Florida Election Shows Danger and Promise in Obamacare Debate

Mar 17, 2014Richard Kirsch

Democrats may have lost the special election for Florida's 13th congressional district, but the polling shows a path to success in 2014 with the Affordable Care Act.

Democrats may have lost the special election for Florida's 13th congressional district, but the polling shows a path to success in 2014 with the Affordable Care Act.

As pundits debate the impact of Obamacare on the special Congressional election held in Florida on March 11, a headline from a new Bloomberg national poll actually does as good as any describing what happened in the Sunshine State: “Americans Stick with Obamacare as Opposition Burns Bright.” That national finding also describes what happened in Florida, where swing voters supported the ACA, but more opponents turned out to vote.

The Bloomberg survey found the “highest level of acceptance for the law yet” in Bloomberg’s polling, with almost two out of three (64 percent) of those surveyed saying they supported either retaining the Affordable Care Act (ACA) with “small modifications” (51 percent) or as it is (13 percent).

The troubling result in the survey for the political prospects of the ACA is that the one-third (34 percent) who want to repeal the law are much more likely to vote. No news here. We’ve known that the ACA is a highly motivating issue for Republican voters, who turn out at a much higher rate in off-year elections than Democrats and independents.

The real news is in the first set of findings, the growing popularity of Obamacare outside the Republican base. These findings were confirmed in the Florida election, when Alex Sink, the Democratic candidate, pushed back against attacks on the ACA from David Jolly, the Republican candidate, and independent groups supporting him.

Jolly’s position was clear:  “I’m fighting to repeal Obamacare, right away.” So was Sink’s: “We can’t go back to insurance companies doing whatever they want. Instead of repealing the health care law, we need to keep what’s right and fix what’s wrong.”

The key part of Sink’s message was to remind voters why people wanted health care reform in the first place. As one of Sink’s TV ads said, “Jolly would go back to letting insurance companies deny coverage.” That’s an effective reminder of the huge problems Americans have had for decades, when insurance companies could deny care because of a pre-existing condition, charge people higher rates because they were sick, even charge women higher rates than men. The ACA ended all that.

As would be expected in Florida – and even more so in a special election – the candidates worked especially hard for the votes of seniors. In their ads for Jolly, the Republican Congressional Campaign Committee repeated their misleading charge from 2010, trying to scare seniors into opposing the ACA by saying that it cut $716 billion from Medicare. But unlike 2010, when Democrats did not respond to attacks on the ACA, Sink pushed back. She reminded seniors that the ACA actually provides important new Medicare benefits, including closing the infamous prescription drug “donut hole.” Sink’s ads accurately said, “His [Jolly’s] plan would even force seniors to pay thousands more for prescription drugs.”

By Election Day, voters had a clear contrast between the positions of the candidates on the ACA. It was a close election, with Jolly winning by a small margin (48.4% to 46.5%) in a district with an 11-point Republican advantage, one that has been represented by the GOP for nearly 60 years. But polling found that independent voters in the district supported the “keep and fix” position over the “repeal” position by a margin of 57% to 31%. Sink actually gained ground over Jolly during the election on the question of which candidate had a better position on the ACA.

The narrow margin is encouraging in a district with this large a Republican voter advantage, but still falls short of the turnout in 2012, when President Obama narrowly carried the district. Democrats will need to do better in November, if they are going to hold on to contested Senate races and have a chance of picking up House seats.

Fortunately, unlike in 2010, the Democratic Senate and Congressional campaign committees at least understand that they can’t run away from Obamacare. Doing so will cede independent voters to Republicans, just when those voters are becoming very supportive of the “keep and fix” message. While Democrats would prefer to keep the focus on the economic pressures being faced by American families – highlighting issues like the minimum wage – they’ll only be heard if they also engage aggressively in the fight over the ACA.

In fact, the ACA is an economic issue; just ask anyone who has lost her job and her health coverage. Or the millions of low-wage workers who can’t afford to go to the doctor, or are trying to pay back medical bills from the visit they could not put off. As millions more Americans get coverage – 11 million as of the end of February between the new exchanges, the expansion of Medicaid and young people under 26 – Democrats should incorporate the ACA into their overall economic message.

Supporters of the ACA have consistently believed that once the ACA began to be implemented, it would become more popular. We’re starting to see that shift. The challenge now will be turning that popularity into votes in November. 

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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Daily Digest - January 30: How Do We Make the Economy Work Again?

Jan 30, 2014Rachel Goldfarb

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Left Jab Radio (Sirius XM)

Click here to receive the Daily Digest via email.

Left Jab Radio (Sirius XM)

Jon Aberman and Mark Walsh speak with Roosevelt Institute Senior Fellow and Director of the Bernard L. Schwartz Rediscovering Government Initiative Jeff Madrick about technological innovation that doesn't lead to productivity increases, the jobs emergency, and how to make the U.S. economy more competitive.

Republicans Just Won the Food Stamp War (MoJo)

Erika Eichelberger writes that as the Senate plans to pass the current House version of the Farm Bill, which cuts $9 billion from SNAP, it's clear that the Democrats lost this fight. These cuts will mean that about a million families will receive $90 less per month.

Port Authority Demands Airlines Raise Worker Wages (NY Daily News)

Dan Friedman, Kenneth Lovett, and Rich Schapiro report that following a week-long campaign pushing for higher wages for airport workers, the executive director of the Port Authority has mandated a $9-per-hour wage for workers at LaGuardia and JFK airports.

Outsiders, Not Auto Plant, Battle U.A.W. in Tennessee (NYT)

Steven Greenhouse looks at the opposition to unionization efforts at the Volkswagen plant in Chattanooga, Tennessee. National groups like the Center for Worker Freedom are pouring vast amounts of money into this fight, even though some think Volkswagen is open to the union.

Fed Stays the Course on Stimulus Reduction (WaPo)

Ylan Q. Mui writes that the Federal Reserve will continue to scale back its bond-buying program by about $10 billion in February. She notes that this is despite some concerns about weak job growth, as the December jobs report showed the nation added only 74,000 jobs.

New on Next New Deal

Roosevelt Reacts: What Worked and What Didn't in the 2014 State of the Union

Roosevelt Institute Fellows and Network members respond to the State of the Union: what they liked, what was missing, and how the president should proceed from here.

State of the Union 2014: Obama Offers Action, Not Apologies

Roosevelt Institute Senior Fellow Jeff Madrick praises the president for focusing on the changes that can be made rather than the year's mistakes. He's also glad to see Obama taking Congress to task for making progress impossible due to gridlock.

The State of the Union Then and Now: Raising the Minimum Wage is Still a Good Idea

Roosevelt Institute Senior Fellow and Hyde Park Resident Historian David Woolner notes that the president's call for a higher minimum wage mirrors President Franklin D. Roosevelt's 1938 State of the Union, which used similar arguments to call for the creation of the minimum wage.

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Citizens United for Real Civic Engagement

Jan 21, 2014Joelle Gamble

On the 4th anniversary of Citizens United v. FEC, consider the ways that citizens can engage beyond campaign donations and the ballot box.

Today marks the 4th anniversary of the Supreme Court decision Citizens United versus the Federal Election Commission. The significance of this case is difficult to overstate as it gave limitless ability to mega-interest groups and corporations to spend money to convince voters to vote for or against a political candidate.

