Category Archives: Public Policy and Governance

“Tax” Is Not A Four-Letter Word

As Congress takes up consideration of what the President and GOP have labeled “tax reform,” and what impartial observers describe as tax cuts mostly for the wealthy, it’s time for a re-run of my rant on the subject of taxation.

I’ve been particularly incensed by the appearance in Indiana of a TV spot aimed at Senator Joe Donnelly. Donnelly is a Democrat (moderate, of the Hoosier variety) considered vulnerable in 2018. The spot features a lovely young woman talking about the importance of tax reform–no specifics, no definitions, just a plea to Donnelly to support “fair” taxation.

I’m all for fair taxation, and I’m willing to bet everyone reading this is, too. I’m also willing to bet that definitions of a “fair” tax system vary widely (the devil, as we all know, being in the details). The one thing we should all recognize, however–whatever our personal opinions about “fairness”–is the difference between tax reform and tax cuts. 

As Jared Bernstein recently wrote in an article in the American Prospect,

In D.C. tax-debate parlance, “tax reform” means something specific: cutting tax rates and broadening the tax base. Rate reductions lose revenue, but you make it up by closing loopholes, exemptions, and favorable treatments of one type of income over another, thus broadening the income upon which taxes are levied.

As Bernstein points out (and we all know), most loopholes are the result of lobbying by special interests, not some disinterested analysis of their utility, making them very hard to eliminate. Even more pernicious is the belief–an article of faith in the GOP–that lower rates will generate more economic activity and thus more tax revenue. There is absolutely no evidence supporting this theory, and considerable evidence rebutting it, but it refuses to die.

In the current tax debate—no surprise—the Trump administration and the Republican Congress are predicting that their tax cuts will return large growth effects. They claim their plan—and to be clear, there is, as of yet, no plan—will increase the real GDP growth rate by at least half, from around 2 percent to 3 percent or 4 percent, and that this increase will offset much of the costs of the cuts.

This was the same story told by Reagan, Bush I, and Bush II, and in every case the results belied the claims. The most recent example, from the state of Kansas, is particularly germane to this discussion, because it reveals flaws in the same ideas being bandied about by the current Congress.

Tax policy experts estimate that the measures being discussed would cost government $6.5 trillion in revenues over ten years, and dramatically increase the deficit the GOP pretends to care about.

The vast majority of the benefits of these measures accrue to the wealthiest households: Almost 50 percent of the cuts go to the top 1 percent, while 6 percent go to the middle fifth. About 27 percent of the gains go to the 120,000 families in the top tenth of the top 1 percent, whose average pretax income is $11 million.

If anything remotely like this package passes, it will exacerbate levels of inequality that already exceed those of the Gilded Age.

According to the Brookings Institute,

this tax reform plan gives a lift to growing inequality, and signals that the GOP is okay with persistent poverty and with the inability of one-third of us to feed our kids. It’s time to ask ourselves, how do we craft tax reform for the long term—reform that tackles American poverty and inequality and creates the conditions for inclusive economic growth?

I would suggest that genuine tax reform begins with the recognition that “tax” is not a four-letter word. Taxes are the dues we pay for social peace and stability, for the myriad of services that modern societies require and their citizens demand, and from which we all benefit.

We currently have a system that incentivizes the “haves” to evade their responsibility to pay a fair share, or even to discuss what a fair share would look like. Until we have that conversation, we may see tax cuts–mostly for the already privileged– but we won’t see anything resembling genuine tax reform.

 

 

American Exceptionalism

“American Exceptionalism” has meant different things at different times. Usually, however, the meanings ascribed to that phrase have been positive. Over at The World’s Most Dangerous Beauty Parlor, however, “El Jefe” has described a far less rosy aspect of our exceptionalism.

As a country, the US is 4.4% of the world’s population, yet we own 42% of the world’s guns.  Let that sink in.  Our homicide rate in the US is over 300% that of the average of the rest of the OECD.

