Welfare Dependent

Since the Romney campaign is making welfare recipients a central focus of their advertising barrage, maybe it’s time to take a closer look at the identity of those who are–pardon the vulgarity–“sucking at the public tit.”

Common Dreams has published a list of entitlements, and who gets what. According to their analysis, social welfare programs cost taxpayers some 59 billion dollars a year. Corporate welfare, on the other hand, costs us much more.

What do they count as corporate welfare? Well, fossil fuel industries get more than $70 billion dollars annually in subsidies–most of which goes to the oil and gas sector. Another $58 billion a year is lost to the Treasury by reason of tax “deferrals” for off-shore profits. Taxing capital gains at 15% rather than at the rates imposed on wage and salary income costs another $59 billion, while hedge fund managers are able to avoid some $2.1 billion in taxes each year due to something called “carried interest.” (I have absolutely no idea what that is, but then, I’ve never been a hedge fund manager, never represented one when I was a practicing lawyer, and never even played one on TV.)

And those are just a few of the garden-variety, built-into-the-system subsidies. The bank bailout cost us $700 billion. And while most of that was apparently paid back–and we really did have to avert a global meltdown–the terms of those “loans” could have been less favorable to the banksters and more protective of the rest of us.

When I read these numbers, I was dubious about their accuracy. Everyone seems to be playing fast and loose with the facts these days, and Common Dreams is a liberal-leaning organization. So I did some research, and  found verification in an unlikely place–Forbes Magazine. Here’s a quote from a Forbes article on the deficit:

Among the most outrageous expenditures is corporate welfare. Desperate businesses now overrun Washington, begging for alms. Believing that profits should be theirs while losses should be everyone else’s, corporations have convinced policymakers to underwrite virtually every industry: agriculture, education, energy, housing, manufacturing, medicine, transportation, and much more.

My Cato Institute colleague Tad DeHaven has published a new study, “Corporate Welfare in the Federal Budget,” on business subsidies, which he figures to cost about $100 billion a year. Slashing corporate welfare obviously won’t balance the budget—which is why middle class and defense welfare also have to go on the chopping block. However, cutting business subsidies would be a good start to balancing the budget. Moreover, going after corporate welfare is essential to create a budget package that the public will see as fair.

Not every subsidy is bad policy, of course. There are sound reasons for encouraging some new enterprises, or saving endangered ones. (I’d argue that rescuing the American automobile industry averted catastrophic economic losses.) But those reasons need to be publicly vetted, debated and justified. Right now, we have ample reason to believe that most corporate welfare is the result of cozy dealings between  campaign donors, lobbyists and legislators. There’s a reason it’s called “crony capitalism.”

Before we nod approvingly at the self-righteous candidates who are beating up on those “shiftless” poor folks, maybe we should take a closer look at the other end of the income spectrum. Maybe we should look at the well-fed and prosperous folks who are so un-self-aware that they don’t even recognize that they are just as dependent on welfare as the people they like to diminish and scorn.

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Paywall Decisions

Last year, after 50+ years as a subscriber, I stopped taking the Indianapolis Star. My reasons were the same as those of the large numbers of other people who have decided to forgo the morning ritual–there is very little “there” there anymore.

The Star and other daily newspapers are in a death spiral, partially due to circumstances beyond their control, and partly due to really poor decisions about how to cope with those circumstances. By now, we can all recite the litany of change: the Internet brought other news sources to our fingertips, mostly for free; Craig’s List cost newspapers a billion dollars a year in classified advertising revenue.  The existing business model simply disappeared.

Meanwhile, big chains like Gannett had gobbled up the dailies, paying inflated prices with borrowed money. Between the competitive changes and the massive debt, bottom lines suffered. So the new owners did what businesspeople do in such situations–they cut employees. Newsrooms have been decimated over the past decade. And the result was–duh!–less news. And with less news came less reason to buy the paper in the first place.

I stopped subscribing when I realized I could read the paper in less than five minutes. I do scan the (very poorly designed and proofed) website from time to time, in case there is actually local news reported. I don’t miss the diet tips, the pictures of someone’s kitchen, or the celebrity “news” and similar items reprinted verbatim from national sources. Such material is widely available. What I keep hoping I’ll find is actual reporting about Indianapolis and Indiana–especially informed reporting about state and local government. There hasn’t been much of that, unfortunately–and we are seeing what happens when a community loses its “watchdog.”

