Congress – Page 14 – The Wrongologist

DOD Could Save $1 Trillion Without Changing US Security

The Daily Escape:

Sea Street Beach East Dennis MA – October 2021 photo by Ulla Wise

Rather than adding to the current vibe of general despair, a new report from the nonpartisan Congressional Budget Office (CBO) offers a number of interesting perspectives on how the US defense budget could sustain a $1 trillion cut over the course of 10 years.

The CBO report says that national defense programs could absorb a well-structured $1 trillion cut while still protecting the homeland and America’s allies from foreign adversaries.

From Responsible Statecraft:

“The new report outlines three different options for cutting the Pentagon budget by $1 trillion over the next decade — a 14 percent reduction. Doing so would still leave the department with $6.3 trillion in taxpayer dollars over the next ten years, in inflation-adjusted 2022 dollars.”

The report’s mandate was to look at how to adjust the size and focus of US military under smaller federal budgets. It created three broad options to illustrate the range of strategies that the United States could pursue under a budget that would be cut gradually by a total of $1 trillion, or 14%, between 2022 and 2031. They developed the options using their Interactive Force Structure Tool.

Here are the CBO’s three options for military force reduction:

Maintain the existing national security strategy but with fewer personnel.
Change the existing national security strategy to focus more on countering adversaries with international allies and coalitions.
Change the existing national security strategy to focus more on protecting America’s access to sea, land, and air and space.

In all three options, the CBO slashed full-time active forces, while leaving the less expensive reserves at their current levels. While acknowledging that “none of the plans are without risk,” they concluded that the Pentagon could reduce spending without sacrificing our security.

According to the report, in all three of CBO’s options, units would be staffed, trained, and equipped at the same levels as they are today, but there would be fewer units, or different combinations of units. The CBO chose to retain fully staffed units because, while personnel are expensive, partially staffed units would not be able to execute their missions. That would make the US more of a paper tiger than we are currently.

The CBO report also put the potential cut in historical perspective. While significant, a $1 trillion cut (14%) over a decade would be far smaller than the cuts America’s military spending in 1988 to 1997 (30%), and the 25% cut we had in 2010-2015. A 14% cut from fiscal years 2022 to 2031 would also still leave annual defense spending at more than it was at any point from 1948 through 2002.

Lindsay Koshgarian, program director at the Institute for Policy Studies (IPS) said:

“The US military budget is now higher than it was at the peak of the Vietnam War, the Korean War, or the Cold War….We are spending far too much on the Pentagon, and too little on everything else…”

A $1 trillion saving isn’t chump change. Those funds could be used to prevent future pandemics, address climate change, or reduce economic injustice. None of those are small matters. And they are all matters of political priorities.

No self-respecting Republican war hawk would have anything to do with cutting the military’s budget. And with the exception of a handful of left leaning Democrats, every other Democrat will shrink from the idea of reducing the military budget. It’s too risky politically.

We actually need Congress to solve three problems: Our revenue problem, our social spending/cost inflation problem, and our defense spending problem.

The CBO idea tackles the defense spending, but we need to consider taxes and revenue along with spending. We need to raise taxes on corporations and the wealthiest individuals while cutting that defense spending.

Turning to social spending, if you ask Americans what spending they want to cut, they will never say that we ought to ravage people’s retirement security. And 90+% of entitlement spending goes to the elderly, the disabled, or people who worked at least 1,000 hours in the past year. The big savings should come from reducing the growth in the cost of medical services.

Taking $1 trillion from Pentagon spending would be a great start, but we have other work to do.

Saturday Soother – October 9, 2021

The Daily Escape:

Truro, MA – August 2021 photo by Tom Baratz

(Wrongo and Ms. Right have temporarily relocated the house of Wrong to Truro, MA for two weeks.)

With all of the talk about debt limits and infrastructure, America hasn’t focused on Sen. Ted Cruz’s (R-TX) delaying the nomination of 59 would-be US ambassadors. He’s said he’ll block dozens more. From the NYT:

“Democrats call Mr. Cruz’s actions an abuse of the nomination process and the latest example of Washington’s eroding political norms. They also say he is endangering national security at a time when only about a quarter of key national security positions have been filled.”

Cruz has put sand in the gears of the nominating process by objecting to the Senate’s traditional practice of confirming uncontroversial nominees by “unanimous consent.” His delaying tactic means that each nominee requires hours of Senate floor time while other major priorities, including Biden’s domestic spending agenda, compete for the Senate’s attention.

Cruz has had help from some of his Republican colleagues. Only 12 State Department nominees have been cleared for a full Senate vote by the committee, because Republicans on the committee have assisted in the foot-dragging.

