“Big Money, Big Mouth”: How The Megadonors Of The Right Think
Let’s be clear about who the political enemy is in this country:
Three years ago, Home Depot co-founder Kenneth Langone helped lead an unsuccessful effort by a group of GOP megadonors to persuade Gov. Chris Christie to make a run for president in 2012.
Now Langone, who remains a Christie cheerleader, said he is convinced the New Jersey governor is the “guy who can win” the 2016 presidential election — and that the George Washington Bridge lane closure controversy is in his rear-view mirror.
“If he decides, and I’d be more inclined to say when he decides to throw his hat in the ring, I think he’s going to be a formidable competitor,” Langone said in an interview. “People I talk to are still high on him. He looks fabulous. He looks healthy. He’s energized.”
Ken Langone is the same billionaire who told CNBC in January that Pope Francis ought to watch his mouth.
Pope Francis’ critical comments about the wealthy and capitalism have at least one wealthy capitalist benefactor hesitant about giving financial support to one of the church’s major fundraising projects.
At issue is an effort to raise $180 million for the restoration of St. Patrick’s Cathedral in New York being spearheaded by billionaire Ken Langone, the investor known for founding Home Depot, among other things.
Langone told CNBC that one potential seven-figure donor is concerned about statements from the pope criticizing market economies as “exclusionary,” urging the rich to give more to the poor and criticizing a “culture of prosperity” that leads some to become “incapable of feeling compassion for the poor.”
Langone said he’s raised the issue more than once with Cardinal Timothy Dolan, archbishop of New York, most recently at a breakfast in early December at which he updated him on fundraising progress.
“I’ve told the cardinal, ‘Your Eminence, this is one more hurdle I hope we don’t have to deal with. You want to be careful about generalities. Rich people in one country don’t act the same as rich people in another country,’ ” he said.
I’m going to take the Pope’s side on this one. And I’m going to get my hardware elsewhere.
By: Martin Longman, Washington Monthly Political Animal, August 31, 2014
“Another Republican Gives Up Obamacare Fight”: Unfortunately For Corbett, It’s Probably Too Late To Save His Re-Election Campaign
Governor Tom Corbett of Pennsylvania is the latest Republican to retreat from the Obamacare wars.
On Thursday, the federal government approved Governor Corbett’s plan to expand Medicaid in the Keystone State, making it the 27th state in the nation to adopt the controversial provision of the Affordable Care Act. Corbett had initially opposed expanding Medicaid at all, but earlier this year he bowed to mounting political pressure by offering a plan that would expand Medicaid with a number of Republican-friendly conditions, such as a work requirement and the authority to charge premiums for recipients living below the poverty line. Those did not make it into the final deal.
The agreement should be a boon to Pennsylvania’s working poor; at least 500,000 Medicaid-eligible Pennsylvanians will now be able to sign up for coverage starting on January 1. It will also save the state $4.5 billion over the next eight years, according to Corbett (independent studies have pegged the savings to be even higher)
Corbett clearly hopes that the news will provide a political boost as well. The governor’s announcement of the agreement, which calls it “historic,” “innovative,” and “truly a Pennsylvania solution,” is just about the nicest thing that any elected Republican has ever said about the Affordable Care Act. Meanwhile, Medicaid expansion is wildly popular in Pennsylvania. And as of last week, the Republican governors on the ballot in 2014 who have adopted Medicaid expansion were polling an average of 8.5 percent better than those who hadn’t. It’s not hard to understand what prompted Corbett’s change of heart.
Unfortunately for Corbett, it’s probably too late to save his re-election campaign; the terminally gaffe-prone governor trails his Democratic challenger Tom Wolf by 16.6 percent according to the RealClearPolitics polling average. But plenty of other Republicans have also realized that it makes sense to buck the party line on Medicaid expansion. As The Washington Post’s Greg Sargent has documented, GOP senate candidates such as Scott Brown in New Hampshire, Tom Cotton in Arkansas, Joni Ernst in Iowa, Terri Lynn Land in Michigan, and Thom Tillis in North Carolina have tied themselves in knots trying to explain how they would repeal the Affordable Care Act without getting rid of any of the popular parts.
