Left In Lowell

If there’s anything I wish we could get through the thick skulls of American voters, it’s this information.

The “red” states up in arms about government spending receive the largest share of it. This is not a new finding, but research by economist Gary Richardson at the University of California-Irvine backs it up.
[…]
It isn’t surprising that the more Republican a state leans, the more likely it is to be furious about government spending. But what is surprising is that states with the highest anti-spending sentiment appear to be the largest beneficiaries of government spending. Not only do red states swallow the lion’s share of government spending, but Richardson found a linear relationship between the extent of GOP support in a state—and, by implication, the fervor of its anti-government sentiment—and the amount of federal largesse the state receives.
[…]
The 28 states where George W. Bush won more than 50 percent of the vote in 2004 received an average of $1.32 for every dollar contributed. The 19 states where Bush received less than 50 percent of the vote collected 93 cents on the dollar.

“Voting Republican paid large dividends,” Richardson wrote in a piece published in the Economist’s Voice. “For each 1 percent of the population voting in favor of the Republican presidential candidate, the state received an additional 1.7 cents in benefits for each dollar in taxes.”

Vedantam also gives us the polar opposite examples…Alaska, an über conservative state, gets back $1.64 for every $1 they send to the federal government, while Massachusetts receives 82 cents for every dollar it send to the feds.

My first comment is, if those conservative hypocrites hate government spending so much, than give us our money back. Massachusetts could do so much with an extra 20% boost in the federal dollars we receive. Maybe, single payer universal health care? Or super cheap or free higher public education? Then we’d really be positioned to kick global economic butt.

But Vedantam doesn’t end there. He goes back to before there was this red-state-blue-state spending disparity, to tell us something even more insidious.

During the 1970s and 1980s—throughout the Carter, Reagan, and George H.W. Bush administrations—there was no correlation between anti-spending sentiment and getting lots of federal money. The net return to states that voted for Republicans was relatively flat, meaning that “red” states didn’t get most of the pie.

But that changed around 1994—after the last Republican takeover of Congress. […]

Buried in the fine print of Newt Gingrich’s “Contract With America,” Richardson found an income redistribution scheme. The proportion of government spending on groups that traditionally supported Democrats fell. The proportion of government income from groups that traditionally supported Democrats rose.

“Tax rates declined more for groups that tended to vote Republican. These groups include people with incomes in the upper tail of the distribution, such as small business owners, property owners, and investors accruing capital gains. … At the same time, expenditures fell more for programs directed toward people that tended to vote Democratic. These groups included welfare recipients, inner-city residents, and individuals in the lower tail of the income distribution.”

In other words, this appears to be a deliberate plan to under-fund the blue states. It’s like the starve-the-beast scenario, only starving blue beasts only. But the explanation for this disparity in which states get more or less funds than they put into the kitty has largely been explained as a progressive income redistribution - richer states subsidizing poorer states who can’t afford adequate funding levels for education, retirement, or social net programs.

The article goes on to dispute that idea, and you can read it yourself, but the point here is, it’s severely hypocritical for conservatives to disparage government spending, since their beloved red states, their base, are the ones who are costing us the most money - being subsidized heavily by those alleged “big liberal spenders.”

Again, if you don’t want our money, please - give it back. Or for heaven’s sake, at least admit the fact that you are a filthy, dirty hypocrite conservative.

Obama just lost us Social Security.

That’s what they could say ten years from now when the Republicans have dismantled the program like they have been trying to do for over 70 years. What the wingers couldn’t do for all that time, Obama has done for them. He has truly begun the undermining of this popular “third rail” of American politics. Republicans are salivating over the battle. Via FireDogLake, HuffPo’s Ryan Grim got Republican leaders on the record saying exactly what you’d expect them to say (bold mine):

Republicans acknowledged that the expiration of the tax holiday will be treated as a tax increase. “Once something like this goes into place, a year from now, when it expires, it’ll be portrayed as a tax increase,” said Sen. Bob Corker (R-Tenn.). So in a body like Congress, precedents matter and this is setting a precedent. I think that certainly is going to create some problems down the road if it passes.”

