Bush on the Homefront: Chapter 12 (excerpt)

8/8/2019 Bush on the Homefront: Chapter 12 (excerpt)

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Domestic

Policy

Triumphs andSetbacks

Bushon the home Front

John D. Graham



Contents

Preface and Acknowledgments vii

1 Ambiguous Mandate, Polarized Congress 1

2 Lower Taxes, More Spending 27

3 The Social Security Debacle 54

4 Making Sure Kids Learn 63

5 Drug Coverage for Seniors 93

6 Producing More Energy 115

7 Consuming Less Energy 163

8 Cleaner Air, Warmer Climate 194

9 Illegal Immigration: Punishment or Amnesty? 221

10 Tort and Regulatory Reform 251

11 Meltdown and Bailouts 272

12 Taking Stock, with Lessons for Future Presidents 292

Notes 333

Index 403



George W. Bush’s domestic policies receive ar less attention than

his oreign policies, especially the military operations in Aghanistan and

Iraq.1 Any president’s oreign policies certainly deserve sustained scrutiny,

but this book has supplied a wealth o evidence that Bush was also a boldand activist president on traditional domestic issues. In light o the partisan

divide in the Congress and Bush’s limited political standing throughout most

o his presidency, it is remarkable how ambitious he was and how much o

his domestic agenda was enacted and implemented, whether by legislative or

executive actions, and yet these accomplishments, by and large, have not been

recognized.

In this nal chapter, I oer my own evaluation o Bush’s domestic record.

What were his most important achievements? Which o his enacted reorms arelikely to prove problematic? Did he propose any policies that, though blocked

by eective opposition, are promising enough that they should be reconsidered

12Taking Stock, with Lessons

for Future Presidents



Taking Stock, with Lessons for Future Presidents · 293

in the uture? What were some key opportunities that Bush missed, opportuni-

ties that uture presidents may wish to consider? And which o Bush’s policies

are likely to be reversed by the Obama administration and the Democratic-controlled Congress? In answering these questions, I draw on the case studies

o specic Bush initiatives described in chapters 2 through 11.

More important, this chapter oers some lessons or uture presidents. It

is never easy to serve as president, and the challenge is exacerbated when the

Congress oen seems to be dysunctional because o a decline in bipartisanship

and the constant threats o libuster in the Senate. How should a president,

Democrat or Republican, go about making domestic policy in this polarized era

o American politics? I American politics remains polarized, as seems likely,uture presidents will ace similar dilemmas unless their parties acquire such

large majorities in the Congress that one-party lawmaking is easible. I oer

eight constructive lessons rom Bush’s experience that may be helpul in the

uture.

Taking Stock

In chapters 2 through 11, I traced the origins and content o Bush’s

agenda, including both the successul initiatives and those that were not en-

acted or were overturned. Now I turn to an evaluation o this record.

Signifcant Achievements

I employ three criteria in the evaluation: whether the reorm is promising,

whether it is primarily attributable to the eorts o the Bush administration,

and whether the reorm is likely to reshape public debate on the issue or many years in the uture. Te last criterion is the most exacting because policy mak-

ing in the United States is typically incremental, with each policy reorm mak-

ing only modest adjustments to previous policies.2 I a president’s reorm causes

a undamental change in how an issue is perceived and debated, as was the case

with LBJ’s Great Society, it is especially noteworthy.

Pathbreaking achievements are dened as those that may ultimately satisy

all three o the evaluative criteria. My tentative evaluations are summarized in

table 12.1. Tey are tentative because ew o the Bush reorms have been subjectedto careul policy evaluation based on real-world experience. Many o Bush’s

reorms may meet at least two o the three criteria, but only a handul have a



294 · Bush on the Home Front

chance o satisying all three. And unpredictable actions by uture presidents,

Congresses, and judges may afect—negatively or positively—how Bush’s re-

orms play out in the long run.

