Thursday, January 4, 2018

Sometimes, You Have to Pass a Bill to Find Out What's In It.

This is a Special Edition of Blank versus Blank. This post is the presentation of a single side of an issue. Because it is only one perspective, we call this a Blank Verse.

This Blank Verse is presented by David.

"But we have to pass the bill so that you can find out what is in it, away from the fog of the controversy."

This may go down as Nancy Pelosi's most infamous quote. In the context of the times, when Obamacare was struggling to find enough Democrats to support it, and with Scott Brown being elected in the bluest-of-blue states, Massachusetts, the quote established in the minds of many Americans that mega-bills in Congress were too big and cumbersome for members to read or comprehend. It firmly established the idea that Congressmen and women don't read the bills they are passing. It remains the narrative, even though Republicans are now in charge of Congress. Ms. Pelosi's quote may have been one more building block in the argument that allowed an outsider like Donald Trump to win the presidency.

But to paraphrase Ms. Pelosi, sometimes you do need to pass a bill to find out just how the bill will work in the real world. In one way, she was right. The way legislation is supposed to work out, and the way it materializes are not the same.

America is full of smart people. We have many smart men and women in the field of economics. Too often, those people craft their analyses and projections based on static models. They make their calculations based on the here-and-now, but don't (or can't) factor in that outcomes change based on the changes that are introduced. These smart people refuse to acknowledge the multitude of variables affecting their projections. Or they know about the variables, but just don't know how to model for them. Obamacare is an example of this reality.

The knowledge we gained from the passage of Obamacare was to see how all of the projections from the Congressional Budget Office (CBO) and healthcare experts like Ezekiel Emanuel and Jonathan Gruber faired when the rubber hit the road. They didn't fair well.

Everyone in America was supposed to get coverage, but we fell well short of that. President Obama promised dozens of times that we'd all get to keep our plans and doctors. That didn't prove to be true (and, according to Gruber, Obama knew that was not going to be true from the beginning). Rates were promised to go down. Instead, rates have doubled for the majority of Americans, and most have deductibles that they will never meet.

While the CBO score on paper looked great, common-sense should have told them that their static model wouldn't work out in a dynamic world. For instance, if politicians make changes to health insurance that causes the cost of health insurance to double, people will be less likely to purchase it. Even if your model forces people to purchase insurance or pay a fine, they will pay the fine if it is much smaller than the insurance costs, particularly if that individual is young and healthy, and unlikely to need the insurance.

But what worked? It turns out people like free stuff. Who would have ever figured? Americans like to have their children stay on their plans until they are twenty-six years old. They like having their pre-existing conditions covered without having to pay any extra for the costs. Older Americans like having young, healthy Americans pay for their care. And states like having the federal government pick up almost the entire tab for their medicaid. These things, too, were easy to forecast.

There were fierce arguments both for and against Obamacare before passage, but it is only now, when we've seen the bill's effects in the real world that we can know with certainty how it worked. The variables were many, and the outcomes were not completely known. Proponents were certain the bill would be a success, and opponents were certain of it's complete failure. It was necessary for the bill to pass, and for the variables to play out, for us to know for sure how society would react, and what the bill would actually accomplish.

So what about the Tax Reform Bill passed last month? Again, economists are split into polarized camps. And once again, we have a bill that has many moving parts, and too many variables to count to know for certain how the legislation will actually play out. The economy has already improved considerably just on the promise of corporate tax cuts. Many of the key benefits that Republicans promised the bill would deliver are already showing signs of fruition. But will the economy actually bring more money into the IRS coffers as Republicans have stated, or will the bill add to the deficit, as Democrats claim? Will corporations repatriate their oversea's cash for the benefit of workers, or will they use the money to buy back stocks to benefit shareholders? Will the bill raise the wages of workers, or raise the pay of CEOs at the top of the heap? Is the bill a panacea for the middle-class, or a Christmas gift to the one-percent?

As Nancy Pelosi says, the bill has passed, now, we'll just have to wait to see what's in it for America.

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Sunday, December 10, 2017

Lies, Damned Lies, and SALT statistics

This is a Special Edition of Blank versus Blank. This post is the presentation of a single side of an issue. Because it is only one perspective, we call this a Blank Verse.

This Blank Verse is presented by David.

As the Tax Reform bill heads to a conference committee, now that a version of it has passed both the House and the Senate, one of the issues that has come up, and generated quite a bit of debate, is whether or not state and local taxes (SALT) should be able to be deducted from federal taxes.

Mark Twain popularized the quote, 'There are three kinds of lies: lies, damned lies, and statistics." The SALT exemption, and arguments for and against its elimination exemplify this sentiment perfectly. The SALT debate also illustrates that there are two sides to an argument, and both sides can be right.