Given that Congress, under Democratic control, can’t gather itself to let tax cuts for the wealthiest Americans expire, members of both parties are convinced that letting the payroll tax rate revert back to its current spot will be near impossible.

“Once you bring a rate down, if it goes back up, people will feel that. They’ll feel their paycheck being less and that argument” — that letting it expire amounts to a tax hike — “eventually is bound to be made,” said Sen. Mike Johanns (R-Neb.).

“There’s always a tendency to continue those things… Once something comes in, it’s very difficult to change it,” said Sen. George Voinovich (R-Ohio.) He then volunteered, without prompting, that “It would be detrimental to the Social Security system, especially when it’s in bad shape.”

We all know this is going to be the way it goes down. There will be a one year extension next year, since the political season’ll be heating up, and then another, and another, maybe longer one. One way or the other, the FICA tax cut will be permanent. Then comes the SS and Medicare “crisis” that this will create. Republicans will say that since neither is solvent any longer, benefits will have to be cut, the age of SS will have to go up, less will have to be paid out. This is, of course, right as the Baby Boomers are retiring, making it even more dire.

There’s an easy answer to this of course. Make the FICA tax cut permanent, but raise the ceiling of wages that FICA affects to $200K, or $250K. But this will not happen, because it should have happened several times already, and Democrats are effing wusses and can’t get it done, even with big majorities in Congress and the White House.

So, kiss your retirement plans goodbye, my friends. Forget about having quality health care in your later years and certainly, don’t rely on Democrats to save your ass, either.

A self-identified strong political centrist friend on facebook recently expressed his disgust at Obama’s “compromise” on the tax cut extensions for the rich. I commented that if Obama has lost him, he really has lost the squishy middle. Polls show that the vast majority of Americans didn’t want a tax cut extension for the wealthy. And in the context of all the (somewhat misplaced) concern over deficits, this so-called compromise from Obama is even weirder - after all, neither the tax cuts, nor the unemployment benefit extension that we “got” from Republinans, are “paid for.” Which makes both the Republicans, who “ran” on the deficit, and Obama, with his Catfood (er, “Deficit”) Commission, incredibly hypocritical.

Of course, Obama didn’t lose, and the Republicans didn’t win, on the election being about deficits. It was about an economy that people felt hadn’t gotten enough attention by our leaders of either party. Many stayed home, and the result was that the fired up Republicans took control of the House. But you can’t convince a Republican about that by giving in to him.

But it gets worse. Obama called the Republicans “hostage takers” - and he’s right. They held a gun to Americans suffering with long term unemployment, and to tax cuts for the middle class, and demanded a ransom for the rich, despite the 60%+ of Americans who don’t want that. Obama wants us to believe that this was about preventing harm to the hostages.

He might be right, but only for the short term. What do you get when you negotiate with hostage takers? Emboldened hostage takers. They now know they can threaten harm to get what they want with little or no consequences. And the next threat of harm is right around the corner, and is very, very dire - Chris Bowers at dkos explains:

The problem is, this deal does not free the hostages, and escort them to a safe place. This is because, at a minimum, the deal does not raise the debt ceiling.

According to current projections, Congress will have to vote on raising the debt ceiling in late March, or else the whole country goes into default. At that time, Republicans could–and likely will–take the entire country hostage. After their successful hostage taking on the tax cuts, in exchange for raising the debt ceiling preventing default, they could demand spending cuts that will far exceed any of the stimulus in this deal, or exceed any collateral damage caused by not doing this deal.

Keep in mind that many Republican leaders threatened this very thing already. It’s not a matter of maybe, it’s a matter of when and how much.

This time it won’t be your $400-to-700-on-average tax cut extension on the line, or the $2M long term unemployed, but the “Full Faith and Credit of the United States” held hostage. That threat, if carried out (government shutdown, defaulting on loans, the works) could cause another severe dip back down to recession. So, what safety did we gain for the American public with this deal? After all, we just proved to Republicans that holding the American economy and people hostage gets them pretty much everything they want.

