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The Supreme Court Hears AEP v. Connecticut

Posted on by The Progressive Policy Institute

Would that allow you to sue all those farmers . . . cow by cow, or at least farm by farm? – Justice Scalia

You’re going to put a $20 a ton tax on carbon, and lo and behold, you will discover that nuisance will be abated. And we bring in 15 economists. – Justice Breyer

In oral arguments for AEP v. Connecticut today the Supreme Court today seemed skeptical of Connecticut and other states’ argument that they should be allowed to pursue nuisance suits against major power companies for their GHG emissions. The transcript is available, and SCOTUSblog has a good overview of the arguments. Though making predictions based on oral arguments is dangerous, I will be very surprised if the court allows this case to proceed. But it is much less clear which of the available reasons for halting the case the court will choose. That decision will have implications that extend well beyond the legal details, and choosing one of the reasons—displacement—could even be beneficial for climate policy.

To recap for those of you that haven’t been following the case, the court has four separate plausible justifications for dismissing it. Very briefly but (hopefully) in plain English, the court could rule that the states can’t sue because:

a) any injury from climate change can’t be traced to the power companies, or courts can’t craft a remedy (Article III standing),

b) the harms of climate change are too generalized and better addressed by Congress (prudential standing),

c) climate change is a “political question” that courts can’t decide; or

d) the Clean Air Act and EPA “displace” federal common law suits like this one.

With four separate grounds available, all of them arguably applicable, the states were always on shaky ground. In fact, the only way I can see the court allowing the case to proceed is if the justices cannot agree on which rationale to choose. If there is no majority, the lower court decision (which favored the states) would stand. This is slightly more likely than normal since Justice Sotomayor has recused herself, making a 4-4 split possible. But this outcome is unlikely. The court will probably choose one (or more) of the rationales and dismiss the case.

The justices spent some time at arguments on each of the four rationales. The political question doctrine was discussed the least, but I can’t rule out any of the four. But it is interesting that two of the justices most likely to rule in the states’ favor—Justice Kagan and Justice Ginsburg—focused on the displacement issue. Each seemed to feel EPA moves to regulate GHGs were significant, and in tension with a nuisance suit: Ginsburg suggested that the suit would require courts to become a “super EPA” without the expertise for that role. If these justices favor dismissing on displacement grounds, that may be the compromise that emerges from the Court.

It helps that an opinion citing displacement almost writes itself—this case was filed, decided, and appealed at a time when EPA never looked like regulating GHGs. A lot has happened since then: Massachusetts v. EPA, the 2009 GHG endangerment finding, new vehicle emissions rules, and the late-2010 settlement agreement under which EPA committed to regulating emissions from exactly those facilities the states are pursuing: the electric power sector.

The states point out that these regulations aren’t in place yet, and though I don’t think that helps them avoid legal displacement, it illustrates why a court decision based on displacement would be so important. If you’ve been following Congress this year, you know EPA authority over GHGs is under threat. It narrowly survived the 2011 budget process, and is likely to be targeted again. But if this authority is all that stands between emitters and federal nuisance suits, it becomes much harder to get rid of. The power companies already acknowledge in their brief that EPA does have the authority to regulate GHGs from their plants (which should, by the way, finally end attempts to rhetorically relitigate Massachusetts v. EPA). If the Supreme Court rules that Congress displaced suits like Connecticut when it gave broad authority to the EPA under the Clean Air Act, legislators are much less likely to take that power away, at least not without putting something new in its place.

So while a loss for the states on displacement grounds might seem like an anti-environmental result, it would be just as accurate to view it as pro-EPA. Dismissal of the case on standing or political question grounds does not have this effect. This also illustrates why displacement is the narrowest grounds for dismissal—if the EPA fails to act or is disarmed by Congress, the Court can revisit the issue, and only then would it need to draw sweeping conclusions about the scope of broad legal doctrines.

The EPA, armed only with its current powers, is not the ideal architect for climate policy—but it is a far better venue than the courts, for both practical and philosophical reasons. The justices today seemed acutely aware of these limitations. Assuming my prediction is correct and this case is dismissed, I agree with others who argue that is the right result regardless of our views on climate policy. But it’s possible that in dismissing the case the Court will strengthen the EPA. If so, that’s good news for the climate too.

Obama Needs a Bipartisan Elder Statesman Road Show to Tackle the Deficit

Posted on by The Progressive Policy Institute

As President Obama begins taking the budget deficit battle show on the road, he faces a number of obvious challenges. But perhaps the most pressing one is this: In the hyper-polarized political environment, how does a President whose approval ratings are stuck in the 40s successfully make the public case for a serious deficit reduction plan?

The answer is he’s going to have to try something different. If it’s just the usual campaign-style events like the GW speech from last week (“I don’t think there’s anything courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill.”), Republicans will respond predictably with wild demagoguery on tax hikes and entitlement cuts, and the battle lines will solidify into familiar gridlock patterns.

But here’s an alternative: Obama should to send a signal that this is serious, this is above party, this is for the good of the country, and if we don’t solve this problem soon, we’re going to pay a major price later. To do this, Obama should assemble a bipartisan team of elder statesmen to accompany him around the country as he talks about this. Imagine if he brought together Clinton and Bush Sr. on a hard-choices-to-tackle-the-deficit tour to give this some gravitas beyond the usual campaign-style events. At the very least he should be going around with Bowles and Simpson.

While the conventional wisdom is that the President can use the bully pulpit to move public opinion, the reality is that this is rarely the case. Public opinion is not easily moved, especially not by a highly divisive President on an issue that touches on issues of entitlements. (see, George W. Bush, privatization of Social Security).

And Obama seems smart enough to know that once a particular plan becomes the “Obama plan,” it’s going to be very hard to get any Republican co-sponsors, which is one reason he’s been slow to talk in specifics.

The political problem is that any serious deficit reduction plan has the dyspeptic taste of chalky medicine going down. This is not Ronald Reagan seeking public support for his tax cuts. A responsible deficit reduction proposal that requires tax increases and entitlement cuts (as a responsible plan must) exposes its advocates to attacks on the two most easily-demagogued issues in American politics. (He wants to raise your taxes! He wants to cut your Medicare and Social Security!) In other words, the politics of that responsible plan are very bad.

And yes, we know deficit reduction good for us, and increasingly, we know we really need to take that medicine (the federal deficit is rapidly shooting up among the ranks of Gallup’s most important problem). But we also keep thinking there must be a tastier medicine that can do just as good of a job, in good part because there’s always somebody out there promising a tastier medicine – magical elixirs based on heroic assumptions about tax cuts or mythical savings to be had from eliminating waste, fraud, and abuse or wooden-nickel promises about being able to preserve entitlements as they are.

If we’re going to get beyond this destructive dissembling, Obama’s going to need some Republicans out there speaking with him. Any plan needs to be sold as a bipartisan plan from the start.

While it’s unlikely any Republicans in the Senate would put themselves out on a limb and appear publicly with Obama, there should be some retired Republicans who might be willing to lend their name to a bipartisan effort to build a serious deficit reduction plan, especially given the stakes involved.

