“Snake Oil Salesmen”: ALEC’s Worthless Recommendations For Prosperity In The States
For most of its history ALEC has operated in the background, but its influence recently drew the spotlight when its promotion of “Stand Your Ground” laws came to light in the wake of the killing of Trayvon Martin in Florida. Faced with the potential of consumer boycotts, corporate sponsors such as McDonald’s and Pepsi withdrew their support. Henceforth, the organization announced, it would concentrate on state economic policy.
State legislators who might look to the organization for leadership on economic policies should be wary of following ALEC’s lead in this arena. A startlingly candid report, “Selling Snake Oil to the States,” just released by the Iowa Policy Project and the Washington-based Good Jobs First, shows that ALEC’s recommendations for producing economic growth in the states are essentially worthless.
This is a strong claim, but the researchers support their conclusion neatly by putting under the microscope the implicit predictions in the 2007 edition of Rich States, Poor States, the volume written by economist Arthur Laffer and the source of the ALEC-Laffer State Economic Competitiveness Index.
In brief, the authors take ALEC’s 2007 ranking of states based upon the states’ adherence to its recommendations, and seeing whether indeed the states that were predicted to prosper were doing so five years later.
None of ALEC’s predictors of economic growth—elimination or reduction of progressive taxation, reduced commitments to public services, tightening of social safety net programs, or reduced union influence—showed any relationship to economic prosperity.
In fact, if anything the ALEC formula for prosperity had an inverse relationship. As the authors put it:
…states that were rated higher on ALEC’s Economic Outlook Ranking in 2007…have actually been doing worse economically in the years since, while the less a state conformed with ALEC’s policies the better off it was.
Looking at median family income specifically:
Once again, actual results are the opposite of the ALEC claim. The more a state’s policies mirrored the ALEC low-tax/regressive taxation/limited government agenda, the lower the median family income; this is true for every year from 2007 through 2011; Figure 5 below shows the results just for 2011. The relationship is not only negative each year, it also became worse over time: the better a state did on the ALEC Outlook Ranking, the more family income declined from 2007 to 2011. The correlation, -.30, is statistically significant.
The authors of the report remind us that the only way to accelerate economic growth is to pursue policies that increase or maintain productivity, such as investing in roads, bridges and schools, and insuring an educated workforce and a healthy population.
One report can hardly be expected fully to turn back the simplistic analysis that ALEC has been promoting for understanding state economic development. But this one should provide a strong counter-weight to the notion that states can prosper by following the low road of tax cuts and limited support for the public sector.
By: Michael Lipsky, The American Prospect, December 3, 2012
“Seriously?”: Mitch McConnell’s Vision Of A Compromise
Senate Minority Leader Mitch McConnell (R-Ky.), not surprisingly, has no use for President Obama’s $4 trillion reduction/economic stimulus plan. Greg Sargent, however, flags the Republican’s vision of what a bipartisan agreement would look like.
In an interview in his Capitol Hill office, Mr. McConnell said if the White House agrees to changes such as higher Medicare premiums for the wealthy, an increase in the Medicare eligibility age and a slowing of cost-of-living increases for programs like Social Security, Republicans would agree to include more tax revenue in the deal, though not from higher tax rates. […]
Mr. McConnell offered his ideas as examples of the structural changes Republicans are looking for. “The nexus for us is: revenue equals genuine entitlement eligibility changes,” Mr. McConnell said.
If this sounds vaguely familiar, there’s a good reason: it’s the blueprint of the plan Sen. Lindsey Graham (R-S.C.) said on Sunday he could support.
What I hope the political world — policymakers, Sunday show participants, etc. — will consider as we go into the weekend is how truly baffling McConnell’s concept of a “compromise” really is.
Despite an election cycle in which Democrats did very well up and down the ballot, the Senate GOP leader envisions an agreement in which Republicans get the Medicare cuts they want, Republicans get the Social Security cuts they want, and Republicans get the tax rates they want. In exchange, McConnell would give Democrats Mitt Romney’s revenue plan.
Seriously.
Sure, President Obama’s plan isn’t exactly an olive branch, but at least it’s a serious effort to reach the goal Republicans established, and it includes policies the White House would not otherwise seek on their own. McConnell’s approach is based on a model in which Obama was the one who ended up with 206 electoral votes, instead of 332.
House Speaker John Boehner (R-Ohio) said today the talks are at a “stalemate.” I wonder why that is.
