PROGRESSIVE POLICIES #1: UNIVERSAL CHILD CARE AND EARLY LEARNING

Access to affordable, high quality early care and education (ECE) for children under school age is essential for allowing parents to be productive members of the workforce and for putting young children, especially those from families facing economic or other challenges, on a trajectory for success. Therefore, providing universal ECE is an important progressive policy priority.

For 65% of children under age six, all parents are working. The lack of affordable ECE means that some parents can’t afford to work, reducing the labor force participation of parents – a loss to our economy. In addition, reduced productivity due to employees’ inadequate or undependable ECE costs businesses billions of dollars a year because of absenteeism and other impacts on parents’ ability to work productively.

Low-income families spend, on average, over 17% of their incomes for ECE. The federal government’s benchmark for affordability is that ECE should cost no more than 7% of income. With two or more children, ECE often costs more than a parent can earn. Therefore, it can make economic sense for a parent to drop out of the workforce and care for the children.

Because providers of ECE must make their services affordable for parents, in many cases they cannot afford to provide high quality services. In particular, they cannot afford to pay ECE teachers enough to consistently attract and retain top notch staff. ECE teachers are paid much less than what they would make in other positions, for example as a public school teacher. Despite the push to have ECE teachers have a Bachelor’s degree, as public-school teachers do, their pay is about half that of public school teachers.

ECE teachers make less than $24,000 on average; pay so low that roughly half of them require public assistance, such as Food Stamps, to make ends meet. Therefore, turnover is high – which does not provide the stability of consistent relationships that children need or the quality of services that an experienced, stable workforce can deliver.

Investments in young children and their families can produce a high return on investment (ROI) – up to $17 for every dollar spent – according to numerous studies. High quality ECE for children, coupled with support for low-income parents, reduces the need for special education and grade retention in schools, reduces high school dropout rates and involvement with the criminal justice system, and increases children’s educational attainment and their future earnings. More recent studies have identified long-term improvements in health and mental health, as well as benefits for the next generation of children. These more recently identified outcomes have not yet been factored into the ROI calculations; they will undoubtedly increase the ROI for investments in young children and their families, probably substantially above the 17 to 1 return calculated by the Perry Preschool Study.

Current federal ECE programs serve only a fraction of eligible children because funding is limited. Head Start serves fewer than 50% of eligible 3 and 4 year olds (i.e., those in families below the poverty line, which is only $21,000 for a family of three that not infrequently consists of a single parent with two young children). Early Head Start, for families with a child from birth to three, serves fewer than 10% of those eligible. Finally, the Child Care and Development Fund, which subsidizes ECE for all other families, serves only about 16% of the eligible families (1 in 6).

Senator (and presidential candidate) Elizabeth Warren has made a detailed policy proposal for universally accessible ECE. Her Universal Child Care and Early Learning plan would:

Provide universal access to locally run ECE in centers, homes, or other settings so every family can choose the ECE it would prefer and every child has the opportunity to reach his or her full potential.
Ensure affordability by providing ECE free to families below twice the poverty line (about $51,500 for a family of 4) and on a sliding fee basis to other families so no family pays more than 7% of its income for ECE.
Guarantee high quality services, including comprehensive support for children’s growth and development, such as health, dental, and other services to ensure a safe, nurturing early childhood experience.
Compensate ECE teachers at the same level as public school teachers and provide them with professional development opportunities, which will improve quality and reduce turnover.

An independent economic analysis estimates that such a program of universal, affordable, high quality ECE would cost about $70 billion per year. Senator Warren proposes paying for this with a wealth tax that would generate $275 billion per year. (See my previous post for more details and options on how to pay for progressive policies like this one.)

Universal, affordable ECE would increase labor force participation and productivity, thereby stimulating economic growth and increasing tax revenue. Therefore, universal ECE would, at least in part, pay for itself in the short-term, and over the long-term the return on investment due to improved outcomes for the children would more than pay for this investment in our young children and their families.

CAN THE U.S. AFFORD PROGRESSIVE POLICIES?

Many in Congress and the Trump Administration, along with many in the media and many pundits, assert that the U.S. can’t afford the progressive policies being proposed by some Democrats in Congress and some of the Democratic presidential candidates.

