Tag Archives: Taxes

education, Environment, Orange County

What’s the Real Purpose of This Tax Hike in Santa Ana?

It’s very rare when I actually agree with The OC Register’s editorial page, but today happens to be one of those rare occasions. Read this and weep:

As the Register reported, the city [of Santa Ana] hired a Sacramento-based polling firm in March in the hopes that residents would tell pollsters that they want higher taxes to pay to fix Santa Ana’s poorly maintained, pothole-filled roads. To the officials’ dismay, residents overwhelmingly opposed the idea of paying higher taxes for roadwork. But officials saw an opportunity in another question, in which residents said they would give “high priority” to higher taxes to deal with gang prevention.

So they commissioned another poll. And lo and behold, they got what they wanted! People were willing to pay more taxes to “pay for more police officers to fight crime”. So now, we’re getting the “gang-fighting tax” in Santa Ana. But is this really what city officials are telling us that it is?

Follow me after the flip for more…

Here’s some more of today’s Register editorial:

Had the city really believed that there is a desperate need for more police, then it would have commissioned a poll that focused on police needs. Instead, it commissioned the poll based on its presumption that roadwork was the prime need. Apparently, city officials will raise taxes for any and all purposes, which is easier than doing what 84 percent of respondents told the city-hired pollsters: that “spending tax money efficiently” is a high priority.

Now to be honest, I disagree with what The Register says later on about taxes being evil, blah, blah, blah. I just don’t buy Howard Jarvis talking points. That’s not the issue for me.

What concerns me here is that the city would mislead residents about the “need” for this tax. First, they said that it’s about fixing our streets. And now, they’re telling us that it’s really to fight gang violence. So which one is it? Or is it really neither?

Is it really meant to pay for subsidies that we can’t afford and that don’t work for us? Is it really to pay for these bloated salaries for these ineffective city administrators? How are we supposed to accept paying more taxes to the city if we can’t even trust the city to be honest with us?

Now don’t get me wrong. I don’t want to see any more gang violence. I don’t want to see any more decrepit streets. I don’t want to see any more dearth of open space in this town. I don’t want to see any more libraries closed.

But if this tax were really about these things, then why can’t the city just tell us that? And if this really weren’t just a reward to a bunch of incompetent jerks who have failed us on all these issues, then why can’t the city just tell us that? How are we supposed to entrust these people with more of our tax money when they can’t even be honest about why they want more of it?

Arnold Schwarzenegger, Budget

Kick-The-Can Budgeting

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The state of California is not generating the revenue that they expected.  This is clear and it’s been known for some time.  The original budget that the Governor proposed, based on those sunny estimates, is obsolete.  In order to balance the budget, spending will have to decrease or revenue increased.  We know what choice the Republican will make.

Gov. Arnold Schwarzenegger is likely to call for state spending cuts beyond those he proposed in January when he presents a revised budget to the Legislature next week, administration officials said Tuesday […]

In January, Schwarzenegger outlined a $103 billion general-fund budget for the 2007-08 fiscal year and proposed balancing it by withholding cost-of-living increases for welfare recipients, cutting welfare payments to children whose parents fail to comply with work requirements, and reducing aid to the homeless, among other things.

The cuts to welfare will remain in the budget the Republican governor is slated to unveil on Monday, Palmer said. That could set up a showdown with Democratic lawmakers, who have made it clear they oppose reducing the social safety net for children.

But don’t worry, there’s a Plan B; privatizing the lottery!

over…

Gov. Arnold Schwarzenegger is poised to call for privatizing the state lottery, a move that would bring California a cash infusion of as much as $37 billion to help solve pressing budget problems but also could sacrifice a major revenue source for decades to come.

….It comes at a time when the state is facing only a modest budget deficit for the coming fiscal year – about $1 billion. But billions more in bond payments will be due soon after.

