Kicker Envy

Individual Oregon income taxpayers are set to receive a record $1.1 billion in so-called kicker refunds just before Christmas. The checks will equal 18.6 percent of the state income tax each filer paid in 2006. The average taxpayer will see $612.

But even before those checks hit our mailboxes, some are questioning whose money it is, and others seem envious that the “rich” are getting much bigger checks than the rest of us.

So, whether the kicker law is good or bad public policy, let’s think a little about who this $1.1 billion really belongs to. Is it a rebate for overpaying your taxes, or is it somehow “our” money that is better left in government coffers?

How the kicker works

First, the mechanics of the kicker law: Oregon state government is highly dependent on the personal income tax for its General Fund budget. With a fairly flat tax structure, most wage earners are in the top nine percent income tax bracket. Therefore, state revenue can be quite volatile, going up and down as the economy cycles between boom and bust.

The legislature first passed the kicker law in 1979, and voters added it to the state constitution in 2000. It mandates that state economists estimate what income tax revenue will be over the following two-year budget period. The legislature must then balance the budget by not allocating more money than the estimate. If the estimate is low by two percent or more, then all the surplus must be returned to taxpayers. The kicker law actually is composed of two parts, personal income taxes and corporate income taxes. This last legislative session suspended the corporate kicker for one cycle in order to build a rainy day fund.

Some people argue that the way the kicker “kicks” makes little sense. They correctly note that projecting state revenue two years out to within a two percent margin is terribly difficult, and has been done only rarely. Others defend the kicker law as an important brake on runaway government spending, especially since voters have rejected other tax and expenditure limitations at the polls.

This year’s $1.1 billion personal kicker refund sets a record because tax revenue grew much faster than the forecast. Even though state economists didn’t foresee the entire windfall, they saw enough to let the current two-year budget grow by a whopping 20 percent. The rest is coming back to us in the form of kicker checks.

Whose money is it?

Whether the kicker law is good or bad public policy doesn’t change the answer to a more fundamental question: Whose money is it?

Some argue that the kicker money really belongs to the state. After all, they say, it’s in the state’s coffers because individuals paid what the tax law said they owed on their 2006 tax returns. As long as any Oregonian has a “need” for that money”•be they school children, the elderly, the disabled, etc.”•then the money should go to them instead of back to the individuals who earned it.

Of course, this is the Marxist “from each according to his ability, to each according to his need” justification. Taken further, not only would the kicker money remain with the state, but the state could retroactively come after even more of your previous income if, in the wisdom of government officials, anyone still “needed” those funds.

One way to look at this argument is to think about walking into a coffee shop today and ordering a $3 latte. The price is posted on the wall, but the person behind the counter asks you a question before accepting your order. “Did you get a raise last year?” “Yes,” you tell her proudly, “I was very productive last year and my boss gave me a 10 percent raise.” “That’s great,” she replies. “The latte will cost you $3.30.” “Why?” you wonder. “Because your ability allows me to better meet my needs.”

You wouldn’t accept this argument from your barista, and you shouldn’t accept it from your government.

Next, some argue that the kicker “lavishes a windfall on those who don’t need it.” They point to the 5,000 taxpayers who will receive more than $10,000 each while most of us will only see a few hundred dollars in our mailboxes. What is often unstated in this argument is that those 5,000 “lucky” taxpayers paid on average over $53,763 in state income taxes in order to earn their $10,000 refunds. They will get back exactly the same percentage of their tax payments everyone else does, 18.6 percent.

Envy is a powerful emotion, but it should not trump reason. If we can find a better way to restrain runaway government spending, we should do so. But until that day arrives, the kicker law is one defense against those who argue that your money belongs to someone else just because they “need” it.


Steve Buckstein is Senior Policy Analyst and founder of Cascade Policy Institute, a Portland-based think tank.

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  • Jerry

    The kicker is our money that never should have been collected in the first place.
    We should not only get the kicker money but back interest as well.
    Rainy day fund people are nuts. The only reason you would ever need a rainy day fund is when the state spends too much.
    Cut spending if you don’t have the money. That is what real people do.

  • DMF

    The kicker is a rebate of my money that was taken from me by the state. If other people want as large a check as I get, then they should pay as large a tax as I do. Low income people get an Earned Income Credit in excess of their taxes, I have no problem with them having it, but that children came from people who don’t qualify.

    • Kathryn Hickok

      No matter what arguments are made about what state government “needs” or who “should” receive their money back, I think that in real life, the kicker checks will be welcomed by people of all income levels, who plan to use them very productively.

      A few hundred dollars in returned taxes equals several months of gasoline bills, purchasing a new energy-efficient water heater, or making a substantial gift directly to charity. This infusion of end-of-year cash (their own hard-earned money) definitedly will not go unappreciated by lower-to-moderate-income workers.

  • John Fairplay

    The Kicker is a key player in preventing the compounding effect from destroying Oregon. Under the current Legislative makekup, any dollar that is spent by State government forces that government to raise $1.10 the following year to maintain the spending. The year after that, $1.21 must be raised, and so on. After 5-7 years, $2 must be raised to achieve the same spending goal as the original dollar. With the State budget doubling every 5-7 years, Oregonians would soon find their state completely bankrupt.

  • Bob Clark

    I think a “kicker” refund concept should be extended to local governments as well, particularly, Portland city government revenues. When this city government gets a windfall it has five primadonna-like councilors who instantly think up new ways to spend money, like city sponsored mid-wifes, zoo-bomber art, or a subsidy for a developer friend or two. If Portland taxpayers got back these windfalls, they could actually give more directly to charity instead of indirectly through their government which deducts a chunk for its administrative costs.

  • CRAWDUDE

    Great article! The truth always flows so much easier than lies using distorted facts and political opinions.

  • Steven

    No matter how hard they spend and waste money there is always some left over. This indicates to me that we are paying to much into the system. Lets cut the budget by 10% and see how the state will fare. We will block all attempts of televising, advertising any and all doom and gloom stories. Children dieing, old people suffering, illegal aliens not getting welfare checks. When we finally reduce the size of government to a reasonable level we will all be better off. Less government is the best government.

  • dean

    Steve,

    Thanks for a good explanation of the kicker. I disagree with your conclusions however, as well as those of the writers above.

    Is it “envy” that makes those of us on the left want to see higher tax collections on wealthier Oregonians? Not in my case. I don’t care about bringing the rich down. I do care about bringing others up. It is manifestly in our interests to have well funded public education, public health, transportation infrastructure, public safety, and a clean environment. We can’t get these services as individuals unless we are very rich (i.e. private schools, the best doctors, our own helicopter, our own security guards, oxygen tanks for clean air, and so forth).

    Is there waste and inefficiency in government? Absolutely. Can we reduce that waste or increase efficiency by cutting taxes & spending? I have never seen any evidence of that. We just end up with fewer services with the same % of waste or a lot of debt. In fact it may get worse because we drive the best people out of government jobs.

