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What lies ahead 


 

V-Lee-HamiltonBy Lee H. Hamilton

Given all the words and images devoted to the midterm elections over the past few weeks, you’d think the results had told us something vital about the future of the country. In reality, they were just a curtain-raiser. It’s the next few weeks and months that really matter.

The big question, as the old Congress reconvenes and prepares to make way for next year’s version, is whether the two parties will work more closely together to move the country forward or instead lapse back into confrontation and deadlock. I suspect the answer will be a mix: modest progress on a few issues, but no major reforms.

Overall, the deep frustration Americans feel toward Washington will likely continue. Especially since, despite the urgent problems confronting us, the House leadership has announced an astoundingly relaxed 2015 agenda that includes not a single five-day work week, 18 weeks with no votes scheduled, and just one full month in session: January.

Why might there be progress? The President wants to enhance his legacy. More politicians these days seem to prefer governing to posturing. The Republican Party may have won big in the elections, but it still cannot govern alone: it will need Democratic votes in the Senate and the cooperation of the President. And both parties want to demonstrate that they recognize they’re responsible for governing.

This is not to say that progress is inevitable. President Obama has made clear that he believes he must act to halt deportations of illegal immigrants, even if he does so without Congress; congressional Republicans say they consider unilateral action an act of war. Meanwhile, the new Republican Senate is almost certain to give the President’s nominees a hard time; while GOP senators are unlikely to want to appear too tough on Loretta Lynch, the nominee for attorney general, the gloves will almost certainly come off for nominees who must negotiate hearings after her.

In the end, 2015 will see a mix of small steps forward and backward. There’s little chance of a minimum wage increase and it’s unlikely the budget will be passed in an orderly and traditional manner. Similarly, significant and difficult issues like major entitlement and tax reform will prove hard to budge.

On the other hand, Congress can probably manage to avoid a government shutdown, and it faces decent prospects of expanding and protecting our energy boom, promoting fast-track trade authority, and funding key infrastructure needs.

Here’s the basic truth: divided government does not have to be dysfunctional. It can be made to work, and if incremental progress on small issues is the way to get started, then let’s hope Congress and the President pursue that course.

 

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Report shows need to rein in Wall Street


_V-LevinBy Sen. Carl Levin

 

Recently my Senate Permanent Subcommittee on Investigations held the final hearing I will hold as its chairman and one of the most important. Our hearing, and a 396-page report we issued, examined the involvement of three Wall Street banks in the market for commodities like metal, coal, uranium and energy.

These are not activities that banks typically take on. For decades, our laws restricted banks to traditional banking businesses like taking deposits and making loans, and they were generally barred from commercial businesses like mining coal, warehousing uranium or running power plants. That changed in 1999, when Congress passed a law that weakened that traditional separation of banking and commerce. Our subcommittee spent more than two years examining the impact of those changes, and what we found was worrisome.

While Wall Street’s growing role in physical commodities has been discussed and debated, the scope of this involvement and the potential for abuse have not been widely known.

One problem is that operating things like oil tankers and coal mines exposes banks to immense risks in the event of a natural disaster or a catastrophic accident. A Federal Reserve study we reviewed showed that banks involved in these activities lacked the capital reserves and insurance coverage to cover potential losses. Should catastrophe strike, it could undermine a bank or spark fears that it might fail, which would bring turmoil to the U.S. economy. My colleague on the committee, Sen. John McCain of Arizona, noted the enormous expense of the BP Horizon oil spill in the Gulf of Mexico, and asked, “What if BP had been a bank?”

Bank involvement with physical commodities also raises concerns about unfair trading, and in some cases, outright market manipulation. JPMorgan recently paid $410 million to settle charges by the Federal Energy Regulatory Commission that it used manipulative bidding schemes at its power plants to elicit $124 million in excessive electricity prices in Michigan and California.

One case study from our report highlights the risks to manufacturers, consumers and markets. In 2010, Goldman Sachs bought a Detroit-area company called Metro International Trade Services LLC, which owns a global network of warehouses certified by the London Metal Exchange, or LME, the world’s largest market for trading metals. Under Goldman’s ownership, Metro mounted an unprecedented effort to dominate the North American market for storing aluminum.