Had the President jumped out there earlier and defined the parameters of the debate on deficit reduction, he might be in a better place rhetorically. But Obama clearly believes in the rope-a-dope strategy – let the other guy (in this case Ryan) get out there first, and then punch back once he’s over-extended.

And yes, Obama can be the anti-Ryan if he wants, since the Ryan plan does not comport particularly well with the contours of public opinion. This might help in the short run. But it also runs the risk of defining the left flank of the debate, when that should really be reserved for the Progressive Caucus plan of 80 percent tax hikes.

This time, Obama should be more creative. Solving the federal deficit is a generational problem that needs to rise above party. Putting together a bipartisan road show of elder statesmen would signal that this is something grave and serious, not partisan politics as usual.

Air Force Certifies the Weakness of Domestic Manufacturing

Posted on by The Progressive Policy Institute

I was just revising a portion of my textbook, Economics:The Basics and I happened to come across this March 21, 2011 entry in the Federal Register where the Air Force is granting a waiver from the Buy American requirements of the American Recovery and Reinvestment Act of 2009. This is what the waiver said:

The domestic nonavailability determination for these products is based on extensive market research and thorough investigation of the domestic manufacturing landscape. This research identified that these products are manufactured almost exclusively in China.

Which products are they talking about?

… the following construction items to be incorporated into the project FTQW094001 for the construction and replacement of military family housing units at Eielson AFB, Alaska under task order FA8903-06-D-8505-0019. The items are 1″ Collated Screws, Shank #10; 1-1/2″ (Taco) Air Scoops for Hydronic Heating Systems; 1-5/8″ Ceramic Coated Bugle Head Course Thread Screws; 2″ (Taco) Air Scoops for Hydronic Heating Systems; 2-1/2″ (Taco) Air Scoops for Hydronic Heating Systems; 2-1/2″ Collated Screws; 3″ Ceramic Coated Bugle Head Course Thread Screws; 3″ Spool Insulators;3/4″ Collated Screws, Shank #10; 3″;Bolt Guy Clamp; Ceiling Fan; Ceiling Fan w/Light Kit; Door Hinge Pin Stops; Exterior Wall Mount Two Head Flood Light w/270 Degree Motion Sensor & Brushed Nickel Finish; Ground Fault Circuit Interrupt (GFCI) Receptacles; Handrail Brackets; Maclean Power Systems Guy Attachment; Residential Style Satin Chrome Handrail Bracket; Satin Nickel Outdoor Sconce Light Fixture; Tamper-Resistant Ground Fault Circuit Interrupt (GFCI) Receptacles; Weather-Resistant Ground Fault Circuit Interrupt (GFCI) Receptacles; Pendant Bar Light Fixture; 24″ Bath Vanity Light Fixture; Pendant Chandelier Light Fixture; Linear Fluorescent Ceiling Lighting Fixture (48″ Lensed Fluorescent w/Dimming Ballast & Satin Aluminum Finish); 48″ Bath Vanity Light Fixture; 20″ Utility Shelf Bracket; Chrome Finish Residential Dishwasher Air Gap Cap Fitting; Satin Chrome Finish Convex Wall Mount Door Stops; Residential Microwave w/Range Hood; Residential Style Polished Chrome Towel Ring; Residential Style Polished Chrome Toilet Paper Holder; Residential Style Polished Chrome Double Robe Hook; Residential Style Bright Stainless Steel 60″ Curved Shower Rod & Flanges; Residential Style Polished Chrome 24″ Towel Bar; Residential Style Polished Chrome 30″ Towel Bar; Satin Nickel Finish Wall Mounted Spring Door Stop.

Hmmm…it’s pretty amazing, don’t you think, that the Air Force is certifying that none of these items are available from American manufacturers. It’s even more extraordinary given that the BEA reports that the U.S. fabricated metal and electrical equipment industries were producing at very high levels as recently as 2007. Similarly, the BLS is reporting record levels of output in the ‘turned product, screw, nut and bolt’ industry as of 2007.

I see four possibilities.

First, the Air Force could be lazy. The parts are really available, but they can’t find them.

Second, U.S. manufacturers only make sophisticated parts, not towel bars and door stops.

Third, these industries were doing great through 2007, and have only gone offshore since the recession.

Fourth, the official data didn’t pick up the offshoring in the 2000s.

Take your pick.

Crossposted from Mandel on Innovation and Growth

How to Think About AEP v. Connecticut

Posted on by The Progressive Policy Institute

Today, the U.S. Supreme Court will be hearing oral arguments in AEP v. Connecticut, a case that will decide whether eight states have the right to sue American Electric Power (AEP) Co. and several other utilities for greenhouse gas emissions. The states have argued that carbon dioxide emissions are a “public nuisance” because they contribute to climate change. They’re hoping to force the companies to reduce their emissions through litigation. The power companies have argued that because of the complexity of climate change, it’s impossible to draw a causal link between any specific emissions and any unwelcome changes in the weather.

For helpful background on the case, there’s no better place to turn than to a recent PPI memo entitled “Why Progressives Should Cool to ‘Global Warming’ Lawsuits.” In the memo, author Philip Goldberg argues that such litigation makes little sense:

Progressives should … not reflexively support climate change litigation, no matter how passionately one might favor emission reductions. We should adhere to our principles and protect due process rights of defendants, even when those defendants are large corporations. The David and Goliath analogy may score political points, but it only works in litigation when Goliath does something objectively wrong. Otherwise, any group that fails to get its way in the political arena will turn to the courts. Such an act would be an affront to democratic proceduralism that has long defined our progressive philosophy.

You can read the entire memo here.

Wingnut Watch: The Tea Party Celebrates Tax Day

Posted on by The Progressive Policy Institute

The Tax Day (or more accurately, Tax Weekend) observances of the Tea Party movement weren’t as large or well-publicized as in the past, but they did reflect the hardening consensus of conservative activists against both the appropriations deal just agreed to by congressional Republicans, and the coming legislation increasing the public debt limit. This consensus is being reinforced by potential presidential candidates and other opinion leaders who are encouraging the perception that the Beltway GOP is once again “selling out” the conservative movement and its latest Tea Party incarnation.

This snapshot of the mood at New Hampshire Tea Party events by Michael Crowley is illustrative:

The overall picture is one of a restless Republican base that sees defeating Obama as a matter of national survival. Angry conservatives believe Washington is spending the country into oblivion, and that lazy freeloaders are leeching federal money at the expense of ever more squeezed middle-class taxpayers. They also feel that the Washington game is rigged against them: “We’re constantly being lied to,” fumed Dan Dwyer of Nashua at a local GOP confab on Thursday night, still angry that Republicans had “caved” in their budget negotiations with Democrats earlier this month.

At a Wisconsin Tea Party rally, anger at congressional Republicans was fed by none other than Sarah Palin, who “unleashed a withering critique of congressional Republicans Saturday, lambasting them for not cutting spending deeper and faster, and saying the party needs to ‘fight like a girl.’” Meanwhile, Tim Pawlenty, who spoke at a number of Tea Party events, has been urging Republicans to oppose a debt limit increase on the questionable grounds that arrangements could be made to avoid a federal credit default until the autumn.

