Policy Shop

Policy as if people mattered

Is a Democracy Trust Fund a Good Idea?

ceciliatkaczyk.com
Cecilia Tkaczyk’s victory is the latest sign that New Yorkers want a different campaign system and they want it now. Tkaczyk challenged a millionaire Assemblyman in a GOP-gerrymandered district and yet, despite a cash disadvantage and little name recognition, she managed to win by 19 votes. And, she managed to win based on her support for publicly financed elections. During the recount battle, she wrote , “If I do get sworn in, I’ll know my support for public financing is a central reason I won the job.” As my colleague Liz Kennedy wrote , New York State is particularly in need of public financing. New York has one of the highest contribution limits in the country and individuals and limited liability corporations can give as much as $60,800 to candidates for statewide office. Even that limit is suspect as a recent NYPIRG report found that hundreds of donors give more money than is allowed every year and candidates fail to disclose large contributions that are given close to Election...

Big Banks and Income Disparity

Flickr/ruanon
Nobel economist Joseph Stiglitz made some critically important observations in the Sunday New York Times . He pointed out that income disparity is a cause of the maddeningly slow recovery from the effects of the Great Recession, not merely a consequence of it. He drew parallels to the income disparity that predated the Great Depression. In my view he is correct, though there are persuasive opinions to the contrary. One key to reducing inequality it tackling structural elements of the financial system that contribute to the widening income gap. The economy needs to promote parity, and the financial system as it currently functions is an impediment. Income disparity is illustrated by the widely known Saez-Piketty graph that garnered so much attention a few years ago: This graph cries out to be compared with another that depicts wages and education in the financial sector compared with other sectors of the economy: The academics who compiled the data on financial sector wages and...

John Mackey and Corporate Responsibility

A year and a half ago, at the Iowa State Fair, Mitt Romney told a protester, "Corporations are people, my friend." This line, ferociously derided by Democrats and weakly defended by Republicans, will likely play a significant part in the historical lore of the most recent Presidential election. The line is, on a pretty basic level, nonsensical—x is not y—and imbues corporate behemoths with a far greater beneficence than they deserve. That said, it has acquired some resonance now as John Mackey, founder and CEO of Whole Foods, is essentially making an argument for Romney's position. While on tour for his tome, Conscious Capitalism , Mackey has done a spirited job of trying to put a human face on a brutally impersonal economic system. I'm not sure he succeeds. In Mackey's view, "conscious capitalism" creates value for "stakeholders," i.e., customers, employees, investors, the environment and so on. The stakeholders, which the company describes as "people who are interested and benefit...

The Endless and Ironic Attacks on the CFPB

Flickr/afagen
Anyone who has followed the creation and early life of the Consumer Financial Protection Bureau knows that conservatives in Congress have repeatedly tried to kill or weaken this agency using the power of the purse. Most recently, last spring, Republicans tried to cut the CFPB's $550 million budget by about 40 percent. It's safe to say that if the CFPB wasn't funded through the Federal Reserve—a stroke of genius, by the way—it'd barely be able to function. And, as it is, all the attacks on the agency slowed its ability to get up and running. Yet harassment of CFPB is ongoing. In August, for example, Judicial Watch released information gathered through the Freedom of Information Act to allege that the CFPB was spending too much money on things like sign language interpreters and training classes for its staff. Among the odd complaints of Judicial Watch was that CFPB had spent $4,500 "to enroll six employees in a Banking Law Fundamentals class at George Washington University." As if we...

Walmart’s Missed Cue at Retail’s Big Show

Demos
Inside of New York’s Javits Convention Center this morning, Walmart US President and CEO Bill Simon took the stage before a crowd of industry leaders to talk about how retail can play a central role in revitalizing the American economy. It’s a topic he’s touched on before , stating that “American renewal is all about jobs,” before annotating his position with a political agenda that includes lower corporate tax rates and new trade agreements to free up the movement of capital overseas. But while Simon made his case for better living through corporate cost cuts to the attendees inside the convention, outside the Javits Center it really was all about jobs. Workers from across the service industry gathered to agitate and spread the word on how companies like Walmart fail workers, families, and the entire economy by keeping their employees below the poverty line with low wages and part-time hours. The National Retail Federation’s (NRF) four-day Annual Convention and Expo is sometimes...

Why In The World Would Business Favor Austerity?

