Category Archives: Public Policy and Governance

Over the past few years, conservative members of Congress have devoted considerable energy to efforts to repeal the Estate Tax. An expensive PR campaign has hammered at the awful unfairness of the “Death Tax.” People unfamiliar with the tax and its application have been led to believe that heirs are routinely having to sell the family farm to pay confiscatory taxes. They’d probably be surprised to learn that 99 percent of estates pay no estate tax at all. 

 

Among the 1% of estates that do pay these taxes, the "effective" tax rate — that is, the actual percentage of the estate that is paid in taxes — averaged about 20 percent in 2005 (the latest year for which IRS data are available), far below the statutory rate of 48 percent. 

 

Although few families pay, the Center on Budget and Policy Priorities calculates that repeal would reduce tax revenues by a trillion dollars in the first ten years. That’s because the 1% of Americans who do pay the tax are very, very wealthy.

 

Meanwhile, as policymakers have argued whether the Estate tax imposes an unfair burden on our wealthiest citizens, they have been shockingly unmoved by a far more confiscatory and widespread “death tax”—the requirement that elderly citizens entering nursing homes impoverish themselves before Medicaid will pay for their care.

 

Millions of older Americans who have worked and paid taxes their whole lives cannot afford the ever-escalating costs of long-term care. Very few insurance policies cover these costs, and those that do are far too expensive for most middle-class retirees.

 

Before these vulnerable Americans can receive the services they need, federal law requires that they “spend down” their assets. That is, they must apply virtually everything they have to payment of the initial nursing home charges. Once they no longer have assets, medicaid will pick up the costs. There are few exceptions: prepaid funeral expenses, or a home that remains occupied by a spouse. Over six million elderly Americans are currently receiving Medicaid. All of those seniors have thus paid the “tax”—i.e. the spend-down. Its “effective rate” is 100%. 

 

My mother spent her last years in a nursing home. Many of the residents had worked hard their entire lives. Like the wealthy, most had hoped to pass their possessions and savings on to their children and grandchildren. Unlike the wealthy, they couldn’t afford estate planners and lawyers to help them shelter their assets and minimize the impact of federal rules. Their savings were gone, and all too often their pride and independence had vanished with the money.

 

Some wealthy Americans believe this state of affairs is wrong. They include Warren  Buffett, George Soros and William Gates, Sr. They have urged Congress to reject President Bush’s push to repeal estate taxes, arguing that "repealing the estate tax would enrich the heirs of America‘s millionaires and billionaires while hurting families who struggle to make ends meet."

 

In other words, agonize less over burdening George Soros, and worry more about wiping out Mr. Average Citizen.

   

 

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It isn’t only FEMA. Everywhere you look, Administration officials are doing “a heck of a job.”

 

A recent audit of the Justice Department, conducted by the department’s own Inspector General, concluded that only two of Justice’s twenty-six issued reports of terrorism prosecutions have been accurate. The department has routinely inflated the number of terrorists being charged by including immigration, marriage fraud and drug trafficking cases entirely unrelated to terrorist activities.

 

Maybe this was just an honest series of reporting errors, rather than an effort to pad the statistics for political purposes, but either way, it is just one more disquieting piece of evidence that—to put it mildly—all is not well at Alberto Gonzales’ Justice Department.

 

While it’s no secret that Constitutional scholars have been overwhelmingly critical of Gonzales’ embrace of the so-called “unitary executive” theory (which places the President above the law in many situations), his interpretation of Presidential authority can be categorized as an honest difference in perspective. Other problems cannot be so easily dismissed.

 

There is, for example, the case of Sue Ellen Woolridge, until last month the chief of the department’s environmental enforcement division. Woolridge bought a million dollar vacation home with one Don Duncan, the top lobbyist for ConocoPhillips. Nine months later, on behalf of the Justice Department, she signed a settlement agreement with ConocoPhillips that allowed the oil company to delay installing pollution-control equipment and to delay paying fines. Making this deal smell even worse was the identity of the other co-owner of this beach house: Ms. Woolridge’s “boyfriend,” Stephen Griles, a former lobbyist for the oil industry who had been appointed to an environmental enforcement position at the Department of the Interior, and who is currently under investigation in connection with the shenanigans of Jack Abramoff.

 

Can we spell “appearance of impropriety?”

 

The Congressional investigation into Woolridge’s activities has now been joined by several inquiries into the firings of seven U.S. Attorneys. All were Republicans appointed by Bush, and all but one had received positive job reviews. The Washington Post reports that “most of the prosecutors were overseeing significant public-corruption investigations at the time they were asked to leave.” One of them—Carol Lam, of San Diego—had obtained a guilty plea from Randy “Duke” Cunningham, and had just indicted others in connection with that case, among them a high ranking CIA official.

 

Gonzales has thus far ignored communications from Congressional committees requesting an explanation of these firings.

