Public Policy and Governance – Page 278

Predatory Municipal Finance

Every once in a while, I come across a study that “connects dots”–that makes previously disparate bits of information tell a new and different story.

I had one of these “aha” moments when I came across a Roosevelt Institute report titled “Dirty Deals: How Wall Street’s Predatory Deals Hurt Taxpayers and What We Can Do About It.”

According to the report, Wall Street and several major financial corporations have “engaged in a systemic effort to suppress taxes.” My first reaction to this was disbelief–not because I harbor any illusions about the business practices of Wall Street, but because I didn’t understand why they’d bother to lobby for generalized tax cuts. What would motivate such efforts? What’s in it for them?

Here’s the missing piece: when it is difficult for cities and states to fund even basic public services–let alone ambitious but necessary projects– out of tax revenues, banks can take advantage of that situation by offering state and local governments “creative” (albeit predatory) municipal financing “deals.”

Predatory financing deals prey upon the weaknesses of borrowers, are characterized by high costs and high risks, are typically overly complex, and are often designed to fail.

Ironically, the money that flows to Wall Street and its partners in these transactions often ends up costing taxpayers more than they’d pay by way of a responsible tax rate imposed by elected officials–and elected officials are accountable to voters in ways that Wall Street wheeler-dealers are not. (The report notes that taxpayers “do trillions of dollars of business with Wall Street every year.)

We have a perfect example of the way this works right here and now: Indianapolis’ proposed Justice Center. I’m in favor of the project, but as I’ve noted previously, I’m extremely leery of the “creative” and highly privatized way in which the city proposes to finance it. The terms “high costs,” “high risks”, and “overly complex” certainly seem apt.

The predatory practices highlighted in the Roosevelt report are made possible by voters’ stubborn belief in a free lunch. We want public services, but we don’t like paying for them. So “creative” politicians work with Wall Street to give us “creative financing” that allows us to pretend we’re getting a bargain.

It’s easy to con people who lie to themselves.

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Play Politics Much?

Every so often, I use this space to share the perspectives of my cousin, a scientist and cardiologist.

Like so many medical professionals, he used to be a reliable Republican; he’s now appalled by the way in which the Grand Old Party has deserted science and especially by its total capitulation to politics over sound medicine. In a recent post to his own blog, he addressed the GOP’s refusal to confirm a stellar candidate to the post of Surgeon General.

In March of this year, President Obama nominated a highly qualified candidate, Vivek Murthy, to be the nation’s next Surgeon General, but the nomination was not advanced to a confirmation vote in the Senate because conservative lawmakers and the National Rifle Association found his reasonable views on firearm regulation unacceptable. Thus a highly respected physician with impressive credentials who would have been an outstanding Surgeon General was rejected solely for political reasons. Although I, for one, believe that the regulation of firearms does indeed qualify as being a health/medical issue (see my post of May 30, 2013), it certainly should not constitute a “litmus test” for qualification for such a position.

Ya think?

Bottom line: The office of Surgeon General is vacant because a highly qualified doctor has pissed off the NRA by saying something that every sentient being understands to be true: gun violence is a public health issue.

No one in the GOP–and damn few Democrats–are willing to stand up to an organization so far out of the mainstream of public opinion that its own members think it is too extreme.

Our political system is so broken, it may be beyond repair.

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What Is Wage Theft?

I will admit that until very recently, I’d never heard the term “wage theft,” but it’s a term that I’ve come across fairly frequently in the context of the current debate over raising the minimum wage, so I consulted Dr. Google.

Basically, “wage theft” applies to situations where an employer doesn’t follow applicable wage and/or hour laws–either paying an employee for less time than s/he worked, or at a rate below the legal minimum.

A landmark survey survey of thousands of low-wage workers in New York City, Los Angeles and Chicago found that 26 percent had been paid less than the minimum wage the week before they were interviewed. According to the 2009 report by the National Employment Law Project and two other groups, 76 percent of the workers who put in more than 40 hours did not get paid or were underpaid the required time-and-a-half overtime rate. About 17 percent of the workers put in unpaid time “off the clock” before or after their shifts, another violation. In the three cities alone, the study estimated, low-paid workers were losing more than $56.4 million per week to wage theft.

As one reporter noted, the central problem in enforcing wage and hour laws is that they are basically driven by the filing of a complaint, and most people earning less than minimum wage are understandably unwilling to risk their jobs by complaining, even assuming they know they have that right.

The impact of even a little “skimming” by employers can be significant.

The Economic Policy Institute calculates: “When a worker earns only a minimum wage ($290 for a 40-hour week), shaving a mere half hour a day from the paycheck means a loss of more than $1,400 a year, including overtime premiums. That could be nearly 10 percent of a minimum-wage employee’s annual earnings—the difference between paying the rent and utilities or risking eviction and the loss of gas, water, or electric service.” Overall, according to projections based on surveys of low-wage workers, “wage theft is costing workers more than $50 billion a year.”

In our downsized, privatized, anti-government environment, I guess having adequate personnel to enforce wage laws is just too much to expect.