Flickr/ Talk Radio News Network
A New York Times article reported that Fix the Debt, the deficit hawk group which positions itself as a neutral body of wisemen, includes a number of corporate lobbyists and board members. The Times noted that many of those involved in Fix the Debt helped create the deficit problem to begin with by fighting to defend tax perks for business and the wealthy, such as the record low rates for capital gains and dividends, along with the notorious "carried interest" loophole. No big surprises there. As John Judis explained long ago in his book, The Paradox of American Democracy , it's hard to find any genuine wisemen in Washington anymore; not in a town where even the most esteemed former public servants have all sold out to the highest bidder. But here's the real thing that puzzles me about corporate leaders who push for deficit reduction: Why in the world would business favor austerity? Sure, I can understand why corporate leaders worry about deficits in the long run. Borrowing a trillion...

Yes, We Have A (Defense) Spending Problem

Flickr/StefPress
Last year, in 2012, the U.S. government spent about $841 billion on security—a figure that includes defense, intelligence, war appropriations, and foreign aid. At the same time, the government collected about $1.1 trillion in individual income taxes. (And about $2.4 trillion in revenues overall if you include payroll, corporate, estate, and excise taxes.) In other words, about 80 cents of every dollar collected in traditional federal income taxes went for security. That's an astonishing statistic, and it captures the most underappreciated aspect of today's fiscal challenges: We have a security spending problem. Such spending is significantly higher than all non-defense discretionary domestic spending. Worse yet, almost nobody in Washington seems interested in seriously curtailing defense spending that is greater in real terms than what the U.S. spent in the Cold War—despite the fact that the U.S. will be officially at peace when we withdraw from Aghanistan next year and the U.S. faces...

Madness In December Employment Numbers

Flickr/Merrimack College
The new job numbers are out and, at first glance, there is nothing surprising here. Job growth continued to inch upward in December, with 155,000 new jobs added. Of course, with several million young people joining the labor force every year, numbers like these don't actually amount to growth. We are just running in place. But here's a statistic that jumped out at me: 89,000 public sector workers lost their jobs in October, November, and December—with most of those losses, 66,000, occurring in October. These numbers are revised figures that are much higher than what appeared in the past BLS employment releases, so for some reason the BLS tends to lag behind in capturing the full scope of government layoffs in a timely fashion. Anyway, back to the main point: Large-scale layoffs of government workers continue across the United States. Such layoffs undermine local economies and stymie the recovery. For every five workers who were hired in the past three months, one was laid off by...

Is the Fiscal Deal a Recipe for National Decline?

White House/Pete Souza
Now that the future revenue path is pretty clear for the next decade, I took another look at President Obama's 2013 budget , which projects spending and revenue through 2022 on the assumption—a correct one, it turns out—that taxes will only rise on the affluent. As I noted in an earlier post today, the White House projects serious cuts to domestic spending. These cuts wouldn't be necessary if the Bush tax cuts were fully repealed. So, in effect, President Obama has largely endorsed the fiscal priorities of his predecessor, with tax cuts forcing spending cuts. This may not amount to "starving the beast," but it is putting government on a conservative diet. I've written a lot about this historic capitulation already, so I won't say more. Instead, let me focus on another implication of letting the Bush tax cuts largely live on. The United States will not only cut spending over the next decade, it will also dramatically increase the national debt—adding $6.6 trillion in new debt by 2022...

Is the NRA a Paper Tiger?

Flickr/Ilmo Joe
The Center for Responsive Politics compiles data on the 50 top interest groups giving money to Congress. Near the top of the 2012 list are the usual suspects—finance, insurance, real estate, and Big Oil. Near the bottom are casinos and the building materials industry (along with "Women's Issues.") But guess who's not on the list? Gun rights groups. Not only did such groups not make the list in 2012; they have never made the list. Even if you only look at the 50 interest groups supporting Republicans, the gun rights crowd doesn't make the cut. However, the NRA does make the Center's list of "Heavy Hitters" which tracks the top all-time donors to politics. But it is number 50 on that list—not far below the American Dental Association. Any number of unions, including the Plumbers and Pipefitters Union, rank higher than the NRA on the Heavy Hitters list . Most of the NRA's clout is wielded in the form of outside spending, and it spent over $18 million in this last election cycle—putting...

