David Callahan

David Callahan is a senior fellow at Demos and editor of PolicyShop, the Demos blog.

Recent Articles

The Upside of Playing Fiscal Chicken

Progressives can use the budget crisis to create a fairer tax system.

The budget hysteria that now grips Washington bodes ill for the economy by foreclosing new and badly needed stimulus. Yet the upside is that it also creates a historic opportunity to revamp federal spending in ways that foster greater national equity. Big reforms are most likely to happen during periods of crisis. Conservatives have famously appreciated this truth with a "starve the beast" strategy that aims to first cut revenues and then use resulting budget crunches to downsize government. That playbook guides them today at both the federal and state level. Progressives need their own strategy for exploiting the fiscal crisis. In truth, there is a whole lot to hate about federal budget priorities, but reform is tough in normal times. So while progressives should keep fighting any and all spending cuts until the economy rebounds, we also have a rare chance to push big changes in where federal dollars go and who gets what. First on the progressive wish-list of cuts is defense spending...

Republicans Raise Taxes

GOP may finally have realized what must be done to reduce the deficit.

Republicans in Congress softened their position on taxes yesterday, when 34 GOP senators voted to repeal tax breaks for the ethanol industry. The proposal, which was added as an amendment to an economic-development bill, failed, but the vote shows that at least some Republican lawmakers are willing to back revenue hikes to cut the deficit. Grover Norquist, the longtime head of Americans for Tax Reform, a conservative group, lobbied hard against the ethanol repeal, arguing that closing tax loopholes was no different than an outright tax increase. But a majority of Republicans in the Senate repudiated Norquist and handed a big victory to Sen. Tom Coburn, who co-sponsored the measure with Sen. Dianne Feinstein. Coburn, who was part of the "Gang of Six" -- a group of lawmakers that tried and failed to come up with a bipartisan budget deal -- has argued for the need to combine spending cuts with increase revenues, which has made him an outlier in his party. The ethanol vote is the latest...

On Again, Off Again

The growing rift between Republicans and Wall Street.

Do Republican leaders in Congress answer to Tea Party activists or to Wall Street? That question will be answered in the next few weeks as the debt-ceiling fight comes to a head. The choice that GOP leaders make will influence more than fiscal policy or the financial markets; it will also shape the 2012 election and reveal the true identity of today's Republican Party. Wall Street has been urging Republicans to approve more government borrowing for months, arguing that it is too risky to use the debt-ceiling cap as a hostage in the budget battle. That message was delivered during a series of meetings in April between GOP leaders and top Wall Street executives and has been repeated often by the finance sector's ubiquitous lobbyists on Capitol Hill. As Rep. Michael Grimm, a Republican from Staten Island told The Wall Street Journal : "Wall Street understands that if we default on our obligations, our markets are going to crash. ... They're doing their job and talking to a lot of members...

Republicans Take a Mulligan

Gutting Medicaid won't be any easier than slashing Medicare was.

(Flickr/Keith Allison)
The smart money in Washington is betting that Medicaid will suffer the deepest cuts when and if lawmakers strike a deal on deficit reduction. Why? Because it is assumed that Medicaid, which was designed to serve the poor, doesn't have powerful friends in the Capitol. That's just how politics works: The weak get shafted. But maybe the smart money is wrong. Republicans who think that Medicaid is an easy target may be in for another hard lesson as seniors revolt against -- and Republicans back away from -- the GOP's plan to gut Medicare. While the cuts to Medicare in Rep. Paul Ryan's budget have gotten the most attention, the plan -- approved by the House earlier this spring and rejected yesterday by the Senate -- would also have ended Medicaid as we know it, turning it into block grants to the states, repealing a provision of the Affordable Care Act that would have expanded coverage, and whacking $207 billion from the program over the next five years. Also, in contrast to how Ryan...

Why Cap Spending at 20 Percent of GDP?

Among the many problems with Paul Ryan's draconian budget plan is the idea that federal spending can and should be capped at 20 percent of GDP. Let's start with why the "should" part is problematic. Like the president's budget commission, which called for capping spending at 21 percent of GDP, fiscal conservatives make the assumption that terrible things will happen if federal spending goes above some magic point. But where is the evidence that a few percentage points actually makes any difference at all when it comes to economic growth?