Archive for April, 2012

Tell the Truth

Sunday, April 29th, 2012

Why is it so difficult for our leaders to tell the truth?

Politics these days seems to be an exercise of saying as little as possible about specifics so that you don’t give your opponent, who is also not saying anything specific, something they can use to criticize you.  Since both campaigns are playing the same game, what we end up with is “fake” statements of truth followed by claims that the other guy really can’t be trusted.

Here’s an example from Romney:

“Our next president is going to face difficult choices. Among these will be the future of Social Security and Medicare. In their current form, these programs will go bankrupt. I know that, you know that, and even our friends in the other party know that. The difference is that I will be honest about strengthening and preserving them, and they won’t.”

He states the obvious regarding difficult choices and specifically difficult choices in entitlement programs, but he doesn’t say what he is going to do about it.  He only says that you can’t trust the other guys to do anything about it.

Here’s what Obama has said about Social Security

“it faces real long-term challenges in a country that is growing older… both parties should work together now to strengthen Social Security for future generations. But we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities without slashing benefits for future generations”

It does seem as though he acknowledges that there is a problem, but he doesn’t say how he is going to solve the problem either.  He only says that it’s not going to include slashing benefits or putting any of the current people who depend on the system at risk.

Fortunately when it comes to financial plans,we have two budget proposals to compare.  The first is the Ryan Budget.  The other is the Obama budget.  Romney has yet to release a detailed budget, but we can look at some of the things he has said.

First up, the Ryan budget.

The whole purpose of the Ryan budget is to reduce the deficit.

The problem is that it fails at this most basic goal.  According to the Tax Policy Center, the tax cuts that are included in the Ryan budget actually add $418B to the budget deficit every year starting in 2015.

Ryan responds that he intends to close the gap between spending and revenue by eliminating some tax deductions, but he does not specify which ones he is going to reduce or eliminate.

Sound familiar?

This is more political standard procedure.  Those who share Ryan’s view that the government wastes money, are quick to agree with Ryan that there MUST be at least $418B in tax deductions that can be cut to make Ryan’s numbers balance.  In order to actually reduce the deficit, he’s going to have to find more than that.

When you actually look at the list of existing tax deductions, however, the stark reality comes into view.

The Congressional Research Service took a look at the 20 tax credits, exclusions and deductions that have the biggest impact on tax revenue. Together, they account for 90 percent of the revenue lost through tax deductions in the code.

Here they are:

Let’s just go through these from the top.

Is Ryan going to eliminate the deduction businesses who offer health insurance to their employees are able to take for their cost of providing that insurance?  Not likely when Ryan at the same time supports repeal of the healthcare reform bill because in his opinion it weakens the current employer-based system.

How about the next one?  Well this one also benefits employers who provide retirement benefits.  Unlikely that Ryan, who is attempting to privatize social security and Medicare is going to touch this one either.

The next one is the single most popular deduction in the tax code, mortgage interest.  With the home construction industry in the tank, he won’t even mention this one.

How about taxing the benefits that elderly receive through Medicare?  He is already treading on thin ice in suggesting changes to Medicare and Social Security.  Forcing seniors to pay tax on the $200,000 worth of benefits that they may have received last year would reverse the whole purpose of Medicare and drive seniors into the ranks of the Democrats faster than any other thing the Republicans could do.

Capital Gains?  Nope that’s Republican bread and butter there.  That is biting the hand that feeds you.

To save any remaining suspense, analysts for the Congressional Research Service drily concluded, “Given the barriers to eliminating or reducing most tax expenditures, it may prove difficult to gain more than $100 billion to $150 billion in additional tax revenues through base broadening.”

And if you were to make all of the changes that might be feasible, the CRS estimates, you could finance “about a one or two percentage point reduction for each (tax) bracket” through reducing or eliminating existing tax deductions.

Just as a reminder, Ryan proposes a 10-percentage-point deduction for the wealthiest of Americans.

So that leaves the basic question, “How are you going to reduce the deficit AND deliver a 10 point reduction in tax rates when tax loopholes will only get you two of those points?”

The bottom line.

It’s not going to happen.