As he also points out, there are many ways in which the population of the U.S. is not exceptional.

  1. Do we have mental health problems?  Of course, but so does every other country.
  2. Do we sell violent video games?  Yes, but so does every other country.
  3. Do we have violent television shows and movies?  Yes, but so does every other country.
  4. Do we have a breakdown in the family unit?  Yes, but so does every other country.
  5. How about churches?  Are our churches shrinking?  Yes, but they are doing the same in other countries.

What we have that other countries don’t have–or at least, don’t have as much of–is guns. Lots and lots of guns.

After the Las Vegas mass shooting, Americans engaged in what has now become a ritual of hand-wringing and mutual recriminations. Critics of our lax gun regulations pointed out that large majorities of Americans (including a majority of NRA members) want to tighten those restrictions; defenders of the armament status-quo insisted that widespread gun ownership equals “freedom.”

Although most of the commentary rehashed arguments we hear after every mass shooting–and we have a lot of mass shootings–I did learn something new, and it was both terrifying and encouraging. Half of the 265 million guns in the U.S. are owned by 3% of the population–and only 22% of us own any firearms.

It’s encouraging to know that my non-armed household is in the majority; the news–and the high number of gun deaths– sometimes make it seem as if every American old enough to lift a gun owns one.

What’s terrifying is the likelihood that  (with the possible exception of people who may be collecting historic muskets and powder-horns) the 3% who possess vast arsenals are scary dudes.

We don’t know nearly enough about gun owners or gun violence, because Congress refuses to allow the CDC or other agencies to fund research on the subject. But USA Today recently reported on a privately-financed survey of gun ownership.

Researchers found that the top reason people owned guns was for protection from other people, even though the rate of violent crime has dropped significantly the past two decades, said Deborah Azrael, director of research at the Harvard Injury Control Research Center and one of the study’s authors.

Azrael said the study tried to update numbers and trends that hadn’t been reviewed in two decades. Separate reports on background checks and gun storage, based on the same survey, are scheduled to be released later this year.

“In a country where 35,000 people a year die by firearms, we haven’t been able to come out with a survey on gun violence for 20 years,” she said. “That’s a real failure of public health and public policy.”

The study also found that gun owners tend to be white, male, conservative, and residents of rural areas. Presumably–hopefully–that means that most of them are hunters, not crazed militia-men. On the other hand, a lot of America’s guns are handguns: the study found 111 million handguns nationwide, a 71% increase from the 65 million handguns in 1994.

So long as we have Trump in the White House and a Congress wholly-owned by the NRA and the gun manufacturers, we are unlikely to impose the sorts of reasonable restrictions that other countries have found effective, and we’re equally unlikely to get the kind of research we need.

I’d really like to know more about that 3%……

Another Last Straw

Every morning since January 20th, Americans have awakened with foreboding: what new attack on reason and sanity has our tweeter-in-chief launched today? And what excuses for inexcusable behavior will spineless GOP Senators and Representatives offer this time?

Optimists wil predict that this (insert latest outrage) will be the final straw. Realists respond that, given the invertebrates in Congress and the ship  of fools that is the cabinet, it won’t be.

Yesterday, we woke to discover that Trump unilaterally and abruptly ended the Obamacare subsidies that make health insurance affordable for millions of Americans. Every single health-care organization in America opposed this action, but if there’s one thing we’ve learned about Donald Trump, it’s that he’s a know-nothing unwilling to listen to people who actually know something.

Congress failed to “repeal and replace” the ACA, so Trump has evidently decided to simply destroy it. The fact that many people will die is obviously of no importance to Mr. Me Me Me. In his zeal to destroy the ACA (and all vestiges of Obama’s legacy), he had already cut the enrollment period for 2018 in half, cut 90% out of the advertising budget and eviscerated the so-called “navigator program” that helps people through the ACA enrollment process.

