Category Archives: Politics

One Thought on Illegal Immigrants

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I sometimes wonder what would happen if we were to use a jury system to deal with illegal immigrants. That is, let an immigrant who is here illegally appeal to a jury of citizens for the right to become a citizen.

I think that a jury system might do two things. It might lead some anti-immigrant citizens who serve on such juries to appreciate the human issues involved for, say, a 16-year-old of Mexican origin who has lived for 14 years in the U.S. and known nothing of Mexico. It also might lead the immigrants themselves, about to come before juries, to think in terms of how they can assimilate and thereby come across as more appealing to a jury of citizens.

It seems to me that the defeat of Eric Cantor will be interpreted, probably correctly, as making it very difficult for Republicans to compromise on immigration issues. My guess is that this will help Democrats. I think that group-identity wedge issues tend to be their comparative advantage, but I could be wrong about that.

Provocative Sentences

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From Roger Pielke:

a “carbon cap” necessarily means that a government is committing to either a cessation of economic growth or to the systematic advancement of technological innovation in energy systems on a predictable schedule, such that economic growth is not constrained. Because halting economic growth is not an option, in China or anywhere else, and because technological innovation does not occur via fiat, there is in practice no such thing as a carbon cap.

Pointer from Mark Thoma.

If you assume a Leontief production function, then this is correct. You either come up with a way to reduce the fixed coefficient of carbon/output or you reduce output.

Instead of a fixed-factor production function, assume some substitutability, in which you can produce the same output with less carbon emissions and more of some of other factor of production–labor, capital, or other forms of energy. That would mean that you can vary the carbon/output ratio with existing knowledge, so that Pielke is not correct. He might argue that the elasticity of substitution is quite small, which may plausibly be the case.

I am skeptical that a carbon cap would be implemented effectively. The more narrowly it is implemented, the more the substitution will be between two different sources of carbon emissions rather than away from overall carbon emissions. Thus, the recent announcement by the EPA that it will target the electric power industry for a 30 percent reduction in emissions over a period of decades strikes me as unwise from even the most staunch environmentalist perspective. Assuming that the policy were to stick and the reduction were to be achieved within that industry, it would most likely be the result of a shift of carbon-intensive energy sources to uses in other sectors. It is not hard to picture a scenario in which total carbon emissions actually increase as a result, because you are directing carbon-based energy sources into less efficient uses.

Regardless, the EPA announcement works well as a gesture. And politics seems to be mostly about gestures. In Hansonian terms, politics is not about policy.

How to Fix Infrastructure

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Scott Sumner writes,

I think a better comparison for New York would be a high income, world-class city like Singapore or Hong Kong or Dubai. Those places are able to build very good infrastructure quickly and at low cost. They might use Bangladeshi migrant workers at $1/hour instead of American “prevailing wage” workers at $50/hour. Indeed even cities like Paris and Berlin build new subway lines at 1/7th the cost of the New York project. A small part of this cost gap may be due to physical differences between the various cities, but by no means all of it…

This demonstrates one of the many internal contradictions of American progressivism. (And by the way, American conservatives have just as many internal contradictions.) You can have your strong public employee unions, “prevailing wages” and restrictive work rules, or you can have nice infrastructure. New Yorkers have (perhaps unknowingly) made their choice. Now they must live with the consequences. Few progressives (with the notable exception of Matt Yglesias) understand these internal contradictions.

Politics and Policy

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William Galston writes,

The document’s emphasis on the middle class is a thinly veiled repudiation of the Romney campaign, whose emphasis on “job creators” reduced the 2012 Republican convention to a gathering of the National Federation of Independent Businesses. As Sen. Mitch McConnell noted at a “Room to Grow” public event last week, Republicans must stop imagining that average Americans are anything like John Galt in Ayn Rand’s “Atlas Shrugged.” Few of them are entrepreneurs, let alone heroic individualists. Most of them are holding jobs or looking for them. A political party that doesn’t address their needs isn’t likely to get their votes.

Pointer from Reihan Salam.

