Normative Narratives


The Progressive Case For More Moderate Policies

If President Trump has had any positive effect on American politics, it’s that people are more engaged than ever. Think about it, when was the last time you heard that lazy complaint that “both parties are the same”?

Not only are the parties not the same, there are big differences within at least one of them. The GOP has become the party of Trump, but significant philosophical and policy differences exist within the Democratic Party. There are “progressives” like Warren and Sanders, “moderates” like Buttigeg, Biden and Klobuchar, and even an outsider-entrepreneur-populist in Andrew Yang.

When considering an ideal platform to run on, I am not talking about my personal preferences, or what may play well in politically uncompetitive parts of the country. Rather I am talking about two things:

  1. What best addresses the nation’s needs;
  2. What is most likely to appeal to independents and moderates, whose turnout and swing votes could be the determining factors in the 2020 election (electability).

Admittedly, “what best addresses the nation’s needs”, is opinion. In the next section I will defend my opinion that more moderate policies, and more of them, best addresses the nation’s needs. What is most likely to appeal to swing voters, however, is not opinion–it is moderate policies. This is common sense, strongly backed by a recent New York Times analysis of undecided voters:

“These potentially persuadable voters are divided on major issues like single-payer health care, immigration and taxes. But they are fairly clear about what they would like from a Democrat. They prefer, by 82 percent to 11 percent, one who promises to find common ground over one who promises to fight for a progressive agenda; and they prefer a moderate over a liberal, 75 percent to 19 percent.”

Making America Greater Than It’s Ever Been

After decades of inadequately investing in most Americans, many changes are needed to bring some semblance of equality of opportunity to this country.

Progressive Democrats focus on free college and healthcare, but economic opportunity goes beyond free or affordable versions of these things. It is not just healthcare and higher education reform that are needed, but also: early childhood development initiatives, investments in worker (re)training and apprenticeships, addressing student loan debt, a major infrastructure plan, an ambitious green economy plan, and perhaps the beginnings of a Federal work guarantee program (which is the real solution to automation). In other words, a realistic version of the Green New Deal.

By embracing more middle-of-the-road policies to address healthcare and college tuition costs, there is more fiscal space and political capital to spend on these other priorities. Lets consider the big ticket plans, as well as their more moderate alternatives:

“Medicare for All” vs. the “Public Option”

  • People will argue that Medicare for All is “socialism”, that it is “European”, not “American”. Yes, these are dumb arguments, unfortunately that does not matter when a large portion of the country believes them.
  • The public option–letting anyone who wants to buy into Medicare do so–on the other hand, embraces two core American values–choice and competition. It simply provides, as the name implies, an option.
    • As with the ACA, subsidies would be provided for people depending on their income.
  • One of the main reasons the ACA is less effective than it could be (aside from constantly being undermined by the GOP) is lack of providers in many areas.
  • There is more support for a public option than Medicare for all, and the gap is widening.
  • The public option is, of course, less expensive (by varying amounts, depending on the details of the plan).

Even Senator Warren’s path to “Medicare for All” is essentially just passing a public option at first, and then trying to pass a single payer health insurance law at a later date.

Free College Tuition vs. Free Community College

If someone knows they want to go to college, and is committed to seeing it through to degree completion, they should be encouraged and enabled to do so. The data shows that the higher your education level, the more you earn and the more likely you are to be employed. However, nothing good comes from a recent high school grad taking out a loan for a program they have no intention of completing, because they have been convinced that doing anything else would be a mistake.

  • Most student loan debt is driven by people attending for-profit colleges for a semester or two and then dropping out. Without the earnings bump one realizes from getting a degree, they find themselves stuck in debt.
  • We have all heard horror stories of people graduating with 6 figure debt, but these people are the loud minority of student loan debtors, and will likely be able to pay that debt off in the future.
    • For those who pursued or want to pursue expensive degrees in order to work for the social good, there are programs to help them pay down their debt (programs which can be expanded).
  • After years of conventional wisdom unwisely saying “everyone should get a degree”, the downsides of such thinking have become apparent; the decreased value of a bachelor’s degree (as they become much more common), and the increased cost (as more demand drives up prices).
  • Free Community College allows unsure young adults see if a bachelor’s degree is for them, or whether they want to go another route, without the burden of student loan debt.
    • State’s public higher education systems need to create as seamless a transition as possible from their associate’s to bachelor’s degree programs. By doing so, they would effectively be cutting the cost of a bachelor’s degree in half.
    • Some people do not want or need to pursue a bachelor’s degree, and that’s OK! This is not evidence of some moral or cognitive deficiency, nor is it a sentence to a life of poverty. We as a society need to better promote the alternatives, meaning;
    • High Schools, Community Colleges, and businesses need to provide more vocational training and apprenticeship opportunities, particularly since these jobs are projected to grow and more young Americans are beginning to show interest in them.
  • As with the public option, providing free community college would be significantly cheaper than making all public college tuition free.

Should any “moderate” plan be fully implemented, America would be immeasurably more progressive than it is today. All the progressives out there, if they truly care about social progress, should be out celebrating in the streets if a public option or free community college ever become the law of the land.

Progressive Taxation

Because bigger ticket plans are so expensive, progressive candidates have had to become innovative on taxation, most notably by proposing a wealth tax. There are also more familiar ideas to increase tax revenues, such as increasing higher end income and corporate tax rates, raising the capital gains tax, and introducing a value added tax. Then there is also adequately funding the IRS, so it can better enforce tax law.

Every other wealthy country in the world generates more tax revenue relative to its GDP than the U.S. Despite what Trump may say, I am not comparing the U.S. to socialist countries with failed states; these are the G7–literally the 6 wealthiest countries in the world after after the U.S.

Source: OECD

Note this chart ends at 2017; the U.S. figure is probably about 1% lower for 2018 after the GOP passed it’s new tax bill. That might not sound like much, but remember 1% of the $20 trillion dollar U.S. economy is about $200 billion dollars.

Doing a very rough back-of-the-napkin calculation, if the U.S. collected at the G7 average, it would easily bring in 1.5 trillion more tax dollars per year. I don’t care if your priority is reducing poverty, environmental protection, building up our military, providing better services to veterans, paying down the debt, or literally anything else, we should all be able to agree as a nation that we are leaving too much tax revenue on the table.

Moderate Democrats must also embrace more progressive taxation. For one, it hits on the widespread belief that the wealthy do not pay their fair share of taxes. Furthermore, if a candidate wants to propose a buffet of policies instead of a few main courses, it will still cost a lot of money. Being a moderate Democrat shouldn’t necessarily mean spending less, but rather spending differently. To do this responsibly still requires embracing much more progressive taxation. 

The Uneven Political Playing Field

Due to a number of factors (Gerrymandering in the House, less populous states being disproportionately represented in the Senate, the Electoral College), Trump’s GOP does not need to win national popular support to stay in power. Instead it will double down on lies, partisan attacks and other scare tactics to try to rile up its base.

The Democratic party cannot play this game. While Democrats have to be tough on Trump, they also have to try to appeal to some conservative voters. If the Democratic Party tries a mirror approach, appealing primarily to extreme progressives while ignoring moderate Democrats, conservatives and independents, all it will accomplish is breaking its own 2016 record of winning the popular vote by the largest margin in history while losing the Presidency.

Think about it, people who support the most progressive policies tend to be clustered in big cities–cities that already vote Democratic. Increasing turnout of this voting block would have less of an effect on the election than one may think.

Thanks to his words and actions, Trump has put previously uncompetitive areas in play–the so called “suburban slide” in the south. The Democratic party must seize on this opportunity and try to appeal to these voters. The party’s progressive wing should not punish it for playing smart politics; as the past three years have shown, the stakes are too high.

A New New Deal

Maybe I am wrong. Maybe absent grand policies like “Medicare for All”, “Free College”, or “$1,000 a month for everyone”, the excitement just isn’t there for any Democratic candidate and Trump wins again. Maybe most voters don’t have the capacity or desire to consider a platform that addresses the issues facing this nation with targeted policies.

Or maybe people do want that type of platform, but don’t think politicians can actually deliver it. This is a much more reasonable argument; the Federal government hasn’t been particularly effective in recent history, and it is easier to pass two bills than five.

To this I say that, in America, fatalism is self-fulfilling. If we say, “we can’t pass those bills”, and don’t even try, then we certainly we won’t pass them. If we say “we can’t tax the rich, they’ll just dodge it”, then that becomes the reality (as it has already begun to be).

Yes, there will be difficulties along the way–there always are when taking on wealthy interests. Globalization has made tax evasion more difficult to police. Today’s hyper-partisan political environment has made it harder to pass legislation that actually reflects the will of the vast majority of Americans across the political spectrum. BUT WE MUST TRY. To quote FDR:

“The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it; if it fails, admit it frankly and try another. But above all, try something. The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach.”

American democracy has driven some truly incredible advances in human progress and social fairness in the past, and there is nothing structurally stopping it from doing so again. The New Deal, which today’s Democratic party seems to want to emulate, was itself a large package of targeted policies addressing specific needs.

More moderate policies, and more of them, has been and continues to be the right approach to addressing the many challenges facing our nation. It also happens to be the more broadly popular–and therefore electable–platform. Whether a candidate with such a platform can make it through the 2020 Democratic presidential primaries, however, remains to be seen.


