Whenever budget negotiations happen on the state or local level, especially when the subject of whether or not taxes should go up, the first thing threatened is the employment of the police, the fire fighters, and the teachers. Every time spending increases or tax increases are at risk, those who advocate increases insist that failure to raise taxes or spending means that those three are threatened. On the federal level, meat inspectors, roads, and the military are threatened instead, as well as Social Security checks for seniors.
Based on the rhetoric, it seems as if the only people hired by the state and local governments are police, fire fighters, and teachers. All the tax assessors, all the code enforcers, all the inspectors and auditors are never placed at risk.
It is probably a case of offering the most valuable services up first in negotiations, the ones that would be most difficult to cut because of the repercussions of doing so. Cutting the fire fighters does put people at risk. Cutting the police endangers their ability to act as a criminal gang, as well as preventing them from occasionally catching a criminal. Cutting teachers means that parents will be responsible for their own children.
Cutting auditors and assessors simply means people will be left alone to go about their business. If police, fire fighters, and teachers were retained while all the code enforcers were furloughed or fired, it would greatly reduce the burden of government in noticeable ways.
As much as it may be the case that the most "important" services are offered up for sacrifice, on the understanding that people won't dare cut those services, the auditors and assessors will not be cut because that would allow people to find out just how much the government weighs on their daily life. People would get the temporary experience of being free, and they might decide they actually like it. As such the rhetoric must continue to be as if the only government employees are those that are considered to actually have a positive impact on people.
Showing posts with label phony reform. Show all posts
Showing posts with label phony reform. Show all posts
Thursday, March 07, 2013
Saturday, December 08, 2012
Fiscal Cliff Theater
As the fiscal cliff looms, there is intense debate in Washington about striking a deal to avert the automatic spending cuts and automatic tax increases that will go into effect otherwise. The debate has boiled down to an increase of a few percentage points of tax on the top two percentage points of income owners. The Republicans claim to want to maintain the current tax rates on all income earners, and the Democrats claim to want to maintain the current tax rates on the bottom ninety eight percent of income earners. The offer from the Democrats is that if this tax increase is granted, then there will be unspecified spending cuts at some future date.
Both sides are lying so badly that it is surprising anyone is able to take their claims seriously. It is even surprising that the major media outlets, paid to believe the claims of politicians, are able to do their job and keep the American public sufficiently worried.
According to Wikipedia for the 2012 Federal budget, the combined federal outlays were $3.795 Trillion and the combined federal revenues were $2.469 Trillion, leaving a deficit total federal deficit of $1.327 Trillion. There appears to include off budget spending. That means that tax revenue accounted for 65% of the total spending.
If the goal is to balance he budget, which is what is being claimed, then there are three options. Using the figures from 2012, analysis of these three options reveals the lies coming from both sides of the debate.
The first option is to raise taxes sufficiently to balance the budget. This means raising taxes by a significant amount on everyone, not just a few percentage points on the rich. Anyone who proposes merely raising taxes on the rich as a solution is lying. Anyone who proposes raising those taxes just a few percentage points as a solution is lying. President Obama is telling the truth about his desire to raise taxes on the top two percent, but lying when he claims that this will have any impact on the budget deficit. The total tax burden would have to be increased by 54% to cover spending. There is no way to increase tax revenue by that amount by increasing taxes only on the rich, even if there is a top rate of 100% on income over $250,000. All taxes would have to go up, which means personal and corporate income taxes and tariffs and excise taxes, and the personal taxes would have to be raised on all brackets. There is some room to try to juggle the burden away from lower incomes and towards higher incomes, but not much, meaning that even lower income earners will feel the effect.
The second option is to cut spending sufficiently to balance the budget. Spending will have to be cut by 35%. This means real cuts, not "Washington cuts." This is where the Republicans are shown to be lying to the American public. Every cut proposed is a reduction in the rate of increase, a “Washington cut”. Moreover, these cuts are delayed in implementation, a second lie by the Republicans. It has often happened in the past that a budget deal would be made with front loaded tax increases and several years later there would be accompanying spending cuts. Every time that deal was allegedly made the spending cuts did not happen. Only one person in the Senate proposed a budget with real cuts, and his cuts only came to $500 billion, and he admitted that his cuts did not go far enough. The rest of the political class thought he was crazy and instead looked at the Ryan budget, with no actual cuts, and talked about what a fiscal hawk Representative Paul Ryan was.
