Public Policy and Governance – Page 97

Ezra Klein Is Right

Ezra Klein is becoming one of my favorite pundits, thanks to columns in the New York Times like this one from late April, in which (in an aside) he pointed out that America “does have a multiparty political system, it’s just tucked inside the Senate Democratic caucus.”

The column–written before reports of the hardening of Senator Manchin’s stubborn refusal to consider any measure, no matter how good for the country, unless it is sufficiently “bipartisan”–considered the prospects of such bipartisanship in today’s degraded political environment.

As he notes,

The yearning for bipartisanship shapes the Senate in profound ways. For instance, it helps the filibuster survive. The filibuster is believed — wrongly, in my view — to promote bipartisanship, and so it maintains a symbolic appeal for those who wish for a more bipartisan Senate. “There is no circumstance in which I will vote to eliminate or weaken the filibuster,” Senator Joe Manchin wrote in The Washington Post. “The time has come to end these political games, and to usher a new era of bipartisanship.”

In the absence of the filibuster, the Senate might pass more legislation, but it would do so in a more partisan way, and some, like Manchin, would see that as a failure no matter the content of the bills. “We’d all prefer bipartisanship, but for some of my colleagues, it’s a very high value,” Chuck Schumer, the Senate majority leader, told me.

Klein offers a contrary view: he argues that bipartisan governance isn’t innately better than partisan governance. In fact, he asserts, it’s often worse.

Although it is true that neither party has all the answers, bipartisan support does not usually generate legislation that features–or even includes– the best ideas of Republicans and the best ideas of Democrats. Klein points out the obvious barriers to such a happy result.

A bipartisan bill is simply a bill that members of both parties support. That means they can support it ideologically and they can support it politically. It’s that latter condition that’s toughest to fulfill: The minority party doesn’t want to give the majority big, bipartisan accomplishments, because the minority party wants the majority to lose the next election….

The set of ideas that both parties can agree on is far smaller and blander than the range of ideas that one party or the other likes. To insist on bipartisanship as a condition of passage is to believe that it’s better for Amercan politics to choose its solutions from the kids’ menu.

Klein reminds readers that virtually all Republican elected officials have signed a pledge to oppose any and all tax increases. A bipartisan approach would thus take taxes off the table. But even when tax policies aren’t under consideration, bills with bipartisan support are generally bills that have seen their “edges” sanded off.

Compromise bills can be wise legislation, but they often result in policy too modest and mushy to solve problems. We would never want industries to release only products that all the major competitors can agree on…

Klein concedes that things haven’t always been this polarized, and bipartisanship hasn’t always produced toothless legislation. But the current search for bipartisanship–at least, as conceived by Manchin and Sinema–is really summarized by a couple of memes circulating on Facebook. One has Lincoln saying he’d like to emancipate the slaves, but only after getting buy-in from the slaveholders; the other shows an 18th-Century man considering American independence, but only if the English agree.

Mitch McConnell has made it abundantly clear that the only “bipartisanship” Republicans will recognize is surrender by the Democrats to their demands.

Manchin and his ilk misunderstand a basic premise of American politics. As Klein explains,

This is what Manchin gets wrong: A world of partisan governance is a world in which Republicans and Democrats both get to pass their best ideas into law, and the public judges them on the results. That is far better than what we have now, where neither party can routinely pass its best ideas into law, and the public is left frustrated that so much political tumult changes so little.

It will surprise no one to hear that I think Democrats should get rid of the filibuster. But it’s not because I believe Democrats necessarily have the right answers for what ails America. It’s because I believe the right answers are likelier to be found if one party, and then the other, can try its hand at solving America’s problems. Partisan governance gives both parties true input over how America is governed; they just have to win elections. Bipartisan governance, at least with parties this polarized, does the opposite: It deprives both sides of the ability to govern and elections of their consequences.

Exactly.

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How Do You Spell Despicable?

One of the most telling accusations against self-proclaimed “pro life” activists is that they aren’t really pro life, they are pro birth. If they were really concerned about protecting life, they would support feeding hungry children, and oppose everything from dangerous pollution to gun violence to the death penalty. Instead, their concerns magically vanish once the fetus emerges from the womb.

A report from the Guardian underscores that observation.

At least 10 US states have siphoned millions of dollars from federal block grants, meant to provide aid to their neediest families, to pay for the operations of ideological anti-abortion clinics.

