distributional effects

In my previous post, I rather disparagingly wrote that "we want arguments with substance, but there are several reasons why we don't get them.  The first and most obvious is the increasing technicality of the problems."  I say disparagingly because clearly implied in the statement is the idea that most Americans would not understand even if the issue was engaged broadly.  A recent example played briefly on the news.  It was reported that the Tax Policy Center had just published a report that examined the Romney tax proposals and found that they favored those in the upper income brackets, and actually increased taxes for those in the middle and lower brackets.  The paper itself, entitled "The Distributional Effects of Base-Broadening Income Tax Reform," is quite technical, as one might imagine, it draws the following conclusion:  "This paper examines the tradeoffs among three competing goals that are inherent in a revenue- neutral income tax reform—maintaining tax revenues, ensuring a progressive tax system, and lowering marginal tax rates—drawing on the example of the tax policies advanced in presidential candidate Mitt Romney’s tax plan. Our major conclusion is that any revenue-neutral individual income tax change that incorporates the features Governor Romney has proposed would provide large tax cuts to high-income households, and increase the tax burdens on middle- and/or lower- income taxpayers."  


I will let those that are interested read the actual report (it can be found at www.taxpolicycenter.org) but I strongly suspect that those reporting on the report didn't actually read it.  Even had they read it, one suspects, they would not have been fully competent to examine with any sense of confidence the technical details of the report, and though I have read the report through, I have to say with some humility that I am not prepared to argue against the way in which the authors of the report -- Brown, Gale and Looney -- came to their major conclusion.  I do, however, understand the conclusion itself clearly enough, and one would suspect that it is bad news for Mr. Romney.  It plays rather directly into the principle stand of the Democrats -- that the Republicans, and American economic conservatism generally tend to play into the hands of the rich at the expense of those in the middle and lower ends of the income distribution.  Rather predictably the news media noted the report, noted that it played into Mr. Obama's hand, and out of fairness solicited comment from the Republicans.  Again, rather predictably, the Republicans questioned, not the report itself, but the bias of its authors and of the Tax Policy Center.  Within the Aristotelian schema, when confronted with a disconfirming and discomforting argument, one can attack the argument itself, its inherent consistency and accuracy, or one can attack the credibility of those advancing the argument.  By any measure, the latter is the easier course, and the road most traveled, but it really does nothing to advance "government by discussion," and it certainly won't lead to pragmatic solutions to on-going problems.  It does a good deal to deepen the predisposition divide.  Those predisposed to support Mr. Obama will credit the report, those predisposed to support Mitt Romney will chalk it up as another example of liberal bias, and we are no further down the road to a tax policy that makes sense for the problems confronting the American people today.  


Lest I be misinterpreted, and I am often misinterpreted, I am not advancing the sort of argument that would turn government over to technocrats.  To assume that the problems facing the American people are simply or only technical is to engage in utopian thinking, and the difficulty with utopian thinking, with any utopian thinking, is to assume that the solution to this problem, this particular problem, is the solution to all problems.  The particular problem will always exist in a context that is, as I have been suggesting all along, political and ultimately moral.  The argument advanced by the Tax Policy Center above, for example, was really an intellectual exercise, a thought experiment of sorts, because why would we assume "revenue neutrality" as a desirable goal in tax policy.  One could have tax cuts across the board, and the resulting loss of revenue would be acceptable because, ultimately, the intent is to reduce the size and scope of government.  If we reduce medicare, eliminate medicaid, privatize social security, abolish the department of education, and so on, there will be plenty of money left to sustain the department of defense.  The efficacy of dismantling the federal government in favor of state or private interests is one thing, the desirability of doing so another, and both are political decisions.  The effects of doing so will not be felt equally by all.  Some will benefit more than others, and ultimately politics and the resulting government are all about the distributional effects of policy.     

Orin Hatch

Of late, I have become interested (obsessed I hope is too strong a word) with American conservatism, in part because I simply can't believe that rational human beings could believe what they believe with such sincerity.  The Salt Lake Tribune recently published (June 29) an editorial by Senator Orin Hatch marking the Supreme Court decisions upholding the constitutionality of the so-called Obamacare.  It can be found at http://www.sltrib.com/sltrib/opinion/54397092-82/health-law-president-care.html.csp) so I won't repeat it entirely here, but it is representative of a style of argumentation that I find, well, distressing.  It piles assertion on top of assertion with nothing to warrant or evidence to support the arguments.