For example, the Bush administration’s clean-air rule makings (especially

the new emission controls on diesel engines and coal plants) are projected tohave impressive public health and environmental benets that justiy their ex-

pense. Yet these rules were implemented using existing legal authority and are

able 12.1. Evaluation of the Domestic Policies of George W. Bush

Evaluative Criteria

Policy Reform Promising? Attributable Reframe Futureto Bush? Policy Debates?

ax Cut Yes Partly a No

ax Cut Yes Yes Yes

No Child Le Behind Yes Yes Yes

Drug Coverage-Medicare Yes Yes Yes

Oil and Gas Promotion Yes Yes No

Pro-Coal Policies Uncertain Yes No

Pro-Nuclear Policies Yes Yes MaybePro-Ethanol Policies Uncertain Yes Maybe

Renewable Electric Power Yes Partly b No

Reorm o Automobile Yes Yes MaybeMileage Rules

Clean Air Rules Yes Yes No

Immigration Crackdowns Uncertain Partly c Maybe

Overtime Reorms Yes Yes No

Union Disclosures Yes Yes No

Regulatory Reorms Yes Yes No

Sarbanes-Oxley Law Uncertain Partly d Maybe

Reorm o Housing Sector Uncertain Yes Maybe

Reorm o Financial Sector Uncertain Yes Maybe

Big Tree Bailout Uncertain Yes No

Wall Street Bailout Uncertain Yes No

a. Te GOP Congress did heavy liing or the tax cut in earlier battles against Clinton.

b. Te Congress was a stronger pro-renewables orce than Bush.

c. Te House GOP was a stronger orce than Bush behind immigration crackdowns.

d. Congress was a more signicant orce or the Sarbanes-Oxley law than Bush.




incremental extensions o previous policies. Tus, since the clean-air rule mak-

ings are unlikely to rerame uture public policy debates about environmen-

tal policy, they are not, according to application o the criteria, “pathbreakingachievements.”

Likewise, the Bush administration’s reorm o ederal overtime law meets

the rst two o the three criteria or a pathbreaking achievement. Yet it is di-

cult to argue that such an incremental reorm has undamentally changed

public debate about labor policy.

Some conservatives hold the view that Bush’s multiple rounds o tax cuts

stand out as his pathbreaking achievement. Even those who oppose the size or

distribution o the tax cuts grant that they were major political victories orBush.

Te reality is that the 2001 tax cuts were not entirely a Bush administration

achievement. Much o the substance o the agenda was dened in the 1990s. Te

groundwork or Bush’s 2001 tax cut was established by congressional Republi-

cans in the 1999–2000 battle with Clinton. Yet Bush certainly played a critical

role. I McCain or Gore had been elected president in 2000, the 2001 tax-cut

package would have been much smaller (assuming any tax cut was enacted).

One also can argue that Bush intimidated Gore and congressional Democrats

into advocating much larger tax cuts than Clinton supported in the late 1990s.

But there is nothing groundbreaking about a newly elected Republican presi-

dent pursuing tax cuts.

Where Bush changed the uture o political debate on tax policy was with

his second round o tax cuts: the 2003 reduction in taxes on stock dividends

and capital gains. Although Bush did not win the elimination o these taxes

that he proposed, they were reduced to their lowest levels since the 1920s. Priorto Bush’s bold proposal, the conventional wisdom was that elimination o the

“double taxation” o corporate prots—while certainly based on good econom-

ics—is too dicult to explain to the public and too politically sensitive or a

party worried about being tagged as pro-business and biased in avor o the

wealthy, investor class. Bush rejected this skepticism and successully launched

pro-growth arguments in avor o cutting taxes on capital gains and stock divi-

dends. Our nation’s solid economic perormance rom 2003 to 2007 provides

circumstantial evidence that the policies were an economic success. Obamamay seek to raise these taxes back to their earlier levels, but he will not succeed

without a political bloodbath.




A second candidate or pathbreaking achievement is the ederal govern-

ment’s new role in K–12 public education that Bush engineered with the Con-

gress in 2001 and implemented rom 2002 to 2008. Prior to Bush, most Repub-licans did not advocate a signicant role or the national government in public

education. At Bush’s insistence, the No Child Le Behind (NCLB) legislation

brought standards, testing, and accountability in public education under the

purview o the ederal government.

For the rst time, the ederal government compelled states and localities

to set explicit standards or math and English knowledge, test students regu-

larly or perormance, and implement systems o accountability or schools and

districts. As ederal spending on public education expands, and I expect it willgrow signicantly in the years ahead, the ederal government’s role in public

education also will grow.

NCLB is certainly ar rom perect. Reorms o NCLB are likely as grass-

roots opposition to some aspects o NCLB is burgeoning in both parties. Te

school-choice provisions did little to create new opportunities or parents. Te

lack o uniorm national tests caused inconsistency and mischie at the state

level. Te primary ocus on math and reading may be shortchanging science,

history, physical education, and the arts. And the exclusive ocus on children

at the border o prociency may be diverting resources rom other children at

the top and bottom o the achievement ladder. But none o these objections is

an argument against ederal responsibility or accountability. Indeed, the objec-

tions suggest a need or more comprehensive ederal responsibilities.

