Saturday, September 30, 2017

Trump, Lies, and Tax Cuts: Why they Will Not Help the Economy

Among the most enduring political-economic myths is the claim that tax cuts on the wealthy
stimulate the economy and will benefit all of society, including the middle and lower classes. This is the central claim of supply-side economics, and this is the logic behind the Trump tax cuts.  One might as well believe in the tooth fairy, big foot, and the Loch Ness monster.  The truth about taxes–especially income taxes on individuals and corporations–is that there is no correlation between tax rates and economic growth.  There is also no evidence that taxes serve as potent tools to encourage business relocation decisions. History has repeatedly proven both of these claims wrong, yet both ideas fails to die, enduring as a chicanery that continues to waste public money, benefiting only the rich.

Two issues place the role of taxes in the economy back on the agenda.  The first is the Trump tax plan, the second is the scramble across the country to use tax incentives to lure Amazon to locate its corporate headquarters to a specific state and community, such as Minnesota.

Turning first to the Trump tax plan, there are multiple frauds and myths here.  First the plan calls for an elimination of the  estate and the alternative minimum tax as well as increasing the standard deduction.  The three are described as helping the middle class.  In reality, none of them will do anything for the middle class or poor.  Right now few individuals pay estate taxes.  As of  2016, there is no estate tax if it is less than $5.45 million.  There are not too many poor or middle class people I know who are worth more than $5.45 million.

Second, the alternative minimum  tax only applies to the likes of billionaires like Donald Trump or major corporations who are able to use creative tax formula to avoid regular incomes taxes.  The alternative minimum tax was meant to impose taxes on the rich and no poor or middle class pay it.  Finally, for most middle class families, the doubling of the standard deduction will not be used because either they make too much or, in the case of the poor, make too little to qualify.  The trump tax cuts will do little to help most middle class.  If any tax cuts would help them and the poor, it would be cutting the payroll taxes which are regressive.  For example, change the Social Security taxes from a flat tax into a progressive one, or lift the income cap on the maximum taxable income for Social Security.  These options will actually put more money into the hands of the poor or middle class.  The same would be true by increasing the Earned Income Tax Credit.

But the bigger fraud is the believe that taxes are efficient and effective tools to stimulate the economy and encourage business investment decisions.  Do high taxes really hurt the economy as much as they believe and will lowering them have much of an impact on stimulating it?  Anecdotal stories and illustrations confirm the tax fallacy.   High tax states such as Minnesota have generally fared better in terms of economic growth, unemployment, median family incomes and location of Fortune 500 companies, than low tax ones such as Mississippi and Alabama. If taxes were the only factor, Mississippi would be thriving, Minnesota in the tanks.  At best, there is little correlation between taxes, income, and unemployment rates, but in many situations high taxes, and with that, government expenditures on education, workforce training, and infrastructure, correlate positively with income and low unemployment and business retention.  One needs to look not just at one side of the equation—taxes—but the other side too—what taxes buy—to see what value businesses get out of them in terms of educated workforces and infrastructure investments. Most debates fail to do this.

Using statistics gathered by the Bureau of Economic Analysis one can also examine how economic growth is related to tax rates.  One can compare annual economic growth as measured by the percent change in the gross domestic product (GDP) percent based on current dollars, comparing it to the highest federal individual marginal tax rate and the top corporate tax rate since 1930.  Effectively, look at the tax on the wealthy and corporations. If taxes are a factor affecting economic growth, one should see an inverse relationship between growth of the U.S. economy and higher tax rates.  The GDP should grow more quickly when top individual and corporate tax rates are lower.  If taxes are a major factor deterring economic growth, lines on a graph should go in opposite directions:  As tax rates go up the GDP should go down.

No such pattern emerges between high taxes and GDP growth over 80 years. During the Depression era of the 1930s corporate and individual taxes rates increased but in 1934 through 1937 the GDP grew by 17%, 11%, and 14% annually.  Top corporate tax rates climbed to over 50% through the 1960s, again with no discernible pattern associated with decreased economic growth.  The same is true with top tax rates on the richest which were as 91% into the 1960s. Conversely, since the 1980s after Kemp-Roth and then after 2001 with the Bush era tax cuts, there is no real indication that the economy grew more rapidly than in eras with significantly higher tax rates on the wealthy and corporations. Looking at time periods when tax rates were at their highest, GDP often grew more robustly than when taxes were cut.  Visually, the graph simply fails to demonstrate that tax rates negatively impact economic growth.