At the Washington Post, Catherine Rampell warns that Trump’s sabotage is likely to destroy the system.

President Trump has made a lot of promises on health care.

Somehow, though, I don’t remember him promising stadiums of cheering fans that he’d take away protections for preexisting conditions, increase deductibles, spike premiums, eliminate basic coverage requirements and, more generally, destabilize the individual health-insurance market.

After explaining what yesterday’s Executive Order will and will not do, Rampell concludes that this impulsive and destructive act was “pretty much on brand for this nihilistic president: When you can’t come up with a new system that works, just blow up the old one.”

One of the most maddening aspects of Trump’s Order is that withdrawing the subsidies will actually cost the federal government money. A lot of money. The Kaiser Family Foundation has estimated that “savings” of 10 billion dollars would be offset by a rise in premium tax credits to 12.3 billion. In other words, the federal government will be paying  2.3 billion dollars more by making health insurance unaffordable once again for untold numbers of Americans.

The CBO projects that cutting off the subsidies will cause premiums to rise 20 percent by 2018 and 25 percent by 2020, and will increase the budget deficit by nearly $200 billion by 2026.

It’s really expensive to screw over the American public, but don’t expect the man with the tacky gold toilet to worry about budgets.

A number of people have compared Donald Trump to Richard Nixon. Admittedly, there are parallels:  Nixon was also mentally ill, also a bigot, and also willing to sacrifice American lives for political advantage.  However, despite his paranoia and some truly unforgivable–even treasonous– decisions, Nixon was intelligent and informed. He knew how government worked and what it was for, and he made some good decisions, including creation of the EPA and opening relations with China.

Trump is profoundly ignorant of government and policy, is clearly uninterested in learning, and is the loosest of loose canons. In ten short months, the man Rex Tillerson has (accurately) described as a “fucking moron” has made America an international laughing-stock, and his irrational behaviors toward North Korea and Iran have brought us dangerously close to nuclear war.

With Trump, I worry that the final straw will be a mushroom cloud.

Economic Development Develops

Every so often, we need to take our eyes off the clown show in Washington, D.C., and consider what’s happening elsewhere. For example, the much-hyped competition for Amazon’s second headquarters.

I hate to be Debby Downer, but that competition is an excellent example of what’s wrong with current approaches to economic development. Economic development offices around the country participate in what is nationally a zero-sum game–attracting businesses from one locality to another, and spending lavishly to do so. (According to several sources, states and counties have awarded over $1.3 billion in incentives just to attract Amazon’s fulfillment centers.)

As a Brookings Institute report recently noted, this approach to job creation is problematic.

The most obvious is that in each of these cases, Amazon was going to come with or without incentives. It is a core tenet of Amazon’s strategy to be able to rapidly deliver products directly to people’s homes, increasingly with same day service, so they must have a major presence in every large region. Seemingly every metro area we’ve worked in over the past several years has highlighted the attraction of an Amazon facility as a major local economic development success story. (A quick web search confirmed the presence or recent announcement of one or more major Amazon fulfillment centers in or near each of the 40 largest US metro regions.) In these cases, state incentives make no sense. And county incentives are used only to influence selection of the actual site within a region, thus pitting local jurisdictions against each other to claim a political win, with no actual competitive benefit to the regional economy….

Another issue is spatial mismatch. In our work across the country, many employers such as Amazon express frustration in not being able to find enough workers—while at the same time, workers complain of not having access to good jobs. This problem is predictable. While traditional retail jobs are spread throughout metro areas to be near customers (and by default, the workforce), warehouse and logistics operations (such as Amazon’s) consolidate employees under one roof on the periphery of the metro…. The Amazon jobs that replaced these are less accessible to many of the lower-skilled employees that are best suited to fill them because workers do not live nearby. Lack of access to transit, zoning decisions that limit nearby affordable housing, and childcare responsibilities severely limit the number of workers in a given region for which this type of job commute makes sense.

