Reax to NYT oped

June 5th, 2017 at 10:16 am

I’ve got an oped in this AM’s NYT on four big ideas that I see Democrats, and not just traditional progressives, but also centrists, converging around.

–a universal child allowance;

–a $15 minimum wage;

–a large expansion of the EITC;

–direct job creation.

Here are some responses and pushbacks. Much of what folks raised are policy ideas omitted from the piece, which is partly a function of space. For reasons I can’t explain, the NYT insists that other opeds have to be on the page today too:

That’s too redistributive an agenda!: This one doesn’t bother me. Read Dean Baker’s “Rigged,” which documents the extent of upward redistribution embedded in today’s operative policy agenda, and add on top of that the Ryan/Trump fiscal/tax agenda.

What about payfors?!: Yep–didn’t have space to get into that, but the minimum wage increase has virtually no budgetary cost. The direct jobs program is hard to score. It’s very sensitive to scaling and economic conditions. An employer subsidy program can be in single digit billions (as was the TANF EF e.g. I cite in the oped) while a direct job guarantee can be a lot more expensive. I’ll have more to say about this in forthcoming posts.

The big, ongoing costs are the child allowance (CA) and the EITC. I would fold the current Child Tax Credit into the CA, which would net ~$60bn/yr. For the rest, here’s where I’d start. http://prospect.org/article/were-going-need-more-tax-revenue-heres-how-raise-it

Advocates of the CA argue that we should tax back that part of it that goes to wealthy households, or, less preferable in their view, have it phase out at high levels–“less preferable” because they correctly point out that raising kids is expensive for everyone. I’m congenitally against complicated policies, of which give-it-to-them-then-tax-it-back fits the bill. But the CA advocates believe its universality is a great selling point, even with the tax-back. This needs more thought, but the main thing is to get the discussion going.

BTW, there was a link in an earlier draft to this pro-CA work by libertarian policy wonk, Sam Hammond, which I found to be a smart, thoughtful take on the issue, though I certainly wouldn’t rob from Peter’s SNAP budget to pay for Paul’s CA.

What about single payer health care?! I would like to have added something about this idea but didn’t have the space. Ben S and I tout it here, ftr.

But to make this list, the policy must not only be progressive; it must be something a majority of Congressional Democrats are warming to (the child allowance may sound like a bit of a reach by that metric, but in fact, many D’s, I believe, support a Child Tax Credit that starts at zero and doesn’t necessary depend on earnings; which amounts to the same thing).

I don’t know if D’s are coalescing around single-payer, though I’ve seen some evidence to that end. I do think there’s some very positive energy around the idea of Medicare for All, or if not “All,” then a slow reducing of the eligibility age. Re payfors, this would have to be matched with higher taxes, though that would be a cost-shift from private premiums.

Other stuff I left out!: More bargaining power, stuff to boost entrepreneurialism, anti-monopoly. All good ideas, and the latter two might meet my criterion above re D coalescing. But re bargaining power, anyone who knows even a fraction of my work knows that’s at the heart of my model of how the world and markets work. I wish I could say this met my political criterion, and no question, many D’s get this point. They understand the importance of unions, for example, and recognize the deep, structural costs of their diminished strength.

But my experience when I worked in government was that R’s hated unions more than D’s loved them, and therein lies the problem. Not sure if that has changed much, though I certainly hope so. Had the union movement remained strong, we might well not be in the mess we’re in today.

I’m still not sure what to do to boost entrepreneurs and tend to the think this is more organic and wave-like than policy oriented. However, it’s connected to pushing back on monopolistic competition, which everyone, left and right, should be for.

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8 comments in reply to "Reax to NYT oped"

  1. Susan Hall says:

    Great stuff. I’m delighted that the Democrats are coalescing on an agenda that is more progressive without getting bogged down in “Can we actually make every last detail of this work?”

    One additional area I’d like to see them address is the concept of a portable and proportional benefits package that would function much better in today’s gig / part-time economy. (See http://prospect.org/article/portable-benefits-insecure-workforce for a recent description of this concept.) Do you have any thoughts about this?


  2. Roscoe VanHorne says:

    I truly hope Democrats get behind your ideas.
    But in order to enact them, The Democratic Party need bodies in congress -and the White House.
    And in order to do that, they need to get people excited about 3 things: voting, democracy and “government.”
    Serious reform and well-functioning democracy are at a terrible disadvantage under our established electoral system. We have nearly lost a whole generation of citizen-voters who can’t be bothered to participate in our byzantine, unresponsive voting system and our near thoroughly corrupt campaign finance system.
    Bernie Sanders hit a giant nerve when he brought up some of the flaws.
    When the Democratic Party decides to reform the rules, improve the voting systems, and get behind publicly financed campaigning their ability to implement progressive policies will improve -Bigly!


    • JF says:

      Very nice comment.

      We govern ourselves in the US form, so we cannot be the problem. Right!??

      But it takes some attention to keep our Republic, at all levels of governance.

