Category Archives: Taxing and spending

What can a government do?

Ken Cuccinelli now says that Obamacare is fine

Virginia’s Ken Cuccinelli, a major force in bringing the constitutionality question on PPACA Obamacare, is now fine with the decision by Justice Roberts. He states that he did not consider the legal position that Roberts put forward in preserving the law. In an interview with The Washington Post, he said “That was not one of the combinations that were even in our top five. That permutation was one that we didn’t spend a lot of time thinking was a likely outcome.”

Why he didn’t think of interpreting the mandate as a tax is not clear, given that many in the GOP were crying that it was a tax. Perhaps he did not consider this interpretation because, if he had, he would not have had a basis for a lawsuit. The good outcome for Cuccinelli in forcing a ridiculous lawsuit into the Supreme Court is that it made his name among the radical right. Without Cuccinelli, perhaps there would have been no constitutional challenge — Lots of money saved, lots of stress averted — but not nearly as many people would know his name. It is difficult not to think he used his public office for political advantage. Regardless of the outcome or the merits of his lawsuit, his opposition to Obamacare kept his name in the national headlines effectively for over a year as a champion of the opposition to President Obama’s signature health care bill. Virginia taxpayers could wish he had thought about that permutation before filing the lawsuit and saved all that expensive ruckus.

Virginia tax credits for private K-12 should not pass

Tax credits for K-12 private school attendance is a bad idea. Remember that a tax credit is actually a payment of money from the public purse. Taxes are collected across the income strata, and public schools are funded from taxes. This legislation shuttles public money to private purses, essentially giving another tax break to people who do not need it. I am opposed to it for two reasons:

  • While it is true that getting a good education should not depend on your zip code,this legislation will do just that. It will establish a two-tiered quasi-public school system in which the state, using tax money from everyone, will support private schools for some children and a lower tier of public schools for others. This is contrary to any sense of equal opportunity.
  • This legislation purports to give poor children entry into private schools. If it is passed, I do not believe that the school populations will change. The private schools need only raise their tuition to absorb the public money that will flow into them, and poor and middle-class children will still attend public schools.
  • We cannot afford to abandon Virginia’s duty to all of our children, to educate them all — this is a foundation stone of democracy, and an absolute necessity for the 21st century. We need to educate all of Virginia’s children, not just those in certain zip codes or certain economic levels. Fix the public schools, don’t make them a ghetto.

    Why Occupy?

    The folks who are standing up to tear gas and rubber bullets have a reason. If we understand it, we can fix it, starting in November:

    Open letter to Senator Mark Warner

    Dear Senator Warner:

    As the text of S. 1247, a bill to develop and recruit new, high-value jobs to the United States, to encourage the repatriation of jobs that have been off-shored to other countries, and for other purposes. comes available, I will follow it closely. This is an important issue, and attracting “new, high-value jobs to the United States” is a number one priority. I hope that your bill has considered the environment in which jobs grow, one in which:

    1. people have economic security — money — and can purchase goods and services,
    2. the infrastructure will bear the weight of the commerce, and
    3. there is a rich culture to enjoy and opportunity for children and families.

    Recent downturns and responses to them based on cuts in spending have reduced all three of these aspects of our economic environment. Above all, it is the responsibility of government to maintain a culture in which people enjoy living and have opportunity. Our corporate welfare focus is foolish. We need to build infrastructure, take care of the health care mess once and for all by extending Medicare to everyone who wants to enroll and supporting Medicaid. We need to defend — and extend — Social Security and restore the retirement age to a reasonable 62, which would open up opportunity for young people. Older people who can scarcely keep up the pace are now locked into jobs they are no longer able to do by the necessity to keep employer medical insurance and the prospect of poverty with reduced Social Security. Let older Americans retire and spend their retirement accounts and Social Security on travel and support for their children and grandchildren — something other than medical care — and the economy will turn around.

    I look forward to voting for you again and again as our Senator from Virginia, and I hope I will get to vote for you for President in the future. Please understand that I do not want to take away from business, but business does not thrive except in a dynamic culture that produces demand for goods and services. Money trickles up, not down, and we know this every time we pay our credit card payment. If we keep cutting off our most vulnerable and forcing our middle class into poverty by low wages, expensive education, rising food costs, rising energy costs, abusive credit practices, and tax incentives to wealthy private corporations we will not survive.