The Ryan budget is a fiction.

It is a stalking horse which allows Republicans to continue to suggest that overly  generous social spending is driving up the deficit.

The truth is that any hope of reducing the deficit has to include economic recovery which will produce higher tax revenue.  There just aren’t enough people working and paying taxes to support the cost to run the government.  Now you can say that the government is too big, but the reality is that regardless of what the size of the government is today, a campaign to dramatically reduce the size of government in the near term is will also drive up unemployment and make the deficit and revenue problems worse.

Right now that government needs to invest in infrastructure.  Infrastructure like roads and bridges generates near term employment in the construction industry and long term benefits in terms of business growth.   And yes, these infrastructure investment WILL increase the short term deficit, but they are the only reliable way to reduce the deficit over the long term.

Next let’s see what candidate Romney has to say on the subject.

Blessed are the Poor

Monday, April 23rd, 2012

What ARE implications of the Republican vision of individualism that is at the core of the current Republican campaign for the White House.

Let’s look at government programs to help the poor.

Social Safety Net

The Republican claim is that the social safety net put in place after the Great Depression and expanded by Medicare passed during the Johnson administration and other programs since has exacerbated the problem of poverty in this country rather than reducing it. Florida Senator Marco Rubio summarized that view in a speech at the Reagan Library.

These programs actually weakened us as a people. You see, almost forever, it was institutions in society that assumed the role of taking care of one another. If someone was sick in your family, you took care of them. If a neighbor met misfortune, you took care of them. You saved for your retirement and your future because you had to. We took these things upon ourselves in our communities, our families, and our homes, and our churches and our synagogues. But all that changed when the government began to assume those responsibilities. All of a sudden, for an increasing number of people in our nation, it was no longer necessary to worry about saving for security because that was the government’s job.

This line of reasoning is based on two assumptions.

  1. Social Safety Net money is wasted because it doesn’t reduce poverty and creates a culture of dependency.
  2. The private sector can do a better job than the government in administering these programs, so handing this over the private sector will reduce the costs to taxpayers who can then use that savings to more efficiently help those in need. This will eliminate the culture of dependency.

Let’s look at each claim.

The first one is simple.

Government programs to reduce poverty are working.

The poverty rate among the elderly was 25% before Social Security and Medicare. These programs alone have reduced elderly poverty to 14%. When you include all the other safety net programs, the elderly have the lowest poverty percentage of any age group in the country at 9%.

The Earned Income Tax Credit reduced the number of poor people by 6M, half of them children. Food Stamps come in a close second at 5M.

This table shows how all of the other programs have affected the poor.

Effect of Specific Adjustments to Income on Poverty Counts, 2010, in Millions
  Age Group
  All Under 18 18-64 65+
EITC -6.1 -3.1 -2.9 -0.1
SNAP (food stamps) -5.2 -2.2 -2.5 -0.4
Housing subsidy -2.8 -1.0 -1.3 -0.5
School lunch -1.2 -0.6 -0.4 0.0
WIC -0.3 -0.1 -0.2 0.0
LIHEAP (energy assistance) -0.3 -0.1 -0.2 0.0
Child support paid 0.3 0.1 0.4 0.0
Federal income tax before credits 1.2 0.2 1.0 0.1
FICA 4.3 1.4 2.9 0.1
Work expense 4.6 1.5 2.9 0.1
Medical out-of-pocket expenses 10.1 2.1 5.4 2.9
         
Number of People in Poverty 49.1 13.6 29.2 6.2

 

You can see that the table also lists those things that exacerbate the problems of the poor. Those include FICA deductions, childcare expenses, and that largest contributor to the ranks of the poor, uninsured medical expenses. The Affordable Care Act will provide a very high percentage of these people insurance coverage that they can’t afford today. The net effect is that 32M who don’t have insurance today will be insured and be able to afford care.

This graph also demonstrates the effects of commitment at the federal to reduce poverty.

People Living in Poverty

 

The other side of the equation is easy too because it is just math.

The question is can the private sector really take up the slack and provide better services to care for those in need than what is available at the federal level? The graph demonstrated that before the social safety net was expanded and charitable institutions were bearing more of the load, the poverty level was at 23%.