It’s almost as if voters would rather expand health care coverage than burn billions of dollars to thumb their noses at the White House.
Of course, this wasn’t supposed to happen. For over a year, Republicans have been promising that Obamacare would be the anchor that sinks every Democrat on the ballot and sparks a GOP wave in November. Instead, many Republicans are now either embracing sections of the law, or just ignoring it altogether. It appears that we can add this blown prediction to long list of Obamacare disasters that stubbornly refused to materialize.
By: Henry Decker, The National Memo, August 29, 2014
“Offender-Funded Justice”: The Economics Of Police Militarism
Two crucial battles broke out in Ferguson, Missouri, this week. The first began with the public airing of sorrow and rage after the death of the eighteen-year-old Michael Brown, who was shot by a police officer, on Canfield Court, in the St. Louis suburb, at 2:15 P.M. last Saturday. Then came the local law enforcement’s rejoinder to the early round of protests. Officers rolled in with a fleet of armored vehicles, sniper rifles, and tear-gas cannisters, reinserting the phrase “the militarization of policing” into the collective conscience. The tactical missteps by the town’s police leadership have been a thing to behold. (They’re also to be expected; anyone doubting as much should pick up Radley Balko’s “The Rise of the Warrior Cop.”)
One moment, we see a young man with a welt from a rubber bullet between his eyes; the next, three officers with big guns are charging at another black man who has his hands up. On Thursday, Jelani Cobb filed a powerful account from the sidewalks and homes of Ferguson. Cobb asks about “the intertwined economic and law-enforcement issues underlying the protests,” including, for instance, the court fees that many people in Ferguson face, which often begin with minor infractions and eventually become “their own, escalating, violations.” “We have people who have warrants because of traffic tickets and are effectively imprisoned in their homes,” Malik Ahmed, the C.E.O. of an organization called Better Family Life, told Cobb. “They can’t go outside because they’ll be arrested. In some cases, people actually have jobs but decide that the threat of arrest makes it not worth trying to commute outside their neighborhood.”
The crisis of criminal-justice debt is just one of the many tributaries feeding the river of deep rage in Ferguson. But it’s an important one—both because it’s so ubiquitous and because it’s easily overlooked in the spectacular shadow of tanks and turrets. Earlier this year, I spent six months reporting on the rise of profiteering in American courts, which happens by way of the proliferation of fees and fines for very minor offenses—part of a growing movement toward what’s known as offender-funded justice. Private companies play an aggressive role in collecting these fees in certain states. (Often, this tactic is aimed at the poor with unpaid traffic tickets.) The reports from Ferguson raise questions about how militarization and economic coercion feed a shared anger.
Missouri was one of the first states to allow private probation companies, in the late nineteen-eighties, and it has since followed the national trend of allowing court fees and fines to mount rapidly. Now, across much of America, what starts as a simple speeding ticket can, if you’re too poor to pay, mushroom into an insurmountable debt, padded by probation fees and, if you don’t appear in court, by warrant fees. (Often, poverty means transience—not everyone who is sent a court summons receives it.) “Across the country, impoverished people are routinely jailed for court costs they’re unable to pay,” Alec Karakatsanis, a cofounder of Equal Justice Under Law, a nonprofit civil-rights organization that has begun challenging this practice in municipal courts, said. These kinds of fines snowball when defendants’ cases are turned over to for-profit probation companies for collection, since the companies charge their own “supervision” fees. What happens when people fall behind on their payments? Often, police show up at their doorsteps and take them to jail.
From there, the snowball rolls. “Going to jail has huge impacts on people at the edge of poverty,” Sara Zampieren, of the Southern Poverty Law Center, told me. “They lose their job, they lose custody of their kids, they get behind on their home-foreclosure payments,” the sum total of which, she said, is “devastating.” While in prison, “user fees” often accumulate, so that, even after you leave, you’re not quite free. A recent state-by-state survey conducted by NPR showed that in at least forty-three states defendants can be billed for their own public defender, a service to which they have a Constitutional right; in at least forty-one states, inmates can be charged for room and board in jail and prison.