Under the LME’s warehouse rules, no matter how many customers want to remove their metal, the warehouse is only required to ship out a limited amount each day. If customers ask to withdraw more metal than the daily minimum, a line or queue forms, and customers have to wait to take delivery. When Goldman bought the warehouses in 2010, the queue in Detroit was just a few days long. But by this year, it had grown to more than 600 days.

We found that Goldman’s warehouse company made a series of complex agreements with some warehouse customers that made it longer. Goldman would pay the owners of aluminum to put their metal in the queue for withdrawal. When that aluminum reached the head of the queue, it was loaded on trucks, but instead of going to a manufacturer, it was shipped a short distance – sometimes just a few hundred yards – to another Goldman-owned warehouse, and placed back in storage. The effect of these deals was that the queue got longer and longer without actually removing any aluminum from the warehouse system.

The lengthening queue boosted revenue at Goldman’s warehouses – the more metal stored in the warehouses, the more rent and fees. But this merry-go-round also affected aluminum prices by increasing the so-called “premium” that customers must pay to cover logistical costs such as storage. Our report found, and expert witnesses confirmed at our hearing, that Goldman’s warehouse, by making the queue longer and pushing the premium higher, was hurting manufacturers and consumers by making aluminum more expensive.

Expert witnesses also told us that if Goldman could use its warehouse to manipulate the queue, and therefore affect aluminum prices, it could profit by employing trading strategies to take advantage of that power. And in fact, Goldman rapidly increased its own aluminum trading after it bought the warehouse company.

Our report offers a number of ways to address these issues. The Federal Reserve is considering rules that could limit banks’ activities in commodities, and it should do so. We also need stronger rules against improper use of insider information and market manipulation. Until such protections are in place, our manufacturers, our markets and our economy are at risk.

Carl Levin is the senior U.S. senator from Michigan and the chairman of the Senate Permanent Subcommittee on Investigations.

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President and Congress should work together on military intervention 


V-Lee-Hamilton

By Lee H. Hamilton

In his speech last week outlining his plans to use military force against the jihadists of the Islamic State, President Obama gave Congress only passing mention. “I have the authority to address the threat from ISIL,” he said. “But I believe we are strongest as a nation when the president and Congress work together.”

He’s right, of course. But that’s not the half of it.

Our process for deciding to use force has not caught up with these dangerous times. It has been decades since Congress asserted any meaningful role; its members prefer to avoid a potentially difficult political vote, let the President take the lead, and then criticize him if he was wrong.

There are certainly occasions when the President must act alone. If we’ve been attacked or hostilities are imminent or some emergency presents itself for which force is the only response, we’d expect the President to respond effectively.

But there are powerful political reasons for making the decision to use force abroad a joint one with Congress, in all but emergencies. When our nation must deal with controversial, complicated questions, there is great value to making the President articulate his analysis of the situation and the reasons for his decisions, and to test that thinking beyond close advisors who naturally tend to support him. The best place to do so is in Congress.

Moreover, military action supported by both the President and Congress carries more legitimacy at home and more conviction abroad. The U.S. is in a far stronger position before the world if it is clear that the branches of government are unified and we are speaking with one voice as a nation.

It is common wisdom that our Constitution is ambiguous on war powers, since it makes the President the commander in chief, yet gives Congress the ability to declare war. In a sense, though, the Constitution’s message is anything but ambiguous: by giving a role to each branch, it clearly considers the use of force to be a shared decision.

This imposes a responsibility on Congress. Congress cannot be a bystander when it comes to the grave decision to use our military abroad. It, too, needs to take ownership of decisions to use force, for the good of the American people’s understanding and acceptance of the issues at stake, and for the benefit of the nation’s profile abroad.

Lee Hamilton is Director of the Center on Congress at Indiana University. He was a member of the U.S. House of Representatives for 34 years.

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Where Congress falls short … and where it doesn’t


V-Lee-Hamilton-web

By Lee H. Hamilton

 

At a public gathering the other day, someone asked me how I’d sum up my views on Congress. It was a good question, because it forced me to step back from worrying about the current politics of Capitol Hill and take a longer view.

