When it comes to unfair tax systems, Washington is No. 1

Published in Tacoma’s News Tribune February 1, 2015

tax burdenThe start of the 2015 legislative session has brought stiff competition for the most suitable image of Washington’s tax code. Reuven Carlyle, chairman of the House Finance Committee, called it a Ford Pinto, the automotive jewel once named by Forbes as “The Worst Car of All Time.”

A bit more kindly, Gov. Jay Inslee evoked earlier transportation history, finding the moniker jalopy more fitting to the tax system’s barely functioning condition.

Sticking with the transportation theme, my vote is with the sedan chair, that 17th-centuryWashingtonAll European conveyance in which the rich and royal rode, carted around by bearers.

There is much to dislike about taxes, of course, but those we pay in Washington are especially onerous. Start with the hundreds of tax breaks, each one no doubt enacted some point in the past to encourage a worthwhile pursuit. Or not. Continue reading

Profit motive drives US health-care cost disparities

Published in The News Tribune, June 19, 2013

Back when he was president, Ronald Reagan famously (or infamously) reduced complex concepts to simple ones he thought the public could understand.

To explain the size of our nation’s debt, which in 1981 had just topped $1 trillion, he summoned the image of one trillion dollar bills stacked one on top of the other. My mind’s eye still can see that tower of bills reaching up beyond the stratosphere, extending one-quarter of the way to the moon. Continue reading

As inequality in the US grows, the rest of the world progesses

Published in The News Tribune, March 27, 2013

Two months ago, economists from around the world converged in San Diego for their annual convention. Dozens presented papers on the hot topic of growing income inequality in the United States.

These papers led to lively and at times heated debates, some of which have subsequently spilled over onto blogs as well as the nation’s opinion pages.

The tendency to focus on the U.S. and our troubling upward trend in inequality is a natural one. But it also misses astonishing progress on the inequality front. Continue reading

That rising tide seems to be missing a lot of boats

Published in The News Tribune, March 14, 2013.

Another encouraging sign of slow economic recovery came last week from the Bureau of Labor Statistics (BLS). It reported that nationwide, February experienced a net increase of 236,000 new jobs.

A year ago, unemploy-ment sat at 8.3 percent; today it is 7.7 percent. A painfully slow improvement, for sure, but at least the labor market is headed in the right direction.

Or is it? Continue reading

We can save much grief by getting ahead of social problems

Published in The News Tribune, February 27, 2013.

Each year as a nation, we spend more than $150 billion on research to find health-improving products. Such research has led to spectacular advancements in the health of those born prematurely or afflicted with heart disease, diabetes or cancer.

Yet when it comes to promoting a healthy population, we shouldn’t be so quick to congratulate ourselves. Continue reading

Untreated mental illness raises the risk factors for violence

Published in The News Tribune, December 19, 2012

The news from Newtown, Connecticut has many of us revisiting recent horrors where unstable citizens in our own communities committed the unspeakable crime of killing off-duty police officers, a sleeping father, a park ranger, and far too many others.  Yet even these senseless crimes pale in comparison with the terrifying violence visited last week on children at Sandy Hook Elementary School.

New York Times columnist Nicholas Kristof passionately, predictably — and correctly – has called for stricter control and regulation of our nation’s guns.  Continue reading

It’s unfair to group the ‘welfare state’ into single lump

Published in The News Tribune, November 22, 2012

Often, holiday meals like those at my house consist of a range of separate contributions which collectively add up to the Thanksgiving Dinner.  As we sit down to partake of the varied assortment of dishes, no one would think of criticizing the turkey because the mushroom soup dish contained more fried onion rings than green beans, or because someone insisted on adding a bag of marshmellows to the sweet potatoes.

The fact that different dishes are on the same table doesn’t somehow turn them into one “Dish” called “Thanksgiving Dinner” that deserves a singular judgment.   Instead, we pass judgment on the successful (and quietly perhaps, the less successful) features of each individual dish.  Continue reading

Misguided drug policies can create tragic, unintended consequences

Published in The News Tribune, November 8, 2012

As part of an introductory course in economics, I used to teach my students about the unintended consequences that usually accompany well-intentioned attempts to make particular transactions illegal.  I would draw on current drug policy to link theory with reality.

