As America’s economic recovery crawls forward, its states suffer from depleted revenues and large spending commitments. Experts project between $30 billion and $40 billion in combined state budget deficits for fiscal year 2012. Though the federal government runs deficits during recessions to fund expansionary policies, many states are constrained by constitutional balanced budget requirements. They must close deficits by cutting spending and raising taxes, choking recovery with behaviors that compound macroeconomic problems.
Policymakers should not seek to eliminate balanced budget amendments, an important federalist measure to prevent states from amassing enormous debts. Rather, the federal government should offer short-term deficit relief to states and enable them to better project revenues and outlays, as well as making rising pension costs more transparent.

Balanced Budgets and Pro-Cyclical Policies

While every state but Vermont has a balanced budget requirement, deficits still occur because the regulations usually only cover operating budgets, comprising about half of state spending. Compounding the problem, this requirement applies only to projected budgets, where states foresee higher revenues and smaller expenditures than reality might suggest. As Harvard Law School professor Howell Jackson told the HPR, states “formally comply with balanced budget rules but do not fulfill the spirit of the amendments.”

As a result of their evasions, many states stand in dire fiscal condition. Periodic deficits are manageable, but Brookings Institute’s Tracy Gordon explains that states have been running deficits for the past five years because of the recession. Now states seek to cut spending, but Gordon adds, “If states run out of money, there are a lot of people who are hurt, and these are often the most disadvantaged people in our society.” The Obama administration, recognizing the threat presented by state statutes, offered fiscal relief in the 2009 economic stimulus. This money prevented some layoffs and spending cuts, but now funds are drying up. Gordon points out, “State governments are continuing to lay off about 30,000 employees per month. This is not only bad for the macroeconomy; it also means a lower quality of services that state and local governments are able to provide.”

As Gordon’s example illustrates, aid proposals such as the American Jobs Act are important steps toward alleviating state budget crises. With spending cuts continuing, the federal government should continue to offer aid to the states. Harvard Kennedy School Professor Daniel Shoag asserts, “State spending can be a real driver” for the economy. Thus, Jackson says, “A revenue- sharing mechanism [between the federal and state governments] can be appropriate.” Devising that mechanism to disperse aid to states remains complicated, because aiding states with the worst fiscal crises merely increases the moral hazard that states will spend frivolously. Awarded assistance based on other measures, like the unemployment rate, might prove a better bet.

Short-Term Crisis

When states make emergency cuts, they often proceed without carefully considering the long-term consequences. Most budget yearly, which, when coupled with balanced budget requirements, offers little incentive for long-term focus. Gordon points out, “There is a lot of push now to improve forecasting on the state level and engage in longer- term planning.” Additionally, state revenues vary considerably between years and work poorly under short-term restrictions. The income and capital gains taxes prove substantially cyclical, plunging states into deficits during recessions. Thus, to prevent shortsighted emergency policies, states should project both revenues and outlays over longer periods. As Elizabeth McNichol of the Center for Budget and Policy Priorities maintains, “Long-term, multi-year forecasting on both the spending and revenue sides… gives the states the opportunity to figure out the impact…on spending programs or tax systems for the long-term balance of their budget.”

One particularly effective mechanism may be the pay-as- you-go rule. This method, which the federal government followed from 1991-2000, would require every spending increase or tax cut to be financed by a tax increase or spending cut of equal size within five years. This policy helped create budget surpluses during the 1990s, and should be pursued as a structural fix to prevent budget crises from reemerging, at both the state and local level.

Unsustainable Costs

Even when the current crisis ends, however, states will still face the prospect of disaster in their pension funds. Pensions for public employees are funded by collecting taxes from workers and investing them in diversified portfolios. Shoag states, “It’s sort of like borrowing from the workers to invest in the stock market.” While these funds have typically earned high returns, approximately eight percent annually, the investments are highly susceptible to downturns, and have suffered greatly recently. Yet states continue to discount their obligations to pension funds without taking risk into consideration.

Funds’ behavior exposes taxpayers to substantial liabilities. Economists Joshua Rauh and Robert Novy-Marx estimate that state pensions are currently underfunded by about $3.23 trillion, assuming the eight percent discount rate. Considering that pension obligations are, as Jackson states, “very difficult to adjust due to legal and contractual arrangements,” many question whether pension obligations should be calculated at such high, risky rates. Given the volatility of pension funds, taxpayers will likely have to bail out public pensions, unless they are reformed.

Experts suggest various solutions. Shoag offers, “Pension obligations probably should fall under a balanced budget amendment.” This would prevent states from underfunding pensions, and would specify how exposed taxpayers actually are. Still, the underfunding itself is not an immediate crisis for the states. According to McNichol, 40 states have taken action recently to either reduce benefits or increase employee contributions. She adds, “It is important to separate out the immediate problems that the states are facing as a result of the impact of the recession on their budgets…from some of the longer-term issues, like pensions, which they don’t have to resolve tomorrow.”

Nevertheless, given the growing burden of pension obligations, especially health benefits, states should not take these problems lightly. Jeff Miron, Harvard economics professor, offers some structural solutions, which include creating defined contribution plans similar to 401Ks found throughout the private sector. Miron claims the benefit as that “[States] don’t have to do the fancy accounting and make those projections because… the employer is never on the hook.” Further, Miron believes the federal government should offer block grants to states for Medicaid expenses, rather than reimbursing states for half of all health care costs. According to Miron, “[States] would be forced to allocate [Medicaid funds] in ways that were affordable.”

In this weak economy, states should not drastically adjust pension or health care benefits. Over the longer term, they should still make the necessary projection and accounting changes. Ultimately, there are no easy answers, and states face complex constraints, often misunderstood in public discourse. But the solutions outlined can, with the right political will, mitigate the current situation and protect against future crises.

Daniel Backman ’15 is a Staff Writer.

