Category Archives: Public Policy and Governance

Taxing The Rich, Helping The Poor

Political observers have consistently dismissed Andrew Yang’s chances of securing the Democratic nomination, and I’ve agreed with their assessment. Yang also agrees–he has terminated his campaign.

Policy folks and political pundits alike have also dismissed his signature proposal–a UBI, or Universal Basic Income. I don’t agree–and neither does the Brookings Institution.

Now, don’t get me wrong–no one who isn’t imbibing very strong drink thinks American lawmakers are likely to pass, or even consider, a UBI any time soon. But as I argued in my most recent book, Living Together, there is a high probability that  millions of jobs will be lost to automation within the next 15-20 years–presenting a challenge America’s current inadequate and bureaucratic social safety net is clearly unable to meet.

In my book, I laid out a number of reasons how–despite Americans’ deep cultural disdain for social welfare programs–a UBI would be both efficient and socially unifying. I also took a stab at explaining how we could pay for it. Nevertheless, some of the sources I identified would require ending fossil fuel and other subsidies and curtailing military expenditures–measures we should take in any event, but that would obviously be politically difficult.

So I was excited to come across an analysis by William Gale of the Brookings Institution that not only made a persuasive case for a UBI, but for his preferred mechanism to pay for it. Here’s the lede:

The Congressional Budget Office just projected a series of $1 trillion budget deficits—as far as the eye can see. Narrowing that deficit will require not only spending reductions and economic growth but also new taxes. One solution that I’ve laid out in a new Hamilton Project paper, “Raising Revenue with a Progressive Value-Added Tax,” is a 10 percent Value-Added Tax (VAT) combined with a universal basic income (UBI)—effectively a cash payment to every US household.

The plan would raise substantial net revenue, be very progressive, and be as conducive to economic growth as any other new tax. The VAT would complement, not replace, any new direct taxes on affluent households, such as a wealth tax or capital gains reforms.

A VAT is a national consumption tax—like a retail sales tax but collected in small bits at each stage of production. It raises a lot of revenue without distorting economic choices like saving, investment, or the organizational form of businesses. And it can be easier to administer than retail sales taxes.

Gale’s UBI proposal is similar to–but smaller than–Andrew Yang’s. The linked article gives the details of how the VAT that paid for it would be structured, and readers with a background in economics are encouraged to read and analyze those details.

The article also explains several of the virtues of the proposed combination of a VAT and a UBI.

The Tax Policy Center estimates that the VAT in conjunction with a UBI would be extremely progressive. It would increase after-tax income of the lowest-income 20 percent of households by 17 percent. The tax burden for middle-income people would be unchanged while incomes of the top 1 percent of households would fall by 5.5 percent.

It may seem counter-intuitive, but the VAT functions as a 10 percent tax on existing wealth because future consumption can be financed only with existing wealth or future wages. Unlike a tax imposed on accumulated assets, the VAT’s implicit wealth tax is very difficult to avoid or evade and does not require the valuation of assets.

Liberals have typically viewed VATs as regressive, but Gale points out that they can be quite progressive when combined with the UBI. He also notes that conservatives should support a VAT because the evidence suggests that VATs almost never increase overall government spending.

Assuming that Gale’s numbers are sound, a VAT would generate more than enough money to pay for a UBI.

Granted, under a UBI, all those caseworkers and number crunchers hired by government to decide who is worthy of support and who is not would lose their jobs. But they would have a UBI, so they wouldn’t starve…

 

Extortion–And Susan Collins

Well, Susan Collins was right–sorta. Trump did learn a lesson from the Impeachment whitewash that she and the other Republican Senators handed him.

The lesson? Extortion works and I can keep doing it.

Earlier this week, Trump tweeted:

I’m seeing Governor Cuomo today at The White House. He must understand that National Security far exceeds politics. New York must stop all of its unnecessary lawsuits & harrassment, start cleaning itself up, and lowering taxes. Build relationships, but don’t bring Fredo!

This, of course, is vintage Trump, displaying both his trademark ignorance of how government actually works and his mob-godfather behavior.

Letitia James, New York’s Attorney General responded to the obvious ignorance.

When you stop violating the rights and liberties of all New Yorkers, we will stand down. Until then, we have a duty and responsibility to defend the Constitution and the rule of law.

BTW, I file the lawsuits, not the Governor.

