Flood Insurance Shouldn’t Be Political

There are a number of government-sponsored enterprises, government-chartered corporations, and government-owned corporations, such as Fannie Mae, the Corporation for Public Broadcasting, and the Tennessee Valley Authority.

The flood insurance program should be arranged as either a government-sponsored enterprise or a government-chartered corporation. The updating of maps and the adjustment of premiums should not be subject to political whims, as there is a proven record of moral hazard in failing to adjust the risk ratings to what exists in the real world.

States should have a role in funding the program that covers their state, with a choice between property taxes, real estate sales tax, a rake on mortgage payments, or other mechanisms.

Under the current regime, the program gives a false sense of security. Many at-risk properties without coverage, many more that aren’t paying according to their real risks. Without truthful premium costs, the market gets a distorted risk signal, knowing the federal government will pay for municipalities’ and states’ messes. Sound familiar?

The political environment makes risk adjustment difficult. Nobody wants to pay more, but they want flood protection. If the program is private, the owners want to ensure they are keeping liabilities in check, so they will keep premiums rising with risks. Specifically, if the lenders are on the hook for underinsured properties that are damaged, they will demand proper insurance.

Similar moves should be made for other issues that should be outside of political tampering, such as the gas tax and vehicle efficiency standards, drug price negotiations for public healthcare programs, and other similar budgetary matters. If these various measures require a waiver process, that’s fine, but generally firms and individuals should pay what’s required for the efficient operation of the system as designed.


Please Leave Enough Time to Override a Veto

The debt ceiling and the continuing resolution votes coming up should be passed with at least 11 days to spare. In the past, these votes have been done at the last minute, but Congress should leave nothing to chance here.

Under the Constitution, the president could sit on a bill for at least 11 days (ten, but they excepted Sundays) before issuing a veto (any longer and it automatically becomes law). While the president would probably sign either bill at the last minute, if McConnell and Ryan give him the chance, he might just screw it up.

The debt ceiling is the bigger deal here, though both matter. But in both cases, what should have been handled well before hand has been put off to the last minute. In both cases, there are efforts to try to leverage political gains out of what should be the most basic, no-nonsense acts of government.

But, worse, we have a president who appears unstable enough to stick a pinky on the corner of his mouth and fire guns at the feet of the legislature, telling them to dance and build his wall and whatever other villain cliches might be on hand at the time.

If the legislature puts the debt bill on the president’s desk in time, and he fails to sign it, causing any default, he would be impeached and likely removed for it. But the damage would be done. The fiscal reputation of the country would be harmed in a way that is not easily repaired.

It’s an easy call to make. Pass the bill early. If President Trump doesn’t sign it, override his veto. It’s the least the government can do for its people.

The continuing resolution to fund the government and keep it open is a similar story, though thankfully the only people directly harmed by a shutdown would be millions of workers and not the very fabric of the international financial order. So, no big deal, right? Just get the bill done. No gimmicks. Clean bill, with a plan to override any veto.

There is about a month left to get both done. If you want to do tax reform, then get these out of the way quickly.


The Civil War Memorials That Matter

Instead of worrying about a bunch of sculptures, we should focus on preserving these living memorials, enshrined in law, and on fulfilling the necessities of our government with respect to them. That includes protection of civil rights, the cultivation of the franchise, and the voting out of any legislator or executive that acts contrary to those ends.

Article of Amendment 13, ratified 18 December 1865.

Section 1. Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.

Section 2. Congress shall have power to enforce this article by appropriate legislation.

Article of Amendment 14, ratified 9 July 1868.

Section 1. All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

Section 2. Representatives shall be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed. But when the right to vote at any election for the choice of electors for President and Vice President of the United States, Representatives in Congress, the Executive and Judicial officers of a State, or the members of the Legislature thereof, is denied to any of the male inhabitants of such State, being twenty-one years of age, and citizens of the United States, or in any way abridged, except for participation in rebellion, or other crime, the basis of representation therein shall be reduced in the proportion which the number of such male citizens shall bear to the whole number of male citizens twenty-one years of age in such State.

Section 3. No person shall be a Senator or Representative in Congress, or elector of President and Vice President, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may, by a vote of two-thirds of each House, remove such disability.

Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Section 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.

Article of Amendment 15, ratified 3 February 1870.

Section 1. The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of race, color, or previous condition of servitude.

