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Getting Politics Wrong

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Politics is generally more complicated than the ideas people have about it. Paul Waldman of The Washington Post has a column today called “Six things people believe about politics that are totally wrong”. I wouldn’t go that far, so I’ve added a few comments in italics. 

Like many billionaires, Elon Musk apparently sees himself as a genius not only in areas where he has real experience but in all things, including politics and government. Which is why he tweeted this about the omnibus spending bill Congress passed last month:

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This is a common type of misinformation, one that swirled about with particular intensity regarding the omnibus bill. Not that Musk doesn’t believe it; I’m sure he does. His tweet shows how easy it is to be seduced by ideas that have intuitive appeal but are completely wrong.

Let’s begin with Musk’s assertion and work our way through some other widespread but pernicious ideas about how politics works:

1

“If members of Congress read bills before voting on them, legislation would be better.”

How could anyone oppose that? But the truth is that most legislators usually don’t read the text — and that’s fine. It isn’t because they’re lazy. It’s because legislation involves a specialized type of language, written by experts for purposes that have nothing to do with understanding and wise decision-making. Members should know exactly what they’re voting on, but the text of bills is only tangentially related to that goal.

The omnibus bill runs more than 4,000 pages, because it’s funding our extraordinarily complex government, which does all kinds of things we want it to do, and it is written in arcane legislative language. I don’t care much whether my senators pored over the section on rural electrification and telecommunication loans that specifies this:

For the cost of direct loans as authorized by section 305(d)(2) of the Rural Electrification Act of 1936 (7 U.S.C. 935(d)(2)), including the cost of modifying loans, as defined in section 502 of the Congressional Budget Act of 1974, cost of money rural telecommunications loans, $3,726,000.

Neither should you. It’s enough that they’ve been told, and are okay with, about $10 billion being spent in that particular section.

Except that legislators often don’t know exactly what they’re voting on, for a variety of reasons. They rely on their staffs and lobbyists to tell them what’s in a bill; they wait for Congressional leaders to tell them how to vote; and the legislative process is often too complicated and disorganized.

2

“If only we stopped wasteful spending, we’d solve most of our problems.”

Waste is bad, after all. And there is plenty of waste in government, just as there’s waste in pretty much every corporation and nonprofit organization everywhere.

But when someone rails against wasteful spending, they seldom specify exactly which spending is supposedly wasteful.

If you press them, they’ll probably cite either spending that’s utterly trivial — some silly-sounding program that spent a few hundred thousand dollars somewhere — or spending that is quite important but they don’t happen to like. Some people think Medicaid is “wasteful,” but the tens of millions of Americans who count on it likely disagree.

As a corollary, some assert that stopping spending will tame inflation. “The ONLY way to stop soaring inflation is to STOP RECKLESS SPENDING,” Sen. Rick Scott (R-Fla.) tweeted last month. Sounds reasonable, right? But inflation is declining, not soaring, and while the level of government spending can contribute to inflation, lots of other factors affect it too: interest rates, the resilience of supply chains and the weather, to name a few.

The truth is that people such as Scott who rail against “wasteful spending” want to spend on some things, but not others. The omnibus bill contained a staggering $858 billion for the Pentagon. At the current rate of growth, we’ll spend more than $10 trillion on the military over the next decade. Ask Republicans whether we should cut that to tackle inflation and see what they say.

Nevertheless, there is wasteful spending that isn’t trivial at all and that deserves more scrutiny. Consider what Charles Pierce of Esquire has written about the F-35 fighter plane, production of which is ten years behind schedule:

This turkey is nowhere near the national disgrace it deserves to be. It simply does not work, which has not stopped the U.S. defense industry from peddling it around the globe…..There was a time when its ejector seats decapitated the crash-test dummies. There was that other time when it could not fly in a thunderstorm because its fuel tanks would explode if struck by lightning. [A] General Accounting Office report was completely merciless. It opened a window into the Alice In Wonderland world of the defense budget.

3

“My family balances its budget. Why shouldn’t the government?”

The reason is that the government is not a family or a household. For instance, when times are tough, deficits do, and should, go up. That’s because the government brings in less revenue and has to do more to help people. If the government slashed spending during every recession to balance the budget, it would only make things worse.