These overwhelmingly Republican-led states used money from the federal Temporary Assistance for Needy Families program (Tanf), better known as welfare or direct cash aid, to fund the activities of anti-abortion clinics associated with the evangelical right. The clinics work to dissuade women from obtaining abortions.

In all cases, the states used these funds even as Covid-19 caused the worst economic upheaval in nearly a century, left one in four families without enough to eat, and resulted in mass layoffs that had a disproportionate effect on low-income and racial minority Americans.

Among the states that have diverted dollars from feeding hungry children in order to line “pro life” pockets are Indiana, Louisiana, Michigan, Missouri, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania and Texas.

Despicable is too nice a word.

These 10 states funneled the money through “Alternatives to Abortion” programs, part of state budgets established by conservative legislatures and often run through state health departments. They not only send millions in federal welfare funds, but also state taxpayer dollars to such centers.

The article details other measures imposed by the states that effectively prevent TANF and other social welfare funds from reaching their intended beneficiaries. A number of those measures are demonstrably racist, but they all begin with the assumption that poverty is evidence of moral failure; the resulting legislation is thus punitive, rather than ameliorative.

Back in 2017, I reported on a survey that found religion to be a significant predictor of how Americans perceive poverty. Christians, especially white evangelical Christians, are much more likely than non-Christians to view poverty as the result of individual moral deficit.

The article cites Missouri as an example of the results of that view:

“We’ve created a new class of Missourians,” Glenn Koenen, a hunger adviser with the left-leaning group Empower Missouri, said at the time the reforms were passed. “We now have legislated that some of our neighbors are too poor to get help from anti-poverty programs.”

Between 1 January 2016, when the reform went into effect, and April 2021, more than 71% of beneficiaries dropped off Missouri’s program. That included 28,643 children and 16,942 families.

Missouri then spent funds not paid to families on other programs, among them the Alternatives to Abortion program. Since 2017, it has sent $26m to anti-abortion clinics, according to state budgets. The average monthly benefit for a Missouri family is $256.

Evidently, the Missouri legislature was perfectly okay with punishing 28,643 children for their parents’ perceived moral deficiencies.

The article proceeds to document the medically-inaccurate “facts” and outright lies routinely told by these “Crisis pregnancy” centers to the women who visit them, and it reports on the religious indoctrination to which they must submit in order to get the minimal help–diapers and milk, for instance–that the centers offer. It also points out that nationally there are far more such centers than there are abortion providers– more than 2,500 ideologically focused, anti-abortion clinics, compared with just 800 abortion providers.

There are a lot of adjectives we might use to describe a refusal to feed and clothe living children in order to force women to give birth. Pro-life is definitely not one of them.

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Taxes And Growth

One of the most reliable laments I post to this blog is the absolute refusal of many policymakers to base their decisions on evidence. We live in a time when experience and reality are no match for the preferred ideologies of our lawmakers. (In all fairness, that phenomenon is probably not new, but it has certainly become more obvious.)

Marketwatch is a business publication that focused upon that disconnect in an article from early May. The title was”Texas, California and Indiana offer surprising lessons about low taxes and economic growth” and the subtitle–which trumpeted the basic conclusion–was “Indiana slashed taxes. Yet wages have fallen even further behind the national average.”

If the subtitle was insufficiently clear, the introductory paragraphs left no doubt:

Among the most common claims of state economic development officials is that higher taxes drive down growth and cause businesses and people to relocate to low-tax states. If you listen to cable news, you are likely to hear dire stories of people fleeing high-tax states in droves.

Yet the high-tax parts of both California and Texas are growing faster than the low-tax parts of both states. And growth in Indiana, which has cut corporate and personal income taxes in the past decade as well as put a cap on property taxes, is dismal.

I tend to foam at the mouth whenever I encounter a reference to Indiana’s property tax cap–not only is the cap bad policy, not only does it disproportionately strangle urban areas in our rural-privileged state, but in an unconscionable move to elevate political game playing over responsible governance, former Governor Daniels constitutionalized the cap–ensuring that, even if subsequent evidence of its counter-productivity emerged, the measure would be virtually impossible to reverse.

The article wasn’t aimed at the multiple flaws of the tax cap, however, so I will leave my extended diatribe for another day.

