No fly, no buy: still a terrible policy

After the Orlando nightclub shooting at Pulse, there was an increased call for gun control or gun reform laws.  The most prevalent call was the idea of “no fly, no buy.”  This policy would entail that people who are on the “no fly” list would not be allowed to buy guns.  Quinnipiac University found that 86% of registered voters back this type of proposal when they polled this issue at the end of June.  A Suffolk University poll taken around the same time found that 76% of likely voters supported such a measure.  The idea has quite a bit of popularity.  It has a “bumper sticker politics” feel to it where it sounds really good on bumper stickers.  What’s more is that it is very easy to say to someone on the no fly list should not be able to buy guns.  It appeals to your gut.  It’s designed to attack those who oppose it.  But it’s terrible policy.  The amendment offered by Dianne Feinstein that would prevent those on the “no fly” list from purchasing guns failed as did Senator Susan Collins’s compromise amendment.  The amendments would include those within the Terrorist Identities Datamart Environment which includes the Terrorist Screening Database of which the no fly list is a subset.  I don’t think it will be brought up again, anytime soon in terms of actual legislation, but I do think people will continue to have discussions revolving around this issue.

Due process problems

There are some Constitutional arguments that we can have over whether or not gun control laws violate the 2nd Amendment.  I, for one, believe that the Constitution does allow for regulations of firearms but for those that disagree with me, I certainly understand.  But I do believe that regulations of firearms have to follow the other Constitutional amendments that we have and the principles found within the Constitution.  We do have principles of due process, equal protection, privacy, and unlawful searches that are equally entrenched and protected in our Constitution.  We must follow through with these principles.  So, you must provide for reasoning as to how or why someone is prevented from purchasing firearms and/or a remedy for them if they are prevented from doing so by either a mistake or inaccurate information.

In 2003, in the immediate aftermath of the 9/11 terrorist attacks, President George W. Bush expanded the screening of suspected terrorists.  The FBI Terrorist Screening Center (TSC) was created.  The TSC houses the consolidated Terrorist Watchlist.  This watchlist is a “single database of identifying information about those known or reasonably suspected of being involved in terrorist activity.”  We’ll get back to the “reasonably suspected” portion of their statement in a bit.  This database is what helps create screening agencies to prevent people from obtaining visas, enter the the country via aircraft or seacraft, or travel via air or sea around the country. The American Civil Liberties Union (ACLU) has been a critic of this agency and process since the onset.  They noted in their report that the TSC  also contains “the selectee list) which identifies “individuals who are subjected to additional questioning, inspection, and screening before being allowed to board flights to, from, or over U.S. territory.”  The ACLU writes that 875,000 individuals as of December 2012 are on the consolidated terrorist watchlist.  The Associated Press reported in February of 2012 that there were about 21,000 individuals on the “no fly list” alone.  The ACLU has since reported that 47,000 people are on the no fly list as of 2013.

The authors for the ACLU write about what it would take to be placed in the Terrorist Screening Database.  The TSC defines a reasonably suspected terrorist is an “individual who is reasonably suspected to be, or have been, engaged in conduct constituting, in preparation for, in aid of, or related to terrorism and terrorist activities based on articulable and reasonable suspicion.”  As the authors of the ACLU write, this is “broad enough to include First Amendment-protected speech and association…mere proximity to a suspected terrorist should not make one a suspected terrorist, but that is what the standard allows.”  The Government Accountability Office (GAO) acknowledged that “agencies utilizing watch list records recognize various definitions of [terrorism].”  That’s just the standard to be included on the database.  The no fly list and selectee list, though, are subsets of that database.  Government representatives acknowledge that there are “additional derogatory requirements.”  These requirements have not been disclosed.

As the ACLU has found in their efforts of representing clients that most of the people do not find out that they are on the no-fly list until they try to fly and are barred from trying to fly.  Previously, the government had not confirmed or denied if people were actually on the no-fly list.  This has since been changed.

What’s more startling is that there are a number of mistakes with the terrorist watchlists and what is not surprising is that people are placed on the watchlists based on discriminatory factors.  The ACLU found that 280,000 on the master watchlist who have “no recognized terrorist group affiliation.”  The city of Dearborn, Michigan which has one of the largest Arab American communities in the country has more people on the terrorist watchlists than any other city in the country except New York City.  There are less than 100,000 people in Dearborn, Michigan.

People are erroneously placed on the No fly list and the list is not updated.  The ACLU writes in their report:

Rahinah Ibrahim, a Stanford PhD student and Malaysian citizen, was prevented from boarding a flight in San Francisco, handcuffed (despite being wheelchair-bound at the time), and held in a detention cell for hours in January 2005 based on what turned out to be a bureaucratic error by the FBI that placed her on the No Fly List. The government fought to avoid correcting the error for years, even invoking the state secrets privilege in an unsuccessful effort to prevent judicial scrutiny. She was permitted to leave the country, but to this day, she has been barred from returning, even though the government admits that she should not have been placed on the No Fly List.

