Has U.S. Democracy Been Trumped?

[johnu]

I think history shows that conservative orthodoxy is only for less spending and lower deficits when a Democrat sits in the White House. As far as I know no Republican President in my lifetime has reduced the US national debt (by any measure) even when holding majorities in both Houses.

How are you supposed to reduce deficits when you have to give big government contracts to your mega donors, friends, and family. It can't be done. B-)

[Chas_P]

How are you supposed to reduce deficits when you have to give big government contracts to your mega donors, friends, and family. It can't be done. B-)

 

They all do it. That doesn't make it right. But it's the way of the world.

[y66]

From George Soros via Andrew Ross Sorkin at NYT:

 

I’m very proud of the enemies I have. It’s a perfect way to tell a dictator or a would-be dictator if he identifies me as an enemy.

This helped me appreciate the trolls on this thread.

[johnu]

[Winstonm]

An outsider's view on Warren's wealth tax:

 

 

“A tax of 2% on the wealth above $50 million and 3% above $1 billion. That tax alone would double the effective tax rate of billionaires, from 23% today to 46%,” says Zucman. “Second, it would generate a lot of tax revenue – about $2.6 trillion over the next ten years. That’s money that can be used for childcare, for healthcare, for student debt relief, which would make it possible for the rest of the population to see their income grow more, and to see their wealth grow.

 

The argument, of course, is whether rich and super rich would move their capital to avoid these taxes. Perhaps a solution to that would be a double taxation penalty for capital gains earned outside the US by an US citizen?

[kenberg]

An outsider's view on Warren's wealth tax:

 

 

 

 

The argument, of course, is whether rich and super rich would move their capital to avoid these taxes. Perhaps a solution to that would be a double taxation penalty for capital gains earned outside the US by an US citizen?

 

 

 

 

It appears that I might have to learn about the wealth tax as we move forward in the choosing of a candidate. I began filling out tax forms in 1953 and I can't say I look forward to having to think about this. Note that Zucman also wants to reduce taxes on the working class and, if you listen to the video, he also wants to get rid of sales tax. He has great hopes for this wealth tax! Some issues that might arise:

 

1. People are skeptical, with considerable reason, of plans that promise much in goodies that will cost us nothing. Don't worry, someone else will pay for it. I mentioned, sometime around the first D debate, that Warren ducked questions about cost and I thought this would not go away. It hasn't gone away.

 

2. I looked up the Wik article about the 16th amendment. I even read some of that article. Mostly my conclusion was that tax law and the constitution is complicated.

 

3. In the video you cite they note that people with modest incomes are, at least for now, very opposed to a wealth tax. The participants are puzzled by this. I am not. Currently the government takes part of our income as taxes, but if we have money in the bank we get to keep it. A wealth tax would change this, the government would be able to take part of what we have saved. It would only apply to the wealthy?? Are we sure about that? When the income tax began there were warnings along the lines of "Sure, they are only going to take 2% now but of we let them do this someday they will take 3% or 4% or even 5%". Once the government sees a source of revenue it is naive to think that they will not expand this source. If they can take from the wealthy, they can take from grandma. If the Congress doesn't think of this, I am sure the wealthy will point it out to them. And the wealthy have more political clout than grandma does.

 

4. How practical is it? Quite a few people, not all of them on the rabid right, think it is not very practical.

 

Ok, I will try to think about this, it appears that I must. For the last fifteen years or so I have hand someone else do my taxes, not because it is all that complicated but simply because I thought that if I saw one more tax form I was going to puke. As you can tell, I am a bit skeptical.

[barmar]

Other countries have tried wealth taxes, mostly without success. However, they generally set the point where it kicks in too low, so it affected upper middle class families, not just the super-wealthy.

 

The prospect of moving capital offshore can be dealt with -- there's no reason the tax has to be limited to wealth held in the US (the same thing is true about corporate taxes, but the government has refused to go there).

 

Why do middle-income people oppose things like wealth tax and estate tax? It may be because they worry that the cutoff will be lowered sometime in the future, but I think it's more likely that they aspire to be rich, and don't like something that will reduce their enjoyment of that prospect. It's an irrational worry, since most of them will never actually reach the cutoff, but emotional reactions are like that.