On the 4th anniversary of Citizens United v. FEC, consider the ways that citizens can engage beyond campaign donations and the ballot box.

Today marks the 4th anniversary of the Supreme Court decision Citizens United versus the Federal Election Commission. The significance of this case is difficult to overstate as it gave limitless ability to mega-interest groups and corporations to spend money to convince voters to vote for or against a political candidate.

As Jeff Raines wrote for Next New Deal, the latest fights in the courts are less about individuals’ right to free speech and more heavily focused on how much monetary influence the wealthy have on our electoral processes. Even the McCutcheon v. FEC case, while concerning individual donor limits, is still centered in a debate around funding committees and other organized donor groups. While curbing the influence of Big Money on our democracy is a worthwhile fight, we sometimes lose the bigger question of how each voter shows up in said democracy in our attempts to talk about how voters as voting blocks and interest groups.

While we know that the level of power that big money gained as a result of Citizens United is poisonous to our democracy, passing meaningful national legislative changes has been an arduous yet worthwhile battle for organizers across the country. Outside of contributing our voices to national efforts to overturn Citizens United, what can those of us without direct access to Washington, D.C. do to strengthen the influence of everyday Americans in the act of governing?

The most immediate answer we come to is, of course, voting.  However, new innovations at the local level are creating fresh avenues for civic participation. Practices such as participatory budgeting and participatory zoning are just a few ways in which we can flex our civic muscle outside of the voting booth. Participatory budgeting, for example, allows community members to make decisions on how to spend a pre-allotted pool of funds from an agency or government’s budget. This approach balances efficiency of outcome, by only allowing participation in a small portion of the budget, while deepening investment and engagement amongst stakeholders.

The Roosevelt Institute | Campus Network values people-centric, policy work that engages young people in their own communities. As we articulated in our report, Government By and For Millennial America, how government engages citizens is foundational to its effectiveness as an institution. Voting and money in politics have a role to play in how much weight one individual has in government. But higher civic engagement at all levels is still important to ensuring that those elected produce results that the citizenry desires. After all, many of the nation’s local and state-level public financing laws have been implemented via legislative processes and grassroots organizing.

Thus, as we continue to hear arguments regarding who has real power under U.S. election law, core questions at play are: what does it mean to have policies and rules that are people-centric? And how can we develop a system that is outcome-oriented and empowering to as much of the population as possible? Most Americans agree that eliminating a system in which some people have a wholly distorted level of financial influence over others is a good start. But by engaging in civic processes in our local communities, we can take our political engagement one step further, and increase individual empowerment in our system.

Joelle Gamble is the Roosevelt Institute | Campus Network National Field Strategist.

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Is Bridgegate Politics as Usual, or Beyond the Pale?

Jan 16, 2014Bo Cutter

A perspective on the Christie administration's behavior from someone who's seen firsthand how government operates.

A perspective on the Christie administration's behavior from someone who's seen firsthand how government operates.

For those who are not familiar with the story -- perhaps that same set of people who in questionnaires do not know where the Mississippi River or the Pacific Ocean is -- Governor Chris Christie's staff created a several-day monstrous traffic jam around the George Washington Bridge last September, apparently to get back at the Democratic mayor of Fort Lee, New Jersey for not supporting the governor for reelection. After denying for months that anything happened, the governor fired everyone he could find, held the world's longest and most lachrymose press conference, denied all knowledge, said he was "very sad," and seemed to conclude that he was the victim here. The poor jerks who sat in traffic for several hours apparently didn't count.

The best and funniest column on this by far was by Gail Collins in Saturday's New York Times; I can't come close to that, so I'll ask the deep questions.

1. What are the odds that Governor Christie is telling the truth when he says he knew nothing?

Zero, or bagel, as they say in the finance business. I suspect he didn't order the dirty deed, but this is exactly the kind of stunt political advisors pull when they're riding high and want to show how tough they are. There would have been lots of smirking around the governor -- remember, at the time they would have been quite proud of it -- and you would have had to be about as unaware as a tree not to notice. The governor is not known for being unaware.

2. Has there been any kind of pattern that might suggest this sort of behavior was part of the governor's genotype?

The only way you can say there was no pattern here is if you are a denier of combinatorial probabilities and a lot of introductory math. The Times has specified several incidents which sure look like revenge bullying. If I give the governor a 60 percent probability that each of these events was not part of a pattern (way above my gut feel), there's still a 92 percent chance that this is all part of a pattern. I'm going with a pattern.

3. Is it surprising that the governor threw everyone on his staff within reach under the bus and denied knowing David Wildstein, a senior staff member and a friend since high school?

Are you kidding me? This is pure "homo politicus" stuff. Take my word on this: there is essentially no one in big-time American politics who wouldn't gut his or her best friend in an instant for almost any temporary advantage. (The high school friend matter is almost too easy. No one in the known universe who graduated from an American high school believed any single word, including "a," "an," and " the," of this story.)

4. Is the actual behavior just life in the big leagues or a touch disturbing?

Certainly this traffic stunt was more inventive than anything I've heard before, and I've been close to this game since 1970. The other acts were nowhere near as clever but seem to be similar to the traffic stunt in two other big ways: they feel out of proportion, and they targeted civilians, not political pros. They imposed large arbitrary penalties on normal professional people who were simply doing their jobs. But I keep coming back to the folks caught in traffic. Let's say 500,000 people were caught in the traffic jams for, say, four additional hours each. That's 2 million traffic jam person-hours. If I value people's time at $20 per hour, that's a $40 million cost, all because someone got angry that a Democratic mayor didn't support a Republican governor who was already winning by a landslide and was simply trying to run up the score. Probably some of the commuters actually lost their jobs because of this.

So ask yourself, if you're just a citizen, and this guy becomes president with a lot more power and lots more reasons to get angry, how likely are you to be collateral damage in some scheme some other political "advisor" comes up with? I think you have to come down on the "disturbing behavior" side. I know "politics ain't bean bag," as Christie said, and if one pol wants to take a whack at another pol, I couldn't care less. But this crosses a lot of lines.

So back to the question in the title. There's no way this is normal behavior for normal human beings. Some of it is very normal for "homo politicus," and for athletes and hedge fund billionaires who feel particularly entitled. But the behavior at the core is way beyond the pale. Life is tough enough without leaders dedicated to getting even at your cost for the tiniest slight or the smallest act of dissent.

Roosevelt Institute Senior Fellow Bo Cutter is formerly a managing partner of Warburg Pincus, a major global private equity firm. Recently, he served as the leader of President Obama’s Office of Management and Budget (OMB) transition team. He has also served in senior roles in the White Houses of two Democratic Presidents.

Photo via ThinkStock.

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The Bernard L. Schwartz Rediscovering Government Initiative: Building on the Successes of 2013 in the New Year

Jan 6, 2014Jeff Madrick

The Rediscovering Government Initiative takes a look back and a look ahead...

The Rediscovering Government Initiative takes a look back and a look ahead...