One thing that I learned from these conversations was that many students felt that discussing the pros and cons of drug legalization was immoral.  This sort of belief is one of the challenges we’ve faced in confronting failures in our drug policies.

Tuesday’s passage of initiatives in Washington (I-502) and Colorado to legalize recreational marijuana usage offer promising signs that change is now in the air.  Continue reading

Rising inequality partly to blame for stagnant economy

Published in The News Tribune, October 25, 2012

Are we better off today than we were four years ago?   For too many people, the answer is no.

As disappointing as this fact is, it’s mostly due to the cycles that modern economies are prone to.  Four years ago we had just passed a cycle’s crest; today we’re slowly climbing out of its trough.  To compare these two periods is to contrast two points in the economy’s short term ups and downs.

This detail of course doesn’t make it any easier for those suffering through this cycle.  It’s just that such a perspective doesn’t reveal much about the true direction in which our economy is headed.   Continue reading

A citizen’s worth cannot be measured by simple arithmetic

Published in The News Tribune, September 21, 2012

A colleague of mine bought a cup of coffee at the local coffee joint this week.  A moment later, cup in hand, she left the shop only to return a minute later to pay for three more.  She’d seen some contract workers outside cleaning up campus in anticipation of the pending arrival of our students.  On the spot she somehow decided that these newcomers to campus would appreciate some coffee.  After paying for their three cups, she informed them coffee would await them during their break, and then off she went to put in a day’s work.

Now I don’t know if Jeannie is among the 47 percent of Americans who don’t owe income taxes.  But I do know that paying taxes is only one of many ways that citizens make valuable contributions to our society. Continue reading

Court ruling could leave state’s poor without access to health care,

Published in The News Tribune, August 2, 2012

The Supreme Court’s decision this summer to uphold the most controversial part of the Affordable Care Act (ACA) – the “mandate” requiring individuals to buy health insurance – was both historic and a critical victory for those battling to achieve universal health care in the United States.

However, while most of the public’s attention has rightly focused on the Court’s determination that the federal government can indeed require us to buy health insurance, this wasn’t the only provision in the ACA that opponents argued was unconstitutional:   They also claimed that the ACA’s expansion of Medicaid to more of the nation’s poor coerced states’ participation by setting the penalty for nonparticipation too high. Continue reading

How many homeless, hungry? Make statistics public

Published in The News Tribune, May 23, 2012

Do you know how many children in Tacoma School District (TSD) schools are homeless?  Or how many people in Pierce County lived without heat or electricity this winter because their power was shut off?

If you don’t, you have lots of company.  And the invisibility of such problems in our community is itself part of the problem. Continue reading

Ex-offenders face incredible odds against shaking their past

Published in The News Tribune, May 9, 2012

If his warm greeting as you enter the downtown YMCA doesn’t get your attention, his story will.

Mychal Goode is an ambitious, smart and personable young man.  Like thousands of others around the state, he’s counting the days until he walks across the stage that marks the completion of his college career.  In his case he’ll have earned a bachelor’s in Business Administration from the University of Washington Tacoma.

Mychal (pronounced Michael) seems pretty typical – a full-time student holding down a full-time job at the Y, looking forward to the future.  We see a lot of students like that at UWT. Continue reading

Solutions exist for Social Security’s long-term problems

Published in The News Tribune, April 25, 2012

What is true in most poor countries today was true in our own long ago:  When elders can no longer support themselves or make sense of what is said around them, their children take care of them.  This is an example of a social compact that balances out in the long run, since children expect their kids in turn to care for them during their waning years.

Some may be surprised to learn that today this social compact is alive and well in our own country.  It is called Social Security.  With Social Security, the elderly look not to their own children, but rather to the collective contributions of the working generation; these workers in turn look to the next generation of workers for support during their retirement.  The terms of this social compact are now politically determined, but the basic idea is the same:  the economically productive support those who no longer are. Continue reading

No country for young (and undereducated, unemployable) men

Published in The News Tribune, March 28, 2012

Over the last six months Washington’s unemployment rate has fallen from 9.3 to 8.2 percent.  That’s terrific news. The same is occurring in states across the nation as employers are now hiring at a record pace.

Yet as some pessimistic sage surely said, every silver cloud has its dark lining.

