Rortybomb

Why Is Spending Through the Tax Code Popular on the Right?

Apr 20, 2012Mike Konczal

Why is spending through the tax code popular on the Right?  Justin Wolfers and Betsy Stevenson have a Bloomberg editorial on tax expenditures that, beyond being a smart column on the topic, notes the distributional impact of these expenditures:

Why is spending through the tax code popular on the Right?  Justin Wolfers and Betsy Stevenson have a Bloomberg editorial on tax expenditures that, beyond being a smart column on the topic, notes the distributional impact of these expenditures:

The rich get such big subsidies for three reasons. First, they spend more on the things the tax system favors, such as homes and health care. Second, they are subject to higher tax rates, so they get more benefit from each dollar of deductions. Finally, they’re rich enough to take full advantage of their deductions. The poor typically have too little income to itemize, while many families in the upper middle class find themselves siphoned off into a separate tax system known as the alternative minimum tax, which allows fewer deductions.

They note that Grover Norquist and other conservatives tend to support tax expenditures.  Why is this?  One reason they give are various psychological biases - "It’s a tribute to our psychological biases that getting a subsidy through the tax system is treated so differently from receiving a government check or copping a fine."

Will Wilkinson at Democracy in America adds some additional reasons.  He argues that many on the right might think the following: "Tax deductions and credits are best understood as selective restraint, as selective acknowledgement of what is ours, on the part of a generally kleptomaniacal government."  He also notes that a lot of how people view this issue is tied up with how they view "giving and not taking" as equivalent actions.

I'd like to throw in another point to compliment these.  It's important to understand tax expenditures as a political project. This goes back quite some time on the Right with health care spending through the tax code - but let's focus on the Reagan era.  Conservatives think that tax expenditures help with privatization and their larger political projects.  Let's look at Heritage's Stuart Butler's 1985 article, released by Cato, titled: Privatization: A Strategy to Cut the Budget.  (Butler was writing this in a lot of venues, but the Cato one is online; we discussed this article recently here.) Butler is worried that President Reagan can't destroy the Welfare State.  He's shocked and appalled by the way that middle-class people rush to the defense of Social Security.  The outright assault isn't working.  What can conservatives do next?

They can use the tax code to create a private-sector welfare state to compete and ultimately win out against the government, removing the government from people's daily lives. Butler is concerned about "public sector coalitions" which are difficult to dislodge; why not create private sector ones?  Butler (my bold):

Complaining about public-spending coalitions achieves little more than high blood pressure. But developing methods to entice the public to choose a private rather than a public way of promoting their self-interest may achieve a great deal….But a distinction is drawn between government as a provider (implying that government should levy taxes and deliver services itself), and government as a facilitator (implying that it should encourage or require those services to he provided by the private sector). Privatization, in other words, means seeking to transfer programs into the private sector using the carrot of incentives, not the stick of aggregate cutbacks…
 
These privatization coalitions are the mirror image, so to speak, of the public-sector coalitions. And they are at the heart of the strategy to create a “privatization ratchet” to counter the federal ratchet. By providing a targeted benefit (such as a tax incentive or some regulatory relief) to those who demand or provide a private alternative to government, considerable rewards can be guaranteed to individuals within the coalition.  Members of that coalition can be expected to press for deeper incentives and to oppose any move to eliminate existing incentives…

Privatization thus turns conventional political dynamics on its head. Lobbying pressure develops for less taxation (if a tax incentive is given), and for private, not public, programs. Moreover, each legislative victory won by the coalition, however small, serves to strengthen it, thereby adding to its capacity to achieve furthen legislative concessions and a corresponding growth in the private program…tax incentives concentrate benefits on a small number of people and they act as the nucleus for the growth of privatization coalitions….Because tax incentives are so essential to a privatization campaign, supporters of the approach should be cautious in their support of tax simplification.

The battle here is between "government as a provider" and "government as facilitator."  Wolfers and Stevenson argue that the two are economically "identical."  Butler sees, I think correctly, that the two provide people with a very different experience of governance.  Since these actions are subsidized, the market is able to provide goods on better terms than they normally would; since they were ‘private’, they removed the linkage between people and the government.
 
And here the political gridlock that results from trying to deal with tax expenditures is a feature not a bug; they use Public Choice theory to note that this privatized welfare state has such concentrated gains and diffused losses that it would be very difficult for the government to try and make these benefits truly public again.  As a tax cut, they are stickier since those whose gains are so concentrated have so much to lose and will lobby accordingly (check out the home builders and the mortgage interest deduction, for starters).  Take one concrete example of a tax expenditure Butler walks through, the subsidization of IRAs being tax-free as a way of fighting Social Security, to see this hidden welfare state ratchet in action (my bold):
Social Security is a classic example of the federal ratchet in operation…Yet a minor provision in the 1981 tax act may eventually break up that coalition…By allowing all working Americans to open tax-deductible IRAs, Congress planted the seeds of a private alternative to Social Security…
 
It was not long after the passage of the 1981 act that banks and other financial institutions…began a massive campaign to encourage Americans to open retirement accounts. Soon after that, nonworking married women began to complain that limiting their deduction to just $250 was unfair and discriminatory (near beneficiaries). And politicians were quick to propose accommodating the near beneficiaries and increasing the standard IRA deduction. A privatization coalition was born.
 
The “tax loss” (as the Treasury puts it) of IRAs has vastly exceeded the original Reagan Administration projections. Yet repealing on reducing the deduction is already politically unthinkable—the coalition is too powerful and the privatization ratchet is in place….In short, the incentive has begun to divert the pressure of demand for a secure retirement income away from the publicly provided system (Social Security) and to the private alternative (IRAs)….From the budget-cutter’s point of view, the growing power of this IRA coalition offers the only real hope for spending reductions in Social Security, since the more Americans prefer IRAs as their primary pension vehicle, the weaker will become support for retaining Social Security in its present form.

For these conservative intellectuals, in order to slay the monsters of the New Deal and the Great Society they had to unleash an even more vicious beast - the political mess of our tax expenditure system.