[awm]

Switzerland has a wealth tax which we pay every year. This starts at a fairly low level (around $200,000), has an aggressively progressive scale, and replaces capital gains tax. It prevents some of the shenanigans that wealthy people can run with "unrealized capital gains" -- in the US (and most places with capital gains tax), the capital gains are only taxed when you actually sell. So people can play games where they don't sell, and instead take out loans (at very favorable interest rates with their unrealized capital gains as guarantee). Since the US has continually reduced/abolished inheritance tax and has this "step up basis on death" rule, you get cases where people bank billions in capital gains and never pay any tax on it during their lives, then pass it to their descendants (tax free, and with the capital gain basis resetting so it's NEVER taxed).

 

Anyway, to answer a few questions about the wealth tax:

 

1. Can you evade it by moving your money out of the country? No, it's based on your country of residency and not where your money lives. In fact most of our money is still in the US but we have to pay the tax.

2. Does it cause people to move out of Switzerland? Maybe; since Switzerland uses the normal residency-based tax you won't have to pay wealth tax if you move to another country. But Switzerland is relatively low-tax given the standard of living that its residents enjoy (neighboring countries like Germany and France have MUCH higher tax for example), so if you really want to avoid it you're probably moving to a very different sort of place. Note that Switzerland (despite the wealth tax) is home to an enormous number of billionaires so I doubt this is a big effect. Switzerland is also pretty careful about tracking where people live, and it might be hard to "actually live in Switzerland" while claiming to live elsewhere.

3. Can you avoid it by undervaluing or hiding your assets? This is probably possible if you put your money into something relatively hard to value like artwork, or convert it to gold and hide it in your basement, etc. But most wealthy people hold most of their wealth in real estate, stocks, and bonds, all of which are relatively easy to track and value. Further, the wealth tax tends to be much lower than the income you can make by investing your wealth, so if you hide your money in gold bars in your basement you probably lost more in interest than you gained in wealth tax avoidance.

[kenberg]

Adam's description could be very useful. What we have had so far is advocacy for a wealth tax. We could instead ask advocates whether they think we should do it exactly as is done in Switzerland, including the elimination of a capital gains tax, and, if the answer to that is no, then exactly what is it that they do advocate. A great question for EW at the next debate.

[y66]

I see that Switzerland came out on top of a recent face-off between national health care systems at NYT. According to the panelists, the Swiss system, which provides universal health care, looks like a better-functioning version of the Affordable Care Act that provides top-notch access and delivers high quality outcomes for a range of services.

 

I suspect that steadily improving what we have now to increase access, reduce costs and improve outcomes is how we will eventually get to the system that Sanders, Warren and a vast majority of American people want but this will not be called Medicare for All in their lifetime unless they figure out a way to pay for it that doesn't scare taxpayers more than death and members of Congress as much as getting primaried.

 

Here's what the Committee for a Responsible Federal Budget is saying about the price tag and funding options for Medicare for All:

 

Proposals to adopt single-payer health care in the United States have grown in popularity in recent years, as numerous lawmakers and presidential candidates have embraced Medicare for All. However, few have grappled with how to finance the new costs imposed on the federal government. By most estimates, Medicare for All would cost the federal government about $30 trillion over the next decade. How this cost is financed would have considerable distributional, economic, and policy implications.

 

In the coming months, the Committee for a Responsible Federal Budget will publish a detailed analysis describing numerous ways to finance Medicare for All and the consequences and trade-offs associated with each choice. This paper provides our preliminary estimates of the magnitude of each potential change and a brief discussion of the types of trade-offs policymakers will need to consider.