Republicans leaders don’t really believe their own hype that tax cuts for the wealthy (or preventing the lapse of such) really helps job growth. The Congressional Budget Office, and many other prestigious institutions, have said over and over again that this “trickle down” theory doesn’t really work - tax cuts for the rich are not stimulative. It is marginally more stimulative to cut taxes for the middle class and below, as they are out there spending their money on goods and services, and so will spend marginally more if given tax cuts. It is more stimulative still is to ensure that the unemployed are buoyed up by benefits, and the best stimulus is direct government spending. Those facts are not in dispute - unless you’re a Republican leader (or their adherents) trying to sell a despicable tax and spending cut policy that will continue to erode the middle class.

In fact, you can easily make the argument that a double dip recession will only benefit Republicans politically, as people will continue the blame the party that is mostly in power, even if in name only. You might even be able to make the argument that they could be cynically aiming to bring us back to recession in order to peddle their snake oil solutions in 2012, and possibly succeed. Certainly, with Democratic leaders reluctant to use their bully pulpit to fight for what will help the middle class and small businesses, there really isn’t any competing storyline out there to gainsay them.

The fact is, not holding a line now will have consequences going forward. Not just political consequences - those are pretty bad alone. But also policy consequences on the “hostages” that Obama thinks he just saved. Enjoy the compromise you have now, because it’s going to get even worse later.

You know what to do today. Go exercise your democratic rights. (Update - find out where you vote and see a ballot preview here!)

Having been so busy lately (teaching, business, etc) I haven’t had much time to post about this election. But suffice to say, I am an enthusiastic NO on all three ballot questions. If any of these pass, we will see a regression in our state, and you will not like the results.

Regarding question one (return of the alcohol exemption) and question three (rollback of the sales tax to 3%), the last thing we need to do in the middle of a time of reduced revenues due to economic woes nationwide is to reduce revenues further by gutting taxes. Yes, math still works the way you were taught in school.

Look, no one loves paying taxes. Everyone would love to have that that $1.25 back on your $20 purchase. However, is that worth seeing more teachers laid off, fewer police, and longer lines at the RMV? We’ve cut the fat, folks, long ago. In fact, Patrick has done a lot to reform the state government - including state transportation department consolidation, which Republican governors have been talking about for years and never accomplished. We’ve started cutting the bone during this recession. Further reducing revenues is suicidal. Forget all the progress we’ve made on jobs, green initiatives, and our kids’ education if we have to cut more essential programs.

With regards to the alcohol tax rollback: don’t listen to the alcohol lobby that you are being “double taxed” on alcohol. What a lot of freaking whining! The excise tax is on volume and is so minuscule, it’s hardly even noticeable - if the excise tax were repealed, prices would hardly change at all. Most other states have a sales tax that applies to alcohol, alongside an excise tax. What the longstanding tax exemption on alcohol was, was a gift and a giveaway. Alcohol is not an essential purchase, so why the hell was it exempt? It should be subject to the same tax that is on all other nonessential goods.

On the sales tax reduction - really, you’re going to save about $3 on a $100 purchase. And remember, sales tax is not applied to most essentials in MA - clothing (unless you buy expensive Gucci) or groceries, for a start. A huge chunk of our discretionary spending budget comes from the sales tax. Is that worth seeing hundreds of teachers laid off? Or unsafe streets? The sales tax cut would be worth a loss of $20 million dollars to Lowell alone, if the cut were applied in full to local aid and Chapter 70 monies from the state. How many city services and school programs do you think $20 million would cut? And since it looks impossible, politically, for Congress to pass another stimulus bill next year, we will be losing the ARRA funding, which has been floating much of our state deficit from reduced tax receipts - our state would be further devastated by the loss of over half the sales tax.