The problem with our labor market is one I’ve been highlighting this month:   too many citizens have inadequate job-market skills with few options for upgrading them, and receive too little support for navigating what for them is an unstable job market.

Continue reading

Poor public policies send desperate people to dubious colleges

Published in The News Tribune, March 14, 2012

In my last column I argued that the life line we’re throwing to those at the bottom rungs of society is increasingly beyond their grasp. Truth is, we also don’t provide them with many chances to rise up.  With neither a hand out nor a hand up, too many citizens are consigned to pretty dim life prospects.

What’s more, other efforts taken to assist them have been akin to the actions taken by Captain Renault in the movie Casablanca.  The Captain famously responded to a shooting of a Nazi by a known assailant with the unforgettable instructions to “round up the usual suspects.”  Renault hoped that the appearance of vigilance would protect him from his evil superiors, and we all hope he was right. Continue reading

Safety net continues to shrink for those who need it most

Published in The News Tribune, March 2, 2012

The Obama Administration’s recently-proposed budget continues what has become a troubling trend in federal policy.  And it isn’t the growing debt I’m referring to.

What is is the large number of citizens who we seem to have given up on.  In fact, so forsaken are they, and dire the consequences to us of this abandonment, that I’ll use my next two columns to pick up where this one leaves off.

The trend is this:  We’re supplying our most vulnerable and low-skill citizens with fewer and fewer public dollars.  Instead, our nation’s “safety net” increasingly targets the rest of us, particularly those with jobs and a working- or middle-class income.  I’m all for helping the gainfully employed – especially those with low income — but when public dollars are scarce, the marginalized are the least capable of competing for them because few advocate on their behalf.  Not surprisingly, they’re losing out in the competition for public dollars.   Continue reading

Veterans need strong connection to civilians to help transition

Published in The News Tribune, January 18, 2012

As readers of this newspaper likely know, last year JBLM suffered a record number of suicides (TNT 12-30).  Tragically, this increase reflects a nationwide trend; suicide rates in the Army have doubled over the last 10 years.  Clearly all is not well with our armed forces.  Divorce rates are climbing.  And the unemployment rate among younger veterans now stands at 30 percent — twice the rate found among younger non-veterans.

In this column I’d like to draw attention to a slow shift occurring in civilian-military relations that contributes to the growing challenges faced by soldiers re-entering civilian life. Continue reading

Let’s be thankful that our problems are those of rich countries

Published in The News Tribune, November 24, 2011

These are divisive times.

It’s easy to see why.  Jobs are scarce, millions have lost their health care coverage, college debt exceeds credit card debt, income inequality is rising, more people are hungry, and state and federal governments look to be on unsustainable paths.   In the past, a robust economy and rising tax revenue succeeded in keeping some degree of division under wraps.

Today’s more austere times means that we now have to establish priorities rather than add new ones.  We’re faced with the inevitable – and unenviable — task of choosing between higher taxes or less spending. Continue reading

Back to square one with end of federal long-term care policy

Published in The News Tribune, October 25, 2011

With little fanfare, a Class Act died earlier this month.

Formally known as Community Living Assistance Services and Supports, Class Act was a short-lived health care program created as part of the recent health care overhaul.  The Obama Administration has just now cancelled it.

Class Act’s demise is noteworthy — certainly much more than would be indicated by its placement on the back pages of the newspapers.   Its end helps remind us of a present and growing problem we have yet to solve.   It also reminds us of the inadequacies in current health care policy. Continue reading

Unfair distribution of wealth has nation going to the dogs

Published in The News Tribune, June 16, 2011

It’s not quite the dog days of summer, but dogs are making the news.

First came the story of the dog Trouble who just passed away.  Although she preferred to call her dog “Princess”, “Trouble” was the name the billionaire Leona Helmsley gave her beloved Maltese.  You may recall that Trouble gained fame four years ago after Helmsley’s death.  Leona, concerned that her dog might have to live out her life leading – well, a dog’s life — left Trouble a $12 million inheritance so that her dog could continue leading the life to which she had become accustomed.  Continue reading

Unions not to blame for problems with pension mess

Published in The News Tribune, April 15, 2011

Paying public employee pensions is costly, and will become more so. So we
better learn the right lesson.

In this state, two public pension programs are running out of money.  Unless
it changes current contracts, the state will have to significantly dip into
the general fund to meet its obligations.