 

We find that Medicare for All could be financed with:

 

• A 32 percent payroll tax
  
• A 25 percent income surtax
  
• A 42 percent value-added tax (VAT)
  
• A mandatory public premium averaging $7,500 per capita – the equivalent of $12,000 per individual not otherwise on public insurance
  
• More than doubling all individual and corporate income tax rates
  
• An 80 percent reduction in non-health federal spending
  
• A 108 percent of Gross Domestic Product (GDP) increase in the national debt
  
• Impossibly high taxes on high earners, corporations, and the financial sector
  
• A combination of approaches
  

Each of these choices would have consequences for the distribution of income, growth in the economy, and ability to raise new revenue. Some of these consequences could be balanced against each other by adopting a combination approach that includes smaller versions of several of the options as well as additional policies.

 

Consequences could also be mitigated through aggressive efforts to lower per-person health care costs and/or by substantially scaling back the generosity or comprehensiveness of Medicare for All.

The Urban Institute puts the incremental cost of Medicare for All at $34 trillion over the next 10 years.

[awm]

US health care is very expensive! Switzerland has the 2nd most expensive system (and arguably the best outcomes) — we pay about $350/person/month and this is without any employer contribution (all Swiss are on the heavily regulated individual private insurance market). We have an additional $2500 per year deductible so our maximum payment is around $6700 per year (per person). We could probably reduce that a bit if we increased our monthly minimum cost. Anyway I’m sure this is less than 10% of the median Swiss salary (and poor people do get government help).

 

The cost in the US is somewhat hidden by the employer contributions and keeping the most expensive people on Medicare, but it seems to be a lot more than this (like maybe double from the post above). And the US outcomes are generally worse.

 

It does help that Swiss are generally healthier (lots of mountain hiking and/or skiing might help, despite the sadly high frequency of smoking in Switzerland) but I think a lot of it has to do with incentives and big medical device or pharma companies getting doctors to overprescribe in the US. We have noticed doctors here do things a bit differently, and we don’t have those “ask your doctor about...” ads on television either.

[y66]

From the NYT's impeachment briefing newsletter:

 

The Times has obtained a copy of the opening statement that Lt. Col. Alexander Vindman, the top Ukraine expert on the National Security Council, plans to deliver to House impeachment investigators on Tuesday. Here are four highlights:

 

1. He was on the July 25 phone call. Colonel Vindman was listening in when President Trump spoke with the Ukrainian president, Volodymyr Zelensky — a call that kick-started the investigation. He said he was alarmed by Mr. Trump’s request that Mr. Zelensky investigate the president’s political rivals.

 

2. He raised concerns about Ukraine. On two occasions, Colonel Vindman went to the top lawyer at the National Security Council with concerns about the administration’s conduct with Ukraine. The first was on July 10, when he said Gordon Sondland, the ambassador to the E.U., urged Ukrainian officials to assist with the president’s political priorities. The second was after the phone call on July 25.

 

3. He tried to get military aid restored. In August, at the direction of his superiors at the National Security Council — including John Bolton, then the president’s national security adviser — Colonel Vindman drafted a memo to restart security aid that had been withheld from Ukraine. Mr. Trump refused to sign it.

 

4. His testimony is a first. Colonel Vindman is the first current National Security Council staffer to testify, defying an order from the Trump administration not to cooperate with the impeachment inquiry. He is also an active-duty military officer and received a purple heart after being injured in Iraq by a roadside bomb, which could make him a more difficult witness to rebut than his civilian counterparts.

That looks like a good warm-up for the hearing with John Bolton which has not been scheduled.

[Zelandakh]

I recommend everyone to read Vindman's opening statement in full as it is not long.

[Winstonm]

I see that Switzerland came out on top of a recent face-off between national health care systems at NYT. According to the panelists, the Swiss system, which provides universal health care, looks like a better-functioning version of the Affordable Care Act that provides top-notch access and delivers high quality outcomes for a range of services.

 

I suspect that steadily improving what we have now to increase access, reduce costs and improve outcomes is how we will eventually get to the system that Sanders, Warren and a vast majority of American people want but this will not be called Medicare for All in their lifetime unless they figure out a way to pay for it that doesn't scare taxpayers more than death and members of Congress as much as getting primaried.

 

Here's what the Committee for a Responsible Federal Budget is saying about the price tag and funding options for Medicare for All:

 

 

The Urban Institute puts the incremental cost of Medicare for All at $34 trillion over the next 10 years.

