Poverty, Meet Cash Transfers

In my guise as The Nonprofiteer, I suggest that the solution to poverty might be money.

dorothea lange depression era photographs 13

Alert the media.  No, really.

VAT Holiday Bleg

Can a cut in value-added tax stimulate economic growth?

In the United States, when we debate whether tax cuts can stimulate a sluggish economy, we are typically thinking of income tax cuts. But such cuts tend to maximize inequality and are also slow to have an impact (not everyone has an income-generating opportunity sitting in front of them just waiting for a lower tax rate).

Many other governments around the world have an additional policy alternative available, which is to cut value added tax. VAT runs as high as 25% in some countries. Unlike an income tax cut, a VAT cut would be felt instantly and would be progressive in impact.

My bleg: Has any country tried a VAT holiday to stimulate their economy, and if so what happened? If there are no policy experiments, are there any modelling white papers at which I could take a look?

Thanks in advance.

Politics and physics

When I was in the eighth grade I had Mr. Nadrowski for science, and one day he called Stephen Chilcote up to the front of the class and told him to push against the cinder-block wall until it fell over.  As Chiclet obediently pushed and the rest of us watched, Mr. Nadrowski kept up a descriptive patter: “So there he is, beads of sweat are popping out on his forehead, his muscles all straining; but you know what?  He’s not doing any work!”  His point was that from a physics standpoint no work occurs unless the object responds to the force; if the wall didn’t move, Stephen’s efforts didn’t count.

This seems to be the definition of “work” Republicans are using to complain that President Obama isn’t doing enough to fix the economy.  They build a cinder-block wall of legislative refusal and then criticize him for failing to push it over.

And when he does manage to move objects despite the cinder-block—by the Executive Order modifying immigration or the administrative maneuvers necessary to maintain contraception as a component of basic health-care—his opponents hyperventilate about Obama’s terrifying expansion of Presidential power.  From the people who created the Constitutionally bogus “signing statement,” that’s chutzpah enough to topple the canonical instance: the boy who, having murdered his parents, asks for leniency because he’s an orphan.

So let’s do some real work of our own.  If you’re interested in actually moving objects—Obama canvassers from Illinois to Iowa, and Iowa Democratic voters from their homes to the polls—please join my Wednesday evening phone bank, beginning this week (July 11) and continuing through the election.  Contact me off-line for details, but bear in mind that Iowa votes early, beginning on September 27: if we’re going to knock over the wall, we’ve got to do it over the summer.

“If our enemies will stop lying about us we will stop telling the truth about them”*

Though he attracted ridicule from the Right for saying it (and what could he say that wouldn’t attract ridicule from the Right?), the President is correct: the private sector is okay, creating jobs at a respectable clip.  The weakness in job creation comes primarily from the public sector, where states and municipalities are firing teachers and firefighters and police officers for lack of Federal funding to retain them–and where lack of Federal funding is the direct result of Republican policies.

So apparently McConnell was telling the truth in 2009, if at no other time, when he said that his party’s highest priority was to defeat the President.  If the Republicans have to swell the ranks of the unemployed to accomplish this goal, why should they care?  Republicans mostly aren’t unemployed, and vice-versa.

In other words: the fact that Republican deficit-cutting policies increase unemployment is a feature, not a bug.  Their success in concealing this unattractive fact is truly remarkable.

——

*A 19th Century political saw, revived by and therefore often attributed to Adlai Stevenson.  Adlai’s version: “I would make a proposition to my Republican friends… that if they will stop telling lies about the Democrats, we will stop telling the truth about them.”  This edition of Today’s Pedantic Footnote provided gratis to our readers.

The real missed opportunity for stimulus in health reform

Back-loading health reform is poor health policy and health politics. It’s poor fiscal policy, too.

Noam Scheiber, Jonathan Cohn, Ezra Klein, Kevin Drum, and even Mitt Romney are getting into it regarding whether the White House missed an opportunity to pursue a second stimulus by pursuing health care reform. As a professor, I hate to interrupt the learning experience of students having a useful debate. Still, enough is enough. It’s time for the answer key.

Pursuing health reform was necessary and right. Had President Obama passed on this chance, he would have forfeited a once-in-a-generation opportunity to advance the economic security of ordinary people, and to address the widespread inhumanities and dysfunction of our health care system. Before President Obama leaves office, millions of Americans will recognize the magnitude of this achievement.

The real missed opportunity was the failure–forced by fiscal conservatives at both ends of Pennsylvania Avenue–to embed more effective and immediate help for states, localities, and ordinary people in the nuts and bolts of the final bill. Health reform included many opportunities for a second stimulus. Many of these opportunities were missed, due to the tentative back-loading of the Senate bill that became the core of the Affordable Care Act.

