Public Policy and Governance – Page 222

This Isn’t Who We Are–Is It?

I don’t want to sound melodramatic, but America is in the midst of an identity crisis, and the identity that emerges will shape the future our children and grandchildren inhabit.

Are we the people who inscribed “Give me your tired, your poor, your huddled masses yearning to breathe free” on the Statue of Liberty? Or are we self-absorbed climbers seeking to ingratiate ourselves with the powerful and privileged while devaluing the poor and ignoring the needs of the disadvantaged?

Are we a country committed to working with other nations to solve problems and resolve disputes, or are we belligerent saber-rattlers throwing our weight around?

Do we respect scientific expertise and intellectual excellence, recognize the social value of the arts and humanities, or do we sneer at the life of the mind and swagger with the hubris and arrogance of people who don’t know what they don’t know?

These are the questions posed by the “budget” the Trump Administration has presented to the U.S. Congress.

Trump’s budget cuts programs like Meals on Wheels that feed housebound seniors. It drastically curtails housing assistance to poor people. It takes the axe to job training and education. It eliminates the Senior Community Service Employment Program, which helps low-income job seekers age 55 and older find work by pairing them with nonprofit organizations and public agencies. It dramatically reduces funds for scientific and medical research.

The budget ends support for both NPR and PBS–sources of unbiased information for millions of Americans. It eliminates the endowments for the arts and the humanities.It destroys the EPA’s ability to enforce the Clean Water and Clean Air Acts. It guts the State Department and “soft power” in favor of more and more powerful weapons–despite the fact that the Department of Defense has previously insisted that such expanded military capacity is unnecessary and even counter-productive.

As Daily Kos posted,

Trump’s budget does have its increases. There’s much more money for defense, so Trump can add ships the Navy didn’t ask for, build more planes that the Air Force doesn’t need, and in general make defense contractors moan in ecstasy. There’s also a lot more money for DHS — because deportation forces and walls don’t run cheap.

CNN Money described what America would look like if the budget were to be passed as introduced:

More agents along the border, but a hobbled PBS. A bigger military, but less chance of getting a decent lawyer if you’re poor.

The budget unveiled by the Trump administration on Thursday would remake the United States — vastly expanding national defense but cutting or gutting dozens of programs that touch the lives of Americans every day.

Charter schools would get more money. But federal money would be eliminated for an agency that improves water and sewer systems in impoverished corners of Appalachia.

The takeoff and landing of your plane would be guided by an air traffic controller working for a nonprofit, not the government. If you live in a small city served by subsidized commercial airline service, you might have to drive farther to get to an airport.

And if you use Amtrak trains to travel across the country, that would become harder, if not impossible. The budget would end support for the company’s long-distance train services.

It isn’t just that the proposed budget is inhumane– a “reverse Robin Hood” exercise that privileges the already privileged. It is also fiscally insane.

People who understand policy–who can connect the dots–know that most of the proposed “cost saving” cuts will end up being much more expensive than the amounts being saved; Meals on Wheels, for example, keeps seniors in their homes longer, and helps them avoid time–overwhelmingly paid for by Medicaid– in hugely more expensive nursing homes. Job training programs reduce welfare rolls. Clean air and water reduce medical outlays. Research breakthroughs save money while improving lives and health.

The budget that encapsulates Donald Trump’s “vision” for America is a prescription for a third-world country, where art, music, science and scholarship are considered effete affectations, where compassion for the less fortunate is a weakness and poverty is seen as evidence of a lack of merit (and certainly not a problem with which the privileged need concern themselves.)

Donald Trump’s “vision” for America is a nightmare.

Lady Liberty weeps.

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Those Pesky Facts

One of my earliest research projects when I entered academia focused on an element of the “Personal Responsibility and Work Opportunity Reconciliation Act of 1996,” (PRWORA) aka welfare reform. I looked at the consequences of the measure’s invitation to (undefined) Faith-Based Organizations to help government agencies provide welfare services.

Needless to say, the “armies of compassion” envisioned by George W. Bush failed to materialize, since the invitation was based largely on fanciful–indeed, “faith-based”–beliefs about the capacities of the invitees.

I mention this in order to explain my heightened interest in a recent “spat” between Peter the Citizen and Arthur Brooks.