Let me propose the following distinction between politics and policy. Politics is a set of gestures and poses that politicians use to win votes, either in elections or in Congress concerning legislation. Policy is what actually gets done.

The Obama team has been magnificent at executing gestures and poses and thereby winning votes. Their approach to policy appears to have been much more haphazard, with results that I imagine disappoint even many of their supporters.

My criticism of “Room to Grow” is that it while it purports to be a policy document, it is in fact a set of gestures and poses. I think that the way Galston and Salam discuss “Room to Grow” tends to confirm that. Rather than complain that these are just gestures and poses, they are willing to engage with the gestures and poses and ask how well they will work politically.

I seem to be the only one who cares whether there is a coherent, implementable policy agenda embedded in “Room to Grow.” Maybe it is premature to worry about that. If you don’t get the poses and gestures right, you won’t have the opportunity to implement anything. But I do not think you should come in as unprepared as the Obama Administration was to deal with actual policy.

Unreformed Conservatism?

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James Pethokoukis writes,

Reagan-era nostalgia, unfortunately, is not much of a superpower. Without recognition that new economic challenges require new thinking and new solutions, this tired GOP sequel is unlikely to attract much of an audience.

He refers to the manifesto entitled Reform, Restore, Modernize. I also find it unsatisfying, but I think James is too quick to dismiss it the way he does. My main problem is that the “specifics” in the manifesto are mere bullet points stating wished-for policy achievements. Until they drill down into “how,” they have not done enough.

Looking at this manifesto and at “Room to Grow,” I am happy to see this sort of ferment but disappointed with what i see so far. Of course, as long as SNEP remains vaporware, I have to be cautious in my criticism.

More RtG

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1. Adam J. White is the author on energy. Mostly it’s “Fracking. Woo-hoo!” Not much in terms of policy specifics.

2. James Pethokoukis writes on regulatory and financial reforms. He berates “too big to fail” and cites two approaches for dealing with it: restricting deposit insurance to banks that do not engage in securities trading or more exotic businesses; or requiring large banks to hold more capital, perhaps more like 15 percent, compared with the 6 percent or less that they can hold under current rules.

He also mentions copyright and patent reform, including Alex Tabarrok’s idea of having patents with different terms: shorter terms for innovations that are not expensive to arrive at (think of innovations in software) with longer terms for innovations that are expensive to arrive at (think of drugs that require hundreds of millions of dollars of research and testing).

What he fails to mention are reform of the FCC and the FDA, both of which are long overdue given new technological realities.

3. Carrie Lukas talks about policies related to work-family balance.

the Government Accountability Office estimates that in 2012 the federal government administered 45 programs related to early learning and child care, which cost taxpayers roughly $14.2 billion per year. In addition, there are five tax provisions to support individual spending on child-care services, which reduce tax receipts by approximately $3.1 billion annually. These resources solely benefit families using formal, paid child-care arrangements–overwhelmingly center-based care. Rather than favoring these choices, policymakers ought to make that support available to all families witih children under the age of five…since many of the current programs, like Head Start, are geared to assist low-income women, a new mechanism for support should be allocated on a means-based scale to help those with lower incomes most.

That makes sense. But, again, there is no integration with other chapters in the book. We saw that Scott Winship touted something like the “universal credit.” Are we going to fold support for child care into a sort of universal credit, or are we going to continue to take a fragmented approach to policies?

4. W. Bradford Wilcox talks about policies to provide incentives (or at least remove disincentives) for marriage.

the Earned Income Tax Credit (EITC) program could be transformed. Instead of depending on household size and household earnings–which creates the potential for a marriage penalty–it could become a wage subsidy for individual low earners.

…for other means-tested tax and transfer policies targeting low- and moderate-income families, couples could receive a refundable tax credit for the amount of money that they lose by marrying.

the marriage penalty associated with Medicaid should be eliminated

So far, in the various chapters of Room to Grow, I have seen three different Medicaid reforms, three different suggestions for changing the EITC, and new tax credits for health insurance, families with children, childless workers, and child care. Obviously, that does not bother the editors of this volume as much as it bother me. They might make an argument that the more ideas, the merrier. But I do not think that you can govern on the basis of solutions that are mutually incompatible.