Photo Credit: kenteegardin, Flickr

On June 14^th of this year, President Obama appointed a commission of seven men and women to evaluate the events that contributed to the Deepwater Horizon spill. The commission, organized less than two months after the spill began but a full month before the oil stopped flowing, released its initial reports this week. In one report, a working paper titled “The Amount and Fate of the Oil,” the staff of the commission issues a withering criticism of the federal government’s own estimates of the amount of oil in the Gulf after the spill and throughout the clean-up process:

“…the federal government created the impression that it was either not fully competent to handle the spill or not fully candid with the American people about the scope of the problem.”

The aforementioned report challenges administration estimates of the amount of oil that was initially flowing into the Gulf and the amount of oil that remained in the Gulf at the end of August, after extensive clean-up efforts. Crucially, a NOAA scientist reported a flow rate of 5,000 barrels-per-day on April 26^th. This number was used by Admiral Mary Landry, who was the ranking on-scene official at the time. While this number was still being used, a number of credible, non-government scientists estimated flows between 10,000 and 50,000 barrels-per-day, with some internal BP estimates placing the flow above 100,000 barrels-per-day. The danger in the government’s initial reliance on the 5,000 barrels-per-day statistic? The response to the spill was organized based on estimated oil flow.

The commission has also challenged the conclusion of Carol Browner, the White House climate advisor, that “three-quarters of the oil is gone,” a statement she made in early August.

The commission is chaired by two former government officials: Bob Graham, formerly a senator for and governor of Florida, and William Reilly, who served as the director of the Environmental Protection Agency under President George H.W. Bush. The remaining five members are all academics, including Cherry Murray, who is Dean of the School of Engineering and Applied Sciences at Harvard.

It is important to note that these reports do not represent the official opinion of the commission, which will be released in a final report next year. It is highly unlikely, however, that these working papers would have been posted to the commission’s website if the members of the commission did not agree with their analysis.

The report is a direct challenge to an administration that has prided itself on its relationship to science. President Obama pledged to maintain a new attitude of transparency in the sciences, in light of President George W. Bush’s perceived neglect of scientific knowledge and method. While President Obama made a series of very public appointments of top scientists to advisory positions, this report reveals the dilemma faced by any politician when the diligence of scientific reporting challenges political expediency.

In a heartbreaking account on NPR’s Science Friday in early June, the renowned oceanographer Sylvia Earle (“the sturgeon general”) described the lack of scientific knowledge about oceans. And yet, the administration condoned the release of dispersants into the Gulf post-spill. Earle and her on-air counterpart, the physicist Lawrence Krauss, lamented the public’s expectation that science provide immediate answers to massive crises. This desire, in the eyes of these two scientists and this blogger, is juxtaposed with a general unwillingness to fund scientific endeavor at a federal level.

President Obama has rightfully tried to involve scientists in decision-making, and his administration has demonstrated its belief that science can play a great role in the resolution of national problems, particularly at an environmental level. This willingness, however, needs to be met in practice. President Obama has made a noble effort, but the reports of the Commission show reluctance on behalf of the administration to listen to independent scientists even when an issue of grave national crisis is unfolding. President Bush often did exhibit an outright disregard for science, but proclaiming a love for science but failing to heed its warnings may be downright dishonest.

Photo attribution: NASA

Many of the government and independent estimates of oil flow were made using satellite technology and imagery.

Count me among the people that regard politics as primarily the art of getting things done — of deliberating on and then distributing out public goods to people, and trying to do this at the lowest costs possible, in the appropriate time horizons, with the greatest impact, and so on. Politics is not poll numbers; it’s not, ultimately, about feelings or even theories. Politics is about doing things.

Adopt this perspective, and the media-wide consensus that Obama has been “weak” on the BP Spill starts to look rather absurd:* the standard for success is a strictly material one; Obama should be judged, in the final analysis, by whether he succeeds at mitigating the effects of this crisis to the fullest extent possible — by whether he helps us plug that (goddamn) hole and then, afterwards, whether he goes to changing the material conditions that allowed the hole to burst open in the first place, the corrupt MMS regulatory regime and our insatiable appetite for crude oil. That is the standard we judge him by.

Theoretically, to judge Obama’s success by the standard of “is he getting it done” you’d need to create “counterfactuals,” where you test his choices against all other conceivable ones. (Note: not stopping the spill doesn’t mean failure; if we had counterfactuals, we might find out that even the best course of action conceivable wouldn’t have allowed the president to stop the spill sooner than he has.) But in practice, the fact of theoretical unknowability doesn’t mean we say “screw it” and decide, instead, to report on people’s perceptions of reality, on feelings or moods or zeitgeist or whatever it is Maureen Dowd is doing. No, it means we work a little harder, investigate the administration’s actions, use our analytical skills to make arguments (with evidence!) for or against them, and then draw conclusions. As it happens, I’ve seen embarrassingly little of that coming out of our press corps.

At the same time, this conception of politics as the material fact of getting goods to people in need helps give us perspective on the political back-and-forths of our moment. There’s a brilliant article out in Slate subtitled “What if political scientists covered the news?” It reads:

Obama now faces some of the most difficult challenges of his young presidency: the ongoing oil spill, the Gaza flotilla disaster, and revelations about possibly inappropriate conversations between the White House and candidates for federal office. But while these narratives may affect fleeting public perceptions, Americans will ultimately judge Obama on the crude economic fundamentals of jobs numbers and GDP.

Chief among the criticisms of Obama was his response to the spill. Pundits argued that he needed to show more emotion. Their analysis, however, should be viewed in light of the economic pressures on the journalism industry combined with a 24-hour news environment and a lack of new information about the spill itself.

Recast Obama’s popularity as a function of the structural forces at play at any given moment — as the result of the slumping economy, the progress of his agenda through Congress, and the fact that a blowout preventer a few thousand feet under the water has been spewing oil for a month — and you start to realize that the narratives about his “feelings” and “leadership” and “tone” are just ex post facto rationalizations. You realize that these narratives, as Jon Chait explains, are most properly understood as “bullshit.”

