Hard Choices

Steven Maloney asked his students to stabilize the budget using the CRFB’s simulator. Some couldn’t do it without making draconian choices that were particularly painful for seniors, or undoing the President’s decisions to preserve troop levels in Afghanistan and extending the Bush-era tax cuts. Some wouldn’t do it:

That students would hand in deficits of 70% of GDP when the assignment was to get it to 60%, and say, “sorry, I just cannot do it,” when they are checking boxes in an extra credit assignment that affects no one… suggests that perhaps most of our polarization problems are problems of focused attention, and not, as popular theories on both the right and left seem to purport, because we are populated by disagreeable, sub-mental, conspirators out to destroy life as we know it.

It’s a very interesting experiment! Further evidence that there would be real value in letting people wrangle with the whole budget in a public forum.

Procedure and Substance in the US Budget

Megan McArdle discusses budget negotiating strategies. She’s right.

Ezra Klein outlines why liberals don’t like it. He’s also right:

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Obama’s got 156 million people splitting $214 billion in tax cuts and benefits. The GOP’s got 4[.8] million people splitting $133 billion in tax cuts. On a per-person level, the GOP’s tax cuts are much larger. An individual billionaire is getting a far better deal than an individual unemployed American. And that’s galling. The problem is that to take the money from the billionaire means to also take the money from the unemployed individual. Actually, taking the money from the billionaire means taking the money from a lot of unemployed Americans.

Perhaps related: African Americans are more than twice as likely to experience downward mobility as whites.

Walmart Coming to DC

walmart-movie-posters.jpgWalmart is planning to open several new “urban” stores in the District, and I’m pretty excited about it. (viaOne of them will be just two blocks away from me, and I plan to shop there. Right now, I do most of my shopping at the rundown, overpriced Safeway or at the Costco off the 495 Beltway: Walmart will give me and my neighbors more options.

DC has a major “food desert” problem, and Walmart will close these gaps. Don’t get me wrong, I’d love to have scored a Trader Joe’s or a Wegman’s, but this part of the city is predominantly middle-class public employees and retirees, so I don’t think we quite fit the yuppie/hipster grocery demographic.

Of course, I’ve long been a [cautious, caveated] Walmart booster, just check out “Walmart: A sufficiently advanced capitalism is indistinguishable from socialism.” I’d change a few things I wrote back then, but the point basically stands. Most people who shop at Target and Whole Foods are participating in the same supply-chain and wage decisions that plague Walmart, but they justify it to themselves because of the status bump that Target borrows from designers. Whereas there’s ample evidence that cheaper food is beneficial to the urban poor.

My [cautious, caveated] celebration of Walmart is all about Kaldor-Hicks optimality: let’s say you can lower the cost of an item by $20/year for 100,000 people but 90 people will lose their jobs paying $20,000/year. The job losers lose* $1,800,000/year, while the purchasers gain $2,000,000. This is what we call a good move: in aggregate, we’ve gained $200,000. Of course, the gains are small per family, and the losses are large for the few who suffer them, but as a society, we’re better off, and we can take our gains and spend them on job retraining and unemployment insurance and there’s still some left over.

The idea is that the economy is better in aggregate and we worry about distributional problems at the state level through taxation, transfer payments, and welfare institutions. It hasn’t always worked out that way, but that’s the theory and it can be very effective if executed correctly. Our experience over the last three decades shows that it works out more often than not: while income inequality is at an all-time high, the standard of living for the poorest is significantly higher. We’ve decreased the rates of domestic childhood undernutrition, to the point that we’re worried about childhood obesity! At the margins, all those different decisions that add $20/year to a family’s budget make the difference between poor people breaking even or failing to put food on the table, and now we can start working on the malnutrition attributable to food deserts.

*(It also helps that those jobs don’t just disappear, they move to China, where they help people who had been living on less than the local equivalent of a dollar a day move up to the middle class, making the local equivalent of five or ten dollars a day and avoiding poverty-related mortality from easily preventable diseases like diarrhea, asthma, or malaria. Many of Walmart’s detractors seem to genuinely favor protectionism, but to my mind that’s a grossly irresponsible, jingoistic, and just plain selfish position to take.)

“Americans don’t live here or on cable TV.”

I didn’t hear Jon Stewart’s speech from the Mall, so his quote about where real Americans live didn’t hit me until today. I’m guessing his claim was designed to set up the old, tired prejudice that the 495 Beltway is some kind of line that separates real Americans from the DC punditocracy. Given his various criticisms of the rhetoric of authenticity, I hoped for better from him. But as I’ve said, I never thought Stewart was some kind of visionary leader. He’s a comedian, and he often goes for the easy joke. (UPDATE: As per Annika’s comment below, the context suggests his “here” meant only the Capitol Building, not the US Capital. At best Stewart gives an ambiguous echo of the Beltway/Real America division. I owe him the same charity he reserves for his guests so I retract what I’ve written above. That said, the rest of what I write here still seems appropriate.)

On the other hand, maybe he’s right. In a very real sense, DC residents are not Americans. Today is our nation’s election day, and while everyone else decides the course of our national policy over the next two years, we will vote for a slate of local offices including the much-discussed mayor’s race. However, because DC is a one-party town, few of these elections are seriously contested. Moreover, when District residents return Eleanor Holmes Norton to the House of Representatives, she will have no impact on whether Democrats or Republicans hold the House, because she cannot vote.

The closest analogy is to colonial possessions, and the fact that the majority of the District’s residents are African-American who still don’t have much local isonomy even under so-called Home Rule ought perhaps to drive that point home.  That’s why I support HR 1014, the ‘No Taxation Without Representation Act

To amend the Internal Revenue Code of 1986 to tax bona fide residents of the District of Columbia in the same manner as bona fide residents of possessions of the United States.

It would treat DC residents like the residents of Puerto Rico, the Virgin Islands, Gaum, the Northern Marinara Islands, and American Samoa by exempting them from paying federal income tax on income earned in the District itself.

Of course, I don’t like being without voting representatives in the House and Senate. My preference would still be to rejoin Maryland for taxation and voting purposes (which would entail higher taxes, but supply access to representation in the Senate where the filibuster and anonymous holds supply greater power.)

The Democrats have not served the District well in this regard, since they put off a vote on the DC Voting Rights Act in April. Surprisingly, though the Democrats often voice the rhetoric of Home Rule, it’s House Republicans like Louie Gohmert and Jason Chaffetz that keep advancing full-fledged solutions rather than half-measures like a single Representative in a body of 437 others. Huh.

Here’s President Obama:

On this occasion, we remember the day in 1862 when President Lincoln freed the enslaved people of Washington, D.C. – nine months before he issued the Emancipation Proclamation. I am proud that an original copy of that document now hangs in the Oval Office, and we remain forever grateful as a nation for the struggles and sacrifices of those Americans who made that emancipation possible.

Americans from all walks of life are gathering in Washington today to remind members of Congress that although D.C. residents pay federal taxes and serve honorably in our armed services, they do not have a vote in Congress or full autonomy over local issues. And so I urge Congress to finally pass legislation that provides D.C. residents with voting representation and to take steps to improve the Home Rule Charter.

The man is the President of the United State of America. Why doesn’t anybody ever listen to him? (Could it be because he lives in DC?)