Enforcement in the New NAFTA

Trade, Enforcement in the New NAFTA, May 22, 2019

There are two other issues we would like to address as it relates to NAFTA and to all subsequent trade agreement. First is Chapter 11 Tribunals. These tribunals put national and state sovereignty at the mercy of the interests of multinational enterprise.

If such enterprise were employee-owned, we would see no problem. That, however, is not the case. Local workers and the environment are put at the mercy of the wealthy few. It is economic gunboat diplomacy without the Navy and it must stop. A big reason we have Trump as President is this kind of trade issue. Obviously the public is not amused.

The second is visas. Canadian (including refugees from Hong Kong) and American citizens can immigrate for one year (renewable) on a NAFTA visa. Mexican workers cannot. This is purely racism. If the Congress believes there are too many Mexican workers in American fields and factories, repeal right to work laws and immigration restrictions.

You will find most employers will prefer American workers if they have to pay a union wage and operate under safety standards set in collective bargaining. Until then, make visa rules uniform and apply them to workers already here. If this does not happen, someone may yet raise an equal protection case in our courts, which will also give us a test of the constitutionality of the Chapter 11 tribunals.

Protecting Patients from Surprise Medical Bills

Health Subcommittee, Protecting Patients from Surprise Medical Bills, May 21, 2019

Participants in Catastrophic Care with a Health Savings Account are never surprised by unexpected medical bills, since they signed up for it. If they do not realize that there will probably be a gap between the catastrophic deductible and the savings account, then it is on them. Adding a portable Medical Line of Credit would still create unexpected costs, but they would at least be funded at service – although this would limit the usefulness of the system in ending care when it is not needed. Most people will put access ahead of long-term savings. It is why the poor under-invest in tax favored savings accounts.

Beneficiaries of comprehensive health care are surprised when they see bills that will eventually be covered by their carrier, as well as those which are not covered that they must still pay.

The deepest cut comes for those of the working poor who have signed up for care under the Affordable Care Act in the lower cost plan. I am among those. A broken rib when I was covered by the ACA resulted in $900 in medical bills I was not expecting (and in truth, I should have simply waited for my Medicare to kick on, but honesty or stupidity had me sign up for the ACA when I could no longer meet the asset test). 

My experience is duplicated for many others.  The reality for most is that these bills are never paid, so the providers eat the cost anyway. Making patients “responsible” has not helped providers one bit. They still eat much of the cost of treating “covered” patients.

Patients under Medicaid have no surprise medical bills. Neither will anyone if Medicare for All is adopted. Indeed, Medicare for All is really Medicaid at the beneficiary level with payments for providers at the Medicare level (else, the Uniformed Public Health Service would have to employ all medical personnel.

Overcoming Racial Disparities and Social Determinants in the Maternal Mortality Crisis

Ways and Means, Thursday, May 16, 2019

The problem of racial disparity occurs because of access to care, which is caused by poverty and social class. Once poverty is accounted for, race is a lesser variable. Most modern healthcare workers provide good care to everyone, although one can imagine that in some facilities, staff may still harbor racism, which does impact care.

Hunger affects maternal mortality and it is also caused by poverty. Maternal hunger is caused by the inadequacy of the Food Stamp program. The program punishes the poor in many ways.

First, the benefits are inadequate to feed an individual or family. This was by design so that states could not raise food stamp entitlements to offset cuts and penalties in Temporary Assistance to Needy Families, which target women for service industry jobs that leave them hungry and hopeless, including training them to provide nursing home care to old white people (to be blunt about it).

Many of the poor and hungry are disabled, either due to poor educational outcomes from underfunded schools or diseases of the poor, like Type Two Diabetes. For the vast majority of the disabled (both SSI and SSDI recipients), the monthly entitlement is inadequate to even cover rent, but are too high to receive anything but a pittance from SNAP.

Two, because many on Food Stamps get no cash subsidy at all, they are forced to sell their stamps for fifty cents on the dollar, which is the standard rip-off. If a cash benefit were added and coverage expanded for such things as toilet paper – along with much more funding for housing and energy, families would not struggle for cash.

Third, because SNAP is inadequate, diets are low in protein and high in carbohydrates, which trigger diabetes in mothers and children. If families cannot afford milk, they serve soda. If they work in low wage jobs, fast food with soda is often dinner. Such a diet endangers pregnant women, increases blood pressure before and during pregnancy, leading to complications like pre-eclampsia.

Such medical complications may require either early delivery, which hurts the later development of children or the need for therapeutic abortion. Improving the diet of poor people should be looked upon as a pro-life issue. Sadly, it is not.  Many in the Pro-Life movement also adhere to views on social welfare which punish the poor for what is seen as a lack of motivation, as if starvation made work easier.

Pregnant women and new mothers need family support; not from their mothers, but from their husbands or partners. The limitation on benefits excluding homes with a father have their basis in punishing the poor, especially racial minorities. The War on Drug Users is another factor in the problem of absent fathers. That this war is related to preventing minority voters from exercising their voting rights is not lost on any of us in the civil rights movement.