Big Macs, Big Profits, Low Wages

(Flickr/The Consumerist)
In a properly working economy, a booming business would be good for everyone involved in building that business: shareholders, executives, and workers. In a broken and dysfunctional economy, the shareholders and executives would get richer and richer while the workers lived in poverty. What's happening at McDonald's leaves little doubt about what sort of economy America has today. According to a recent investigation by Bloomberg reporter Leslie Patton, McDonald's saw its profits soar by 135 percent between 2007 and 2011, and found itself with so much cash last year alone that it devoted $6 billion to dividends and stock repurchases and paid its CEO, Don Thompson, $8.8 million. Given this success, and all the money sloshing around, you'd think that workers at McDonald's would see their fortunes rise as well. Well, you'd be wrong. Many McDonald's workers earn just over the federal minimum wage, near-poverty incomes, and have barely seen any pay increases in recent years. The CEO of...

Crossroads GPS in the Crosshairs

(CrossroadsGPS)
Last week, New York Attorney General Eric Schneiderman announced new disclosure requirements for “dark money” nonprofits . The proposed rules would require 501(c)(4) organizations that spend money on politics in New York State to reveal the donors behind their spending. The Los Angeles Times summarized the proposed rule as follows: The regulations would require nonprofits that spend at least $10,000 a year on New York state and local elections to report all their political expenditures, as well as all contributors who give at least $100. The rules would apply to any group engaged in election-related activity within six months of a New York election, whether on television or the Internet, through the mail, or even by a grant to another organization. This is a good thing. Secret spending is a serious threat to accountability and good government . It makes it impossible for Americans to know who their elected officials are indebted to and who is really calling the shots. Earlier Demos...

War At Home

(Associated Press)
Perhaps the most breathtakingly obscene aspect of American society is our absolute and utter refusal to deal with the murderous gun violence that lays its awful blanket of blood and sorrow across the families of thousands upon thousands of victims each and every year. On Friday, even the presumed safe harbor of an elementary school in suburban Newtown, Connecticut, was defiled when the school was invaded by a young man armed with military-style assault weapons. Try to imagine the sudden horror of the six- and seven-year-olds in two first-grade classrooms as the gunman, who had already killed their principal, opened fire on the children themselves. He would kill a total of 26 people, including 20 children, before taking his own life. How many times will we allow these atrocities to occur before we find the courage and the will to intervene? What is the point of having a self-governing society if we can’t—or won’t—protect kindergarten pupils from the flood-tide of killing set loose by a...

Why Does Obama Want to Spend $8 Trillion on Defense?

United States Air Force
Washington is in a fiscal panic, yet surprisingly few people are asking an obvious question: Why in the world is the Obama administration proposing to spend $8 trillion on security over the next decade? Included in that giant sum is not just Pentagon spending, but also outlays for intelligence, homeland security, foreign aid, and diplomacy abroad. If the administration gets its way, security spending would account for a fifth of all government outlays over the next decade. Such spending would be roughly twice as great as all non-mandatory spending through 2022—a category that includes everything from NASA to Pell Grants and national parks. And—get this—around 40 cents of every dollar collected from individual income taxes over the next decade under the president's plan would go for security spending, according to White House estimates. That's a whole lot of defense for a country that, as of 2014 (when U.S. forces withdraw from Afghanistan), will be officially at peace and faces no...

Why Does the Center for American Progress' Budget Plan Embrace the Bush Tax Cuts?

(Center for American Progress)
The Center for American Progress (CAP) is out with a budget plan that would reduce deficits by $4.1 trillion over the next decade and, at first glance, seems to makes a good deal of sense. Two former Treasury secretaries—Larry Summers and Robert Rubin—are listed as co-authors of the plan, along with Roger Altman, William Daley, John Podesta, Leslie Samuels, Neera Tanden, Antonio Weiss, Michael Ettlinger, Seth Hanlon, and Michael Linden. An impressive brain trust by any measure. The plan would raise about $1.8 trillion in revenue over the next decade, which is about $200 billion more than what President Obama is asking for. It would do this by raising the top tax bracket back to 39.6 percent, where it was under Clinton, and also raising the top rate for capital gains to 28 percent—nearly double what it is today—as well as treating dividends as ordinary income. CAP's plan would also simplify today's labyrinth of tax deductions and exemptions, and limit the value of some deductions for...

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