Tuesday, September 13, 2016

ELECTION REFLECTIONS IN A DARK HOUR

[NOTE: I sent the following letter to a small group of family and close friends in the early hours of Monday morning.  Those who have replied have liked it, and I thought that I would share it, slightly touched up for publication.]

Since I am writing at this hour, you know that I have not been sleeping.  I have pretty much recovered from a bad cold caught on my trip to California to help my ex-wife and her car get to Albuquerque for her new start on life.  She has a nice apartment and a promising job at last (let us pray).  My four dogs and three cats were glad to see me when I retrieved them from the boarding kennel.  Life has returned to normal.

Just in time for the news: Clinton’s pneumonia.  I do not question her health, and I do not pay the press much heed on this one (I sometimes think that it wants Clinton to fail and Trump to succeed; he will generate far more news).  But I find the episode troubling because it prompted me to realize that Hillary is losing the race which she should have won long ago.  And she is losing it because she has no beard to shave.  If she did, she would have to look in the mirror every day and eventually address the questions which the mirror always asks.

So we now have in Hillary a candidate as unwilling to face the reality of her situation as much as we have in Donald a candidate indifferent to any reality other than the moment in the context of his sociopathic spin on it.  Some choice.  In evading the reality of her character and its flaws—a penchant for secrecy at all costs, a willingness to evade political discomfort at all costs—she is paying those costs, for nothing in her campaign treasury can cover them.  Simple: if she does not trust the people, they will not trust her.

Trump will win, and Hillary will lose.  And the reality she will find inescapable.  She will have defaulted to a demagogue who will do irreparable—and I mean irreparable—damage to this country, to democracy, to people for whom political and economic justice remains a dream and to people who have dreamt that they had it, and, most particularly, to women, who will now have to face the historical fact that one of the most highly qualified nominees for the modern presidency and the first woman nominee of a major political party was the first woman to fail, and to the worst candidate ever to run as the nominee of a major political party.

Trump has shown us the truth about America and Americans.  It has never been “one nation” of a people united by a shared democratic process, universal justice, and mutual respect for others.  Instead, it has been a mixture of political, religious, and economic factions with no effective core of principles or values.  Plainly, talk about truths “self-evident” and laws guided by constitutional principles has been the pieties necessary to avoid the fact that most Americans do not subscribe to equality, fair play, decency, or even, at a minimum, self-restraint.  The rules-are-made-to-be-broken crowd of the left is as responsible for this state of affairs as the government-is-the-problem crowd on the right.  Both have succeeded in destroying all authority, moral, legal, or political, in the name of liberty, or license.  “Do your own thing” is exactly what we are doing.


Many who subscribe to these pieties will strive to protect and preserve what they assert from the mob of bigotry and the elite of plutocracy.  Thus, to region after region, state after state, city after city, neighborhood after neighborhood, dwelling after dwelling, the hostilities of internecine war will come to America.  As a “radical moderate” of the center which no longer holds, I shall still be part of the good fight for a good, though losing, cause.  Even the need to fight, even if the good cause were to prevail, diminishes the American which will emerge.  The first Civil War never really ended; the second Civil War will not end either.  Reconstruction then, reconstruction at some future date—futility once, futility forever.  The Great Experiment has failed.

Sunday, July 24, 2016

COMMON CAUSE PROPOSAL SUPPORTS FUNDING OF RE-ELECTION CAMPAIGNS & REDUCES MONEY FOR SOCIAL SERVICES

Common Cause’s proposed ordinance for public financing of local elections poses a sharp choice.  Either automatically transfer $200,000 from the City General Fund to a “Fair Elections Fund” (FEF) available to all candidates or leave $200,000 available for social services.  Ordinance advocates have not answered, or agreed upon answers to, four questions: what purposes it serves, what problems it solves, what standards measure success or failure, and whether the benefits outweigh the costs.  Apparently, advocates believe that past elections have been “unfair” and future elections need tax dollars to be “fair.”

Whatever its other deficiencies, the ordinance has three major defects, each with undesirable consequences.

