Corporations Can Show Their Patriotism By Hiring
Former President Bush was roundly derided a decade ago for urging Americans traumatized by the September 11 attacks to go shopping. He may, in fact, have been onto something.
Certainly, shopping on its own is a facile and inadequate response to a tragedy that required a new assessment of our national security procedures and how much of our revered American civil liberties we were willing to give up to achieve security—or perhaps, a sense of security. That conversation needs to continue, especially in the area of civil liberties retrenchment.
But Bush was right about something, and that is that ours is a consumer-driven economy. This is arguably a bad basis for a modern economy; there is only so much we can consume (the obesity epidemic is only one sign of our over-indulgence). And people were foolishly taking out home equity loans on wildly over-valued properties and then using the money not to improve the property (thus, theoretically, increasing its value), but to buy other things. This is not sensible. But the reality is, our economy runs on people buying things, and with the economy in the state it’s in, people aren’t shopping anymore. Since people aren’t buying, companies aren’t creating jobs. Many corporations are making record profits and holding huge amounts of cash, but they don’t want to take on more workers because the demand is not there.
So, here’s a 10-years-after tweak of Bush’s suggestion: if corporate America wants to shows its collective patriotism, its leaders should hire someone. Hire even a dozen people, if you run a large company, or even one employee, if you own a small business. Some public officials are worried about raising taxes on the wealthy, arguing that the well-off are job creators. Well, create some jobs, first, and that argument will have more merit. And remember: taking on another employee isn’t a cash loss, ultimately, because it creates a new customer (and a taxpayer who won’t be getting unemployment insurance anymore, either). If shopping was the answer a decade ago, hiring someone is the answer now. It’s the patriotic thing to do.
By: Susan Milligan, U. S. News and World Report, September 12, 2011
Romney’s Stupidest Idea Of The Week
One of the signature policy proposals that Mitt Romney outlined in his economic plan and highlighted in his USA Today op-ed last week is a policy that is as pernicious in practice as it sounds unthreatening. On page 61 of his plan, Romney proposes to cap the rate at which agencies would impose new regulations at zero. This means that if an agency is required by law to issue a new regulation, it must offset the costs, presumably by eliminating some other regulations. Essentially, Romney is proposing to adopt pay-as-you-go budgeting to regulations.
It’s not entirely clear if this rule applies to each agency—would the Food and Drug Administration have to eliminate some food inspection rules if they created some new regulations of food?—or if this is government-wide policy, so if the government creates rules in one area, it would be required to undo rules in another, unrelated area. But either way, this policy would have far-reaching negative consequences. Imagine, for instance, if a cap on regulations was in place after the financial crisis, when lack of regulation of Wall Street led to the cratering of the economy. Under this proposal, in order to regulate Wall Street to ensure that economic devastation couldn’t happen again, the federal government would have to eliminate regulations on food or water or air, or some other protections. Where is the logic of undoing clean air regulations because new consumer protections are needed?
Behind this policy response is a simple animosity towards any rules for businesses that come at the expense of profits. Republicans have been arguing that regulatory uncertainty is hurting job growth because businesses supposedly refuse to make hiring decisions when they don’t know what the rules will be. But if anything were going to feed uncertainty, it would be a rule that haphazardly and randomly picks old rules to eliminate once new rules were created. Companies make decisions about their future assuming those regulations stay in place; eliminating old regulations will simply favor some firms over others.
The bigger point to be made, however, is that regulations are not what are ailing our economy now, nor are they hindering growth. McClatchy recently surveyed small business owners on why they weren’t employing additional people—none offered regulation among the barriers to hiring. (That’s why it’s particularly unfortunate that the president recently fed the Republican obsession with his suspension of the ozone rule, citing “regulatory uncertainty, particularly as our economy continues to recover,” as part of his rationale.) In fact, if anything, greater regulation can be correlated with greater growth: Over the last 50 years, the decades of the highest growth rates for our economy saw the greatest expansion of government and its regulations. Growth rates were highest in the 1960s at 4.55 percent for the decade, when we created Medicare, Medicaid, and the Great Society poverty programs—our greatest expansion of government. And growth rates were the lowest in the last decade, averaging only 1.38 percent. I think it is safe to say George Bush was not a friend of regulation.
