Opinion

Reihan Salam

Are we having the wrong marriage debate?

Reihan Salam
Oct 19, 2012 21:34 UTC

The marriage debate is entering a new phase. As recently as 1996, a Gallup survey found that 68 percent of Americans opposed civil marriage rights for same-sex couples. On May 8 of this year, Gallup released a report which found that only 48 percent were opposed to same-sex marriage while 50 percent were in favor. The next day, in an interview with Robin Roberts of ABC News, President Barack Obama announced that he too favored the legal recognition of same-sex marriage, a move that delighted social liberals, many of whom believed that the president’s previous tepid opposition was rooted in political concerns rather than real conviction.

Even in the months since, the legal and political ground has continued to shift in favor of same-sex marriage. Just this week, a divided panel of the Second Circuit Court of Appeals ruled that the federal Defense of Marriage Act, a law that limits federal recognition of marriages to couples consisting of one man and one woman, is unconstitutional. Meanwhile, ballot initiatives aiming to uphold laws authorizing same-sex civil marriage are leading in Maine, Maryland and Washington. Perhaps most strikingly, a re-energized Romney campaign has made little effort to capitalize on opposition to same-sex marriage.

Opponents of the practice have no intention of throwing in the towel; nor is it inevitable that the legal and political efforts of advocates will continue to succeed. In November, Sherif Girgis, Robert P. George, and Ryan T. Anderson are releasing What Is Marriage?, a vigorous intellectual critique of the case for same-sex civil marriage that has attracted wide attention in traditionalist circles. Moreover, opponents have achieved a number of political victories at the state and local level, most notably in North Carolina in May of this year.

Yet the deeper problem for opponents, as the political theorist Peter Berkowitz argued in a 2005 Policy Review article on “The Courts, the Constitution, and the Culture of Freedom,” is that what Girgis, George, and Anderson refer to as the conjugal view of marriage, in which procreation and lifelong marital fidelity are central, has been supplanted by a very different view. As Berkowitz put it, “children, once at the center of marriage, have now become negotiable, and what used to be negotiable — love, companionship, sex — has moved to the center.” The legal recognition of same-sex marriage thus represents “an adaptation of law to a profound change in social meaning.”

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In light of this deeper shift, one wonders if we have been having the wrong marriage debate all along. Though no one should discount the importance of the marital aspirations of same-sex couples, it is not the only marriage issue we face. The share of poor and middle-income American adults actually living in stable marriages has been hitting new lows.

Back in 2010, the National Marriage Project and the Institute for American Values released a “State of Our Unions” report focused on the uneven retreat from marriage. Among college-educated Americans, who represent 30 percent of the adult population, marriage rates have remained high and marriages have proven to be quite durable. The opposite is true among the 12 percent of Americans without a high school diploma, among whom marriage is rare and quite weak. What the report highlights, however, is the transformation of marriage norms among the 58 percent of the adult population that falls in the “moderately educated” middle of the spectrum, i.e., those with a high school diploma but without a four-year college degree.

By the late 2000s, for example, 6 percent of children born to college-educated women were born outside of marriage. For the least educated mothers, the number was 54 percent. Rather alarmingly, the number was 44 percent among moderately educated mothers. That is, the pattern among the broad middle more closely resembles the pattern among the poorest and most socially isolated Americans than it does the pattern among those at the top.

These numbers wouldn’t be so much of a concern if, as in northern Europe, nonmarital childbearing nevertheless happened in the context of stable relationships. But there has in fact been a marked increase in family disruption. From the 1970s to the 2000s, the share of 14-year-old girls born to moderately educated mothers living with both parents fell from 74 to 58 percent. The share fell from 65 to 52 percent for 14-year-old girls born to the least educated mothers. The only exception to this dismal trend is that 14-year-old girls born to college-educated mothers are slightly more likely to live with both parents — the share increased from 80 to 81 percent in this group. Andrew Cherlin, a sociologist at Johns Hopkins University and author of The Marriage-Go-Round, has referred to “the deinstitutionalization of marriage,” in which marriage has remained a prestigious mark of individual achievement even as adults spend less of their lives in intact marriages. And he has projected, as one of several possible alternatives, a “fading away of marriage” in which marriage continues to lose ground to cohabitation and other less stable arrangements.

A number of thinkers have drawn attention to the decline of marriage. Kay Hymowitz of the Manhattan Institute focused on how diverging marital patterns have exacerbated economic and social inequality in Marriage and Caste in America, and Charles Murray documented the decline of marriage among non-Hispanic white Americans in Coming Apart.

This June, David Blankenhorn, founder of the Institute for American Values, published an op-ed in the New York Times in which he called for a new marriage conversation. Having emerged as one of the leading critics of same-sex civil marriages, which he sees as a potential threat to a fragile institution, Blankenhorn called for a kind of truce. “Instead of fighting gay marriage,” he wrote, “I’d like to help build new coalitions bringing together gays who want to strengthen marriage with straight people who want to do the same.” Earlier this week, Blankenhorn and I discussed the future of the marriage debate and the difficulties of running “a think tank, not a doctrine tank” in a polarized age. Many of Blankenhorn’s erstwhile allies saw his op-ed as a capitulation, and as a result the Institute for American Values lost several members of its board. To be sure, Blankenhorn has gained a number of new allies as well, including Jonathan Rauch, journalist and author of Gay Marriage: Why It Is Good for Gays, Good for Straights, and Good for America. But the Institute, which has done more to advance the discussion of how marriage contributes to America’s economic and social well-being than institutions many times its size, is at risk of closing its doors within the next six months.

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With rare exceptions, leading politicians have steered clear of this larger marriage conversation. During his campaign for the Republican presidential nomination, Rick Santorum often spoke of how the erosion of married two-parent families contributes to social turmoil, though he did it in a style that alienated potential allies more often than not. President Obama has reflected on the importance of responsible fatherhood, but this hasn’t emerged as one of the themes of his presidency, despite his unique cultural authority on the subject.