The ACLU reports the Department of Justice Inspector General wrote in 2008 that watchlist records are not appropriately generated, updated, or removed as required by FBI policy. In 2009, the same Inspector General found that many people were not removed from the watchlist and tens of thousands of names were placed on the list without a factual basis. Some of the other more notable names that have been included on the watchlists include Nelson Mandela, Ted Kennedy, and John Lewis.

Those on the watchlists have very little opportunities to be able to get their names off of the list as they are not offered a chance to make their case in front of a neutral arbitrator.  In Feinstein’s amendment would require the attorney general to draft measures to make sure that national security is not compromised which would prevent an individual from finding out why they were denied the ability to buy a gun.   Unless the government provides reasons as to why an individual is on the watchlist that is preventing them from purchasing a gun and allows for a real ability to correct the issue, it fails basic due process standards.

 

 

 

 

 

 

 

 

 

 

 

A goal

Political party heuristics

There’s only so much time in the day.  After working, spending time with your family, and doing whatever you do to relax, there’s simply not that much time to be able to pay attention to politics, unless you really care.  We use heuristics to help explain the world and how we interact with various policies.  That’s one of the major benefits of having a political party used for an identity.  If you do identify with a particular political party, you can rely on how your political party reacts to a particular set of policies before you decide how you feel.  For the most part, that works wonders.  You have a way to decide on policies that is particularly quick and easy to recite.

When a politician or a political party talking head talks about a particular issue, you can immediately agree or disagree with them as soon as you know their political affiliation.  We trust that only those who agree with us are the ones telling us the truth.  The ones that aren’t a member of our political party are practicing ways to deceive us and we are the ones who are smart enough to see through it.

This is a part of our cognitive biases at work.  The most prevalent one is confirmation bias.   Confirmation bias leads you to look for and notice information that confirms your original beliefs and discount or ignore information that contradicts our previously held views.  This especially holds true for beliefs that we haven’t researched thoroughly.  We will talk about this later.  Another cognitive bias that is prominent in reading and understanding politics is negativity bias.  This is an evolutionary trait that has helped us avoid predators.  In our brains, we prioritize bad or negative news over the positive outcomes.  For instance, the other day Amanda found bugs in her uncooked pasta similar to the ones that are found in flour.  I was eating a different pasta but I had to check every single noodle to make sure there wasn’t a bug there.  Consequently, I didn’t like the pasta very much.

These biases are particularly powerful.  They can convince us of things that didn’t actually happen.  The stimulus bill that was passed in 2009 contained almost $300 billion in tax reductions.  The nonpartisan Tax Policy Center found that 96.9% of households enjoyed a tax cut of an average of $1,200.  One of the larger tax credits was the Making Work Pay tax credit, it was designed for less tax to be withheld from people’s paychecks because the evidence suggested that more people would spend this tax cut rather than saving it.  The idea was to stimulate the economy.  Other portions of the tax cuts was to extend the Alternative Minimum Tax and to increase the Earned Income Tax Credit (EITC).  In 2008, George W. Bush proposed a tax cut that was about half as large, ($145 billion), and issued a rebate check to households.  The problem with Obama’s tax credits is that nobody noticed.    The New York Times and CBS issued a poll that found that half of those polled said that they thought the taxes for most Americans had stayed the same, a third thought that their taxes had gone up, fewer than 10% said that taxes had been lowered, and about a tenth said they did not know.  During this same time, there was a tremendous push by Republicans saying that Obama was raising their taxes with hikes that didn’t materialize.

Or let’s give a more recent example. Public Policy Polling (PPP) recently did a poll of North Carolina and polled a number of statements by Republican nominee Donald Trump.  The poll asked if you viewed the video of Iran collecting money from the US that Trump claimed to have viewed.  47% of Trump supporters agreed that they viewed the video.  The video, of course, doesn’t exist.  Trump also admitted he had never seen the video. In that same poll, 40% of Trump supporters believe the defunct organization of ACORN will steal the election for Hillary Clinton.  It’s not to say that Republicans or Trump supporters are the only ones guilty of it.

Or if we want to see a better example of both negativity bias and confirmation bias in action we can look at social welfare programs.  For some people, they know someone who has taken advantage of a social welfare program such as Temporary Assistance for Needy Families (TANF).  Because they know of someone that took advantage of the system, they assume that most has taken advantage of it and that we should drug test those who receive welfare.  Despite that when they are implemented, 5% or less of welfare recipients fail drug tests that cost states money and suspicionless drug testing for welfare recipients has been ruled unconstitutional.