The War on Drugs, inadequate benefits and attacks to voting rights are all examples of deliberate governmental failure – or more adequately, sabotage – by reactionary legislators. Sadly, when progressives take power, nothing is changed.

In policy analysis, the leading cause of poverty is not enough money. Giving more income to families actually helps them survive and even find work – especially if such items as the child tax credit are tied to either a job, a benefit or an educational program. The Child Tax Credit should be large enough to take care of current children and to prevent the need to abort additional children. It should provide a middle-class existence (ending the need for government grant programs). Current U.S. Department of Agriculture estimates stay in the $1000 per month per child range, although any tax credit should be adjusted for inflation. Even using the Chained CPI is better than nothing at all.

Again, this is a right to life issue. The movement should treat it as such or go away.

We further address the problems of poverty in Attachment One, Leveling the Playing Field for Working Families: Challenges and Opportunities, March 7, 2019, which repeat our May 2016 comments. Sadly, we have gone backwards.  We have updated our four-part tax proposal, which is referenced in the Attachment.

Keeping Our Promise to America’s Seniors: Retirement Security in the 21st Century

House Budget, Keeping Our Promise to America’s Seniors: Retirement Security in the 21st Century, May 15, 2019
Finance, Challenges in the Retirement System, May 14, 2019
Subcommittee on Social Security, Protecting and Improving Social Security: Enhancing Social Security to Strengthen the Middle Class, March 12, 2019

To strengthen the middle class in retirement, we must understand the purpose of social insurance, who is in the middle class and how tax reform and employee-ownership can bring people into the middle class and keep them there.

Care for the retired was provided by families prior to the establishment of Social Security. Extended families provided shelter, income and health care because they had to. Allowing seniors to live independently freed the nuclear family to move without taking everyone with them. This led to a crisis in health coverage for those seniors left behind.

The logic of social insurance led to both Social Security, Medicare and Medicaid. This provided care for everyone regardless of accidents of birth or death. Without it, families with no surviving parents or grandparents would pay nothing, where only children might have to pay for both parents and their in-laws. This inequality still happens with housing and it strains many marriages.

Our comments on who belongs in the middle class come from the Subcommittee on Select Revenue Measures on How Middle Class Families are Faring in Today’s Economy held February 13, 2019 are omitted (repeated in Attachment One.)  Our latest comments on Family Income and Employee-Ownership before the Subcommittee on Worker and Family Support on Leveling The Playing Field For Working Families: Challenges And Opportunities Thursday, March 7, 2019 are repeated in Attachment Two. Attachment Three restates or Social Security reforms last attached to our comments on the 2016 Trustees Report. 

Our employee-ownership comments are based in two elements of our four-part approach to tax reform, the employee contribution to Old Age and Survivors Insurance and our Net Business Receipts/ Subtraction Value Added Tax.

The employee contribution will feature a lower income cap, which allows for lower payment levels to wealthier retirees without making bend points more progressive. This contribution is only retained if a tie between retirement income and wages is necessary to preserve broad based support for the program. 

There should be a floor, however, because most of the heavy lifting to support retirees will come from the NBRT, with these contributions to FICA credited on an equal dollar basis, rather than as a tie to wage levels. Doing so makes contributions less regressive, both because they tax all value added and because there is no upper limit to their collection. This ends the need for the Earned Income Tax Credit and its replacement with a high child credit.

The NBRT/SVAT includes  additional tax expenditures for family support,  health care and the private delivery of governmental services. It will fund entitlement spending and replace income tax filing for most people (including people who file without paying), the corporate income tax, business tax filing through individual income taxes and the employer contribution to OASI, all payroll taxes for hospital insurance, disability insurance, unemployment insurance and survivors under age 60.

Covering retirement will also be part of the NBRT. Employee-ownership is the ultimate protection for worker wages.  Our proposal for expanding it involves diverting an every-increasing portion of the employer-contribution to the Old Age and Survivors fund to a combination of employer voting stock and an insurance fund holding the stock of all similar companies.

At some point, these companies will be run democratically, including CEO pay, and workers will be safe from predatory management practices. This is only possible if the Majority quits using fighting it as a partisan cudgel and embraces it to empower the professional and working classes.

Sadly, many people are trapped in poverty until they retire into a life of less poverty. Bringing families into the middle class through adequate family wages and building financial and real assets through employee-ownership. The dignity of ownership is much more than the dignity of work as a cog in a machine.

Fixing a Broken Budget Process: Perspectives of Two Former Chairmen

The experience of the Budget Committee and its current and prior leadership only takes us so far, as my prior comments reflect. I would point to past successes due to bipartisanship and negotiation with the executive branch. Any reform should be done differently than the Joint Select Committee, which gave parties a veto instead of each house of Congress. Luckily, with each house in a different party, bicameralism has the same effect without the same insanity. Let us not mess with a constitutional process that has worked for over two centuries. 