The Star is now instituting a paywall. The question is whether there is enough content left to merit a 12./month charge. At my house, we willingly pay for the New York Times, because the content justifies the charge. We’ve decided to see if the electronic version of the sad remnants of what used to be a real newspaper is worth even twelve bucks a month.

Stay tuned….

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Are We Better Off? You Betcha!

Pundits have begun asking Democrats how they will answer the Gipper question: Are you better off than you were four years ago?

Dean Baker’s response is perfect: Suppose your house is on fire and the firefighters race to the scene. They set up their hoses and start spraying water on the blaze as quickly as possible. After the fire is put out, the news reporter on the scene asks the chief firefighter, “is the house in better shape than when you got here?”

A serious reporter, Baker notes, would ask the fire chief if he had brought a large enough crew, if they had enough hoses, if the water pressure was sufficient. The analogy is obvious: serious reporters would ask whether the stimulus was large enough, whether it was properly designed and implemented, and whether  other measures might have been taken that weren’t.

Baker’s analogy is on point. But even if we persist in asking the question, I think the only honest answer is yes. We are better off–although we certainly aren’t well off. As a Facebook friend noted the other day, you are definitely better-off if you live in Kokomo, or in any other city  where the local economy depends on the continued vitality of the auto industry.

People are also better off if they have retirement accounts;  recent financial reports confirm that these accounts have more than recovered from the huge hit they took in 2008–they’ve not only made up the lost ground, but surpassed previous levels. Job creation has been agonizingly slow, but slow beats hell out of the month-after-month huge losses that characterized 2008. We still have young men and women in harm’s way in Iraq and Afghanistan, but far fewer than were there fighting ill-conceived wars when Obama took office–and those who are still there are coming home.

As Joe Biden likes to say, Osama bin Ladin is dead and the American automobile industry isn’t.

So let’s be honest. We are all better off, in a multitude of ways, now that the administration has stopped the hemorrhaging and begun the slow process of recovery.

But if we are being honest, we also have to admit that better isn’t good. Unemployment remains unacceptably high; the economy is not only growing too slowly, globalization means that it is vulnerable as never before to missteps in Europe and elsewhere. There are thorny questions about what to do about Iran and Syria. The planet is heating more quickly than even the most pessimistic science had projected. And Washington seems incapable of engaging in a rational discussion of these and other pressing national issues.

The pundits ought to be asking both candidates and their campaigns for the specifics. (In the case of the Romney campaign, especially, those specifics have been all but invisible.)

What, exactly, do you propose to do about [fill in the blank]? Don’t give us gauzy, dismissive promises (“I’ll create 12 million jobs; I’ll repeal ‘Obamacare'” “I’ll save Medicare”). Tell us precisely how you propose to get from where we are–which is demonstrably better than where we were, but still not good–to where we need to be. If you are promising to defund Planned Parenthood, tell us where the low-income women who depend upon it for breast screenings will be able to get those services. If you are promising to repeal the Affordable Care Act, tell us which of its provisions, if any, you will spare–and how, in its absence, you will slow the growth in medical costs that have been strangling our economy. If you are promising to protect Israel from Iran, tell us how many young men and women you are willing to put at risk to do that, and why you prefer a military incursion to diplomatic efforts. If you propose to balance the budget by closing loopholes, tell us precisely which “loopholes” you are targeting.

Most important of all, do tell us how your proposals are any different from the decisions that set the house on fire in the first place.

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The Guy in the Chair

The Daily Show’s Jon Stewart is a penetrating observer of today’s politics, and the other night–while delivering a very funny review of Clint Eastwood’s “dialogue” with an empty chair at the Republican convention–he delivered one of those “Aha” moments.

Stewart noted that he’d had trouble getting his head around many of the accusations Republicans leveled at Obama, but that now he understood: there are TWO Barack Obamas, one of whom only Republicans can see!  It’s the invisible guy they keep talking about!

There’s more than a little truth to that, and it is unfortunate for a lot of reasons.

I’m not the only person who has been mystified by charges that a moderate Democrat implementing a healthcare program devised by Republicans is somehow a “socialist,” or that a President who has presided over the slowest growth in government spending since Eisenhower is engaged in ruinous and unrestrained spending. I’ve been stunned by accusations that a man who entered the national consciousness with an “only in America” speech at the 2004 Democratic convention is routinely accused of “hating America.”