Political compromise

When I talk to other people about politics who don’t spend the majority of their personal time reading about politics or following politics outside of every four years for the Presidential election, they indicate to me their problem with government is that nothing seems to be happening with the federal government which is fairly true with the idea of passed and enacted laws.  According to a Gallup poll in 2013, 21% said that they are critical of Congress because they are not getting anything done.  Related to that is the idea held by 28% of those polled saying that they are critical due to party gridlock/bickering/not compromising.

During the years of 2009-2013 when Democrats controlled both the Senate and the White House, there were 307 motions to end a filibuster.  During the time period where Republicans held the White House under George W. Bush and the Senate, there were 130 motions to end a filibuster from January-May 2001 and January 2003-2007.  The filibuster is used by the minority party in Senate to halt legislation, appointments, etc. from passing the senate.  This requires 3/5 of the Senate to defeat each filibuster, or 60 votes.

I do believe that compromise is a good thing in politics.  I believe that having opposition to a party or a policy allows us to be able to view things in a new light.  It forces us to at least look at new evidence.  As we’ve seen, though, we do not necessarily embrace the new evidence.  It might lead us to ignore the evidence.  Perhaps the minority amendments to the bill would lead to actual reforms that help the bill.  It allows for progressive legislation to be shaped by a variety of voices and thoughts.  But most of the opposition that we’ve seen at this point is political grandstanding where one member holds up legislation to score political points.  Rarely, do we even see a talking filibuster.  And in the rare cases that we do see a talking filibuster, they are fun to watch but serve no real purpose.

Passing bills requires a large number of veto points in our Madisonian democracy.  Whether it is the subcommittee, the committee, the house where the bill originated, the house where it did not, the president, or the Supreme Court.  Progressive legislation is hard to come by.  It has to be able to pass each of these procedural hurdles (I am leaving some out, still).  Potentially each member of Congress (either house) can derail legislation from being passed.  It’s a wonder it hasn’t been so derailed before.

The typical response to this legislation is that we need to have outsiders to go to Washington to clean it up.  But this assumes that they have knowledge of how to write legislation, forge compromises, and to understand legislation.  Or maybe it doesn’t assume that, but this I believe necessitates more gridlock.

Where to go from here

I can’t change your mind.  If you are open to arguments that challenge your original beliefs, I may be able to give you some pause.  But if you believe that raising the minimum wage will destroy the economy and lose thousands  of jobs, my post about the minimum wage isn’t going to convince you otherwise.  If you don’t believe in progressive legislation, I’m not going to convince you otherwise.  If you believe that the death penalty is required to deter crime, I can’t convince you.  But I might be able to convince you that the death penalty is a drag on our state’s budget.  I might be able to convince you that we should think about the morality of those living in poverty and help them with a living wage.  I might be able to convince you that increasing the Earned Income Tax Credit helps lift people out of poverty, as well.

To quote Barack Obama:

We may not agree on abortion, but surely we can agree on reducing the number of unwanted pregnancies in this country. The reality of gun ownership may be different for hunters in rural Ohio than for those plagued by gang-violence in Cleveland, but don’t tell me we can’t uphold the Second Amendment while keeping AK-47s out of the hands of criminals. I know there are differences on same-sex marriage, but surely we can agree that our gay and lesbian brothers and sisters deserve to visit the person they love in the hospital and to live lives free of discrimination. Passions fly on immigration, but I don’t know anyone who benefits when a mother is separated from her infant child or an employer undercuts American wages by hiring illegal workers. This too is part of America’s promise – the promise of a democracy where we can find the strength and grace to bridge divides and unite in common effort.

In nearly every speech for the last 12 years, Obama has talked about the efforts to perfect our union.  This is an incrementalist approach to politics that if we take steps in the right direction, we can continually perfect this union that we have.  We might disagree on issues but there are steps that we can compromise.  You may not like the ACA but you certainly prefer that health insurance companies can’t discriminate based on pre-existing conditions.  You may not agree with any politician 100% about the policies that they are taking to make the country better but there are certainly useful allies across the aisles across political spectrums.  Instead of vilifying each other, instead of denigrating our opponents, we need to work together.

The founders wrote about the ways in which we can try to perfect our union and I believe we should continue.  We can’t continue this with one person dictating what is right or wrong or one party holding too much influence over our political lives.  What we need is healthy opposition, a way to challenge old beliefs, and work together to form new solutions.  That is my goal here to lay out what I believe should happen in policies and various politicians.

I certainly don’t believe that I hold all of the right answers.  I read a lot, I have worked with non-profits and members of Congress.  I am going to write about posts that interest me.  I believe in progressive legislation to help with a number of issues.  I’ll be honest and straightforward with what I believe and lay out the reasons for why I believe it.  I will back up my claims that I make with cites and links where I can.  If you disagree with me, that’s great.  Explain to me why you disagree.  I’m going to respect you enough to not just repeat talking points back at you why I support certain legislation and policies.  Have the same respect to me.  Don’t think that you can make unsubstantiated claims about politics without me arguing about it.  If you’re wrong, I’m going to tell you why you’re wrong.  If you think I’m wrong (and I certainly am some of the time) then explain why.  While we may have disagreements, I think we should work to find our common ground instead of focusing on the parts that we disagree about.