I think our pundit class would be a whole lot better if they acknowledged these simple truths: first, things happen to countries; then, presidents respond to those things that happen; those responses are bounded by the nature of those things that are happening (say, how much expertise the federal government has on offshore drilling), and, moreover, by the conditions of the world we live in. While the president steers the ship of state, he can’t be held responsible for the conditions of the water.

After all, isn’t this perspective what drew us to Obama in the first place? At the center of his campaign was a promise: to move us beyond the theatrics of politics — beyond the cynical new left/new right vocabulary of our parents, and beyond the erratic “suspend my campaign to fix the financial crisis!!” cowboy politics of his opponent — and towards a politics of reason, deliberation and decency, even when that doesn’t play so well in the media. Towards the politics of getting things done. That was the “change you can believe in” and it is perhaps the man’s deepest conviction: that we can be responsible and civic even in times of great urgency.

So let the guy be calm in crisis. That’s why we elected him, right?

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* Adopt this perspective and you see why racism is best understood as what you choose to do not what you feel and claim. (Re: Rand Paul.)

Photo credit: U.S. Coast Guard

More than two-thirds of Americans are overweight or obese. Childhood obesity has tripled in the last thirty years. For the first time since the Civil War, Americans’ life expectancy may be declining. These facts paint a depressing, and by now familiar, picture.

After decades of failed attempts to convince individuals to make healthier eating choices, it is evident that reducing obesity will require changes in the food industry. Some recent initiatives undertaken by the Obama administration and the Food and Drug Administration will try to contribute to this effort by changing the way people think about food.

Forcing the Industry to Change

Many cities and states have taken the initiative in the fight against obesity by passing laws which put pressure on companies to make their food healthier. New York was the first major city to order a trans-fat ban in its restaurants, after a failed public education campaign. Other cities and states have followed suit and many are now also considering soda taxes and calling for reductions in salt content.

Kelly Brownell, director of Yale’s Rudd Center for Food Policy and Obesity, told the HPR, “You simply can’t do enough education to begin to compete with the food industry. We need to change the fundamental drivers of the obesity problem such as food marketing and the cost and content of food.” Local initiatives have been effective so far and have also had some positive unintended consequences: after facing trans-fat bans in major cities, nearly all fast food chains have removed trans fats from their national products. When faced with restrictions in large markets, it is often more efficient for companies to implement changes across the board.

But the most effective way to force the industry to change may be to create federal laws similar to those passed by lower levels of government. The food lobby, however, stands in the way. As Brownell explained, “The tobacco experience might be very informative here. The federal government had its hands tied because of lobbying by tobacco companies, and early on real action took place in cities and states.” But, she continued, “once enough victories occurred there, the federal government had cover and was able to take action.” Food companies will only change “if there is a threat of national government action or if these companies have to make changes for public relations reasons,” said Brownell.

Mobilizing the Public

The latter strategy is also being explored. The Obama administration has made fighting obesity a priority, with First Lady Michelle Obama’s “Let’s Move” campaign encouraging young people to exercise. The First Lady has worked with the FDA to increase public awareness, and a major focus has been nutritional labeling.

Siobhan DeLancey, a spokeswoman for the FDA, explained in an interview with the HPR that the FDA “has partnered with the First Lady … to make sure nutrition labeling is accurate and informative for people to rely on and make healthy choices in their day-to-day lives.” But she also acknowledged that even with this improved information available, consumers may not necessarily follow it. “With a busy lifestyle, it is difficult to spend the necessary energy and time to really comprehend food labels,” DeLancey said.

While improved food labels and the First Lady’s information campaign are potentially parts of the solution, an important—and often overlooked—step in the fight against obesity is getting the public to understand how much power the food industry has. For example, Pepsi recently announced that it will remove all sugared beverages from secondary schools in the United States. While this is a welcome move, Brownell cautioned that we have to make sure companies “don’t simply take their marketing muscle and apply it elsewhere like the Internet or store displays through which they can still encourage children to drink sugared beverages.” In order to ensure that companies such as Pepsi make and market healthier products, the public will have to confront them head-on and pressure them to take the correct action.

With the support of the Obama administration, the fight against the obesity epidemic is making strides. Nevertheless, it is important to realize that continued progress depends on changing the culture of food in the United States. As Brownell concluded, “We need to create the public sentiment to encourage change and then force companies to change.”

Neil Patel ‘13 is the Graphics Editor.

The Tea Party movement attracted a lot of attention with its vocal opposition to the Democratic health care legislation, but it took shape at the very beginning of the Obama presidency. It arose out of widespread libertarian and populist outrage over the federal government’s intervention in the economy. While opposing the Obama administration, the Tea Party movement has remained independent from the Republican Party, sometimes openly confronting the GOP establishment. Yet the two organizations are united by their opposition to the Democratic agenda. What will ultimately determine the future of the Tea Party movement, then, is how successfully Republicans can incorporate elements of the Tea Party’s doctrine into their party platform. And how effectively they can prevent the Tea Party from bringing down more electable, establishment candidates.

The Origins of the Tea Party

When CNBC commentator Rick Santelli railed against the “homeowner bailout” at the Chicago Mercantile Exchange in February 2009, he tapped into a widespread frustration with government “handouts.” Santelli famously declared that he wanted to oppose Obama’s economic agenda with a “Chicago Tea Party” in July. Within weeks, anti-tax groups had sprung up across the country. Zephyr Teachout, a professor of public policy at the Harvard Kennedy School, emphasized the importance of these early events in an interview with the HPR. “While right-wing media and politicians fueled the anger around health care reform and other programs,” she said, “I suspect that some of the organic growth of the Tea Party movement came from extraordinary anger at the bank bailouts.” Indeed, the bailouts—combined with the stimulus package’s $787 billion price tag—were major instigators for the Tea Party movement.