First, the FEF supports an unknown but larger number of candidates, presumably, the more, the merrier.  Not likely.  In a city population leaning left more than right, more candidates can be expected from the left than the right.  Because political discipline in elections is weaker on the left than on the right, the left will likely have several candidates and divided supporters, and the right will likely have only one candidate and unified supporters.  The probable result will be a majority of councilors on the right governing a majority of citizens on the left.  From a democratic point of view, the ordinance would increase the risk of the election of a government lacking “the consent of the governed.”

Second, the FEF supports qualifying candidates—experienced politicians and first-time novices—equally.  Yet experienced politicians, who have name recognition, numerous supporters, and generous contributors, have advantages which first-time novices do not.  They are more likely, their rivals less likely, to raise enough money to receive the maximum funds permitted by the fund.  So the FEF gives as least as much money to the “haves” as to the “have nots,” although the “haves” are likely to receive far more private money to support their campaigns.  Nothing would be “fair” about equal FEF distributions.

To make the fund seem “fair,” the ordinance excludes present Council members from receiving FEF funds for their first campaign after ordinance approval.  Thereafter, any continuing or former Council member, still possessing the advantages of public office, can qualify for public funding.  Clearly, Council advocates intend this ordinance to help them in all but the first of their re-election campaigns after enactment.  Otherwise, they could have refused qualification for FEF funds to any person who has served as a Council member.  What advocates chose not to do reveals that they intend the ordinance to serve mainly their interests, not primarily those of potential competitors.  The public does not benefit from experienced politicians getting taxpayer funds for their campaigns.

Third, the ordinance mandates an annual, “non-lapsing,” FEF contribution.  Anti-democratically, Council advocates intend it to protect this money for themselves before the annual budget process begins and public participation in setting budget priorities commences.  Self-servingly, Council advocates think that $400,000 is better spent on elections every two years than $200,000 for other purposes each year.  Anyone believing that these funds might be better spent on hungry, homeless, or sick people; on victims of domestic abuse or rape; on senior centers or public parks; or other social services should know that Council advocates believe that their needs come first.  Arrogantly, they presume to know better than future City Councils what will be in the best interests of Las Cruces citizens.


Whatever else may be said about the proposed ordinance, mandating the availability of taxpayer funds to experienced politicians for their re-election and denying those funds to other community purposes in advance of discussion neither serve the public interest nor support democratic government.  The only fix is its defeat.

Tuesday, June 28, 2016

COMMON CAUSE: STILL POLLUTING, NOT PROMOTING, DEBATE ON PUBLIC FINANCING

[NOTE: In my previous blog on the issue of public funding of qualifying candidates, I noted the disparity between Common Cause’s claim to “[empower] ordinary people to make their voices heard in the political process” and its conduct in trying to discourage anyone who disagrees with its position on this issue.  Common Cause wants City Council to meet briefly to pass its proposal as an ordinance; I desire a public disclosure and debate in advance of any decision whether by Council vote or a ballot vote.  In this open letter recently emailed to the Las Cruces Mayor, all other members of City Council, and others in the community, I now detail the efforts of Common Cause’s agents and its local loyalists to discredit dissenters from their views.]


Mr. Mayor:

I write to expand on my reply to some email exchanges Thursday and Friday in the on-going controversy about public financing of local candidates for elected offices.  (I shall send all relevant emails to those requesting them so that they can judge for themselves matters discussed below.)  I copy others to inform them about the state of discourse on this issue and concerted efforts to discredit me by impugning my character because of my presumed opposition to the Common Cause proposal.  I say “presumed” because my questions and criticisms want facts and note flaws; if they are not answered or rebutted, I shall oppose public money spent without likely greater benefit.  The strategy of its advocates reflects a commonplace legal strategy: if the facts are against you, argue the law; when if the law is against you, argue the facts; and if both are against you, attack opposing counsel.

Thursday began with your calling into question my transparency, with the obvious implication that, if I were not transparent according to your definition of “public figure,” not letting you know who were receiving my emails suggested to you that I was operating in a shady manner.  You had my response, but there is still more to say.

As Mayor and head of City Council, you are unquestionably a “public figure.”  Yet Counselors and you are considering behind closed doors in smoke-free rooms—actually, most Council members already approve—a Common Cause proposal for public financing.  At public forums, Common Cause agents, some Councilors, other advocates, and you have made presentations to generally uninformed audiences in no position to know whether your representations accurately report on the proposal provisions, including the provision mandating annual funding, or to ask informed questions.  Such problems exist.