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America’s Choice: Winner-Take-All or Social Democracy

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The 2018 midterm elections, which saw significant gains for the Democratic Party, were in many ways a rejection of President Trump’s policies and worldview. But while the American people seemingly know what we don’t want, do we know what we do want? Those are the questions to be answered leading up to and by the 2020 elections, campaigning for which is already underway.

Ultimately we cannot have the “economic populism” many Americans across the political spectrum seem to want with our current tax code. Insufficient tax revenue means the government cannot provide what is needed to develop the next generation of Americans while simultaneously addressing more immediate concerns. In order to fulfill these two key responsibilities of governing, it is time to seriously consider ideas that have, for a while, been outside of mainstream political discourse.

One such idea is that taxes can be significantly higher at higher income levels. The vast majority of Americans believe that the wealthy and corporations do not pay their fair share of taxes (and these survey results are from before the new GOP tax code went into effect, which even further reduced taxes for the wealthy and corporations).

Alexandria Ocasio-Cortez has recently brought this idea to the forefront, proposing top income tax rates upwards of 70%. Nobel prize winners have said optimal rates may be as high as 80+%. I do not know what a politically viable top rate is, that’s for the American people to decide. I do know that it should be significantly higher than it is today.

Here are three things to consider regarding taxes in America:

  1. Marginal Income Tax Rates

    Whatever tax brackets we choose to have, they will work within the marginal tax rate system we currently use. What are marginal tax rates you ask? Well, imagine there are 3 tax brackets:

    10% for those making > $10,000
    20% for those making $10,000-$100,000
    30% for those making > $100,000

    If I got a raise from $90,000 to $110,000, only the $10,000 over 100,000 would be taxed at 30%. Dollars 1-9,999 would still be taxed at 10%, and dollars 10,000 – 100,000 would still be taxed at 20%. My income would not all now be taxed at the highest rate, only the amount over that top bracket threshold.

    The idea that people will work less hard because of higher marginal rates is silly–people typically can’t control their earnings that much (without the help of high priced accountants at least). Your average American works as hard as they can in hopes of earning as much as they can–they do not calibrate their level of effort based on what is typically a small tax increase that results from entering a higher bracket.

    Now having high marginal tax rates is admittedly harder in a globalized world than it was in the mid 20th century, because people can move themselves and their money around much more easily today. Having said that, and feel free call me a “homer” if you like, but I think that America is pretty unique and special place. If our leaders prioritized curtailing tax avoidance by coordinating with other countries and international organizations, I believe that people would still choose to live, operate businesses, and park their wealth here even if we had higher tax rates.

    In other words, if the choice was pay your fair share or leave, I believe that most wealthy people would choose to pay their fair share.

  2. Income as a Measure of Hard Work, and Inequality in the Age of Globalization

    Think about entrepreneurs in the 1950s. They brought their products mainly to domestic markets, which relied primarily on domestic infrastructure, court systems, and public goods to function. At the time, the government was able to provide these goods without running huge deficits, in large part by adequately taxing the rich.

    Now think about entrepreneurs in the 2010s. They bring their products to a global market. If it’s a popular product, global capital chases it, expanding operations and profits. Maybe they decide to sell their company to foreign firm for a huge pay day.

    The 1950s millionaire entrepreneur can easily be today’s billionaire. Does today’s billionaire work that much harder? Generally speaking, not really–both work(ed) very hard, and there are only so many hours in a day. The same is true of today’s business executives versus those of decades past. Today’s greater earnings, rather, are largely an effect of the global economy we operate in, not harder work–there are billions of potential customers out there instead of millions.

    The global economic system is expensive to maintain. Today the U.S. government needs to not only finance domestic infrastructure and institutions, it also has to help finance international institutions and (perhaps most importantly and expensively) global defense.

    The U.S., as a global leader, naturally pays a large portion of this global economic infrastructure. While it is impossible to quantify piece-by-piece, overall this is a good deal for Americans–just look at the world as it currently is as proof! America is leading the way in almost all macroeconomic metrics (despite what Trump may say about us getting “taken advantage of”, “losing”, or “not being respected”).

    Where America is lacking is in social cohesion, social mobility, and general optimism and happiness. This is not an accident, but rather a feature of our current winner-take-all economic system. This is not just a liberal “bleeding heart” speaking, just ask Fox News host Tucker Carlson.

    It is not difficult to understand the anger of Americans displaced by globalization. Over the past few decades, middle class workers have seen their incomes stagnate, even as their productivity has risen. Why should the wealthy see gains well beyond their hard work, while the average person doesn’t even see the gains their work should rightfully earn them?

    Wealth did not trickle-down as promised (no surprise there, it never does). People who could not afford the increasingly expensive baseline goods needed take advantage of the global economy (early childhood development, higher education, job [re]training) became disgruntled, believing politicians from neither party cared about them. They then went out and voted for any “outsider” offering simple solutions to complex problems, and we ended up with President Trump.

    The truth is that America’s economy has become unfair. In order to restore that fairness we need to provide certain public goods–like affordable (if not free) higher education and healthcare. In order to provide these things, we need more tax revenue, and that tax revenue has to come from the ever-wealthier wealthiest Americans.

    There are many types of taxes, aside from income tax, that are also in play. Some are currently part of the U.S. tax code, while others are not. Examples include corporate taxes, capital gains taxes, financial transaction taxes, carbon taxes, estate taxes, sales taxes and gasoline taxes. 2020 Democratic Presidential candidate Elizabeth Warren has proposed a first-of-its-kind-in-America wealth tax, which has certainly gotten people’s attention.

    Some of these taxes fall mostly on the rich, while others hit everyone. This is an important consideration when trying to address inequality through the tax code. There are also countless tax loopholes, some of which are useful but many of which should be closed.

    The appropriate top marginal income tax rate is a function of the overall tax code.

  3. Adequately Fund and Reprioritize the IRS

    “The [budget] cuts are depleting the staff members who help ensure that taxpayers pay what they owe. As of last year, the IRS had 9,510 auditors. That’s down a third from 2010. The last time the IRS had fewer than 10,000 revenue agents was 1953, when the economy was a seventh of its current size…the IRS conducted 675,000 fewer audits in 2017 than it did in 2010, a drop in the audit rate of 42 percent. But even those stark numbers don’t tell the whole story, say current and former IRS employees: Auditors are stretched thin, and they’re often forced to limit their investigations and move on to the next audit as quickly as they can.

    Corporations and the wealthy are the biggest beneficiaries of the IRS’ decay. Most Americans’ interaction with the IRS is largely automated. But it takes specialized, well-trained personnel to audit a business or a billionaire or to unravel a tax scheme — and those employees are leaving in droves and taking their expertise with them. For the country’s largest corporations, the danger of being hit with a billion-dollar tax bill has greatly diminished. For the rich, who research shows evade taxes the most, the IRS has become less and less of a force to be feared.

    The story has been different for poor taxpayers. The IRS oversees one of the government’s largest anti-poverty programs, the earned income tax credit, which provides cash to the working poor. Under continued pressure from Republicans, the IRS has long made a priority of auditing people who receive that money, and as the IRS has shrunk, those audits have consumed even more resources, accounting for 36 percent of audits last year. The credit’s recipients — whose annual income is typically less than $20,000 — are now examined at rates similar to those who make $500,000 to $1 million a year. Only people with incomes above $1 million are examined much more frequently.

    [Former IRS Commissioner Koskinen, in testimony about the IRS budget] told the Senate, “I don’t know any organization in my 20 years of experience in the private sector that has said, ‘I think I’ll take my revenue operation and starve it for funds.’”

    The idea that a resource-strapped IRS is auditing EITC recipients instead of millionaires and multinational corporations is as absurd economically as it is cruel morally. No wonder most Americans hate the tax man and think the wealthy don’t pay their fair share–they are right.

Being a “Competitive Economy” Need Not Be a Race to the Bottom

A friend recently shared a Breitbart article about America being “the world’s most competitive economy”. While this is good news, it definitely needs some context.

First, America wasn’t a slouch before Trump; we placed 2nd, 3rd, and 3rd in 2017, 2016, and 2015 respectively. I don’t feel like going further back, but I’m sure we’ve never been low on this list.

Second, look at the countries right after us. “Singapore, Germany, Switzerland, and Japan [make up the rest of the] top five. The top ten includes the Netherlands, Hong Kong, the U.K., Sweden, and Denmark.”

These countries almost all have higher levels of taxation, stronger safety nets, and stronger worker protections than the U.S. Some were the “most competitive” countries in past years. A country does not have to “race to the bottom” in order to be competitive.

Being first on this list, as opposed to being second or third, really doesn’t gain us anything other than a nice headline. Companies do not decide where to build plants or hire employees based on “most competitive” indexes, they do it based on their complex internal calculus (cost of labor, cost of moving goods around their supply chain, level of employee expertise needed, infrastructure needs, tax rates, etc.). In some cases this will be the U.S., in others it will not, regardless of meaningless titles.

Jobs and the “Green New Deal”

I am actually a fan of how Trump uses his bully pulpit to make hiring American workers an important consideration for companies–I like his tough rhetoric here. While I am not a fan of protectionism in general, in some cases the credible threat of tariffs is needed in order to show these are not just empty words. This is particularly true when another country isn’t playing fair on trade, which is certainly the case in some instances.