This is “kick-the-can-down-the-road” budgeting, and it’s no different than George Bush trying to run out the clock on Iraq so that the next executive has to clean up the mess.  It’s irresponsible to put so much of a debt burden on future generations.  We’re looking at hundreds of billions of dollars in debt for decades and decades, in bond issues and the loss of revenue for short-term gain.  Kevin Drum thunders on this, and he’s absolutely correct:

Once again, Arnold “We Have To Stop This Crazy Deficit Spending” Schwarzenegger is desperately trying to figure out a way to increase our deficit spending so that he can continue to pretend that he hasn’t raised taxes. That’s all this is about.

He’s already done this once with his deficit bonds, which will have to be repaid out of increased taxes eventually, and now, in order to make sure that “eventually” is sometime after he leaves office, he wants to raid the lottery to tide himself over. The result, of course, will be lower revenue in the future and therefore higher taxes. But not on his watch.

Schwarzenegger may have a sunnier persona than George Bush, but the cynicism on offer here is even worse than Bush’s. Arnold knows perfectly well he’s raising taxes. He’s just hoping the rest of us are greedy enough to allow ourselves to be convinced otherwise.

We’re going to have three and a half more years of this nonsense, of this focus on short-term glitz at the expense of long-term security.  We are getting played, and I would like to see some of our Democratic leaders in this state make this point forcefully.

Arnold Schwarzenegger, California, Health Care

You say po-tay-to, I say po-tah-to: Taxes and Fees in the health care debate

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In Today’s LA Times, George Skelton goes after Arnold Schwarzenegger the tax/fee issue.  SO, before we start, definition wise, here’s what I think the distinction to be.  A fee is charged specific users of specific services that the state provides.  Taxes are just general charges that are not tied to specific services.  Tax increases, under Prop 13, are required to have asupermajority.  Fees can pass with a simple majority (and, of course, a gubernatorial signature).

So, remember how Arnold made lots of “no new taxes” pledges? Well, it turns out that if you call it a fee, they are exempted too.  Yay!!

One of the pleasures of writing a Sacramento column is that politicians read it and occasionally change their minds. I’m thinking that must be what happened to Gov. Arnold Schwarzenegger on taxes.

First, he apparently has bought into my oft-written contention that taxes, as Oliver Wendell Holmes put it, “are what we pay for a civilized society.” In order to enhance the quality of life in an increasingly congested state, taxes sometimes have to be raised.

Schwarzenegger, who previously preached the no-tax gospel, seems to have converted. Why else would he have proposed to sock doctors and hospitals with a new tax to help pay for universal healthcare in California? The docs would pay the state 2% of their receipts and the hospitals 4%, raising an estimated $3.5 billion.(LAT 1/15/07)

Follow me over the flip.

So Arnold decides that taxes are ok now?  Funny thing, Skelton notes, because these same fees that he is proposing are the same ones that Arnold’s campaign cited as a very large chunk of the “massive $18Billion Angelides Tax increases”.

Last year, when Angelides suggested a similar “play or pay” concept – requiring employers to either provide the coverage or pay the state to do it – Schwarzenegger smeared him as a liberal taxer. An absurdly high $7-billion price tag was placed on Angelides’ idea – now essentially Schwarzenegger’s – and that became the biggest piece of the Democrat’s “$18-billion tax increase.”

Angelides’ taxes “would drive California’s economy backward,” the governor repeatedly charged.

The $7-billion and $18-billion figures were distortions shamelessly crafted by Schwarzenegger’s hired-gun political gurus. They quickly left the state after his reelection, scattering to various presidential campaigns.

But they left behind mounds of balderdash for Schwarzenegger to gingerly step through – on top of his own demagogic campaign rhetoric.

Well, actually, I heard that Steve Schmidt is still in town, but I’m not one to quibble over details.  You know, I protested when Westly came up with that $10B, partially because a big chunk was these fees.  But Garry South kept feeding the ammunition to Arnold’s campaign, and off we went trying to come up with a solution.  We want health care, sure, but how do we resolve the fact that Arnold, in campaign mode, said a lot of ridiculous stuff, much of which he had no intention of honoring.