NCLB is a undamental change because it shis the public debate rom

whether the ederal government should be involved in public education to how

the ederal government should hold states and localities accountable or thescope and extent o learning in their schools. Some Republicans may envision

a return to the day when public education is addressed entirely by local com-

munities, but it seems highly unlikely that the ederal responsibilities under

NCLB will be eliminated or pared back. Since Senator ed Kennedy o Mas-

sachusetts is no longer in the Senate to deend NCLB, I do expect signicant

modications and renements, as should be expected aer any policy reorm

o this magnitude.

My third candidate or signicant achievement is the private-sector modelor health care reorm that Bush and the Congress adopted with the new pre-

scription drug benet under Medicare. Te act that Medicare was expanded




to include outpatient drug coverage was not so signicant because I believe it

would have happened sooner or later, regardless o who became president in

2001. Te House Republicans were already scrambling to enact such a benetbeore Bush was elected. Te potent political power o seniors, combined with

rapidly rising pharmaceutical expenditures, ensured that Medicare would be

expanded to cover outpatient drugs.

What Bush did was demonstrate the viability o a competitive, private-

insurance model o health care reorm. As citizens and politicians become more

comortable with the new prescription drug benet, it may become easible

to urther privatize Medicare and extend the competitive, consumer-oriented

model o health care. I the implementation o this reorm continues to improveand i senior citizens become satised with it, the single-payer model o health

care that has dominated progressive thinking or decades will have no uture

in the United States.

Bush’s policies to revive nuclear energy as a source o electricity in the

United States are potentially a ourth signicant pathbreaking achievement.

Trough new policies on insurance or large-scale accidents, loan guarantees

and subsidies or construction costs, and new waste-management strategies,

the Bush administration helped oster an improved investment climate or

nuclear power. Preliminary evidence indicates that utilities are already act-

ing to lengthen the lives o existing reactors while considering expansion o

nuclear capacity at existing and new sites. Tese policies are promising because

nuclear energy has ew o the environmental problems associated with ossil-

uel combustion, including none o the carbon dioxide emissions linked to

global climate change.

Bush’s pro-nuclear policies are classied as a pathbreaking achievementwith two qualications. First, Bush’s pro-coal policies were at least as infu-

ential as his pro-nuclear policies. Nuclear power may thereore make only

marginal gains over time. Second, the durability o Bush’s pro-nuclear poli-

cies is questionable given the Democratic takeover o the Congress and the

opposition o many Democrats to nuclear power and to Yucca Mountain as a

permanent burial site or nuclear wastes. Without a permanent solution to the

waste problem, the uture o nuclear power in the U.S. will remain in doubt.

But Bush has certainly persuaded the Republican Party that it is not suicidal tobe pro-nuclear in an era o growing concern about global climate change. John

McCain aggressively advocated nuclear power during the 2008 presidential




campaign. And even President Obama appears to be somewhat open-minded

about a nuclear uture.

Finally, Bush’s energy conservation policies in the transport sector, boththe modernization o ederal mileage standards and the demonstrations o con-

gestion pricing, have the potential to be pathbreaking achievements. Te only

question on auto mileage is whether the Caliornia rules on carbon dioxide

emissions will overshadow or undermine the ederal auto mileage reorms. A

key question or Obama is whether he is prepared to let Caliornia, rather than

Washington, chart regulation o the automotive industry. Te uture o conges-

tion pricing is also somewhat uncertain. It hinges on whether local politicians

and their constituencies will support such worthy measures, even though they are unpopular among some motorists.

Enacted Yet Dubious Policies

It is unortunate that the Bush administration initiated or aligned itsel with some

domestic policy initiatives that are o dubious value. Te two that are most strik-

ing are the mandate o ethanol as a petroleum substitute and the Sarbanes-Oxley

legislation aimed at deterring corporate raud. Neither policy arose rom a care-

ul campaign position. Both evolved rom complex political considerations.

