“Is Vast Inequality Necessary?”: Inequality Is Inevitable; The Vast Inequality Of America Today Isn’t
How rich do we need the rich to be?
That’s not an idle question. It is, arguably, what U.S. politics are substantively about. Liberals want to raise taxes on high incomes and use the proceeds to strengthen the social safety net; conservatives want to do the reverse, claiming that tax-the-rich policies hurt everyone by reducing the incentives to create wealth.
Now, recent experience has not been kind to the conservative position. President Obama pushed through a substantial rise in top tax rates, and his health care reform was the biggest expansion of the welfare state since L.B.J. Conservatives confidently predicted disaster, just as they did when Bill Clinton raised taxes on the top 1 percent. Instead, Mr. Obama has ended up presiding over the best job growth since the 1990s. Is there, however, a longer-term case in favor of vast inequality?
It won’t surprise you to hear that many members of the economic elite believe that there is. It also won’t surprise you to learn that I disagree, that I believe that the economy can flourish with much less concentration of income and wealth at the very top. But why do I believe that?
I find it helpful to think in terms of three stylized models of where extreme inequality might come from, with the real economy involving elements from all three.
First, we could have huge inequality because individuals vary hugely in their productivity: Some people are just capable of making a contribution hundreds or thousands of times greater than average. This is the view expressed in a widely quoted recent essay by the venture capitalist Paul Graham, and it’s popular in Silicon Valley — that is, among people who are paid hundreds or thousands of times as much as ordinary workers.
Second, we could have huge inequality based largely on luck. In the classic old movie “The Treasure of the Sierra Madre,” an old prospector explains that gold is worth so much — and those who find it become rich — thanks to the labor of all the people who went looking for gold but didn’t find it. Similarly, we might have an economy in which those who hit the jackpot aren’t necessarily any smarter or harder working than those who don’t, but just happen to be in the right place at the right time.
Third, we could have huge inequality based on power: executives at large corporations who get to set their own compensation, financial wheeler-dealers who get rich on inside information or by collecting undeserved fees from naïve investors.
As I said, the real economy contains elements of all three stories. It would be foolish to deny that some people are, in fact, a lot more productive than average. It would be equally foolish, however, to deny that great success in business (or, actually, anything else) has a strong element of luck — not just the luck of being the first to stumble on a highly profitable idea or strategy, but also the luck of being born to the right parents.
And power is surely a big factor, too. Reading someone like Mr. Graham, you might imagine that America’s wealthy are mainly entrepreneurs. In fact, the top 0.1 percent consists mainly of business executives, and while some of these executives may have made their fortunes by being associated with risky start-ups, most probably got where they are by climbing well-established corporate ladders. And the rise in incomes at the top largely reflects the soaring pay of top executives, not the rewards to innovation.
Don’t say that redistribution is inherently wrong. Even if high incomes perfectly reflected productivity, market outcomes aren’t the same as moral justification. And given the reality that wealth often reflects either luck or power, there’s a strong case to be made for collecting some of that wealth in taxes and using it to make society as a whole stronger, as long as it doesn’t destroy the incentive to keep creating more wealth.
And there’s no reason to believe that it would. Historically, America achieved its most rapid growth and technological progress ever during the 1950s and 1960s, despite much higher top tax rates and much lower inequality than it has today.
In today’s world, high-tax, low-inequality countries like Sweden are also both highly innovative and home to many business start-ups. This may in part be because a strong safety net encourages risk-taking: People may be willing to prospect for gold, even if a successful foray won’t make them quite as rich as before, if they know they won’t starve if they come up empty.
So coming back to my original question, no, the rich don’t have to be as rich as they are. Inequality is inevitable; the vast inequality of America today isn’t.
By: Paul Krugman, Op-Ed Columnist, The New York Times, January 15, 2016
“Politicians Protecting Themselves”: Ideology And Polarization Are Trumping All Of The Old Rules Of Politics
If you need convincing that 2015 wasn’t just an “outlier” of a year in American politics, where all of the old rules seemed to fly out the window, please read Mark Schmitt’s fascinating piece in the New York Times earlier this week that examines the rapid decline of some of the bedrock principles of political behavior we all used to take for granted. You cannot, he concludes, blame any of this weirdness on Donald Trump; it’s preceded his rise for a good while.