Cruz says that he’s doing this to protest Biden’s stand in favor of Nord Stream 2, a gas pipeline project from Russia to Germany. In May, Biden waived congressionally imposed sanctions on the project. Nord Stream 1 got started in 1997. Nord Stream 2 was finished last month. There has been criticism of both projects since the 1990s because they provide Russia with some leverage over European energy security, while also circumventing Ukraine, which operates a competing pipeline for Russian gas.

But the project helps Germany, and Biden decided to prioritize our relations with Germany.

Cruz isn’t alone. Noted Republican weenie Sen. Josh Hawley, (R- MO), is vowing to block all national security nominees over the Biden administration’s handling of Afghanistan. He wants Secretary of State Blinken, Secretary of Defense Austin, and national security adviser Jake Sullivan to resign.

Cruz also delayed the debt limit deal negotiated between the Dems and the Republicans this week. A deal emerged on Thursday in which Senate Minority Leader Mitch McConnell (R-KY) agreed to support a short-term debt extension, giving Democrats time to pass a full extension in December.

The Parties had planned to let the fix go through with a simple majority vote, but Cruz overturned that arrangement by insisting on a filibuster, meaning that the deal needed to find 60 votes for cloture in the Senate. That caused McConnell to find ten Senate Republicans to vote for it. In the end, 11 Republicans voted for cloture, and then the Dems passed it on a party-line vote.

But EVERYBODY knows that ending the filibuster would be wrong because the filibuster ensures bipartisanship.

There isn’t a clearer example of how the Senate filibuster has become a tool, not to protect the minority, but simply to sow chaos. Today, it is used to stop Biden’s appointments, or to slow down his legislative priorities. Historically, it was used to block civil rights legislation.

Never before has the filibuster been used so cavalierly.

Democrats have discussed filibuster carveouts for the debt ceiling and voting rights. McConnell’s agreement to allow Republican votes for cloture on the debt ceiling was largely a message to Democratic Sens. Manchin and Sinema, showing that the system still works. He’s saying to them that they can count on McConnell and the Republicans when the Democrats can’t muster the votes they need if the vote is in the national interest. So they shouldn’t vote for a filibuster carve-out.

The clever McConnell has made Schumer’s job over the next few months even more difficult.

The weekend is upon us, so it’s time for our Saturday Soother. Tomorrow, we will be enjoying the Wellfleet Art & Oyster Crawl, where you walk between art galleries that offer wine and oysters to the an increasingly tipsy crowd of potential buyers of local art.

For you, take a few minutes to leave the machinations of Cruz, McConnell, and Schumer behind. Grab a seat by a window and listen to Yo-Yo Ma and Kathryn Stott play “Over the Rainbow” from 2020’s “Songs of Comfort and Hope“.

The album was inspired by the series of recorded-at-home musical offerings that Ma began sharing in the first days of the COVID-19 lockdown in the US:

While this performance is instrumental, here’s a sample of the lyrics:

When all the clouds darken up the skyway
There’s a rainbow highway to be found
Leading from your windowpane
To a place behind the sun
Just a step beyond the rain

Somewhere, over the rainbow
Way up high
There’s a land that I heard of
Once in a lullaby

Biden Invites Sinema and Manchin to Talks

The Daily Escape:

Sunset, Cape Disappointment, WA – September 2021 photo by Rick Berk Photography. The lighthouse was built in 1856 and was the first in the Pacific Northwest.

In politics as in business, there’s theater, and then there’s the real work. Biden outlined his goal of raising taxes on the wealthy to strengthen the middle class and boost the economy in remarks on Thursday afternoon at the White House.

On Wednesday, Biden met with Sens. Joe Manchin (D-WVA) and Kristen Sinema (D-AZ), looking to find a path forward on the infrastructure bill, along with the big social spending package and Machin’s voting rights bill.

Democrats will use budget reconciliation for the social spending bill, bypassing Republican opposition. It allows them to win Senate passage with 51 votes, with VP Harris casting the tie breaking vote, rather than the 60 votes that would otherwise be required.

But that means Manchin and Sinema need to vote for the big bill, something they have said they won’t do. No one who was in the room when the talks took place came out and said that a deal was pending. But there’s still time for that to emerge.

The House Ways and Means Committee unveiled a tax proposal this week to pay for the $3.5 trillion package, which includes Democrats’ plans for universal pre-K, expanding Medicare, child and elder care, and the environment. The committee approved its portions of the big bill in a near party-line vote Wednesday, which included the new tax provisions.

Predictably, the WSJ’s editorial board weighed in on the proposed tax plan, saying:

“…this bill looks like a House Democratic suicide note.”

