Part 3 – An Interesting Quinnipiac Poll

Noting that every other highly developed nation has universal healthcare, Gaffney pointed out to the panel that “overall, the healthcare systems of these countries are quite high quality. Overall, they have higher life expectancies than we do; they have lower infant mortality… Overall, these nations achieve better results with less money.” Asked why a free market system for healthcare can’t work “like it does with auto insurance,” he said:

A true free market in healthcare is something… no civilized nation would ever accept. You’d have people literally dying on the street because they couldn’t afford the care. You can’t have a free market in healthcare when you think something is a right… that people should have healthcare by virtue of being a human being, then you cannot leave it to the free market. That means that people who can afford it get it and everybody else suffers. I work in an intensive care unit. I’ve seen people come in with life-threatening complications ’cause they couldn’t afford care… I don’t want to see that anymore, and we need, as a nation, to decide that that’s not going to be acceptable.

Gaffney is an instructor at Harvard Medical School, and a pulmonologist and critical care physician at the Cambridge Health Alliance. He also serves as president of Physicians for a National Health Program (PNHP), which advocates for implementing a single-payer healthcare system in the United States. The Fox Business Network segment aired just days after Rep. Pramila Jayapal (D-Wash.) introduced the Medicare for All Act of 2019. The bill has been praised as precedent-setting in terms of guaranteeing healthcare as a human right and is endorsed by PNHP. In statement supporting Jayapal’s legislation and denouncing what critics often call “Medicare for Some” proposals, Gaffney said, “Accept no substitutes—only single-payer, Medicare for All can fix the grave dysfunctions and injustices of the American healthcare system.” “Congress shouldn’t be distracted with incremental plans like a Medicare buy-in or public option,” he added. “The only way to achieve universal and comprehensive coverage is to eliminate the profits and waste of the private insurance industry, which drains hundreds of billions of dollars from our healthcare system each year.” The current profit-driven system in the United States “is failing both physicians and patients,” Gaffney concluded. “We can do better. In fact, we have to: The health and future of our nation hangs in the balance.”  

Big companies have long capitalized on business-friendly laws to minimize their tax liability. Now, President Trump’s tax law is making it even easier for profitable corporations to reduce what they owe the government. Case in point: Companies ranging from internet giants Amazon and Netflix to industrial bellwethers General Motors and U.S. Steel could end up paying as little as $0.00 in federal income tax this year despite recording hefty profits. Some companies will also collect large tax rebates. Defenders of the corporate cuts under the tax law that took effect this year, which lowered the rate companies pay to 21 percent from from 35 percent, contend they will plump profits, drive investment and boost economic growth. Opponents say the drop in corporate income tax revenue will grow the deficit and make it harder to fund public programs.

There is no suggestion that companies seeing a dramatic dip in their tax obligations are doing anything against the law — indeed, it is the prospect of already thriving Fortune 500 companies legally reaping large tax windfalls that is giving ammunition to progressive critics and lawmakers. Sen. Bernie Sanders, a candidate for the 2020 Democratic presidential nomination, recently claimed on Twitter that the $119 Amazon Prime members pay annually for perks, including free two-day shipping, is more than the online retail giant paid in taxes last year.  Paying their fair share? According to a recent analysis of Amazon’s regulatory filings, the e-commerce company won’t pay a cent in federal income tax this year, despite its profits soaring to $11.2 billion in 2018, nearly double the $5.6 billion it earned the previous year. It would be the second year in a row Amazon paid no federal tax, said the left-leaning Institute on Taxation and Economic Policy, which estimated the company’s effective tax rate for 2018 at -1 percent.

Amazon dismisses ITEP’s tax analysis and notes that its profit margins on more than $232 billion in revenue last year are in the single digits. “Amazon pays all the taxes we are required to pay in the U.S. and every country where we operate, including paying $2.6 billion in corporate tax [worldwide] and reporting $3.4 billion in tax expense over the last three years,” the company said in a statement to CBS MoneyWatch. “Corporate tax is based on profits, not revenues, and our profits remain modest given retail is a highly competitive, low-margin business and our continued heavy investment,” an Amazon spokesperson said.

