Unstoppable (12 page)

Here's a perfect place for an LR coalition. Why wouldn't liberals and conservatives band together to stop these scandalous raids on the taxpayers? Many would, except those who are too occupied fighting battles over social issues and dialing for campaign dollars to take on corporate welfare reform that would lead to convergence.

3. Restore efficiency in government procurement.

At this point, government purchasing, a multitrillion dollar business—annually at the federal, state, and local levels—is overripe for huge savings and for obtaining better products and services. For too long, the full text of many procurement contracts has not been made public, too many are left without competitive bidding, and more often they are not even monitored during and after their completion. A bipartisan move passed Congress in 2004 requiring all agencies to put summaries of these contracts online. Similar bipartisan support exists for putting the entire texts online, as Indiana and Texas have done, but there has been no vigorous push to get this enacted as a result of the quiet opposition of the vendor industry, which does not like the sunlight. With entire texts online, more competitors are likely, taxpayer groups and the media can regularly monitor them for adherence or improvement in the terms on the next round, and scholars can delve deeply into this enormous, often sweetheart, contract state.

In 1988, the Center for Study of Responsive Law held a conference in Washington, DC, on government procurement to stimulate innovation, stressing how a fine-tuning of such contracts can create larger civilian markets. Earlier in this book, I noted the example of auto safety, in which air bags were introduced to cars via purchases by the government. One example in which procurements stimulated positive directions was the use of generic drugs by US Army purchase practices around World War II. And for years the navy, for economic reasons, was buying solar photovoltaics for
remote locations. Solar energy advocates have used this fact in their activism.

Feelers for convergence have appeared in Congress (with Republican senator Tom Coburn teaming with Democrats), at the state level, in the literature, and in concrete examples, enough to suggest it is time to move to a larger stage. It is to be expected that objections will come from strict libertarians, who will say the true change would be to get the government out of most of these activities. That is another discussion, which will have to be gone through category by category. Here the convergent focus should be on the best and most honest use of the taxpayer dollar now.

4. Link the minimum wage with inflation.

A bottom-up convergence effort will be needed here to give the 70 percent plus support this measure has with the public a cutting edge in Congress. Over thirty million workers—hailing from varying political persuasions—are laboring at between the current $7.25 an hour (by far the lowest rate among the Western world's large countries) and the $10.50 per hour they would be getting if the 1968 minimum wage had been adjusted for inflation. This demand is going to get across-the-board support because a conservative worker at Walmart or McDonald's is not going to put any (perceived) antigovernment ideology ahead of his or her desire to put bread on the family table. And properly so.

Leading traditional conservative thinkers, with few exceptions, believed we needed to have a minimum, mandatory level of worker well-being. The exceptions do not believe in any minimum wage whatsoever, arguing, among other things, that it reduces the number of jobs that will be available. This is a stance that has been decisively rebutted by knowledgeable, published scholars, including Robert Pollin and other prominent economists.
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At least 70 percent of the population is behind an adjusted minimum wage, including Rick Santorum and, until 2012, Governor
Mitt Romney. With the outraged reactions that will be voiced when, for example, the full personal stories of what it is like for Mom and Dad to try to make it on $7.25 to $10.50 per hour when the bosses, like the CEOs of Walmart and Target, are making $11,000 or more per hour, reach the mass media, who has to worry about the claims of well-rewarded, armchair columnists?

5. Enact taxation reform, and gather uncollected taxes.

Taxation appears to be one of the more divisive issues among conservatives and liberals. Hardly a press opportunity goes by without no-tax, conservative (his description) House Speaker John Boehner decrying “all of the over-taxing, over-regulating, and over-spending that's going on in Washington.”
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Now switch to David Stockman, another Reagan conservative and former head of the White House's budget office in the early eighties. Retired after a long investment banking career, Stockman recently condemned the “simplistic and reckless idea that the way to stimulate the economy is to cut taxes anytime, anywhere, for any reason [which has] become embedded [in the GOP]. It has become a religion, it has become a catechism. It's become a mindless incantation.”
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In fact, total income taxes paid by corporations or individuals as a percent of income and GDP in the United States is at the lowest level in decades.
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That is a major reason why government deficits are expanding. Having less and less revenue to meet the spending levels of government, including its unpaid-for wars, results in trillion-dollar-plus deficits a year. Stockman says this plunge into red ink started with George W. Bush, who put forward massive increases in defense spending and large reductions in the revenue base while not making any effort at cutting spending of the corporate state.

What is Stockman's favorite tax? It would be one levied on financial transactions—in effect a sales tax on Wall Street speculation—one that could raise big money daily. Showing that one can never
stereotype conservatives, even ones like Stockman, who would cut all kinds of federal social service and boondoggle military programs, he describes Wall Street in these words: “We have a massive casino that is doing nothing but churning transactions by the millisecond, robots trading with each other, as a result of the Federal Reserve juicing the system continuously with overnight money that's free. There's no productive value for Main Street or the real U.S. economy.”
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A speculation tax on the hundreds of trillions of dollars annually spent chasing derivatives would not have to be more than one-half of 1 percent to raise $300 billion a year. The European Commission proposed such a tax as well. Eleven European countries already have some lesser form of transaction tax.
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Such a tax is an easy sell to shoppers, who have to pay a 6 to 8 percent (or more) retail sales tax in stores when they buy the necessities of life. LR shoppers is where the convergence can start, but to get off the ground it would need some high-profile political leadership and media reporting and commentary. I've often joked that we won't get such a financial transaction tax, one championed, by the way, by many an organized nurses' rally, unless leading financial columnists for the
New York Times
, Floyd Norris and Gretchen Morgenson, get on the issue.