    Who’s money is it? Ask yourselves how much you would be earning in an anarchic world with no government. Ask how you would communicate and transport products. Ask what water you would drink and what air you would breath. Ask who would keep the hordes of impoverished gangs from taking whatever you have. Visit some sub-Saharan African countries if you want to see what near zero government actually looks like.

    It is good to debate whether this or that government program is worth the cost, and whether services are being delivered as efficiently as is posible. It is an abstraction to simply say less government is somehow better.

    Why should the rich pay more? 2 reasons. First, they can afford it. Second, they have much more to lose if and when the social system breaks down.

    Just one liberal’s opinion.

    • CRAWDUDE

      You’re last sentence sums up your beliefs Dean and is manifested in this statement from the article. “Of course, this is the Marxist “from each according to his ability, to each according to his need” justification. Taken further, not only would the kicker money remain with the state, but the state could retroactively come after even more of your previous income if, in the wisdom of government officials, anyone still “needed” those funds”.

      I’m not a liberal, socialist, Marxist or whatever the current handle they are using. I do not believe throwing money at an issue is a solution to a problem.

      You State: “Is there waste and inefficiency in government? Absolutely. Can we reduce that waste or increase efficiency by cutting taxes & spending? I have never seen any evidence of that. We just end up with fewer services with the same % of waste or a lot of debt. In fact it may get worse because we drive the best people out of government jobs”.

      I’ve never seen evidence that continuing to give and/or increasing the amount of money the government has to inefficently waste has ever produced a reduction in such acts.

      Since I may agree with your above statement as well as my own. I’ll opt to have as much of MY money given back to me since we both agree that neither action stated above will force the government to fix it’s wasteful spending processes.

    • Jerry

      Dean – you never seem to quit. Money is not the answer. The government’s main job is to keep us safe. Private entities can provide education (many do – have you ever heard of Harvard?), private concerns can supply water and power and even infrastructure. You are so caught up in how wonderful government is you can’t see the forest for the trees. Government is a bloated, inefficient mess in Oregon and at the national level. It is NEVER going to improve by giving it more money. Not EVER. How can you not figure that out? It hasn’t improved yet, and we have given it more money each and every year, without exception.

      If you are so certain more money would help, I again urge you to send yours in. You don’t need others to agree with you on this and you don’t need others to be forced into doing the same thing. If all liberals like you sent their money in think of how much it could help – at least according to you.

      PLEASE, Dean, send it in and send it in NOW. Before it is too late.

      And guess what, the rich do pay more. Poor people, by definition, don’t have any money, so how can they possibly pay taxes???
      The rich pay almost all the taxes in this country. We already have a grossly progressive tax payment system. How can you not know this??

      Here is a FACT for you to digest…unless you don’t believe in math, because math is what tells us this:
      The top 5% of the income earners in the US pay 53.25% of all income taxes. Isn’t that enough? What would be enough? I am not sure you know.
      Try to think back to when we had marginal rates approaching 90% for state and federal – the economy, which employs people, was in a shambles.
      Do you reall the luxury tax on boats?? All it did was put thousands of not so rich boat builders and their workers out of business.
      Please, Dean, think about this stuff a little and see if you can’t make some sense out of it.
      Stealling form the rich to give to those who won’t work simply does not work and never has.
      We live in a country with enough opportunity that no one need be poor.
      Again, too, I wish you a very Merry Christmas.

    • Steve Buckstein

      Dean, others are doing a good job responding to some of your points, so let me just make two comments.

      First, I’m glad that envy isn’t your motivation for wanting to see higher taxes on wealthier Oregonians. But it does seem to be the motivation of others. They seem eager to “bring the rich down” without understanding or caring that this will do little or nothing to help “bring others up.”

      Second, you ask “who would keep the hordes of impoverished gangs from taking whatever you have” without government protecting us? Even granting this assumption, realize that Oregon State government spends only something like 11 percent of its All Funds budget on police, courts and the criminal justice system. I don’t have comparable numbers for all local governments in the state, but I know that the city of Portland, for example, spends less than 25 percent of its overall budget on public safety, which includes police and fire services. These statistics don’t make much of a case for letting the state keep our kicker refunds. It seems like we’ve paid more than enough to keep our property and our lives safe already

    • Bad Boy Brown

      Hey Dean! I found your statement that by not funding government we will drive out the best employees. That is so utterly laughable, I’m amazed you even posted that statement. Did you see any of the clowns running our state agencies leaving en masse due to low wages? I think not. But our idiot Governor – someone I’m sure you voted for (and possibly even helped his campaign) – thought it was “needed” to give most of these people 20% raises.
      When you start paying more than 25% in taxes we’ll talk more. Until then, you better go back to your collge class and maybe take an economics 101 class – since LIEberals like yourself seem to be light on financial sense.

      • dean

        Crawdude,
        Wasn’t it a fellow named Jesus who said something about the rich having trouble getting into heaven? And didn’t he advise something about selling jewelry and giving the money to the poor? That was way before Marx.

        I agree, giving MORE money to the government also has no impact on waste or inefficiency. What I would suggest is that if increasing efficiency is our objective (as opposed to simply reducing what we pay) then another approach is required. My suggestion is civil service reform AND recruiting the best and the brightest rather than the mediocre and dullest to public positions. Coservatives often say government should be run like a business. Okay, successful large scale, complex businesses make a huge effort to find the best managers and employees. Do they know something?

        Jerry, but sometimes more money IS needed. Many public services are labor intensive. Parole officers can only track so many parolees for example. Packed classrooms deafeat even the best teachers.

        Have I heard of Harvard? Yes. Tuiton is around $50K a year in spite of their having the highest endowment of any private university. It is a great school, with very well paid teachers, the best the world has. Great facilities also. Harvard is your answer? How many of our kids are going to be able to go to a Harvard or its equivlent?

        Our community college and public university system is what is going to turn out the bulk of our doctors, lawyers, engineers, business owners, architects, planners, teachers and others who make modern life possible. Not Harvard.

        Math is not something to believe in or disbelieve in. It simply is. Yes, the wealthy already pay more in income taxes than the rest of us. In the aggregate they make and have a lot more. But when you factor in SSI, sales taxes (in most states) and other fees and taxes, the middle classes pay a higher proportion of our incomes than do most of the rich.

        When marginal tax rates on the rich were much higher than today, the economy was not in a shambles. The 1950s and 60s were decades of high growth, high union membership, and a much more even distribution of wealth. There were still a lot of poor people, but much of that was attributed to insitutional racism that limited opportunities for huge numbers of Americans. Plus, when Clinton raised taxes on the rich the economy shot up.