Single-digit corporate tax rates: Video streaming service Netflix likely paid no U.S. income tax in 2018 either, despite posting a record $845 million U.S. profit, according to ITEP’s analysis. Its 10-K estimates its federal income tax liability at $-22.176 for 2018 — hence ITEP’s conclusion that it won’t pay the government any money for the year. “When I say they paid zero, really what I mean is they reported a $22 million income tax rebate, so they have a negative income tax,” Gardner said. Netflix’s number is just an estimate. “We don’t have access to their actual corporate tax returns so we can never know precisely and fully what they are doing,” he said. “But based on the limited disclosures they are required to make in annual reports, it seems pretty clear that they are relying on distinct tax breaks, all of them clearly legal,” Gardner said.

Netflix’s annual earnings report shows an effective tax rate (after deductions) of 1 percent for the year — referring to taxes paid worldwide. Netflix said it paid $131 million in taxes globally in 2018. “We don’t break out U.S. versus foreign in that figure, but there were U.S. taxes paid,” a Netflix spokesperson told CBS MoneyWatch. For 2018, General Motors paid taxes at an effective rate of 5.5 percent, its annual report shows, while the auto giant claimed a $104 million refund on $8.5 billion in profit. Its effective tax rate would be higher — 17.4 percent — if it didn’t use generally accepting accounting practices. Another industrial giant, U.S. Steel, claimed a fat $303 million rebate on a $957 million profit. These companies’ single-digit tax rates are startling — given how much lower they are than the already reduced 21 percent imposed by the new law. So how are big companies legally reducing their exposure to federal income tax? By using a mixture of existing and new tax breaks.  

The guardians of our conventional wisdom on taxing the rich have messed up — and they know it. They slacked off. They started believing their own tripe. Average Americans, they assumed, would never ever smile on proposals to raise tax rates on the richest among us. After all, the conventional wisdom maintains, those average folks figure that someday they’ll be rich, too. But now, with tax-the-rich proposals proliferating and polling spectacularly well, the keepers of our bless-the-rich faith are panicking. Their old rhetorical zingers no longer zing. Higher taxes on the rich as a “penalty on success”? Average Americans today don’t see “success” when they gaze up at America’s top 0.1 percent and see a 343 percent increase in earnings, after inflation, over the past four decades. They see monopoly and outsourcing and insider trading.

Yes, America’s rich didn’t actually pay taxes at the exact high rates in effect in the decades right after World War II. But those rich paid much more of their incomes in tax than rich Americans today. That reality becomes particularly clear when we go beyond the merely rich top 1 percent and compare the richest of the rich, the top 0.001 percent, of the postwar years with their counterparts today. In 1960, the Republican Dwight Eisenhower’s last full year as President, the nation’s top 0.001 percent paid 46 percent of their total incomes in federal income taxes. In 2016, the latest year with full IRS stats available, the richest 0.001 percent paid under 23 percent of their total incomes in federal income tax. In other words, after exploiting every loophole and tax break they could find, the richest of America’s rich back in 1960 paid taxes at over double the rate that the richest of America’s rich pay today.

Those “ordinary” millionaires resented that tax bite. They campaigned relentlessly to cut it back. Eventually, they succeeded. The top-income-bracket tax rate in the United States has dropped from 91 to today’s 37 percent. And what impact has that plummet had on the concentration of America’s income and wealth? Since the middle of the 20th century, the economist Emmanuel Saez calculates, our top 0.1 percent has quintupled its share of the nation’s income.  