The superficially confusing aspect of this rhetoric is that the conservatives who are being most vocal about the dire nature of the deficit-and-debt emergency are precisely the same people who are fearful that congressional Republicans might cut some long-term budget deal with Senate Democrats and the administration that leaves increased taxes on the wealthy on the table. That’s why they are linking any approval of a debt limit increase not just to some deficit agreement, but to acceptance of the kind of deep spending cuts and “entitlement reforms” laid out in Paul Ryan’s budget proposal.

Accordingly, we will soon see Tea Party fire concentrate on those Senate Republicans said to be negotiating a deal that would include some tax increases. The Republican point man in the so-called “Gang of Six” of bipartisan senators engaged in these negotiations, Saxby Chambliss of GA, is already drawing unfriendly home-state fire from Red State’s Erick Erickson, who had this to say today:

Senate Republicans are going to support raising the debt ceiling and raising taxes all while refusing to demand passage of a Balanced Budget Amendment. House Republican Leaders will no doubt decide that . . . well . . . Republicans only control one house of one branch of government so . . . .

Bend over America.

This conflict will soon make it more obvious than ever that most conservative activists, including those identified with the Tea Party Movement, are less concerned with deficit reduction than with permanently shrinking the size and reach of the federal government and pushing both radical spending cuts and continued tax cuts.

On another front, there are growing signs that Republican elites have decided to give Donald Trump the same dismissive treatment that was said to have led to Sarah Palin’s steady decline in credibility as a potential presidential candidate. Over the weekend, Karl Rove called Trump a “joke candidate.” Playing his snooty Tory role, George Will called The Donald a “blatherskite,” and warned he could seriously screw up Republican presidential candidate debates. Slate’s Dave Weigel went to the trouble of reading Trump’s 2000 proto-campaign book, and noticed that Trump expressed a fondness for the Canadian single-payer health care system. Surfing off that disclosure, the Club for Growth put out a release calling Trump a “liberal.”

It’s almost certain that this offensive was stimulated by the Public Policy Polling survey of Republicans that was released on Friday showing Trump jumping out into a sizable national lead over the rest of the potential presidential field. Trump’s 26 percent is higher than any proto-candidate has registered in early national polls. And the internals, showing 23 percent of Republicans saying that could not vote for a candidate who believes Barack Obama was born in the United States (and another 39 percent saying they weren’t sure if they could or not), were probably terrifying to beltway GOPers.

No Trump

Posted on by The Progressive Policy Institute

Eventually, even billionaires grow bored with making money and look for more meaningful pursuits. For Bill Gates, it’s fighting disease in Africa; for George Soros, it’s kindling civic freedom in closed societies. To find Donald Trump, you have to slide considerably further down the social utility scale, to reality TV and, now, tea party demagoguery.

Is Trump a serious candidate? That’s an easy one: No. If he runs it will be to provide comic relief, which may be superfluous given the Republican Party’s already motley collection of odd, extreme and improbable presidential aspirants.

A tougher question: are Republicans a serious political party? That America’s vulgarian-in-chief can so easily vault to the top of early polling suggests a fatal GOP weakness for noisy celebrity over political substance.

Continue reading at Politico

Response to Michelle Malkin: AmeriCorps Supports Conservative Values, Too

Posted on by The Progressive Policy Institute

Self-styled conservative pundit Michelle Malkin just published a column on National Review Online that places politics over facts to slam an innovative public/private, faith-based/secular partnership that is effectively fighting domestic hunger across the United States.

She argues that it is wrong to use participants in the AmeriCorps national service program to help low-income families, children, and seniors obtain food stamps benefits, which she derides as “welfare.” Yet Malkin purposely omits key facts that would help the public understand that many components of both the AmeriCorps Program and the Supplemental Nutrition Assistance Program (SNAP) – the current name for what used to be called the Food Stamp Program – advance conservative principles.

Let’s start with the idea of national service, which engages Americans in domestic community service, usually through non-governmental nonprofit groups. Participants receive a small living stipend, but don’t receive a penny unless they work hard. If they successfully complete a full term of service, they receive an educational scholarship, but again, only if they do the work and do it well. It is no wonder then that, in the late 1980’s, when the Democratic Leadership Council and the Progressive Policy Institute (two organizations generally affiliated with the conservative/moderate wing of the Democratic Party and for whom I worked) proposed the idea that would become AmeriCorps, it was traditional liberals who were the staunchest opponents of the program, saying it was wrong to tie government benefits to work requirements.

In 1990, arch-conservative William F. Buckley, the founder of the National Review, wrote an entire book (Gratitude: Reflections on What We Owe to Our Country) promoting a government-funded system of national service, in which most of the money would be controlled by the states and participants would be provided a small living allowance. That’s exactly how AmeriCorps works today. Buckley went as far as to say that Americans who chose not to give back to their country by serving in such a program would be “contemptuous of their heritage and ungrateful.” He predicted that most conservatives would eventually embrace the idea because a “natural conservative sense of duty and of reverence for tradition will gradually win over most conservatives.”

It is ironic indeed that an idea championed by conservatives and derided by liberals is now lambasted as some sort of so-called example of liberalism run amuck.

In reality, most AmeriCorps funding decisions are made by states. Conservatives who are consistent about supporting federalism should embrace this program. All AmeriCorps benefits are made contingent upon work. Conservatives who are consistent in their claim that work should be the centerpiece of social policy should herald AmeriCorps as a best practice.

The most egregious misinformation in the Malkin piece is her implication that the national AmeriCorps benefits outreach program she is slamming is managed directly by the federal government and funded only by the federal government. It is not. In fact, it is run by the organization I manage, the New York City Coalition Against Hunger, a 501(c)3 nonprofit group, in conjunction with nonprofit groups and faith-based organizations around the country. (For the record, I am writing this response using non-governmental funds.) While most of the funding is federal, significant matching funds have been provided by the Walmart Foundation and the Trinity Church Wall Street in New York City. Conservatives who are consistent in their desire to buttress non-government entities should hold up AmeriCorps as a shining example.

Malkin derides religious organizations working with the government on SNAP outreach as “left wing,” but the reality is that our AmeriCorps outreach program is working with mainstream Protestant, Catholic, and Jewish groups. Our partners include the Presbyterian Hunger Program, Baylor University, and the Jewish Federation of Los Angeles. Conservatives who are consistent in their support for faith-based partnerships should run to the hilltops to praise this program.

Moreover, it’s absurd to claim that helping our hungry neighbors, including seniors and children, obtain food is somehow “left wing.” Given that mandates to do so are central commandments of the Old Testament, the New Testament, and the Qur’an, I would think that self-proclaimed religious people, such as Malkin, should promote, not deride, such efforts. After all, it was Jesus Christ himself (in Matthew 25) who said that helping the poor and hungry obtain food was just as holy as feeding the Lord.