There are currently 45M people in poverty.

There are currently an estimated 335,000 churches in this country.  Roughly 59M people attend church regularly and the average size of a congregation is 75 people.

Here’s how the math works out.

If we depended on churches to deliver the same level of support that the government current provides, each church would be responsible either directly or indirectly for 137 people.

If you assume that the average household size in country applies to those who attend church regularly that means that there are 22M households where church going is a regular activity. Each household would be responsible to support two more people. How much would they have to pay?

The cost for our social safety net (excluding unemployment) in 2010 was $365B. As this graph shows, the majority of that increase as for Medicare.

Growth in Safety Net Programs

Math again comes to our aide. The amount of money we are spending per poor person is a little over $8K. Using our previous figures, every church would need to come up with an additional $1M a year. On a per family basis, every family would need to come up with an additional $16K.

Where is that money going to come from?

The conservative claim is that tax rates would go down and the private sector would give more.

However, simple math can help us with this claim too since we have already determined that the average family would have to contribute an additional $16K a year to make up for the support currently coming from the government. The average individual tax (federal, state, and local) paid in 2010 was $10,549. The social safety net spending represents roughly .3% of the federal budget.   So even if we extrapolate that savings to the total tax burden rather than just the federal tax, the reduction each individual would see is $31.64. With that savings comes the burden providing the equivalent of $16K in services to the two poor people they are responsible for.

Why the Math Doesn’t Work

The math doesn’t work because in a tax system, the government receives contributions from everyone.

In a private sector system, contributions only come from those who are motivated to contribute. There just aren’t enough willing to contribute to cover the gap. Today, the average charitable contributions are shown in the following graph. You can see they are all in the mid to low single digits. Adding another $31.64 in tax relief isn’t going to dramatically increase this contribution.

Dependency Culture

Conservative logic is faulty on this count too.

Their claim is based on a simplistic view of the situation.

Because they are looking at this through the prism of conservative values, conservatives have a difficult time understanding why anyone would take money from the government rather than taking the initiative to improve their lives themselves.

Rather than go into the details of why people are poor, or cycle in and out of poverty; let’s just address the question of dependence.

The key question here isn’t even whether dependency exists because the data also doesn’t necessarily support that bit of common wisdom either.

The only real question that conservatives are raising is whether dependency is a function of getting help from the government rather than the private sector because in both cases the poor are getting services they didn’t pay for. If anyone has had any personal experience with the challenges of getting money from the government, you know that it is infinitely more complicated to satisfy government requirements than it is to get help from a charitable organization.

So if there is a culture of dependency that exists among the poor, changing the source to one that is easier to deal with would logically INCREASE dependence.

Yet Paul Ryan and others claim that this is the problem. In a speech to the American Enterprise Institute he said our safety net, “lulls able-bodied people into lives of complacency and dependency, which drains them of their very will and incentive to make the most of their lives. It’s demeaning.”

Conclusion

And therein is the rub.

The bottom line when you deconstruct this whole argument is that conservative Republicans object to the very CONCEPT of providing assistance to the poor.

Mitt Romney summarized the current conservative Republican view when he said, “I said I’m not concerned about the very poor that have the safety net, but if it has holes in it, I will repair them…The – the challenge right now – we will hear from the Democrat Party, the plight of the poor, and – and there’s no question, it’s not good being poor and we have a safety net to help those that are very poor.”

But when you look at the Ryan Budget, which Romney also supports, it does not repair the safety net. In fact it includes steep cuts to food stamps, school lunches, crop subsidies, Supplemental Security Income for very poor seniors and disabled people, unemployment insurance, veterans’ pensions and refundable tax credits to the working poor. Even the US Conference of Catholic Bishops, though they are unhappy with the current administration over health care reform, wrote a series of letters objecting to the Ryan budget. They reiterated our national responsibility to protect the poor and said the proposed GOP budget “fails to meet these moral criteria.”

The bottom line is that government through the tax code is able to step in and spread the cost of programs for the poor over the whole taxpaying population.

