The 2016 presidential election confronts the U.S. electorate with political choices more fundamental than any since 1964 and possibly since 1932. That statement may strike some as hyperbolic, but the policy differences between the two major parties and the positions of candidates vying for their presidential nominations support this claim.

A victorious Republican candidate would take office backed by a Republican-controlled Congress, possibly with heightened majorities and with the means to deliver on campaign promises. On the other hand, the coattails of a successful Democratic candidate might bring more Democrats to Congress, but that president would almost certainly have to work with a Republican House and, quite possibly, a still Republican Senate. The political wars would continue, but even a president engaged in continuous political trench warfare has the power to get a lot done.

Candidates always promise more than they can deliver and often deliver different policies from those they have promised. Every recent president has been buffeted by external events unanticipated when he took office. But this year, more than in half a century or more, the two parties offer a choice, not an echo. Here is a partial and selective list of key issues to illustrate what is at stake.

The Affordable Care Act, known as Obamacare or the ACA, passed both houses of Congress with not a single Republican vote. The five years since enactment of the ACA have not dampened Republican opposition.

The persistence and strength of opposition to the ACA is quite unlike post-enactment reactions to the Social Security Act of 1935 or the 1965 amendments that created Medicare. Both earlier programs were hotly debated and controversial. But a majority of both parties voted for the Social Security Act. A majority of House Republicans and a sizeable minority of Senate Republicans supported Medicare. In both cases, opponents not only became reconciled to the new laws but eventually participated in improving and extending them. Republican members of Congress overwhelmingly supported, and a Republican president endorsed, adding Disability Insurance to the Social Security Act.  In 2003, a Republican president proposed and fought for the addition of a drug benefit to Medicare.

The current situation bears no resemblance to those two situations. Five years after enactment of Obamacare, in contrast, every major candidate for the Republican presidential nomination has called for its repeal and replacement. So have the Republican Speaker of the House of Representatives and Majority Leader in the Senate.  

Just what 'repeal and replace' might look like under a GOP president remains unclear as ACA critics have not agreed on an alternative. Some plans would do away with some of the elements of Obamacare and scale back others. Some proposals would repeal the mandate that people carry insurance, the bar on 'medical underwriting' (a once-routine practice under which insurers vary premiums based on expected use of medical care), or the requirement that insurers sell plans to all potential customers. Other proposals would retain tax credits to help make insurance affordable but reduce their size, or would end rules specifying what 'adequate' insurance plans must cover.

Repeal is hard to imagine if a Democrat wins the presidency in 2016. Even if repeal legislation could overcome a Senate filibuster, a Democratic president would likely veto it and an override would be improbable. 

But a compromise with horse-trading, once routine, might once again become possible. A Democratic president might agree to Republican-sponsored changes to the ACA, such as dropping the requirement that employers of 50 or more workers offer insurance to their employees, if Republicans agreed to changes in the ACA that supporters seek, such as the extension of tax credits to families now barred from them because one member has access to very costly employer-sponsored insurance.

In sum, the 2016 election will determine the future of the most far-reaching social insurance legislation in half a century.

Social Security faces a projected long-term gap between what it takes in and what it is scheduled to pay out. Every major Republican candidate has called for cutting benefits below those promised under current law. None has suggested any increase in payroll tax rates. Each Democratic candidate has proposed raising both revenues and benefits. Within those broad outlines, the specific proposals differ.

Most Republican candidates would cut benefits across the board or selectively for high earners. For example, Senator Ted Cruz proposes to link benefits to prices rather than wages, a switch that would reduce Social Security benefits relative to current law by steadily larger amounts: an estimated 29 percent by 2065 and 46 percent by 2090. He would allow younger workers to shift payroll taxes to private accounts. Donald Trump has proposed no cuts in Social Security because, he says, proposing cuts is inconsistent with winning elections and because meeting current statutory commitments is 'honoring a deal.' Trump also favors letting people invest part of their payroll taxes in private securities. He has not explained how he would make up the funding gap that would result if current benefits are honored but revenues to support them are reduced. Senator Marco Rubio has endorsed general benefit cuts, but he has also proposed to increase the minimum benefit. Three Republican candidates have proposed ending payroll taxes for older workers, a step that would add to the projected funding gap.