He may be changing the rules of the presidential primary race, but in the halls of Congress and in governors’ mansions across the country, politicians have already acted in ways that would have been unimaginable a decade ago. By testing and breaking the rules, they have been reshaping the practice of politics since long before Mr. Trump emerged.
Members of Congress, Schmitt observes, are showing unprecedented independence from their own constituents, and so, too, are state elected officials. In both cases they are beginning to refuse to “bring home the bacon” if they dislike the ideological provenance of the cook:
[S]everal members even announced in 2013 that they would not assist constituents with problems involving the Affordable Care Act. The idea of not just neglecting but actively refusing constituent services, for reasons of ideology, would be unimaginable to the constituent-focused members of Congress of both parties elected beginning in the 1970s.
Governors, too, rejected everything from infrastructure spending to federal funding for Medicaid expansion. Even when they saw their approval ratings drop into the 30s, they survived. In 2011, Rick Scott of Florida rejected $2.4 billion in federal funds for a commuter rail project and yet got reelected.
The widespread expectation that red states would accept the Medicaid expansion once the Supreme Court made it voluntary, as a deal too good to refuse, is an example of the old conventional wisdom. In nearly half the states, ideology trumped helping constituents access available funds and services.
Schmitt believes that predictable partisan voting patterns and special-interest pressure have combined with ideology to all but kill the once-reigning assumption of American politics: the “median voter theorem,” which held that politicians of both parties would inevitably cater to the interests of swing voters in the middle of the ideological spectrum in the pursuit of a majority. It’s the basis of the still-common belief that in competitive contests candidates have to “shift to the center” to win general elections no matter how much time they spend “pandering to the base” in primaries. If, however, an ever-higher percentage of voters simply and reflexively pull the lever for the party with which they identify, then keeping them motivated enough to vote — perhaps by negative attacks on the hated partisan foe — becomes far more important than appealing to an ever-shrinking number of “swing voters.” Eventually, as Schmitt suggests, the whole idea of accountability to voters begins to fade, as pols try to figure out how to protect themselves via gerrymandering and oceans of special-interest money.
[B]y recasting politics as a winner-take-all conflict between wholly incompatible ideologies and identities — as most of the presidential candidates have done — they help to closely align party and ideology, so that those who identify as Republican will always vote Republican and vice versa. When politicians know more or less who will vote and how, they can ignore most voters — including their own loyalists.
Schmitt attributes a lot of these trends to the conquest of the GOP by conservative ideologues, but also notes that the declining competition for median voters has liberated Democrats — themselves less constrained by a conservative minority that barely exists anymore — to think bigger and bolder thoughts about the role of government than they have at any time since the Great Society era. So judging the new rules of politics as a good or a bad thing will most definitely depend on one’s own ideological perspective.
If Donald Trump didn’t cause the fading of the old political order, is he nonetheless benefiting from it? Quite probably so, in that he is the living symbol of spitting defiance to the belief of Republican elites that the median voter theorem required a less viscerally angry and culturally reactionary GOP. Indeed, political observers view Trump as strange and scary precisely because the old rules that would have consigned him to the dustbin of history don’t seem to be in operation anymore. We’d better all lower our resistance to the unexpected.
By: Ed Kilgore, Daily Intelligencer, New York Magazine, January 6, 2015
“How Conservatives Lost 2015”: Talked A Big Game But Ended Up Losing Almost Every Big Legislative Battle
Establishment Republicans had a miserable year on the campaign trail. But on Capitol Hill—far from Make America Great Again hats—they cleaned up.
Conservatives on the Hill, emboldened by Republican gains in the midterm elections, followed the battle cry of the Heritage Foundation’s powerful lobbying arm against their Establishment overlords. But over the past year, they’ve faced defeat after biting defeat.