This is a matter of priorities not affordability. For example, in 2017, Congress and the Trump Administration were able to afford $150 billion a year in tax cuts primarily for wealthy individuals and corporations. They also propose spending over $700 billion in 2020 on the military and foreign wars, a $34 billion increase from 2019. And the country has had no problem spending hundreds of billions of dollars building prisons and paying for a huge increase in the number of people in prison.

To fund her progressive policy proposals, Senator (and candidate for president) Elizabeth Warren has proposed a wealth tax on American citizens with over $50 million in wealth. It would generate about $275 billion per year to spend on progressive programs. (See my previous post for details and background on her proposed wealth tax.)

A recent report called the Poor People’s Moral Budget puts forth a vision for a set of progressive polices for the U.S. including ways to pay for them. [1] Their definition of “poor people” includes low-income households up to twice the federal poverty line or “one emergency away from being poor.” This includes 43.5% of the U.S. population or 140 million people. Many of these people are on the edge of being middle class and many of them were middle class before the loss of a good job, a health care emergency, or some other crisis pushed them over the edge and into economic hardship.

The Poor People’s Moral Budget identifies three categories of policy changes that could provide the federal government with the funds to pay for progressive policies:

$886 billion a year from fairer taxes on wealthy individuals, businesses, and the financial industry (see detail below),
$350 billion a year in cuts to military spending (see detail below), and
Billions of dollars in savings from reducing incarceration and other sources.

The proposals for fairer taxes on wealthy individuals would bring in an estimated $628 billion per year:

An annual wealth tax: $275 billion per year. (This is the same as Sen. Warren’s proposal. See my previous post for details.)
Increase the income tax rate on income (e.g., dividends and interest) and gains from assets (e.g., stocks and bonds) so they are taxed at the same rate as income from work: $150 billion per year.
Apply the capital gains tax to the increased value of assets prior to any transfer, such as through a gift or inheritance: $78 billion per year.
Impose a 5.5% income tax surtax on income above $500,000 per person: $50 billion per year.
Increase the inheritance tax by closing loopholes and applying it on inheritances of over $3.5 million per person (instead of the current $11 million per person): $40 billion per year.
Increase the income tax rate on income over $10 million to 70% (which is what it was in the 1970s and before): $35 billion per year.

The proposals for fairer taxes on businesses would bring in an estimated $170 billion per year:

Restore the corporate tax rate to 35% (instead of 21%) as it was before the 2017 tax cut law: $130 billion per year.
Repeal the 2017 tax cut that provides individuals with a 20% deduction for income from un-incorporated businesses: $39 billion per year. (More than 80% of this tax cut goes to the richest 5% of individuals, such as hedge fund managers and partners in law firms.)
Repeal tax breaks for fossil fuel companies: $1 billion per year.

The proposals for fairer taxes on the financial industry would bring in an estimated $88 billion per year:

Place a small “sales” tax on financial transactions ($1 for every $1,000 of value): $78 billion per year. (This would discourage speculative, short-term trading, which is destabilizing to financial markets and has no productive value for the economy. See my earlier post for more details.)
Place a small tax on big banks ($1.50 for every $1,000 of liabilities): $10 billion per year. (This would discourage risky investments and reduce the likelihood that banks fail and must be bailed out.)

The proposals for cutting military spending would save $350 billion per year and cut military spending roughly in half. The savings in military spending include:

Close 480 of the 800 overseas military bases in 90 countries: $90 billion per year. (The U.S. would still have four times as many overseas bases as all other countries combined.)
End the foreign wars the U.S. is currently fighting: $66 billion per year.
Reduce purchases of weapons that are obsolete, ineffective, or unneeded: $58 billion per year.
Eliminate nuclear weapons and delivery systems, and cancel planned upgrades: $43 billion per year. (This would be a huge step toward eliminating the threat of nuclear war and allow the U.S. to join the 70 countries that have signed the U.N. ban on nuclear weapons.)
A variety of other cuts and improvements in efficiency: $93 billion per year.

These new revenues and spending cuts would allow the federal government to spend over $1,250 billion per year (roughly one-third of the current federal budget) on progressive policies that would increase opportunity and fairness in our society. The new progressive policies would create jobs, strengthen our economy, address climate change, rebuild infrastructure, invest in education and human capital, and provide other short-term and long-term benefits.