So, we play semantic games.  And I’m not even sure that even approaches my biggest concern for this plan.  My biggest concern: 4%.  4%? WTF? What kind of insurance can you possibly pay for with 4% of say, a $20K cashier at Wal-Mart or Safeway? I’m sorry, but $800 will buy jack squat on the open insurance market, even in a nice state sponsored group.  Safeway, Ralph’s, and perhaps even Wal-mart, likely pay more than 4% now. So what will this end up being? Yup, a big windfall for EVERY employer, with the good citizens of California left holding the bill.  I’m sorry, we don’t need that kind of plan.

So, I return you to what I think I will return to every time the health care issue comes up.  Shiela Kuehl.  SHe has reintroduced her single payer bill that was vetoed last year.  It is the most sensible, pragmatic, and effective plan on the table.  It’s likely the way we will have to get to eventually, even if we pass a form of Arnold’s plan.  Let’s just cut through all the crap and move on down to a real health care plan.  Mr. Schwarzenegger, I’m sure you could find Sen. Kuehl’s number.  Why don’t you give her a call?  You want to really be remembered as the governor who changed California? Sign Sen. Kuehl’s bill.

Uncategorized

Sports Venues and Sleazy People

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SFBrianCL writes in the Blog Roundup:

I’m really quite sick of cities giving sports teams money.  They should go where it is profitable for them and cities should provide only the support they would offer to any other business.  I hope both SF and Santa Clara hear that.

I hope Sacramento – the city and the state government – hears it too.  The Sacramento Bee (registration required) reports:

NBA Commissioner David Stern swept into Sacramento on Monday and declared that he would take responsibility for crafting a workable plan to build a new arena for the Kings and selling it to the public…He said he came with no preconceived notions of what would work, but in meetings Monday he repeatedly brought up the idea of a statewide authority to help finance California sports venues.

My added emphasis, More over the flip…

This pisses me off on two levels.  First, voters in Sacramento already voted on public financing of the arena.  The answer is no.  We don’t want it.  Calling in a new negotiator to try to “sell it to the public” is not necessary.  The matter is settled.  If the Maloofs want to build a new arena in Sacramento, they need to come up with the half-a-billion-or-more dollars on their own.  Second, a statewide authority to finance sports venues?  Are you freaking kidding me?!  It’s bad enough that they’re trying to get local taxpayers to foot the bill – at least there’s some vague connection in that case between the people being taxed and the sports venue in question.  But can anyone tell me just why the hell taxpayers in Riverside should have to pay to build an arena in Sacramento?  It’s madness.  All these team owners need to get off the corporate welfare and realize that they need to run their business as a business, and not as some weird entertainment division of the government.  It’s not like they don’t have the money to build these things on their own.  Why should they be the only businesspeople in the country who get to run their businesses risk-free?

I hope the voters in Sacramento have the good sense to vote out the Mayor and City Council members who are complicit in these continued shady dealings.  I for one would vote for a yellow dog if it ran on a platform of opposing taxpayer financing for the arena.

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Monitor Senator Max Baucus

With Democrats only enjoying a one seat majority in the U.S. senate, a single Democratic defection would allow Vice President Dick Cheney to cast a tie-breaking vote. For Republicans, the number one target to undermine Harry Reid’s leadership is Senator Max Baucus (D-MT). Even the conservative New Republic wrote, “What Baucus does is use his influence as the top Democrat on the Finance Committee to systematically undercut his party and enable George W. Bush’s most egregious domestic legislation.”

Yesterday’s Washington Post has a story, Democrats to Push Pocketbook Issues where Sen. Baucus hinted at siding with big corporations to undermine incoming Senate Majority Leader Harry Reid (D-NV).