        Steve, maybe envy is the motivation of some. But I have a lot of liberal friends and I have never heard anyone say we have to tax the rich more to teach them a lesson. And yes, if ALL we wanted from government was personal security we could get by on lower taxes. But if that meant the population of the poor went way up as well then we would also need a lot more security right? And you did leave out all the other public services outside of security that we depend on (transportation, clean water, hydroelectric energy, clean air, and so forth).

        BBB…I don’t know what your life experience has been. I worked for the feds for 11 years (Forest Service). When our funding was cut and cash buyouts were offered, many of the best and the brightest were the first in line for the exits. We joked that the barnacles attached to the hull of the ship were going to hang on no matter what because they had few private sector options. I’m saying reform civil service to make barnacle scraping much easier, and do what needs to be done to bring in the best minds to run the shop. If you disagree on that, I can only conclude that you WANT government to fail.

        Kulongowski’s proposed pay raise is probably what is needed, only more so and further down the food chain. And yes, i voted for him twice, more enthusiastically the 2nd time than the first. But no, i did not campaign for him.

        • Sybella

          “Wasn’t it a fellow named Jesus who said something about the rich having trouble getting into heaven? And didn’t he advise something about selling jewelry and giving the money to the poor? ”

          Obviously you have only heard a quote. The purpose behind that statement was the rich tend to love their money instead of that fellow named Jesus. It is Jesus that gets us into heaven, not money.
          But don’t you think the idea of the poor loving the rich mans money is just as bad.

          It seems to me everybody loves the rich mans money, if they didn’t why do they want so much more of it? It has nothing to do with whether one person makes more money than another. It has to do with the fact that he has it and you want it. I believe that is called covetiousness.

          • CRAWDUDE

            Thanks Sybella, I think it was kinda cheap of Dean to try to infuse religion into a discussion about taxes, pathetic attempt to change the subject apparently.

          • Chris

            That’s a typical liberal tactic: once they’re cornered, they’ll resort to some barb regarding Christianity. That or a Hitler reference.

    • Chris

      Dean burped: “Why should the rich pay more? 2 reasons. First, they can afford it. Second, they have much more to lose if and when the social system breaks down.”

      Dean, are you handicapped? If not, you can afford to pick up trash on the highways and clean sewers without pay — say 20 hours a week? You think that’s a fair deal? I can’t imagine the catterwalling we’d here from you if government set the same mandates on you as they do the ‘rich.’

      Second, if our government wasn’t so anti-gun, most of the rich would be armed. Which is a very good deterrent to criminal activity. I’m well armed and criminals better think long and hard before they mess with my family, my property or myself.

      • dean

        Syb…better theologians than I have debated what Jesus meant.

        CD…I was not trying to change the discussion. I was saying philosophers of note other than Marx have weighed in on the obligations of the rich to the poor.

        Chris…I like your proposal. Arm the rich, in fact let them raise and pay for their own privately funded armies (Blackwater is available) and we can really cut our taxes to the marrow.

        • Anonymous

          You took it out of context so you were wrong.

          • dean

            Anon,
            Took what out of context? Which bit?

          • Sybella

            He didn’t look at the entire thing that was being said. The rich man wanted to know what to do to get into heaven. He was told a poor man had a better chance. If you read the entire thing you will find Jesus did not condemn anybody, he also made no rules we had to live by, he did show us material things were not the answer and this is what he was trying to show the rich man. The entire teaching of Jesus was to love God, and accept him as your Savior. He taught love of our fellow man but did not require us to love our fellow man. He did not tell the rich man to give his money to the poor as a condition of getting into heaven, he just said throughout all his teachings, our goal was righteousness, not works. He also taught that if works would get us into heaven, then he didn’t have to die for us, because there would have been no need.

            I repeat dean took it entirely out of context. It is not necessary to be a theologian to read the bibile and understand it is meant for you, not the other guy.

        • Chris

          It’s obvious your lack of a rebuttal means you don’t have one.

          It’s understandable, though — there’s no way you can argue forced labor according to one’s ability is different than forced taxes according to one’s ability.

  • Jerry

    Hey Dean – the bible also says if a person is unwilling to work he should not eat. Did you forget about that part? Do you only quote the parts that support your twisted notions?
    I thought so.
    My point on Harvard is that the private sector, in almost every case, can provide what the government provides, better, and for less. That is true – so we need to privatize this stuff, reduce the budget, reduce taxes, etc.
    Also, Dean, you seem to forget one very important thing. If you overtax the rich they will figure out ways around it – like buying used yachts instead of new ones in the luxury tax example I mentioned but which you completely ignored – because it proved you are wrong.

  • Jerry

    Dean – here it is for you:
    2 Thessalonians 3:10 (New International Version)
    New International Version (NIV)
    Copyright © 1973, 1978, 1984 by International Bible Society

    10 For even when we were with you, we gave you this rule: “If a man will not work, he shall not eat.”

    • CRAWDUDE

      Are you happy now Dean? You got the whole issue of taxes tossed out and a religous conversation going. Now you don’t have to try to defend your indefensible position any longer.

      If it wasn’t such a typical liberal misdirection ploy it would almost be laughable.

      • Sybella

        I thought we did a good job putting him down.

        But you are right it definitely changed the subject which was, “THE KICKER”.

        While those that are complaining about the large kickers some will get, they should be happy they don’t have to pay taxes on their refunds. Those who are getting bigger kickers, will probably have to include them in taxes.

      • dean

        CD…I’m neither happy or unhappy. I am baffled by the responses however. I listed a whole lot of stuff paid for by our taxes, suggestions for how to make government more efficient, and made the point (or at least tried) that helping out those less wealthy than ourselves is both the ethically right thing to do AND is in our self interest. What I got back is a tirade about public shools, an interesting interpretation of Jesus Christ’s teachings about rich and poor, and an unsupportable claim that Harvard, among the most expensive educational instututions in the world, is providing education for less than public universities.

        So okay, lets go back to Steve’s initial premises: (1) the kicker money is “ours” and (2) those of us in the $600 category should not “envy” those in the $10K category.

        I agree that money we earn legally is ours. I agree that under state law the state is obligated to return payments that exceed its budget estimates. Its not a law I like, but cest la vie.

        I believe we citizens have both an obligation and self interest in sending a portion of our earnings to pay for public services, most of which are essential to modern life.

        I contend that the more you have, the more you should chip in (and that includes myself), for the reasons I laid out. I accept that most of you don’t agree with either proposition.

        Lastly, bashing the poor seems to be fun sport among many of you. But ask yourselves this. Why does the richest country in the world have the highest poverty rate (and child poverty rate) among all the industrialized nations. And could this fact somehow be related to the facts that we have the highest crime rate AND highest proportion of people in prison? And if you do manage to convince your fellow citizens to ghettoize poor kids in badly funded, overcrowded schools while the rich and middle class kids are in private schools, are you really prepared for the consequences?