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Price Point

New Deal Numerology: Romney's Returns

Apr 19, 2012Tim Price

This week's numbers: $40 billion; $400 billion; 13.9%; 22%; 200

$40 billion... is a sealed number. That’s the cost of the tax loopholes Mitt Romney has proposed closing. This plan will reduce the deficit like a man emptying a lake with a thimble.

$400 billion... is a deficient number. That’s the additional cost of the tax cuts Romney is proposing. Progressives might ask if that just makes things worse, but the answer would presumably be “For whom? Pass the caviar.”

This week's numbers: $40 billion; $400 billion; 13.9%; 22%; 200

$40 billion... is a sealed number. That’s the cost of the tax loopholes Mitt Romney has proposed closing. This plan will reduce the deficit like a man emptying a lake with a thimble.

$400 billion... is a deficient number. That’s the additional cost of the tax cuts Romney is proposing. Progressives might ask if that just makes things worse, but the answer would presumably be “For whom? Pass the caviar.”

13.9%... is an avoidant number. That was the effective tax rate Mitt Romney paid on $21.6 million in income in 2010. He also turned out to have $3 million in an unreported account in Switzerland, where the tax levels are just the right height.

22%... is a deal-making number. That was the effective tax rate FDR paid on $70,103 in income in 1935. Adjusted for inflation that would make him a millionaire today, or in Republican terms, a member of the struggling middle class.

200... is a meticulous number. That’s how many pages it took Romney to complete his 2010 tax return. He’s filed for a six-month extension this year because he hasn’t had time to finish working on the footnotes and bibliography. 

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The Win-Win Tax Reform Fantasy

Apr 17, 2012Mark Schmitt

Bipartisan dreams of raising revenues while lowering rates skirt the real problems in our tax code.

Bipartisan dreams of raising revenues while lowering rates skirt the real problems in our tax code.

With your taxes due today, the Buffett Rule blocked in the Senate, and the next fiscal showdown (during the lame duck congressional session between the election and the seating of the new Congress in January) coming into sight, the phrase “tax reform” is beginning to be heard throughout the land. For those of us who have been pushing for comprehensive tax reform for many years, this should be a beautiful, thrilling moment.

But count me worried, not thrilled. We seem to be approaching tax reform for all the wrong reasons, and politicians of both parties are possessed of some dangerous illusions about what tax reform can and can’t achieve.

The push for tax reform is not based, as it was in the mid-1980s, on a shared belief by a wide range of politicians that the tax code is inefficient, overcomplicated, and unfair. Rather, it’s based on the fact that something called “tax reform” seems to be the only way out of the box that politicians have put themselves in. Obama has boxed himself in by his promise not to let taxes go up on any household with taxable income under $250,000. The Republicans have limited themselves even further by refusing to discuss any tax increases at all. Some Republicans, just a few, are willing to consider something called “tax reform” if it increases “revenues” slightly without increasing “taxes,” that is, tax rates. The option of letting the Bush tax cuts expire is unacceptable even to most Democrats, because it would raise taxes for the middle class, while a deal on extending the middle-class cuts is unacceptable to the Republicans because it would raise taxes on the wealthy.

But as last summer’s debt limit deal expires at the end of the year, the only alternative to the brutal sequesters of defense and non-defense spending promised in the deal is some movement on revenues in order to facilitate a deal to cut spending. And all that is left is something called “tax reform.” In the current environment, tax reform is not a positive goal, built on a vision of a fairer and more efficient tax system. Instead, it seems to be just the only way out of a situation that should never have been created in the first place.

And all too many politicians, including many Republicans and a good many Democrats, are caught in a fantasy: that tax reform might be a “win-win,” in which rates can go down and revenues go up, simply by “broadening the base.” Tax reform often represents a fantasy of a common-sense middle ground between the parties, one they could embrace if they just understood how easy it would be. Here’s John Avlon, a self-identified centrist and advocate for bipartisan solutions, on CNN last month: Tax reform is “the Bowles-Simpson idea. You can lower rates, close loopholes, and raise revenue. That should be a win- win. Only in Washington is that not a win-win.”

In fact, the idea of a win-win is all too appealing in Washington. Lowering rates, closing the loopholes (also known as “broadening the base”), and raising more revenue is the idea that most Democrats, and a few Republicans -- including, without details, House Budget Chair Paul Ryan -- have latched onto. But to call it a win-win is deeply misleading.

It’s useful to compare our situation with the circumstances of the mid-1980s, when the legendary bipartisan tax reform of 1986 was passed. At that time, tax rates were actually high (the nominal top rate was 70 percent) and the loopholes were many and insane. The top tax rates were effectively meaningless. The biggest loophole involved the deductibility of passive losses – investments in which the taxpayer didn’t actually take a risk. Even then, there were losers, particularly the oil- and gas-producing sectors, that relied on passive investment, and the powerful members of Congress who represented them. And even in that legendary win-win, only two of the three big goals were achieved. Rates were lowered. Loopholes closed. (Leaving many rich people better off, on net.) But revenues were not raised, because the goal of tax reform at the time was to separate it from arguments about raising or cutting taxes by making it revenue-neutral.

If all three goals couldn’t be achieved in 1986, that’s even more true in today’s very different circumstances. Today rates are very low by historic standards (not quite as low as the 28 percent achieved in the cleaned-up system of 1986, but that was unsustainable), and loopholes are many – but many of them reach the middle class. We can broaden the base, but if we do so in the context of long-term deficit reduction, the revenues will have to go to that purpose first.

And even doing that would require going far, far beyond the loopholes that President Obama has talked about (deductibility of expenses for private planes) and that Mitt Romney hinted he might close, in an overheard speech at a fundraiser, such as the deductibility of mortgage interest for second homes. (Or, in his case, third and fourth homes as well.) Neither of those are in the top 12 list of tax expenditures (the more formal term for loopholes, or spending through the tax code) maintained by the Tax Policy Center. To have any real impact on either revenues or tax rates, Congress would have to be willing to consider the big ones: the tax deduction for mortgage interest on high-end houses, the deduction for employer-paid health insurance (which would be far more disruptive than the Affordable Care Act), charitable contributions, or the special rate for capital gains. Much of the complexity of the tax code is now at the low end, in the myriad of credits that are partially refundable, such as the Child Tax Credit. While these should be simplified, the goal of doing so shouldn’t be to raise revenue, since it would mean raising taxes on lower-income workers.