Most of these wins were on wonky, unsexy issues—like funding for infrastructure construction and rules about how the president can negotiate trade agreements. Not exactly the most scintillating stuff.
But while these individual debates may not have galvanized national attention, they were hugely important to Tea Party-friendly conservative groups. And the cumulative losses these groups face suggest that their clout may have flatlined or they overplayed their hands.
Heritage Action, the lobbying wing of the powerful Heritage Foundation think tank, got a major shellacking in March during the fight over “Doc Fix” legislation, which overhauled how doctors who treat Medicare patients get reimbursed. Heritage Action key-voted against the bill, citing concerns that it would grow the national debt by half a trillion dollars over twenty years. Despite the group’s protestations, though, the Doc Fix passed the House with just 37 no votes (only 4 of whom were Democrats). In the Senate, just 8 members voted against it.
It was a tough loss for Heritage Action. And many more followed. Trade legislation drew significant opposition from the group in June, as members fought over whether Congress would give the president extra authority to negotiate trade deals, allocate funds to support Americans who lose jobs due to said deals. While issues like Trade Adjustment Assistance and Trade Promotion Authority may not roll off the tongue of your average Tea Partier (or, well, your average human being), Heritage Action’s key-voting against trade provisions helped energize grassroots conservative opposition. That, combined with Breitbart News and the Drudge Report’s liberal (and frantic) use of the “Obamatrade” moniker stoked opposition on the right.
And all those guys lost.
Congress gave the president additional authority to negotiate trade deals and allocated more funds to help Americans who lose jobs to overseas competition, and the president announced he plans to have the U.S. sign on to the new Trans Pacific Partnership trade deal.
“Is Anyone Still Scared of Heritage Action?” wondered National Journal. It was a good question.
And it was a question that arose again in July, when legislation came up to change funding for the National Institutes of Health and the FDA. The bill was called the 21st Century Cures Act, and, well, was complicated. Heritage Action opposed it adamantly, for comparably complicated reasons. If NIH funding mechanisms get your juices flowing, check out Heritage Action’s release explaining its stance. If not, just rest assured that it was a big deal for the group, and the group lost. Seventy-seven House members voted against the bill, seventy of whom were Republicans.
And, of course, there’s perhaps the unsexiest issue of all: the highway bill! Next time you’re trying to get out of an unpleasant conversation, just bring up infrastructure funding and see what happens. The highway bill allowed more than $300 billion for transportation spending, and it reauthorized the Export-Import Bank—a program that gives loans to U.S. businesses that have overseas commerce, and that conservatives have long criticized as corporate welfare. Heritage Action’s denunciation of the bill said the highway projects were funded with “almost exclusively with embarrassing budget gimmicks.”
The Ex-Im bank’s funding expired this summer, and Congress couldn’t get it reauthorized—due in large part to conservative opposition—until the Highway Bill came up.
“Ending this bank was a major blow to the culture of crony capitalism festering in Washington,” said Heritage Action’s statement, “and reviving it now damages the conservative movement and the credibility of efforts to rid the federal government of favoritism for special interests.”
The president signed the bill early in December.
But there was one last loss to be felt: the year-end omnibus spending bill—a legislative package full of the kind of spending projects that make conservatives want to scratch their eyeballs out, including funding for Planned Parenthood. Heritage Action, naturally, key-voted against it. And the House, as was natural in 2015, passed it anyway.
It wasn’t always this way. During the 2013 government shutdown, Heritage Action exerted enormous influence to pressure members of Congress against supporting any funding for the Affordable Care Act. And members shivered at the prospect of facing primary challengers who would attack them over low marks on the group’s vote scorecard. But now, much of that fear seems to have abated.
“When Heritage key-votes against a bill now, it is almost guaranteed to get less conservative, and guaranteed to pass both chambers and become law,” said one former Republican House leadership staffer. “They have reverse Midas touch.”
Heritage Action didn’t respond to a request for comment on this story.
By: Betsy Woodruff, The Daily Beast, January 2, 2016
“The Exact Opposite Of Reality”: Rubio’s Principal Talking Point Starts To Crumble
One of the more dramatic flaws in Marco Rubio’s presidential candidacy is a brutal contradiction: he’s a career politician, winning six elections before his 41st birthday, with no real accomplishments to his name.