 

 

 

 

 

 

 

 

 

Yes, we built it; can we repair it? Pt. 17

Perhaps the most ambitious of Reagan’s moves as Governor was his role in trying to pass the tax reform via a constitutional amendment known as Proposition 1.  Perlstein in The Invisible Bridge summarizes the measure.

[It] included a rollback of the personal income tax rate from 8.3 to 7 percent and a provision that if the state collected more than an allotted amount in any year the surplus would be refunded to taxpayers. It established an emergency fund of not more than 0.2 percent of taxpayer income to maintain government functions—but only the governor could declare the emergency. It also set tax limits for cities, counties, and special districts. Finally, it exempted the wealthy from California tax law’s $10,000 mandatory minimum assessment, and included a rebate for lower-income taxpayers.

Reagan campaigned for the Proposition hard

California’s official nonpartisan legislative analyst A. Alan Post wrote his assessment that there would need to be a $620 million reduction in the next year’s state budget.  Reagan accused him of serving the Democratic Assembly Leader’s agenda.  After Reagan accused him of this, Post had a number of supporters.  Perlstein writes

Post had just been profiled as a model of objectivity and rectitude on the front page of the Wall Street Journal. He had once been, in fact, a registered Republican—then changed his status to “declined to state,” to foreground his nonpartisan scrupulousness. The chairman of the California senate Republican caucus rose to defend him: “Alan Post doesn’t slant figures.” So did the Republican floor leader in the California assembly: “I have never personally been of the opinion he is partisan.” Post appeared before the assembly Ways and Means Committee to patiently explain his statistics-laden seventy-five-page conclusions that over a four-year period Prop 1 would require budget cuts totaling $3.5 billion, and would merely shift the tax burden to localities and property taxes. The governor’s chief deputy director of finance called that “misleading, distorted, and biased.” A shouting match nearly broke out.

Democratic Assembly Speaker Robert Moretti challenged Reagan to debates to question what would Reagan cut to be able to afford the tax cuts.  Reagan avoided the debates deftly.  Reagan infuriated his opponents.  On the one hand, he would get upset about the attack that the tax plan would create deficits saying that it would produce $41.5 billion in 15 years in new money.  Then he would claim that the plan was to give the state less money to spend. When Moretti and others would claim that Reagan’s plan would cut bureaucracies or government services, Reagan would say that the emergency funds would protect them but also he didn’t want to protect them, anyway.  Reagan tried to pass Proposition 1 as a statute but the state senate held it up.  Reagan claimed it was sabotage but as Perlstein writes “it lost a vote in plain daylight, by a margin of 80%, including a majority of his fellow Republicans.”

Perlstein writes

If Reagan wanted to cut taxes and spending, Jerry Brown pointed out, why had he raised both in his previous seven years as governor, despite having a line-item veto? (He had even authorized a surprise tax increase for the Los Angeles school district two weeks after his initiative made the ballot.) “How can a magic formula, written by invisible lawyers, do what Ronald Reagan has been unwilling or unable to do?”

Ultimately, the measure failed 54-46.  Reagan would later reflect that it was a campaign of disinformation that was the reason for its ultimate demise.  Based on the track record and the slippery relationship that Reagan had with the truth especially with regards to this issue, it’s hard to believe him.  The conservative Heritage foundation also cited a campaign by public employee unions that argued that a state tax and spending limit would lead to local tax increases.  So voters were confused and ended up voting against the proposition with the idea that they were going to cut taxes.

Yes, we built it; can we repair it? Pt. 16

Reagan’s tax reform did not make much sense at the time.  Most of the tax favors in his tax plans would help out the well-off.  He argued that he was defending the tax payer from what Barry Goldwater would call the Leviathan of government.  Perlstein writes in The Invisible Bridge of Reagan’s response:

Are we automatically destined to tax and spend, spend and tax indefinitely, until the people have nothing left of their earnings for themselves? Have we abandoned or forgotten the interests and well-being of the taxpayer whose toil makes government possible in the first place? Or is he to become a pawn in a deadly game of government monopoly whose only purpose is to serve the confiscatory appetites of runaway government spending?

California had a budget surplus at the time so it didn’t quite make sense.

During the 1973 energy crisis, there was some concern of various states running short of energy and having to go through drastic measures to keep it going.  Reagan would not have anything to do with it. Reagan decided to blame environmentalists for preventing California from building nuclear power plants.  Besides, he argued, the state wouldn’t be able to do a lot in the event of a fuel shortage.That was news to the head of the state government’s resources agency, Perlstein writes, the nuclear facilities weren’t being built because “their sites were on earthquake faults.”