Kate Zernike, national correspondent for the New York Times, told the HPR that “the motivating grievance for most [Tea Partiers] was when Congress passed TARP—under President Bush.” TARP, which provided emergency assistance for major financial institutions, was maligned by populists on both the left and right. Furthermore, many Ron Paul supporters, devoted libertarians, provided an organizational structure for the nascent movement. A loose populist-libertarian coalition arose that sought to limit federal spending and roll back newly acquired government powers. The stimulus bill, Zernike said, was just fuel on the fire.

Tea and GOP

The Tea Party movement has repeatedly rebuffed the GOP establishment’s attempts to co-opt it, which has alarmed some Republicans. Richard Parker, a professor at the Harvard Kennedy School, observed, “The RNC remains concerned about three things: the impact of Tea Party primary challengers on the electability of general election candidates, how Tea Party voters will vote in November, and the potential political damage that negative perception of the Tea Party can cause.”

Overall, though, the Tea Party movement has chosen to operate as a wing within the Republican Party in the upcoming midterms, recognizing that fielding candidates against Republicans in general elections would be counterproductive. Indeed, Rasmussen Reports has found that in three-way contests between Democrats, Republicans, and Tea Party candidates, the anti-Democratic vote is split down the middle. Zernike explained, “Tea Party leaders generally boil their issues down to three things: fiscal responsibility, constitutionally limited government, and free markets.” These issues comprise the core values of fiscal conservatives, and Tea Partiers generally recognize that Republicans are better aligned with their interests than Democrats. Still, there is no doubt that the Republican establishment should be concerned, as it has seen a number of preferred candidates receive strong challenges from the Tea Party movement.

Tea Futures

As the economy recovers, the anger and frustration driving the Tea Party could abate. The principles behind the movement, however, will survive. If the Republican establishment adopts Tea Party planks and refrains from voting for new spending programs, Tea Party leaders will feel more incorporated into the political mainstream. The Republican caucus has already unanimously opposed numerous Democratic proposals, most notably President Obama’s health care initiative. As long as Tea Partiers believe that Republicans are listening to their concerns, the Tea Party is likely to function as “an outside advocacy group” that “works for Republican candidates, but does not uniformly support them,” Zernike predicted.

The Tea Party, originally a reactionary movement against what was perceived as unnecessary federal intervention in the nation’s economy, has become an organized political force. Although the Tea Party movement has not outright endorsed the Republican Party, it can exert significant pressure on the GOP to maintain a platform of strict fiscal conservatism, as seen in such primary challenges as Marco Rubio’s in Florida or J.D. Hayworth’s in Arizona. Though the economic conditions fueling the Tea Party’s growth will dissipate, the movement itself may have a long-term impact on American politics.

Alexander Chen ’13 is a Staff Writer.

Photo Credits: Flickr (Caveman 92223 and bisongirl)

Rand Paul

Sam Barr’s most recent post makes the rather shocking claim that Rand Paul, the Republican nominee for the U.S. Senate seat in Kentucky being vacated by the retiring Jim Bunning, is a racist, or at least that he is not a non-racist. Sam deduces this from the fact that Mr. Paul is not a “consistent libertarian,” that he “picks and chooses” appropriate targets for government intervention and contends that eliminating racism in the workplace is an illegitimate function of government. Specifically, Rand Paul is pro-life and supports laws against abortion, but says he would have opposed the Civil Rights Act had he been in Congress in 1964.

In Sam’s estimation, Mr. Paul is not racist in the sense that he wears a white hood and burns crosses, but in the sense that, in the words of the illustrious Mr. Kanye West, he “does not care about black people.” Sam’s post rightly implies that the bar for calling someone the “R-word” should be relatively high, a standard many of his fellow partisans have often ignored: witness Sen. John Edwards’s absurd insinuation in the 2004 vice presidential debate that Dick Cheney was racist because he voted against the holiday for Martin Luther King, Jr., while in Congress, or Rep. Diane Watson, an African American congresswoman who condemned her Republican colleagues for the mere act of opposing “the first president who looks like” her, or the relentless attempts by the media to indict the Tea Partiers as a reincarnation of the KKK (we know this is not true, by the way, since if it were, the President pro tempore of the U.S. Senate would be scrambling to join its ranks). Sam’s accusation, unlike many leveled by trigger-happy race-baiting Democrats, is reasonable and deserves an answer. I should explain at the outset that I am not a libertarian per se, that I supported Trey Grayson, Rand Paul’s erstwhile opponent in the Republican primary, and that I have no intention of passing either positive or negative judgment on the Civil Rights Act. What I will argue here is that simultaneous opposition to anti-discrimination policies and support of anti-abortion laws does not a racist make. The reader will have to excuse the length of this post; such a serious charge requires a thorough response.

In Economics 1017, Professor Jeffrey A. Miron, Harvard’s foremost authority on libertarianism, provides an analysis of racial discrimination in the workplace from a libertarian perspective (and luckily for the HPR, I retained my lecture notes from the course). The economic model of discrimination, he explains, begins with the assumption that some people have a “taste” for discrimination, which in this case means people prefer hiring or buying from only persons of a certain race. As any graduate of Ec-10 knows, a free market will in theory drive racist employers out of business. Assume, for example, that some white employers do not like hiring blacks. This preference initially reduces the demand for black employees and reduces their wages, but this results in any employer with non-discriminatory preferences obtaining a cost advantage by hiring black employees. Since the non-discriminating firms have lower costs, they can set lower prices and take profits away from the discriminating firms. The discriminating firms exit the industry as they lose money, which then reduces the demand for white relative to black employees, and results in equal wages for blacks and whites in equilibrium. I would add to this that the economic disincentive to refrain from serving minority customers is even more obvious: business owners who choose not to serve an arbitrary segment of the population put themselves at a competitive disadvantage by depriving themselves of access to a broad swath of the market. In theory, therefore, competitive markets provide a potentially strong counterweight to employer discrimination.