Somewhat surprisingly, it was Mitt Romney who, in his own awkward way, injected the issue of family stability into the presidential campaign earlier this week. While ostensibly answering a question about gun violence during this year’s second presidential debate, Romney added, “But gosh, to tell our kids that before they have babies, they ought to think about getting married to someone — that’s a great idea, because if there’s a two-parent family, the prospect of living in poverty goes down dramatically.” Romney was channeling Isabel Sawhill, president of the National Campaign to Prevent Teen Pregnancy and co-director of the Center on Children and Families at the center-left Brookings Institution. Together with her Brookings colleague Ron Haskins, Sawhill has found that adults who finish high school, work full-time, and marry before they have children are less likely to be poor, the numbers falling from 15 percent to 2 percent. Romney has cited this research, which is very much in keeping with his cultural sensibilities, on the campaign trail on numerous occasions.

One obvious rejoinder to Romney is that his prescription for a better life is out of reach for many Americans. This is part of why some on the left, including Richard Kim of The Nation and Lisa Duggan of the University of Pennsylvania, have called for more cultural and economic support for household diversity rather than a focus on marriage. That is, rather than lament the ongoing transformation of American families, Kim and Duggan have argued that we should expand public spending to accommodate the more fluid families of the 21st century.

Another view is that marriage really is uniquely valuable but must be understood in a larger economic context. Sawhill and Haskins have devoted their lives to understanding the challenges facing single mothers, many of whom aspire to marry yet find that the supply of reliable men capable of finding remunerative work is severely limited. Romney, for all his virtues, has spent relatively little time talking about the challenges facing the less educated and even moderately educated men who have seen their economic prospects deteriorate and who have thus become less marriageable than they might have been a generation ago. Indeed, he has spent as little time on this marriage debate as he has on the debate over same-sex marriage.

“Family issues” are often treated as the garnish on the salad of American political debate. But insofar as the core goal of American conservatism is to strengthen civil society and to limit the power of the state, it is worth noting that family instability weakens the capacity for self-reliance, leaving the state to pick up the slack.

PHOTO: Lela McArthur (R) and Stephanie Figarelle, both from Anchorage, AK, kiss on the observation desk of the Empire State Building after being married on the 61st floor in New York, February 14, 2012. REUTERS/Andrew Burton 

Moving beyond our vacuous education reform discussions

Reihan Salam
Oct 12, 2012 16:16 UTC

Barack Obama is a champion of education reform. So is Mitt Romney. Even in the midst of an extremely polarized political season, the former Massachusetts governor has offered praise for Arne Duncan, President Obama’s secretary of education, and for the Obama administration’s Race to the Top initiative. The same is true of Jeb Bush, the former Florida governor, who has emerged as the GOP’s leading point person on fixing America’s schools. To those who lament partisan rancor, this might look like very good news. But it’s not. Rather, it is an indication that our conversation about “education reform” is pretty vacuous.

The reform label applies to at least three broad ideas: (1) standards-oriented reform, or let’s have more testing and accountability; (2) human capital reform, or let’s have better teachers; and (3) choice-oriented reform, or let’s use “backpack funding” that will allow public education dollars to follow the student wherever she chooses to enroll, whether it’s a neighborhood public school, a public charter or (perhaps) a voucher-eligible private school. Many people who love one kind of reform hate the others, so saying you’re “pro-reform” doesn’t mean very much.

That shouldn’t come as a shock. There is something about public education that starts Americans gushing and makes them sentimental and unrigorous. Hardly anyone disagrees with the late R&B songstress Whitney Houston, who believed that the children are our future and that we should teach them well and let them lead the way. Schmaltz is deployed on all sides of the debate – from teachers’ union members who insist that those who oppose across-the-board pay hikes don’t care about kids to voucher proponents who specialize in heartstring-tugging tales of inner-city youth.

It’s not just schmaltz that limits our ability to think clearly about public education. Frederick Hess, an education policy scholar at the center-right American Enterprise Institute and one of the smartest think tankers I know, has argued that we’re also hamstrung by our collective fixation on schools as instruments for achieving social justice.

The stubborn gap between the graduation rates and achievement levels of white Anglo and Asian American students on the one hand and Latino and African American students on the other is a real problem, particularly as the Latino share of the population surges. But by viewing public education first and foremost through the lens of this “achievement gap,” philanthropists and legislators have, in Hess’s view, prioritized raising reading and math scores of the weakest students to the detriment of reforms that could boost performance across the system as a whole.

How could focusing on the poorest, most vulnerable kids be a bad thing? In effect, achievement gap thinking allows the vast majority of middle-class parents to remain complacent about their own mediocre schools while focusing attention on a handful of dysfunctional urban school districts that educate a minority of America’s K-12 students. This complacency suits suburban America’s elected officials and school administrators, as it allows them to avoid contentious battles over truly innovative instructional models that could rattle the status quo.

The biggest barrier to the embrace of these innovative models is cultural. We find it very hard to imagine structuring schools in new and different ways. Even the most celebrated charter school networks are just slightly modified versions of the public schools most of us attended as children. And the reform conversation tends to focus on minor tweaks. Consider human capital reform. Reformers on the left and right tend to oppose so-called last-in, first-out hiring policies, salary schedules that emphasize years on the job over effectiveness, and tenure rules that make it virtually impossible to fire underperforming teachers. Moving beyond these practices could very well make a difference in the quality of education, and that shouldn’t be dismissed.

But these measures fail to address the deeper problem: that K-12 education makes little use of specialization, the main driver of productivity growth in every other sector of the economy. As Hess and Olivia Meeks observe in The Futures of School Reform, the size of the teacher workforce tripled from 1.1 million in the 1950s to 3.3 million in the early 2000s. At the same time, college-educated women who once had few professional options outside of teaching saw their opportunities expand dramatically. And so it became far less likely that a new public school teacher had graduated in the top 10th of her high school class. Many human capital reformers argue that the right solution to this problem is to dramatically increase compensation for teachers. Many also champion shrinking class sizes. Even if we could afford to pursue these strategies, and it’s far from obvious that we can, there will come a point at which we will exhaust the supply of American adults who are willing and able to teach.

