“Heightening Inequality To Even More Astronomical Levels”: If Inequality Worries Republicans, Why Do They Keep Making It Worse?
You can tell things have gotten very bad when the issue of economic inequality — a serious national problem mostly ignored for more than three decades — is suddenly in political vogue. And you can be sure things have gotten very, very bad when Republicans — who usually insist that inequality is natural, inevitable, even beneficial — suddenly claim they’re worried about it, too.
As the 2016 contenders officially declare their intentions, all of them seem aware that voters want to restore a vestige of fairness to the American economy. Regardless of personal ideology or political reliance on plutocratic billionaires, every presidential candidate must, at the very least, display concern for working families, single mothers, indebted students, and everyone struggling to achieve or maintain a decent living.
Yet how concerned are they, really? In the video that announced her candidacy, Hillary Clinton spoke briefly but bluntly: “Americans have fought their way back from tough economic times, but the deck is still stacked in favor of those at the top. Everyday Americans need a champion, and I want to be that champion.” The only Democrat in the race so far, Clinton realizes that a populist agenda will be required to excite her party base — and to answer those who regard her as too wealthy and too well connected to empathize with the downtrodden.
That unflattering portrait omits many relevant facts about Clinton’s life, from her own modest origins to her many years of advocacy for the disadvantaged, especially women and children. She spoke out publicly about economic fairness long before doing so became politically fashionable, both as a United States senator and during her last presidential campaign. Now the skeptics can listen and decide for themselves.
But voters should also listen closely to the Republicans who mock Clinton’s populism and assert that they are the true spokesmen for the working class. What do they propose to address inequality? And how “authentic” is their concern?
At least two of the Republican candidates, Senator Rand Paul (R-KY) and Senator Ted Cruz (R-TX), want to institute a so-called flat tax — which would severely exacerbate inequality by reducing tax levies on the wealthy and increasing the burden on everyone else. Such plans would cost the Treasury an annual amount estimated between $700 billion and $1 trillion. Yet Paul and Cruz insist that they will simultaneously slash taxes, increase defense spending, and balance the budget — and so does Senator Marco Rubio (R-FL), who proposes his own regressive tax breaks for the rich.
Those promises are mathematically impossible — unless, perhaps, the federal government permanently ended all discretionary spending on student aid, unemployment insurance, health care, veterans benefits, environmental protection, food safety, and dozens of other programs necessary to working- and middle-class families. Somehow they never mention that part.
While decrying economic inequality, Republicans tend not to emphasize their other proposed giveaways that would benefit wealthy donors, such as Paul’s plan to end capital gains taxes, or Rubio’s plan to end not only all taxes on capital gains but on interest and inherited estates, too — leaving only wage earners to be taxed. Schemes like this delight the Koch brothers precisely because they would heighten inequality to an even more astronomical level.
Although Republicans often mention the “right to rise,” as Jeb Bush would put it, they’re hostile to any measure that would actually elevate the incomes of those at the bottom — for example, increasing the minimum wage. Indeed, they tend to be opposed to the very idea of a legislated wage floor because, as Rubio once said, “I don’t think a minimum-wage law works.”
The Florida senator’s economic knowledge is as weak as his budgetary arithmetic. The most recent studies show that in states without a minimum- wage law, inequality is considerably worse than in states with a minimum wage that is at least a dollar above the federal minimum.
But don’t worry, Rubio says he knows a better way to reduce inequality than either higher wages or fairer taxes. Instead, for people languishing in low-wage jobs, government should “incentivize the creation of innovations in education that are accessible.”
So he offers something for everyone: The wealthy get still more big tax cuts; and the not-so-wealthy get a few phrases of incomprehensible, pseudo-wonkish jargon.
By: Joe Conason, Editer in Chief, The National Memo, April 18, 2015
“Asking For A Bail Out Of His Self-Made Crisis”: Cut Taxes Or Expand Medicaid?; Florida Governor Rick Scott Is In Quite A Pickle
The Florida state government has been a hotbed of opposition to Obamacare, and has succeeded in resisting the law’s Medicaid expansion, in large part because of the state’s Low Income Pool: a multi-billion dollar, 10-year-old pilot program through which, right now, the federal government subsidizes health care providers who treat the poor.
