Wonkbook: The policy and politics of ‘redistribution’

September 20, 2012

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RCP Obama vs. Romney: Obama +2.9%; 7-day change: none.

RCP Obama approval: 49.6%; 7-day change: +0.4%.

Intrade percent chance of Obama win: 68.0%; 7-day change: +7.7%.

Top story: The policy and politics of 'redistribution'

New Romney plan: attack Obama on 'redistribution.' "After two politically treacherous days, Mitt Romney is trying to right-side his campaign by focusing on something President Obama said 14 years ago...In a 1998 audio clip that surfaced online Tuesday afternoon, Obama is heard speaking at a conference at Loyola University in Chicago, where he suggested that society needed to come up with a plan to 'structure government systems that pool resources and hence facilitate some redistribution, because I actually believe in redistribution, at least at a certain level, to make sure that everybody’s got a shot.' Romney pounced on those comments, which Obama made when he was an Illinois state senator, at an Atlanta fundraiser on Wednesday. Obama’s speech, Romney said, indicated support for a European-style system that would never work in the United States. 'I know there are some who believe that if you simply take from some and give to others then we’ll all be better off. It’s known as redistribution,' Romney told the crowd. 'It’s never been a characteristic of America.'" Ed O’Keefe and Rosalind S. Helderman in The Washington Post.

(Charlie Riedel / Associated Press)

Watch: The Republican National Convention's ad on 'redistribution'.

@DouthatNYT: We would have a much, much, much smaller gov't if the only thing the gov't did was redistribution to the bottom quintile.

A closer look at the 'redistribution' tape. "Part of the recording, though, might surprise critics who believe Mr. Obama has an unalloyed love of government largess: He also suggested in his comments that he agreed, at least to some degree, with attacks on 'the possibility of government action and its efficacy.' 'I think some of it has been deserved,' Mr. Obama said." Richard A. Oppel, Jr. in The New York Times.

@thegarance: Romney folks know harping on how O wants to redistribute $ is basically advertising for him, right? Whole theory of tax increase on wealthy.

As Romney accuses Obama of supporting 'redistribution,' he says he'd better serve the poor. "'The question of this campaign is not who cares about the poor and the middle class,' Mr. Romney told campaign donors here during a fund-raiser. 'I do,' Mr. Romney said. 'He does,' he added, referring to President Obama. 'The question is who can help the poor and the middle class. I can! He can’t!' Mr. Romney said...Mr. Romney kept up his assault on Mr. Obama for his seeming to say in a 1998 interview that he believed in the concept of wealth redistribution. America, Mr. Romney said, 'does not work by a government saying, become dependent on government, become dependent upon redistribution. That will kill the American entrepreneurship that’s lifted our economy over the years.'" Michael Barbaro inThe New York Times.

@ByronTau: Carney on 'redistribution' video: Sometimes campaigns having a very bad day or bad week "desperately" try to change the subject.

Paul Ryan adds a jab on redistribution to his stump speech. "Ryan has largely stuck to his standard stump speech. But on Wednesday, he added a new attack line: a jab at President Obama over the 1998 audio remarks he made about government efficiency and its role in 'redistribution.' The audio surfaced on Tuesday. 'He’s going to try and distract and divide this country to win by default,” Ryan said of Obama at an event in Danville, Va. 'You know, President Obama said that he believes in redistribution. Mitt Romney and I are not running to redistribute the wealth. Mitt Romney and I are running to help Americans create wealth.'" Felicia Sonmez in The Washington Post.

Wonkblog explains: The one tax graph you need to know.

By international comparison, the U.S. tax system heavily redistributes. But that's because we don't spend a lot on the poor. "[L]ooking at the tax code alone in discussions about progressivity is always somewhat misleading. Everyone knows that Europe’s welfare states are much more progressive than the United States’, in that they reduce inequality by a much greater percent...But as the Northwestern sociologists Monica Prasad and YingYing Deng have found (pdf via Lucy Barnes), the progressivity of taxes alone in the United States is much higher than that of European tax systems. Indeed, most European tax systems are straight-up regressive...The United States has by far the most progressive income, payroll, wealth and property taxes of any developed country...Basically, all of the progressivity of our fellow developed nations’ welfare states comes on the spending side. They spend a whole lot more on transfer programs, education and health services, and other initiatives that are redistributive in impact. We, by contrast, tax progressively, and then spread the money around in a less progressive fashion." Dylan Matthews in The Washington Post.