The Bernard L. Schwartz Rediscovering Government Initiative had an active and rewarding second year. Our programs continue to be directed toward broadening the public discourse on the purposes of government, and in particular, countering the ideological anti-government attitudes that have so influenced discourse about public policies since the 1970s. We believe that many of America’s most challenging problems are a consequence of the neglect and misuse of government.

In 2013, we emphasized job creation. The facts are stark: America has a 7 percent unemployment rate four years into a recovery. It has a record-low employment-to-population ratio, especially for young workers. A record number of workers have been unemployed for more than six months.

In addition, the large majority of jobs created in the recovery have been low-wage jobs. As a result, typical household income is no higher than it was more than a decade ago. Unequal and stagnating incomes cannot be separated from the jobs crisis. There is concern that weak job markets are now a long-term reality.

To us, this is not just a jobs crisis. It is a full-fledged jobs emergency.

We also pursued other programs related to government and the perpetuation of the New Deal legacy of Franklin and Eleanor Roosevelt.

Here are a few of the 2013 successes we plan to build on in 2014:

A Conference: A Bold Approach to the Jobs Emergency

The crown jewel of our 2013 efforts was a June conference in Washington, D.C., which we called “A Bold Approach to the Jobs Emergency.” Our keynote speakers, Senator Tom Harkin (D-IA), Former Federal Reserve Vice Chairman Alan Blinder, and Congresswoman Jan Schakowsky (D-IL), addressed the jobs emergency from a variety of viewpoints to a jam-packed auditorium.

At the conference, we held seven separate panels on solutions to the jobs emergency. These included fiscal stimulus, public-private infrastructure projects, financial regulations to encourage jobs, improved education, raising the minimum wage, labor law reform, and local political advocacy programs.

Our panelists represented a diversity of backgrounds and perspectives, and included Ai-Jen Poo of the National Domestic Workers Alliance, Federal Reserve Board Governor Sarah Bloom Raskin, Gar Alperovitz of the Democracy Collaborative, Dean Baker of the Center for Economic and Policy Research, Damon Silver of the AFL-CIO, and Maya Wiley of the Center for Social Inclusion, along with Roosevelt Institute Fellows Dorian Warren, Annette Bernhardt, Richard Kirsch, and Mike Konczal.

The video and transcripts of the proceedings, along with summaries of the key points made in each panel, are available on our website.

A Report: “A Bold Approach to the Jobs Emergency: 15 Policy Ideas”

Despite a pessimistic and persistent refrain that government cannot solve America’s jobs problems, we learned from the many experts at our jobs conference that there are multiple ways to return to full employment. Based on these and other ideas we researched over the course of 2013, we will publish a report in January outlining 15 bold ideas to deal with the jobs emergency. Our report amounts to a call for renewed optimism about how we can solve this central economic problem.

A New Book: Myths of Government

In 2013, UC Press offered the Initiative a book contract, based on the essays presented by several participants at our Washington, D.C. conference on the purpose of government in summer 2012. Myths of Government will include contributions from Lane Kenworthy of the University of Arizona, Peter Lindert of the University of California at Davis, Jon Bakija of Williams College, and Rediscovering Government Director Jeff Madrick. The book debunks major economic claims that government’s role must be limited if economic growth and the standard of living are to be improved. To the contrary, it shows that constructive government policies are critical to the future of the economy and a rising standard of living for all.

Other Public Events

Here are a few of the public events we held:

-- In April, we hosted Mark Levitan and Moe Magali of the New York City Center for Economic Opportunity to discuss the staggering 30 percent youth unemployment rate in New York City and the job creation programs that the city government is implementing to mitigate this problem.

--In August, in New Orleans, we gathered leading local experts on youth unemployment, including Amy Barad of the Cowen Institute for Public Education Initiative, Cherie LaCour-Duckworth of the Urban League of Greater New Orleans, Lauren Bierbaum of Partnership for Youth Development, and Jerome Jupiter of the Youth Empowerment Project, to discuss strategies to reconnect the 6.7 million young people nationwide who are both out of work and out of school. Jeff Madrick wrote about the gathering in his monthly Harper’s magazine column, and Program Manager Nell Abernathy wrote a comprehensive post on the subject of youth unemployment for the Roosevelt Institute’s blog, Next New Deal. Jeff Madrick was interviewed on NPR’s Marketplace on these issues.  Roosevelt Institute | Pipeline, our nationwide network of young progressive professionals, co-hosted the event.

--In September, we hosted a panel in New York City entitled “Inequality: The Next Mayor’s Challenge.” Local experts outlined policies the mayor’s office could enact to fight rising inequality. The panel included David Jones of the Community Services Society, NYU professor Lawrence Aber, Maya Wiley of the Center for Social Inclusion, Tsedeye Gebreselassie of the National Employment Law Project, and James Parrot of the Fiscal Policy Institute.

--In October, as part of our commitment to updating the Roosevelts’ New Deal legacy, we partnered with the Frances Perkins Center in Portland, Maine to host a discussion on the changing attitudes of Americans toward government and how to keep the New Deal’s spirit alive. The event highlighted Perkins’s role as the FDR adviser most responsible for Social Security. Participants included Ai-Jen Poo, Sally Greenberg of the National Consumers League, and Jeff Madrick.

--Also in October, Jeff Madrick participated in “Progressivism in America: Past, Present, and Future,” a conference in Dublin, Ireland hosted by the Roosevelt Institute and University College Dublin’s Clinton Institute for American Studies. Madrick contributed an essay on the future of progressivism to be published in 2014.

Publications

Throughout the year, the Rediscovering Government staff published a range of longer-form essays and blogs that reflected the central themes of the Initiative.

The subjects we focused on most closely are listed below.

Youth Unemployment:

The Real Lost Generation, by Jeff Madrick for Harper’s Magazine

Tragedy as a Generation for US Youth, Jeff Madrick with David Brancaccio for Marketplace on NPR

How Can We Help America’s Opportunity Youth? Five Lessons Learned in New Orleans, by Nell Abernathy for Next New Deal

Fiscal Policy and Public Investment:

America Is Having the Wrong Fiscal Argument, by Jeff Madrick for Harper’s Magazine

Simpson-Bowles Consensus isn’t Common Sense. It’s Nonsense, by Jeff Madrick for Next New Deal

The Truth About the GOP's Phony Shutdown Offer, by Jeff Madrick for Next New Deal

Social Security:

No Need to Cut the Little that Recipients Get, by Jeff Madrick for The New York Times

Good News on the Deficit Makes Social Security Cuts Even Worse, by Jeff Madrick for Next New Deal

Monetary Policy:

A Bit of Good News, by Jeff Madrick for Harper’s Magazine

Summers’ View on Monetary Policy Not So Hidden, by Jeff Madrick for Next New Deal

It Would be Tragic to Raise Rates Now, by Jeff Madrick for U.S. News & World Report

Unemployment Benefits:

Conservatives and Progressives Agree: Congress Should Not Cut Unemployment Benefits, by Nell Abernathy for Next New Deal

Looking Ahead: 2014 

In 2014, we will continue to develop and promote ideas about the positive role of government in the U.S. in general as well as how government can and should improve employment opportunities for all Americans. We specifically plan to host public events and commission papers on three key strategies for improved employment and GDP growth: the minimum wage, infrastructure investment, and government support of research and development.