 

John Dean, former White House Counsel for Richard Nixon, recently summed up the situation at the Justice Department. Calling for Gonzales to resign, Dean’s criticism was trenchant.  “In the history of U.S. Attorney Generals, Alberto Gonzales is constantly reaching for new lows. So dubious is his testimony that he is not afforded the courtesy given most cabinet officers when appearing on Capital Hill: Congress insists he testify under oath. Even under oath, Gonzales’ purported understanding of the Constitution is historically and legally inaccurate, far beyond the bounds of partisan interpretation.”

 

Heck of a job.

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Governor Daniels has proposed a 25-cent cigarette tax to fund health insurance for at least some of Indiana’s children who are currently uncovered. It’s another proposed “patch” for our costly, byzantine and inefficient medical system, but it would be something. Real reform would never pass.

 

Americans don’t want “socialized” medicine—but of course, that is what we have now. Only we have socialized our system through insurance companies rather than through government, and have thereby managed to get the worst of both worlds—highly regulated care that is over twice as expensive as the next most expensive country’s.

 

Forty-six million Americans are currently uninsured; another forty million will experience lapses of a month or more in any given year. Half of all personal bankruptcies—costing businesses millions—are due to medical bills. Because we make medical insurance an employer responsibility, the cost of American goods is inflated—over two thousand dollars of the cost of each General Motors car covers health care.      

 

What if we had a “single payer” system like several in Europe—a system that covered everyone, was funded through taxes and administered by existing insurance companies?

 

There would be an immediate payoff in economic growth. Health insurance (for companies that can still afford it) is the single largest “drag” on new job creation. Aside from the cost of the insurance itself, administering benefits consumes untold hours of HR time. Smaller companies—the real engines of economic growth—are increasingly unable to offer health benefits, putting them at a competitive disadvantage for good employees. If we de-coupled health insurance from employment, companies would be able to add workers and increase wages.

 

Individuals would save money, too, and not just on uninsured medical expenses. Automobile and homeowners insurance premiums would decline, because underwriting would no longer need to take the costs of medical care into account.

 

But what about the price tag? Most health economists believe the additional taxes needed would be minimal, and not just because there would be economies of scale. Right now, between programs like Medicaid and Medicare and coverage for public employees—police and fire personnel, public school teachers, and millions of municipal, state and federal employees—government is already paying for the health care of 45% of the American population. Just  standardizing that coverage would save billions.

 

Medical costs in the U.S. include paychecks for thousands of employees in doctors’ offices and hospitals whose only job is to comply with conflicting insurer regulations, submit or reject claims and collect—or argue about—amounts due. (Thirty percent of total U.S. healthcare costs are administrative; meanwhile, much-maligned Medicare keeps its overhead under 3%.) Eliminating insurance companies’ marketing costs and negotiating with drug manufacturers and other medical vendors for lower prices would generate huge savings. Costs also decline when people  get timely care, rather than costly emergency room attention when they can no longer ignore the problem.

 

A cigarette tax is like giving aspirin to someone whose appendix has ruptured. There’s momentary pain relief, but he still needs an operation.

 

 

 

 

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      How should Americans talk about really divisive issues? It is hard enough to draw a line between passionate advocacy and discourse that is over the line. The problem becomes infinitely harder when the stakes are higher.

      With the benefit of hindsight, we fault the “good Germans” who were temperate after Kristalnacht. But every excess is not Kristalnacht. So how do we decide when a contemporary policy is so dangerous, so wrong, that moral people simply cannot smile nicely, pour tea and politely disagree with it? Ironically, this dilemma is one of the most troubling consequences of engaging routinely in intemperate political language; as I said in a recent column, when every tax increase is met with hysteria about creeping socialism, and every over-reaction by a police officer is evidence of fascism, what language is left for serious threats? It’s the boy who cried wolf syndrome.

      I’ll be the first to admit that I lost it when Congress passed the so-called “detainee” act a few weeks ago. When this bill passed, I thought—and I still think—that words like “totalitarian” were factually descriptive, rather than rhetorically excessive. But if it is okay for me to cry “fascist” about this bill, what about the people who believe abortion is genocide, or that progressive taxation is theft? When we use such terminology, we are not communicating with anyone, or changing anyone’s mind.

      Let me specify my problems with the detainee bill, and why I see it as a dangerous break with time-honored American legal and policy traditions. I wasn’t the only one, by the way—diplomats and military officials sent statements strongly objecting to this legislation, and warning that it would actually encourage terrorism while making our soldiers less safe. This measure:

·        Suspends Habeas Corpus, a protection we’ve enjoyed for 700 years.

·        Allows use of illegally-obtained evidence against suspects—in violation of the 4^th Amendment.

·        Protects torture: first, by giving the President the right to define what torture is and isn’t, and second by shielding those who have tortured during the past several years from prosecution.