For instance, this past Thursday, at a PVA meeting, I addressed this funding provision and explained its consequences.  I said that it did not matter whether the proposal included a mandate or not because the proposal would always present a choice between funds for candidates and funds for other purposes, particularly social services, the only difference being that a mandate made the decision permanent, not annual.  Craig Fenske countered by claiming that the proposal contained no mandate.  Afterwards, at the PVA party, Don Kurtz explained to me that the provision was like other mandates—admitting that it was a mandate—which commit present and future funds to pay off bonds, etc.  My reply that bonds, unlike the proposed provision, are not funded by general revenues did not please him.  An earlier example: speaking on a panel moderated by Peter Goodman, Councilor Gil Sorg stated that the proposal cost was $100,000 a year over 8 years.  False: it is $200,000 a year over a 4-year election cycle.  Did Sorg misspeak, misrepresent the proposal, or not understand what he supports?  If advocates contradict each other on its funding provision or misreport it for whatever reason, who else can understand, much less evaluate, the proposal?

So I propose, in the interest of transparency, that you arrange for the city website to provide, and prominently indicate the means to view, the latest version of the proposal.  Citizens could decide for themselves what the proposal says or does not say.  It would make clear whether Fenske or Kurtz is accurately representing or reasonably interpreting the funding mechanism.  It would enable citizens to learn what else the proposal includes or excludes, and whether the proposal serves public, not special, interests.

On that point, when Councilor Smith and you met with me, you explained that the funds were for inexperienced, unknown, unfunded candidates, and recited your history as one such candidate when you began your political career.  It had not occurred to me otherwise, so I overlooked the omission of anything in the proposal to preclude present and former elected officials from using these funds in their future campaigns.  However, later, someone’s “Sound Off” stated just such a suspicion: City Council members want no restrictions on their eligibility to make funding their future campaigns easier.  It implies that the proposal is a disingenuous ploy to help fill City Council members’ campaign coffers.  Your transparency might address this suspicion and disclose other flaws.

Absent a published proposal, a public statement of the problems, a discussion showing that the proposal solves them, a cost-benefit analysis, criteria of success (or failure), and a sunset provision, advocates can say anything to anyone at any time to promote the proposal.  In the absence of this public information, discussion degenerates into personal attacks on those criticizing something about which even advocates do not agree.  Your Thursday morning question challenging my integrity was followed by Kurtz’s Thursday night warning—how did Kurtz know?—that Common Cause would “deal with” me in a Friday email smear by Aaron Sherb at Common Cause’s Washington headquarters.  This timing and the link between Kurtz and Sherb suggest collusion to discredit me by assassinating my character.  No surprise: those who refuse to answer reasonable questions and respond to criticisms of a proposal have few alternatives.  Set aside your innuendo about my integrity and your definition of me as a public figure, a definition relevant to libel, and Fenske’s and Sherb’s lawyerly avoidance of libel by using cognates of “seem” to insinuate my indifference to “dark money” or my dishonesty in reporting agreement that the CCNM funding mechanism is “unusual,” respectively.  Your failure to promote informed and unfettered public discussion on so important an issue as elections and their funding, and advocates’ misinformation, contradiction, and personal attack are good reasons to question their integrity and their and its purposes.  If the time and energy devoted to discrediting me had been put into addressing obvious questions and concerns, everyone would be better served, not least the public.

So I repeat my opening suggestion: get the proposal on the website.  I repeat a previous suggestion: have someone—Common Cause, city staff, or the city lawyer—prepare a competent rationale of it.  I urged one over 6 months ago when Fenske, Peter Goodman, and I lunched in mid-December, and I offered to help Fenske prepare one.  Fenske indicated agreement with and acceptance of my good-faith offer, but he did not follow through; instead, he later misrepresented my position on “dark money” in a column which did little or nothing for informed discussion of the proposal.  It is long since time for City Council and Common Cause to come clean—to be transparent—by fully disclosing all relevant public documents and by promoting informed and honest democratic debate of this proposal.

Michael

Sunday, June 5, 2016

SO TELL ME—HOW IS THE SYSTEM RIGGED AND HOW CAN IT BE FIXED?

