Most of you know the broad outlines of this. Here is a pie chart showing where the federal govt (2/3 of taxes go there) spends our tax dollars. It is from the liberal Center for Budget and Policy Priorities. For a breakdown of state and local spending in California go here. For CA it’s basically 75% goes to five major activities: Education 25% + health care 20% + 10% prisons + 10% public safety + 10% welfare. In most other states the pie chart looks about the same.
Now that Trumpcare is dead, he and the congressional GOP say they will move on to tax reform. Tax reform could take many forms and end up quite different from the plans proposed by Trump and other Republican leadership, if it happens at all. (And, again, who pays how much or saves how much is not the only thing that matters about taxes.)
Still, the Tax Policy Center (a think thank) estimated how the total tax burden would change under the Trump and House GOP tax reform plans, based on what was known n February 2017. I can’t get the charts to paste into this post. So, please see this NPR summary of the main findings here.
As you would expect, even though almost all American households would see some reduction in taxes under either proposal, the rich get much, much more tax relief. According to the TPC analysis, the bottom 40% of households would get about a 1%-2% increase in after-tax income, while the top 1% of households would get a 13%-17% boost.
[Sunday key update: Trump’s tax plan contains many, many hidden windfalls for the wealthiest earners and could raise taxes on millions of families, including via the corporate tax. I’m sorry to pour it on, but truth is truth.]
And, this analysis does not even include the effects of the GOP’s proposed cut in the corporate tax rate or a “border adjustment tax.” Off the top of my head, I would guess that since a BAT would be a lot like a sales tax on imported goods, it probably would hit working people the hardest, at least in the short run before trade patterns and exchange rates adjust. To Trump, I imagine a BAT’s main appeal is that it privileges exports over imports. But, to the House GOP members tentatively supporting it, a BAT’s main appeal is that it would raise enough revenue help make room for the other tax cuts. Corporate taxes tend to be passed through to consumers, so I’m not sure reducing them would change the overall tax burden much. We’ll find out.
I’ll do one more quick post tomorrow with pie charts on what the federal government spends our tax money on.
In tax policy, taxes are “progressive” if payers contribute more as a proportion of their income than they do lower income payers. Liberals like a progressive tax structure because they believe wealthier people (1) can afford the burden more, and (2) generally benefit more from the pubic goods that government supplies (like public universities and property right protections).
How progressive is the American tax system? Not very! Yes, federal taxes are fairly (albeit not highly) progressive, as this chart shows.
So, leftwing paradise? Wrong. First, note only some federal taxes are progressive (especially income and estate taxes). Payroll taxes for Social Security and Medicare burden working people the most because they don’t apply above a certain level of income. Payroll taxes comprise almost ½ of all federal taxes paid (not shown on chart).
More importantly, about 1/3 of all taxes are paid to state and local governments. When they are included – so, all taxes at all levels – the burden of paying for government in America is basically flat as a share of income. This is because state/local taxes like sales and sin (tobacco, alcohol) taxes are highly regressive, so much so that every one of the 50 states has a regressive overall tax burden. Even California. In seven states, the poorest 20% of people pay more than four times the rate the richest 1% pay!
This chart that includes all taxes at all levels shows the flatness.
It breaks Americans into five income groups, from the bottom-earning 20% to the top 20%. It also breaks the top 20% down into the top 10%, next 5%, next 4%, and finally the top 1%. For each quintile and very top, a pair of bars compares the share of total income each group earns to its share of total taxes paid at all levels. Note how closely what most groups pay is to what they, on average, earn. The richest pay a little more than their “fair share” when measured this way, and the bottom 40% pay a bit less.
There is more to tax fairness than what I have described. And, fairness is not the only thing that matters in a tax system. More on this stuff later.
I timed this topic in the expectation that the Republican Congress would have completed Obamacare repeal and be nearing completion of its first budget, with yet more large tax and spending cuts. Like everybody else I overestimated their competence. President Trump just announced that repeal is dead and it’s time to move on to…more tax cuts (aka tax reform.) Since by law the first major step in preparing the FY2018 federal budget must be completed by April 1 and the FY2018 budget is not even close to finished yet, now would be a good time for both the GOP and CivCon to focus on taxes and spending.
