I Think I See a Theme Emerging…

The Indianapolis Business Journal sends out a chatty, daily “Eight at 8″ for subscribers. A couple of days ago, the transmittal included the following “Soapbox Moment.”

Our city and state leaders knock themselves out offering financial incentives to support local business expansions and to attract firms to central Indiana (see No. 1). As well they should. Excellent work. However, Eight@8 wishes they would throw more weight behind arts organizations and find more ways to bring more artists here. As in business, the benefit could be modest. Or the benefit could be incalculable. One or two artists can change the way the entire country thinks of Indy. I give you two examples. First, author John Green. He came to Indy because his wife found a job here in the arts. So this is where he based his juggernaut novel “The Fault in Our Stars,” filled with specific references to local places. This is why the tens of millions of people who have read the book and/or seen the movie know that Indianapolis 1) exists; and 2) could be an awesome place to live. He continues to happily associate himself with Indy, occasionally in his ambitious multimedia projects (200 million video views and counting). You can’t CONCEIVE of the value of that kind of warm-puppy publicity…Second example: Asthmatic Kitty. It’s not an artist, per se, but a record label which came to be based in Indy because its manager happened to move here in 2005. It has since become one of the most influential small labels in the country and a national calling card for our music community. And its leaders have turned their energies to the city’s urban fabric. We’ve run out of room, so check out The Atlantic’s CityLab feature on Asthmatic Kitty’s influence on our city.

Good try, Eight @ 8, but–agree or not about the merits of those “financial incentives” generally– official Indianapolis has never given much indication that we appreciate or value the contributions made by the arts to the culture and economic health of central Indiana.

Eight referenced a recent, lengthy post from Aaron Renn at the Urbanophile, in which Renn discussed the roots of–and differences between–the cultures of Indianapolis and Louisville. Louisville remains largely a product of southern tradition, a tradition that valued aristocracy and respected “the finer things.” (Although that culture has a considerable downside–which Renn acknowledges–it also tends to produce better restaurants, among other things.) 

Indiana, he notes, grows out of a very different tradition. After pointing to Columbus as a deviation from the Hoosier norm, he writes

But in a state replete with struggling communities, has anyplace ever looked to imitate Columbus? Has it been held up as a model? No. Why not? It’s because Indiana as a whole rejects the values that made Columbus successful. J. Irwin Miller famously said that “a mediocrity is expensive.” True, but that misses the point re: Indiana. Mediocrity isn’t an economic value in the state. It’s a moral value. People aren’t choosing mediocrity in the mistaken belief that it’s cheap. They think aspiring to better is a character defect. That sacralization of average is why many of its communities are willing to martyr themselves in its honor. And if a place tries to aspire to better, don’t worry. The General Assembly will soon be introducing legislation to make sure that doesn’t spread.

Ouch. That hurts because it rings so true–especially the line about our benighted General Assembly. And it reminded me of a recent conversation with Drew Klacik, researcher extraordinaire at IUPUI’s Public Policy Institute. Commenting on the persistent disdain of so many of Indiana’s legislators for Indianapolis, and their disinclination to consider measures that would benefit or strengthen the core of Indiana’s largest city, he offered an analogy:

Why do Marion county and downtown matter? Well, think about a solar system; why does the sun matter? It matters because it provides the energy that drives us forward and provides the gravity that holds us together. That is exactly what downtown Indianapolis does for the region and the state.

The problem, as Renn aptly notes, is that our General Assembly is broadly representative of Indiana’s culture, where excellence is “uppity,” the arts are “elitist” and education (as opposed to good old job training) is suspect. No wonder there is so little legislative regard for Indianapolis’ aspirations to “world class” status.

Honest to goodness, Indiana.

 

 

Correcting My Goof

A few days ago, I reported that the deficit and debt had steadily declined during Obama’s tenure. A reader pointed out that although we have seen the deficit dramatically reduced, so long as there is any deficit at all, the debt continues to grow.