Also right now, in Florida, Governor Rick Scott wants to enact hundreds of millions of dollars in annual tax cuts.
The budget room for those tax cuts, in other words, exists because the federal government is spending money—money that comes with no guarantee—in a way that bolsters Florida’s resistance to Obamacare.
Not keen on financing opposition to itself, the Obama administration is leaning toward ending this sweet arrangement, and phasing out the Low Income Pool, which has in any case grown obsolete in a world where Florida can adopt the Medicaid expansion and provide insurance to nearly a million of its poor citizens.
All of which is to say that if Scott and Florida Republicans want their tax cuts, they will have to use expanded Medicaid to fill the budget hole where the Low Income Pool used to be. But rather than push against that open door, Scott announced Thursday that he will sue the federal government. Specifically, he’s arguing that by rescinding the Low Income Pool, the Obama administration is coercing Florida into participating in Obamacare, so the Low Income Pool must continue. Put another way, he’s asking the courts to force the feds to bail out his tax cut.
This is all playing out against the backdrop of King v. Burwell, in which conservatives have asked the Supreme Court to rescind billions of dollars in Affordable Care Act subsidies in their own states—money they claim is contingent upon them establishing their own exchanges. Like most Republican governors, Rick Scott didn’t establish an exchange, but for some reason he isn’t sounding the coercion alarm over King.
Scott’s argument is transparently frivolous, but it underscores the extent to which the GOP’s deranged resistance to Obamacare is boomeranging on itself. As Greg Sargent notes at the Washington Post, “Scott’s lawsuit is designed to get the administration to fork over federal money for health care—but only if it isn’t part of Obamacare.” Without that money, Scott probably won’t get his tax cuts. Which means that in Florida, the GOP’s commitment to tax cuts is running up against its Massive Resistance to Obamacare. And the tax cuts might lose.
This adamant opposition to the Medicaid expansion is a relatively recent development. Scott claims his opposition stems from the administration’s coolness to the Low Income Pool. If the federal government can just end that program, how can Floridians trust them to commit to their end of the Medicaid expansion? But that doesn’t wash. The Low Income Pool was scheduled to expire, whereas the federal government is obligated by law to fund 90 percent of the Medicaid expansion in perpetuity.
Florida’s Senate president—a Republican—thinks Scott is being ridiculous. He released a statement that refutes Scott’s objection to the Medicaid expansion and undermines the lawsuit:
The federal government has no obligation to provide LIP funding, or to work within our timeframe. While we respect Governor Scott’s authority to protect the state’s interests in the way he sees fit, we have a constitutional responsibility to pass a balanced budget by a specific deadline. From where I sit, it is difficult to understand how suing [the federal government] on day 45 of a 60 day session regarding an issue the state has been aware of for the last 12 months will yield a timely resolution to the critical health care challenges facing our state. The Senate budget anticipated the potential reduction or elimination of LIP funding and included solutions to provide Floridians access to health care services and coverage. We remain hopeful CMS will approve the Senate proposal.
A likelier explanation for Scott’s change of heart is a combination of anti-Medicaid spending by the Koch-backed advocacy group Americans for Prosperity, and entrenched Obamacare opposition in the Florida House. Sensing that the Medicaid expansion might be in danger, Scott flipped, rather than be caught on the losing side of it.
But Scott could have solved this problem a long time ago if he’d ever fought for Medicaid expansion earnestly, and could solve it now by teaming up with the Senate to stare down the House.
Instead Scott is suing the federal government to bail him out of a self-made crisis. This isn’t an anomaly, but a pattern. Across the country, Republican governors are coping with the consequences of their own Obamacare intransigence—staring into a future where their insurance markets get destroyed by virtue of their refusal to help implement Obamacare and their unwillingness to take on the right as it pursued litigation.
It was inevitable that as Obamacare became more entrenched, Republicans would see their opposition to the law come into tension with their other core interests. This is exactly what’s happened, and to some extent it has exposed weaknesses in the resistance strategy. But that resistance—to the idea of providing health insurance to the poor—remains very strong. Stronger, perhaps, than the allure of tax cuts.
