Category Archives: Public Policy and Governance

Ironies of the Season

A former student of mine, Derek Thomas, is a policy analyst at the Institute for Working Families–a local think-tank that focuses on policies affecting (duh!) working families. He has a recent post at the Institute’s website documenting the toll taken on those families by the ongoing sequester.

I couldn’t help feeling a twinge of guilt as I read the catalog of the sequester’s consequences for my fellow Hoosiers, not because I consider myself culpable (I didn’t vote for those responsible, nor did I support the use of this meat-ax approach to budgeting), but because I hadn’t really thought about the sequester in such concrete terms.

Most Americans who share my good fortune–still middle-class, still employed, still able to make my mortgage payments–think of the sequester in terms of policy, assuming we think of it at all. It was stupid and cowardly, evidence of Congressional dysfunction. We haven’t thought about it in terms of Indiana children thrown out of Head Start, or elderly folks who aren’t getting hot Meals from Meals on Wheels, or the landlords and tenants alike who no longer receive housing vouchers both depend upon…let alone the multiple other hardships detailed in Derek’s report.

Worse still, the full impact of the sequester hasn’t yet hit.

While low-income working families are struggling with the consequences of decisions made by people those decisions wouldn’t affect, our news media has focused on the Black Friday near-riots at big-box stores, as shoppers fought each other for the presumed “bargains” on display.

What was really on display was the disconnect between the “still-haves” and the “no-longer-haves.”

Also on display was the evident lack of concern about the latter category by those of us in the former one.

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It’s More Complicated Than That…

H.L. Mencken famously said that for every problem, there’s a solution that’s clear, simple  and wrong.

That’s an observation that has escaped lawmakers and economists for a long time, although in the last several years, many of them have come (grudgingly) to recognize its wisdom.

For a long time, economists predicted human behaviors using a “cost/benefit” framework; incentives were  “profit maximizing” and costs were, well, costs.  Of course, real human beings aren’t so one-dimensional. We don’t behave as the economists predicted, because what constitutes an incentive or disincentive for any particular person cannot be so neatly identified.

It isn’t that we humans don’t act in our own self-interest–we do. It’s just that “self-interest” means different things to different people. Teachers who could make more money in the private sector are rewarded by making a difference in children’s’ lives; lawyers for public-interest organizations forgo substantial monetary rewards but derive immense satisfaction from “doing justice.”

“Value” and “reward” are inescapably subjective.

The incentives to which people respond–what impels someone to work, or to work at this job rather than that one–is often a matter of cultural values and expectations. That’s why the widespread belief that a social safety net creates a “culture of dependency” has always been flawed. People don’t work just for sustenance; they work for cultural acceptance, meaning, self-esteem and personal pride, among other reasons.

A recent cross-national study has recently confirmed the lack of a relationship between the generosity of a country’s social safety net and the diligence with which unemployed people look for work. (It also found that receipt of social benefits didn’t make people happier or more satisfied. Depending on the kindness of strangers simply keeps folks fed and/or housed, not cheerful.)

In other words, feeding people who’ve lost their jobs doesn’t make them stop looking for work, and providing minimal support to those who are down and out doesn’t make us suckers.

It might, however, make us better humans.

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Pushed Too Far

Remember the old comic book ad in which a bully kicks sand in the face of a skinny guy, and the skinny kid takes a Charles Atlas course, muscles up, and comes back to flatten his tormenter?

I think Harry Reid took that course!

Yesterday, Reid invoked the “nuclear option,” changing the Senate’s rules in order to permit most Presidential nominees to be approved by a simple majority.

If you are old enough, you may remember when such majority rule was the rule. The filibuster–a procedural mechanism devised by the Senate itself and found nowhere in the Constitution–was until recently employed only rarely, and usually by a Senator who actually filibustered, a Senator who talked until he could no longer hold out. During the George W. Bush administration, Democrats used it more frequently, but it was only with the election of Barack Obama that things got seriously out of hand.

As media reports have confirmed, early in the Obama Administration, Congressional Republicans decided to block any and all measures coming from the White House. The merits of the proposals, the bona fides of nominees, the desires of the electorate–none of those things would matter. And they would no longer bother to actually filibuster–they’d just say “we’re filibustering, so you need sixty votes” to pass this bill or confirm this nominee.

There’s a Yiddish word for that: chutzpah. 

The GOP’s goal was simple: deny this President any victory, no matter how small, no matter how good for the country, no matter if the proposal had originally been their own.

Case in point: Lawyers and judges have pleaded with lawmakers to fill the mounting  and unprecedented vacancies that have slowed justice to a crawl and brought business to a halt in many of the nation’s federal courts. Legal organizations and the ABA have sounded the alarm. No matter. Senate Republicans have kept focused on their primary mission: say No to this President.

They finally pushed the Democrats too far.

Reid’s reluctance to “go nuclear” has been clear for some time. But it  finally became obvious even to him that the alternative was another three years of stalemate, another three years of national drift, of getting virtually nothing done.