Politicians in high, state-tax states want to keep the SALT exemption.  The argument they make is that their states provide more taxes to the federal government than they receive, so residents of their states should be able to deduct their SALT taxes.

But is that actually true? It depends on how you measure it.

It is true that more populous states pay more in federal taxes than those smaller states with less population. More people living in the state equals more people paying taxes. It is also true that people living in large, urban areas are wealthier, and therefore pay more in taxes than those in more rural areas.

But do they get less of their federal dollars returned? Do they get fewer services? Well, it gets a bit trickier to answer that question. There are many variables to take into account, and they aren't determined by whether a state leans blue or red.

Poorer states contribute less in taxes, and because they are poorer, they are more likely to receive money for programs that serve the poor. States that have military bases receive huge amounts of government funding, regardless of whether their SALT taxes are high or low.

Here's a nice, data-rich article describing various ways to run the numbers looking at the states as collective tax-paying entities:

Are Red States Tax Takers and Blue States Tax Makers? ~The Federalist, Kyle Sammin.

When the author breaks down the numbers by inter-governmental payments based on individual tax payments, he found that "against a national average of $1,935 in intergovernmental spending per American, red states receive just $1,879. Blue states get considerably more, at $2,124 per resident."

Which is a nice segue to a different way of evaluating the SALT exemption. Rather than running the numbers based on how much a state pays as a collective, how about comparing individual tax payers and their rates.

A Texan making $100,000 dollars a year doesn't get to deduct any SALT from his Federal taxes. Texas doesn't have a state income tax. So the Texan has to pay the entire federal-tax bill that comes his way. A New Yorker making $100,000, on the other hand, gets to deduct his rather large SALT bill from the federal taxes he pays. Based upon individual tax burdens, the Texan is paying much more to fund the federal government and all of its programs than the New Yorker. Is that fair?

As a Hoosier, I'm proud that my state legislators and governors have kept our tax burden low. But I find it unfair that folks in big-government blue states, that are making the same amount of money I am, are paying less than I am for federal programs and bureaucracy, some of which I don't support.

(As a side note, it was Democrat Evan Bayh who oversaw Indiana's largest tax cut during his tenure as governor. So taxes and tax cuts are not simply a Republican/Democrat issue.)

But income tax isn't the entire story either:

What are the Best and Worst States to Pay Taxes In? ~Investopedia, J.B. Maverick

I wish I had a dollar for every time I've heard a liberal say that this group or that group wasn't paying their fair share. I could retire. As I've tried to illustrate here, deciding what is a fair share depends largely on how you lay out the numbers. Do you count as part of a collective, or as an individual? Since we pay income taxes as individuals, and not as states, I believe anyone who tries to parse the statistics based on collective data, is being misleading. Or, as Mark Twain would say, lying.

Will the SALT exemption remain in place, or will it disappear in the tax bill's final form? It probably depends on which statistics get the most media support. Since most of the big-media headquarters are located in big cities located in states with high-tax rates, I'm going to guess the media will focus on statistics that make their states look like victims, even though individual citizens are not paying into federal programs at the same rate as their smaller, low-tax states.

Numbers don't lie. Or do they?

Sunday, November 5, 2017

If the Flag Doesn't Symbolize Unity, What Will?

This is a Special Edition of Blank versus Blank. This post is the presentation of a single side of an issue. Because it is only one perspective, we call this a Blank Verse.

This Blank Verse is presented by David.

 We are a very diverse nation. And we have very diverse opinions. But overall, we have much more in common than we don't.

The NFL protests this season have opened up considerable dialogue, although not exactly what the NFL would have preferred, or the players anticipated. Several players have offered up their view that the protests about an inequality within the justice system, is a unifying event.

It isn't. The why of their protest was overshadowed by the when of their protest.

It used to be that many Americans spent their Sunday afternoons watching the NFL. It was a unifying event. But now, for many, the introduction of politics into the sport destroyed that unity. According to ratings, many Americans are now spending their Sunday afternoons doing other things.

After the President got involved, likely for political gain, the players doubled down on their calls for unity. But it was a call for unity within their teams, not unity as a country. It should have been obvious to them that they were on the wrong side of this argument when Pittsburgh Steeler Alejandro Villanueva's jersey became the best-selling jersey in America after he stood for the anthem alone, as his team "unified" within the locker room.

Alejandro Villanueva standing alone for the National Anthem

Drew Brees, Saints quarterback, said, "Do I think that there's inequality in this country? Yes I do. Do I think that there's racism? Yes I do. I think that there's inequality for women, for women in the workplace. I think that there's inequality for people of color, for minorities, for immigrants. But as it pertains to the national anthem, I will always feel that if you are an American that the national anthem is the opportunity for us all to stand up together, to be unified and to show respect for our country." (Brees stood for the anthem.)

It is regrettable that icons of national unity like “The Star Spangled Banner” and the American flag are being used for division, no matter how worthy the cause.