Democratic candidates, in contrast, would raise benefits, across-the-board or for selected groups—care givers or survivors. They would switch the price index used to adjust benefits for inflation to one that is tailored to consumption of the elderly and that analysts believe would raise benefits more rapidly than the index now in use. All would raise the ceiling on earnings subject to the payroll tax. Two would broaden the payroll tax base.

As these examples indicate, the two parties have quite different visions for Social Security. Major changes, such as those envisioned by some Republican candidates, are not easily realized, however. Before he became president, Ronald Reagan in numerous speeches called for restructuring Social Security. Those statements did not stop him from signing a 1983 law that restored financial balance to the very program against which he had inveighed but with few structural changes. George W. Bush sought to partially privatize Social Security, to no avail. Now, however, Social Security faces a funding gap that must eventually be filled. The discipline of Trust Fund financing means that tax increases, benefit cuts, or some combination of the two are inescapable. Action may be delayed beyond the next presidency, as current projections indicate that the Social Security Trust Fund and current revenues can sustain scheduled benefits until the mid 2030s. But that is not what the candidates propose. Voters face a choice, clear and stark, between a Democratic president who would try to maintain or raise benefits and would increase payroll taxes to pay for it, and a Republican president who would seek to cut benefits, oppose tax increases, and might well try to partially privatize Social Security.

On no other issue is the split between the two parties wider or the stakes in their disagreement higher than on measures to deal with global warming. Leading Republican candidates have denied that global warming is occurring (Trump), scorned evidence supporting the existence of global warming as bogus (Cruz), acknowledged that global warming is occurring but not because of human actions (Rubio, Carson), or admitted that it is occurring but dismissed it as not a pressing issue (Fiorina, Christie). Congressional Republicans oppose current Administration initiatives under the Clean Air Act to curb emission of greenhouse gases.

Democratic candidates uniformly agree that global warming is occurring and that it results from human activities. They support measures to lower those emissions by amounts similar to those embraced in the Paris accords of December 2015 as essential to curb the speed and ultimate extent of global warming.

Climate scientists and economists are nearly unanimous that unabated emissions of greenhouse gases pose serious risks of devastating and destabilizing outcomes—that climbing average temperatures could render some parts of the world uninhabitable, that increases in sea levels that will inundate coastal regions inhabited by tens of millions of people, and that storms, droughts, and other climatic events will be more frequent and more destructive. Immediate actions to curb emission of greenhouse gases can reduce these effects. But no actions can entirely avoid them, and delay is costly.  Environmental economists also agree, with little partisan division, that the way to proceed is to harness market forces to reduce greenhouse gas emissions.” 

The division between the parties on global warming is not new. In 2009, the House of Representatives narrowly passed the American Clean Energy and Security Act. That law would have capped and gradually lowered greenhouse gas emissions. Two hundred eleven Democrats but only 8 Republicans voted for the bill. The Senate took no action, and the proposal died.

Now Republicans are opposing the Obama administration’s Clean Power Plan, a set of regulations under the Clean Air Act to lower emissions by power plants, which account for 40 percent of the carbon dioxide released into the atmosphere. The Clean Power Plan is a stop-gap measure. It applies only to power plants, not to other sources of emissions, and it is not nationally uniform. These shortcomings reflect the legislative authority on which the plan is based, the Clean Air Act. That law was designed to curb the local problem of air pollution, not the global damage from greenhouse gases. Environmental economists of both parties recognize that a tax or a cap on greenhouse gas emissions would be more effective and less costly than the current regulations, but superior alternatives are now politically unreachable.