An alternative assumption is that discriminatory preferences come from customers. For example, suppose restaurant patrons prefer to be served by white waiters, meaning they are willing to pay a higher price even if the quality of service is the same. In this case, Miron notes, a higher wage for white waiters can persist in equilibrium, but even here there are economic pressures that counteract the discriminatory preferences of customers. For one thing, restaurant owners face higher costs than they would if they could use both white and black wait staff, so they might still use both if customer discrimination is weak. And since some customers presumably do not care, the benefits of accommodating the customers with discriminatory preferences are potentially small. The same logic, incidentally, applies to situations in which some whites prefer not to be served in an establishment that accommodates blacks. A priori reasoning thus indicates that economic forces are likely to hinder discrimination in the workplace. As an example, Miron cites Levine, Levkov, and Rubinstein (2008), who determine that increased competition resulting from deregulation in the banking industry from the mid-1970s to the mid-1990s reduced both the racial wage gap and racial segregation in the workplace, particularly in states with a comparatively high degree of racial prejudice.

That said, Miron explains that what is known as “statistical discrimination” in employment may be rational as a result of the correlation of unobservable factors, such as educational achievement and general competence in the workplace, with observable factors like race. If African Americans are disproportionately likely to be poor workers because they receive disproportionately poor educations, in other words, then it can be rational for employers to use race as a proxy for the less observable characteristics of intelligence and competence. The fact that statistical discrimination might be rational, as Miron points out, does not mean it is acceptable. But if statistical discrimination is the underlying cause of workplace discrimination, improving the quality of education offered to minorities is likely to be more effective than direct anti-discrimination policies à la the Civil Rights Act. Incidentally, Republicans have long advocated school choice through government vouchers to improve education within minority communities, an effort that has been blocked by teachers’ unions and their allies among congressional Democrats.

Assuming workplace discrimination is based on employer or consumer preferences rather than statistical correlation with unobservable traits, policy may undertake to counteract discrimination either by prohibiting it in hiring, promotion, firing, establishing wages, selecting customers to serve, and so forth, or, in the job market, by “affirmatively” promoting the hiring of targeted groups through quotas. The Civil Rights Act of 1964, among other things, ended racial discrimination in all federal government agencies and organizations receiving federal support, and prohibited discrimination in the private sector to the extent permitted under the Constitution. While the private sector provisions probably had some impact, Sam’s opinion that “Paul gets the Civil Rights Act completely wrong” because the “ban on private discrimination was absolutely central to its achievement” is hardly a matter of scholarly consensus. I couldn’t agree more, by the way, with Max Novendstern’s comment in his response to Sam’s post that the Civil Rights Act should be judged based on its “material consequences, not just (and not primarily) the soundness of its ethical claims.” Although black-white wage differentials have declined substantially over the past fifty years, Miron points out that the gap began declining before the federal government adopted anti-discrimination policies, and that there is little dispute that “forces other than anti-discrimination policy played a significant role in reducing race … wage differentials.” One plausible candidate that he mentions is increasing educational attainment by African Americans. In “Catching Up: Wages of Black Men” in The American Economic Review, Finis Welch notes that he and James P. Smith observed that although the relative wages of blacks increased in the decades after 1960, “there was little evidence of improvement within cohort”; the narrowing wage gap was in other words a result of younger African Americans receiving better wages rather than increased wages for blacks already in the workforce (Smith and Welch, 1977, 1984, 1989). Although there were clear employment shifts toward industries with concentrations of firms presumed to be more sensitive to affirmative-action pressures, the wage gains were “pervasive and not restricted to these industries.” For these reasons, Smith and Welch conclude that improvements in the quantity and quality of schooling were more important in decreasing workplace discrimination than federal legislation. Miron further points out that the Civil Rights Act was accompanied by Justice Department suits against Jim Crow laws (which, let’s not forget, were racist government interventions frequently opposed by profit-seeking private firms) as well as private actions including boycotts and protests in the South. So while some academics and policymakers contend that the Civil Rights Act was crucial to eliminating racism, others have argued that it was unnecessary, and, as Miron points out, “reasonable people can disagree.”

One might assume that the Civil Rights Act was justified if it succeeded even to a very minor degree in eradicating racism in the private sector. This is a legitimate position, to be sure, but the fundamental libertarian philosophy as articulated by Professor Miron, which Sam appears to overlook, is that while the free market often delivers imperfect outcomes, government intervention generally does more harm than good. It is therefore necessary to examine the potential costs of anti-discrimination policy, including those that may accrue to the very minority communities they are intended to help, before arriving at a final evaluation. For one thing, libertarians often contend that the distinction between merely banning employment discrimination on the one hand, and implementing racial quotas on the other, is not meaningful in practice, since without affirmative action there is no way to enforce fair hiring practices (employers, in other words, can always claim that whites are simply more qualified). And Miron explains that affirmative action entails potentially draconian costs, including perpetuated negative stereotypes of minority communities (i.e., the perception that minorities are unable to find employment without the government’s help), resentment among non-minorities (i.e., whites who feel cheated out of positions for which they are more qualified), reduced educational attainment and effort within minority communities (i.e., reduced incentive for minority communities to improve themselves if the government guarantees them a certain number of jobs), and reduced efficiency (i.e., firms cannot hire the most qualified employees). But Miron explains that even anti-discrimination measures by themselves might do more harm than good. If an employer knows he might get penalized for firing, or not promoting, or not giving a raise to a minority employee, it might make sense to avoid hiring members of the protected group in the first place. One prominent example of this is the Americans with Disabilities Act (ADA) of 1990, which requires employers to accommodate disabled workers and outlaws discrimination against the disabled in hiring, firing, and pay. Acemoglu and Angrist (2001) observe a sharp drop in the employment of disabled workers after the ADA went into effect, and ironically isolate the ADA itself as the likely cause. Sam’s libertarian straw man advocates the right to do “whatever you want with what’s yours,” even if it means “perpetuating a system of race-based subordination.” While it would be difficult to oppose a government effort to eradicate discrimination that reliably produced results in excess of its costs, Miron points out that policy cannot ban discrimination without endorsing the view that firms are partially “public” and can be told to operate in “socially” approved ways. Even if this does more good than harm in the context of discrimination, he says, blurring the private/public distinction might legitimize ill-advised government intervention in other areas. All this is to say nothing of the deadweight loss from taxation needed to fund the personnel who enforce the laws. So the notion that anti-discrimination legislation in general, and the Civil Rights Act in particular, is an unequivocal good is far from accurate.

