Thursday, October 10, 2013

The Taker Caucus

As a child of a family therapist, I have been trained from my formative years to look at events through the lens of family history. My grandparents included a Goldwater Republican from Chicago, a Nixon Republican from Montgomery, Alabama, and two Humphrey Democrats from Kiev. Thus, I am the picture of a modern Californian: part fiscal conservative, part social liberal, half immigrant. One documented, one not.

As a Californian, I am proud of my state's embrace of immigrants. They come from other states and other countries to imagine new technologies and build a future that exists only in their imagination. And they come from other countries with a willingness to work hard and a determined faith that their family's future will only be constrained by their own energy and imagination.

From a Tea Party perspective, no doubt, the world that I embrace is emblematic of all they disdain. Social insurance reforms were implemented here years ago. Immigration reform pushes the boundaries of what is permissible within a federal context. The simple fact is that the work and energy here is driven by the young and the newly arrived. Industries from tech to Hollywood to aerospace are enabled by the qualities and motivations of the labor force, educational institutions and financial infrastructure. In this context, enforcing health insecurity as the grounding of personal freedom seems at best quaint, at worst cruel.

The Tea Party has all the elements of revanchist denial of the world as it is. Rick Santelli's original rant on the floor of the Chicago Mercantile Exchange that is credited with being the founding moment of the movement was itself steeped in the ironies and rhetorical manipulations that have defined the Tea Party. After all, Santelli stood before an audience of commodity traders on a cable network that caters to the financial markets and decried the behavior of "losers" who took on the no down payment mortgages and liar loans on offer from Wall Street. Santelli's rant justified the now deeply rooted denial across the entire industry of bankers and traders that they in any way contributed to the $24 trillion of losses across the national economy that the Dallas Fed has traced to the 2008 financial crisis. In the half decade since Santelli laid down the emotional foundation for the Tea Party, those traders and others have been made fully whole by TARP and other legislation, and Fed policies have restored upwards of $4 trillion to the balance sheets of the rescued Wall Street banks--funds that were effectively stolen from the accounts of retirees, pension funds and other savers across the economy. Yet, to this day, there has not been even a whisper of gratitude from Wall Street to the nation that paid the price for the arrogance and excesses of the financial sector.

The famous plea at an early Sarah Palin rally to "not let the Government get its hands on our Medicare" became the second foundational rhetorical manipulation of the Tea Party movement. Like Santelli's rant, this plea to protect the common folk from the predations of government harkened back to the anti-government language that served Ronald Reagan to such great effect. But if one can debate the complex roots of the financial collapse, the fact of Medicare as a government program is unarguable.

Suzanne Mettler, of Cornell University, has documented the extent of public attitudes denying their own use of government programs. Her data suggesting that 40% of Medicare users deny that they have used a social program is fundamental to the challenges underlying the divide in Washington today. If Reagan helped through his rhetoric to harden anti-government attitudes across a broad section of the American public, the process of cognitive dissonance--or simple denial--has now resulted in people who instinctively hate government apparently concluding that anything on which they depend must not be government. Thus, a large share of Medicare beneficiaries deny that they benefit from any government program, just as our leading bankers continue to deny that they are beneficiaries of public largesse.

As a Californian, I hear the continued slights of the Golden State's slide into fiscal irrectitude. Even as Jerry Brown has demonstrated what a principled elder statesman can accomplish, he is criticized for relying on a mix of tax increases and spending cuts to tackle the State's serious fiscal challenges. But the slings and arrows from the conservative right are a bit hard to take. In particular, it is hard to abide the pious words of supply side guru Art Laffer and former Club for Growth President Stephen Moore who, in a recent Wall Street Journal op-ed, extolled the policy paths of those states--largely those of the old Confederacy--who, in contrast to California, are eliminating their income taxes and pursuing supply side policies.

How easy it is to be one of those states that Laffer and Moore praise. How easy is the rhetoric of the Tea Party members of Congress who have brought the nation's business to a halt with their demands to end the binging on public money, the profligacy that is undermining our moral character and financial stability. With a rhetorical slight of hand that harkens back to Ronald Reagan's folksy indictments of welfare queens and food stamps, one Tea Party member of Congress after another repeats the calumnies against all those who would deny them the power they crave but have been unable to achieve through the regular order of things.

It is the rhetoric manipulations that are so galling. The arrogant claims to fiscal rectitude of the Tea Party bely the underlying realities. They are not the makers of their own imagination, but are rather in large numbers the takers that they have been so quick to disdain. Their members are older and more dependent on Medicare than the rest of the population. They might prefer to imagine that Medicare is not a government program, but it is, and this year its share of the federal budget will surpass Defense to become the largest area of expenditure after Social Security. They might imagine that what they are taking out of it is only what they put in over their in the workforce, but that is a far cry from the truth. The average Medicare recipient now takes out ten times what they paid in.