The program generates positive results at a cost of approximately $30 per tax payer.

Without these programs the number of people in poverty would increase and the cost for those willing to provide services for those in need would increase dramatically from what they are paying today.

Those are the facts.

What we have from the Republicans is a thinly veiled attack on the poor. They feel that the poverty is the appropriate punishment for those unwilling to work for a living and any attempt to help those in need only encourages those who have already made bad decisions to continue their pattern. Since the poor clearly have earned their condition, Republicans feel perfectly justified in turning their back on them in the interests of debt reduction.

But that doesn’t make sense either, because when you take out Medicare, poverty programs represent only .3% of the federal budget.

So why bother?

It’s because Republicans are terrified of taking on the REAL problem of Medicare and jobs. Instead they are trying to convince voters that liberals have been running up the deficit by wasting money on poor people who don’t deserve it.

This “big lie” politics is a method of distraction that Republicans appear to be much better at that Democrats.  In future posts we’ll try to figure out why.

Next let’s deconstruct the Ryan budget and determine how effective it is in reducing debt.

 

Philosophy and Physiology

Tuesday, April 10th, 2012

It will be interesting to see if President Obama and the likely Republican nominee Mitt Romney actually engage each other in a clear debate over the vision each has for America’s future.  If so, this could be one of the most important elections in recent memory.

The core question is what sort of government do we want?

Both laid their respective visions out in speeches they gave to the American Society of Newspaper Editors.

The choice is between the collectivism described by Barack Obama and the individualism described by Mitt Romney.

The Democrats talk about the pain that others feel and our responsibility to build a society that is inclusive and leaves no one behind.  That’s why Democrats see government as a necessary agent to mitigate the myriad of individual risks that cannot be reasonably controlled or predicted.  The grand bargain of the FDR’s New Deal, for example, was crafted in the wake of the great depression which was caused by the unregulated economic expansion and speculation of the 1920’s.  The bargain was that in return for workers continuing bear the risks inherent in even a regulated capitalist economy, the government would also create a social safety net to protect workers when businesses failed or workers could no longer work.

The Republicans only want to talk about success.  Winners should not be encumbered by concern about others.  They should be able reap the full reward for their success without any obligation or responsibility for the repercussions of their success.  Losers, on the other hand, have only themselves (and presumably their dependence on others) to blame.  That’s why Republicans want a much smaller government that doesn’t get involved in protecting individuals or families, doesn’t attempt to regulate business activities, and certainly doesn’t impose higher taxes on the rich than the poor.

This difference in view is consistent with a recent study about the values and language of liberals and conservatives.  That study was described in Jonathan Haidt’s book “The Righteous Mind”.

Liberals value caring for the weak, fairness, and liberty.  They feel that individual success can only occur in an environment where that success does not take advantage of the weak, is not the result of an unfair advantage, and accounts for all potential externalities (e.g. environmental pollution).

Conservatives share those concerns, but define fairness and liberty a little differently.  They also care about loyalty, respect for authority, and sanctity.  That’s why we have seen conservatives attempt to define themselves during the Vietnam era by their respect for institutions like the flag and the military.

Haidt found that these values can be traced to infancy.  Children who were described by their nursery-school teachers as curious, verbally expressive, but sometimes messy and disobedient often grew into liberal Adults.  Children who had a big startle reflex in response to loud noises or disgusting images (think eating worms) grew up to be conservative adults.

In fact a University of Toronto study found that people expressed more conservative views when asked a series of questions about drug use and pornography if they had first washed their hands.  A similar study at Cornell found that subjects only had to be near enough to hand sanitizer to either smell it or see it in their plane of view to behave similarly.

Other studies have suggested that because conservatives share three of the values that motivate liberals, they are able to appreciate why liberals feel the way that they do, even though they may strongly disagree with them.  Liberals on the other hand find it very difficult to understand why conservatives would pick church over the individual on issues like contraception or gay marriage.