The problem is that Trump gets headlines for the jobs his policies creates or keeps, but not for the ones they lose. For example, job losses have exceeded gains when it comes to iron and steel tariffs and solar panel manufacturing tariffs. Aside from jobs, there is also the increasing prices of imports to consider, which make up about 15% of U.S. GDP–the American consumer likes options, including ones made abroad.

As I have said before, Trump’s worldview is too zero-sum and short-term. Specifically, he views addressing climate change only as a cost (which he always inflates), and not an opportunity for the U.S. to be a leader in emerging industries. Unfortunately, due to the 2013 sequester budget cuts, the Bureau of Labor Statistics stopped tracking “Green Jobs”, making it much more difficult to quantify the benefits of being a leader in these emerging industries.

Take electric vehicles (EVs) for example. General Motors is begging Trump to support a Nationwide Zero Emissions Vehicle program, to no avail. It’s like private sector lobbyists always have Trump’s ear, unless they are promoting something environmentally friendly.

ev investments by country

Credit: Reuters

Over the next decade car companies will invest over $300 billion in EVs, with the largest chunk going to China due to government incentives (Germany is second, while the U.S. is a distant third). As you can see from the image above, Trump’s stance towards EVs has resulted in us leaving other countries investment dollars on the table. It’s like Trump always wants to be tough on China and promote investing in the U.S., unless it has to do with something “green”.

Meanwhile, over in Germany, the government is paving the way for Volkswagen to position itself as a future leader in EVs. In fact, Ford just announced a partnership with VW on EVs. American automakers now need to look abroad for support because our President won’t help them–sad. Hey, remember when Obama saved the U.S. auto industry just a decade ago? That was pretty cool, but I guess Trump wants to undo that part of Obama’s legacy as well…

Auto companies are starting to reach a 200,000 vehicle sale threshold that triggers a gradual elimination of consumer tax credits for buying electric vehicles. Under normal circumstances, either a Republic or Democratic President would seriously consider extending these credits. Instead, the Trump administration has signaled it wants to eliminate the credits altogether.

The shift to a global economy was done on the backs of the commoner–global wealth soared, but so did wealth inequality. “Yellow Vest” protests in France show that regular people will not let the next major shift–from a fossil fuel based economy to a “green economy”–be solely placed on their backs as again (and rightly so!). Rather, this shift will need to be part of an “all hands on deck” approach, with everyone (rich, poor, and all those in between) contributing their fair share towards a greener, fairer, and more dynamic economy. This is the spirit of the “Green New Deal”.

America’s Choice: Social Democracy vs. Unbridled Capitalism

“Supply-side” GOP economics has always relied on questionable math (“magic asterisks“), Trump is just faster and looser with the rules. To Trump, numbers (and the truth in general) are things to be manipulated to promote his agenda. Lies about the value of the Saudi Arabian arms deal, the costs of addressing climate change, and the costs of illegal immigration are prime examples of this.

It is amazing how a man who casts doubt on so many things he disagrees with can speak with such confidence about things that actually are uncertain, like economic outcomes. But then again, humility and honesty have never been Trump’s forte.

Living in a democracy, the shape of our economic system is a choice we collectively make. In American democracy the means justify the ends, as long as the debate is honest and people can make informed decisions. To date, the debate on the structure of our economic system has been anything but honest. Those supporting wealthy interests pretend that any tax increases would ruin our economy, while simultaneously painting any social program as communism.

A choice does not have to be made between having a competitive economy, an environmentally sustainable economy, and a fair economy that promotes equality of opportunity–that is a false trichotomy. We can have all of those things with the right mix of public policy, hard work, and American ingenuity.


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Bipartisanship and the 2018 Midterm Elections

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Ode to John McCain

I did not always agree with the late Senator John McCain on public policy, the most recent defense spending bill bearing his name being a case in point.

His integrity, however, should never be questioned. His willingness during his 2008 Presidential campaign to stand up to constituents who disrespected his opponent Barack Obama, despite the political ramifications, are prime examples of this integrity. How he bucked his party on certain important issues, such as the disastrous Obamacare “skinny repeal” vote, is further proof of his strength of character.

As a soldier and later as a legislator, John McCain was an American hero in every sense of the word. With the country as politically divided as it has been in decades, and our Congress seemingly populated with spineless representatives, we need him now more than ever. He is sorely missed.

From Partisan Differences to Demonization

Ideally, bipartisanship would be a quality which helped a candidate get elected. Unfortunately America is far from, and has perhaps never been further from, this ideal.

America was founded on compromise between the Federalists and Anti-Federalist. Historically, some of our strongest pieces of legislation have resulted from bipartisan compromise. Today it seems like politicians will tow the party line regardless of a policy’s real-world implications, leaving any negative impacts to their party’s spin-doctors (or, due to the time delay it takes for the full impact of many policies to be felt, to future legislators).

Politicians have always cared about getting re-elected, but the type of behavior that voters reward seems to have changed. What was once a quest to push the frontier of American progress has been replaced with a cynical, no-holds barred attempt to secure governing super-majorities that can ram legislation through without any support from the other side. The other side then uses said legislation as campaign fodder, hoping to increase voter turnout and overturn it.

This results in a never ending loop of legislative gridlock in which the average American–regardless of political affiliation–loses. No wonder Americans don’t trust their government and are so politically divided!

This us-versus-them style of governance is reminiscent of sectarianism in newer, fragile democracies (like Iraq or Kenya)–it should not be a feature of American democracy. Policy differences have always existed, but the fight has seemingly gotten dirtier since Trump took office. Even more disturbing is that this increasing partisan divide is being driven by the President himself.

Trump recently called his Secretary of Defense “sort of a Democrat”. While this is far from true, it is also ridiculous that this is even a dig at all–as if being a Democrat is some sort of inherently bad thing. It is this sort of rhetoric that leads Democratic and Republican voters to talk past one another, instead of to one another, precluding the hard work of finding common ground.

Trump also recently said Democrats are “an angry, left-wing mob…they would turn our country so fast into Venezuela, and Venezuela’s not doing too well, folks.”

Look, it was not right when Hillary called Trump supporters “deplorables” during the 2016 Presidential campaign, and it is not right for Trump to call Democrats “an angry mob” now. When we look at the country’s partisan divide, we have to acknowledge the role that the leaders of our political parties play–when they act like children, there is a trickle down effect to the behavior of the average voter.

Lord of the Lies

It is not just morally “wrong” for Trump to say Democrats would “turn our country into Venezuela”, it is inaccurate and hypocritical. The major economic issues facing Venezuela are massive government debt and resulting hyperinflation. Trump’s tax plan will increase the U.S. debt load by $1.5 trillion dollars over the next decade, and he has been critical of the Feds efforts to combat inflation by raising interest rates. I would not go so far as to say that Trump’s policies will turn us into Venezuela, because it would take decades of economic mismanagement to “turn America into Venezuela”. But if either party’s policies are putting us on the path to “becoming Venezuela”, it is the G.O.P’s, not the Democrats.

Trump is taking advantage of the fact that many people want simple answers to complex problems. Responsible leaders admit there are no simple answers, whereas Trump makes up simple answers that will not solve the problems and in many cases exacerbates them. Anyone who tries to point out the shortcomings of his plans are dismissed as liars or out-of-touch experts, trying to bamboozle the common man.

These falsehoods are part of a larger concerted effort by President Trump to blur the line between fact and fiction; when everything is in question, people can make up their own reality. How often have you heard Trump say something to the effect of “maybe it is, maybe it isn’t, who knows?”–on a regular basis if you’ve been paying attention (twice in his most recent “60 Minutes” interview alone).

We’ve all heard of “fake news”, but don’t forget about “alternate facts“, “alternative data“, the “witch hunt” (Mueller investigation), and unsubstantiated conspiracy theories promoted by the President to cast doubt on the outcomes of the 2018 midterm elections.

If some people do not like “politically correct” politicians or “experts” that’s one thing-I don’t agree, but I get it. This does not mean we needed to elect someone who purposefully tells lies and sows confusion and discord as their primary means of governing–there is a huge middle ground here America.

Trump The False Populist

You can blame social media, poor leadership, or whatever other factor of varying importance you want, but where we are as a country ultimately points to a failure of the American people to elect the right type of representatives. If this is a tough pill to swallow then good, it should be; it is meant to prompt introspection and personal accountability. People of all political stripes are complicit in this collective failure, and it will take a change in thinking across the board to correct it.

I do not have the answers to these problems, except to try to educate and lead by example; I think that is all anyone without a celebrity-sized platform can do, so I carry on. Maybe I should just run for office…

Speaking of running for office, remember that Trump campaigned and was elected as a “populist“. While it was pretty clear to anyone who knew anything about his pre-Presidential endeavors that this was not the case, I wanted to give Trump the benefit of the doubt–after all, if he did well it would be good for the country!

Instead, Trump decided to pursue an agenda based on division, class and racial warfare, shortsighted “America First” foreign policy, blindly slashing regulations regardless of whether they were useful or not, and generally undoing all of President Obama’s achievements. To date, Democrats in Congress have had little success defending what I identified as the party’s red-line issues.

Even more tellingly, none of the many potential areas of compromise I identified after the Presidential election have been pursued. These would have been low-hanging fruits for Trump to pick, restoring the public’s faith in the government’s ability to address the issues facing the average American and healing the partisan divide, but he elected to go a different route.