Radically altering who bears the burden of paying for the American government has been the GOP’s raison d’etre for 20+ years. Obamacare repeal itself would have been a big tax cut on the wealthy and a big cut in subsidies for low-income Americans. It also would have opened up room in the budget for the really huge tax cuts they were planning as the real centerpiece of GOP governance. (I will explain how on Monday, or just see the link below.) I guess creating such room is wasn’t worth walking the plank of taking away millions of people’s health insurance.
Anyway, even without all of this drama, a number of considerations would complicate our discussion of tax fairness. There is more than one way of defining what’s equitable, for instance. Beyond fairness, Public Finance 101 says that a good public finance system should have other features, like be as “efficient” as possible (minimally distorting to the private economy). It should be sustainable and stable, simple,; and politically acceptable. Oh, and no discussion of the costs of government makes any sense if it ignores the benefits of government. As I have mentioned 8 million times, informed citizens must have a rough idea of what and who our taxes are spent on.
For links, I’ll try something a little different this week. This post will stay at the top of the website all week. It has the usual meeting discussion questions and a few short, useful introductory articles.
But, below it I will do 2-3 short posts. Each one will have one or two simple charts that illustrate something important about how high the tax burden is in the United States and who bears it. The idea is we need to know what is before we meet to debate what should be.
DISCUSSION QUESTIONS –
- Tax level/burden: What is the level and distribution of the tax burden now? Federal v. state/local taxes. Which types of taxes (income, corporate, payroll, etc.) cost the most? Who pays which taxes?
- Spending: Biggest programs and who benefits? Biggest misconceptions?
- Loopholes like the mortgage interest deduction are equivalent to spending. How are these “reverse tax burdens” distributed?
- Fairness: Ways of defining it + how should it be defined?
- Short run: How and for whom does GOP plan to change tax burden?
- Long run: How should/will burden be shared?
- What changes to tax fairness would Americans accept?
SUGGESTED BACKGROUND READING –
- Principles: The 5 principles of a good tax system = Equity, adequacy, simplicity, exportability, and neutrality. Very short and recommended.
- Public opinion on taxes/spending is plain nuts:
- ACA repeal: Why GOP must repeal Obamacare’s taxes to make room for future tax cuts.
NEXT WEEK: Which moral standards should we use for judging historical figures?
What better way to start the New Year than by debating an impossibly complicated question? How in the world could we judge the benefits and costs of the Global War on Terror (GWOT)? I still call it the GWOT because, even though President Obama mercifully retired the clunky phrase in 2013, it remains an apt description of the sheer scope and scale of our anti-terrorism efforts.
The easiest measure of anything government does is its budgetary costs. For the GWOT, even that is hard to gauge. That’s partly because some spending is secret but mainly because anti-terrorism is an embedded function throughout government at all levels now and it’s hard to separate out the anti-terrorism spending. Almost 1,300 government organizations and 2,000 private companies work on anti-terrorism. One estimate puts total GWOT spending since 9/11 at around $1.7 trillion and others put the long-term costs (inc. caring for the disabled vets) at more than $4T. Critics often express such monetary costs in terms of the opportunities foregone to have spent the money solving America’s other problems or leaving it in taxpayers’ hands.
There have been many, many other costs to fighting Islamist terrorism, of course. 5,000+ American dead and 50,000-100,000 wounded (excluding 9/11 casualties and the, ahem, 1 million or so foreign civilians.). Weakened civil liberties and creation of a vast surveillance state. Accrual of unilateral presidential power. A fearful electorate. Loss of respect for American leadership. There are many more, some serious, others perhaps not.
Yet, we cannot ignore the benefits of anti-terrorism efforts. Al Qaeda has been decimated over 15 years and (for the moment) largely is reduced to rooting for lone wolf attacks by extremist social media junkies. ISIS, AQ’s rival and wannabe successor is slowly being rolled back, although at great cost. Our government has prevented all but a handful of Islamist terrorist attacks planned on U.S. soil since 9/11. Anti-terror efforts also have yielded other benefits that are less visible, like a revamping of public health and emergency response/disaster relief infrastructure and greatly improved international intelligence-sharing and money laundering enforcement.