More from the WSJ: (Emphasis by Wrongo)

“If Americans are successful, Democrats want to tax more of their income. The top individual tax rate will rise to 39.6% from 37%, as Mr. Biden promised. But wait: The higher tax rate will kick in at a mere $400,000 for individuals and $450,000 for married couples. That’s down from $523,600 and $628,300 under current law.”

A mere $450,000. They trot out their “pity the poor rich” trope any time the possibility that tax rates might be raised shows up. Let’s unpack this:

The 98th percentile of household income is $387,116 and the 99th is $531,020,

This opens the possibility that there will be some families that are below the 99th percentile of household income and above the 98^ththreshold. Under the new law, they would be forced to pay about $700 more in taxes than they do now. That’s assuming the Democrats’ latest effort at socialism in America is enacted. This paltry tax increase might cut into the nanny’s Christmas bonus. Why are Democrats so cruel?

Don’t Forget the Debt Limit

The Daily Escape:

After Hurricane Ida, Grays Beach, Cape Cod MA – photo by Casey Chmieleki

With all the screaming headlines about Afghanistan, Texas anti-abortion laws and the march of the Delta variant, you probably missed that the US government is running out of money. Reuters explains it:

“Leaders of the Democratic-led Senate and House of Representatives are expected to force votes to lift the $28.4 trillion debt limit in late September. The limit was technically breached on July 31 but is being circumvented by Treasury Department “extraordinary” steps.”

This is an unavoidable political issue for both Parties, because while people dislike the idea of more government debt, they really like the goodies that come along with that debt.

This is happening while the Democrats are jousting with each other, trying to find 50 Dem votes for the bipartisan infrastructure bill, a budget resolution, and a budget reconciliation bill. But they also need to work on increasing the debt limit. From Ed Kilgore:

“The debt limit was suspended in 2019 as part of a two-year budget deal between Congress and the Trump administration intended to postpone major fiscal fights until after the 2020 elections. The deal expired on August 1, 2021, with the effect that the debt ceiling was adjusted upwards to the level of debt as it exists right now.”

Accruing debt above $28.43 trillion requires an increase in, or suspension of, the debt limit. At current levels of expenditure, the government’s checking account, called the Treasury General Account (TGA) at the Federal Reserve Bank of New York, will hit zero in mid-October. It can be extended by “extraordinary measures” into November, which is when the US government would begin defaulting on its bills.

The politics of government funding and increasing the debt limit are always a farce, and it’s no different this time. Republican Senate Minority Leader Mitch McConnell has already announced that Democrats cannot expect a single Republican vote for a debt limit measure right now.

That’s a political problem for Democrats, because a debt limit increase or suspension is subject to the Senate filibuster, requiring 60 Senate votes unless there’s some way around — like including it in a filibuster-proof budget reconciliation measure.

McConnell helpfully suggested that Democrats should just include a debt limit increase in the Fiscal Year 2022 budget-reconciliation bill. But that would guarantee Republicans could “blame” Democrats in the 2022 mid-term election for an increase in government debt.

The foul Republican tradition of trying to hold Democrats hostage when an increase in the debt limit is required, only goes back to the odious Newt Gingrich in 1996. We all know how the farce ends: Congress will avoid default at the last possible minute, just as it has done 78 times without fail since 1960, after concessions are extorted from the other side.

It’s a farce because Congress has already appropriated the funds to be spent and to be borrowed. It has told the Administration in detail how to spend those funds. Now Republicans in Congress want to say (again): “Nope, you can’t borrow the money to cover what we told you to spend”.

Republican Congress critters know we must pay our bills, but for myriad cynical reasons ̶ or just plain political incompetence, they keep the issue alive budget year after budget year, and vote after vote.

The debt limit shouldn’t be increased; it should be repealed. The passage of a budget or any other legislation has an implicit expectation that the government will need to raise x and/or spend y. It’s really that simple. Congress should bite the bullet, and never again need to fight about it.

When they debate the debt ceiling, remember the only reason it’s happening is because one half of our government is good at politics but has no ethics, morals, or sense of patriotism, while the other half of our government is breathtakingly bad at politics.

Eventually, it will be obvious that the Republicans are really fighting about increasing taxes on corporations and the ultra-rich.

We all would be better off if this bullshit ended, and Congress got on with real work.