Based on their statements, any of the current leading Republican candidates would back away from the recently negotiated Paris climate agreement, scuttle the Clean Power Plan, and resist any tax on greenhouse gas emissions. Any of the Democratic candidates would adhere to the Clean Power Plan and support the Paris climate agreement. One Democratic candidate has embraced a carbon tax. None has called for the extension of the Clean Power Plan to other emission sources, but such policies are consistent with their current statements.

The importance of global policy to curb greenhouse gas emissions is difficult to exaggerate. While the United States acting alone cannot entirely solve the problem, resolute action by the world’s largest economy and second largest greenhouse gas emitter is essential, in concert with other nations, to forestall climate catastrophe.

If the next president serves two terms, as six of the last nine presidents have done, four currently sitting justices will be over age 86 and one over age 90 by the time that presidency ends—provided that they have not died or resigned.

The political views of the president have always shaped presidential choices regarding judicial appointments. As all carry life-time tenure, these appointments influence events long after the president has left office. The political importance of these appointments has always been enormous, but it is even greater now than in the past. One reason is that the jurisprudence of sitting Supreme Court justices now lines up more closely than in the past with that of the party of the president who appointed them. Republican presidents appointed all sitting justices identified as conservative; Democratic presidents appointed all sitting justices identified as liberal. The influence of the president’s politics extends to other judicial appointments as well.

A second reason is that recent judicial decisions have re-opened decisions once regarded as settled. The decision in the first case dealing with the Affordable Care Act (ACA), NFIB v. Sibelius is illustrative.

When the ACA was enacted, few observers doubted the power of the federal government to require people to carry health insurance. That power was based on a long line of decisions, dating back to the 1930s, under the Constitutional clause authorizing the federal government to regulate interstate commerce. In the 1930s, the Supreme Court rejected an older doctrine that had barred such regulations. The earlier doctrine dated from 1905 when the Court overturned a New York law that prohibited bakers from working more than 10 hours a day or 60 hours a week. The Court found in the 14^th Amendment, which prohibits any state from ‘depriving any person of life, liberty or property, without due process of law,’ a right to contract previously invisible to jurists which it said the New York law violated. In the early- and mid-1930s, the Court used this doctrine to invalidate some New Deal legislation. Then the Court changed course and authorized a vast range of regulations under the Constitution’s Commerce Clause.  It was on this line of cases that supporters of the ACA relied.

Nor did many observers doubt the power of Congress to require states to broaden Medicaid coverage as a condition for remaining in the Medicaid program and receiving federal matching grants to help them pay for required medical services.

To the surprise of most legal scholars, a 5-4 Supreme Court majority ruled in NFIB v. Sibelius that the Commerce Clause did not authorize the individual health insurance mandate. But it decided, also 5 to 4, that tax penalties could be imposed on those who fail to carry insurance. The tax saved the mandate. But the decision also raised questions about federal powers under the Commerce Clause. The Court also ruled that the Constitution barred the federal government from requiring states to expand Medicaid coverage as a condition for remaining in the program. This decision was odd, in that Congress certainly could constitutionally have achieved the same objective by repealing the old Medicaid program and enacting a new Medicaid program with the same rules as those contained in the ACA that states would have been free to join or not.

NFIB v. Sibelius and other cases the Court has recently heard or soon will hear raise questions about what additional attempts to regulate interstate commerce might be ruled unconstitutional and about what limits the Court might impose on Congress’s power to require states to implement legislated rules as a condition of receiving federal financial aid. The Court has also heard, or soon will hear, a series of cases of fundamental importance regarding campaign financing, same-sex marriage, affirmative action, abortion rights, the death penalty, the delegation of powers to federal regulatory agencies, voting rights, and rules under which people can seek redress in the courts for violation of their rights.

