In July, I began asking prominent Democrats their views on substantive policy questions. Sen. Elizabeth Warren (D-Mass.), who actually initiated the exercise with her sua sponte answers, and Los Angeles Mayor Eric Garcetti both have participated. Sen. Chris Murphy (D-Conn.) agreed to be next.
As a preliminary matter, I want to thank the senator for the substantial effort it took to answer questions in a serious way. His responses, which in some ways dramatically conflict with my own views, nevertheless reaffirm my belief that, when we get away from horse-race politics and the topic of President Trump, there are thoughtful people in government willing to think about complicated problems. Here are his answers in full. At the conclusion, I have some thoughts in response.
1. What is the right balance of taxes, debt and spending?
The answer to this question is almost completely dependent on what government is buying with its spending, and what activity the government is taxing. In general, without the specifics, government should roughly approximate budgetary outputs with inputs, while leaving room to create debt for spending projects that will provide a return on investment in a longer term window. Most smart economists I know suggest that deficits in the range of 3 percent of gross domestic product are responsible and manageable.
But today, that’s not what the government is doing. We are running increasingly gargantuan deficits in order to finance massive transfer payments, largely for retirement and health care purposes, that provide relatively small longer term revenue gains for our economy. Recently, these deficits have been created by a moronic choice by the Republican Congress to dramatically reduce tax revenues, largely for corporations and the richest Americans. However, Democrats who complain about this backward anti-growth tax policy must also acknowledge that some of the stuff we’ve been spending money on for years is worthwhile, but not meritorious of continued deficit financing.
Most smart businesses have an investment plan. They prioritize spending money to improve the quality of their workers, the efficiency of their physical plant, and the margin of their competitive edge over their market competitors. For the U.S. budget, these investments would be our education system, our national infrastructure, and our investments in science and technology. But you know what? If you total all the money the federal government spends on these three “investment accounts” — education, infrastructure, and science — it’s less than five percent of the federal budget. Granted, when we spend gazillions on Medicare and Medicaid, a big chunk of that money ends up in research and development too, but that’s inefficient, indirect spending. Most health care spending is simply about keeping people alive — super worthwhile, yes, but not terribly additive economically.
The federal government should contemplate massive increases in these investment accounts. Start, for instance, with free preschool and some sort of guaranteed post-secondary education. This would be the type of spending worth deficit financing, because putting millions more Americans through relevant collegiate-level coursework would add tremendous value to the economy and increase the earning and tax paying potential of Americans. And you could pay for this investment either by raising income taxes on higher earning Americans, who are paying lower levels of their income in taxes than at any point in the last one hundred years, or by making real reforms to the way in which health spending is allocated, prioritizing payment for outcomes rather than simple volume or visits and procedures.
2. If you think the 2017 tax cuts sparked an economic “sugar high” that will fade, what is the better way to increase productivity and create higher, sustained growth?
First of all, the 2017 tax bill wasn’t really a tax cut bill for the majority of Americans. It was more of a bait-and-switch: while a lot of folks will see a small reduction in their tax bill for the first few years, it’s gone by 2026, at which point millions of American households will be paying more, not less, in federal taxes. So let’s get that straight. Meanwhile, the corporate tax cuts are permanent.
In the short term, corporate earnings are soaring, net pay for millionaires is getting larger, one-time stock buybacks are making the super wealthy even wealthier, and the stock market is humming. But you know what — this doesn’t matter to most Americans. Because most Americans aren’t wealthy already, and very few, surprisingly, have money in the market. In fact, of the families in America who are in between the poorest 20 percent and richest 20 percent, only one in four has significant investments in the stock market. So the “sugar high” of the Trump economy doesn’t really touch them.
It’s frankly time we started measuring the health of the economy through metrics that are more relevant than the ones we use today, which are largely the unemployment rate and the Dow Jones [industrial average]. Wages are going up at a slower pace under Trump than under [former president Barack] Obama, and wage growth has actually slowed since the tax cuts went into effect. The unemployment rate number can be misleading: finding a job is easier when all the jobs are temporary or part time, with meager pay and benefits. We shouldn’t stop caring about the number of people who don’t have jobs, because few things are worse than being unemployed, but we should start caring much more about wages than we do today.