He was absolutely right, of course–my mind was evidently elsewhere when I wrote that particular sentence. (It is a bit worrisome that, as I grow older, my mind increasingly takes these small trips to…somewhere.) The question that naturally arises, then, is: as the Obama Administration increasingly tames the deficithow worried should we be about the debt?

Paul Krugman has the answer to that question.

About those projections: The budget office predicts that this year’s federal deficit will be just 2.8 percent of G.D.P., down from 9.8 percent in 2009. It’s true that the fact that we’re still running a deficit means federal debt in dollar terms continues to grow — but the economy is growing too, so the budget office expects the crucial ratio of debt to G.D.P. to remain more or less flat for the next decade.

Things are expected to deteriorate after that, mainly because of the impact of an aging population on Medicare and Social Security. But there has been a dramatic slowdown in the growth of health care costs, which used to play a big role in frightening budget scenarios. As a result, despite aging, debt in 2039 — a quarter-century from now! — is projected to be no higher, as a percentage of G.D.P., than the debt America had at the end of World War II, or that Britain had for much of the 20th century.

So perhaps we need not freak out about the debt, but still, it would be nice to eliminate it entirely. (Had W. left Clinton’s tax rates in place and not taken us into a costly and unnecessary war of choice, the debt was on track to disappear…but that was then and this is now…). So how much pain would we need to endure now in order to at least stabilize the debt–to keep it at its current ratio to GDP? Krugman has that information also:

Still, rising debt isn’t good. So what would it take to avoid any rise in the debt ratio? Surprisingly little. The budget office estimates that stabilizing the ratio of debt to G.D.P. at its current level would require spending cuts and/or tax hikes of 1.2 percent of G.D.P. if we started now, or 1.5 percent of G.D.P. if we waited until 2020. Politically, that would be hard given total Republican opposition to anything a Democratic president might propose, but in economic terms it would be no big deal, and wouldn’t require any fundamental change in our major social programs.

These facts would be comforting–if the people screaming bloody murder over the terrible, horrible, menacing debt were genuinely concerned about fiscal policy–and not motivated by partisan rancor or personal gain.

 

Who Pays?

Americans talk a lot about growing inequality, but we often fail to recognize how frequently poorer folks shoulder the costs of change simply because existing systems work that way. “The way things are” often translates into an unthinking acceptance of burdens that should—and could–be reallocated.

A recent column in the LA Times by Mark Schapiro  makes that case with numerous and telling examples.

Congress may continue to resist a carbon tax, but Schapiro points out that the American  middle and working classes are already paying for the costs of climate change. Those costs may not look like the much-disdained carbon tax, but if we are honest, they amount to one. Every time the average American uses fossil fuels, he increases his tax burden.

Schapiro counts the costs of recovering from Superstorm Sandy, Hurricane Katrina and a growing number of major droughts—the sorts of dramatic climate “incidents” that are likely to become much more frequent as climate change advances. And he details the economic consequences of changing weather patterns for all of us.

“Start with food: Farmers have always faced good years and bad years, but as bad years get more frequent, taxpayers pick up more and more of the tab. When the Government Accountability Office issued its biannual audit of the government’s highest financial risks last year, for the first time since the list was launched in 1990 climate change was identified as a major financial threat, specifically because of the government’s flood and crop insurance programs.”

Federally subsidized payouts for crop insurance have skyrocketed (from $4.3 billion in 2010 to $10.8 billion in 2011 and to $17.3 billion in 2012). Even more significantly, the USDA has estimated that the 2012 drought led to a 20% jump in meat prices. And the price of cereals has doubled since 2000, according to the U.N. Food and Agriculture Organization, again due to climate change.

Acidification of the oceans and rising sea levels (from melting ice packs and glaciers) have given us declining yields—and soaring costs—of shellfish.

The list goes on. And that’s just at the grocery.

Scientists writing in the journal Health Affairs report that “over the first nine years of this century, six “climate-related” events (floods, hurricanes, infectious disease outbreaks) led to 760,000 encounters with the healthcare system amounting to as much as $14 billion in health costs.”