Many in the party want to change Medicare’s new drug benefit so the government can negotiate prices directly with pharmaceutical companies. Incoming Senate Finance Committee Chairman Max Baucus (D-Mont.) remains unsure. “We need to be very honest in getting the facts” about whether such a switch would be helpful, he said.

Would lowering prescription drug prices be helpful? For you and I, yes. But Max Baucus is wondering whether triangulating against Democrats will help his re-election campaign.

Policy experts agree that Senator Max Baucus deserves most of the blame for the Medicare disaster. Almost three years ago, Matthew Yglesias wrote an article for the American Prospect on Max Baucus and Medicare, titled Bad Max:

Fellow Democrats were even more aggrieved, however, by Baucus’ behavior during the Medicare battle with which Congress closed last year’s session. The Senate initially passed a compromise bill with support from Republicans and some liberal Democrats like Ted Kennedy (D-Mass.), while the House put forward a much more partisan piece of legislation on a narrow vote. A conference committee composed of members of both chambers was convened, but the Republican leadership, in a sharp break from precedent, said that though Democrats could be officially appointed to the committee, none would be invited to the meetings where the substantive negotiations would take place and the actual bill be written. None, that is, except for Baucus and the similarly cooperative John Breaux of Louisiana, who will retire at the end of the year.

By lending this farce a veneer of bipartisan credibility, Baucus and Breaux essentially denied the Democrats what was not only their best chance of defeating the bill in question but the party’s last hope of putting a stop to a long string of Republican provocations aimed at reducing the minority party to window-dressing status.

As Norman Ornstein, a congressional analyst at the conservative American Enterprise Institute told The Washington Post in December, Democratic senators with any concern for the viability of the party would have said, “[I]f you don’t let in Tom Daschle [D-S.D.] — our leader, elected by the Senate to be in the room — then we’re not going in the room” and insisted that the Republicans at least abide by the rules.

Notably, Baucus’ behavior has drawn condemnation not just from liberals but from centrist Democrats outside of government who can normally be found extolling the virtues of such willingness to work across party lines.

That last line is key. It is The New Republic calling for Max Baucus to be stripped of seniority on the finance committee. It is Montana Democratic leaders who are having the conversations about a 2008 primary campaign to hopefully at least hold Baucus on major votes and if not be positioned for a change. Sirota explained:

For years, the grassroots in Montana has felt compelled to keep quiet about Baucus no matter what he has done on any issue. But things are different now. The successful Schweitzer 2004 and Tester 2006 campaigns have people in a proactive mood, meaning they are ready to strongly support Baucus if he’s serious about working-class issues, and  ready to voice opposition if he becomes Senator K Street in the new Congress.

Indeed, Montana Democrats chose populist Jon Tester over DLC Baucus wannabe John Morrison by a 26 pt landslide in this year’s primary. But the real problem for Baucus is comparing the primary election results for US Senate in the 2002 and 2006 primary.

2002 Midterm: Max Baucus, incumbent Senator, unopposed: 66,713 votes
2006 Midterm: Jon Tester, grossly outspent: 65,757

That is less than a thousand vote difference which speaks volumes about the lack of energy for Baucus and the clear preference for populist candidates in Montana. And Baucus has been simply awful on ecomonic issues, as William Greider wrote about Max Baucus in a piece titled, Senator Sellout

Yet leading the rush to appeasement is Senator Max Baucus of Montana, the ranking Democrat on the Senate Finance Committee and the party’s number-one Quisling. Baucus tips over easily to outrageous deals with Republican tax-cutters. Back in 2001, he sold out on Bush’s reactionary tax reduction package. Now he is working to organize a rump group of Democratic senators for “compromise” on the estate tax. That is, give the Republican sponsors most of what they seek and, in the process, cripple possibilities for the future. […]

The second great task for grassroots Dems is to confront the party leaders on their own cowardly acquiescence. Why do they allow this one disloyal rogue to undercut the party’s position and yet escape any punitive consequences? If Democrats should win back Senate control this year, Baucus will become Finance Committee Chairman again–free do more outrageous tax favors for his wealthy pals.