The third option is a combination of tax increases and spending cuts. Meeting half-way this means increasing tax revenue to 82% of 2012 expenditures and reducing spending to 82% of 2012 expenditures. This would require a total revenue increase of 26%. It will be easier for those who favor taxing the rich for the crime of being rich to be able to adjust the burden away from the lower incomes, but it will still be necessary to increase taxes on the middle class as well as excise taxes and tariffs. Spending cuts also have some interesting implications as this will require a total spending cut of 18%.
Social Security, unemployment, and labor are 34% of the budget. Medicare and health are 24% of the budget. The military is 18% of the budget. Debt financing are 7% of the budget. Food and Agriculture, Veterans Benefits, Transportation, Education, Housing and Community, International Affairs, Energy and Environment, Science, and Government (everything else) are 18%. If a policy of peace were to be adopted, the military budget can be cut in half easily, saving 9% and leaving another 9% to cut. Perhaps a percentage point can be cut from "everything else." That leaves 8% remaining to cut, which means that either Social Security or Medicare will have to be cut, perhaps both. Any plan which doesn’t include cutting Social Security or Medicare is not an honest plan.
Nobody in Washington is discussing anything close to any of those three proposals, except for Senator Rand Paul. Therefore nobody in Washington except for him is doing anything about the crisis that the Fiscal Cliff discussion was supposed to try to avert.
Both sides are lying so badly that it is surprising anyone is able to take their claims seriously. It is even surprising that the major media outlets, paid to believe the claims of politicians, are able to do their job and keep the American public sufficiently worried.
According to Wikipedia for the 2012 Federal budget, the combined federal outlays were $3.795 Trillion and the combined federal revenues were $2.469 Trillion, leaving a deficit total federal deficit of $1.327 Trillion. There appears to include off budget spending. That means that tax revenue accounted for 65% of the total spending.
If the goal is to balance he budget, which is what is being claimed, then there are three options. Using the figures from 2012, analysis of these three options reveals the lies coming from both sides of the debate.
The first option is to raise taxes sufficiently to balance the budget. This means raising taxes by a significant amount on everyone, not just a few percentage points on the rich. Anyone who proposes merely raising taxes on the rich as a solution is lying. Anyone who proposes raising those taxes just a few percentage points as a solution is lying. President Obama is telling the truth about his desire to raise taxes on the top two percent, but lying when he claims that this will have any impact on the budget deficit. The total tax burden would have to be increased by 54% to cover spending. There is no way to increase tax revenue by that amount by increasing taxes only on the rich, even if there is a top rate of 100% on income over $250,000. All taxes would have to go up, which means personal and corporate income taxes and tariffs and excise taxes, and the personal taxes would have to be raised on all brackets. There is some room to try to juggle the burden away from lower incomes and towards higher incomes, but not much, meaning that even lower income earners will feel the effect.
The second option is to cut spending sufficiently to balance the budget. Spending will have to be cut by 35%. This means real cuts, not "Washington cuts." This is where the Republicans are shown to be lying to the American public. Every cut proposed is a reduction in the rate of increase, a “Washington cut”. Moreover, these cuts are delayed in implementation, a second lie by the Republicans. It has often happened in the past that a budget deal would be made with front loaded tax increases and several years later there would be accompanying spending cuts. Every time that deal was allegedly made the spending cuts did not happen. Only one person in the Senate proposed a budget with real cuts, and his cuts only came to $500 billion, and he admitted that his cuts did not go far enough. The rest of the political class thought he was crazy and instead looked at the Ryan budget, with no actual cuts, and talked about what a fiscal hawk Representative Paul Ryan was.