I must also point out that, in some fundamental ways, the SNAP program is a conservative approach to fighting hunger. SNAP benefits are, first and foremost, wage supports, helping make low-income work a better way to support a family than receiving cash welfare. In fact, people who have left welfare are less likely to return if they receive SNAP. That is why many conservative governors have promoted SNAP access even as they continue to reduce their welfare rolls. Even President George W. Bush’s Administration made it clear that SNAP was a work support, not welfare. In fact, the Bush Administration’s USDA Under Secretary Eric Bost once said, “I assure you, food stamps is not welfare.” Yet because the term “welfare” sounds so much more nefarious than the accurate term “nutrition assistance,” Malkin uses it over and over again to inflame her audience.

SNAP is the ultimate voucher program, allowing families to use government funds to shop at private stores. Unlike truly liberal countries like India or Brazil where government food programs direct low-income families to government-run food warehouses, SNAP is now distributed entirely through the U.S. private enterprise system. Every government dollar spent by taxpayers on SNAP creates 1.8 dollars in private economic activity. Conservatives who are consistent in their support of vouchers should highlight the effectiveness of SNAP.

To be sure, AmeriCorps also bolsters the traditional liberal goals of increasing economic opportunity and expanding educational access. But there is no question that it also supports the traditional conservative goals of rewarding work and strengthening communities.

Likewise, outreach to increase SNAP usage advances the traditional liberal goal of reducing poverty. But there is no doubt that it also reinforces the traditional conservative goal of strengthening families.

If we want to live in a country that exists in a state of perpetual political warfare – in which we automatically denounce anything supported by our political opponents – then it makes sense for some people to reflexively oppose AmeriCorps and SNAP just because their opponents support them.

But if we want to live in country where Americans come together to solve major problems based on shared values – as the vast majority of Americans do – then we should all embrace efforts such as AmeriCorps. Our national service program, fighting hunger with a mix of federal and private funds, working with both secular and religious non-profit groups, represents the best of middle-of-the road American tradition. It deserves all Americans’ consistent support.

cross-posted from New York City Coalition Against Hunger

Lobbyists and Corporations Have Too Much Power?

Posted on by The Progressive Policy Institute

I’ve been mulling over a Gallup Poll that came out this week on who has too much power. You probably won’t be surprised to hear that majorities of Americans think that the following three groups have too much power: lobbyists (71 percent); major corporations (67 percent), banks and financial institutions (67 percent). The assessments are remarkably bipartisan.

But the poll also reflects a broader distrust of power in institutions generally, and poses a challenging puzzle: how do you reduce the power of one set of institutions without raising the power of another set of institutions with potentially opposing interests? My view is that you can’t, and Americans need to face up to that sooner or later.

First off, it’s worth noting that the poll results are nothing new. If you look at National Elections Studies polling, you’ll find that since the mid-1980s, solid majorities of Democrats, Republicans, and Independents (65-70 percent) have been convinced that government is run for the benefit of a few big interests, with the one exception being that for a few brief years under George W. Bush (2002 and 2004), only about 40 percent of Republicans thought this way.

Arguably, one of the reasons that corporations appear to have so much power is that they are incredibly well-represented in Washington by lobbyists. I’ve calculated that for every one lobbyist representing a union or public interest group, there are now 16 lobbyists representing business interests, up from about a 12-to-1 ratio in 1981 (still pretty high). Of course, this conflates the power of corporations and lobbyists, and banks are a subset of corporations. However, I think it’s a fair conflation.

But the thing about power is that it’s relative. In a Madisonian view of American democracy, the most effective way to deal with powerful “factions” (Madison’s term for special interests) is to empower other factions that have opposed interests, in the hope that out of the rough-and-tumble clash, something that resembles the public interest can emerge. Madison’s alternative would be to try to eliminate the power of one institution by stripping it of its rights to participate in the political process, which he rightly called this approach a “remedy…worse than the disease.”

So, if you think corporations, banks, and the lobbyists who represent them have too much power, following this logic means you need to empower another institution that could reasonably go head-to-head with these organizations, and in the process help to produce a better compromise outcome.

But here’s the thing about the American people: they’re skeptical of power from any institution. Gallup also asked whether various institutions in society didn’t have enough power. The organization that most frequently came up as having not enough power was the military, which is actually a bit frightening. But only 28 percent of respondents thought this. Other institutions that came close were unions (24 percent) and organized religion and churches (24 percent as well)

Unions, of course, are the most likely candidate to go head-to-head with corporations, but predictably, Republicans don’t like unions (69 percent they have too much power, 10 percent not enough); Democrats are more favorable to Unions (only 20 percent say the have too much power, as compared to 39 percent who think they don’t have enough.)

The federal government might also have the ability to go head-to-head with corporations and their lobbyists, if one believes the government is capable of acting as an independent entity. But not surprisingly, 75 percent of Republicans and 67 percent of independents think government has too much power, compared to just 34 percent of Democrats. Usually independents fall somewhere between the two parties on a given issue, so that fact that they are so strongly worried about the power of government should be a troubling sign for Democrats. Still, only 18 percent of Democrats (and 7 percent of Republicans and 4 percent of Independents) want to give federal government more power.

In many ways, the Tea Party Republicans share the same hopeful faith of Brandeis liberals of a century ago: that somehow we can return to an idealized America of small, local institutions, and thus avoid the concentration of economic power that inevitably leads to political power. (Of course, it’s worth noting that Republicans didn’t exactly jump on an amendment to limit the size of big banks when it was offered last year to the Dodd-Frank Bill.)

The reality remains that until we come up with reasonable ways to offer countervailing forces to balance out the influence that large corporations and their lobbyists have in Washington, the “too much power” numbers will remain high, as will the perception that Washington is only working for a few big interests. Unions may not be the right way to do this, and expanding the government may not be the right way to do this either. But we ought to come up with something smarter than nostalgically hoping for a return to some Edenic past.

A Better Charter School Debate

Posted on by The Progressive Policy Institute

Charter schools are a hot topic in many states this spring. But as New York City knows well, the debate quickly falls into a predictable rut, with partisans wrangling over the virtues and vices of charters themselves.

Here’s a much more promising focus: How can we dramatically expand students’ access to the nation’s best charter schools? While many charters do no better than district-run public schools, a subset of charters – perhaps 10% – produces extremely high levels of learning and college-going by disadvantaged children who enter school years behind.

Continue reading at the New York Daily News:

Obama Reframes the Fiscal Fight

Posted on by The Progressive Policy Institute

Entering the lists at last, President Obama delivered a stout defense of progressive values yesterday and checked the rightward drift of the deficit debate. For all its strengths, though, his speech also left open the question of whether he and his party are ready to grapple effectively with surging health and entitlement costs.

Obama started with a history lesson. As the Tea Party harks back to 19th century conceptions of limited government, he reminded Americans that the nation’s progress since then has been built upon a pragmatic synthesis of free enterprise and progressive governance. The extent of public activism required to create optimal conditions for shared prosperity is always a legitimate matter of debate, but the basic need for it shouldn’t be.

By insisting that deficit reduction leave room for strategic public investments in scientific research, modern infrastructure and education, Obama underscored a vital distinction that was being lost in the scramble to cut government spending: Reducing budget deficits is integral to reviving America’s economic dynamism. For most Americans, the priority is to get our economy moving again, not shrink government.