MyDD political analyst Chris Bowers chronicled:

Here is some history on Max Baucus:
*Energy Bill: Yea
*Bankruptcy Bill: Yea
*Medicare Bill: Yea
*War Vote: Yea
*2001 Tax Cuts: Yea

When the chips are down, and it is time for all those who are not complicit with the radical conservative agenda in this country to be counted, almost every single time Max Baucus has chosen not to be counted. On the majority of the most egregiously foul pieces of Bush-led legislation over the past four years, Max Baucus has been complicit with the incompetence, deception, and destructive force that is modern conservatism (otherwise known as whatever George Bush did today). He only came back into line on Social Security after extensively cajoling. Today, he has outdone himself, by undercutting his own caucus leader by stating he would vote to confirm Roberts only hours after Harry Reid said he would not.

Even setting aside for as moment whether or not confirming Roberts is the right thing to do, why would Baucus issue a press release only hours after Reid’s? Is he intentionally trying to undercut the Democratic Party, and make us all as complicit as him? I think so. For that matter, why would he release a press statement at all? Baucus is not on the judiciary committee, he is not running for re-election in 2006, he has no national profile, he is not a member of the Gang and he will never run for President. What does the nation care what Baucus will do on Roberts? Why would he release this statement now, unless he was intentionally trying to undermine Reid? Why couldn’t he just vote however he wanted and shut up?

But TNR Editors go even further:

If you look closely enough at recent domestic policy debacles, you’ll invariably see his fingerprints. Facing George W. Bush’s massive tax-cut proposal in 2001, Baucus undermined the Senate Democrats’ strategy of forcing concessions by maintaining a united front. In private negotiations with his GOP counterpart, Chuck Grassley, Baucus produced a bill that handed the White House virtually all of its top priorities. Afterward, he boasted that he’d done Democrats a favor, since they “would have been in trouble in 2002 just saying no to every one of the president’s proposals.” We shudder to think what might have happened had the Democrats been labeled “obstructionist.”

Then there was the 2003 Medicare debate. Baucus, true to his method, agreed to a set of procedural conditions that undermined Democratic unity and preordained a disastrous outcome. Then he used the little authority he retained to–how to put it?–give away the store. In addition to agreeing to Health Savings Accounts–a gambit that he had once condemned as irresponsible–Baucus assented to a provision preventing Medicare from negotiating discounts with pharmaceutical manufacturers.

Baucus and his defenders–alternately known as his press office–make two arguments on his behalf. The first is that Baucus is simply doing what he needs to do to get reelected. (This argument usually masquerades behind the mantra of doing what’s best for the “people of Montana.”) But, unless the way to get ahead in Montana is to insist on overcharging Medicare patients by billions of dollars, the senator has been going far above and beyond the call of duty.

Baucus’s second argument is that Democrats get substantively better legislation when he engages Republicans on their behalf. But this argument assumes the Bush administration has the votes to pass legislation without Democratic support. Often, it’s Baucus who provides the margin of victory–either with his own vote or by crafting pseudo-compromises that provide cover for a small number of Democratic defectors. Indeed, the Democrats’ only real victory of the last five years–stuffing the administration on Social Security–came after Harry Reid cautioned Baucus against freelancing with the White House.

Even in the minority Republicans can still rule the senate, all they need is Max Baucus.

Arnold Schwarzenegger

The Lie That Binds

Well, the election is over.  Dowd and Schmidt will be off on their merry way to whatever state will be next hoodwinked by those two.  But us? We’re stuck with Arnold.  This time it’s an Arnold that made some promises that he shouldn’t have, and the budget will be the worse for it.

Arnold made two statements that could have disastrous ramifications for our state in the upcoming year.  One: “There really is no plan for the deficit”.  You can view one of my Tracking Arnold videos the quote in question here.  The disastrous nature of this quote is quite simple here.  The man that was re-elected as Governor has no ideas of how to confront the pending defecit.  And it’s no small one either, current best guess? 5 billion dollars.  Yup, that’s with a “b.”

