Hey Voters! Wake up! You are being tricked!
Originally published Thursday, October 22, 2009.
Greetings loyal subscribers.
I write to bring a matter to light which of course should make every good political thinker, with half a brain in his head laugh, if it wasn’t so tragic. At the university where I am currently enrolled and employed, they have a little student newspaper called the Daily Egyptian. Its name is a bit a curiosity: Daily, obviously because it comes out daily, is frequently left off the title when people are referring to it in speech. Egyptian refers to the fact that the people of this region between the Wabash, Ohio and Mississippi south of St. Louis, refer to their home as Little Egypt. There are historical reasons for this, while none of them involve a significant portion of Egyptian settlers in the area. But I digress.
Today, The daily Egyptian published an article in that paper, which pretty much sums up every state’s budgetary crisis. The article is (somewhat incorrectly) titled: “Voters want Cuts in Budget, not Services.” Leaving aside the fact that the budget of the state is made up of services and salaries, the title of the article would have us believe that voters supported cutting salaries to balance the budget. This is a function of a poorly titled article. The meat of the work, however, is a bit more demonstrative of the problem in this country.
Reading the article, I discovered that it is not a cut in the budget people wanted, but they wanted to not have to pay taxes.
Green Bay protestors Demand Things for Nothing!65% of the respondents of a recent survey were opposed to a very modest increase of income taxes from 3% to 4.5% in this state. The silver lining for the poor, perhaps is that people were almost unanimously opposed to an increase in the regressive sales tax. And yet people still oppose any cuts in the services they individually enjoy. As a result, legislators have put off any discussion of increase of taxes until after the primary elections next February, so their opponents can’t use taxes against them in an election. Meanwhile, the future of most public services is still up in the air, and the state is having to not pay its contracts. That uncertainty threatens jobs.
So let’s think about this a second: where did this notion that we could have something for nothing come from? There is a long standing opposition to income taxes, or any taxes in this country. The most striking revolt against taxes in recent American history, more striking than the poorly conceptualized and even more poorly opaqued “Tea Parties” of earlier this year, came in the late 70’s, in the tax revolts led by the conservative movement in California; that same movement propelled Regan into the White House January 20, 1981. In California, these conservatives used the ballot initiative system, originally championed by progressives in the state, to enshrine their narrow-minded political opposition to having to help fund social programs in Proposition 13 (which was actually about property taxes). Other states followed suit. The most onerous passage in that proposition was that 2/3 of the legislature had to approve any change in the tax rate, including income taxes.
The result of these short sighted policies was a massive transfer of revenue out of the state government and into the pockets of the rich, who benefited because their property tax rate was effectively halved. Meanwhile, state services, which were enacted while California had the ability to adequately fund itself, continued as if the revenue stream had not been affected. Into the 90’s, and perhaps even the early 2000’s California colleges and universities were for all practical purposes, free for California residents. People got upset by increase of tuition in the California system to like 49$ a credit hour. They had for so long been so used to nearly free higher education that they viewed it as an entitlement, and were justifiably upset when the state announced that that system, at that price, was no longer sustainable.
It seemed that few remembered that the reason that California schools were in such dire straits was the selfish and greedy action of conservatives in the late 70’s. California’s economy, the 6th largest economy in the entire world, had been slowly bled dry over 20 years of comprehensive and criminal neglect. Budgetary shortfalls and massive borrowing are now the annual norm in California’s budget process, and people are getting tired of lending to California. As a result, services are slashed, removing entitlements from middle class people, and nearly completely eliminating the social safety net for the poor. Meanwhile, the incarceration rate of Californians is among the highest in the western world. All because California ignores the advice of people like Warren Buffett and refuses to give itself the power to take a little more from those who are most able to pay it.
What does California have to do with Illinois? Well, the answer is as simple: people in this state have exactly the same attitude toward taxes in this state as they do in California. Few of our residents think they should have to pay them. This article in the Daily Egyptian that I cited above clearly lays that fact out, once you get past the title: Nobody wants their income taxes raised, but nobody wants any cuts in services either. As the article says, that is an “irrational” way to plan a budget. And the people that express these attitudes are similarly irrational.
Let’s think about this. In my part of the state, there are a LOT of poor people. When people think of Illinois, they generally tend to think about Northern Illinois, that is, Chicago, or the rolling prairies covered in corn, wheat, and other cash crops. People don’t know that there are places in Illinois which are a lot like Appalachia. We have enduring and systemic poverty, widespread and prolific drug and alcohol abuse, a collapsing extractive economy, unemployment, and general despair. Southern Illinois is in many ways like a tiny third world country. We may have it better off than some Indian Reservations, but not much better.