Monday Wake Up Call – August 16, 2021

The Daily Escape:

Bear Sculpture, Kent CT – August 2021 iPhone photo by Wrongo

ProPublica reported that: “Secret IRS Files Reveal How Much the Ultrawealthy Gained by Shaping Trump’s Big, Beautiful Tax Cut”. The article shows how billionaire business owners deployed lobbyists to make sure Trump’s 2017 tax bill was tailored to their benefit: (emphasis by Wrongo)

“In the first year after Trump signed the legislation, just 82 ultrawealthy households collectively walked away with more than $1 billion in total savings….Republican and Democratic tycoons alike saw their tax bills chopped by tens of millions, among them: media magnate and former Democratic presidential candidate Michael Bloomberg; the Bechtel family…and the heirs of the late Houston pipeline billionaire Dan Duncan.”

Trump’s Tax Cuts and Jobs Act was the biggest rewrite of the tax code in decades. It is arguably the most consequential legislative achievement by any one-term president. It was crafted in secret, with lobbyist input, and then rushed through the legislative process.

ProPublica says that as the draft of the bill made its way through Congress, lawmakers and hired lobbyist friendly to billionaires were able to shape the bill’s language to accommodate special interests. The final version of the bill led to a vast redistribution of wealth to the pockets of a few wealthy families.

This siphoned away billions in tax revenue from the nation’s coffers. Here’s a chart of the tax savings of the big winners:

This gets a little technical. Corporate taxes are paid by what are known as C corporations, including large firms like AT&T or Amazon. But most businesses in the US aren’t C corporations, they’re what are called pass-through corporations. The name comes from the fact that when one of these businesses makes money, the profits are not subject to corporate taxes. Instead, the profits “pass through” directly to the owners, who pay taxes on the profits on their personal returns.

Pass-throughs include the full gamut of American business, from small barbershops to law firms to, in the case of Uline, #2 on the list above, a packaging distributor with thousands of employees.

Republicans touted the Trump tax cut as boosting “small business” and/or “Main Street,” and it’s true that many small businesses got a modest tax break. But a recent study by the Treasury Department found that the top 1% of Americans by income have reaped nearly 60% of the billions in tax savings created by the provision. And most of that amount went to the top 0.1%.

That’s because most of the pass-through profits in the country flow to the wealthy owners of a limited group of large companies. The tax break is due to expire after 2025, and Democrats in Congress want to end the provision early.

Senate Finance Chair Ron Wyden, (D-OR), has proposed legislation that would end the tax cut early for the ultrawealthy. He wants to end the gravy train for anyone making over $500,000 per year. It would be extended to the business owners below that threshold. Wyden’s proposal would make the policy both fairer and less complex, while also raising $ billions for priorities like childcare, education, and health care.

Time to wake up America! The current complaints by Republicans about the Biden efforts to rebuild the economy say that we shouldn’t have the nice things Biden has promised. They now (again) complain about the federal deficit. They continue to sit on their hands about raising taxes on their donors, despite those same donors reaping most of the benefits not only from the Trump tax cut, but from the surge of the national economy since it bottomed while Trump was managing the pandemic.

To help you wake up, watch and listen to “Patria Y Vida” (homeland and life) the song that has defined this summer’s uprising in Cuba. The title is a take-off on the slogan used by Fidel Castro, “Patria O Muerte” (homeland or death) for 62 years, since the start of the Cuban revolution.

This song of summer is also a deep protest song:

This is a rough time in Cuba. Trump’s sanctions policy sharply restricted the foreign remittances on which many Cubans rely. Then came the pandemic, which decimated the tourism industry. Cuba’s GDP has dropped roughly 11% since 2019.

In response to a recurring chorus saying, “It’s over now,” the singers call to Cuban officials and tell them: “Your time is done, the silence has been broken…we’re not afraid, the trickery is over now, 62 years of doing damage to our country.”

They add, “Let’s start to build what we’ve dreamed of; of what they destroyed by their own hand.”

Census Data Shows Big Changes Coming

The Daily Escape:

Big Balanced Rock, Chiricahua National Monument, AZ – photo by Arnaud Barré

From the WaPo:

“For the first time in the history of the country’s census-taking, the number of White people in the United States is widely expected to show a decline when the first racial breakdowns from the 2020 Census are reported this week.”

The headline news includes these facts: For the first time, the portion of White people could dip below 60%, and the under-18 population is likely to be majority non-White. In 26 states, the number of Whites has declined. Up to six states and DC could have majorities of people of color.

In case anyone was wondering what was motivating all the Republican voting restrictions, this is it.

The actual data will be released later today. So there’s at least some chance that the WaPo and Wrongo are well, wrong about the census results. That’s unlikely, since the numbers have been moving in this direction for years. More from the WaPo:

“Estimates from 2016 to 2020 show that all of the country’s population growth during that period came from increases in people of color. The largest and most steady gains were among Hispanics, who have doubled their population share over the past three decades to almost 20% and who are believed to account for half of the nation’s growth since 2010. They are expected to drive about half the growth in more than a dozen states, including Texas, Florida, Arizona, New Mexico and Nevada.”

