“In Politics, Does Evidence Matter?”: We’ll Be Having A Lot Of Disagreements Over The Next Few Years
One of the lovely formulations in John F. Kennedy’s inaugural address expressed his hope that “a beachhead of cooperation may push back the jungle of suspicion.” Kennedy was talking about the Cold War, but we could use a little of this in the partisan and ideological warfare that engulfs our nation’s capital.
And so let us pause at the beachhead established after the midterm elections by Sen. Patty Murray (D-WA) and Rep. Paul Ryan (R-WI). They have co-sponsored a bill that’s unlikely to get a lot of attention but deserves some — not because it will revolutionize politics but because it could, and should, encourage both sides to begin their arguments by asking the right questions.
The Murray-Ryan bill would create a 15-member commission to study, as they put it in a joint announcement, “how best to expand the use of data to evaluate the effectiveness of federal programs and tax expenditures.” The commission would also look into “how best to protect the privacy rights of people who interact with federal agencies and ensure confidentiality.”
Before you sigh, dismiss this as “just another commission,” and turn or click elsewhere, consider what Murray and Ryan are trying to do. Whatever your views, they’re saying, you should want government programs to achieve what they set out to do. And in this age of Big Data, there are more metrics than ever to allow you to have a clear sense of how well they are working.
Also, credit Murray and Ryan for this: They are looking not only at whether programs live up to their billing but also at whether the various tax breaks Congress has enacted — they are worth about $1 trillion a year — bring about the results their sponsors claim they will. If we are ever to reform the tax system, it would be useful to know which deductions, exemptions and credits are worth keeping.
The bipartisan duo — they worked together amicably on budget issues despite large disagreements — is not asking the commission to invent something out of whole cloth. On the contrary, evidence-based social policy is a hot idea at the moment.
Ron Haskins, my Brookings Institution colleague, has just co-authored a new book with Greg Margolis, Show Me the Evidence
Haskins, by the way, is a Republican with whom I’ve engaged in a long-standing (though friendly) argument over welfare reform. His interest here is not partisan but in having both sides pay more attention to what it takes to create “high-quality programs.”
“In politics, evidence is typically used as a weapon — mangled and used selectively in order to claim that it supports a politician’s predetermined position,” Haskins and Margolis write. “That is policy-based evidence, not evidence-based policy.”
The Haskins-Margolis effort comes in the wake of Moneyball for Government
No one, of course, should pretend that by marinating ourselves in data, we’ll render our philosophical and partisan differences obsolete. The major divide over how much government should do and which problems it should take on will persist. So will disagreements over the extent to which government should push back against rising inequality and the degree of regulation a capitalist economy requires.
But conservatives who care about more than just scoring points against government inefficiencies (both real and invented) should want taxpayer money spent in a sensible way. And progressives have more of an interest than anyone in proving that government can work effectively to solve the problems it sets out to deal with. It’s on those two propositions that Murray and Ryan have found common ground.
Argument is at the heart of democracy, so we shouldn’t fear that we’ll be having a lot of disagreements over the next few years. But dumb arguments are not good for anyone. Insisting that politicians base their claims on facts and evidence ought to be the least we expect of them.
By: E.J. Dionne, Jr., Opinion Writer, The Washington Post; The National Memo, December 8, 2014
“Chief Tax-Dodging Officers”: It’s Gotten Pretty Easy For Large Corporations To Avoid The Taxman
Republican and Democratic leaders don’t often see eye to eye on taxes.
But surprisingly, corporate tax reform looks like one area where there might actually be some potential for bipartisan action in Washington. This should be good news, since our corporate tax system is clearly hopelessly broken.
Here’s a stark indicator of just how broken: Last year, 29 of the 100 highest-paid CEOs made more in personal compensation than their companies paid in federal income taxes. That’s according to a new report by the Institute for Policy Studies and the Center for Effective Government.
Source: Fleecing Uncle Sam, an Institute for Policy Studies and Center for Effective Government report
Yes, it’s gotten that easy for large corporations to avoid the taxman.
This is true even for the country’s wealthiest companies. Citigroup, Halliburton, Boeing, Ford, Chesapeake Energy, Chevron, Verizon, and General Motors all made more than $1 billion in U.S. profits last year, but still paid their CEOs more than they paid Uncle Sam. In fact, most of them got massive tax refunds.