@JohnJHarwood: Like Obama, Romney backs govt income redistribution (favors progressive income tax rate structure, opposes flat tax). Just less than Obama

KLEIN: Of course Romney supports redistribution. "[Romney]: 'There’s a tape that came out just a couple of days ago where the president said yes he believes in redistribution. I don’t.' It’s one thing to wildly misrepresent your opponent’s positions. But to wildly misrepresent your own? Mitt Romney, like pretty much every other American politicians, believes in redistribution. Specifically, the 'issues' section of his Web site says he believes in a progressive tax code, the Medicare program, the Medicaid program, the food stamp program, the Social Security program and pretty much every other feature of the federal government that’s involved in redistributing income. Romney might believe in slightly less redistribution than President Obama does, but the idea that he doesn’t believe in redistribution is belied by every single thing he has ever said he will do as president." Ezra Klein in The Washington Post.

@ezraklein: You can't support a progressive tax code, Medicare, Medicaid, food stamps, Social Sec.y, and then say, "I don't believe in redistribution."

DIONNE: Romney on America. "Romney misses the real story of government in the lives of most Americans. So often, we combine our own exertions with a little assistance along the way -- the GI Bill, student loans, Social Security survivors’ benefits, public education -- to become self-sufficient and independent. And Romney said not a word about all the redistribution upward in a tax code that favors investment over labor income...Romney misses something else about America: We do believe in a certain amount of 'redistribution' toward those in need." E.J. Dionne in The Washington Post.

Top op-eds

ROMNEY: . "Efforts that promote hard work and personal responsibility over government dependency make America strong...Under President Obama, we have a stagnant economy that fosters government dependency. My policies will create a growing economy that fosters upward mobility. Government has a role to play here. Right now, our nation's citizens do need help from government. But it is a very different kind of help than what President Obama wants to provide...My course for the American economy will encourage private investment and personal freedom. Instead of creating a web of dependency, I will pursue policies that grow our economy and lift Americans out of poverty." Mitt Romney in USA Today.

LAMBERT: The labor-market woes of low-skilled women. "Rather than being long and relentless, work hours in hourly jobs, especially low-level ones, are often scarce, fluctuating and unpredictable. Sales associates and restaurant servers might be scheduled for 7 hours one week and 32 the next. Hotel housekeepers might work Tuesday, Wednesday and Friday one week, and then Sunday, Thursday and Saturday the following week. Schedules are often posted just a few days in advance. And women in hourly jobs are likely to have less input than men in determining their work schedules, according to national surveys...The lack of stability is especially hard on parents. Unpredictable work schedules leave them scrambling to arrange child care and reluctant to volunteer for school events or to schedule doctor’s appointments. They make it tough to establish the household routines that experts tell us are essential for healthy child development." Susan J. Lambert in The New York Times.

NEUGEBAUER: Problems at the Consumer Financial Protection Bureau. "The Consumer Financial Protection Bureau, which can draw more than $550 million annually from the U.S. Federal Reserve, has vast power in determining its budget...What's more, the bureau's transfer requests often come in the form of one-page letters lacking details as to how the money will be spent...A review of the bureau's salaries as of Aug. 28, 2012, reveals that approximately 60% of its 958 employees make more than $100,000 a year. Five percent of its employees are out-earning U.S. cabinet secretaries by raking in $200,000 or more annually. The director's secretary alone is paid $165,139 a year...The salaries are the tip of the iceberg. Since the bureau's founding, there have been many questionable expenditures of the sort one might expect from an agency that can spend with impunity. Whether the Consumer Financial Protection Bureau wanted $124,090,000 for undefined "other services," $40 million for building renovations, or decided to provide consumer information in 187 languages." Randy Neugebauer in The Wall Street Journal.

SCHULZ: Soft-skill shortage as a cause of unemployment. "American manufacturing has become more advanced, we're told, and requires computer aptitude, intricate problem solving, and greater dexterity with complex tasks. Surely if Americans were getting STEM education, they would have the skills they need to get jobs in our modern, high-tech economy. But considerable evidence suggests that many employers would be happy just to find job applicants who have the sort of 'soft' skills that used to be almost taken for granted. In the Manpower Group's 2012 Talent Shortage Survey, nearly 20% of employers cited a lack of soft skills as a key reason they couldn't hire needed employees. 'Interpersonal skills and enthusiasm/motivation' were among the most commonly identified soft skills that employers found lacking. Employers also mention a lack of elementary command of the English language...The SHRM/AARP survey also found that 'professionalism' or 'work ethic' is the top 'applied' skill that younger workers lack." Nick Schulz in The Wall Street Journal.