RtG on the Safety Net

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The chapter is by Scott Winship.

rather than instituting work-promoting reforms program-by-program, there is much to be said for consolidating them, thoughtfully modifying phase-out rates to transparently encourage people [to] move to work, and offering supports outside the confines of specific programs.

As part of SNEP, I have a somewhat specific proposal that attempts to do this. Winship refers a proposal by Oren Cass that sort of sounds like mine, but as I look closer the resemblance seems to go away. You can read Reihan Salam’s write-up from last year on the Cass proposal.

As an alternative, Winship writes,

Congressman Paul Ryan, who chairs the Budget Committee, has spoken favorably of the United Kingdom’s “universal credit.” Under this approach, various means-tested programs would again be consolidated, and benefits would be distributed to families as a single amount rather than through separate programs with their own applications procedures and bureaucracies. A universal credit may be designed with a single phase-out schedule as beneficiaries move into work

Yes. I need to find out more about the British experience, which I understand ran into a number of implementation snafus.

Again, I raise the issue of coherence. The big enchilada of means-tested programs is Medicaid. If you going to have a coherent policy document, then you need to decide whether or not Medicaid reform is going to consist of folding into a universal credit. Instead, the chapter on health care reform talks about a completely different approach to Medicaid.

I want to see a policy playbook, and that means that the ideas have to fit together. Relative to that expectation, RtG comes across to me like a bunch of vendors standing outside the ballpark, all shouting. “Tax credits!” Getcher health care reform here!” “Gotta have higher ed reform!”

RtG on Tax Reform

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The essay is by Robert Stein.

tax cuts for the middle class should be designed to offset the greatest fiscal-policy distortion that affects middle-class Americans: the disincentive to raise children caused by Social Security and Medicare.

…A recent tax reform proposal by Senator Mike Lee (R., Utah) would take a large step in this direction. He would keep the current $1000 child credit and the personal exemption for children, and a new credit of $25000 available to all taxpayers with kids, with no phase-out of the sort that applies to the current credit. The new credit could be used to reduce income-tax and payroll-tax liabilities: it couldn’t be used to increase refunds for those who have already used other credits (like the earned income credit) to reduce their tax bill to zero.

To help pay for the news larger child credit, Senator Lee would greatly simplify the income tax code, getting rid of all itemized deductions except for the mortgage interest and charitable deductions. He would also limit the deduction for new mortgages to $300,000.

1. The assumption is that people are thinking, “My retirement is taken care of. So I don’t need my children to pay for my retirement. So I won’t have so many children.” I would like to see some estimates of this effect. How large is it? I’m not even sure that it has the right sign (having your retirement taken care of might make you more willing to have children, because your finances are less uncertain).

2. Getting rid of itemized deductions and capping the mortgage deduction sound like good ideas. But I would rather use the revenue from those to reduce payroll taxes and thereby improve the labor market.

3. Meanwhile, in another chapter, written by Michael Strain, we find

The EITC is much more generous to households with children than to those without; in 2014, the most a childless worker will get from the EITC is $496, while a worker with three or more children will get up to $6143….we could increase the maximum size of the credit for a childless worker by a factor of six and the maximum credit for a worker with one child would still be larger. So policymakers should double or triple the credit available to childless workers, and fund the expansion by reducing tax benefits (like the mortgage interest deduction and the state and local tax deduction) that now almost exclusively benefit higher-income households.

I don’t mind so much that one author thinks we don’t subsidize middle-class parents with children enough and the other thinks that we don’t subsidize childless workers enough. But I certainly mind that each of them wants to use the same revenue source to fund additional subsidies.

One of the reasons that I am reluctant to have SNEP be a large group project or to think in terms of political appeal is that I want it to be coherent. To me, that is the difference between politics and policy. Incoherence might be a feature in politics. In policy, I think of it as a bug.

Again, you have my idealism/cynicism, which separates politics from policy. Politics is what politicians do to win votes. Policy is what wonks propose in the hope that it will help the country. I think that one should propose good policy, taking into account obvious political constraints. However, I would not assume that voters, other than rent-seeking interest groups, choose candidates on the basis of specific policies.