Instead of simply increasing the number of teachers, Hess and Meeks propose shifting teaching from a profession built around generalists – people who teach reading and fractions and supervise bus-loading and monitor the cafeteria and grade papers – to one built around specialists. Just as the Mayo Clinic has specialists working on discrete medical problems (cardiologists here, neurosurgeons there) and support staff who enable them to do their work, schools could “unbundle” the job of teaching. We don’t find it strange or scandalous that highly trained obstetricians don’t also clear bedpans. In the same vein, schools should rely more heavily on support staff to load the bus, monitor the cafeteria and grade exams while letting teachers who are really great at teaching fifth grade geometry focus on teaching fifth grade geometry. Like medical specialists, specialist teachers in the rarest, most demanding fields should expect more compensation. School employees with skills that aren’t quite as uncommon, meanwhile, could be paid less without sacrificing quality.

To be sure, we shouldn’t replace one rigid, centralized approach with another. While the Hess and Meeks vision of schools that deploy talent in smarter ways is attractive, there isn’t a single best way to unbundle education. And that is the reason why choice-oriented reform is a crucial complement to real human capital reform – we need new schools and school networks to experiment with different models.

According to Neerav Kingsland, the CEO of the non-profit New Schools for New Orleans, the key emerging divide in the education world is between reformers and those he calls relinquishers. Reformers are school district leaders who aim to make centralized, government-run educational systems work more effectively by imposing new rules and regulations concerning what school administrators and teachers can and cannot do. Relinquishers, in contrast, believe that the job of the school district is to empower charter school operators to teach as they see fit, subject to oversight from a small and nimble central office.

The caveat is that relinquishers have a special responsibility to shut down schools that fail and help schools that succeed grow as quickly as possible. In New Orleans, where 85 percent of students are enrolled in charter schools, Kingsland’s organization launched seven schools just this fall, and he has also been involved in the wrenching process of shutting failing schools down.

Yet New Orleans is very much an outlier; it is hard to imagine school districts across America voluntarily following the lead of New Orleans. Fortunately, school choice isn’t the only way to drive innovation and experimentation in education. Instead of relinquishing at the level of the school, schools can start relinquishing at the level of individual courses.

John White, Louisiana’s state superintendent of education, has worked with Governor Bobby Jindal to push forward the most ambitious education agenda in the country. One of White’s most promising initiatives is course-level instructional choice. Having previously served as superintendent of the Recovery School District, White recognizes the power of charter schools – yet he also recognizes their limitations. “It takes an enormously talented leader to start a new school, and the number of such organizations is inherently limited,” he explained. “So in order to really scale quality and innovation and access, you can shrink the unit that needs to be developed from an entire school into something smaller.” That is, instead of expecting parents and students to leap from one school to another, you can give them the option of choosing, say, a Spanish class taught by a local teacher or a Mandarin class taught online. For White, the beauty of this approach is that it allows students to leverage the many other institutions – colleges and universities, private firms, the military – that can provide developmental experiences as valuable as those offered by K-12 schools.

More broadly, course-level instructional choice might even improve the cost-effectiveness of education. Burck Smith, the CEO and founder of the low-cost higher education provider StraighterLine, has floated the idea of an educational “cafeteria” plan, in which students would be assigned a fixed budget that could be used for a wide array of courses. By taking a low-cost online language course, for example, a student could save money for extra precalculus tutoring or a summer enrichment program.

Relinquishers remain a small minority in the education world. Most education visionaries are still chasing after the One Big Solution, whether it’s merit pay, better teacher evaluations, or mimicking Finland or Shanghai. Charter schools are still seen as a boutique movement, and relatively few policymakers have even heard of course-level instructional choice. But as Americans face up to the limitations of one-size-fits-all school reform, the relinquishers are slowly gaining ground.

PHOTO: Jazmine Raygoza, 18, (C) adjusts her cap before her high school graduation in Denver, May 19, 2012. REUTERS/Rick Wilking

No matter who wins, there’s still a healthcare cost crisis

Reihan Salam
Oct 1, 2012 17:10 UTC

One of the strangest aspects of the 2012 presidential campaign is that President Obama has barely bothered to make the case for the Affordable Care Act (ACA) and Mitt Romney has only rarely summoned the will to make the case against it. This is despite the fact that ACA is arguably the most consequential domestic policy legislation since 1965, when President Johnson presided over the creation of Medicare and Medicaid.

The usual explanation for why we haven’t had a serious debate over ACA is that Democrats recognize that the law is not wildly popular and that Romney is boxed in by his continued support for the universal coverage law he backed as governor of Massachusetts. All of this may well be true. But the foundations of America’s patchwork health system are unraveling before our eyes, and conservatives need to make the case for a more cost-effective reform sooner rather than later.

It is commonly understood that the United States spends an incredibly large amount of money on personal healthcare – the number was $2.19 trillion in 2010 – and that health spending is increasing rapidly as a share of GDP. A high level of health spending isn’t necessarily a bad thing. It makes perfect sense that an affluent country will spend a great deal of money to keep its citizens healthy, and medical care is a complex service that demands a lot of skilled labor.

What is worrisome is that the cost of medical care seems to be outstripping our ability, and more to the point our willingness, to pay for it. We tend to think about this in the context of the dramatic growth of Medicare and Medicaid spending, and understandably so. There is virtually no elected official, Democrat or Republican, willing to support the tax increases we would need to pay for these programs at their current growth rates, which is why the Obama White House and congressional Republicans alike have called for aggressive, and some would say unrealistic, cost controls.

Yet the clearest indication of our unwillingness to pay for rising health costs is the slow-motion collapse of employer-sponsored health insurance (ESI).

