Category Archives: Public Policy and Governance

Reduction by Addition

Over at the Washington Post, John DiIlio (late of the Bush White House Office of Faith-Based and Community Initiatives) makes a point I’ve frequently made--if we want to reduce the actual size of government, we need to hire more federal workers.

As DiIlio points out, the number of federal civilian workers (excluding postal workers) has been flat for quite some time. When George W. Bush became president, the executive branch employed about 1.8 million civilians–virtually the same number as when John F. Kennedy won the White House.

There were more federal bureaucrats (about 2.2 million) when Ronald Reagan won reelection in 1984 than when Barack Obama won reelection in 2012 (about 2 million)…

This is the dirty secret behind all those debates over the size of government. Yes, government is big and is dangerously debt-financed, but it is also administered by outsiders — and that is what guarantees that our big government produces bad government, too.

DiIlio calls this state of affairs “Leviathan by proxy,” and it’s an apt phrase.

America has had a 30-plus year love affair with “privatization.” The problem is, what we’ve been doing is not privatization–it’s contracting out, a very different animal. As my friend Morton Marcus is fond of pointing out, privatization is what Margaret Thatcher did; she sold off enterprises that government didn’t need to operate. They became private, they paid taxes, they either prospered or failed. What Americans call privatization is dramatically different–we provide government services through third-party, for-profit or non-profit surrogates.

Not only does this mode of service delivery lead to the inefficiencies and management problems that DiIlio identifies in his article, it makes the size and reach of government less visible. It enables Leviathan.

The last time I looked, there were approximately 18 million people working for federal, state and local governments who were not on any government’s payroll. The number of employees who work for contractors doing the work of government agencies–people whose full-time jobs are to deliver government services and who are paid with tax dollars– dwarfs the number of bureaucrats actually employed by those governments. It is virtually impossible to keep track of them, let alone ensure their accountability–constitutional or otherwise.

As DiIlio notes,

Big government masquerading as state or local government, private enterprise, or civil society is still big government. And privatization that involves “acquisition workforce” bureaucrats contracting out work to entrenched interests is not really privatizing. The growth of this form of big government is harder to constrain, and its performance ills are harder to diagnose and fix, than they would be in a big government more directly administered by an adequate number of well-trained federal bureaucrats.

When you demonize government, but demand services, this is what you get.

It isn’t pretty–and it isn’t privatization.


Indiana Could Learn a Few Things from Oregon

People who live in Indiana are aware that our public officials are somewhat deficient when it comes to recognizing ethical standards. Not to put too fine a point on it, we have far too many people in public office who wouldn’t recognize an ethical issue if they fell over one–and they do have a well-documented tendency to stumble.

The most recent display of ethical chutzpah revolved around Eric Turner, the Senate Republican who knew enough to recuse himself from voting on a bill that would damage his son’s very lucrative business (in which he held a significant interest), but somehow failed to see any problem with strong-arming members of his caucus behind the scenes. Perhaps the most interesting part of that story is that he broke no rules–because Indiana’s legislative code of conduct is for all practical purposes non-existent.

I’ll leave it to others to opine on the ethical propriety of a sitting Governor appointing University Trustees who (what a coincidence!) then hire him to be President of that University. Or the City-County Counselor who cast the deciding vote on a fifty-year contract with a vendor represented by his law firm. Or or or…..the list is long and definitely not pretty.

Indiana might take a lesson from Oregon.

Data from the Justice Department, compiled by political scientists at Indiana University at Bloomington and the City University of Hong Kong, show that, over a period of 32 years, there were fewer corruption convictions in Oregon than in any other state, when controlling for the number of state workers.

The researchers attributed Oregonion honesty to robust transparency laws, tough rules for campaign finance disclosure, and rules forbidding lobbyists and special interest groups from giving gifts worth more than $50 to state employees. It is also significant that Oregon  requires most public-improvement contracts to be awarded based on competitive bidding–they don’t do the no-bid contracts so popular around here.

It’s no surprise that taxpayers foot the bill for corrupt practices, but the number of ways in which corruption costs us did surprise me.

Corruption forces states to spend more on everything from construction and highways to corrections and police. But the authors of the study, John Mikesell and Cheol Liu, also found that states with higher rates of corruption tend to spend less on education, public welfare, health and hospitals. So more corruption costs taxpayers — in terms of money and the social services the government provides.