Pictures are worth a thousand words, but statistics are priceless.  Statistically, if a tax hurts economic growth, the correction with it is -1. If they positively facilitate growth the relationship is 1, and if they have no impact the 0.  The correlation between GDP and top individual taxes is 0.29, between GDP and top corporate taxes is 0.32, and among the three it is 0.14.  Statistically, there is a slight positive impact on either top individual or corporate taxes or economic growth, but overall almost no connection between tax rates on the wealthy and corporations and economic growth in the United States.

But what about taxes as job killers?  Again running similar statistical tests, there is little connection.  Using Bureau of Labor Statistics data on unemployment rates since 1940, the correlation among top individual and corporate taxes and the annual unemployment rate is -0.02—essentially no connection at all.

Now some will claim that the 1963 Kennedy tax cuts are an example of how changing tax rates will stimulate the economy.  Contrary to the folk legends, there is little evidence they helped the economy.  And even if tax cuts do stimulate the economy, presently the US economy is doing well with near 3% GDP growth.  The cuts will do little to help the economy, especially if concentrated in the hands of the wealthy  or corporations.  If anything, targeted cuts to help those currently unemployed, or incentives to invest to increase worker productivity, will be more helpful.
 Cuts in taxes without cuts in spending inflate the national debt and that may not be beneficial.  Conversely, cuts in taxes along with cuts in government spending will depress the economy.

Finally,  now think about the bidding war  by states to lure the new Amazon headquarters to their communities.  Again, there is little evidence that tax incentives are a major determinant of business location decisions.  Businesses, when looking to locate, look to the quality of the workforce, access to markets and suppliers, infrastructure, and other amenities (such as the arts) are far more important factors influencing location decisions than tax cuts.  Literally hundreds of studies and interviews with  businesses confirm this.  Businesses ask for tax cuts for one reason--because t hey can--and  governments are foolish enough to oblige.

The belief that tax cuts make much of an economic difference is a lie that is hard to kill off. Trump's tax plan, along with the Amazon scam, are just the latest examples of policy ideas that do no more than enrich the wealthy at the expense of the rest of us.

Sunday, September 24, 2017

Trump and the NFL–The Constitution Dictates no Political Orthodoxy

If there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion or force citizens to confess by word or act their faith therein.
West Virginia v. Barnette,  319 U.S. 624, 642 (1943) (Justice Robert Jackson)

As a society we owe a debt of gratitude to the Jehovah Witnesses.  They taught us that the government cannot force us to salute the flag and why.  It is their famous case of West Virginia v. Barnette  that tells us why Trump has it wrong when it comes to  hi.s fight with the NFL.
        No matter what sports teams, players, or owners do when it comes to politics, it is none of the business of President Donald Trump or the government.  This is true whether they stand, salute, kneel, or refuse to take the playing field.  It would also be the case that it is none of the government’s business what private companies or individuals believe or do when it comes to politics.  For all of them to refuse to bow to the government or to hew to orthodoxy, this is exactly what the First Amendment protects, and the Supreme Court declared such a point nearly 75 years ago.  All those who defied Trump–including Stef Curry and LeBron James–they are real patriots and deserved to be applauded.
Donald Trump’s call to fire or bench sports players who kneel during the National Anthem is simply one more instance of how he fails to understand that there is this amazing thing called the Constitution and the Bill of Rights that restrains the government.  His failure to comprehend the basics of separation of powers, checks and balances, bicameralism, and federalism are at the root of his inability to get anything done as president of the United States.  But his failure too to comprehend v that presidents are not kings, that the US is a constitutional representative democracy that respects individual rights, is also deplorable.
What does it mean to live in a constitutional democracy? Among other things, it means that the government cannot tell us what to do.  There are limits or walls that define the scope of governmental authority over private individuals or businesses.  At the end of the day, what both individuals and businesses believe and do is not something the government can or should dictate.   Freedom is freedom from external restraints, from a government telling us how to think, hope, believe, pray, and act.  This is what the US stands for, and everyone regardless of their political beliefs and ideologies should support the idea that the NFL teams, players, and owners should be free to express their beliefs, not having to fear a government or president telling them what to do.
The present fight between Trump and the NFL is reminiscent of a controversy underlying  arguably the greatest Supreme Court opinion in American history--West Virginia v. Barnette.  That 1943 case was all about a state law that compelled students to say the Pledge of Allegiance in school.  Members of the Jehovah Witnesses religion objected to the law on First Amendment grounds, and the US Supreme Court agreed with them.
Writing for the Court, Justice Robert Jackson penned two of the greatest lines in Supreme Court history, both of which captured the essence of what it means to live in a free society.  The first  was to say that:

The very purpose of a Bill of Rights was to withdraw certain subjects from the vicissitudes of political controversy, to place them beyond the reach of majorities and officials and to establish them as legal principles to be applied by the courts. One's right to life, liberty, and property, to free speech, a free press, freedom of worship and assembly, and other fundamental rights may not be submitted  to vote; they depend on the outcome of no elections (319 U.S. at 638).

No election can or should determine who has what rights.  Majorities do not get the right to tell minorities what rights they have.  The very essence of American constitutionalism is majority rule balanced by minority rights.  Not only does the Constitution restrain the ability of majorities to dictate to minorities, it more importantly restrains the ability of the government to tell people what to do.  Again, as Justice Jackson said in Barnette:

If there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion or force citizens to confess by word or act their faith therein (319 U.S. at 642).

Barnette was about telling the government telling a religious group they had to salute the flag, and all of us should be angered by that proposition.  The same should be the case here with Donald Trump–he and the government have no right to tell an individual sports players or teams that they should salute the flag.  For if today the government can do that with sports teams and players, why not tomorrow tell Catholics, Protestants, and members of other faiths, as well as small businesses, and anyone else, what they should believe and  do.
It is the task of the government in the US to remain politically neutral when it comes to the political beliefs of individuals, respecting their right to criticize the government, even if the choice of words or views are repugnant.  Donald Trump as an individual may have his own political beliefs and he is free to express them. But as president he is not free to use the coercive power of the presidency to chill the political expression of others.

Friday, September 22, 2017

What is Ranked Choice Voting and How does it Work?

After Minneapolis first adopted and used Ranked Choice Voting (RCV) in its 2009 elections, the
Minneapolis Elections Bureau asked me to do an evaluation.  In that report, I drafted a description of RCV in terms of the pros and cons and how it is supposed to work.  Now that the early voting in Minneapolis and St. Paul has begun, I decided it was time to reprint this section of the report. 

What is RCV?
In November 2006, voters in Minneapolis adopted RCV as their preferred method for running elections and selecting candidates in their city.  The decision to make this switch came as a result of several years of lobbying and mobilization by individuals and groups such as Fair Vote Minnesota (FVM).  The voting mechanism that RCV voting replaced is known as first past the post (FPTP) or simple majority rule.

FPTP is a simple voting system.  It states that whenever there is an election for a single member seat, such as for mayor or a city council seat, the candidate who receives the most votes wins the seat.  Thus, in a two-person race, the candidate who wins 50% of the votes plus one wins the race.  In races with three or more candidates, the one who receives the most votes wins, even if that candidate wins less than 50% of the total vote.  In non-single member races, such as where two candidates are to be elected, the top two vote getters are elected, again whether or not they receive more than 50% of the vote. 

In voting, citizens are allowed only one vote for each office holder to be selected.  If voting for mayor, each eligible voter is allowed to case one vote.  In multi-member races, such as when citizens are allowed to elect two school board members, each voter is allowed to vote for up to two candidates.  They may not cast more than one vote for a specific candidate.  FPTP is often described as simple majority rule—yet, as noted above, there are no requirements for a candidate to receive a majority of the vote unless that is an additional stipulation imposed by law.  Minneapolis prior to 2009 employed FPTP in all of its elections.