By: Steve Benen, The Maddow Blog, November 30, 2012
“Seriously? You’re Going To Block A Tax Cut?”: The Only One Relevant Question For Republicans To Ask
The Republicans are trying hard to make it look like they’re the ones driving the Fiscal Cliff negotiations, but Wall Street isn’t buying it.
No matter how many times House Speaker John Boehner says the Democrats’ opening offer is ridiculous, for example, the more clued-in pundits (Politico’s Ben White, for example) and investors stick to their guns:
The Democrats have won. Taxes on the highest earning Americans are going up.
Given the reality of the situation, in fact, the only real question for Republicans is this:
Seriously? You’re going to block a tax cut?
Because if the Republicans really do refuse to come to the table in the next month, that’s exactly what they will be doing.
On January 1, by law, tax rates are going to go up and government spending is going to get cut.
The Republicans can’t stop that from happening by being obstructionist. They can only stop it by compromising.
The Obama Administration’s proposal cuts taxes for all but the highest earning Americans.
If the Republicans “just say no” to that proposal, they will be rejecting a tax cut.
Given that the main economic plank of the Republican party is still cutting taxes, there’s no way they’re going to do that.
So you can go ahead and tune out the many media appearances of John Boehner, et al. This one’s over. There’s no way the Republicans are going to block a tax cut.
By: Henry Blodgett, Business Insider, December 2, 2012
“BS Hidden In Plain Sight”: Let’s All Agree To Pretend The GOP Isn’t Full Of It
It’s really amazing to see political reporters dutifully passing along Republican complaints that President Obama’s opening offer in the fiscal cliff talks is just a recycled version of his old plan, when those same reporters spent the last year dutifully passing along Republican complaints that Obama had no plan. It’s even more amazing to see them pass along Republican outrage that Obama isn’t cutting Medicare enough, in the same matter-of-fact tone they used during the campaign to pass along Republican outrage that Obama was cutting Medicare.
This isn’t just cognitive dissonance. It’s irresponsible reporting. Mainstream media outlets don’t want to look partisan, so they ignore the BS hidden in plain sight, the hypocrisy and dishonesty that defines the modern Republican Party. I’m old enough to remember when Republicans insisted that anyone who said they wanted to cut Medicare was a demagogue, because I’m more than three weeks old.
I’ve written a lot about the GOP’s defiance of reality–its denial of climate science, its simultaneous denunciations of Medicare cuts and government health care, its insistence that debt-exploding tax cuts will somehow reduce the debt—so I often get accused of partisanship. But it’s simply a fact that Republicans controlled Washington during the fiscally irresponsible era when President Clinton’s budget surpluses were transformed into the trillion-dollar deficit that President Bush bequeathed to President Obama. (The deficit is now shrinking.) It’s simply a fact that the fiscal cliff was created in response to GOP threats to force the U.S. government to default on its obligations. The press can’t figure out how to weave those facts into the current narrative without sounding like it’s taking sides, so it simply pretends that yesterday never happened.
The next fight is likely to involve the $200 billion worth of stimulus that Obama included in his recycled fiscal cliff plan that somehow didn’t exist before Election Day. I’ve taken a rather keen interest in the topic of stimulus, so I’ll be interested to see how this is covered. Keynesian stimulus used to be uncontroversial in Washington; every 2008 presidential candidate had a stimulus plan, and Mitt Romney’s was the largest. But in early 2009, when Obama began pushing his $787 billion stimulus plan, the GOP began describing stimulus as an assault on free enterprise—even though House Republicans (including Paul Ryan) voted for a $715 billion stimulus alternative that was virtually indistinguishable from Obama’s socialist version. The current Republican position seems to be that the fiscal cliff’s instant austerity would destroy the economy, which is odd after four years of Republican clamoring for austerity, and that the cliff’s military spending cuts in particular would kill jobs, which is even odder after four years of Republican insistence that government spending can’t create jobs.
I guess it’s finally true that we all are Keynesians now. Republicans don’t even seem to be arguing that more stimulus wouldn’t boost the economy; they’ve suggested that Obama needs to give up “goodies” like extending unemployment insurance (which benefits laid-off workers) and payroll tax cuts (which benefit everyone) to show that he’s negotiating in good faith. At the same time, though, they also want Obama to propose bigger Medicare cuts, even though they spent the last campaign slamming Obama’s Medicare cuts and denying their interest in Medicare cuts. I live in Florida, so I had the pleasure of hearing a radio ad from Allen West, hero of the Tea Party, vowing to protect Medicare.
