Category Archives: Public Policy and Governance

Defunding Certain Police…

One inevitable result of November’s election will be the failure of any effort–at least in the short term– to make the rich pay their fair share of the national budget. Instead, we will see another gift to the super-wealthy, as the Trump administration rewards its billionaire donors with further tax cuts.

In all likelihood, that gift to the richest among us will be accompanied by cuts to the IRS budget. That budget was finally increased under Biden, in an effort to allow the agency to do its job. Ironically, it is the GOP that really wants to “defund the police”–in this case, the folks policing compliance with tax laws. Republicans have led the decades-long effort to defund the agency, ensuring that there will be fewer audits for the very rich. (Back in the 1990s, the IRS audited more than 20 percent of estate tax returns, but more recently it has been able to audit fewer than 4 percent.)

Congressional Republicans cut $20 billion for law enforcement at the I.R.S. in a recent spending bill. I guess GOP opposition to “defunding the police” depends upon which police you’re proposing to defund…

Policies that confer favorable tax rates (and ensure limited enforcement of those on the books) have a number of negative consequences. There is, of course, the matter of fundamental unfairness–I still remember when Warren Buffett pointed out that he paid taxes at a lower rate than his secretary. But there are notable, negative social consequences as well, as a site called “Fight Inequality” enumerates.

The most important rationale for a wealth tax is to reverse the age-old trend of rising inequality. Wealth taxes are meant to move society in the opposite direction, that of promoting equality. Economist Jomo Sundaram stresses the need to “get more revenue from those most able to pay while reducing the burden on the needy.”

Surprisingly, both the World Bank and the International Monetary Fund (WB-IMF) have come out in support of a wealth tax to counter rising global inequalities. This surfaced in a joint WB-IMF conference on Oct. 19, 2021, which noted “the persistence in income inequality” and concluded that a “progressive tax policy is one of the prime tools for addressing such inequality.”

The mere fact of inequality does not, in and of itself, justify imposing a greater tax burden on wealthy taxpayers. Rather, it’s the results that flow from that inequality. Social unrest is one: many uprisings seen around the globe over the past few years have been triggered by resentment of corporate greed, and the accompanying disproportionate exercise of economic and political power–the creation of plutocracies at odds with democratic principles.

Research tells us that systems of significant inequality are incompatible with social stability. 

The bias in our tax code and especially the fact of lax enforcement against wealthy tax evaders is a major assault against the rule of law, which rests on the premise that the rules apply equally to everyone. (That is particularly damaging at a time when Trump’s escapes from accountability have already undercut  that premise.)

The richest people are also notorious for rampant tax evasion.

The world’s top billionaires, particularly the owners of Amazon, Apple, Facebook, Google, Microsoft, and Netflix have avoided paying billions of dollars in taxes by transferring their wealth to tax havens outside the United States where they also set up shell companies.

Researches have revealed that tax rates by the top billionaires like Warren Buffet, Jeff Bezos, Michael Bloomberg and Elon Musk range from 0.10% to 3.27% while corporate tax rates hover at 35%.

It isn’t just the U.S.

In the Philippines, the richest are not necessarily the top income taxpayers. The Department of Finance’s Tax Watch service showed that for 2012, “only 25 out of the 40 richest Filipinos (as reported by Forbes) are on the Bureau of Internal Revenue’s (BIR) list of top individual taxpayers.”.

Even when identified and charged accordingly, rich tax evaders are also able to escape prosecution or penalties. The BIR’s “Run After Tax Evaders” project has a pitiful accomplishment record. Out of 929 cases against tax evaders from 2005 to December 2018 with total tax collectibles of P148.35 billion, only 14 have been resolved, with only 10 convictions.

It’s difficult for most of us non-billionaires to understand the levels of greed involved, the apparent need for constant acquisition–the grasping for more, more, more. When I was growing up, my mother used to comment that, rich or poor, one could wear only one pair of pants at a time. Presumably, the rich can only sail on one yacht at a time…

There’s a lot wrong with our society today. Tax policy isn’t the reason for all of it, but it’s a big part of the problem. 

Comments

What If We Had Mandatory Voting?

A couple of days ago, a commenter suggested that a shift to mandatory voting might help reinvigorate American democracy.

I once thought the only countries requiring citizens to cast ballots were the ones running phony elections, the countries where autocrats could claim an overwhelming mandate after marching people to the polls, but a few years ago, during a cruise of Croatia, I met a retired professor of public administration from Australia, who disabused me of that belief.

