The Minimum Wage Shows Why (and How) We Should Vote Today

It is time for the states to lead.

Every once in awhile in the history of this great country of ours, the federal government just can’t get the job done. Partisan gridlock, constitutional uncertainty, public distrust all play a role. But one of the great strengths of the American system is that the states — those laboratories of democracy, as Louis Brandeis called them — can act when Washington will not. Abolitionism, women’s suffrage, health care reform, gay rights: All started at the state level.

This is one of those times. Our national system is inert. Our national leaders are mired in the muck of inaction.

And yet there is hope. For today is Election Day, and on this day, we will elect 36 governors. This is no time to stay home when the polling places are open. This is a time to choose leaders who will act where Washington has not.

I can think of no better example of the choice we face as a country today than the minimum wage.

After World War II, Congress set the minimum wage at approximately half the average wage in the country. In today’s dollars, it was over $10 an hour. Earning the minimum wage, one full-time worker could support a family of three above the poverty line.

Today, the federal minimum wage is $7.25, less than 36 percent of the average wage. It’s so low that it can’t even keep a family of two out of poverty.

Unlike Social Security or Medicare payments, the minimum wage is not indexed to the cost of living. Only Congress can raise it. The last time they did so was 2009. Democrats proposed raising it again earlier this year, but the majority of senators opposed it.

The feds have failed to act. It’s time for the states to lead.

And we have ample evidence that they can. Twenty-three states already have minimum wages higher than $7.25. Five states — Alaska, Arkansas, Illinois, Nebraska, and South Dakota — have an initiative on today’s ballot to increase theirs.

But not everyone is onboard.

“I don’t think it serves a purpose,” said Wisconsin’s Republican governor Scott Walker last month.

“I don’t think as governor I want to be the cause of someone losing their job,” said Greg Abbott, the Republican candidate for governor in Texas, in explaining his opposition to raising the minimum wage. Pennsylvania’s Republican governor Tom Corbett made a similar argument when stating his opposition last year.

At least they pretended to know what they were talking about. When Republican Governor Rick Scott was asked what Florida’s minimum wage should be, he said, “How would I know?”

These men are on today’s ballot in four of our nation’s largest and most influential states.

And they are tragically out-of-step with the lessons of economic history. In a recent study, the economists Hristos Doucouliagos and T.D. Stanley survey the vast research that economists have done measuring the impact of the minimum wage in recent decades — 64 papers in total — and they find “little or no evidence” that minimum wage increases caused job losses.

On the contrary, raising the minimum wage is a clear boost to the economy. In another recent paper, the economist Arindrajit Dube found that raising the minimum wage significantly reduces the poverty rate, a finding that is consistent with the other 12 studies economists have published in recent years measuring the same effect in different ways.

Only a politician severely out-of-touch with the modern economy could think otherwise. Today’s corporations don’t have to cut back jobs when wages rise. They have to cut back profits, which are at an all-time high. In the long run, they might not have to cut back anything. Higher wages lead to higher productivity, better health, fewer strikes, lower turnover, and higher consumption, which in turn leads to more demand for their products and therefore higher profits.

Individual companies may not want to raise wages if their competitors won’t, but when everyone does it, everyone benefits.

Trying to save money by keeping the minimum wage low is like trying to improve your health by starving yourself. It’s classic shortsighted behavior, hardly the visionary leadership that we’d like to see in the governor’s mansion.

That’s why today’s election matters. In this age of do-nothing politics, it’s easy to despair, but we must remember the intent behind the design. The same founding fathers who created a federal system that resists radical change also created a state system that encourages experimentation. Today we celebrate their creation, and we direct its attention to the challenges of our time.

If the feds do not act, the states will. We the voters will make sure of it.

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This op-ed was originally published in the Huffington Post.

Guess Who Tried to Prevent the VA Crisis — and Who Stood in Their Way!

The Three Trillion Dollar War

Linda Bilmes and Joseph Stiglitz predicted the VA scandal.