As commentators have noted, this new threat followed a more generalized version that Trump had included in his delusional, fact-free State of the Union speech. In that speech, he threatened reprisals against sanctuary cities and states (mischaracterizing, as usual, what sanctuary laws say and do–it really is amazing how impervious he has been to learning anything in the three years he’s held office).

It also followed a previous, petty retaliation against New York, described by a Daily Kos contributor:

When the Department of Homeland Security announced on Feb. 7 that residents of New York would no longer be allowed to participate in programs such as Global Entry that speed passengers through airport security, it seemed like an act of petty vengeance. But then … petty vengeance is Donald Trump’s middle name. He just spells it with a J. So the idea that Trump would make a move designed to irritate millions of New Yorkers because their state passed laws supporting immigrants seemed absolutely believable.

But as it turns out, Trump wasn’t acting out of pure retaliation. Not at all. On Thursday Trump fired off a tweet making it clear that the real purpose behind making New Yorkers go to the back of the line was extortion—to force the state into leaving his taxes, his company, and his friends alone.

After all, it worked so well in Ukraine.

For a more in-depth discussion of this latest, astonishingly brazen effort to obtain a personal quid pro quo–threatening to withhold money meant to protect the citizens of New York unless that state dropped its multiple investigations into his criminal activities–you really should visit (or revisit, if you have already seen it) this discussion on Morning Joe.

Once again, the word that comes to mind is chutzpah.

What I find so astonishing is not the criminal behavior itself–and make no mistake, it is criminal, although I’m sure that the blowback will be dismissed with Trump’s usual “it was a joke” disclaimer (this from a man who wouldn’t know humor if he encountered it)– but the chutzpah of tweeting it out for the whole world to see. All that was missing was “Nah nah nah–you can’t impeach me! I’m protected by the spineless, dishonest, unAmerican Republicans in Mitch McConnell’s Senate.”

Yes indeed, Senator Collins. He certainly learned a lesson…

 

Making A List…

There are no perfect candidates. We all have to overlook various aspects of would-be Democratic nominees–issues where we differ, behaviors we consider problematic, experience we consider questionable or insufficient, doubts about ability to win. But just for fun–and for the (unlikely) edification of the occasional Trumpers who visit here–I have begun making a list of the things that a voter will have to overlook in order to cast a ballot for Donald J. Trump.

I’m not the only one “making a list and checking it twice.” A couple of months before the midterm elections, McSweeneys published “Lest We Forget the Horrors: A Catalog of Trump’s Worst Cruelties, Collusions, Corruptions and Crimes.” Politico has published “138 Things Trump Did While We Weren’t Looking” and other publications have weighed in with their own compendiums.

My own list doesn’t even include the Trump voter’s need to overlook the constant lying, the  pussy-grabbing and multiple accusations of rape/sexual assault, the five kids from three wives, the clear signs of mental illness, and the other personal behaviors that used to be considered inconsistent with authentic Christianity. We know his base doesn’t give a rat’s patootie about any of that. Nor do they care that he’s dumb, can’t spell, has the vocabulary of a third-grader and the geography knowledge of a kindergartener.

Presumably, they also don’t care about the widely documented chaos at the White House–unprecedented turnover, backstabbing and leaks, the (also unprecedented) number of unfilled jobs and jobs filled by “acting” appointees (mostly former lobbyists) who don’t need–and couldn’t get–Senate confirmation even from the spineless Republicans terrified of Trump’s immature rages.

You would think they might care about the fact that the administration has engaged in an unremitting assault on the rule of law. (The most recent episode, in which the President and Bill Barr meddled with the sentencing of Roger Stone, demonstrated that they no longer even feel the need to hide that assault.) Their leniency for corrupt cronies contrasts with their criminalization of humanitarianism–threats to sanctuary cities and prosecutions of people leaving food and water for desperate people trying to cross the border.

You might think they’d care about the decision to forego ABA vetting of judicial nominees–a clear sign that the people Trump is elevating to the federal bench aren’t just ideologues, but also embarrassingly unqualified.

You might think they’d care about deep cuts to the CDC, including cuts to research that would combat pandemics like the one we are dealing with now.

You would hope at least some of them would be appalled at the number of environmental regulations that have been eliminated or eviscerated (that old Tom Lehrer joke about America being a country where you can’t drink the water and can’t breathe the air no longer sounds so funny and old-fashioned).

