It ain’t necessarily so 1.

In 2002, a campaign finance law outlawed political spending by either unions or corporations during the last sixty days before an election.[1]  In 2010, the Supreme Court overturned this law in its “Citizens United” decision.  This led to widespread outrage among Democrats, who portrayed the decision as allowing millionaires and billionaires to buy all the political power they wanted.  Certainly, it looked like the Koch Brothers wanted to buy the 2016 election if it was for sale: they announced plans to spend almost $900 million in support of favored candidates.   That is as much as either of the two major parties.

Recent presidential elections haven’t done much to support this theory.  In the 2012 election Mitt Romney got beat by Barack Obama.  So far in the 2016 presidential primaries, Jeb Bush piled up a war-chest of $100 million, then got run off the road.  Meanwhile, Bernie Sanders and Hillary Rodham Clinton have raised $362 million; the last six Republican candidates raised $286 million.  Sanders, with $182 million, and Clinton, with $180 million, far out stripped Ted Cruz, with $78.2 million.  As for Donald Trump, he has raised about $50 million.[2]  Current guestimations are that Clinton will win the Democratic nomination and the White House.

Democrats fume that the rich still control everything because of their influence behind the scenes and because their ads resonate with idiots.  Even if the Democrats do win the White House on occasion, they can’t get anything done because of the obstruction by the Congressional toadies of the rich.   Journalist Jane Mayer has done much to highlight the influence—real or imagined–of the Koch brothers.[3]  It’s difficult to know exactly how much influence the Kochs have had.  Much of their money has gone to shaping the intellectual debate on the role of government.  Thus, they have donated to libertarian-leaning think-tanks and universities.[4]  A lot of it has gone to support right-wing challengers to mainstream Republicans in primaries.  This, it is said, compels mainstream Republicans to veer right to fend off challengers.

This argument works on the unspoken assumption that Republican voters themselves have moved farther right even as mainstream Republican politicians remained more centrist until challenged in a primary election.  Why might Republican voters have come to believe in a smaller government?  At the risk of forcing square pegs into round holes, consider a couple of statistics.  First, 22.4 percent of workers now need a government license to get and keep their jobs.  Nearly 20 percent of those in non-medical fields needed such a license.[5]  Second, on average, people spend 35 hours a year filling out government forms of one kind or another.[6]  However, adults fill out forms for their children and often for their own elderly parents.  For these people—who are of voting age—the real amount of time spent filling out forms might be double or triple the average.  So, a work-week or two out of their lives each year.  Perhaps this is part of what has shifted some voters to the right?

[1] “Citizens United: Has big money lost its power?” The Week, 29 January 2016, p. 17.

[2] http://elections.uscommonsense.org/

[3] Jane Mayer, Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (New York: Doubleday, 2016).

[4] Recently, the editorial pages of the New York Times have witnessed much hand-wringing over the absence of conservative voices in academia.  This is attributed to an apparent liberal bias in hiring.  The effect, however, is to provide the Democratic Party with an army of spokesmen for the pro-government argument.  On the other hand, much of the funding for these spokesmen is traceable.  Much of it comes from taxes and tuition paid by people who are not on the left.

[5] “The bottom line,” The Week, 6 May 2016, p. 36.

[6] “Noted,” The Week, 6 May 2016, p. 16.

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In re: Donald Trump as crazy person.

Three months ago, Paul Krugman pointed out that Donald Trump is the only Republican candidates who is willing to raise taxes on the rich and who has something to say in favor of universal health care.[1] While Krugman goes on to denounce Trump for “his implicit racism” what is really interesting about Krugman’s analysis comes later in the column. Krugman argues that, when it comes to economics, Trump is voicing what a lot of the Republican base actually believes. However, their views have never been articulated in recent years because the Republican Party’s elected representatives are chained to a demonstrably failed economic ideology. The chains are campaign donations from wealthy donors.[2] The Republican politicians have been living in a fool’s paradise. Trump is rich enough in his own right to run for president while speaking his own mind. Even if Trump doesn’t capture (Please, oh please) the Republican nomination, his campaign is likely to shift the terms of debate inside the party, and not necessarily in the way that Democratic pundits have been predicting.

What if Donald Trump is also articulating what a lot of Americans think on other issues?

Opinion polls in October 2015 revealed that almost half of Americans (46 percent) supported building a wall along the border between the United States and Mexico.[3] A slightly larger share (48 percent) opposes building a wall. Six percent aren’t sure. While the core of the base for building is Republican (73 percent of them approve it), there are also a good number of Democrats (perhaps a third) and fewer than half (less than 48 percent) of Independents. Nothing in the polling reveals how much voters assign primacy to this issue in comparison to other issues.