Though we tend to think of ESI as “private” coverage, the chief reason it is so prevalent is that it is subsidized by a tax exclusion that was worth $260 billion in 2010 – a tax exclusion that individuals buying their own health insurance do not enjoy. Even with this tax subsidy, however, a growing number of employers are deciding that sponsoring health insurance coverage is a bad bet.

In 2000, 69.2 percent of Americans under 65 were covered by ESI. By 2010, that number had fallen to 58.6 percent. To put that in raw numbers, we went from 169 million Americans with ESI to 157 million. The decline of ESI has been particularly pronounced among low-income workers, for whom the tax exclusion is not nearly as valuable as it is for high-income workers.

One of the main reasons for ESI’s decline is that the rising cost to employers of sponsoring health insurance coverage is crowding out wages and other benefits. Some big companies, like Sears and Darden Restaurants, are trying to salvage ESI by shifting to a strategy of offering workers a fixed sum of money to purchase insurance on an exchange, and this might make a difference.

But ESI is clearly in trouble, and an increasing number of Americans have been forced to seek health insurance from outside its protective umbrella. Some low-income workers have turned to Medicaid, which has seen enrollment increase from 33.3 million in 2000 to 54.6 million in 2010. This expansion may in turn have encouraged at least some low-wage employers to drop coverage. A small but growing number of non-elderly Americans have turned to Medicare. While Medicare is generally understood to be a program for the old, it also provides medical care for the disabled. In 2010, Medicare spent $59 billion – well over a tenth of its total budget of $525 billion – to provide medical care for Social Security Disability Insurance (SSDI) beneficiaries. SSDI enrollment has skyrocketed, going from 5 million in 2000 to 8.2 million in 2010. As the MIT economist David Autor has argued, at least some of this increase can be attributed to the shriveling up of labor market opportunities for less-skilled workers.

The many Americans who don’t qualify for Medicaid or Medicare, meanwhile, have been forced to navigate the often confusing and intimidating individual insurance market, where subsidies are scarce and people with pre-existing conditions can face frighteningly high insurance premiums. And so ESI’s decline has created a tremendous demand for health insurance options that offer all the benefits of job-based coverage, like the low premiums that come from being part of a big risk pool, without keeping workers shackled to a particular job.

Health reformers on the right and left have spent decades puzzling through how to address this extremely tricky problem. The main advantage of job-sponsored coverage is that a large business enterprise is relatively easy to hold together, and it’s a fair bet that it will include the relatively young and healthy as well as the relatively old and sick. Although some firms vary premiums by age or income, most ESI is community-rated, requiring the younger, healthier and generally poorer employees to subsidize their older, sicker and generally wealthier co-workers. However, healthy employees are unlikely to leave a job just to get a lower health insurance premium.

Holding together a pool that is not united by employment at a single company is much harder, as the young and healthy aren’t likely to want to subsidize the cost of insuring the relatively old and sick. If the government nevertheless wants to hold together such a pool, it must either offer generous subsidies, impose an individual mandate, or both.

And that, in essence, is what the architects of the Affordable Care Act decided to do. As Douglas Holtz-Eakin, president of the right-of-center American Action Forum, explained in an interview, the ACA has in essence created “a second Medicaid-style program” in the form of its state-based insurance exchanges. These exchanges will allow individuals and families who do not have access to job-sponsored coverage to purchase insurance policies that will cost no more than a tenth of their income. As with Medicaid, state governments are meant to set the terms and conditions of the insurance policies offered on the exchanges, subject to various federal mandates and restrictions.

In theory, this new exchange-based system will exist alongside ESI and Medicaid. Indeed, under ACA, Medicaid is meant to expand dramatically, as the federal government has promised to pick up the full cost of expanding state Medicaid programs to cover all households earning less than 133 percent of the poverty level.

But as Eugene Steuerle of the Urban Institute has observed, people who are covered via the exchanges will receive much higher subsidies from the federal government than those with job-sponsored coverage or Medicaid. This will create a strong incentive for employers to drop coverage, even in the face of the employer penalties established under ACA. Thus, the slow-motion collapse of ESI is very likely to pick up speed. And as more non-elderly Americans flood the exchanges, ACA’s commitment to keeping family medical expenditures below a tenth of household income will become cripplingly expensive – far more so, in all likelihood, than the Congressional Budget Office has assumed.

ACA aims to contain healthcare cost growth by encouraging medical providers to consolidate into larger Accountable Care Organizations (ACOs). Given that Medicare’s “fee-for-service” structure has been the main barrier to the emergence of higher-quality, lower-cost networks of medical providers, this should be a very positive development. Yet so far at least, these ACOs are quite unlike successful integrated providers such as Kaiser Permanente and Intermountain Healthcare, which are renowned for offering cost-effective care. Rather, they appear to have increased the market power of local hospitals, which have been shielded from antitrust regulations and from more specialized competitors. Some, including Holtz-Eakin, suggest that the new ACOs are bending the cost curve up instead of down.

There is a more sustainable alternative to the Affordable Care Act. Back in 2008, Senator John McCain’s presidential campaign called for a comprehensive overhaul of the tax treatment of health insurance. The tax exclusion for employer-provided health insurance would be scrapped in favor of a universal tax credit, a move that would, in one fell swoop, curb tax subsidies for the rich while increasing them for low- and middle-income households. All households would receive a stable and predictable amount of premium support that they could then use to purchase coverage. Insurers and medical providers would have a strong financial incentive to contain costs, as they wouldn’t be able to game ACA’s unlimited subsidies. While the McCain plan would not have solved every problem facing America’s health system, it would have allowed for more state-level experimentation with high-risk pools and organized care delivery models.

The political problem with the McCain plan, which the Democrats exploited masterfully, is that it acknowledged that the tax subsidies for high-income and middle-income households had to be curbed to move the country to a fairer and saner health system. That, alas, cut against the instinctive conservatism of voters who liked their job-sponsored coverage, and who much preferred Barack Obama’s wildly unrealistic promise to keep ESI as we know it intact.

