Category Archives: Welfare Policy

The Tool of Taxation

Old hammer during reconstruction of the buildi...

Old hammer during reconstruction of the building in Pleszew. (Photo credit: Wikipedia)

In graduate school a professor of mine often referred to the “toolbox of government.”  The characterization must have resonated with me because I still use it in my own classes almost fifteen years later.  Of course he was referring to the variety of actions that governments at all levels have at their disposal to implement and otherwise enforce public policy.  For our purposes we can narrow the contents of the “toolbox” down to the bare minimum:

  • The power of government to deprive a person of liberty (think incarceration and in the most extreme form, the death penalty)—the hammer.
  • The power of government to deprive a person of property (think real property and money)—the hammer.

Confused?  Don’t be.  Chief Justice John Marshall (1801-1835) is credited with expressing the position that the power to tax is the power to destroy.  In this regard the power to tax is the power to punish those who violate the law, ignore regulations, or otherwise challenge the general welfare—the hammer.  The power to tax citizens and residents, businesses, corporations, is generally available to most governments—from Congress to your local water district.  Check your text books, one of the first concurrent or shared powers listed is the power to tax.  Moreover, taxes are ubiquitous—fees: taxes; assessments: taxes; dues: taxes; levies: taxes; taxes: taxes.  The power to tax is the power of government to deprive.

In the months following the Supreme Court’s decision on the Affordable Care Act (Obama-care) , much will be made of the taxation aspect of the now upheld health care reform package—especially the individual mandate, which requires people capable of paying for health insurance to do so or risk a penalty (tax).  What do you think, is it the most intrusive tax ever devised by government (in this case by democrats)?  Is it a new tax?  Is it a tax increase (even though it only applies to people who don’t buy their own health insurance—and wouldn’t we otherwise call these people free-riders or equate them to people who don’t buy car insurance and drive up all of our rates)?  With all the hammers we get hit with every day, is this the one we’re really going to object to?  Ouch!  I know how to fix it; where’s my hammer?!



Food Stamps, Government Subsidies, and Elections

Why have food stamps become a political football in the 2012 election?  The first high profile punt came from Republican candidate and former Speaker of the House, Newt Gingrich, when he referred to President Obama as the “food stamp President.”  The dynamic and diverse new media world of tweeting and blogging could be partly responsible; along with the never ending search for the ultimate sound-bite.  But explanations that focus on the nature of the media today forget to acknowledge that political parties and their candidates have made use of such socially and politically-charged symbolism for decades—if not since the early days of the Republic.

In a larger context, food stamps are just one form of federal and state public assistance to families with incomes that are too low to adequately provide for their needs.  In one form or another, food stamps have been a staple of the social welfare safety net that has protected the poor since the New Deal.  But as a form of government subsidy, food stamps are a symbol of the relationship that exists between government and people.  In that sense, food stamps and tax incentives that benefit home owners (i.e., the deduction of interest paid on home mortgages) are equal—both represent public policies intended to benefit very real constituencies in the political process.  More importantly, the actual impacts of such policy choices are never as one-sided as some might suggest.  A dollar spent by way of food stamps in part keeps farms, dairies, grocery stores, truckers, importers, and even members of Congress at work (just as tax breaks to home owners keep mortgage brokers, banks, tellers, and ATM companies at work).

Public policies generally don’t just benefit one person, group, or class.  And they probably don’t just capture a narrow range of intentions on the part of the policy-makers that pass them.  What do you think?  Are food stamps the issue as some would suggest?  If so, then shouldn’t all government subsidies become symbols during elections?  Can you imagine a way of talking about such programs that does not lend itself to vilifying particular communities in the name of political expediency?


Class Warfare?!

Karl Marx (1818 – 1883)

Karl Marx

President Obama recently proposed $1.5 trillion in tax increases on American corporations and the American wealthy in an attempt to reduce the nation’s annual deficit. To be fair, the term “tax increase” is not entirely accurate as the president’s plan would not increase taxes per se but would merely close corporate tax loopholes and let the Bush-era income tax cuts expire. CNN’s political ticker posted a great blog summarizing the various responses of GOP leaders to Pres. Obama’s debt plan. In general, the response from the Republican leadership has been to condemn the president’s plan as class warfare.