The current executive should be included in any reform negotiations to the extent that they were involved in negotiating the unaptly named Balanced Budget Act of 2018. Like that Act, the budget caps should be increased to at least 2025 at realistic levels. More spending offsets liquidity in the asset markets created by the Tax Cut and Jobs Act. Letting the extra liquidity go into anywhere but the bond markets will set off an unwanted boom and bust cycle. 

We have already stated what could be a way to enhance the budget side, although some will not like it. Abolish the Budget Committees and create a Joint Committee to consider only the high-level spending, tax and entitlement goals submitted by the Administration to be enacted in a Joint Budget Resolution. If no agreement is reached by a reasonable deadline, the increased Budget Caps are automatically enacted as the next annual or biennial budget. If they snooze, they lose. That would put pressure to get something done. To add more pressure, delay delivery of detailed Administration and Current Services estimates until the Joint Resolution is signed or overcome by events. 

The real dysfunction in the process has nothing to do with the Budget Committee and is outside the experience of the witnesses. This is the inability to pass appropriations by the beginning of the fiscal year. This can also be solved with an automatic process, which deems the current services budget submitted under the Joint Budget Resolution or the Budget Caps deemed passed if not enacted by September 30th. 

There is likely some concern about enhanced executive power. These comments would be useless if the issue were ignored. 

The answer is bipartisanship to enough of an extent to override any veto of appropriation or joint resolution.  As some may remember, I defined bipartisanship as more than a process with a partisan veto.  It demands leadership and the willingness to simply disregard offending members, seeking votes and compromise with the other party. There is no organizational fix for this, just leadership and courage by leadership. 

The topic of bipartisanship always comes up when the current majority is facing an electoral rout. There is Balanced Budget Amendment which often includes super-majority requirement to either run a deficit or raise taxes. It essentially guarantees the new minority either a veto or more likely a way to stop the budget process. It is exactly the wrong thing to do. The right thing to do is to make sure the process moves forward automatically so that shutting down the government is never a possibility. 

A summary of our previous comments to this Committee on February 24th to responding to their proposals is attached as a reminder. They include automatic appropriations and an increased control period with higher appropriation levels until 2025, when the temporary provisions of the TCJA expire. 

In the short run, agreement is vital. In the long run, the only way to make budgeting work is adequate revenue from the savings sector, who use their excess for asset speculation rather than real growth. Investments as part of GDP come from consumption, not from the availability of capital. Capital can always be had, but until there are customers, there is no investment. 

The comments below detail how and why income tax payers owe $13 of gross debt for every dollar of taxes paid. The other way to look at this is by economic class. The following table should prove convincing. 

Understanding the Tax Gap and Taxpayer Noncompliance

Ways and Means, Understanding the Tax Gap and Taxpayer Noncompliance, May 9, 2019

The tax gap occurs in many forms. The most reported loss is from the underground economy. Indeed, part of the attractiveness of the Fair Tax proposal is that, as with all consumption taxes, members of the underground economy would finally pay. This is true, but their customers likely would not unless their activities were legalized. As a retail sales tax, avoidance would be worse as it will be easy for many to claim that their retail purchases were really wholesale, thus avoiding the tax. The higher the tax rate, the greater the incentive to avoid.

As a single tax, without major spending cuts that would be a major blow to GDP and a boon for asset speculation, the Fair Tax rate would have to be high. An invoice value added tax and an additional subtraction VAT for tax benefits and social welfare spending would be much harder to evade. Leaving a menu of taxes in place, especially a high-income surtax, would allow for lower tax rates.

As we commented yesterday, our newest feature is an Asset Value Added Tax paid by the buyer and collected by the broker, rather than relying on the income tax for collection of capital gains taxes. The real money in tax avoidance is in the under reporting of capital gains by the wealthy. A broker collected consumption tax on asset purchases will both decrease avoidance and be a boon for record keeping in computing value added.

No prior value added tax will be credited for inherited assets or options exercised, although the current ESOP sale tax exclusion will remain in place. This will decrease speculation and increase employee democracy. It is a feature, not a flaw.
 
Attachment One: Senate Committee on Finance, Hearing on the 2019 Tax Filing Season and the 21st Century IRS, Wednesday, April 10, 2019 

Attachment Two: Complexity and the Tax Gap: Making Tax Compliance Easier and Collecting What’s Due, United States Senate Committee on Finance, June 28, 2011

MACRA Implementation and the Road Ahead

Under Medicare for All proposals, it is assumed that insurance rates and copayments will be reduced to Medicare levels. Payments to Physicians will continue under Medicare rates, presumably relying on current reforms, such as MACRA, to help control the funding gap, with some kind of payroll or value added tax replacing premium payments, regulation of monopolistic hospital chains as public utilities, including negotiations to control both hospital and drug prices. Monopoly and monopsony power already control costs to increase profit to shareholders. Negotiation will aim to reduce these profit margins. Please see our attachment which excepts previous comments from last year on Medicare Advantage, including a more detailed exploration of Medicare for All.



 Attachment One – Hearing on the Medicare Advantage Program, Tuesday, May 8, 2018