What’s the bottom line? Well, that is for us to discuss. But, a few points I will come back to during our discussion:
- There is a reason they call it “asymmetrical warfare.” The costs of defending against terrorist attacks are inevitably huge compared to the damage of any single attack.
- The damage attacks do goes far beyond their immediate casualties. The public grows fearful and vengeful. Politicians panic. Democracies get brittle and fragile. How much crazier would our politics be if other 9/11-scale attacks had succeeded or if we had Europe’s ISIS problem? In comparing costs to benefits of anti-terrorism, we have to look at the dogs that haven’t barked, too.
- The GWOT is far larger than the catastrophic Iraq war. How would you judge counter-terrorism had we not invade Iraq?
- President Trump will soon control our vast surveillance and counter-terrorism apparatus.
I’m still pondering ways to structure our meeting to accomplish more than just let us serially vent about our biggest war on terror pet peeves (Iraq, torture, NSA, not preventing ISIS’s rise, drones, etc.) Later this weekend I will try to do some discussion questions that might help us. Have a good New Year!
(AND, start thinking about topic ideas for 2017!)
SUGGESTED BACKGROUND READING –
- The enemy: How terrorist groups and the threats they pose are evolving. Worth knowing.
- Spending too fight terrorism has been staggeringly high.
- Casualties: Ours, as compared to deaths/wounds in other US wars. [Plus 1m or so Iraqi and other foreign civilians.]
- The permanent war:
- Evaluations of GWOT:
- Short: It cost a lot, but do not call our efforts a failure. Recommended.
- Long RAND Corp. (20p pdf): We’ve done pretty well. Recommended
- Long US Army (17p pdf): No, the GWOT has not accomplished most of its objectives. Not
- Donald Trump will…
NEXT WEEK: The coming tidal wave of elderly prisoners.
We last talked about the Affordable Care Act/Obamacare in July 2013 (great links!), as parts of it were still being rolled out. Three years later all of its major provisions have begun to operate and experts are starting to get an idea of where the law has been successful at achieving its goals and where results have been disappointing and why.
Non-experts like us have a hard time getting any sense of it at all. Obamacare is only dimly-understood by most Americans. The law had to be grafted onto the existing, highly-complex American health care system, so it is very complex. The law’s affects also are nearly invisible to most Americans, largely by design. Complexity and invisibility left a huge opening for clever propagandists to trash the law and attribute every negative development as the beginning of Obamacare’s imminent collapse.
This is a bummer for a lot of reasons, not the least of which is it makes it hard for us to see through the complexity and opacity to draw our own conclusions about the law’s good parts and bad parts (both exist). To help us out a bit, I will start our meeting on Monday evening by reviewing two key contextual points:
- The major problems/shortcomings of the status quo ante health care system that Obamacare was designed to fix; and
- How the ACA was supposed to do that.
Then, we can go one of several ways. We could discuss each major part of Obamacare in turn, such as the state insurance exchanges, the law’s many new consumer protections, and Medicaid expansion. As we talk I can sketch out some of the latest good news/bad news in each area. Or, we could go big picture and explore whether the ACA has succeeded so far at its three big, broad goals: Achieving near-universal health insurance coverage, controlling health care costs, and improving the quality of medical care. Very ambitious goals.
As we talk, I think it is very important for us to do two things that news stories on Obamacare implementation almost never do.
- Look at the entire law – not just some piece of it that has experienced recent good or bad developments; and
- Compare its results to a realistic alternative – either one based on where our health care system was heading before Obamacare or to Republican alternatives (to the extent they even exist – see links).
If you want we can get into GOP alternatives and Hillary’s plans to protect Obamacare’s gains and fix its flaws or expand it. And, yes, there is yet another lawsuit probably heading to the Supreme Court that is aimed at one of the ACA’s major provisions and bringing the whole thing crashing down.