Throughout U.S. history, the American people have granted nine appointed judges the power to decide whether the actions taken by elected legislators are or are not consistent with a constitution written more than two centuries ago. As a practical matter, the Court could not maintain this sway if it deviated too far from public opinion. But the boundaries within which the Court has substantially unfettered discretion are wide, and within those limits the Supreme Court can profoundly limit or redirect the scope of legislative authority. The Supreme Court’s switch in the 1930s from doctrines under which much of the New Deal was found to be unconstitutional to other doctrines under which it was constitutional illustrates the Court’s sensitivity to public opinion and the profound influence of its decisions.

The bottom line is that the next president will likely appoint enough Supreme Court justices and other judges to shape the character of the Supreme Court and of lower courts with ramifications both broad and enduring on important aspects of every person’s life.

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The next president will preside over critical decisions relating to health care policy, Social Security, and environmental policy, and will shape the character of the Supreme Court for the next generation. Profound differences distinguish the two major parties on these and many other issues. A recent survey of members of the House of Representatives found that on a scale of ‘liberal to conservative’ the most conservative Democrat was more liberal than the least conservative Republican. Whatever their source, these divisions are real.  The examples cited here are sufficient to show that the 2016 election richly merits the overworked term 'watershed'—it will be the most consequential presidential election in a very long time.

Event Information

An American Enterprise Institute-Brookings/USC Schaeffer Initiative Event
 

For most of the last five decades, the most-discussed finding by the Medicare trustees has been the insolvency date, when Medicare’s trust fund would no longer be able to pay all of the program’s costs. Last year’s report projected that the hospital insurance trust fund would be depleted by 2030 – just 14 years from now. The report also predicted a more immediate and controversial event: the Independent Payment Advisory Board (IPAB), famously nicknamed “death panels,” would be required to submit proposals to reduce Medicare spending in 2018, with the reductions taking place in 2019. Do we remain on this path to automatic Medicare cuts next year?

The American Enterprise Institute and the Schaeffer Initiative for Innovation in Health Policy, a collaboration between the USC Leonard D. Schaeffer Center for Health Policy & Economics and the Brookings Institution, hosted a discussion of the new 2016 trustees report on June 23. Medicare’s Chief Actuary Paul Spitalnic summarized the key findings followed by a panel of experts who discussed the potential consequences of the report for policy actions that might be taken to improve the program’s fiscal condition. You can join the conversation at #MedicareReport.

Video

• Introduction and keynote address
• Panel discussion

Audio

• The 2016 Medicare Trustees Report: One year closer to IPAB cuts?

Event Materials

• AEI TR16 final
• 20160623_medicaretrusteesreport_transcript

Latin America is starting off 2015 with a clear economic slowdown. The United Nations Economic Commission for Latin America and the Caribbean (ECLAC) projects a modest recovery (2.2 per cent) with respect to last year (in 2014 growth was only 1.1 per cent, the lowest since the 2009 crisis), though these calculations may vary due to several factors.

The world economy is not helping. The downward trend in raw materials prices, scant dynamism in global demand, and the appreciation of the dollar are three factors that work against the region today.

Venezuela and Argentina, are facing very complex economic contexts. Venezuela is in the midst of stagflation (aggravated by plummeting oil prices); and Argentina is experiencing negative growth, high inflation, and the unresolved conflict with the “vulture funds.”

The two largest economies of the region, Brazil and Mexico, are facing their own demons. Brazil President Dilma Rousseff, with a weak mandate, is gambling the political capital of her second term (which just began on 1 January) on the new economic team led by Joaquim “Scissorhands” Levy. Levy is to make a fiscal adjustment that has been put off and is much needed; Rousseff hopes it will enable her to regain investor confidence, and thereby return to higher growth. The Petrobras scandal (in addition to the negative impact it has been having within the Workers Party) requires that she wage a head-on struggle against corruption and impunity (she just proposed a national anticorruption campaign), and that she implement a thoroughgoing political reform, which has been put off for too long.

In Mexico, falling oil prices, economic growth below official expectations, and the wave of protests in the wake of the murders of the 43 students in school to become teachers at Ayotzinapa, have eclipsed the so-called Mexico moment and have Enrique Peña Nieto against the ropes. He has sought to retake the initiative by announcing new reforms and proposals, and he hopes to recover citizen trust if the structural reforms yield the results promised.