How is this possible?
While big businesses moan about the U.S. corporate tax rate of 35 percent, most of them pay nowhere near that. Between 2008 and 2012, the average large corporation paid an effective rate of less than 20 percent.
Hiding profits in tax havens is one of the most common ways large corporations avoid paying their fair share to the IRS. And indeed, the 31 firms who paid their CEOs more than Uncle Sam operate 237 subsidiaries in low- or no-tax zones like the Cayman Islands and Bermuda.
But that’s just one tax-dodging trick. Corporations have lobbied successfully for a plethora of other tax loopholes and subsidies.
Boeing, for example, has figured out how to double dip in the Treasury’s pool.
The aerospace giant hauled in more than $20 billion in federal contracts in 2013. According to Citizens for Tax Justice, taxpayers also picked up the tab for $300 million of Boeing’s research expenses last year through a tax break that Congress is now considering making permanent.
When tax time came, Boeing got $82 million back from the IRS, despite reporting nearly $6 billion in U.S. pre-tax profits. Meanwhile, Boeing chief executive Jim McNerney made $23.3 million.
Corporate tax dodging is bad for ordinary Americans — and our nation’s long-term economic health.
For example, if Boeing had paid the statutory corporate tax rate of 35 percent on its $6 billion in profits, it would’ve added an extra $2 billion to the funds available for public services. That sum would’ve covered the cost of hiring 2,775 teachers for a year.
Shirking taxes may boost the bottom line in the short term, but in the long run it erodes the economic infrastructure businesses need to be competitive.
Unfortunately, the current political rhetoric has little to do with cracking down on corporate tax avoidance.
Republicans are hooked on corporate tax giveaways. And President Barack Obama has suggested that he’s ready to reward corporations for stashing money overseas by giving them deeply discounted tax rates on their profits if they’ll just agree to bring them home.
Both of these positions are based on the unfounded claim that smaller corporate tax burdens translate into more good jobs.
In a Hart Research poll of voters on election night, only 22 percent favored taxing corporations less. In the same poll, less than 30 percent wanted Congress to make tax cuts a higher priority than investments in education, health care, and job creation.
The American people have their priorities straight. They deserve leaders who do too.
By: Sarah Anderson and Scott Klinger are the co-authors of “Fleecing Uncle Sam”; The National Memo, November 19, 2014
“Theatrical Posturing, Not Much Lawmaking”: What We Talk About When We Talk About A Republican Senate
Presuming we have a Republican Congress next year, there’s going to be a lot of talk right after the election about what that will change 1) politically and 2) substantively. While I’m ordinarily an advocate of more substantive discussion and less political discussion (not that I have a problem with political discussion, since I do plenty of it myself, it’s just that it should be leavened with consideration of the things that actually matter), there’s a potential problem in the substantive discussion that I think we should be on the lookout for.
For instance, this morning on the radio I heard some energy expert whose name I didn’t catch say that if Republicans take over the Senate, we’re likely to see the government shift its focus toward fossil fuels and away from renewables. Which sounds perfectly logical until you ask how such a shift is supposed to take place.
This is what is often missing from policy discussion: enough acknowledgment of the institutional processes that determine how policies actually get set and altered. If you’re going to say that a Republican Congress is going to produce a particular policy change, you have to be clear that you’re saying the following events will occur:
1. Republicans will write a bill to do the thing.
2. The bill to do the thing will not only pass the House but more importantly garner 60 votes in the Senate, which means it will get the votes not only of Republicans but also of some Democrats, thereby overcoming a Democratic filibuster.
3. President Obama will sign the bill to do the thing.
It’s possible that that sequence of events could occur in some cases. For instance, Republicans have had a feverish desire to build the Keystone XL pipeline for some time, and they’ve come to attach an importance to it that’s way out of proportion to its actual impact. They seem to say with all sincerity that building the pipeline is a key to American prosperity, which is beyond absurd—building the pipeline would create a few thousand temporary jobs, and the number of permanent jobs maintaining it would literally be in the dozens. But President Obama never seemed adamantly opposed to the pipeline, and one could imagine him signing on if he got something in return. You could also see the pipeline getting a few Democratic votes from red state Democrats who want to show that they love the world’s dirtiest fuel (tar sands oil) and are therefore not hippies, so it could get 60 votes.