        • Sybella

          CD…I’m neither happy or unhappy. I am baffled by the responses however. I listed a whole lot of stuff paid for by our taxes, suggestions for how to make government more efficient, and made the point (or at least tried) that helping out those less wealthy than ourselves is both the ethically right thing to do AND is in our self interest. What I got back is a tirade about public shools, an interesting interpretation of Jesus Christ’s teachings about rich and poor, and an unsupportable claim that Harvard, among the most expensive educational instututions in the world, is providing education for less than public universities.

          A. We only responded to your statements and if you didn’t like the responses, you should not bring religion into it.

          B. Government can not be more efficient unless it is smaller. It is not governments job to feed us. If those poor haven’t had a desire to do better instilled in them, then you can give them all you want until they have more to do and they still will be poor. I challenge you to pick an unfortunate street person or welfare person and take them under your wint. Give them as much as they think they need. I can tell you my friend you will have a bottomless pit. No giving them is not the way to help. Instill in them pride and GOALS which without we don’t even get up in the morning.

          So okay, lets go back to Steve’s initial premises: (1) the kicker money is “ours” and (2) those of us in the $600 category should not “envy” those in the $10K category.

          I agree that money we earn legally is ours. I agree that under state law the state is obligated to return payments that exceed its budget estimates. Its not a law I like, but cest la vie.

          I believe we citizens have both an obligation and self interest in sending a portion of our earnings to pay for public services, most of which are essential to modern life.

          C. You are correct, government needs money to operate on. But only to do the things they need to do. Government has become the same bottomless pit as that unfortunate you are going to take under your wing. If nothing else to prove me wrong. Please no old crippled people that couldn’t provide for themselves if they could, but somebody that could provide for themselves but won’t.

          I contend that the more you have, the more you should chip in (and that includes myself), for the reasons I laid out. I accept that most of you don’t agree with either proposition.

          D. Apparently you missed that, the more we earn the higher taxes we already pay. Are you that same bottomless pit. If I gave government 90% of my income I can guarantee you still would want me to give more.

          Lastly, bashing the poor seems to be fun sport among many of you. But ask yourselves this. Why does the richest country in the world have the highest poverty rate (and child poverty rate) among all the industrialized nations. And could this fact somehow be related to the facts that we have the highest crime rate AND highest proportion of people in prison? And if you do manage to convince your fellow citizens to ghettoize poor kids in badly funded, overcrowded schools while the rich and middle class kids are in private schools, are you really prepared for the consequences?

          E. To begin with it is not necessary to bash us with the idea we are bashing the poor. We have the highest poverty rate because we make them poor. We as a society have taken pride, and a desire to achieve away from people. Good grief man, If you didn’t have to work for a living and I supported you as most of these people do, you would be the same, thinking it is your due. I can guarantee you nobody owes you anything, nobody owes the poor anything, Nobody owes me anything. But in this the richest country in the industrialist nations, there is absolutely no excuse for being a bum.
          There will always be poor among us. It is not your responsibility to tell us to take care of them. It is your responsibility to take care of them. It is not my responsibility to tell you to take care of them, but it is my responsibility to take care of them.

          I think that’s where you’re missing the boat. You have no clue what we have done or not done for somebody else.

          #9.1.2 dean on 2007-11-27 10:55 (Reply)

          • dean

            Syb…you seem to assume that all or most poor people are unemployed bums when in fact most are working one or two low paid, often dead end jobs. If you don’t support more taxpayer assistance to these working people, do you support raising the minimum wage, requiring businesses to provide health benefits, and making it easier for working stiffs to unionize?

          • Sybella

            No, I don’t assume they are all bums, but you cannot help people without giving them the tools to help themselves. You seem to only want to throw somebody elses money at the problem.

          • Steve Buckstein

            Dean, you asked this question of Sybella, but taking the original author’s prerogative, here is my short answer:

            Don’t have the government give workers more, or require others to give them more, but remove government-created barriers that may be preventing them from getting ahead financially themselves.

            Specifically:

            1. Minimum wage laws simply penalize the young and unskilled at the expense of more skilled (and union) workers. An employer will not hire someone at a rate that is above the benefit he or she receives from that employee. Removing minimum wage laws (granted, almost impossible to achieve politically) would go a long way toward increasing the demand for entry level employees, allowing them to better their own circumstances through on-the-job training.

            2. Listen to Oregon’s Sen. Wyden who argues that we need to break the employer-health insurance link altogether. Get government mandates out of the way to bring down the cost of true health insurance. If you must subsidize insurance, do it through a tax credit system as Pres. Bush has suggested, not by capturing even more people in the employer benefits trap which tends to raise costs and fosters “job lock” where people are less willing to change jobs for fear of losing their insurance.

            3. Making it easier for “working stiffs” to join unions may be fine as long as the government also makes it easier for employers to reject those unions. So-called card check laws tilt the playing field against both employers and workers who may not want to unionize. Consider adopting right to work laws instead.

          • Chris

            (ahem) Sybella, please don’t get caught up in Dean’s so-called statistics. We do not have the highest poverty rate. The way the U.S. counts someone at the poverty level is much different than the way other countries do it.

            The standard of living for our ‘poor’ is higher than almost all countries. Our ‘poor’ have access to the best medical care in the world. Many of them also own homes, TVs, cell phones, cars, DVD players, game consoles and have air conditioning. Plus, America’s ‘poor’ are better fed than almost all ‘poor’ Europeans.

            I agree with your other premises, but Dean’s statistics are not to be believed.

          • dean

            Chris,

            The international standard I use is 50% of the median. So a poor person in any given country makes 1/2 or less that of those in the middle. This standard is ued as a way to adjust for cost of living differences between nations.

          • dean

            Chris…and to your earlier point on forced volunteering, we used to have this thing called the draft. Some have called for a return of the draft if we are going to keep starting stupid wars. Some have called for a 1 year community service draft. I’m open to the idea.

          • Chris

            Nice non-answer, Dean.

          • Steve Buckstein

            Dean, dang, and here I thought you and I might at last find a policy to agree on – opposition to the draft.

            For those interested in a compelling argument against at least the military draft, listen to how Milton Friedman responded to General William Westmoreland during the policy debates on ending the draft during the Viet Nam War:

            In his testimony before the President’s Commission on an All-Volunteer Force…then commander of all U.S. troops in Vietnam…Westmoreland said he did not want to command an army of mercenaries. Mr. Friedman interrupted, “General, would you rather command an army of slaves?” Mr. Westmoreland replied, “I don’t like to hear our patriotic draftees referred to as slaves.” Mr. Friedman then retorted, “I don’t like to hear our patriotic volunteers referred to as mercenaries. If they are mercenaries, then I, sir, am a mercenary professor, and you, sir, are a mercenary general; we are served by mercenary physicians, we use a mercenary lawyer, and we get our meat from a mercenary butcher.”