The Earned Income Tax Credit (EITC)

The Earned Income Tax Credit (EITC) was enacted by President Gerald Ford’s administration in 1975.   The Tax Policy Center explains that it is a federal tax credit that “equals a fixed percentage of earnings from the first dollar of earnings until the credit reaches its maximum.  The maximum credit is paid until earnings reach a specified level, after which it declines with each additional dollar of income until no credit is available.”   The federal EITC is fully refundable.  This means that if the credit exceeds the family’s tax liability, the family still receives the full credit in the form of a tax refund.  The EITC is only awarded if you have an income.  What’s more is that the EITC’s credit grows with each additional dollar of income, this creates an incentive for people to increase their income either by increasing their hours, leaving welfare and looking for work, and looking for higher paying jobs.  The Center on Budget and Policy Priorities (CBPP) explain the eligibility requirements.  For filing taxes for the 2015 calendar year, “working families with children that have annual incomes below about $39,000 to $53,300 (depending on marital status and the number of dependent children) may be eligible for the federal EITC.”  To be eligible for the EITC if you do not have children, you have to be in the ages of 25-64 and also have an income below about $14,800 ($20,300 for a married couple). You can receive a small EITC.  In 2013, over 27 million working families and individuals received the EITC.  97% of benefits from the EITC go to families with children.  According to the Tax Policy Center, almost all benefits of this tax credit go to families in the bottom three quintiles of income distribution.  The U.S. Census Bureau found that the EITC lifted 6.2 million people out of poverty in 2013.  This included 3.2 million children.

How does it work?  The phase in rate is the money where you earn a portion of your income to increase the value of the EITC.  So let’s say the phase-in rate for a married couple with one child is 34%, for every dollar that is earned by the couple, the EITC is increased by 34 cents until you reach the income threshold where the phase-in ends and the EITC holds steady. It includes every dollar that you earn.  The phase-in for a married couple with one child ends at $9,880 so at that point, your EITC would be $3,359.  If you make between $9,880 and $23,630, your EITC would be $3,359.  Then you slowly lose that money from your EITC depending on how much you earn until it is reduced by zero.  The phaseout rate is 15.98% for a married couple with one child.  All of these numbers were based in 2015.   If your EITC is larger than your tax liability, you receive it back from the federal government in a refund.  In 2013, the average EITC was $3074 for a family with children compared to $281 for a family without children.  That $3074 is equivalent to boosting wages by $256/month.

More benefits of the EITC

The EITC and relative expansions of it have had tremendous effects on unemployment and reducing welfare and other cash assistance programs.  Because the EITC essentially requires you to work to be able to claim the credit, it encourages people to transition from welfare to work.   In Examining the Effect of the Earned Income Tax Credit on the Labor Market Participation of Families on Welfare, the authors V. Joseph Hotz, Charles H. Mullin, and John Karl Scholz found that the EITC had a “substantial, positive effect on the employment of families who have uses or will use welfare.”  In a paper by Jeffrey Grogger, titled Welfare Transitions in the 1990s: The Economy, Welfare Policy, and the EITC, he finds that the EITC had the most signficant effects in reducing welfare caseloads during the 1990s.  He writes the EITC expansions “reduced welfare participation by 6.5%,relative to its 1993 peak.  Thus they accounted for over 10% of the 1993-1999 decline.”  Hotz, Mullin, and Scholz write that “for those out of the labor market, the EITC provides an unambiguous, positive incentive to work.”  Similarly, they found EITC expansion “accounted for 11.8% of the average increase in employment” over 1991 – 2000.

By far, the biggest recipients of the EITC are single mothers.  They are the ones most likely to qualify because of their low income earnings and qualifying children.  From March of 1990 and March of 2000, Hotz, Mullin, and Scholz wrote that employment rates of single mothers rose to 73.9% from 55.2%.  Not all of this can be attributed to the expansions of the EITC but as we’ve seen the increase encourages people to work.  The CBPP analysis shows

Economic studies controlling for other policy and economic changes during this period also found that the most significant gains in employment attributable to the EITC occurred among mothers with young children and mothers with low education…

Other research has found that EITC expansions between 1984 and 1996 accounted for more than half of the large increase in employment among single mothers during that period…

The EITC expansions of the 1990s “appear to be the most important single factor in explaining why female family heads increased their employment over 1993-1999,” University of Chicago economist Jeffrey Grogger has concluded.

The recession in recent years has hurt a number of workers and decreased wages.  The National Employment Law Project found in their analysis that “mid-wage jobs made up  60% of the jobs lost during the recession, they made up only 22% of the job gained during the recovery…lower-wage jobs, in contrast, represented 21% of the jobs lost during the recession but 58% of jobs gained during the recovery.”  The money refunded through the EITC help low-wage workers meet temporary needs, able to afford college, or pay other bills.  When I received my portion of the EITC, I used a majority of my money to afford daycare for my daughter for a substantial part of the year. The majority of those who receive the EITC only do so for a year or two at a time.  61% of those who received the EITC between 1989 and 2006 did so for only a year or two at a time.

