On my local ballot this election, there are four positions up for grabs on the Whatcom County Council, two positions with the Port of Bellingham, two positions on the Bellingham City Council, and one position on the School Board. There is also a school levy.
County Council
I try not to be a single-issue voter, but county politics has become completely engulfed by the Gateway Pacific Terminal issue. In a nutshell, the GPT would become a port for coal shipments. The coal would be shipped here on trains, then out through the GPT to the rest of the world. Environmental activists oppose it because it's coal; unions support it because it means good jobs. Liberals have been walking a balancing act, trying to keep the support of both the environmental lobby and the unions; conservatives support the GPT for the same reason the unions do.
My position is that there are standard environmental reviews in place for projects like this already. Those reviews should be allowed to run their course without undue political influence one way or the other. In this case, it's the environmentalists who are arguing for special exemptions to prevent the GPT, so my position casts me with the unions and the conservatives.
In the current election, that means I am voting for Kathy Kershner, Ben Elenbaas, Michelle Luke and Bill Knutzen for County Council. All four of these candidates have been endorsed by both the county Republican and Libertarian parties. Sealing the deal: the opponents of these four candidates have run campaigns demonizing them as "Tea Party endorsed" (when the local Tea Party makes a point to not endorse any candidates) while playing up their own endorsements by Planned Parenthood and the Democrats.
Port of Bellingham
I am voting for Renata B. Kowalczyk over Dan Robbins for Port Commissioner. While the Democrats have endorsed Kowalczyk and the Republicans have endorsed Robbins, both oppose the Blue-Green Coalition's call for a "living wage zone" at the Port. Both support industrial development at the Port. But based on the limited statements I can find from both candidates, Kowalczyk seems to have a more in-depth understanding of what the Port Commissioner has to do and the issues the Port faces.
In the other Port Commissioner race, I am voting for Ken Bell over Mike McAuley. Bell supports the GPT. He also has experience in the private sector cleaning up hazardous waste sites, which is exactly what the Port needs to do with the waterfront.
Bellingham City Council
In my ward, I am voting for Clayton Petree over Pinky Vargas. Petree has the experience needed for council, while after announcing her run, Vargas had to rely on one of the city's most reliably liberal blog writers to give her what he called a "crash course" on the important issues. Petree also opposed the fireworks ban, and I believe can be counted on to oppose the random little bans that the current city council loves so much.
For the Council-At-Large position, my preferred candidate from the primary did not make it to the general. Of the two remaining candidates, both are pretty bad, but Roxanne Murphy is not as bad as Bob Burr.
Bellingham School District 501
Of the three candidates in the primary for the school board, the one I did not consider due to a lack of information lost. In the primary, I voted for Steven Smith over John H. Blethen. Now that those two are running in the general election, I will again vote for Steven Smith.
The school district is also putting forward a levy this election. That levy, Proposition 2013-1 would allow the district to borrow $160 million to be used for "construction." Much of that will be going towards nicer administrative buildings, including $5 million for artificial grass. The district still owes $59 million from the $67 million bond that was passed in 2007. The new bond amounts to $2000 for every man, woman and child in Bellingham, not counting interest charges. To pay it back, the levy would raise the property tax we pay for schools by an astonishing 54%, with promises to cut it back to just a 32% raise in six years (if you believe that). I say the people of Bellingham should keep their own money, and the school district can let the natural grass grow instead of borrowing money to install artificial grass. I am voting NO on Proposition 2013-1.
Summary
County Council: Kathy Kershner, Ben Elenbaas, Michelle Luke, Bill Knutzen
Port Commissioners: Renata B. Kowalczyk, Ken Bell
City Council: Clayton Petree, Roxanne Murphy
School Board: Steven Smith
School Levy: NO
Showing posts with label taxes. Show all posts
Showing posts with label taxes. Show all posts
Tuesday, November 5, 2013
November 2013 Statewide Issues
I find I have left this blog unattended for longer than I meant, but once again, it is time to vote, so I'm back. There are two state initiatives, a few advisory votes and a slew of local candidates to consider, plus one local issue. In this entry, I'll cover the statewide issues: I-517 regarding initiative reform, I-522 regarding GMO labelling and advisory votes 3, 4, 5, 6 and 7, regarding tax increases passed by the state legislature.
I-517: Initiative Reform
First up is I-517, which reforms the initiative process in Washington state. I-517 includes four key reforms:
I-522: GMO Labeling
The only other statewide initiative is I-522, which establishes a labeling system for food containing genetically-modified organisms. To decide which way to vote on I-522, I must ask three sequential questions, all of which must have an affirmative answer to vote for I-522. Those three questions are the following:
In Washington state, thanks to a 2007 initiative, any tax increase passed by the legislature is submitted to the people for an advisory vote. The results are not binding, but they do ensure the public is aware of all tax increases, even ones the media doesn't deem important enough to mention. The advisory votes also give voters a chance to give the legislature some much-needed feedback.
This year, there are five advisory votes, numbered 3 through 7 (A-1 and A-2 were on 2012's ballot). In deciding how to vote, I've followed a simple rule: Taxes should be lower and simpler. That means increases in tax rates and new special taxes on specific groups should be repealed, but that bills that eliminate special credits for specific groups should be maintained.
A-3 Substitute Senate Bill 5444
This bill eliminated a tax credit for taxpayers who lease public property. Taxes should be the same whether you're leasing publicly-owned or privately-owned property. This eliminates an unfair tax credit, so it should be MAINTAINED.
A-4 Senate Bill 5627
This bill imposed a tax on commuter air carriers "in lieu of property tax." Why do air carriers need a special tax? The Washington State Budget and Policy Center has the context: "Senate Bill 5627 was championed by Governor Inslee in order to reduce taxes for Kenmore Air, a commuter air carrier located in Washington state. ... Although Kenmore Air will pay an additional $35,000 per year in aircraft excise taxes, its state and local property tax bills will fall by about $51,000 per year, a cost that will automatically be recouped through higher property tax bills for other homeowners and businesses." The Legislature, at the behest of the Governor, is shifting property taxes from one favored company to other disfavored companies and homeowners. Obviously, this should be REPEALED.
A-5 Engrossed Substitute House Bill 1846
This bill eliminated a tax exemption for pediatric oral services from the insurance premium tax. As a consequence, it also ensures that dental services purchased outside the new health care exchange do not face a tax disadvantage compared to those purchased within the exchange. While it would be preferable not to have an insurance premium tax in the first place, given that there is such a tax, it should apply as fairly as possible. This bill should be MAINTAINED.
A-6 Second Engrossed Second Substitute House Bill 1971
This bill eliminated a tax exemption in the retail sales tax for some telephone and telecommunications services. Specifically, cell phone service was subject to the sales tax while landlines were not; instead landlines were subject to two special excise taxes. This bill eliminate the excise taxes and extended the sales tax to landlines, so that the same tax applies to all telephone services. This bill should be MAINTAINED.
A-7 Engrossed House Bill 2075
This bill extended the sales tax to some property transfers and raised the tax rates for estates over $4 million. This is a complicated one. On the one hand, it closes a loophole in the estate tax that was introduced by the courts. Closing loopholes and simplifying taxes is always good, and if that was the extent of what this bill did, I would vote to maintain. However, the legislature also introduced a new loophole for businesses, and to make up the revenue from the new loophole, raised the tax rate. Tax rates do not need to be raised and new loopholes do not need to be added, so this bill should be REPEALED.
Summary
I-517: YES
I-522: NO
A-3: MAINTAIN
A-4: REPEAL
A-5: MAINTAIN
A-6: MAINTAIN
A-7: REPEAL
I-517: Initiative Reform
First up is I-517, which reforms the initiative process in Washington state. I-517 includes four key reforms:
- It increases the time allowed to gather signatures for initiatives from ten months to sixteen months. Allowing at least a year (the time between elections) for gathering signatures seems like a reasonable reform.
- Any initiative that receives enough signatures must be placed on the ballot for a vote, eliminating the possibility of interference from local officials. Here in Bellingham, we recently had an initiative against red light cameras that was blocked by a lawsuit from the company that had been given the contract to install the cameras. This is an obviously needed reform.
- Official signature gatherers currently have the same legal protections as any other citizen standing on the street. I-517 would make it disorderly conduct (a misdemeanor) to "interfere with or retaliate against a person collecting signatures or signing any initiative or referendum petition..." Exactly what that means is defined by a long list in the initiative of actions that you shouldn't be doing to anybody anyway, whether or not they're collecting signatures. The claim by Riley Sweeney that "if you told someone to go jump in a lake when they asked for your signature, they could sue you for harassment" is simply false if you read the actual text of I-517 (I suppose, technically, anyone can sue anyone else for harassment, but that doesn't mean they have a snowball's chance of winning). Since gathering signatures is a required step for we citizens to exercise our right to petition the government, some special protection for those gathering and providing the signatures seems appropriate.
- I-517 also defines the places where signature gathering will be protected. According to the text of the initiative, official signature gathering "shall be a legally protected activity" in three types of places:
- "...inside or outside public buildings..." This one seems obvious--if the buildings truly are public (unlike national parks and memorials, as we found out during the recent shutdown), then you should be able to collect signatures in these public places.
- "...on public sidewalks and walkways..." Again, this seems obvious if these places are to be considered truly public.
- "...all sidewalks and walkways that carry pedestrian traffic, including those in front of entrances and exits of any store..." This is the one part of I-517 that might cause problems. Opposition to I-517 says this violates property rights. It certainly gives property owners less control over what happens on their property, which I don't like. That said, under I-517, signature gatherers are not allowed inside private buildings, nor are they allowed anywhere members of the public normally aren't, nor are they allowed in open areas that aren't sidewalks or walkways, nor are they allowed to do things (such as stalking, threatening or assault) that normal people can't do. Furthermore, existing law doesn't have a well-defined limit for where signature-gathering is or is not legal on private property, and this issue has gone to the courts several times. I-517's outside-walkways rule, while imperfect, is better than no rule at all.
I-522: GMO Labeling
The only other statewide initiative is I-522, which establishes a labeling system for food containing genetically-modified organisms. To decide which way to vote on I-522, I must ask three sequential questions, all of which must have an affirmative answer to vote for I-522. Those three questions are the following:
- Should genetically-modified food be labelled as such? I think the answer is likely yes. To be clear, I believe the science that says GMOs are safe. They have been in use now for nearly two decades and are likely in the majority of our food with no apparent side effects. Genetic engineering has been happening for millennia through hybridization; GMOs are simply a more direct way to get the genes that we want into the organisms that we want. If anything, I would trust the genetics of a GMO more than some random animal that came out of some field. That said, I know not everyone agrees with me. One of the necessary prerequisites to having a well-functioning free market is the freedom of information, and if people believe that they don't want GMO food, it is their right to avoid it.
- If GMOs should be labelled, should such labeling be required by the government? Here, I think the answer is likely no. The federal government already certifies organic food, and certified organic food cannot contain GMOs. For non-organic non-GMO food, private organizations like the Non-GMO Project are already picking up the slack. Since lots of people want to buy non-GMO food, there is a huge incentive for the private market to supply that information even without government requirements.