In addition, we will increasingly focus our efforts on reducing the number of children living in poverty in America, arguably America’s greatest social problem and a major contributor to inequality and stagnating wages. In June, we will host a conference in Washington, D.C. that will bring together top policymakers and advocates to promote an agenda for fighting child poverty and reducing inequality overall.

In September, Alfred A. Knopf will publish Jeff Madrick’s new book, Seven Bad Ideas; How Economists Damaged America and the World. Its theme is related to the neglect of government, and much of the contents of the book reflect issues and ideas pursued by Rediscovering Government. 

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A Silicon Valley CEO's Words Can't Hurt the Poor, But Government Can Help Them

Dec 18, 2013Nell Abernathy

Greg Gopman's callous comments about San Francisco's homeless demonstrate why we need government to support the most vulnerable Americans.

Greg Gopman's callous comments about San Francisco's homeless demonstrate why we need government to support the most vulnerable Americans.

So yet another Silicon Valley innovator is in trouble for publicly ranting about the horrifying experience of having to share San Francisco’s streets with our nation’s tired, poor, and huddled masses. Last week, AngelHack CEO Greg Gopman wondered why San Francisco’s homeless have the temerity to wander into civilized parts of the city. He wrote on his Facebook page, “You can preach compassion, equality, and be the biggest lover in the world, but there is an area of town for degenerates and an area of town for the working class. There is nothing positive gained from having them so close to us. It's a burden and a liability having them so close to us.”

The Internet went into a full-throttle shame-fest and forced Gopman to apologize on his Facebook page. Maybe I am jaded, but my indignation is a little less acute than some. Mostly, I don’t find arrogance and corruption on the part of industry leaders to be very novel. (To be fair, I’m not much surprised by arrogance and corruption on the part of think tank academics, non-profit do-gooders, or politicians either.)

Don’t econ textbooks tell us that our world is one comprised of individuals maximizing their own best interest? Why should any of us be surprised that techie X’s interest is to avoid homeless people or that banker Z’s interest is to get a really big bonus? While I vehemently oppose Gopman’s sentiments, I know that I am more likely to spend Wednesday night on my couch watching Nashville than working in a soup kitchen, so, you know, glass house and stones and all.

What this whole incident does underscore is the absolute need for a public sphere where we join together in service of something larger than our own petty interests. Through our government we can choose to live in a city and state and country where we are guided by more than our most self-serving of instincts. This is what so much of American anti-government rhetoric misses. The rules we choose to codify as “government” do not need to proscribe our freedom; rather, they can free us from the constraints of Lord of the Flies-like living.

This is a debate that could bring us back to Locke and Hobbes and even get us speaking in Greek, so instead I’ll stick to a few points.

1) Mr. Gopman is not unique in his dismissal of poverty in his neighborhood. Americans have demonstrated a remarkable ability to dismiss poverty in our country. Of the world’s top 35 richest countries, the U.S. is second only to Romania in child poverty. And just last week, Andrea Elliot at the New York Times put a face to the grim statistics with her meticulously reported series “Invisible Child.”

2) The belief that visionary entrepreneurs or privately funded non-profits can reduce poverty has not produced tangible evidence of success. The optimism from Silicon Valley that technology can save the world is perhaps best encapsulated by George Packer’s July New Yorker piece on the tech community’s political culture and Dave Eggers’ dystopian novel The Circle. We hear the same argument from Wall Street about the value of accessible capital; who can forget when Lloyd Blankfein claimed to be “doing God’s work”?  Indeed, finance and technology are powerful tools to improve lives, but who uses them and how they are used are important questions.

Keep in mind that despite the enormous increases in technology capacity and availability of credit, the official U.S. poverty rate has shifted from 14 percent in 1964 to 15 percent in 2012.  A new Columbia University study released last week measured American poverty according to location and transfers, and found the poverty rate in fact dropped from 26 percent in 1967 to 16 percent in 2012.  How did this drop occur? The researchers attributed the gains largely to government transfers.

3) The third false idea so often repeated is that the government cannot effectively do anything to help people. And as much as I wish the Department of Health and Human Services had turned to Mr. Gopman and his friends to build Healthcare.gov, I’m not ready to turn my back on government’s efficacy at tackling any or all public goals.

Let’s think of a few things that government has done that Mr. Gopman and the Silicon Valley crowd might appreciate. There’s the taxpayer-funded state college he attended, the government roads he drives on, the big bridges he probably crosses to get in and out of San Francisco, the public safety services he relies on to keep him from being mugged, the legal system he most likely employs to protect his company, and the cheap loans he may have benefited from thanks to remarkably low interest rates and inflation.

But let’s ignore all that and just focus on his bread and butter, technological innovation, which, Mr. Gopman and his friends may be surprised to learn, has been driven largely by government-funded research in basic science. Take the iPhone, for example. It took the genius of Steve Jobs to imagine and design the product, but it also took decades of government research to develop the components an iPhone needs to function. In a recent book, The Entreprenuerial State, Mariana Mazzucato traces the iPhone's roots to the defense researchers who developed the Internet, GPS, and the voice activation programs that served as Siri’s prototype. Public universities and labs funded by government dollars developed HTML and touch screens. Before going public, Apple even benefited from a $500,000 loan from the federal government’s Small Business Administration.

And for those who believe the private sector could have done it better, perhaps you will take the word of the American Energy Innovation Council, led by Bill Gates and Jeff Immelt. “When firms make investments in basic science or R&D, they create knowledge spillovers that benefit society as a whole, as well as other firms. Those other firms get a free ride on their competitors’ R&D investment. Because it is difficult for any individual firm to monetize all the benefits of these types of investments, the private sector has tended to systematically under-invest in R&D relative to the potential gains to society — even where a market for the desired technology exists.”

There is a time and a place for rugged individualism.  But I am grateful that I am dependent neither on the good will of Mr. Gopman nor the good will of any other rational self-interested individual for the common services I consume. Rather, I am relieved to rely on the good will of the public, that amorphous body in which we can all project our ambitions for a world more just and more free than one guided by the anarchy of our impulses.

Nell Abernathy is the Project Manager for the Roosevelt Institute's Bernard L. Schwartz Rediscovering Government Initiative.

 

Golden Gate Bridge image via Shutterstock.com 

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Guest Post: Max Sawicky on the Liberal Case Against a Universal Basic Income

Dec 17, 2013Mike Konczal

Earlier this month, I was on a Wonkblog live event panel discussing a Universal Basic Income (some video clips here), a topic I wrote about at Wonkblog earlier in the year. There was two people for and two people against, one from the left and one from the right. The person who represented the liberal side who was against a Universal Basic Income was Max Sawicky, formerly of EPI and the blog Maxspeak. He had prepared remarks for his introduction. I asked him if I could post them here and he agreed, and here it is:

With the coming referendum in Switzerland has come a flurry of commentary about a “Universal Basic Income” (UBI). There are some strange bedfellows from left and right are saying nice things about it. I suggest that it can be a distraction from more important things.

If you don’t have time to read this, just consider that a payment of $10,000 to every U.S. adult, a pretty basic basic income, would cost $2.5 trillion. Game over.