So the state, who refuses for political reasons, to raise taxes, cuts services for these people. There are no longer services for homeless youth in Williamson County, which could have been the difference between these kids doing something positive and productive with their lives and them turning to a life of crime. Carbondale closed the childcare center in the black neighborhood in our town (which is still quite segregated, for all our claims of having liberal attitudes) because they weren’t getting enough funding from the state to cover the costs. As a result, the parents who relied on that center to watch their kids while they went out and worked, had to make other arrangements. This story is repeated over and over again in a state that refuses to raise money so it can pay its bills.
We got a temporary infusion of money from the federal stimulus bill, and those funds have gone to save and even slightly expand some services to the poor, but those funds will disappear in 2011, and then the people are back to where they started. It is questionable whether the legislature will have developed the political will by that point to do something that is unpopular, but necessary, which is to raise taxes.
Why do people so oppose taxes, some might ask? Why do they want to keep social programs but do not think they as individuals should have to put in anything to help support those programs? Why is it, in this state, and around the country, we think a 3% income tax is too high? I think it is because of a number of flaws in the way we see ourselves in this country. Allow me to lay out some of those mental defects that we as a society have.
1) We have been taught that we are all individuals, and hence are responsible for our own welfare. Who taught us this? Who knows? Who cares! But the message is daily reinforced, in schools, homes, extracurricular activities, on television, in many a church, in our workplaces, etc etc etc. If we can’t adequately provide for our own welfare, there is something wrong with US. Consequently, the poor are poor because they are either lazy or stupid. The rich, conversely, are rich because they are industrious, innovative, and ingenuous. And it is not important what resources the individual had at his disposal when he was born. The poor apparently, through hard work, have the same opportunity to be rich as the rich people who are born into a wealthy family. That they regularly and consistently fail to accomplish that apparently easy goal says something about the poor as human beings.
2) An important corollary to this is that not only are we individuals, but we are the most important individual, the most creative, the best speller, the best worker, etc. We should get trophies just for showing up, just for gracing others with our presence. We deserve to be wealthy, we deserve to be famous. And anyone who says we aren’t the most important individual in the world is a jerk who can’t seem to get it through their head that what we are individually doing is far more important than what anyone else is doing.
3) We have been taught that when we go to work, what we make is wealth. Further, that wealth is somehow OUR wealth individually, and doesn’t belong to anyone else. It is ours to individually dispose of as we see fit, and no other person has any legitimate claim on any of that wealth. We only put up with the minor impositions of the state on our wealth either because we have to, an attitude that sees taxes as a mugging in broad daylight (though it is important to note that those who can do something about it, like hiding it in some offshore tax shelter, frequently, but not surprisingly, do), or because we don’t know about it, as in the case with sales tax which is simply added into things we buy without us actually thinking about it. Since we are scarcely aware of the fact that sales tax is being collected, we focus on income and property taxes, which we actually have to attend to deliberately. If those claims on our wealth become too much, no threat of jail will be enough to stop us from revolting, or at least attending a tea party.
4) Not only do we oppose income taxes and property taxes, but we also think that we should be able to enrich our children without them having to incur any obligation to do anything responsible with that wealth. And we believe that we should be able to gamble in the stock market to make more wealth with our individual wealth, without having to pay any taxes on those earnings, that we should be somehow rewarded for being willing to gamble with our wealth. And we believe this, almost to a man, regardless of whether we actually have enough wealth to participate in these activities or not. We believe that we owe nothing to the society that allowed us to make the money or regulated the economy so we could produce a predictable outcome.
5) We have some sense that social welfare programs are means tested: that is, we know that social spending goes to people with few means, but not us. We also know that the poor pay very little, if anything in taxes (though their tax obligation is frequently collected at the point of sale, and nobody gets any of that money back). So there is this seeming discontinuity in the state’s social welfare programs: The people who are being taxed to support those programs don’t get anything for their taxes, while those who are able to avoid paying income taxes because they don’t even earn enough money to incur any liability, tend to get social welfare programs. It doesn’t dawn on us that those people get those programs precisely because they don’t make enough money to incur a tax liability. Instead, we just focus on what we AREN’T getting for the mugging we face every April 15- it turns the poor, who have the least amount of political power in this society into the mugger.