- If GMO labeling should be required, is I-522 the right way to do it? The answer here is a definite no. While I-522 requires labels for many foods, there are quite a few exceptions, including alcoholic beverages, food served at restaurants and medical food. If labels are so important for public health, why are there so many exceptions? Moreover, while the state's Department of Agriculture is usually in charge of food safety and labeling, GMO labels would be regulated by the Department of Health. This may seem small, but it likely means food produces will have twice the paperwork and have to go through twice the bureaucracy. It also means the Department of Health would have to duplicate a regulatory infrastructure that the Department of Agriculture already has in place.
In Washington state, thanks to a 2007 initiative, any tax increase passed by the legislature is submitted to the people for an advisory vote. The results are not binding, but they do ensure the public is aware of all tax increases, even ones the media doesn't deem important enough to mention. The advisory votes also give voters a chance to give the legislature some much-needed feedback.
This year, there are five advisory votes, numbered 3 through 7 (A-1 and A-2 were on 2012's ballot). In deciding how to vote, I've followed a simple rule: Taxes should be lower and simpler. That means increases in tax rates and new special taxes on specific groups should be repealed, but that bills that eliminate special credits for specific groups should be maintained.
A-3 Substitute Senate Bill 5444
This bill eliminated a tax credit for taxpayers who lease public property. Taxes should be the same whether you're leasing publicly-owned or privately-owned property. This eliminates an unfair tax credit, so it should be MAINTAINED.
A-4 Senate Bill 5627
This bill imposed a tax on commuter air carriers "in lieu of property tax." Why do air carriers need a special tax? The Washington State Budget and Policy Center has the context: "Senate Bill 5627 was championed by Governor Inslee in order to reduce taxes for Kenmore Air, a commuter air carrier located in Washington state. ... Although Kenmore Air will pay an additional $35,000 per year in aircraft excise taxes, its state and local property tax bills will fall by about $51,000 per year, a cost that will automatically be recouped through higher property tax bills for other homeowners and businesses." The Legislature, at the behest of the Governor, is shifting property taxes from one favored company to other disfavored companies and homeowners. Obviously, this should be REPEALED.
A-5 Engrossed Substitute House Bill 1846
This bill eliminated a tax exemption for pediatric oral services from the insurance premium tax. As a consequence, it also ensures that dental services purchased outside the new health care exchange do not face a tax disadvantage compared to those purchased within the exchange. While it would be preferable not to have an insurance premium tax in the first place, given that there is such a tax, it should apply as fairly as possible. This bill should be MAINTAINED.
A-6 Second Engrossed Second Substitute House Bill 1971
This bill eliminated a tax exemption in the retail sales tax for some telephone and telecommunications services. Specifically, cell phone service was subject to the sales tax while landlines were not; instead landlines were subject to two special excise taxes. This bill eliminate the excise taxes and extended the sales tax to landlines, so that the same tax applies to all telephone services. This bill should be MAINTAINED.
A-7 Engrossed House Bill 2075
This bill extended the sales tax to some property transfers and raised the tax rates for estates over $4 million. This is a complicated one. On the one hand, it closes a loophole in the estate tax that was introduced by the courts. Closing loopholes and simplifying taxes is always good, and if that was the extent of what this bill did, I would vote to maintain. However, the legislature also introduced a new loophole for businesses, and to make up the revenue from the new loophole, raised the tax rate. Tax rates do not need to be raised and new loopholes do not need to be added, so this bill should be REPEALED.
Summary
I-517: YES
I-522: NO
A-3: MAINTAIN
A-4: REPEAL
A-5: MAINTAIN
A-6: MAINTAIN
A-7: REPEAL
Tuesday, August 6, 2013
August 2013 Primary Election
I should've done this earlier, but I didn't, so here I am! We are having a primary election right now which ends tonight, so I guess it's time to figure out who I'm voting for. There are two races on the ballot, and I'll look at them one at a time.
Bellingham City Council At-Large
There are three candidates for this at-large position. Their biographical info and positions can be found here. The important issues are whether taxes should be raised to address the city's budget deficit (they should not) and whether the city should do more to oppose the Gateway Pacific Terminal (it should not, mostly because it's outside the city limits and none of the city's business, but also because the GPT would be good for the region and create jobs).
Taxes
Bob Burr says, "Raising taxes certainly is an option that must be considered with an open mind." Roxanne Murphy prefers "regular and creative budget improvement avenues before a tax increase would be considered." (I have no idea what that actually means.) Allen Brown gives a single word answer: "NO". Point goes to Allen Brown.
Gateway Pacific Terminal
Bob Burr says, "Absolutely" the city should do more to oppose the GPT because it "would be disastrous to our City." Roxanne Murphy is more nuanced in her opinion, but still says, "I’m opposed to the Gateway Pacific Terminal as a Lettered Streets resident who lives near the railroad tracks..." Allen Brown says no, the city should not do more to oppose the GPT because public opinion is split. He also says, "As long as the project meets current environmental and safety regulations, we cannot obstruct." Point to Allen Brown.
Conclusion: Vote for Allen Brown
Allen Brown opposes tax increases and at the very least doesn't want the city to oppose the GPT. Both Murphy and Burr are open to tax increases and both want the city to take a stand againsts the GPT. The choice is clear--I'm voting for Allen Brown.
Bellingham School District Director
There are three candidates for Director #4, but Hue Beattie doesn't seem to have any kind of web presence and apparently did not respond to the voter guide questions. Having no idea what his positions are, I cannot vote for him.
John H. Blethen's campaign seems to be composed of opposing the closure of Larrabee Elementary and spouting slogans like "support the teachers" and "smaller class sizes." He also wants city government to have more control over the schools (I can't help but think that's a bad idea considering how city government handles everything else), and would consider raising local taxes if the state cuts the budget. Steven Smith is the incumbent and voted to close Larrabee Elementary. I don't know whether that was the right decision or not, but he does oppose raising local taxes if the state cuts the budget.
Conclusion: Vote for Steven Smith
This is a tough one, partly because there's so little information, but mostly because I don't usually pay attention to school board politics. A lot of the issues that separate the candidates may be important, but I don't know enough to judge. What I do know is that Smith opposes new taxes on me and has taken action as an incumbent to cut spending so that new taxes are not necessary. On the other hand, Blethen supports higher taxes for me and opposed Smith's action to cut spending. That's enough for me to cast my vote for Steven Smith.
Bellingham City Council At-Large
There are three candidates for this at-large position. Their biographical info and positions can be found here. The important issues are whether taxes should be raised to address the city's budget deficit (they should not) and whether the city should do more to oppose the Gateway Pacific Terminal (it should not, mostly because it's outside the city limits and none of the city's business, but also because the GPT would be good for the region and create jobs).
Taxes
Bob Burr says, "Raising taxes certainly is an option that must be considered with an open mind." Roxanne Murphy prefers "regular and creative budget improvement avenues before a tax increase would be considered." (I have no idea what that actually means.) Allen Brown gives a single word answer: "NO". Point goes to Allen Brown.
Gateway Pacific Terminal
Bob Burr says, "Absolutely" the city should do more to oppose the GPT because it "would be disastrous to our City." Roxanne Murphy is more nuanced in her opinion, but still says, "I’m opposed to the Gateway Pacific Terminal as a Lettered Streets resident who lives near the railroad tracks..." Allen Brown says no, the city should not do more to oppose the GPT because public opinion is split. He also says, "As long as the project meets current environmental and safety regulations, we cannot obstruct." Point to Allen Brown.
Conclusion: Vote for Allen Brown
Allen Brown opposes tax increases and at the very least doesn't want the city to oppose the GPT. Both Murphy and Burr are open to tax increases and both want the city to take a stand againsts the GPT. The choice is clear--I'm voting for Allen Brown.
Bellingham School District Director
There are three candidates for Director #4, but Hue Beattie doesn't seem to have any kind of web presence and apparently did not respond to the voter guide questions. Having no idea what his positions are, I cannot vote for him.
John H. Blethen's campaign seems to be composed of opposing the closure of Larrabee Elementary and spouting slogans like "support the teachers" and "smaller class sizes." He also wants city government to have more control over the schools (I can't help but think that's a bad idea considering how city government handles everything else), and would consider raising local taxes if the state cuts the budget. Steven Smith is the incumbent and voted to close Larrabee Elementary. I don't know whether that was the right decision or not, but he does oppose raising local taxes if the state cuts the budget.
Conclusion: Vote for Steven Smith
This is a tough one, partly because there's so little information, but mostly because I don't usually pay attention to school board politics. A lot of the issues that separate the candidates may be important, but I don't know enough to judge. What I do know is that Smith opposes new taxes on me and has taken action as an incumbent to cut spending so that new taxes are not necessary. On the other hand, Blethen supports higher taxes for me and opposed Smith's action to cut spending. That's enough for me to cast my vote for Steven Smith.
Tuesday, April 2, 2013
I Was Wrong, part I
I believe it's important to admit when you were wrong. Now that the fiscal cliff and sequester are mostly behind us, I can say that I made a few predictions that proved to be wrong.
Immediately after Obama's reelection, I said,
Color me pleasantly surprised. Even a blog called Expected Optimism wasn't optimistic enough!
Immediately after Obama's reelection, I said,
"First of all, expect the fiscal cliff to stay in place. After all, we just re-elected most of the people who put it there to begin with. … Any compromise will include more tax hikes than spending cuts, if spending is actually cut at all."As it turned out, the fiscal cliff did not stay in place. The deal to avert the fiscal cliff included $250 billion in lower taxes compared to just $9 billion in higher spending, relative to what would have happened with no deal. At the time, I said,
"If you think that two month delay is a sign that the sequester will never happen anyway, I think you're right. It was never going to happen in the first place, and we lose nothing by delaying it."This was also wrong. Not only did the sequester actually come to pass, the continuing resolution recently passed by the Senate and House and signed by Obama also keeps it in place for the next six months. While the Senate budget for fiscal 2014 repeals the sequester, the House budget does not, leaving open the distinct possibility that the sequester's lower spending is here to stay.
Color me pleasantly surprised. Even a blog called Expected Optimism wasn't optimistic enough!
Tuesday, January 8, 2013
Fiscal Cliff Optimism
I'm not the only one who thinks the fiscal cliff deal was a good thing.
David Henderson begins his thoughts on the deal by saying, "Pssst: Someone tell the Republicans they won." Like me, Henderson compares the deal to what would have happened without it, rather than some ideal version that never would've passed the Senate. Henderson, however, goes into far more detail than I did.
Among the many negative responses to Henderson's post I've seen, only Bob Murphy seems to understand that it's the baseline that matters--that is, what would have happened without the deal (even though Murphy still disagrees with Henderson).
