Delegate Riley Moore and Business Tax Cuts

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On October 19, 2017 Delegate Riley Moore, who represents the Shepherdstown District in the West Virginia House of Delegates, published an opinion piece in the Charleston Daily Mail. The piece urged Congress to pass the Trump “tax reform” bill for the sake of economic growth, particularly in West Virginia. Putting aside that Del. Moore could not have known the details of the Republican tax bill on October 19 because it had not yet been made public, he extolled the virtues of various tax cuts he expected the plan to contain. In particular, Del. Moore is fond of tax cuts for business. His logic is the following. The desirable end result is more economic activity and good jobs for everyone. So far, so good. The means of achieving that desirable end result is to give over a trillion taxpayer dollars to corporations — with no strings attached — and hope that they spend this money in productive ways. What could possibly go wrong with this plan?

Republicans have creative ideas from time to time, and Del. Moore is no exception. He sponsored a bill during the last legislative session that would have created tax credits to stimulate new businesses in West Virginia. But Republicans never want to pay for their creative ideas with new tax revenue. Instead they want to cut into already existing tax revenue that would be available for other useful government work. Tax credits are one way to do this. Tax credits are tax reductions for specific taxpayers who meet the requirements, yet they are still essentially transfers of our public money in exchange for certain taxpayer behavior. Is encouraging this behavior more desirable than some other use for the tax money? The problem is that when these tax credits are proposed it is impossible to identify precisely what government program will be eliminated in exchange, or will suffer for lack of funding. The proponent of the plan doesn’t have to make the case that the tax credit is better than an environmental program, more student loans, or some other worthy project. So the public cannot intelligently answer the question.

Indiscriminate business tax cuts are far worse. Under the Republican world-view, money is best diverted from public uses to private uses. The end result is that government has less and less ability to do what we need it to do. Make no mistake, every dollar that is cut from the taxes of a business is a dollar that we could otherwise use to fund our schools, our healthcare and our public safety. Indiscriminate business tax cuts don’t even pretend to require desirable behaviors from the business like tax credits do. Business tax cuts are just giveaways of our money plain and simple. Today the Wall Street Journal reported that the Trump tax plan in its present House version would permanently reduce the corporate tax rate to 20%, costing $1.5 trillion dollars in lost tax revenue.

Has anyone else noticed that Republicans only seem to be concerned about the deficit and the debt when it is “entitlement” spending programs that are under consideration? True tax reform would shift tax burdens around to be more equitable and streamline administrative procedures. But it would also find new revenues to make up for revenues lost – revenue neutrality. Trump’s tax plan as initially revealed by the House Republican leadership hardly makes an effort to claim revenue neutrality. Paul Ryan and others say that the enormous tax cuts will stimulate growth over the next decade and from this growth new tax revenues will come. No economist will stand up to support this trickle-down baloney. If the so-called “fiscal hawks” in the Republican Party don’t oppose this thinking, then we should all change the channel the next time they complain about spending programs from the Democrats.

Del. Moore’s opinion piece in The Daily Mail also spoke warmly of middle-class tax cuts and on this it is hard to disagree with him. Putting more money in the pockets of those who need a boost is exactly the kind of alternative use for tax revenues that does make sense. It will also boost the economy because middle-class taxpayers will be much more likely to spend their tax cut than the wealthy, who will save any tax cut they get.

But a business is entirely different than a middle-class taxpayer. Sure a business tax cut will free up some money for the business, but what’s to keep that money from being spent on a vacation in the tropics for the owner, or a non-productive use like paying down debt or share repurchases? Writing in the Washington Post, David Lynch notes

Several companies already have indicated that they will use excess funds to pay off debt, increase dividend payments or repurchase their own shares rather than create new jobs or raise wages. On Wall Street, the consensus is that workers will be the last in line behind shareholders, creditors and investment bankers when the extra corporate cash is distributed.

The Republican tax plan contains absolutely no requirement that a business use the tax cut for investments that will create jobs. If Del. Moore wants to have his house painted, you can be sure he doesn’t just send checks to all the painters in town in hopes that one will show up at his house.

If this country is going to give away its tax revenue to corporations for the goals of generating economic activity and creating jobs, there are ways to ensure that the money is employed to these purposes. One need look no further than the way the money from the recent West Virginia road bond referendum will be used. The goals were increased economic activity in the short term and more jobs for West Virginians. There is a linear connection between these goals and the means chosen to achieve them. Projects will begin in the current fiscal year all over the state. The West Virginia Jobs Act requires that contractors receiving these funds employ a workforce of at least 75% West Virginia residents and a proposed amendment introduced at the recent Extraordinary Session of the Legislature would put some teeth into this requirement. Of course, there can always be slips between the cup and lip. But this arrangement creates more confidence that our tax money will be used for the desired purpose than trillion dollar business tax cuts with no strings attached.