But I think it is more promising to start a dialogue outside the box of this LR wrangling over the tax rates for income, capital gains, and dividends (I believe they should all be taxed at the same rate). Thinking outside the box, we might consider proposing that before taxes on work or labor, there should be taxation of what society likes the least or dislikes the most, so as to diminish these activities. For example, tax carbon pollution, a policy favored by Exxon/Mobil, several leading Republicans, liberal and conservative economists, and many environmentalists. And tax financial speculation; hike gambling taxes and taxes on addictive products like tobacco, alcohol, and certain addictive drugs; raise the penalties on
corporate crime along with other harmful activity; and do all that before going for worker incomes.

Conservative Nobel laureate in economics Gary S. Becker, former secretary of the treasury George P. Shultz, and former chief economic adviser to President George W. Bush, N. Gregory Mankiw, are leading proponents of a carbon tax or a gasoline tax to pay for the damage (called “externalities” by economists) of motor vehicle traffic. Canadian reformers have a saying for this: “Tax what we burn, not what we earn.” I would add: “Tax first what we bet, not what we net.” When I discuss these ideas before mixed audiences, I find much convergent interest in those kinds of tax priorities, although some want the carbon tax to be revenue-neutral. But we won't really know if these out-of-the-box proposals have traction unless some politicians and a few corporate leaders like Warren Buffett lead the way in giving the ideas visibility and credibility and then help the people mobilize.

As to the chronic matter of owed but uncollected taxes, where the miscreants are flouting the law, signing on should be an easy decision for conservatives. Such flouting is unfair to those who pay taxes and have to pay more or receive fewer services. It amounts, says the IRS, to more than $300 billion a year in tax evasion! This is not tax avoidance, the type practiced by corporate interests that legally use tax havens and have many other arcane ways they have pushed through Congress to escape taxes; it is a violation of the law. Amazingly, many conservatives and libertarians I have spoken with over time view this as a sport, as if cheating is making up for the too many taxes people have to pay. Because of this attitude, this issue may have to be shelved for a more auspicious time of convergent resolution.

6. Break up the “too big to fail” banks.

Conservative columnist George Will put the judgment pithily: a financial institution that is “too big to fail is too big to exist.”
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Richard W. Fisher, the president of the Federal Reserve Bank of Dallas, delivered a detailed address in January 2013 on just how to disaggregate these banks in a top-to-bottom restructuring, so that no one giant bank can imperil the financial system and require another gigantic taxpayer bailout. Out of more than 5,600 US commercial banks, Fisher says, “half of the entire banking industry's assets are in the hands of five institutions”—JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, and US Bancorp. “This incurs the wrath of ordinary citizens,” Fisher adds, “and smaller entities that resent this ‘favorable treatment.' . . . [Through encouraging these big banks] we plant the seeds of social unrest.” Perversely, the big bank bailouts under Bush and Obama required immediate mergers and acquisitions that more than doubled this concentration of banking assets and deposits.

Too-big-to-fail (TBTF) guarantees profits because it socializes losses. Mr. Will expresses why this subject is an immediate subject for ideological and legislative convergence: “TBTF is a double moral disaster. It creates moral hazard by encouraging risky behavior and it delegitimizes capitalism by validating public cynicism about its risk-reward ratios.”
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Most members of Congress, liberal and conservative, agree that TBTF must end, but as Senator Richard Durbin (D-IL) said, “The banks . . . frankly, own the place.”
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Perhaps what he should have said was that “the banks bought this place.” If the votes are there, with the smaller banks, consumers, and taxpayers at their back, members of Congress can un-buy themselves, at least for the limited purpose of prohibiting TBTF and letting market discipline prevail to that extent.

7. Expand and redirect contributions to charity.

How about a job creation convergence, which could be based on encouraging large charitable contributions from the rich and super-rich to local educational and charitable organizations needing more staff? This involves a national vision made possible by
local networking and outreach to persuade donors that if they like what private charities are doing for children, needy people, the arts, sports, the environment, literacy, historic preservation, and more, then contributing enough to expand the staff budget means the charities can hire more people, which spells the magic word these days—JOBS!

The arithmetic is impressive. There are trillions of dollars held by upper-income Americans in what might be called “inert” investments, many in money market funds, savings banks, and treasuries, bringing in a fraction of 1 percent in interest. Almost all the people holding these monies are nowhere near their annual charitable deduction limit of 50 percent of adjusted gross income. Lamentably, many also give very little to charitable associations. Most could save more in taxes from their charitable contributions than by keeping the money in near zero-interest savings.

For each billion dollars in aggregate extra charitable donations per year to existing or new certified charitable associations to
expand staff
, 30,000 people could be hired at a salary around $30,000 a year. Ten billion additional dollars would produce 300,000 jobs all across the country, enlarging the good works of these organizations, which, in turn, produce their own human and economic savings. Think of the collateral benefits of safety programs; food banks; elder care; historic renovations sprucing up communities; sports programs for youngsters; more human assistance between the generations; support groups for the disabled and infirm; arts, crafts, and music activities; and quicker, adequate help for families or neighborhoods beset by the aftermaths of natural calamities, street crimes, domestic violence, and accidents.

As the
Chronicle of Philanthropy
reports, the unmet needs and opportunities are endless, and the willing talent pool only grows in a recession with high unemployment.
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