Let this list of unpursued policies (headlined by the lack of an infrastructure plan or apprenticeship bill) stand as a testimony of Trump’s choice not to govern for all Americans.

Update (10/24/18): Things have gone from dirty to downright dangerous in the days leading up to the 2018 midterms. Apparently people have sent pipe bombs to Barack Obama, Hillary Clinton, George Soros, and CNN offices.

Maybe having a GOP leader that promotes and applauds violence has somehow actually incited violence! Who would’ve thunk it?!


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“Stealing Elections” and Stealing Elections

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The Supreme Court of the United States, with “Equal Justice Under Law” etched into the front.

“The [Wednesday, September 5th] House hearing [with Twitter and Facebook Executives] was interrupted by Laura Loomer, a conspiracy theorist who has been banned from major social media sites. She shouted that Dorsey was lying, accusing him of banning conservatives and saying Twitter was going to help Democrats “steal” the November elections.” [Quoted article]

While it is easy to dismiss conspiracy theorists, I do not think these are the just the ravings of a madwoman. I think a lot of ardent Trump supporters buy into the idea, promoted by the President himself, that should the GOP lose Congressional majorities in the midterm elections, that those seats would have been “stolen” by some wide ranging conspiracy encompassing traditional media, social media, and China.

In an attempt to debunk and educate, lets explore the difference between “stealing elections”, and really stealing elections by devaluing people’s votes.

“Stealing Elections”

The idea that there is some conspiracy to “steal elections” is utter nonsense which only serves to widen the country’s already massive partisan divide. This is not just my opinion–only 13 of the 24 states’  attorneys generals invited to the Justice Department’s meeting on “social media bias” even bothered to attend. Furthermore, the meeting ended up focusing on privacy concerns on social media, not political bias; when the adults get together they speak about the real issues, not baseless allegations.

Allegations like these are part of the Trumpian playbook; get out there early and cry foul, so if an outcome you don’t like comes to pass, you can say “see, I told you it was rigged”. Trump did this throughout his campaign, and it has continued into his Presidency.

This is a sad, if unsurprising, abdication of accountability by Trump. It is a childish excuse, commonly employed by those who are unable to accept loss in a dignified manner. You would not (or should not) accept such excuses from your friends on trivial matters, so why would you from elected officials on much more consequential ones?

Yes, Twitter made a mistake with its algorithm. Yes, this mistake caused certain profiles to become less accessible by failing to auto-suggest them when a user began a search (they were still returned in search results). Twitter has owned up to this mistake and fixed it. To err is human; when mistakes inevitably do occur, the best course of action is to admit to and rectify them, as Twitter has done.

It should be noted that this was a relatively benign mistake that occurred well before the election cycle got into full swing (July, elections in November); it is not something that will impact the outcome of any of the midterm elections.

A broader issue, however, is at play here–the delicate balance between free speech, protecting public safety (censoring extremist content and hate speech), and ensuring our democratic process plays out fairly (limiting false information on political issues / candidates, including foreign interference).

There is no rule book for finding the “right balance”, as a nation we are learning as we go. Having said that, false political information is an actual threat to the integrity of our elections (as opposed to baseless accusations of bias). If anything social media companies should probably be erring on the side of too much restriction of potentially false information, not too little. Note that false information (or “fake news”, if you must) does not include opinion pieces that present themselves as such, like Normative Narratives, but rather false information being presented as fact.

Trying to find the proper limits on free speech is not a new problem, social media is just the latest (and probably most complex) iteration of this ongoing debate. Public safety has always had to be balanced against freedom of speech (“clear and present danger”, you can’t yell “FIRE” in a crowded movie theater)–it is baked into the First Amendment itself.

Technological improvements often outpace our elected officials ability to regulate them. This problem is especially prevalent in today’s hyperpartisan political environment, with its resulting legislative gridlock. Taken together, all this means it could take several imperfect attempts in either direction–to much censorship or too little–before we reach that elusive “proper balance”.

The reality that it is a long road to reaching this “proper balance” is a feature of democratic governance that we must accept. What we should not accept is the deliberate marginalization of voters that results from political and racial gerrymandering.

[Really] Stealing Elections–“Gerrymandering”

The original “gerrymander” in early 19th-century Massachusetts.

“[Gerrymandering] in U.S. politics, [is] drawing the boundaries of electoral districts in a way that gives one party an unfair advantage over its rivals.”

The U.S. Supreme Court has ruled that racial gerrymandering is unconstitutional, but has not yet ruled on partisan gerrymandering. Several states, however, have ruled that partisan gerrymandering is also unconstitutional, which should (eventually) force the Supreme Court to come to a definitive ruling at the national level.

Unfortunately, even when a state’s ruling is affirmed by a Federal court, the end result does not always restore justice. Recent events in North Carolina are a case in point:

A U.S. court panel has ruled there is not enough time to recast North Carolina’s congressional maps ahead of the November elections even though it found the Republican-constructed lines were illegally drawn for partisan purposes.

“North Carolina will have to suffer again under yet another unconstitutional Republican law that silences voters, divides our state, and undermines our democracy,” Wayne Goodwin, the state’s Democratic Party chairman, said in a statement. The party was a plaintiff in the suit.

Republicans in 2016 won 10 of the 13 House districts – 77 percent – despite getting just 53 percent of the statewide vote, nearly the same result as in 2014.

The North Carolina dispute centered on a congressional redistricting plan adopted by the Republican-led legislature in 2016 after a court found that Republican lawmakers improperly used race as a factor when redrawing certain U.S. House districts after the 2010 census.

The Republican lawmaker [Rep. David Lewis, a Republican member of the North Carolina General Assembly] in charge of the plan said it was crafted to maintain Republican dominance because “electing Republicans is better than electing Democrats.”

First of all, when it comes to the democratic process, there is no “better” party. Policy differences of course exist, but these are secondary to making sure the democratic process plays out as fairly and transparently as possible; any “patriot” that puts party ahead of democracy needs to take a long look in the mirror. Now back to the issue at hand–gerrymandering.

In the past decade, North Carolina lawmakers have been found to have illegally drawn voting districts based on both racial and political considerations (in fact they directly and unapologetically replaced their racially unconstitutional map with a politically unconstitutional one). It is hard to argue that there were not some truly stolen elections in North Carolina. Unfortunately this problem is not limited to North Carolina (or the Republican party–Democrats do it too).

Which party gerrymandering benefits more really just depends on who the majority is when it comes time to redraw a state’s voting district lines (“redistricting”). It is worth noting that because of demographic trends (liberals tend to live in more concentrated cities), gerrymandering has more potential benefit to the GOP.

The larger issue is not which party gerrymandering benefits more, but rather that it should not be a tool to benefit either party. Hopefully changes to the redistricting process (or possibly even more significant changes to how we elect our representatives), in addition to a more definitive U.S. Supreme Court ruling, can eradicate this plague on our democracy. It is, however, certainly an uphill battle.

When the Democratic Process Plays Out Fairly, the Means Justify the Ends

When the democratic process plays out fairly and transparently–two qualifications many elections, including the 2016 Presidential election, do not meet–the means justify the ends. Elections do have consequences, but they should never be predetermined, or even allowed to be titled to one sides favor.

All that should matter is the principle of one-person, one-vote. Now the Electoral College purposefully distorts this principle in Presidential elections, but that is another topic for another day. Regardless of your opinion on its current merits, the Electoral College was created intentionally as one of the compromises that birthed our great nation; it is enshrined in the U.S. Constitution until an amendment is passed that says otherwise.

Gerrymandering, on the other hand, is a bastardization of America’s democratic process. It is not a stretch to say that our Founding Fathers did not intend for gerrymandering to be a feature of our democratic process. This problem has only become more acute as software is developed to help lawmakers more effectively “pack” and “crack” districts. As with the issue of free speech on social media, technological improvements in gerrymandering have outpaced our government’s ability to regulate it.

By continuously punting on the issue of partisan gerrymandering, the U.S. Supreme Court has been negligent in upholding the words carved into its facade–“Equal Justice Under the Law”.


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Military Spending and “Moral Hazard”

Image result for defense spending cartoon

The ONE thing I have always agreed with President Trump about is that our NATO allies need to spend more on defense. But while Trump has certainly talked this talk, his actions have actually had the opposite effect by reinforcing a “moral hazard”.

You may be thinking, what is a moral hazard? It is “a situation in which one party gets involved in a risky event knowing that it is protected against the risk and the other party will incur the cost.”

In the case of the U.S. and our NATO allies, the “risky event” is NATO countries underinvesting in defense spending. Our allies are able to do this because they know they are protected by the U.S., who is the other party that will “incur the cost” through our massive defense budget.

I invoke this argument because the GOP often uses moral hazard as a justification when it proposes slashing spending on safety net programs (particularly healthcare programs). While I will not wade into that argument, hopefully framing my argument this way will resonate with some people who otherwise would not agree with my prescription for getting our allies to spend more on defense–by reducing (or at very least not increasing) our own defense spending. 