For pro-life libertarians like Rand Paul, the cost-benefit equation with respect to abortion is substantially different. Abortion restrictions, like anti-discrimination laws, undoubtedly entail costs. The difference is that pro-lifers equate the termination of unwanted pregnancies (at least those that do not result from rape or incest and do not threaten the mother’s life) with murder. Prohibiting abortion is therefore an attempt to prevent the needless slaughter of innocent human life, which, unlike ensuring equal employment opportunities for every citizen, is justified at virtually any cost. In the most recent issue of the Harvard Salient, Roger G. Waite notes that the United States has the highest abortion rate in the developed world, as well as a legal system extremely permissive of abortion. This does not imply causation, but it’s difficult to imagine that laws against abortion would increase the number of abortions, or that our high abortion rate results from Americans’ moral depravity (or, as Mr. Waite posits, the structure of our health care system). A true libertarian who opposes the Civil Rights Act and supports anti-abortion laws, therefore, is not being inconsistent, but making a rational cost-benefit analysis of government intervention in two distinct cases.

Sam ends his post by invoking the questions Ezra Klein poses to Mr. Paul as to whether the federal government can set the private sector’s minimum wage, tell private businesses not to hire illegal immigrants, tell oil companies what safety systems to build into an offshore drilling platform, tell toy companies to test for lead, or tell liquor stores not to sell to minors. I’ll spare you the explanations, but I can assure you that what Sam calls “consistent libertarians” can indeed oppose each of these forms of intervention, or oppose some and not others, according to a rational cost-benefit analysis. Sam and Mr. Klein might reach different conclusions, but this does not imply that libertarians or Mr. Paul are “willfully blind and insensitive to racism.”

None of this is to say that I endorse or condemn either anti-discrimination policies or the libertarian response thereto. The point is that it is entirely possible for Rand Paul to be a consistent libertarian, and not to be a racist, while both opposing the Civil Rights Act and supporting legal restrictions on abortion. Perhaps Mr. Paul is racist, but not by virtue of anything he has said about the Civil Rights Act. It is important to hold politicians accountable on an issue as fundamental as race, and I do not fault Sam for raising this accusation given Mr. Paul’s opposition to landmark civil rights legislation. I would advise Sam, however, that a valid charge of racism must withstand the strictest of scrutiny. This one does not.

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INTERVIEWER: Would you have voted for the Civil Rights Act of 1964?

PAUL: I like the Civil Rights Act in the sense that it ended discrimination in all public domains, and I’m all in favor of that.

INTERVIEWER: But?

PAUL: You had to ask me the “but.” I don’t like the idea of telling private business owners—I abhor racism. I think it’s a bad business decision to exclude anybody from your restaurant—but, at the same time, I do believe in private ownership. But I absolutely think there should be no discrimination in anything that gets any public funding, and that’s most of what I think the Civil Rights Act was about in my mind.

I’m glad Paul is honest, and I’m glad he’s more consistent in his libertarianism than most are. What he doesn’t seem to realize is that this is exactly why sensible people aren’t libertarians, and why most libertarians aren’t consistent. Libertarianism means, at bottom, doing whatever you want with what’s yours. If that means perpetuating a system of race-based subordination, that’s fine. After all, don’t tread on me! Or, if you like, freedom for me, but not for thee. This is the reductio ad absurdum of libertarianism, but Paul doesn’t find it absurd at all.

Opposing racial hierarchy because “it’s a bad business decision” is incredibly weak. He couldn’t even say it’s unjust, because for libertarians, the only real injustice is when government interferes with private property. It’s not that Paul weighs two injustices (government interference versus racial discrimination) against each other. It’s that he only sees one injustice.

So I don’t agree with the commenter over at the Washington Monthly blog who says “it’s pretty clear he’s not a racist.” What we can tell about Paul from these comments is that he’s definitely not a non-racist. A non-racist would not say “it’s a bad business decision.” A non-racist would not be against government interference with racial discrimination, but for government interference with a woman’s reproductive choices. If he were a truly consistent libertarian on all counts, then maybe I’d grant that he’s probably not a racist, just willfully blind and insensitive to racism.

But since he picks and chooses which libertarian positions to take, and since he picks the one that opposes the ban on racial discrimination, I’m going to say, yup, he’s probably a racist. I know people get incredibly sensitive about using the R-word, and I’ll probably catch hell for this. But if we can’t say it’s racist to oppose the de-institutionalization of racism, then we’re pretty much saying that you’re only racist if you wear a white hood.

Paul also gets the Civil Rights Act completely wrong, by the way. The ban on private discrimination was absolutely central to its achievement.

UPDATE:

I’ve been thinking all day about whether I really should have called Rand Paul’s opposition to the Civil Rights Act racist. Ezra Klein has a post that helps clarify my thoughts:

Can the federal government set the private sector’s minimum wage? Can it tell private businesses not to hire illegal immigrants? Can it tell oil companies what safety systems to build into an offshore drilling platform? Can it tell toy companies to test for lead? Can it tell liquor stores not to sell to minors? These are the sort of questions that Paul needs to be asked now, because the issue is not “area politician believes kooky but harmless thing.” It’s “area politician espouses extremist philosophy on issue he will be voting on constantly.”