6) There is a power disparity in the state between the haves and the have-nots. Those people who resent having to pay taxes so poor people can eat, and would just as soon let them starve in the streets, are ironically the same people with the most power over the continuance of those programs, while those who have a vested interest in the perpetuation of social programs have the least ability to advocate on behalf of those programs. We all know that money equals access in our state and national capitals. The rich have the ability to lobby legislators for cuts in property/capital gains/income taxes, while no legislator seems to acknowledge the homeless person who asks him for change while he goes into work as lobbying for the poor. Consequently, legislation is passed that benefits the people wearing suits and ties, and which incidentally also happens to hurt those wearing every piece of clothing they own, just trying to keep out the cold. It’s a strangely perverse form of equalizing in a means tested environment. The poor benefit from means tested welfare programs more than the rich, so the rich spend their money to reduce that disparity and ensure that the poor don’t benefit from anything ever. They got enough of our tax dollars in their food stamps already…
All this leads to a social welfare system that is fundamentally broken. And I should also note that when I discuss social welfare, I’m not just talking about temporary assistance to needy families, or food stamps or Medicaid. I am also talking about the state education system, which funds tuition for kids and pays for books, as well as higher education, as well as public health programs, as well as every other outlay in state funds. Childcare services, foster care services, reduced lunch programs, adult literacy programs, the public library, the police and fire departments, road maintenance, infrastructure maintenance, etc etc, all comes out of state money. And all are affected by this really twisted attitude that Americans seem to have adopted vis-a-vis paying taxes. The public sector takes a hit every time costs of maintaining what exists at the moment (saying nothing about expanding) increases, and the state refuses to increase its revenue stream.
There is one more piece to this sick puzzle which needs to be addressed, however, before I move on to prescription: That is the role of the federal government in all this mess. For so long states have been able to get away with not raising taxes, which in effect, institutionalized this hatred of putting “individual” wealth into the public coffers, because they were largely subsidized by the federal government. Well, the reason why we have a budget crisis in so many states now, is not because anything has really changed all that much in the states. Things are pretty much the same in California in 2009 as they were in California in 1979, except for inflation which has destroyed a portion of the surplus. It’s not like, over the last thirty years, all business has disappeared from the state of Illinois. Instead, a very vital source of funding has dried up, and that is on the national level. The federal government is no longer able to fund a lot of the mandates they have placed on states over the decades since the 1970's.
Why not? We have one of the largest economies in the entire world. We have a GDP per capita of around $47,000 in 2008. That is, as a generic citizen of the US, my share of the total production of the US economy, all manufacturing, services, finance, and public sector is around 47 thousand dollars! Consequently, I, as a generic citizen of the US, am among the richest people in the entire world. So why is it so hard for our federal government to help the states do the things the federal government has mandated that they do?
Well, the answer is that the same people who were responsible for the tax revolts in California got their guy elected as President in 1980. Since then there has been less and less commitment to kicking down federal funds for states. Meanwhile, as the public became more and more aware of how the funding scheme for these federal programs in states worked, the anti-tax folks were able to portray federal outlays to states as pork, that is, as something that is corrupted and parochial. Naturally, the public began predictably crying against the same programs that keep their kids educated, that keep their roads paved, that expand infrastructure, and that provide lots and lots of jobs to states and municipalities all across this country.
The ultimate aim of the people who were driving this agenda in the Federal capital was not to clean up corruption or to preserve states rights, as they had claimed while promoting this anti-earmark/anti-pork attitude among the ignorant electorate. Instead, it was to protect more of their money from the taxman, and deny the government the ability to help out the poor in this society. Turns out that social spending is still somewhat popular in the US (as the DE’s article reports), but not as popular as state and federal budget deficits are unpopular.
Consequently, the anti-tax people are able to destroy social spending by reframing the argument as an attack on financial “irresponsibility.” Anyone who listens to this debate knows that “responsibility” is code for “cut spending” or “austerity”. And realistically, cuts in spending never seem to affect those programs which go to help Wal Mart come into a community and destroy all the local competition. Cuts in spending never mean an end to the two wars we are currently engaged in, and they rarely (though more often nowadays) mean cuts in prison funding. Instead, cuts in spending always affect programs for the poor first, and then broader based social spending like education and infrastructure.