If anything, defense spending is better positioned for a moral hazard argument than safety net programs are. Moral hazard implies a choice is being made by a rational party based on cost, benefit, and risk. So what happens with the same choices when a person or country’s income rises? Wealthy people typically do not forgo health insurance, but wealthy nations sometimes do forgo adequate military spending, which is the crux of this whole issue. All this is not to say that a moral hazard does exist for military spending but not for safety net programs–I leave the reader to draw their own conclusions on that. The point of this little digression, rather, is to say that if you believe a moral hazard exists for safety net programs, it is hard to argue that one does not also exist for defense spending.

Regardless of your beliefs, this is not the first time that differentials in defense spending between the U.S. and our allies have been identified as a moral hazard. Former U.S. Defense Secretary Robert Gates made a similar claim, as highlighted in an Op-Ed written about his final speech to NATO in 2011:

“Gates’s frustration was no doubt sparked by the realization that his department has become the victim of moral hazard. The United States provides a free security guarantee to Europe. Europeans, meanwhile, have responded in an economically rational way by taking greater risk with their external defense. With the collapse of the Soviet Union removing the last plausible military threat, it was logical for European policymakers to avoid spending on expensive space, communications, and intelligence systems that the United States was largely providing for free. 

Gates concluded his speech by warning Europe’s leaders that the next generation of U.S. leaders lacks nostalgia for the Cold War struggle and could walk away from the NATO alliance. In the future, Europe will undoubtedly have to do more for its external defense. That doesn’t seem like a problem now [2011] since there is no apparent external threat. But should they have to more fully insure themselves, European defense planners should consider how they would rebuild their defenses. They should consider how much time it would take to mobilize political and budgetary authority to prepare for these threats and how long it would take to rebuild the required military forces.”

Since that speech [June 2011] many of the external threats to our NATO allies, which Gates noted were then not present, have since emerged. Absent adequate European military capabilities to deter and/or respond to a threat, the Syrian Civil War metastasized from a seemingly containable conflict to the worst humanitarian crisis since WWII. Refugees from the war and other regional conflicts have shaken the E.U. to its foundations, leading to Brexit and increasing Euroscepticism across the continent. More directly, a European (albeit non NATO) country, Ukraine, was invaded and had territory annexed by Russia.

It is, therefore, past time that European countries started taking greater ownership of their collective military capabilities. As Gates correctly noted, mobilizing sufficient public support–a necessary initial step for policy change in democracies–takes time and political ability. Recognizing this fact, it seems that European politicians are far behind where they should be in terms of reconciling their respective electorates with this reality.

Even that U.S. leader who “lacks nostalgia for the Cold War struggle and could walk away from the NATO alliance” is now in power in President Trump. While Presidents Obama and Bush also pressured NATO countries to spend more on defense, they did so more diplomatically. Perhaps surprisingly, I do not think that was necessarily the right approach when it comes to the issue at hand; sometimes difficult things just have to be said candidly, and proper incentives provided, to get a desired outcome (especially when large sums of money are involved, and speaking diplomatically has continuously failed to produce the desired outcome).

I’m sure Donny would tell you, in his usual egomaniacal hyperbole, that “no one has been tougher on NATO spending than me”. While Trump’s words have been the toughest, just like his predecessors his policies are reinforcing this longstanding moral hazard. To see how, just follow the money; the U.S. continues to increase its defense spending (over $100 billion increase since Trump took office, up to $716 billion dollars in fiscal year 2019), sending the message that we will keep making up for the rest of NATOs shortfall–after all, actions speak louder than words.

In order to end this moral hazard, Trump has to not put taxpayer money where his mouth is by not increasing defense spending. Of course the military-industrial complex (and his bases’ blind support for military spending) won’t allow him to do that, regardless of what moral hazard or–much more importantly–the other needs of our nation demand. 

If we continue on this course we will ultimately be left with more military spending both now and in the future, as we decrease pressure on our NATO allies to build up their military capabilities. 


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Labor, Education, and Apprenticeships

Image result for apprenticeship

Long time no see folks. It’s well past time to shed that post-policy depression (tax code) and get back to it. In doing so let’s consider a topic I have discussed often, one that should have bipartisan and Trump administration support, but has unfortunately yet to get its due–apprenticeships.

The Trump administration just concluded it’s “Task Force on Apprenticeship Expansion” in May. Here are some key recommendations from the final report:

  • “The Subcommittee on Attracting Business to Apprenticeship recommended that the Industry Recognized Apprenticeship program should streamline and simplify program funding through various methods, such as updating Federal funding criteria, streamlining State grant access, and exploring sector-led financial options.” (p 10)
  • “According to recent research by the U.S. Government Accountability Office (GAO), there are more than 40 workforce development programs across nine Federal agencies. Data shows that these programs were funded with more than $42 billion, although less than half that amount ($17 billion) went to employment and training activities. Based on this data, there is a clear need to streamline and simplify programs by developing an organized approach that recognizes and preferentially funds apprenticeship.” (p 27,28)

Who can argue against greater efficiency? Nobody. However these efficiency increasing measures were already implemented, according to the Government Accountability Office (the very entity the Task Force cited regarding inefficiency in the first place)–that low hanging fruit has already been picked.

The Trump administration wants the private sector to share in the cost of scaling-up apprenticeship programs–another sentiment that is difficult to argue with. The problem is that it has not offered any incentive for the private sector to do so. Private companies are currently bringing in record profits while under-investing in apprenticeships; why would these companies change their behavior now, when times are good, without a new incentive to do so? Instead of increasing spending or leveraging the recent corporate tax giveaway to provide such an incentive, the Task Force cites measures to increase efficiency that have already been implemented.

The private sector needs to play a role in developing the curricula for apprenticeship programs, but can we stop pretending it will provide meaningful financing for them? Maybe if we cut corporate taxes even further they would, right!? If only we could’ve done away with that pesky corporate income tax completely, surely they would have (well, there is no more corporate alternative minimum tax now)…OK, clearly I’m still salty about tax reform…

It is time to admit that private businesses have largely abandoned the apprenticeship model. Sure there will always be anecdotes about successful training programs, particularly from large corporations that can afford to attract top talent. Unfortunately nothing currently exists on the scale required to meet the needs of the average American worker or business.

The results are obvious: underemployment, stagnant wages (a modest uptick in wage growth recently does not make up for decades of stagnancy), and ballooning tuition rates / student loan debt as everyone feels they must go to college to make a decent living. If the Trump administration’s answers to these societal problems are reaching some unattainable level of efficiency and expecting the private sector to suddenly become more altruistic, nothing will change from today’s unacceptable status-quo. If, on the other hand, apprenticeships were adequately invested in, they could provide an affordable alternative to the four-year college path, and revive America’s dwindling middle class.

The Trump administration just proposed merging the Labor and Education Departments. In talking about it, a friend asked me if I thought the proposal was a good idea. My answer was that it could be a good idea, but under this administration it would not be. If, for example, the merger really reduced redundancies and opened up more resources for programs like apprenticeships, that would be a positive trade-off in my opinion (again, greater efficiency is hard to argue against, in theory).

But lets be realistic, that is not the point of the Trump proposal. Look at Trump’s big Apprenticeship Task Force, which would fall squarely within the proposed agency’s mandate. Where’s the beef? SHOW ME THE MONEY! It’s simply not there…

As a nation we invest in what is important to us. No amount of free-market rhetoric, appeals to “greater efficiency”, or other forms of lip-service are going to shrink Americans’ skills gap or “make America great again”. Only investing adequately in our greatest asset–the American people–can accomplish that feat.

(Note: When considering what we do spend tax dollars on, don’t forget that the recent spending bill appropriated $61 billion MORE for defense spending–$655 billion total, compared to $42 billion for workforce development programs. Also, don’t forget that the recently passed tax code will reduce tax revenue by over $1 trillion dollars over the next decade)

 


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The First Casualty of “America First”: The Kurds

A member of Iraqi federal forces holds the Kurdish flag upside down in Kirkuk, Iraq on October 16, 2017.REUTERS/Stringer

Remember when the fate of Syria’s Bashar al-Assad was uncertain, the country mired in a horrific Civil War with no end in sight while the IS was rapidly gaining ground? Remember when Iraqi forces fled IS advances, abandoning Mosul, Iraq’s second largest city? You should remember both, they were only a few years ago…

You should also remember how, in both cases, the Kurds proved themselves to be capable, brave fighters. They were and continue to be a stable faction in a volatile region–native boots on the ground that the U.S. can rely on. But facts on the ground can change quickly, especially when external powers intervene decisively in a conflict.

Seemingly a victory, a referendum for Kurdish independence quickly soured when the Iraqi military retook the Kirkuik oil field (backed by Iranian proxies). Yes, the same Iraqi military that melted away in the face of IS fighters and needed the Kurds to help clean up their mess, turned their guns on the Kurds for exercising self-determination.

In Syria, Russia and Iran helped Assad turn the tide of the Civil War decisively in his favor. Now that he appears to be firmly in power, Assad has set his sights on retaking Syria’s Kurdish regions.

In addition to being capable fighters, the Kurds have a penchant for democratic governance and women’s rights. In terms of a Middle Eastern partner, they are a dream match for the U.S.. We always lament the fact that we do have not enough true, democratic allies in the region, but I fear we are now abandoning one because supporting them doesn’t fits into Trump’s “America First” foreign policy.

In Iraq, we stood by as the Iraqi military and Iranian militias ripped away the would-be heart of any future Kurdish state. But the U.S. has invested a ton of resources into maintaining a unified Iraq; while I cannot agree with America’s inaction here, it is somewhat understandable.