The Constitution requires a simple majority vote to pass bills and confirm most nominees. Except in a few specific instances, it does not require a super-majority. And yet, for the past five years, the GOP’s constant abuse of the filibuster has effectively required a super-majority for even the most mundane and previously uncontroversial actions.

The Party of No has used the filibuster to throw sand in the gears of the Senate–as a way to refuse to do the people’s business so long as Obama occupies the White House. Senate Republican leadership made a calculation: they would stand united to ensure the failure of the hated (black/Kenyan/Muslim) Obama, and the Democrats wouldn’t have the balls to go nuclear.

It was a reasonable bet, but it turned out to be wrong.

The skinny weakling grew a pair.

 

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Our Own Desert Island

Later today–between I:00 and 2:00 pm– there will be a rally at the Indiana Statehouse on behalf of the nearly 400,000 Hoosiers who find themselves marooned on Indiana–the island of the uninsured.

States surrounding us, Republican and Democrat, have opted to take advantage of the new federal incentives and expand Medicaid. Not Indiana. Our Governor has decided that political posturing trumps the health needs of Indiana citizens who work in retail, education, home health, child care and other low-wage jobs without benefits. These are the people who are caught in the middle, who are too poor to use the new exchanges but  too “rich” to qualify for Indiana’s existing medical programs.

It’s pretty obvious that refusing to expand Medicaid effectively screws over these  400,000 Hoosiers. What is less obvious–and even more maddening–is how that refusal screws over the rest of us.

  • If a state expands its Medicaid coverage, the federal government will pay 100% of the costs for the first three years and 90% thereafter. Indiana is forgoing approximately twenty-six billion dollars between now and 2020–dollars that would create an estimated 30,000 sorely needed new jobs in our state.
  • The American Academy of Actuaries says that private insurance costs will rise in non-expansion states like Indiana. Local media has reported that Hoosiers are already seeing rates higher than the rates in states that surround our “island.”
  • The federal money we are turning down would offset expenses for indigent care and prison health care that are currently being covered by Indiana taxpayers.

Medicaid expansion would save money while saving lives and improving the health of our citizens. It would provide access to preventative care to those who are currently uninsured, reducing the tab for healthcare costs overall, including those that we taxpayers are now paying.

I know you’ll all be shocked to discover that Indiana currently ranks near the bottom of all states for most health indicators. In a sane world, we would jump at the opportunity to improve Indiana’s health and its economy.

Governor Pence’s refusal to expand Medicaid has already forced significant layoffs by Indiana hospitals, which have argued forcefully–but thus far unsuccessfully–for expansion. Other states with Republican governors have done the math and decided that the good of their citizens should trump their hatred of the President.

This should be a no-brainer.

I’ll forego the obvious pun.

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Shades of Milton Friedman

Switzerland is evidently considering implementing a “minimum income” program that would require the Swiss government to send a check to every citizen every month.

Proposals for similar approaches here have been kicking around since Milton Friedman advocated a negative income tax. Given current Congressional hostility to anyone who isn’t a plutocrat, the prospects for the U.S. adopting such an approach hover somewhere between nil and minus a million, but there is a strong case to made for replacing our patchwork safety net with a minimal income guarantee. According to Business Insider,

In 2012, there were 179 million Americans between the ages of 21 and 65 (when Social Security would kick in). The poverty line was $11,945. Thus, giving each working-age American a basic income equal to the poverty line would cost $2.14 trillion. For some comparison, U.S. GDP was almost $16 trillion in 2012 and the defense budget was $700 billion.

But a minimum income would also allow us to eliminate every government benefit as well. Get rid of SNAP, TANF, housing vouchers, the Earned Income tax credit and many others. Get rid of them all. A 2012 Congressional Research Service report found that the federal government spends approximately $750 billion each year on benefits for low-income Americans and that rises to a clean trillion when you factor in state programs. Eliminate all of those and the net figure comes out to $1.2 trillion needed to pay for a universal basic income, still a hefty sum.

Of course, that price tag assumes a check going to every American, rich or poor. As I recall, Friedman’s proposal was more modest: send checks to folks under the poverty line, tax those over it. The Swiss approach would send money to all citizens, regardless of income, and that does have the appeal of simplicity–no income verification bureaucracy, no game-playing.

A guaranteed minimal income would have some interesting consequences: for starters, no American would live below the poverty line. Despite a 50-year War on Poverty, nearly 50 million Americans remain below that line.

A guaranteed minimum income would give American workers the security to demand higher wages and better working conditions. Families could allow one parent to take time off to raise the kids. Best of all, eliminating the numerous different government welfare programs would simplify government and lead to private-sector efficiencies, as adults would simply receive their check in the mail (or via electronic transfer) and not have to waste time filling out paperwork and visiting numerous government offices.

The major argument against a guaranteed income is that it would be a disincentive to work–or, looked at another way, an incentive to idleness. Research suggests those fears are overblown, especially since a guarantee of poverty-level income doesn’t exactly provide trust-fund luxury. And of course, the same argument is routinely made against existing programs. 

If the Swiss follow through, I guess we’ll get to see who’s right.

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