With progressive policies in place, the rising tide of a growing economy would once again lift up all people as it did in the 1950s, 1960s, and 1970s. The middle class would be revived and re-invigorated.

Future posts will discuss some of the specific progressive policies that could be implemented with the $1.25 trillion in annual funding made available by the changes in revenue and spending policies identified above.

[1] Barnes, S.G., Koshgarian, L., & Siddique, A., June 2019, “Poor people’s moral budget: Everybody has the right to live,” Poor People’s Campaign, Institute for Policy Studies, and Kairos Center (https://www.poorpeoplescampaign.org/budget/)

SHOULD THE U.S. HAVE A WEALTH TAX?

Economic inequality has been growing rapidly in the U.S. over the last 40 years. The wealthiest 10% of households now have roughly 80% of all wealth in the U.S. and 50% of all income. The richest 130,000 households now have almost as much wealth as the poorest 117 million households combined. The top 0.1% of households have seen their share of all wealth nearly triple, from 7% to 20%, in the last 40 years. Changes in tax laws since the 1980s have dramatically reduced taxes on the wealthy, even though they are the ones who receive the greatest benefit from the U.S. economic system and our public infrastructure. Economic disparities in the U.S. are greater than in any of the other 36 countries with advanced economies that make up the Organisation for Economic Co-operation and Development (OECD). [1]

One way to slow the growth of inequality, and perhaps reverse it, would be to tax wealth annually, like income taxation. Income is taxed because it is one way to determine how much someone has benefited from our economic system and public infrastructure, how much they can afford to pay in taxes, and how much it would be fair for them to contribute to the maintenance of our public infrastructure and the smooth functioning of our society – our education system, our transportation systems, our public safety systems, our legal system of laws and courts, etc. As with the income tax, a wealth tax would have a standard deduction or exemption so that low-wealth households would not pay any wealth tax. For example, the current exemption in Switzerland is about $75,000 per person in wealth (i.e., savings), in Spain it’s around $800,000 per person, and Senator Warren has proposed $50 million per household for the U.S. (See below.)

Under our current tax system (including federal, state, and local taxes), wealthy households pay a smaller portion of their financial resources in taxes than poorer households. This is true whether the calculation is done based on income or wealth. For example, the 0.1% wealthiest households are estimated to pay 3.2% of their wealth in all taxes, while the bottom 99% of households are estimated to pay 7.2%. U.S. tax laws no longer reflect the core principle of fairness – that what one pays in taxes reflects his or her ability to pay.

Some current taxes share some characteristics of a wealth tax but are limited in scope or scale. At the state and local levels, the ownership of real estate is typically taxed and in some places some forms of tangible property, such as cars or business assets, are taxed. However, ownership of financial assets (e.g., stocks, bonds, etc.), of boats and planes, of jewelry and art, of collectibles, and of other forms of wealth are generally not taxed. Income from wealth held as financial assets and the profits from the sales of assets are taxed. Transfers of assets through gifts and inheritance are taxed.

For every one of the wealth-related taxes – on property, on income and gains from assets, and on inheritance – the wealthy and well-connected (often due to their campaign spending) have gotten policy makers to change and write loopholes into our tax laws that reduce the taxes wealthy individuals pay. For property ownership, real estate taxes and interest payments on mortgages are deductible when calculating federal income taxes (although the 2017 tax bill has surprisingly put some limits on these deductions). Income from wealth held as financial assets and the profits from the sales of assets are taxed at a lower rate that income earned from working. If assets are transferred to another person, through inheritance, gifts, or other means, the gain or profit on the assets is typically NOT taxed, allowing the wealthy to pass on their wealth tax-free. Furthermore, the inheritance tax has been cut and serious efforts have been made to eliminate it. Currently, it is applied only on assets over $11 million per person. In addition, loopholes in tax laws allow wealthy families and their tax experts to avoid or reduce their payment of inheritance taxes. If an asset is given to a charity, the gain or profit on it is not taxed, even though the donor can deduct the full, current value of the asset to reduce the income tax they would otherwise owe. This is a double tax avoidance scheme that provides huge benefits to the wealthy.