Medicare is a general welfare program. Say it slowly. And repeat.

But it is more than that. Too many of those Tea Party pols that quote shibboleths from the founders to somehow justify their own anti-democratic conduct, and who decry debt and profligacy, come from states that take more from the public trough than they put in. This is the essential problem with the Laffer/Moore hypothesis: The states do not stand alone. There are, in the Tea Party terms, makers and there are takers, and the flow of federal dollars dwarf the local dollars.

Here are some data points: Consider a cohort of Red states whose Tea Party members have been so quick to disdain the rest of us. Mississippi, Alabama, Louisiana, South Carolina, Virginia, Tennessee and Kentucky. Each of those states voted Republican in each of the past three presidential cycles, except for Virginia. And take a cohort of Blue states who in Tea Party eyes are the epitome of Liberal corruption, of all that troubles our nation--California, Massachusetts, New York, Connecticut and New Jersey--each of which voted Democrat over those same years, to confirm their lascivious nature.

Citizens in those Red states earn on average $24,000 per year, and taxes paid from those states to the federal government total just over $6,000 per capita. In contrast, citizens in the Blue states earn an average of $33,000, and the taxes paid per capita are a bit over $12,000. The Blue states are wealthier, and they provide more revenues to the Federal Government. No surprise there.

But due to our Constitutional framework, smaller states are better represented in Congress. 1.2 times better in this case. The Red states cohort here has one member of Congress per 556,000 people, while the Blue states have one per 651,000. The consequence of this over-representation often gets lost in the arrogance of the Red state hubris: They take back more than they give, and have succeeded in assuring that a disproportionate share of federal dollars flow back to their states to subsidize their economies and standards of living. While Red states pay in $6,000 per person, they get back $11,000 per person. In contrast, those Blue states pay in $12,000, but get back just two thirds of what they contribute, or just over $8,000.

There is nothing new in this. Literally dating back to Reconstruction, the federal dollars has invested disproportionate sums to build up the economy of the south. Military bases, waterways, electrification, hospitals, the list goes on. The bottom line is that today this cohort of Red states gets back over $4,000 per person more that they pay inalmost exactly the reverse of this group of Blue states, which contribute $4,000 more per capital than they get back. Those Red state residents are not just getting all of their federal dollars back, but a bonus equal to 20% of their per capita income. Courtesy of the Blue states. Courtesy of the Constitutionally defined power structure. And courtesy of the regular order of budget decision-making over the years that has, and continues, to pour money into smaller and rural communities.

This data set is not an aberration. Of the 20 states that take substantially more than they contribute, 14 voted Republican Bush/McCain/Romney. In contrast, of the 16 states that contribute materially more than they get back, only three--Texas, Nebraska and Arkansas--are red states, while 10 are deep blue.

I happen to believe that we do have a debt problem to attend to, and that entitlement spending is slowly usurping the capacity of the federal government to invest in needed areas. But it gets old listening to the same old rhetoric--from bankers whose industry has sapped the nation and retirees who prefer not to believe that they are beholden to the rest of us--about how everyone else is the problem.

From a Californian perspective, these numbers are stark. After all, that money that we send back--that primarily ends up subsidizing the economies of Red states--comes at a price: It increases the amount we must tax ourselves. You have to admire the brilliance of those anti-tax, small state Republicans. In a quite literal sense, when Californians approved an increase in income tax rates this past election day, we were agreeing to tax ourselves so that we could continue to send money to those states of the old Confederacy. This continuing flow of outside tax dollars from other states then allows politicians in those states to cut their tax rates on their own citizens and trumpet their anti-tax bona fides.

And this is celebrated on the pages of the Wall Street Journal as inspired public policy.

If the Tea Party Republicans want to radically reduce spending, how about a simple new rule that says that no state will receive back more money from the federal government than it pays in. That way, the excess tax receipts coming from those Blue states can be used to pay down the deficit, and those Red states can learn to walk the walk for a while and get along on their own without our money. A little fiscal rectitude is good for the soul. Jerry Brown tells us so frequently.

But if the Tea Party shuns this suggestion, I would suggest we give the Suicide Caucus a more apt name. The Taker Caucus. They are taking money from the rest of us, and rather than showing the least bit of humility or gratitude, they have make clear their intention to destroy the regular order of the democracy of which they are supposed to be a part, and from which they have taken so much, for so many years.

The discourtesy and ingratitude of too many of the Tea Party caucus is shameful. At our family gatherings, my Republican grandparents could not have had less in common with the Russian immigrants who sat across the table. As hard as they might try, they could never really understood each other. Their worlds were just too far apart. But they knew that their lives and futures would be forever intertwined, and based on that alone they built a foundation of respect and mutual appreciation. And that is how it should be in our politics. Our collective future depends on it.