That aside, first off we need to distinguish between the objective of ensuring a minimum standard of consumption for all persons and the specifics of a UBI. You can support the first without the baggage of the second. More plausible ways to pursue the objective include: promote full employment, raise the minimum wage, rationalize and expand our system of refundable tax credits in the Federal individual income tax, federalize the Temporary Assistance for Needy Families program (reversing the welfare reform of 1996), establish the Federal government as an employer of last resort, support trade unions, and establish pay for caregivers. All of these in some combination are worth more of our time than a UBI. They are all more in keeping with our current system and our political culture.

What’s wrong with the UBI? It is not the utopianism. The measures I note, if you scale them up, are pretty ambitious. Nor do I see incentive problems with a UBI or similar measures. I do not believe that the availability of a UBI would spawn an army of slackers and moochers.

Let's start with the rationale for the UBI, which I would summarize as eliminating poverty with a low overhead cost. That still leaves a lot to the imagination. UBI proposals tend not to be fully baked. Presumably you reduce overhead by eliminating existing programs, but which ones? Are you willing to ding people at 105% of the poverty line to help others below it? Note you would still need eligibility determination and verification with a universal program. And how universal would it be? Immigrants? The aged? Children? Prisoners? Ex-convicts?

Like good fiction, the way to read the UBI is not as a real proposal, but as a message about something else: our existing system. But the implicit critique of the existing system underlying UBI advocacy is not well-founded.

Overhead cost is typically exaggerated in conservative discussions. Conservatives present comparisons of spending under a long list of Federal programs, many of which have broader or entirely different objectives than reducing poverty. The costs of programs that try to do things requiring public employees are not the same as ‘overhead,’ nor are these employees necessarily a bureaucracy. Even the programs explicitly aimed at reducing poverty are designed to cover more than just those under the poverty line. Moreover, the overhead costs of the main programs noted below are low, for the most part.

We also see exaggerations of the number of programs that are dedicated to reducing poverty. The fact is that most anti-poverty spending is concentrated in relatively few places: Medicaid, food stamps, the Earned Income Tax Credit, Supplemental Security Income, Temporary Assistance for Needy Families, unemployment compensation, and housing subsidies. Coverage in most of these programs goes well above the official poverty line.

In the current system, there is plenty to criticize. Eligibility could be simplified and broadened. Assistance could be increased. The main gap in coverage where a UBI would have the most impact is on able-bodied adults without children, who currently get the least from the current system as far as cash transfers are concerned. I’ve already mentioned easier ways to remedy that deficiency.

So why are we talking about the UBI? Dissatisfaction with the current system feeds a dream of wiping the slate clean, but motivations for a clean slate vary drastically.

Some on the right would like to replace existing programs because they disapprove of what those programs do, not because they fail to erase poverty. What the programs do is masked with the epithet of “bureaucracy.” Or they imagine a scenario where Federal spending decreases, and the remaining UBI programs can then be further whittled down over time. In effect, conservative supporters of the UBI concede their major, historic critique of anti-poverty benefits – the moocher issue. One naturally wonders how deeply felt this conversion really is.

Some on the left would like more ample, broader, simpler provision of benefits. This critique actually goes back to the 60s, when the principal anti-poverty program – Aid to Families with Dependent Children – was viewed as intrusive and demeaning.

If you like the transfer of cold cash, your chief target ought to be Temporary Assistance for Needy Families, the fruits of the Clinton/Gingrich welfare reform of 1996. The Feds provide a grant to state governments, who busy themselves with helping people to help themselves. In the actual event, states helped a lot of people off the welfare rolls and into poverty. The national poverty rate, notwithstanding this reform, steadily went up after 2000. So if you want to strike a blow for reduced overhead, simplicity, and adequacy – if you’re serious – go ahead and make my day: Federalize TANF and establish it as an individual, adequate cash payment to which every resident has a legal right. To constrain its cost, limit eligibility to families with dependent children and phase it out as other income grows.

We do have a mix of programs – what’s been called a “mish-mosh” -- aimed at poverty reduction, among other objectives. Why this complexity?

1.  No surprise, poor people don’t have much political power. They are obliged to seek alliances with provider interests – most famously with agriculture behind the food stamp program (an alliance that may be ending).

2.  The disorganization of Congress and associated interest groups encourages fragmentation. Every member wants something specific to attach his or her name to. (In recent decades, instead of spending programs, we have tax breaks named after Members of Congress).

3.  Federalism, hard-wired into our constitution.

4.  Public opinion, a Tower of Babel.

In light of these constraints, why dwell on a proposal founded on the mirage of wiping the slate clean to start from scratch that presumes a completely fantastical political environment? The answer is, to avoid devices that have been used successfully in the past, that exist at some level and actually work, that stand better than a ghost of a chance at being enacted, and importantly, surviving.

People need a basic income, so they need us to talk about the best ways to get it.

Max Sawicky is employed with the Federal government. His views here do not represent those of his employer.

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Earlier this month, I was on a Wonkblog live event panel discussing a Universal Basic Income (some video clips here), a topic I wrote about at Wonkblog earlier in the year. There was two people for and two people against, one from the left and one from the right. The person who represented the liberal side who was against a Universal Basic Income was Max Sawicky, formerly of EPI and the blog Maxspeak. He had prepared remarks for his introduction. I asked him if I could post them here and he agreed, and here it is:

With the coming referendum in Switzerland has come a flurry of commentary about a “Universal Basic Income” (UBI). There are some strange bedfellows from left and right are saying nice things about it. I suggest that it can be a distraction from more important things.

If you don’t have time to read this, just consider that a payment of $10,000 to every U.S. adult, a pretty basic basic income, would cost $2.5 trillion. Game over.

That aside, first off we need to distinguish between the objective of ensuring a minimum standard of consumption for all persons and the specifics of a UBI. You can support the first without the baggage of the second. More plausible ways to pursue the objective include: promote full employment, raise the minimum wage, rationalize and expand our system of refundable tax credits in the Federal individual income tax, federalize the Temporary Assistance for Needy Families program (reversing the welfare reform of 1996), establish the Federal government as an employer of last resort, support trade unions, and establish pay for caregivers. All of these in some combination are worth more of our time than a UBI. They are all more in keeping with our current system and our political culture.

What’s wrong with the UBI? It is not the utopianism. The measures I note, if you scale them up, are pretty ambitious. Nor do I see incentive problems with a UBI or similar measures. I do not believe that the availability of a UBI would spawn an army of slackers and moochers.

Let's start with the rationale for the UBI, which I would summarize as eliminating poverty with a low overhead cost. That still leaves a lot to the imagination. UBI proposals tend not to be fully baked. Presumably you reduce overhead by eliminating existing programs, but which ones? Are you willing to ding people at 105% of the poverty line to help others below it? Note you would still need eligibility determination and verification with a universal program. And how universal would it be? Immigrants? The aged? Children? Prisoners? Ex-convicts?

Like good fiction, the way to read the UBI is not as a real proposal, but as a message about something else: our existing system. But the implicit critique of the existing system underlying UBI advocacy is not well-founded.