Class warfareis a term typically used by communists and socialists to describe the struggle between the rich and the poor. In fact, according to Karl Marx, class warfare is necessary as it will lead to the violent overthrow of capitalism. In other words, the republican response to proposed tax increases as class warfare is an attempt to imply the plan as ideologically and inherently Marxist and thus un-America and illegitimate. Conversely, if asking the top 5% to pay their fair share is analogous to class warfare, what is cutting services to the middle-class to avoid rising taxes on the rich? The American middle-class have stood idly by as:

  • Corporate lobbyists maintain more influence in Congress than the American people
  • The U.S. Congress facilitates the outsourcing of American middle-class jobs to China via tax breaks
  • Corporations receive bailouts and/or subsidies devoid of strings
  • Colossal military spending goes unimpeded while the average American soldier is underpaid
  • Bank of America and General Electric paid zero taxes to the IRS in 2009 and 2010 due to tax loopholes

The “cut government spending” counter-solution presented by Republican Party leaders make for great politics but contradicts history. Historically, there has never been a nation that has “cut” its way into prosperity. However, history is filled with examples of nations building their way to prosperity with the United States being one of them. Asking the super wealthy to pay higher taxes was not a partisan issue under the republican Eisenhower administration when the wealthy paid a whopping 90% of their income to the government. So why is asking the rich to simply pay their fair share, who are currently paying the lowest taxes since World War II, an issue today?  The answer is unfortunate but simple – party politics.


The Super-Duber Congress

Unofficial seal of the United States Congress

The 12 member joint-committee formed by the Budget Control Act of 2011(BCA) to reduce federal budget deficits by $1.2 trillion, commonly referred to as the “super congress,” has come into final fruition as its membership has been completed.  

A joint committee of the U.S Congress is a congressional committee consisting of members of both the U.S. House of Representatives and U.S. Senate.

The Budget Control Act gave the “super congress” a significant amount of authority in attempt to circumvent the gridlock and entrenched partisanship that has solidified in congress since the midterm election of 2010. The joint-committee assignments consist of six Republicans and six Democrats will have until Nov. 23 to develop a plan to reduce the budget deficit. If at least seven of the 12 members agree to a bill, both houses of Congress must vote on the bill with just a simple majority. No filibustering by senators and no amending allowed in either the House or Senate. If the committee fails to pass a bill, or if Congress fails to pass the committee’s bill, significant automatic-spending cuts will take effect to both discretionary spending and defense.

Massimo Calabresi posted a blog with Time Swapland interpreting the deficit joint committee’s membership selections. However, what does it say about the American political process when a congress within a congress must be established to force elected legislators into action?


Pork as Federal Spending; The Eternal Conundrum?

In the context of the federal budget the term “pork” generally refers to spending at the state and local levels that members of Congress are able to claim as evidence of their hard work on behalf of their constituents.  It goes without saying that members of Congress share the belief that “bringing home the bacon” increases the likelihood that  they will win reelection.  All one has to do is look for signs in their community that proclaim “YOUR TAX DOLLARS AT
WORK, funded in part by . . . .”  I dare say we usually appreciate the work being done. After all, don’t we all like road improvements, new libraries, and better policing?  Add national entitlement programs like social security and Medicare—and don’t forget military spending—to that list and voila, you have the federal budget.

That’s just on the spending side.  What about the revenue side?  Individual and corporate income taxes provide almost 51 percent of federal revenues (42 percent and 9 percent respectively).  In 2010, the federal  government collected $2.2 TRILLION in receipts from these and other sources.  That can buy a lot of “pork.”  Wait . . . it does buy a lot of pork.  The problem is that one person’s bacon (pork), lettuce, and tomato sandwich (in the form of some federally funded project or another) is another person’s social security check.  A federal dollar spent on one project is a federal dollar that can’t be spent on another. One person’s gain; one community’s gain, is another’s loss.  What one sees as our tax dollars at work another may see as our federal taxes being wasted.  After all, why should my taxes help build a bridge in Oregon (I live, work, and pay taxes in California)?  That’s the dilemma.  If there were enough money to go around we wouldn’t be having this and many other conversations.  But there isn’t.  Federal revenues are being strained by unemployment at the same time that the costs of government programs are rising in leaps and bounds.  And as long as members of Congress see spending federal money at home as their constitutionally granted prerogative there will be a strain that affects all of us (see Matthew Frank’s Blog posted on the Missoula Independent for an example of the thinking in Congress).  Is there an alternative to the system of pork barrel politics that drives much of federal spending?  Other than a threatened presidential veto, can you think of other checks that can be used to reduce the temptation on members of Congress to spend federal funds on projects that might be funded at the state or local level (or maybe even by private sources)?  We could use some help about now.