In 2011, 47 percent of Americans thought that Islam’s values were “at odds” with America’s values. By November 2015, 56 percent of Americans thought that Islam’s values were “at odds” with America’s values.[4] In late November 2015, 56 percent of Americans were against allowing Syrian refugees into the United States. In contrast, 41 percent favored accepting Syrian refugees.[5] That leaves only 3 percent who “aren’t sure.” In sum, on these issues at least, America is divided into two big and solid blocks. To my mind, President Obama is right in his belief that Muslims and America are compatible and in his willingness to accept Syrian refugees. However, right at the moment, he isn’t with the country on these issues.

Well, he doesn’t have to be. He’s a lame-duck president facing a Republicans opposition in control of both houses of Congress. He isn’t going to get any legislation passed unless it’s in line with what Republicans want. He is likely to rely on executive orders and regulatory changes that get tied up in the courts, and on public excoriation of the voters for not “getting it.”

What if the Republican Party isn’t the only party whose leaders are tied to an ideology that its voters really don’t accept? What if, just for the sake of speculation, there are a bunch of Democrats who are social progressives, but economic moderates? Bernie Sanders appeals to social and economic “progressives.” In November 2016 that seems likely to be a small slice of the pie. It’s easy and comforting to think that Hillary Clinton would defeat Donald Trump. Can she?

[1] Paul Krugman, “Trump Is Right on Economics,” NYT, 7 September 2015. http://www.nytimes.com/2015/09/07/opinion/paul-krugman-trump-is-right-on-economics.html?_r=0

[2] This suggests that Republican voters have supported people who don’t share their economic beliefs because the alternative would be to vote for Democrats who might share some of their economic beliefs, but whose views on social issues they reject. So much for Marxism.

[3] This is a separate question from who should pay for such a wall.

[4] “Poll Watch,” The Week, 27 November 2015, p. 17.

[5] “Poll Watch,” The Week, 4 December 2015, p. 19.

Reponomics.

To be fair (See: Demonomics), Josh Barro has savaged Republican tax plans in two recent “Upshot” pieces in recent days.[1] Since the Reagan years Republicans have been in thrall to “Supply Side Economics.” The doctrine behind tax cuts for high-income earners is that the untaxed income will flow to investment; investment leads to economic growth; and America needs both investment and growth. Democrats ridicule this as “trickle-down economics.”[2] Now, however, another school of thought has arisen among some Republican dissidents. They favor cutting taxes on the middle class. For example, some pushed for a substantial tax credit–$2,500—for each child long before President Obama discovered “middle class economics.” They also wanted to leave the top tax rate at 35 percent, and not cut the tax on capital gains.

Some Republican leaders have sought to paper over this feud by suggesting that both types of tax cuts be implemented. Not only would middle-class earners get their tax cut, but the taxes on capital gains and on dividend income would be cut to zero. Furthermore, the plan would offer corporations the option of having their profits taxed as if they are wages (at a lower rate than corporate profits).

Barro lashes this as the “Puppies and Rainbows Tax Plan.” He argues that the combined plan would cost at least $2.4 trillion in lost revenue over a decade.[3] If the Republicans can add the White House to their control of the Congress, they will find themselves responsible for controlling the deficit. Hence, they will have to settle for much smaller tax cuts than they currently envision. Moreover, they may have to choose between giving little dribs and drabs to both types of cuts or getting something noticeable for one type of cut. Which will they choose?

Then Barro found himself crossed by a report from the Tax Foundation that concluded that the combined tax cuts would stimulate so much investment that GDP would rise 15 percent and wages 13 percent over a decade. A wide range of economists quickly derided the forecasts. Barro argues that Republicans like economic analyses that predict high benefits from tax cuts. This matters, because the Congressional Budget Office has just adopted “dynamic scoring”[4] in estimating the impact of different budget plans. He is clearly worried that nonsensical assumptions about growth will be deployed to justify big tax cuts.

Barro comes across as a Democratic partisan, but he’s not alone in seeing the flaws in these plans.[5] A House Republican plan to eliminate deficits within a decade would allow an expansion of military spending beyond the levels set by the “sequester” under the guise of emergency war funds. (President Obama plans the same maneuver.) It also cuts a trillion dollars from entitlement programs (Medicare and Medicaid, Social Security) without specifying how—what with 24 Republican Senators up for re-election in 2016. It assumes a trillion dollars in revenues from taxes levied as part of the Affordable Care Act (ACA) even while proposing to repeal the ACA. Puppies and rainbows indeed.