Even that substantial sum is dwarfed by the millions spent by the CDC and other research institutions to study the ways in which climate change is enabling an ever-expanding universe of bacteria and diseases affecting humans, plants and animals in new and troubling ways.

There is much more, but the bottom line is that the general public–that’s you and me– bears the costs of climate change through both higher prices and higher taxes; meanwhile,  the fossil fuel companies contributing to the problem continue to enjoy massive subsidies.

The farmer who needs fuel for his combine, the factory worker who fills his tank for his commute to work, the soccer mom doing car pool duty—these are the people who are paying the tax that isn’t labeled a tax.

The major corporate producers of these fossil fuels continue to make unprecedented, outsize profits, thanks in large part to public policies that underwrite and subsidize fossil fuel exploration. Those energy policies exacerbate inequality by placing the costs of climate change and energy exploration almost entirely upon the consumer.

There are obviously much more important reasons for addressing climate change than the unfair allocation of costs—reasons of life and death. But those of us who advocate for responsible environmental policies also need to insure that the costs of necessary remedial measures are equitably distributed.

We need to take care that the burdens do not always fall on the most vulnerable–and in this case, at least, the least culpable—Americans.

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Fiscal Responsibility Doesn’t Look Like This

The White House recently announced that the federal budget deficit will fall to 583 billion this year. That’s the smallest deficit since Obama became President, and it continues a widely-ignored trend of falling deficits during his tenure.

If you listened to the Republicans, you’d never know that the debt and deficit have both been declining (if you listened to Faux News, you wouldn’t know the difference between them), and you’d certainly get the impression that the GOP is the party watching out for the public purse. That impression would be wrong.

Very wrong.

The Washington Monthly notes that

The Republican House just voted for an inexcusable $287 billion supply-side corporate tax giveaway:

The GOP-led House of Representatives embraced a former stimulus measure Friday, voting to make it and another related tax cut permanent, adding $287 billion to the deficit over the next 10 years.

The largest part of the cut, worth more than $263 billion, is making permanent so-called bonus depreciation, which allows businesses to write off the cost of capital investments and improvements much more quickly.

It was enacted twice during the administration of President George W. Bush, and the most recent version expired last year. The idea behind it is that if lawmakers give businesses a break during tough economic times, they will speed up major equipment purchases and stimulate economic activity.

Those who support making such a stimulus measure permanent argue that it would give businesses the certainty to be able to plan their investments. But opponents — primarily Democrats — mocked the idea, pointing to Congressional Research Service reports that found the break was a weak stimulus to begin with, and that the stimulative effect is likely to fall even further if the break becomes permanent.

Not only is the GOP not party of fiscal responsibility, it has become the pro-redistribution party–a reverse Robin Hood cabal intent upon taking from the poor to give more and more to the rich. (Except, of course, when there is an advantage to doing otherwise.)

Welfare for the well-off. Bupkis for the poor. Welcome to dystopia.

 


 

Look Who’s Taxing the Rich!

If today’s GOP has one unshakable article of faith, it is that taxing the rich retards economic growth; that even the most modest tax increase will dissuade the “makers” from, well, making –hiring, expanding, or working harder.

So–how to explain why the Indiana General Assembly, which is lopsidedly and unequivocally Republican, piles taxes on the state’s rich counties and redistributes that money to the poor ones?

As a friend of mine whose research is focused upon the Indiana economy recently noted, Indiana heavily taxes its “rich” metropolitan counties–Marion County prominently among them–for the benefit of rural counties with dramatically dwindling populations. A study by the Indiana Fiscal Policy Institute found that the 10 counties that make up the Indianapolis metropolitan area were major donors to rural Indiana;  residents here paid 33.5 percent, or $4.6 billion, of total state taxes and received 28 percent, or $3.8 billion, back.

I guess a welfare state is in the eye of the beholder. The (rural) home counties of so many state lawmakers couldn’t explain this very un-Republican impulse for redistribution…could it? Surely this deviation from such a core belief–or the “core belief” itself–couldn’t be based upon self-interest.

Ah, irony. Thy name is Indiana.