But if regulations aren’t the culprit, what is? What’s holding up hiring now is that there is not enough demand in the economy. Even bond traders like Bill Gross acknowledge the need for direct federal help for job creation and growth. To actually create jobs, Republicans should come to the table with the president and pass ideas they have supported in the past, like investment in roads and bridges and hiring teachers who have been laid off. But because Republican ideology will not tolerate federal policies that actually help create jobs, they are reduced to pithy sounding policies on regulations that are just another way of getting rid of protections for consumers in order to help corporations.
As a former policy director on a presidential campaign, I am sympathetic to the desire to try to propose “new” policy ideas that sound good in a speech or a press paper. In the back and forth of a campaign, reporters, campaign press staff, and even the candidates can demand new policies in areas that have been well-trodden and don’t typically make for exciting speeches. But a serious candidate has to put forward serious ideas to solve actual problems. And for a candidate trying to distinguish himself from a Texas governor ready to shoot from the hip, Mitt Romney’s cap on regulation does not meet that test.
By: Neera Tanden, COO, Center for American Progress, Published in The New Republic, September 12, 2011
Texas-Style Tort Reform: Rick Perry’s Texas Health Care Hoax
In his quest to win the Republican presidential nomination, Texas Gov. Rick Perry is perpetuating a convincing hoax: that implementing Texas-style tort reformwould go a long way toward curing what ails the U.S. health care system.
Like his fellow GOP contenders, Perry consistently denounces “Obamacare” as “a budget-busting, government takeover of healthcare” and “the greatest intrusion on individual freedom in a generation.” He promises to repeal the law if elected.
Unlike those in the “repeal-and-replace” wing of the Republican Party, however, Perry has emerged as leader of the “repeal-and-let-the-states-figure-it-out” wing that believes the federal government has no legitimate role in fixing America’s health care system.
“To hear federal officials tell it, they’ve got all the answers on health care and it’s up to the rest of us to sit, wait and embrace whatever solution — if any — they may eventually provide,” Perry wrote in a newspaper commentary in 2009. “I find this troubling, since states have shown they know a thing or two about solving problems that affect their citizens.”
Even as he points with pride to the alleged benefits of malpractice and other tort reforms that have been enacted during his tenure as governor of Texas, Perry says he is opposed to tort reform at the federal level. He cites the 10th Amendment to the Constitution, which states-rights advocates say limits the role of the federal government.
But if Perry had his way, all the states would do as Texas did in 2003 when lawmakers enacted legislation, which he championed, limiting the amount of money juries can award patients who win malpractice lawsuits against doctors and hospitals. The legislation capped non-economic (pain and suffering) damages at $250,000 in lawsuits against doctors and $750,000 against hospitals. A few months after he signed the bill into law, the state’s voters narrowly passed a constitutional amendment, also endorsed by Perry, which had the same effect. Proponents of the amendment wanted to be sure the new law would be constitutional.
Texas, he wrote in that 2009 commentary “stands as a good example of how smart, responsible policy can help us take major steps toward fixing a damaged medical system, starting with legal reforms.”
As a result of the 2003 tort reform law, malpractice liability insurers reduced their rates in Texas and, according to Perry, the number of doctors applying to practice medicine in the state “skyrocketed.”
He says that in the first five years after tort reform was enacted, 14,498 doctors either returned to practice in Texas or began practicing there for the first time.