Congress, I said, does some things fairly well. Its members for the most part are people of integrity who want to serve their constituents and the country. They also strive to reflect their constituents’ views, though they tend to under-appreciate voters’ pragmatism and over-estimate their ideological purity. Still, they’re politicians: their success rests on being accessible to their constituents, understanding what they want, and aligning themselves with that interest.

Yet for all the attractive individual qualities that members of Congress display, their institutional performance falls short. They argue endlessly, pander to contributors and powerful interests, posture both in the media and in countless public meetings, and in the end it amounts to very little. They discuss and debate a lot of problems, but don’t produce effective results.

This may be because many members of our national legislature have a constricted view of what it means to be a legislator. They’re satisfied with making a political statement by giving a speech, casting a vote, or getting a bill through the chamber they serve in, rather than writing legislation that will make it through both houses of Congress, get signed by the President, and become law. The days appear to be over when members of Congress strove to be masters of their subject matter and legislators in fact as well as in name.

Perhaps because they’re forced to spend so much time raising money and listening to well-heeled people and groups, they also seem to have trouble seeing current affairs from the perspective of ordinary people. They fall captive to the politics of any given issue, rather than thinking about the much harder question of how you govern a country with all its residents in mind. They don’t see the necessity, in a divided Congress and a divided country, of negotiation and compromise.

Plenty of forces are responsible for this state of affairs, from the outsized role of money in the political process to today’s hyper-partisanship to TV-driven sound-bite debates. But in the end, it’s still a source of great frustration to the American people, me included, that well-meaning, talented individuals cannot make the institution work better.

Lee Hamilton is Director of the Center on Congress at Indiana University. He was a member of the U.S. House of Representatives for 34 years.

 

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There’s an alternative to the Imperial Presidency


V-Lee-Hamilton-webBy Lee H. Hamilton

 

In his State of the Union speech to Congress last month, President Obama drew widespread attention for pledging to use his executive authority to advance his priorities. He insisted he intends to act with or without Congress, and listed well over a dozen actions he plans to take by executive order.

Plenty of people were happy about this. The speech was applauded by pundits who have given up on Congress, and believe the only way to move forward is by strengthening the presidency. The present government is paralyzed, they argue. A stronger presidency would get Washington moving again.

Others are alarmed by this approach. The President, they say, is trampling on the constitutional separation of powers, and grabbing powers for himself that were meant to be shared with Congress.

The problem with this debate is that it’s missing a key part of the equation. Yes, our system needs a strong presidency. But it also needs a strong Congress. We are best off as a nation when the two consult, interact, and work together as powerful branches.

Every president in recent memory has expanded the power of his office and been accused of a power grab. They’ve had plenty of motivation to do so. The modern world demands decisive action. Americans tend to support presidents who act forcefully. Congress is complex and hard to work with.

Yet there are limits to this approach, because in the end there is no substitute for legislation. Executive orders lack the permanence and force of law, so they can be hard to implement and can be cancelled by a later president. They don’t benefit from consensus-building and consultation with voices independent of the President’s.

Consensus-building can’t happen in a vacuum, however. Without a strong Congress able to find its way effectively through the thickets of lawmaking, this President and his successors will surely continue to address the nation’s challenges on their own. The question is, how far down that road can we go before Congress becomes irrelevant, with too much power and too much potential for the abuse of power in presidential hands?

The march toward presidential unilateralism dangerously undercuts our constitutional system. Before we give up on the separation of powers, let’s try strengthening Congress. This may not be the easy route, but if we don’t take it, representative democracy itself is in doubt.

Lee Hamilton is Director of the Center on Congress at Indiana University. He was a member of the U.S. House of Representatives for 34 years.

 

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Congress still isn’t being responsible


 

V-Lee-HamiltonBy Lee H. Hamilton

 

Congress is winding down its historically unproductive session with a small flurry of activity. It’s a welcome change, but so long overdue that it can’t possibly make up for what should have been accomplished on Capitol Hill this year. The problem is that for too long, members of Congress have been working hard at everything except the one thing they should have been working hard at: legislating. They’ve been so unproductive that they’ve actually threatened our world standing and our domestic well-being.