Childless workers, the minimum wage, and strengthening the EITC

In order to help reduce income inequality, we need to strengthen the EITC.  Conservative economists including economic adviser to Donald Trump, Stephen Moore support raising the earned income tax credit.  Beyond that, conservative think tanks the American Enterprise Institute and American Action Forum also support strengthening the EITC.  The difference is that they support strengthening the EITC in a vacuum instead of tying it to strengthening the minimum wage, as well.  The CBPP argues that both the minimum wage and the EITC should be strengthened because “they function best when both are strong because each helps fill gaps that the other can’t fully address on its own, and neither is sufficient by itself.”

The current phase in for the maximum amount for the EITC for a single filer is $6,580 with a the phase out beginning at $8,240.  With the current federal minimum wage at $7.25/hour that is roughly the equivalent of 17-21 hours per week to earn the maximum amount of the EITC.  The maximum amount from the federal EITC is $503.  The EITC return begins to decline at that point.  A single filer who works full-time in a minimum wage position would earn $15,080/year and would not qualify for the EITC.  The maximum amount of hours to qualify for any portion of the EITC is $14,819 which would be just over 39 hours per week.  The credit’s value would be $1.  That hourly estimate is based off the federal minimum wage instead of any increases in the minimum wage at the state level.

This may not seem like a giant deal, although, we do have data on who earns the minimum wage or close to it so to see how many people this might affect.  The Congressional Budget Office (CBO) found that only 26.1% of low-wage earners are parents.  The Department of Labor found that 50.6% of those who are earning $7.25/hour or less are aged 16-24.  The Economic Policy Institute (EPI) found that 36.5% of workers earning $11.10 per hour or less were aged 20-29 while 73.7% of all those earning $11.10 per hour or less were aged 20-54.  The guidelines for childless single adults are that you have to be 25 or older and you have to work essentially 17-21 hours per week at $7.25/hour.  EPI found that 14.2% of workers who earn $11.50 or less work fewer than 20 hours/week.  Also, according to them, 54% work full time, meaning 35 or more hours per week.  A minimum wage increase without an accompanying increase in the EITC would harm workers and reduce their potential income.

While we are at the point where we should be strengthening the EITC.  The easiest solution is to adjust the ages that people are eligible to receive the EITC if they are childless. The typical response has been to expand the age requirements to 21 instead of 25 and expand it from 65 to 67.  My fear with expanding it that much is just that there is still a gap of those who are covered.  I would rather have it expanded to those at 18 (which we have generally decided is the age to become an adult) all the way up to 70.  But we must also go further, increasing phase in ending income threshold and increasing when the phase out income threshold begins would also wonders to help reducing poverty.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Yes, we built it; can we repair it? Pt. 15

Reagan’s 1966 campaign focused on lowering the cost of higher education, welfare, restore order on the college campuses in California, and tax reform.  Reagan focused some of his campaign on the University of California at Berkeley.  He warned his supporters of “sexual orgies so vile that I cannot describe them to you.”  Perlstein notes that the orgy line got wild applause.  No proof was ever offered.

During Ronald Reagan’s first term as Governor, Reagan went hard after abuses in social welfare programs.  One of the more famous ones was his crusade against the abuses in Aid to Dependent Children.  The Los Angeles Times conducted their own investigation finding as Perlstein writes, “abuses in four-tenths of 1 percent of relief cases and editorialized that for the sins of these 180 families and $31,960 lost from the state treasury, innocent children whose birthright was poverty were being put at risk of starvation.”  Reagan was merely capitalizing on an issue that he brought up consistently and a thought that was fairly widespread.  A White House study conducted by the Lyndon Johnson administration found that nearly 75% of white Bostonians thought most welfare cases were fraudulent.

The 1960 Donahoe Act, also known as the Master Plan for Higher Education, helped establish tuition free college for all California students who wanted a higher education.  The plan was drawn up by UC president Clark Kerr.  The University of California would provide education tuition free to the top 12.5% of high school graduates.  The top 33.3% of high school students could go to one of the California State Universities, tuition-free.  Everyone else could go to one of the community colleges throughout California.  Community college graduates could then transfer to the University of California system or California State University’s system and finish their bachelor’s degree, tuition free.

Reagan upon his inauguration was able to get control of the Board of Regents for the University of California system.  He was able to fire Kerr.  He also proposed cutting the University of California system by 10% across the board.  He also proposed that the University of California system charge tuition and wanted the Berkeley to sell off collections of rare books.