His other statement? The “I won’t raise taxes” pledge.  How is he going to square the defecit and that pledge?  Beats the hell out of me.

Once his victory celebration ends, Gov. Arnold Schwarzenegger may be in for a nasty post-election hangover — partly of his own making.

A host of daunting, potentially multibillion-dollar problems confront the governor as he begins his second and final term. Prisons are filled dangerously beyond capacity. Public schools are badly in need of reform, the governor has said. More than 6 million Californians lack health insurance. And a $5 billion budget deficit looms next year.

But Schwarzenegger faces those challenges constrained by his central, George H.W. Bush-esque campaign promise: No new taxes. How the governor reconciles his sweeping policy ambitions with that anti-tax stance could prove a defining challenge of his governorship.

“If the state’s economy grows and brings in new revenues, he’ll be able to hold to the no-taxes pledge” and pay for new programs, said Jack Pitney, a political-science professor at Claremont McKenna College. But that’s a big if.

“He may eventually face a situation,” Pitney added, “where the state will have to either raise taxes or make some very unpopular cuts.” (SJ Merc 11/13/06)

The no-taxes pledge will put our entire economy at risk.  I know that’s a big statement, but it’s true.  Will Arnold give ground and accept some new taxes or fees? Or will he become obstinate and demand cuts, likely from education as he did in 2003. If we do nothing, we will have to pay more interest (both rate and actual dollars), and our economy will begin to spiral out of control.

In the new legislative session, we need to boost up pressure upon Arnold to come up with some resolution to the structural defecits.  All he has said so far is No. No vehicle license fee (aka car tax), No new taxes, No, No, No.

At some point, he’ll have to say yes.  He cannot obstruct forever, and will eventually have to work with the Legislature to fix the structural deficit.  These are hard decisions, and he’s got to pick a side.

Budget

Thinking outside the box on Proposition 13.

I have an idea that I’ve been kicking around for years — I don’t think it was entirely my idea, originally, but I’ve honestly forgotten where I first got it from — that perhaps could cut the Gordian knot of the California budget process.  I suspect it would have to be passed through an initiative process (because of the supermajority thing in the leg), and the actual numbers to balance the budget would need to be filled in by some very talented finance folks.

If you’re curious, read the full post.  And let me know what you think.

I posted about this in comments on a (somewhat wingnutty) diary about Prop 86.  I am probably going to vote for the tobacco tax, but I have to admit that I dislike our habit, in California, of tying specific revenue streams to specific programs.

JSW points out (rightly) that the reason we do this (and indeed, the reason I’ll vote for 86) is that we can’t let the perfect be the enemy of the good.  A sane tax structure is not on the table, in California, because of Prop 13 and the huge supermajority requirement to do anything serious to reform the tax code.

So.  How about we abolish property taxes entirely?  That would make Prop 13 a dead letter.  We can replace the revenue stream with a zoning-based land tax (a low per-sqft rate on residences, a small credit for maintaining inspected public green space, and a higher rate for commercial and industrial space) plus a fairly steep real-estate capital-gains tax (to discourage speculation and capture the state’s share of the increase in value of the state’s land — land increases in value because of the society around it, not because of anything inherent to the soil! — which previously was captured through periodic assessment for property taxes).

This change would need to be phased in (having the property tax base rate continuing to rise at the Prop 13 rate, but with a falling multiplier discounting it away, while the new taxes were phased in at the same linear rate, and with the multipliers for the two tax systems always adding up to 100%).  This perhaps should be done over as much as 30 years (the life of a typical mortgage).  The point is to avoid creating windfall profits and losses, like Prop 13 did — it gave a huge benefit to older people who already owned homes, and disadvantaged younger people who wanted to buy later.  It continues to operate as a punishment to families that want to move, or that are first-time home-buyers.  If you’ve bought a house in CA since the early ’80s, you’re a victim of Prop 13, not a beneficiary.  Possibly you could do the phase-in somewhat faster, maybe as little as ten years.  In any ten-year period, there’s very likely to be a period where advantageous refinancing is available (due to standard cycles in interest rates), and that probably will help people deal with any change in expectations about the cash flows associated with real estate ownership.  In any case, as I said to begin with, there are details to nail down.