But as this promise comes undone, voters will be faced with a choice. We can either embrace something like the McCain plan, which will pave the way toward a more market-oriented health system, or we will wind up with stringent bureaucratic price controls as ACA’s subsidies prove unaffordable. In light of the conservative failure to actually make the case for a market-friendly solution, the latter outcome is looking ever more likely.

PHOTO: Patient Sharon Dawson Coates (L) has her knee examined by Dr. Nikhil Narang at University of Chicago Medicine Urgent Care Clinic in Chicago, June 28, 2012. REUTERS/Jim Young

Actually, conservatives should favor even fewer people paying income tax

Reihan Salam
Sep 20, 2012 19:44 UTC

The outrage over Mitt Romney’s extended off-the-record riff to wealthy donors about the fact that “47 percent of Americans pay no income tax” has shown no sign of dying down. As of now, this looks like the defining moment of his presidential campaign. In lumping together those who have no federal income tax liability with those “who believe the government has a responsibility to care for them,” the former Massachusetts governor gave new life to every crude caricature of conservatives as class warriors for the ultrarich.

But did off-the-record Romney have a point? Is it a problem that we have narrowed the federal income tax base, or is there a case that conservatives seeking to contain the growth of government should strive to make the income tax base even narrower?

In a 2001 interview with Nicholas Lemann of the New Yorker, Republican Senator Jim DeMint of South Carolina called the narrowing of the tax base “a major crisis in democracy.” Just months before the first Bush tax cut removed millions of households from the federal income tax rolls, DeMint warned that “the tax code will destroy democracy, by putting us in a position where most voters don’t pay for government.” DeMint’s dark premonition wasn’t enough to get President Bush to revamp his tax cut, but the idea has grown more popular among conservatives in the intervening years, hence Romney’s riff.

Critics of DeMintism point out that virtually all of the households that don’t pay federal income taxes pay other taxes, including payroll taxes and state and local taxes. Indeed, some pundits have declared that this is Romney’s saving grace: Hardly anyone in the GOP nominee’s 47 percent actually believes that he or she is part of the 47 percent.

The deeper problem isn’t that too few people are paying federal income taxes, as DeMint and Representative Michelle Bachmann and now Mitt Romney maintain. Rather, it is that most of the taxes we do pay, with the big exception of retail sales taxes, are quite stealthy. In the days before income tax withholding, taxpayers had to write checks to the federal government. Now, many taxpayers have a better sense of the size of their income tax refund than of what they’ve actually forked over to the federal government.

It turns out that the best way to address Romney’s underlying concern – that a large and growing number of Americans have lost sight of the real cost of government – might be to remove even more households from the income tax rolls and create a very visible new tax to make up the difference. That is why Republicans, Mitt Romney included, should give serious consideration to Michael Graetz’s Competitive Tax Plan (CTP).

Conservatives hate the idea of new taxes. But imagine if every time you bought a cup of coffee, it said on the receipt that you had also just paid a 12.3 percent consumption tax to the federal government. Instead of paying your taxes once a year, you would pay taxes every time you made a purchase. What better way to remind people of all of the money government spends, and all of the money government spends foolishly, than to make them pay for government several times a day?

That’s not all. Imagine also that the federal income tax only applied to income over $100,000 for married couples, $50,000 for single filers, and $75,000 for head of household filers. Households that earn less than this “family allowance” would be under no obligation to file a federal income tax return. In that case, the 12.3 percent consumption tax would pay for liberating millions of Americans from the IRS. According to a recent analysis from the Tax Policy Center, the tax policy rules in effect today will require 147,540,000 tax units to file taxes in 2015. Under Graetz’s CTP, that number would fall to 36,625,000.

Even those poor souls who still have to file under the CTP will benefit, paying a much-reduced federal income tax at a basic rate of 16 percent and a surtax rate of 25.5 percent on income above $200,000. These low marginal tax rates would improve work incentives for high earners far more than Mitt Romney’s proposed tax cut and would be an even bigger improvement relative to President Obama’s proposed tax increase for the top 2 percent of households. And though the CTP wouldn’t completely eliminate taxes on savings and investment, it dramatically lowers them, particularly for families of modest means.

One concern is that even with this radical shrinking of the income tax, poor families that spend the bulk of their income would pay more under a consumption tax. That is why the CTP includes a generous per-worker and per-child rebate that would be used to offset payroll taxes. These rebates would also serve as a replacement for the earned-income tax credit, which is the chief reason tens of millions of low-income households have to go through the hassle of filing income tax returns. The end result is that the tax burden under the CTP would be exactly as progressive as it is under today’s tax rules.

The CTP would strike a blow against the IRS’s intrusiveness, a cause all conservatives should cheer. And as Graetz explained to me, “by eliminating millions of people from the income tax, you’ll never get them back.” Once the inflation-indexed exemption is raised, “you’ll never get a politician to agree to lower the exemption from $100,000.” It has many other benefits as well. For example, while Mitt Romney has called for a 25 percent corporate tax rate and President Obama has called for a 28 percent rate, the CTP cuts the corporate rate to 15 percent. In one fell swoop, this would make the U.S. a far more attractive destination for foreign investment, reduce tax avoidance and be conducive to economic growth.

So why haven’t conservatives signed up for Graetz’s ingenious proposal? The big barrier on the right is the view that a consumption tax is a one-way ticket to socialism. While most states have retail sales taxes, the United States is one of a small handful of countries that does not use a value-added tax, or VAT. In Europe, VATs raise a huge share of government revenue, and the statutory rates tend to be very high. The worst thing about the European approach to the VAT, from a conservative perspective, is that it’s invisible. That is, consumers often have no clear indication of how much of what they’re paying is accounted for by the VAT. This is one reason why many European governments have hiked their VAT rates over the years – because taxpayers won’t know the difference. Anti-VAT conservatives fear that an American VAT would be susceptible to the same tendency to creep higher, indiscernibly.