In “The Dignity Deficit: Reclaiming Americans’ Sense of Purpose,” Arthur Brooks, president of the American Enterprise Institute (AEI), emphasizes the importance of work requirements for welfare programs and suggests that the 1996 welfare reform law provides a model for other safety net programs:

Putting more people to work must also become an explicit aim of the social safety net. Arguably, the greatest innovation in social policy in recent history was the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. The PRWORA, which became synonymous with the phrase “welfare reform,” made several major changes to federal policy. It devolved greater flexibility to the states but established new constraints, such as a limit on how long someone could receive federal welfare benefits and a work requirement for most able-bodied adults.

As Peter points out, PRWORA changed a number of programs, but what Brooks is lauding is TANF (Temporary Assistance for Needy Families). Peter, like Brooks, is a political conservative; he was a former member of the Reagan Administration whose “portfolio” was welfare programs.

And he begs to differ.

For the past two years, I have been writing papers as a citizen to highlight TANF’s many problems. My hope is that conservatives will adopt more “rigor” in their assessment of the 1996 law and use evidence rather than ideology in developing reform proposals.

Brooks claims that TANF reduced poverty, and that its “lessons” about “the dignity of work” should be extended to other poverty programs. Peter convincingly demolishes the first assertion, and provides copious data to prove his point. Although he clearly agrees that there are “lessons” to be learned, the content of those lessons differs significantly from what Brooks suggests. I really encourage readers to click through and read the entire paper. The exchange illustrates the difference between ideology and intellectual integrity–between seeing what you want to see and seeing what the evidence shows.

What really caught my eye, however, were the following observations (emphasis mine):

TANF’s block grant structure creates a situation in which states don’t have the resources to run meaningful welfare-to-work programs, as the amount is not adjusted for inflation or demographic changes. This problem is exacerbated when state politicians divert scarce funds to plug budget holes….

In fiscal year (FY) 2015, just 25 percent of TANF funds were used to provide basic cash assistance and just 7 percent were for work-related activities, despite the fact that the number of poor families with children was higher in 2015 than in 1996. In many states, TANF has become a slush fund used to supplant state spending and fill budget holes…

Since TANF’s inception, states have used tens of billions of federal TANF dollars to simply replace existing state spending. For example, Jon Peacock of the Wisconsin Budget Project explains how “a significant portion of the federal funding for … assistance is being siphoned off for use elsewhere in the budget, to the detriment of the Wisconsin Works (W-2) program and child care subsidies for low-income working families.” It would be one thing if poverty had declined in Wisconsin since TANF’s enactment, but the poverty rate for children in Wisconsin grew from 14.3 percent in 1997 to 18.4 percent in 2011. If the supplanted funds were used to fund other programs for poor families, the practice would be less harmful, but that doesn’t seem to be what happens in Wisconsin. According to Peacock, “That shell game uses TANF funds to free up state funds [general purpose revenue] (GPR) to use for other purposes, such as the proposed income tax cuts.”

Trump’s budget–which combines utter fantasy with gratuitous cruelty (eliminating Meals on Wheels!?)– contains deep cuts to Medicaid and proposes to fund what’s left through block grants, facilitating–and probably ensuring– precisely the sort of “shell game” that the states have played with TANF.

Anyone who thinks that the monies sent to the states via Medicaid block grants would all be applied to the costs of providing medical care for poor people is smoking something, and it’s hallucinogenic.

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That Terrible Corporate Tax Burden

One of the reasons I became a faithful reader of Ed Brayton’s Dispatches from the Culture Wars is that he disdains the euphemisms that “polite” commentators use to convey their criticisms, and simply tells it like it is. A good example is a recent post about the “confusion”–or deliberate obfuscation–surrounding discussions of corporate tax rates.

As he began,

Republicans love to claim that America’s corporate taxes are the highest in the developed world. This is a lie. The marginal tax rates, up to 35%, are among the highest. The actual rates paid are a fraction of that. In fact, some of the most profitable companies in the world pay no federal taxes at all.

The Institute on Taxation and Economic Policy used the tax information filed by 258 profitable Fortune 500 companies to analyze what those corporations actually paid. The companies chosen for the analysis collectively earned more than $3.8 trillion in profits over the eight-year period of the analysis.