There’s one more thing. The ACA’s shortcomings are particularly tragic, and not just because health care matters so much. Unlike other laws Obamacare cannot be amended at all because Republican lawmakers will not allow it. They want the ACA to collapse so they can “repeal and replace it.” To my knowledge, no major law has ever been held to this standard, expected to work perfectly in its first iteration. Major laws are amended all the time to correct mistakes and adapt to new conditions and unanticipated or even unanticipatable problems. For example, Medicare’s basic fee structure was completely overhauled less than 10 years after its 1965 passage because it wasn’t controlling costs very well, and the program has been modified thousands of times since then.
So, however brilliant or dumb the Affordable Care Act is, we are stuck with it as is. Any insufficiencies in the law (or unexpected adaptation by consumes and businesses) must either be addressed administratively or left to fester, or, if a GOP-controlled Congress is elected, solved or ignored their way.
DISCUSSION QUESTIONS –
- Review: How was Obamacare supposed to solve the major problems in our health care system?
- The Parts: How has implementation of each major moving part of Obamacare gone? What caused any failures and how was implementation of the law adjusted to compensate?
- The Whole: Can we declare overall success or failure (or making good/bad progress) on the 3 major goals of ACA: Helping the uninsured, making HC more affordable, improving quality of care?
- The Divide: Do liberals and conservatives define “success” differently?
- The Future: What’s next in U.S. HC reform?
- Latest GOP lawsuit.
- Dem/HRC plans to fix/expand?
- GOP plans to repeal/replace?
SUGGESTED BACKGROUND READING –
- A tutorial on ABCs of Obamacare.
- NYT in 2014: Yes ACA is working, but with some caveats. Recommended.
- The ACA is succeeding. The evidence keeps piling up. Either.
- It’s doing way more for the poor than expected.
It’s a mixed bag or it’s failing:
- Progress has been mixed. Recommended. The state exchanges are worryingly fragile.
- It has failed (Conservative POV):
The Future –
- Your must-read! In this month’s JAMA Obama himself outlines progress made to date and next steps in HC reform. (I’m sure Donald Trump’s journal of the AMA article will be published shortly.)
- Key point: Liberal and conservative goals for HC reform are fundamentally different (click thru here to access recommended WSJ article).
- GOP alternatives:
NEXT WEEK: Does the “historical Jesus” matter?
Did you know that October is National Disability Employment Awareness Month and that 2015 is the 25th anniversary of the Americans with Disabilities Act? Me neither, when I chose this topic. I picked it, with its specific focus on government spending on the disabled, because the rapid rise in the number of Americans on disability in the last 25 years has made the disabled into another political football to be kicked around. Conservatives point to the increase in spending as evidence of widespread fraud and/or some sort of runaway “entitlement society” mentality. As Paul Krugman said, the disabled have become the new welfare queens. Progressives are outraged, etc.
Yet, it’s a complicated issues. The sharp rise in the number of Americans on federal disability income supports is mostly explainable by benign demographic factors, like an aging population. A lot of the money state and local governments spending on the disabled is intended specifically to reduce society’s burden of caring for them by helping them get an education and a place to live so they can find work and stay employed. But, when you add up all of these costs it is fairly expensive for our society to provide the full range of services that allows disabled Americans to survive and thrive. There may be legitimate issues here.
Which ones should we discuss Monday night? Like last week’s meeting on the transgendered, my first goal is a little education. I’d like us to learn some basic facts on who in America is disabled, why, and what is done for them at public expense. We could then get into how well these programs work and whether more should be done or less. Also, last week’s big budget deal that prevents national debt default (but not, BTW, a govt shutdown, which is still likely) included some reforms to Social Security Disability Insurance. I will briefly explain those changes in my opening.
As always, I expect (and encourage!) us to debate the core philosophical concern at issue: What is our moral responsibility to act as a community to care for the least fortunate among us.
Discussion Questions –
- WHAT: What does it mean to be “disabled?” How do the govt and others define the term? How many Americans are disabled and how and why? What are the trends here?