There are several criticisms of FPTP.  One is that the lack of a majority requirement means that candidates elected in single member districts may take office even though only a plurality of voters cast ballots for them.  The concern here is that candidates do not enjoy the legitimacy of majority support if they take office with less than 50% of the voters having supported them.

A second criticism is that FPTP creates disincentives for third party candidates to run for office and get elected.  The reason for this is that voters, fearing that a vote for a minor or third-party candidate would effectively result in the candidate they desire the least being elected.  Thus, third party candidates are viewed as spoilers who voters are reluctant to support.  For example, in the 2000 Florida presidential election, many argued that Ralph Nader was a spoiler.  By that, some argued that votes cast for Nader came from otherwise Democratic votes that would have gone to Al Gore had the former not run.  Thus, Nader votes effectively produced a victory for George Bush, the candidate some contend who was the last choice for Nader or Gore voters. 

While there is mixed evidence that Nader served as the spoiler as described above, the argument is that in general voters will not vote their first choice (a third-party candidate) if they perceive that the candidate does not have a real chance of winning, for fear that it would lead to the election of the candidate they least desire.  This in turn means that it will be difficult for third party candidates to run, thereby insulating Republican and Democratic parties as the two major parties.  Thus, FPTP decreases incentives for voting for third party candidates and effectively limits voters to a choice among the two major parties.

RCV is supposed to address many of maladies of FPTP.  At its most basic, RCV involves three candidates, A, B, and C, all running in a single member district.  Voters are asked to rank choice their candidates, indicating on a ballot who their first, second, and then third choices are.  In order to be elected, a candidate needs to win 50% plus one of all the votes cast.  Assume that there are 100 voters, one could have this scenario.

A receives 51 votes.
B receives 30 votes
C receives 19 votes.

Under this scenario, candidate A is the winner.  However, assume a different situation where

A receives 45 votes.
B receives 30 votes
C receives 25 votes.

Under this scenario using RCV, no candidate is initially declared the winner.  Instead, the candidate with the least number of votes—C—is dropped from the ballot and her votes are transferred to A and B based on the expressed preference of the voters when they ranked their preference for candidates.  Whoever then receives 51 votes is declared the winner.

RCV does not give voters multiple votes; it merely allows voters to rank their candidate preferences.  Votes are then transferred from voters’ first choice to their second choice (or third if there are more candidates) until someone receives the 50% plus one votes.  At no point does any individual voter receive more than one vote or have more than one vote counted in single-member districts. 

Benefits of RCV
Advocates of RCV contend that this voting procedure is superior to FPTP.  They argue first that RCV addresses the problem of candidates being elected with less than 50% of the vote by mandating a real majority to take office.  This addresses the issue of minority (less than 50%) candidates taking office, thereby ensuring that majority rule is actually honored.  Second, the argument is that RCV deals with the spoiler psychology.  Specifically, because voters know that they can rank choice their candidate preferences they have a greater incentive to vote their first choice, even if a minor party candidate, because the candidate cannot be a spoiler.  If no candidate in the first round of voting receives more than 50% of the vote then votes are transferred from one’s first choice (a third-party candidate, for example), to the remaining candidates.  Assume for a voter her first candidate choice is C, second choice A, third choice B, and assume:

A receives 45 votes.
B receives 30 votes
C receives 25 votes.

Under this scenario, since C received the least number of votes, that candidate is removed from the ballot and votes for her are transferred to the voters second choice.  In the case of the voter above, her vote would transfer to A.  If enough second choice ballots from those who voted for C are transferred to A then, A wins.  If more second choices go to B, then B wins.  There is no guarantee that a voter’s second choice will win, but RCV supposedly creates an incentive to support one’s first candidate choice and not view a ballot cast for her as a wasted vote.

As a result of RCV, voters are potentially encouraged to support third or minor party candidates, minority parties are therefore encouraged or given better opportunities to run and win, and voters are therefore given more choices beyond the two major parties.