What about in Syria, where this is not the case? Here too we are failing to protect our ally. In order to appease Turkish President Erdogan, President Trump has said he will stop arming the Kurds.

This is the problem with Trump’s “America First” foreign policy–it is inherently short-sighted. Is it in America’s short term interests to defend the Kurds now? Probably not–we used em’ and now we could lose em’. Turkey is stronger than the Kurds; it is easier to give in to our more powerful “ally’s” wishes here regardless what is “right”, even as President Erdogan continues to turn Turkey into an authoritarian, non-secular country.

Turkey does have some legitimate concerns about its territorial integrity when it comes to Kurdish statehood. Despite the erosion of Turkish democracy, Turkey is far from a “failed state” (as Iraq was and Syria still is), making the case for appropriating Turkish land for a Kurdish state much weaker. Mechanisms could be set up to protect Turkish sovereignty and borders alongside the introduction of a Kurdish state, which I have outlined in a previous blog post.

More pointedly, if Turkey didn’t want the Kurds to have a much stronger claim to their own state, it should have acted more decisively in the Syrian Civil War and in the fight against the IS. Instead Turkey, like the rest of the global and regional powers, let the Kurds do the heavy lifting. Now, understandably, the Kurds want their just deserts.

Would continuing to decisively back the Kurds upset some powerful players? Yes. What meaningful change does not? What happened to Trump’s supposed bravado? Risk aversion will only reaffirm to the status-quo in the Middle East–picking the least bad autocrats to be our allies, while the region remains mired in conflict and stalled development. Building true democratic allies in the Middle East will not be quick or easy, but it is important work nonetheless.

Now to be fair, in international affairs long-term goals need to be weighed against short-term security concerns, and shortsightedness is not exclusive to the Trump administration. Obama did not do enough to protect a budding democracy in Egypt, and was too risk averse in Syria, allowing Russia to eventually come in and dictate the result of the conflict. There is, however, a sense that the Trump administration will not even really weigh these options when making tough decisions. After all, Trump has shown at best a lukewarm appreciation for democratic institutions at home (attacks on the judiciary and independent media) and has praised authoritarian leaders abroad. It is, therefore, no stretch of the imagination to think that he will, by default, opt for the easy solution without even considering the long-term benefits of promoting democratic governance.

In this case, even considering the potential negatives, abandoning the Kurds would be one of America’s most short-sighted decisions the Middle East since we sleepwalked into the Iraq War in the first place. Based on what we know about Trump and his “America First” foreign policy, it is not likely to be the last short-sighted decision either.

Update (1/27): I knew Trump wouldn’t do the right thing…The U.S. has agreed to stop arming the Syrian Kurds to appease Turkey’s Erdogan. Erdogan, sensing weakness in Trump’s resolve, is trying to further dictate terms to the U.S., demanding we remove all of our troops from Manbij.

It would be incredible to imagine the U.S. allowing another country to dictate where we keep our troops, particularly since Manbij is part of Syria, not Turkey. With that being said, nothing would surprise me anymore; all bets are off with the Trump administration.

Bottom line–Turkey and Erdogan have no right to tell us who we can ally with, and where to position our troops.


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With Tax Reform, America Must Go “Back to the Future”

Tax reform is not “sexy”, there is no getting around this fact. It is, however, a very important issue, as every government program is funded either by tax dollars or debt. While the specifics of tax policy may be difficult to comprehend, almost everyone has their own beliefs on taxation and the role of government.

Looking at these preferences, the majority of Americans believe the government does not do enough to help poor and middle class people. Relatedly, a full three quarters of Americans feel that the wealthy aren’t paying their fair share of taxes.

Against this backdrop, lets consider Trump’s tax proposal:

  • Fewer tax brackets at lower rates for the wealthiest. The plan sets three tax brackets for individuals — 12 percent, 25 percent and 35 percent — down from the existing seven rates (which top out at 39.6 percent).
  • Lowering the corporate tax rate from 35 to 20%. While our corporate tax rate is too high, due to loopholes the actual rate paid is much lower (particularly for large corporations who can afford the best lobbyists, lawyers, and accountants). Based on actual taxes paid, the U.S. ranks comparatively low among developed countries. The corporate tax rate should only be lowered if the revenue lost if offset by closing the right loopholes. Trump has not specified which loopholes, if any, he plans to close.
  • Cutting the “pass-through” tax rate, which is what individuals who file their corporate earnings as personal income pay, from the current highest income tax rate of 39.6% to 25%. This rate cut would almost exclusively benefit the wealthy, and is one to watch closely-in recent years more and more businesses have begun filing as “pass-throughs” in order to minimize their tax bill.
  • Repeal of the alternative minimum tax, which is essentially in place to ensure wealthy people pay a certain minimum amount as they use their accountants to game the tax code. But it will make the tax code fit on a post card! And thats what matters!
  • A lowering an eventual repeal of the inheritance tax, which is only paid on the largest estates. This is being billed as a move to help family farmers, which is an audacious spin of the issue to be sure.
  • Trump’s plan has been light on details about capital gains taxes. However, there is nothing to suggest his financier-stacked Cabinet (Mnuchin, Cohn) will want to do anything but lower these rates as well.

All these proposed ideas would reduce taxes paid by the wealthy, compromising the government’s ability to further help poor and middle class people. So the question is, if these ideas are so unpopular, how is Trump selling them to the American public?

For some, it is enough to say that lower taxes will promote growth, increase employment, and pay for themselves. People who drink this “supply-side” Cool-Aid are outliers, and notably the vast majority of economists disagree with these claims. But remember, we are talking about many of the same people who disagree with 97% of climate scientists on climate change, so this is actually a consistent (if not irrational) repudiation of “experts”.

Most reasonable people, however, believe what the overwhelming majority of experts in a field conclude. For these people, support for Trump’s plan likely comes from being told they will receive a “massive” tax cut. But when you look at it, the “massive” cuts in Trump’s plan are reserved for those with the highest incomes.

Consider the distribution of income tax cuts, as shown on the table below. 77% of the cuts go to people earning more than $143,100 a year. That is hardly the “middle class”.

It’s more of the same when it comes to corporate tax cuts. According to the nonpartisan Tax Policy Center, “middle-income taxpayers would receive less than 10 percent of the benefit of a corporate rate cut while the top 20 percent would receive about 70 percent. The top 1 percent would see about one-third of the benefits and the top 0.1 percent would get about one-fifth.

Trump’s plan would increase our national debt by well over a trillion dollars. The IMF has warned the plan will increase inequality and will not lead to higher growth. Wall Street is betting it will lead to greater investments in automation, not workers. The Fed has even waded into the debate to issue a rare warning, saying the proposed plan could lead to high inflation.

For all these negatives, middle class earners will only get a small tax cut, if that. Treasury Secretary Mnuchin admitted some middle class earners may not get any cut at all. This is coming from the man who also said it is “hard to create a system where you’re not going to also cut taxes on the top 10 percent“. Maybe if you are a derisive elitist with zero consideration for societal well-being, who has no business governing, it is difficult to imagine not cutting taxes for the wealthy. For most people, it is extremely easy to imagine.

So Trump’s plan is unpopular, and those who support it are either irrational, have been misled, or are wealthy and likely to benefit personally. Just like with healthcare, the GOP has no tax reform plan that works for the vast majority of Americans; hopefully its tax reform efforts will meet a similar defeat.

The Case for Higher Top Rates

Remember, Trump’s plan sets three tax brackets for individuals, down from the existing seven. While the U.S. tax code has become overly complicated due to deductions and loopholes, the complicating factor is not the number of income tax brackets. Like any misdiagnosis, reducing the number of tax brackets would not solve any problems, and would likely make the situation worse.

Republicans in Congress plan on including a fourth higher bracket in their proposal, but this is not enough. There should be even higher brackets and rates for people with 7 and 8 digit incomes.

After a certain point, the higher your income, the less it is connected to working harder, and the more it is related to the risks one takes and the carefully constructed, trade-based global economy in which we operate (infrastructure, government R&D, international peace and trade rules, strong judicial systems, educated workforces, relatively prosperous customer bases, etc.). Notably these characteristics are all, to varying degrees, financed by tax revenue. 

I can already hear people moaning at this point and calling me a socialist, so allow me to clarify with an example. Take someone who manufactures clothing. Decades ago, the owner of this company would more or less be constrained to selling his or her goods domestically. Despite working very hard, their overall earnings were capped (at least by today’s standards). Today, the same person, putting in the same amount of work, can sell their goods all over the world through the internet, earning a lot more money. The work these two owners from different eras put in is roughly equivalent, but the modern day entrepreneur can potentially earn a lot more. In fact, this is half of the story of increasing extreme global inequality.

What about my other point, about these systems being financed to varying degrees by tax revenue? Well this is certainly true of the internet (whose origins were in defense research). It is also true of all of the spending that promotes international peace and fair trade practices (defense spending, development aid, contributions to international organizations like the WTO, etc.).

While the risks people take should be rewarded, the context in which wealth is earned should not be ignored. This is not to say “you didn’t build it” or “you didn’t work hard”, it is simply acknowledging that outside factors play a role in how much wealth one can amass. Ignoring this reality does not make it go away, but it does risk underinvesting in making sure it continues into the future.