What we need is not tax reform, but revenue reform – a system that is not only fair and efficient, but brings in adequate revenues to support, over the fairly long term, the services we want government to provide. Nothing on the table right now – not the Buffett Rule in either its specific form (a version of the Alternative Minimum Tax for those earning more than $1 million) or the general principle, nor anything in Paul Ryan’s budget – constitutes anything like revenue reform. And when we do see real revenue reform, it won’t be a “win-win” for everyone. It will have to mean that those who have been the big winners in tax policy for the last 30 years will have to pay a bit more.

Mark Schmitt is a Senior Fellow and Director of the Fellows Program at the Roosevelt Institute.

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Rortybomb

How Can Herbert Spencer's 1892 Revisions to his Social Statics Help Us Understand Conservative Opposition to the Individual Mandate?

Apr 16, 2012Mike Konczal

What should liberal wonks make of the conservative movement's abandonment of center-right policy innovations like the individual mandate and cap-and-trade once President Obama took them up?

What should liberal wonks make of the conservative movement's abandonment of center-right policy innovations like the individual mandate and cap-and-trade once President Obama took them up? To answer this, it might be useful to look at revisions made to the 1892 edition of Herbert Spencer's classic 19th century handbook of laissez-faire, Social Statics or The Conditions essential to Happiness specified, and the First of them Developed.  That's the book Oliver Wendell Holmes alluded to when dissenting in Lochner, famously saying, "The Fourteenth Amendment does not enact Mr. Herbert Spencer's Social Statics."

I

Herbert Spencer's name bounced around the internet while I was on vacation after President Obama referred to Paul Ryan's budget as “thinly-veiled Social Darwinism.” Damon Root at Reason wrote that that it's unfortunate that Spencer is smeared as a monster when he was a proponent of free markets, a defender of private charity, and had "pioneering support for feminism and women’s equality."

The feminism, women's equality, and women's suffrage points are correct. In his book Social Statics, originally written in 1851 and with the following taken from the 1888 reprint, Spencer had chapter 16 titled "The Rights of Women," which opens, "Equity knows no difference of sex." Spencer thought dominion of man over women in the household was a form of feudalism, something he believed his evolutionary thought was there to bury: "in as far as our laws and customs violate the rights of humanity by giving the richer classes power over the poorer, in so far do they similarly violate those rights by giving the stronger sex power over the weaker."

Spencer embraced the worry of critics that giving women some rights would inevitably lead to demands for suffrage: "The extension of the law of equal freedom to both sexes will doubtless be objected to, on the ground that the political privileges exercised by men must thereby be ceded to women also. Of course they must; and why not?" He concludes, "it has been shown that the rights of women must stand or fall with those of men; derived as they are from the same authority; involved in the same axiom; demonstrated by the same argument."

He was a serious defender of women's rights... until it looked like women might actually start getting rights. He then suddenly became very concerned about equality between the genders. The revolutionary language and political equality above was removed from the 1892 edition of Social Statics.

And Spencer had changed his position much earlier. In August 1867, when John Stuart Mill asked Spencer to join the Women's Suffrage Society, he declined, saying that there had been a "modification" of his views. The same year, Spencer also declined Mill's request, on behalf of his step-daughter Helen Taylor, that "The Rights of Women" from Social Statics (the essay that Root linked to in his post) be included in a collection of essays she was putting together. When Mill sent him a copy of The Subjection of Women, Spencer replied that someone should write an essay called The Supremacy of Women, about how women nag men and that gives them a lot of hidden power. (Mill responded, "two contradictory tyrannies do not make liberty.")

People change their minds all the time. But the reasons Spencer gave weren't impressive. One argument was that women don't share in military service, thus they shouldn't share political rights. Given how important it was to Spencer that his arguments be rigorous and hang together logically from his system of authority, axioms, and arguments, this reversal is so underdeveloped many argue it resulted from his lack of luck with romance and women.

But I think it's clear what his real objection was: universal suffrage has the potential to advance socialistic causes, interfering with his laissez-faire project. From his autobiography: "Another extension of the franchise since made...will inevitably be followed by a still more rapid growth of socialistic legislation." When he realized women's equality could potentially interfere with laissez-faire economics, it was time for women's equality to get cut from his overall theory of a better world. He would rather mutilate his intellectual project instead of allowing his enemies to continue to build their governance project.

II

Because Spencer was an ardent defender of laissez-faire. He thought evolution would bring about less government, he attacked the idea that government regulations "will work as it is intended to work, which it never does," he believed in a Right To Ignore The State, and, of course, he believed that private property in land was a joke and that all land should be nationalized and run like "a joint-stock company" by the State. His belief that the injustice of private property in land fell so naturally out of his rigorous theory of laissez-faire that he titled Chapter 9 of Social Statics "The Right To Uses of the Earth," which argued that "to deprive others of their rights to the use of the earth, is to commit a crime inferior only in wickedness to the crime of taking away their lives or personal liberties."

What's that you say? How could a laissez-faire person like Spencer be against private property in land? Spencer:

For if each of them “has freedom to do all that he wills provided he infringes not the equal freedom of any other,” then each of them is free to use the earth for the satisfaction of his wants, provided he allows all others the same liberty... Equity, therefore, does not permit property in land...

For if one portion of the earth’s surface may justly become the possession of an individual...eventually the whole of the earth’s surface may be so held...the rest of its inhabitants can then exercise their faculties—can then exist even—only by consent of the landowners; it is manifest, that an exclusive possession of the soil necessitates an infringement of the law of equal freedom. For, men who cannot “live and move and have their being” without the leave of others, cannot be equally free with those others.