The political score-keeping aside, the blunder crystallized the issue that experts should be discussing: the relative importance that government policy places on personal responsibility, on the one hand, and economic security, on the other. How do you balance the two? The bipartisan welfare reform of 1996 changed the system for providing cash aid to the poor by setting the expectation that people receiving assistance should be working. In signing the legislation making these changes, President Bill Clinton said: “Today, we are ending welfare as we know it.” But the shift in thinking about safety-net policies primarily as tools to help low-income Americans get and keep jobs is not as straightforward as it seems. Some people may be unwilling to work because they lack the very “work supports” — cash, food, housing assistance, medical care and the like — that would enable them to get and keep a job. It’s hard to find a job, let alone keep it, if you don’t have a roof over your head, or the medical care and nutrition necessary to keep you healthy.

There’s a chicken-and-egg problem here. On the one hand, if work supports aren’t tied to work requirements, then they give people an incentive not to get a job. On the other, if they are only available to people with jobs, then they can make it harder for people to move from not working into employment. Implicit in the argument that people who are unwilling to work have forfeited their claim to economic security is that work is available. But jobs may not always be available, both for people who are willing to work and those who aren’t, particularly during economic downturns. During the Great Recession, there were over six unemployed workers for every job opening. Another major challenge in weighing the balance between responsibility and economic security is what to do about the hard cases. How should policy handle the situation where a person is truly unwilling to work? Or a person who loses his job and won’t realistically be successfully retrained, but who is a decade away from retirement?

The first step in deciding how much economic security is owed to those unwilling to work is to recognize that this is a question of values. What do those who are relatively well off owe the poor? What, if anything, do the most vulnerable in society owe their neighbors? These questions have no objective answer. I tend to lean more toward the importance of personal responsibility than economic security. Public policy should not create an entitlement to economic security for all who are unwilling to work. Instead, just as society has obligations to its most vulnerable members to provide a base of security, those who receive assistance also incur obligations to those providing it. The U.S. safety net often does a decent job of reflecting these values while also being flexible enough to deal with the hard cases and economic contingencies that often arise. Some features of these programs can serve as a model for thinking about how to fix and improve the system overall. For all the talk about work obligations, programs can (and often do) have activity requirements rather than strict employment mandates. Those who receive public assistance are required to contribute to society in exchange for the benefits they receive, whether through paid employment, schooling or training, or some form of community engagement. Even in a depressed local economy with few job openings, there are plenty of opportunities to volunteer or to receive training.

Some safety net and social insurance programs are relatively more generous during economic downturns. States can request temporary waivers, for example, from enforcing time limits on food stamps when unemployment is high and jobs are relatively scarce. And the unemployment insurance program offers additional compensation to laid-off workers when joblessness in a state is particularly high. In addition, there should be measures to bolster labor demand during recessions and in depressed areas. In 2009 and 2010, as part of their response to the Great Recession, 39 states and the District of Columbia operated subsidized employment programs, successfully placing low-income workers into private-sector jobs. Initial evidence suggests that these programs were successful.

Rather than impose a work requirement on every individual receiving a safety net benefit, programs can require that a certain share of the total number of beneficiaries be engaged in a work activity. For example, under the 1996 welfare reforms, half of families receiving cash from the Temporary Assistance for Needy Families program in each state must be engaged in a work-related activity for at least 30 hours per week. Ninety percent of two-parent families in each state are required to be engaged in work under TANF. Placing the work obligation on the overall population of benefit recipients rather than on each individual creates a mechanism to deal with many hard cases, while still offering the pro-work goals of the safety net and the powerful message that society expects recipients to be engaged in their communities. Even before Alexandria Cortez-Ocasio came on the scene, it was clear that the debate over how to balance economic security and personal responsibility would be a major issue in the years to come. Changes in the economy could continue to put pressure on workers with relatively few skills and less experience. Inequality could continue to widen, putting pressure on our political system to provide greater assistance to those who are relatively less well off. “Unwilling to work”? Public policy shouldn’t accommodate that. Government shouldn’t send the message that disengagement with the rest of society is nothing more than a personal choice. But a key to making the safety net more pro-work will always require balancing the tradeoff between personal responsibility and economic security, and not abandoning either.