The third option is a combination of tax increases and spending cuts. Meeting half-way this means increasing tax revenue to 82% of 2012 expenditures and reducing spending to 82% of 2012 expenditures. This would require a total revenue increase of 26%. It will be easier for those who favor taxing the rich for the crime of being rich to be able to adjust the burden away from the lower incomes, but it will still be necessary to increase taxes on the middle class as well as excise taxes and tariffs. Spending cuts also have some interesting implications as this will require a total spending cut of 18%.
Social Security, unemployment, and labor are 34% of the budget. Medicare and health are 24% of the budget. The military is 18% of the budget. Debt financing are 7% of the budget. Food and Agriculture, Veterans Benefits, Transportation, Education, Housing and Community, International Affairs, Energy and Environment, Science, and Government (everything else) are 18%. If a policy of peace were to be adopted, the military budget can be cut in half easily, saving 9% and leaving another 9% to cut. Perhaps a percentage point can be cut from "everything else." That leaves 8% remaining to cut, which means that either Social Security or Medicare will have to be cut, perhaps both. Any plan which doesn’t include cutting Social Security or Medicare is not an honest plan.
Nobody in Washington is discussing anything close to any of those three proposals, except for Senator Rand Paul. Therefore nobody in Washington except for him is doing anything about the crisis that the Fiscal Cliff discussion was supposed to try to avert.
Saturday, November 17, 2012
Greece, Twinkies, and the Fiscal Cliff
By now Hostess, as a company, no longer exists. The upper management of that company ran it into the ground and drove it into bankruptcy. A bankruptcy judge created a plan that would make Hostess sustainable for the near term, and it involved cutting the pay of the workers. One of the two unions balked at that, and Hostess, unable to continue operating, has closed down.
There is plenty of blame to go around, but once the impartial bankruptcy judge made his decision the union really had a Hobson’s choice, a "take it or leave it." And they decided to leave it. They decided it is better to not receive a bigger paycheck than it is to actually receive a smaller one, and they got exactly what they asked for.
Meanwhile, in the bankrupt country of Greece, every time there is an attempt to balance the national budget, or at least make it less unbalanced, the result is riots in the streets and a change in the national government. The fact that the money simply isn’t there does not deter the Greek people from demanding that they receive the benefits promised to them.
This demand for entitlement has reached a peculiar stage. It doesn't matter if the money isn't there, those making demands still want their checks anyway. Where the money comes from isn't a concern, that the money isn't there in the first place isn't a concern, that the checks are written against an account that does not exist isn't a concern. Explaining the math to those making the demands does not work. Apologists for the Bakers Union are left saying that it is the responsibility of Hostess to provide a job whether it can be afforded or not.
It is a situation analogous to the later parts of Atlas Shrugged. Hank Rearden had just been introduced to the Steal Unification plan, and when he points out that the plan cannot work, the response from everyone in the room is that he can make it work somehow. They do not know how, and they do not care to hear his explanations of how it cannot work.
The United States is heading down that road. So many people have their tiny portion of the Federal Budget as their subsidy, and they do not want it cut. They each have allies that do not want their own parts cut, and they work together to protect the whole. The politicians know that something needs to be done to avoid national bankruptcy (either by default or by inflation) but cannot work together to solve the problem.
There is little reason to worry about the Fiscal Cliff. If one still believes in government, those currently in office are too afraid of the cliff to happen. They will find the way to kick the can down the road for a few more months until it finally becomes impossible to do so any farther. Then those who scream every time there is a threat of cuts will discover that the money really isn’t there, and their choice to not receive a larger check instead of actually receiving a smaller check will be granted. If one doesn't believe in government then it is apparent that it is nothing more than a minor adjustment that won't have any real effect except to kick the can down the road for a few more months.
And eventually, like Greece and like Hostess, those screaming "all or nothing" will find out just how much "nothing" really is. Austerity doesn't come because it is chosen, it comes because the money is no longer there.
There is plenty of blame to go around, but once the impartial bankruptcy judge made his decision the union really had a Hobson’s choice, a "take it or leave it." And they decided to leave it. They decided it is better to not receive a bigger paycheck than it is to actually receive a smaller one, and they got exactly what they asked for.
Meanwhile, in the bankrupt country of Greece, every time there is an attempt to balance the national budget, or at least make it less unbalanced, the result is riots in the streets and a change in the national government. The fact that the money simply isn’t there does not deter the Greek people from demanding that they receive the benefits promised to them.