Back in 2008, the eminent researchers — one a professor at the Harvard Kennedy School, the other a Nobel laureate in economics — published a book called The Three Trillion Dollar War, where they argued that most Americans were drastically underestimating the cost of the Iraq War. They didn’t specifically describe the events that have unfolded in recent weeks, but they did point out the enormous burden that would be placed on the VA system as veterans returned from Iraq — a burden that we were not preparing for.

And that was before the surge in Afghanistan.

Upon taking the oath of office, Barack Obama tripled U.S. troop levels in Afghanistan, sending over 60,000 troops into combat. Only now, five years later, have troop levels reverted to the level they were at when he took office. So you can add 60,000 troops for five years on top of the costs projected by Bilmes and Stiglitz — projections that were verified and replicated by the Joint Economic Committee of Congress, as well as Nobel laureate Lawrence Klein, the father of modern economic forecasting.

And yet, Congress refused to boost the VA budget.

For years, discretionary funding for the VA health care system had been growing at approximately 6 percent per year, slightly less than health care costs for the average American family, making it the most cost-efficient system in the country. Meanwhile, it ranked at the top of quality rankings, better than all its private competitors, year after year. It was the best medical care system in America.

That is, until the troops came home.

“Republicans beat back a Democratic attempt to provide almost $2 billion in additional health care funding for veterans,” reported the Washington Post in 2005, “rejecting claims that Department of Veterans Affairs hospitals are in crisis.”

The following year, Bilmes told ABC News, “In 2004, the VA had a backlog of 400,000 cases. Last year it was 500,000 cases. Now the backlog is 600,000 cases. That’s just in two years. And the big wave of returning Iraqi veterans has not even hit yet.”

And yet, the VA budget kept growing by 6 percent per year, as if the war didn’t exist at all.

As if that wasn’t a big enough problem… “Proposed cuts in Department of Veterans Affairs spending on major construction and non-recurring maintenance threaten to derail efforts to update the department’s aging infrastructure,” reported the Washington Post in 2012. And so, Democratic Senator Patty Murray led the charge to boost the VA’s construction funding, only to have it beat down by Republicans.

Later that year, Paul Ryan, the Republican chair of the House Budget Committee, released the party’s annual budget proposal. Had it become law, the VA would’ve sustained billions of dollars in budget cuts, forcing smaller facilities to shut down in rural areas.

So it wasn’t surprising to Senator Murray when allegations surfaced of VA hospitals lying about the number of veterans on their waiting lists because they didn’t want the world to know that they were unable to give their patients lifesaving treatments. “In an environment where everybody is told, ‘Keep the cost down. Don’t tell me anything costs more.’ — it creates a culture out there for people to cook the books,” she said in a recent interview.

Who would’ve ever thought, after years of relentless cost-cutting in the halls of Washington, that the federal government actually spends our money on important stuff? Who would’ve thought that wars cost money, and tax cuts cost money, and maintaining our infrastructure costs money? Not the Republicans, that’s for sure. While the Bush administration plunged us into two wars and cut taxes on the rich, who were already taking a bigger piece of the pie than they had since the Roaring Twenties, Republicans in Congress were blocking every Democratic attempt to give the VA the funding they needed to give our veterans the medical care they were promised. And then, when the Obama administration tried to correct this funding crisis, Republicans responded by proposing deeper spending cuts.

Let this be a warning to every politician and every voter who thinks we can cut our way to prosperity: Those dollar figures represent real services that the government provides to real people. Every cut has a cost, and not just in money. In lives.

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This op-ed was published in today’s South Florida Sun-Sentinel and Huffington Post.

Geography: The Latest Front in the Class War

Upward Mobility Across America

At the heart of today’s political gridlock is a sense of disconnect. Too many Americans feel disconnected from their government, their economy, and even their fellow citizens.

Gone is the collective bond that united us in war and in peace, the sense that we rise together and fall together. In its place is a deeply divided America.

We talk a lot about the partisan divide in this country, but we don’t talk enough about the geographic divide. The citizens who feel the greatest disconnect from collective institutions are often the ones who live farthest away from them.

The latest evidence of this fact comes from a new study by the Equality of Opportunity Project, a team that includes some of the most celebrated young economists in the country. They found that one of the greatest enemies of economic advancement was sprawl.

