How Stimulating…

When the Great Recession hit, liberals and conservatives disagreed on the appropriate role of government. (“Yes,” I can hear you saying, “and the sun rose in the east…”). One of the bones of contention was the stimulus. While virtually all economists supported a stimulus, there were lots of arguments about its proper size, with Nobel Laureates like Paul Krugman and Joseph Stiglitz pressing for a larger amount than the Republicans in Congress would authorize.

As we have begun the slow and decidedly unsteady climb out of the economic abyss, there have been even more vociferous arguments about the stimulus’ effect. Economists of all ideological persuasions agree that things would have been much worse without it, but conservatives have continued to pooh-pooh its importance to the economic recovery.

If the stimulus’ effect really was less robust than predicted, I now have one theory about why.

Bear with me.

Yesterday’s post was about the substantial “reversion” of money from the Department of Children’s Services at a time when the agency was underfunded, understaffed and ultimately unable to save the lives of 26 abused children.  Reversions are budgeted but unspent amounts that an agency sends back to the state’s general fund. A friend who works on policy issues for a major nonprofit shared the full list of reversions for fiscal year 2011-12. The total was a staggering $670,931,548.98.

Some of the amounts unspent seemed reasonable–after all, budget figures are “guestimates.” Others were eyebrow-raising: juvenile justice and violent crime administration returned half a million. The Department of Health and its various programs returned six and a half million dollars that weren’t spent making Hoosiers healthier.

FSSA–the agency charged with responsibility for our most vulnerable populations–returned a whopping $47,643,955 to the general fund. The Department of Environmental Management was close behind, at $38,860,038. (What’s a little environmental degradation among friends??) After those two, Education’s reversion looked positively skimpy at $7, 302,510.

What do these reversions have to do with the stimulus, you ask?

According to friends with knowledge of the arcana of state fiscal matters, the Administration used portions of its stimulus funds to replace state monies budgeted for service delivery. This was illegal, but people I trust, knowledgable people with no reason to lie, assure me it happened. The agencies then “reverted” the replaced monies back to the state, allowing the Governor to brag about his budgetary prowess and return that all-important $100 each to Indiana taxpayers.

The reason such shenanigans are illegal should be obvious–if stimulus funds are used to replace dollars that are going to be spent anyway, they aren’t going to “stimulate” anything. Given the complexity and lack of transparency of state budgetary processes, my informants say, the likelihood of being caught was remote. The political reward was worth the risk.

Caveat here: I am not a budget wonk–I am admittedly incapable of the sort of analysis needed to confirm these charges. It is certainly possible my sources are wrong.

If they are wrong, however, we are left with an explanation that is even worse.

Either the administration misused stimulus funds and reduced their effectiveness, delaying the recovery and keeping many Hoosiers unemployed, or it deliberately refused to spend money that had been budgeted for education, health and the environment, piling up surpluses while failing to meet the needs of children and our most vulnerable citizens.

No matter which explanation is right, what we are left with is very, very wrong.

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Use the Damn Money to Do Your Job

Not-my-man Mitch has announced that the state has a 2+ billion dollar surplus, and that he plans to return 100. to each taxpayer.

Let me see if I have this right: Indiana has shitty transportation, neglected parks, and substandard schools. We have a Department of Childrens Services that is so understaffed that children are literally dying. Services have suffered while public servants have been furloughed and fired. But rather than apply the surplus to any of these purposes, Daniels proposes to send each of us taxpayers a refund sufficient to buy a nice dinner.

Whoopee.

John Gregg and Vi Simpson reacted strongly–and appropriately– to the Governor’s announcement, pointing out that a significant part of the “surplus” Daniels is bragging about includes money that should have been spent by DCS on programs to protect children.

Between 2007 and 2011, DCS returned more than 234 million dollars to the state’s general fund. During that same time period, the Indianapolis Star found at least 25 Hoosier children had died even though DCS had been notified of abuse or other severe problems in their families. Gregg told of one 12-year-old boy who was beaten to death on the very same day that DCS closed its investigations into allegations that the boy was the victim of neglect and abuse. He also noted that the Department has stopped its previous practice of providing mental health services to families with children who pose a threat to themselves or others.

For years, child advocacy organizations have echoed the Star’s conclusion that the agency has too few caseworkers and is underfunded, but miraculously, it had $234 million dollars “left over” to return to the state’s general fund.

Guess what, Governor Daniels? I don’t want a refund. I want to live in a state with a reasonable quality of life. I want to live in a state with a decent educational system. And I definitely want to live in a state that takes its obligation to protect defenseless children seriously.

I can buy my own damn dinner.

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It’s a Penalty! It’s a Tax! It’s Unprecedented!

I have been bemused–and occasionally amused–by all the posturing over the provision in the Affordable Care Act requiring people to purchase health insurance.

How dare they!!

If you listen to the right-wing blogs and talking heads, you’ll come away believing that such a mandate is unprecedented. The government has never required us to do something, or penalized us for failing to do something.It’s unAmerican to penalize inaction. That evil Obama  is introducing an entirely foreign element into American law. (The fact that Romney did exactly the same thing in Massachusetts is obviously different….)

Of course, this line of attack is entirely fanciful.