Criticisms of RCV

There are also criticisms frequently directed against RCV.  The first is that this voting mechanism is biased in favor of political parties on the left.  Second, that this voting procedure is non-monotonic.   Specifically, using RCV it is possible to vote in such a way that a specific voters’ ranking that their candidate will yield election of a lesser-ranked or preferred candidate. Third, that RCV violates the one person, one vote standard for the counting of votes.  In response, to these criticisms, there is no empirical evidence that RCV favors candidates of one political persuasion or another.  Second, while RCV is non-monotonic, so is FPTP.  Third, no voters have their ballots counted more than once (by that, each voter gets only one vote per round counted in a single-member race) and there is no double counting of ballots. 

Thursday, September 21, 2017

Do the Math: Despite Herself, Betsy Hodges is Still the Favorite to Win Reelection in Minneapolis

Betsy Hodges may be inept as mayor and as a candidate, but she has a great chance of winning a second term as mayor.  The reason for this is divided and weak  political opposition and the logic of ranked choice voting (RCV).
There was so much hope for Hodges when she was elected mayor of Minneapolis four years ago.  She inherited from R.T. Rybek a city generally headed in the right direction.  Yes, the city was challenged by uneven economic growth, racial disparities, crime, and other big city problems, but  these maladies were solvable with good leadership.  That did not happen.

Repeatedly Hodges failed when it came to managing the city, including rebuilding Nicollet Mall, working with City Council, overseeing the police, and addressing the core educational and socioeconomic disparities she pledged to combat as candidate.  Her tenure as mayor included a tin ear when it came to stories about her frequent travel while ignoring city business, inept dealing with developers of the land near the new Vikings stadium, she has been embroiled in court disputes about releasing a timely budget, and her reelection campaign has suffered two major mass resignations.  She ought to be doomed as a candidate for a second term.
Yet Hodges may be the luckiest person in the world.  As much as she may be disliked in the city, her opposition is generally weak and divided.  Consider the candidates.  With the singular exception of Tom Hoch, there is no major candidate running who has the political or executive experience to run the city.  Jacob Frey, Raymond Dehn, and Nekima Levy-Pounds lack executive experiences, and none of them seem to have the leadership capacity to unite voters or the city. No single anti-Hodges candidate has emerged, and there is no sign that votes are coalescing around any of these candidates.  In addition, given that the news cycle is dominated by Donald Trump, it is possible that many Minneapolis voters have not heard of all or any of the other candidates running against Hodges, the mayor may be the best or only known candidate by many in the city.
But even if Hodges is disliked and voters have someone else they prefer to her as mayor, they may not have someone else as a second choice beyond her.  Hodges may be many voters’ second choice simply–as the old saying goes–better the devil you know than the one you do not.  This is where RCV comes in.
Consider the following scenario in the mayor’s race.  Assume these are the election results with Frey getting 26% of the vote, Hodges, second at 26%, and so forth.  Assume also that Hodges is the second choice for all voters.


Using a RCV predictor tool, Hodges wins the election.

Now assume Hodges is second choice with these results where Frey is the clear frontrunner and Hodges is tied for second.  Hodges still wins the election.


Finally, consider a third scenario where  Hodges is a third choice but still comes in a close second.  Frey wins.


Many other scenarios will produce different results and many will show Hodges losing.  But if one assumes Hodges is a top three finisher in a close race and she is the second choice of most voters, she wins a second term as mayor.