The WaPo quotes William Frey, a demographer at the Brookings Institution: (brackets by Wrongo)

“The trend is projected to continue, with Whites falling below 50% nationally around 2045…[and] at that point, there will be no racial majority in the country. Between 2015 and 2060, the Hispanic and Asian populations are expected to approximately double in size, and the multiracial population could triple due to both immigration and births.”

America is heading into uncharted territory. Our older generations will be much Whiter than younger ones. Racial minorities will drive the growth in the US labor force as White Boomers retire. Frey calls what’s about to happen a “cultural generation gap”.

This could mean that both groups may compete for resources. For example, public spending on services for seniors versus spending on schools or job training.

The new data are also expected to reflect continuing ethnic diversification of the suburbs. Now, more minorities live in suburbs than live in cities. Frey says that the vast majority of the nation’s more than 3,000 counties and its more than 350 metropolitan areas became less White in the past decade.

All of this has tremendous implications for social cohesion. Cities and states that want to sustain economic growth will need strategies to attract minorities. That’s already happened in places such as Kansas, the Philadelphia metro area, Miami-Dade County, and Prince George’s County, MD.

How predominantly White boards of directors manage predominantly diverse management teams and workers could be a big challenge.

The data release comes amid concerns over its accuracy. The 2020 count had huge problems, including the Trump administration’s attempts to add a citizenship question and block undocumented immigrants from being counted. On top of that, the pandemic caused major delays for the survey.

This release also provides the first look at whether last year’s count missed significant numbers of minorities. Arizona, along with Texas and Florida, each fell short of expectations with smaller gains in Congressional seats than projected.

The big event is that release of the Census data kicks off this decade’s Congressional seat redistricting. The clock is now ticking for states to draw new Congressional maps. The fact that the data are already late creates a scramble among most states to finish their maps before primaries begin next year.

In addition to questions about data accuracy, get ready for a new round of “white replacement” tirades from the Right. Expect to see a revival of the debate over whether the undocumented should be counted in the Census. Expect a fresh wave of Right-Wing anger directed against America’s minority populations.

Our ugly politics will probably get uglier, at least for a while.

It’s ironic that Republicans are both completely resistant to more support for families, although they complain loudly about the declining share of the White population.

It isn’t only people of color who need better policies – like more parental leave; control of healthcare costs; housing affordability; and better and cheaper childcare. It’s also those Millennials and GenZ’ers who are of child-bearing age who can’t afford kids.

Protecting voting for all Americans is the most important priority for Congress. Particularly now, as it seems clear that Republicans are trying to bail on democracy.

Why? Because it’s hard to promote White supremacy to non-white people.

Child Tax Credit Not a Hit With Voters

The Daily Escape:

Cranberry season, Cape Cod, MA – August 2021 photo by Sharon Pilcher Castrichini

The American Rescue Plan included a fully refundable child tax credit. The credit provides $3,600 per year for children under 6, and $3,000 per year for children between 6 and 17. The credit is temporary, for 2021 only. It is paid monthly and phases out for single parents who earn more than $112,500 and married couples earning more than $150,000. The IRS began sending out the monthly Child Tax Credit payments on July 15.

This marks a sea change in government policy towards poor children. For years, the poorest children have been excluded from income support by eligibility rules that made assistance available primarily as a tax credit to families with sufficient income to pay taxes. This new credit, in contrast, is unconditional.

From the WaMo:

“The policy is winning rave reviews from think tanks. The Urban Institute…estimated that this year’s poverty rate will be cut from its 2018 level by 45%….And the Niskanen Center predicted that the credit will boost consumer spending by $27.6 billion and ‘deliver a substantial boost to rural economies across the country.’”

But as with many new policies in this pandemic, reality brings a few hiccups. Roughly 60 million children have already started receiving payments. These kids are in families that filed tax returns with the IRS in 2019 or 2020.

But there are two design flaws. The first is that many of the poorest families do not file tax returns, and hence will not automatically get checks. Approximately 4 million children who are eligible for the payments are falling through the cracks, including 2.3 million whose parents do not file a return. Immigrant parents may be hesitant to the sign-up process because they fear that their personal information would be shared with DHS or Border Patrol.

A second problem is that due to the combination of means-testing and receiving payments in advance, some families will be subject to a nasty year-end surprise when the IRS says they owe more taxes because of these payments.

This leads to two political problems. First, the Dems plan on running in the 2022 mid-terms partly on a message that the child tax credit has done something important for poor people, and that if elected, they plan to make the tax credit permanent.