The cost of higher education, therefore, was not the cost on the individual but rather the cost of higher education on the government. He later said, as Perlstein notes, that “it was not the business of the state to subsidize intellectual curiosity.”  Reagan offered no sympathy to student protesters. After a student was shot observing a protest, Reagan said,”the police didn’t kill the young man.  He was killed by the first college administrator who said some time ago it was all right to break the laws in the name of dissent.”

Paid family leave

One of the ways that we can reduce income inequality would be to provide for paid family and medical leave. The Family and Medical Leave Act (FMLA) which was passed in 1993 provides up to 12 weeks of leave.  This law only applies to companies with more than 50 employees and doesn’t actually give employees a chance to recover their wages.  Moreover, only about 60% of workers are covered by FMLA establishments.   It is up to the employers if they will provide paid leave to their employees.  According to the Department of Labor, published in 2013, in the employee benefits survey only 12% of workers have access to paid family leave.

A national paid leave law would provide employees to earn a portion of their pay while they take time to address a serious health condition, care for a family member with a serious health condition, and care for a newborn, newly adopted child or newly-placed foster child. According to National Partnership for Women and Families, a serious health condition is one that requires either inpatient care or continuing treatment by a health care provider.  Continuing with National Partnership for Women and Families, usually payment for these types of programs are either by join employer-employee contributions or solely by employee contributions and the funds are paid to a special insurance system where funds are disbursed. As Cohn notes in The New Republic, the paid family leave is typically set up in a similar fashion to unemployment or disability insurance where the money is taken out via a payroll tax and is then withdrawn when you need it.

California passed a paid family leave law in 2004.  The law is similar to other government social insurance funds, such as disability or unemployment and would provide up to six weeks of paid leave at up to 55% of an employee’s earnings.  While it is a good program, I did not take advantage of it while I was in California as even 55% of my wages while I was there when my daughter was born would not have been enough to support my family.  In a survey conducted by the Center for Economic Policy and Research, 89% of businesses said they felt the law either had a positive or no noticeable effect.  Further, they found that 87% of employers reported that the state’s paid family leave program resulted in no cost increases.  The researchers wrote “fears expressed by opponents of the program that PFL would create a heavy burden on the state’s employers even report reduction in costs and improvements in productivity or profitability.”  In a report from the White House Counsel of Economic Advisers, they found that 90% of California employers reported no noticeable or a positive effect on on profitability, turnover, and morale.

Jonathan Cohn writes in The New Republic that businesses actually like to offer paid family leave and it makes more sense to begin to offer it contrary to what some conservative politicians argue.   Google announced that it was extending paid leave for its employees by several weeks.  The White House Counsel of Economic Advisers in their report on paid leave found that 2/3 of human resource managers called family-supportive policies including flexible schedules as the single most important factor in attracting and retaining employees.  And in that same report 90% of respondent employers characterized their family-friendly policies as cost-effective.  In a report written by Linda Houser and Thomas Vartanian titled Pay Matters: The Positive Economic Impacts of Paid Family Leave for Families, Businesses and the Public they studied the economic impacts of paid leave compared to the effects of unpaid leave or no leave.  Houser and Vartanian had a number of interesting findings in their paper.  Women who report taking paid leave are more likely to be working 9 to 12 months after a child’s birth than are those who report taking no leave at all.

The reason that it makes more business sense is that, as Houser and Vartanian find, employees have stronger labor force attachment after returning from leave.  Betsey Stevenson, a member of the president’s Council of Economic Advisers, suggested “women who are offered maternity leave are more likely to return to the same firm, and many women who would not have otherwise returned to work re-enter the labor force within a year.”  As Cohn notes, numerous studies have shown that offering paid leave tends to improve retention.  This is very important, in the same report from the White House Council of Economic advisers found that the median cost of replacing an employee was 21% of that employee’s annual salary.  What’s more is that an employee absenteeism due to work-family responsibilities cost employers about $500 – $2,000 per employee per year.

The reason that there is a need to be able to provide this as a government benefit instead of relying on the private sector is that corporations are not reacting quick enough and those that would benefit the most from these policies are not offered.  As we see with the statistics from the Department of Labor, overwhelmingly, the poorest do not have access to paid family leave:

Characteristics Family leave  
  Paid Unpaid
Worker characteristics    
Management, professional, and related 20 92
    Management, business, and financial 25 92
    Professional and related 17 92
Service 7 80
    Protective service 14 90
Natural resources, construction, and maintenance 8 81
    Construction, extraction, farming, fishing, and 7 80
     forestry    
    Installation, maintenance, and repair 9 83
Production, transportation, and material moving 7 86
    Production 8 88
    Transportation and material moving 6 84
Full time 15 90
Part time 5 77
Average wage within the following categories3:    
    Lowest 25 percent 5 78
        Lowest 10 percent 4 75
    Second 25 percent 11 87
    Third 25 percent 15 91
    Highest 25 percent 21 93
        Highest 10 percent 22 94