[1] Josh Barro, “Something for Everyone In a Republican Tax Plan,” NYT, 12 March 2015; Josh Barro, “Under This Plan, Tax Cuts Still don’t Pay for Themselves,” NYT, 17 March 2015.

[2] Republican presidential candidate George H.W. Bush ridiculed it as “voodoo economics.” Bush didn’t inspire much enthusiasm among Republicans. He ended up as Reagan’s Vice President and one-term heir as President.

[3] Barro is silent on the cost in revenue from President Obama having fought hard to make 98 percent of the George W. Bush administration tax cuts permanent. On this score, as on many others, it’s like living during the Cheney Administration.

[4] Basically, assuming that tax cuts or increases will affect the growth rate of the economy. D’uh. Obviously they do. However, the essential question becomes how accurate is the model used to predict the effect.

[5] Nick Timiraos and Kristina Peterson, “House GOP Outlines Plan to End Deficits,” WSJ, 18 March 2015.

Demonomics.

“Liberalism” has always been about freeing people from restraints in order to achieve their full potential as human beings. In the 19th Century, that meant free speech, free markets, representative government, and an end to government regulations that favored protected interests. By the end of the 19th Century, American liberals recognized that their initial plans had failed to foresee the rise of powerful organizations (big business, big labor), the destructive power of prejudices, and inequality of opportunity. What we think of as modern liberalism emerged from this recognition as liberals sought to create a strong state that could hold in check and mediate between powerful organized interests. It then went beyond this mission to attack the racial prejudices and economic disabilities that held back people from reaching their potential. Subsequently, liberals went on to endorse “expressive liberalism” that allowed people to enunciate their core identity (such as being gay) or controversial opinions.

What are we to make of the definition of current liberalism tossed off by Nate Cohn in the New York Times? Cohn defines the Democratic Party’s mission as one of simply “expanding the safety net.”[1] Apparently, there is no philosophy behind this mission, beyond winning elections by spending far more money out of tax revenues than the Koch brothers have at their disposal. In the absence of such a philosophy, Democrats turned to raiding the program of “reform conservatism” for ideas. Health care insurance reform (“RomneyCare”), earned income tax credits, and college tax credits all began as ideas on the right, but were taken over by Democrats without ideas of their own.

Recent efforts to define an agenda for the future have undermined the unity of the party. On the one hand, the Party focused on easing the plight of the poor through the expansion of health insurance to the small minority of Americans who desired it, but could not afford it, and by trying to raise the minimum wage. On the other hand, liberal activists on the left wing of the party have pushed it to embrace causes which—however sensible in the eyes of reasonable people—clash with the interests or values of many Democrats: climate-change, gun control, and amnesty for illegal immigrants. As a result, Cohn remarks, the Democratic Party lacked a “coherent message for the middle class… in 2014 or even 2012.”

The emerging agenda of the Democrats focuses on what Cohn labels the “parent agenda”: In fact, it is best seen as part of response to the “great wage slowdown” of recent decades. Under the banner of fairness and promoting equality, the “parent agenda” will seek to redistribute resources from the wealthy to the middle class. In part this will be accomplished through the tax system: an expanded earned income tax credit (a transfer payment), child tax-credits, universal preschool, and universal precollege. In part it will be done by the state substituting for the decrepit union movement that cannot bargain for employees: paid family leave is the initial idea, but others are likely to follow. It will require higher taxes on upper income groups, The great advantage to the “parent agenda” is that it can be presented as providing opportunities, rather than as outright redistribution. It isn’t liberalism or even redistribution. It’s just retribution.

All this seems to represent an intellectual exhaustion on the part of the Democratic Party. Doubtless it would be thrown into an even more stark relief if not for the intellectual exhaustion of the Republican Party. The Republicans cling to tax cuts and “patriotism” (i.e. high defense spending by the many and military service by the few) in place of creating an “opportunity society” that might liberate those whom the Democrats have abandoned.

[1] Nate Cohn, “The Parent Agenda, The Democrats’ New Focus,” NYT, 10 February 2015.

 

CINAY-sayers.