By: Brian Beutler, The New Republic, April 17, 2017
“He’s Not A Reformer He’s A Fraud”: Marco Rubio Is The Most Disingenuous Republican Running For President
Most of the Republican Party’s primary candidates have internalized something that was blindingly obvious to everyone who watched the 2012 elections unfold. So long as traditional turnout patterns hold, Republicans can’t keep up with Democrats in presidential contests. To win, they need to alter the turnout pattern, and to alter the turnout pattern, they need to break with GOP orthodoxy in some way.
Jeb Bush is jilting the conservative movement by swearing off red meat, hoping an even temperament will appeal to uncommitted voters. Senator Rand Paul is courting young and minority voters by promising to challenge the surveillance and carceral states.
Senator Marco Rubio, who will announce his candidacy for president on Monday, was supposed to lead a GOP breakaway faction in support of comprehensive immigration reform, but was unable to persuade House Republicans to ignore the nativist right, and the whole thing blew up in his face. In regrouping, he’s determined that the key to restoring Republican viability in presidential elections is to woo middle class voters with fiscal policies that challenge conservative orthodoxy.
His new basic insight is correct. The GOP’s obsession with distributing resources up the income scale is the single biggest factor impeding it from reaching new constituencies, both because it reflects unpopular values and because it makes them unable to address emerging national needs that require spending money.
It also happens to be the raison d’être of the conservative establishment. Challenging the right’s commitment to lowering taxes on high earners, and reducing transfers to the poor and working classes, will encounter vast resistance. Where Paul can appeal to the moral and religious sensibilities of elderly whites who might otherwise oppose criminal justice reforms, a real challenge to GOP fiscal orthodoxy will get no quarter from GOP donors.
If Rubio were both serious and talented enough to move his party away from its most inhibiting orthodoxy, in defiance of those donors, his candidacy would represent a watershed. His appeal to constituencies outside of the GOP base would be both sincere and persuasive.
But Rubio is not that politician. He is no likelier to succeed at persuading Republican supply-siders to reimagine their fiscal priorities than he was at persuading nativists to support a citizenship guarantee for unauthorized immigrants. In fact, nobody understands the obstacles facing Marco Rubio better than Marco Rubio. But rather than abandon his reformist pretensions, or advance them knowing he will ultimately lose, Rubio has chosen to claim the mantle of reform and surrender to the right simultaneously—to make promises to nontraditional voters he knows he can’t keep. My colleague Danny Vinik proposes that Rubio wants to “improve the lives of poor Americans” but he must “tailor [his] solutions to gain substantial support in the GOP, and those compromises would cause more harm to the poor.” I think this makes Rubio the most disingenuous candidate in the field.
Nothing captures Rubio’s irreconcilable commitments quite like the evolution of his plan to reform the tax code. From the outset, Rubio never intended to sideline the interests of the wealthy. As originally conceived, his tax plan would’ve paired modest middle class benefits with very large tax cuts for high earners, much like George W. Bush’s first big tax cut in 2001. But when conservatives voiced dissatisfaction with that particular distribution, Rubio responded not by telling them to buzz off, or by eliminating the middle-income benefits and plying the savings into further high-end tax cuts. He kept the benefits, and layered hugely regressive additional tax cuts for the wealthy on top of an already unaffordable plan. What once would have increased deficits by $2.4 trillion over a decade, according to the Tax Policy Center, would now increase them by trillions more. The beneficiaries would be investors, who would no longer pay any tax on capital gains and dividends, and wealthy families, whose enormous bequests would be subject to no tax either.
Unbelievably, this play to have it both ways still doesn’t satisfy supply-siders. “This business side of the plan is pretty darn good and I like it,” Larry Kudlow told Politico’s Ben White. “The personal side of it is a mess and will be politically and economically indefensible and he is going to take tremendous criticism for it and my guess is he will have to back off it very fast.”
That a Republican’s tax math doesn’t add up is nothing new in politics. But most Republicans brush off the shortfalls with vague promises to make huge reductions in social spending. That’s what Mitt Romney did, and what Paul Ryan did back when he chaired the House budget committee. This didn’t put them on the level, but it helped complete a picture—that cutting taxes was a higher priority to them than supporting lower and middle class incomes. Rubio, by contrast, says he will hold anti-poverty spending flat. Now that Ryan is no longer responsible for writing Republican budgets, and doesn’t have to reconcile his incompatible priorities, he also claims he wants to hold anti-poverty spending flat. Rubio isn’t so lucky. As a presidential candidate, he, unlike Ryan, will be held to account for all of his tax and spending proposals.