Jeff Flake’s Conservative Conscience

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Jeff Flake is the junior United States Senator from Arizona. He graduated from Brigham Young University with a degree in International Relations and spent time as a missionary in South Africa. Later he served as the Executive Director of the Goldwater Institute, a conservative think tank, and was elected to the House of Representatives six times beginning in 2000 before his run for the Senate. Flake is very conservative, believing that government’s involvement in the lives of individual citizens should be minimized and that strangling tax revenues and spending is the best way to ensure this. He is pro-life, opposed to gun control and voted against disaster relief spending for victims of Hurricanes Katrina and Sandy. So one would not expect Jeff Flake to be openly critical of a Republican President whose election in 2016 made this conservative nirvana more likely. But Jeff Flake is a man of principle and he has unloaded on Donald Trump.

Flake’s opposition to Trump began during the 2016 Presidential campaign. Although he does not acknowledge a vote for Hilary Clinton, Flake openly admits he did not vote for Trump. He then opposed Trump’s travel ban, declaring that it was unacceptable when even lawful permanent residents could be stopped at the border.

Flake is up for reelection in 2018, so he has recognized that his maverick positions require some explaining. He has attempted to do this in a book recently published entitled Conscience of a Conservative, a title he borrowed from Barry Goldwater’s famous manifesto.

Flake’s opening salvo in the book is a description of the “madman” strategy employed by Richard Nixon to make Ho Chi Minh believe that we might actually drop a nuclear bomb on North Vietnam. In a breathtaking observation about Trump, Flake says “there is a significant difference between appearing to have problems with impulse control and actually having impulse-control problems.” Flake does not let up from there.

Perhaps most destructive of all, we haven’t ever had an occupant of the White House who so routinely calls true reports that irk him “fake news” while giving his seal of approval to fake reports that happen to support his position. This is tremendously damaging . . . Only in anti-democratic propaganda states do we see “alternative facts” successfully compete with the truth for primacy.

Flake not only takes aim at Trump, he is also critical of the partisan gridlock in Congress and the behavior of his own party. He says that the “impulse to dehumanize, to ascribe the worst possible motives to people who in normal times would be regarded not as ‘the enemy’ but merely as political opponents, is a signal that something is terribly wrong.” This applies, of course, not only to Republicans but to all of us these days. In a chapter entitled “Country Before Party” he speculates that Lincoln, Teddy Roosevelt and Ronald Reagan might not be welcome in the Republican Party of today because they were pragmatic and willing to compromise to achieve important national goals. In a particularly powerful passage he argues that

populist resentments may feel good in the moment, but indulging them is destructive, and self-destructive, and offers no solutions to the very real problems that gave rise to the resentments in the first place. Manipulating populist resentments is the oldest trick in the book, and it is shameful. When we allow ourselves to prioritize winning at all costs over what is best for our country . . . then we have chosen our political interests over the public interest and in so doing we inflict great harm on the country.

This is certainly refreshing and welcome. But it will not endear Flake to the harder right elements in his own Party. He now has a challenger in the upcoming Arizona Republican primary, who called his refusal to support Trump “treacherous” and describes Flake’s policies as “America Last.” Trump won in Arizona over Clinton by only 49% to 45% — a far smaller margin than in West Virginia and the narrowest win for a Republican since 1996. So Flake will have both a vigorous Democratic opponent and his hard right challenger to consider. On top of this, his popularity rating in Arizona last fall was only 35%. All this has led The Atlantic magazine to wonder whether Jeff Flake is “too nice” for the Senate, noting that he sometimes seems as if “he has just crash-landed here in a time machine from some bygone era of seersucker suits and polite disagreements.”

It is hard for a progressive to wish a man like Flake political success. His views on most things are somewhat extreme, as befits his libertarian outlook. But on closer inspection he can’t be so easily dismissed. Indeed, he may be an example of a middle course like the one Joe Manchin has attempted to take. For example, Flake is a globalist, believing that we all prosper through international trade agreements and calling for a renegotiation of NAFTA instead of a complete rejection of the treaty. He also flatly rejects Trump’s populist anti-immigrant stance and supported an end to the Cuban Trade Embargo.

Whatever can be said about Jeff Flake’s political views, it is plain he is driven by principle. It is hard to say the same about Joe Manchin. The best that can be said about Manchin’s behavior in the Senate is that he consistently votes in a way he thinks will help West Virginians. But his judgments on this are sometimes debatable, such as with his unflagging support for the coal industry. On matters affecting the nation more than the state, Manchin’s only “principle” is political survival. One can’t help wish for a West Virginia Senator who is willing openly to stand for country over party, for respect of the opponent even during disagreement, and for basic decency despite the political risk. Maybe this is the true middle course that, in the end, will be rewarded by voters.