Four European countries have a wealth tax and back in 1990 twelve of them did. The wealth tax has been dropped in eight countries for a variety of reasons, but one was that wealthy individuals in Europe can relatively easily designate a tax-free location as their official residence to avoid the wealth tax. In addition, the wealth taxes were not generating much revenue because the tax rate was low (e.g., 1% to 2%), because exemptions for certain assets or circumstances have been written into the laws, and because of tax avoidance. Furthermore, other wealth-related taxes were viewed as preferable, e.g., taxes on gains or profits when assets are sold, inheritance taxes, property taxes, and taxes on inter-generational gifts. [2]

Senator Elizabeth Warren, as part of her presidential campaign, has proposed a wealth tax for the U.S. that she calls the Ultra-Millionaire Tax. It would apply only to the 0.1% richest households – about 75,000 households – with net wealth (i.e., assets minus debts and other liabilities) of over $50 million. They would pay an annual tax of 2% on net worth over $50 million up to $1 billion and 3% on net worth over $1 billion. This tax is estimated to generate $275 billion per year and, thereby, increase federal government revenue by about 7%. [3]

Warren’s proposed wealth tax would apply to all assets held anywhere in the world by a U.S. citizen. The IRS would be able to grant deferments (i.e., a postponement or delay) in the payment of the tax in extenuating circumstances. To calculate someone’s wealth, Warren notes that the IRS already has rules for valuing most assets for inheritance tax purposes. These rules could be used or they could be improved, and the IRS would be authorized to use cutting-edge valuation techniques for hard-to-value assets. Her proposal includes an increase in the IRS’s enforcement budget to oversee taxpayers subject to the Ultra-Millionaire Tax. A 40% exit tax would be charged on net worth above $50 million for anyone renouncing their U.S. citizenship to avoid the tax. The revenue this proposal would generate is what Senator Warren would use to pay for the programs she has proposed in other policy areas.

Economic inequality in the U.S. is spiraling to unprecedented levels because the wealthy have been using their wealth to skew public policies, such as tax policies, to their benefit. For example, some Republicans in Congress acknowledged that the 2017 tax bill, with its huge tax cuts for the wealthy, was passed to satisfy and reward donors to their campaigns, who were demanding a return on their “investment”. [4]

A wealth tax could be one strategy to address the huge and growing economic inequality in the U.S. It would ask those who have benefited tremendously from the U.S. economic system and our public infrastructure to pay something back to maintain this business environment so that the next generation has the same opportunity to succeed as they did.

[1] Thornton, A., & Hendricks, G., 6/4/19, “Ending special tax treatment for the very wealthy,” Center for American Progress (https://www.americanprogress.org/issues/economy/reports/2019/06/04/470621/ending-special-tax-treatment-wealthy/)

[2] Taylor, T., 2/4/19, “Why have other countries been dropping their wealth taxes?” Conversable Economist (http://conversableeconomist.blogspot.com/2019/02/why-have-other-countries-been-dropping.html)

[3] Warren, E., retrieved 6/12/19, “Ultra-Millionaire Tax,” (https://elizabethwarren.com/ultra-millionaire-tax/)

[4] Thornton, A., & Hendricks, G., 6/4/19, see above

FUTURE SUPREME COURT CASES WILL TELL A TALE

The following upcoming Supreme Court cases should be watched to see if the “conservative” majority continues to make partisan or ideologically-driven decisions that reflect judicial activism (i.e., they disregard precedents and established law): (See my previous post on why the “conservative” justices are really radical, right-wing activists.)

Department of Commerce vs. New York State, where the Court will decide whether to prohibit the addition to the 2020 Census of a question on citizenship status. The Constitution mandates a census to count all people living in the U.S. The Census Bureau itself (which is part of the Department of Commerce) estimates that adding a citizenship question would mean that 5.8% of households with a non-citizen would not respond to the Census, resulting in 6.5 million people not being counted.
An acknowledged undercount (due to a citizenship question or anything else) would violate the intent of the Constitution. Furthermore, the undercounting of households with a non-citizen, who disproportionately live in states and districts represented by Democrats, will result in billions of dollars of reduced federal financial assistance to those areas due to funding allocations based on population. It might also result in Democratic leaning states losing seats in the U.S. House of Representatives and the loss of Democratic leaning seats in state legislatures.