It turns out that countries like Australia, Belgium and Brazil all require citizens to cast ballots. In such countries, including Australia, modest fines for non-voting are typically assessed. In Belgium, non-voters may be fined and they may also face disenfranchisement for repeatedly abstaining. In Brazil: voting is also compulsory, but the rule makes several accommodations for illiterate citizens, the elderly, and those living abroad.

Mandatory voting rules require citizens of voting age to register and participate in elections. Penalties for noncompliance range from small fees to restrictions on public services. (In some countries, like Brazil, proof of compliance is needed for public employment or for obtaining a passport.)

In most systems, the rules contain exemptions for valid reasons for not voting– illness, travel, or  even religious objections may exempt individuals from penalties. And use of mail-in or other absentee ballots are considered to be in compliance. The mandate is not onerous.

Even people who want to show affirmative disdain for all of the candidates can comply with the law by submitting a blank or spoiled ballot–signifying their vote for “none of the above.”

There’s a fairly substantial body of academic literature analyzing the effects of mandatory voting.

Unsurprisingly, turnout increases dramatically (duh!), but research has also suggested other salutary outcomes. Researchers have found  that compulsory voting reduces “socioeconomic biases” in voter turnout. (In countries without required voting, the majority of people who fail to vote are typically poorer.) Vote totals in mandatory systems thus reflect the sentiments of a broader cross-section of the society. As a result, some studies have suggested that governments in countries with mandatory voting are more likely to adopt policies that benefit broader segments of society.

Critics of mandatory voting argue that forcing uninterested or uninformed individuals to vote dilutes the quality of electoral decisions. A 2009 study titled Full Participation: A Comparative Study of Compulsory Voting, for example, highlighted these concerns about uninformed voting. (On the other hand, those of us who live in the U.S. can attest to the fact that making voting mandatory could hardly turn out a higher percentage of uninformed voters that those who routinely go to the polls here. Data shows that Donald Trump’s margin of victory was greatest among those who consume little or no news.”)

When I was doing some superficial research for this post, I also found pundits who argue that making voting mandatory infringes on individual freedom. (Civil libertarian that I am, that was actually my initial reaction during discussion with my fellow passenger.) On reflection, however, I have changed my mind–for a couple of reasons.

I have often said that taxes are the dues we pay for a functioning society, but taxes represent only one part of those “dues.” Other obligations of citizenship include obeying laws and responding to summonses for jury duty. Surely casting a ballot can be considered another such obligation.

Over and above the inclusion of voting as a duty of citizenship, however, is the likely effect of such a mandate on policy.

Poll after poll shows large majorities of citizens supporting or opposing particular policies –preferences that are routinely ignored by America’s lawmakers. Most lawmakers who feel safe ignoring public opinion are the Representatives elected to the House who have been gerrymandered into “safe” districts. As I have often noted, however, gerrymandering is a voter suppression tactic. In a large number of those districts, universal turnout would make purportedly “safe” districts far more competitive–and would send a signal to incumbents that they might actually need to listen to their constituents.

When it comes to the election contests that aren’t subject to gerrymandering–Governors, Senators, President–universal turnout could not possibly give us worse results than those of the 2024 elections.

Will the United States ever impose mandatory voting? Doubtful, in a country where millions of people resist the most modest measures to protect the health and well-being of their neighbors.

But it’s certainly worth putting on our wish list….

Comments

Rokita Again…

Among the worst results of the recent election was the local–and sadly predictable–victory of Indiana’s statewide Republican ticket. Mike Braun can be expected to obediently follow the Trumpist/MAGA line. Micah Beckwith and Jim Banks are self-proclaimed Christian Nationalist and an embarrassment to the state (and, actually, to intelligent humans pretty much everywhere.) But Todd Rokita may actually be the worst choice Hoosiers made, if only because he was running for re-election after a term in which he displayed what he is for all to see–an unethical publicity hound consistently pandering to the very worst of the MAGA base.

And he is at it again–(mis)using the resources of his office to pursue ideological, rather than legal, ends. This time, it’s an effort to intimidate Indiana organizations that serve immigrant populations.

One of those organizations is Su Casa, a nonprofit organization that was issued a civil investigative demand by the office of the Indiana Attorney General. The purported reason was an inquiry into human trafficking. Su Casa–along with many other entities in Indiana that serve immigrant communities– are being “questioned” by the AG’s office, probing how they serve migrant communities.