Your family also probably borrows money to invest in important long-term projects that cost too much money to pay cash up front — like your home or your education. So should government.

Yet the government also borrows for short-term operations. And when times are good, balancing the budget and even running a surplus would make sense. The Clinton administration did it four years in a row, the only four years it’s happened since 1970 [Wikipedia].

4

“Government should be run like a business.”

But government isn’t a business. It’s not an enterprise devoted to obtaining profits. It does many things that cost money but don’t produce a financial return, like delivering mail to far-flung rural addresses or caring for the sick.

Or building fleets of fighter aircraft. This commonplace wisdom really is totally wrong.

5

“The parties need to stop the partisan squabbling and get things done.”

This is an incredibly common idea, one driven by the presumption that political differences are meaningless. But especially in our polarized age, political differences are incredibly meaningful.

Partisans “squabble” over questions such as whether abortion should be legal, whether taxes for the wealthy should go up or down, what to do about climate change, whether to extend health coverage to more people and whether workers deserve higher pay, to name just a few.

There aren’t nonpartisan answers to these questions just waiting to be seized if people would put aside party loyalties. Those loyalties are driven by deeply held values, and, a lot of the time, conservative and liberal values aren’t compatible.

Although too often, politicians squabble in order to score political points. In recent years, it’s been Republican politicians making the most trouble, in order to rile up their supporters and get on Fox News.

6

“We need more people in Congress who aren’t politicians.”

You hear this often from first-time candidates, who present their lack of qualifications as their key qualification. Yes, politicians are prey to some bad tendencies — self-aggrandizement, cravenness, short-term thinking — but just as you wouldn’t hire an accountant to rewire your house or an electrician to do your taxes, you need people who understand politics and policy to deal with political and policy questions.

A grain of truth here is that Congress would benefit from having more “statesmen”, members more dedicated to the public good than keeping their jobs. Mr. Waldman could have added “self-preservation” to his list of negatives.

To return to the omnibus spending bill, none of this means there aren’t objectionable things in the bill. There are. But they didn’t get there because members didn’t read the bill, or because anyone was being “reckless,” or because of a deficit of common sense. They were choices, some of which you might like and some of which you won’t. That’s how policymaking works.

Why Infrastructure Is More Than Roads and Bridges

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Merriam-Webster defines “infrastructure” as “the system of public works of a country, state, or region — also : the resources (such as personnel, buildings, or equipment) required for an activity”.

Jonathan Cohn of Huff Post explains why improving the services that help people prosper counts as infrastructure:

Building roads and bridges is good for the economy, pretty much everybody agrees. But helping senior citizens stay out of nursing homes? Raising pay for child care workers? 

President Joe Biden says those sorts of initiatives can help, too. And he’s got a strong case.

Ever since the 2020 presidential campaign, Biden has talked about having the government spend a lot more on caregiving ― for children, older adults and disabled people. . . [He] pointedly included them as part of his economic agenda, arguing they would create better, higher-paying jobs and unleash untapped potential for growth.

Now Biden is president, and his approach hasn’t changed. On Wednesday, he introduced the first half of what he has called his “Build Back Better” agenda. And although he proposed big new spending on traditional infrastructure projects like bridges and waterways, he also proposed a dramatic increase in federal support for “home- and community- based services.” 

Those are supports and services for elderly and disabled people who need help with daily living to stay out of nursing homes or other types of congregant care settings. In practical terms, that means everything from personal attendants who help seniors with bathing to counselors who help people with intellectual impairments find jobs so they can live on their own.

More proposals are on the way. The second half of the Build Back Better agenda, which Biden plans to introduce later this month, is likely to include major new initiatives to make child care and preschool more widely available, as well as some kind of paid leave program.

And these do not appear to be token gestures. Wednesday’s home care proposals envision $400 billion in new federal spending, accounting for nearly one-quarter of the $2 trillion package Biden unveiled. A meaningful initiative on child care and preschool would likely require hundreds of billions of dollars more.

The primary case for these initiatives is that they make life easier on a day-to-day basis. That’s certainly true for the home- and community-based services Biden proposed on Wednesday to support.

Medicaid, the government health insurance program that states operate using federal funds and under federal guidelines, already pays for nursing homes and other forms of institutional care. And there’s no pre-set limit on that spending. The more people who need the help, the more funding Medicaid provides.