Suppose ACA had included a five-year extension to the COBRA subsidies embedded in the 2009 stimulus. Imagine if ACA had abolished the mandatory Medicare waiting period for individuals who qualify for federal disability programs. Imagine if the bill had allowed each state the option to begin health insurance exchanges as soon as these could possibly be implemented. Imagine if ACA had continued the 2009 stimulus’s highly-favorable federal matching rates for hard-pressed state Medicaid programs.

Each of these measures would have been sound health policy. Each would have accelerated the on-the-ground implementation of health care reform for ordinary people. The Affordable Care Act’s original sin, tentative back-loading of its main pillars, left health reform more politically vulnerable than it needed to be. It also left on the table needed opportunities to provide immediate help to a weak national economy.

Sure, these measures would have been costly. Let’s suppose they would have cost another $75 billion annually for a few years until ACA is solidly-in place.* As far as I can tell, opponents’ post-truth “repeal and replace” talking points about trillion-dollar-entitlements would have been much the same as they are right now. And ordinary people, states and localities, and the national economy would have received more potent help when they most needed it.

The first paragraph of the answer key says, “Back-loading health reform is poor health policy and health politics.” It’s poor fiscal policy, too.

*A friend emails that $75 billion per year forever adds up to…real money. I meant this as a short-term stimulus and transition measure.

The jobs report: what should we do?

(cross posted at freeforall)

My first post of 2012 said the top public policy priority for 2012 was to:

…enact policies that encourage economic growth now, while moving toward a sustainable budget over the long run. This main policy need is unchanged from 2011, and we didn’t manage to do either very well.

This is still true.

Continue reading “The jobs report: what should we do?”

NHSC: A quiet triumph of the Obama stimulus plan

Thousands of National Health Service Corps members help provide basic services to an estimated 10.5 million Americans, a dramatic expansion facilitated by the 2009 stimulus package.

Conventional wisdom is that American Recovery and Reinvestment Act (ARRA) didn’t do much. That’s wrong. ARRA did much good, especially in some very practical, low-tech activities in public health and other areas.

One of its less-noticed contributions was made within the domain of safety-net care. Secretary of Health and Human Services Kathleen Sebelius just announced that the number of participants in the National Health Service Corps (NHSC) has nearly tripled. More than 10,000 NHSC members – doctors, nurses, dentists, and others – provide basic health services to an estimated 10.5 million Americans, almost triple the number served in 2008. (h/t Alice Chen)

The stimulus package expanded NHSC, a sound, cost-effective program that assists needy Americans while strengthening the primary care workforce. For example, NHSC’s loan repayment program provides an initial, tax-free award of up to $60‚000 in return for two years of service in an underserved community. People can pay off more of their health professional student loans if they continue in these services. Many young providers who participate in NHSC programs go on to spend their careers caring for needy patients after they complete their service obligations.

Did the deployment of several thousand health providers to needy areas end the recession? No. Did these efforts help many, many people? Yes.

Was this $300 million (I believe about 0.04 percent of ARRA’s overall expenditures) well-spent? Absolutely.

Westen vs. Chait on Obama

Keith Humphreys’ thoughtful post called to mind some thoughts I wanted to jot down after re-reading Drew Westen’s NYT piece on Obama and Jonathan Chait’s blistering response to Westen in the New Republic. Westen is surely a primary target of Keith’s scorn, and I agree with both Chait and Keith that Westen grossly exaggerates what a leader in Obama’s position could have been expected to accomplish.

Yet it would be a mistake not to acknowledge that Westen is onto something. Obama might not have been able to have achieved substantively different outcomes in many of the recent battles. But he does have the rhetorical skill to have forced Republicans to pay a much stiffer political price for their obstructionism. And his supporters can hardly be faulted for being upset that he chose not to.

Last December’s struggle about the Bush tax cuts on high-income households is a case in point. Many on the left have been bitterly critical of the president for capitulating to Republican demands on that issue. But consider the details of the choice the president faced.  Continue reading “Westen vs. Chait on Obama”

The joke’s on us.

Christine O’Donnell’s politics are hilarious: she thinks we should go around telling people masturbation is wrong. Thing is, there’s a Supreme Court justice who’s very angry that we can no longer make it illegal.

Christine O’Donnell’s victory in the Delaware primary is indeed great news for the Democrats—and may finally get the media to pay attention to just how out of the mainstream Tea Party candidates really are.  I have to agree with Jonathan’s commenters, though: her saying masturbation is equivalent to adultery is a bizarre view but very different from calling for a government ban.  (Some people say masturbation is equivalent to adultery; some say people should have sex with butterflies.  Neither position, given that it will have zero effect on public policy and is not even a statement about public policy, either picks my pocket or breaks my leg.)