Su Casa was founded in 1999 as a response to the increase of Latin American immigrants arriving in Columbus, Indiana.  The majority of them had limited English proficiency, and Su Casa provided assistance and removed barriers to essential services in that community. It’s mission is to “increase self-sufficiency, health, economic independence, education, and ensure Latino families feel safe and belong here.” Its website says “Su Casa believes that all residents should have equitable access to the tools and support needed to be successful regardless of socio-economic or immigration status, gender identity, sexual orientation, race, or beliefs.”

MAGA cultists like Rokita consider such beliefs unacceptably “woke.”

When I did some research, I discovered that the Attorney General has initiated investigations into several organizations– including nonprofits, government agencies, and businesses– that work to facilitate what the cult deplores as an  “influx of migrants into Indiana communities.” These investigations purport to be about labor trafficking and “the strain on local resources due to increased migrant populations.”

Comments

The Know-Nothing Administration

Data tells us that education levels predict the major divisions among American voters. Educational differences are also playing out in Washington, as Trump assembles a know-nothing cabinet composed of cranks, toadies, various conspiracy theorists and general ignoramuses.

Primary among those ignoramuses is Elon Musk. Musk’s reputation as a “genius” rests almost entirely on Americans’ quixotic tendency to ascribe intelligence to the accumulation of wealth. Musk inherited a fortune, purchased rather than invented the Tesla, and pretty much tanked Twitter. We taxpayers provide much of his income through lucrative contracts with the federal government.

I may be underwhelmed by Musk’s purported brilliance (actually, he isn’t stupid, he’s ignorant, and that’s different) but–like Trump–he himself is anything but modest. He’s proclaimed an intent to use his promised new (illegitimate) “department” to produce savings and government “efficiency.”

Musk and fellow billionaire Vivek Ramaswamy have promised to cut two trillion dollars out of the federal budget–a promise that displays incredible ignorance of what is in that budget, what is and isn’t discretionary, and what would be required to reduce it.

Vox recently explained that, even if Musk and Ramaswamy took an axe to the relatively small portion of the budget that is discretionary, that would save “only” $1.1 trillion. But those cuts would be incredibly painful–and would never make it through Congress:

Let’s suppose that Musk and Ramaswamy decide to really go for it. They’re going to cut non-defense discretionary spending in half, maybe by shutting down all scientific and health research and K–12 school aid. They’re slashing Medicare and Medicaid by a quarter, and they’re eliminating food stamps, ACA credits, and unemployment insurance entirely.

These, to be clear, are all cuts that would require congressional approval and that Musk, Ramaswamy, and Trump could not achieve through executive action alone. Furthermore, they’re cuts that seem politically impossible to push through. For the sake of argument, let’s suppose this is the package.

Doing the math, even this unbelievably ambitious package would amount to a little over $1.1 trillion annually. It’s barely halfway to Musk’s stated goal.

Robert Hubbell, among others, has noted that it isn’t mathematically possible (not to mention politically feasible) to achieve $2 trillion in cuts. A one trillion dollar cut would require “massive cuts to Medicare, Medicaid, unemployment insurance, and subsidies for the Affordable Health Care premiums.” The majority of people hurt by those cuts would be the MAGA folks in Trump’s base, and they’d take effect right before the midterms.

What about Musk’s proposal to save money by firing thousands of federal workers? Again, he displays his ignorance. The federal workforce has remained essentially flat for decades; increases in the number of government workers have occured at the state and local level.

As Hubbell writes, 

The US economy is the largest in the world—by a large margin. Although Musk and Ramaswamy may not like it, the size of the US economy is due in part to the federal government, which creates stable marketplaces and economic conditions for growth.

If you demolish the federal regulatory framework by firing millions of federal employees, we devolve into a kleptocracy—like Russia, which has an economy smaller than that of Brazil. Indeed, Russia’s current GDP is smaller than that of the US before WWII. See World Bank Ranking of GDP 2023….

The myth that the US has a bloated federal bureaucracy is demonstrably false when compared to other developed economies. If Musk and Ramaswamy recommend cutting the US federal workforce by a million jobs, we will have a federal regulatory environment on the same scale as Haiti and El Salvador. That state of affairs might benefit robber barons and tech bros, but it won’t help working-class Americans.