Yuval Levin at NRO (ht) approves of the deal for political strategy reasons. He says, "For liberals, this was not a moment of danger to be minimized but by far their best opportunity in a generation for increasing tax rates," and they got far less than they could have just by doing nothing and going over the cliff. "Having discovered an effective political wedge in the tax debate, the Democrats have now basically used it up and gotten awfully little in return."
Finally, if you're still not convinced that the deal was a good thing, take a look at the latest newsletter from the Socialist Equality Party. The self-described socialists hate the deal. In the opening paragraphs, the author echoes Levin's observations on political strategy. In the 7th paragraph, he gives a list of reasons to hate the deal that pretty closely mirrors Henderson's reasons for liking it. If it's that bad for the socialists, it has to be good for the rest of us.
David Henderson begins his thoughts on the deal by saying, "Pssst: Someone tell the Republicans they won." Like me, Henderson compares the deal to what would have happened without it, rather than some ideal version that never would've passed the Senate. Henderson, however, goes into far more detail than I did.
Among the many negative responses to Henderson's post I've seen, only Bob Murphy seems to understand that it's the baseline that matters--that is, what would have happened without the deal (even though Murphy still disagrees with Henderson).
Yuval Levin at NRO (ht) approves of the deal for political strategy reasons. He says, "For liberals, this was not a moment of danger to be minimized but by far their best opportunity in a generation for increasing tax rates," and they got far less than they could have just by doing nothing and going over the cliff. "Having discovered an effective political wedge in the tax debate, the Democrats have now basically used it up and gotten awfully little in return."
Finally, if you're still not convinced that the deal was a good thing, take a look at the latest newsletter from the Socialist Equality Party. The self-described socialists hate the deal. In the opening paragraphs, the author echoes Levin's observations on political strategy. In the 7th paragraph, he gives a list of reasons to hate the deal that pretty closely mirrors Henderson's reasons for liking it. If it's that bad for the socialists, it has to be good for the rest of us.
Thursday, January 3, 2013
The Fiscal Cliff and Opportunity Cost
I keep seeing conservative laments about the fiscal cliff deal, like this one, which sums up a bunch from Twitter. There are far too many to link to, but so far, every single one that I have seen has ignored the economic principle of opportunity cost.
Conservatives are upset that taxes are going up and spending won't be seriously cut. But when we look at the opportunity cost for this fiscal cliff deal, we can't just look at some pie-in-the-sky "deal" where the Democrats roll over and give conservatives everything we want. We have to look at the reality of what would have happened without the deal. And the reality is, without the deal, taxes would have gone up twice as much ($478 billion compared to $220 billion), and we would've seen a spending cut that's a measly 0.3% of federal outlays.
I know this isn't how the deal is being portrayed in the media, but these are the facts. Republicans gave the Democrats $9 billion in higher spending, and got $250 billion in lower taxes, compared to what would have happened without the deal. To me, that looks like a win.
A final note on the sequester: Most of the supposed sequester cuts would not have happened for years in the future anyway. If you believe future Congresses would have abided by the sequester, then you're in luck. The sequester is still going to happen, just two months later. If you think that two month delay is a sign that the sequester will never happen anyway, I think you're right. It was never going to happen in the first place, and we lose nothing by delaying it.
Conservatives are upset that taxes are going up and spending won't be seriously cut. But when we look at the opportunity cost for this fiscal cliff deal, we can't just look at some pie-in-the-sky "deal" where the Democrats roll over and give conservatives everything we want. We have to look at the reality of what would have happened without the deal. And the reality is, without the deal, taxes would have gone up twice as much ($478 billion compared to $220 billion), and we would've seen a spending cut that's a measly 0.3% of federal outlays.
I know this isn't how the deal is being portrayed in the media, but these are the facts. Republicans gave the Democrats $9 billion in higher spending, and got $250 billion in lower taxes, compared to what would have happened without the deal. To me, that looks like a win.
A final note on the sequester: Most of the supposed sequester cuts would not have happened for years in the future anyway. If you believe future Congresses would have abided by the sequester, then you're in luck. The sequester is still going to happen, just two months later. If you think that two month delay is a sign that the sequester will never happen anyway, I think you're right. It was never going to happen in the first place, and we lose nothing by delaying it.
Thursday, November 29, 2012
Taxes in the Fiscal Cliff
It is becoming increasingly clear that we are not going to make it into 2013 without tax increases. If we go over the fiscal cliff, taxes are going up, but Democrats have made clear that any negotiated deal would include increased taxes as well. Assuming we do go over the cliff, what would those taxes look like?
On the other hand, even if Congress does not reach a deal to avoid the cliff, I expect a minor deal to avoid the AMT. After all, Congress has enacted one-year patches to the AMT every year for more than a decade, under both Republican and Democratic Congresses, as well as under the split control we've seen since 2010. This year should be no different.
On the Bush tax cuts, Obama was reelected after campaigning to raise taxes on the wealthy. If no deal is reached, Obama gets his wish; the Bush cuts expire and taxes are raised on the wealthy (and everyone else). The Republicans really don't have any leverage on this issue, so I expect any deal would only keep the Bush cuts for those below some income level, probably $200k or $250k.
The real uncertainty is the payroll tax cut. Normally, I would expect Democrats to abhor the cut on the grounds that it undermines Social Security. Republicans should celebrate it, not only as a tax cut, but because it undermines a massive entrenched entitlement. And yet, in some sleight of hand I still haven't figured out, Obama got the Republicans to oppose (and Democrats to support) a tax cut on every worker in the country. Now that the election is over, will the parties stick to these flipped roles, or revert to their principles? Or will the payroll tax cut expire with no one paying attention?
What Republicans Should Do
Whatever happens with the rest of the fiscal cliff, the rich (and people who work for the rich) are going to get hosed. Obama will probably get his way on the Bush tax cuts, and many of the Obamacare taxes are also aimed at the rich. Health costs are also going to go up, but I think the smart insurance companies have already raised their rates to compensate. There may not be a noticeable increase in premiums because the increase has already happened.
Given this, Republicans need to refocus on what good they can still do. Taxes are going up, and with Obama's reelection, that was inevitable. But if Republicans are smart and tactful, they can still keep taxes low for most of us. Give Obama the tax hike on the rich, since that will happen even with no deal, but secure the payroll tax cut and the Bush cuts for the non-rich in exchange. Obama himself is campaigning for the latter, so this should be easy to do, if Republicans are willing to do it.
- New Obamacare taxes would come into effect.
- The Alternative Minimum Tax would return to full strength.
- The Bush tax cuts would expire.
- The payroll tax cut would expire.
On the other hand, even if Congress does not reach a deal to avoid the cliff, I expect a minor deal to avoid the AMT. After all, Congress has enacted one-year patches to the AMT every year for more than a decade, under both Republican and Democratic Congresses, as well as under the split control we've seen since 2010. This year should be no different.
On the Bush tax cuts, Obama was reelected after campaigning to raise taxes on the wealthy. If no deal is reached, Obama gets his wish; the Bush cuts expire and taxes are raised on the wealthy (and everyone else). The Republicans really don't have any leverage on this issue, so I expect any deal would only keep the Bush cuts for those below some income level, probably $200k or $250k.
The real uncertainty is the payroll tax cut. Normally, I would expect Democrats to abhor the cut on the grounds that it undermines Social Security. Republicans should celebrate it, not only as a tax cut, but because it undermines a massive entrenched entitlement. And yet, in some sleight of hand I still haven't figured out, Obama got the Republicans to oppose (and Democrats to support) a tax cut on every worker in the country. Now that the election is over, will the parties stick to these flipped roles, or revert to their principles? Or will the payroll tax cut expire with no one paying attention?
What Republicans Should Do
Whatever happens with the rest of the fiscal cliff, the rich (and people who work for the rich) are going to get hosed. Obama will probably get his way on the Bush tax cuts, and many of the Obamacare taxes are also aimed at the rich. Health costs are also going to go up, but I think the smart insurance companies have already raised their rates to compensate. There may not be a noticeable increase in premiums because the increase has already happened.
Given this, Republicans need to refocus on what good they can still do. Taxes are going up, and with Obama's reelection, that was inevitable. But if Republicans are smart and tactful, they can still keep taxes low for most of us. Give Obama the tax hike on the rich, since that will happen even with no deal, but secure the payroll tax cut and the Bush cuts for the non-rich in exchange. Obama himself is campaigning for the latter, so this should be easy to do, if Republicans are willing to do it.
Wednesday, November 7, 2012
Aftermath: Reflections on Obama's Re-election
Barack Obama has been re-elected President of the United States.
For starters, Gary Johnson was not a spoiler. While the results are still coming in, as of 11:30pm Pacific, there was not a single state won by Obama where Romney would have won even if every Johnson voter had voted for Romney instead.
Second, there is no mandate. While Obama won, he won with a far narrower lead in both the popular vote and the electoral college than he had in 2008. While Democrats increased their lead in the Senate, Republicans increased their lead in governorships, and the House is on track to be more or less the same as it was. This was very much a status quo election.
On the whole, will we be better or worse with Obama as president?
First of all, expect the fiscal cliff to stay in place. After all, we just re-elected most of the people who put it there to begin with. While I haven't spent too much time learning about the fiscal cliff, Wikipedia claims a 19.63% increase in revenue and a 0.25% decrease in spending, or a nearly 80-to-1 ratio of tax hikes to spending cuts. This will not end well-- and even if our new old government leaders manage to avoid the cliff, the re-elected Obama is in a prime position to extract concessions he was unable to before the election. Any compromise will include more tax hikes than spending cuts, if spending is actually cut at all.
Second, Obamacare will be implemented fully over the next few years. Expect the nation's health, freedom and balance sheet to all suffer. Although to be honest, I don't believe Romney would have done any better.
The national debt will continue to grow. If the fiscal cliff causes a second recession, expect more stimulus and bailouts, probably for Europe too. We may look back at $1.5 trillion deficits and laugh about how small they were. On the other hand, the same probably would've happened under Romney, considering his plan to index military spending to 4% of GDP.
On other long-term important issues, I don't expect Obama to do much of anything. He'll keep ignoring space (mercifully), Social Security will continue to stumble forward without reform, trade deals will be forgotten, immigration won't change. We'll mostly withdraw from Afghanistan on schedule, although the lack of attention the war gets these days means we'll probably keep troops there for the long haul, same as we've still got troops in Germany, Japan and Korea. On trade and Afghanistan, at least, Romney would have been even worse. While Romney may have avoided the fiscal cliff, his insistence to go after China on trade might have been just as bad for the economy.
The main difference between the two candidates in terms of our long-term welfare is this: With Obama's victory, 2016 will see another wide-open primary for Republicans, where we'll have another shot at nominating a true spokesperson for liberty. Had Romney won, we wouldn't get that chance until 2020. So hold onto your hats. It's gonna be a rough four years for liberty, but we made it through the last four. We'll make it this time, too.
For starters, Gary Johnson was not a spoiler. While the results are still coming in, as of 11:30pm Pacific, there was not a single state won by Obama where Romney would have won even if every Johnson voter had voted for Romney instead.