The challenge of the polls

In the 2015 electoral agenda, of special note are three presidential elections (Argentina, Guatemala, and Haiti), three legislative elections (El Salvador, Mexico, and Venezuela), and several state, regional, and municipal elections, in Bolivia, El Salvador, Colombia, Mexico, Paraguay, and Uruguay, among others.

The three presidential elections continue to be very open races. In Guatemala (from the return of democracy to date) the party in power has never been returned to office. The three best-positioned presidential candidates are the government party candidate Alejandro Sinibaldi, and opposition candidates Manuel Baldizón (for now he’s leading the polls) and former first lady Sandra Torres.

In Argentina, kirchnerismo is pulling into the election period worn down and without any clear candidate for now. The three leading candidates based on polling data are Peronists Daniel Scioli (former vice president of Néstor Kirchner and current governor of the province of Buenos Aires) and Sergio Massa (former chief of staff of Cristina Fernández de Kirchner, currently a federal legislator and opponent of the government), and on the center-right Mauricio Macri (current head of government of the city of Buenos Aires).

In Haiti, in a tense political environment, it is not clear who will succeed President Michel Martelly, or what the exact date will be for municipal, legislative, or presidential elections. It is rumored that presidential elections may be held in January 2016. Ultimately the electoral calendar will depend on how negotiations proceed between Martelly and the opposition.

The Salvadoran legislative and municipal elections are especially important. The Sánchez Cerén administration will seek to revalidate its triumph of early 2014, ensuring good legislative and municipal support for his efforts with a view to the next three years, while the Alianza Republicana Nacionalista (ARENA) will seek to turn things around at the polls.

In Mexico, the future of the administration of President Peña Nieto, beset by protests and scandals, turns on the midterm elections of June 2015. Whether Peña Nieto will have sufficient political capital to continue giving impetus to his agenda of structural reforms (“Pacto por México”) during the remaining three years of his term will hinge on the results of these elections.

In Venezuela, the legislative elections will increase political tension and repression by the regime. The opposition has a golden opportunity to win back the legislative majority from the chavistas or President Chavez followers, taking advantage of the profound economic crisis looming over the country and the fall in Nicolás Maduro’s popularity in the polls. The big question is whether the opposition will prove capable of taking advantage of this opportunity and whether the elections will be truly free and competitive. The other aspect to monitor is whether Vatican diplomacy, under the leadership of Pope Francis (and with the precedent of the re-establishment of relations between the United States and Cuba in his favor), will be able to facilitate an effective political dialogue between the government and the opposition to seek a negotiated solution to Venezuela’s complex situation.

Colombia, Cuba and Chile

In Colombia, in addition to the regional elections (in which the uribistas, or followers of former President Álvaro Uribe, will seek to come out on top this time), attention is focused on the final phase of the negotiations in Havana between the Revolutionary Armed Forces of Colombia (FARC) and the government of Juan Manuel Santos aimed at achieving peace. If the negotiations are successful, it will no doubt be the most important political event in the region in 2015. The fate of the peace process will be subject to a referendum, which will probably be held in the second half of 2015 or early 2016 (depending on the speed at which the negotiations proceed and their success).

The most important political event of 2014--the re-establishment of diplomatic relations between the United States and Cuba after more than 50 years of confrontation--will continue to capture considerable attention in 2015. This decision, which entails a 180-degree turnabout in U.S. policy to Cuba, will help improve relations between the United States and the region. It enables Cuba to fully assume its place in the hemisphere (its participation at the Seventh Summit of the Americas next April in Panama will make it a historic occasion), and at the same time it will also be able to diversify its trade relations and allow for new investment at a time when Venezuela (its main partner in recent years) is experiencing its own profound economic crisis. Full normalization of relations between the United States and Cuba (including the end of the embargo, a decision in the hands of Congress) will be a long and complex process, but the first step has already been taken, and in the right direction. In 2015 it will also be important to monitor the evolution and results of the economic reforms that Raúl Castro has been carrying out.

