Let me say some words sure to make you swoon: Tax Reform.
I know; I know. You’re swooning, but it’s more likely from stupefying boredom than from ardent passion. Assuming you’ve even made it past that sleepytime first paragraph, you may already be suffering from increased drowsiness and slower metabolic cycles. If you’re a politician, you might well be fast asleep.
And that last bit worries me. As near as I can tell, tax reform is getting ignored in the political arena precisely because it’s too sensible. At the buffet table of election-cycle rhetoric, the most popular items are the juiciest -- words like Ponzi Scheme, Class Warfare, and Throwing People Under a Bus. Tax Reform is the nondescript jar of bran, attracting nobody’s attention, but absolutely necessary to make things flow smoothly.
In 2010, President Obama set up an independent commission to identify “policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run.” One of the star ideas in its report (known as Simpson-Bowles after the committee’s co-chairs) was to simplify our nation’s labyrinthine tax code.
They gave lots of good reasons. For starters, the report found embedded in the tax code $1.1 trillion worth of “tax expenditures,” a mildly disguised form of government spending that benefits certain groups by requiring fewer taxes from them, in the form of deductions or exemptions. Those tax expenditures become opaque channels for influence-peddling, encouraging corruption. The report also condemned the current tax code as “hopelessly confusing and complicated,” noting the high cost of searching for loopholes or employing tax preparers to do so. The code “presents individuals and businesses with perverse economic incentives instead of a level playing field.”
I agree with all these criticisms: a complicated tax code is by nature regressive. That, is the poor are the most likely to pay the nominal rate they’re assigned, since they can’t afford to hire accountants with the expertise to guide them through the Enchanted Loophole Forest. The similarly complex corporate tax code reduces the competitiveness of American firms by diverting resources away from productive enterprises and into the search for tax credits and exemptions. And of course there’s the incentive to pour money into lobbying Congress for more government largesse in the form of tax expenditures. By eliminating loopholes in the tax code, the government can lower rates for everyone, cut back incentives for corruption, and actually bring in more tax revenue than before. The big losers are the interest groups who profit from the impenetrability of the current system. And accountants, I guess. Sorry, accountants.
Simpson-Bowles estimated that simplifying the tax code would lead to $785 billion in deficit reduction over the next eight years. That’s a not insignificant amount, even against the $15 trillion national debt. But tax reform’s more important effect is to reduce inefficiencies that constrict our business climate. A clearer, leaner tax code should decrease evasion rates since audits are simpler and therefore cheaper. It should spur the growth of businesses, which can put less money into unproductive tax lawyers and more into expanding their services. Above all, it’ll allow us to gather more revenue while lowering overall tax rates -- so everyone has something to crow to their constituents about.
In fact, that’s one of my favorite things about tax reform -- a lot of people agree on it. A lot of diverse people. Alan Simpson and Erskine Bowles, the co-chairs of that committee whose report I’m talking about, are a former Wyoming Republican senator and a former Clinton Chief of Staff, respectively. (Although, really, no title could convey greater credibility than a name like Erskine, am I right?) The suggestions of the committee, including tax reform, were strongly championed during the debt crisis by a bipartisan group of consensus-minded senators calling themselves the Gang of Six. I perceive a general dearth of angry ideologues hollering about how much they hate the idea of reforming the tax code.
And that seems to be the problem with the idea. If we can’t yell about it, why talk about it at all? In a political climate that treats compromise like a stinky old sock, tax reform stays at the bottom of everyone’s list precisely because it’s on everyone’s list. As Congress sweats over ways to cut the deficit in the next few months, reforming the tax code should be a no-brainer. Democrats can point to increased government revenues that can help keep social programs afloat. Republicans can point to lower tax rates and a more business-friendly environment, both of which will help drive economic recovery. Both can pat themselves on the back for helping trim the deficit. But it’ll only happen if politicians think a piece of sensible, bipartisan progress will be an asset rather than a liability in the minds of constituents. That’s an admittedly big “if”, especially with the 2012 election looming. But this could also be an opportune moment for tax reform – the rotten aftertaste of gridlock is still strong in the electorate’s mouth. I can only speak for this voter, but after the debt crisis goat rodeo, sensible bipartisan progress is looking pretty good.
02 October 2011
19 July 2011
On governance in the Information-Overload Age.
There’s been a lot of wringing of hands lately about how broken the American political system is, and the decline of the objective ideal of the media, and whether democracy even still makes sense anymore. All of which, I think, are important and thought-provoking things for us to be wringing our hands over. Let’s wring those hands for all they’re worth.