Obama also pushed back hard against Rep. Paul Ryan’s delusional budget, which asserts that the America’s path back to fiscal responsibility entails 100 percent spending cuts and 0 percent tax increases. In endorsing (finally!) his own fiscal commission’s plan, the president has set up a clear choice between the GOP’s fanatical devotion to shielding the rich from higher taxes and a bipartisan approach that exempts no one from sacrifice.

The president’s confident rejection of GOP tax dogma left House GOP Whip Eric Cantor sputtering. He was reduced to repeating the ridiculous Republican mantra that asking the wealthy to pay higher taxes is tantamount to killing America’s small businesses. Please Eric, bring it on: this is a debate progressives can win.

But Obama can’t just win debates. He needs to preside over passage of a comprehensive deficit-reduction package that, in a divided government, can only be achieved on a bipartisan basis. If he wants moderate Republicans to play on raising revenues – and a few intrepid souls like Sens. Tom Coburn and Saxby Chambliss have begun to do – he is going to have to convince Democrats to play on entitlement reform.

Here his speech fell short. Clearly mindful of President Clinton’s success in rallying the pubic behind his plans to protect Medicare and Medicaid during the 1995-96 budget battle, Obama categorically ruled out structural changes in how government finances those programs. That could prove to be a mistake.

It’s one thing for Democrats to reject the size of Ryan’s proposed cuts in the big public health care programs. But for both substantive and tactical reasons, they shouldn’t reject out of hand innovative devises to constrain entitlement costs.

It’s 2011, not 1996, and the baby boom retirement is underway, not over the horizon. This demographic surge, combined with health care costs that have been rising for decades faster than the economy has grown, are the real drivers of America’s debt crisis. To put a governor on the engine of federal health care spending, Ryan has proposed moving Medicare to a premium support model, and turning Medicaid into a federal block grant.

In his speech, Obama endorsed an alternative: strengthening provisions in his health reform bill to slow the unsustainable rate of health care cost growth. These provisions would encourage health providers to shift from fee-for-service to fixed fees for bundled services or capitated payments, which reward the value rather than volume of care delivered. These and other Obamacare provisions, including the independent commission set up to explore efficiencies in Medicare, are all good ideas. But even if they work, it will take a very long time for them to reach the scale necessary to break the back of medical inflation.

In the meantime, we need to protect public budgets from surging health care costs that threaten to soak up every dollar of revenue raised by 2040. If premium support and block grants are ruled out – even though some prominent liberals and Democrats have long supported one or the other — progressives need to come up with an alternative.

The political “grand bargain” Obama must strike couldn’t be clearer. It’s embedded in the fiscal commission plan: GOP support for raising revenues in return for Democratic support for constraining public health care and retirement costs. As the political action now shifts to the Senate, Obama needs to challenge his own party too.

Time To Target Qaddafi’s Stuff

Posted on by The Progressive Policy Institute

NATO’s current strategy has effectively reached the end of its road. Divisions between member states, anti-Qaddafi forces, and the alliance’s command structure, plus Qaddafi’s forces’ adopting altered tactics, suggest that it’s now time to go after the Libyan leader’s personal pressure points if NATO wants to compel him to step down. Hitting Qaddafi’s palaces, remaining military command centers, and sources of personal wealth may be necessary to convince him that Libya’s future is best without him.

The good news is that finding a Qaddafi-specific target set shouldn’t be construed as classic mission creep: as Qaddafi has adopted new mechanisms to attack and terrorize his own citizens in places like Misrata, NATO remains justified in using “all necessary measures” to protect them. It’s clear that the only way to do that is without Qaddafi.

Over the past ten days, fighting in Libya has essentially ground to a stalemate. After a furious seesaw along the coastal road between Ras Lanuf and the rebel stronghold of Benghazi, the front line has effectively settled somewhere west of Ajdabiya, which leaves but an uneasy 100 miles of cushion before reaching the de-facto separatist capital. The lone exception to this division is Misrata, further west still, where fighting continues.

Amidst the stalemate, the anti-Qaddafi forces have become anxious that NATO isn’t doing enough. One of the rebels’ highest military commanders, Abdul Fatah Younis, complained at a press conference last week that “NATO did not provide us what we need” and threatened to take the measure back to the UN Security Council. French Foreign Minister Alain Juppe and his British counterpart William Hague have echoed Younis’ calls this week, and called an emergency meeting in Paris today to discuss. From Juppe’s interview with French radio:

NATO wanted to take over military operations, and we accepted that. But it must play its full role. That is to say, it must prevent Qaddafi from using heavy weapons against the civilian population.
For its part, NATO says it’s doing just fine, thank you. Commanding Brigadier General Mark van Uhm countered that NATO has maintained a high operational tempo and is doing a “great job”, given resources.

Elsewhere, discord reigns: The Obama administration is content to stand at the ready, happily leading the initial wave before transitioning into a support role. Italy wants to arm the rebels. Sweden, UAE, and Qatar are supplying planes but possibly with restrictions on what they can do. And the African Union, full of leaders purchased by Qaddafi’s petro-power, have offered a non-starter of a peace-plan.

Clearly there’s a disconnect: The rebels, France, the UK, and Italy want NATO to do more absent a consensus on what; NATO insists it is being successful; and the US thinks it has done enough heavy lifting. All are correct to a degree, but are missing a key ingredient: Qaddafi.

By adapting to the new strategic realities, Qaddafi’s forces have modified their tactics. Rather than charge headstrong up the coastal road in easily identifiable tanks, the Qaddafistes have begun to rely on more concealable methods such as ambushes, snipers, and mortar fire. These tactics don’t permit for a full offensive towards Benghazi, but do provide just enough firepower to sow chaos amongst civilians while being small and hidden enough to evade NATO strikes from above.

Qaddafi has clearly retained enough firepower to kill civilians — particularly in Misrata — as report after report continue to indicate. Arming the rebels remains an unsure prospect — the time to train and deploy heavier armaments may be too long for them to be truly effective. Covert teams, authorized by the Obama administration, seem to hold out the best prospect for success by identifying key targets closely associated with Qaddafi, his family, and his wealth. NATO is left with little choice but to target the source of the chaos and destruction if it is to bring such a tragic scene to its conclusion.

Wingnut Watch: How the Budget Compromise Played Out on the Far Right

Posted on by The Progressive Policy Institute

The consensus in Washington that last week’s appropriations deal represented a victory for conservatives was not shared very widely on the Right. Polls showed self-identified Republicans significantly less likely to approve of the deal than Democrats or indies. At the activist/elite level, the negative reaction was much stronger. Fits were pitched over the surrender of policy “riders,” notably by RedState’s Erick Erickson, who accused congressional GOPers of, quite literally, selling out “murdered children.” Rush Limbaugh even claimed that media assessments of the deal as a Republican win represented some sort of devious liberal trick.