The recent House budget addresses this problem by reducing future payouts to
retired workers. Yet even if approved, the changes still leave the two
programs billions of dollars short over the coming years. Continue reading

Fiscal problems falling on the shoulders of children

Published in The News Tribune, March 15, 2011

In theory, local, state and federal governments operate like layers on a cake, each making separate and distinct contributions to the overall cake.  The federal government defends us from foreign enemies, state governments build roads, and local governments quench fires.  In practice, governments are related in ways making the analogy of a marble cake more apt.  For instance each state administers a distinct unemployment insurance program, but federal law and tax dollars make this a state-federal partnership.

Despite complicated relationships among our governments, the fiscal problems that each government now faces is addressed without  considering the collective impact of all the budget cuts.   And so, almost no attention is being paid to how our collective responses to governments’ fiscal problems are disproportionately harming children. Continue reading

Government should help poor to save for retirement

Published in The News Tribune December 21, 2010

At a time of year when businesses everywhere are urging us to spend, the bipartisan presidential commission on reducing the national debt and Governor Gregoire’s proposed budget sound like Ebenezer Scrooge.  According to both, saving, not spending, is the order of the day.  One can’t help but wonder what Charles Dickens would say about the new-found cult of “austerity.”

 

As conservatives will point out, Dickens’ A Christmas Carol extols the virtues of private charity, and wasn’t intended as a guide to government action.   But the basic principle underlying Dickens’ classic is that we all owe a duty to the less fortunate among us.  Sometimes that duty is best performed by means of collective, governmental action. 

 

At the very least, the government should not pass up policies that could help the poor at little cost to anyone else.

 

But the presidential Commission missed an opportunity to do just that in its proposal for fixing Social Security.

 

The dilemma of Social Security is this:  Within a few decades the revenue flowing into the system will not be enough to cover the required payments.  We thus must either cut benefits, find additional revenue, or combine the two.   The bottom line for any reform should be that it protects the pensions of the most unfortunate among us. 

 

On this point, the Commission’s plan is not that bad.  First, it reduces everyone’s benefits by slowing cost-of-living adjustments and increasing the age at which we’re eligible for a full pension.   Second, it increases the amount wealthier individuals will pay into Social Security.  Finally, it restructures pensions so that those to the wealthy decrease and those to the poor increase. 

 

A good starting point.  But we should keep in mind that Social Security has always been meant to supplement citizens’ other sources of retirement funds.  For low income workers, Social Security provides about $10,000/year — not enough to get them over the official poverty line.  But these retirees as well as almost half of all retirees rely on Social Security for roughly four out of every five dollars of post-retirement income.   For many, then, the premise that Social Security is a supplement just doesn’t hold. 

 

We could of course beef up the size of the government’s pension to low income retirees.  This is what other rich countries do:  On average they provide their low income citizens with about 50 percent more retirement income than we do.   Or we could follow in their footsteps by providing greater income support.  Yet these policies are partly responsible for the budget problems plaguing European nations; and anything that increases our own budget woes during these austere times is a non-starter.

 

But here’s what we can do that wouldn’t be all that costly:  enact policies to promote savings and asset accumulation among low and middle income citizens.   In addition to low income, a lack of savings is what explains why too many citizens reach retirement without a nest egg to supplement their Social Security check.  

 

The federal government already has loads of policies that promote wealth accumulation.    Think of the home mortgage deduction, the favorable taxation of capital gains, and tax breaks for contributions to retirement or college savings plans.  But these policies, which collectively total  hundreds of billions of dollars in subsidies, are not targeted to those at the lower end of the income distribution; over 90 percent of these subsidies to wealth building go to those in the top half of the income distribution.   Not surprisingly, these citizens already own over 95 percent of the nation’s wealth.   Current subsidies thus encourage wealth accumulation among the wrong people.

 

We know from demonstration projects that given the right support, those with even very low income can and do save.  Through tax credits and other forms of government subsidies, it is possible to get low to moderate income households to build up assets.   By doing so during their working life, citizens gain the ability to plan, respond to emergencies, and pass on opportunities to their descendants – in addition to retiring with greater income security.

 

Promoting saving among poorer citizens is an idea that all Scrooges should like.