Although the top corporate rate is 35 percent, the study found that 100 of the companies — nearly 40 percent — paid zero taxes in at least one year between 2008 and 2015.

Eighteen, including General Electric, International Paper, Priceline.com and PG&E, incurred a total federal income tax bill of less than zero over the entire eight-year period — meaning they received rebates.

This result was entirely legal. The companies simply took advantage of numerous loopholes in the tax code. Some, including American Electric Power, Con Ed and Comcast, qualified for accelerated depreciation. That allowed them to write off most of the costs of new equipment and machinery well before it wore out–or in “tax speak,” well before before the end of its “useful life.”

Facebook, Aetna and Exxon Mobil, among others, saved billions in taxes by giving options to top executives to buy stock in the future at a discount. The companies then get to deduct their huge payouts as a loss. Facebook used excess tax benefits from stock options to reduce its federal and state taxes by $5.78 billion from 2010 to 2015, the institute found.

As Ed reminds us, “In the 1950s, corporate taxes were about one-third of all federal revenue; today, it’s under 10%. And the burden is then transferred to individual taxpayers.”

Conservative economists will remind us that ultimately, individual consumers will pay corporate taxes–that the taxes companies pay will be factored into the prices of the goods they sell. And that is absolutely true. But it is a far fairer and much more honest way to do business.

The prices of consumer goods should reflect the actual cost of producing them, and taxes are–or should be– part of that cost. We don’t want the manufacturer who is “disposing” of his waste illegally to be able to undercut the prices of the guy who is following the rules, and we don’t want companies with more “creative” tax avoidance strategies to undercut competitors who are paying their fair share . Capitalist markets only work properly when pricing is honest.

Our current system doesn’t reward innovation; it rewards “game playing.” Lobbyists sneak arcane loopholes into our increasingly complicated tax code. Those loopholes further tilt the playing field, distorting market forces in ways that favor the companies that can afford the lobbyists.

I’m all in favor of lowering the top marginal corporate tax rate, if we get rid of the loopholes at the same time. (We should start with those that provide an incentive for moving American businesses to off-shore tax havens–but we shouldn’t stop there.)

The current system allows corporations to whine about the tax rate in public, while making out like bandits behind the scenes. It’s dishonest, it’s anti-competitive, and it shifts the tax burden in ways that are unfair to individual taxpayers and a drag on the economy.

A responsible Congress would eliminate or dramatically reduce the loopholes and readjust the tax burden. Our Congress, however, is too busy making the system worse.

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Now For The Numbers….

So–the nonpartisan Congressional Budget Office has released its analysis of “TrumpCare.”

Here are their numbers:

14 million Americans will lose their insurance by 2018
21 million Americans will lose their insurance by 2020
24 million Americans will lose their insurance by 2026
There will be 52 million Americans with no health insurance by 2026 (for comparison, there were 46 million uninsured before Obamacare became law)
The bill will cut $880 billion from Medicaid by 2026
15 percent of Planned Parenthood patients will lose access to care
A 64-year-old making $26,500 would have to pay $14,600 for insurance in 2026 (for comparison, that 64-year-old pays $1,700 under Obamacare), and

After transferring $275 billion from public-health spending to the richest 1 or 2 percent via tax cuts, it will reduce budget deficits by $336 billion between 2018 and 2026.

AHCA–aka “Trumpcare” or perhaps “Ryancare”– would reduce deficits by $336 billion but would cut government spending on healthcare programs by $1.2 trillion.

When you think about it, this is a brilliant approach to deficit reduction that we could apply across the board.

We can cut billions out of the budget if we stop paving Interstate highways and inspecting and fixing bridges. We can reduce the deficit significantly if we stop hiring those high-priced CPAs to monitor bank compliance with financial regulations and enforce the SEC’s oversight of corporate securities offerings. We can save another bundle if we no longer enforce rules against air and water pollution (actually, Scott Pruitt, the new EPA Chief, has already begun that effort.) Betsy DeVos assures us that schools don’t need oversight, so we don’t need the Department of Education. We probably don’t need those bean-counters at the CBO or the Bureau of Labor Statistics, either.

And of course, we could stop paying Social Security to all those useless old people. Think of what that would save us!

It’s true that if we did all these things, government would no longer function, and we’d be thrown into a Hobbesian, dog-eat-dog world, but that’s actually the result many Republican Congress-critters have been working toward. The President wouldn’t mind, because he really has no idea what most of government does anyway.