But we Americans are bush leaguers. I’m in Argentina right now , where political fatalism is a kind of national pastime. The president continues consolidating power and muzzling or coopting the press, while she coasts to victory after victory on a wave of welfare and patronage. People are so inured to bad behavior in government that their default assumption is that every candidate is corrupt, and in a country where voting is mandatory, this indifference translates into a benefit for the incumbent -- the devil we know over the devil we don’t. Corruption and disrespect for the rule of law raise the cost of transactions, hampering the healthy function of the market and inhibiting a more equitable distribution of the wealth that, despite it all, continues pouring into the country. The popular conception (and here I’m just repeating what I’ve heard a lot of people say) is that the money the government raises from agricultural export taxes goes into welfare programs for poor but able-bodied people, discouraging them from seeking employment and making them into loyal supporters (and, according to some, thugs and goons) of the government. Thus the government continues to win elections without doing anything to substantially improve the lot of its citizens. An Argentine friend of mine averred to me last week his sincere belief that “This country will never change.” Nor is he by any means alone.
But I’m an American, dammit, and an insistence on always seeing a glimmer of hope in everything has been pounded into me from all sides since birth. For one thing, Argentina’s growth has averaged something like 8% over the last decade, as the government will be proud to tell you. (I happen to be of the opinion that this growth has happened largely in spite of, and not because of, many of the government’s policies, and is precariously dependent on China’s voracious demand for Argentine soybeans. But that’s another post.) If nothing else, this is a good sign for those who believe that economic well-being often brings with it cleaner democracy.
I’m probably one of those people, and I’ll tell you why. Because when people are richer, they tend to consume more of everything, including education and news, and a more informed and engaged electorate is bound to make better decisions. A brilliant paper by Claudio Ferraz and Frederico Finan of Berkeley found that in an election coming shortly after a national audit of local government performance in Brazil, towns with a radio station were more likely to vote corrupt politicians out of office. Hooray for media! An even higher-tech (but unproven) idea comes from India, where the New York Times reports that the chief minister of Kerala state installed a webcam in his office, broadcasting to the internet 24/7. Is it going to eradicate corruption? No. Is it a political gimmick? Almost certainly. But in a certain sense it sets the bar a bit higher for everyone else, and more immediately, it reflects the potential for technology to make government more transparent.
I know, I know. We’re also concerned, like I mentioned at the beginning, that we’ve become too saturated in media, that the signal-to-noise ratio has become imperceptibly weak, that the deafening barrage of ideological voices of every timbre allows us each to retreat into our own echo chamber and bark all the more loudly from the comfort of our detachment from reality. I recognize that these are legitimate concerns, and I’m not blind to them. But back to the Indian governor’s camera stunt -- to me it points up the consistent ability of individual human ingenuity to adapt existing resources to new problems. Everyone, not just collectively but individually, wants to live in a country that is governed cleanly, that gives them the opportunity to learn and work and be safe and full. And I think we’re making progress toward that goal, not just in America but in the world, and I think the difficulties associated with all the world’s information being at everyone’s fingertips all the time are outweighed by the opportunities, because we will take that raw material in our hands and make it into something not only useful but beautiful. Maybe this is just because I’m from a country whose pedigree of irrational hopers far outclasses that of its international footballers. I’m convinced the end of the world is still a ways off -- the Argentines still have a long time to polish their political fatalism. But with a little luck and maybe some webcams in high places, that national pastime might just get ever more challenging .
But we Americans are bush leaguers. I’m in Argentina right now , where political fatalism is a kind of national pastime. The president continues consolidating power and muzzling or coopting the press, while she coasts to victory after victory on a wave of welfare and patronage. People are so inured to bad behavior in government that their default assumption is that every candidate is corrupt, and in a country where voting is mandatory, this indifference translates into a benefit for the incumbent -- the devil we know over the devil we don’t. Corruption and disrespect for the rule of law raise the cost of transactions, hampering the healthy function of the market and inhibiting a more equitable distribution of the wealth that, despite it all, continues pouring into the country. The popular conception (and here I’m just repeating what I’ve heard a lot of people say) is that the money the government raises from agricultural export taxes goes into welfare programs for poor but able-bodied people, discouraging them from seeking employment and making them into loyal supporters (and, according to some, thugs and goons) of the government. Thus the government continues to win elections without doing anything to substantially improve the lot of its citizens. An Argentine friend of mine averred to me last week his sincere belief that “This country will never change.” Nor is he by any means alone.
But I’m an American, dammit, and an insistence on always seeing a glimmer of hope in everything has been pounded into me from all sides since birth. For one thing, Argentina’s growth has averaged something like 8% over the last decade, as the government will be proud to tell you. (I happen to be of the opinion that this growth has happened largely in spite of, and not because of, many of the government’s policies, and is precariously dependent on China’s voracious demand for Argentine soybeans. But that’s another post.) If nothing else, this is a good sign for those who believe that economic well-being often brings with it cleaner democracy.