 

Moral Politics

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Recently, the Charleston Gazette published an editorial that I have not been able to quit thinking about. The editorial was entitled Morality, Irony and the Fate of America. It pointed out that the current Republican agenda is to take healthcare away from 20 million Americans, 170,000 of them West Virginians, and direct that money to the rich in tax cuts. It noted further that the proposed Trump tax cuts would cut one-fourth of the SNAP benefits for low-income families, undermining nutrition for 100,000 West Virginians. All with the same result of benefitting the rich. And “various other programs that keep the wolves from the door, that give people breathing space to improve their own circumstances, are at risk in the ongoing conflict.” According to the Gazette, this is not just wrong as a matter of policy. It is immoral.

Using morality as the basis for political argument has a rich history in America and elsewhere. But this is dangerous territory because each of us has a personal view of morality fashioned by family, religion, education and personal experience. When it comes to morality we are not all using the same language. As but one example, opponents of abortion use one version of morality to fuel their opposition. Freedom of choice proponents use a different version to argue for the opposite outcome. Still it seems worthwhile to discuss whether there is a moral politics and, if so, what it is. So, with no expertise in political philosophy or thinking about morality, I now venture there.

The first question is the legitimate role of government. This, of course, is a hot topic these days. Beginning from the conservative view of its proper role, government should only do the things that to be effective must be done collectively. In this category would be things like national defense, large infrastructure projects, and the tax collection system that funds both. Since government has a legal monopoly on force, then also among the things government should do is make laws for common safety and security, enforce the laws through policing and corrections, and resolve disputes through the court system.

Are social welfare programs that create a floor beneath the less fortunate among these things? Here we are talking about highly popular programs like Social Security, Medicare, SNAP benefits, unemployment compensation and disability benefits. If social welfare programs are to be undertaken at all, then it is easy to conclude that these programs are also among the things government should do.

Only government can mount social welfare programs on the scale that would be effective. Most social welfare programs operate on insurance principles that spread the risk of catastrophic outcomes and their cost throughout the whole population instead of forcing the individual victim to bear the full weight. This has to be organized collectively. There may be some among us who would say that churches and private charities could do this work but this is a pipe dream. Private charity is important but it would be quickly overwhelmed without collective government action.

Well then, does government have an obligation to devise and implement social welfare programs – to support the needy and less fortunate among its citizens? Libertarians and other followers of the “objectivist” philosophy of Ayn Rand would say no. They believe that the individual prospers by being selfish, asking for no help from others and giving none.

This objectivist view is inconsistent with the Judeo-Christian philosophy of action and with the teachings of every organized religion. Religious leaders whose business it is to consider moral issues consistently say that helping others in need is a moral imperative. A recent letter to the editor of the Gazette from the Executive Director of the West Virginia Council of Churches urged our Congressional representatives to maintain their support for SNAP benefits on religious grounds.

Then there is the fact that every modern government recognizes this imperative, those in Western Europe more than others. Social welfare programs became more common as the phenomenon of empathy spread in society. But mere empathy withers in the face of the high cost of acting on it. As New York Times columnist David Brooks has argued, those we recognize as having a strong moral compass have sense of obligation to some religious, military, social or philosophic code. They would feel a sense of shame or guilt if they didn’t live up to the code. Whatever the source of this moral sense, when it comes to social welfare most people have it. It would be difficult to find a political leader in any country, except perhaps our own, willing to deny that government has a moral obligation to build some sort of support system for those in need.

Without anything to back this up other than a visceral feel, I believe that our sense of moral imperative, and therefore the legitimacy of government social welfare programs, is highest when dealing with basic needs. Wide swaths of society can rally around programs that eliminate or reduce hunger, but far fewer around programs that, say, provide recreational opportunities. In the high legitimacy category I would also put minimizing pain and disease, homelessness, the infirmities of old age, and responding to natural disasters. But certainly there can be a lot of debate around what we are morally compelled to do.

Unlike the debate about abortion, there is no countervailing moral argument behind the current Republican opposition to Medicaid and SNAP benefits. Medicaid expansion, and even the basic idea of Medicaid itself, has been threatened in the fever to repeal Obamacare. How, or if, we manage health insurance for those able to afford it is a different question entirely from whether we provide it for those who can’t. The fact that Congressional Republicans have wrapped the two issues together in the repeal effort demonstrates that the argument to undermine Medicaid cannot stand on its own.

When Paul Ryan, Mitch McConnell and their surrogates offer any reason behind their hostility to Medicaid and SNAP benefits it is a fiscal, not a moral reason. They say we must cut back on these benefits because they are growing at a rate that is unsustainable over the long run. I don’t pretend to know whether this is true but it seems unlikely we couldn’t find some adjustments to make them sustainable. What is perfectly obvious is that the people who receive these benefits are in need now — today. The moral imperative for government to act should not yield in favor of some cool assessment of future bookkeeping. Doing what should be done may not be easy, but that is often the nature of moral choices.