Why is it I think that if pervasive theft was hurting employers rather than workers, the response would be different?

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Time for a Change

There are lots of suggestions for changing the way we Americans conduct elections.

We debate nonpartisan commissions to replace partisan redistricting (gerrymandering), making election day a holiday, changing to a vote-by-mail system (Oregon votes by mail and the turnout in Oregon last Tuesday was over 69%), eliminating the Electoral College, and efforts to get big money out of politics, starting with a Constitutional amendment reversing Citizens United. All of these, and many other suggested changes, have their merits.

Here’s another suggestion, one that I heartily endorse.

In a New York Times op-ed written before the midterms, a Duke University professor and one of his students make the case for eliminating the midterms entirely, and extending Congressional terms to four years from the current two. They begin by pointing out that barely 40 percent of the electorate will bother to vote, “even though candidates, advocacy groups and shadowy “super PACs” will have spent more than $1 billion to air more than two million ads to influence the election.”

There are few offices, at any level of government, with two-year terms. Here in Durham, we elect members of the school board and the county sheriff to terms that are double that length. Moreover, Twitter, ubiquitous video cameras, 24-hour cable news and a host of other technologies provide a level of hyper-accountability the framers could not possibly have imagined. In the modern age, we do not need an election every two years to communicate voters’ desires to their elected officials.

Agreed. The op-ed authors make several other arguments, all persuasive, and the piece is worth reading in its entirety. But the bottom line is that the people who win these off-year elections will immediately begin fundraising for the next election cycle. No time to breathe, let alone time to consider issues of actual governance. Just dialing for dollars, and not-so-incidentally trying not to do anything that will piss off big money donors.

Many of the reforms being debated should be implemented. This is one of them.

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Why Politicians Like Rokita are More Dangerous–and Anti-American–Than you Think

According to yesterday’s New York Times, pragmatism about climate change is beginning to trump politics at the local level. The article focused primarily on candidates in Florida, where rising sea levels and other consequences of global warming have become too obvious for local Republican candidates to ignore. But the article also quoted Carmel’s Mayor, Jim Brainard, who has defied his national party’s fealty to Big Oil (more than 58% of Congressional Republicans deny the reality of climate change) and who has worked actively to reduce Carmel’s carbon footprint.

“I don’t think we want to be the party that believes in dirty air and dirty water,” Mr. Brainard said, noting that the Environmental Protection Agency was founded under President Richard M. Nixon, a Republican.

Contrast Brainard’s eminently sensible approach with that of Indiana Congressman Todd Rokita, who recently told the Purdue Exponent that claims about global warming are still “under debate,” and that the belief in anthropogenic climate change is “arrogant,” because after all, who are we to think our human activities could change God’s climate?

When asked by a constituent about government subsidies for renewable energy sources like wind and solar, Rokita said that he respects “God’s green earth,” but that the private market should decide which energy sources receive funding.

Evidently Rokita hasn’t noticed the massive subsidies we taxpayers are providing to the (enormously profitable) fossil fuel industry.

It would be easy enough to dismiss Rokita and the other dogged defenders of the energy status quo as politicians pandering to a know-nothing base. As a 2012 article from Scientific American pointed out, however, these anti-science attitudes not only threaten America’s economic future, they represent a dramatic–and dangerous–departure from traditional American values.

The Founding Fathers were science enthusiasts. Thomas Jefferson, a lawyer and scientist, built the primary justification for the nation’s independence on the thinking of Isaac Newton, Francis Bacon and John Locke—the creators of physics, inductive reasoning and empiricism. He called them his “trinity of three greatest men.” If anyone can discover the truth by using reason and science, Jefferson reasoned, then no one is naturally closer to the truth than anyone else. Consequently, those in positions of authority do not have the right to impose their beliefs on other people. The people themselves retain this inalienable right. Based on this foundation of science—of knowledge gained by systematic study and testing instead of by the assertions of ideology—the argument for a new, democratic form of government was self-evident.

The authors warned that the anti-science posture of contemporary politicians “reflect an anti-intellectual conformity that is gaining strength in the U.S. at precisely the moment that most of the important opportunities for economic growth, and serious threats to the well-being of the nation, require a better grasp of scientific issues.” Anti-science positions occur at both ends of the ideological spectrum, from anti-vaccine activists on the left to climate change deniers on the right.

By falsely equating knowledge with opinion, postmodernists and antiscience conservatives alike collapse our thinking back to a pre-Enlightenment era, leaving no common basis for public policy. Public discourse is reduced to endless warring opinions, none seen as more valid than another. Policy is determined by the loudest voices, reducing us to a world in which might makes right—the classic definition of authoritarianism.

The entire article is well worth reading, but I found this paragraph particularly compelling:

“Facts,” John Adams argued, “are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.” When facts become opinions, the collective policymaking process of democracy begins to break down. Gone is the common denominator—knowledge—that can bring opposing sides together. Government becomes reactive, expensive and late at solving problems, and the national dialogue becomes mired in warring opinions.

When Congressmen like Rokita substitute convenient and uninformed opinion for science and fact, they threaten both our planet and our democracy.

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