A citizenship question has been added to the Census 1) in violation of the law for modifying the Census, 2) over the objections of experienced Census Bureau employees and six former directors of the Bureau under both Democratic and Republican presidents, and 3) based on a rationale that has been lied about by Commerce Secretary Ross and other Trump Administration officials. [1]

A recently uncovered 2015 report by a Republican redistricting strategist, Thomas Hofeller, concluded that a citizenship question would provide data to facilitate drawing political districts that would benefit Republicans. Hofeller also suggested using the rationale for the question that the Trump Administration has put forward: that the question would help protect minority voters under the Voting Right Act. The Justice Department letter to the Commerce Department requesting the addition of a citizenship question, uses, word-for-word, a paragraph from Hofeller, despite denials from the Justice and the Commerce Departments that they were aware of Hofeller’s work. [2]

Therefore, if the Court rules that a citizenship question can be included on the Census, the decision will reek of partisanship.
Rucho vs. Common Cause and Benisek vs. Lamone are cases where the Court will rule on the constitutionality of partisan gerrymandering of congressional districts to benefit Republicans in North Carolina and Democrats in Maryland. [3] Although these two cases reflect gerrymandering by each party, the bulk of and the most extreme partisan gerrymandering that is in place today has been done to benefit Republicans. (See my previous posts on gerrymandering here and here.)
If the Court refuses to ban extreme partisan gerrymandering, the decision will clearly benefit Republicans and, therefore, appear to be partisan.
The Court has decided to rule on three cases involving employment discrimination against gay, lesbian, bisexual, or transgendered (LGBT) individuals. Courts, including the Supreme Court, have ruled since the 1980s that the Civil Rights Act of 1964’s prohibition on discrimination based on sex protected LGBT people from discrimination in employment, housing, and public accommodations. The Equal Employment Opportunity Commission, which enforces non-discrimination in the workplace, has interpreted the Civil Rights Act to apply to sexual orientation and gender identity. Protection for LGBT people in federal law is important because 30 states do not have laws protecting them from discrimination. Many in the LGBT community are concerned that the Supreme Court will overturn these precedents in its rulings on these cases. It is even possible that its rulings in these cases could undermine protections for women. [4]
If the Supreme Court’s rulings in these cases overturn protections for LGBT individuals, the Court’s decisions will be viewed by many as radical, right-wing ideological and partisan decisions by activist justices.
Although no case is expected to reach the Supreme Court for a while, anti-abortion activists in Alabama and a number of other states clearly intend to engender a Supreme Court case that will give the Court an opportunity to reverse the Roe vs. Wade decision guaranteeing women the right to terminate a pregnancy. Anti-abortion activists are pushing these laws now because they believe the current “conservative” Supreme Court justices will overturn the settled law and precedent that Roe vs. Wade represents and that has been in place for over 45 years.
A Supreme Court ruling overturning Roe vs. Wade will be viewed by many as a radical, right-wing ideological and partisan decision of judicial activism.

If the Court makes radical, right-wing, partisan, activist decisions in some or all of these cases, Congressional action to reverse them is possible, with the possible exception of the inclusion of a citizenship question on the 2020 Census. Even there, Congress could ameliorate the effects of the inclusion of the question. (See my previous post on reversing the effects of Supreme Court decisions.)

These Supreme Court cases will be closely watched. A series of radical, right-wing, partisan, activist decisions will, unfortunately, continue to undermine the faith of the public that the Supreme Court – and our court system in general – is impartial and non-partisan. They would also undermine a foundational element of our democracy: its system of supposedly independent checks and balances.

[1] Liptak, A., 4/15/19, “The Supreme Court will soon consider whether the Census will include a citizenship question,” The New York Times

[2] Wang, H. L., 5/30/19, “GOP redistricting strategist played role in push for Census citizenship question,” National Public Radio (https://www.npr.org/2019/05/30/728232221/gop-redistricting-strategist-played-role-in-push-for-census-citizenship-question)

[3] Stohr, G., & Robinson, K., 3/26/19, “Supreme Court Justices question suits over partisan gerrymandering,” Bloomberg Law (https://www.bloomberg.com/news/articles/2019-03-26/top-court-justices-question-suits-over-partisan-gerrymandering)

[4] Arana, G., 5/22/19, “Does the Civil Rights Act protect gay employees? The Court will decide,” The American Prospect (https://prospect.org/article/does-civil-rights-act-protect-gay-employees-court-will-decide)

REVERSING SUPREME COURT DECISIONS

Congress could reverse the effects of many of the Supreme Court’s decisions by changing relevant laws. Many of the Court’s 5 to 4 rulings by the “conservative” justices (who I argue in a previous post would be more accurately described as radical, right-wing, activists justices) are politically or ideologically driven. Congressional action to reverse them is possible and in many cases would restore long-standing precedents and established law that the “conservative” justices have chosen to ignore or overturn.