- GOVT: What assistance with living do disabled Americans need? What government programs exist to provide it? How much does it all cost and who pays for it?
- EFFECTIVENESS: Do these programs/services “work?” Big gaps, wrong focus, vary by state, etc.?
- TOO MUCH? Why have the disabled rolls grown sharply in the last 25 years? Are the reasons innocuous or have these programs turned into a de facto safety net?
- TOO LITTLE? Alternatively, do we spend too little helping the disabled and/or should more be done to support their ability to work?
- ADA: How effective has the Americans with Disabilities Act been? At what cost?
SUGGESTED BACKGROUND READING –
- Basic facts about disabled-Americans. (Note: 1 in 5 have a disability, but most are elderly or working. Only 1 in 20 Americans age 25-64 are too disabled to work.)
- ABCs of the two main federal disability programs: SSDI + SSI. Recommended skim.
- These programs are abused and overused. Conservative news media are really, really outraged about it. Recommended.
- No, they are NOT being abused:
- UPDATE Sunday: I did not mean to imply there are no problems in disability programs. Here is one: Lack of work incentives.
- Are disability programs responsible for the shrinking U.S. labor force?
- Optional since I’ll explain: The big budget deal tweaks SSDI to lower its costs a bit without cutting benefits.
- The ADA at 25:
Next Week: Do we need more or less government regulation of business?
We have a bit of an unwieldy but important topic this week. American agriculture is the most productive in the world. The industry supplies about 10% of global food production. Huge economies of scale and high-tech farming methods make food prices in the United States lower than they’ve ever been relative to average income and widely available for most of us. (
1/3 1/6 of households have “food insecurity” problems, but they are a function of low incomes, not high food prices.)
But, American agriculture is a highly concentrated industry, which, critics say, is a problem in and of itself. A small number of very large companies dominate each ag sector, giving them enormous power over ideally competitive markets. They also possess enormous political power and, the critics say, use it freely to avoid having to be environmentally and socially responsible. How concentrated? According to the USDA, just 4% of U.S. farms account for 66% of all sales, while the smallest 75% account for less than 5% of sales. Raising and processing food animals is, if anything, even more hyper-concentrated, including geographically, on a small number of gigantic factory farms.
We’re talking about blue chip, household name companies like Perdue and Tyson’s (poultry), Dole and Del Monte (fruit/veg) Cargo and Archer Daniels Midland (grains), Armour and Smithfield (livestock). But, also others you would not think of as agricultural giants, like Monsanto and DuPont (seeds/herbicides). And don’t forget the big foreign-owned giants, like BASF (herbicides) or Seagrams (liquor/grains). You also could throw in the big ag equipment manufacturers (International Harvester), supermarket chains, or other parts of the industry. Big, big Ag.
Lace suggested we talk about Big Agriculture in general, since it gets a LOT of big criticism these days from political activists and popular media. (Movie: Food, Inc.; Books: Omnivore’s Dilemma.) This is totally not my area of expertise, but I know enough to be aware that the criticisms involve a few big (there’s that word again) issues.
Pollution: This includes damage to soil, ground and surface water, and, and even ocean contamination from fertilizer and pesticide runoff and offal from the big CAFO factory farms. Heavy use of monoculture (single-crop) farming also has been criticized.
Health: Industrial farming practices are said to cause poor human health. Low-quality and unhealthy ingredients may contribute to obesity and chronic diseases like diabetes. Toss in food-borne illnesses from poor sanitary methods, overuse of antibiotics, and animal cruelty issues.
Communities: Industrial farming may contribute unnecessarily to depopulation of America’s rural areas. Big Ag’s monopsony power (the power to dictate prices and terms to its suppliers) robs smaller, often family-owned farms of income and independence.
Political Power: It’s hard to overstate the power of Big Ag, at any level of our politics. The industry uses its clout to get large government subsidies and other special favors, many of which allegedly are unnecessary, market-distorting, and encourage consequence-free farming methods.
Now, Big Ag has its defenders, too. IMO, some of their arguments deserve more than to be dismissed as corporate shilling. I’ve linked to a few pieces written by non-hack supporters of the industry, below.