 Elizabeth Warren declares that the economic system is rigged.  Bernard Sanders agrees.  Yet neither offers an incisive critique, a reformist agenda, and a clear account of how the system is stacked against most Americans.  Controlling credit-card interest and breaking up “too-big-to-fail” banks are not going to reform the economy or greatly affect peoples’ lives.  Hillary Clinton supports doing something—who knows what?—about economic injustice.  Trump has no clue, and Republicans repeat their ad-man slogans—lower taxes, less regulation, more jobs, more opportunity—to cover their support of state capitalism run amok.  Sensible proposals to reform the economy scare politicians; they would reduce their political power by ending transfers of public wealth to private coffers, eliminating the lucrative practice of lawyers and lobbyists of special interests, and drying up campaign contributions from moguls of capitalism who want favors.


The difficulty is to make the economic policies underlying the system understood.  They may not involve numerical computations, but they do reflect mathematical relationships.  Understandably, the subject scares off or repels most people, who remain ignorant of the subject.  Equally understandably, politicians exploit their ignorance.  They not only mislead Americans about the rigged economic system—nothing new about that—, but also let them mislead themselves.



Americans now suffer great angst about the lack of employment opportunities, job displacement by immigrants, competition in the global economy, and a decline in the standard of middle-class living.  Yet they remain resolute in their ambiguity about the distribution of wealth.  Many agree with Warren and Sanders about the skewed and worsening distribution of wealth.  As the notorious 10 percent, 1 percent, or one-tenth of 1 percent increasingly accelerate their accumulation wealth and their share of national wealth, the rest have gained little or lost much, even in an expanding economy.  High-income people do better, low-income people do worse, and in-betweens are squeezed.



Others admire Trump for his wealth and success.  They do not resent those like him who have great wealth so much as they resent that they cannot work, or feel secure in working, hard and earn a decent living without being rich.  For them, the deal is simple: if they can live respectably, others can live lavishly.  Thus, they reject “tax-the-rich” proposals as contrary to the American Dream of making it big and amassing a fortune, like the powerful hope but remote chance of buying the pot-winning lottery ticket.



Americans have to reconcile this ambiguity when they decide political questions about which economic policies are beneficial to their real lives in those around-the-kitchen-table-budget discussions.  But they cannot do so without understanding that a “rigged” system means that the whole of the parts, not just this or that part, is defective or faulty.  I explore the interlocking ideas which underlie the economic policies rigging the system, not the imaginings which end in a big payout.



*       *       *       *       *       *       *



The first sign of a rigged economy is misrepresentations of it, the main two of which emphasize the bright and upbeat, and omit or downplay the dark and depressing.  One is the unemployment rate, always lower than the higher real rate of unemployment because it omits those who have given up looking for work or those who could not find work in the first place, after graduation.  The national figure differs from state and local figures, and indicates little about the close-at-hand under- and un-employment distress.



The other is Gross National Product, or GNP, which represents aggregate productivity.  Once upon a time, when America’s economy was largely independent, international trade was a small part of economic activity, and inequalities of wealth were less widespread and less pronounced, this conventional measure might have offered a reasonable index of the economy.  Then, they lived happily ever after.  Or more happily: even then, major sectors of the economy like agriculture lagged the rest of the economy.



Today, GNP does not take into account the great changes and greater diversity in the economy, with the increasingly differences in the distribution of wealth among groups.  GNP can increase, but wealth increases more at the higher end than at the lower end of the economy.  Although officials cite a rising GNP to assure the public that the economy is strong, it assures the haves more than the have-less or have-nots.  Popular discontent reflects the widespread realization that an improving economy has been good for the minority of wealthy but bad for the majority of Americans.  As inequality persists and expands, many are reaching the conclusion, beyond contradiction by measures of the national economy, that the system no longer works fairly.  The inadequacies of the GNP are no secret, but politics prevents its reform.  No one wants the GNP identify those groups or sectors which benefit or suffer in the economy; such information would likely lead to demands for reform.  Although many Americans sense that the GNP is dishonest, they probably do not realize that it is deliberately so to protect the status quo.