The problem is, a mid-July Morning Consult poll showed that only 35% of voters said the expansion should “definitely” or “probably” be made permanent, while 52% said the opposite. A YouGov poll from around the same time found only 30% of voters favored permanent expansion, with 46% opposed to it. In both the Morning Consult and YouGov polls, a majority supported the expanded child tax credit for the current year, but not when they were asked whether the extension should be permanent.

This makes it difficult for Dems to find a message that will work if they plan on running on the child tax credit.

The second problem is the price of a permanent program. It will cost the Treasury about $100 billion annually through 2025, and about $190 billion annually after that. A permanent extension of the expanded child tax credit would cost $1.6 trillion over 10 years. Republicans are sure to bring this up when any Democrat says they want to make it permanent.

Passing a permanent child tax credit would also make passing many of the other progressive priorities impossible.

As unpleasant as it is to consider, the recent polling tells us that most voters may not be as in favor of slashing poverty as much as progressive Democrats are. They may have accepted it as a temporary fix to help people (children) survive an economic crisis, rather than as permanent economic policy.

Not every voter is moved by moral appeals to eradicate poverty. Not every voter feels sympathy for the poor. Most voters prioritize their own financial situation above all else. That’s where the Niskanen report can be most helpful, showing that local economies will benefit from the expanded child tax credit, with more consumer spending.

Income inequality is a top problem facing America today and one of the most destabilizing. The expanded child tax credit may be effective (and maybe good policy), but it doesn’t yet seem to be good politics.

The hope that a near-universal policy would forge an allegiance between middle-class, working-class, and poor voters seems as far away as when the bill was passed.

To boost those poll numbers, Democrats must impress voters outside of their political base about the economic gains from the policy.

Dems Fumble Eviction Response

The Daily Escape

Mt Rainer at sunset, Paradise, WA – July 2021 photo by regulader.

There’s a political crisis brewing for Democrats in the form of the now-lapsed eviction moratorium. Progressive Democrats are angry at mainstream Dems like Pelosi and Biden for failing to extend the moratorium that expired on August 1.

The moratorium was put in place 18 months ago by the CDC. It has been popular with tenants, but many of them never caught up on their bills, and/or figured out how to access the aid promised under the moratorium.

Landlords sued to end the moratorium, and last month, the Supreme Court allowed the moratorium to remain through the end of July. But at the time, Justice Kavanaugh wrote that any further extensions would require “clear and specific congressional authorization” via new legislation.

While Kavanaugh said that a further extension of the moratorium would require Congressional action, that wasn’t the issue before the court. The issue before the court was whether to vacate a lower court stay. Their decision left the moratorium in place. When a judge expresses views beyond the specifics of the case, it is known as dicta, and is not binding.

So, the administration actually was free to extend the moratorium, and assuming the extension was later challenged in court, they could argue to the Justices that circumstances have changed. Here’s Judd Legum: (parenthesis by Wrongo)

“First, the Delta variant has made it more dangerous to allow millions of evictions to proceed voluntarily. Second, the time that Kavanaugh thought would allow for the orderly distribution of the funds (one month) has not been sufficient.“

But instead, Biden wanted Congress to act. The Congressional Democrats launched an effort to extend the ban, but the House adjourned last Friday without passing a bill. Senate Democrats were also pushing for an extension but didn’t have enough support that would lead to passage.

And now, the Biden administration is in a bind. Moderate Democrats along with Republicans, do not want to see the moratorium extended. Biden doesn’t want it extended either, so maybe we’ll see a deluge of evictions. From The Guardian:

“More than 15 million people live in households that owe as much as $20 billion to their landlords, according to the Aspen Institute. As of July 5, roughly 3.6 million people in the US said they faced eviction in the next two months, according to the US Census Bureau’s Household Pulse Survey.”

On Sunday, Pelosi and other House leaders said that action extending the moratorium “must come from the Administration.” They said that extending the moratorium “is a moral imperative to keep people from being put out on the street which also contributes to the public health emergency.”

But it’s hard for Democrats to hold the moral high ground when they refuse to stand on it. The House hasn’t interrupted its 7-week recess to address the issue.

Progressive Democrats are up in arms. Last weekend, Rep. Cori Bush (D-MO) led a protest on the Capitol steps to get the attention of her colleagues and the country. She wants Congress to reconvene and extend the national eviction moratorium.

What we’re seeing here is the political power of a freshman Congressperson. Bush has the attention of the media as she sits outside the Capitol. That means the administration and senior Democrats are paying attention. These kinds of political stunts rarely work, but since the Dems are in control of the government, albeit with very slim margins, everything needs to be taken seriously.