I’m probably one of those people, and I’ll tell you why. Because when people are richer, they tend to consume more of everything, including education and news, and a more informed and engaged electorate is bound to make better decisions. A brilliant paper by Claudio Ferraz and Frederico Finan of Berkeley found that in an election coming shortly after a national audit of local government performance in Brazil, towns with a radio station were more likely to vote corrupt politicians out of office. Hooray for media! An even higher-tech (but unproven) idea comes from India, where the New York Times reports that the chief minister of Kerala state installed a webcam in his office, broadcasting to the internet 24/7. Is it going to eradicate corruption? No. Is it a political gimmick? Almost certainly. But in a certain sense it sets the bar a bit higher for everyone else, and more immediately, it reflects the potential for technology to make government more transparent.
I know, I know. We’re also concerned, like I mentioned at the beginning, that we’ve become too saturated in media, that the signal-to-noise ratio has become imperceptibly weak, that the deafening barrage of ideological voices of every timbre allows us each to retreat into our own echo chamber and bark all the more loudly from the comfort of our detachment from reality. I recognize that these are legitimate concerns, and I’m not blind to them. But back to the Indian governor’s camera stunt -- to me it points up the consistent ability of individual human ingenuity to adapt existing resources to new problems. Everyone, not just collectively but individually, wants to live in a country that is governed cleanly, that gives them the opportunity to learn and work and be safe and full. And I think we’re making progress toward that goal, not just in America but in the world, and I think the difficulties associated with all the world’s information being at everyone’s fingertips all the time are outweighed by the opportunities, because we will take that raw material in our hands and make it into something not only useful but beautiful. Maybe this is just because I’m from a country whose pedigree of irrational hopers far outclasses that of its international footballers. I’m convinced the end of the world is still a ways off -- the Argentines still have a long time to polish their political fatalism. But with a little luck and maybe some webcams in high places, that national pastime might just get ever more challenging .
20 May 2011
On throwing, and getting thrown, under a bus.
Mitt Romney had strong opinions about Obama's speech about (and to?) the Middle East. Nor was he alone. The stars of the Republican firmament lined up to deride the president's appalling betrayal of such a beloved ally. But did the Arab world erupt in celebration of this slap in Israel's face? No. It yawned.
That's because Obama hardly said anything new. The speech was a much-needed clarification of his oft-murky policy, and it even inspired. But it merely gave voice (albeit a very important official voice) to things everyone already knows about the conflict and its presumed resolution. The temperature of the Republican response indicates the strength of the American (or at least conservative) public's attachment to Israel. In an election season, everyone wants to be seen as the most hyperbolic clamorer for America's commitment to Israel's specialness.
I love Israel's specialness. That sounds snarky, but I don't mean it to. I sincerely regard it as a special place; I would love to go there someday; and I in no way intend for any of my comments in this post or ever to smell even remotely like anti-Semitism.
But that special place, given its current leaders' actions, is also a national security liability to the United States. As Israeli governments obstruct Palestinian statehood, they sharpen one of the most powerful recruiting tools available to terrorist organizations who target the United States and its citizens. I don't pretend that the occupation of the Palestinian territories is the cause of terrorism. I think it has a lot more to do with widespread systemic failures in the Arab world, notably in education and corruption. But in the volatile mix of the Middle East's many problems, Palestine acts as a catalyst for extremism-- and more particularly, for the direction of that extremism against the United States. Why not do everything we can to take that catalyst out of the mix?
Right now I'm not even talking about the justice or morality or predestination of either camp's position. I'm not even advocating any particular final solution. At the risk of oversimplifying, I'm talking about American lives. As long as terrorism exists, Americans at home and abroad will be targets of it. As long as the Palestinian territories are occupied, there will be more terrorism. As long as the peace process stalls, the Palestinian territories will be occupied. It is in the interests of American lives to remove obstacles to the peace process.
Which are legion. One is Hamas's refusal to acknowledge Israel's right to exist. One is Israel's refusal to allow Palestinan refugees to return to their homes. One is the corruption and division within the Palestinian Authority. There is probably no end to this list, and over most of these things on it we as Americans have little or no control.
But one of the biggest roadblocks to the peace process is continued settlement construction in the West Bank. While Israeli governments bless the developers building new Jewish suburbs of East Jerusalem -- on land the Palestinians expect to become part of their country someday -- the Palestinians have trouble seeing them as sincere negotiators. Stopping construction would deprive the naysayers in the Palestinian camp of one more excuse for their reticence. Meanwhile, I don't see how the construction of new Israeli settlements in the West Bank makes America safer (if you can, let me know; I'm interested to hear it), and I can think of a lot of ways it hurts us. The benefits to pressuring Israel to stop settlement construction seem to far outweigh the costs.