This demand for entitlement has reached a peculiar stage. It doesn't matter if the money isn't there, those making demands still want their checks anyway. Where the money comes from isn't a concern, that the money isn't there in the first place isn't a concern, that the checks are written against an account that does not exist isn't a concern. Explaining the math to those making the demands does not work. Apologists for the Bakers Union are left saying that it is the responsibility of Hostess to provide a job whether it can be afforded or not.
It is a situation analogous to the later parts of Atlas Shrugged. Hank Rearden had just been introduced to the Steal Unification plan, and when he points out that the plan cannot work, the response from everyone in the room is that he can make it work somehow. They do not know how, and they do not care to hear his explanations of how it cannot work.
The United States is heading down that road. So many people have their tiny portion of the Federal Budget as their subsidy, and they do not want it cut. They each have allies that do not want their own parts cut, and they work together to protect the whole. The politicians know that something needs to be done to avoid national bankruptcy (either by default or by inflation) but cannot work together to solve the problem.
There is little reason to worry about the Fiscal Cliff. If one still believes in government, those currently in office are too afraid of the cliff to happen. They will find the way to kick the can down the road for a few more months until it finally becomes impossible to do so any farther. Then those who scream every time there is a threat of cuts will discover that the money really isn’t there, and their choice to not receive a larger check instead of actually receiving a smaller check will be granted. If one doesn't believe in government then it is apparent that it is nothing more than a minor adjustment that won't have any real effect except to kick the can down the road for a few more months.
And eventually, like Greece and like Hostess, those screaming "all or nothing" will find out just how much "nothing" really is. Austerity doesn't come because it is chosen, it comes because the money is no longer there.
Friday, April 09, 2010
Who will be betrayed?
Now that healthcare reform has passed, the onerous task of finding out what is actually in it has begun. But some parts are already known. There is a provision that people must either carry insurance or pay a fine, but the fine is lower than the price of an insurance policy. This is coupled with a prohibition against denying anyone who has a pre-existing condition.
Politicians are convinced this will cause everyone to carry insurance for their own good. Economists are convinced that given the nature of the incentives people will only carry insurance when they actually need it and will prefer to pay the fine the rest of the time. Politicians are shocked when economists tell them that people may deliberately opt to not carry insurance given the nature of the incentives.
The situation is completely unsustainable. One way or another something has to give. The question is what exactly will give? As long as the situation continues as designed then the insurance companies will lose money. Who exactly is congress planning on betraying?
At first people will pay the fines rather than carry the insurance. At first the insurance companies will lose money. Then they will petition congress to raise the fine above the cost of an insurance policy. Then one of two things will happen.
One option is that congress will comply with the wishes of the insurance companies and raise the fines. This will cause people to actually try to contest the validity of the fines in court. This will lead to the argument that by paying the fines before they went up people had agreed to the validity of the fines. Those who had not contested the fines in previous years will have their standing questioned. Perhaps congress will, when raising the fines, enact legislation that anyone who had willingly paid the fine in previous years without complaint have no standing in the future.
The other option is that congress will keep the fines low in spite of the complaints of the insurance companies. Perhaps, adding insult to injury, they will raise the fines but still keep them lower than the cost of an insurance policy, directing yet more money that “should” have been going to the insurance companies to the government. This will bankrupt any company that is offering health insurance and direct even more people to a government healthcare plan.
Neither option is attractive, and it is difficult to say which option is worse. But given the current situation as designed in the healthcare reform bill those are the two possible futures.
Politicians are convinced this will cause everyone to carry insurance for their own good. Economists are convinced that given the nature of the incentives people will only carry insurance when they actually need it and will prefer to pay the fine the rest of the time. Politicians are shocked when economists tell them that people may deliberately opt to not carry insurance given the nature of the incentives.
The situation is completely unsustainable. One way or another something has to give. The question is what exactly will give? As long as the situation continues as designed then the insurance companies will lose money. Who exactly is congress planning on betraying?