Evidently no one in Trump’s base enjoys America’s National Parks, or appreciates the public lands we used to protect, since they are willing to overlook the underfunding of park maintenance and the encouragement of drilling and mining on once-protected national monuments.

Trump’s base also must be willing to overlook America’s withdrawal from our international obligations–the petty nastiness shown to our most important allies, the sucking-up to the world’s worst demagogues, and the betrayal of weaker allies like the Kurds, who trusted us. (I guess the fact that America’s President is a laughingstock around the world doesn’t bother them, either.)

Tariffs? The base has to overlook the extra costs burdening American consumers; overlook the spike in farm bankruptcies (despite the fact that taxpayers have paid farmers billions to offset the harm done by those tariffs–much more than the auto industry got during the Great Recession); overlook the fact that the “old” GOP was right to oppose tariffs and trade wars because they inevitably hurt us much more than they hurt the other guy…

So much for overlooking. I’ve reluctantly concluded that Trump’s base actually approves of policies most reasonable people find mean-spirited and/or appalling: enriching the already rich and screwing over the poor, cutting Social Security and Medicare, trying to destroy Obamacare, spending billions on an utterly ridiculous border wall that won’t deter illegal immigration…and especially, keeping brown people out of the country even if it involves caging their brown children.

The fact that Trump and his collection of idiots and gangsters reject science and evidence is actually a plus with the base–Trump’s supporters hate “elitists” (i.e., experts and people who actually know what they are doing) with a passion.

And what about the devotion and endorsement of white nationalist groups, the KKK and Neo-Nazis? That’s a plus too. That’s evidence that he “tells it like it is,” that he recognizes the superiority of straight, white, “Christian” males, and is working to make America “great again”– for them. 

Well, “working” is probably a misnomer…..but they overlook the “executive time” (when we pay him to watch TV) and the excessive amount of golf, too.

 

Why Not Whale Oil?

One of my graduate students alerted me to something I really have to share.

Here’s the background.

As regular readers of this blog know, Indiana State Representative Soliday authored a bill that would prevent Indiana utilities from switching from coal to cleaner, cheaper energy– effectively blocking utilities in Indiana from closing any coal-fired power plant unless the closure has been mandated by the Trump administration – which would never happen, given the president’s repeated empty promises to “bring back coal.”

The only exception for closing a coal plant would be if utilities can “prove” to state utility commissioners that it would be in the public interest. That exception was included in the bill to let coal companies oppose closure of a coal plant by dragging the issue through the Indiana Utility Regulatory Commission and the courts. That would cost utilities and ratepayers huge sums of money and further delay the transition to renewable energy sources like wind and solar.

Inside Climate News reports that if the bill passes, Indiana would become the third state to pass a law aimed at combating market forces that make renewables and natural gas cheaper than coal.

Soliday’s bill is opposed by all five of Indiana’s investor-owned utilities, the Indiana Chamber of Commerce, consumer and environmental groups, the Indiana Conservative Alliance for Energy, and ratepayers across the state. Nevertheless, it passed the House and will now be taken up by the State Senate.

So much for background. Democratic State Representative Ryan Dvorak decided that if Indiana was going to prop up outdated, unsustainable energy sources, why stop with coal? So he offered an amendment–a perfect amendment:

Whereas whale oil provides bright, dependable light that is favored even by lighthouse keepers; and many American jobs have been lost in the decimation of the whale oil industry; a public utility may not sell electricity for the purpose of providing power to harsh, flickering, and toxic light bulbs, when natural and reliable whale oil would serve the purpose of lighting Hoosier homes and businesses.

Wouldn’t it be great if Dvorak’s amendment got a hearing?

Ken Cook, President of the Environmental Working Group, also weighed in, asking “How about legislation to replace every car in Indiana with a horse and buggy?”

As the Environmental Working Group has noted, Dvorak’s amendment and Cook’s suggestion make as much sense as the industry-backed scheme to bail out coal on the backs of Indiana residents. It wouldn’t just cost the utilities more money, it would force citizens to pay more for electricity, even when cheaper, cleaner renewable sources are available.

House Bill 1414, introduced by Republican State Rep. Ed Soliday, is “one of the dumbest policy proposals ever,” said Cook. “It would be a disaster for the environment, public health and Indiana’s economy.”