On question 2, the elimination of comprehensive permitting to build affordable housing, also has a regressive result. Of course, many people are frustrated with this law and how it is applied in our communities. However, the repeal of it will have a devastating effect on families who need affordable housing. I don’t have to tell you we have some damned expensive housing costs here in MA. It’s a side effect of our leading-the-nation prosperity. The more people in the middle class and up can afford, the more expensive housing is. The more dense the jobs and opportunity, the more the demand for housing. For those who are in jobs that do not have the same level of opportunity, or for those who are underemployed, disabled, or retired with no savings, the availability of affordable housing is paramount to their survival.

Affecting how difficult is it to build affordable housing in Massachusetts means keeping some families out of the prosperity. That’s not what our state is all about. Maybe the law needs reform (and maybe it doesn’t), but eliminating it is no way to do it. It will only hurt some of our most vulnerable citizens. We’re better than that.

So, I will vote no to all three of the ballot questions. I wish we didn’t have to keep having the same damn debate over revenues and taxes - it’s exhausting to constantly have to defend what is undesirable by any human being. Where’s our ballot question enacting positive initiatives?? But as Governor Patrick has always said, we have to decide what we want government to do, and then decide how to pay for it. Ignoring the reality (and basic math) of the situation to vote for something that feels good now but will hurt us in the long run is just stupid.

No wonder the mob has gone after David Frum. In this article, which looks at a survey done about the perceptions of tea party protesters, we find out why, exactly, they think there’s a tax crisis in the country. Hell, if I thought 40% of GDP was going to just the federal government, I might be out protesting too!

Tuesday’s Tea Party crowd, however, thought that federal taxes were almost three times as high as they actually are. The average response was 42% of GDP and the median 40%. The highest figure recorded in all of American history was half those figures: 20.9% at the peak of World War II in 1944.

They are also hugely wrong on the percentages of taxes on a $50,000 salary.

The other common assumption is that taxes have gone up under Obama. W.R.O.N.G.:

Tea Partyers also seem to have a very distorted view of the direction of federal taxes. They were asked whether they are higher, lower or the same as when Barack Obama was inaugurated last year. More than two-thirds thought that taxes are higher today, and only 4% thought they were lower; the rest said they are the same.

As noted earlier, federal taxes are very considerably lower by every measure since Obama became president.

Now, don’t get me wrong, this survey is all about the perceptions about the federal government, not local and state. So added together, the numbers for total taxes go up a bit, obviously. But if you think about it, once under Bush you reduce even the moderate tax rates under Clinton, but you still have the same number of kids to educate, the same numbers of fires in buildings, the same amount of roads to repair, buses to run, and impoverished kids to feed, or hey, even more than you had, the local and state governments have to make up the shortfall somewhere. That somewhere ends up being our local property taxes in the end.

However, make no mistake - the tax rate under Clinton was merely moderate. Under Bush, they became, historically, extremely skinny. And we paid for it in the form of perpetual federal deficits, debt, and zero room to react to a bad recession. But don’t tell a teabagger that. They won’t listen.

[HT BMG.]

The news is reporting that MA home sales last month were up incredibly from last November, by a whopping 59% for single family homes. Of course, November 2008 was a terrible month for home sales, but that is still a very good trend. This is in addition to the encouraging, though fragile news that the state’s revenues are also on the rise, beyond previous gloomy projections.

The conservatives have attempted to label the stimulus efforts of the last year as more than fruitless - they state it has been a huge waste of taxpayer money. For instance, they constantly cite their favorite sets of numbers with regards to the Cash for Clunkers program - that each “clunker” cost far too much to be useful as a stimulus.

But here’s what I know. I know a family member of mine who works in the auto parts industry went from a dismal reduction in hours a year ago, to working full time again in the last few months. I know his company is now working on electric car technology, partly due to a bigger emphasis on green transportation and getting ourselves rid of “clunkers.” I know that my own brother proudly purchased his first home to take advantage of the first-time buyers program last summer, one more notch in the stabilization of home prices. He has a good steady job and was a perfect candidate for someone who just needed a little incentive take the plunge to being a home owner.

