In an 1814 letter to John Taylor, John Adams wrote that “there never was a democracy yet that did not commit suicide.” That may read today like an overstatement, but it is certainly true that our democracy finds itself facing a deep challenge: During my recent stint in the Obama administration as director of the Office of Management and Budget, it was clear to me that the country’s political polarization was growing worse—harming Washington’s ability to do the basic, necessary work of governing. If you need confirmation of this, look no further than the recent debt-limit debacle, which clearly showed that we are becoming two nations governed by a single Congress—and that paralyzing gridlock is the result.
So what to do? To solve the serious problems facing our country, we need to minimize the harm from legislative inertia by relying more on automatic policies and depoliticized commissions for certain policy decisions. In other words, radical as it sounds, we need to counter the gridlock of our political institutions by making them a bit less democratic.
POLARIZATION—the divergence of voting patterns in Congress—was historically low following World War II. But it started rising rapidly in the 1970s, and it’s now at historic highs. To grasp why such bold measures are needed to circumvent polarization, we first need to understand that it cannot be easily fixed and that it is therefore not going away.
A common idea in Washington policy circles is that gerrymandering is to blame for polarization. In fact, gerrymandering doesn’t play nearly the role that many people believe. This becomes clear when you compare the House with the Senate. If gerrymandering were the main culprit, we would expect polarization to be considerably worse in the House (where districts are gerrymandered) than in the Senate (where they are not). Yet polarization patterns have been roughly similar in both parts of Congress. Indeed, although the political science literature contains deep disagreements about the causes of polarization, it is virtually unanimous in dismissing gerrymandering as an important force. Sean Theriault of the University of Texas at Austin has concluded that redistricting can explain no more than 10 to 20 percent of the rise in polarization. Other estimates are similar. As Tom Mann of the Brookings Institution has argued, “Gerrymandering cannot account for the sharp partisan polarization of the House, and diagnoses that place it at the center of the problem—as well as the prescriptions that invest entirely in redistricting reform—are clearly flawed.”
It’s too bad the redistricting myth is not right, because, if it were, the problem of polarization would be much easier to fix. All we would have to do is change the country’s redistricting laws. Unfortunately, the true causes are less amenable to simple solutions. One crucial cause, as documented in Bill Bishop’s The Big Sort, is that Republicans and Democrats are increasingly living in separate places. Compared with the ’70s, roughly 25 percent more of the American population now lives in a county that votes decisively, one way or the other, in presidential elections.
This trend is taking place alongside technological changes in the media that have created a splintered market. Common news sources, such as major broadcast TV stations and national newspapers, have been joined by an array of websites, podcasts, and cable shows. Research suggests that Americans are only tuning into or logging onto a small share of the media choices available to them—and they are picking the ones that fit their beliefs. The effect is to further reinforce geographical sorting.
Psychology research shows that, when people with similar opinions are put together, their views become more radical. In Going to Extremes: How Like Minds Unite and Divide, Cass R. Sunstein, the legal scholar who is now administrator of the White House Office of Information and Regulatory Affairs, reviews a variety of evidence and concludes, “When people talk to like-minded others, they tend to amplify their preexisting views, and to do so in a way that reduces their internal diversity.”
It is true that several respected political scientists have suggested that elites play a larger role in polarization than my analysis would suggest. But those arguments founder on a simple point: Political scientist Gary Jacobson has found that people’s views on politics have not diverged considerably from those of their representatives. This suggests that polarization is not primarily an elite-driven phenomenon. As Bill Galston and Pietro Nivola of Brookings explain, “Polarized politics are partly here, so to speak, by popular demand. And inasmuch as that is the case, undoing it may prove especially difficult.”
FACING THIS PROBLEM is crucially important because our current legislative gridlock is making it increasingly difficult for lawmakers to tackle the issues that are central to our country’s future—issues like climate change, the hard slog of recovering from a financial slump, and our long-term fiscal gap. It is clear to everyone that a failure to act will lead to undesirable outcomes in these areas. But polarization means that little action is possible. This is why I believe that we need to jettison the Civics 101 fairy tale about pure representative democracy and instead begin to build a new set of rules and institutions that would make legislative inertia less detrimental to our nation’s long-term health.
Let me be more specific in the context of fiscal policy, which was at the heart of the debt-limit debate. Virtually all responsible economists agree that we should be aiming to reduce the deficit in the long-term but not in the short-term. We need an even larger deficit in 2011 and 2012, to support a weak economy—but a much smaller deficit in 2020 and 2050, to put the nation back on a sustainable fiscal course. Yet our polarized political system has proved incapable of reaching a consensus on this common-sense approach.