Medicaid also pays for services at home and in the community, but with limited allotments that don’t rise with demand. This disparate treatment is a legacy of the program’s history. When Democrats created Medicaid in 1965, during Lyndon Johnson’s presidency, there was a much bigger push to keep older and disabled people in institutions ― and much less awareness of how many of them wanted to, and could, stay at home.

The lack of open-ended funding forces states to cut off enrollment and put everybody else on waiting lists. Nationwide, about 800,000 people are now on those lists, and some have been for years. It’s a well-known fact that deters many others from even trying. Most experts think the actual unmet demand for home- and community-based services is closer to 1.5 million.

For decades, advocates have proposed putting home-based care on an equal footing with institutional care. That way, the choice between whether to stay at home or to go into a congregant living setting would be about the preferences and needs of individual people and their families ― not because of a financial disparity rooted in a decision lawmakers made half a century ago. . . . 

Biden’s proposal “can help millions of Americans who live with disabilities or chronic illnesses receive needed care at home or on a human scale within their own communities rather than within institutional settings,” Harold Pollack, professor at the University of Chicago and an expert on long-term care, told HuffPost.

Other types of caregiving are just as sorely in need of extra federal support.

Quality child care in the U.S. is notoriously hard to find and financially out of reach for large numbers of working families. The U.S. is the only country in the developed world that does not offer paid leave, which puts a huge strain on workers whenever they have children or older family members battling medical problems ― and sometimes when they have medical problems of their own.

Caregiving has gotten more attention generally in recent years, especially from Democrats. The new twist, from Biden, is to place these proposals alongside traditional infrastructure projects as part of a broader economic agenda.

That’s bound to seem like an awkward fit, at least to some people, because infrastructure spending more commonly consists of front-loaded or one-time expenditures ― money for airport runway expansion or the construction of a pipeline that stops flowing once the projects are done.

But the economic benefits of caregiving initiatives are real. For one thing, caregiving is literally an investment in making individual human beings more productive. This is most obviously the case when it comes to early childhood programs. Research has shown repeatedly that, when infants and toddlers get good care, they are more likely to stay in school, remain employed and stay physically healthier as adults.

That logic applies just as surely to home- and community-based services, especially for disabled people, many of whom can go to school and join the workforce with proper support.

“It has a huge economic development component,” said Nicole Jorwic, senior director of public policy at The Arc, a civil rights organization for people with intellectual disabilities. “You’ve got all these people with disabilities who right now are on waiting lists, and can’t work because of services they need in order to … become part of the economy.” 

Another way government caregiving initiatives can help the economy is by providing the families of children, disabled and older people with more choices about how they spend their time. Many caregivers will choose to work more outside of the home, putting specialized skills to use, because they will be able to know their loved ones are getting the care they need. . . . 

One final way a caregiving agenda can help boost the economy is by improving the pay and working conditions for the professional caregiving workforce, which is another part of Biden’s agenda.

The median hourly wage for home health aides is barely more than $12, for example, which is about what retail workers and parking lot attendants make. For child care providers, the median hourly wage is even lower. Meanwhile, those caring for children and older people do some of the most intimate, difficult jobs imaginable.

“We place a high value on the work that [caregivers] do, and we don’t pay them in a way that’s consistent with that value,” Sen. Bob Casey (D-Penn.) told HuffPost. . . . 

Doing this all at once ― helping more people to pay for caregivers while simultaneously requiring that caregivers get higher pay ― makes the project a lot more expensive. . . .That’s bound to be a hard sell politically . . . , perhaps even among some conservative Democrats . . . . That is undoubtedly one reason why Biden and his allies are talking about these proposals in the context of their potential to create a more dynamic economy. . . .

As Ai-jen Poo, executive director of National Domestic Workers Alliance, put it on Wednesday, “like our physical infrastructure — roads, bridges, green energy — our care infrastructure needs permanent investment to ensure our communities can thrive.”

Congress and the President Do Something Big for a Change

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One congressman said he and other longtime Democratic lawmakers feared they’d never do anything consequential in Congress again. But the American Rescue Plan (aka the Covid relief bill) will be extremely consequential. There’s much more in it than $1,400 checks for most Americans and extended benefits for the unemployed.