Hoosiers can and should tighten up our lax ethics laws. But that’s unlikely to happen unless voters make it an issue.

Meanwhile, as we wait for that (thus far undetectable) civic indignation, Indianapolis is proposing to cut a deal with “consultants” and private contractors to build a massive justice center–and being considerably less than forthcoming with the details. The Administration has taken the position that we mere taxpayers (and the City-County Councilors who represent us )have no right to know how these transactions are being structured.

Somehow, knowing that –whatever “extra amounts” that deal ends up costing us, whatever no-bid or “wink wink” arrangements may be involved–none of the deals being cut are likely to violate Indiana’s nonexistent ethics laws doesn’t comfort me.

I hear Portland is a really cool city.



A Task for Indy’s Next Mayor

So, yesterday, Joe Hogsett opened his campaign office, joining fellow Democrats Ed Delaney and Frank Short who previously announced they’d be opposing Greg Ballard. Early as it is, it would seem that the mayoral race is officially on.

Whoever wins that election will have his job cut out for him. (And yes, “him” is the proper pronoun. So far, Indy hasn’t exactly embraced female candidates for mayor, and this time around we don’t have any.) To suggest that our city faces multiple challenges would be a real understatement–from transit (rather, the lack thereof), to crime, to poorly maintained parks, to battles over the Mayor’s role in decisions about how to fix our schools, to debates over municipal funds for fancy sporting venues, the list is long–and resources to deal with the problems are getting ever more scarce.

You can add to the list of obvious issues a less recognized one: our unenviable status as the U.S. city with the fastest-growing inequality. According to the Institute for Working Families’ Derek Thomas,

This week, the Indy Star reported on the U.S. Conference of Mayors’ ‘Income and Wage Gaps Across the U.S.’ report. The story presented the group’s finding that “wage inequality grew twice as rapidly in the Indianapolis metro area as in the rest of the nation since the recession.”

The consequences of that inequality can be seen everywhere: in taxes we don’t collect, in hopelessness that leads to all manner of social dysfunction, in crime, in economic development that isn’t sustainable….

The candidates contending for our votes need to demonstrate that they understand the ways in which these problems are interrelated–and they need to tell us how they plan to address them.

The Nitty-Gritty Matters

When I tell people I work at a school of public policy, I can often see their eyes glaze over. Policy is so…boring.

Politics, on the other hand, is interesting.

Political horse-races are so much more exciting than the intricacies of the tax code. And let’s be honest: people can decide how to vote on the basis of a candidate’s skin color or his willingness to stick a probe up a pregnant woman’s vagina; they don’t have to know anything about that candidate’s stance on tax policy.

Today’s politics, especially, is all about distraction and the “shiny object.”

And while we are all engaged with that shiny object,  American taxpayers are getting ripped off–and it’s all legal.

We’ve heard a lot lately about so-called inversions.

Companies striking deals to become technically foreign can be found in all corners of American business, from California computer-equipment manufacturer Applied Materials to Minnesota medical-device giant Medtronic to North Carolina­based banana behemoth Chiquita. Little is changing in the core business of these firms. They will just pay less in taxes – and to a foreign government, often Ireland or the Netherlands.

As the article notes, however,

[I]nversions are just the tip of the iceberg. The crisis of corporate tax avoidance is far more pervasive – and destructive – than either Obama or Lew is letting on. At a moment when Congress appears impossibly divided, a strong, bipartisan consensus has, in fact, emerged in Washington: The world’s richest corporations will get away with fleecing hundreds of billions of tax dollars from the rest of us….

Last year the IRS finally collected more in tax receipts than it did before the crash in 2007. But dig a little deeper into the numbers and it is clear we haven’t returned to normal: Corporations paid nearly $100 billion less in federal income taxes last year than before the Great Recession….

The top names in American business – from Apple to Xerox – have joined in the greatest tax dodge in world history. Using clever accounting games, these corporations have siphoned majestic sums out of the country and into tax-haven shell companies – where the money is untouchable by the IRS.

 The numbers are staggering. More than $2 trillion in U.S.-based multinational profits currently sit in offshore accounts, representing, by credible estimates, in excess of $500 billion in unpaid taxes. If that money were deposited in federal coffers tomorrow, it would wipe out the deficit for 2014. And every year that Congress dithers on a crackdown, America is forfeiting an approximate $90 billion in revenue.