    For an economy to thrive, some of the money that goes up needs to be forced back down to the bottom so that it can recirculate. The way to do this is to collect taxes from the people who use our labor force and our infrastructure and our consumer base to become wealthy. The wealthy are not the source of jobs, they are the result of many people working to get by and to have a few dollars extra to take the family to the beach once a year and to carry smart phones in their pockets. The working people are the source of jobs and the source of wealth because they both do the work and generate the demand for goods and services. Infusing money at the top and asking corporations for the favor of a few jobs is utterly ridiculous.

    I hope that your new bill considers the workers in the United States when you are thinking about jobs, because if our workers are not healthy and hopeful and do not benefit from their work we will not have an economy no matter how much money we give to corporations.

    I hope also that you will see this message. I know that you receive many letters, but this message is clear. In the United States today we are seriously talking about taking out the foundations of the economy and trying to sustain the wealth at the top by giving more money to wealthy people. This is a third world solution, and we can do better.

    Discussions don’t have to end in bloodshed

    When someone sees all opinions as equal — i.e., any person has a right hold any opinion — all discussion is circular. People who are trapped in that false construction of reality feel personally threatened by conflicting opinions. But they are lucky in one way: they have it pretty easy in the research department.

    When a person sees opinions as derived from weighing the facts, the conflicting opinion is not a personal threat, but it does present you with a lot of work. First you have to see what facts the other person uses to justify their opinion, then you have to see how those facts fit into the larger context of your opinion and your known facts, and then you have some fact checking and connecting of the dots to do before you:

    • change your mind and agree with the other person,
    • continue in disagreement with facts to sustain you,
    • or arrive at a third opinion that incorporates all of the facts.

    Sometimes the gathering of facts becomes so involved that you can’t remember the original conflicting opinion, but you have the benefit of the study even if you can’t remember what the object was. (Hint: Wikipedia is cool, but set a timer.)

    Once you start gathering, verifying, and associating facts, you discover how seldom you have all of them. Some are hidden for later discovery — often in hopes they will never be found — and new ones keep popping up. Example: I might spend money today at Sam’s Club. That will invalidate several facts in Sam’s inventory, in my bank account, and — if I trip over the curb and break my leg — in whether or not I can drive a car. So if someone verified any of those facts yesterday, their facts would be outdated.

    Sometimes people pick their fact set to persuade you to believe something contrary to the truth, maybe in order to move money from your bank account to theirs. So you have to see who is using what facts to promote what opinions and what they are leaving out, and there you have another whole set of dots to connect.

    Keeping conflicting opinions in the factual universe and connecting the dots is worth the effort. You can learn new things, modify an opinion without bloodshed, and break out of the circular discussion. Frequently you can even keep your friends, since you don’t have to kill them, silence them, or shame them.

    Probably the greatest advantage of forming your opinions in the fact-based universe is that the fabric of that universe is not easily ripped by shouting heads. You can study the deficit, tax breaks for big oil, tax breaks for millionaires, or any other issue in the opinion mill, without feeling like it is a deadly tumor in your own personal cranium. Nobody is expected to be rational about a deadly tumor in their own personal cranium, but the number of people who are irrational about public policy issues today is — well, irrational.

    Who would pay us?

    A Facebook friend recently asked, “If everyone worked for the government (as some people are suggesting) then who would pay our salaries?”

    I have not heard this suggestion, but it is interesting. If indeed we all worked for our government, the government would pay our salaries. Since we have a democracy, a “government of the people and by the people and for the people,” we would all be working for ourselves and paying ourselves.

    Governments that are not democratic usually have a monarch or some monopoly that owns everything, and individuals do commerce by permission or charter. It still appears to workers that they work for whoever hands them money on payday, but that person is a middle-man with a charter or lease from the king. All persons work for and at the pleasure of the king. This arrangement is what Adam Smith was looking at when he wrote The Wealth of Nations and explained that wealth was not accumulated money sitting in the king’s treasure rooms, but rather was money that was moving through the economy from hand to hand to hand, earned and spent sequentially by many people in the pursuit of their ambitions and dreams.