We Can Do Better than this in Narrowing the Wide Divides

With the presidential campaigns heating up, hopefully voters can learn from past mistakes.  Rather than their raw emotions falling for faux hyperbole, let’s listen carefully to the details of the policy proposals & solutions candidates advocate for: opinion/oppression-majority.  The wide divides throughout society have components which aren’t just based on income, but are cultural, educational & geographical along with other factors, seen in excerpts from why-is-american-democracy-danger.  Polarizing news sources greatly contribute to those divisions:

Today, Lipset’s assessment still resonates. Despite decades of growing wealth, the United States has experienced rapid increases in economic and educational inequality. Wages in the United States have risen since 2000, but five times as fast for the highest earners than for the lowest earners. With fewer union protections and less government assistance, many Americans are struggling just to get by, even as the number of millionaires in the country hit record highs. A 2017 report by the U.S. Federal Reserve Board found that approximately 40 percent of Americans reported being unable to cover an unexpected $400 expense. Lipset contended that education was also a key safeguard against factionalization and mob rule. That was one of the reasons economic development bolstered democracies: More-developed countries were better able to provide education. Here, too, though, the United States is falling short, with declining quality of education and growing inequality in educational attainment. As the education scholar Sean Reardon succinctly summarized in 2011: “The achievement gap between children from high- and low-income families is roughly 30 to 40 percent larger among children born in 2001 than among those born twenty-five years earlier.”

Moreover, researchers have documented the increasing commodification of opportunities, showing that educational opportunities are increasingly dependent on the affluence and private resources of individual families. When it comes to economic development, then, the United States is increasingly accruing the conditions that destabilized democracies around the world before World War II. Nor is the United States doing well on Lipset’s other marker of democratic health: the legitimacy of the political system. He identified specific conditions that would consistently undermine the legitimacy of democracy. First among these was the way that a society deals with major political conflicts. Lipset argued that a failure to resolve important political differences as they arose increased political polarization, because those differences would become embedded in conflicts between factions. Indeed, much of the polarization and frustration in America can be linked to the failure to resolve fundamental cleavages. Debates over abortion rights, gun rights, access to health care, voting rights and other important social issues have amassed over the past half-century along increasingly partisan lines.

Political factionalization is not solely driven by failures to find solutions to thorny issues. Lipset argued that divisive politics thrived on social and intellectual isolation, which political leaders can manipulate to build support. Such leaders need to prevent their followers from being exposed to ideas and narratives that do not fit their political argument. Indeed, propaganda and claims of “fake news” were rampant in the European countries that experienced democratic decline in the interwar years. In the U.S. context, we have seen such threats to legitimacy grow more prevalent during the past several decades. According to the Reuters Institute’s 2017 analysis of people’s news consumption habits across 37 countries, American news consumption is among the most polarized in the Western world. Viewed through the lens of Lipset’s work, the intensification of ideological cleavages surrounding long-unresolved political issues, coupled with growing divisions over what kinds of news people consume and trust, have intensified the legitimacy crisis in the United States.  

Reckless behavior
Is looking at a man
Like he was a savior
Blind leading blind
Everything looks darker
When you close your eyes
When you close your eyes

What were we thinking?

Back at the beginning
The beginning of the end
What were we thinking?
Back at the beginning
The beginning of the end
The end

Rise and the fall

Descending into madness
The writing’s on the wall
Starting a fire
‘Cause all you really wanted
Was just to watch the world burn
So watch it burn

What were we thinking? (Oh, oh, oh)

Back at the beginning (oh, oh, oh)
The beginning of the end
What were we thinking? (Oh, oh, oh)
Back at the beginning (oh, oh, oh)
The beginning of the end