To be sure, they are moving incrementally. Gridlock is breached, but not broken. The likelihood is that Congress will pass a defense bill. It reached a small-scale budget agreement that undoes a bit of the damage caused by the sequester. It is finally starting to work through a list as long as your arm of judicial and executive-branch confirmations, but only because Senate Democrats decided they had to change the rules if they wanted to fill long-unfilled government appointments.

Yet, the list of what Congress hasn’t done is sobering. There’s no food-stamp reauthorization or waterways construction bill. It passed a one-month extension to the farm bill, but that falls far short of the certainty this crucial economic sector needs. There’s no lasting solution to the debt-ceiling problem. Almost nothing has been done about the fundamental gap between taxes and spending. It has left unemployment benefits unresolved, immigration reform unresolved, tax reform unresolved, and action on climate change unresolved. This lack of productivity makes me wonder if Congress can address truly hard challenges without a crisis before it.

Mind you, some legislators take pride in how unproductive Congress has been. They argue that the less the government does, the better. But given Congress’s pathetically low standing in the polls, it’s clear that most Americans don’t agree. They don’t like incompetence, as their response to the botched rollout of the Affordable Care Act suggests, and they really don’t like people who dodge their responsibilities, which is what Congress’s ineffectiveness amounts to. Unlike many members of Congress, Americans seem to understand that things that ought to be done are not getting done, and that there are real costs to inaction.

We’re in a competitive race with China for world leadership, and whether we like it or not, others around the globe are comparing our two governments. The attractiveness of the American model is under challenge, and our political dysfunction is a serious handicap. As the Wall Street Journal put it recently, a superpower that isn’t sure it can fund its government or pay its bills is not in a position to lead. And, because problems aren’t getting addressed, others are stepping into the breach at home, too—but with less transparency, less accountability, and less flexibility.

The Fed is doing the heavy lifting on the economy. The Supreme Court is essentially legislating. Executive branch agencies are trying to handle massively difficult challenges through executive orders. State and local governments have decided that even on issues they can’t truly address effectively, like immigration, they’re on their own.

When asked about all this, congressional leaders tend to blame the other house, arguing that they’ve done their best but the other side has bottled up their efforts. All I can say is, finger-pointing is not an excuse, it’s an admission of failure. A leader’s responsibility is to enact legislation, not just get a bill through the house of Congress he or she controls.

Legislating is tough, demanding work. It requires many hours of conversation about differences, commonalities, and possible solutions. It demands patience, mutual respect, persistence, collegiality, compromise, artful negotiation, and creative leadership, especially when Congress is so divided.

Yet, when Congress meets only episodically throughout the year, when it often works just three days a week and plans an even more relaxed schedule in 2014, when the House and Senate give themselves just one overlapping week this month to resolve huge questions of public policy, you can only come to one conclusion: They’re not really willing to work hard at legislating. A last-minute flurry of bills offers hope, but it’s going to take a lot more work to convince the country that Congress knows how to live up to its responsibilities.

Lee Hamilton is Director of the Center on Congress at Indiana University. He was a member of the U.S. House of Representatives for 34 years.
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November = No food for some Michiganders


By Mona Shand

Michigan residents who receive federal food assistance will see their benefits decrease by the end of this week, even as Congress debates further cuts to the anti-hunger program. Photo courtesy of stockphotosforfree.com.

Michigan residents who receive federal food assistance will see their benefits decrease by the end of this week, even as Congress debates further cuts to the anti-hunger program. Photo courtesy of stockphotosforfree.com.

At the height of the recession, Congress authorized a small increase to the Supplemental Nutrition Assistance Program (SNAP, or food stamps), but that extra funding runs out November 1, leaving many Michigan residents struggling even harder to put food on the table. Beginning next week, a family of four receiving SNAP benefits will see a loss of about $36 per month.

Gilda Jacobs, CEO of the Michigan League for Public Policy, declared that this is the wrong time to make any cuts to such a vital anti-hunger program, which serves Michigan’s most vulnerable.

“It goes to seniors, it goes to veterans, it goes to children, it goes to working families—many people who have no other way to get nutrition and healthy foods,” Jacobs said.

N-November-no-food2-plateThe U.S. House has passed a Farm Bill, including even deeper cuts to the SNAP program, which would eliminate 200,000 low-income men and women from food assistance in Michigan. A bipartisan version that passed in the Senate also makes a cut, but it’s quite small compared to the reduction of $40 billion over 10 years in the House bill.