The opening paragraph is indicative.  It begins, "over two years again, I stood on the floor of the Senate and warned the president that he'd regret jamming his massive $2.6 trillion health spending bill through Congress on a party-line vote.  He'd regret his signature policy achievement that undermines personal liberty and the constitutional limits on the powers of the federal government."  There are so many implications here that one doesn't know where to begin unpacking them, but let me say first, OK, it presents a number of arguable assertions, one for which evidence could be found and should be found. One assertion is that the President would regret "jamming" the bill through congress on a "party line vote."  Jammed, of course, is a loaded verb, but we'll look the other way on that, but the implication, of course, is that there's something terribly wrong with "party-line votes," and that they are an object of regret as opposed to what?  More consensual votes across party lines.  It's convenient for Hatch to accuse the President of "party-line votes," in part because the Republican party has become famous for strict ideological alignment and refusing to compromise unless its a crises and the 11th hour -- famous enough that two moderate, but right leaning scholars felt it necessary to write a book about the ideological extremism of the Republican party and their insistence on "party line votes" .  Mann and Ornstein's title, It's Even Worse than it Looks: How the American Constitutional System Collided with the New Politics of Extremism, says it all.  Because they make the argument there, I won't make it here, and suffice it to point out the irony of Hatch's assertion later in the editorial that the President behaved "arrogantly -- ignoring or attacking th legitimate concerns of those who disagree with him."  At the very least, it seems, that ball bounces between two courts.

Another assertion is that the President would regret "his signature policy that undermines personal liberty and the constitutional limits on the powers of the federal government."  I think the President would agree that the health care law is his signature policy, but one implication of Hatch's statement, of course, is that the President considers it his signature policy, not because it extends health care to hundreds of thousands of uninsured Americans, but specifically because it "undermines personal liberty" and "limits on the powers of the federal government."  I suspect that the President's intention was more the former, and that he gave not one nano-second of thought to how he could "undermine personal liberty."  In fairness, Hatch is not making that claim, but rather a factual or descriptive claim -- that the health care law, regardless of its motivating intent, has the effect of "undermining personal liberty" and "the constitutional limits on the powers of the federal government."  Let me take each in turn.

On the first, it probably wouldn't surprise my one reader that I find the whole question of personal liberty fraught with difficulty, as did the founders and everyone since.  Short of no government, any government is an infringement on my personal liberty.  The restrictions on my "personal liberty" range from the ridiculous to the sublime, and there are altogether too many to list.  A big one, of course, is the governments imposition on my income, in the form of taxes, and the government has imposed a positive obligation, a positive responsibility on me.  Hatch does not say how the law is an infringement on my personal liberty, but I suspect he is referring to the individual mandate.  To suggest that the individual mandate is an infringement on my liberty is true, but trivial.  Of course it is.  So is the requirement that I drive on the right side of the road, that I throw my trash in the trash receptacle, that I pay my sales tax, that I refrain from smoking at the mall, shoplifting, killing my neighbors dog, or raping his wife.  The  question before us is not whether the individual mandate or other provisions of the law are an infringement on our liberty, but whether the infringement on our liberty, the mutual obligations it creates as a tax, is ethically and morally responsible.  A good deal of ingenuity goes into avoiding precisely those questions because we would have to decide, as human beings, what our obligations are to others in a civil and moral society, and as Americans we want to believe we have few if any obligations to provide others with anything, and certainly not something as expensive as health care.  As one wag famously yelled, referencing the uninsured, "let them die."

On the second, I am not a constitutional scholar, and so would not really want to comment in depth on the "constitutional limits on the powers of the federal government."  The Supreme Court, by definition, are constitutional scholars, so I am confused.  The editorial was occasioned, or so it would seem, by the Supreme Court decision.  A majority of the court decided that the law was constitutional, so again, by definition, it did not undermine the constitutional limits on the powers of the federal government.  That Scalia side-stepped the presented arguments, declaring the individual mandate a tax, strikes me as interesting, in part because I believe it to be a tax (and would have appreciated a more cogent argument from Scalia in that regard) and in part because I thought the "not-a-tax" argument on the part of the democrats was in some measure a misguided appeasement of conservative anit-tax sentiment.   It is misguided because the Republicans are not to be appeased.  That the Republican pundits were so outraged by his decision, that he had not voted with his appointed purpose along ideological (or rather party) lines and struck down the law, is deeply ironic.  The individual mandate itself was an appeasement of private insurance providers, which originated in a Republican health care proposal, and now that it is a "tax," of course, it is open to attack as a tax.  Hatch writes that "families earning under $250,000 a year will bear most of the burden of this tax," and factually he may well be correct, but what he doesn't say, and won't say, is that families earning under $250,000 already bear the greatest burden of taxation in this nation, and that every Republican tax proposal will exacerbate the disproportionate share of that burden while decreasing the services and security of middle America.          