 

More than doubling all individual and corporate income tax rates

 

Here is the question I have concerning this claim - what is additional cost - if there is any - to the corporations and individuals?

 

What I am getting at is that right now everyone who works or owns a business is already paying a large private tax to a healthcare insurance company. In the case of an employee at most corporations, both the corporation and the employee share in paying an insurance cost to cover that employee. Whatever the cost of universal healthcare, it will be at somewhat offset by the elimination of this private taxation.

 

So before I am scared off by talk of it will cost "X" gazillion, I'd like to know what part of "X" gazillion I know longer have to pay my piece of shite HMO, their technical name according to the movie, As Good As It Gets.

[Winstonm]

 

Why do middle-income people oppose things like wealth tax and estate tax? It may be because they worry that the cutoff will be lowered sometime in the future, but I think it's more likely that they aspire to be rich, and don't like something that will reduce their enjoyment of that prospect. It's an irrational worry, since most of them will never actually reach the cutoff, but emotional reactions are like that.

 

I think it is due to so many being too uninterested (and perhaps lazy) to seriously look into the history and differences in economics and governments or form their own opinions, being satisfied to stay glued to their favored form of propaganda which has since the end of WWII been preaching about the evils of socialism and communism. These are the people who have no clue the district in which they live nor the name of their Congressman but can tell you nearly verbatim the latest lie from Sean Hannity. :(

[Winstonm]

Ok, I will try to think about this, it appears that I must. For the last fifteen years or so I have hand someone else do my taxes, not because it is all that complicated but simply because I thought that if I saw one more tax form I was going to puke. As you can tell, I am a bit skeptical.

 

Interesting. I am not as skeptical so color me hopeful, instead. I am firmly convinced that wealth inequality is at least the number 2 problem in the U.S., and almost all of our socioeconomic woes can be lain like a wilted wreath at that open grave, so just the fact that it is being seriously talked about and ideas of how to correct it are raised is a good sign.

[Winstonm]

I recommend everyone to read Vindman's opening statement in full as it is not long.

 

Thanks for posting this as I had yet to see it.

[y66]

Why do middle-income people oppose things like wealth tax and estate tax? It may be because they worry that the cutoff will be lowered sometime in the future, but I think it's more likely that they aspire to be rich, and don't like something that will reduce their enjoyment of that prospect. It's an irrational worry, since most of them will never actually reach the cutoff, but emotional reactions are like that.

What is the evidence for thinking most middle-class taxpayers oppose a wealth tax?

 

According to Morning Consult, 63% of voters think upper-income people currently pay too little in taxes and 61% support an annual tax of 2% on household wealth above $50 million and 3% on wealth above $1 billion.

 

According to Pew Research, 60% of Americans are bothered "a lot" by the feeling that some wealthy people don't pay their fair share of taxes.

[y66]

From Kathleen Hunter at Bloomberg:

 

Nancy Pelosi’s plan for an impeachment-related House vote this week threatens to put Donald Trump’s defenders in a tight spot.

 

The speaker’s decision to counter charges that the closed-door probe is illegitimate with a vote on the next steps poses a dilemma for Republicans: They can defy a president still popular with the conservative base or go on record effectively opposing an effort that’s gaining public support, without knowing what other damaging revelations may emerge.

 

In a sign that Pelosi’s move has already blunted attacks, Republican senators said the House vote could change their plans for a resolution — sponsored by Majority Leader Mitch McConnell and Trump ally Lindsey Graham — condemning the inquiry.

 

And another potential bombshell is looming. Investigating committees are set to get key evidence today when a former Army officer assigned to the White House National Security Council testifies he listened to Trump’s July 25 call with Ukraine’s president and was so disturbed by it that he reported it to the NSC’s legal counsel.

 

With the probe poised to move into its public phase — and more testimony to come — Republicans may one day rue demanding to formally weigh in this early in the process.

