Wednesday, December 7, 2011

Workable Demands for Wall St. Occupiers

Attention all Occupiers: you have America’s attention. It’s time to turn that attention in to workable action. Keep on merely protesting and nothing will change. Fox News and similar media are vilifying you. The usual liberal suspects are busy trying to co-opt you. Trends indicate that your hard efforts will result in a minor glitch in the usual left-right battle, and some stories to tell your grandchildren. If you want a more lasting impact you need to move from protest to policy.
I was protesting on Wall St. before it was cool.
No, I am not playing the muddled message meme here. A quick check on Wikipedia yields a concise set of demands: getting corporations out of politics, more jobs, re-regulating the financial system, doing something about the wealth gap, etc. That’s a pretty coherent political platform. Rather less muddled than many Republican presidential candidates. Just what did W stand for other than incompetence, crony capitalism and water boarding? What does Mitt Romney stand for besides executive hair? What will Newt Gingrich stand for next month? Your message is less muddled than many political platforms.
But platforms are not policy. Behind the talking points, sound bites, and grin-like-a-monkey-at-the-camera video clips, each major party has an army of staffers, think tanks, friendly lobbyists, and professionals ready to work in the executive branch. They craft the actual policies. If you want your ideas enacted, you likewise need someone to convert your values and policies into concrete proposals that can be written into law. The usual liberal suspects are eager to perform this service. Allow me to offer some alternatives. Pick which you like best.
Let’s take “getting corporations out of politics.” How would you legislate it? Do you forbid corporate executives from making political statements? What of their free speech rights? Do you forbid corporations from publishing political tracts and/or videos? What of the New York Times? It is published by a corporation. MSNBC and CNN are also corporate owned. Do you forbid newspapers and news channels from having editorials? If so, how do you reconcile such a policy with freedom of the press, as enshrined in the Bill of Rights? The press has always involved money. Do you want to modify the Constitution?
Corporate influence on our legislators and regulators is indeed excessive. I’m not dissing your demand. I’m demanding sound policy to fulfill what you are crying out for. Here are some possibilities:
1.      Public funding of all incumbent lawmakers. While you are a challenger, you can solicit money for your cause. Once in office, you work for The People. For this to work The People will pay you, including re-election expenses. I suggest that public funding should equal half of what the biggest spending challenger spent the last go-around. (Fundraising is expensive. Nearly half the money raised is used to raise the money, so a factor of ½ is fair.) I don’t support public funding for challengers because that puts the government in the position of deciding who a valid challenger is. Give money to all declared challengers and the kooks will come out of the woodwork demanding money. “Objective criteria,” such as money in proportion to prior performance can lead to positive feedback. Vladimir Putin used such a public funding algorithm to give his party overwhelming power.
2.      Pay retired legislators a pension on the condition they don’t double-dip. Our government is too big, and elections too expensive for us to have old-fashioned citizen legislators. So let us pay our legislators, even upon retirement after a short term of office provided they don’t milk that office for private payments. Cut book deals, get paid enormous amounts for “consulting” or get paid enormous honoraria for speaking and no more pension for you. Ditto for high level regulators.
3.      No securities trading by federal legislators or high level executives. Representatives, Senators, President, Vice President and Cabinet Secretaries should have to divest their private holdings and put them into government bonds (or perhaps land) while holding office. No blind trusts. What a joke! If you know what went into a trust, you know the effects of your policies on that trust’s value. And no private pensions either. You want to lead? You work for The People.

More Jobs

More jobs at good wages is not a policy, it is a goal. To achieve the goal we need to legislate policies which lead to the goal. To achieve the goal, you need to encourage those with money to spend it on domestic labor, vs. capital, foreign labor, or natural resources. Some examples:
Simplify payroll tax computations. When I was briefly an employer, I had to compute eight different taxes for each paycheck: federal and state income taxes, employer and employee FICA taxes, employer and employee Medicare taxes, federal and state unemployment insurance. I had to know the employee’s state and federal exemptions to do the computations/table lookup. This was a royal headache. Here is an alternative: just set federal withholding at a flat rate, say 20%. Each month let the federal government send a check to those who had too much withheld and a bill to those who had too little withheld. The bill/check can provide the itemized list of what taxes are due/paid. I pay Universal Service Fund to the phone company every month, yet I have no idea how to calculate it. Ditto for all the other nitnoid fees. Let the federal government do the same and save millions of employers major headaches.
Separate employment from health insurance. The unemployed need health insurance more than the employed. So why do we tax health insurance unless an employer buys it? Note how the arrangement discriminates against those who change jobs often. Note how group rates for businesses discourage hiring older employees. This should stop. Either socialize health insurance or replace the tax exemption for employer-provided coverage with government health insurance vouchers for all citizens. I favor the latter, and the latter option plays better at tea parties. (Not a trivial factor, as you, the Occupiers do not represent the 99% politically.)
Separate retirement savings from employment. Eliminate 401(k) plans and discourage pensions. Encourage savings by individuals. Increase the amount that individuals can put into personal savings plans tax deferred. Let employers focus on making money and employees focus on getting their fair share of said money.
Do defer taxes on deferred income. While I don’t like pensions, I do like shorter term deferred income to workers. Business income often comes in months or years after the work is done. If all wages are immediate, said wages must be based on pessimistic projections and availability of working capital to meet payroll. Many a computer programmer became a millionaire without benefit of union representation because startups paid partially in stock options instead of cash. Conversely, if the traders who destroyed the economy had their bonuses deferred until their positions cleared, they wouldn’t have been paid to destroy the financial system. With deferred bonuses, you can eliminate “heads I win, tails the company/nation loses.”
Replace unemployment insurance with free money. Some lost jobs aren’t coming back. Many laid off workers need to take up inferior jobs until they get their careers on new tracks. Bummer. But better to get started now. But rather than the Republican “work or starve” ethic, let us have the gentler “work or live like a hippie.” With unconditional money it pays to work, but if waiting for a better job is the better option, you can afford to wait if you are frugal.
Lower the corporate income tax rate to 20%. Huh!? How can Occupiers support that?? Answer: raise the capital gains tax up to the ordinary income rate at the same time. The result is a wash for founders of new businesses. It is a tax cut for Grandma: for both her pension fund and her personal holdings. The corporate income tax rightfully makes corporations pay more tax than less protected businesses like partnerships and sole proprietorships. But a corporation is more than its executives and large shareholders. A corporation is also small shareholders, customers and line employees. If you want a progressive income tax, make the progressive rates on individuals not corporations. Besides, multinational corporations can easily move profits to the country with the lowest rates. Jobs get moved in the process sometimes. The Laffer Curve maximum is lower for multinationals than for smaller businesses and individuals.

Reining in the 1%

I’m pushing 1400 words and I still haven’t said much about that gap between the 99% and the 1%. Increasing the capital gains rate to the ordinary income rate is a start. So are having better middle class jobs. We can do far more, and we don’t need socialism or even big government to do it. But my bedtime draws nigh, and you have enough to chew on for now. The 1% can wait until a future post. Tell me what you think of what I have proposed so far in the comments or by email. What am I missing? Which of the above are unacceptable and why? Let’s get a productive discussion going.