What we need, then, are ways around our politicians. The first would be to expand automatic stabilizers—those tax and spending provisions that automatically expand when the economy weakens, thereby cushioning the blow, and automatically contract as the economy recovers, thereby helping to reduce the deficit. A progressive tax code is one such automatic stabilizer. The tax code takes less of your income as that income declines, so after-tax income tends to decline less in response to an economic shock than pre-tax income. Since spending is based on after-tax income, the impact on the economy is cushioned. Alan Auerbach of the University of California at Berkeley has found that, as a result, the tax code has, over the past 50 years, offset about 8 percent of the initial shock to GDP from economic downturns. For the same reason, making the tax code more progressive would strengthen its role as an automatic stabilizer. Unemployment insurance is another automatic stabilizer; as the economy weakens, unemployment insurance expands, providing a boost to demand right when the economy needs it.
Other automatic stabilizers are possible as well. For instance, rather than simply extending and expanding the existing payroll-tax holiday, as President Obama has proposed, policymakers should permanently link the tax to the unemployment rate. Consider a system under which the payroll tax would be reduced by 6 percentage points whenever the quarterly average unemployment rate exceeded 7.5 percent or increased by more than 2 percentage points over the previous year. Since a cut in the payroll tax is a powerful form of stimulus, this would be a built-in way to ensure a quick and effective government response to an economic downturn.
Beyond automatic stabilizers, we also need more backstop rules: events that take place if Congress doesn’t act. In this sense, the fiscal trigger created as part of the debt-limit negotiations is a good step forward. It leads to automatic spending reductions if Congress doesn’t enact measures to reduce the deficit; in other words, it changes the default from inaction to action.
Finally, a significant part of the response to polarization and gridlock must involve creating more independent institutions. A good model for this was the process of closing military bases that began in the late ’80s and involved several rounds. To deal with the political difficulty of shutting down bases, Congress empowered a commission of nine independent experts to come up with a list of bases to close. If the president accepted the list, Congress had 45 days to enact a joint resolution disapproving of the entire list—or else it went into effect.
That final point is the key: The commission’s recommendations took effect unless Congress specifically disapproved. Thus, unlike most commissions, this one had a guarantee that its recommendations would not sit on a shelf collecting dust. On the other hand, even though this process favored action over inaction, it was not completely undemocratic: Congress still had oversight and could, if it wanted to, reject the commission’s ideas.
Proposals abound for expanding this type of process. In the late ’90s, economist Alan Blinder proposed shifting responsibility for tax policy to a Fed-like institution of experts. Stephen Flynn of the Center for National Policy has proposed a similar process for infrastructure decisions—and, indeed, creating an infrastructure bank, as President Obama has proposed, would accomplish much the same goal. Such a bank would be empowered to select individual infrastructure projects, thereby removing some decision-making power from Congress.
Perhaps the most dramatic example of this idea is the Independent Payment Advisory Board (IPAB), created as part of the recent health care reform legislation. The IPAB will be an independent panel of medical experts tasked with devising changes to Medicare’s payment system. In each year that Medicare’s per capita costs exceed a certain threshold, the ipab is responsible for making proposals to reduce projected cost growth. The proposals take effect automatically unless Congress specifically passes legislation blocking them and the president signs that legislation.
THE PROBLEM WITH such commissions is that, like automatic stabilizers and backstop rules, they reduce the power of elected officials and therefore make our government somewhat less accountable to voters. Larry Diamond of the Hoover Institution at Stanford puts it this way: “There is something undemocratic about entrusting the formation of big policy decisions to expert commissions.” And yet he also goes on to note that “the process is not less democratic than having nine unelected justices with lifetime tenure and no political accountability to anyone but themselves decide such basic questions as when a woman can have an abortion and where a child can go to school.” He concludes that, despite the risks, rising polarization justifies the increased use of these types of commissions.
As the debt-limit experience vividly illustrated, by polarizing ourselves, we are making our country more ungovernable—and no one has come up with a practical proposal to deal with the consequences. I wish it were not necessary to devise processes to circumvent legislative gridlock, but polarization isn’t going away. John Adams may have been exaggerating when he pessimistically noted that democracies tend to commit suicide, yet, as we are seeing, certain aspects of representative government can end up posing serious problems. And so, we might be a healthier democracy if we were a slightly less democratic one.
Peter Orszag is vice chairman at Citigroup and an adjunct senior fellow at the Council on Foreign Relations. This article appeared in the October 6, 2011, issue of the magazine.