America’s militarized police forces now have some highly visible tools at their disposal, some of which have been in the spotlight this week: machine guns, night-vision equipment, military-style vehicles, and a seemingly endless amount of ammo. But the economic arm of police militarization is often far less visible, and offender-funded justice is part of this sub-arsenal. The fears that Cobb and Ahmed describe—court debts that lead to warrants and people who are afraid to leave their homes as a result—compound the force that can be wielded during raids or protests like those on the streets of Missouri. Debtors’ fears change their daily lives—can they go to the grocery story or drive a child to school without being detained? “It deters people who have legitimate problems from calling the police, and removes the police’s ability to do what they’re supposed to be doing—helping people in the community respond to emergencies,” Karakatsanis said. It erodes the community’s trust in and coöperation with law enforcement.
In Alabama, Equal Justice Under Law has filed a class-action lawsuit against the city of Montgomery on behalf of minor offenders who have been jailed for debt; their challenge is pending and the city refutes the allegations, but, Karakatsanis says, at least thirty-five people were released from jail for their court debts since the suit was filed. (A judge has issued a preliminary injunction that leans in favor of the debtors.) More often than not, though, plaintiffs who face overwhelming municipal-court debts never get a shot at a legal challenge. Instead, their problem often compounds their resentment and their disinvestment in authority.
Several years ago, I embedded with U.S. troops in Kandahar, Afghanistan, and spent time with a unit that was tasked with implementing the directives from a set of trainings known as “Commander’s Guide to Money as a Weapons System.” The trainings instruct troops in how to use economic tools to further military objectives, and there is a warning printed in the opening pages of one such field manual: “Warfighters and their leaders must ensure their actions will stand up to a Congressional inquiry and must not cause embarrassment to the Department of Defense.” Here, “real” militarism has one advantage over its domestic counterpart, at least doctrinally—the principle is genuine investment in communities where the military hopes to earn trust and influence. Unsurprisingly, it has proved complicated to implement (and has often failed wildly), but, at least in theory, it is far more graceful than police officers or the military blasting their way across human terrain. Here at home, SWAT teams continue to tear down the proverbial power lines.
In a sign of hope, the new commander in Ferguson, Captain Ron Johnson, of the Missouri State Highway Patrol (who grew up in Ferguson), immediately seemed to grasp this issue when he assumed leadership on Thursday. “We all want justice. We all want answers,” he told the Associated Press. “It means a lot to me personally that we break this cycle of violence.”
In reckoning with police militarization, the economic side of the phenomenon should be considered. The connection may not be obvious to those who’ve never had the gas or water or electricity in their homes shut off. But these forces operate in tandem—the tear gas and the tickets; the weaponry and the warrants—compromising a wide range of fundamental rights that seem, in Ferguson and beyond, to have gone up in smoke.
By: Sarah Stillman, The New Yorker, August 15, 2014
“Inequality Is Natural”: The Big, Long, 30-Year Conservative Lie
First came Occupy Wall Street, and its pitch-perfect slogan on inequality: “We are the 99 percent.” After that movement fizzled, Thomas Piketty, the handsomely ruffled French professor, released a 685-page book explaining that we really were living in a new Gilded Age in which the wealth gap was as wide as it had ever been. Finally, in June, one of the plutocrats sitting atop the piles of money he made in the digital revolution, Nick Hanauer, wrote an article in Politico magazine—it’s the most-shared story ever on Politico’s Facebook page—warning that the pitchforks were coming, and rich people like him should advocate for a healthier middle class and a higher minimum wage.