Either Rubio is promising to run up bigger deficits than any president in history, or he’s swindling someone. Upper income tax cuts, middle class tax credits, anti-poverty spending—at least one of these will have to give. The experience of watching his tax plan evolve tells us a great deal about which one won’t.
By: Brian Beutler, The New Republic, April 13, 2015
“Where Government Excels”: Recognizing The Reality That There Are Some Things The Government Does Better Than The Private Sector
As Republican presidential hopefuls trot out their policy agendas — which always involve cutting taxes on the rich while slashing benefits for the poor and middle class — some real new thinking is happening on the other side of the aisle. Suddenly, it seems, many Democrats have decided to break with Beltway orthodoxy, which always calls for cuts in “entitlements.” Instead, they’re proposing that Social Security benefits actually be expanded.
This is a welcome development in two ways. First, the specific case for expanding Social Security is quite good. Second, and more fundamentally, Democrats finally seem to be standing up to antigovernment propaganda and recognizing the reality that there are some things the government does better than the private sector.
Like all advanced nations, America mainly relies on private markets and private initiatives to provide its citizens with the things they want and need, and hardly anyone in our political discourse would propose changing that. The days when it sounded like a good idea to have the government directly run large parts of the economy are long past.
Yet we also know that some things more or less must be done by government. Every economics textbooks talks about “public goods” like national defense and air traffic control that can’t be made available to anyone without being made available to everyone, and which profit-seeking firms, therefore, have no incentive to provide. But are public goods the only area where the government outperforms the private sector? By no means.
One classic example of government doing it better is health insurance. Yes, conservatives constantly agitate for more privatization — in particular, they want to convert Medicare into nothing more than vouchers for the purchase of private insurance — but all the evidence says this would move us in precisely the wrong direction. Medicare and Medicaid are substantially cheaper and more efficient than private insurance; they even involve less bureaucracy. Internationally, the American health system is unique in the extent to which it relies on the private sector, and it’s also unique in its incredible inefficiency and high costs.
And there’s another major example of government superiority: providing retirement security.
Maybe we wouldn’t need Social Security if ordinary people really were the perfectly rational, farsighted agents economists like to assume in their models (and right-wingers like to assume in their propaganda). In an idealized world, 25-year-old workers would base their decisions about how much to save on a realistic assessment of what they will need to live comfortably when they’re in their 70s. They’d also be smart and sophisticated in how they invested those savings, carefully seeking the best trade-offs between risk and return.
In the real world, however, many and arguably most working Americans are saving much too little for their retirement. They’re also investing these savings badly. For example, a recent White House report found that Americans are losing billions each year thanks to investment advisers trying to maximize their own fees rather than their clients’ welfare.
You might be tempted to say that if workers save too little and invest badly, it’s their own fault. But people have jobs and children, and they must cope with all the crises of life. It’s unfair to expect them to be expert investors, too. In any case, the economy is supposed to work for real people leading real lives; it shouldn’t be an obstacle course only a few can navigate.
And in the real world of retirement, Social Security is a shining example of a system that works. It’s simple and clean, with low operating costs and minimal bureaucracy. It provides older Americans who worked hard all their lives with a chance of living decently in retirement, without requiring that they show an inhuman ability to think decades ahead and be investment whizzes as well. The only problem is that the decline of private pensions, and their replacement with inadequate 401(k)-type plans, has left a gap that Social Security isn’t currently big enough to fill. So why not make it bigger?
Needless to say, suggestions along these lines are already provoking near-hysterical reactions, not just from the right, but from self-proclaimed centrists. As I wrote some years ago, calling for cuts to Social Security has long been seen inside the Beltway as a “badge of seriousness, a way of showing how statesmanlike and tough-minded you are.” And it’s only a decade since former President George W. Bush tried to privatize the program, with a lot of centrist support.
But true seriousness means looking at what works and what doesn’t. Privatized retirement schemes work very badly; Social Security works very well. And we should build on that success.
By: Paul Krugman, Op-Ed Columnist, The New York Times, April 10, 2015
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