A Quick Lesson on Marginal Tax Rates

I think that much of the opposition to higher tax brackets comes from misunderstanding how marginal tax rates work. When you enter a higher bracket, only the amount you earn over the higher threshold gets taxed at the higher rate.

Lets take a look at a hypothetical numerical example. If the rate below $100,000 is 20%, and the rate above is 30%, when a person earns their 100,001st dollar, only the amount over the threshold–the one dollar–is taxed at the higher 30% rate. The rest, the first $100,000, is still taxed at the lower 20% rate. People do not become poorer by moving into a higher tax bracket.

In recent history, before the Reagan era tax cuts, top income tax rates were around 50%. This seems like a reasonable number if not for its roundness and inherent fairness, but the exact optimal number of brackets and rates is not what’s most important. More important is recognition by people across the political spectrum that the wealthy must pay their fare share of taxes. Based on the survey results cited earlier, most people already do share this belief–it is well past time their elected representatives acted on it.

The tax code should be used neither to venerate the wealthy as infallible job creators, nor to vilify wealth so much as to stifle innovation. Simply put, the tax code must allow us to adequately invest in the very systems which enabled America to become the wealthiest nation in the world in the first place. Anything else is a short-sighted failure of governance.

“Back to the Future” (With Some Help From Our Friends)

Trump’s base often talks about “Making America Great Again”. To a small minority, this is a thinly veiled embrace of our country’s racially charged past. To others, I’d like to think most people, making America “great” is about (re)creating an economy that rewards anyone who is willing to work hard.

So how can we make sure that, as a country, we can afford to make the investments needed to get back to this “Golden Age”? Not surprisingly, some of the answers lie in the past; America has historically had both more income tax brackets, and higher tax rates for top earners. These were the good old days many low-tax advocates are pining for!

There is nothing uniquely American about these higher historic rates either. According to the Organisation for Economic Co-operation and Development (OECD)top personal income tax rates in rich nations had fallen to 35 percent in 2015 from an average of 62 percent in 1981.To put a bow on an earlier point, this is the other half of the story of increasing extreme global inequality.

Now admittedly some things have changed in the past few decades. The rise of information technologies has led to irreversible changes in financial markets. When people can move their money around the world instantly with the click of a mouse, it is important to have some level tax coordination between countries in order to fight tax evasion (in its many forms). In today’s globalized world, countries and international institutions such as the OECD must work together to ensure the ultra-wealthy are not getting a free ride.

If America wants to be able to adequately invest in the very systems that made and continue to make it great, and if we want to be able to give working class people a tax cut without greatly increasing our national debt, we must hold the wealthiest Americans economically accountable.

Update (12/1/17):

Some elements of the tax bill have changed since I originally wrote this blog, but these were marginal changes. At it’s core, this bill is still the regressive piece of legislation it always was.

According to the non-partisan Congressional Joint Committee on Taxation, even accounting for supposed growth this bill will “unleash”, it will still increase the deficit by 1 trillion dollars over the next decade. That shortfall will ultimately be paid for by reducing spending on popular government programs, and forestall the conversation on any new government programs (think education, healthcare, infrastructure). The only hope is that the Senate and House are unable to reconcile their bills and pass a unified one, but this is unlikely–if there is one thing most conservatives Congressmen believe in, it is making the rich richer and the poor poorer.

For all the talk of how damaging Trump has been to this country, taking a longer view he will ultimately be a flash in the pan. This tax bill, should it pass, would have a much larger negative impact on our country, ultimately leading to lower social mobility for decades to come. The last major tax overhaul persisted for over 30 years–this country (literally and figuratively) cannot afford to have this bill become our new tax code.

Update (12/22):

The House and Senate reconciled their tax bills, with the final version being signed into law by President Trump. The only silver-lining is that this massively unpopular law may lead to a Democratic resurgence. However, Republicans will do their best, via repressive voting laws and gerrymandering, to stop this from happening.

The American people cannot afford this tax law on the books for a prolonged period of time.  It will leave us further in debt, while compromising our ability to further invest in our people and our infrastructure. We now turn to the 2018 and 2020 elections as a barometer for just how fed-up the American people are by the bait-and-switch “populism” of Trump and the GOP.

 


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Could Venezuela Become “America’s Syria”?

Recently President Trump, seemingly out of nowhere, threatened Venezuela’s increasingly authoritarian President Nicolas Maduro with the possibility of military intervention. Where did this idea come from? How crazy is it? Lets dive in.

To answer the first question, I can just imagine at some point during a National Security Council meeting, someone mentioned the need for a military option should the situation in Venezuela continue to deteriorate. Trump, never missing an opportunity to put his foot in his mouth, turns that into his ad-libbed “military option” line.

It’s like a game of telephone that never should’ve happened between the National Security Council, Trump, and Maduro. What was supposed to be implicitly understood–that America will defend its interests and regional allies–was instead explicitly said in the worst way possible (much to the joy of Maduro, who is using Trump’s words as a rallying cry in hopes of gaining domestic and regional support).

But what about the second question, how crazy is the idea of a limited American military intervention in Venezuela? The answer: not as crazy at is sounds.

I have always said America would never let something like the Syrian Civil War happen in Latin America. For all the anti-interventionists out there, lets take stock of what European inaction in Syria has cost it–a refugee crisis and a crisis of identity: Brexit, a rise in right-wing populism, and the continued inability to address the large scale economic and social problems that have plagued the continent since the Great Recession and whose solutions require closer European integration. And that’s not even considering the suffering realized by the Syrian people.

So the next questions are obvious: is Venezuela “America’s Syria”? Could inaction in Venezuela lead to similar horrors in the United States?

Long answer short, no. There are some key differences between these two crises.

Most significantly, while there is certainly a humanitarian crisis in Venezuela, the government has not been particularly violent in its crackdown on dissent (at least compared to Assad’s response to protesters in Syria). The Venezuelan military, however, is loyal to Maduro, so it’s actions are certainly something to keep a close eye on as the situation unfolds.

Latin America as a region is more stable than the Middle East. It has experience with democratic governance and resolving disputes peacefully. At this point, it still seems unlikely that full scale civil war will break out in Venezuela.

The U.S., for its part, has vastly superior military and border control capabilities compared to the EU. Venezuela is also further from the Southern U.S. than Syria is from Southern Europe; greater physical distance will help insulate America from any negative spillover effects.

There is, however, one common thorn in the side of a reasonable solution–the spoiler you love to hate, Vladimir Putin. Putin has worked out a weapons and financing for oil deal with Maduro, giving Russia a strategic partnership in the region similar to what he had with Assad in Syria.

Putin’s Puppet?

As Maduro has been ostracized by the international community and seen the value of the Bolivar deflated away due to economic mismanagement, he has increasingly relied on Russian financing to keep his regime afloat. In exchange, Maduro has offered access to Venezuela’s lucrative oil reserves on very preferential terms.

In an attempt to stop this damaging, shortsighted behavior, the Venezuelan Congress took away Maduro’s authority to make oil deals without legislative approval. Maduro responded by using the courts to circumvent the rule:

“In March, the nation’s Supreme Court – whose members are loyal to Maduro – took over the powers of the opposition-controlled National Assembly. A majority of elected Assembly members opposed any new oil deals with Russia and insisted on retaining power to veto them.

Days later – after fierce national protests against the action – the court returned most powers to the national legislature at Maduro’s public urging. But the court allowed the president to keep the legal authority to cut fresh oil deals with Russia without legislative approval.

The episode was pivotal in escalating daily street protests and clashes with authorities that have since caused more than 120 deaths.”

Of course the Venezuelan Congress has since been dissolved and replaced with a rubber stamp assembly, so at this point it doesn’t matter what the Congress had ruled.

With this entanglement of Russian and Venezuelan money, arms, and oil, you can forget about any meaningful UN Security Council action against Maduro. Russia will shield him with its veto power under the guise of “national sovereignty”, because if Maduro falls, Russia’s influence and its oil deals would likely be in jeopardy:

“The Russian strategy has its risks. Many of the world’s top energy firms took a hit when Chavez nationalized their assets, and an opposition-led government could later reverse or revise any deals Maduro cuts without their blessing.”

Funny, I thought Maduro said America was trying to steal Venezuela’s oil? It seems like he’s doing a fine job of that himself, leveraging his country’s future in a desperate and costly attempt to remain in power.

Not Syria, But a Serious Situation

So if Venezuela is not “America’s Syria”, why did I say earlier that the idea of limited American military intervention is “not as crazy as it sounds”? This is because bad situations–and the Venezuelan crisis absolutely qualifies as one–usually fester and become worse if left unaddressed.

Anti-Maduro activists are becoming fed-up with the official opposition. If the people believe the organized opposition is ineffective, it could lead to more extreme measures like guerrilla warfare, which could ultimately lead to civil war. Venezuelan’s will not sit idly by as the collapsing economy and shrinking political space encroach upon their human dignity.

The fallout from a failed Venezuelan state would not be confined to the country’s borders. It could, for instance, trigger a refugees crisis. While Latin America is more stable than the Middle East, the region is not particularly wealthy or able to absorb large numbers of refugees. There could be cascading crises as other Latin American nations struggle with such an influx, ultimately threatening America’s national security and economic interests.