The more concentrated a city was, they discovered, the more likely its citizens were to climb the economic ladder. Conversely, the lower and middle classes had fewer opportunities to advance in cities that were more spread out.

The release of their findings just happened to coincide with the bankruptcy of Detroit, an episode that illustrated their point quite tragically. Detroit is one of the most spread out cities in America — and one of the most economically segregated. At its core, the average household earns an income that’s half of what suburbanites earn just outside the city’s borders.

This is yet another consequence of the extreme inequality that is rending this nation’s social fabric. Not only have the richest One Percent taken almost all of the income gains in the past thirty years, but they have isolated themselves in communities where they never have to see the pain of the 99 Percent they left behind. Walled up behind their iron gates, they become less and less aware of the struggles of the average American, until one day when the elites who run our country no longer know what our country even looks like anymore.

Nowhere is this disconnect more clear than Washington, D.C., which boasts six of the nation’s ten richest counties alongside one of its poorest cities. Our legislators never seem to notice that the people who need their help the most are in their own backyard.

The famous political scientist Robert D. Putnam made this case beautifully in a sad new essay about his hometown of Port Clinton, Ohio. He talked of how stable and connected the community once was and how that all disintegrated when the manufacturing jobs disappeared. He marveled at how far his classmates had come and how different their experience was from the poor generation that followed them.

Port Clinton no longer lives as one community but two.

“In the last two decades,” writes Putnam, “just as the traditional economy of Port Clinton was collapsing, wealthy professionals from major cities in the Midwest have flocked to Port Clinton, building elaborate mansions in gated communities along Lake Erie and filling lagoons with their yachts. By 2011, the child poverty rate along the shore in upscale Catawba was only 1 percent, a fraction of the 51 percent rate only a few hundred yards inland.”

In this fractured world, it’s easy to see how the average American would feel abandoned — by the government, by the economy, even by their own fellow citizens — and why they would distrust anyone who asks them to bind together in common cause.

I know whereof I speak. This month marks my seventh anniversary of moving from the country to the city. I grew up in rural Pennsylvania and suburban Florida. Since then, I’ve lived in Philadelphia, New York, London, and Los Angeles. I’ve seen the world through two very different lenses, and I don’t blame the one for being suspicious of the other.

But we must overcome this disconnect if we are to rebuild these forgotten communities and resurrect our ailing economy. The more isolated we have become, the more we have all suffered. We must find ways to connect the rural and urban regions, whether through physical connections like high-speed rail or social connections like labor unions. We must work together, and that means we must put our trust where it has always done the most good: in each other.

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This op-ed was published in today’s South Florida Sun-Sentinel.

The Republican Riddle: What the States Know That the Feds Don’t

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I’m going to tell you a riddle. It’s a paradox of sorts, and it’s confounding some of the brightest political minds of our time. Here it is…

The Republican Party has lost the last two presidential elections. In the House of Representatives, they lost the majority of the nation’s votes. In the Senate, they’re outnumbered 55 to 45.

The future looks even dimmer. The youngest generation is more liberal than its immediate predecessors, and they’ve been turning out in record numbers. The electorate is becoming more educated and more diverse — two liberal trends that don’t show signs of stopping anytime soon.

And yet, at the state level, the story is completely reversed. Republican governors outnumber Democrats 30 to 20, and they control a majority of state legislatures.

How can that be? What are Republican politicians doing right at the state level that they aren’t doing at the federal level?

I’ll give you a hint: They aren’t who they say they are.

The answer to this riddle is the greatest act of hypocrisy in modern politics. It’s a magic act, really. An illusion. Don’t be fooled by appearances. Look at what they do, not what they say.

Republican politicians say they want smaller government. They say the states are better at governing than the feds. They say we can afford tax cuts. They say we need tax cuts.

But their actions tell a different story.

Take Obamacare for example. The Affordable Care Act instructed the states to set up exchanges where people could purchase affordable health insurance that they weren’t getting from their employers. Twenty-six governors declined, choosing to let the federal government do it for them. Of these twenty-six, twenty-four were Republican.