Separate ownerships would merge into the joint-stock ownership of the public. Instead of being in the possession of individuals, the country would be he held by the great corporate body—Society. Instead of leasing his acres from an isolated proprietor, the farmer would lease them from the nation... A state of things so ordered would be in perfect harmony with the moral law.

This was a crucial part of Spencer's thinking... until it wasn't. In the 1892 edition of Social Statics, the entire chapter on land reform is gone. Spencer suddenly thought that his policy had some serious problems right around the time land reformers were making progress.

The equivalent of the late 19th century wonk blogosphere sprang into action to figure this out. Alfred Wallace, who you may know as the person who discovered evolution by natural selection separately from Darwin, was the president and founder of the Land Nationalization Society. He dedicated his 1892 presidential address to Spencer, noting that reading Social Statics in 1853 made him found the Society, and tried to clarify why Spencer's new policy was incorrect, both as they related to his overall theory and the practical reality of the policy itself. Clearly he just made a mistake.

Henry George wrote A Perplexed Philosopher, a large critique of Spencer's new opinion. George noted that Spencer took the brave and daring step of siding with the wealthy, landed aristocracy in his new policy. In the conclusion, George refers to the about-face as an act of "intellectual prostitution." Clearly he was bought off.

Spencer had always been under attack for that chapter of his book. The Economist magazine, god bless 'em, praised the laissez-faire parts of the original Social Statics but went after the land reform parts at length in its 1851 review. The conservative press, and well as laissez-faire organizational groups like the "Liberty and Property Defence League," were constantly attacking Spencer on the land question because they saw reformers do the "even Herbert Spencer agrees...." thing. Clearly he realized what the correct argument was all along.

But what if it is the same situation as women's suffrage? What if he saw, correctly, that this piece of his theory was emboldening his enemies in the progressive, socialist, and reform movements? Even though he agreed with them in principle, to see democratic challenges from below succeed would both show that the other side can deliver on its projects and would threaten the laissez-faire economy he wanted to build.

What's both fascinating and sad about the process is that, in order to defeat even the potential of his enemies gaining a policy priority he believed in, he was willing to butcher his elaborate theory of the world so that it could protect the thing - the regressive, anti-evolutionary, feudal, unproductive, landed British aristocracy - he was hoping it would bury.

Two quick endnotes:

1. Here's a thought:  All property in land exists through the might of a barrel of a gun and the subsequent property documents are dripping with the blood from a sword. To try and cynically create a calculus that x years wipes y amount of the blood off the documents makes you as cupable as the person who pulled the trigger. The thought of a radical, Kenyan, anti-colonialist thinker? Nope, just Herbert Spencer in Social Statics, Chapter 9, Part 3:

It can never be pretended that the existing titles to such property are legitimate. Should any one think so, let him look in the chronicles. Violence, fraud, the prerogative of force, the claims of superior cunning—these are the sources to which those titles may be traced. The original deeds were written with the sword, rather than with the pen: not lawyers, but soldiers, were the conveyancers: blows were the current coin given in payment; and for seals, blood was used in preference to wax...

“But Time,” say some, “is a great legaliser. Immemorial possession must be taken to constitute a legitimate claim"...To do this, however, they must find satisfactory answers to such questions as—How long does it take for what was originally a wrong to grow into a right? At what rate per annum do invalid claims become valid?

2.  I'm currently reading Free Market Fairness by John Tomasi; here they are debating the theory at Cato Unbound. In order to explain the difference between classical liberals and high liberals like Rawls, Tomasi uses the thought experiment of how each would set the rules for a game of Monopoly. He does it in the book and he does it in this blog post. Classical liberals want equal rules for everyone in Monopoly and are okay with unequal starting money; High Liberals are concerned about inequalities in wealth, even after the game begins. And so on.

How would Herbert Spencer approach Monopoly, a game entirely about private property in land? The crucial part of the game isn't the issue of fairness between players on turn one, it's how fair the game is to people who start on turn 30. At that point, the productive capital (all the land cards) have been purchased. The turn 30 players would run around the board hoping not to be bankrupted. Maybe they'd pass go enough times to build enough wealth to buy some land, but most likely all their income would be siphoned off in rents by the turn one players. To use Spencer's phrase, the turn 30 players cannot “'live and move and have their being' without the leave of others" and thus "cannot be equally free with those others."

Spencer answered Tomasi's rules question when he anticipated the incrementalist types in the land reform movement who thought redistributing the land once and setting up some side rules would suffice (i.e. restart the Monopoly game) by noting "what becomes of all who are to be born next year? And what will be the fate of those whose fathers sell their estates and squander the proceeds? These portionless ones must constitute a class already described as having no right to a resting-place on earth—as living by the sufferance of their fellow men—as being practically serfs. And the existence of such a class is wholly at variance with the law of equal freedom."

So if you asked the young Herbert Spencer how to fairly set up the rules of Monopoly, he'd probably say "there are no fair rules to this game," flip the board over and walk away. Like a boss.

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A 99% White Party is Bad for Republicans -- and for America

Apr 13, 2012Tim Price

The conservative movement remains beholden to its racist fringe, and that has left progress at a standstill across the political spectrum.

The conservative movement remains beholden to its racist fringe, and that has left progress at a standstill across the political spectrum.

“If planning a trip to a beach or amusement park at some date, find out whether it is likely to be swamped with blacks on that date… Do not act the Good Samaritan to blacks in apparent distress, e.g., on the highway… In a pure meritocracy there would be very low proportions of blacks in cognitively demanding jobs.” These are just a few of the pearls of anti-wisdom offered by conservative pundit John Derbyshire in his instantly infamous essay, “The Talk: Nonblack Version.” Derbyshire’s employers at the National Review were quick to distance themselves from him and his racist manifesto, which was written as a response to the outcry over the hunting and killing of Trayvon Martin.