            Source: David R Henderson, associate professor of economics at the Naval Postgraduate School in Monterey, California in his 1999 essay at:
            https://www.davidrhenderson.com/articles/0199_thankyou.html

          • Sybella

            I feel very strongly about the things dean is saying. In Pendleton Oregon, there are jobs going begging. There are people out of work, There are no people to fill those jobs. Why? Throwing money at the problem like dean wants to do is the cause. They have no desire to help themselves. When I needed work, I woked minimum wage, They won’t and look at how much minimum wage is. Of course as minimum wage increases, supposedly to help them, so does their cost of living. Dean’s solution isn’t the answer, it’s the problem.

            Every wonder what dean would do or say if he was forced into a 1 year community service, what would his employer say, if he’s self employed how is his business going to make out with him gone. What will his children eat. Guess he could take them to the free kitchen with him. Ha-ha make them work.

          • Chris

            Yep. And there is ample evidence showing our welfare and Medicaid systems have made poverty worse.

          • dean

            Steve…I’m saying I’m open to the draft making a comeback, though my 18 year old son would disown me if he heard that. I do think if we had a draft we would not have had the Iraq war for example. Though if people stopped volunteering for the military, that would put an end to this war in short order also.

            The evidence on the minimum wage is pretty clear. There is no relation between raising it and the unemployment rate except if it is raised too high too fast. Oregon and Washington have the highest minimum wages in the nation, yet we don’t have higher unemployment. Unions are the strongest suporters of minimum wage increases because it lifts the boats of all working people, including those at WallMart who are well beyond entry level “associates”.

            I do agree wiith the idea of breaking the link between employment and health care for the reasons you suggest. But it would take a sliding scale of taxes where those with more chipped in for those with less, so we go back to square one of my thesis.

            But my larger point Steve, which I know you get, is that there is a relationship between public policy, poverty, and social problems. No responders have suggested otherwise. No one has responded to my point that the US is rich, yet we have more poor than comparable nations, more crime, and far more people in prison. Are our poor people somehow different than poor people in France or Sweden?And no one has suggested we do away with the bulk of public services except for schools, a suggestion I find disheartening and indefensible.

            Syb…those jobs would fill fast if the wages were raised high enough. That is free enterprise. Secure the borders, deport 14 million low wage workers, and it would be interesting to see how high wages might go.

            I’m curious about what tools you would give people to better help themselves and how you would pay for those tools. From what I know, the best tool is a good education, yet I se all these posts that disparage public schools.

            I am self employed, and my employer and my mortgage holder would not approve of my taking a 1 year sabbatical for community service. If it makes you feel better I probably put in 10 hours a week volunteering in my community. But my suggestion would apply to those aged 18-25 or so, including my own son. If we had 1 year of service at subsistence wage with 2 years of full ride public college paid we could solve a whole lot of problems.

            Chris, welfare was reformed in the 90s. Few people are actually on welfare, and those who still are include single moms and their kids. How exactly would kicking the remainder off and taking their health care away make them less poor?

            My continued puzzlement at the “conservative” world view is the combination of: anger at “government,” ridicule of the poor, and the uncanny ability to turn a blind eye to multiple social and ecological problems that cannot and will not be addressed by individuals or the private sector.

          • Steve Buckstein

            Dean,

            On the draft, you may be correct that if we’d had a draft over the last few years it might have made starting or continuing the Iraq war impossible. I simply don’t think that policy outcome justifies subjecting free people to forced service, be it military or civilian. It interests me that in the past it was liberals who opposed the draft, now many seem to support it.

            I would challenge your statement that there is generally no relation between raising the minimum wage and the unemployment rate. The latest figures I’ve seen put Oregon’s unemployment rate 17 percent above the national rate (5.5% vs. 4.7%). That puts us at #41 in employment. While Washington is at #33, both well below the average. Idaho, in contrast, has the same minimum wage rate as the federal rate ($5.85) and is #1 in employment.

            On your larger point, the issue is more complicated that simply looking at the proportion of a population that is statistically “poor” as you’ve defined it. In America, for example, there is a high degree of income mobility. Someone in the lowest income quintile today is more likely to be in the highest quintile five years from now than he or she is to still be in the lowest. Partly that’s because many college students are counted as “poor,” yet they are likely to be making much more income in a few short years. As to the higher prison population here, we may have more agreement than you think. To the extent that some are incarcerated for “victimless crimes” such as drug use, I agree with Republican William F. Buckley Jr. and former Republican Governor Gary Johnson of New Mexico that such laws do our country more harm than good.

          • Sybella

            Ok you’re self employed, I need a job and I qualify for the position you need. I refuse to work for minimum wage but I’m worth $40,000 per year to live on. Tell me why you won’t pay me $40,000

          • dean

            Steve,

            On further reflection, I agree a return to the draft would not be a good thing, for many reasons. I would rather see an expansion of the Peace Corps and Americorp programs and trade subsistence level public service for college tuition and expenses.

            On the minimum wage, we would have to have a larger state survey and compare statistics over a longer period of time to establish a true correlation wouldn’t we? I expect the Oregon and Washington story has more to do with lots of young people moving here for quality of life than anything else. Interestingly, many of the European countries I have been comparing us to do not have any minimum wage (Germany, Sweden, Denmark). But they have such strong labor policies and unions that wages tend to be much higher there than here anyway. I would trade away the min wage for stronger labor laws, more investment in education across the board, and strong disincentives for businesses to hire undocumented workers.

            On class mobility, haven’t a number of recent studies confirmed that basically we in the US are essentially class bound? Born poor, you are likely to stay poor. Born middle class, you will stay middle class. Inheirit a pile and you will remain rich. Yes, some mid class are temporarily poor, not just from being in school but also if they get laid off in a downsizing industry in a declining locale, or if they get sick or disabled. All the more reason to have a good social safety net & portable health care.

            Syb…I’m not sure I get your question. Are you saying that I have a position I need someone for, and they want $40K a year, but I think they are only worth the minimum wage or below?

            If that is your question, I would say that I have a problem on my hands if I can’t find anyone qualified at the wage I want to pay. I either need to lower my expectations, be willing to invest in training, or abandon the idea of that position. That is how free enterprise is supposed to work isn’t it?

            And interestingly, your experience seems to contradict Steve’s assertions about the minimum wage. You say you can’t find anyone in Pendleton who wants a min wage job. Steve says the min wage is causing unemployment. It seems to me if people aren’t willing to work for the minium they are certainly not going to accept work below the minimum.

          • Sybella

            Dean it isn’t the money, THEY DON’T WANT TO WORK BECAUSE THEY DO BETTER LIVING ON THE DOLE SO THEY CAN DO WHAT THEY WANT. Better rephrase that, They want the job ok, and if they can stay home and I send them the check, they will take it. After all “that’s more important than working isnt it.” That is a direct quote from one of my employees who is no longer working for us.