Monday, September 11, 2017

Dayton v. Legislature: The Minnesota Supreme Court Punts

The  Minnesota Supreme Court's Dayton v. Ninetieth Minnesota State Senate and the Ninetieth House of Representatives was not a decision, it was a  punt.  The Supreme Court did not really decide the case in favor of Dayton or anyone, contrary to what the media reported; instead it pushed it down the road, hoping to avoid having to make the real decision.  It did so perhaps to avoid revealing  something deeper and more troubling in the case–a Court that is divided politically by the case with Dayton appointees voting for him, the other Justices against him.
The Dayton non-decision had something for everyone, and both the governor and he legislature can claim to be winners.  It both declares that the governor’s line-item veto of the legislature’s funding is constitutional but in the very next sentence it says this “conclusion does not, however, end the matter.”  The Court then describes how the Constitution requires three functioning branches and then the governor and the legislature are ordered into mediation to resolve disputes over funding and perhaps other matters.  The Court notes the tension between the two conflicting provisions of the State Constitution yet it never  resolved it.  This is the essence of judicial review, and the Supreme Court punted at the most critical spot.
The Court really did not want to decide the case and it made that clear when it stated that:  “The other Branches should resolve these doubts through the political process.”  The real decision here was to declare this dispute a political question, one that the Court did not have to or consider legitimate to decide.  In ordering mediation, the Court hopes that the two sides will work out their differences.  Paradoxically, one has to wonder whether the Court can order them into mediation, especially given that this is the same Court in oral arguments and in this decision which questioned whether it had the authority to order temporary funding when the governor and the legislature are deadlocked.
Another sign that the Court did not really decide the case–there was no vote.  This was an order signed by the Chief Justice.  The Minnesota Supreme Court can issue per curiam unsigned opinions, but they generally only do so when very divided and all they can agree on are some basic points.  This is what happened here.  One hypothesis is that the four Dayton appointees wanted to rule for him, the other Justices against him.  A Minnesota Supreme Court ruling for the governor  with votes supplied simply by his appointees and divided by political party and who appointed the justices would have done lasting damage to the Court and questioned the legitimacy of the decision.  Thus instead, the Dayton Justices got a part of a decision that said the governor should win, the other Justices favored the Legislature, and the political deadlock on the Court produced an opinion with language to make everyone happy while not deciding the case.
Institutionally this non-decision may have been the best choice for the Court if it wishes to  protect it political and legal legitimacy.  Yet for those hoping that the basic constitutional questions would be resolved, it was not. And for those worried about the Minnesota courts becoming politicized, this case speaks to a potential fear that the Supreme Court may be at that point.

Saturday, September 9, 2017

Swing Counties and Why Clinton Really Lost? It Wasn't Sanders Fault...It was Hers

So why did Hillary Clinton lose to Donald Trump?  For many this is now a “Who cares?” and it is time to “move forward” as Bernie Sanders said Thursday on The Late Show.  Yet Clinton cannot.  In her forthcoming book she describes the attacks on her by Sanders as causing “lasting damage” damage to her campaign.  No doubt, Clinton’s new book will seek the causes of her defeat in outside forces–the Russians and Sanders for example–but the roots of her defeat also lie within her own control.  Much could be written about how all the mistakes she made and how she failed to learn from them eight years later.  Yet perhaps one way to capture her mistakes is simply to look at her general election campaign, especially in terms of where she campaigned and how often.
I am in the process of doing a second edition of Presidential Swing States.  In editing that book with Stacy Hunter Hecht I realized it is not simply swing states that make the difference in presidential elections, it is the swing voters within the swing counties in the swing states that are critical.  In this second edition I am doing a chapter on the swing counties.  Looking at county campaign activity tells one a lot about the mistakes made by Clinton in the 2016 general election.
There are 3,142 counties, parishes, or boroughs in the United States.  During the 2016 general election, Clinton/Kaine made a total of 152 campaign visits to 75 counties located in 14 different states.  Trump/Pence made a total of 248 campaign visits to 142 counties in 25 states.  Total, they  made 400 campaign visits to 167 counties located in 26 states.   Between the two campaigns, they only campaigned in 5.3% of the US counties.  For Clinton it was only 2.4% of all counties, for Trump it was 4.5%.  Trump/Pence not only made nearly 60% more campaign visits than Clinton/Kaine, but they visited nearly 90% more counties.  Simply put, they made more visits to more locations than Clinton/Kaine.  Alone that tells one something about why Clinton lost–she did not campaign as much or broadly as Trump–he simply out-hustled her on the campaign trail.
But what is also interesting to consider is where the Clinton and Trump campaigns chose to  visit.
Clinton and Trump demonstrated different tactics in terms of the counties they chose to visit. For Clinton, her most frequent visits were to Democratic Party strongholds located in big urban areas such as Philadelphia, Fort Lauderdale, and Detroit.  For Trump,   the focus seemed less on big Republican strongholds and more on visiting swing areas or counties such as Hillsborough County in New Hampshire or Mecklenberg County in North Carolina.
These contrasting strategies suggest  that Clinton’s focus was either on shoring up her party base or simply trying to maximize her turnout among the Democrats.  For Trump, the focus seemed more on swing voters, perhaps reflecting the fact that either he was sure he had his base or that he was trying to expand or shift it.  All these are possible scenarios.  Yet I would also argue that what the Trump campaign did was more strategic and realistic.  His campaign understood that the key to winning an election is not just holding and mobilizing a base, but it is also going after the s wing voters in swing areas who control the balance of power in presidential elections.
Yes it is possible that Clinton had to campaign in the Democratic Party strongholds to overcome the attacks inflicted upon her by Sanders.  But a stronger argument can be made is that she simply failed to make enough campaign visits in the critical swing countries among swing voters to ask them for their vote.  If that is the case, she violated a cardinal rule of politics once enunciated by Tip O’Neill–never take a vote for granted and always ask for it.  It appears Clinton just did not ask the swing voters in the swing states for their votes, and that is why is lost.