But outside of Europe, the picture looks very different. Canada’s VAT, known as the GST, for goods and services tax, was 7 percent when it was first introduced in 1991. Since then, it has fallen to 5 percent. Although the GST remains extremely unpopular, it has played a crucial role in helping Canada shrink its yawning federal budget deficits. Moreover, the two decades since the introduction of the GST have seen Canadian federal spending and federal debt plummet as a share of GDP while the United States has gone in the opposite direction. That is an outcome all small-government conservatives should respect

There are, to be sure, huge obstacles in the way of Graetz’s Competitive Tax Plan, as he freely acknowledges. If a Republican gets behind it, we can expect Democrats to demonize it as a tax hike on the poor to fund income tax cuts for the rich, leaving aside the generous rebates and the family allowance. If a Democrat gets behind it, Republicans might wage war against the VAT as a diabolical foreign plot.

All the same, the CTP is the only realistic plan that will preserve progressivity while giving 100 percent of Americans the sense that they are bearing the cost of our federal Leviathan.

PHOTO: U.S. Republican presidential nominee and former Massachusetts Governor Mitt Romney pauses as speaks to reporters in Los Angeles, September 17, 2012. REUTERS/Jim Young

How the Occupy movement may yet lead America

Reihan Salam
Sep 14, 2012 17:07 UTC

This coming Monday, Sept. 17, is the first anniversary of the day when protesters gathered in Lower Manhattan’s Zuccotti Park under the banner of Occupy Wall Street. The occupation was first dreamed up by Kalle Lasn and Micah White, the close collaborators behind Adbusters, a slickly produced, high-art magazine that uses the tools of commercial culture to make the case against capitalism. Having decided that America needed an uprising akin to those that had shattered authoritarian governments across North Africa, Lasn and White chose a date, created an arresting image emblazoned with the Occupy Wall Street slogan, reached out to potential collaborators and then watched as their creation seized the imagination of millions of Americans.

One year on, the encampments that had sprung up in Lower Manhattan and in cities, college campuses and foreclosed homes across the country have for the most part been abandoned. And so at least some observers are inclined to think, or to hope, that the Occupy movement has been of little consequence. That would be a mistake. Occupy’s enduring significance lies not in the fact that some small number of direct actions continue under its banner, or that activists have made plans to commemorate “S17” in a series of new protests. Rather, Occupy succeeded in expanding the boundaries of our political conversation, creating new possibilities for the American left.

As our slow-motion economic crisis grinds on, it is worth asking: How might these possibilities be realized? For some, Occupy was a liberating experience of collective effervescence and of being one with a crowd. As one friend put it, it was “the unspeakable joy of taking to the streets, taking spaces, exploring new relations and environments” that resonated most. For others, it created a new sense of cross-class solidarity. Jeremy Kessler, a legal historian who covered the Occupy movement for the leftist literary journal N + 1 and the New Republic, senses that it has already shaped the political consciousness of younger left-liberals. “There is more skepticism towards the elite liberal consensus,” and so, “for instance, there is more support for the Chicago teachers union and more wariness towards anti-union reformers.” Ideological battle lines have in this sense grown sharper. Yet it is still not clear where Occupy, and the left, will go next.

Perhaps the most politically fruitful path for the American left would be to go back to the future – to draw on the lessons of the Populists of the William Jennings Bryan era, who sought to unite farmers and industrial workers against the stranglehold of Eastern capital. Back then, the Populists failed, as the interests of industrial workers were more closely tied to their bosses than to those of highly indebted smallholders living in the prairies. Now, however, millions of middle-income households struggle under the burden of underwater mortgages.

In the latest issue of the Nation, David Graeber, the anarchist anthropologist considered an intellectual leading light of the Occupy movement, argues that the “financialization” of the economy should be understood as “an enormous engine of debt extraction,” through which the 1 percent extracts wealth from the 99 percent. Rather than champion specific policies designed to reduce the burden of debt, Graeber calls for a campaign of mass resistance devoted to delegitimizing what he calls “Mafia capitalism.” While Graeber’s language is bracing, and it will undoubtedly appeal to at least some radicals who hope to keep the spirit of Occupy alive, it is not obvious that his idea of mass resistance can build a mass movement.

But might a softer version of Graeberism succeed? As the Georgetown University historian Michael Kazin argues in The Populist Persuasion, American populist movements have traditionally pitted the producing majority against a parasitic elite. That is one reason why “We Are the 99 Percent,” the slogan coined by Graeber and his allies, has proved so resonant: It invokes older American political traditions.

And the case for placing debt at the heart of our politics is stronger than you might think. As the heterodox economic thinkers J.W. Mason and Arjun Jayadev recently observed, household debt has climbed from 50 percent of GDP in 1980 to 100 percent just before the financial crisis. Yet according to Mason and Jayadev, this sharp increase does not primarily reflect an increase in borrowing. Had interest rates, growth and inflation remained the same in the three decades following 1980 as they had in the three decades preceding 1980, household debt levels would have actually decreased. One of the central problems, Mason and Jayadev argue, is that inflation levels decreased faster than households could decrease their borrowing levels. Back in 2009, Christopher Hayes, author of The Twilight of the Elites and host of MSNBC’s Up with Chris Hayes, argued that a period of moderate, sustained inflation was essential to addressing America’s economic woes. While this argument seems very technocratic, it has the virtue of speaking directly to the challenge of household debt.

The latest Census data indicates that real median household income in the United States has fallen to levels last seen in 1995. Income inequality, meanwhile, has increased. It is easy to imagine that healthy gains in median household income would mitigate concerns about income inequality as such. But instead, sluggish wage and household income growth have fueled a great deal of anxiety and resentment. Millions of households that had hoped and expected to be climbing the ladder to middle-class prosperity instead find themselves burdened by debt. If the political right and center can’t find a way to revive economic growth and to create shared prosperity, the future might very well belong to Occupy.