          • Steve Buckstein

            Dean, specifically on what you call class mobility (which is different than the income mobility I first mentioned), I’m not familiar with the resent studies you mention, but I do think that your “born poor likely to stay poor” assumption is only true if you’re caught in the very social services system you promote expanding.

            The poor who are not on welfare are more likely to get out of poverty according to a colleague of mine who will hopefully be able to enter the discussion soon and give you’re her more informed opinion.

          • dean

            Steve & Syb,
            Unless I missed something (entirely possible at my age) we had this thing called welfare reform in the mid 90s, passed by a Republican congress and signed by a Democratic president. That law put a time limit on welfare recipients and provided some child care and job training benefits. You both write as if that law either did not pass or is not being implemented. Syb, your former employee will get a reality check when the other check runs out.

            Steve, I have no argument with the assumption that one could better work or educate one’s way out of poverty than simply stay in place on whatever the government offers. But statistically, we still tend to stay within the class we were born into.

            You both seem to assume I am for “increasing the dole.” I’m not, except for those who really can’t work. I am for improving public education, making college more affordable, access to decent health care for everyone, and other measures that help people help themselves. I’m also for increasing spending (and taxing) for public infrastructure, which would create many more high paying jobs and improve life for most of us.

          • Bina Patel (Cascade Policy Inst.)

            Welfare reform in the 1990s did not in any way permanently time limit one’s benefits. Instead, work requirements and time limits made the welfare process cyclical. Having worked directly with 100s of low-income families, I know that they are smart enough, and rational enough to respond to program incentives. Remaining employed long enough to get full benefits, refusing raises in order to keep food stamps, etc are problems inherent in the welfare system. The perverse (dis)incentives are staggering – and fully show an implemented, operational and expanding welfare system.

            – Class and income are extremely different measures. Class is a much broader range, similar to a tax bracket. Do people move through classes? Depends on how one defines that. And how it is exhibited. Do we know someones class by their car, clothes, jewels, or lack thereof. Never judge a book by its cover.

          • Steve Buckstein

            Dean,

            I understand some welfare reform has occurred. States like Oregon and Wisconsin did significantly reduce their welfare roles through programs such as Jobs Plus (welfare to work), but I don’t believe overall welfare/food stamps/Medicaid, etc. spending or dependency has dropped nationwide.

            Again, income level and class are two different things. A “poor” person can move out of poverty by earning a few thousand more dollars a year, yet not move into a different “class” depending on the definitions.

            You say you’re not for increasing the dole, and I take you at your word, but I’m afraid that the policies you advocate will do just that. Increasing taxes to spend on “public infrastructure” may create some high paying jobs, but at what cost to those paying the taxes? How many of them will be less well off because they pay the taxes instead of reap them? And what is the likelihood that those projects represent the highest and best use of the money expended? Do we really assume, for example, that the Portland Tram was the best way to spend some $57 million in transportation dollars (which was initially budgeted at what, only $15 million?). Cost overruns and under-performing results are endemic in public infrastructure projects for a number of reasons, but clearly they are no panacea for making our society as a whole better off economically.

  • Chris

    Let’s talk about schools. Why is it private schools can teach at a level equivalent or higher for less money? Why then do the rich neighborhoods force local government to create a private school run with public money when they can clearly afford private school?

    I propose that anyone who makes more than 80K for a family of 3, 90K for 4 and 100K for 5 should not be allowed to attend public school-rather those folks should attend private school and allow the government to get out of the business of private school.

    Of course, those can only send their children to private school shall be refunded their portion of taxes. In the end, the government can focus on the “poor” and “underprivileged (what a word, as if all children should be privileged).

    In reality, public school was intended to teach immigrants (legal and otherwise) basic skills-which ironically in Hillsboro, Beaverton and Gresham is much of the same while privileged kids are forced to deal with ESL and other BS.

    Let’s start there. Then we can have a real debate.

    • DMF

      Public schools can still be a good thing. Your 100% correct about private schools doing as good or better job than public schools.

      If the public schools were doing as was intended and teaching things necessary to live in this world, such as reading, math, history, government as it is not as we want it to be, and economics, instead of football, baseball, volleyball, golfing etc, it could be also done.

      The teachers would have to be allowed to be teachers, not baby sitters, and the kids would have to be treated as something besides babies.

      I am speaking in generalities and not addressing the exceptional students who do well in spite of the government, I am speaking about the way the public school system operates.

      Instead of parents crying about how much private school costs, why don’t they get serious about their kids education. Quit worrying about whether the child is being abused by not being allowed to play all their lives.

      I see a lot of 30 something skateboarders playing their lives away. Yes I believe public school has failed miserably and it is the fault of the parents by allowing it.

      • Chris

        Our public schools, at least at the elementary level, are pretty darn good. That is, if you’re a responsible parent and wiling to work with your kids and raise them in a responsible manner.

        Our public schools are a farce because teachers are continually having to work with the 20% of kids who’s parents suck.

        However, as far as curriculum is concerned, public schools do an acceptable job of educating.

  • dean

    Some statistics for you all to chew on. These are from the Organization for Economic Cooperation & Development (OECD). 30 nations, all more or less democratic and capitalist, including the US, Canada, and all of Europe.

    I picked 5 social indicators and compared 5 countries
    GDP per capita:
    US-$34K Britain-$28K France-$25K Canada $27K Sweden-$27K

    Social spending as a % of GDP
    US-$16% Britain-20% France-29% Canada 17% Sweden-31%

    Prison population per 100,000
    US-738 Britain-143 France-88 Canada-107 Sweden-78

    Health expenditures (public & private) % of GDP
    US-15% Britain-8% France-10% Canada-10% Sweden-9%

    Life expectency female/male
    US-80/74 Britain-80/76 France-83/77 Canada-82/77 Sweden-83/78

    Another interesting stat is that the US has the greatest level of income inequality among these nations.

    Discuss amongst yourselves.

    • Jerry

      What is truly interesting here, Dean, is the wanton rioting and unrest in France at this very moment. Not quite the utopia you had in mind, is it?? Would you really want to live there?? Seems like maybe they need to incarcerate more of their people if this is how they are going to act.

      Income inequality is a GOOD thing as it gives most everyone something to aspire to.

      We don’t need to discuss anything amongst ourselves and we are not going to – if you read the posts you will see that we all agree you are wrong!!

      You need to discuss your ideas with an econ professor so maybe you can snap out of your tax and spend liberal downward spiral.

      Remember, you might someday get what you are asking for, and you won’t be happy. France is a veritable hell hole right now. Here is what a Frenchman (Moisi) actually said about France:

      “The French always seem to be opposing the United States on some issue or other. They coddle Saddam Hussein and denounce American “cultural imperialism.” Why is France so difficult to deal with? It is, quite simply, in a bad mood, unsure of its place and status in a new world. The French are jealous of America, which seems to run the world; afraid of globalization, which threatens to erode their culture; and ambivalent about European unification, which might drown out their voice. France must meet these challenges while struggling with a cumbersome statist economy and a rising extreme right. To do it all, France must transcend itself.”