So let’s start having a purposeful policy to grow wages. Let’s raise the minimum wage — that ends up raising all boats. Let’s strengthen organized labor — that’s the best way to put pressure on more economic growth to flow to workers rather than to already flush investors and owners. Let’s take some burdens completely out of the employer/employee relationship, like health care, so that more company earnings can go straight into the worker’s pocket instead of to his or her doctors. Let’s grow wages, not just jobs, and then the economy will start humming for everyone, not just those who watch the stock ticker every day.
And as for taxation, we should be asking some simple filter questions that are nowhere in our tax debate today. One, are we leaning the federal tax burden on the things we want less of, and the things that can’t move out of the taxing jurisdiction? Two, are we taxing as lightly as possible the things we want more of, and the things that can choose to move out of the taxing jurisdiction? And three, are there things that are more efficiently taxed at a federal level, because of the negative externalities associated with allowing states to tax entities that can easily move from one state to another? If you apply these questions to federal tax rates, we would stop providing a disincentive to wage growth by taxing employers more heavily through the payroll tax when they increase wages. We would, in fact, keep the corporate tax low because of how easily companies can move their base of operations overseas. And we wouldn’t worry about the race-to-the-bottom that occurs in states when the super mobile companies of the twenty first century can force states to pay them for the jobs associated with bid factories and headquarters, removing all state revenue to pay for the things necessary to support the people who come with the jobs, like schools and roads.
3. We’ve had more than 330 mass shootings this year. What gun safety laws could actually pass that would help reduce mass killings (as well as suicides and other crimes)?
This one is easy. Universal background checks (to start with).
The issue of reducing gun violence is unlike any other. On no other issue is there such broad bipartisan agreement among voters yet complete paralysis among lawmakers. Why? The gun lobby. To their credit and blame, the gun lobby has successfully convinced politicians and the media that closing loopholes and tightening background checks are divisive and controversial. In reality, nothing could be farther from the truth. Large majorities of Americans support universal background checks, permit requirements for gun ownership, and bans on the most dangerous kinds of weapons and ammunition. The gun lobby, and the loud minority it echoes, makes the issue seem like more of a hot-button issue than it is.
In states that have universal background checks for handgun sales, there are 35 percent fewer gun deaths than in states without them. And if there was a national requirement, gun death rates would come down everywhere, even in the states like Connecticut that already have mandatory checks, because the guns used in crimes in my state generally come from states where criminals can buy guns easily online and at gun shows.
Of course, I would also get these military-style assault weapons off the streets. The recent wave of mass killings didn’t start until the 1990s ban expired, and the copycat nature of the AR-15 mass murders is unmistakable. And I’d encourage states to require permits before issuing handguns. That change alone in Connecticut’s law reduced gun homicides by 40 percent.
But whatever we do, we need to do something meaningful soon. Because I also believe that our silence is noticed by madmen who are contemplating mass murder, and perceive our inaction to be an endorsement. It isn’t a coincidence that the two largest declines in violence in America generally occurred after the two most significant gun control bills passed through Congress — in the late-1930s and the mid-1990s. When Congress acts, and sends a signal of wholesale condemnation of violence, society takes the cue.
4. Other than through rhetorical leadership, what measures do you favor that would promote national unity and a sense of common purpose?
First, remove all the political incentives for partisan hackery. Gerrymandered House districts around partisanship are an atrocity, and they result in a large number of House members having no incentive at all to cooperate across the aisle. Campaign fundraising is even worse — we all raise money from our political base, and our bases are more motivated to donate by what they fear than what they support. Thus, in order to the raise the millions necessary for a non-self-financing candidate to protect against a self-funder, you need to set up clear lines of division with the other party as soon as the last election is over as a mechanism to scare as much money out of your base as possible. Actual public financing of elections would remove this permanent trench warfare, and allow for a lot more cross party work in between elections.
And finally, I’d teach a lot more U.S. history and civics. As adults, we now drift into our own social, cultural and political corners much more easily than in eras prior. But as kids, we still learn together, and one of the last things that binds this nation together is the common mythology of our founding, and our belief in our unique style of government. Half of us hate Donald Trump and half of us hate Hillary Clinton, but despite the efforts of some on the fringe, George Washington and Thomas Jefferson are still pretty universally popular. Let’s bond over our common heritage more often, and maybe that can help hold us together.