·        Allows the administration to designate someone as an enemy combatant—and gives the individual so designated absolutely no way to challenge that designation. Think about it: the President can say that you are someone who has “purposefully and materially supported hostilities against the United States.” To begin with, that’s a pretty subjective standard. But what’s worse, let’s say you are a citizen, or someone else who shouldn’t even be subject to this law—there is no way for you to appeal, no way to show that you are entitled to a trial, no way to demonstrate that you are the wrong person.

·        As Senator Feingold testified, “this legislation would permit an individual to be convicted on the basis of coerced testimony and hearsay, would not allow full judicial review of the conviction, and yet would allow someone convicted under these rules to be put to death.”

·        What is truly perverse, once the government actually has enough evidence to charge a detainee with a crime, then and only then do the few due process protections left under the act apply. Before that, they don’t—and prisoners can simply be indefinitely detained. No trial, no hearing, no nothing. The result, as Senator Obama has noted, is that the less evidence the government has, the fewer rights the detainee has. When you realize that out of the 700 people held at Guantanamo, only ten had been charged with any crime as of a couple of months ago, the enormity of that really hits you.

So–how do we talk about this? How do we impress on our fellow citizens the magnitude of what this law does? how do you say “such measures are beneath us, inconsistent with what it means to be an American?”

      Just yesterday, a student sent me a partial answer to that question, a link to You Tube with a speech made by Senator Barack Obama during the floor fight in the Senate. Obama was fighting for an amendment to curtail some of the most extreme features of this legislation. He began by acknowledging that the threat posed by terrorism was real, and that it needed to be dealt with. He also said “if we are properly agressive in addressing the threat, it is inevitable that mistakes will be made, that we will occasionally cast too broad a net. There is nothing necessarily wrong with that—so long as we retain the means to correct those mistakes.” He went on to list the troublesome elements in the bill, to offer very specific evidence of the harms done by each, and to suggest with a good deal of precision what corrective language or policy he would propose. And he concluded with a statement that went to the heart of his objections: “We don’t have to imprison innocent people to win the war on terror.”

      Obama was polite, but not weak. He respected his opponents without conceding to their arguments. That’s terribly difficult—especially if you tend to be a bit emotional, like me—but I don’t see any feasible alternative. At some point, we all have to trust in the good-will and good sense of other Americans. We have to trust that in the marketplace of ideas, truth will ultimately prevail. That doesn’t mean we should work less diligently or passionately to get American values back; it means we have to offer arguments and evidence that will persuade our fellow citizens, we have to object to the use of dishonest arguments, and we have to safeguard the mechanisms of constitutional government to ensure that all arguments will be heard and all relevant evidence considered.

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    It is difficult—if not impossible—to discuss important disagreements when language no longer has meaning. When every tax is socialism, and every abuse of police power is fascism, we’ve lost the tools to adequately describe genuine threats to our political system. We can no longer discriminate between the merely troublesome and the genuinely threatening.

    This isn’t a new phenomenon. During the Peloponnesian War, Thucydides wrote that “to think of the future and wait was merely another way of saying one was a coward; any idea of moderation was just an attempt to disguise one’s unmanly character; ability to understand a question from all sides meant one was totally unfitted for action.” Many years later, George Orwell would portray corruption of language as an essential tool of the authoritarian state.

   

So what can we say about the recent Military Commissions Act, passed at the end of September? In seemingly innocuous language, the United States Senate gave the President unchecked authority to use “interrogation techniques” on “detainees.” The Act doesn’t say “unbridled discretion to torture prisoners;” indeed, it says torture remains illegal. It just lets the President define what torture is—and isn’t—and lets him keep the definition secret.

   

The “detainees” (almost sounds like guests, really) are people who have been designated “unlawful combatants.” And if the Pentagon—using whatever criteria it chooses—says you are an unlawful combatant, then you are. Period. Of course, once you’ve been labeled an “unlawful combatant” you can no longer use habeas corpus to protest your innocence, or to show that there has been some mistake, like with that German businessman the CIA picked up and tortured, who turned out to have the same name as the guy we were really looking for.

    Oops.

    In the world of Orwellian language, this legislation protects our rights. In the real world, however, where there is no remedy, there is no right. When there is absolutely nothing you can do once you are wrongly accused—when a law permits summary arrest and indefinite detention on the say-so of those in power, with no hope of appeal, talk of “rights” is surreal. When there is no punishment provided for violating a rule, it isn’t a rule—it’s a suggestion. 

   

In the real world, members of the United States Senate spent barely two days discussing a bill to gut time-honored constitutional guarantees that generations of American soldiers have fought and died for. Senators didn’t agonize over this drastic change. They didn’t listen to the decorated military officers who argued that its passage would endanger our troops.

    In a recent column, Garrison Keillor said it best: no one who voted for this bill has any right to speak in public about the rule of law anymore, or to wax poetic about the American Idea. If the government can round up someone and never be required to explain why, then it’s no longer the United States of America. 

   

And we no longer have the words to describe what we are becoming.

 

 

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