Blame the economists

Blame the economists

In the decades after World War II, significant government engagement with the economy accompanied a period of sustained economic growth in America. This growth lifted up the middle class, with median incomes rising at a similar pace as the overall economy. But when that growth sputtered, economists convinced policymakers that growth could be revived by having government take a more hands-off approach and giving more power to corporations. The New York Times’ Binyamin Applebaum explains:

In the four decades between 1969 and 2008, economists played a leading role in slashing taxation of the wealthy and in curbing public investment. They supervised the deregulation of major sectors, including transportation and communications. They lionized big business, defending the concentration of corporate power, even as they demonized trade unions and opposed worker protections like minimum wage laws. Economists even persuaded policymakers to assign a dollar value to human life — around $10 million in 2019 — to assess whether regulations were worthwhile.

But just as government policies helped widen the historic schism that exists between the richest Americans and everyone else today, so too can government play a role in making sure more people benefit from a growing economy. 

Reducing inequality should be a primary goal of public policy. The market economy remains one of humankind’s most awesome inventions, a powerful machine for the creation of wealth. But the measure of a society is the quality of life throughout the pyramid, not just at the top, and a growing body of research shows that those born at the bottom today have less chance than in earlier generations to achieve prosperity or to contribute to society’s general welfare — even if they are rich by historical standards.


The politics of Medicaid contracts
Rather than paying providers directly for Medicaid recipients’ care, Louisiana contracts with private health insurers to oversee care for 1.5 million Medicaid beneficiaries – an arrangement that comprises roughly one-fourth of the entire state budget. So when those contracts go up for bid – and two of the existing insurance providers lose out – you can expect a lot of bellyaching, along with legitimate concerns about what will happen to the 500,000 people who will have to switch plans by Jan. 1. The Advocate’s Mark Ballard:

A phalanx of lobbyists, highly paid by the two losers, whispered contrary questions into the ears of legislators during last week’s hearing where the contract decision was reviewed. Democratic U.S. Rep. Cedric Richmond wrote of his concerns. And “We’re being thrown out of work” billboards have gone up all over town. The disagreement could end up in court.

The governor’s office says the state carefully followed its own procurement law in selecting the four winning bidders. The AP’s Melinda Deslatte blames the election-year timing of this dispute on Edwards: 

(T)he Edwards administration could have avoided such a high-profile dispute in the middle of an election cycle if it had sought new bids for the work before the existing contracts were slated to expire in December 2017. Instead, the health department urged lawmakers to extend the current deals for another 23 months, placing decisions about new contracts smack in the middle of campaign season.


Supplemental pay in the crosshairs
One of the oddities about Louisiana is the fact that state government spends $120 million per year to provide $500 per month stipends for roughly 20,000 local sheriff’s deputies, firefighters and other law enforcement officers. Just about everywhere else, local first responders are paid by local taxes at the discretion of local elected officials. U.S. Rep. Ralph Abraham has promised to increase those stipends if elected governor, without any plan for where the money would come from. The Advocate’s editorial board objects:

We support paying officers more. But it ought to be done the right way, with local voters — who can judge if sheriffs and police chiefs are doing a good job with their money — passing judgment on taxes for these very local needs. … It is just one segment of the Huey (Long) system, in which local politicians — sheriffs, mayors and so on — slough off their responsibilities to pay their own bills by making the case to their own voters for revenues.


A sad anniversary for poor families
Last week marked the 23rd anniversary of President Bill Clinton signing the law eliminating the federal guarantee of cash assistance for eligible low-income families. In its place is the Temporary Assistance for Needy Families block grant, which gives states a fixed amount of funding they can spend on a broad array of social programs. It hasn’t worked out very well, as Stephanie Mencimer of Mother Jones reports:

Overall, CBPP estimates that the Temporary Assistance for Needy Families program could be serving 2.5 million more families living below the poverty line than it does now. Some states are worse than others on this front. At the very bottom end of the scale are Louisiana and Texas, where according to CBPP, only four out of every 100 eligible families receives cash assistance from TANF.  If Louisiana served the same percentage of poor families as it did in 1996, nearly 70,000 families in the state would have received assistance in 2017. Instead, only about 6,000 did. 


Number of the Day
3.8 million – Number of Americans who could be helped by Temporary Assistance to Needy Families (TANF) block grant if it had the same reach as in 1996. Currently it serves 1.3 million people. (Source: CBPP via Mother Jones)