The debate over inequality is now raging, and most Americans are unhappy about the widening divide between the haves and have-nots. Hanauer has been making the same case for years, drawing heaps of both praise and scorn. Forbes magazine has alternately called Hanauer insane and ignorant. His TED University presentation calling for a $15-minimum wage was left off the organization’s website because it was deemed too “political.” That’s nothing next to Piketty’s detractors, who at their most extreme accused him of twisting his data.
Hanauer and Piketty inspire these broadsides because they are challenging, in a far more aggressive way than plutocrats and economists usually do, the conservative economic orthodoxy that has reigned since at least the 1980s. Under Ronald Reagan, we called it trickle-down economics, the idea that the men who can afford their own private jets—they’re usually men—deserve gobs of money because they provide some special entrepreneurial or innovative talent that drives the American economy.
That’s well known. Far less often discussed is the flipside of this belief: that helping the less well off will dampen the American money-generating engine—that it will hurt growth, because the only thing that inspires the “job creators” to work so hard is the promise of insanely vast financial rewards. Poverty is a necessary evil in this worldview, and helping the less well off creates a “culture of dependency,” which discourages work. “The United States thrives because of a culture of opportunity that encourages work and disdains relying on handouts,” Matthew Spalding of The Heritage Foundation wrote in 2012, neatly summing up the conservative ethos.
Conservatives have dominated discussions of poverty for a generation with arguments like this one. It’s completely wrong. It’s more than that—it’s just a lie, concocted as cover for policies that overwhelmingly favored the rich. But it took the worst economic crisis since the Great Depression for many economists, liberal or not, to finally say publicly what many had long argued: Inequality is bad for the economy.
The latest to say so is the rating agency Standard and Poor’s, not exactly a bastion of lefty propaganda. An S&P report released August 5 says that rising inequality—gaps in both income and wealth—between the very rich and the rest of us is hurting economic growth. The agency downgraded its forecast for the economy in the coming years because of the record level of inequality and the lack of policy changes to correct for it. The report’s authors argue against the notion that caring about equality necessarily involves a trade-off with “efficiency”—that is, a well-functioning economy.
To be sure, they’re not making a case for a massive government intervention to help low-income Americans. They discuss the benefits of current policy proposals—like raising the federal minimum wage to $10.10 per hour—with the caveats that such changes could have potential negative consequences—like dampening job growth. (Most economists agree that such a small hike wouldn’t have that impact.)
At its core, though, the S&P report does argue that pulling people out of poverty and closing the gap between the 1 percent and the 99 percent will increase economic growth. The authors argue for some redistributive policies, like increased financial aid for post-secondary education. “The challenge now is to find a path toward more sustainable growth, an essential part of which, in our view, is pulling more Americans out of poverty and bolstering the purchasing power of the middle class,” the authors write. “A rising tide lifts all boats…but a lifeboat carrying a few, surrounded by many treading water, risks capsizing.”
It’s an important moment for such a debate. The Great Recession was a great equalizer, a crisis in which many in the middle class, and even upper-middle class, fell all the way to the bottom and relied on the government safety net. They learned what anyone who cared to look at the data already knew: The vast majority of people relying on government benefits are suffering a temporary setback that they will recover from, as long as they have a helping hand. The holes in the safety net also became more apparent. Even Paul Ryan, the Republican congressman from Wisconsin who has set his blue eyes on higher office, adequately diagnosed many of the problems with anti-poverty programs when he introduced a new plan last month. (Whether he would actually want to pay for the changes he calls for is debatable.)
Closing the gap by lifting low-income families out of poverty could do more to help the economy than any number of tax credits for “job creators” might, which is what Hanauer argued in Politico. And the S&P report puts more support in his corner.
On the question of what to do, there is widespread agreement on boosting educational attainment and increasing salaries at the bottom end. Policymakers have had a lot of time to think about how to help the middle class, since real wages began declining in the mid-1970s. Many of the problems of inequality have policy solutions ready to go, spelled out in a white paper stuffed in someone’s desk drawer. Why has it taken so long to think about addressing it? Was the political might of the right so overwhelming that they couldn’t speak up until people like Hanauer saw, as he warned in his essay, that the pitchforks would be coming for them?