According to Jacobs, the effects of cuts to the SNAP program go far beyond the dinner table in a state like Michigan, which is still struggling to pull itself out of the recession. “These dollars also help our local economies,” she said. “This money is spent directly in people’s neighborhoods. They go into small businesses. So, there’s really a ripple effect.”

Today an estimated 13 percent of Michigan households meet the definition of “food insecure,” meaning they do not consistently have enough food. That’s up from 9 percent just a decade ago.

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How to improve the road ahead


V-Lee-HamiltonBy Lee H. Hamilton

 

One of the more amazing spectacles in the days after the government shutdown ended was the obsession in Washington with who won and who lost in the showdown. Yes, the capital is focused on next year’s elections, but honestly! There was only one real loser, and that was the American people.
Why? Because nothing got resolved. The agreement leaves the government open only until mid-January, and gives the Treasury the ability to borrow through early February. This is the barest minimum that we needed. So the question is, can we avoid a similar crisis down the road? To do so, Congress must confront three enormous challenges. To begin with, great democracies do not lurch from doomsday moment to doomsday moment. They plan ahead, they resolve their challenges, they fulfill their responsibilities abroad and respond to their own people’s needs. Congress can do none of these things so long as its members respond only to brinksmanship, resolving one crisis by setting up another a few months down the road.

Second, I find myself thinking often these days of the skillful legislators I’ve known over the years. Where are their counterparts today? Congress only works well when politicians and staff understand that each party has to walk away with something; that it’s crucial to preserve flexibility and avoid scorched-earth rhetoric; and that it takes people with the fortitude not to walk away from talks when things are going poorly. Congress needs legislators who are willing to roll up their sleeves and commit fully to the process.

Finally, Congress is weak today. By its inaction, it has given power to the President, who can use executive actions to enact policy. It has strengthened the federal bureaucracy by leaving regulatory decisions to federal agencies with very little direction or oversight. It has given massive economic power to the Federal Reserve, since someone has to promote economic growth. And it has allowed the Supreme Court to become the central policy-making body on controversial issues from campaign finance to affirmative action to environmental regulation.

“Any society that relies on nine unelected judges to resolve the most serious issues of the day is not a functioning democracy,” Justice Anthony Kennedy said in a recent speech. I’m sorry to say that he’s talking about us.

Lee Hamilton is Director of the Center on Congress at Indiana University. He was a member of the U.S. House of Representatives for 34 years.

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What you need to know about Congress right now


V-Lee-HamiltonBy Lee H. Hamilton

Deeply unpopular and flagrantly unproductive, Congress is on its August recess right now. It won’t return until Sept. 9, after a five-week recess, leaving itself just a few days to settle issues like raising the debt ceiling and passing a federal budget. Here are some things you should know about where it stands at this stage of the game:

— Few, if any, Congresses can match this one for futility. It managed to help out some communities in the wake of Hurricane Sandy and to reach a deal on presidential nominations, but mostly it can’t get things done — whatever your politics. The repeal of Obamacare, action on climate change, a “grand bargain” on our fiscal problems, education and tax reform, creating jobs, strengthening gun laws… the list of dropped balls is long, although there is still hope for immigration reform, if just barely. A few weeks ago Speaker John Boehner told Americans not to judge Congress by how many laws it passes, but by how many it repeals. It hasn’t succeeded on either count.

— The budget process is a mess. It’s been years since Congress put together a budget according to its regular order, but even by its recent low standards this year has been chaotic. None of the appropriations bills needed for the government to continue running after Sept. 30 has been enacted. “It is common for Congress to leave big budget fights until the last minute,” the Wall Street Journal’s Janet Hook wrote as Congress left town, “but the budgeting process now seems so adrift that even congressional veterans find it hard to see a resolution.” Passing a budget is the most basic function of government, and Congress can’t manage it.

— Members of Congress do not like to compromise. The parties are more divided ideologically than they’ve been for many decades, with one side fiercely hostile to government and the other convinced that government can accomplish good things. Neither side can get things done on its own. That’s pretty much the definition of when responsible lawmakers step forward to build a consensus. Yet in this Congress, either they don’t know how or they’re not interested. A glimmer of hope does exist, as more members respond to polls showing Americans believe it’s more important for the parties to compromise than to stick to their positions. They may not be able to come to agreement, but some of them are talking about how willing they are to reach across the aisle.