Here’s the takeaway: We will hear an incredible amount of insufferable mansplaining and chest-thumping from Musk and Ramaswamy. But they will soon face the reality that government spending helps the American people (which is the point of having a government) and creates the conditions for a prosperous economy.

Musk and his ilk are just prominent examples of the uninformed population that thinks running a government is no different than running a business. As I explained yesterday, that belief rests on a profound misconception of what government is, and what it is for.

It isn’t just Musk and Ramaswamy. Trump’s entire cabinet is a collection of dunces and conspiracy theorists–from Soviet apologist Tulsi Gabbard to RFK, Jr. and his brain worm. His pick for Treasury Secretary is evidently pro-tariff, but as the New York Times has noted, will have a very uphill battle selling tariffs to a business community that actually understands how they work.

Some of these Trump-world clowns probably believe the earth is flat…..

Comments

I Repeat Myself

A reader recently asked me to repeat a previous column explaining why calls to run government like a business misunderstand the nature of both. I found it–it was from late 2016–and I agree that in the era of Musk and his “government efficiency department,” it’s once-again timely. It was called “The Business of Government.”

______________

Americans like to believe that government should be run like a business. That belief–pernicious and naive– helped elect Donald Trump, and its persistence is evidence (as if any additional evidence is needed) of the public’s profound lack of civic literacy.

Should government be run in a businesslike fashion? Of course. Is managing a government agency “just like” managing a business? Not at all.

A former colleague recently shared an article addressing the differences between business and government. Addressing the myth that anyone who can run a successful business can manage government, the author noted

This is not a 21st-century — or even a 20th-century — phenomenon. In a classic 1887 article, Woodrow Wilson, then a professor at Princeton University, maintained that there was a “science of administration” — arguing, in effect, that there were principles of management that transcended the context in which they were applied. “The field of administration is a field of business,” wrote Wilson. “It is removed from the hurry and strife of politics.”

Later observers and scholars of public administration thoroughly discredited this notion. The pithiest statement on the topic came from Wallace Sayre of Columbia University, who argued in 1958 that “public and private management [were] fundamentally alike in all unimportant respects.” In 1979, Graham Allison, then dean of the Kennedy School of Government at Harvard, used Sayre’s comment as a launching point from which to examine similarities and differences. He noted that both private firms and governments must set objectives, develop plans to achieve those objectives, hire people and direct them toward the achievement of objectives, and manage external environments. But he observed that the way in which these things occur is often fundamentally different from one sector to another.

The article lists some of the important ways in which private enterprises differ from public ones.

Government is about this thing called the “public interest.” There is no such animal in the private sector. Private firms care about their stakeholders and customers; they do not generally care about people who do not invest in their businesses or buy things from them. Thus, accountability is by necessity much broader in government; it is much more difficult to ignore particular groups or people.

Private-sector performance is measured by profitability, while performance measurement in government focuses on the achievement of outcomes.

Compromise is fundamental to success in the public sector. No one owns a controlling share of the government…. The notion of a separation of powers can be anathema to effective private management. It is central to the design of government, at least in the United States.

Government must constantly confront competing values. The most efficient solution may disadvantage certain groups or trample on individual or constitutional rights. In the private sector, efficiency is value number one; in government, it is just one of many values.

Government has a shorter time horizon. In government, the long term may describe the period between now and the next election. Thus there is a strong incentive to show relatively immediate impact.

Government actions take place in public, with much scrutiny from the press and the public. There is no equivalent of C-SPAN showing how decisions are made in the corporate boardroom. Corporate leaders do not find it necessary to explain their every decision to reporters or even to employees.

When corporate executives are elected to run cities or states, they often expect to operate as they did in their companies, where they made the decisions and others obediently carried them out. But legislative bodies–even those dominated by the political party of the chief executive–are not “minions.” They too are elected officials, and they bristle (rightly) when a mayor or governor or president presumes to issue orders. Successful relations between the legislative and executive branch require negotiation, diplomacy and compromise–and those aren’t management skills generally found among corporate CEOs.

Trump and most of his cabinet nominees lack any government experience. Most also lack any education relevant to the missions or operations of the agencies they have been tapped to lead. They don’t know what they don’t know.

And it has become quite obvious that the concept of “the public interest” will be new to all of them….

____________________-

As we prepare for Trump II, nothing in those last two paragraphs has changed…..

Comments