The reason I am comfortable making an admittedly harsh judgment about Paul is that, unlike Mark Kleiman, I doubt he’s a “completely consistent libertarian.” I suspect, for instance, that he thinks the federal government’s age limit on alcohol purchases is perfectly fine. Very few people are so libertarian that they really can’t think of anything bad enough for the federal government to regulate. If I had reason to think that Rand Paul was one of these very few absolutely consistent libertarians, then I would say, yes, he’s just a libertarian, not a racist. (Notice that this position might actually be more crazy than the alternative.) But because Paul’s position is probably more like, alcohol bad enough to be regulated, but racial discrimination not bad enough, then I think it’s perfectly reasonable to wonder what kind of person thinks that racial discrimination isn’t all that bad. What kind of person thinks that way? Fill in the blank yourself.

It’s also worth remembering that his campaign spokesman resigned last year for having undeniably racist messages on his Myspace page. And that his dad has a pretty despicable history of bigotry and racial fear-mongering. Circumstantial evidence, to be sure, but come on, Ockham’s Razor, people.

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I am struck by a few things from Peyton’s post, and I want to pull them out and talk about them directly.

First, Peyton argues that we should not consider the FICA tax when assessing the overall progressivity of the tax system, because, he says, those who pay FICA taxes “receive direct monetary benefits during retirement.” The idea here seems to be, if I may put it crudely, it’s not really a tax if you’re getting it back eventually. But when conservatives lament the overall tax burden that falls on, say, the top 5% of American earners, I am pretty sure they include FICA. Otherwise, taxes would seem pretty darn low! Moreover, the FICA tax isn’t the only one that is remitted back to the people in the form of some service or benefit. Peyton helpfully lists these: “the U.S. military, benefits for veterans and federal retirees, federal support for education, transportation and infrastructure, and international affairs, and the numerous other areas of federal spending not directly tied to workers’ retirement welfare.” Now, liberals and conservatives disagree about how much money should be spent on such things, and how cost-effective our current spending is, but we don’t try to calculate what proportion of our taxes is eventually remitted back to us in the form of services and benefits, and then say that only the remainder, only the waste that is, is our real tax burden. To sum up, taxes are taxes.

Second, Peyton responds to the point that everybody also has to pay state and local taxes by saying that these taxes “vary tremendously from state to state and from locality to locality.” Of course. But Republicans and conservatives media figures have been pushing the narrative for at least a week that 47% of Americans just don’t pay taxes, period. Even when they take care to say “federal” taxes (which they don’t always do, as I found out yesterday when I flipped to Fox News), the implication is clear to everyone: half the country is a bunch of freeloaders, and the other half is paying their way. One Tea Party sign, quoted by the New York Times today, read: ““I’m the 50 percent stuck paying for the other 50 percent.” If that were true, it would be quite objectionable. But it’s just not true, and the existence of state and local taxes makes it not true. Peyton can’t do these two things at once: recognize basic facts about our system of government, and imitate or justify the moral outrage of the Tea Partiers.

Finally, Peyton has a very interesting psychological argument about how voters who don’t pay much in taxes might not be responsible stewards of our fiscal future. But I don’t understand the leap from saying “I ultimately don’t pay the federal government any income taxes” to saying “I have no stake in anything the federal government funds.” Obviously this is the kind of thing that’s easier to say than to show, but I just don’t think people reason like that. It’s not that Peyton’s being too cynical, as he worries. It’s that he’s not being cynical enough! Voters don’t go through those sorts of calculations. Many if not most people vote out of atavistic party loyalty; many others vote based on the personal characteristics of candidates; many vote on symbolic issues or issues unrelated to taxing and spending; and many people who care about the deficit also don’t much in federal income taxes (unless we are to suppose that all fiscal conservatives are in the top 53%).

I also object to Peyton’s claim that “Such programs are all benefit and no cost for the bottom 47 percent of the country.” Just to pick an easy target, I hardly think it’s the case that military spending is all benefit and no cost for the poorest Americans. Not when they’re the ones fighting our wars.

Ultimately, I agree with Peyton that this debate comes down to irreconcilable moral positions. But I still think we need to get our facts straight, and talk about these issues with complete candor and statistical rigor. And as for the moral side, I’ll just say this: Peyton might be right that all citizens ought to have a stake in how the government spends its money, but I’m not willing to worsen the living conditions of the working and middle classes just to satisfy this abstraction.

Photo credit: Ezra Klein

If they made posters of Supreme Court Justices, I’d put John Paul Stevens on my bedroom wall. The man is a progressive hero — first and foremost, for his longevity. In 2006, the liberal radio station Air America made a parody of “Hang On Sloopy” called “Hang On Stevens” — with lyrics like, “Stevens, I don’t care if you lose your mind, just wait until Bush leaves before you resign.” Past Sandra Day O’Connor and William Rehnquist and David Souter, Stevens hung on. And he probably could have kept going. He plays tennis twice a week, at 90 years old!

Still, his retirement is well-deserved. And thankfully, we don’t need Stevens to hang on anymore. We can only hope that President Obama finds someone as thoughtful and, yes, empathetic as Stevens to fill his shoes.

Appointed by Republican Gerald Ford in 1975, Stevens was not always an icon of the left. He has claimed that he didn’t change — that the Court changed around him. But it’s hard to take that seriously. Over the course of 34 years, Stevens has changed his mind on affirmative action, obscenity, and the death penalty, always moving in a more liberal direction.

Even his last major opinion, his dissent in the Citizens United campaign finance case, reflected a long-ago flip-flop. In January, Stevens caustically wrote, “While American democracy is imperfect, few outside the majority of this Court would have thought its flaws included a dearth of corporate money in politics.” In 1978, though, a Stevens-backed majority ruled that speech doesn’t lose the Constitution’s protection “simply because its source is a corporation” — the same sort of claim made by the Citizens United majority. It’s a shame Stevens wasn’t always as liberal as we’ll remember him, but he should feel no shame in admitting that he learned on the job, that he came around.