RtG on Health Care

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The essay is by James Capretta. He says that there are four keys to health care reform.

First, the basic market orientation of this approach is in a sense its overarching characteristic…allow providers on the ground to try new ways to deliver quality care at a low cost

When during the question period I said that RtG sounded tentative and timid, without strong specifics, the moderator rebuked me, saying that I needed to read the sections on health care and education. But, honestly, I did not see anything specific in Capretta’s chapter that indicates a policy change that would contribute to the worthy objective given above.

His second idea is to

place an upper limit on the amount of employer-paid premiums that would enjoy tax-preferred status.

That is fine, although I thought that at one point some sort of penalty for “Cadillac health plans” was part of Obamacare. Of course, if it ever was part of Obamacare, it probably got waived.

Anyway, Capretta also proposes an age-graduated tax credit to people without employer-provided health insurance. So without being especially charitable, I can say that he is specific on his point two. However, I have to quibble and say that while such a tax credit may be good on horizontal equity grounds–putting different categories of consumers on the same footing–it tends to worsen the overall bias that consists of subsidizing health insurance through the tax code.

His third idea is continuous-coverage protection. The idea as I understand it is to outlaw making risk adjustments to anyone who already has insurance coverage. If you never had coverage and you walk in to an insurance company with a bad illness, too bad for you. But if you were covered before, you have to be given rates that do not penalize your bad illness. That strikes me as a reasonable approach, although I still think we will need high-risk insurance pools. There are going to be people who choose not to insure and then find out that they have an expensive illness, and we are not going to bankrupt them.

His fourth idea is to enable Medicaid recipients to take a cash-equivalent voucher to purchase health insurance. Again, that is a reasonable idea. But as he points out, we need to sort out the state-Federal mix in Medicaid, which right now creates perverse incentives for states to over-spend Federal money.

With SNEP, I am thinking in terms of integrating all means-tested programs, including Medicaid. There is another piece in RtG, by Scott Winship, which alludes to the Oren Cass Flex Fund. But Capretta’s Medicaid ideas and the Flex Fund are an example of two specifics in RtG that strike me as not fitting together.

So, of Capretta’s four keys, the first has no specifics (no reforms of the supply side of medical care), the second involves a new tax credit that may or may not be a net improvement, the third seems fine to me, and the fourth strikes me as incompatible with other specific proposals in the book.

RtG and the Conservative Vision

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Reading Room to Grow allows me to clarify my goals in Setting National Economic Priorities. In the opening essay, Peter Wehner writes,

Americans do not have a sense that conservatives offer them a better shot at success and security than liberals. For that to change, conservatives in American politics need to understand constituents’ concerns, speak to those aspirations and worries, and help people see how applying conservative principles and deploying conservative policies could help make their lives better.

I am at once more idealistic and more cynical than this. I am idealistic in that I would just spell out the policies I would most like to see given what I judge to be the political constraints, without worrying about how the policies come across to ordinary people. I am cynical in that I do not think that voters respond to policy proposals.

Yuval Levin writes,

Moral individualism mixed with economic collectivism feels like freedom only because it liberates people from responsibility in both arenas. But real freedom is possible only with real responsibility. And real responsibility is possible only when you depend upon, and are depended upon by, people you know. It is, in other words, possible only in precisely that space between the individual and the state that the Left has long sought to collapse.

…the conservative approach to public policy… involves three steps: experimentation (allowing service providers to try different ways of solving a problem), evaluation (enabling recipients or consumers of those services to decide which approaches work for them and which do not), and evolution (keeping those that work and dumping those that fail).

Levin sounds like a cross between Edmund Burke and, well, me. I consider it to be moral philosophy properly done. What passes for moral philosophy on the left, in contrast, comes across to me as a set of gestures and postures. Tom Lehrer summed it up years ago in The Folk Song Army.

We are the Folk Song Army.
Everyone of us cares.
We all hate poverty, war, and injustice,
Unlike the rest of you squares.