The Amazon Headquarters frenzy highlights what economic development has become; a system that revolves around government giveaways to corporations.

There’s a better way. And the Indianapolis Chamber of Commerce has recently partnered with Brookings to research that better way, culminating in a report titled “Rebuilding the Dream: Inclusive Growth in the Indianapolis Region.” It begins with a recognition that the economy is “misaligned between employer needs and workforce capability, and riddled with barriers to upward mobility,” and it urges policymakers to focus on removing those barriers and creating the conditions for inclusive and sustainable growth.

Rather than a competition to bring new employers to the region, the report advocates an emphasis on expanding companies that are already here, especially but not exclusively in so-called “advanced” industries (tech, very broadly defined). If those companies are to grow, however, they need access to a workforce capable of doing the jobs they are creating. The report enumerates the multiple barriers those potential employees face, and recommends a comprehensive and strategic approach to their removal: improved transportation, childcare,  health care innovations, language and training opportunities, etc.

This makes so much sense.

Rather than prospecting for companies willing to relocate and then bribing them with our tax dollars, the Chamber wants us to spend those dollars on measures that will reduce the mismatch between employer needs and the ability of unemployed or underemployed residents to meet those needs.

This is an investment that would pay real–rather than PR– dividends. Policymakers should endorse it.

Trashing The Country

I see that Scott Pruitt intends to roll back the Clean Power Plan put in place during the Obama administration.  Pruitt’s devotion to fossil fuel interests and his determination to eviscerate the agency he heads is, if anything, stronger than ever. To hell with clean air and water, or for that matter, the future of the planet.

The Guardian recently looked at another of the Obama-era regulations that Trump and Pruitt reversed.

A ban on bottled water in 23 national parks prevented up to 2m plastic bottles from being used and discarded every year, a US national park service study found. That is equivalent to up to 326 barrels of oil worth of emissions, 419 cubic yards of landfill space and 111,743lb of plastic, according to the May study.

Despite that, the Trump administration reversed the bottled water ban just three months later, a decision that horrified conservationists and pleased the bottled water industry.

Donald Trump’s primary policy motivation has been clear from the moment he assumed office: the erasure of Barack Obama’s legacy, no matter what the policy, no matter how good for America, no matter how good endorsing it would be politically for Trump himself. If Obama did it, Trump is determined to undo it.

For whatever reason–Obama’s skin color (Trump’s racism is no longer in question), his devastating take-down of Trump at that correspondent’s dinner, or some other motivation lurking in Trump’s clearly disordered mind–the only consistent thread in the disaster that is this administration is the determined and vicious assault on Obama’s legacy.

Did Obama want clean water and breathable air? Then those things aren’t important. Did he want to protect our national parks from pollution and despoiling? “Freedom” means letting plastic bottles proliferate!

The plan to curb pollution in America’s most famous wilderness areas was spurred when arguably its most famous park, the Grand Canyon, banned the sale of plastic water bottles in its gift shops, according to the report. Approximately 331 million people visit US national parks each year.

The program was meant to support a “life cycle” approach to plastic, which activists say is the largest global threat to the environment behind climate change. One million plastic bottles are sold per minute, according to a Guardian analysis. The top six drink companies in the world use an average of just 6.6% recycled plastic.

At the same time, new research has shown that plastics which find their way into the sea have entered the food supply. Scientists have found plastic particles in sea salt, honey, fish, beer and tap water.

When the parks began banning bottled drinking water in 2011, they installed hydration stations with free water. But that didn’t stop the bottled water industry from accusing the government of “infringing the freedom of families to decide for themselves how to hydrate.”

Think I’m kidding?

“It should be up to our visitors to decide how best to keep themselves and their families hydrated during a visit to a national park, particularly during hot summer visitation periods,” said the acting service director, Michael Reynolds.

You can’t make this shit up.