Having said all that, the fundamental difficulty with Hatch's position, such as it is, comes in the last paragraph.  He writes, "before we can even undertake these much-needed reforms, we have to scrap ObamaCare and start over.  Then we can move forward with real, step-by-step reforms to give the American people the health care they deserve from the doctor they want at a price they can afford."  Even if I were to concede every point made by Hatch, and it would be difficult because there are few points to concede, my response to the last paragraph would need to be something along the order of "yes, and what would those step by step reforms be exactly?"  It is also deeply ironic that the Republican contender for the White House must repudiate his own step by step approach, the one he implemented as Governor, to appease his party base.  When Hatch tells us that "when Mitt Romney becomes president, he'll scrap it is in its entirety and move forward with common-sense health reforms the American people deserve," I suspect Mitt Romney will learn the lesson that Obama (and probably every occupant of the White House) has learned.  It is one thing to run for president, quite another thing to be president.

The occupant of the White House must make  positive proposals of the "do this" variety.  Any positive action is open to a wide-ranging critique, in part because any positive action will have greater consequences for some, lesser consequences for others, but it is unlikely any change within a domain as complex and as fraught with competing interests as health care will have positive consequences across the board -- not for any one individual, and certainly not for the larger society.  Anyone undertaking a change will encounter those who, to quote Hamilton in the first of the federalist papers, will "resist all changes which may hazard a diminution of the power, emolument, and consequence of the officers they hold" -- or in the current vernacular, those who will be negatively impacted by the change.  Mitt Romney, and those like Hatch who are his campaign minions, have it easy.  There is much in the health care proposal that can be critiqued, that has been critiqued, but to say that, "over two years later, this law is as unpopular as it was then," is to say virtually nothing unless one is willing to specify, unpopular with whom?  and why?  -- to say that what people "want is a different approach that addresses their number one concern: skyrocketing health care costs that are eating away at every family's pocketbook," is again to say virtually nothing unless one is willing to specify just what that different approach might entail and how it might be implemented.  

If Mitt becomes the occupant of the White House, and God forbid that he should, the one positive proposal is the repeal of the existing health care reforms.  That action too will be subject to a wide-ranging critique.  I am not entirely convinced that the number one concern among the American people are the "skyrocketing health care costs."  I would agree, however, that it might well be a signature concern among employers and employees who find themselves in a double bind.  As the costs of health care escalate, along with the costs of health care coverage, they must either diminish the amount of coverage for their employees or defer the escalating cost of that coverage to the employees or as is more often the case some combination of decreased coverage and increased cost to the employee.  There is, of course, another option.  The employer can continue coverage at the same level and accept diminished profits, but I would concede that, given the rapidly escalating costs, for many small to medium sized employers, to do so would mean no profit and ultimately no business.  So, for that faction, the "skyrocketing health care costs" are of concern, but even so that does not address the needs of those who are unemployed, those who are under-employed in contingent or part time positions, those who are of age and attending school full time -- the millions of Americans who are uninsured.  I suspect their number one concern is not the cost of health care, but their access to health care.  On the questionable assumption that we are a moral society, when the crises comes, we will not turn them away, and they will access the health care systems, but they do so in ways that are guaranteed to have  the greatest impact on the escalating health care costs.  It is, in every respect, a vicious cycle.

If the Obama health care reforms should be critiqued, and they should if we are to improve upon them, I would suggest that they are not enough Democratic health care reforms -- that they are too much step-by-step reforms of the sort advocated by Hatch -- that they are too much the RomneyCare compromises that attempt to rescue the increasingly dysfunctional relationship between private insurers and private employers and private providers.  The expansion of medicaid is a teeny-weeny step in the right direction, but on that point Hatch might be right, if altogether too hyperbolic, in that it is a "gun to the head of the states."  It simply substitutes the state for the employer and maintains the same employer-employee imbroglio, which is, I believe, at the core of the problem.  Hatch tells us that "before we can even under-take these much needed [entitlement] reforms, we have to scrap ObamaCare and start over."  Mitt Romney, as president, might well scrap his resurrected Massachusetts legacy of health care reform, but I doubt seriously that he will "start over."  Health care reform is fraught with difficulty, not least the money.  A good deal of money flows around and through health care, and I strongly suspect that those who benefit most from the status quo are those who are most likely to make the right kind of contribution to the Republican war chest. I don't want to pander to the same sorts of ad hominem arguments that rife within political rhetoric, so just saying, if one wants to know where the real resistance to health care reform originates, "follow the money."