      Glad you picked France, though, as it shows just how out of touch with reality you really are. Why don’t you move there if it is so, so very much better than these rotten United States with our rampant poverty, huge unemployment, rioting in the streets, cruel, mean-spirited ways????? Maybe, just maybe, they wouldn’t want you…a positive outlook on life rather than a constant whine might be a change you should look into.

      And, unless you don’t follow the news, France just elected someone who is not going to continue down the leftist path that has so damaged that once fine nation.

      • dean

        Hi Jerry.
        I picked 5 countries to compare, not just France. I have been to France and loved the place (beautiful land, good climate, great food, family oriented people, wonderful cities and villages, fantastic public transportation system, beautiful women,) but would never call it a utopia.

        There are several serious problems the French have been unable or unwilling to address, including high unemployment and failure to integrate millions of North Africans immigrants into society. Rioting in France is a time honored tradition by the way. No one takes anyone seriously unless they are willing to go out and break something, like when that farmer drove his tractor through a MacDonalds to make his point. Every nation has its own quirks.

        As far as living there, yes, I wouldn’t mind that. But it isn’t a practical solution for me. And I do love the U.S. and particularly Oregon and the Northwest, in spite of our own imperfections.

        Sarkozy is determined to make some badly needed changes in the way France works. Let’s see how well he does before judging one way or the other. Personally I wish him God’s speed.

        I’m curious though why you ignored Sweden. They represent the highest contrast with the U.S. across the board, and are closer to utpoia than France. Any thoughts on the Swedes?

        • Chris

          Dean, you can’t compare a nation of 9 million people (Sweden) to a nation of 300 million (USA). That’s like comparing Microsoft to Zupan’s.

      • CRAWDUDE

        Don’t forget the 10-20 thousand old people who died during the heatwave a few years ago. Great people, awesome socialized health care. 10 to 20 thousand, let that sink in before we hold France up as a shining example……………of anything besides a developing 3rd world country.

        • dean

          CD…you must not get out much if you think France is 3rd world. And with the US currency tanking, the Euro rising, we seem ehaded in opposite directions.

          Yes, they had a terrible tragedy from a heat wave (global warming related?) and lack of air conditioning. But rather than make a sweeping generalization from a one-off event, look at their socialized health spending against their life expectancy and compare that to the US. If they are indeed killing off their old folks faster than we are, then why is their life expectancy 3 years greater?

          And let that sink in a bit before you send in another glib response.

    • Bina Patel (Cascade Policy Inst.)

      Income inequality is among the least useful frameworks for understanding poverty. Income is a poverty indicator to tell us what a person can consume at X point in time. It tells us very little about the health and well-being about a person. A person can have millions in assets, on a work break, and still be considered poor and eligible for some welfare services, according to government requirements.

      Income inequality is much more about keeping up with the Jones’ than it is about poverty. Relatively, we will always have inequality in income. Unless the answer is to redistribute income down to the cent. Clearly, there are problems with that. Problems is an understatement even. And, who decides where that spot on the income spectrum is?

      The income inequality argument also assumes that wealth is static. A contradiction of its own philosphy: the rich get richer, the poor poorer. Wealth grows, shrinks, and gets transferred. Luckily for business owners, kids with savings accounts, and the rest of us – wealth begets wealth. That means in fact, we can bring the poor up without bringing down the rich. The answer is not to increase taxes and the safety net – the answer is to understand why the poor can’t leverage assets and increase wealth: 1) welfare forces consumption of government approved goods. Only food stamps for food, only Section * for housing, etc. It is extremely restrictive, does not allow for any risk (central to gaining wealth), and forces consumption of goods the recipient may not want.
      2) Reduce barriers to the things that the poor need to increase their income and long-term self-sufficiency. tax burdens. the Earned Income Tax Credit (a credit refund sent back to low income individuals based on earnings) has been proven to be the best poverty reduction tool ever! 5 million people annually are lifted out of poverty. Reduce barriers to credit, quality education (not only public), etc.

  • Jerry

    Dean – give it a rest. These countries are no big deal. They are nothing in the overall scheme of things.

    Here is what a Swede thinks of Sweden:

    Sweden is already a banana republic, perhaps on its way to becoming an Islamic republic. Swedish culture is disappearing with astonishing speed in front of our eyes. If the trend isn’t stopped, the Swedish nation will simply cease to exist in any meaningful way during the first half of this century. The country that gave us Bergman, ABBA and Volvo could become known as the Bosnia of northern Europe. The “Swedish model” will no longer refer to a stable and peaceful state with an advanced economy, but an Eurabian horror story of utopian multiculturalism, Socialist mismanagement and runaway immigration. Sweden has national elections in 2006. This will be one of the last opportunities the country has to resolve its towering internal tensions in peaceful and civilized ways. Some fear it’s already too late.

    • dean

      Jerry,
      I don’t know who wrote that, but I’ll take it as one man’s opinion. Sweden has had a economic higher growth rate than the US for several years running, so they must be doing something right. Not to mention they are living longer and spending less on health care.

      You should not dismiss these other countries Jerry. How can we know how well our policies are working unless we are brave enough to compare ourselves to others? How can we learn what works and doesn’t work? Europeans have looked at our higher productivity growth and made changes, and this has allowed them to catch up with us. We could learn a lot from them on a lot of issues if we would just open our minds a bit and be less parochial.

      Bina…I am a big supporter of the EITC and the whole concept of negative income tax. If we got serious about that it could cut out a lot of welfare bureaucracy. Too bad Nixon never prevailed on his efforts.

      I agree with your distinction on class and income. I was mixing the two up. I should have used income bracket instead of class, but was short-handing. Nevertheless, one tends to stay within the income bracket one was born into. I’ll stick with that contention unless you can show me good data that says otherwise.

      I have never advocated complete income equality, and have never said we could eliminate either absolute or relative poverty. People have uneven levels of talent, drive, and luck, and thus outcomes will never be fully equal.

      What I have suggested is that the policies a nation and state have, and the level to which they are funded, make a demonstratable difference in how much poverty there is. Social spending matters.
      Some social spending is a lot more effective, some less so. In comparison with other nations of similar GDP levels, the US has more relative poverty, higher income inequality, lower health, and a vastly higher prison population.

      I think you and Steve would agree that among the nations I compared us to (and many others) the US is the most “libertarian” of all. What would the consequences be of making ourselves more libertarian, i.e. lower taxes on the wealthy, less income redistribution, less social spending, etc?

      Maybe we would have higher economic growth, maybe not. But we would almost certainly have even greater social problems than we have now.

      I’m not for complete socialism, and I’m not for complete libertarianism. Both isms have good critiques we can learn from, but both suffer from the same problem; they rely on perfect people to work as designed. I’m for a mixed system with adequate spending on the things that are best done collectively.