As a legal scholar recently noted, the very same week it upheld the ACA, the Supreme Court affirmed a law requiring sex offenders to register their whereabouts, employment and appearance with local authorities. If they fail to do so, the law in question imposes a penalty of ten years in prison–a bit more draconian than the ACA’s fine. The Court made it clear that this mandatory registration was not punishment for a crime –the individuals subject to the requirement have already paid their debt to society for those transgressions (a contrary construction would run afoul of the Ex Post Facto prohibition).

Courts upholding this particular type of mandate–and there have been several–have explicitly said that the only conduct being punished was the “inactivity” of failing to register.

There are many other examples–so many that a Professor at John Marshall Law School has actually written an essay on “The Incredible Ordinariness of Federal Penalties for Inactivity.”

As I have repeatedly noted, there is nothing wrong with faulting provisions of this particular approach to healthcare reform. What I find absolutely astonishing, however, are the  logical contortions opponents will go through in order to attack the legitimacy of any attempt to  extend access to healthcare. I have been absolutely stunned by opponents’ self-righteous denunciations of such efforts, and by their evident willingness to simply let the uninsured suffer and die.

A recent editorial in the Journal of the American Medical Association is worth quoting.

That editorial began “Physicians and hospitals have a moral duty to provide acute care and emergency care to those who need it.” Proceeding from that expressly moral premise, the editorial concluded that individuals “have an enforceable moral duty to buy sufficient health insurance to cover the costs of acute and emergency care…requiring individuals to buy health insurance is consistent with respect for  individual liberty because individuals have a duty to mitigate the burdens they impose on others.”

We don’t talk much about the morality of policy. We should.

Yesterday, every single House Republican voted to take away health coverage for young adults staying on their family plans, raise prescription drug prices for seniors, end protections for those with pre-existing conditions, reinstate lifetime insurance caps, scrap tax breaks for small businesses, raise the deficit, and take benefits away from 30 million Americans. Pundits reporting the vote generally noted that it was one of a series of such votes, and that it stood no chance of ultimate passage. They spent a lot of time analyzing the politics of the GOPs message and speculating on its electoral effect.

To the best of my knowledge, none of them pointed out how utterly immoral it was.

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Taxing “Small Business”

This is really getting tiresome.

Obama and the GOP continue their standoff over the Bush tax cuts. Obama is willing to extend those cuts for taxpayers making less than 250,000 a year, but wants to let the cuts expire for those making more–those in the top 2%. The GOP has fought tooth and nail to protect that 2% from the horror of a return to Clinton-era marginal rates of 39%, and (lacking even a superficially convincing argument for that position) they have deployed a number of rhetorical weapons intended to justify their stance.

First it was “job creators.” Raise the marginal rate to its previous low point and the wealthy won’t create new jobs! Since we have had the historically low Bush rates for nearly a decade, and the jobs have not been forthcoming, voters have begun to see through that one. (Recent studies have confirmed that job creation bears virtually no relationship to tax rates; we have had robust job growth in periods of relatively high rates.)

The curent faux concern is for “small business.” Since many small enterprises choose to be taxed as individuals, Romney and the GOP argue that a higher rate on those making over 250,000 will “target small business.”

Obviously, the word “small” means something different to Romney than it does to most of us. The nonpartisan Joint Committee on Taxation found that in 2013, the higher rate would affect just 3.5% of small business–mainly doctors and lawyers. As Harry Ried noted during a recent debate, the GOP’s idea of “small business” evidently includes “fabulously rich so-called small business owners like Kim Kardashian and Paris Hilton.”

The Republicans’ insistence on protecting its wealthy donors from even a modest tax hike sure makes their rhetoric about the deficit ring hollow.

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Something Different, Continued

Yesterday’s post on the pros and cons of labeling foods with genetically-altered ingredients led to a back-and-forth discussion that exemplifies the real-world problems of policymaking, where matters are seldom black and white.

The discussion illustrated a contemporary reality: given the increasing complexity of the world we inhabit, in many policy domains, few people will fully understand the issues involved. Think climate change, poverty, education, healthcare…and food labeling.

Miriam’s comment raised many of the potential pitfalls involved in labeling; as she noted, in an effort to give people relevant information, we may instead end up misinforming them. In particular, her question “how far do we drill down?” is key. How much information is enough, and how much is too much? How are we defining our terms? What do we include/exclude?

Mort underscores the economic motives of the stakeholders in this particular debate, reminding us of the increasing role that money and influence play in our policymaking, often to the detriment of accuracy and the public good. (The climate change debate is an example.)

What do consumers have a right to know about the products they purchase? What do they need to know?

On the one hand, the vendor/manufacturers’ “trust us” is not only insufficient, it is contrary to the premises of our regulatory structure. On the other hand, both Miriam and Mort are undeniably correct  when they point out that most consumers do not have the background and scientific training needed to evaluate technical information accurately and will either over-react to it or ignore it.

Most of us shake our heads or laugh when the stewardess demonstrates how to buckle a seat belt, or when we read the label on a ladder that warns us against falling off.

We don’t need a nanny state that overprotects us. We do need relevant information that allows us to make informed choices. Deciding where to draw that line–deciding what information should be conveyed–is the hard part.

Yesterday’s exchange reminded me of the old story of the village rabbi who is approached by two men to settle an argument. The first tells his side, and the Rabbi says, “you’re right.” The second tells his side, and once again the Rabbi says, “You’re right.” An onlooker protests: they can’t both be right! To which the Rabbi says, “You, too, are right!”

Policy is complicated. Simple answers and binary choices don’t make for good policy.

Maybe that’s one reason we don’t have much good policy these days.

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