ROVE: Really, this is only a flesh wound for Romney. "This moment, too, will pass for Mr. Romney. More important, the past week's events have not significantly altered the contours of the race...In the two weeks before the presidential debates begin, Mr. Romney must define more clearly what he would do as president. In spelling out his five-point plan for the middle class, he'll have to deepen awareness of how each element would help families in concrete, practical ways, and offer optimism for renewed prosperity." Karl Rove in The Wall Street Journal.

Top long reads

Frank Rich spends a week consuming the news of the American Right: "[I made] an attempt to put myself in the Republican brain by spending a solid week listening to, watching, reading, surfing, and otherwise gorging on conservative media...What did I learn in my week imbibing the current installment of the Reagan revolution? I came away with empathy for those in the right’s base, who are often sold out by the GOP Establishment, and admiration for a number of writers, particularly the youngish conservative commentators...Watching the convention through conservative media, you are constantly reminded how much the GOP is isolated from the cultural mainstream. That’s a direct consequence of the party’s shortage of diversity and youth, and some on the right are bugged by it...[Their] anger is certain to rage long past Election Day, and if I learned anything in my week strolling around the conservative mind, it was that anyone who sticks to an exclusive diet of lamestream media is missing the news."

Wonk alert interlude: The Library of Congress' THOMAS site is dead. Long live Congress.gov.

Got tips, additions, or comments? E-mail me.

Still to come: the housing recovery presses onward; lots of penalties for no health insurance; how Housing and Urban Development blew a billion dollars; carbon taxation in British Columbia; and fire tornadoes which you have to watch.

Economy

Preview of the first debate: it's the economy, stupid. "In case you were wondering how big a deal the economy is, just check out the list of topics for the first presidential debate. Each of these subjects will get a 15-minute segment in the Oct. 3 debate, though not necessarily in this order: The Economy – I. The Economy – II. The Economy – III. Health Care. The Role of Government. Governing. Jim Lehrer of PBS, who is moderating the debate, released the list. " Rachel Weiner in The Washington Post.

The housing recovery is looking more and more real. "Two U.S. housing reports released Wednesday morning show more signs of improvement in the housing market, suggesting that it might finally be on its way toward a full recovery. The National Association of Realtors reported that existing-home sales rose 7.8 percent to a seasonally adjusted annual rate of 4.82 million in August and the national median home price rose on a year-over-year basis for the sixth month in a row. The Commerce Department reported that housing starts increased 2.3 percent in August to a seasonally adjusted annual rate of 750,000 and building permits, an indicator of future building activity, fell 1 percent to a seasonally adjusted annual rate of 803,000." Kathy Orton in The Washington Post.

Global central banks coordinate monetary policy easing. "Massive injections of stimulus into financial markets by the world's largest central banks are creating a domino effect around the globe, prompting governments from Brazil to Turkey to take steps to keep easy money from flooding in and driving up their currencies. The Bank of Japan Wednesday became the latest central bank to ease monetary policy. That follows bold pledges by the world's two biggest central banks [the U.S. Federal Reserve and the European Central Bank] to launch open-ended programs to bolster their economies."Tom Lauricella, Sudeep Reddy, and Erin McCarthy in The Wall Street Journal.

Embrace the fiscal cliff. You know you want to. "Since the Bush tax cuts will expire automatically, Republicans won’t technically have voted for tax increases if we go off the fiscal cliff—the expiration of the Bush tax cuts and other tax breaks and the triggered sequester cuts that are all scheduled to take effect after Dec. 31. Instead, both parties would presumably come up with a deal that would restore some, though not all, of the Bush tax cuts as part of a larger bargain. That would mean they could call it a tax cut. That’s the reason that folks like William Gale have explicitly advocated for passing over the fiscal cliff." Suzy Khimm in The Washington Post.

Boom time for global metropolises. "A new paper in the Proceedings of the National Academy of Sciences tries to figure out what, exactly, will happen as these countries become increasingly urbanized between now and 2030. The amount of total urban land area will swell by 185 percent...Nearly half of that growth will occur in Asia -- mostly in China and India. But Africa is expected to see a large boom as well, particularly in five key areas: the Nile River in Egypt; the coast of West Africa; the northern shores of Lake Victoria; the northern regions of Nigeria; and Addis Ababa in Ethiopia." Brad Plumer in The Washington Post.

You know you want to interlude: When you add fire and tornadoes together, here's what you get.

Health Care

More than expected to be hit with no-insurance penalties. "Nearly six million Americans, most of them middle-income workers, will face a tax penalty under President Obama’s health overhaul for not getting insurance, Congressional analysts said Wednesday. That estimate, from analysts at the nonpartisan Congressional Budget Office, is significantly higher than their previous projection, calculated in 2010 shortly after the law passed. The earlier estimate found four million people would be affected in 2016, when the penalty is fully in effect." The Associated Press.

