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Single Payer Healthcare is Better, Would Lower Costs and Make America and American Workers Globally More Competitive

(as published in Letters to the Editor in the Times-Dispatch, December 4, 2017)

 I read with great interest the “common-sense plan for better health-care delivery” by doctors McGuire, Scott, Thomas and Davis and Hullinen W. Moore.  Basic single-payer universal healthcare and supplemental, nice-to-have coverage from private insurers mirrors my campaign position as a candidate for Virginia’s first congressional district.  This plan would sharply lower our total healthcare costs, improve our general health and healthcare outcomes.

The authors correctly describe the American healthcare system as enormous, complex, redundant, inefficient and twice as expensive as that of other industrialized democracies.  They did not detail the incredible damage our healthcare system does to our global economic competitiveness and ability to create well-paying American jobs.  We won’t fix our economic competitiveness until we fix our healthcare system.

Only in the US is the employer primarily responsible for an employee’s healthcare. Elsewhere the government fulfills this role.  An American worker has to be far more productive than a German, Japanese, or other nationality to cover his family’s healthcare cost.   Today, if a company has two factories, one in America and one overseas, and wants to close one, most likely it will choose to close the American factory.  This is because here the employer must pay for healthcare, which costs twice as much as it should. Likewise new factories are built overseas, not here.

Over time we can reduce our healthcare costs by 50%, to levels common in other industrial countries.  If France and Canada can do it, so can we.  Our expensive healthcare system hurts American economic competitiveness. The difficulty and expense in getting insurance financially ruins families and small businesses, creates incredible anxiety, and fosters unhealthy situations.

Guaranteed basic healthcare with single payer will create secure, well-paying jobs and enable Americans to start their own businesses. Such a healthcare system would make our economy and our workers competitive again.

GOP Tax Reform is a Fraud and a Con

The Wikipedia entry reads:  Three-card Monte is a confidence game in which the victim, or "mark", is tricked into betting a sum of money, on the assumption that they can find the "money card" among three face-down playing cards. Three-card Monte is an example of a classic "short con" in which a shill pretends to conspire with the mark to cheat the dealer, while in fact conspiring with the dealer to cheat the mark. The mark has no chance whatsoever of winning, at any point in the game. In fact, anyone who is observed winning anything in the game can be presumed to be a shill.

The tax reform program currently being promoted by the GOP is also a con game.  And as in all con games, if you don’t know who the mark is, it’s you.  The shills are our straight-faced GOP congressmen who distract ordinary Americans with the promise of a small and temporary tax cut while they give our wealthiest citizens and largest businesses huge and permanent ones.  The “money card” that the mark will never find is the promised higher wages and better jobs trickling down as companies and the wealthy invest their huge tax cuts to grow the economy.  Trickle down economics have never have worked in the past and they won’t work now.

The cover story, the con that justifies the tax cuts, is that the wealthy and businesses are over-taxed and cash-starved.  The shills in congress deliberately mislead us by quoting the higher nominal tax rates, not the effective tax rates that corporations and the wealthy actually pay.  The effective or real federal rate for US corporations for example is about 18%, not 35% as the republicans like to claim.  And taxes on US businesses add up to only 2.2% of our GDP, well below the average among all industrial countries of 2.8%. Our companies are not at a tax disadvantage.  Nor are our businesses starved for cash.  Just the companies in the S&P 500 alone for example have $1.5 trillion in cash available for investments. 

A tax cut won’t add to more job creating investments, it’ll just add to dividends and share buy back programs benefiting the wealthy, who’ll now pay even lower taxes on their gains.

The wealthy are not over-taxed either. Their effective tax rate is also well below the nominal rate of 39.6% quoted for ordinary income and capital gains and dividends are only taxed at 20% or less. An American who makes $225 thousand a year—which puts him or her at the 90th percentile of income-- pays on average an effective federal rate of 21.7% not 39.6%.  The wealthiest earners do pay about 33% in taxes on income they can’t shield from taxes, but they have many legal ways to avoid taxes.  President Trump, if you think I’m wrong, prove it by releasing your tax returns. Tell us what the proposed changes in the estate tax would mean in tax savings for your family.

So if we really want to reform our tax code and not give the wealthy even more, we should start out by demanding that our Republican representatives tell us the truth and not shill out falsehoods to booster their con. And how about some open hearings before you vote for it.  Oops, too late.

The GOP claims that tax reform will create higher paying jobs and grow the economy.  That growth, albeit taxed at a lower rate they say, will more than pay for tax cuts made to businesses and the wealth even as tiny tax cuts for the working and middle classes disappear.  This is a lie.  It has never happened before and it won’t happen now.  Here are some facts:  tax cuts for the wealthy increase the deficit but they do not increase wages for ordinary Americans.