I’m not sure yet which parts of this big huge mammoth topic to try to cover in my introductory framing remarks. Update: I will briefly describe the structure of U.S. ag industry and the federal subsidies and supports for agriculture. Do you all want to focus the discussion on any areas in particular? Say so in comments, please, and maybe I will add my usual Discussion Questions later this weekend..
SUGGESTED BACKGROUND READING –
- Concentrated power: The entire production cycle of our food is in the hands of a small number of very large multinational companies.
- Factory farms problems. .
- A brief list of the major accusations made against Big Ag.
- More detail: “The failure of modern industrial agriculture.” (Common Dreams very progressive) Recommended.
- More on Factory farms (CAFOs). Or, for a more graphic depiction (non-video) by a whistle-blowing Perdue subcontractor here.. Recommended
- Health: Big Ag, its subsidies, and health.
- Communities: Big Ag’s effects on U.S. rural areas and small town life.
- Political Clout:
In Defense of Big Ag –
Next Week: Has the Executive Branch Grown Too Powerful? (new schedule, Bruce idea)
Ah, federalism! Debate over the appropriate balance of power between states and the federal government has been a mainstay of American politics for much of our history, of course. So, is this topic another one of David’s civics 101 discussions, or is something big and new in the field of federalism?
Big and new, and most people don’t know it. In our hyper-polarized politics, both sides often champion federalism. Yeah, yeah, they often do it just opportunistically, like when the other side has power in Washington and a state is doing something they like. (See the blue state marijuana or red state abortion debates.) In everyday use, certainly, federalism is more of a political marketing buzzword than a philosophy of government.
But, it’s really more than that. In the last 20 years, federalism has been re-animated as a legal and politicla philosophy, first by the Right in the 1990s and now by the Left. Conservatives first acquired enough control of the courts to make some inroads into limiting federal power over the states, even as liberals expanded federal reach in health care, environmental, and education policies. More recently, liberals have embraced federalism to justify states’ liberalization on culture war issues, like gay marriage, and the “blue state” economic governing model. And, as we discussed recently, Tea Party states governments have created their mirror images, and far
I’ll open on Monday by trying to sum up where we stand on federalism issues and how we got here. Then, we can debate the notion of whether more state and less federal power is the answer to our polarized society.
DISCUSSION QUESTIONS –
- What is federalism? Is it “states’ rights,” or something else? à How is federalism justified by reference to the Constitution and its benefits to our country? à Is federalism a coherent legal or political philosophy, or a convenient justification for the policy outcomes people want?
- History, legal: How important has federalism been in American law in the last 20 years? How have the Rehnquist and Roberts Courts advanced federalism?
- History, results: What’s changed in the balance of power between the Feds and the states, in terms of
- Regulation of the economy
- The social safety net,
- Culture war issues, and
- Other major areas, like education policy?
- Is more federalism the answer to our polarized country’s political stalemate?
- Should progressives embrace it? Should conservatives?
- What is “federalism” and its U.S. history? (Wiki – sorry)
- Federalism is popular – at least in principle: The public wants decentralized government more than it used to.
- But, is federalism just used opportunistically? Recommended.
- Conservatives say:
- Let the culture wars be decided state-by-state. Recommended
- Stop smearing the term; federalism is good for the country. (Reason Mag.)
- Liberals should embrace federalism:
- [Added – long, but the best single link] Federalism is a must in a diverse country like ours. It’s even the way forward in immigration policy!
- Federalism good for liberalism if it’s about empowering local governments.
- Or [link fixed] constraining concentrations of private power. (long 16pp pdf) Recommended.
- No, liberals should oppose federalism.
- It’s being used to justify “repealing the 20th century.” Recommended
- It rarely leads to progressive outcomes. Recommended
- Federalism makes many of our problems worse and/or unsolvable.
- And, states make lousy “laboratories of democracy” these days because state Dem/GOP parties just mimic their national parties – they don’t experiment much anymore.
Next Week: The Future of Progressivism after Barack Obama (!!)