Of course, if we wanted to make a real dent in the national debt, we could dramatically reduce the bloated amounts we spend on the military. But something tells me that might be a bridge too far…..

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It’s Not Just Complicated…

Trump generated a lot of well-deserved criticism–not to mention sarcasm–for his recent expression of surprise at the complexity of health policy, saying “Who knew it was so complicated?” The universal response was “Apparently, everyone but you!”

Which brings us to the bill currently before Congress.

Virtually every headline about Paul Ryan’s proposed ACA replacement has been negative: NBC’s said bluntly “Experts: The GOP Healthcare Plan Just Won’t Work.”

While their objections vary depending on their ideological goals, the newly introduced American Health Care Act (AHCA) is facing an unrelenting wave of criticism. Some experts warn that the bill is flawed in ways that could unravel the individual insurance market.

Among other problems, the article pointed out that the bill is almost certain to reduce overall coverage and result in deductibles increasing. It will also phase out Obamacare’s Medicaid expansion. Older, sicker and lower-income patients will be the bigger losers.

The headline of the Washington Post’s Plum Line was equally direct: “The New Republican Health-Care Plan is Awe-Inpiringly Awful.”

Noting that Trump had campaigned on a promise to replace the ACA with “something terrific,” Paul Waldman, who authors the Plum Line, observed that the bill is

so far from terrific that there doesn’t seem to be anyone other than House Speaker Paul D. Ryan (R-Wis.) himself who thinks this bill isn’t a disaster. It’s being attacked not just from the left but from the right as well. Heritage Action and the Club for Growth, two groups that exist to browbeat Republicans into upholding hard-right principles, have just come out against it.

Waldman marveled that

House Republicans have accomplished something remarkable: They have written a bill that would make every problem they’ve complained about much, much worse. If there’s any saving grace, it’s that almost no one will be happy about it, except for the wealthy people to whom it gives a gigantic tax cut.

So… Republicans are going to drastically reduce the number of Americans with health insurance while increasing costs pretty much across the board: individuals, state governments and the federal government will all pay more. According to insurance experts, the bill will also do enormous damage to the insurance market. The GOP is evidently willing to inflict all that pain in order to give rich people a tax cut.

The problems with the bill range from the ludicrous to the outrageous, and you can all decide for yourselves which parts you find more horrific or ridiculous, but as a number of observers have pointed out, the promises of a genuine Republican replacement for Obamacare were always impossible to keep.

Today’s GOP is an increasingly uncomfortable amalgam of true believers who oppose the very notion that government has an obligation to provide access to health insurance, and who are working frantically to eliminate Medicare and Medicaid, and the party’s realists, who know that taking health insurance away from Americans who finally have been able to access it–not to mention Medicare recipients– is political suicide.

That’s a political fence that can’t be straddled.

What Ryan and his minions are trying to do is square the circle: drastically reduce coverage while pretending they are doing no such thing.

Some day–if and when sanity and a modicum of honesty return to American government– the United States will join virtually every other first-world country and provide universal coverage. I’ve previously posted about the multiple benefits and clear superiority of Medicare for All.

In 2006, the Economist—hardly a leftwing publication—had this to say about the U.S. healthcare system:

“America’s health care system is unlike any other. The United States spends 16% of its GDP on health, around twice the rich country average, equivalent to $6,280 for every American each year. Yet it is the only rich country that does not guarantee universal health coverage. Thanks to an accident of history, most Americans receive health insurance through their employer, with the government picking up the bill for the poor (through Medicaid) and the elderly (through Medicare).

[…]

In the longer term, America, like this adamantly pro-market newspaper, may have no choice other than to accept a more overtly European-style system.”

Obamacare was a step in the right direction, but America still spends more per person on healthcare than any other country–and we still rank 37^th in outcomes. (If our infant mortality rate was as good as Cuba’s—Cuba’s!—we would save the lives of an additional 2,212 babies every year.)

Other countries have opted for more efficient–and more humane– national systems.

In 2017 America, we are still arguing over whether healthcare should be viewed as a right (or at least a utility), or whether we should continue to treat it as a consumer product, available to those who can afford it and “tough luck” to those who can’t.

That circle can’t be squared.

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