If you think about it in the context of language, conservatives can speak the liberal’s language because it is part of their own language.  Liberals, however, are unable to communicate with conservatives when it comes to things like loyalty, respect for authority, and sanctity.  They simply don’t understand the language.  That’s why it has been so hard for liberals to understand why Republicans would waste their time with the flurry of primary issues around loyalty, authority, and sanctity.  From a Democratic perspective these are religious or moral issues and have little or nothing to do with government.  It is why the Democratic Party has had a very difficult time engaging conservative voters in any sort of meaningful dialogue.  It’s also likely why some conservatives characterize liberals as feckless, self-absorbed, solipsistic, and amoral.

This country has been living with New Deal and Great Society institutions for decades.  Those institutions represented by Social Security and Medicare are clearly based on the collectivist liberal principles of empathy, shared risk management, and opportunity creation.  Mr. Obama accurately describes the current Republican ideological position as “an attempt to impose a radical vision on our country”.  He’s right to the extent that the Republican vision questions the fundamental assumptions on which the New Deal and Great Society were founded.

Romney, in articulating the Republican vision, is clearly saying that it IS time to re-examine the assumptions that led to the financial challenges we face in funding the Baby Boomer retirement.  He talks about an earlier (some would say mythical) America where people pulled themselves up by their own bootstraps, didn’t look to others for help, and were successful because they didn’t have any other choice.  That individual success became the foundation for generations of family success, and to hear Romney tell it, our success as a country is based on successful families.  For Republicans, the New Deal was a perversion of the American character rather than an expression of it.  The New Deal led, in the minds of Republicans, to a dangerous dependence on government that robs those at the bottom of the ladder of the incentive to start climbing, and obligates those at the top of the ladder to fund programs that successful people clearly don’t need.  The implication is that if the Democrats hadn’t created this entitlement culture, a significantly larger number of us would be wealthy.

This is the salient question.  Do we want a government whose priority is creating more wealthy people, or do we want a government whose priority is reducing the number of poor people?

Future posts will dig into the implications of both of these visions.

Thought Police

Thursday, April 5th, 2012

We are starting to see the first seeds of that the Republican campaign for Presidency is going to look like and it isn’t pretty.

The first battle in this war, for those not following these sorts of politics closely, is to define your opponent in the eyes of the electorate before they can define themselves.

Think about the last couple of elections.

The Obama McCain election turned on McCain’s fumbled attempt to engage in the financial crisis which exploded midway through the campaign versus Palin’s attempts to characterize candidate Obama as a radical in sheep’s clothing.

Bush versus Kerry was almost over before it started because of the swift boat attacks which suggested that Kerry was not the war hero he claimed to be.

Bush versus Gore ultimately turned on Gore as a Washington insider versus Bush as a political lightweight. It was also a referendum on the Clinton legacy. All the narratives stuck and it was a very close election.

Clinton versus Dole was a classic case of young versus old. Clinton won because he was able to portray Dole as too old and out of touch to manage the challenges of a new emerging economy.

The green shoots of the Republican campaign are already out there and they indicate how far the Republicans are prepared to go to attempt to put President Obama on the defensive.

The big problem the Republicans face is that their main argument, Obama has mismanaged the economy, is at odds with the personal experiences that people are having every day. The economy is getting better and the individual economic condition of many people is improving. So all the Republicans are left with is that they would have done it better – of course that is in stark contrast to the optic that was present for all to see in the debt ceiling crisis when the Republicans appeared willing to put the country into default in order to win a political advantage.  Even though the Republicans will be running a very successful businessman, they aren’t going to escape the fact that many voters regarded this behavior as irresponsible.

The Republican primary has also forced Romney to demonstrate that he could be just as conservative as his challengers.  The result is that he has lost significant ground with moderates and women, particularly in the swing states where this election will be decided.  There is still a long way to go before November, but it is going to be difficult for Romney to walk very many of those statements regarding women’s issues back very far.  Obama, by comparison, has reliable understandable consistent positions on many of the issues that these voters care about.

So the Republicans have opened a new front. Rather than attempt to define the President on what he has done, they are building a new narrative based on suggestions of things that he will do if he is elected for a second term.

In other words, they are building a whole new straw man based on the fears of those who distrust the President today, and attributing actions that they know will upset voters to this new straw man.