Part of what’s going on here, of course, is that conservative activists want to maintain their leverage over Republican pols going forward. Many also don’t much appreciate all the bouquets being tossed at John Boehner for how well he “managed” them during the negotiations. Still others, especially on the Christian Right, really did care more about the policy riders than the overall level of budget cuts. A few, including probable presidential candidate Michele Bachmann, have adopted the Ahab Posture, making repeal of “ObamaCare” the condition for their vote on any budget or appropriations measure.

In any event, wingnut opinion is virtually unanimous in demanding a harder line in the FY 2012 budget debate and the associated debt limit vote, which many opinion-leaders (most famously Sen. Marco Rubio) are already promising to reject unless Democrats surrender definitively on every major issue, including “entitlement reform.” You can also expect a lot of conservative pressure to be applied to Republican senators this week to minimize support for the so-called Gang of Six, a bipartisan group that is working on a budget deal (loosely based on the Bowles-Simpson deficit commission report) that includes revenue measures, and may wind up working in tandem with the White House.

Over on the presidential campaign trail, things continue to heat up. Many conservatives took advantage of Mitt Romney’s announcement of a campaign exploratory committee to mock him for his stubborn continued support for the Massachusetts Health Plan, which, as it happens, was enacted five years ago this week. Puzzlement over the Mittster’s strategy for winning the nomination is spreading as well, particularly since it’s beginning to appear he may run away from serious campaigns in South Carolina as well as Iowa.

But the big news on the presidential front has been the startling evidence of significant support for possible candidate Donald Trump, the mythical tycoon and reality show host. A new CNN poll, in fact, shows The Donald running even with Mike Huckabee for the national lead among Republicans at 17 percent. The big question is whether such showings simply reflect name identification (Trump is, after all, nothing if not a celebrity), or perhaps a reaction to his recent high-profile expression of neo-Birther sentiments.

A PPP poll of New Hampshire, showing Trump running a relatively close second to Mitt Romney in that state, indicates the latter could be a factor: Trump actually leads among those denying Obama was born in the U.S. All these polls also show Trump having unusually high unfavorable numbers as well, so he’s hardly a threat to actually win the nomination. Still, his sudden emergence may indicate a craving in the GOP electorate for candidates with greater star quality, and perhaps more hard-core conservative views, though Michele Bachmann is certainly doing everything possible to supply both qualities. The possibility that Trump could actually run (and his bizarre interview with Christian Right journalist David Brody shows he’s trying to check off the interest-group boxes) should remain unsettling to other candidates; aside from his alleged wealth, he would be a nightmare in debates.

While Trump seems to be doing better than had been imagined among the conservative rank-and-file, the big winner during the last week in the Invisible Primary of insiders was Tim Pawlenty, with the announcement that former Republican Governors Association executive director Nick Ayers would run his campaign. Ayers, a Georgia-based wonder-boy (he’s only 28), was given a lot of credit for the GOP’s big gubernatorial gains in 2010. But a lot of the buzz about his T-Paw gig stems from the earlier assumption of many pols that he’d be involved in a different campaign: that of Haley Barbour, who was Ayers’ boss at RGA during the 2010 cycle. If nothing else, Pawlenty now has something important that he has lacked: a prominent backer from the South, where he will need to show strength if he winds up being the “consensus conservative” alternative to Romney to his left and perhaps an actual southerner to his right.

As Obama Prepares to Speak, PPI Hosts Tax Reform Forum

Posted on by The Progressive Policy Institute

Today, President Obama is speaking on long-term deficit reduction. He’s expected to embrace the National Commission on Fiscal Responsibility and Reform’s general framework (also known as Bowles-Simpson).

Yesterday, the Progressive Policy Institute joined forces with the Moment of Truth Project to host an event to discuss what comprehensive tax reform should look like, and what it will take to get it passed. (Moment of Truth was formed by Fiscal Commission co-chairs Erskine Bowles and Sen. Alan Simpson to build momentum behind the commission’s deficit reduction plan.)

Yesterday’s event, at Johns Hopkins University, helped build the momentum for reform. There was wide consensus that tax reform will need to be bipartisan and comprehensive, and will need to scale back most of the $1.1 trillion in tax expenditures. Tax expenditures are at the heart of the “modified zero plan,” which would eliminate or scale them back, and use the savings to cut individual and corporate tax rates, as well as budget deficits.

Coinciding with the event, PPI released a policy memo on the modified zero plan, written by PPI Senior Fellow Paul Weinstein and Marc Goldwein of the Committee for a Responsible Budget, and both formerly of the Commission. Both were on hand.

Yesterday’s forum event featured three Senators who have been leading the charge for reform – Michael Bennet (D-Colo.), Ron Wyden (D-Ore.) and Dan Coats (R-Ind.) – and one CEO and Fiscal Commission member, Dave Cote (CEO of Honeywell). They provided the big picture framing, so I’ll summarize the highlights of their remarks first, and then delve into the two panels of experts second.

Sen. Bennet kicked off the event with stories from the town halls he’d been spending the last two years doing: “In every single meeting, debt and deficit came up,” he said. “There’s a deep skepticism that if we can’t figure out how to pay our bills, it suggests a lack of confidence in our government and our elected leaders, and it’s fairly well-placed.”

Bennet offered three criteria for what a deficit reduction plan would have to accomplish to pass muster with voters. First, it would need to be comprehensive. “People know we can’t fix this overnight, but they want it to be comprehensive.”; Second, sacrifice has to be shared: “They want to know that we’re in this together, and everybody has a share of the burden.”; Third, it has to be bipartisan.

Coats laid out a similar series of principles for the legislation that he has introduced with Senator Wyden. First, he said, echoing Bennet, it has to be bipartisan. Second, it has to be revenue neutral. Third it has to be simple (“Right now we’ve got 71,000 plus pages of tax code, 10,000 plus special preferences and deductions. It’s a nightmare.) Fourth, it has to help out the middle class, and help families to save money for college, and help charitable organizations. And fifth and finally, “this has to be based on a principle of growth…the bottom line is it has to lead to jobs.”

Wyden looked at the problem through the lens of tax simplification, noting that as April 15 approaches, “Americans are going through the 6 billion hours they spend each year filling out tax forms — 690,000 years is what you have in an annual effort going through the water torture of figuring out if line 9 is modifying line 7.”

Wyden also stressed that any tax reform also needed to encourage investment in what he called “red-white-and-blue jobs” – that is, solid American jobs, preferably in manufacturing. Wyden called his bill fundamentally a jobs bill.

Cote, CEO of Honeywell, echoed similar themes in his remarks. “We need a global competitiveness agenda for the U.S.” he began. “Our corporate tax system is globally uncompetitive. We have the highest tax rate in the world, and we’re the only major country with a territorial system that encourages companies to keep their cash overseas. And we give back $1.2 trillion in what is euphemistically named ‘tax expenditures,’ but just another form of spending that’s done through the tax code.”

Echoing the urgency of the Senators, Cote posed the looming crisis this way: “The debt problem can get resolved one of two ways. We can do it now and do it thoughtfully, or the bond market can force us t do it, like Greece and Portugal.”