OTOH, eviction is purely a state/local process. It’s very difficult to really do much at the federal level. Also, landlords deserve to be paid, and able-bodied renters need to pay their bills. That’s how our system works.

The fact is that tenants and by extension, landlords were promised help and haven’t gotten it. The pandemic has caused a cascade of negative consequences at all levels. But $ billions of taxpayer funds are unused, and available to help landlords, if only they could avail themselves of the opportunity.

The system is set up to convey the payments to landlords, but renters must apply for the money, and too few either know about it, or have availed themselves of the program.

The White House won’t step in. The Dems in the House and Senate can’t be bothered to delay their trips to the Hamptons and the Vineyard to solve the problem. The Republicans, the so-called party of Christianity, will do nothing to help.

Who’s left? AOC and Cori Bush on the steps of the Capitol?

There are rumors that Biden is finally going to do something about this, but no details yet, as of this writing.

Saturday Soother – July 10, 2021

The Daily Escape:

Sunset at White Sands NP, NM – 2021 photo by Guyin6300dollarsuit.

Gabriel Zucman and Gus Wezerek had an opinion piece in the NYT about the divergence between personal and corporate tax rates:

“In the decades after World War II, close to 50% of American companies’ earnings went to state and federal taxes. Economically, it was a golden period. Middle-class incomes grew at roughly the same rate as those of the richest Americans.

But as globalization gave companies the ability to choose where they recorded profits, Congress scrambled to keep their business by lowering corporate taxes. In 2018, American companies were taxed at an average effective rate of less than 14 %, by our calculations.”

For the past 30 years, corporate tax breaks have helped business owners amass huge amounts of money, much of which is kept offshore. Their gain has been the loss for middle-class Americans, who have footed the bill, as Congress has supported our federal budgets by raising taxes on wages:

This chart shows the result of Republican policies. Corporate taxes are at an all-time low, while many profitable corporations pay no tax at all, and workers’ taxes on wages have risen. This has caused a huge and still growing gap in income and wealth between the rich who lead America’s corporations and the rest of us.

Let’s spend a minute on some tax arcana. There used to be a tax regulation that kept income out of tax havens. It is called unitary taxation, a method of allocating corporate profit to a particular state (or country) where that corporation has a taxable presence. It attributes the corporation’s total worldwide profit (or loss) to each jurisdiction, based on factors such as the proportion of sales, assets, or payroll in that jurisdiction.

If this were in effect, it would slow the parking of profits in tax havens by multinationals. California and other states used to use unitary taxation. It was the subject of two US Supreme Court cases: Mobil Oil v. Vermont and Exxon v. Wisconsin, both decided in 1980 in favor of the unitary tax principle. In other words, in favor of the states.

In 1983, the US Supreme Court again ruled in favor of unitary taxation but this time on a worldwide basis in their Container Corporation vs. Franchise Tax Board decision.

That’s when St. Ronnie pressured California and other states to adopt a restricted version known as the water’s edge method that excludes the profits of foreign affiliates from a state’s pre-apportionment tax base. This allowed profit-shifting to tax haven affiliates to mushroom to what we see today.

Biden is trying to end the race to the bottom on corporate tax rates. But even if Congress approves the 15% global minimum corporate tax, it won’t be sufficient to close the growing economic gap between America’s corporations and its workers. Taxing multinationals at 15% would still leave them facing a lower rate than the average American pays in state and federal income tax.

What’s really needed is a 25% percent minimum corporate tax. That would bring in about $200 billion in additional revenue annually. Over 10 years, that would be enough to pay for nationwide high-speed internet, free community college and universal preschool for 3- and 4-year-olds.

All are worthy uses of tax dollars, but it’s doubtful that all Senate Democrats, much less enough Senate Republicans would support a 25% floor for corporations.

A Republican Congress took a shot at reforming the hiding of offshore profits with their 2017 Tax Cut and Jobs Act, which failed. Data from the Bureau of Economic Analysis suggest profits booked in foreign tax havens have not declined since the law was passed.

In 2018, US corporations reported more profit in Ireland than in Mexico, China, Germany and France combined. For example, in 2018, Facebook made $15 billion in profit in Ireland, about $10 million for each of its Irish employees, while Bristol Myers Squibb’s reported profit in Ireland worked out to about $7.5 million per employee.

For decades, Congress tried unsuccessfully to play catch-up as business owners and a handful of tax havens have driven our tax policy. The result is that we’re a nation where working-class Americans are left with underfunded public schools while the wealthiest Americans are boarding rocket ships in some ego-fueled game.