Second, there is no mandate. While Obama won, he won with a far narrower lead in both the popular vote and the electoral college than he had in 2008. While Democrats increased their lead in the Senate, Republicans increased their lead in governorships, and the House is on track to be more or less the same as it was. This was very much a status quo election.
On the whole, will we be better or worse with Obama as president?
First of all, expect the fiscal cliff to stay in place. After all, we just re-elected most of the people who put it there to begin with. While I haven't spent too much time learning about the fiscal cliff, Wikipedia claims a 19.63% increase in revenue and a 0.25% decrease in spending, or a nearly 80-to-1 ratio of tax hikes to spending cuts. This will not end well-- and even if our new old government leaders manage to avoid the cliff, the re-elected Obama is in a prime position to extract concessions he was unable to before the election. Any compromise will include more tax hikes than spending cuts, if spending is actually cut at all.
Second, Obamacare will be implemented fully over the next few years. Expect the nation's health, freedom and balance sheet to all suffer. Although to be honest, I don't believe Romney would have done any better.
The national debt will continue to grow. If the fiscal cliff causes a second recession, expect more stimulus and bailouts, probably for Europe too. We may look back at $1.5 trillion deficits and laugh about how small they were. On the other hand, the same probably would've happened under Romney, considering his plan to index military spending to 4% of GDP.
On other long-term important issues, I don't expect Obama to do much of anything. He'll keep ignoring space (mercifully), Social Security will continue to stumble forward without reform, trade deals will be forgotten, immigration won't change. We'll mostly withdraw from Afghanistan on schedule, although the lack of attention the war gets these days means we'll probably keep troops there for the long haul, same as we've still got troops in Germany, Japan and Korea. On trade and Afghanistan, at least, Romney would have been even worse. While Romney may have avoided the fiscal cliff, his insistence to go after China on trade might have been just as bad for the economy.
The main difference between the two candidates in terms of our long-term welfare is this: With Obama's victory, 2016 will see another wide-open primary for Republicans, where we'll have another shot at nominating a true spokesperson for liberty. Had Romney won, we wouldn't get that chance until 2020. So hold onto your hats. It's gonna be a rough four years for liberty, but we made it through the last four. We'll make it this time, too.
Tuesday, October 30, 2012
No on Two Local Issues
With exactly a week before my ballot has to be back in the
government's hands, I'm filling it out a bit faster now. So far I've voted yes
on I-1185, I-1240 and SJR-8221, approved R-74 and voted no on I-502, SJR-8223, A-1 and A-2. Below are two local issues, one for the Port of Bellingham and one for the City of Bellingham.
NO on Port of Bellingham, Proposition 1, Number of Port Commissioners
The Issue: There are currently three Port of Bellingham Commissioners; this proposition would raise that number to five.
My Position: While the official argument for Prop-1 speaks of increased representation, this smells to me like an attempt to pack the commission. I can find no clear evidence for or against my hypothesis, but it still smells like a fish to me. Plus, Washington's open meetings law applies to one-on-one meetings of a three-member commission; it does not apply to one-on-one meetings of a five-member commission. That smells even fishier. I will be voting NO on the Port's Prop-1.
NO on City of Bellingham, Proposition 1, Low-Income Housing Levy
The Issue: City Council wants to raise property taxes by $36 per $100,000 of assessed value to fund a program for low-income housing.
My Position: I will be voting no on this tax increase, for three reasons:
1) An increase in the property tax will increase rent, and I don't want my rent to go up.
2) Trying to make housing more affordable by raising taxes on housing is just plain stupid. As the official "Statement Against" says, "You don't make housing more affordable by making it more expensive."
3) The state and federal governments already provide low-income housing subsidies, as well as other programs for low-income people. Do we really need yet another level of government doing the same thing as the others?
NO on Port of Bellingham, Proposition 1, Number of Port Commissioners
The Issue: There are currently three Port of Bellingham Commissioners; this proposition would raise that number to five.
My Position: While the official argument for Prop-1 speaks of increased representation, this smells to me like an attempt to pack the commission. I can find no clear evidence for or against my hypothesis, but it still smells like a fish to me. Plus, Washington's open meetings law applies to one-on-one meetings of a three-member commission; it does not apply to one-on-one meetings of a five-member commission. That smells even fishier. I will be voting NO on the Port's Prop-1.
NO on City of Bellingham, Proposition 1, Low-Income Housing Levy
The Issue: City Council wants to raise property taxes by $36 per $100,000 of assessed value to fund a program for low-income housing.
My Position: I will be voting no on this tax increase, for three reasons:
1) An increase in the property tax will increase rent, and I don't want my rent to go up.
2) Trying to make housing more affordable by raising taxes on housing is just plain stupid. As the official "Statement Against" says, "You don't make housing more affordable by making it more expensive."
3) The state and federal governments already provide low-income housing subsidies, as well as other programs for low-income people. Do we really need yet another level of government doing the same thing as the others?
No on Three Minor Statewide Issues
With exactly a week before my ballot has to be back in the
government's hands, I'm filling it out a bit faster now. So far I've voted yes
on I-1185, I-1240 and SJR-8221, approved R-74 and voted no on I-502. Below are three minor statewide issues: SJR-8223 on public fund investments, plus two advisory votes.
NO on SJR-8223, Public Fund Investments
The Issue: In general, Washington state public funds are prohibited from investing in private stocks and bonds. Over time, a laundry list of exceptions has been added to the constitution, primarily allowing public trust funds and public pension funds to invest in private stocks and bonds. SJR-8223 would add the operating budgets of the University of Washington and Washington State University to the list of exceptions.
My Position: Using public funds to invest in private companies looks to me like a backdoor way to pick winners and losers with voters none-the-wiser. I think the general prohibition is a great idea, and that we should probably reduce the list of restrictions rather than increase it.
REPEAL A-1, B&O Tax Increase
The Issue: The Washington legislature raised B&O taxes on some financial institutions and lowered taxes for others, including manufacturers of agriculture products and newspapers, for a net 10-year tax increase of $24 million.
My Position: Tax increases in general are bad. This one in particular is worse. It raises taxes on a disfavored industry (finance) by $170 million, and mostly offsets it with cuts to favored industries (agriculture, newspapers). While this is only an advisory vote, I will vote to repeal to send a message against tax increases and against favors to certain industries over others.
REPEAL A-2, Petroleum Tax
The Issue: A tax on certain commercial petroleum products was set to expire, and the Washington legislature extended the expiration date for a 10-year tax increase of $24 million.
My Position: Once again, tax increases are bad. While A-2 is not as bad as A-1, I will still vote to repeal to send a message against tax increases.
NO on SJR-8223, Public Fund Investments
The Issue: In general, Washington state public funds are prohibited from investing in private stocks and bonds. Over time, a laundry list of exceptions has been added to the constitution, primarily allowing public trust funds and public pension funds to invest in private stocks and bonds. SJR-8223 would add the operating budgets of the University of Washington and Washington State University to the list of exceptions.
My Position: Using public funds to invest in private companies looks to me like a backdoor way to pick winners and losers with voters none-the-wiser. I think the general prohibition is a great idea, and that we should probably reduce the list of restrictions rather than increase it.
REPEAL A-1, B&O Tax Increase
The Issue: The Washington legislature raised B&O taxes on some financial institutions and lowered taxes for others, including manufacturers of agriculture products and newspapers, for a net 10-year tax increase of $24 million.
My Position: Tax increases in general are bad. This one in particular is worse. It raises taxes on a disfavored industry (finance) by $170 million, and mostly offsets it with cuts to favored industries (agriculture, newspapers). While this is only an advisory vote, I will vote to repeal to send a message against tax increases and against favors to certain industries over others.
REPEAL A-2, Petroleum Tax
The Issue: A tax on certain commercial petroleum products was set to expire, and the Washington legislature extended the expiration date for a 10-year tax increase of $24 million.
My Position: Once again, tax increases are bad. While A-2 is not as bad as A-1, I will still vote to repeal to send a message against tax increases.
No on I-502, Marijuana
With about a week before my ballot has to be back in the
government's hands, I'm filling it out bit by bit. So far I've voted yes
on both I-1185 and I-1240, and approved R-74.
I-502, Marijuana
The Issue: I-502 would make it legal under state law (but not federal law) to possess and sell marijuana under a system of strict regulations. Marijuana producers could not have any financial interest in marijuana retailers and vice versa. Licenses to produce, process or retail marijuana would cost $250 to apply plus $1000 per year per location, with samples regularly submitted to state labs for testing.
Furthermore, marijuana would be taxed at 25% at each level of production and distribution, prior to state and local B&O and sales taxes. At the legally-mandated minimum of two steps of production (producer -> retailer), state taxes on marijuana would be approximately 68%. Total tax, including the state average for local sales taxes, would be over 70%.
I-502 also establishes many alcohol-equivalent rules for marijuana use. For example, marijuana possession would remain illegal for those under 21, driving under the influence of marijuana would be illegal for everyone, open containers in public would be prohibited, etc. The pro-502 website is here. The official anti-502 website, which is pro-legalization, is here.
My Position: I don't fully buy the arguments supporting the drug war, but I also don't buy a lot of the arguments opposing it. My libertarian leanings run up against path dependency, and I remain agnostic on the drug war as a whole.
I am opposed to I-502 because it won't bring any of the benefits of legalization, yet will create a massive new state bureaucracy under the guise of legalization.
My Reasons:
1) I-502 will directly contradict federal law, under which marijuana production, distribution and possession will all remain illegal. If passed, the initiative is likely to be struck down entirely or in part in federal court. (The counterargument is that I-502 allows but does not require violations of federal law, so that it is not pre-empted and will not be struck down. However, I-502 does seem to require violations of federal law by state marijuana regulators, particularly the prohibitions on possession and distribution of marijuana. The feds may also consider it money laundering to accept funds raised from the marijuana tax.)
2) Even if I-502 is not struck down, the threat of federal prosecution for marijuana crimes will prevent the benefits of legalization from being realized. Licensed marijuana producers, processors and retailers will have their names, addresses and precise details of their businesses recorded in a state database. Any guesses on how long it takes that database to get into federal hands? Anyone who opens a marijuana business is betting big on that never happening. New producers will be discouraged from entering the market; existing producers will be discouraged from becoming licensed.
3) Furthermore, the regulatory system set up by I-502 will place legal marijuana sellers at a substantial disadvantage to illegal sellers. Legal marijuana sales will have a cumulative tax of at least 68%, and possibly more than 100% if the production and distribution chain contains more than two steps. Then there's the significant regulatory burden placed on legal sellers-- the fees they must pay to the government, or to third parties because of government requirements; the restrictions on where they can sell, where and how they can advertise, what other businesses they can be involved in; and all of it with the threat of federal prosecution still hanging over their heads. Again, new producers will be discouraged from entering the market, and existing producers will be discouraged from becoming licensed.
4) The existing (illegal) marijuana market is an international one, yet legal marijuana sellers under I-502 will be limited to Washington state, both in who they buy from and who they sell to. With the other disadvantages placed on legal sellers, they will never be able to compete with existing illegal sellers, and those illegal sellers have scant incentive to become legal.