      Instead of direct employment as a stark statement, I’d add an intergovernmental revenue share agenda. Public employment grew proportionally to the population but we lost many of these jobs in the last crisis, kicking the competitive props out of labor markets everywhere (stable full-time jobs we want as a norm, so disruption to the historic public employment ratios makes no good sense). And why is it that state and local infrastructure bonds are not bought by the Fed during downturns? Lots of minor changes in our governmental cooperation set makes sense, if we care to keep our Republic the one where we proudly givern ourselves, that is.


      • JF says:

        Had to come back to this, if nothing else but to be provocative. Part of an intergovtl cooperation agenda would be a provision in a bill granting permission to the States to enact a Net Worth tax regime, required to be calculated on a worldwide basis, where departure excises or fees are required should a person move away, granting permission for an interstate compact.

        Interestingly, such an interstate compact tax probably could not be deductible at the Federal level as this would circumvent the apportionment clause in the Constitution. Have to chuckle, perhaps wealthy interests might see a reason to substitute income taxes with progressivity provisions for this and defend federal deductibility when they make their contributions to public finance.

        We govern ourselves, we cannot be the problem.


  3. Nick Batzdorf says:

    Interesting that you write that editorial the same day Txxxx/Bannon want to privatize air traffic control. There’s a straight line between Reagan launching the union-busting to the crisis we’re facing today.

    I think it’s crude symbolism.

    Anyway, what’s your opinion about expanding capital ownership as part of the mix? For example, I keep thinking that if every government contract – local, state, federal – mandated meaningful profit-sharing, that could only help.

    “Those countries, and most other advanced economies, provide regular payments to families with children based on the recognition that investing in children is an essential public good.”

    Amen. You’d think that would be an easy sell!


  4. Rick NJ says:

    Re: PayFors

    Universality is a very good thing. If everybody benefits from a government program, it’s much harder to make the case that it should be cut.

    So… why not pay for the CA the same way we pay for our other universal programs, Social Security and Medicare — with a payroll deduction of a certain percentage of income up to a set maximum. Those with higher incomes pay more into the system than those with lower incomes — exactly what CA needs to be effective.

    Payroll deductions are *much* simpler and easier to administer than income taxes. And so too with administering universal benefits — no “means testing” or other red-tape to get in the way of delivering benefits to recipients. Which means more money is left to pay benefits after administrative costs. (Which is why Medicare is so much more efficient than private insurance.)


  5. Smith says:

    This is a pretty phony agenda except for the $15/minimum, already being phased in for California and New York (with geographical differential of $12/hour upstate) Expanded EITC is an expensive boondoggle, corporate welfare, and disadvantages fair wage employers.
    1. Paying your employee substandard wages? Offering them part time employment instead of full time with benefits and overtime? No problem, the government and you the tax payer will pick up the difference. Corporate stake holders rejoice.
    If you are a business paying a fair wage, offering full time employment, your costs will be higher, you won’t be able to compete. Thanks to this blog, you’re driven out of business.

    2) The entire EITC program benefits are dwarfed by an increase in the minimum.

    3) Increased EITC presumes working, and punishes those without, which is the real cause of poverty. Poor households don’t have full time wage earners. EITC is an expensive program that robs funds for real solutions.

    4) Childcare tax credits are no substitute for universal quality child care. Further privatizing the system will discourage any movement towards a real solution. Way to scuttle the chances of real benefits for everyone. But the credits will benefit the rich who already can afford private quality care. Again, like minimum vs EITC, the benefit of actual child care would dwarf the benefit amount of from a credit. To fill in the gaps rich parents use, cover child care from 3:00 pm to 5:00 pm, from 2 years old to 4 years old, and especially July and August when studies indicate less advantaged children fall behind everyone else when not in free public school.

    5) Tax credits should be anticipated and doled out in monthly paychecks, not in end of year tax credits, subject to the ability of a tax professional to prepare a return. Low income earners are especially good at tax preparation themselves and don’t need the money except once a year I guess you assume.

    I’ve had this argument over EITC several, numerous, maybe countless times in this blog and never a response to actual objections. EITC needn’t be cut, as is, but the need for it needs to disappear. Your argument for EITC, let alone expanded EITC, is contradictory to your goals, and doesn’t truly address the causes of poverty, or the obvious solutions. But it does promise to punish any business trying to treat their workers fairly.

    If less people needed EITC, you could actually increase the benefit, for those really unable to obtain full time work. Your proposal promises just the opposite, a more expensive program for more people, which makes it all the harder to give adequate benefits to only those truly in need.

    EITC, supported by Reagan, Bush, Ryan and Republicans everywhere, that tells you all you need to know.


  6. Serene says:

    Smith is right about the EITC. The reason nobody will address the objections honestly is because the Democratic party is run by the beneficiaries of the EITC and they don’t like minimum wage. Walmart is a perfect case in point. They want to import cheap goods and force the government to subsidize their operations. What a business model!

    The only proper use of the EITC would be to provide a phased-out wage subsidy in isolated regeions that would otherwise face a large disruption caused by a rapid rise in minimum wage.

    The Democratic party is a disaster in my view, and it is totally incapable of fighting Trump in its current form. Trump trumps neoliberalism.


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