That might or might not happen, but it’s at least conceivable. It wouldn’t, however, represent some massive shift in our nation’s energy policy, whatever else you might think about it. And it’s an extremely unusual case.
On almost everything else Republicans want to do, either the bills they write won’t overcome Democratic filibusters, or they’ll be vetoed by the President. Much of the time, that will be because instead of embarking on a good-faith effort to find some accommodation with Democrats, they’ll just propose the thing they really want. It might be possible to forge a compromise on tax reform, but that would be a lengthy and involved process, so Republicans will just try to pass a bill slashing corporate tax rates, which won’t become law. There are ways the Affordable Care Act could be improved, but instead of working with Democrats to find them, they’ll be much more inclined to just pass repeal votes, whether it’s repeal of the entire law or repeal of individual provisions one by one (or, more likely, both).
In other words, we’re going to get an awful lot of theatrical posturing, and not very much lawmaking. We shouldn’t mistake the latter for the former.
By: Paul Waldman, Contributing Editor, The American Prospect, November 3, 2014
‘From Embattled To Pitiful”: Boehner Has A New Pitch To Defend Congressional Ineptitude
About a year ago, a reporter started to ask House Speaker John Boehner (R-Ohio) about Congress’ “historically unproductive” term. “That’s just total nonsense,” he snapped, before the question was even finished.
In reality, it wasn’t nonsense at all, and the question appears even more apt now. The fact remains that this is the least productive Congress since clerks started keeping track nearly a century ago.
Soon after, Boehner switched gears and tried to turn the argument around – sure, he said, Congress isn’t legislating, but that’s a good thing. According to Boehner, Congress “should not be judged by how many new laws we create,” but rather, Congress “ought to be judged on how many laws we repeal.”
This effort to rebrand failure also posed a problem: Congress hasn’t repealed laws, either. By either standard, the legislative branch was failing miserably.
But the hapless House Speaker clearly remains sensitive about Congress’ ineptitude, which seems to have led him to an entirely new argument: Congress isn’t working, but the Republican-led House is awesome.
As he began his annual month-long, 14-state bus tour this week, the Ohio Republican left many of the red-meat issues that rev up his base back in Washington. Instead, he’s trying to promote a different message: Republicans are doing the legislating while everyone else is slacking off. […]
“When you hear all this stuff about the Congress, understand there are two bodies in the Congress,” Boehner said during a morning fundraiser in Bolingbrook, a suburb of Chicago. “One is working our rear ends off, and frankly, you’d be surprised all the stuff we do is done on a bipartisan basis. [Senate Majority Leader] Harry Reid didn’t even try to pass a border bill that we passed last Friday.”
And it’s at this point when the House Speaker made the transition from embattled to pitiful.
Boehner may feel slightly embarrassed for creating an accomplishment-free legacy for himself, and he’s no doubt frustrated by the fact that Congress’ approval rating has fallen to levels unseen since the dawn of modern polling, but this latest tack to rationalize failure is laughable.
Consider the example Boehner himself is using: the GOP-led House passed a “border bill,” while the Democratic-led Senate ignored it. Proof of House Republicans working their “rear ends off”? Not for anyone who was actually awake and watching Congress last week.
The House’s “border bill” was a ridiculous joke that even Boehner didn’t like. The Speaker pushed an entirely different bill; his own members decided to ignore his weak leadership (again); causing Boehner to give up and tell right-wing extremists to write whatever they wanted, without any regard for whether it would become law.
It was a pathetic effort to ram through a symbolic gesture, not a legitimate effort to pass a real bill. That Boehner is using this as a great example of how effective House Republicans are helps prove the exact opposite point.
On the surface, it stands to reason both sides are going to blame the other – in this do-nothing Congress, the Democratic Senate wants voters to blame the Republican House and vice versa. None of this is surprising.
But there’s an objective truth available to anyone who wants to see it. This Congress could approve immigration reform, tax reform, ENDA, and a minimum-wage increase, among other things, were it not for the no-compromise, far-right party dominating the U.S. House. That’s just the reality.