Whatever benefits full legalization might provide, we won't see any of them under I-502. Meanwhile, the state will spend tens of millions of dollars setting up a bureaucracy to regulate a market that will likely fail to materialize.
I will be voting NO on I-502.
I-502, Marijuana
The Issue: I-502 would make it legal under state law (but not federal law) to possess and sell marijuana under a system of strict regulations. Marijuana producers could not have any financial interest in marijuana retailers and vice versa. Licenses to produce, process or retail marijuana would cost $250 to apply plus $1000 per year per location, with samples regularly submitted to state labs for testing.
Furthermore, marijuana would be taxed at 25% at each level of production and distribution, prior to state and local B&O and sales taxes. At the legally-mandated minimum of two steps of production (producer -> retailer), state taxes on marijuana would be approximately 68%. Total tax, including the state average for local sales taxes, would be over 70%.
I-502 also establishes many alcohol-equivalent rules for marijuana use. For example, marijuana possession would remain illegal for those under 21, driving under the influence of marijuana would be illegal for everyone, open containers in public would be prohibited, etc. The pro-502 website is here. The official anti-502 website, which is pro-legalization, is here.
My Position: I don't fully buy the arguments supporting the drug war, but I also don't buy a lot of the arguments opposing it. My libertarian leanings run up against path dependency, and I remain agnostic on the drug war as a whole.
I am opposed to I-502 because it won't bring any of the benefits of legalization, yet will create a massive new state bureaucracy under the guise of legalization.
My Reasons:
1) I-502 will directly contradict federal law, under which marijuana production, distribution and possession will all remain illegal. If passed, the initiative is likely to be struck down entirely or in part in federal court. (The counterargument is that I-502 allows but does not require violations of federal law, so that it is not pre-empted and will not be struck down. However, I-502 does seem to require violations of federal law by state marijuana regulators, particularly the prohibitions on possession and distribution of marijuana. The feds may also consider it money laundering to accept funds raised from the marijuana tax.)
2) Even if I-502 is not struck down, the threat of federal prosecution for marijuana crimes will prevent the benefits of legalization from being realized. Licensed marijuana producers, processors and retailers will have their names, addresses and precise details of their businesses recorded in a state database. Any guesses on how long it takes that database to get into federal hands? Anyone who opens a marijuana business is betting big on that never happening. New producers will be discouraged from entering the market; existing producers will be discouraged from becoming licensed.
3) Furthermore, the regulatory system set up by I-502 will place legal marijuana sellers at a substantial disadvantage to illegal sellers. Legal marijuana sales will have a cumulative tax of at least 68%, and possibly more than 100% if the production and distribution chain contains more than two steps. Then there's the significant regulatory burden placed on legal sellers-- the fees they must pay to the government, or to third parties because of government requirements; the restrictions on where they can sell, where and how they can advertise, what other businesses they can be involved in; and all of it with the threat of federal prosecution still hanging over their heads. Again, new producers will be discouraged from entering the market, and existing producers will be discouraged from becoming licensed.
4) The existing (illegal) marijuana market is an international one, yet legal marijuana sellers under I-502 will be limited to Washington state, both in who they buy from and who they sell to. With the other disadvantages placed on legal sellers, they will never be able to compete with existing illegal sellers, and those illegal sellers have scant incentive to become legal.
Whatever benefits full legalization might provide, we won't see any of them under I-502. Meanwhile, the state will spend tens of millions of dollars setting up a bureaucracy to regulate a market that will likely fail to materialize.
I will be voting NO on I-502.
Wednesday, October 24, 2012
Yes on I-1185, the Two-Thirds Tax Requirement
The election is upon us! In recent days I have received both the poorly-named, 143-page voters' "pamphlet" with sample ballot as well as my actual ballot. I have until 8pm on Election Day to get it back to the government, so it's time to do my homework. First up is an easy one:
I-1185, the Two-Thirds Tax Requirement
The Issue: Current law in Washington state requires tax increases to be passed with a two-thirds majority in both houses of the state legislature, or by a simple majority in a popular vote. This law has been passed four times by popular initiative, most recently in 2007 and 2010. It was overturned by the legislature upon losing initiative protection in 2010. I-1185 renews the law to prevent it from being overturned in 2013. The pro-1185 website is here; the anti-1185 website is here.
My Position: I wholeheartedly support I-1185, and indeed any law that provides a check on the government's ability to take my money at will. The two-thirds requirement makes it more likely that taxes will only be raised when it truly is necessary.
Counterarguments: There seem to be four main arguments against I-1185:
1) Taxes should be higher, and I-1185 makes it more difficult to raise them as high as they should be, negatively impacting government services. (Rebuttal: No, taxes should not be higher. Important services can be funded by cutting non-important spending. If everything the government is doing is so important that none of it can be cut, then it should be easy to get a two-thirds vote in the legislature or a simple majority popular vote.)
2) I-1185 is unfair because it allows tax cuts & loopholes to be passed with a simple majority, but reversing those cuts & loopholes requires a two-thirds majority. (Rebuttal: This is true, but I have to admit, I'm just fine with a system that's biased towards letting me keep more of my own money.)
3) A two-thirds requirement is undemocratic. (Rebuttal: I-1185 allows tax increases via direct, simply majority popular votes. Nothing could be more democratic than that.)
4) A two-thirds requirement is unconstitutional. (Rebuttal: I would certainly prefer a constitutional amendment that does what I-1185 does, but constitutional amendments must be proposed by the legislature, and wouldn't you know it, they don't seem to like amendments that limit their own power. If an initiative as beneficial as I-1185 actually is unconstitutional, that would be a failure of the state constitution, not the initiative.)
I will be voting YES on I-1185.
I-1185, the Two-Thirds Tax Requirement
The Issue: Current law in Washington state requires tax increases to be passed with a two-thirds majority in both houses of the state legislature, or by a simple majority in a popular vote. This law has been passed four times by popular initiative, most recently in 2007 and 2010. It was overturned by the legislature upon losing initiative protection in 2010. I-1185 renews the law to prevent it from being overturned in 2013. The pro-1185 website is here; the anti-1185 website is here.
My Position: I wholeheartedly support I-1185, and indeed any law that provides a check on the government's ability to take my money at will. The two-thirds requirement makes it more likely that taxes will only be raised when it truly is necessary.
Counterarguments: There seem to be four main arguments against I-1185:
1) Taxes should be higher, and I-1185 makes it more difficult to raise them as high as they should be, negatively impacting government services. (Rebuttal: No, taxes should not be higher. Important services can be funded by cutting non-important spending. If everything the government is doing is so important that none of it can be cut, then it should be easy to get a two-thirds vote in the legislature or a simple majority popular vote.)
2) I-1185 is unfair because it allows tax cuts & loopholes to be passed with a simple majority, but reversing those cuts & loopholes requires a two-thirds majority. (Rebuttal: This is true, but I have to admit, I'm just fine with a system that's biased towards letting me keep more of my own money.)
3) A two-thirds requirement is undemocratic. (Rebuttal: I-1185 allows tax increases via direct, simply majority popular votes. Nothing could be more democratic than that.)
4) A two-thirds requirement is unconstitutional. (Rebuttal: I would certainly prefer a constitutional amendment that does what I-1185 does, but constitutional amendments must be proposed by the legislature, and wouldn't you know it, they don't seem to like amendments that limit their own power. If an initiative as beneficial as I-1185 actually is unconstitutional, that would be a failure of the state constitution, not the initiative.)
I will be voting YES on I-1185.
Friday, June 8, 2012
Romney, Obama and the Big Diversion
Apparently, Romney's latest talking point is that Obama "knowingly" slowed the economic recovery by focusing on passing health care reform rather than improving the economy. Sigh. Never mind whether this is true or not. If you believe half the rhetoric that comes out of the Romney camp on what should be done about the economy, you should be happy that Obama set his sights on health care instead!
Look at what Obama did when he actually was focused on the economy. There were the auto and bank bailouts, then the $800 billion "stimulus" that ended up as mostly just a bailout for state and local governments. Then there was Cash for Clunkers. Once health care reform was done, there was Dodd-Frank, plus talk of a second stimulus that never got anywhere. And since 2010, Obama's economic plan has primarily consisted of taxing the rich and insisting the stimulus worked.
To be fair, part of that stimulus included tax cuts, and there is the payroll tax cut. I suppose it's possible that, if Obama had focused on the economy instead of health care, he would have passed more tax cuts instead of more spending, more bailouts, pushing Dodd-Frank through a few months earlier or even raising taxes. It's possible, sure, if you believe it. But the reality is, if Obama actually had focused on the economy more, we just would have seen more of the same policies that conservatives never wanted in the first place. If you believe conservative ideas are what the economy really needs to recover, you should be happy Obama got distracted by health care!
Is this a sign that Romney doesn't really believe conservative ideas are what the economy needs? Perhaps, but that's probably reading too much into it. More likely, Romney is just appealing to the old idea that government should just do something, no matter what it is, and that being seen to be doing something is more important than what you're actually doing. Romney sees an opportunity to attack Obama for looking like he didn't do enough, even though what he would have done would have made things worse. Hopefully Romney loses that old idea before he moves into the White House and starts to actually govern.
Look at what Obama did when he actually was focused on the economy. There were the auto and bank bailouts, then the $800 billion "stimulus" that ended up as mostly just a bailout for state and local governments. Then there was Cash for Clunkers. Once health care reform was done, there was Dodd-Frank, plus talk of a second stimulus that never got anywhere. And since 2010, Obama's economic plan has primarily consisted of taxing the rich and insisting the stimulus worked.
To be fair, part of that stimulus included tax cuts, and there is the payroll tax cut. I suppose it's possible that, if Obama had focused on the economy instead of health care, he would have passed more tax cuts instead of more spending, more bailouts, pushing Dodd-Frank through a few months earlier or even raising taxes. It's possible, sure, if you believe it. But the reality is, if Obama actually had focused on the economy more, we just would have seen more of the same policies that conservatives never wanted in the first place. If you believe conservative ideas are what the economy really needs to recover, you should be happy Obama got distracted by health care!
Is this a sign that Romney doesn't really believe conservative ideas are what the economy needs? Perhaps, but that's probably reading too much into it. More likely, Romney is just appealing to the old idea that government should just do something, no matter what it is, and that being seen to be doing something is more important than what you're actually doing. Romney sees an opportunity to attack Obama for looking like he didn't do enough, even though what he would have done would have made things worse. Hopefully Romney loses that old idea before he moves into the White House and starts to actually govern.
Monday, May 21, 2012
Gary Johnson on the Issues
Last Sunday, I wrapped up my series of posts on Mitt Romney's positions in the debates. Now it's time to look at Gary Johnson, who initially ran as a Republican but has now secured the nomination for the Libertarian Party. Since Johnson was only in two debates, the first and the sixth, there's simply not as much material as there was for Romney, who was in 19 debates. While Romney got five entries, Johnson only gets this one.