— Even so, it’s worth noticing that one of the congressional parties is extraordinarily difficult to lead at the moment. The Republicans are fractured and squabbling over their future direction. This makes me sympathize with the formidable task the Republican leadership confronts.

— Hardly anyone out there thinks Congress is doing a good job — it’s consistently below 20 percent approval ratings — and most people think it’s too partisan. Yet members aren’t very concerned. They’ve become quite skilled at running against Washington, even though they are Washington. And they count on the fact that few voters hold their own member of Congress responsible for its shortcomings, however unpopular Congress as a whole has become.

— As lobbyists descend in swarms on Capitol Hill, they hold more power than ever. They rain cash, twist arms, and even draft bills — all the things that powerful congressional leaders used to do. The NRA’s defeat of legislation strengthening background checks for gun purchases, in the face of overwhelming public sentiment after Newtown, was nothing less than an impressive display of political clout and an example of how influential lobbyists and special interests have become. Perhaps this is why a good number of my former colleagues have made a tidy living for themselves by becoming lobbyists.

— Finally, all of this contributes to the emerging themes for the 2014 congressional campaign. Candidates will clearly run against the mess in Washington, and a good number of them, though not all, will talk regularly about the need to be bipartisan. The big question for 2015 will be whether the successful ones can translate their talk into legislation to help move the country forward.

Lee Hamilton is Director of the Center on Congress at Indiana University. He was a member of the U.S. House of Representatives for 34 years. Now on Facebook you can find information about our educational resources and programs, and you can share your thoughts about Congress, civic education, and the citizen’s role in representative democracy. “Like” us on Facebook at “Center on Congress at Indiana University.”

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A more rounded way to gauge Congress


By Lee H. Hamilton

I suspect that most members of Congress will want to forget the year that just ended.
The institution that symbolizes our democracy finished 2011 plumbing depths of unpopularity it has never experienced before. The poor jobs picture, the lurching from one brink-of-disaster deadline to the next, the polarization that keeps the parties from working together, the widespread sense that Congress is so dysfunctional it cannot meet the nation’s challenges—all played a role.
These are valid ways of judging Congress, but they are not the only way. Every year, the Center on Congress at Indiana University polls a group of congressional scholars on how they think the institution is doing, and one of the challenges we face is devising a set of questions that meaningfully probe Congress’s performance. It’s not as easy as you’d think. You have to look deeply at how Congress is operating in order to get a well-rounded picture.
The first of Congress’s responsibilities is to protect its constitutional role as a strong, coequal branch of government. It must stand apart from and serve as a check upon the excesses of presidential power. So how well does it oversee the executive branch, and is it generating meaningful, politically sustainable policy alternatives, or just sitting back and letting the White House take all the political risks?
Its second great role is to represent the American people. This means making sure that all voices get a fair hearing and that diverse viewpoints play a part in crafting initiatives—all while safeguarding institutional practices that allow legislation to move forward in a timely manner.
Third, in a country as politically and demographically varied as ours, sound process, negotiation and compromise are key to crafting legislation that can enjoy broad political support. Are its leaders capable of working hard to forge a consensus? If they can’t, do conflicts over legislation represent substantive differences, or mere political game-playing? Does it balance careful deliberation with making decisions? Does it protect the rights of the minority and allow all points to be heard?
Fourth, does Congress set sufficiently high standards for its individual members? Do they keep partisanship in check and behave ethically?
And finally, do they maintain strong connections to their constituents back home? Do they make themselves accessible in a variety of settings, listen well, and speak out for their communities and constituents at times of need?
All of these questions add up to how well Congress represents the interests of the American people, and as always, it does better on some than on others. Despite its obvious troubles, the picture is not entirely bleak. And I can’t help but believe that the more well-rounded our understanding of where Congress falls short and where it performs well, the better we can hold it to account.
Lee Hamilton is Director of the Center on Congress at Indiana University. He was a member of the U.S. House of Representatives for 34 years.

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