Boehner, taking orders instead of giving them, has approved a bunch of symbolic, partisan bills that no one, including Republicans, expect to become law, but that’s not governing – it’s self-indulgent posturing. Until the Speaker is prepared to acknowledge the difference, Congress will remain a national embarrassment.
By: Steve Benen, The Maddow Blog, August 7, 2014
“Corporate Artful Dodgers”: We’re Heading Toward A World In Which Only The Human People Pay Taxes
In recent decisions, the conservative majority on the Supreme Court has made clear its view that corporations are people, with all the attendant rights. They are entitled to free speech, which in their case means spending lots of money to bend the political process to their ends. They are entitled to religious beliefs, including those that mean denying benefits to their workers. Up next, the right to bear arms?
There is, however, one big difference between corporate persons and the likes of you and me: On current trends, we’re heading toward a world in which only the human people pay taxes.
We’re not quite there yet: The federal government still gets a tenth of its revenue from corporate profits taxation. But it used to get a lot more — a third of revenue came from profits taxes in the early 1950s, a quarter or more well into the 1960s. Part of the decline since then reflects a fall in the tax rate, but mainly it reflects ever-more-aggressive corporate tax avoidance — avoidance that politicians have done little to prevent.
Which brings us to the tax-avoidance strategy du jour: “inversion.” This refers to a legal maneuver in which a company declares that its U.S. operations are owned by its foreign subsidiary, not the other way around, and uses this role reversal to shift reported profits out of American jurisdiction to someplace with a lower tax rate.
The most important thing to understand about inversion is that it does not in any meaningful sense involve American business “moving overseas.” Consider the case of Walgreen, the giant drugstore chain that, according to multiple reports, is on the verge of making itself legally Swiss. If the plan goes through, nothing about the business will change; your local pharmacy won’t close and reopen in Zurich. It will be a purely paper transaction — but it will deprive the U.S. government of several billion dollars in revenue that you, the taxpayer, will have to make up one way or another.
Does this mean President Obama is wrong to describe companies engaging in inversion as “corporate deserters”? Not really — they’re shirking their civic duty, and it doesn’t matter whether they literally move abroad or not. But apologists for inversion, who tend to claim that high taxes are driving businesses out of America, are indeed talking nonsense. These businesses aren’t moving production or jobs overseas — and they’re still earning their profits right here in the U.S.A. All they’re doing is dodging taxes on those profits.
And Congress could crack down on this tax dodge — it’s already illegal for a company to claim that its legal domicile is someplace where it has little real business, and tightening the criteria for declaring a company non-American could block many of the inversions now taking place. So is there any reason not to stop this gratuitous loss of revenue? No.
Opponents of a crackdown on inversion typically argue that instead of closing loopholes we should reform the whole system by which we tax profits, and maybe stop taxing profits altogether. They also tend to argue that taxing corporate profits hurts investment and job creation. But these are very bad arguments against ending the practice of inversion.
First of all, there are some good reasons to tax profits. In general, U.S. taxes favor unearned income from capital over earned income from wages; the corporate tax helps redress this imbalance. We could, in principle, maintain taxes on unearned income if we offset cuts in corporate taxes with substantially higher tax rates on income from capital gains and dividends — but this would be an imperfect fix, and in any case, given the state of our politics, this just isn’t going to happen.
Furthermore, ending profits taxation would greatly increase the power of corporate executives. Is this really something we want to do?
As for reforming the system: Yes, that would be a good idea. But the case for eventual reform basically has nothing to do with the case for closing the inversion loophole right now. After all, there are big debates about the shape of reform, debates that would take years to resolve even if we didn’t have a Republican Party that reliably opposes anything the president proposes, even if it was something Republicans were for just a few years ago. Why let corporations avoid paying their fair share for years, while we wait for the logjam to break?
Finally, none of this has anything to do with investment and job creation. If and when Walgreen changes its “citizenship,” it will get to keep more of its profits — but it will have no incentive to invest those extra profits in its U.S. operations.
So this should be easy. By all means let’s have a debate about how and how much to tax profits. Meanwhile, however, let’s close this outrageous loophole.
By: Paul Krugman, Op-Ed Columnist, The New York Times, July 27, 2014
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