National Security
In the first debate, he said he would withdraw from Afghanistan "tomorrow," was against the war in Iraq from the beginning, and was also opposed to intervention in Libya (Syria was not yet an issue at the time). He is solidly against war, saying in the 6th debate, "The biggest threat to our national security is the fact that we're bankrupt." As part of his promise to balance the budget, he supports a 43% cut to military spending.
Immigration and Trade
He said in the first debate that there was "very little, if any benefit" to securing the border, and that freer immigration would create "tens of millions of jobs." On trade, he said, "I'm a free market guy... I don't favor tariffs of any kind, whatsoever." In the two debates, he was only able to address trade with one country, Cuba, which he supports, because he believes that trade encourages friendship.
Taxes and Spending
He supports the Fair Tax, a national sales tax that would replace the corporate and personal income taxes. On spending, he would balance the budget in his first year in office. Since he says current spending outpaces revenue by 43%, that's how much he wants to cut from all federal spending, including 43% each from the military, Medicare and Medicaid. To get it done, he would turn Medicare and Medicaid into block grants, veto any bill where expenditures exceeded revenue, completely eliminate the Department of Education and subject federal programs to cost-benefit analyses, then get rid of the ones that don't measure up.
The Economy
To get the economy growing again, he would restructure the tax code and greatly reduce federal spending as described above. He also sees freer immigration as a way to encourage "tens of millions" of new jobs. He would eliminate the federal minimum wage, and stop extending unemployment benefits.
Social Issues
He declined to describe himself as "pro-life," and said in the first debate that he supports abortion "up until viability." (While viability lacks a precise definition, that would allow abortions at least into the fifth month of pregnancy, and possibly later.) However, he opposes public funds for abortion, and favors parental notification and counseling. On drugs, he admits to having smoked marijuana, and supports legalization along with regulation and taxation of marijuana. While gay marriage didn't come up in the debates, on Twitter he often sells himself as the only candidate supporting "marriage equality" (at least, prior to Obama's recent conversion).
Ron Paul
When directly asked in the sixth debate what made him a better choice for libertarian Republicans than Ron Paul, Johnson said, "I'm not going to presume to make that assumption." When asked who his running mate would be if it had to be someone at the sixth debate, he said Ron Paul. On Twitter, many of his public tweets are also directed towards Ron Paul. While I haven't seen anything explicitly laying this out, I suspect he looks at Paul's age and wants to be the next Ron Paul once Paul himself leaves public life. It will be very interesting to see how much support Johnson gets from Paulites once Paul eventually quits the race.
National Security
In the first debate, he said he would withdraw from Afghanistan "tomorrow," was against the war in Iraq from the beginning, and was also opposed to intervention in Libya (Syria was not yet an issue at the time). He is solidly against war, saying in the 6th debate, "The biggest threat to our national security is the fact that we're bankrupt." As part of his promise to balance the budget, he supports a 43% cut to military spending.
Immigration and Trade
He said in the first debate that there was "very little, if any benefit" to securing the border, and that freer immigration would create "tens of millions of jobs." On trade, he said, "I'm a free market guy... I don't favor tariffs of any kind, whatsoever." In the two debates, he was only able to address trade with one country, Cuba, which he supports, because he believes that trade encourages friendship.
Taxes and Spending
He supports the Fair Tax, a national sales tax that would replace the corporate and personal income taxes. On spending, he would balance the budget in his first year in office. Since he says current spending outpaces revenue by 43%, that's how much he wants to cut from all federal spending, including 43% each from the military, Medicare and Medicaid. To get it done, he would turn Medicare and Medicaid into block grants, veto any bill where expenditures exceeded revenue, completely eliminate the Department of Education and subject federal programs to cost-benefit analyses, then get rid of the ones that don't measure up.
The Economy
To get the economy growing again, he would restructure the tax code and greatly reduce federal spending as described above. He also sees freer immigration as a way to encourage "tens of millions" of new jobs. He would eliminate the federal minimum wage, and stop extending unemployment benefits.
Social Issues
He declined to describe himself as "pro-life," and said in the first debate that he supports abortion "up until viability." (While viability lacks a precise definition, that would allow abortions at least into the fifth month of pregnancy, and possibly later.) However, he opposes public funds for abortion, and favors parental notification and counseling. On drugs, he admits to having smoked marijuana, and supports legalization along with regulation and taxation of marijuana. While gay marriage didn't come up in the debates, on Twitter he often sells himself as the only candidate supporting "marriage equality" (at least, prior to Obama's recent conversion).
Ron Paul
When directly asked in the sixth debate what made him a better choice for libertarian Republicans than Ron Paul, Johnson said, "I'm not going to presume to make that assumption." When asked who his running mate would be if it had to be someone at the sixth debate, he said Ron Paul. On Twitter, many of his public tweets are also directed towards Ron Paul. While I haven't seen anything explicitly laying this out, I suspect he looks at Paul's age and wants to be the next Ron Paul once Paul himself leaves public life. It will be very interesting to see how much support Johnson gets from Paulites once Paul eventually quits the race.
Tuesday, May 8, 2012
Mitt Romney on Economic Policy
This is the second in a series of entries revisiting Mitt Romney's policies as stated in the debates. The first covered foreign policy, including immigration, trade and defense, as well as policies toward some specific countries and regions. This entry covers Romney's seven-point plan for economic growth (which he outlined in whole or in part in the 3rd, 6th, 7th, 17th and 19th debates) and the connected policy areas.
1: Taxes
Romney's position on taxes changed from debate to debate. For example, in the 3rd debate, he said, "I don't believe in raising taxes" and indicated he would walk away from a deal with Democrats offering a 10:1 ratio of spending cuts to tax hikes. But in the 4th debate, he said taxes should be "part of the American experience," so he was not concerned about raising taxes on those who do not pay federal income taxes. In the 8th debate, in Nevada, he advocated a state-level redistribution tax tied to acceptance of a nuclear waste facility. The state that built the facility would receive the money while the other 49 would pay the tax.
In the 16th debate he said the top tax bracket should be 25%, while in the 20th debate, he wanted to cut all marginal rates by 20%. Taken at face value, that would turn the current tax brackets of 10%, 15%, 25%, 28%, 33% and 35% into brackets of 8%, 12%, 20%, 22.4%, 26.4% and 28% (assuming the Bush cuts are kept in place and the 2013 tax cliff is avoided), with two brackets higher than 25%.
He would cut the corporate tax rate to 25% to make it more competitive with other countries. When combined with state corporate taxes, this would move us from the highest rate to the 8th highest rate among the 34 OECD countries. He would also eliminate taxes on savings for people with incomes less than $200,000.
2: Regulations
He said he wants to improve the regulatory climate, and specifically mentioned Obamacare, Dodd-Frank and NLRB actions such as going after Boeing as regulations that are hurting businesses and preventing job creation.
He also wants to require every business to prove the legal immigration status of new hires through a national identification card connected to the federal E-Verify database. Any business that hires someone without the card or that accepts a counterfeit card would be "severely sanctioned."
3: Trade
I covered Romney's trade policy in the first entry in this series. It primarily consists of "cracking down on China," but he also advocated expanding our exports.
4: Energy
Romney said in the 8th debate, "We're an energy-rich nation that's acting like an energy-poor nation." He focuses on energy security-- getting our energy from domestic sources rather than importing them. In the 4th debate, he said he wanted to "make sure we stop sending about $500 billion a year outside our country, in many cases to nations that are not real friendly with ours." However, he does support the Keystone XL pipeline from Canada.
To accomplish his goal of increased domestic production, he wants to reduce regulations on energy companies, especially oil and gas. At the same time, he has criticized Obama for subsidies to Solyndra and other alternative energy programs, indicating a general laissez-faire approach to energy. On the other hand, in line with his focus on domestic energy sources, he said he was willing to accept more expensive gasoline if that was the result of the "crippling sanctions" he wanted to place on Iran.
5: Rule of Law
While Romney often spoke of the fifth point as reinstating the rule of law, his focus with this point early on was labor policy. He viewed pro-union actions by the Obama administration as violations of the rule of law, in particular citing the GM bankruptcy and the NLRB case against Boeing. Romney believes the auto companies should have gone through the normal legal bankruptcy process from the beginning, saying in the 2nd debate that the GM bankruptcy allowed Obama to "put his hands on the scales of justice." However, in the 20th debate, he indicated he would be willing to bail out the auto companies after they've gone through a normal bankruptcy process, saying, "If they need help coming out of bankruptcy, the government can provide guarantees and get them back on their feet. No way would we allow the auto industry in America to totally implode and disappear." (Note that these positions on the auto bailout have apparently already been Etch-a-Sketched.) He also supports a federal right-to-work law.
In later debates he broadened the "rule of law" point to an opposition of "crony capitalism," citing Solyndra and the rejection of the Keystone XL pipeline as examples. Since I think it's appropriate, I'll include here a few positions from even broader interpretation of "the rule of law."
Judicial Oversight: Romney does not want Congress to oversee judges directly in most cases, but he does believe Congress has the ability to "rein in excessive judges" (from the 13th debate) either through direct impeachment or by clarifying statutes or, of course, Constitutional amendment.
Extrajudicial Killings: In the 11th debate, he said there is "a different form of law" for those who "attack the United States" compared to those who merely commit crimes against American citizens. In the 10th, he said that anyone who joins a force we are at war with is "fair game" even if they are an American citizen. In the 16th debate, he said, "Let me tell you, people who join al Qaeda are not entitled to rights of due process under our normal legal code."
Indefinite Detention: In the 16th debate, he not only said he would have signed the NDAA, which authorized indefinite detention of American citizens, but also defended indefinite detention itself. He would have signed the NDAA not just as a flawed bill that would still get funding to the troops, but because he believes indefinite detention of American citizens is, in itself, a good policy.
Eminent Domain: In the 2nd debate, he said he believed in eminent domain for "a public purpose" but not for property that would end up going to private organizations.
SOPA: He opposed SOPA and considered opposition to SOPA to be "standing for freedom" in the 17th debate.
6: Education
In the 6th debate, he said, "We need to get the federal government out of education." He supports school choice and standardized testing. When accused by Perry of supporting Obama's Race to the Top program, which uses funding incentives to reward school systems for meeting certain goals, Romney said he did not support Race to the Top, but did support teacher evaluations and encouraging schools to hire better teachers and get rid of bad teachers. In the 20th debate, he supported No Child Left Behind because it stood up to the teachers unions and promoted school choice by establishing testing standards.
He also supports allowing illegal immigrant children to gain citizenship through military service, but not through attending college. He also frequently cited his policy requiring English immersion in Massachusetts schools as an example of how conservative he is.
7: Fiscal Responsibility
In general, Romney believes government should not spend more than it takes in. He frequently talked about the Cut, Cap and Balance plan-- cutting current spending, capping federal spending at 20% of GDP and thus balancing the budget through spending cuts rather than tax increases-- mentioning it in the 3rd, 5th, 7th, 10th and 20th debates.