Overhead cost is typically exaggerated in conservative discussions. Conservatives present comparisons of spending under a long list of Federal programs, many of which have broader or entirely different objectives than reducing poverty. The costs of programs that try to do things requiring public employees are not the same as ‘overhead,’ nor are these employees necessarily a bureaucracy. Even the programs explicitly aimed at reducing poverty are designed to cover more than just those under the poverty line. Moreover, the overhead costs of the main programs noted below are low, for the most part.

We also see exaggerations of the number of programs that are dedicated to reducing poverty. The fact is that most anti-poverty spending is concentrated in relatively few places: Medicaid, food stamps, the Earned Income Tax Credit, Supplemental Security Income, Temporary Assistance for Needy Families, unemployment compensation, and housing subsidies. Coverage in most of these programs goes well above the official poverty line.

In the current system, there is plenty to criticize. Eligibility could be simplified and broadened. Assistance could be increased. The main gap in coverage where a UBI would have the most impact is on able-bodied adults without children, who currently get the least from the current system as far as cash transfers are concerned. I’ve already mentioned easier ways to remedy that deficiency.

So why are we talking about the UBI? Dissatisfaction with the current system feeds a dream of wiping the slate clean, but motivations for a clean slate vary drastically.

Some on the right would like to replace existing programs because they disapprove of what those programs do, not because they fail to erase poverty. What the programs do is masked with the epithet of “bureaucracy.” Or they imagine a scenario where Federal spending decreases, and the remaining UBI programs can then be further whittled down over time. In effect, conservative supporters of the UBI concede their major, historic critique of anti-poverty benefits – the moocher issue. One naturally wonders how deeply felt this conversion really is.

Some on the left would like more ample, broader, simpler provision of benefits. This critique actually goes back to the 60s, when the principal anti-poverty program – Aid to Families with Dependent Children – was viewed as intrusive and demeaning.

If you like the transfer of cold cash, your chief target ought to be Temporary Assistance for Needy Families, the fruits of the Clinton/Gingrich welfare reform of 1996. The Feds provide a grant to state governments, who busy themselves with helping people to help themselves. In the actual event, states helped a lot of people off the welfare rolls and into poverty. The national poverty rate, notwithstanding this reform, steadily went up after 2000. So if you want to strike a blow for reduced overhead, simplicity, and adequacy – if you’re serious – go ahead and make my day: Federalize TANF and establish it as an individual, adequate cash payment to which every resident has a legal right. To constrain its cost, limit eligibility to families with dependent children and phase it out as other income grows.

We do have a mix of programs – what’s been called a “mish-mosh” -- aimed at poverty reduction, among other objectives. Why this complexity?

1.  No surprise, poor people don’t have much political power. They are obliged to seek alliances with provider interests – most famously with agriculture behind the food stamp program (an alliance that may be ending).

2.  The disorganization of Congress and associated interest groups encourages fragmentation. Every member wants something specific to attach his or her name to. (In recent decades, instead of spending programs, we have tax breaks named after Members of Congress).

3.  Federalism, hard-wired into our constitution.

4.  Public opinion, a Tower of Babel.

In light of these constraints, why dwell on a proposal founded on the mirage of wiping the slate clean to start from scratch that presumes a completely fantastical political environment? The answer is, to avoid devices that have been used successfully in the past, that exist at some level and actually work, that stand better than a ghost of a chance at being enacted, and importantly, surviving.

People need a basic income, so they need us to talk about the best ways to get it.

Max Sawicky is employed with the Federal government. His views here do not represent those of his employer.

Follow or contact the Rortybomb blog:

  

 

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Conservatives and Progressives Agree: Congress Should Not Cut Unemployment Benefits

Dec 10, 2013Nell Abernathy

Extremists who think government support for the unemployed is holding the economy back don't have the facts on their side.

Extremists who think government support for the unemployed is holding the economy back don't have the facts on their side.

It’s a rare day indeed when Next New Deal bloggers support economic arguments with links to the Weekly Standard, the American Enterprise Institute, and Goldman Sachs. But at this moment, in this economy, we are all singing the same tune about the absolute necessity of extending unemployment insurance and providing additional support to the long-term unemployed. So, consider our current alignment a sign of extraordinary times.

Extraordinary because six years after the recession, there are still at least 4.1 million long-term unemployed Americans who have been looking for a job for more than six months and have yet to find work. Extraordinary because despite agreement from both progressive and conservative economists on the need for government action, the congressional flank led by Paul Ryan and Rand Paul is so far outside the mainstream that they are arguing to cut benefits for the long-term unemployed. Extraordinary because the 113th Congress is so dysfunctional that these extremists just might succeed in their goal.

Protecting unemployment insurance is a “disservice” to the unemployed, Rand Paul told the morning shows Sunday. The clear logic being that those folks looking for work for the last six months have been all-too-coddled by their $300-a-week government check, when what they need is some real motivation to pound the pavement even harder.

Unfortunately for Mr. Paul and his friends, there are a few flaws in this latest version of the up-by-your-bootstraps logic. But, don’t take our word for it. For a full outline of the arguments in support of extending unemployment insurance, we turn to the conservative intelligentsia and financial establishment.

Who are the long-term unemployed? Lazy hangers-on?

According to a report from the Urban Institute, in 2012, two-thirds of the long-term unemployed were ages 26-55, one-third had children, one-half had at least some college, and one in ten were college graduates.

Michael Strain in the Weekly Standard:

“A large share of the long-term unemployed are people with relatively high earnings potential and personal responsibilities that extend beyond themselves. It is hard to imagine an educated worker in her prime working years with a kid at home having allowed a $300-a-week check to stand between her and a strenuous job search for over half a year.”

Well, then why aren’t they getting jobs?

A growing body of empirical evidence indicates that the long-term unemployed experience “scarring” simply for being unemployed.

Congressional Testimony of American Enterprise Institute fellow Kevin Hassett:

“There is an evident shift in the curve [the Beveridge curve which serves as a measure of how quickly the labor market matches workers with job openings] for workers who have been unemployed for 27 weeks or more, unemployed workers of shorter durations have experienced no outward shift in the Beveridge curve. They conclude that being unemployed for a longer amount of time has an effect on the chances that a worker will become employed, suggesting that being long-term unemployed is in itself a cause of the persistence in unemployment.”

While I feel bad for them, it’s not my problem. Isn’t unemployment insurance just a big waste of my taxpayer dollars?

With a GDP multiplier of 1.6, unemployment insurance is one of the most efficient fiscal stimulus tools. Every dollar spent on unemployment insurance contributes $1.60 to GDP. In contrast, a lump sum tax rebate or a dividend and capital gain tax cut would provide GDP multipliers of only 1.2 or 0.4, respectively.

Congressional testimony of Mark Zandi of Moodys Analytics:

“Emergency UI provides an especially large economic boost, as financially stressed unemployed workers spend any benefits they receive quickly. With few other resources, UI benefits are spent and not saved.”

Moreover, a recent report from the Fed indicates that the declining skills of the long-term unemployed have degraded our potential for GDP growth in the future.