Section 2. The Congress shall have power to enforce this article by appropriate legislation.

Article of Amendment 24, ratified 23 January 1964.

Section 1. The right of citizens of the United States to vote in any primary or other election for President or Vice President, for electors for President or Vice President, or for Senator or Representative in Congress, shall not be denied or abridged by the United States or any State by reason of failure to pay any poll tax or other tax.

Section 2. The Congress shall have power to enforce this article by appropriate legislation.


Paths to Tax Reform

The Republicans have two basic options. They can go for expediency, raising the deficit in the short-term for tax cuts, avoid stepping on any toes, or they can go for real reform that involves dealing with blowback from special interests and being fiscally responsible.

It’s a hard choice. The early signal is they will go for the coward’s cut, since they are seeking to use reconciliation and not starting from a place of bipartisanship. It’s the route used under President George W. Bush, which is why his tax cuts expired.

But let’s say they want to go the responsible route, instead. How do you deal with the real estate lobby that will count the sitting president among its members? Or the carbon fuel lobbies that will want to keep their own favorite tax toys? Or pharma?

One way, maybe the easiest, is to reduce all of their loopholes equally. If they all get a haircut, it’s hard for any one of them to claim they were singled out. And the stock reply to their wailing becomes, “We did it across the board, fellas. Suck it up. Walk it off.”

Now, some of those groups may find pressure points to lean on, but if they are all pushing at once, it’s possible that they create a keystone arch of pressure, all pushing against each other, and leaving a pocket that allows the thing to pass. The weak point, they keystone, would be the president, who would probably cave on real estate treatment, and the arch would collapse.

Another option would be a sort of parametric tax code. Basically, you would formulate a point system based on size of business (gross revenue, number of employees, etc.) among other factors. Then the business can spread their points among various tax strategies as they see fit. Some might have more points in capital investment, while others might have more points in employee perquisites. But the overall deductible income would be minimized, and the tax code could be modified not only to strengthen or weaken the areas of deduction, but to increase or decrease the points available.

We really do need tax reform, and if the Republicans would take it seriously they could do a lot of good. Nobody expects them to set the rates high enough, but that’s the beauty of the tax code: the Democrats or future generations can always increase the rates to a responsible level. Right now, it’s more important to see the code simplified, even if it means the rates aren’t right.


How About a Bill for Comprehensive Migration Reform

While the GOP decides whether to curtail legal immigration, how to handle tax reform, and generally struggles with existential doubts, they should instead be focusing on ways to make it easier for folks to move around (something Trump agrees with me on: The Washington Post: 3 August 2017: “Trump is right about this: Americans need to move where the jobs are”; too bad he’s not pushing for legislation to make it easier). They should work on things like making state taxes easier when you have moved across state lines so that you don’t have to struggle through three income tax codes in a year.

The modern economy concentrates too many workers in places like San Francisco, California. That’s driven housing prices too high, not to mention other woes. And part of the reason for that concentration is the concentration itself, like a gravity well, sucking talent in so that it cannot escape.

But spreading some of that talent outward would enhance the regional and national economy in the same way that immigration does: by adding more basic spending rather than marginal spending. The cost of moving is too high, though, especially for businesses that would have to pay for relocation costs for employees plus all of the red tape involved in setting up new offices.

One of the big ones for a business that might want to cross state lines is health insurance, of course. They have to deal with a whole different network and insurer. Making the system into a nationwide system, like most modern countries have, would go a long way to easing that burden.

Transportation is another big piece of the migration puzzle. With modern connectivity, train travel should be able to make a comeback, as a five hour train isn’t as bad compared to a much shorter plane if you’re connected the whole way. If people must work in the biggest cities, but housing is expensive, they could at least have better commutes where they aren’t staring at traffic.

The RAISE Act is undoubtedly a bad deal, which will cause economic drag, but that drag is only added to the existing drag that isn’t even acknowledged. We need to improve on the story of how Americans can move about this country while being productive and comfortable in the knowledge that they aren’t going to uproot only to find nothing when they arrive.

But another factor in all of this is that as workers move, it will cross-pollinate cultures, ideas, politics, which leads to new businesses and creations, not to mention shifts in who votes where. At least one of the factors in post WWII prosperity was the interactions of millions of young folks with peers from all over the country (nevermind that they took place in Europe amid horrific violence).