He often cited repealing Obamacare as a way he would cut spending, but also complained that money was being cut from defense to pay for Obamacare, and that he wanted to spend the money on defense instead. As mentioned in the previous entry on Romney's positions on foreign policy, he wants to increase defense spending.
Other ways he proposed to cut spending include returning discretionary spending back to its 2008 level, cutting federal employment by 10% through attrition, linking public sector compensation to private sector wages, eliminating the National Endowment for the Arts, including public broadcasting, and block granting several programs, such as Medicaid, housing and food stamps, to the states. However, he would walk away from a deal with Democrats offering a 10:1 ratio of spending cuts to tax hikes.
He gave the impression that he would support spending-based stimulus, saying that the recovery was slow partly because we had "a stimulus plan that was not as well-directed as it should have been."
On Social Security, he said in the 4th debate, "Under no circumstances would I ever say, by any measure, it's a failure," because there are "tens of millions of Americans who live on Social Security." He made similar points again in the 5th and 6th debates. In the 16th debate, he said he would keep Social Security the way it is for those 55 and older. For the rest of us, he would apply two different inflation adjustments, a lower one for the rich and a higher one for everyone else. He would also raise the retirement age "a year or two," but for the most part would keep the system in place the way it is today.
Other Economic Policies
The Fed: He would not reappoint Bernanke, and believes the Fed should be less independent and have more Congressional oversight. But contrary to Ron Paul, he argued in the 5th debate that "we need to have a Fed… because if we don't have a Fed, who's going to run the currency, Congress?"
Housing: He wants to block grant federal housing programs to the states. In the 9th debate, he said we have a housing crisis because government was too involved in housing, and that when government is the problem, more government is not the solution. However, in the 18th debate, he added that he wanted to "help people see if they can't get more flexibility from their banks," although he didn't say how he would use government to make that happen.
Poverty: He wants a personal unemployment account system rather than the current unemployment benefits system. He wants most anti-poverty programs to be run at the state level through block grants, specifically mentioning food stamps, Medicaid and housing programs.
Pro-Market Quotes
In the 13th debate, asked what industries will create the most jobs in the next few years, he says, "The free market will decide that; government won't."
In the 17th debate, he said, "My view is, capitalism works. Free enterprise works."
Anti-Market Quotes
In the 18th debate, he said, "Markets have to have regulation to work-- you can't have everybody open up a bank in their garage."
In the 20th debate, he said, "That's the nature of what it is when you lead an organization or a state. You come to Congress and you say, these are the things we need."
1: Taxes
Romney's position on taxes changed from debate to debate. For example, in the 3rd debate, he said, "I don't believe in raising taxes" and indicated he would walk away from a deal with Democrats offering a 10:1 ratio of spending cuts to tax hikes. But in the 4th debate, he said taxes should be "part of the American experience," so he was not concerned about raising taxes on those who do not pay federal income taxes. In the 8th debate, in Nevada, he advocated a state-level redistribution tax tied to acceptance of a nuclear waste facility. The state that built the facility would receive the money while the other 49 would pay the tax.
In the 16th debate he said the top tax bracket should be 25%, while in the 20th debate, he wanted to cut all marginal rates by 20%. Taken at face value, that would turn the current tax brackets of 10%, 15%, 25%, 28%, 33% and 35% into brackets of 8%, 12%, 20%, 22.4%, 26.4% and 28% (assuming the Bush cuts are kept in place and the 2013 tax cliff is avoided), with two brackets higher than 25%.
He would cut the corporate tax rate to 25% to make it more competitive with other countries. When combined with state corporate taxes, this would move us from the highest rate to the 8th highest rate among the 34 OECD countries. He would also eliminate taxes on savings for people with incomes less than $200,000.
2: Regulations
He said he wants to improve the regulatory climate, and specifically mentioned Obamacare, Dodd-Frank and NLRB actions such as going after Boeing as regulations that are hurting businesses and preventing job creation.
He also wants to require every business to prove the legal immigration status of new hires through a national identification card connected to the federal E-Verify database. Any business that hires someone without the card or that accepts a counterfeit card would be "severely sanctioned."
3: Trade
I covered Romney's trade policy in the first entry in this series. It primarily consists of "cracking down on China," but he also advocated expanding our exports.
4: Energy
Romney said in the 8th debate, "We're an energy-rich nation that's acting like an energy-poor nation." He focuses on energy security-- getting our energy from domestic sources rather than importing them. In the 4th debate, he said he wanted to "make sure we stop sending about $500 billion a year outside our country, in many cases to nations that are not real friendly with ours." However, he does support the Keystone XL pipeline from Canada.
To accomplish his goal of increased domestic production, he wants to reduce regulations on energy companies, especially oil and gas. At the same time, he has criticized Obama for subsidies to Solyndra and other alternative energy programs, indicating a general laissez-faire approach to energy. On the other hand, in line with his focus on domestic energy sources, he said he was willing to accept more expensive gasoline if that was the result of the "crippling sanctions" he wanted to place on Iran.
5: Rule of Law
While Romney often spoke of the fifth point as reinstating the rule of law, his focus with this point early on was labor policy. He viewed pro-union actions by the Obama administration as violations of the rule of law, in particular citing the GM bankruptcy and the NLRB case against Boeing. Romney believes the auto companies should have gone through the normal legal bankruptcy process from the beginning, saying in the 2nd debate that the GM bankruptcy allowed Obama to "put his hands on the scales of justice." However, in the 20th debate, he indicated he would be willing to bail out the auto companies after they've gone through a normal bankruptcy process, saying, "If they need help coming out of bankruptcy, the government can provide guarantees and get them back on their feet. No way would we allow the auto industry in America to totally implode and disappear." (Note that these positions on the auto bailout have apparently already been Etch-a-Sketched.) He also supports a federal right-to-work law.
In later debates he broadened the "rule of law" point to an opposition of "crony capitalism," citing Solyndra and the rejection of the Keystone XL pipeline as examples. Since I think it's appropriate, I'll include here a few positions from even broader interpretation of "the rule of law."
Judicial Oversight: Romney does not want Congress to oversee judges directly in most cases, but he does believe Congress has the ability to "rein in excessive judges" (from the 13th debate) either through direct impeachment or by clarifying statutes or, of course, Constitutional amendment.
Extrajudicial Killings: In the 11th debate, he said there is "a different form of law" for those who "attack the United States" compared to those who merely commit crimes against American citizens. In the 10th, he said that anyone who joins a force we are at war with is "fair game" even if they are an American citizen. In the 16th debate, he said, "Let me tell you, people who join al Qaeda are not entitled to rights of due process under our normal legal code."
Indefinite Detention: In the 16th debate, he not only said he would have signed the NDAA, which authorized indefinite detention of American citizens, but also defended indefinite detention itself. He would have signed the NDAA not just as a flawed bill that would still get funding to the troops, but because he believes indefinite detention of American citizens is, in itself, a good policy.
Eminent Domain: In the 2nd debate, he said he believed in eminent domain for "a public purpose" but not for property that would end up going to private organizations.
SOPA: He opposed SOPA and considered opposition to SOPA to be "standing for freedom" in the 17th debate.
6: Education
In the 6th debate, he said, "We need to get the federal government out of education." He supports school choice and standardized testing. When accused by Perry of supporting Obama's Race to the Top program, which uses funding incentives to reward school systems for meeting certain goals, Romney said he did not support Race to the Top, but did support teacher evaluations and encouraging schools to hire better teachers and get rid of bad teachers. In the 20th debate, he supported No Child Left Behind because it stood up to the teachers unions and promoted school choice by establishing testing standards.
He also supports allowing illegal immigrant children to gain citizenship through military service, but not through attending college. He also frequently cited his policy requiring English immersion in Massachusetts schools as an example of how conservative he is.
7: Fiscal Responsibility
In general, Romney believes government should not spend more than it takes in. He frequently talked about the Cut, Cap and Balance plan-- cutting current spending, capping federal spending at 20% of GDP and thus balancing the budget through spending cuts rather than tax increases-- mentioning it in the 3rd, 5th, 7th, 10th and 20th debates.
He often cited repealing Obamacare as a way he would cut spending, but also complained that money was being cut from defense to pay for Obamacare, and that he wanted to spend the money on defense instead. As mentioned in the previous entry on Romney's positions on foreign policy, he wants to increase defense spending.
Other ways he proposed to cut spending include returning discretionary spending back to its 2008 level, cutting federal employment by 10% through attrition, linking public sector compensation to private sector wages, eliminating the National Endowment for the Arts, including public broadcasting, and block granting several programs, such as Medicaid, housing and food stamps, to the states. However, he would walk away from a deal with Democrats offering a 10:1 ratio of spending cuts to tax hikes.
He gave the impression that he would support spending-based stimulus, saying that the recovery was slow partly because we had "a stimulus plan that was not as well-directed as it should have been."
On Social Security, he said in the 4th debate, "Under no circumstances would I ever say, by any measure, it's a failure," because there are "tens of millions of Americans who live on Social Security." He made similar points again in the 5th and 6th debates. In the 16th debate, he said he would keep Social Security the way it is for those 55 and older. For the rest of us, he would apply two different inflation adjustments, a lower one for the rich and a higher one for everyone else. He would also raise the retirement age "a year or two," but for the most part would keep the system in place the way it is today.
Other Economic Policies
The Fed: He would not reappoint Bernanke, and believes the Fed should be less independent and have more Congressional oversight. But contrary to Ron Paul, he argued in the 5th debate that "we need to have a Fed… because if we don't have a Fed, who's going to run the currency, Congress?"
Housing: He wants to block grant federal housing programs to the states. In the 9th debate, he said we have a housing crisis because government was too involved in housing, and that when government is the problem, more government is not the solution. However, in the 18th debate, he added that he wanted to "help people see if they can't get more flexibility from their banks," although he didn't say how he would use government to make that happen.
Poverty: He wants a personal unemployment account system rather than the current unemployment benefits system. He wants most anti-poverty programs to be run at the state level through block grants, specifically mentioning food stamps, Medicaid and housing programs.
Pro-Market Quotes
In the 13th debate, asked what industries will create the most jobs in the next few years, he says, "The free market will decide that; government won't."
In the 17th debate, he said, "My view is, capitalism works. Free enterprise works."
Anti-Market Quotes
In the 18th debate, he said, "Markets have to have regulation to work-- you can't have everybody open up a bank in their garage."
In the 20th debate, he said, "That's the nature of what it is when you lead an organization or a state. You come to Congress and you say, these are the things we need."
Monday, February 20, 2012
Social Security and The Payroll Tax Cut
Last Friday, Congress passed another extension to the payroll tax cut. It looks like this one will last until the end of 2012, at least. This has always been an issue that seemed like a slam dunk to me, especially for conservatives and libertarians. We spend so much time saying taxes are too high, so when one of the most liberal Presidents in living memory actually wants to cut taxes, why would we ever say no? Nevertheless, many Republicans and even a few libertarians I admire have resisted this tax cut, allowing the media to paint this most recent extension as "handing President Barack Obama a major victory in this election year" (that's Reuters at the Yahoo link above).