On some issues, of course, Stevens has been consistent. He has always protected a woman’s right to choose, upheld the separation of church and state, and defended the federal government’s power to regulate the economy. And in the last ten years, he has made his name, and shaped his legacy, as the intellectual leader and chief strategist of the Court’s increasingly beleaguered liberal wing.

What we might call Stevens’s heroic era began in 2000 with Bush v. Gore, an affront to democracy that Stevens unabashedly identified as such. In the early part of the Bush era, Stevens helped the liberals eke out major victories, or at least stave off major defeats, by assigning opinions to centrist justices like O’Connor and Anthony Kennedy and then rallying the liberal troops. This savviness gave us cases like Lawrence v. Texas, the major gay-rights victory; Grutter v. Bollinger, the last vindication of affirmative action; and Roper v. Simmons, which forbade the death penalty for crimes committed by minors.

This period will also be remembered for Stevens’s brave defense of the rule of law in a string of decisions rejecting Bush counter-terrorism policies. In 2004 he led a six-justice majority in holding that federal courts had jurisdiction over the prisoners at Guantánamo Bay, Cuba. The Bush Administration would no longer be able simply to ignore detainees’ claims of wrongful detention. In 2006, Stevens wrote the opinion overturning Bush’s military commissions because they had not been authorized by Congress and violated the Geneva Conventions. Finally, in 2008, this line of cases culminated in Boumediene v. Bush, which rejected even congressionally authorized military commissions as offensive to the right of habeas corpus. After September 11, few would have guessed that a majority of the Supreme Court would be courageous enough to stand up for the procedural rights of terror suspects. Stevens deserves a great deal of credit for that outcome.

Of course Stevens wrote a few decisions that shouldn’t sit well with liberals. I don’t want to suggest that he was the ideal Supreme Court Justice, as if such a thing exists. In 1989, Stevens refused to protect flag-burning under the First Amendment, hearkening back to “the soldiers who scaled the bluff at Omaha Beach” under the Stars and Stripes. (Stevens himself served in the Pacific Theater.) And in 2008 he upheld a photo-ID requirement that, like most anti-voter fraud laws, disproportionately hindered the poor and the elderly from exercising their right to vote.

But neither Supreme Court justices nor the nominees chosen to replace them should be held to a standard of ideological purity. With regards to nominees, we couldn’t do so if we tried. No prominent lawyer, judge, or politician is going to have a track record on every constitutional question that might arise in the next thirty years. And if they did, they’d never be confirmed. Our broken political process demands that nominees say nothing interesting or substantive; platitudes and evasions are the name of the game.

The next several weeks will, of course, be given over to fevered and uninformed speculation about whom Obama might nominate to replace Stevens. I’m not going to pick a favorite. Harvard parochialism doesn’t decide the issue for me — how could I choose between Elena Kagan, Elizabeth Warren, Cass Sunstein, and Martha Minow? If I wanted a smart, liberal, female law professor from Stanford, I’d have to flip a coin between Pam Karlan and Kathleen Sullivan. Better to just wait and let Obama pick for me.

Still, I can say this much: Obama is probably never going to have such a good chance to appoint a bona fide liberal to the Court. There’s no doubt the Democrats are going to lose at least a handful of senators in the fall, making any post-midterm nominations much dicier. And, as the New York Times reported last week, Republicans may be wary of being portrayed (accurately) as “knee-jerk obstructionists.” My bet is still that they’ll filibuster anyone Obama nominates; they cannot afford to deflate their base’s balloon before the midterms.

So the question becomes whether the nominee can be sold to the public and to the handful of reasonable GOP senators. Ultimately, “wise Latina” or not, Sonia Sotomayor was broadly popular from the get-go, and there just wasn’t enough there for honest Republicans to oppose. Let the Republicans complain; if Obama appoints the right person, things will fall into place. We need someone like Stevens, someone who we’ll be cheering to “hang on” thirty years from now.

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The income tax is the largest source of revenue for the federal government, having generated $900 billion in FY2008. While virtually all working Americans pay excise and payroll taxes, the former account for a miniscule portion of federal revenue, and the latter are paid with the expectation of retirement benefits.

Mr. Ohlemacher goes on to point out that although the number of households avoiding the income tax is down two percent from 49 percent in FY2008, it has increased by nine percent overall since FY2007, for which the figure was 38 percent. This sustained increase comes in part as a result of the President’s tax cuts for low- and middle-income families contained in last year’s economic recovery package. While this figure is likely to decrease over the next few years as the recession subsides and income levels increase, the President’s campaign promise to eliminate the income tax for seniors making less than $50,000 per year, as well as his current proposals to extend additional tax credits to the poor and middle class while imposing nearly $1 trillion in higher taxes on households making more than $250,000, would have the effect of exacerbating the disparity.

While progressive income taxation is not without its merits, such an extreme level of redistribution raises a few obvious concerns. For one thing, the tax burden falls heaviest on the people most capable of creating jobs—and most capable of shipping those jobs overseas. Given their above-average incomes and above-average rates of saving, these are also the people most able to reduce their output or stop working altogether in response to higher taxes. Furthermore, under this regime, nearly half the electorate has little if any interest in reining in the deficit, since most federal programs outside Social Security and Medicare are all benefit and no cost for the bottom 47 percent of the country.

Given how tremendous this revenue disparity is and the fact that President Obama would like to increase it, the more fundamental question is, What is the endgame? Presumably the President and his party do not believe the top income quintile should shoulder the entire tax burden. But since we seem to be moving in that direction, one wonders at what level of redistribution they will be satisfied. If nothing else, it would be fitting for President Obama to acknowledge this state of affairs and explain the extent to which it is appropriate for the government to “spread the wealth around.”

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