These Republican governors, who say the states are better at governing than the feds, ceded enormous power to the federal government, violating a core principle of their party’s ideology. And then they crowed that Obamacare was a failure because it required a massive federal bureaucracy — the very bureaucracy that they chose to create!

The dirty little secret of Republican politicians at the state level is that they love the federal government. They need it. They depend on it.

In fact, Republican states receive far more federal spending, relative to the taxes they pay, than Democratic states. For every dollar they put in, Republican states get $1.46 back. Democratic states get $1.16. Of the 22 states that voted for John McCain in 2008, 86 percent received more federal funding than they paid in taxes, compared to only 55 percent of the states that voted for Barack Obama.

Then the Republican politicians have the temerity to brag that their states have lower taxes. Well, of course they can afford lower taxes: The feds are picking up the tab!

What they don’t tell you is that they’re spending just as much money. They’re just being subsidized by the Democratic states!

It’s no surprise, then, that Republican state governments are more popular than Democratic ones. They have lower taxes and more federal funding — both of which are very popular.

Thus the riddle is solved: At the state level, Republicans are cynically and diabolically riding to victory on the wings of a big federal government while claiming to be doing the exact opposite.

At the national level, meanwhile, they’re just starting to learn how to play this game. In Washington, Republicans really have been trying to shrink the federal government, so much so that they threatened to default on the nation’s debt and blow up the global economy if the President didn’t agree to cut spending on everything, including retirement programs.

It wasn’t until they realized that the spending cuts were extremely unpopular — because, you see, the public actually needs the services that the government provides — that they backtracked and claimed that they never supported them in the first place. And when the President finally proposed cuts to retirement programs, they attacked him for even considering such an idea…even though they basically forced him to do it.

But the award for worst hypocrisy surely belongs to Oklahoma Senators Jim Inhofe and Tom Coburn, who went all-out to prevent sending federal aid to Hurricane Sandy victims and then demanded that the federal government send aid to their home state in the wake of the recent tornado disaster.

Maybe they’re finally starting to figure out what state-level Republicans have already discovered: The government is an essential part of our social fabric. It does important things, and someone has to pay for those important things. You can’t cut spending without hurting people, and you can’t cut taxes without cutting spending or blowing up the deficit.

There’s no such thing as real magic. Anyone who says differently is trying to trick you.

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An abbreviated version of this op-ed was published in today’s South Florida Sun-Sentinel.

Reader Requests: Why Aren’t We Prosecuting Fraud?

A reader asks: Each year American taxpayers lose billions of dollars to fraud, yet nobody in Washington wants it stopped. Why?

Yes, fraud is a continual challenge with government programs. However, it’s not true that nobody in Washington wants it stopped. The Patient Protection and Affordable Care Act of 2010 (a.k.a. “Obamacare”) improved the government’s ability to detect and crack down on Medicare fraud. As a result, earlier this year, the Obama administration announced the largest anti-fraud takedown in history, totaling $452 million. The Obama administration has also tried to increase the IRS’s budget to crack down on tax fraud, but Republicans in Congress blocked it. The IRS estimates that they can collect an additional $200 in tax revenue for each dollar added to their budget. They know how to combat fraud. They just don’t have the resources to do so.

In response, another reader asks: Do you know why Republicans blocked it?

They want to cut the budgets of all the major regulatory agencies. They’re fanatically opposed to regulation, and they don’t want to collect more tax revenue, even if it means letting cheaters get away with their crimes. They want to “shrink [the government] down to the size where we can drown it in a bathtub,” as one of their leading lobbyists famously said.

Many of them campaigned on eliminating the IRS altogether. “Getting rid of the IRS is something we’d all love,” said Mitt Romney in a 2007 primary debate. They’ve been waging this war since the 1990s, when the Republican Senate leaders compared the IRS to the Nazi secret police.

It’s also worth noting that the rich have the most to gain from lax tax enforcement. They can afford accountants who hide their income in dubious tax shelters, a luxury not available to the poor or middle class. In the Republican mindset, the rich are producers and the rest are moochers, so anything the rich do to avoid paying taxes is their right as the anointed kings of capitalism.