But as other commentators have pointed out, there’s more to this story. For one thing, “Derb” has been producing openly racist (and homophobic) material for years now without repercussion. So why did the premiere intellectual journal of American conservatives only disassociate itself from a bigot once the very last vestiges of plausible deniability had been stripped away? The answer lies in the fact that the conservative movement, while not racist in and of itself, is beholden to racists who support it. And in order to maintain their support, it appeases them either actively or through sins of omission in ways that alienate other potential supporters and create barriers to real progress on racial justice.

I want to be clear that conservatives are not inherently racists, just as progressives are not by default free of racism. While some conservative policies, such as restricting voting rights, cracking down on undocumented immigrants, and slashing the social safety net may have racially disparate outcomes in practice, there are intellectual and moral arguments for each of these that that have nothing to do with race. Sadly, Republicans often fail to make them because they’re busy sending more coded signals than a third base coach in order to appease the most reactionary elements of their base. And when taken in aggregate, it’s easy to see why minority groups perceive the conservative agenda as actively hostile toward their interests, even if that’s not the intent.

The uneasy alliance between high-minded conservative wonks and unreconstructed racists is a legacy of Richard Nixon’s Southern Strategy, which used civil rights as a wedge with white voters to turn the formerly Democratic “Solid South” into staunch Republican territory. But while that approach has continued to reap short-term rewards, it’s a bad bet in the long run. As Roosevelt Institute Fellow Dorian Warren has noted, “the Republican strategy is basically to be a white party and a white southern party. The time is ticking on that demographic in this country.” With the voting bloc of angry white conservatives from the old Confederacy giving way to the most diverse and progressive generation in history, Republicans risk political extinction if they can’t refurbish their image and adapt their policies accordingly. In this year’s Republican primaries, even states with the largest black populations have registered only 1 to 2 percent black voter participation. And despite the GOP’s hope that it could peel away minority voters who agree with them on social issues, Barack Obama enjoys approval ratings in the high 80s among black voters and retains strong support from Latinos when matched up against his Republican rivals. Yet the conservative base seems stubbornly resistant to change, and to quote Donald Rumsfeld, you go to war with the army you have, not the army you wish you had. Thus, even many moderate and mainstream conservatives are forced to politely clear their throats and look away from all but the most egregious examples of racism among their allies. Without them, they wouldn’t have the votes to win elections.

The right is clearly sensitive to this issue, or it wouldn’t be so bashful when the Derbyshires of the world let their fig leaves drop. But instead of addressing these internal tensions, it tries to turn the tables by accusing progressives of “playing the race card” (i.e. mentioning that racism exists). As Alex Pareene wryly noted, many conservatives seem to operate under the assumption that “accusations of racism are the new racism, and said accusations are invariably politically motivated.” This tendency has been on full display in the case of Trayvon Martin, from labeling President Obama a “race hustler” for extending his sympathies to Martin’s family to the Free-Beacon’s blunt headline, “Registered Dem Killed Trayvon.” Sure, George Zimmerman shot a 17-year-old boy to death, but the real question on everyone’s mind was who he voted for.

While these attempts to turn racism into a partisan issue might help to assuage some guilty consciences, the results are ultimately bad for both conservatives themselves and the country as a whole. The need to keep the racist fringe mollified means that once Republicans are in power, they inevitably set to work implementing discriminatory and divisive laws like the ones mentioned above – even, as my colleagues Bryce Covert and Mike Konczal have pointed out, when their electoral sales pitch is based on promises of fiscal discipline and economic recovery. This also has consequences for their attempts to broaden their base. It’s no shock that outreach toward Latinos has failed when 91 percent of them want progressive immigration reform like the DREAM Act yet it can barely garner single-digit support among congressional Republicans. And on a broader level, it’s impossible to seriously discuss or redress racial inequality and injustice if someone keeps changing the subject.

Some progressives might be tempted to say, “So what? Aren’t we trying to discredit conservatives anyway? Let’s just sit back and watch the train wreck.” But in truth, the inability of the conservative movement to escape the racist albatross around its neck is bad for progressives, too. If we’re to be measured by the quality of our opponents, what does it say about us if we win because the other guys got caught e-mailing each other Photoshops of Barack Obama as a witch doctor with a bone through his nose? There’s no reason for progressives to push ourselves to strengthen our arguments or develop bold new solutions to seemingly intractable problems unless there’s an equally powerful, credible, and clear-minded counter-force. Besides, in a two-party system, the other side is going to take the reins of power at least some of the time. When that happens, we want them to be people we can debate in good faith.

This sad state of affairs wasn’t inevitable. For a brief moment, Barack Obama’s victory in 2008 seemed to signal a sea change in America’s eternally fraught racial politics. The last, greatest barrier had been surmounted and a new generation, unburdened by the prejudices of the past, had risen to power, ready to tackle the big issues and debate the questions that really mattered. But the idea of Obama being a “post-racial” president soon degenerated into a punch line as many Republicans, terrified of the new president’s broad appeal, gave in to their darkest impulses. The most high-profile and embarrassing of these efforts was the attempt to cast doubt on Obama’s birth records, which culminated with Donald Trump beclowning himself by basing his entire presidential campaign around an easily debunked conspiracy theory. (Oddly, Trump was not asked to produce any documentation to explain what part of the planet Earth produces vividly orange people with gossamer hair.) Instead of putting the last nail in racism’s coffin, Obama’s historic triumph brought the cranks out of the woodwork, spooked by a premonition of their demise.

But all hope is not lost just because some conservatives continue to write clueless op-eds about how white privilege doesn’t exist because someone who may or may not have been black may or may not have stolen a bike. Even if electoral concerns make the right hesitant to repudiate and cut ties with its more retrograde allies for now, it remains a demographic reality, as Jonathan Chait has written, that the current conservative coalition must either change or die – and conservatives are nothing if not resilient. And if conservatives do manage to join the 21st century and start winning over minority groups, it will mean that elected Democrats will actually have to start working for their votes again. As Bryce Covert has written, “once we find ways to get our representatives to truly represent the diversity of our people, more Sarah Palins and Herman Cains will be a good sign. Progressives won’t have to vote for them, but we’ll know that they come with the territory of greater equality.” Once that happens, and once conservatives start proactively challenging racism in their ranks instead of shouting “I’m rubber; you’re glue!” when called on it, maybe we can finally have an adult conversation about race and move forward as a united country.