However, there is somebody who is appalled that we can’t ban masturbation: Justice Scalia.  Remember what he said in his dissent in Lawrence v. Texas (towards the end of section I):

State laws against bigamy, same-sex marriage, adult incest, prostitution, masturbation, adultery, fornication, bestiality, and obscenity are likewise sustainable only in light of Bowers’ validation of laws based on moral choices. Every single one of these laws is called into question by today’s decision; the Court makes no effort to cabin the scope of its decision to exclude them from its holding. …The impossibility of distinguishing homosexuality from other traditional “morals” offenses is precisely why Bowers rejected the rational-basis challenge.

What a massive disruption of the current social order, therefore, the overruling of Bowers entails.

(bold type added).

This was a completely unforced error.  Justice Thomas, also dissenting, wrote that banning gay sex, while in his view constitutional, was “uncommonly silly” [citing Griswold v. Connecticut], and that “punishing someone for expressing his sexual preference through noncommercial consensual conduct with another adult does not appear to be a worthy way to expend valuable law enforcement resources.”  Scalia could have said that, but he didn’t.  What makes him angry is not that a legislature might be able to jail people for spanking monkeys—but that it might not.

We’ll hear the last of O’Donnell after she gets the votes of everyone in Delaware who’s never masturbated.  Scalia, we’re stuck with.

The powerful and the powerless in hard fiscal times

Surprise: People with AIDS and disadvantaged youth fare worse than large banks, Medicare recipients, and physicians in squabbling over the federal budget.

I recently had a 12:30 meeting at a Chicago clinic. Rather than getting stuck in traffic, I walked down to 63rd street and caught the Green Line. The L meandered across the south and west sides, past vacant lots littered with the usual detritus of low-income urban life. My fellow passengers included a fair number of boisterous teenage boys. They didn’t bother anyone. They were just being loud and adolescent, but many nearby adults would have been happier to see those youth hired to do something more useful than goofing with their friends. This might have happened, too, had Congress come through with a better jobs bill.

Last month, I attended a meeting with leaders of local government, criminal justice systems, and nonprofit agencies concerned with youth violence. Judges, police, correctional officials, social workers, and young people themselves will tell you that a job is one of the best things we can do to keep kids out of trouble. It gives youth a place to be, something worthwhile to do, and a little money in their pocket which can only reduce the lure of other things.

The job numbers for youth are terrible right now. Cities and states don’t have the money to pick up the slack. We were hoping for more money from the federal government through a jobs bill and some other things that didn’t come through. Across the nation, youth are applying to summer job programs that can hire a fraction of those looking for work. Many of these same kids go to schools facing punishing budget cuts. To give one small example, kids are losing JV and other sports opportunities at the very moment politicians rail about the growing problem of child obesity.

This morning’s Times includes a beautifully reported story by Kevin Sack about state AIDS Drug Assistance Programs. For the first time in years, many programs are capping enrollment, establishing waiting lists, or limiting medications for people living with HIV and AIDS. States, under great fiscal pressure, are cutting many health programs. Senators are bickering about whether to ship some TARP or stimulus funds over to ADAP. Everyone seems to feel badly, but no resolution has been found.

Then I read that the United States Senate could not find 60 votes to extend unemployment benefits to two million people. Congress also failed to extend Medicaid support to states that are therefore making deep cuts in dental care and other related services. “Concern about the federal deficit” is the most commonly cited reason. The budget really is tight. Programs will be cut; constituencies are bound to be disappointed.

Not everyone will be equally disappointed, however. Today’s paper contains two other stories showing sunnier outcomes for specific groups. For example, large banks won a reprieve (courtesy of Scott Brown) from a $19 billion fee in financial regulation reform. Physicians got another reprieve from Medicare’s “Sustainable Growth Rate” formula, which, in principle could impose a 21 percent reimbursement cut. Congress continually modifies this complicated and politically impossible policy with the ritualized “doctor fix.” (Last month Congress voted to replace the 21 percent payment cut with a 2.2 percent increase. See Austin Frakt for the details).

Still, the contrast in urgency is striking. In these cases and others, organized, rather privileged interests fare well when the political shoving starts. That’s politics 101. It applies to both parties, though more glaringly and with less embarrassment in the GOP. Sometimes this fact of life produces good policy, sometimes not. I’m sorry the banks got off the hook. I’m glad Congress always fixes the SGR, since a drastic reimbursement cut would be terrible public policy.

No Senator or Representative wants to lose her job creating a mess for Medicaid patients and providers. Concerns about federal deficits remain, but these concerns take a back seat when something is very important to Medicare patients and providers. That’s good. I only wish more politicians felt the same fear about disappointing people living with HIV, disabled Medicaid recipients now losing services, and disadvantaged urban youth. Until they do, politicians will continue to rather feel badly as they neglect important needs. And the politics of the federal budget (and state budgets, too), will remain disspiriting.