At first people will pay the fines rather than carry the insurance. At first the insurance companies will lose money. Then they will petition congress to raise the fine above the cost of an insurance policy. Then one of two things will happen.
One option is that congress will comply with the wishes of the insurance companies and raise the fines. This will cause people to actually try to contest the validity of the fines in court. This will lead to the argument that by paying the fines before they went up people had agreed to the validity of the fines. Those who had not contested the fines in previous years will have their standing questioned. Perhaps congress will, when raising the fines, enact legislation that anyone who had willingly paid the fine in previous years without complaint have no standing in the future.
The other option is that congress will keep the fines low in spite of the complaints of the insurance companies. Perhaps, adding insult to injury, they will raise the fines but still keep them lower than the cost of an insurance policy, directing yet more money that “should” have been going to the insurance companies to the government. This will bankrupt any company that is offering health insurance and direct even more people to a government healthcare plan.
Neither option is attractive, and it is difficult to say which option is worse. But given the current situation as designed in the healthcare reform bill those are the two possible futures.
Saturday, February 06, 2010
Top Two
Recently a political advertisement arrived in the mail from CAIVP - the California Independent Voter Project or California Independent Voter Network. They are an organization backing a "Top Two" initiative.
The proposal is to open the primaries to everyone, and then the two candidates who receive the most votes, regardless of party, will appear on the final election ballot. This means that in the final race the votes could be limited to just choosing between a Republican and a Democrat, or they could be limited to just choosing between two Republicans or between two Democrats.
CAIVP assures the voters that third parties will not be negatively impacted.
It is bad enough that this attacks free association, as the individuals in political parties have a right to say who they are and are not associated with, but the position put forth by CAIVP stands in stark contrast to reports by third parties in states where "top two" has been implemented. The effect has been to shut out Greens and Libertarians in the state of Washington except in races where there was no major party opposition to major party incumbents.
Even when someone claiming association with a third party did make it to the November ballot (as in the cases where there was no major party opposition) there really is a "purity of message" issue. A hard core libertarian could claim "Green" and thus dilute the message of the Green Party, and a hard core green could claim "Libertarian" and thus dilute the message of the Libertarian Party. It is bad enough that Libertarians have to deal with the No True Libertarian argument as well as other baseless accusations, this would truly make it impossible for third and minor parties to get their message out.
If reform is the goal, try attacking the obstacles to ballot access instead, or try attacking safe districts or campaign finance limits. Phony reform is not what is needed.
The proposal is to open the primaries to everyone, and then the two candidates who receive the most votes, regardless of party, will appear on the final election ballot. This means that in the final race the votes could be limited to just choosing between a Republican and a Democrat, or they could be limited to just choosing between two Republicans or between two Democrats.
CAIVP assures the voters that third parties will not be negatively impacted.
How will Top Two Candidates Open Primary impact third party candidates?
The Top Two Open Primary will level the playing field for third parties by allowing them to appeal to broader base of voters in the primary. Under the current election system, third parties have an extremely difficult time winning legislative, congressional and statewide elections. Only one third party candidate has served in the state legislature in modern California history. Under a Top Two Open Primary system, for example, a general election could conceivably pit a Democrat against a Green party candidate in San Francisco or a Republican and Libertarian candidate against each other in Orange County.
It is bad enough that this attacks free association, as the individuals in political parties have a right to say who they are and are not associated with, but the position put forth by CAIVP stands in stark contrast to reports by third parties in states where "top two" has been implemented. The effect has been to shut out Greens and Libertarians in the state of Washington except in races where there was no major party opposition to major party incumbents.
Even when someone claiming association with a third party did make it to the November ballot (as in the cases where there was no major party opposition) there really is a "purity of message" issue. A hard core libertarian could claim "Green" and thus dilute the message of the Green Party, and a hard core green could claim "Libertarian" and thus dilute the message of the Libertarian Party. It is bad enough that Libertarians have to deal with the No True Libertarian argument as well as other baseless accusations, this would truly make it impossible for third and minor parties to get their message out.
If reform is the goal, try attacking the obstacles to ballot access instead, or try attacking safe districts or campaign finance limits. Phony reform is not what is needed.
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