The article details a variety of tax provisions–all legal, all part of the U.S. Tax Code–that privilege corporate America at the expense of individual taxpayers. The people who are outraged–outraged–by the use of tax dollars to provide poorer citizens with access to healthcare are curiously silent about the immense costs of this preferential treatment of corporations.

The silence of the elites, of course, is understandable. People who understand that our tax code is massively tilted toward America’s “haves” tend to be beneficiaries of those provisions. They are unlikely to complain.

Most of the silence, however, can be attributed to the average American’s deep-seated disdain for policy, our preference for easy issues, “shiny objects” and pop culture distractions from all those boring details.

I guess it’s just too much trouble to figure out who is picking our pockets, and how they’re doing it. And too much work to vote their lapdogs out of office.


The Tangled Web Politicians Weave

When three separate people send you an article, you read it.

That’s what happened to me; three readers of this blog evidently live in or around Florida, and independently emailed a link to this column from the Palm Beach Post.

Here are the pertinent sections:

 The challenge to the Obamacare law was aimed at declaring it unconstitutional. While that didn’t work, foes of the new law were given a small consolation prize by the U.S. Supreme Court — a chance for the states to opt out of the expansion of Medicaid under the new law.

Florida, like 23 other Republican-run states, hung onto that thread and waved it around like a victory flag.

“For all of those who are about fiscal sanity and protecting the taxpayers of our states, the court’s decision on the Medicaid issue was a big win,” Florida Attorney General Pam Bondi said two summers ago at an event sponsored by the Koch-brothers group, Americans for Prosperity.

It certainly wasn’t a “big win” for the estimated 750,000 Floridians who have incomes that fall below 138 percent of the federal poverty wage, which is about $26,000 for a family of three and $15,000 for an individual.

Not only did Florida refuse to accept an expansion of Medicaid that would have used federal dollars to cover health-care costs for these people, but the state did its best to make it as difficult as possible for the rest of Florida’s 3.8 million uninsured residents to purchase plans under the new health-care law.

Umm…Hoosiers, does this sound familiar?

The state refused to set up an insurance exchange, spent no money to encourage citizens without medical insurance to sign up for the plan, and banned federal workers from helping Floridians sign up for insurance at county health departments. Even so, Florida led the nation with sign-ups for Obamacare plans, accounting for nearly 1 million insured state residents……

The state is losing $66.1 billion in federal Medicaid funding over the next 10 years, costing hospitals in the state $22.6 billion in lost reimbursements, the Robert Wood Johnson Foundation reported.

No other state has turned its back on so much money, the foundation found. If Florida invested $5.3 million in Medicaid expansion from now until 2022, it would get back $13.41 in federal funds for every dollar it invested in its citizens’ health care, the report said.

“Every comprehensive state-level budget analysis of which we know found that expansion helps state budgets, because it generates state savings and additional revenues that exceed increased Medicaid costs,” the report said.

Not to mention helping people like Charlene Dill, 32, a working mother of three from Central Florida. Dill died earlier this year from a lingering heart condition.

She worked a variety of part-time jobs and was selling vacuum cleaners when she collapsed and died. Dill couldn’t afford health insurance, but she would have been covered under Medicaid if Florida had expanded it under the law. But unlucky for her, she lived in a state that put her on the losing side of a “big win.”

How do you calculate that cost?

I have watched Republican governors tie themselves into pretzel-shaped knots trying to explain their hysterical opposition to a program originally developed by conservative think tanks and promoted by GOP leaders like Bob Dole and Mitt Romney (pre-presidential campaign). I’ve been amazed by the governors’ willingness to forgo billions of  dollars for their states–not to mention their willingness to let uninsured citizens continue to die–in order to deny President Obama a “win.”

(As Americans have begun to use the program, and warmed to it, some of those Republican governors have begun back-tracking. Indiana’s Governor is a case in point–his version of Medicaid expansion isn’t as inclusive as the real thing, but it’s a start.)

Here’s the thing. I’m one of many people who don’t think the ACA is particularly good public policy, although it is demonstrably better than nothing. If these naysayers proposed a better approach, I think a lot of us would consider it. Instead, we’ve been treated to a particularly ugly expression of high dudgeon–how dare the government use tax dollars to provide medical care to these worthless “takers”? 

I know that everything these days is politics, but shouldn’t there be some games even politicians won’t play?