Why is it that prescriptions for lower taxes, like other seemingly obvious economic “cause and effect” formulations, turns out to be contradicted by real-world evidence?

Modern economic research consistently reports that lower taxes tend to promote growth and migration, but only when all other factors are held constant.

Here’s the rub: It is straightforward to create a model holding all these other factors constant, but in the real world, they never are constant. So the role of taxes has to be weighed against the value of what tax dollars provide.

It took me a long time to recognize the importance of that insight. I used to think it was obvious that a higher minimum wage would depress job creation–until I realized that such a result required all things being equal–and all things are rarely, if ever, equal. The “obvious” result ignored–among other things–the effects of low-wage workers’ increased buying power. We now have real-world evidence from jurisdictions that raised the minimum wage that the “obvious” result isn’t necessarily the actual result.

In the case of economic growth, the article looks at the rivalry between Texas and California, and finds (surprise!) that the popular rhetoric doesn’t reflect reality.

Stories about people “fleeing” California for Texas are common, and Elon Musk’s high-profile announcement that he was moving to Texas fuels the anecdote-driven news cycle. Taxes per capita are higher in California than in Texas, giving weight to the story that low taxes are driving this migration.

In fact, in the last year for which we have data, two out of every 1,000 Californians departed for Texas, while 1.2 of every 1,000 Texans moved to California. This is hardly a notable exodus, and it hardly explains why a rational Texan would head to California. Something else has to be going on.

Furthermore, as the article notes, people are more likely to move from city to city within a state than they are to move out of state, and tax rates vary far more between local governments than between states.

In California, the total state and local taxes in the highest-taxed place were more than three times that of the low-tax county. In Texas, the difference is three times as large as in California.

Further contradicting the preferred story, it turns out that population growth in both California and in Texas is concentrated in the higher-tax places. That’s because–as city planners have long insisted–what matters most isn’t the tax rate (although it certainly factors in) but the quality of life. It’s value for the dollar.

Taxes represent one price for living in a particular city or town, but value — not price — is the key decision variable.

For the average family, value comes from tangible amenities like safe, livable neighborhoods, high-quality schools and great parks and trails. They go far beyond natural amenities such as beaches and mountains.

That’s a lesson I doubt Indiana’s gerrymandered legislators will ever learn.

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Corrupting The Process

In New York, a recent release by the Attorney General’s office reported the results of an investigation into efforts by “Big Telecom” to defeat Net Neutrality. It seems that in 2017, major U.S. telecom companies pumped “millions of dollars into a secret campaign” to flood the FCC with millions of fake comments supporting the agency’s repeal of net neutrality protections.

The product of a multi-year investigation, the new report (pdf) details an industry-backed effort to create the appearance of “widespread grassroots support” for then-FCC chair Ajit Pai’s broadly unpopular repeal of net neutrality rules.

I have written before about Ajit Pai who was put in charge of the FCC by the Trump Administration in furtherance of that administration’s intent to make online life easier–and more lucrative– for monied interests. Apparently, simply installing a tool at the FCC wasn’t seen as sufficient; so the industry’s “big guys” decided to give Pai’s efforts a boost.

“In 2017, the nation’s largest broadband companies funded a secret campaign to generate millions of comments to the FCC. Many of these comments provided ‘cover’ for the FCC’s repeal of net neutrality rules,” the investigation found. “To help generate these comments, the broadband industry engaged commercial lead generators that used prizes—like gift cards and sweepstakes entries—to lure consumers to their websites and join the campaign.”

“However, nearly every lead generator that was hired to enroll consumers in the campaign, instead, simply fabricated consumers’ responses,” the report states, noting that 8.5 million fake comments in favor of net neutrality repeal were generated by the effort.

New York AG Letitia James issued a statement that identified the danger of such campaigns: the fabrication of responses in order to influence public policies drowns out actual responses from the American people, distorting public opinion and defeating passage of laws and regulations that should be responsive to that opinion.

“Today, we are taking action to root out this fraud and the impersonation that has been corrupting the process for far too long,” James continued. “From net neutrality rules to laws affecting criminal justice reform, healthcare, and more, these fake comments have simply been generated to influence too many government policies, which is why we are cracking down on this illegal and deceptive behavior.”