            David Wise (1930- ) went into the newspaper business as soon as he got out of college. Working for the “New York Herald-Tribune,” he became its White House correspondent in 1960. He served as the paper’s Washington bureau chief from 1963 to 1966. Wise came to know a lot of people and a bunch of them were in the intelligence community. The CIA, NSA, and Defense Department are as much a snake-pit of personal rivalries and tortured consciences as anywhere else. People told Wise things and gave him leads. Nobody ever got paid for just sitting around, so Wise ran down the leads. He published a series of books on what he found out.
            The books revealed to the reading public details of the development of the U-2 spy-plane; CIA efforts to overthrow hostile governments (Guatemala, Iran, Cuba, Indonesia); and covert operations in Southeast Asia during the Vietnam War.[1] Subsequently, he moved on to books on the struggle between Soviet intelligence (KGB) and its American opponents (CIA, FBI).[2]
            However, three of Wise’s books had a longer half-life in American politics than did his topical works on espionage. The Invisible Government, in 1964; The Politics of Lying: Government Deception, Secrecy, and Power (1973); and The American Police State: The Government Against the People (1976), all raised alarms about the growing power of the career professionals in agencies charged with protecting America from enemies. Wise warned against the encroachment of intelligence and police professionals on powers that traditionally were the responsibility of democratically elected officials. These books resonated with the public because of the times in which they were published. The “Pentagon Papers,” the fall of President Richard Nixon over the “Watergate” scandal; and the hearings chaired by Senator Frank Church on the intelligence community all inspired alarm among American citizens. Subsequently, the alarm died down after various reforms were put in place.

Recent events have revived concern. The 9/11 attacks, the war with Islamists, and the revelations by Edward Snowden all have contributed to concern about the erosion of individual civil rights and democratic government. This time the herald comes from academia.

Echoing David Wise lo these many years, Michael Glennon[3] argues that the elected officials charged with oversight of the government bureaucracy have abdicated their role. In part, this abdication springs from deference to experts on complicated issues.[4] In part, this abdication results from the decay of Congress from a participant in shared government to a freak-show. Without rigorous oversight and with the best of intentions, the national security organizations that were created to fight the Cold War with the Soviet Union have not only escaped control, but have actually gained the upper hand over constitutional government. The national security experts control the formulation of policy choices laid before the Executive. These same organizations help draft the laws that the Legislature passes; they then implement (or ignore) that legislation. They serve up the rationales for actions which the Judiciary usually approves. The National Security Council, the Central Intelligence Agency, and the Joint Chiefs of Staff figure as the big dogs in what Wise would have called a “secret government.”

[1] The U-2 Affair, with Thomas B. Ross (1962); The Invisible Government, with Thomas B. Ross (1964); The Espionage Establishment, with Thomas B. Ross (1967).

[2] Molehunt: the secret search for traitors that shattered the CIA (1992); Nightmover: How Aldrich Ames Sold the CIA to the KGB for $4.6 million (1995); Spy: The Inside Story on How the FBI’s Robert Hanssen Betrayed America (2002).

[3] Michael Glennon, National Security and Double Government (New York: Oxford University Press, 20 14).

[4] Pearl Harbor and 9/11 loom over this deference like a mushroom cloud.

 

Cry of the Halliburton

In January 1919 came a huge oil strike at Burke-Burnett, Texas. Soon afterward, Erle Halliburton founded a company to provide services and supplies to oil companies. As the oil industry spread from the United States to foreign countries in Latin America, the Middle East and Africa, Halliburton extended its operations. In 1962 Halliburton merged with Brown and Root, a big Texas construction company. Soon thereafter, the company started doing a booming business with the United States government. In 1992, near the end of the presidency of George H. W. Bush, the Defense Department began spinning off many of its logistical and support functions to private contractors. The argument ran that private industry could achieve greater efficiency and flexibility than could a huge federal bureaucracy like the Defense Department, which needed to concentrate on its own specialty—waging war.

During the presidency of Bill Clinton Halliburton’s business dealings with the American and foreign governments, and with oil companies zoomed upward. Halliburton earned $5.7 billion in 1995 and $12 billion in 2000. The company’s business with the United States government grew still more as a result of the second Iraq War. By 2007 the company’s revenues topped $22 billion. Halliburton’s oilfield services division gained the contract for repairing Iraq’s badly damaged and deteriorated oil industry; its logistics and construction division provides all sorts of services to American troops.

What sort of controversies surround Halliburton? First, it has been accused any number of times of over-charging the United States government. In one particularly embarrassing case, it charged the government for 42,000 meals delivered to US forces in Iraq when it had only delivered 14,000. “Oops, my bad,” said Halliburton. Second, people complain that the company was awarded no-bid contracts by the government, so they have no incentive to hold down prices. Both the Defense Department and Halliburton have countered that there are only a few companies in the world that could handle the work. Halliburton has long experience in this work and employs 100,000 people in 120 countries around the globe. Furthermore, not all of the equivalent companies are American. The work was not going to go to a French, Chinese, or Russian company under any circumstances. It was going to go to Halliburton, they argue, so why waste time with bidding when the need was urgent?

