Public Policy and Governance – Page 200

In Praise of George W. Bush (No Kidding)

Where was this guy while Dick Cheney was running the country?

Granted, George W. Bush has been looking a lot better during the disaster that is Donald Trump…but I’m still dumbfounded (and awed) by his speech last week at the Bush Institute’s Spirit of Liberty event in New York.

A few quotations:

“Bigotry seems emboldened. Our politics seems more vulnerable to conspiracy theories and outright fabrication.”

“Bigotry in any form is blasphemy against the American creed and it means the very identity of our nation depends on the passing of civic ideals to the next generation. We need a renewed emphasis on civic learning in schools.”

“And our young people need positive role models. Bullying and prejudice in our public life sets a national tone, provides permission for cruelty and bigotry, and compromises the moral education of children.”

“The only way to pass along civic values is to first live up to them.”

“We’ve seen our discourse degraded by casual cruelty. At times, it can seem like the forces pulling us apart are stronger than the forces binding us together. Argument turns too easily into animosity. Disagreement escalates into dehumanization.”

“Too often we judge other groups by their worst examples while judging ourselves by our best intentions, forgetting the image of God we should see in each other. We’ve seen nationalism distorted into nativism, [and] forgotten the dynamism that immigration has always brought to America.”

In a further reproach to Trump–whose name he never uttered and who has dismissed the evidence–Bush also underscored the conclusion of all the American intelligence agencies about Russian interference in last year’s elections, calling it real and labelling it “subversion.”

Credit where credit is due: during his presidency, Bush never came across as a bigot, although he often failed to push back against his party’s use of bigotry and especially homophobia to win elections.

It is obviously easier for politicians who are not facing another election to call out Trumpism, as we’ve seen with John McCain and Bob Corker. But it is also easier to refrain from publicly defying a sitting President of one’s own party, easier to avoid setting an example that cannot help but shame the current leadership of that party. Easier to keep your head down and enjoy the accolades that come from being an “elder statesman.”

Bush’s broadside is so important because it is his party (or more accurately, what his party has become). Trump ran as a Republican. The House and Senate are controlled by Republicans. Admonitions from Democrats–even previous Presidents–will be dismissed by the party’s base as partisan carping.

As welcome as this speech was, the fact that Bush delivered it is an ominous sign of how worried responsible people are. Those who understand government, who recognize the challenges facing the country and the incredible damage being done to America’s democracy at home and our stature abroad, are speaking up, and we need to recognize how unprecedented that is.

Differences of opinion on policies would never prompt this behavior. Only a deep foreboding–a sense of existential crisis–can explain this departure from Presidential behavioral norms.

When George W. Bush feels it necessary to warn the country against Trump and Trumpism, we’re in trouble. Bigly.

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Listen To Nick Hanauer

Recently, I posted about the difference between tax cuts and tax reform, and why we need the latter but not the former. That argument was made–far more persuasively than I made it–by billionaire Nick Hanauer, in a recent post to Politico.

The Republican tax plan is a scam—a massive and destructive financial giveaway masquerading as pro-growth tax reform. Which is why our first response must be to demand not one penny of tax cuts for big corporations and rich guys like me. In fact, if I were Benevolent Dictator, I would substantially raise taxes on myself and my wealthy friends. Why? It is the only way to sustainably grow the economy, boost productivity, increase business opportunities, and create more and better jobs.

Hanauer takes aim at the central premise of GOP tax policy, what I have referred to as an “article of faith,” because when you take something on faith, it’s because you have no empirical evidence for its validity. In this case, as Hanauer points out, we have substantial evidence that the premise is fatally flawed.

There is is simply no empirical evidence nor plausible economic mechanism to support the claim that cutting top tax rates spurs economic growth. When President Bill Clinton hiked taxes, the economy boomed. When President George W. Bush slashed taxes, the economy ultimately collapsed. It wasn’t until after most of the Bush tax cuts expired during the Obama administration that the post-Great Recession recovery started to pick up steam—an ongoing recovery that, as uneven as it has been, has grown into one of the longest economic expansions in U.S. history.

And then, of course, there’s Kansas.

As we all know, and as Hanauer reminds us, Kansas dramatically “underperformed ” the rest of the country in economic growth and job creation after Sam Brownback, its “true believer” Governor, slashed taxes on individuals and corporations. And as he also reminds us, California, which horrified those true believers when it imposed the nation’s top income tax rate, has thrived. By 2015, California had the fastest-growing economy in the nation. Kansas? Dead last.

For several years, Hanauer has been arguing that Republicans have the economic argument exactly backwards–that inequality, not high tax rates, retards economic growth and job creation.

But the Republicans’ problem is that they have economic cause and effect reversed: Low wages and rising inequality are not symptoms of slow growth, low wages and rising inequality are the disease that causes slow growth—and inequality cannot be cured by creating even more inequality. In reality, our modern technological economy is best understood as an evolutionary feedback loop between innovation and demand. Innovation is the process through which we evolve new solutions to human problems, while consumer demand is the mechanism through which the market selects and propagates successful innovations. And it is economic inclusion—the full participation of as many people as possible in as many ways as possible, as innovators, entrepreneurs, workers and robust consumers—that drives both innovation and demand. The more we invest in the American people—in our wages, our education, our health care and our infrastructure—the more dynamic that feedback loop, and thus the faster and more prosperous our economy grows.

As I tell my students, if you own a widget factory, and no one is buying your widgets, you are unlikely to hire more workers to increase widget production. When consumers lack disposable income with which to buy your widgets, you cut back–or stop making widgets entirely.

As Hanauer explains:

The real problem with our economy is that we are concentrating wealth in the hands of people who aren’t spending or investing it, while starving working- and middle-class Americans of the ability to invest in themselves—not to mention sapping the consumer spending power that accounts for 70 percent of GDP. We rich Americans may not all be idle, but these days, much of our money is—and you will not get it flowing back through the economy again by cutting our taxes even further. I already earn about 1,000 times more per hour than the average American, but I couldn’t possibly buy 1,000 times more stuff. I only own so many pairs of pants. My family and I can only eat three meals a day. We enjoy a luxurious lifestyle, but we already own several houses, a private jet and one too many yachts (turns out, the optimal number is two). Cutting our taxes will make us richer, but it won’t incentivize me or my venture capital partners to spend or invest more than we already do. What’s holding us back isn’t a shortage of cash, but rather a shortage of demand—from you.

Exactly.

Thank you to everyone who wished me a happy birthday yesterday. It was much appreciated!

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“Tax” Is Not A Four-Letter Word

As Congress takes up consideration of the tax bill of 2017–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.

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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.

Do we have mental health problems? Of course, but so does every other country.
Do we sell violent video games? Yes, but so does every other country.
Do we have violent television shows and movies? Yes, but so does every other country.
Do we have a breakdown in the family unit? Yes, but so does every other country.
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%……

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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.

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