James also announced that the AG’s office had negotiated settlements with three of the companies that had generated millions of false comments on behalf of Big Telecom—Fluent, Inc, Opt-Intelligence, Inc., and React2Media, Inc. Those companies will pay more than $4.4 million in penalties and disgorgement; significantly, they will also be required to implement “comprehensive reforms in future advocacy campaigns.”

Supporters of Net Neutrality had suspected something of this sort, and this investigation confirmed those suspicions. Unfortunately, it confirmed something even more troubling–the extent to which presumably reputable American business interests engage in (or at the very least, wink at) corrupt behaviors.

I still remember how shocked I was when my middle son, who was then traveling through India, told me about the frustration of an Indian friend. The friend ran an orphanage and wanted to increase its capacity to care for abandoned children. In order to get a permit for the expansion, he was expected to pay a fairly substantial bribe to the official responsible for issuing such permits. My son said that such expectations were widespread, not particularly secretive, and just as applicable to “do-gooders” as to more profitable enterprises.

We Americans used to pride ourselves on the absence of such expectations in our dealings with government officials, petty and not-so petty.

When societies become desensitized to corrupt behavior, when “winning” and/or profiting are the only metrics that matter, it’s a short distance to the normalization of outright bribery and other highly unethical practices.

The corruption that attended the fight over Net Neutrality is so troubling because it may well be a “canary in the coal mine”– a very worrisome omen.

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The End Of Free Markets?

Last month, Time Magazine published an article asserting that the “free market” was effectively dead. The author then went on to speculate over what might replace.it. (For the record, I’m pretty skeptical of definitive pronouncements of this sort–as I used to tell my students, the real world is considerably more complicated than that.)

Time’s conclusion was evidently prompted by a recent meeting in the White House between President Biden and the CEOs of some of America’s largest companies, attended by the head of the U.S. Chamber of Commerce (whose “presence was enough to rock the political landscape” according to the article.)

“Washington’s most powerful trade group is having a political identity crisis,” wrote Politico. Two weeks later, a group of 150 CEOs, unaffiliated with the Chamber, followed suit, throwing their weight behind Biden’s COVID relief bill, which sailed through Congress. They have been similarly supportive of the additional $2 trillion the administration has now proposed for infrastructure spending – but they unsurprisingly don’t want corporate tax rates to be the means for paying for it.

The article went on to say that corporate America’s support for public investment is not a new or temporary phenomenon–rather, it’s evidence of the “most profound realignment in American political economy in nearly forty years,” and it cites the rise of ethno-nationalism on the right and democratic socialism on the left as evidence of a widespread disillusionment with conventional economic wisdom.

For the record, the “conventional economic wisdom” being undermined has only been conventional for some 40 years.

The article traces the evolution of free market absolutism, and acknowledges that prior to the 1970s, most economists had advocated fairly robust government action—countercyclical fiscal spending, management of the currency, tactical protectionism—to create long-term prosperity. The emergence and influence of what the article calls “free market apostles” changed that, and led to what we now call Reaganomics–the notion that virtually any government regulation of the market is unhelpful, if not illegitimate. (This required some cherrypicking of Adam Smith, but hey…)

Interestingly, in what may be the most insightful portion of the article, it connected this shift to an anti-government “free market” philosophy to racial politics. The need for government to take a “hands off” approach coincided with federal efforts to ameliorate some of the most egregious economic effects of state-sanctioned racism.

In any event, while the article argues that public and expert opinion have swung against what it labels “free-market orthodoxy,” what is actually happening–at least among people who are concerned with such things– is a return to a much more nuanced understanding of market economics.

Virtually all rich countries today have mixed economies, in which certain services are “socialized”–i.e., provided communally by government–and others are left to a market subject to reasonable regulation. Americans love “either/or” politics–it’s either capitalism or socialism, freedom or tyranny. That makes for great sloganeering, but bad politics.

The issue isn’t free markets versus socialism. The actual issues confronting policymakers are much more nuanced, and fall into two broad categories: 1) which services ought to be provided by government, and which should be left to the market? and 2) what regulations are needed to ensure the proper operation of that market and which are counterproductive? Just how “free” should markets be?

People of good will will have different answers to those questions, and it would be nice if the ensuing arguments were evidence based–although I’m not holding my breath.

I do know that those evidence-based conversations are not encouraged by headlines suggesting that a new emphasis on anti-trust enforcement or other regulatory activity is tantamount to the end of the free market.

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