Paul Waldman of The Washington Post describes some of the bill’s other features, the totality of which make this an historic bill (that, unlike the only major legislation of the past four years, isn’t designed to help corporations or the rich):

If anything, we’ve underplayed how significant this bill is.

Yes, those subsidy checks are important . . . A family of four with a household income under $150,000 will get $5,600, even before other measures, such as the boosted child tax credit, are accounted for. That . . . will provide a tremendous boost of economic activity that will accelerate the recovery; the American economy is now projected to grow this year at a pace we haven’t seen in decades.

But . . . the bill is full of provisions that could have significant or even transformative effects on the country, many of which have gotten little or no attention:

The child tax credit. For the next year, the bill increases the child tax credit and makes more of it “refundable,” which means that more people with very low incomes will be able to get that credit as a refund even if they’re paying little or nothing in taxes. It will also send the child tax credit to families on a monthly basis, rather than having it as something they might or might not get as a lump sum after filing their taxes. . . . 

The Earned Income Tax Credit. The bill expands the EITC for childless low-income workers; 17 million of them could see a boost in their after-tax income.

Pensions. The bill includes a provision championed by Sen. Sherrod Brown (D-Ohio) that bails out a group of 185 multi-employer union pension plans that are in danger of failing. As the New York Times put it, “without the rescue, more than a million retired truck drivers, retail clerks, builders and others could be forced to forgo retirement income.”

Student loan debt. Under current law, if you have outstanding student loan debt that is canceled, the IRS treats your forgiven debt as income, which can result in a huge tax bill. Millions of borrowers on repayment plans pay a set portion of their income every month, and after 20 years the remaining balance is forgiven. The ARP would make that kind of loan forgiveness tax-free, and it would also apply to future loan forgiveness the Biden administration might undertake.

Exploitation of veteran students. The ARP closes a loophole in student-loan rules that has provided an incentive for colleges, particularly for-profit operations, to heavily recruit veterans paying for college with the G.I. Bill; these veterans are often roped in with false promises and then left without a degree or a good education.

Farmers. The ARP provides billions of dollars in assistance to disadvantaged farmers, many of whom are Black. As The Post reports, the bill would benefit “Black farmers in a way that some experts say no legislation has since the Civil Rights Act of 1964.”

Affordable Care Act subsidies. Under the ACA, only those earning up to 400 percent of the federal poverty level, or $106,000 for a family of four, are eligible for any subsidies to help afford health insurance they buy on the private marketplaces. The ARP removes that limit, meaning those at higher incomes could get some help if their insurance costs more than 8.5 percent of their income. In addition to removing this “subsidy cliff,” it also enhances the subsidies for those at lower incomes, which will mean significant premium cuts for many people.

Medicaid expansion. Twelve states have still refused to accept the ACA’s expansion of Medicaid, leaving huge numbers of poor citizens without health coverage. The ARP boosts the federal contribution to Medicaid so that holdout states will actually make money if they accept the expansion. According to the Kaiser Family Foundation, if Texas accepted the expansion, it would [improve] its state budget [and provide] coverage to 878,000 uninsured, low-income Texans.

Mass transit. The bill includes $30 billion to shore up mass transit systems that were hit hard by the pandemic, forestalling service and maintenance cuts. As Mike Konczal of the Roosevelt Institute says, “Where we’d normally see the recovery worse from cuts, and financial weakness used as a cynical excuse to slash, privatize, and never restore public functions, the ARP moves to stop that dead in its tracks.”

There’s plenty more, including funds for child care, rental assistance and food assistance, among other things. Some of these provisions, including the student loan forgiveness provision, the pension bailout and the “subsidy cliff” fix, will only be in effect until 2025. Democrats are hoping that they’ll prove popular and effective enough that they can be made permanent. It’s a good bet that at least some of them will.

There’s a lot more to say about this bill, especially how it represents a rethinking of fiscal policy and the incentives government provides citizens. . . . But the big picture of the American Rescue Plan is that, to paraphrase a former vice president, this is a seriously big deal. And the more we learn about it as it gets implemented, the bigger it will probably look.