    In any case, the person who has a job is the person who is making the money as well as the person who is getting paid. The employee is “making the money” for the employer. The employer uses the money that the employees make to pay each worker’s salary and benefits, to pay applicable taxes, and to maintain and furnish workplace necessities. What is left over after these expenses is profit for the owner or owners, investors and capitalists, people who ideally pump that money back into business in the hope of making more profits. If they put it in their treasure rooms, it is drained out of the market and the market is diminished.

    So each employee earns a salary by making money for the employer. Successful employers are usually hard-working, hard-headed practical ambitious people who know that their income depends upon employees, customers, suppliers, and clients. Employees depend upon the employer to understand and adjust to the market and to keep designing the work and the product so that everybody in the system keeps their job and makes a living.

    Nobody in the system requires charity from anybody else in the system. It is a cooperative effort in which members owe each other respect and considerations that keep the system going — salary, benefits, hard work, etc. The employee and employer system in turn depends upon that broad complex of roads, railroads, bridges, communication lines, power lines, safety regulations, police, fire departments, childcare, elder-care, hospitals, health care, financial institutions, laws, courts, schools, worker protections, consumer protections, contracts, etc., that permit people to live with confidence, take risks, innovate, and pursue their dreams.

    An economy is not simple, and it is time we learned to look at complexity.

    It’s the semantics

    Attorney General Ken Cuccinelli, R-VA, is fighting implementation of HCR in Virginia (using Virginia taxpayer money) based on two semantic points:

    1. The commerce clause of the U.S. Constitution allows Congress to regulate “activities that substantially affect interstate commerce.” Cuccinelli is arguing that under this clause, the U.S. cannot require individuals to purchase insurance or pay a fine for not doing so because not purchasing insurance is not “activity,” rather, he says, it is “inactivity,” non-participation in health care commerce.
    2. The Constitution gives Congress broad powers of taxation, and the fine for not purchasing health insurance would be collected when taxes are filed. Cuccinelli argues that the fine does not qualify as a “tax,” and is rather a “penalty” not covered by the powers of taxation.

    Regarding the first argument, nobody chooses not to participate in health care. When the car stops spinning and flipping over and they pull you out of the wreck unconscious, you don’t have a card in your wallet that says, “I participate in health care. Please take me to the hospital.” There is no alternative to taking you to the hospital. If you put a card in your wallet that says “I chose not to participate in health care. Let me bleed to death here on the road,” the responders will still take you to the hospital. They are mandated to care for you, and they don’t have time to check your wallet. They are checking your vital signs and tying you to a rigid transport device in case your neck is broken. You will go to the hospital. If you have insurance, your insurance pays. If you don’t have insurance, everyone else pays for you in the form of higher premiums and/or tax-supported services. Everyone is in the health care market because no one can be turned away from an emergency room. Refusal or neglect to purchase insurance in this case is an active choice to let everyone else bear the cost when you need care.

    Regarding the second argument, in Virginia we have a $500.00 uninsured motorist fee. If you go to register a car and you do not have insurance, you pay that fee. An uninsured motorist gets nothing for the $500.00. It is not a tax. It is a pure penalty for not purchasing insurance. The fee is put into a fund that is parceled out to insurance companies to reimburse them for their losses due to uninsured motorists interacting with their paying subscribers. So in Virginia, you pay a penalty for not purchasing the required insurance, you get no insurance for the fee, and the fee goes to subsidize the insurance that other residents have purchased.

    In view of this Virginia requirement, it appears that Cuccinelli’s argument is political as well as semantic, since he has raised no objection to the Virginia statute. Virginia solicitor general Duncan Getchell told the court that by requiring individuals to purchase a commercial product, the U.S. government was exercising authority that is “unprecedented, unlimited, and unsupportable in any serious regime of delegated, enumerated powers.” I take issue with the “unprecedented,” because Virginia has a precedent. One well-documented requirement to meet a defined need does not qualify as “unlimited,” and since the need is defined and documented, it is apparently not “unsupportable.”