Bush’s most important objectives on the supply side o energy policy were

to expand production o oil, gas, coal, and nuclear power. Such legislation was

vulnerable to widespread Democratic opposition on the Senate foor. Te oppo-

sition was overcome when Bush agreed to mandate a large increase in the use o

ethanol as a substitute or petroleum, recognizing that corn-based ethanol (not

cellulosic ethanol) would dominate the ethanol industry or the next decade.

Indeed, it was ethanol’s economic boost to the corn-growing states that helpeddeliver the votes o arm-state Democrats or Bush’s energy bill.

Te case or Bush’s ethanol program was that it reduced the rate o growth

o U.S. oil consumption and thereore exerted downward pressure on the world

price o oil, with potential benets or consumers throughout the developing

and developed world. I Bush’s ethanol plan is replicated in other parts o the

world, building on the pro-ethanol policies o Brazil and Sweden, the energy

security benets or the world may be substantial.

Unortunately, the Bush ethanol program has some serious faws. Te costo making ethanol rom corn has declined somewhat in recent years due to pro-

ductivity improvements, but higher corn prices nullied those eciency gains.




On an energy-equivalent basis, it still costs at least $1 per gallon more to use

ethanol then gasoline. Furthermore, the rapid growth o the ethanol industry is

causing environmental damage that is not yet ully understood or appreciated,such as water shortages and carbon emissions due to land-use changes. And

higher ood prices are an adverse side eect o the ethanol mandate that is only

beginning to be considered by policy makers. In short, the de acto mandate

o corn-based ethanol, without removal o taris on ethanol imports, appears

to be causing a range o unintended adverse consequences. One can only hope

that Bush’s aith in the uture o cellulosic ethanol—a aith that is shared by a

surprising number o venture capitalists—proves to be warranted.

Te Sarbanes-Oxley legislation, like the ethanol mandate, did not resultrom a campaign commitment by Governor George W. Bush. Nor was it part

o Bush’s planned domestic agenda. It arose instead rom the public outrage

caused by the unexpected Enron scandal and other highly publicized incidents

o corporate raud. Te Bush administration could have stopped or scaled back

such legislation with a veto threat but chose not to do so, possibly to avoid con-

troversy or congressional Republicans prior to the 2002 midterm elections, and

to protect Bush himsel rom public criticism.

Te benets and costs o the Sarbanes-Oxley law were never estimated

beore it was adopted and are still largely unknown. Te law may have had

its intended short-term eect (2002–2004) o restoring investor condence in

securities markets. But the long-term consequences o such a massive and com-

plex regulatory program are only beginning to be understood. Concerns have

been raised that the law has discouraged private companies rom going public,

redirected oreign investment away rom the United States, and imposed need-

less costs and rigidities on the operation o publicly owned companies in theUnited States.

Promising Failures

When a White House proposal is blocked in Congress or in the courts, it may be

worthwhile to reconsider the proposal in the uture. Some o Bush’s ailed policy

initiatives were promising. Indeed, table 12.2 summarizes the ailed Bush initia-

tives that were examined in chapters 2 through 11. A plausible case can be made

or a number o these policies: ederal vouchers or low-income parents who seek to enroll their children in private schools, fexibility or young workers to invest

some o their Social Security taxes in private investment accounts, more per-




mission or companies to drill or oil and gas in an environmentally responsiblemanner (onshore and oshore), and removal o taris on Brazilian ethanol.

O the promising proposals that ailed to pass Congress, the one that is the

most signicant and commendable in my opinion is the guest worker program

or oreign nationals. Tis legislation could have included both a program or

the 12 million illegal immigrants currently living in the United States and a

program or unskilled and skilled workers who are seeking to enter the United

States to work or several years beore returning home.

I recognize that the guest worker idea is controversial. Opponents o thisplan may be correct that we need more secure borders beore we can start is-

suing millions o work permits or guest workers. Illegal immigrants and the

able 12.2. Te Fate of the Failed Domestic Policies of George W. Bush

Policy Attempted Method Comment

of Enactment (L=Legislative:

A=Administrative)

Social Security Reorm L Never reached House

or Senate foor

Subsidized Vouchers or L Deeated in House and

Private Schools Senate foor votes

Permission to Drill or Oil in L Deeated by Senate

Alaska (ANWR) libuster

Removal o aris on L Never reached HouseImported Ethanol or Senate foor

Mercury “Cap-and-rade” Rule A Struck down by ederal

judiciary

Clear Skies L Never reached House

or Senate foor

New Source Review Reorms A Struck down by ederal

judiciary

Guest Worker Program or L Blocked by House

Illegal Immigrants Republicans

Medical-Malpractice Reorm L Deeated by Senate

libuster

Caps on Damage Awards L Deeated by Senate

libuster

Asbestos Compensation Plan L Deeated by Senate

libuster




businesses who hire them do need to pay a price or violating immigration laws!