Goldman Sachs Global Economics, Commodities and Strategy Research analysis of Fed report:

“They estimate that real potential GDP growth has only averaged 1.3% since 2007, the output gap is currently about 3% of GDP, and the structural unemployment rate had risen to 5.75% by 2012 (although it is now again on a slight downward trend). They then use a modified version of FRB/US with an added role for ‘hysteresis; in labor markets--that is, a gradual transformation of cyclical unemployment into structural unemployment and/or labor force withdrawal --to analyze the sources of this deterioration, using a simulation in which the model economy is hit by a major financial crisis that is calibrated to match the size of the 2007-2009 episode. In a nutshell, they find that the post-crisis period ‘features a noticeable deterioration in the economy's productive capacity’ and that about 80% of the deterioration ‘…represents an endogenous response to the persistently weak state of aggregate demand.’”

Well what are we supposed to do – just pay them forever not to work?

Well, we can discuss a minimum income later. For now, let’s invest in programs to get workers back in the workforce. Here are a few steps we can take:

1. The government can fund direct employment for the long-term unemployed.

AEI’s Kevin Hassett testifying before Congress:

“The stigma of long term unemployment may be ameliorated by a short run jobs program that recruits the long term unemployed to assist with normal functions of government. This may allow individuals to look for a new job while employed, a change that may have a large impact on placement.”

2. The government can increase transportation infrastructure to ensure all workers can get to work and create jobs.

Michael Strain in the Weekly Standard:

“One way to advance these goals would be to improve transportation networks within cities and their outlying areas in order to shorten commute times from low-income neighborhoods to employment centers…. In its cheapest incarnation, this would involve extra buses that run nonstop from low-income neighborhoods to employment centers, both in city centers and in suburbs. And of course, more money for better roads, bridges, and tunnels would shorten commute times for everyone, including the working poor.”

3. The government can expand work-sharing programs.

Michael Strain in the Weekly Standard:

“To help make sure that we aren’t adding any new workers to the rolls of the long-term unemployed, states without worksharing UI programs — about half of them at the moment — should start them. Under worksharing, a worker who has his hours reduced by his employer in response to a temporary lull in demand can receive a prorated UI benefit. This makes it easier for firms to reduce employees’ hours by, say, 20 percent, rather than laying off 20 percent of their workforce. Government shouldn’t tilt the scales towards layoffs by prohibiting workers who have their hours reduced from receiving prorated UI benefits.”

What now?

I’ve just listed a few of the many government solutions to our current economic woes on which progressives and conservatives agree. Extending unemployment insurance is not a partisan issue. The government providing a helping hand to those who most need it has not, historically, been a partisan issue. This is not about left and right. It is about pragmatic versus extremist.

For the sake of current GDP, future GDP growth, and the long-term unemployed, congressional Republicans cannot let the extremists win this time.

Nell Abernathy is the Program Manager for the Roosevelt Institute's Bernard L. Schwartz Rediscovering Government Initiative.

Capitol Building banner image via Shutterstock.com

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How Can We Help America's Opportunity Youth? Five Lessons Learned in New Orleans

Nov 20, 2013Nell Abernathy

Young people who aren't in school or working aren't beyond hope, but we need to invest more in the programs that will help them.

Young people who aren't in school or working aren't beyond hope, but we need to invest more in the programs that will help them.

The great recession has hit younger, less educated workers hardest, leaving 6.7 million young people between the ages of 16-24 out of work and out of school. These “Opportunity Youth” are more likely than their peers to experience unemployment, low wages, and poverty as adults, and more likely to end up incarcerated or in need of government assistance.

The Roosevelt Institute’s Bernard L. Schwartz Rediscovering Government Initiative went to the heart of the crisis, New Orleans, where 23 percent of young people between the ages of 18-24 are out of work and out of school, compared to a national average of 16 percent.

We asked expert academics and practitioners how we, as a country, can tackle this pressing challenge.

Here’s what we learned:

I. Opportunity Youth remain hopeful and we should too.

The vast majority of Opportunity Youth remain motivated and optimistic. One of our panelists, Amy Barad, Director Strategic Initiatives at the Cowen Institute for Public Education Initiatives, summed it up well: “What makes me hopeful is the kids themselves, they really want to get and education, get a job and contribute to society. Based on responses to a national survey, nearly three-quarters of Opportunity Youth are very confident or hopeful that they will be able to achieve their goals. Over three-quarters of respondents believe that getting a good education and job is their own responsibility and depends on their own effort.”

According to a survey conducted on behalf of Civic Enterprises and America’s Promise Alliance, 77 percent of those surveyed believe that getting a good education and a good job is their own responsibility and whether they succeed depends on their own effort, and 73 percent of Opportunity Youth are confident or hopeful in their ability to achieve their life goals. Here are those results in chart form:

II. However, the obstacles to reconnection are enormous and costs of disconnection are huge.

Disconnected Youth are more likely to grow up in poverty than their peers and were hit hardest by the recent recession. They are unlikely to have role models with degrees, the qualifications they need, transportation options for travelling to a job, or access to good jobs in their neighborhoods.

“The challenge is what urban planners call a wicked problem. The factors affecting disconnected youth are numerous, messy, and inter-related," Lauren Bierbaum, Executive Director of the Partnership for Youth Development, said. The obstacles to addressing disconnection are structural and rooted in communities.

For more, see the graphs below from Sarah Burd-Sharps and Kristen Lewis's report One in Seven: Ranking Youth Disconnection in the 25 Largest Metro Areas.

III. Some programs are successfully tackling these challenges, and the Opportunity Youth are eager to receive the help.

Two much-heralded programs designed to support these young people include Project U-Turn in Philadelphia, which recently won $499,000 in funding from the Aspen Institute as part of a plan to identify and replicate a national model, and YouthBuild, a nationwide Department of Labor program for high school dropouts.

Because the long-term societal costs of disconnected youth who don’t get help include lost taxes, more government transfers, higher prison budgets, and more, upfront investment in these programs is much cheaper than doing nothing.

And kids really want this help. “I’m excited to see the youth that are out there and that really want these programs,” Cherie LaCour-Duckworth, from the Urban League of Greater New Orleans, told us. “They are screaming for them. But funding has been cut drastically.”

Through Project U-Turn, the City of Philadelphia launched a collaborative effort to provide at-risk youth with needed services and raised the city’s high school graduation rates from 52 percent in 2005 to 64 percent in 2012. The following graph provided by Project U-Turn demonstrates the program's success so far:

According to a 2010 survey, 50 percent of YouthBuild participants received a high school degree or GED at the end of the program and 60 percent either went on to college or found full-time living wage jobs. Here is a chart illustrating the progam's impact:

Taxpayers are going to pay one way or another, either for fixing the problem upfront or for the costs of negligence later. The following charts from Civic Enterprises' reports on its National Roadmap for Opportunity Youth and The Economic Value of Opportunity Youth show this clearly:

According to the Civic Enterprises Survey, the kids are eager and ready for this help:

IV. But here is the rub: despite the long-term societal and fiscal benefits, we are under-investing in these intervention programs.

Most programs successfully serving disconnected youth are over-subscribed, and due to austerity measures, funding is further reduced. Youth opportunity grants authorized through the Workforce Investment Act reached 90,000 young people and reduced the overall number of out-of-work, out-of-school teens. But the program has not been funded since 2005, and sequestration has reduced overall workforce training funds by an additional $1.5 billion.