In the enormous Republican field, voters can choose between established, experienced candidates who’ve done things in public office (Kasich, Bush) or insurgent outsiders with non-governmental records (Trump, Carson), but Rubio is burdened with the worst of both worlds, winning several elections without having done much in the way of meaningful work.
It’s a point about which the Florida senator appears increasingly sensitive. In fact, in October, Rubio tried to take credit for others’ work during his tenure in the state legislature. This week, Rubio’s begun telling voters that he actually has a major federal accomplishment – he helped undermine the American health care system – and his allied super PAC is pushing the line in a commercial:
“On Obamacare, some Republicans gave up. Some talked tough but got nowhere. For all the Republican talk about dismantling the Affordable Care Act, one Republican hopeful has actually done something.”
For some GOP voters and much of the media, this seems compelling – Rubio hasn’t just spun his wheels for five years on Capitol Hill; when he’s bothered to show up for work, he invested real time and energy into interfering with families’ access to medical care.
There are, however, two important flaws in the pitch. The first, of course, is the fact that deliberately trying to undermine the American health care system is not an accomplishment upon which to build a presidential campaign.
The second, as the Washington Post explained today, is that Rubio didn’t do what he claims to have done.
Success always has many fathers, but Rubio goes way too far in claiming credit here. He raised initial concerns about the risk-corridor provision, but the winning legislative strategy was executed by other lawmakers.
The irony is, Rubio has recently tried to take credit for others’ work as a way of differentiating himself from President Obama. “I’m not like that other one-term senator who ran for president,” the Florida Republican has effectively argued, “because I’ve gotten things done in Congress.”
It’s not just a lazy lie; it’s actually the exact opposite of reality.
As we discussed a few months ago, Obama put far more effort into his congressional career than Rubio, and as a result, he had more success. As a senator, Obama developed a reputation as a work horse, being well prepared for briefings and hearings, introducing a lot of bills, and developing an expertise on serious issues like counter-proliferation.
There’s a great story from 2005 in which the Senate Foreign Relations Committee held a day-long hearing on U.S. policy in Iraq, and then-Chairman Dick Lugar (R-Ill.) praised Obama for being the only other senator who was on hand for the entire thing, start to finish. As Salon’s Simon Maloy noted, “It was minor stuff, but it gave Obama a reputation as someone who was willing to do the basic work needed to get things done.”
Rubio has never developed that kind of reputation among his colleagues. On the contrary, he’s seen as a senator who misses a lot of votes, skips a lot of hearings, and fails to show up for a lot of briefings.
Eight years ago, there was a talking point that made the rounds in GOP circles when going after then-candidate Obama: he’d never run a city; he’d never run a state; and he’d never run a business. The trouble is, the exact same talking point can be applied to Rubio, and can even be made a little worse: he’s never built up a legislative record, either.
It’s not fair to say Rubio never passed a bill, but it’s awfully close. According to congress.gov, the far-right Floridian, over the course of five years, took the lead in sponsoring a measure that was signed into law. It’s called the “Girls Count Act,” and it encourages developing countries to register girls’ births. There’s certainly nothing wrong with the policy, but it was a largely symbolic measure that passed both chambers without so much as a vote.
He also helped name September as National Spinal Cord Injury Awareness Month.
That’s about it.
If Rubio and his allied super PAC find that embarrassing, they should probably try to change the subject – because deceptive claims and taking credit for others’ work isn’t generally a recipe for an improved presidential campaign.
By: Steve Benen, The Maddow Blog, December 23, 2015
“Republicans Take The Less Risky Path”: The Budget Passes! Has The GOP Congress Come To Its Senses?
The news that the House passed a budget that will fund the government through next fall, and the Senate quickly followed suit, is in and of itself a big deal. But the fact that the bill passed so easily — on a vote of 316-113 in the House, with Republicans voting in favor of it by a margin of 150-95 — may be the really interesting story here.