      And Steve, that initial tram estimate was back of the envelope for a ski lift. What was ultimately built was much more than that, the project management was bungled, and the cost was high. But both the private and public sectors bungle projects. There are lots of examples we could both point at.

      • Steve Buckstein

        Dean,

        You ask “What would the consequences be of making ourselves more libertarian, i.e. lower taxes on the wealthy, less income redistribution, less social spending, etc?” One clarification; I would not at all object to lowering taxes on the “poor” first. Payroll taxes are particularly onerous for low-income people, without much of a financial return at the other end.

        You assume that both socialism and libertarianism rely on “perfect people to work as designed.” I’ll let the socialists speak for themselves about their assumptions, but libertarianism assumes people are far from perfect; that’s one reason why we shouldn’t let a few of them hold concentrated political power over the rest of us. Power corrupts mere mortals and public choice economics tells us that government officials and bureaucrats look out for themselves and their own families first rather than being the pure “public servants” we delude ourselves into hoping they are.

        And, even if the “initial tram estimate was back of the envelope for a ski lift” I seem to remember that that was the estimate the Portland City Council used to approve the project. Of course some private sector projects go way over budget, but I think you’ll find in the economic literature that public projects have a systemic bias toward overspending, in my view because they’re spending other people’s money.

        • dean

          I’ll amend my point. Both rely on perfect people for the blueprint to work, but neither actually trusts people. Socialists don’t trust due to individual greed, and libertarians apparently feel the same way, its just that you think it is the public sector officials who are the gredy ones.

          Having worked 19 years in the private sector (with a lot of that work for public agencies,) and 11 years in the public sector, my experience is that about 1/3 of public sector employees are first rate, very dedicated to their work, 1/3 do the basics, and 1/3 are barnacles that should be scraped off of the hull. A lot of the “waste” in government comes from the 1/3 who have to be worked around, over, or through.

          People anywhere should be expected to look out for themselves and their families, but “absolute power?” In our mixed system no one other than Cheney seems even close. My experience is that many bureaucrats are fearful, and that fear leads to bad work.

          Rather than assuming that governement is out to get you and whack away at it, it would be better if you helped make it work more efficiently. Just one liberal’s opinion.

          The $15 million may have been what they used. But again, it was faulty. There were a whole lot of events, some bad decisions, some bad luck like steel prices going thru the roof. But how would you get public infrastructure built better? Private contracting is already done on all major projects. Bureaucrats are not out there doing much engineering or construction.

          And Steve, it is pretty well established that the poor are the ones who most benefit from the payroll tax at the other end. The middle classes do less well perhaps. The rich do great.

          • Steve Buckstein

            Dean,

            I don’t think just public officials are greedy. People are people, and they respond to the incentives they’re presented, be it in the public or private sector. It’s just that power is more concentrated in the public sector, and in parts of the private sector given monopoly protection by government.

            I don’t think government is “out to get me.” I gladly try to help government work more effectively when I think it’s doing something it should be doing. But I prefer to reduce its size rather than help it do more efficiently what it shouldn’t do in the first place.

            We will also have to disagree on your assertion that “the poor are the ones who benefit most from the payroll tax at the other end.” Proportionately they may come out slightly better, but the returns our unfunded Social Security system provide everyone are dismal compared to a funded program of personal accounts. And younger workers are likely to see negative returns when they retire – they’d be better off stashing their payroll tax money under the mattress than sending into the SS coffers.

          • dean

            Steve,

            My experience is and was that power is not “concentrated” in government. Quite the opposite, it is amazingly diffused and weak. No single bureau or office at any level has much power (outside of the FBI, CIA, and military). Policies and funding are negotiated by elected representatives from all over the place, then directions are sent down the pipeline to a thousand and one offices. In many agencies, the 2nd floor does not even know what the 1st floor is doing. PGE can shut off your electricity, but ODOT can’t stop you fromo driving on their roads. And even when government can take action against you it is usually too scared someone might get mad.

            Case in point, in our local community a landowner has illegally clearcut his property and dumped about 5000 cubic yards of dirt into a stream with no permit. Is he in jail? No. Has he been fined? No. Everyone is making nice. In the end the taxpayers will probably get the bill for the cleanup.

            Yes, young middle income earners won’t come out ahead financially on SSI. But it is a social insurance program, not an investment program, and was never designed to be. What do you think of Hilary’s plan to reinstitute the inheritance tax and use the funds to set up investment accounts for every newborn?

            I like the idea a lot. A great way to share the wealth and give people a leg up. Every one an investor. We could end up with a whole nation of republicans!

          • ***************

            Dean,

            I will defer to your knowledge of the internal workings of government agencies. I’ve heard the same criticisms from other former government employees. What I meant by saying that power is concentrated in government is that there is generally little or no competition between government agencies, and thus few or no choices for the average citizen to avoid having to deal with them. People on the 2nd floor may not know what those on the 1st floor are doing, but it’s we, the people, who suffer the consequences when we can’t get the services we expect, or we have to wait in line for poor service, or our kids don’t get the educational opportunities we wish for them, etc.

            On Hilary’s idea to, as you put it, “share the wealth and give the people a leg up,” again we must disagree. Increasing taxes on those who have been financially successful will simply make it harder for others to follow in their foot steps. Giving investment accounts to every newborn could be a great idea, but I don’t believe the ends justify the means here.

            In general, figuring out ways to help everyone, especially poor people, build assets is a great idea. Converting current government income transfer accounts into asset accounts is one way to do that without adding to the tax burden of anyone, rich or poor. Check out Bina Patel’s work at Cascade for more information.

          • John Fairplay

            “Bureaucrats are not out there doing much engineering or construction.”

            You’re obviously not acquainted with the Oregon Dept of Transportation. Every time the federal government changes environmental standards on culverts, for instance, the ODOT engineers go to work and redesign every project in their files – even ones that are not scheduled to be built for years to come. Many of these projects have been re-engineered numerous times – at taxpayer expense.

          • dean

            John,
            I am familiar with ODOT, yes. Older style culverts were undersized, badly designed, are prone to plugging up and washing out, and many block fish from migrating. Over the years public and private sector engineers have experimented with improved designs, and they are working, and fish are now reaching good upsteam habitat. Yes, it all costs money, but steel culverts only have a life span of 25 years or so. The road managers I work with prioritize replacing the ones that are due to rot out. And I have not seen anyone do a site specific design for something that is years off in implementation.

      • Jerry

        But Dean – only the public sector can bungle a project with no consequences whatsoever.

        • dean

          Jerry…I wouldn’t say there are NO consequences, but I take your point that they don’t run the same personal financial risk.

          Politicians can get unelected, bureaucrats can lose promotions and can even get downsized. But I agree with you it is not the same as losing your investment.

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