The two examples that have popped up so far are Romney’s claim that an off-hand remark by Obama to President Medvedev of Russia suggests that a second term Obama would accommodate the Russian objections to the missile defense systems we are erecting in eastern Europe. In the process Romney also called Russia our “No. 1 geopolitical foe,” – a terrible gaffe attempting to suggest that Obama is consorting with the enemy.

The second example is Sen. Orrin Hatch suggesting that the President will make Mitt Romney’s Mormon religion an issue in the fall campaign.

The first is a wild speculation that ignores what Russia may be willing to give in return for a change in current US policy. Russia is one of the current supporters of Iran and Syria. They could help end the current crisis in Syria. Iran and their nuclear ambitions is one of the biggest problems in the Mideast. If Russia was able to bring Iran to the table and broker an agreement for Iran to end its nuclear weapons program, that might be worth dismantling our eastern European weapons. After all our reason to build that system was to put pressure on Russia and protect those countries from Iran. That strategy, like much of the rest of Obama’s foreign policy, appears to be working.

The second was just a weak attempt to make any criticism that Romney receives for his religion Obama’s fault. There are people who aren’t going to vote for Romney because of his religion, but most of them are conservative Republicans, not Democrats. Obama doesn’t have to do or say anything to remind people that Romney is a Mormon, just as Romney doesn’t have to do or say anything to remind people that Obama is an African American. Those personal attributes will cost both candidates some votes and win both candidates some votes. The key is that the Republicans are trying to build this narrative that Obama is PLANNING to use Romney’s religion against him and that it is this sort of THINKING which should disqualify him from re-election.

The substance of both of these narratives is to build the syllogism that IF Obama were willing to do these despicable things, what else is he planning to do once he is immune from the pressure of having to run for re-election.

It is only April, but the jostling for position and advantage have already started.

It is an odd way to run a country.

What’s going on?

Sunday, April 1st, 2012

Marvin Gaye released an album and a single by this name in 1971. It was a combination of concern about the Vietnam war and the ongoing racial tensions at home. Now more than forty years later we’re facing conditions in the African American community that don’t seem that different from those Marvin Gaye was singing about.

Almost half the nation’s murder victims are African American, even though they only represent 13% of the population. The majority of those victims were between 17-29. Almost 93% of those victims were killed by other black people.

Less than half of the African American high school population graduates. The national average for all students is over 70%. 22% of all African American students were suspended at least once from high school. Compare that to 5% of white students.

22% of blacks live below the poverty line and 72% of all African American children are born to unwed mothers.

The national unemployment rate for African Americans is 13%. The unemployment rate for young black men is over 40%.

There are now more African American men in prison than were enslaved in 1851.

The Southern Poverty Law Center reports that since Barak Obama’s election, radical right wing militia groups have grown ten fold after a long period of decline.

A group of Mississippi teenagers beat and killed an African American auto factory worker in the parking lot of a local motel just because of the color of his skin. The 19 year old driver of the truck that ran over and killed the African American man was recently sentenced to two life sentences for his crime.

White Plains police officers broke down the door of an ill 68-year old African American man who had inadvertently pressed his medic alert button. It took them an hour to gain access to his apartment. After attempting to subdue the man several times with a taser the police shot him twice in the chest. The police claimed that the elderly man picked up a butcher knife and charged them after being tasered.

And we have the case of Trayvon Martin which seems to finally have received sufficient national attention to call all of these issues into question.

Like Marvin, I don’t have answers, only questions.

Why is our educational system failing young African American men?

Why is it so difficult for African American men to find a job?

Why are so many African Americans in prison?

Why are so many African American kids killing each other?

This is a national tragedy that is exacerbated by poverty, politics, and racial bigotry.

This is what we reap when we decided to unravel the social safety net for the most vulnerable in our country.

This is what we reap when we consider gun ownership a basic human right.

This is what we reap when we accept the dismantling of our manufacturing base and assume that all must be well because the rich are getting richer.

Mother, mother
There’s too many of you crying
Brother, brother, brother
There’s far too many of you dying
You know we’ve got to find a way
To bring some lovin’ here today