But most importantly, making sure Maduro does not turn Venezuela into a fully failed state (like Syria) is the right thing to do for the Venezuelan people. Sometimes the right thing to do aligns with short term national security and economic interests (they always align in the long run). When they do align, taking action suddenly seems less crazy, and inaction seems less defensible.

If the situation deteriorates further, America must be ready to commit resources to its Latin American and Venezuelan allies to remove Maduro. This would enable an interim government to restore Venezuelan democracy. Only then can the hard work of rebuilding Venezuela’s economy begin.

Trump wasn’t wrong that a military plan should be in place in case the situation in Venezuela further deteriorates–being prepared is a good thing. What he was wrong for doing, as usually, was not fully comprehending the situation and opening his big fat mouth. The “military option” should be a contingency plan, not a threat. Trump’s inability to say nothing, to not be the tough guy, has made a bad situation worse.


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Trump’s War on the Environment

Despite President Trump’s “pledge” to “promote clean air and clean water”, things are not looking good on the climate change front. By targeting key U.S. policies–the Clean Power Plan and vehicle emission standards–and international agreements–the Paris Climate Accord and the Green Climate Fund–Trump’s administration is threatening to undo recent progress made combating climate change.

Trump’s proposed budget would cut EPA funding by 31%. Scott Pruitt, the new EPA head, said he is unconvinced “that carbon dioxide from human activity is the main driver of climate change.” This is an old tobacco industry tactic, justifying inaction by saying that more research is needed–it is not, there is overwhelming scientific consensus on the subject.

Trump’s budget director, Mick Mulvaney, said of investing in climate change mitigation, “we’re not spending money on that anymore. We consider that to be a waste of your money”. Trump is also reconsidering the government’s use of the “social cost of carbon” metric, which takes into account the potential economic damage from carbon emissions that would result from proposed policies.

All things considered, it is not hyperbolic to say that the Trump administration is carrying out a multi-pronged “War on the Environment”

U.S Emissions–The Clean Power Plan and Vehicle Emission Standards:

Pie chart of total U.S. greenhouse gas emissions by economic sector in 2015. 29 percent is from electricity, 27 percent is from transportation, 21 percent is from industry, 12 percent is from commercial and residential, and 9 percent is from agriculture.

Greenhouse gas emissions in the U.S. are highly concentrated in the electricity, transportation, and industry sectors. These three sectors accounted for 77% of 2014 emissions according to the EPA.

While a national cap-and-trade policy or carbon tax would help reduce emissions across the board, partisan disagreement has prevented such a policy from being enacted. To get around this gridlock, the Obama administration targeted key sectors through existing legislation and executive action. Specifically, the Clean Power Plan (part of the Clean Air Act) addresses emissions in the electricity sector, while stricter vehicle emission standards address emissions in the transportation sector. These important new rules are now in the crosshairs of the Trump administration:

“The tailpipe pollution regulations were among Mr. Obama’s major initiatives to reduce global warming and were put forth jointly by the E.P.A. and the Transportation Department. They would have forced automakers to build passenger cars that achieve an average of 54.5 miles per gallon by 2025, compared with about 36 miles per gallon today.

Those regulations are locked into place for vehicle model years through 2021, and just before Mr. Trump took office, the E.P.A. put forth a final rule intended to cement them for vehicles built from 2022 through 2025. However, the E.P.A. did not jointly release its plan to do so with the Transportation Department, leaving a legal loophole for the Trump administration to take advantage of.

The E.P.A.’s Clean Power Plan regulations, which would cut climate-warming pollution from power plants, will probably be much harder for Mr. Pruitt to undo. He will have to legally withdraw the existing rule and propose a new rule to replace it, a process that could take up to two years and is expected to be fraught with legal challenges and delays along the way.”

Undoing the Clean Power Plan and/or stricter vehicle emission standards would have devastating impacts on air quality (and therefore people’s health) and the fight against climate change.

Global Emissions–The Paris Climate Accord and The Green Climate Fund

The Paris Climate Accord, agreed to by 194 countries, is built on the concept of Intended Nationally Determined Contributions” (INDCs). These contributions represent a country’s climate change mitigation targets, taking into consideration its economic ability and level of development. Trump has vowed to pull the U.S. out of the Accord.

Failure by the U.S. to realize our commitments (a certainty if the Clean Power Plan and stricter vehicle emissions standards are scrapped) would not completely undo the Paris Accord–other countries have stated they will press ahead with its implementation. But, as the world’s second largest greenhouse gas emitter, such a failure would surely crimp the Accord’s effectiveness.

Furthermore, as INDCs are to be updated every 5 years, future commitments by other countries are likely to be less ambitious without U.S. commitment, leadership, and funding. Climate change experts are relying on more ambitious future commitments to stave off the worst impacts of climate change. The Accord was seen as a starting point towards stronger future action, now even this starting point is in jeopardy.

What about the commitments of developing countries, many of which face increasing energy needs and have untapped fossil fuels reserves? While it is true that sustainable development is a challenge, there are reasons to be optimistic. These countries have neither the strong fossil fuel lobbyists nor the “sunk” energy grid infrastructure costs the U.S. does. Furthermore, these countries tend to rely more on agriculture for their economic output, placing a premium on predictable climate patterns and environmental protection. Therefore, with a little prodding in the right direction, developing countries may be willing to largely forgo fossil fuel use–this is where the Green Climate Fund (GCF) comes into play:

“The agreement reaffirms an earlier collective pledge from the developed nations to jointly provide $100 billion a year in grants, loans, and investments in developing countries, from public and private sources.

With energy use soaring over the past decade in Asia, it is clear that helping emerging economies avoid tapping their coal reserves in favor of installing renewable sources in solar, wind, tidal, wave, and geothermal energy will be essential in mitigating their carbon emissions without unfairly stifling their economic development.”

Trump’s proposed budget would completely eliminate America’s contribution to the Green Climate Fund. U.S. leadership is needed to galvanize global efforts to even come close to the lofty GCF goal of $100 billion a year. Without this funding, poorer countries will not be able to meet their commitments under the Paris Accord, further undermining its effectiveness.

If absent Green Climate Funding developing countries develop unsustainably, efforts taken by developed countries to lower their emissions would likely prove inadequate in preventing the worst impacts of climate change.

“It’s the Economy (and National Security), Stupid”

Even if you do not care about the environment or sustainable development, climate change has economic and national security implications for the U.S.

“In terms of returns on investment, climate finance is ridiculously cheap for what America gets for it: goodwill and cooperation, less warming, clean and resilient growth, and, importantly, fewer refugees.

What’s more, these renewable energy sectors hold vast business potential for American companies wanting to supply technical expertise and equipment. Establishing the U.S. as a leader in green energy is directly in the Trump administration’s interest as it aspires to slow, or at least balance, China’s expanding global clout.

Aid to help poor rural farmers on marginal lands adapt and thrive can be the key to avoiding a surge of climate refugees flowing either into already crowded urban centers in the developing world or, worse yet, forcing people to set out on dangerous voyages over land or water in search of a livable future. In security terms, the U.S. military and relief agencies alike understand that an ounce of this kind of prevention is worth a pound of cure.”

Some people may dismiss the notion that climate change is a national security risk as liberal-hippy nonsense, but this is simply not the case. Trump’s own Defense Secretary James Mattis stated climate change was a national security risk during his confirmation hearing.

On the economic front, clean energy related activities already are and will increasingly be big employers in the U.S. However, growth in future clean energy employment could be compromised if Trump’s budget for the Department of Energy comes to pass. “The [budget] plan would eliminate the Advanced Research Projects Agency-Energy, which funds ‘high-risk, high-reward’ research.” This is exactly the type of public R&D needed to ensure the U.S. is a leader in the emerging clean energy economy.

Multilateral clean energy financing also promotes American exports. “…of the top 30 markets for U.S. renewable energy exports—as determined by the Commerce Department—more than half are eligible for GCF [Green Climate Fund] investments. As has occurred in other multilateral environment funds, the GCF is beginning to directly finance some projects that have U.S. sponsors or use U.S. equipment and services.”

China aims to spend at least $360 Billion on renewable energy by 2020 because it understands the value of being the global leader in the clean energy economy. Trump talks about “being tough on China”, however his stance on clean energy investment is anything but.

Resistance Is Not Futile

As with any war, the Trump administration will face resistance in its efforts to undo important environmental protections. Obviously liberals will oppose Trump, and many foreign leaders will try to get him to reconsider his position. The state of California, a progressive thorn in the Trump administration’s side on a number of issues, recently upheld stricter vehicle emission standards in a challenge to the aforementioned rollbacks at the federal level.

Perhaps most significantly, however, is the resistance to Trump’s anti environmental protection agenda that is growing in the Republican party:

The activists’ efforts have not swayed anywhere near a majority yet on Capitol Hill. Only 20 or so of the 237 Republicans in the U.S. House of Representatives have spoken out on climate change this year. But they hope to build a big enough bloc in Congress, or enough influence at the White House, to temper Trump’s agenda.

“It shouldn’t surprise anyone that more and more Republicans are interested in this issue,” said Republican Representative Carlos Curbelo of Florida. “This issue was regrettably politicized some 20 or so years ago, and we are in the process of taking some of the politics out.”

The negative effects of environmental degradation–economic, national security, and health–are felt by people across the political spectrum. If enough Republicans take a stand, it just might be enough to get the fight against climate change back on track.