Time for a post-tropical storm Elsa break! Just when you think all is lost, you discover it isn’t. For the first time, Queen Elizabeth has decided that you can now have a picnic on the front lawn of Buckingham Palace. Don’t get too excited, there are rules: No knives to slice your cheese, no dogs, no prosecco. Besides, 78,000 people are already on the waiting list:

Now take a moment, and listen to Czech composer Bedřich Smetana’s String Quartet No.1 In E Minor “From My Life“, the Largo movement by the Amadeus Quartet, recorded in 2013:

Deferred Maintenance is America’s Exceptionalism

The Daily Escape:

West Cornwall Covered Bridge, West Cornwall, CT – photo by Juergen Roth Photography. The 172’ bridge spans the Housatonic River.

America runs on deferred maintenance. We won’t do a thing today that can be put off for another day, another year, or several years. The ongoing disaster of the collapsed condo at Champlain Towers South in Florida is a perfect metaphor for America. A quick look at some details is instructive.

The NYT had a story about the conflicts among residents and the Champlain Towers South condo board. A report indicated that major repairs were needed to maintain the structural integrity of the building. But the repairs weren’t popular with the residents: (brackets by Wrongo)

“Steve Rosenthal, 72, a restaurant advertising executive, went to the gym in the building nearly every day. Afterward, he would stop at the pool, where he could see a crack on a third-floor balcony that he described as ‘atrocious.’ But he called the $135,000 assessment [to fix the problems] on his condo, a corner unit with double balconies, a ‘second mortgage’.

‘It’s an upscale building, but it’s not the Ritz or the Four Seasons….The people that live [here]…aren’t Rockefellers or Rothschilds. We’re upper middle class, I guess, and a lot of us are retired’….When a neighbor knocked on his door, 705, with a petition against the assessment, Mr. Rosenthal signed it. The first payment was due on July 1.”

BTW, Rosenthal survived the condo collapse. He was rescued from the intact part of the collapsed building, and he’s staying in a Residence Inn a few blocks away. Worse, Rosenthal has filed a lawsuit against the condo board for negligence and against the property for shoddy construction!

America is filled with assholes like Rosenthal. They’ve taken over – they dominate our politics (I’m talking to you Mitch). They dole out promotions to other assholes. They punish anyone who tries to do the right thing. They tell us how to vote, and who to love. (Hat tip: Jessica Wildfire)

Their attitude that “This seems bad, but if I have to pay to fix it, count me out” is the position of many, many Americans, regardless of what kind of deferred maintenance is being considered. Fixing our roads? Sorry, no gas tax increases. Better school buildings? Property taxes are too damn high. Better Internet? Why? Better health insurance? Socialism!

DC politics is infested with a “we can’t afford this” knee-jerk reaction whenever the subject of dealing with America’s deferred maintenance is on the table. And of course, that’s the thinking that deferred the maintenance in the first place.

It’s particularly bad when the subject is how to deal with climate change. What incentives are there to alter behavior to prevent change that will have most of its effects after 2050? The answer is none, except for an intangible feeling that you’ve done the right thing for posterity.

Current stakeholders (regardless of whether they have a stake in a property, a city, or the entire country), willingly defer maintenance to the next generation of stakeholders, when it will be much, much more expensive. Eventually, the problem can’t be remedied. Like In the Florida condo, that’s when things start collapsing, and people start dying.

Perhaps someone should have said to the condo residents: “You can probably play Russian roulette without dying, but do you really like your odds?”

There was a 1981 ad by Fram Oil Filters that had the tag line: “pay me now or, pay me later.” Imagine, accountability and wisdom brought to you by Madison Avenue! When we move from car maintenance to the country, the answer is you’ll pay WAY more later. We’ve been blowing off serious repair and replacement of our infrastructure for decades.

We’ve blown off making sure that all Americans have safe bridges and roads.

We’ve blown off making sure that all Americans have basic health insurance.

We’ve blown off immigration reform.

We’ve blown off gun sanity.

We’re blowing off moving from fossil fuels to renewables.

Do you see the parallel in how we respond to these issues? First, there’s a warning, then there’s evidence, followed by denial, delay, and ultimately, disaster. There’s no problem, if there is a problem, it’s too expensive to fix. Maybe we can fix it in a few years, eventually followed by incalculable cost and misery.

We’re the only rich country that kicks the can down the road on anything that’s politically difficult. You know that’s true if you’ve been to an airport in China or Europe. If you’ve taken public transit in Europe or Hong Kong. If you’ve seen the ports in Rotterdam or in Asia.

Time to kill all the assholes.

The Wrongologist

Geopolitics, Power and Political Economy

Category: Congress

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Deferred Maintenance is America’s Exceptionalism