Tort Reform Backfires in Texas
That certainly sounds impressive — so long as you look at that number in isolation. But when you look at how Texas stacks up with the rest of the country in terms of physician growth in direct patient care, tort reform appears to have given Texas no leg up in competition with others states for doctors. In fact, according to statistics compiled by the American Medical Association and other physician organizations, Texas has actually lost ground when it comes to the number of doctors practicing in the state since tort reform was enacted. Big time.
In 2008, the number of physicians in patient care per 10,000 civilian population in the United States was 25.7. At just 20.2 doctors per 10,000 people, Texas ranked near the bottom of the 50 states. In fact, only nine states fared worse. In 2000, three years before tort reform, Texas was still bringing up the rear, but not as badly. Back then, 11 states fared worse than the Lone Star state.
Even more revealing, the number of doctors in patient care increased 13.2 percent nationwide from 2000 to 2008. It increased only 12.8 percent in Texas. The rate of growth was actually greater in 41 other states and in Washington, D.C. than it was in the Lone Star state.
It is true that malpractice insurance rates dropped in Texas after tort reform was enacted, but Texans would be hard pressed to claim any direct benefit from that drop — except, that is, Texans who are doctors.
The Dallas Morning News published a chart earlier this year showing that the average malpractice rate charged ob/gyns in Texas by the state’s largest domestic insurer of physicians fell from $53,752 in 2003 to $33,881 in 2011. The paper reported drops of similar percentages for doctors in family practice and general surgery.
Advocates of tort reform have long claimed that one of the reasons for escalating health care costs is the “defensive medicine” doctors practice, such as over-treating and prescribing more medications and diagnostic tests than necessary, out of fear of being sued. Well, if Texans believed their own health insurance rates would go down once tort reform made defensive medicine less prevalent, they have by now been disabused of that notion. The chances of a Texas family saving a few bucks on premiums would actually be greater if they moved to another state.
In 2010, the average premium for family coverage in Texas was $14,526. That’s $655 higher than the U.S. average. Those numbers seem to indicate that doctors have not passed on their own insurance savings to their patients and that they are not practicing medicine any less defensively than before tort reform was enacted.
Not only are Texans paying more for their own insurance while doctors are paying less for theirs, their chances of getting employer-subsidized coverage is less than it would be if they lived in another state. The Dallas Morning News, citing statistics from the Agency for Healthcare Research and Quality and other sources, reported that a smaller percentage of employers in Texas offered coverage to their workers last year than in the U.S. as a whole (51 percent and 53.8 percent, respectively). And the Texans who do have coverage through the workplace are contributing far more out of their own pockets for that coverage than people who live in most other states. In Texas last year, the average employee contribution toward company-sponsored coverage was $4,500. The U.S. average was much lower: $3,721.
Another statistic Perry is not likely to mention when he talks about the benefits of tort reform is the number of Texans who are uninsured. The U.S. Census Bureau reports that Texas continues to be the state with the highest percentage of its residents without coverage, a whopping 25 percent last year, compared to about 16 percent nationwide. It was dead last in 2003 and it is dead last now.
All this should leave us wondering what “thing or two” states have come up with to solve the problems that affect their citizens. Considering the dismal state of health care in Texas, perhaps Perry had Massachusetts in mind.
By: Wendell Potter, Center for Media and Democracy, September 1, 2011
Morally Inept: The New GOP Resentment Of The Poor
In a decade of frenzied tax-cutting for the rich, the Republican Party just happened to lower tax rates for the poor, as well. Now several of the party’s most prominent presidential candidates and lawmakers want to correct that oversight and raise taxes on the poor and the working class, while protecting the rich, of course.
These Republican leaders, who think nothing of widening tax loopholes for corporations and multimillion-dollar estates, are offended by the idea that people making less than $40,000 might benefit from the progressive tax code. They are infuriated by the earned income tax credit (the pride of Ronald Reagan), which has become the biggest and most effective antipoverty program by giving working families thousands of dollars a year in tax refunds. They scoff at continuing President Obama’s payroll tax cut, which is tilted toward low- and middle-income workers and expires in December.