Tim Price is the Deputy Editor of Next New Deal.

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Rediscovering Government

Memo to Romney: America's Greatest Presidents All Used Government to Increase Prosperity

Apr 5, 2012David Woolner

As part of the How We Value Government series, a reminder that while America has benefited from the free market, we wouldn't be anywhere without the government playing a major role in the economy -- and our entire society.

As part of the How We Value Government series, a reminder that while America has benefited from the free market, we wouldn't be anywhere without the government playing a major role in the economy -- and our entire society.

In his Wisconsin primary victory speech, presidential aspirant Mitt Romney made some interesting observations about Franklin Roosevelt, Lyndon Johnson, and Abraham Lincoln. He seemed to indicate that he admires them, as they were what he termed "historically great" presidents. He then went on to chide the current president for having the audacity to think of himself in the same league as these three great former leaders. He described the coming presidential election at great length as a historic choice between what he termed a "government-centered society" and a "society led by free people and free enterprises."

In making these observations, Mr. Romney made no attempt to rectify the fundamental contradiction in his remarks. He either failed to see, or decided to conveniently ignore, the fact that the three "historically great" presidents (one Republican and two Democratic) he made reference to at the opening of his remarks all shared one thing in common: a fundamental belief in the positive use of government to help expand the economy and provide a greater degree of economic opportunity and social justice for all Americans -- not just those at the top of the income ladder.

It was President Lincoln, for example, who in 1862 signed such pieces of legislation as the Homestead Act, which issued 160 acres of Federal land west of the Mississippi River at little or no cost to any adult citizen who had not borne arms against the United States, provided they agreed to improve the land. He also signed the Morill Act, which donated 30,000 acres of federal land to a number of states and territories that could then be sold by the state to provide the revenue needed to fund public colleges and universities. The result was the establishment of over 60 "land-grant" colleges and universities across the country, including Cornell University, the Massachusetts Institute of Technology, and the University of Wisconsin at Madison (the very state in which Mr. Romney made his remarks about the evils of a "government-centered" society). The Homestead Act greatly accelerated the settlement of U.S. territory in the West and was a boon to the overall economy. The establishment of "land-grant" colleges and universities brought the dream of higher education to tens of thousands of low-income farmers and workers who had previously been denied that opportunity, which had untold benefits in science, technology, and the liberal arts.

Join the conversation about the Roosevelt Institute’s new initiative, Rediscovering Government, led by Senior Fellow Jeff Madrick.

FDR brought us the most comprehensive banking and financial reform in U.S. history. He established the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and a number of other important laws that restored confidence in the country's financial and banking sector not only among the American people, but also among the business community. In using government in this way, the Roosevelt administration laid the basis for the overall growth of the financial sector for decades to come. FDR also greatly expanded the country's economic infrastructure through a massive effort to update the country's antiquated roads, bridges, airports, and other facilities, all of which helped propel the expansion of the economy in the 1930s, '40s, '50s, and beyond. He also signed the National Labor Relations Act into law, which encouraged higher wages through the unionization of the workforce and, near the end of his life, pushed through the GI Bill, which allowed thousands of returning World War II veterans the chance to secure further job training or access to higher education. Both of those efforts helped make the post-1945 U.S. economy the envy of the world.

The Johnson administration gave us the Civil Rights and Voting Rights Act of 1964 and '65, which began the long, slow process of ending racial discrimination in America. It gave us Medicare and Medicaid to provide the elderly and low-income individuals with access to health care. Head Start and the Higher Education Act of 1965 helped low-income families secure a better education for their children. The Truth-in-Lending Act helped protect consumers from abusive lending practices. These and a host of other initiatives were designed to build a "Great Society" that would provide everyday Americans with a greater measure of social security and economic opportunity.

In short, all of these "historically great" presidents used government as a tool to improve the lives of working Americans through a host of important initiatives that not only helped render the United States a more just and equitable society, but also helped expand our economy by increasing the level of economic opportunity.

Ignoring all of this, Mr. Romney insists that it is only "free enterprise" and the "free enterprise system" that can lift people out of poverty, educate our kids, and build a strong middle class. He claims that this is the one true path to economic prosperity and as such says he is running for president because he wants to "restore to America the economic values of freedom and limited government that has made us the powerhouse of the world."

But in making this claim, Mr. Romney misreads our history. There is no question that the United States and the American people have benefited tremendously over the years from the fruits of the free enterprise system. But the notion that our government has not played a major part in this success story ignores the facts. Ask yourself where we might be today without the innovations of such institutions as MIT or Cornell University, if our banking system was not backed by the FDIC, or what sort of social security system we might have if we had turned over the Social Security Trust Fund to the private equity markets prior to the recent financial crisis. Also ask yourself if you really think the financial sector would be better off without the SEC or if it really is fair that Warren Buffett's secretary pays a higher rate of tax than her employer.

History teaches us that the true story of America is one of enlightened leadership in the creative use of government to unleash the creative energies of the American people. History also reminds us that the free market, left unchecked, can bring the country to financial ruin. Mr. Romney refuses to acknowledge this. Instead, he claims that President Obama is wrong to focus so much of his attention on finding government-led solutions to our current problems. Meanwhile, he mocks him for even attempting to aspire to the greatness of a Lincoln, Roosevelt, or Johnson -- the three of our presidents who, perhaps more than any others, understood that there are times when, as FDR put it, the American citizen, in seeking to rectify economic inequality and injustice, "could only appeal to the organized power of government."

David Woolner is a Senior Fellow and Hyde Park Resident Historian for the Roosevelt Institute. He is currently writing a book entitled Cordell Hull, Anthony Eden and the Search for Anglo-American Cooperation, 1933-1938.