But our economy urgently needs this additional supply o labor. Much more o

it will be needed in the years and decades to come.What Bush proposed may prove to be several years or, more likely, a decade

ahead o his time. Ironically, in an interview given during the last week o his

presidency, Bush expressed regret that he had not begun his second term with im-

migration reorm instead o Social Security reorm. My own hunch is that Bush’s

political party—exemplied by the House Republican leadership—was not ready

or, and would not have permitted, reorm o ederal immigration law.

Missed OpportunitiesNo president can possibly advance a policy agenda on every legitimate concern

o the public. Where we should ault an administration is when the scientic

community and our closest allies around the world are begging or leadership

rom the United States but the administration does not respond adequately.

Bush was on solid ground in rejecting ratication o the Kyoto Protocol on

global climate change because it was unrealistic, economically dangerous, and

ineective (due to the exclusion o the rapidly growing developing world rom

mandatory programs). Bush should be aulted or ailing to seek a viable alter-

native to the Kyoto Protocol, a more practical international regime or address-

ing global climate change. In particular, the United States should have reached

out to China, Russia, and other countries with reservations about the Kyoto

Protocol and then led a process to develop a more realistic yet promising inter-

national strategy. Fortunately, the international dialogue was re-energized by

Bush in 2007–2008—a dialogue that he could have ostered six years earlier.3

Bush’s mismanagement o the global climate issue was not simply bad orthe global environment and bad or the reputation o the United States around

the world. It inadvertently placed American businesses, workers, and consum-

ers at risk o economic harm because o the prolieration o ill-considered state

and local regulatory policies that were advocated by rustrated environmental-

ists. A more proactive national policy on climate change by the Bush admin-

istration would have been more cost-eective than the policies that Caliornia

and other states are now orcing on the rest o the country. Bush would also

have preserved presidential leadership on an international issue that PresidentObama will now have to wrest away rom the governors o several states. In

short, Bush could have preempted the overly aggressive, wasteul climate poli-




cies that are now looming on the horizon while moving the planet gradually

toward a less carbon-intensive uture.

Another opportunity that was missed was a reduction in the tax rate appliedto corporate income. Among countries in the Organisation or Economic Co-

operation and Development (OECD), U.S. corporate income taxes are among the

most punitive. Te loss o revenue rom lower rates could have been oset by a

broadening o the base (as President Reagan and the Congress accomplished in

1986 and as Democratic senator John Breaux proposed to the George W. Bush

administration). Corporate tax cuts might also have been combined with a small

but gradually rising tax on carbon dioxide emissions in the U.S. economy. By

linking a new carbon ee to corporate tax reorm, the president could have simul-taneously advanced both economic and environmental policy objectives.4

In summary, a careul evaluation o Bush’s domestic record reveals that,

despite his limited political standing and a polarized Congress, he instituted

numerous promising reorms and several potentially pathbreaking achieve-

ments. Some o his improvised policies—among them the ethanol mandate, the

Sarbanes-Oxley law, and the GM-Chrysler bailout—are objectionable, but he

also proposed a variety o promising policies that were blocked in Congress or

the courts, such as the guest worker program or immigrants and Social Security

reorm. His most important missed opportunities were his belated leadership on

global climate change and his decision not to pursue corporate tax reorm.

First Term vs. Second Term

Bush’s rst-term record in domestic policy had numerous successes

because he recognized his limited political standing and the polarized Con-gress, and devised his agenda accordingly. His early successes on tax cuts and

education enhanced his credibility as a leader and established that he knew how

to make things happen in Washington. Bush entered the 2004 re-election cycle

as a serious, accomplished politician who had proven he could overcome the

polarization in Washington, D.C., at least on several key domestic issues.

Bush’s second term was less successul because his agenda was “more as-

sertive than conditions appeared to warrant.”5 Te choice o legislative pri-

orities in the second term ailed to account or the president’s limited politicalstanding and the ability o the (diminished) Democratic minority in the Sen-

ate to unite and block his lawmaking ambitions. And Bush appeared to take

Bush on the Homefront: Chapter 12 (excerpt)

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