Workers of America Unite; You Have Nothing To Lose But Your Chains!

Communism is an economic and socio-political theory proposed by Karl Marx that aims for a classless society structured on the end of wage labor and private property. Communist theory states that the main producers of wealth in society are the working class who are also perpetually exploited and marginalized by the unproductive capitalist owners of production. According to Marx, the only way to solve the problems caused by capitalism is for the working class to unite and overthrow the capitalist system itself via violent revolution.

For Marx, the end of capitalism is inevitable as the class conflict between those who have and those who have not caused by capitalism will ultimately lead to its destruction. However, class conflict in the United States is practically nonexistent as the American working-class has been tricked into accepting blame for the nation’s economic woes. The middle-class is too busy blaming middle-class pension plans and labor unions to remember the upper-class  actually caused the great recession. As it stands now, public teachers and firefighters are to blame not private bankers or hedge managers. Not surprisingly, no one from the public sector has been prosecuted for the illegal activities that ultimately caused the economic recession.

CNN’s Lisa Desjardins posted a blog examining what the current deficit debate is really about and the consequences each plan would certainly have for middle-class Americans. However, how democratic is the United States when justice, safety, education, health-care, and representation are determined by ones economic class? The American people have stood idly by for decades as:

  • Corporate lobbyists maintain more influence in Congress than the American people
  • The U.S. Congress facilitates the outsourcing of American middle-class jobs
  • Corporations receive bailouts and/or subsidies devoid of strings
  • Tax cuts for the extremely wealthy are paid for by cutting services for the poor and elderly
  • Colossal military spending goes unimpeded while the average American soldier is underpaid

How can the average worker achieve the “American dream” within the current capitalist system? Should the American working-class  consider communism as a viable option?


Government Deficits: Death by a Thousand No-Cuts

Living within a budget is simple:  First, determine your income realistically and accurately.  Second, make a thorough and honest list of expenses that does not exceed your income.  However, problems can arise at both the first and second stages of the process.  For example, what if your income is unpredictable or subject to fluctuations beyond your control?  What if you have unforeseen expenses?  Preparing for such problems is possible.  You can start by estimating your income using different scenarios—e.g., best, medium, and worst-case scenario planning.  You can prioritize your expenses and limit or rule out unnecessary spending.  And there is always saving for a rainy day.  In the real world living within a budget is not only simple; it is a necessity.

In a recent post Jack Cafferty asks, “Why won’t Congress and the President get serious about America’s debt crisis?”  In his blog he identifies a number of government hiring freezes and programs that are not receiving funding because of the ongoing budget problems facing the federal government.  In other words, not only are current funding requirements being ignored by the budget fiasco, but the likely outcome is that both Republican and Democratic lawmakers in the White House and Congress will adopt a federal budget that does not come remotely close to balancing the budget any time soon.  Every year the budget runs at a deficit—the government spends more money than it brings in—the overall debt of the national government grows accordingly.  What many people do not understand is that the national debt is like the “BIG ONE;” the predictable mega-quake that will shatter the west coast like a plate falling on the floor.  It doesn’t just happen all at once.  It is being prepared as you read this, by all the little stresses and strains that occur every day off our radar.  Every day the government borrows money it does not have to pay for programs it can’t afford it is forced to pay off debt using money that could have been used for something else.  It cannot go on forever.  “Jack!”  The answer is simple.  Congress and the President don’t expect to be there when the quake finally comes.  Unfortunately, millions of Americans are there now, and their homes and their businesses are crumbling around them as you read this. 

What do you think about deficit spending?  Is there more people can do to help solve this problem?  Who should be held responsible for the economic mess the federal government is in?

Congress, Mr. President:  Read the first paragraph to this blog please.