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Ellen Chesler: Contraception Sparked an Economic Revolution for Women

Mar 26, 2012

Think that the controversy over birth control is a purely social issue? Think again. In last week's episode of "Fireside Chats" on Bloggingheads, Roosevelt Institute Senior Fellow Ellen Chesler and author and writer Michelle Goldberg discussed the economic impacts of birth control. "If you are a working woman in America today, government protection of your right to have contraception covered by your insurance carrier...is crticial to your economic well-being and the economic well-being of your family," Ellen says.

Think that the controversy over birth control is a purely social issue? Think again. In last week's episode of "Fireside Chats" on Bloggingheads, Roosevelt Institute Senior Fellow Ellen Chesler and author and writer Michelle Goldberg discussed the economic impacts of birth control. "If you are a working woman in America today, government protection of your right to have contraception covered by your insurance carrier...is crticial to your economic well-being and the economic well-being of your family," Ellen says.


As Ellen points out, women had worked before birth control became widely available, "but they worked episodically until the 1970s and '80s, early in their lives before marriage or once their children were grown." Then things began to change, and the change came rapidly. It was in the '80s, she notes, "relatively recently in history, that in the United States Census more women indentified as workers than homemakers." Now that's the predominant family model. Yet this revolution didn't happen all by itself. "Contraception is a sine qua non of this economic revolution," she says.

Check out the new special issue of The Nation, guest-edited by Roosevelt Institute Senior Fellow Jeff Madrick.

Now that the revolution is here, what is the outlook for the future? Ellen is optimistic. "I think 80 percent of the country is comfortable with these long-term structural changes in the basic organization of families," she says. "But 20 percent of the country is not, and they form the base of the Republican Party now." Yet she points out that polling shows strong support among young people. "The future is really with us," she concludes.

Watch the entire video below for a discussion of Romney's changing position on birth control, whether the left should thank the GOP for going after contraception, and why Planned Parenthood is so important:


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Cato vs. Koch and the Importance of Nonpartisan, Opinionated Think Tanks

Mar 21, 2012Mark Schmitt

Think tanks that serve the interests of a particular party won't decrease the power of lobbyists.

Think tanks that serve the interests of a particular party won't decrease the power of lobbyists.

In yesterday's post, I discussed the theory of lobbying as a "legislative subsidy" to under-staffed members of Congress and discussed a proposal to diffuse the influence of lobbyists by paying congressional staff more. I argued that a major push by conservatives had been to dismantle or discredit independent sources of analysis, such as the Office of Technology Assessment, but that the same effect could be achieved by creating more shared resources.

Another independent resource for information and analysis comes from think tanks, and this connects the debate over lobbying and money to the argument about whether think tanks are becoming "too political," as Tevi Troy of the Hudson Institute asked in an important recent article in National Affairs. That the question had immediate relevance became apparent when Charles and David Koch filed suit (that is, asked for help from the government) to take control of the libertarian Cato Institute. The dispute itself is confusing and seems to reveal a strange management structure in which Cato was controlled not by its board, like most non-profits, but by a small group of people who called themselves "shareholders." But the Kochs' underlying complaint seems to be that Cato was too independent and was not serving the political interests represented by other groups the Kochs back, such as Americans for Prosperity.

Troy argued in the Washington Post last weekend that "the dispute is tarnishing Cato's reputation as a place that can provide nonpartisan, if not non-ideological, research." There's an important distinction here: Cato obviously has a viewpoint. It is libertarian. But as Troy implicitly accepts, having a viewpoint, or ideology, doesn't necessarily hurt the credibility of a paper or argument coming from Cato or another think tank. If I read something from Cato, I'm reasonably confident that it will be a solid libertarian argument for a particular position and that the facts in it will be basically accurate, even if I might draw a different conclusion. The distinction between "nonpartisan" and "non-ideological" that Troy draws works well in the case of Cato, because libertarianism exists orthagonally to the current political parties. Making Cato more useful to Republican candidates and causes, as the Kochs seemingly would do, would be a huge shift.

Buy a copy of The Unfinished Revolution: Voices from the Global Fight for Women’s Rights, featuring a chapter by Roosevelt Institute Senior Fellow Ellen Chesler.

Having a viewpoint, especially one that is known and public, can be a great strength for a think tank. On the center-left, the Center on Budget and Policy Priorities, for example, has a general point of view about the importance of the social safety net, and its analyses are considered impeccable. As politics has shifted and become more sharply partisan, they may have fewer Republican friends and probably find themselves critiquing, say, Paul Ryan's budget proposals more harshly than Democratic ones. But their north star is not the current interests of a political party. As Troy shows (drawing heavily on the work of former Roosevelt Institute president Andrew Rich), think tanks naturally evolved from the technocratic quasi-universities of the Brookings Institution and the Rand Corporation to be more open and explicit about their ideological assumptions. That's a healthy development, just as it is healthy for the media to abandon the "view from nowhere" and be more open about their assumptions.

But not everyone wants reliable, solid analysis. For the same reasons that the Gingrich Republicans eliminated the OTA, their 2012 counterparts would take down Cato and make it into something more reliably useful to their immediate interests. A think tank that serves the political interests of a party, or the economic interests of its backers, can't help at all in offsetting the legislative subsidy provided by lobbyists. In fact, it increases their monopoly.

You don't have to agree with the Cato Institute to see that there's more at stake here than just the meaning of an old agreement among a bunch of libertarians.

Mark Schmitt is a Senior Fellow and Director of the Fellows Program at the Roosevelt Institute.

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Romney Finds Republican Religion on the Minimum Wage

Mar 7, 2012Richard Kirsch

Romney's flip-flop on raising the minimum wage betrays what Republicans really mean when they talk about small government.

Last month I wrote about how economic issues like the minimum wage were twisting Republican candidates into pretzels as they tried to make it look like they cared about the economic squeeze on American families while toeing the line on free-market orthodoxy. As I said at the time:

Romney's flip-flop on raising the minimum wage betrays what Republicans really mean when they talk about small government.