Back to the states: having had the federal carpet pulled out from underneath them, and politically unwilling to raise their own taxes to pick up some of the slack from the cuts in federal assistance, states all across the country are now in crisis. While people still support social spending, they have been trained somewhere along the way to resent the fact that they have to pay for it. As a result, they tend to punish legislators who raise their taxes. Because of the way the debate is framed, however, there is not as much cost to cutting social spending, because that is sold as “fiscal responsibility”. And the rich get to get away with paying less and less in taxes every year, because they are able to rally a bunch of sympathetic, albeit somewhat ignorant yokels, using faux populism, to go on television and speak about how a 4.5% income tax would be so onerous and burdensome that it would kill the economy dead.
This situation is untenable. The system is obviously broken. But it should not be abandoned. Instead, it needs to be reformed. I suggest reforms along a number of dimensions:
1) We first need to alter our attitude about social spending. Asking people to do it for themselves, however, will not be effective. There is something the government can do, though. The government can move away from means tested welfare programs and establish more universal social spending. That is, they can make it so not only poor people, but everyone has access to public health services and reduced cost medical care. Education needs to be more fully funded, for all members of society to participate in, regardless of income. Affordable housing needs to me made a priority for all. But politicians need to be careful. For example, our state’s governor said earlier this week that it would be acceptable to make “rides for seniors” available only to poor people to save money on the program. He said there was no reason that rich people should be taking advantage of that program. This undermines the efforts. All people, regardless of income, need to buy into social services, so some people can’t get away with targeting it for their own individual enrichment. In other words, we all need to have a stake in well funded universal social services.
2) If we can’t make social spending universal, we at least need to expand the margins of it. The people who are doing the worst in this society are not actually the perpetually and abject poor, but the working classes, who make just a little too much from having to work three jobs for any of the poor programs, but realize the tax burden the most, because 3 percent of 1200 dollars a month is a lot larger portion of a person’s ability to take care of himself than 3 percent of 10000 dollars a month. Working classes are fundamentally closer to the margin every single month and yet are cut out of means tested programs because they make too much from having to work. If the government can’t seem to muster the political will to make social services universal in their states, at least they could expand the programs to include a larger portion of society.
3) How do we pay for this expansion? Politicians need to raise taxes. Politicians who refuse to raise taxes need to be kicked out of office, and replaced by those who will raise them. Fiscal responsibility has two sides. We can either reduce spending, or we can get a better job that pays more money. Reduction of spending is not an option, because when the state reduces spending, crime, social dysfunction, preventable illness, starvation, ignorance, and death increase. Increase in tax burdens from 3 to 4.5 percent produce none of these effects. No rich person ever starved from having to pay an extra point and a half on his income. And most poor people don’t have to pay that anyway. We could even raise taxes as much as 3 percent, and nobody will be made poor to the point that they starve to death. Cuts in social spending, on the other hand, virtually guarantee that outcome.
4) Another way we could fund it is to restore federal outlays to states. How do they do that? There is a budgetary process that moves lots and lots of money from the federal treasury to the states. But short of printing new money, the federal government could, and probably should institute a two pronged approach to this problem. First, the wars we are fighting need to end and the money we are putting into those wars needs to go into social spending. We can and should say that we have done everything we can do in these foreign lands, and bring our forces home. These wars are a massive drain on the public treasury, as are the contractors who take advantage of our inability to fully support our forces overseas logistically. Therefore, the federal government could and should refuse to make any more contracts with private corporations. This is corporate welfare, pure and simple, and it is sort of ironic that advocates of corporate welfare also happen to be the staunchest opponents of poor relief programs and individual taxes.
5) To offset the loss of jobs that will accompany the ending of federal support of private business, the federal government should begin training people to perform these services on the government dollar. We could theoretically move toward a National Service Program. Rather than paying someone else to do it, meanwhile enriching stockholders in those companies, why not just cut out the middle men and just pay ourselves to do it? You could expand employment, give people skills and jobs at the same time, and move people off of the dole. The federal government could conceivably kill three birds with one stone, while at the same time doing something that at last benefits society.
It is naive to claim that if this program were implemented, there would not be a series of shocks and hardships in the country as we made the adjustment. Most opposition will come from a predictable quarter: those who led the original revolts in the 70’s will be dragged back out. There will be Fox News sponsored and Glenn Beck encouraged tea parties. But even during this period of unrest, good will come out: The opponents of the poor will show themselves for the crass and greedy individuals they are, and as a result, their magical spell over at least some of the population will wear off. The agenda will become clear by who fights against the notion that we should have to pay for the services that 2/3rds of our society demands from its government. And when we know who the real enemies of the people are, at least then we will have a better ability to deal with them as a democratic population.