A better measure of economic condition would more closely approximate the truth, not about the economy in general, but about groups or sectors in the economy to which a person or business might belong.  It might be called an Economic Unit Index, or EUI.  The aggregate of all EUIs would equal the GNP but would enable people or businesses to better situate themselves in a group (or groups, depending on those used), to know which groups were faring well or poorly, and to help explain why.  The gap between the GNP and afflicted EUIs explains today’s widespread angst and malaise because those in afflicted EUIs think that a lot of money is going into others’ stock portfolios or bank accounts but not into their wallets.  EUIs could help target economic reforms, but not if they are not reported.



EUIs would discredit the stale metaphor about an improving economy, “a rising tide lifts all boats,” as misleading.  All boats rise equally in a rising tide, but wealth is not water.  Because of the factors which skew wealth distribution, some sectors of the economy do not rise as far or as fast as others do, if they rise at all.  When politicians proclaim their resolve to improve the economy to benefit everyone—“to lift all boats”—trust them to intend to uplift some interests more than others, and ask whose and why.



*       *       *       *       *       *       *



Rectifying the system of wealth inequality requires reforming inequality-enhancing tax policies implicit in the tax code.  These policies mandate and augment the unequal distribution of wealth in several ways.



First, tax policy assumes that not all money is equal, depending on its source.  Some money is better or worse than other money, and deserves favorable or unfavorable tax treatment accordingly.  Money earned in capital gains, stock options, estate transfers, commissions on financial deals, etc., is taxed less than money earned in wages, salary, and tips.  Yet rationales for these tax-rate disparities reflect the social snobbery or political influence of those who value innovative over routine labor or smarts over sweat, not societal utility.  But, for many, a good plumber beats a good psychiatrist any day (or night).



Second, tax policy prefers some interests to others.  The tax code allows some people or some businesses to get legislated tax benefits—deductions, credits, allowances, subsidies, etc.—which others do not.  The most common explanation is that wealthy people and big companies make good use of “access” (from campaign contributions), lawyers, and lobbyists to get favorable provisions put into the code.  For example, to promote the construction-related industries, homeowners get mortgage deductions.  But the result is not a savings to the buyer, who, for a modest but seductive deduction, pays for a higher-priced home than he/she otherwise would and then pays more principal and interest until he/she pays it off.  Other legislation provides non-monetary benefits favoring some, but not other, interests.  For instance, legislation limiting the liability of nuclear power companies for damages from plant accidents saves the companies the full costs of doing business by reducing costs for plant safety and insurance.  This cap on liability not only imposes increased safety and health risks on the public, but also risks its tax dollars to cover what plant insurance does not.  Such preferential legislation lacks a public-good rationale.



A note on these special benefits for privileged people and preferred businesses.  Their benefits cut revenues which must be made up by tax increases paid by everyone or by borrowing.  Large tax benefits for the rich or the big must be matched by small tax increases on all.  For example, an annual subsidy of $5 billion to the energy industry requires on average nearly $37 from each taxpayer to cover the give-away.  The total of many such tax inequities increases the burden on those who have less and pay at lower rates more than the burden on those who have more and pay at higher rates—a paradox discussed below.  For years, total annual tax breaks for the high and mighty have added up to over $1 trillion, a figure approximating the annual increase in national debt.  Its $19 trillion-plus total today amounts to nearly $139,000 per taxpayer.  To avoid making the burden unacceptable by taxing to pay for these tax breaks, the government borrows at home and abroad.  The system is rigged by a tax code which makes the debt payable by all Americans, not by those who have run up the tab.  Never in human economic history have so many owed so much because of so few.



Three, because current tax-rate brackets imperfectly reflect the value of money, they benefit the richer at the expense of the poorer.  It might seem odd to talk about the value of money—is not a dollar a dollar?—, but it makes sense if the dollar is considered in the context of a taxpayer’s income.  A person with an annual income of $10,000 likely values one dollar far more than a person with an annual income of $1,000,000 values it.  We speak of rich people as those having money to burn; in fact, “Diamond” Jim Brady, an America’s baron of yesteryear, used to light his cigars with $100 bills (or $2875, today).