Last month I wrote about how economic issues like the minimum wage were twisting Republican candidates into pretzels as they tried to make it look like they cared about the economic squeeze on American families while toeing the line on free-market orthodoxy. As I said at the time:

Romney, clearly aware that he needs to support some policies that show him sympathetic to struggling families, has broken with free-market orthodoxy by supporting indexing the minimum wage to inflation. For this he was loudly attacked by Fox News, The Wall Street Journal, and Rush Limbaugh, among others. Andrew McCarthy’s post in the National Review captured the mood with the headline, “See Mitt Pander.”

It turns out Mitt couldn't take the heat from his right yet again (which makes you wonder how he'd deal with the pressures of actually being president). This week he got back in line with right-wing economic theology, telling CNBC's Larry Kudlow "there's probably not a need to raise the minimum wage." Even in reversing his position he can't help throwing in a waffle: "probably."

In the same interview, Romney told Kudlow that "people are hurting; they want someone who can see rising incomes, rising jobs, and a bright future for their kids." Unless, it appears, those people are working full-time at minimum wage and still don't make enough to rise above the poverty level.

Maybe the problem is that full-time workers are not "the very poor" who Romney isn't "concerned about." He told us "we have a safety net there. If it needs repair, I'll fix it." So I guess since minimum wage workers are just poor, not the very poor, Romney doesn't think they need help.

Check out “The 99 Percent Plan,” a new Roosevelt Institute/Salon essay series on the progressive vision for the economy.

As Romney knows, it's easy to go after the very poor, who are demonized as dependent on government hand-outs in code for racist politics. But there is overwhelming support for people who are working hard and still barely able to feed their families. Even if most people make well above the minimum wage, they still feel the economic crush of stagnant wages, disappearing benefits, and job insecurity.

You can just see the Obama campaign lampooning Romney for pretending he understands that "people are hurting" while opposing raising the minimum wage, after he was for it. It's a perfect combination of Romney the rich guy who doesn't get it, Romney the captive of the right wing, and Romney the flip-flopper.

But beneath the political vulnerability is a deeper truth that Obama and progressives more broadly need to drive home this year. When Republicans preach smaller government, less regulation, and defending business as job creators, they are sentencing families to a future that is the opposite of what Romney told Kudlow he wants. It's a future of shrinking incomes, disappearing jobs, and a darker future for our children.

We don't need smaller government; we need government that works for working people, not the ultra-rich. We don't need less regulation; we need rules that assure that working families can live in dignity. It's not businesses that are the job creators. It's people who go to work every day, who shop on Main Street, who are the business creators. And that includes people who work their butts off every day at the minimum wage.

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

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On Education, Santorum Flunks History

Feb 27, 2012Jeff Madrick

By disparaging public education and increased access to college, Rick Santorum is overlooking one of America's greatest historical achievements.

By disparaging public education and increased access to college, Rick Santorum is overlooking one of America's greatest historical achievements.

Rick Santorum has found a new populist voice in criticizing Obama's "theology." He claims he does not mean Obama is not a Christian, but apparently his belief in a number of progressive policies, including formal schooling for Americans, violates Santorum's deeply held theological views. Pandering to ignorance is not new with Santorum. But surely the candidate determined to be the candidate of the working class has reached a new low. And he has given those who are sincerely religious a bad name. His misunderstanding of American history and how the economy grew is more than stunning.

In recent remarks, Santorum praises home schooling, claiming that with the rise of factories, Americans had to go to formal schools that were like factories. Public school is an anachronism, he says. But formal schooling is about as American a virtue as there is. Has Santorum read any American history?

In selling federal land to farmers, Thomas Jefferson and others insisted that some be set aside for a school house. In the Northeast, free and mandatory public schooling in the primary years was a singular and early achievement, and it occurred before the age of big factories. Perhaps nothing is as singular in American history is its development of a free primary school system that exceeded even Prussia's in terms of the proportion of school age attendance by roughly the mid-1800s. The U.S. rate of enrollment was well ahead of France and England by then.

In a world in which computation and literacy were requirements for a modern economy -- I am talking about the 19th century economy here -- America was a leader. Santorum prefers some romantic view of farmers educating their children. But if homeschooling had dominated into the 20th century, America would not have become the world's leading nation.

By the late 1800s, high schools were needed to hone skills still further as an industrial revolution of giant industrial, retailing, and services companies made America's economy the largest in the world. Even factory work became more demanding. Educated Americans manned the factories and the bureaucracies of giant business institutions. In the early 1900s, women made rapid strides in getting their high school diplomas.

Check out “The 99 Percent Plan,” a new Roosevelt Institute/Salon essay series on the progressive vision for the economy.

America was the world's education leader, and that went hand in hand with spreading economic opportunity. As far back as the late 1800s, the U.S. subsidized the important land-grant colleges. And after World War II, the U.S. also subsidized college attendance with the G.I. Bill and students loans.

Educational attainment kept increasing in America. More young people went to college. The proportion of those aged 25-34 with a four-year degree was the highest in the world. But in the last few decades, many European nations have caught up to or have exceeded educational attainment in the U.S. A higher proportion of their youth now go to college.

Does Rick Santorum think that is good? He calls Obama a "snob" for wanting to ease access to college for more Americans. He says people are different and not everyone should go to college. That is probably true and the nation should have a robust debate about it. Yes, some classrooms are too rigid. Education, like everything, always needs shaking up.

But Santorum should also point out that the average wage for a person with four years of college is about twice that of someone with no college at all. Average wages for those with only a high school diploma have fallen sharply adjusted for inflation since the late 1960s. He should point out that work is getting more sophisticated and those who get less schooling will likely feel themselves increasingly left out. Maybe he should realize that if America continues to fall behind, others won't, and the competition for future markets will be intense.

Every rich nation in the world has a thriving formal education apparatus. None depended on home schooling to develop a productive work force.

Santorum's pandering is a tragic joke. If his knowledge of American history is reflected in his beliefs about the importance of education in the U.S., he is a sadly uneducated man. Education has been one of America's three or four greatest achievements. Has the Republican Party really come to this?

Roosevelt Institute Senior Fellow Jeff Madrick is the author of Age of Greed.

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