The players who didn’t stand for the anthem have cited numerous reasons for their protests, such as police brutality, racism, and even opposition to President Trump and his policies, but the general, overriding message they are sending is this: We are not a united country anymore.

On June 14, 1777, the Continental Congress resolved "That the flag of the United States be thirteen stripes, alternate red and white; that the union be thirteen stars, white in a blue field, representing a new constellation."

The United States Flag predates the adoption of the U.S. Constitution by 12 years. It's been a part of America longer than the basis of our legal system that the NFL players are protesting against.

In South Boston, Virginia, at the Annin Flagmakers factory , workers were asked by their local newspaper to name life's most important elements. No matter the political or ethnic backgrounds, the same answers come back: family, work and faith. When asked to sum up the values Americans broadly share, they point to their handiwork and what it stands for — freedom, opportunity and prideWhen presented with the idea of living in any other foreign land, they uniformly say "no, America can't be beat".

"We may be divided on some things, but when it comes down to the most important things we come together," said Emily Bouldin, a 66-year-old seated before a jabbering sewing machine on an Annin production floor awash in red, white and blue. "Because we realize, together we stand, divided we fall."

"The United States is the freest and the best country on this earth and that flag represents that," said Ed Haney, a 69-year-old maintenance mechanic at the Annin plant.

The NFL protests, because they are so open to interpretation, are ineffective. Whatever message these players are trying to send is obscured by the reckless way they’re doing it. There are plenty of other venues for protests. This is not the forum for such protest. By this time, most (but not all) of them clearly realize their tactical error. They have begun kneeling at some point during the pre-game, but they are standing for the anthem.

However, one thing is for sure, recreating national unity can’t come from top-down economic solutions or policies. It can only come from a healthy, revitalized culture and leaders who know how to channel it in the right direction. A stand for unity in America is healthy, in the right forum, and with a unified goal of making America the best that it can be.

America was never a perfect nation, but we have made incredible progress. The flag represents our aspirations and goals. It represents the best of America, not the worst.

Watch this short video of a men who had a dream of raising a 400-foot flag pole in Wisconsin, and see the excitement the project brought about in everyone involved, from designers, to engineers, to the construction crew. The flag is unifying. A really big flag is really unifying.

The Making of the Acuity Flagpole.

The American  flag itself is the most easily accessible image for unity. Is it lawful to burn it? Yes. Is it lawful to take a knee during the National Anthem? Yes. But is it unifying to do so? Absolutely not.

It may be permissible to do something, but it is not necessarily beneficial to your cause. In the instance of the NFL, protesting during the displaying of the flag and the playing of the National Anthem has aligned many Americans against the players and their cause. The message has been lost because of the manner of protest.

A great many Americans treasure the flag for very personal reasons. Members of the military specifically believe they have fought, and many of their peers have bled and died for this country and it's ideals. The American flag represents that sacrifice and the deaths of any soldier who has ever worn the uniform of our country.

These same veterans admit that one of the ideals they fought for was free speech, and for Americans to be able to protest. They understand better than most of the protestors why these rights make America a great country. But they don't have to like it, or condone the disrespect to the flag and all of the great things it represents.

What the NFL players seem to have finally realized, is that taking a knee during the anthem was the wrong manner and time to make their point. Did it start a discussion? Oh boy, did it. But Colin Kaepernick's original message has been overshadowed by the fallout over the choice of protest. Within a few short months, the NFL has fallen from it's perennial spot as America's most popular sport. Major League Baseball has taken over that spot just this year. There are other factors that play into this shift, such as the resurgence of the never-win Chicago Cubs finally winning the World Series last year. But while the NFL toppled, and it's negative ratings climbed, college football remained stable in it's fan base and viewership. So it's only professional football that is currently falling. Most polls list the NFL protests as a major factor in fan opinions. And the opinions have largely been negative.

The American flag can unify us, in a time where unity is needed.  Go out and buy one and hang it on your house today.  If the flag as a symbol can't unify us, is there anything that can?

We are all Americans, even when we disagree about the solutions to our problems. Whether it's Obama or Trump who wears the mantle of President, they both stand in front of an American flag, and represent our country to the world. I disagreed with Obama, and you may disagree with Trump. That's America, my friend. Let's rejoice in our Americanism.

There are calls for national unity everyday, yet those calls are usually followed by the usual, divisive identity-politics-messaging. Real unity will come from people like you and me, who choose to find unity with those around us each and everyday. It also means we have to find unity with those who disagree with us, each and every day.

Let's be Americans. Together.

Have a thoughtful Veteran's Day this November 11th. The NFL is planning for some extraordinarily big celebrations next Sunday. Perhaps they can repair some of the damage the've done. Waving some flags and sincerely applauding veterans will certainly be a unifying step in the right direction.