By: Monica Potts, The Daily Beast, August 8, 2014
“Inequality Is A Drag”: There’s No Evidence That Making The Rich Richer Enriches The Nation
For more than three decades, almost everyone who matters in American politics has agreed that higher taxes on the rich and increased aid to the poor have hurt economic growth.
Liberals have generally viewed this as a trade-off worth making, arguing that it’s worth accepting some price in the form of lower G.D.P. to help fellow citizens in need. Conservatives, on the other hand, have advocated trickle-down economics, insisting that the best policy is to cut taxes on the rich, slash aid to the poor and count on a rising tide to raise all boats.
But there’s now growing evidence for a new view — namely, that the whole premise of this debate is wrong, that there isn’t actually any trade-off between equity and inefficiency. Why? It’s true that market economies need a certain amount of inequality to function. But American inequality has become so extreme that it’s inflicting a lot of economic damage. And this, in turn, implies that redistribution — that is, taxing the rich and helping the poor — may well raise, not lower, the economy’s growth rate.
You might be tempted to dismiss this notion as wishful thinking, a sort of liberal equivalent of the right-wing fantasy that cutting taxes on the rich actually increases revenue. In fact, however, there is solid evidence, coming from places like the International Monetary Fund, that high inequality is a drag on growth, and that redistribution can be good for the economy.
Earlier this week, the new view about inequality and growth got a boost from Standard & Poor’s, the rating agency, which put out a report supporting the view that high inequality is a drag on growth. The agency was summarizing other people’s work, not doing research of its own, and you don’t need to take its judgment as gospel (remember its ludicrous downgrade of United States debt). What S.& P.’s imprimatur shows, however, is just how mainstream the new view of inequality has become. There is, at this point, no reason to believe that comforting the comfortable and afflicting the afflicted is good for growth, and good reason to believe the opposite.
Specifically, if you look systematically at the international evidence on inequality, redistribution, and growth — which is what researchers at the I.M.F. did — you find that lower levels of inequality are associated with faster, not slower, growth. Furthermore, income redistribution at the levels typical of advanced countries (with the United States doing much less than average) is “robustly associated with higher and more durable growth.” That is, there’s no evidence that making the rich richer enriches the nation as a whole, but there’s strong evidence of benefits from making the poor less poor.
But how is that possible? Doesn’t taxing the rich and helping the poor reduce the incentive to make money? Well, yes, but incentives aren’t the only thing that matters for economic growth. Opportunity is also crucial. And extreme inequality deprives many people of the opportunity to fulfill their potential.
Think about it. Do talented children in low-income American families have the same chance to make use of their talent — to get the right education, to pursue the right career path — as those born higher up the ladder? Of course not. Moreover, this isn’t just unfair, it’s expensive. Extreme inequality means a waste of human resources.
And government programs that reduce inequality can make the nation as a whole richer, by reducing that waste.
Consider, for example, what we know about food stamps, perennially targeted by conservatives who claim that they reduce the incentive to work. The historical evidence does indeed suggest that making food stamps available somewhat reduces work effort, especially by single mothers. But it also suggests that Americans who had access to food stamps when they were children grew up to be healthier and more productive than those who didn’t, which means that they made a bigger economic contribution. The purpose of the food stamp program was to reduce misery, but it’s a good guess that the program was also good for American economic growth.
The same thing, I’d argue, will end up being true of Obamacare. Subsidized insurance will induce some people to reduce the number of hours they work, but it will also mean higher productivity from Americans who are finally getting the health care they need, not to mention making better use of their skills because they can change jobs without the fear of losing coverage. Over all, health reform will probably make us richer as well as more secure.
Will the new view of inequality change our political debate? It should. Being nice to the wealthy and cruel to the poor is not, it turns out, the key to economic growth. On the contrary, making our economy fairer would also make it richer. Goodbye, trickle-down; hello, trickle-up.
By: Paul Krugman, Op-Ed Columnist, The New York Times, August 7, 2014
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