PHOTO: Occupy Wall Street protesters relax on a tree at Marshall Park prior to the start of the Democratic National Convention in Charlotte, North Carolina September 3, 2012. REUTERS/John Adkisson

Obama and the ghost of Walter Mondale

Reihan Salam
Sep 6, 2012 17:47 UTC

When Barack Obama accepts the Democratic presidential nomination in Charlotte, he will no doubt channel party heroes of the past like Bill Clinton and JFK and FDR, all of whom are celebrated still for their charisma and raw political skills. But he would do well to heed the wisdom of Walter Mondale.

Yes, that’s right. Most Democrats see Mondale as a faintly embarrassing relic from an era in which Democrats had lost their way, and of course there is something to that. He was also one of the last Democrats to make the case that government was worth paying for, not just by the rich but also by the middle-income households that rely on expensive social programs.

By the summer of 1984, Mondale, the former Minnesota senator who had served as vice-president under Jimmy Carter, knew that he was facing an uphill battle for the White House. The brutal Reagan recession had given way to a V-shaped Reagan recovery, and Reagan Democrats were thick on the ground. So Mondale decided to do something very strange at that year’s Democratic National Convention. Rather than make the most anodyne, ultra-cautious, poll-tested argument he and his team could conjure up, he told the truth as he understood it. “Mr. Reagan will raise your taxes,” he told the assembled delegates. “And so will I.”

Mondale lambasted Reagan for his secret tax plan that would “sock it to average-income families” and “leave his rich friends alone,” just as critics of the Romney-Ryan ticket have alleged that the GOP’s conspicuously vague tax reform ideas would almost certainly mean shifting the tax burden downward.

Yet the really interesting part of Mondale’s tax plan that year is that it didn’t just raise taxes on America’s highest-earning households. In an era of relatively high inflation, during which “bracket creep” was a big concern for middle-income families, he called for limiting the indexing of tax brackets for roughly half of all households, a step that raised most of the revenue he hoped to generate from individual taxpayers. There were, to be sure, steeper tax increases for high-income households, but Mondale maintained that all non-poor families should chip in to tackle yawning deficits and to make the investments he believed were necessary to foster “the best-educated, best-trained generation in American history.”

That fall, of course, Mondale suffered a crushing defeat at the hands of a sunny, upbeat Ronald Reagan, who, as it turned out, really did raise taxes in his second term. Reagan’s grand ideas for containing the growth of spending – which included an ambitious swap of responsibilities between the federal and state governments and building on President Carter’s tough reforms of Social Security Disability Insurance in the middle of an economic downturn, to name only two politically explosive money-savers – had been bitterly opposed by Congress and largely abandoned by the mid-1980s. Accepting tax increases was a price Reagan was willing to pay to continue waging his war on Soviet Communism.

In 1985, coming off his huge electoral triumph, President Reagan actually campaigned for tax reform by blasting “unproductive tax loopholes that allow some of the truly wealthy to avoid paying their fair share,” as Tim Dickinson recounted in an anti-GOP jeremiad published last year in Rolling Stone. In classic fashion, the Teflon president embraced the popular part of the Mondale message and discarded the rest.

The lesson battle-hardened Democrats of that era learned was that they could never again openly call for tax increases on middle-income households. Bill Clinton, at the time the conspicuously young governor of Arkansas, took the lesson to heart when he pledged during his 1992 presidential run to cut taxes on middle-income households and to raise them on households earning over $250,000. The Clinton administration did succeed in persuading a Democratic Congress to raise the two top marginal tax rates on ordinary income as part of its 1993 budget deal. In his second term, however, President Clinton agreed to a deep cut in capital gains taxes backed by a Republican Congress in 1997, a move that helped fuel the investment boom of that era. Clinton had successfully reinvented the Democrats, GOP protestations notwithstanding, as a low-tax party.

Recognizing the success of Clinton’s tax pledge, then-candidate Barack Obama made the same promise, even using the same $250,000 threshold, despite the fact that $250,000 in 1992 would have been worth roughly $380,000 in 2008. The bigger difference between 1992 and 2008 was that the Bush-era tax cuts meant that there was far less scope for cutting the taxes paid by middle-income households.

The tax overhauls of the Clinton and Bush years had made the federal income tax highly progressive. To be sure, factoring in payroll taxes and state and local taxes makes the overall U.S. tax burden considerably less progressive. But the tax systems in most affluent democracies are actually slightly regressive, as they rely more heavily on national consumption taxes to fund universal social programs. The central virtue of these tax systems is that they undermine work incentives less than progressive tax systems that rely heavily on high marginal tax rates.

So now, as President Obama runs for a second term, he faces a serious dilemma. Despite having inveighed against the Bush-era tax cuts, he has committed himself to preserving the four-fifths of them that apply to income that falls below the all-important $250,000 threshold. At the same time, he has pledged to protect Medicare, expand Medicaid, and create a new health entitlement for young and middle-aged Americans who aren’t covered by either program, commitments that will grow more expensive as the U.S. population ages and as the voting public demands expensive new medical treatments and who knows what else.

Republicans are in a similarly tight spot. In his epic Wednesday night speech, Bill Clinton came roaring out of retirement to warn swing voters that Mitt Romney has backed extremely deep cuts to the Medicaid program. Political genius that he is, Clinton realized that while Medicare has attracted all of the attention, it is Medicaid, which covers almost 50 million beneficiaries, many of them elderly voters in need of nursing home care, that is the real sleeper issue of this election. In the very likely event that a President Romney refused to follow through on politically toxic Medicaid cuts that would leave voters and Republican governors howling, he would either have to preside over a significant tax increase or allow debt levels to keep spiraling out of control.

Other affluent democracies pay for social programs through value-added taxes that are embedded in the cost of virtually all goods and services, a measure that Paul Ryan has seriously considered as a replacement for America’s jerry-built corporate income tax. It is safe to say that the president is not going to go down this road, at least not before November.