Whatever. I realize that the GOP’s up-is-downism puts news reporters in an awkward position. It would seem tendentious to point out Republican hypocrisy on deficits and Medicare and stimulus every time it comes up, because these days it comes up almost every time a Republican leader opens his mouth. But we’re not supposed to be stenographers. As long as the media let an entire political party invent a new reality every day, it will keep on doing it. Every day.
By: Michael Grunwald, Time Swampland, November 30, @012
“An Effective Ad Man”: Democrats Could Use Their Own Grover Norquist
Here’s the first lesson from the early skirmishing over ways to avoid the fiscal cliff: Democrats and liberals have to stop elevating Grover Norquist, the anti-government crusader who wields his no-tax pledge as a nuclear weapon, into the role of a political Superman.
Pretending that Norquist is more powerful than he is allows Republicans to win acclaim they haven’t earned yet. Without making a single substantive concession, they get loads of praise just for saying they are willing to ignore those old pledges to Grover. You can give him props as a public relations genius. Like Ke$ha or Beyonce, he is widely known in Washington by only one name. But kudos for an openness to compromise should be reserved for Republicans who put forward concrete proposals to raise taxes.
The corollary is that progressives should be unafraid to draw their own red lines. If you doubt that this is a good idea, just look at how effective Norquist has been. Outside pressure from both sides is essential for a balanced deal.
Start by insisting that Social Security and any increase in the retirement age be kept off the table. President Obama’s bargaining hand will be strengthened further if he can tell Republicans that there just aren’t Democratic votes for steep cuts in Medicaid and Medicare. The president’s room for maneuver expands still more if liberals refuse to look at cuts in programs unless Republicans are prepared to raise tax rates on the wealthy.
Already, there are signs that Republicans realize how much leverage the president has. If Congress doesn’t act, all the Bush tax cuts expire at the end of the year. At that point, the Senate’s Democratic majority has the power to block (or Obama can veto) any restoration of the upper-end Bush tax rates.
One indication that Republicans are aware they’re boxed in came from Rep. Tom Cole (R-Okla.), one of his party’s shrewdest political minds. He suggested that Republicans should take up the president’s invitation to extend the Bush tax cuts for the 98 percent of Americans who earn less than $250,000 a year. Yes, this would amount to throwing in the towel on those upper-bracket levies. But Cole knows that it won’t help the Republican brand if voters come to see the GOP’s one and only objective as protecting wealthier Americans from tax increases.
The next lesson is not about politics or PR. It’s about substance, and this is where the Washington establishment has to get serious. The simple fact is that it’s bunk to claim that “tax reform” alone can produce the revenue we need.
One of the great disservices of the Bowles-Simpson commission was that it fed the impression that tax reform could generate so much cash that it would permit a cut in tax rates.
Grant Erskine Bowles and Alan Simpson credit for good intentions — they were desperate to find a way to get Republicans on their commission to acknowledge the need for new revenue. It’s also worth remembering that their proposal assumed the expiration of the Bush tax cuts for those earning more than $250,000 a year. Nonetheless, their stress on tax reform with lower rates was more a political deal than wise policy. They sent us down the wrong path.
The only way tax reform might raise enough money to prevent a rate increase, let alone create an opportunity for rate cuts, is to reduce popular deductions (like the one on mortgage interest) so deeply that middle-class Americans would get a tax increase, too. And eliminating or sharply undercutting the deduction for state and local taxes is a bad idea. This only penalizes higher-tax states that try to solve their own social problems — for example, by providing health insurance to their low-income residents.
And all the schemes to eliminate tax expenditures to avoid rate increases have the effect of protecting just one group: Americans with very high incomes. That’s how the math works.
The right thing is to bring back Bill Clinton’s tax rates on the well-off and then have a broad tax reform discussion next year. A similar logic applies to health-care programs, as Jonathan Cohn suggested in the New Republic. Before making big cuts in Medicaid and Medicare, we need to see whether the reforms in the Affordable Care Act can contain medical inflation.
The fiscal cliff creates an enormous opportunity to end an era in which it was never, ever permissible to raise taxes. In the pre-Grover days, conservatives believed passionately in pay-as-you-go government. A tough stand by progressives will make it easier for conservatives to return to the path of fiscal responsibility.
By: E. J. Dionne, Jr., Opinion Writer, The Washington Post, November 28, 2012
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