Is the GOP Congress not what we thought it was? Is the way liberal commentators (myself included) have characterized the Republican caucus in the House over the last couple of years, as a group dominated by extremists who are willing to burn down everything in their path, an oversimplification?
It just may be. But let’s look at some competing explanations for why this budget passed so easily:
Paul Ryan is a genius. Perhaps this is all Paul Ryan’s doing, so deftly did he work his members to corral support for this bill. There’s something to that — there were specific steps he took to make all his members feel like they had a voice in the process, and even some of the most conservative members have praised his openness to their input.
But there are a couple of reasons to think that this explanation is incomplete at best. First, it suggests that the crises and intra-Republican battles of the last few years occurred only because John Boehner was inept at managing the more restive parts of his caucus. While no one is going to suggest that Boehner was some kind of legislative sensei, the members who forced those crises weren’t doing it just because they disliked Boehner. They were acting out of their own ideological and electoral interests, many because they saw their political fortunes in their own districts tied to the idea that they would be uncompromising in fighting both Barack Obama and their party’s leadership.
Second, this bill really was a compromise. It doesn’t defund Planned Parenthood, it doesn’t reduce the size of government, and it gives Democrats plenty of other things they wanted as well. Republicans in the House weren’t going to go along with it for no reason other than the fact that they got to sit down with the new Speaker and voice their complaints. So while they may feel better about Ryan than they did about Boehner, that can’t be the whole story.
They realized that making a fuss only raises expectations. The key dynamic in Republican politics these days comes from voter dissatisfaction with the party’s leaders, who have repeatedly promised to fight President Obama to their dying breath but has been unable to deliver on any of their substantive goals, like repealing the Affordable Care Act. Smarter Republican members may realize that shutdown crises only serve to increase this dissatisfaction, because they inevitably end in defeat for the conservatives. Even the angriest tea partier could eventually face a primary challenger who points out that the congressman didn’t succeed in stopping the march of socialism, no matter how often he shook his fist at his party’s leadership. So the less risky path might be to let the bill pass, keep the government running, and hope that nobody takes much notice of it.
There’s a silent (or at least relatively quiet) majority of Republicans in the House. Let’s not forget that 95 Republicans did vote against the bill, including the most conservative ones. In the past, the conservatives (or the tea partiers, or the Freedom Caucus, or however you want to refer to them) were only able to create crises and shutdowns because they were able to bring slightly less crazy members along with them. So it isn’t that the extreme conservatives have gotten any less extreme; what made the difference this time is that the merely very conservative members were no longer willing to set fire to the Capitol.
Those members in the ideological middle of the caucus (which, to be clear, is a very conservative place) can sound like tea partiers when the situation demands, but they are also realistic enough to know that some battles aren’t worth fighting. They certainly feel pressure from their right, but they may have learned from the mistakes of the past. And right now, as we move into 2016, the calculation of which risks are worth taking has changed. Which leads us to the final explanation:
The presidential race has changed everything. As I’ve been arguing since the last midterm election, congressional Republicans didn’t really need to “show they can govern.” What they needed to do was avoid screwing things up for their eventual 2016 presidential nominee. The reason is simple: if a Republican wins the White House next year, 2017 will see a bacchanal of conservative legislating that will leave no Republican desire unfulfilled. Trying to extract a few concessions from Barack Obama today is spectacularly foolish if it makes Republicans look bad and thereby reduces the chances of electing a Republican president by even the tiniest amount. The best strategy for congressional Republicans is to do no harm, and be patient.
With the presidential primary campaign now in full swing, that reality may be hitting home for more and more members of Congress. So even the most conservatives ones aren’t going to try to force a shutdown. Instead, they’ll vote against the budget bill, and when a reporter asks they’ll say, yes, of course it’s a surrender to Obama and a betrayal of conservative values, blah blah blah. But in their hearts, they probably realize that at this particular moment, passing the budget is the smart move.
So which one of these explanations is the right one? The answer may be different for different members, but I’m pretty sure they all played a role.
By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line Blog, The Washington Post, December 18, 2015
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