[y66]

From the Henry Kaiser Family Foundation (October 15, 2019):

 

Support for Medicare-for-all has narrowed in recent months, with 51% now saying they favor a national health plan and 47% opposed. At the same time, support for a public option has inched up since July, with 73% now saying they favor a government plan that would compete with private health care plans and 24% opposed

[y66]

Paraphrasing from Paul Krugman in his Master Class titled "Economics and Society":

 

A number of countries with prosperous, well-functioning economies have higher tax rates than the U.S. The first question we should ask when designing a tax system is not how high taxes should be, but what services should the government provide and how best can we pay for them.

[y66]

From Steven Shepard and Ally Mutnick at Politico:

 

A North Carolina state court has ruled the state cannot proceed with next year’s House primaries under its current congressional map, temporarily setting aside the GOP-drawn districts in a potential boon for Democrats.

 

A three-judge panel in Wake County preparing to hear a case over whether the congressional districts are politically gerrymandered granted a motion Monday to put the map on ice. The court said Democrats are likely to prove the districts violate the state constitution, and preparing to conduct the March 3 primary under the current lines would be improper.

 

Democratic-linked plaintiffs in the case are likely to “prevail on the merits of this action by showing beyond a reasonable doubt that the … congressional districts are extreme partisan gerrymanders in violation” of the state constitution’s “Free Elections Clause,” the court said.

 

Because of the GOP gerrymander, Republicans currently hold 10 of the state’s 13 congressional districts.

 

Democrats celebrated the court's action. Marc Elias, the prominent Democratic election lawyer working on the case, called the ruling "a major victory for the voters of North Carolina," who "will finally be able to vote in constitutional districts for 2020."

 

Added Rep. Cheri Bustos (D-Ill.), who chairs the Democratic Congressional Campaign Committee: "North Carolina just took an important step in the fight to ensure congressional maps are not drawn to protect politicians, but rather to ensure fair representation for the people living in each and every district.”

 

Members of the North Carolina GOP delegation seemed resigned to the fact that a new map would likely dwindle their numbers.

 

“Fundamentally, it would be very, very difficult to keep 10 Republican seats. Nine is certainly possible. Eight is probably the magic number with the redraw,” said GOP Rep. David Rouzer, who noted he’s run under two different maps during his three elections.

 

The surging growth of the state’s cities and suburbs, he said, could complicate the ability to create GOP-friendly seats.

[y66]

In today's column at Bloomberg, Tyler Cowen asks: "Is America doomed to a future of complete incompetence?" Exhibit A is California, America’s biggest and probably most innovative economy, treating a power blackout as some kind of unavoidable natural event.

 

Economists themselves have been of no great help. My Twitter feed includes plenty of the world’s greatest (or at least best-known) economists. They love to debate Elizabeth Warren’s plan for a wealth tax, an idea that probably isn’t going to happen (just ask Mitch McConnell or, for that matter, any moderate Democratic senator). When it comes to designing a better incentive model for California power utilities — a concrete problem for which economics is remarkably well-suited — there has been close to complete silence.

 

Economists are just reflecting a more general failing in American political debate. The old saying that all politics is local has been turned on its head: All issues are now national in scope and partisan in nature. People are less interested in the day-to-day mechanics of actual governance, including at the state and local level. The comeuppance for those ideological obsessions is now upon us.

[Winstonm]

From Michael Gerson

If Trump survives the impeachment process, and somehow wins a second term, many explanations will be offered. It may be that the Democratic Party went too far left, or picked a nominee with a glass jaw, or couldn’t swim against the political tide of a good economy. But there will be one reason behind all of these reasons: because evangelicals lost their taste for character and gave their blessing to corruption. And this grand act of hypocrisy would mark them for a generation.

 

The only redeeming news is that younger members of evangelical denominations mostly reject their parents' xenophobia and approval of corruption and vengeful natures so that going forward these people over time will have less and less impact on the political landscape.

 

Now, if we could only get the Catholics to do the same.... :o

[kenberg]

I recommend everyone to read Vindman's opening statement in full as it is not long.

 

Thank you. I did as you suggest. It is very useful to have such a document available to read and reflect on.