Clinton Campaign Visits
State County Visits
Pennsylvania Philadelphia 8
Florida Broward 7
Florida Miami-Dade 7
Nevada Clark 6
Michigan Wayne 6
Ohio Cuyhoga 6
Pennsylvania Allegheny 5
North Carolina Wake 4
Iowa Polk 4
Florida Orange 3
Florida Palm Beach 3
Ohio Franklin 3
New Hampshire Hillsborough 3

Trump Campaign Visits
State County Visits
New Hampshire Hillsborough 7
Colorado El Paso 6
New Hampshire Rockingham 6
Nevada Clark 5
North Carolina Mecklenberg 5
Florida Miami-Dade 5
Nevada Washoe 5
North Carolina New Hanover 4
Arizona Maricopa 4
Ohio Cuyhoga 4

Friday, September 1, 2017

Labor Day and the Truth about Immigration

It’s September 2017 and there is still no funding or plan to build Trump’s wall along the Mexican border.  While earlier this week Trump said he would not go along with raising the debt ceiling unless there was border wall funding (I guess US taxpayers pay for it and then we bill Mexico?), he eventually again backed off from this mandate.  No surprise.  The 140-character Twitter presidency says lots of things to get supporters and opponents hot and bothered, only to see no follow up by Trump or even reversals by his staff (think of the Defense Secretary temporarily halting the ban on transgenders in the military).

Immigration persists as a tough political issue for both Republicans and Democrats.  Republican failure to support immigration reform is a way for them to dig their own graves with future Hispanic voters.  The party needs to give on this issue but its current aging and xenophobic base makes that impossible.  Instead, Republicans call for a wall along the Mexican border, or for laws to allow for law enforcement to simply stop and detain individuals whom they think are illegal.  This is what Sheriff Arpaio did and with Trump’s pardon, he got away with it.  The State of Texas wants to go after sanctuary cities and a judge has put a halt to that, and of course Trump’s immigration bans have significantly been weakened in Court.  They exist mostly as media sound bites, although they do hurt some people.

Immigration is the new race word.  At one time, affirmative action, crime, or desegregation were code words for racism.    You could not respectably run as a racist so those issues were surrogates for race.   Immigration is the same, except now it seems that it is okay to run as a racist, or at least let the racism come out.  But all this beg a question—Why the fear of immigrants?

In general, especially in tough economic times, the argument is that immigration and immigrants take jobs away from Americans and serve as a drain on the economy. They are often singled out as competing against American citizens for jobs or that they cost taxpayers money. There is a belief that the benefits of citizenship, the free schools, and other programs found in the United States operate like a lure to attract illegal immigrants to the United States.  Allowing them to work in the United States, get a driver’s license, the availability of schooling, health care, and citizenship for children, or even lax enforcement of immigration laws, sends a signal to them that they are welcome. Thus, immigrants—documented or not--flock to the United States and something needs to be done to stem this invasion.