I also know that I myself have expanded my business as a direct result of stimulus money which is going to a program intending to help people gain the skills necessary to become more financially responsible. My business is doing so well I have less time for blogging.

I know there’s construction going on around the state and I know that the Hamilton Canal District’s Appleton artist live-work rentals had their groundbreaking and is keeping people employed for 18 months. I know that MA’s unemployment numbers are looking better every month, and I know that our schools have dodged a huge bullet when it comes to losing budget in the last year, thanks largely to the priorities of our Governor.

Maybe today’s just a glass half full day because my Christmas shopping is done and mostly wrapped and we’re headed for a three day weekend and I get to watch my excited nieces unwrap gifts, but I’m feeling that 2010 is definitely looking up, and I think that the policies enacted to deal with the Main Street worries, such as the stimulus bill and the incentive programs, did what they were supposed to do. Could they have been more efficient? Sure. For instance, we wasted a 1/3 of the stimulus in pointless tax breaks for special interests and big business. It’s well known* that you do not get back the same economic activity from tax cuts as you do direct spending.

But overall, I think we’re in better shape than we could have been, and averted a worse economic crisis. Now we need to fix what was broken, namely, the regulation of industries in which greed played and still plays such a powerful roll. We need to go back to having a firewall between lending activity and investing, among other things.

I’m not optimistic about health care reform (in that I think that the Senate bill subsides for Big Insurance are just going to become tomorrow’s boondoggle) but at least restricting the ability of insurers to deny you care for a preexisting condition or kicking you off care is a good step (we do that in MA by the way). We need fast action on carbon reduction, and though Copenhagen was a tough nut I hope people are not done fighting for it. If we can build these three pillars - economic reform, heath care reform, and environmental reform - we will have gone a long way towards transforming our country to thrive for the next 9 decades of this century.

* Known except to those who cannot let facts get in the way of their theory binkie called “trickle down.”

Lowell blogger, kad barma at Choosing a Soundtrack, post on yesterday’s Globe story, “Recycling doubles, but many left out/City program excludes apartment dwellers” speaks to a lot of us who live in condos.

I believe his comments are a direct response to those made to the Globe by Gunther Wellenstein, Lowell’s Recycling Coordinator and Solid Waste Manager.

Globe: ” Wellenstein said it would be a ‘nightmare’’ for the town to provide trash pickup to the roughly 12,000 residents now not served. ‘We’d charge each household the $125, so for every customer we take on, we’d lose money,’ he said. ‘For every thousand new customers we take on, we would lose $155,000 a year because what we collect would not fully fund the service’.”

kad baram: “first of all, taxes are taxes, and for mine to be collected just as assiduously as all my trash-pickup-served neighbors, but not extend to provide me with basic trash-hauling services like all of them enjoy, stinks.”

Residents who do have access to municipal waste removal are assessed $125 a year, the actual cost is $280. And the balance is taken from the general fund. So in effect, the rest of us help pay, through our real estate tax, a service which we are not allowed to receive.

I do not think this issue is going to go away soon. I know in my own condo association (115 townhouses) this topic is continuously discussed. As the cost of waste removal increases, we are beginning to wonder how long do we have to be punished for not owning and living in a “conventional” home?

I haven’t had as much breathing space to post on this, but kudos on Governor Patrick for getting what he wanted - transit, pension, and ethics reform, before the allotted deadline (signing the budget bill with the sales tax increase).

When he started playing hardball with the lege this year, I heard a lot of, frankly, whining from some corners of the legislature (also genuine concern from other corners). The hack wing fled to the newspapers and cried on reporters’ shoulders about how Patrick wasn’t working with them, that they do all the real hard work.

Well, previous to the hardball moves by the Governor this spring, ethics reform appeared stalled and actually weakened the State Ethics Commission, transit reform looked like it wasn’t going to have all the elements of pulling together the “quasi-independent” failure agencies back under the executive branch so they could be held accountable, and pension reform was slated to not apply to current employees.