In addition, 2015 is a vital year in Chile for the government of Michelle Bachelet who, with markedly diminished popularity and mounting criticism of her presidency, must address two major challenges in the second year of her administration: bringing about the recovery of an economy that has clearly slowed down (1.7 per cent during 2014), and continuing to give impetus to an ambitious agenda of reforms.

This year the polemical education reform should be approved; it not only enjoys the backing of the opposition, but also provokes major tensions within the government coalition. In addition, the electoral reform should be unveiled (it will do away with the binomial system) and the labour reform, which is resulting in a new distancing of business from the government. Another point on the agenda is starting up the process aimed at amending the Constitution (one of Bachelet’s three main pledges during her campaign); the process promises to be the “mother of all reforms.”

Different scenarios in regional relations

In regional relations, seven events stand out for their importance and should be closely monitored:

1. The first ministerial meeting of China-Comunidad de Estados Latinoamericanos y Caribeños CELAC Forum in Beijing, China (January 8 and 9);
2. The third meeting of CELAC in Costa Rica (January 28 and 29), where Ecuador will assume the presidency;
3. The Seventh Summit of the Americas, which will take place in Panama (April 10 and 11), and whose focus of attention will be Cuba’s participation for the first time since the Summits process began in 1994;
4. The election of a new Secretary General of the Organization of American States (OAS) with the capacity to strategically reposition this weakened regional organization affected by the political divisions among its member countries;
5. The evolution of the process of rapprochement between MERCOSUR and the Pacific Alliance;
6. The EU-Latin America Summit;
7. The recent re-launch of UNASUR (which took place in December in Quito), under the leadership of former President Ernesto Samper.

My opinion

Latin America finds itself in the doldrums, and must undertake a two-fold transition: from the model based on high raw materials prices and low financing costs, to one with low raw materials prices and higher financing costs. As the OECD rightly notes: “this abrupt economic slowdown is not a passing phenomenon, it has come to stay. It’s the end of a cycle.”

This requires the region to urgently set in motion profound structural reforms, aimed at changing its development model which can strategically adapt to this new global context.

Only by improving productivity and competitiveness, education and innovation, infrastructure, but also the quality of its institutions, will the region be able to achieve inclusive, equitable, and sustainable economic growth that makes it possible to continue reducing poverty and inequality. All this will enable the region to respond more effectively to the demands and expectations of citizens ever more aware and demanding of their rights and of quality public services.

This economic slowdown and the implementation of an agenda of structural reforms (including the structural adjustment policies that we’ll see in some countries) will surely affect certain interests, thereby paving the way for certain countries to suffer greater social discontent in 2015 and a more complex situation when it comes to governability.

Yet the region is not homogenous. On the contrary, there is a considerable degree of heterogeneity that will determine a wide diversity of national situations. In effect, while Central America grew 3.7 per cent in 2014, and will grow 4.1 per cent in 2015, in South America these percentages are 0.7 per cent and 1.8 per cent respectively. Yet there is also diversity among countries. Accordingly, for example, while Panama (7.0 per cent), Bolivia (5.5 per cent), Peru, Dominican Republic, and Nicaragua (5.0 per cent) head up the list of economies with the best prospects for growth. Countries such as Brazil and Argentina – with more capacity for traction than the rest of the economies – have much more moderate projections. Mexico and Chile, predicted to experience 3 per cent annual growth, could help push the regional average up. Venezuela, similar to 2014 (with negative growth and inflation at about 64 per cent), will have a very complicated year economically speaking.

As Warren Buffet said, and rightly so, “when the tide goes out you can see who's been skinny dipping.” Something similar will happen with the countries of the region in 2015. Soon we’ll know which governments have been financially exposed.

This piece was originally published by International IDEA.