Stewart is right, of course, as he usually is: the Barack Obama who is the target of these accusations isn’t the Obama who actually occupies the White House. It’s the Barack Obama of fevered–and let us be honest here, essentially racist–imaginations.

There are two major problems with the nature of these attacks. The obvious one is that the Romney campaign’s willingness to “go there,” to engage in dog whistles and worse, exacerbates an ugly divide that America has tried hard to erase. It is analogous to picking at the scab on a still-unhealed wound. If the strategy wins–if, in the wake of the election, Romney is perceived to have benefitted from it–racial tensions will make it even harder to rebuild a politics of reason.

The other problem with the Republicans’ fixation on an imaginary Obama is that it has foreclosed debate on the actual policies of the actual Obama. This President–like all of his predecessors–has implemented, or failed to implement, a wide variety of policies that deserve to be critically examined. Like most citizens, I agree with some and disagree with others. Elections are intended to provide citizens with discussions of the strengths and weaknesses of policy positions held by the candidates, as well as giving voters a sense of the character of those who are asking for our votes.

That discussion–that reasoned critique of this Administration’s performance and priorities–has been virtually absent from this campaign.   It has been drowned out by hyperbole and outright fabrication.

The campaign against the real Barack Obama has been obscured by the one directed at the invented version sitting in the empty chair.

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Music for World-Class Cities

When I was in City Hall back in the late 1970s, the goal was to make Indianapolis a “world class” city. That wasn’t just the rhetoric used by the Mayor and his administration–it was echoed by the City Committee (now long defunct) and by the Lilly Endowment, which facilitated the goal with generous grants.

The decision to make Indianapolis into an amateur sports capital wasn’t made because city leaders loved sports, although many surely did. It was based on a hard-headed analysis of where we might have a comparative advantage. The goal was city-building, and sports were a means to that end.

That was then, and now is now. There is no longer a City Committee, and the Endowment–while still generous and immensely important to Indianapolis– no longer partners with elected officials to improve Indianapolis as it did then. Our current Mayor is not a visionary (to put it kindly). Making matters worse, Indianapolis has lost many of the corporate headquarters and locally-owned banks from which we used to draw private-sector civic leadership.

Now, we are in danger of seeing the Indianapolis Symphony–a symphony befitting a world-class city, a symphony of which we have been justifiably proud–become a part-time (read “second-class”) enterprise.

The Symphony is facing significant financial problems.  It will obviously be important to determine the cause of those problems–poor portfolio management? Unfavorable labor contract? Other? I certainly haven’t a clue, and few outside the Board and musicians themselves are likely to have even a reasonable hypothesis.

But I do know one thing: in addition to being a beloved part of our city’s cultural scene and a point of pride, the symphony is important to our local economy.

Nationally, nonprofit arts organizations generate $135 billion in economic activity annually, supporting 4.1 million jobs and generating $22.3 billion in government revenue. Investment in the arts supports jobs, generates tax revenues, promotes tourism, and advances our increasingly creativity-based economy. The typical arts attendee spends $24.60 per person, per event, not including the cost of admission, on items such as meals, parking, and babysitters. Attendees who live outside the county in which the arts event takes place spend twice as much as their local counterparts.

A symphony season has far more impact on the local economy than football. Early in my academic career, I worked on a paper with an expert in the economic impact of sports. Such impact as exists is by virtue of intangibles–the value of raising the profile of the city with the team, that sort of thing. There was no direct dollar benefit. Despite that lack of immediate economic impact, we pump large amounts of public money into privately-owned sports teams and venues.

To the best of my knowledge, no public money flows to the symphony and a mere pittance is distributed among other arts organizations in the city. The arts have clearly not been a priority.

I am not suggesting that long-term public funding is the answer to the symphony’s current problems. Obviously, figuring out what happened, correcting missteps as possible, and developing a plan for future sustainability is critical, but that process takes time. If Indianapolis weren’t so starved for revenue, some sort of “bridge” loan or grant to keep the symphony going during that time would make a lot of sense, because keeping something important is easier and less costly than trying to rebuild it once it is gone.

Indianapolis used to understand that world-class cities require constant attention and inspired leadership. These days we don’t seem to have either.

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