Obama has thus left himself with only one option for raising revenue. He will have to raise taxes on high earners to levels far higher than those that prevailed during the Clinton boom. The Obama White House has, for example, championed the idea of curbing tax deductions and credits for over-$250,000 households. Soaking the rich might be a cherished tradition in Democratic politics, but as effective marginal tax rates approach 50 percent, the impact on incentives would be brutal.

The irony is that President Obama might have been better off taking a page from Walter Mondale and forthrightly arguing that universal health coverage and high levels of public investment and a fairer society and a greener environment and everything else Democrats want from government are actually worth paying for – not just by the top 2 percent of the top 1 percent, but by the top 50 percent. The only real alternatives are rolling back the growth of government, Ryan-style, or accepting sluggish growth for years to come.

PHOTO: Minnesota Democratic senatorial candidate and former Democratic presidential nominee Walter Mondale smiles at a student’s question at a town meeting at Macalaster College in St. Paul, Minnesota, October 31, 2002. REUTERS/Stringer

 

Artur Davis and the crucial role of party switchers

Reihan Salam
Aug 29, 2012 15:07 UTC

TAMPA, Florida – If you’ve been watching the Republican National Convention at home, you probably missed the speech former Representative Artur Davis of Alabama gave on Tuesday night. Sandwiched between Ted Cruz, the Tea Party darling who won an impressive come-from-behind victory in Texas’s GOP Senate primary, and Nikki Haley, the strikingly youthful Indian-American governor of South Carolina, Davis was overshadowed in most of the media coverage. MSNBC decided not to air Davis’s speech at all, which was a noteworthy omission given that Davis had cut his political teeth as a Democrat and indeed as an enthusiastic early backer of President Obama.

But on a star-studded night, before hotly anticipated speeches by Ann Romney and conservative action hero Chris Christie, it was Davis who gave the most effective performance. It was so effective, in fact, that I heard many of the assembled participants speculate about which office he’d run for next.

Party switchers are a staple at these quadrennial affairs. They dramatize the case against the opposition by offering dispatches from within the belly of the beast and signal that it’s safe for voters to forswear their old allegiances. And so they serve the double function of rallying the base and wooing the center.

Perhaps the most notable party switcher in recent memory was Zell Miller, the then-U.S. senator and former governor of Georgia, who gave a spellbindingly zealous speech at the 2004 Republican National Convention. Having once been the centrist Democrat par excellence, practically inventing Bill Clinton’s Third Way playbook, Miller let loose a torrent of rage at Democratic nominee Senator John Kerry that delighted rock-ribbed conservatives everywhere — and may well have frightened small children.

Miller’s fiery address foreshadowed the results of the 2004 election. White southerners, many of whom had retained some vestigial loyalty to the Democratic party of their forefathers, flocked to George W. Bush and the GOP, which helped the party make significant gains in the U.S. Senate. This consolidation of the South has had a deep and profound impact on our politics, in part by sparking an equal and opposite reaction that has driven much of coastal urban America into the arms of the Democrats.

Which is why Democrats have had their own bumper crop of party switchers. This year they’ve pulled off a coup by including Charlie Crist, the ex-Republican former Florida governor once known as “Chain Gang Charlie” for his draconian law-and-order enthusiasms, on their roster of speakers for the Democratic National Convention in Charlotte. It’s almost as though the Democrats took a look at Artur Davis and said, we’ll see you your congressman and raise you a governor.

Among the cynical journos whose tweets I had the distinct displeasure of reading that night, there was a derisive, sneering tone toward Davis, with many observing that the former Alabama congressman, an African American raised by a single mother, was unlikely to sway black voters.

What the critics failed to understand is that Davis’s address, unlike Zell Miller’s, was not about making an ethnic or regional appeal. Rather, he served as a stand-in for a kind of upwardly mobile, aspirational voter you’ll find in many American communities. Davis was raised in humble circumstances in West Montgomery, Alabama. But he also attended Harvard College and Harvard Law School, where he proved an academic success. He later returned to Alabama to serve as a prosecutor. In those years, he embraced the moderate wing of the Democratic Party, and in particular the pragmatic centrism of Bill Clinton. Unlike most elite-educated professionals of his vintage, he didn’t embrace a hard-edged social liberalism. He tried to find ways to reconcile left and right and white and black, and he saw Clinton’s message of hope, growth and opportunity as the right way to do it.

Now, however, having served as a Democrat in Congress under President Obama, and having lost a bruising, ideologically charged Democratic gubernatorial primary in his home state, Davis has changed teams. Not surprisingly, his erstwhile allies have been notably unkind. Once feted as the new face of black Democratic politics and as the “Alabama Obama,” various fair-weather friends have condemned him as an opportunist.

The simple truth is that as the Obama years wore on, Davis found himself agreeing more and more with right-of-center figures like Indiana Governor Mitch Daniels, New Jersey Governor Chris Christie and former Florida Governor Jeb Bush. Their tough-minded, whatever-works pragmatism resonated with his experiences, while the Obama administration’s highly ideological approach did not. Davis anticipates, in his words, “the rise of a reform-oriented center-right that is bent on restoring accountability and market principles to public systems” over the next decade.

The really interesting question about Davis’s political future is whether the GOP will become the party of Daniels and Christie and Jeb Bush or, as its critics allege, something narrower, angrier and more ideological. Davis has made it clear that he believes conservatives should seek to reform and improve government as well as contain its growth. This is a conviction widely shared among real-world Republicans. Yet apart from the aforementioned governors, all of whom have their idiosyncrasies, it has few convincing champions in the Republican political class, least of all in Congress.

If Mitt Romney is elected president, he will have a brief window of opportunity to seize this ground and to make the GOP the party of reform, aspiration and inclusiveness. If he pulls that off, Artur Davis will be the harbinger of a much bigger, more consequential shift.

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