You might be saying we have little control over where the Israelis build settlements, and you might be right right. But we send an awful lot of money to them every year, and we could conceivably specify that some of those dollars will only flow to an Israel that only builds within its own borders. Maybe Israel would decide they value their new settlements more than American money, and it wouldn't work. But I haven't even heard anyone propose that we try.
Why is there no politician urging us to make at least some of the aid we send to Israel conditional on the halting of settlement construction? I'm not even talking about demolition, much less any kind of abandonment of the special relationship we have with Israel. Just Stop Building New Settlements. We are still committed to Israel's existence and security, that I don't question; but I hope we are not committed to (or bound by) their caprices, especially when they undermine our own security. I'm mostly looking at you, GOP: your irrational and exclusive obsession with Israel runs counter to your much-vaunted national security pedigree -- heck, call it a spending cut; that's pretty popular right now. I haven't even heard any Democrats propose any kind of substantive pressure on Israel either. Can we make this a conversation? Or does AIPAC money talk louder than American lives?
That's because Obama hardly said anything new. The speech was a much-needed clarification of his oft-murky policy, and it even inspired. But it merely gave voice (albeit a very important official voice) to things everyone already knows about the conflict and its presumed resolution. The temperature of the Republican response indicates the strength of the American (or at least conservative) public's attachment to Israel. In an election season, everyone wants to be seen as the most hyperbolic clamorer for America's commitment to Israel's specialness.
I love Israel's specialness. That sounds snarky, but I don't mean it to. I sincerely regard it as a special place; I would love to go there someday; and I in no way intend for any of my comments in this post or ever to smell even remotely like anti-Semitism.
But that special place, given its current leaders' actions, is also a national security liability to the United States. As Israeli governments obstruct Palestinian statehood, they sharpen one of the most powerful recruiting tools available to terrorist organizations who target the United States and its citizens. I don't pretend that the occupation of the Palestinian territories is the cause of terrorism. I think it has a lot more to do with widespread systemic failures in the Arab world, notably in education and corruption. But in the volatile mix of the Middle East's many problems, Palestine acts as a catalyst for extremism-- and more particularly, for the direction of that extremism against the United States. Why not do everything we can to take that catalyst out of the mix?
Right now I'm not even talking about the justice or morality or predestination of either camp's position. I'm not even advocating any particular final solution. At the risk of oversimplifying, I'm talking about American lives. As long as terrorism exists, Americans at home and abroad will be targets of it. As long as the Palestinian territories are occupied, there will be more terrorism. As long as the peace process stalls, the Palestinian territories will be occupied. It is in the interests of American lives to remove obstacles to the peace process.
Which are legion. One is Hamas's refusal to acknowledge Israel's right to exist. One is Israel's refusal to allow Palestinan refugees to return to their homes. One is the corruption and division within the Palestinian Authority. There is probably no end to this list, and over most of these things on it we as Americans have little or no control.
But one of the biggest roadblocks to the peace process is continued settlement construction in the West Bank. While Israeli governments bless the developers building new Jewish suburbs of East Jerusalem -- on land the Palestinians expect to become part of their country someday -- the Palestinians have trouble seeing them as sincere negotiators. Stopping construction would deprive the naysayers in the Palestinian camp of one more excuse for their reticence. Meanwhile, I don't see how the construction of new Israeli settlements in the West Bank makes America safer (if you can, let me know; I'm interested to hear it), and I can think of a lot of ways it hurts us. The benefits to pressuring Israel to stop settlement construction seem to far outweigh the costs.
You might be saying we have little control over where the Israelis build settlements, and you might be right right. But we send an awful lot of money to them every year, and we could conceivably specify that some of those dollars will only flow to an Israel that only builds within its own borders. Maybe Israel would decide they value their new settlements more than American money, and it wouldn't work. But I haven't even heard anyone propose that we try.
Why is there no politician urging us to make at least some of the aid we send to Israel conditional on the halting of settlement construction? I'm not even talking about demolition, much less any kind of abandonment of the special relationship we have with Israel. Just Stop Building New Settlements. We are still committed to Israel's existence and security, that I don't question; but I hope we are not committed to (or bound by) their caprices, especially when they undermine our own security. I'm mostly looking at you, GOP: your irrational and exclusive obsession with Israel runs counter to your much-vaunted national security pedigree -- heck, call it a spending cut; that's pretty popular right now. I haven't even heard any Democrats propose any kind of substantive pressure on Israel either. Can we make this a conversation? Or does AIPAC money talk louder than American lives?
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This blog is a space spanned by my opinions, which can be expressed as vectors forming a matrix that is linearly independent and invertible and has only the trivial solution.
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