingly polarized. While the GOP pulls further and further to the extreme right, the Democrats have desperately been running to the center, abandoning long held principles and accepting the conservative framing of key issues. It was true under Clinton and it's more true than ever under Obama. Democrats are eager to compromise, but Republicans, in the thrall of their irrational Tea Party bass, reject even the most advantageous deals. As a result, the political center has shifted significantly rightward in the last 20 years. I think this simplistic 'a pox on both their houses' framing here is wildly inaccurate and corrosive.
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raker
08:25 AM on 08/12/2011
The problem is not polarized politics, the problem is Republicans who think they are entitled to dominate government and take anything and everything they want. The instant media cliche is that the problem is childish politicians who just won't agree is dishonest. It is a false equivalency. It is a lie.
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Tsakonas
Architect
08:22 AM on 08/12/2011
I fail to see how the Left has become as extreme as the Right. In fact, the righties love to boast about how the country has moved to center-right. If the Left was equally extreme as the right they would be calling for pure Socialism, yet they make political deals with 98% GOP wishes (as Boehner bragged). The only people talking about Socialism are Repubs. Dems today are more like Reagan than the Repubs. This country has lost it's collective minds and souls. We deserve everything coming!
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rothomaha
The Truth will out
07:53 AM on 08/12/2011
Nicely done - however, you were a bit too abrupt about the third structural factor. It is the fact that wealth determines the ability to run for office which increasingly leads to the infiltration(yes, I use the word advisedly) by the corporate "policy-makers" who, in turn, determine domestic and foreign policy through those puppets whom their wealth has purchased. This, of course, inevitably is policy which devolves to production of greater wealth for those same folks, leading to greater concentration of wealth in the hands of fewer and fewer. The politicians are simply riding the checkbooks of these folks, but put on a good Punch and Judy show for the rest of us "dummies" who(they think) cannot tell what is really going on! In today's America, nobody goes into politics(and succeeds) based upon moral values and ethical principles, and if they wander in by accident, they are treated like the Christians in the Roman coliseum! So, I agree with you about the long-term prospects, but I have far less faith in those "differences" you speak of being real.
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07:32 AM on 08/12/2011
"The increasing cost of electoral campaigns" is ... at best ... a delicate euphemism. Yet another self-apology for:

High Crime.

Surf over to the well-respected site, http://www.opensecrets.org, and have a look around. As you do so, bear in mind that, if we take all three Branches of Government and a handful of important commissioners, we are talking about ... all told ... slightly less than 700 people in all.

This site will tell us that, last year, those 700 people consumed more than 3.6 billion dollars, and that 12,000 people made it their full-time "job" to "feed" them.

"The Tea Party, Inc." is a well-funded and therefore highly visible instrument ... not of solidarity ... but, of further division. It is only one such example of many.

"A House Divided Against Itself Cannot Stand." That's more than a slogan: it's a political strategy.

700 people. or, 312 million. Who wins?
06:50 AM on 08/12/2011
"The rise of the Tea Party movement within the Republican Party is only the most recent vehicle that has continued a 30-year trend."

"30-year trend"?

I've been around for much longer than thirty years, and can remember the Weathermen of the '60s. They weren't polarizing. FYI, they weren't rightists.
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ALL OK HERE ON PLANET X
IU '98 A.S. Public Affairs
03:51 AM on 08/12/2011
I beg to ask, and some random moment in the past, when the national debt hit such monumental milestones such as say, 6 trillion or 8 or 10 trillion - vast unfathomable sums - why S&P did not pull the downgrade then? I myself believe it may have had something to do with politics, but for the reverse simpathies. Not to hurt GWB's credability. Is this reasoning sound? What do the S&P workers do all day, watch naughty vids on their work computers like the SEC staff did. I have a right to ask these questions, don't I?
06:57 AM on 08/12/2011
"...6 trillion or 8 or 10 trillion - vast unfathomab­le sums - why S&P did not pull the downgrade then?"

I think that you have an excellent question here. I'll try to answer it.

The national debt became a staggering sum by the end RR's second term (even before). Many of us were quite alarmed then because we were borrowing vast sums of money, despite the fact that times were good. As the 80s gave way to the 90s, it was apparent that this was a long term trend.

It was such an alarming issue in the 90s that legislation was passed (Graham-Rudman) to try to stem the tide of red ink. There were other smaller initiatives as well, such as the Repubs threatening to shut down the government unless fiscal sanity were restored.

But the credit rating agencies didn't sound the alarm because the US government was not having any difficulty in getting bonds sold here and abroad.

But, now, we have a different story. Deficits have gotten completely out of control and, if one reads the entirety of S & P's statement, the deficit and debt trajectory that we are on is completely unrealistic and unsustainable for even the coming ten year period. In other words, if the folks who lend money for a living are alarmed at the amount of lending taking place, you KNOW we have a MAJOR problem on our hands.