Moving to the policy substance, the first panel featured Paul Weinstein, PPI Senior Fellow, Diane Rogers of the Concord Coalition, Alan Viard of the American Enterprise Institute, and Howard Gleckman of the Tax Policy Center as moderator

Weinstein gave the quick version and backstory of the “modified zero plan,” which is the subject of a new PPI memo Weinstein co-authored. As the name might suggest, it began as the “zero plan,” which was the name the deficit commission gave the plan that reduced all tax expenditures to zero, saving $1.1 trillion in deductions, credits, and deferrals. The “modified zero plan” put back in only a few consensus tax expenditures, like the EITC, a mortgage deduction, a charitable contribution deduction.

“The rates are lower, it simplifies the tax code to fewer incentives and helps reduce tax avoidance and mistakes,” explained Weinstein. “Obviously the revenue increases get bigger and bigger over time. We estimate $800 billion over ten years.”

Rogers responded favorably to the plan. “I like the approach. There’s something for everyone to love,” she said. “Liberals should like it because it’s progressive and better than having to cut direct spending. Conservatives should like it because it’s an economically efficient way to raise revenues, and it doesn’t raise the size of government. It reduces the size of government.”

Viard gave it two cheers. He called it “Well-specified and thoughtful. This is one of the best approaches you can have with an income-based tax system that includes a separate corporate income tax.” Viard’s stated preference was for a value-added tax (VAT), though the subsequent discussion highlighted how difficult the politics of transitioning to a VAT would be. (Rogers put it this way: “we should work within the existing system first.”)

As the discussion shifted into the politics of policy, there was general agreement that tax reform terminology is confusing to the general public, and any discussion of tax expenditures is going to lead to thousands of interest groups begging to keep their favorites. And again, there was agreement that it needs to be comprehensive. “Tax reform can’t be done unless it’s in the context of deficit reduction,” said Weinstein. “You need to look at the whole apple.”

The second panel featured Leonard Burman of Syracuse University, Marc Goldwein, of the Committee for a Responsible Federal Budget, Joseph Minarik of the Committee for Economic Development and Derek Thompson of The Atlantic as moderator.

Goldwein began by reiterating the consensus: “The current income tax code is a mess. There is a consensus to broaden the base, and reduce the rates, and don’t keep tax expenditures that aren’t worth their cost.”

But how to do that? Burman argued that ending tax expenditures would require not referring to them anymore as tax expenditures. “We need to change the fiscal language. I sometimes call them IRS pork,” he said. “Part of the problem is mischaracterizing tax expenditures. Some people think that by putting new tax expenditures in the code you’re making government smaller, but what you’re doing is just spending more money and making taxes higher to achieve a given level of revenue.”

Minarik, a grizzled veteran of tax fights, highlighted the fact that the inside-the-halls negotiating in Congress is very different from the “outside” formulating that goes on at events like this, and reminded everyone that the simpler the solution, the easier it will be to pass. In that respect, he said, a fifth-best solution that’s simple and straightforward is better than a second-best solution that can lead to more complicated politics.

Less is More: The Modified Zero Plan for Tax Reform

Posted on by The Progressive Policy Institute

 

As the ideological battles between the House Republicans and the President over discretionary spending continue to dominate news headlines, the real progress toward defusing America’s debt crisis is occurring more quietly in the Senate. There, a bipartisan group known as the “Gang of Six” has rallied behind the balanced blueprint produced by the National Commission on Fiscal Responsibility and Reform (Fiscal Commission).

Originally derided by some on the left and right when it issued its December 1, 2010 plan, the Fiscal Commission plan has become the only bipartisan game in town when it comes to deficit reduction. In March, 64 Senators (32 Democrats and 32 Republicans) called on the President to support a broad approach for addressing deficit problem and stated that the Fiscal Commission’s “work represents an important foundation to achieve meaningful progress on our debt.” Shortly thereafter, ten former heads of the Council of Economic Advisers, both Republicans and Democrats, co-signed a public statement urging that the Fiscal Commission’s report “be the starting point of an active legislative process that involves intense negotiations between both parties.”

The Fiscal Commission plan includes something for everyone to dislike, but along with a real plan to cut the deficit, the proposal includes a number of reforms that break through the partisan logjam that has plagued Washington in recent years. One such reform is the Fiscal Commission’s tax reform plan, which despite reflexive opposition from conservative anti-tax groups was supported by all three Senate Republicans on the Commission.

Read the Policy Memo

Nobel Laureate Joseph Stiglitz is All Sorts of Wrong on Inequality

Posted on by The Progressive Policy Institute

I’m never going to win a Nobel Prize. Maybe in literature. I don’t know why Joseph Stiglitz’s new Vanity Fair piece on inequality is so off-base. But it is. And it’s incredibly frustrating (1) to see someone so intelligent be thwarted by ideology and (2) to watch as his views are propagated on the basis of his name recognition.

What’s a lonely uninvited-to-Davos blogger to do? Blog. Herewith, my fact check of the VF article. Stiglitz writes

The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent.

Stiglitz doesn’t cite any of his figures (possibly a limitation of the outlet), but the Piketty & Saez estimate of the top one percent’s income share in the most recent year (2008) was 18 percent, which is just a hair closer to “nearly a quarter” than it is to “just over a tenth”. Their data says that share was 9 percent in 1985, but that should be adjusted upwards to 13 percent. Similarly, CBO says the top one percent’s share was 17 percent in 2007 for after-tax income, up from 11 percent in 1989. Saez’s estimate of the top one percent’s share of wealth is 21 percent for 2000, 21 percent for 1990, and 22 percent for 1985. Edward Wolff’s is 35 percent for 2007, up from 34 in 1983 (which I doubt is statistically different from 35 in this case). The top appears to have experienced income and wealth losses from 2007 to 2009 while the bottom experienced gains. Taken together, the top one percent’s income share rose from 11-13 percent twenty-five years ago to 17-18 percent according to the most recent data. The top one percent’s wealth share basically hasn’t risen.

MIT economist Erik Brynjolfsson’s comments led me to add this paragraph: Brynjolfsson raises an important point (though I wouldn’t call it a mistake) in noting that Stiglitz may have been referring to the Piketty and Saez numbers that include realized capital gains in “income”. I chose the series excluding capital gains because the timing of when capital gains are realized has everything to do with tax law, the strength of the economy, and when people retire. The P&S series including capital gains still doesn’t account for all the unrealized gains accruing to people (most importantly, those accruing to people in their retirement accounts). Capital gains realization is “lumpy” in a way that makes trends problematic.

But I will concede that the level of the top’s income share (including realized capital gains) is closer to 25 percent than the P&S numbers I cite above suggest. Now whether their share of income including unrealized capital gains is closer to 25 percent or 17 or 18 percent is an open question. And I still say the series excluding capital gains is the way to go for trend estimation. But look, all this aside, the CBO series includes realized capital gains (but also considers taxes and other things the P&S series leaves out). And it shows the same basic trend and level as my conclusion above.]

While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone.