In a Crisis, Bigger Is Better

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Paul Krugman explains why Biden’s Covid relief package has to be big (I’ve left out some of the economics discussion, but left in the history):

. . . No, the Biden plan isn’t too big. While [some] pundits’ concern that the size of the package might produce some economic stresses isn’t silly, it’s probably overwrought. And they have the implications of an expansive plan for the future completely backward: Going big now will enhance, not reduce, our ability to do more later.

. . . What policymakers are trying to do here is like fighting a war — a war both against the pandemic itself and against the human fallout from the pandemic slump.

And when you’re fighting a war, you don’t decide how much to spend by asking “How much stimulus do we need to achieve full employment?” You spend what you need to spend to win the war.

Winning, in this case, means providing the resources for a huge vaccination program and for reopening schools safely, while limiting the economic misery of families whose breadwinners can’t work and avoiding gratuitous cuts in public services provided by fiscally constrained state and local governments.

And that’s what the American Rescue Plan mostly involves; it is, as Biden’s economists say, a bottom-up plan that starts with estimated needs. Using numbers from the Committee for a Responsible Federal Budget, here’s the composition of the proposed package:070221krugman1-jumboAlthough discussion is weirdly dominated by those proposed $1400 checks, they’re only a fraction of the total; medical spending, school aid, aid to the unemployed, and help for state and local governments dominate the plan. And there’s a good case for those checks, too; more about that later.

. . . But what about the argument that there are big elements of the Biden plan that aren’t essential relief?

Skepticism about the substance of the Biden plan, as opposed to its size per se, mainly centers on the idea of sending cash to the great majority of American adults — the so-called stimulus checks, although they aren’t stimulus and they aren’t checks. There are other elements; . . . some believe that aid to state and local governments will be bigger than necessary. But the stimulus checks are the big question mark. So let’s focus on them, and with them the broader question of how to set the stage for future policy.

There’s no question that many people receiving stimulus checks will be people who haven’t taken a serious hit to their income and don’t need special help. In that sense the checks will be poorly targeted, certainly as compared to enhanced unemployment benefits.

However, we know that a substantial number of people experiencing significant income losses won’t be helped by unemployment benefits — for example, those who are still working but at reduced hours or wages. Universal basic payments will give such people much-needed help. True, they’re a leaky bucket, and you wouldn’t want them to be the main element of a rescue plan — but they aren’t! They’re a supplement that will do some good.

And they’re also hugely popular, which isn’t an irrelevant consideration.

Actually, every major element in the Biden plan has strong public approval. But support for stimulus checks is through the roof.

[Note: According to a poll taken this month, 68% of voters want Biden and the Democratic Congress to pass a relief package that will do the most to stop the spread of coronavirus and help people economically. Only 32% favor a smaller package that will do less but have bipartisan Republican support.]

Now, policy shouldn’t be driven entirely by opinion polls. But if you care about setting the stage for policy beyond the pandemic, delivering the goods to voters in the first round will be crucial.

Of all the arguments made by critics of a big rescue plan, the one that really has me rubbing my eyes is the suggestion that we should scale the plan back to make room for later policies, like investment in infrastructure. Wasn’t the overwhelming lesson from the Obama years that that’s not how it works? The effective constraint on good policy isn’t financial, it’s political — and as a result underpowered policy in the short run ends up killing the chance of good policy in the years ahead.

A trip down memory lane: Back in 2009 I was more or less frantically warning that the Obama stimulus was too small, and a key part of that warning was my fear that going small would undermine future policy prospects. Here’s what I wrote in January 2009:

“I see the following scenario: a weak stimulus plan, perhaps even weaker than what we’re talking about now, is crafted to win those extra GOP votes. The plan limits the rise in unemployment, but things are still pretty bad, with the rate peaking at something like 9 percent and coming down only slowly. And then Mitch McConnell says “See, government spending doesn’t work.”

“Let’s hope I’ve got this wrong.”

Alas, I didn’t have it wrong.

Circumstances are different now, but the basic logic is the same. If you want effective policy on infrastructure, on the environment, on children and more, Biden has to deliver big, tangible benefits with his rescue plan. Otherwise he’ll squander political capital, and probably lose any chance to do significantly more.

So this plan really needs to go big. The risks, economic and political, of falling short are huge, and should [end the discussion].

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