Until fairly recently, Republicans, at least, have been fairly consistent in their position that tax cuts should benefit everyone. Though the Bush tax cuts were primarily for the rich, they did lower rates for almost all taxpayers, providing a veneer of egalitarianism. Then the recession pushed down incomes severely, many below the minimum income tax level, and the stimulus act lowered that level further with new tax cuts. The number of families not paying income tax has risen from about 30 percent before the recession to about half, and, suddenly, Republicans have a new tool to stoke class resentment.
Representative Michele Bachmann noted recently that 47 percent of Americans do not pay federal income tax; all of them, she said, should pay something because they benefit from parks, roads and national security. (Interesting that she acknowledged government has a purpose.) Gov. Rick Perry, in the announcement of his candidacy, said he was dismayed at the “injustice” that nearly half of Americans do not pay income tax. Jon Huntsman Jr., up to now the most reasonable in the Republican presidential field, said not enough Americans pay tax.
Representative Eric Cantor, the House majority leader, and several senators have made similar arguments, variations of the idea expressed earlier by Senator Dan Coats of Indiana that “everyone needs to have some skin in the game.”
This is factually wrong, economically wrong and morally wrong. First, the facts: a vast majority of Americans have skin in the tax game. Even if they earn too little to qualify for the income tax, they pay payroll taxes (which Republicans want to raise), gasoline excise taxes and state and local taxes. Only 14 percent of households pay neither income nor payroll taxes, according to the Tax Policy Center at the Brookings Institution. The poorest fifth paid an average of 16.3 percent of income in taxes in 2010.
Economically, reducing the earned income tax credit and the child tax credit — which would be required if everyone paid income taxes — makes no sense at a time of high unemployment. The credits, which only go to working people, have always been a strong incentive to work, as even some conservative economists say, and have increased the labor force while reducing the welfare rolls.
The moral argument would have been obvious before this polarized year. Nearly 90 percent of the families that paid no income tax make less than $40,000, most much less. The real problem is that so many Americans are struggling on such a small income, not whether they pay taxes. The two tax credits lifted 7.2 million people out of poverty in 2009, including four million children. At a time when high-income households are paying their lowest share of federal taxes in decades, when corporations frequently avoid paying any tax, it is clear who should bear a larger burden and who should not.
By: Editorial, The New York Times, August 30, 2011
Brazen: Eric Cantor’s Chutzpah
Eric Cantor’s op-ed laying out the Republican agenda is filled with the kind
of distortions you’d expect, but this passage deserves special commendation.
After decrying a National Labor Relations Board Ruling, he continues:
Such behavior, coupled with the president’s insistence on raising the top tax rate paid by individuals and small businesses, has resulted in a lag in growth that has added to the debt crisis, contributing to our nation’s credit downgrade.
So Cantor is arguing that S&P downgraded U.S. debt because of President
Obama’s future plans to increase the top tax rate. That’s such a mind-boggling
claim that even Cantor cannot bring himself to put it in quite these terms. So
instead he breaks it into a series of steps.
First, he claims that the future promise of upper-bracket tax hikes “has
resulted” in a lag in growth. (Question: if the mere possibility of future tax
hikes is enough to depress growth, why don’t we go ahead and just raise taxes?
If we’re going to get the slower growth anyway, might as well get the revenue,
right?)
Second, the lag in growth “caused” by hypothetical future tax hikes added to
the debt crisis.
Third, the debt crisis contributed to the downgrading of the debt.
It’s a fairly brilliant bit of rhetoric. After all, S&P specifically cited the Republican threat to fail to lift the debt ceiling and Republican refusal
to consider any tax increases as the cause of the downgrade. cantor has
found a way to present Obama’s support for higher taxes as the cause of the
downgrade. That’s so brazen I almost have to admire it.
By: Jonathan Chait, The New Republic, August 22, 2011
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