President Reagan was the first to try to increase revenues by lowering tax rates. It didn’t work.  Reagan inherited a budget deficit of $79 billion.  Deficits soared after he cut taxes. Deficits averaged $177 billion annually during his two terms.  And no, economic growth did not make up for the lower rates.  But the rich did get richer.  The top 1% owned 21% of the country in 1980.  By the time President Reagan left office, they owned 36% and salaries and wages for ordinary Americans did not grow at all.  They were flat.

President Clinton inherited a deficit of $255 billion, and actually raised taxes while growing the economy substantially.  President Clinton left President George W. Bush an annual surplus of $128 billion.  President Bush promptly lowered taxes and deficits soared. President Bush’s annual deficits averaged $443 billion compared to Clinton’s average $8 billion surplus.  Tax-cutting President Bush left Obama a shattered economy and an annual deficit of $1.4 trillion. 

President Obama went to work, investing in the economy, allowing tax cuts on the wealthiest in America to expire, lowering the deficit most years in office and leaving President Trump a deficit of $440 billion, a third of what he inherited.  If the republican’s tax cuts do go through, deficits will soar by over $200 billion a year to $765 billion a year in 2019 alone.  Republican tax cuts will increase our national debt by $1.7 trillion if they actually create growth. Otherwise their deficits will total $2.5 trillion. Hard to explain why congressmen like David Bratt who campaigned against deficits would vote for something like this.

So why are the republicans doing this?  First of all, because their wealthy donors demand it.  Republican office holders have been told, point blank, lower our taxes or we won’t contribute to your next campaign.  Secondly and cynically, because as their tax cuts take hold and our deficits soar, as interest rates go up, as our government is starved for cash, the republicans will use the crisis they created to cut back on government spending.  While tax cuts for the wealthy are preserved, tax cuts for those in the middle will disappear.  And the republicans will use the debt crisis as an anvil upon which to pound out cuts to education, infrastructure spending, federal emergency management, Medicare, Social Security, Medicaid, and other programs that actually help people.

Let’s review some numbers from the Tax Policy Center and Joint Committee on Taxation.  In 2019 the republican tax cuts Rob Wittman and David Bratt voted for will reduce taxes for 89% of middle class Americans by $1,090.  They will reduce taxes for someone making over $733 thousand by $64,210 per year—make ten times as much and get a 60 times bigger tax cut.  They will reduce taxes on a point-one-percenter by $350,020 per year. 

And what else will ordinary Americans get as deficits soar?  Well for one, no real tax cut. Increases in your healthcare costs as they sabotage ObamaCare will easily eat up your automatically disappearing $1,100 tax cut. Two, as interest rates go up, so will the cost of buying a home or car.  And our deduction for mortgage interest and state and local taxes will go down which some analysts say will lower property values.  And there will be no money for education, infrastructure, Medicare, and Social Security.  And no money for the America where we’re all in this together but big tax cuts for those who believe it’s every man for himself.

Our congressmen, Rob Wittman and David Bratt, without holding public hearings or town hall meetings, voted for this fiasco.  They think you will fall for the big con.  Don’t be the mark. Remember who they work for next time you vote.

 

Higher wages improve the economy

(As published in the Times-Dispatch March 23, 2017)

Editor, Times-Dispatch: I read with disappointment your “Outwageous” editorial lamenting that gubernatorial candidates Ralph Northam and Tom Perriello want to raise the minimum wage to $15 an hour. Instead of a higher minimum wage, you propose that the government bridge the gap between the non-living wage paid by an employer and the minimum income required to live. In effect you want the government to subsidize employers who can’t find the means to pay their workers a fair day’s pay for a fair day’s work.

Economic theory actually tells us that there is a tradeoff between labor and capital — when the cost of one increases, the use of the other does as well. A higher minimum wage would drive investment and make each of us better off, regardless of how much we earn now. While there is no evidence that a higher minimum wage results in job losses after a short period of adjustment, there is a lot of evidence that a gradual increase in the minimum wage drives investment in labor-saving capital and investment in human capital, i.e., training. So even if someone does lose his or her job as a result of a higher minimum wage in the short run, in his next job he will earn a better living and be more productive.

Travel to a high-cost country and you will still find the fast food restaurants we have here, only the workers will be better trained, more productive and use more automation. Likely they will have better benefits, including health care, and more tenure. Until those who believe a higher minimum wage suppresses job growth put away their ideological myths and observe the way the world really works, they will be holding back upward mobility, productivity and economic growth.

 
 


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