The 18 percent figure looks to be from Piketty and Saez (the change from 1998 to 2008). The claim about median incomes falling is incorrect if one takes into account the value of employer- and government-provided health insurance. (Majorities of workers with employer coverage say they prefer more generous coverage to higher wages, so it turns out employers aren’t crazy in substituting ever-more-costly insurance for wages over time.) The decline in earnings (not income) for men with just a high school diploma is probably less than 12 percent. Based on some analyses I’ve been working on using the Current Population Survey, I find that men with a high school diploma but no four-year college degree saw a 12 percent decline in earnings over the roughly 33-year period from 1971-73 to 2003-2007, but that doesn’t take into account the caveats I mention in this post. And earnings among women with the same level of education rose by over 50 percent, so that’s inconvenient for Stiglitz.

The change in household or family income among men with just a high school diploma was, I’d wager, positive even before factoring in the caveats. And while I can’t cite the paper yet, research I’ve seen using the PSID rejects the conclusion that wives have been forced to work more due to stagnant husband earnings—the biggest increases in work were among wives with the best-educated husbands, and while the hours of married men declined, those of single men did not (suggesting that the decline among married men was a reaction to increased work among their wives). I’ll update this post when I can cite the paper (though that won’t be for a couple months anyway). But think about it–did all these women increase their college-going simply in anticipation of marrying men with stagnant earnings, or did they prefer the fulfilling professional options that a college degree afforded them? Or consider–is declining fertility, delayed marriage, and increased college-going among women in developed countries around the world all somehow related to rising American inequality? You can get the basic trend on work by sex by marital status from Table 1 of this paper while you anxiously await my update.

All the growth in recent decades—and more—has gone to those at the top.

Nope, not if “the top” refers to “the top 1 percent” cited two sentences earlier. According to the Piketty and Saez data, depending on whether one uses the share of nominal or real (inflation-adjusted) gains and whether one includes or excludes capital gains in “income”, the share of income growth going to the top one percent from 1998 to 2008 was between 22 and 33 percent. If you go back to 1988, the range is from 19 to 32 percent of gains since then. And keep in mind that when you start from an unequal distribution, if everyone experiences the same rate of income growth, a disproportionate share of gains will go to the top.

In terms of income inequality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran.

Compared to nearly all of the major nations of western and central Europe, the U.S. does have higher inequality (but it may not be that far off from the U.K. or Canada). The only numbers I could find for Russia and Iran are from the CIA World Factbook (the quality of which I can’t speak to). Out of 136 countries, the U.S. is ranked 40th worst. Iran is ranked 43rd and Russia 52nd. So that sounds bad, right? Meh. Hong Kong and Singapore rank worse than the U.S., and Indonesia, India, and Ethiopia rank much better than Russia. Stiglitz will have to do better than this if he wants to argue that American inequality is a big deal.

First, growing inequality is the flip side of something else; shrinking opportunity….Second, many of the distortions that lead to inequality—such as those associated with monopoly power and preferential tax treatment for special interests—undermine the efficiency of the economy.

OK, so now Stiglitz is trying to tell us why we should care about the inequality that he exaggerates. But these are just assertions. The best evidence suggests that opportunity for men to move from the bottom to the top over the course of a career hasn’t changed much over the past 35 to 40 years, and it has unambiguously increased for women (see Figures 15A and 15B). Across generations, the evidence is extremely thin, but it doesn’t point to an unambiguous increase or decrease in opportunity over the past few decades. As for inequality and efficiency, my dissertation advisor, Christopher Jencks, has found that there is little correlation between economic growth and inequality levels, which doesn’t exactly help those who believe inequality promotes growth but is equally problematic for Stiglitz and others who believe that inequality is inefficient.

When you look at the sheer volume of wealth controlled by the top 1 percent in this country, it’s tempting to see our growing inequality as a quintessentially American achievement…

Here Stiglitz is conflating income inequality (growing) with wealth inequality (basically flat and at a historic low in the U.S.). Whatevs.

America’s inequality distorts out society in every conceivable way. There is, for one thing, a well-documented lifestyle effect—people outside the top 1 percent increasingly live beyond their means.

So document it! The share of families with any debt rose from 72 percent in 1989 to 77 percent in 2007, though note that the share with assets also grew. Median net worth (assets minus debt) rose from $75,500 to $120,600. In the wake of the housing bust, it fell, but it was still around $92,000 in 2009. Among people with debt, median debt payments rose from 15.3 percent of family income in 1989 to 18.6 in 2007. These are pretty small changes in indebtedness, and I’m not sure how Stiglitz could empirically link them to inequality.

Inequality massively distorts our foreign policy.

Ummm…going for the Peace Prize next?

The chances of a poor citizen, or even a middle-class citizen, making it to the top in America are smaller than in many countries of Europe.

What little evidence there is suggests that upward mobility is lower in the U.S. only for men and only for those who start out poor. [UPDATE: Just to clarify, I’m talking about only men who start out poor, not men plus all people who start out poor. See the linked paper for details, but we’re talking about 12 to 13 percent of the population, roughly.]

All of this is having the predictable effect of creating alienation—voter turnout among those in their 20s in the last election stood at 21 percent, comparable to the unemployment rate.

Oh boy, the shift to political science by economist pundits is always fraught with danger. The 2010 election is a single data point (and an off-year election, when voting rates are much lower). I’ll just quote from a fact sheet from a Tufts research center that studies civic engagement among youth: “The 2008 election marked the third highest turnout rate among young people since the voting age was lowered to 18.” What any of this has to do with inequality is anybody’s guess.

In recent weeks we have watched people taking to the streets by the millions to protest political, economic, and social conditions in the oppressive societies that they inhabit….The ruling families elsewhere in the region look on nervously from their air-conditioned penthouses—will they be next?…As we gaze out at the popular fervor in the streets, one question to ask ourselves it this: When will it come to America?

My guess is never. By the way, Joe, be honest–were you using a pseudonym here?

 

Crossposted at ScottWinshipWeb

PPI EVENT: Tax Reform Now

Posted on by The Progressive Policy Institute

With April 15 just around the corner, PPI and Moment of Truth, and a bipartisan cast of U.S. Senators, are joining forces to call for the most sweeping overhaul of federal taxes since 1986.

Moment of Truth was formed by Fiscal Commission co-chairs Erskine Bowles and Sen. Alan Simpson to build momentum behind the commission’s deficit reduction plan. At the heart of that plan is the “modified zero plan,” which would eliminate or scale back tax expenditures, and use the savings to cut individual and corporate tax rates, as well as budget deficits.

In addition to Sen. Michael Bennet (D-Colo.), a leading voice for restoring fiscal responsibility in Washington, Sens. Ron Wyden (D-Ore.) and Daniel Coats (R-Ind.) will be on hand to discuss their new bill, which would also close tax loopholes to finance lower rates and deficits.

Both approaches embrace the “broaden the tax base, bring down tax rates” logic of the last great tax reform in 1986. PPI also will release a new report by Paul Weinstein, a key architect of the “modified zero plan,” on how the plan sparked a bipartisan breakthrough on the commission, and on how the plan could be further refined and strengthened.

The April 12 forum, to be held at Johns Hopkins University’s Washington campus, will also feature prominent budget and tax experts. Click here to see the whole program and RSVP.