Subsequent to the backbone Patrick showed after all that occurred, despite the screaming from the hack wing of the legislative branch, we got bills that were a lot stronger and more meaningful. Now, Patrick has signed the budget, having accomplished three important things in his agenda, which many people pronounced dead.

Sure, the bills are only a start. We need more transit funding, so we can get rid of the Big Dig debt and increase public transit services. We need further reform of the pension system and how it is funded. And ethics will always be on the agenda - we also need to enforce those laws that are already on the books. However, anyone who says Patrick is a do-nothing governor or that state government isn’t balanced because it’s all Democrats needs to reexamine the evidence.

On another note, I still also endorse a future gas tax hike. For all the reasons I’ve argued since this debate began. The first argument is that this is NOT a tax that goes up with inflation, unlike a percent tax, and therefore has lost a lot of value. The gas tax, had it been indexed to inflation since its last increase, would be about $.30 higher, from what I’m given to understand. So I am sick of people whining it’s a tax increase. It’s not. It’s catching up to what we should have been paying for a couple of decades.

Not to mention, like cigarettes, we need to get the hell off this oil addiction before it’s too late. Do you like our wet, cold spring and early summers? You might have to get used to them. This has been our weather pattern, building for years. I noticed it back the year or two before the big flood. It’s happened pretty much every year since. It’s certainly not normal, and it’s looking less and less “cyclical” as time wears on.

Tax the hell out of oil. Use the money to build transit and green, renewable energy infrastructure. Our children and grandchildren will thank us for our sacrifice.

Reported first on BMG, then the Globe.

Though such a local option tax really benefits more developed nonrural cities and towns, in Lowell, adding such an increase would have very little actual impact and do a lot of good.

I’d pay $.10-.20 more on my $10 lunch to go to our local schools and other services. Maybe we could avoid closing the Rogers.

So, House, whatayagonnado?

This op-ed by Sonia Chang-Diaz and Jamie Eldridge says it all: we are completely avoiding the real discussion about taxes in this state.

“Taxes” is often thought of as the dirtiest word in politics. Yet taxes are the way that we, as a society, pay for the things we value: education, police and firefighters, and public transportation. Each day we rely upon government services, public infrastructure, and state regulation, paid for by our taxes, in order to allow us to work and raise a family. What’s so dirty about that - and why are we so afraid to talk about it?

A fair tax system asks residents to contribute to the cost of government services based on their ability to pay - and few people would consider a tax system to be fair if the poorer you are, the greater proportion of your income you pay in taxes. But that’s exactly what more regressive taxes - such as a sales or cigarette tax - do. They ask those who can least afford it to pay more.

The crux of the matter:

There are also ways we could modify the income tax to make it even more progressive. Over the long haul, an amendment to the Constitution would allow the Commonwealth to join 34 states and the federal government in establishing a tiered, progressive tax rate system. But even this year, we could raise the personal exemption, increase the state Earned Income Tax Credit, or expand the Property Tax Circuitbreaker, so that more of the revenue we raise is coming from taxpayers with higher incomes, while lowering taxes for those near the bottom.

Even as someone in a not-so-low tax bracket these days, I heartily endorse an income tax increase, with a progressive regime to ensure those least able to pay are paying less, proportionately, of their income. And I endorse a constitutional amendment to allow true progressive taxation. The article is correct in that we are in the bottom half of states in regards to taxes paid as a percentage of personal income. We’ve gotten into that bottom half by the aggressive and short-sighted policies last few administrations and legislatures. But we got to be a strong Commonwealth, a wealthy Commonwealth, because of our prior history of investing in our citizens through education, entrepreneurship, and services to help those who need it help raise themselves up. That investment is waning, and so is our state. We’re losing population, our educational prowess is declining, and our universities becoming unaffordable and unattainable.

It takes investment in ourselves to make us strong. The loss of that is making us weaker. We need a fair and honest tax system NOW.