In recognition of the value of money, tax rates are progressive; that is, they increase by increments, or brackets, as taxable income increases.  However, especially since the 1980s, politicians increasingly complaining that “taxes are too high” have cut both tax rates and the number of tax brackets.  These cuts reduce revenues for services and thus increase borrowing to maintain them; the historical record of post-Second World War administrations proves the point.  Advocates of lower taxes and, in the name of tax code simplification, fewer tax brackets are the ones who decry the burgeoning national debt.  Simultaneously, these advocates of tax-code legislation giving benefits to the upper class insist that the debt results from discretionary funding of programs serving the needy in the middle and lower classes.



The ultimate in lower tax rates and fewer tax brackets is the “flat tax,” that is, one tax rate for all and no brackets.  Because lower tax rates and fewer brackets increase the relative burden on lower income taxpayers and decrease it on higher income taxpayers, the “flat tax” makes the relative burden even less equitable.  “Flat tax” advocates recognize the inequity and try to mitigate its burden by setting a minimum threshold for the lowest income earners.  No matter where the threshold is set, the relative burden is still greater at lower than at higher taxable income levels.  Nothing is “fair” about a “flat tax” if fairness is measured, not by the same tax rate applied to every income, but by the burden of the tax payment in terms of the value of money.  A ten-percent tax on $50,000, or $5,000, means making do on $45,000; a ten-percent tax on $500,000, or $50,000, means struggling to make ends meet on $450,000.  Pardon me: I lack sympathy for any flat-tax burden on people at the upper reaches of the income spectrum.



Further flat-rate cuts—“taxes are [always] too high” because of the unfair tax burden on the middle and lower classes—make wealth inequalities even greater.  If a ten-percent tax rate is cut to five percent, the taxes on an income of $50,000 drop from $5,000 to $2,500, for an increase in disposable income of $2,500; and the taxes on an income of $500,000 drop from $50,000 to $25,000, for an increase in disposable income of $25,000.  In this case, the gap between the poorer and the richer increases by $22,500.  The general principle is that cuts in income tax rates always benefit the richer more than the poorer and increase the disparity in wealth.



*       *       *       *       *       *       *



What can be done about these inequities?  The reforms are simply stated and tacitly argued in light of earlier discussions:



  1. Supplement GNP with EUIs.



  1. Define all money as equal, dollar by dollar, regardless of source.  Value all income or profit from whatever sources—wages, salaries, tips, winnings, capital gains, stock options, etc.—the same by taxing them in the aggregate at the same rate.



  1. Eliminate all deductions, credits, allowances, subsidies, etc., because they serve no public good and swell the national debt.



  1. Establish a progressive tax structure of six to ten tax rates based on a consensus about the value of money which would likely require adjustments, but not sharp changes, over time.  For the stability of the structure, require a two-thirds vote of both chambers of Congress to reduce rates or cut brackets and a three-fifths vote to raise rates and increase brackets.



These reforms would affect wealth distribution by progressively reducing, though not eliminating, the disparity between richer and poorer people and businesses.  They would make personal and corporate tax returns far simpler than they are now.  Without credits or deductions, the forms would require details on all sources and amounts of income, indicate the bracket and rate for tax payment, and state the tax due.



The next reforms to reduce great disparities of wealth would consider a small but progressive annual tax on all personal assets—home(s), car(s), yacht(s), airplane(s), art, jewelry, etc.; the original acquisition costs as the cost basis of assets transferred to estate beneficiaries; and a (more) progressive estate tax (assets valued at current market value).



These radical reforms need not cause sharp dislocations in the economy.  Benefits can be eliminated by phasing them out over time.  For instance, the tax code could allow existing mortgage deductions to continue until the mortgage is paid off but deny mortgage deductions on new home sales.  Others, like caps on liabilities, could be phased out over shorter or longer periods of time, say, 5 or 10 years, respectively.



The only requirement is that all reforms be implemented concurrently and consistently; any delays or exemptions for some privileged persons or businesses would unravel the reforms as all others would return to lobbying for privilege.



One final note.  Advocates of “free markets” will protest most vigorously against these reforms although they remove the government from the economy through its historical use of the tax code to help favorites.  They will also protest the continuation of government regulations of businesses as its continued but unbalanced presence in the market.  They will thus try to obscure the fundamental difference between giving money away to the rich and the big, and protecting the safety and health of people, and the environment of their country.  Their desire for the government to give away money to the rich and the big reflects capitalistic greed; however, the requirement for the government to look out for the general welfare is Constitutional.