“Rep. Soliday and the other lawmakers supporting H.B. 1414 are turning Indiana into a laughingstock when it comes to energy policy,” said EWG Senior Energy Policy Advisor Grant Smith, an Indiana resident. “The number of states where wind and solar are rapidly becoming a dominant source of electricity is steadily climbing, even as mossback lawmakers in Indiana and a few other states are desperately – and futilely – trying to keep coal on life support.”

And then there’s the hypocrisy of those defenders of the free market, who clearly only defend the market until it threatens the bottom line of their donors and patrons…

Why not whale oil, indeed?

 

 

Cities And Democracy

Jane Jacobs was one of the great urban theorists of the twentieth century, and an enormously provocative thinker. (Her Systems of Survival is one of my all-time favorite books–in my opinion, right up there with the Death and Life of Great American Cities.) 

A recent article about Jacobs focused on a less-well-known aspect of her work: her abiding concern about the fragility of democracy.

As the author noted,

Urban life was Jacobs’s great subject. But her great theme was the fragility of democracy—how difficult it is to maintain, how easily it can crumble. A city offered the perfect laboratory in which to study democracy’s intricate, interconnected gears and ballistics. “When we deal with cities,” she wrote in The Death and Life of Great American Cities (1961), “we are dealing with life at its most complex and intense.” When cities succeed, they represent the purest manifestation of democratic ideals: “Cities have the capability of providing something for everybody, only because, and only when, they are created by everybody.” When cities fail, they fail for the same reasons democracies fail: corruption, tyranny, homogenization, overspecialization, cultural drift and atrophy.

The article began with a description of an Appalachian village–Higgins, North Carolina–where Jacobs’ aunt was a social worker. The town was a depressing example of decline, an example of civic failure that evidently deeply concerned Jacobs.

In a year when American democracy has courted despotism, Jacobs’s work offers a warning and a challenge. Her goal was never merely to enlighten urban planners. In her work she argued, with increasing urgency, that the distance between New York City and Higgins is not as great as it seems. It is not very great at all, and it is shrinking.

Jacobs’ first book, Constitutional Chaff was a compilation of failed proposals from the Constitutional Convention of 1787, such as a third house of Congress and direct election of a Senate that never went out of session. In the introduction to the book, Jacobs argued that this diversity of conflicting perspectives “reflected the soul of American democracy as vividly as the ratified document itself did.”

In her “magnum opus,” The Death and Life of Great American Cities, Jacobs argued that a city–or for that matter, a neighborhood– absolutely requires diversity: “diversity of residential and commercial use, racial and socioeconomic diversity, diversity of governing bodies (from local wards to state agencies), diverse modes of transportation, diversity of public and private institutional support, diversity of architectural style.”  She also insisted that concentrating numbers of people in relatively small areas, far from being problematic, is the foundation of healthy communities. Dense, varied populations are desirable, Jacobs wrote,

because they are the source of immense vitality, and because they do represent, in small geographic compass, a great and exuberant richness of differences and possibilities, many of these differences unique and unpredictable and all the more valuable because they are.

If vitality comes from diversity, decline comes from homogeneity. Early indicators of decline in places like Higgins–a decline we increasingly see in small towns across many states, including Indiana–are :

“cultural xenophobia,” “self-imposed isolation,” and “a shift from faith in logos, reason, with its future-oriented spirit … to mythos, meaning conservatism that looks backwards to fundamentalist beliefs for guidance and a worldview.” She warns of the profligate use of plausible denial in American politics, the idea that “a presentable image makes substance immaterial,” allowing political campaigns “to construct new reality.” She finds further evidence of our hardening cultural sclerosis in the rise of the prison-industrial complex, the prioritization of credentials over critical thinking in the educational system, low voter turnout, and the reluctance to develop renewable forms of energy in the face of global ecological collapse.

The article’s conclusion brings the lesson home.

No reader of Jacobs’s work would be surprised by the somewhat recent finding by a Gallup researcher that Donald Trump’s supporters “are disproportionately living in racially and culturally isolated zip codes and commuting zones.” These zones are latter-day incarnations of Higgins: marooned, amnesiac, homogenous, gutted by the diminishment of skills and opportunities. One Higgins is dangerous enough, for both its residents and the republic to which it belongs. But the nation’s Higginses have proliferated to the point that their residents have assumed control of a major political party.

Assuming voters successfully “vote blue no matter who,” one of the multitude of daunting tasks a new administration must undertake is the rescue of small-town America.

I have no idea how.