Third, the company has long cultivated strong political connections. Brown and Root had always supported Lyndon Johnson when he was the Senator from Texas and they reaped the benefit, say critics, when Johnson became president. Later, in 1992, the Secretary of Defense who initiated the shift to using private contractors to support Defense Department operations abroad was Dick Cheney. In 1995 Halliburton named Cheney as Chief Executive Officer (CEO). He remained CEO until 2000, when he left to become Vice President. Subsequently, Cheney was a proponent of war with Iraq and Halliburton has reaped the benefits described above.

In a large sense, Halliburton may be a symbol for a number of controversial developments. First, there is the issue of the “revolving door” as people cycle between companies that seek government contracts and the government agencies that award those contracts. Second, there is the whole issue of the uneven distribution of benefits in American society. Cheney made $45 million while at Halliburton and Halliburton’s stock quadrupled in value after 2003 while most people’s incomes stagnated.

Sore Winners and Sore Losers from Obamacare.

Medicare provides health insurance for 98 percent of Americans aged 65 and over.

Who lacked/lacks health insurance before/since the Affordable Care Act (ACA)?

Group                                                  Before ACA               Today              Difference.

All Americans under 65                      16.4 percent                11.3 percent    -31 percent.

Hispanic-Mexicans                              26.2 percent                16.5 percent    -37 percent

Blacks                                                             24.1 percent                16.1 percent    -33 percent.

Whites                                                14.1 percent                10.0 percent    -29 percent

Asians                                                             13.6 percent                 9.7 percent    -29 percent

Aged between 18 and 34,                   21.6 percent                14.2 percent    -34 percent[1]

Aged 35 to 44                                     16.4 percent                11.2 percent    -32 percent

Aged 45 to 54                                     15.0 percent                10.6 percent    -29 percent

Aged 55 to 64                                                 12.7 percent.               9.1 percent    -28 percent

Poorest 20 percent of neighborhoods 26.4 percent                17.5 percent    -36 percent

Next poorest 20 percent                      21.6 percent                14.3 percent    -34 percent

Middle 20 percent,                              17.6 percent                11.9 percent   -33 percent

Next highest 20 percent                      13.4 percent                 9.4 percent    -30 percent

Richest 20 percent                               6.5 percent                6.5 percent    ————–

 

Overall and within almost all groups, the ACA has reduced the uninsured by about one-third. Still, two-thirds of those who were uninsured before the ACA remain uninsured today.

Why hasn’t a plan intended to provide almost all Americans with health insurance come anywhere near to achieving that goal? In large measure, the failures of this part of the ACA go back to its design. The ACA originally sought to coerce the states into expanding Medicaid to cover many of those who are uninsured today. In 2012, the Supreme Court rejected that component of the plan. States were left free to expand or not expand Medicaid. So far, twenty-seven states have chosen to expand Medicaid, while twenty-three have rejected it.

Why did many states reject Medicaid expansion? One answer would be Republican wrecking tactics directed against the center-piece of President Obama’s agenda. However, not all Republican-led states rejected expansion and not all Democratic-led states accepted it.

It is possible that rational calculation played a role. The states that rejected expansion had an average uninsured rate of 18.2 percent before the ACA, while those that accepted expansion had an average uninsured rate of 14.9 percent. Federal subsidies for expanded Medicaid are scheduled to be reduced in a few years. States will have to increase their share of the expanded costs. Many of the states that rejected Medicaid expansion pursue a low-tax strategy to attract business. Other parts of the ACA were not completely thought through. Perhaps the failure to make the complete Federal subsidy permanent is another such “glitch.” It will take a Democratic House, Senate, and White House to fix it.

Even in states that expanded Medicare, 9.2 percent of people remain without insurance.   Why? Ignorance? A libertarian resistance to coercive good intentions? Most Republicans have an ideological opposition to an “entitlement” that was forced on them by Democrats. Unlike post-war Europe, there is no consensus on this issue.

Kevin Quealy and Margot Sanger-Katz, “Obama’s Health Law: Who Was Helped Most,” NYT, 29 October 2014.

[1] Understates the gain because it doesn’t include the three million people who are allowed to remain on parents’ insurance.