One prominent example of a Supreme Court ruling that congressional action could reverse is the Court’s decision that gutted the effectiveness of the Voting Rights Act. (See my previous post on this case here.) By updating the criteria for determining which local jurisdictions are subject to federal oversight, Congress could reinstitute federal review of states’ election practices. The proposed Voting Rights Advancement Act in Congress would accomplish this. [1]

As another example, Congress could reverse recent Supreme Court decisions that allow businesses to force harmed consumers and workers to settle their claims in a privatized arbitration system that overwhelmingly favors business interests. These Court decisions selectively interpret legal language or fabricate legal reasoning to allow a business to require consumers and workers to sign mandatory arbitration agreements that prohibit them from suing the business if they are injured or harmed. For example, the Court has read into the Federal Arbitration Act, which says nothing about class action lawsuits, that a corporation can require a consumer to sign away his or her right to join a class action lawsuit. [2] Congress could pass a law that establishes a right for consumers and workers to sue a business if they are harmed.

Additional examples of legislatively correctible Supreme Court decisions where established law and/or precedent have been ignored or overturned include:

Congress could pass a law reinstituting long-standing anti-trust laws that the Court has overturned. The Court’s decisions have changed anti-trust laws to:
- 1) allow price fixing between manufacturers and distributors, and
- 2) define a theoretical promise of short-term consumer price reduction as the sole criterion for deciding whether to permit corporate mergers and aggregations of marketplace power.
Congress could reverse the Court’s overturning of executive branch agency regulations, which the “conservative” justices did by developing a rationale for ignoring a 35-year-old precedent that had been repeatedly cited as established law. The Court has rejected agency regulations based on its own re-interpretation of underlying laws, rather than deferring to agencies’ expertise and interpretation of the law as had been the precedent. This effectively shifts regulatory power from executive branch agencies with long-standing experience and expertise to the five right-wing, male justices of the Supreme Court. Congress could pass a law prohibiting the courts from overturning a regulation if it is based on a permissible interpretation of the underlying law (which was the old precedent).
Congress could reverse the Supreme Court’s dramatic weakening of protections from discrimination based on race, age, religion, sexual orientation, and gender-identity. In race and age discrimination cases, the Court has ruled, contrary to precedent, that discrimination must be proven to be the sole cause of negative treatment. It has defined the term “supervisor” so narrowly that almost no one can be found guilty of sexually or racially harassing a subordinate. It has ruled that an employer or business owner can, based on his or her personal religious beliefs, eliminate coverage for birth control from an employer-sponsored health insurance plan. [3] Congress could pass laws defining the term “supervisor” and the standard for a finding of discrimination. It could also pass a law requiring all employer health insurance to meet the standards of the Affordable Care Act (Obama Care), which would mean including coverage for contraception.

Congressional action to overturn these and other Supreme Court decisions is not only possible, and would not only reverse bad legal precedents and harmful effects, but would send a message that power resides with Congress, not with five, unelected “conservative” men. Even if legislation to reverse these decisions can only be passed by the House, doing so would be beneficial. It would highlight the harm and lack of impartiality behind these politically or ideologically driven decisions, as well as the “conservative” justices’ ignoring of precedents and established law. House passage of such laws might temper future decisions by the Court and highlight important issues for future hearings on the confirmation of Supreme Court justices.

My next post will identify some upcoming Supreme Court decisions that should be closely watched to see if the trend of politically or ideologically driven decisions continues.

[1] Millhiser, I., 2/13/19, “Not so Supreme? Congress actually has a lot of power, mostly unused, to rein in the Roberts Court by clarifying the intent of the law,” The American Prospect (https://prospect.org/article/not-so-supreme)

[2] Millhiser, I., 2/13/19, see above

[3] Millhiser, I., 2/13/19, see above