It makes financial sense for employees to support paid family leave. Heather Boushey, the executive director and chief economist at the Washington Center for Equitable Growth writes that women lose an estimated $274,044 and men $233,716 in lifetime wages and social security benefits when they have to leave the labor force early due to care giving responsibilities. Women in the workforce have not changed in a significant manner since the mid 1990s.  In their paper Female Labor Supply: Why is the US Falling Behind, Francine D. Blau and Lawrence M. Kahn write “by giving workers the right to thei job back after taking the leave, [paid leave] raises the job prospects of those who have left the labor force after the birth of a child.”  Houser and Vartanian found in their paper that women who report leaves of 30 or more days are 54% more likely to report wage increases in the year following the child’s birth than are women who take no leave at all.  Perhaps the idea that those returning from leave have a labor force attachment have some merit.  By shifting the burden to provide this leave away from businesses and place it squarely with the government, there will be new opportunities for small businesses who cannot afford to currently provide paid family leave.  Smaller businesses would not have to compete with larger firms for the same talent pool and be able to offer more competitive offers.  As we have seen, human resource managers believe that family supportive policies are what can attract and retain employees.

Finally, it makes sense for the government to encourage it.  While there will be a small uptick in government spending in “entitlement” spending due to how the Paid Leave Insurance would be distributed, there would likely be a cost savings as those who take leaves will likely see a decrease in other government spending.  Houser and Vartanian found that those who received paid family leave were much less likely to have to rely on public assistance.   Specifically they found

Women who return to work after a paid leave have a 39% lower likelihood of receiving public assistance and a 40% lower likelihood of food stamp receipt in the year following the child’s birth, when compared to those who return to work and take no leave at all.  Men who return to work after a paid family leave have a significantly lower likelihood of receiving public assistance and food stamps in the year following the child’s birth, when compared to those who return to work and take no family leave at all.

This should be self-evident by relying on the paid family leave, they were able to stay afloat without having to deal with additional public assistance.

Where it stands now

Hillary Clinton, Bernie Sanders, and Martin O’Malley all announced their support for paid family leave laws.  Clinton previously supported a similar law in her 2008 run for the Democratic nomination.  Cohn believes that Clinton would support such a law if she became president and would lay it out as a central tenant in her governing agenda.  The most ambitious form of paid leave among federal legislators is The Family and Medical Insurance Leave Act (The FAMILY Act) which has been introduced by Kirsten Gillibrand and Rosa DeLauro.  Their law would allow workers up to 12 weeks of up to 66%  of their monthly wages up to a capped amount for a serious health condition; the serious health condition of their child, parent, spouse or domestic partner; and the birth or adoption of a child.  It would cover all workers in all companies and would be funded by payroll contributions which they described as two-tenths of one percent by each the employer and employee.  It would also create a new Office of Paid Family and Medical Leave within the Social Security Administration.  Clinton’s plan would cost about $1 billion in annual spending.  This bill would cost more.  While she hasn’t endorsed this plan, she has said she supports the principle.

Marco Rubio in his failed bid to win the Republican presidential nomination offered a plan to pay for family leave which was based on a tax credit.  Rubio argued against a federal mandate comparing the paid family and medical leave to Obamacare.  Rubio argued for a tax credit to help pay for it.  The tax credit would be a “25% non-refundable tax credit for businesses that voluntarily offer at least four weeks of paid family leave, limited  to twelve weeks of leave and $4,000 per employee each year.”  In other words, as Jonathan Cohn writes, “for every four dollars in wages that companies paid out to employees on leave, they would get just one dollar back from the government.”    Since the $4,000 is the maximum tax credit, a company would need to pay $16,000 to get the maximum credit.  As Cohn reports other policy analysts as saying that the tax credit is just too small for companies to take advantage of the policies.  The Tax Policy Center issued a report on tax breaks similar to this such as hiring people on welfare and people with disabilities, and found that   While I should refrain from commenting on someone’s failures when they were trying to run for President, Rubio’s plan was modeled after the Republican plan put forth by Deb Fischer and Angus King. It is surprising that Rubio even mentioned this type of plan while other more conventional candidates running for President such as Jeb Bush argued against paid family leave.

I think it’s more likely that Gillibrand’s plan with the FAMILY Act is the better plan; I think that Rubio’s plan is more likely to pass.  My assumption is that there will be a compromise to increase the tax credit for employers to be able to take advantage of offering such a package.  While I do believe that paid family leave would be difficult to be able to pass through an increasingly hyperpartisan Congress, I think that it’s worth seeing where everyone’s support lies.  My support lies with Gillibrand and her plan.  I think it’s a better plan because I believe that it covers more workers and is more likely to be followed through with.  Rubio’s plan, I believe, will be hailed as a plan that will solve the issue while doing nothing.  Nevertheless, paid family leave is an important idea and one that deserves our support.   I believe that I have laid out the arguments in favor of such a plan.