                What is the reality?  Are immigrants a net drain on the economy; specifically, are they a bigger drain on taxes and public services than they are overall contributors to the economy? Second, immigrants are depicted as taking jobs away from Americans. What do we know about both of these claims?
First, while acknowledging that immigrants may in some local settings or jurisdictions place some short-term significant burdens upon public services, overall, they are net contributors to the economy. Several studies substantiate this point. The 2005 Economic Report of the President provided a detailed analysis of the impact of immigration upon the United States economy. The report noted that they as a group had up to a $10 billion net positive impact upon the economy. The report noted, for example, that while immigrants may be more likely than native born Americans to be on public assistance, the “net present value of immigrants’ estimated future tax payments exceeded the cost of services they were expected to us by $80,000 for the average immigrant and his or her descendants.”  However, with changes in public assistance laws, that figure had been upped to $88,000. While better educated immigrants (high school degree or better) definitely reflect this contribution, even among those not as well educated, the gains from them and their descendants’ productivity nearly, if not totally, offset the costs they impose upon public services that accrue to state and local governments. Finally, the president’s report also provided other documentation regarding the impact of immigrants upon the economy. For example, it noted that immigrants paid Social Security taxes on income of $463 billion dollars (108). Moreover, because many immigrants cannot collect Social Security, it is likely that immigrants overall pay more into this government program than they receive from it.

In addition to the President’s 2005 report, other studies have noted the net economic benefit of immigrants to the United States. A 1997 National Academy of Sciences study found several net benefits associated with immigration, including a $10 billion net positive impact on the economy. Brad Edmondson’s “Life Without Immigrants” found that: “Illegal aliens in prison cost about $471 million per year, and they consume about $445 million more in Medicaid funds. But these costs are offset by about $1.9 billion in taxes paid by illegals and billions more in consumer spending.” Furthermore, the National Academy of Sciences, President’s Report, and the Edmondson study, all indicated that younger workers provided for important sources of productivity that also served the economy well. Overall, these and other studies clearly contested the myths that immigrants were a drain on the economy.

In general, broader studies on immigration in the United States also confirm that there is a net benefit of immigrants to the economy. They generally pay more in taxes than they consume in public services. They have provided critical payments to Social Security to help maintain its solvency. Heidi Shierholz  in Immigration and Wages: Methodological Advancements Confirm Modest Gains for Workers found that even native US citizens have seen modest gains in terms of wages as a result of immigration. More importantly, California, Florida, New York, and Texas, the states with the highest immigration, seem to have particularly benefitted from it. Others reach similar conclusions about the impact on workers while noting that the granting of amnesty to undocumented immigrants has benefitted the economy and increased tax revenues to the United States.
The second criticism leveled against immigrants is that they take jobs away from American workers or they negatively impact wages. Again, several studies refuted that. For example, the National Academy of Sciences study found the wage impact to be negligible, while the President’s Report found little impact on wages of native Americans. The report also noted and dismissed the argument that immigrants displaced American citizens in the labor market. Instead, they often filled labor gaps abandoned by others, such as farming and agriculture, and they definitely constituted a new source of productive labor particularly at a time when the size of the labor pool from other workers had disappeared.

In addition to the above a Pew Hispanic Center study reached similar conclusions. It compared the economic growth in selected states with high versus low immigration and found no differences in economic growth or in its impact on the labor markets. It also found that there was in fact in 12 states a positive correlation between the growth of immigrant and native-born workers. By that, there was no evidence that in states where more immigrants entered the labor market it depressed the entry of others into work. Finally, even among immigrants who were young and lacking in education, there was no indication that they directly competed against and hurt native-born workers with similar background.
                In sum, the evidence that immigrants are financial drains on the economy and that they take jobs away or hurt the wages of native-born workers is simply false.  Attacking immigrants and blaming them for society’s problems goes a long way back in American history, and the reasons for this animus lie can only be explained on xenophobic or racist grounds.
                As we enter the Labor Day weekend it is possible to be pro-America, pro-worker, and pro-immigrant.  The US economy is stronger because of immigrants and workers are not hurt by them.  The causes of why working Americans are losing ground in many cases has to do with technology and the failing economic policies embraced by both Democrats and Republicans over a 40 year period.