Even though this isn't likely to come up again for another ten months or so, I left a comment on Coyote's post above, and I'd like to echo those ideas here. If taxes are too high, I think we should cut them any chance we can, because we don't get too many chances. But the main issue with the payroll tax cut, for me, is how it relates to Social Security reform.
The Personal Case for Reform
I'm young enough that two things are true for me when it comes to Social Security:
1) The Cliff. The program isn't going to be there for me when I retire, not without major cuts to benefits or major tax increases. The most relevant graph is on slide 15 of this CBO report, reproduced at right. Although revenues are projected to stay rather constant, outlays are already greater than revenues and are expected to grow even more. That is, they're expected to grow until the trust fund runs out in the late 2030s, and the "payable benefits" line has a dramatic cliff. Suffice it to say, my earliest-possible retirement date doesn't come until after that cliff.
There are some (relatively) minor changes that could be made to push that cliff back a few years, such as raising the retirement age, raising the tax rate, changing the cost-of-living adjustment calculation, means testing benefits, etc. We might even push it back a few decades, but this ignores that in 2008 (PDF), the cliff wasn't supposed to come until the late 2040s. In less than four years, the cliff is some fourteen years closer. Considering demographics, including the high probability of advances in life extension, pushing the cliff back will only be a temporary solution (and we may not succeed at pushing it back in the first place).
2) There is still hope. If we do manage to enact meaningful reform (meaning some kind of personal accounts that move us away from pay-as-you-go), my retirement is far enough in the future that I have time to save up enough for my own retirement within the new system.
For these reasons, I personally hope that we switch to something like the Chilean model as soon as possible.
The Societal Case for Reform
Obviously, not everyone will be persuaded to do what is best for me alone, but I also believe that this is the best approach for the rest of society as well. The two facts above are even more true for everyone younger than me, and they are also mostly true for those a few years older than me. On the other hand, no serious proposed Social Security reform touches those who are already on benefits, and most don't change the program at all for those 55 or older, so those two groups won't see any difference anyway.
Those who stand to lose the most from immediate reform are therefore those in the 40-55 age range. However, given probable medical advances in the coming decades, those who are now in their 40s and 50s can likely expect to live to their 80s, 90s or beyond. They will live past the approaching cliff, and will have to deal with the same cuts in benefits that I would. The difference is that, unlike me, they might be able to push the cliff past their own deaths with only minor reforms.
The Payroll Tax Cut
The Social Security trust fund is held in Treasury securities. Like all Treasury securities, when the securities in the trust fund are redeemed, they are paid for from the general fund. Since the Social Security Administration is now running on a deficit, redeeming the Treasury securities it holds, Social Security benefits are already being paid for, in part, by the general fund. That general fund comes from all the other taxes we pay. The Social Security trust fund is real, but it is funded through general tax dollars, not through some special pile of cash we've kept separate from the rest of the economy somehow
This is a marvelous accounting gimmick. Indeed, from my view, the biggest argument against Social Security reform today is the false idea that nothing is wrong because we have the trust fund. Therefore, anything we can do to dispel this idea will be useful in achieving real reform early enough to make a difference for people like me.
How do we dispel this false idea? Well, education, partly through blog posts like this, is one way to do it. But a more effective way is to erase the accounting gimmick itself-- that is, draw down the trust fund until no one is able to ignore that coming cliff. The payroll tax cut accomplishes exactly that. If we keep the tax cut in place, Social Security runs a larger annual deficit, and has to draw down the trust fund faster than planned. The sooner we draw down the trust fund, the sooner we'll see real reform.
With the payroll tax cut, we're more likely to see real Social Security reform sooner. Add to that the libertarian-minded benefit of cutting any tax and the economics-minded benefit of giving every worker a little extra take-home pay, and, as I see it, extending the payroll tax cut is a clear victory for the good guys.
Even though this isn't likely to come up again for another ten months or so, I left a comment on Coyote's post above, and I'd like to echo those ideas here. If taxes are too high, I think we should cut them any chance we can, because we don't get too many chances. But the main issue with the payroll tax cut, for me, is how it relates to Social Security reform.
The Personal Case for Reform
I'm young enough that two things are true for me when it comes to Social Security:
There are some (relatively) minor changes that could be made to push that cliff back a few years, such as raising the retirement age, raising the tax rate, changing the cost-of-living adjustment calculation, means testing benefits, etc. We might even push it back a few decades, but this ignores that in 2008 (PDF), the cliff wasn't supposed to come until the late 2040s. In less than four years, the cliff is some fourteen years closer. Considering demographics, including the high probability of advances in life extension, pushing the cliff back will only be a temporary solution (and we may not succeed at pushing it back in the first place).
2) There is still hope. If we do manage to enact meaningful reform (meaning some kind of personal accounts that move us away from pay-as-you-go), my retirement is far enough in the future that I have time to save up enough for my own retirement within the new system.
For these reasons, I personally hope that we switch to something like the Chilean model as soon as possible.
The Societal Case for Reform
Obviously, not everyone will be persuaded to do what is best for me alone, but I also believe that this is the best approach for the rest of society as well. The two facts above are even more true for everyone younger than me, and they are also mostly true for those a few years older than me. On the other hand, no serious proposed Social Security reform touches those who are already on benefits, and most don't change the program at all for those 55 or older, so those two groups won't see any difference anyway.
Those who stand to lose the most from immediate reform are therefore those in the 40-55 age range. However, given probable medical advances in the coming decades, those who are now in their 40s and 50s can likely expect to live to their 80s, 90s or beyond. They will live past the approaching cliff, and will have to deal with the same cuts in benefits that I would. The difference is that, unlike me, they might be able to push the cliff past their own deaths with only minor reforms.
The Payroll Tax Cut
The Social Security trust fund is held in Treasury securities. Like all Treasury securities, when the securities in the trust fund are redeemed, they are paid for from the general fund. Since the Social Security Administration is now running on a deficit, redeeming the Treasury securities it holds, Social Security benefits are already being paid for, in part, by the general fund. That general fund comes from all the other taxes we pay. The Social Security trust fund is real, but it is funded through general tax dollars, not through some special pile of cash we've kept separate from the rest of the economy somehow
This is a marvelous accounting gimmick. Indeed, from my view, the biggest argument against Social Security reform today is the false idea that nothing is wrong because we have the trust fund. Therefore, anything we can do to dispel this idea will be useful in achieving real reform early enough to make a difference for people like me.
How do we dispel this false idea? Well, education, partly through blog posts like this, is one way to do it. But a more effective way is to erase the accounting gimmick itself-- that is, draw down the trust fund until no one is able to ignore that coming cliff. The payroll tax cut accomplishes exactly that. If we keep the tax cut in place, Social Security runs a larger annual deficit, and has to draw down the trust fund faster than planned. The sooner we draw down the trust fund, the sooner we'll see real reform.
With the payroll tax cut, we're more likely to see real Social Security reform sooner. Add to that the libertarian-minded benefit of cutting any tax and the economics-minded benefit of giving every worker a little extra take-home pay, and, as I see it, extending the payroll tax cut is a clear victory for the good guys.
Thursday, March 4, 2010
Repeal the Individual Health Insurance Tax
The number of uninsured in the United States is estimated by the Census to be around 47 million people. Many of them are only uninsured because they lost their job, and their health insurance was tied to that job. When someone gets sick, they're more likely to lose their job but are in much greater need of health insurance. It's remarkable that so many Americans take that risk of losing their insurance right when they need it the most. Even so, about 93% of Americans who have private health insurance have that insurance through their employer. Now why would they do that when it's such a risk?
It's actually pretty straightforward. Back in the 50s, the federal government began giving Americans a tax break for purchasing health insurance through their employer. Any income you spend on employer-based health insurance is exempt from the income tax. However, if you want to purchase an insurance plan not provided by your employer, you have to pay the full tax on that income. Depending on your tax bracket, for most people that's a 20-25% penalty fee just for wanting to buy insurance that won't disappear if you lose your job.
The solution? Just extend the tax break. If you spend any portion of your income on health care or health insurance, you are refunded all tax paid on that income.
How much of a difference would that make? For one thing, the tens of millions of people who are uninsured simply because they're between jobs would be able to afford insurance in the interim. That could be as much as one-third to one-half of the uninsured at any given time. It's not a silver bullet solution, but I think it's as close as you can get on an issue this complex. This one tiny change could cover at least a third of the uninsured. I think it's a great place to start.
So what would it cost? The biggest cost would be to the government in lost tax revenue, but even that is not very much. There's about 12 million Americans currently paying this tax. The average annual premium for one-person non-employer insurance is about $3,000, and the average marginal tax rate in the US is about 22%. [Sources: insurance, taxes] That works out to about $8 billion in tax revenue that the government would be giving up with this policy, or $26 per American. That's pocketchange to a government that's running deficits hundreds of times this amount.
So why isn't it being considered? Well, I don't know. Maybe someone reading this can provide a counterargument? It's worth noting that the only play this has gotten in the Democrats' plan has been suggestions to eliminate the tax break entirely, and tax the entire country on their health plans (but that's only to pay for the trillion-plus cost of the rest of the program). That would be much more devastating to the average American, although it would eliminate the incentive for employer-based insurance.
It's actually pretty straightforward. Back in the 50s, the federal government began giving Americans a tax break for purchasing health insurance through their employer. Any income you spend on employer-based health insurance is exempt from the income tax. However, if you want to purchase an insurance plan not provided by your employer, you have to pay the full tax on that income. Depending on your tax bracket, for most people that's a 20-25% penalty fee just for wanting to buy insurance that won't disappear if you lose your job.
The solution? Just extend the tax break. If you spend any portion of your income on health care or health insurance, you are refunded all tax paid on that income.
How much of a difference would that make? For one thing, the tens of millions of people who are uninsured simply because they're between jobs would be able to afford insurance in the interim. That could be as much as one-third to one-half of the uninsured at any given time. It's not a silver bullet solution, but I think it's as close as you can get on an issue this complex. This one tiny change could cover at least a third of the uninsured. I think it's a great place to start.
So what would it cost? The biggest cost would be to the government in lost tax revenue, but even that is not very much. There's about 12 million Americans currently paying this tax. The average annual premium for one-person non-employer insurance is about $3,000, and the average marginal tax rate in the US is about 22%. [Sources: insurance, taxes] That works out to about $8 billion in tax revenue that the government would be giving up with this policy, or $26 per American. That's pocketchange to a government that's running deficits hundreds of times this amount.
So why isn't it being considered? Well, I don't know. Maybe someone reading this can provide a counterargument? It's worth noting that the only play this has gotten in the Democrats' plan has been suggestions to eliminate the tax break entirely, and tax the entire country on their health plans (but that's only to pay for the trillion-plus cost of the rest of the program). That would be much more devastating to the average American, although it would eliminate the incentive for employer-based insurance.
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