5. Should we open international markets rather than pursue tariffs? If so, how do we assist those who are displaced by trade or automation?
Few things are less popular today than free trade, and that’s for good reason. In the Connecticut mill towns that I represent, the manufacturing jobs are gone, and all the proceeds seem to have accrued to people who have Zip codes in Greenwich, not New Britain. I think people in America understand that we aren’t going backward to a world in which it makes sense to make a sensible men’s shoe in the United States, but what they really resent is having the rug pulled out from under their former economic way of life without any preparation for what comes next.
As trade agreements and the natural expansion of the global economy made obsolete many skills that American workers had made a good earning off for a long time, the cost of getting yourself or your child trained for the new economy, which generally required a college degree, went up from 1980 until today by three hundred percent in adjusted dollars. Three hundred percent.
I’m all for trade agreements that lower barriers to U.S. goods getting into foreign markets and require those countries to scale up their cost of doing business by holding to the same labor and environmental standards we do — but not if we don’t help American workers adjust to the transition. A hundred years ago, when we were perfecting the idea of free education, we decided to gift Americans enough training to be able to get a good paying job with a livable wage. In 1918 that was high school. Today, that’s a fourteenth or sixteenth grade education. We should acknowledge that the goal posts have moved for what level of education is needed to survive economically today, and start living up to our original commitment we made a century ago.
With regard to spending, Murphy makes a good case for changes in spending priorities and, unlike Republicans, expresses real concern about the debt. However, other than raising taxes on the rich (How much? What is the definition of “rich”?), the senator does not address the revenue side in any depth nor entitlement spending, which is the largest segment of our budget. If we want to spend more on children, the poor and worker training (I do!) then we have to figure out how to both spend less elsewhere and/or consider a substantial change in our tax code (e.g., a federal value-added tax). I’m still looking for a politician to endorse the Simpson-Bowles proposal, which is looking better by the day.
On increasing productivity, Murphy talks about raising the minimum wage and guaranteeing health care. However, those things do not increase productivity; to the contrary, it pays people more to do the same amount of work. Given the conflicting results from studies seeking to determine whether increasing the minimum wage kills jobs, it would be worthwhile to see whether a regional minimum-wage system would be feasible. On this topic, Murphy also suggests changes to the tax code to incentivize hiring and to prevent businesses from fleeing one jurisdiction. His suggestion that we look at payroll taxes, which make it more expensive to hire workers, is one that I favor. If we want to get at the knotty problem of productivity, I think we need to look at upgrading our workforce, alternatives to four-year college and a huge push for research and development.
On guns, Murphy’s emphasis on background checks enjoys wide, popular support. His desire to “get these military-style assault weapons off the streets” is one I share, but how? It’s going to be hard enough to limit sales of certain weapons going forward. Voluntary buyback programs are worth exploring, but would get only a fraction of these weapons. Might we consider requiring gun locks and stiff civil liability for those who don’t secure their weapons? Murphy is right about the big picture, however. The problem is getting worse and there is some evidence the National Rifle Association’s iron grip is loosening. Perhaps we have an opening in the next two years. It will be interesting to see whether the House has the nerve to pass a substantive measure and send it over to the Senate. On this, I concur that something needs to be done.
Murphy’s suggestions to increase national unity — civics education, and end to gerrymandering and addressing campaign finance — are a good start. To these I would add: Automatic voting registration, voting by mail and some sort of national service campaign. We can get creative on the latter. Imagine if every four-year college were to start requiring a year of some kind of service. Likewise, employers who, by rote, automatically require college education to perform jobs could be encouraged to accept public-service in lieu of a four-year degree. What’s missing is familiarity with people outside our socioeconomic and racial cocoon, as well as a sense of shared common purpose.
Finally, on trade, Murphy is right that the reaction to trade is, in many cases, a reaction to dislocation. Perhaps we shouldn’t use trade policy as a substitute for domestic policies that address the underlying issue of automation and job readiness. We should do both — expand markets and work to modernize the workforce; the solution as we are seeing play out in the current tariff wars is not to prop up dying industries or to create a system of favoritism where politically-connected firms get a leg up via exemptions and waivers from tariffs. Going down the road of a tariff war has been among the biggest unforced economic errors since . . . well, since we threw away the chance for a Trans-Pacific Partnership deal.