AmeriCorps-funded programs, which offer young people from diverse backgrounds the opportunity to serve in communities across the country, have been found to improve graduation and employment rates. The 2009 Serve America Act passed by Congress committed to increasing the number of AmeriCorps positions from 75,000 to 250,000 by 2017. The Act has not been implemented, however, and 85 percent of the more than 500,000 applicants were turned down in 2012. 

Here's a pair of charts highlighting this problem, from the National Skills Coalition and Service Nation

V. So what now?

“The only way we’re going to be able to have an impact is if government at all levels tackles these issues,” Jerome Jupiter, from the Youth Empowerment Project, told us in New Orleans, “This is no one person’s issue. We need all hands on deck – key stakeholders at the federal, state, and local levels, as well as institutions such as higher education all must work collaboratively to address youth unemployment.” 

Nell Abernathy is the Program Manager for the Roosevelt Institute's Bernard L. Schwartz Rediscovering Government Initiative.

 

Banner image via Shutterstock.com

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Given the Myth of Ownership, is the Idea of Redistribution Coherent?

Nov 14, 2013Mike Konczal

Given that all property rights are a creation of the state, is it possible to refer to “redistribution” without reifying a notion of “everyday libertarianism”? I believe so.

However, Matt Bruenig, over at our neighbors Demos, disagrees, and is slowly picking off liberal wonks on this topic. Given that I’m likely on the kill list, I might as well play offense. This post is probably not of interest to general readers.

Given that all property rights are a creation of the state, is it possible to refer to “redistribution” without reifying a notion of “everyday libertarianism”? I believe so.

However, Matt Bruenig, over at our neighbors Demos, disagrees, and is slowly picking off liberal wonks on this topic. Given that I’m likely on the kill list, I might as well play offense. This post is probably not of interest to general readers.

Bruenig argues that instead of redistribution, we “have in front of us a huge variety of potential economic institutional sets that we must pick from. Each set of economic institutions generates its own unique distributive outcome.” Pulling from a previous post, he states that “every single institutional choice that is made surrounding the economy sets the stage for the distribution that results...The cocktail of institutional choices you make dictates the distribution that follows.”

As I read him, Bruenig is meant not to be dealing with matters of justice (i.e. “this distribution of income is unjust”) but instead arguing that there’s no other way for this to be (i.e. “it’s impossible for the state not to create the distribution of income”). This argument, following the Myth of Ownership, is often deployed against the topic of horizontal equity in taxation, arguing that the goal of preserving pre-tax income is a fundamentally incoherent idea. (People in favor of funding all higher-education through income-based repayments from students often rely heavily on such claims to horizontal equity.)

Though relevant for tax policy, this argument becomes more problematic for social insurance. Because even though the distribution of income is created by the state through property rights [1], social insurance itself is then created through said distribution.

It also blurs different ways in which we mean the state to be creating the distribution. It might be better to start this argument not by talking about property, which can put people at the edge of their seats, but instead sports. We’ll use basketball, but you can fill in your own. There are two ways in which the referees determine the distribution of points.

The first is in the creation of the rules themselves. If the three point line became a six point line it would benefit players and teams with better outside shooting relative to those who play close to the net. If the length of the game was doubled it would benefit endurance players versus those who can score quickly. If fouls were called more or less aggressively that would benefit those playing certain strategies against others. And so on.

It quickly becomes clear that the rules of the game are not neutral, and they can have significant impact on the distribution of points, making winners into losers with just minor twists. This is where much of the liberal policy conversation takes place, with people like Ed Miliband saying things like “Markets don’t just drop down from outer space, perfectly formed.”

Here it is completely clear we can speak of “redistribution” of points. Because referees set the rules doesn’t mean they pick the score. One sees a tension in this argument - from the Bruenig quote, above sometimes the state “sets the stage for the distribution” while other times it “dictates the distribution that follows.” So even after setting the rules, we may want to wall off certain distributional outcomes. We can say that the leader should never be more than 20 points ahead of the loser at any time, for instance.

There’s a second, deeper, sense here, and that is that all the points are created and justified by the referees. If someone does a slam dunk, they may say “that was easily worth four points.” Their opponents might retort “no way, it’s only worth one point.” The referee is the one that everyone looks to for the correct score, where he’d say “it’s two points.” However, if the referee calls a penalty on that slam dunk, then those points simply do not appear. At any given moment we can’t refer to the score without justifying it based on what the referee is saying it is.

However, there are two reasons redistribution is still a coherent concept here. That it is absolutely true that any specific distribution of points are created by referees does not mean that that the referees pick whatever distribution they want. Thus they can think of a distribution they create, and have institution responses to move from one distribution to another that operate in a second-order manner. This second-order is what puts the “re” in “redistribution.”

And to move back to the world of public policy and property, this is especially true as the social insurance state dialectically creates itself through engagement with a market distribution and set of prices that was already being created by the government. Various goals like “prevent sudden drops in income” or “provide a certain replacement level of income in old age” or “ensure that food costs are less than a quarter of a family’s budget” or “have the government pay the costs of health insurance and public education” all require a set of market distributions and prices already present to carry out.

To take two specific examples, something like “a universal basic income that prevents poverty” requires a definition of poverty that will need to be drawn from an already existing distribution of market prices. The example that started this discussion, Social Security, is predicated on a replacement rate of market incomes, making any reference to social insurance here impossible without referencing a market distribution.

So yes, when discussing social insurance one needs to have some set of distribution already in play in order to shift it around. That the pre-tax distribution of income is arbitrary and could be done differently doesn’t preclude its existence, and that a set of institutions is put into place to change said income shouldn’t just be folded under the term “distribution.”

 

 

[1] It’s worth noting that we have been talking about property rights, instead of property claims. Taking a point from Jeffrey Winters’ Oligarchy, we should distinguish between property claims and property rights. Like all property, both are secured by violence and coercion. However, property claims are secured personally against the community; property rights are enforced impersonally by (or in the name of) the community.

Because the strong form of the argument that all property is ultimately created by and enforced by the state is wrong. We can imagine a situation much like our world - let’s call this distribution A. Someone named Adam in our world A decides he’ll go out and purchase some illegal drugs, hire a person to perform illegal acts of an adult nature, purchase one of those illegal DVDs of new movies recorded on a handheld cam you always see people selling in cities, and, to top it off, hire someone off-the-books to clean his house for less than minimum wage. Let’s refer to this new distribution as A’.

Perhaps you hope Adam will repent and fix his life, or perhaps you want to party with him. But either way, the new difference in distribution between A’ and A can’t be defended by claims to the state. (It’s not only not constructed by the state, but the state seeks to crush those claims.) If something goes wrong, if Adam is robbed for instance, he can’t rely on an impartial state to adjudicate these disputes. He has to rely on personalized claims to property in a world where the violence in property isn’t centralized in an abstraction and the rules aren’t codified in advance.

And, as economists of the commons like Elinor Ostrom have found, if we don’t put private property rights into everything we don’t descend into chaos. Norms adjust, though it’s hard imagining a capitalist economy running on such things. (Property rights are far more important when wealth is held outside of land and natural resource claims, and instead in capitalist ownership abstractions like “corporations.”) One could turn around and call this new set of customs for adjudicating property claims “the state,” which is fine as far as it goes, but it doesn’t have the same type of elements that modern property rights have.

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