Innovation in health insurance. "As one of the country’s largest health-insurance companies, Humana regularly has a say in where its members seek care. Now it wants sway over what groceries they buy. Humana announced a new partnership with Wal-Mart on Wednesday that will give the more than 1 million members of its wellness program, HumanaVitality, a 5 percent discount on healthy groceries...The unusual partnership between a major insurer and major retailer speaks to insurers’ increased push to become involved in areas traditionally outside their purview...The partnership looks to put a new twist on existing wellness programs by offering a financial incentive to purchase healthier groceries." Sarah Kliff in The Washington Post.

Domestic Policy

How the Dept. of Housing and Urban Development blew a billion dollars. "The U.S. government may have paid hundreds of millions of dollars in mortgage aid to struggling homeowners who did not qualify for that help, a new report found. The inspector general for the Department of Housing and Urban Development said the agency did not adequately enforce standards for its Preforeclosure Sale Program, which uses government aid to cover the shortfall for troubled homeowners who must sell their home for less than they owe on their mortgages...Based on its sample, the investigators estimated that HUD may have paid more than $1 billion in claims for 11,693 sales that did not qualify for participation in the program." Danielle Douglas in The Washington Post.

Does the future of public campaign finance rest with third parties? "The program for federal funding of presidential elections is meant to give candidates a way to pay for their races without relying on big donors. Lately, its only purpose has been to fund minor candidates, who may have little hope of winning any electoral votes but nevertheless have big hopes of influencing the broader debate. Besides Stein, libertarian Gary Johnson and Republican Buddy Roemer qualified for public funding this election cycle. The system, which matches small donations during the primaries and provides a large grant for the general-election campaign, has not kept pace with the ballooning cost of the presidential contest." T.W. Farnam in The Washington Post.

Here's why you are going to get more junk mail soon. "Customers might complain about the flood of unsolicited credit card applications, supermarket fliers and shopping catalogs in their mail, but the Postal Service is hoping to deliver even more. Faced with multibillion-dollar losses and significant declines in first-class mail, the post office is cutting deals with businesses and direct mail marketers to increase the number of sales pitches they send by standard mail, the official term the agency uses for what is less kindly referred to as junk mail...Cities struggling to pay recycling and landfill costs to dispose of billions of pieces of unwanted mail are objecting to the expense. Localities estimate that they spend about $1 billion a year to collect and dispose of it...About 48 percent of the mail is advertising appeals, according to Postal Service data. Last year, Americans received about 84 billion pieces of junk mail." Ron Nixon in The Washington Post.

With budget axe overhead, military-industrial complex reorganizes. "The defense industry is remaking itself in the face of changing technologies and shrinking budgets, with companies rushing to buy or sell vast lines of business to better position themselves for an uncertain future...Driving the changes are concerns about Pentagon spending reductions already in place as well as those yet to come, including a roughly $500 billion cut slated for January. But the companies are reacting in very different ways, each trying to game out what parts of the industry are likely to thrive in coming years. The result is a period of particular instability that makes it difficult to predict winners and losers." Marjorie Censer in The Washington Post.

Heroic interlude: A new game for wonks: 'Budget Hero.' It's like 'Guitar Hero,' but with accounting instead of rocking out.

Energy

Look to British Columbia for a successful carbon tax swap. "[H]ow do carbon taxes actually work in practice? One place to look is the Canadian province of British Columbia, which has had a modest carbon levy in place since 2008...The tax started at $10 per ton of carbon in its first year and rose by $5 per ton each year thereafter. That translates into a roughly 9-cent tax on a gallon of gasoline, rising 5 cents per gallon each year...British Columbia has also used the carbon tax proceeds to lower both its local corporate income tax and the tax rates on the bottom two brackets, in order to alleviate the fact that the carbon tax hits the poor a bit harder." Brad Plumer in The Washington Post.

Extreme melting of Arctic ice leads to climate warnings. "The drastic melting of Arctic sea ice has finally ended for the year, scientists announced Wednesday, but not before demolishing the previous record -- and setting off new warnings about the rapid pace of change in the region. The apparent low point for 2012 was reached Sunday, according to the National Snow and Ice Data Center, which said that sea ice that day covered about 1.32 million square miles, or 24 percent, of the surface of the Arctic Ocean. The previous low, set in 2007, was 29 percent. When satellite tracking began in the late 1970s, sea ice at its lowest point in the summer typically covered about half the Arctic Ocean...[S]ome scientists think the Arctic Ocean could be largely free of summer ice as soon as 2020." Justin Gillis in The New York Times.

Wonkbook is produced with help from Michelle Williams.

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