I haven’t ever applied any sort of rigorous legal or financial analysis to this.  But I figure, maybe it’s time I try to get it in front of people who actually know more about the tax code.  Any takers?

Uncategorized

Read My Lips: Taxes aren’t the issue

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(The media is chasing Arnold’s Ball. Cross-posted on PowerPAC.org – promoted by SFBrianCL)

So the big news today is Gov. Schwarzenegger predictably declaring he won’t raise taxes if elected for a second term this November. This is the problem (well, one of them) with the mainstream media. Why, I wonder, isn’t the headline “Governor promises not to balance the budget”? That is what is at the heart of this debate, and the relentless hammering on “not raising taxes” is only a convenient and politically expedient distraction.

As the story in the Bee says, Angelides has talked about a plan to make corporations and California’s extremely wealthy pay their fair share in order to balance the state budget while providing for the needs of the state’s 37 million residents.

But the mainstream media is playing right into Schwarzenegger’s strategy to make this election all about taxes. Give me a break! There are 7 million people in California who don’t have health insurance. The cost of living is skyrocketing for families, putting the typical California middle-class dream out of reach for millions of people year after year, and further squeezing those lucky enough to be living a middle-class life now. Meanwhile, wages remain stagnant for those at the bottom of the economic scale, under a Governor who has twice vetoed a minimum wage increase.

These are the issues that matter to most Californians, and these are the issues that the media and the public must hold Gov. Schwarzenegger and Phil Angelides accountable to. Schwarzenegger can and will keep delivering his well-rehearsed lines about taxes in order to try to trick people into voting for him, but those of us who know the truth have to fight back.

Economy

Set a spell, Congress. we’ve got a couple things to chat about…

This past week, much to everyone’s surprise, Democrats in the House of Representatives managed to slip a proposal to increase the minimum wage into a bill funding the Departments of Labor and Health and Human Services.

Faced with the specter of having to vote against increasing the wage floor from its current embarrassing level of $5.15 to $7.25 by Jan. 1, 2009, Congressional Republicans snapped into action and pulled the bill.

This is what these brave souls do in election season when they don’t want to have to go back to their districts and answer questions as to why it’s ok to cut hundreds of billions in rich people’s taxes but deny the working poor a boost.

Well, I say: “Not so fast, guys.  Let’s chat about this for a few minutes.”

Not let me get this straight.  Last month, you passed $70 billion worth of new tax cuts, mostly by extending earlier Bush cuts on dividends and capital gains.  When tax cuts target investment income, the benefits flow to the wealthy, and these cuts are exhibit A: they reduce millionaire’s tax payments by $43,000, and those of middle-income families by $20.  Sorry, that’s not a typo.  It’s what you get when you put the YOYOs in charge of fiscal policy.

Wait a second, where you going?  I’m not done.  Set a spell…

After you finished that master stroke, you came alarmingly close to repealing the estate tax, a gift to the Paris Hilton’s of the world that would have cost $1 trillion over 10 years.  A few stalwarts blocked you, but you’re sure to be getting back to this one first chance you get.

Other than that, let’s see…you made a lot of noise about gay marriage and flag burning, and you guys in the House just passed the Iraq War Resolution supporting the administration on Iraq and rejecting the setting of a date for troop withdrawal.

Oh, and you raised your own pay by $3,300.  In fact, you’ve raised your own salaries by about $35,000 since the last minimum wage increase.

But when it comes to raising the minimum wage, you pull the bill.

Let’s review a few facts.  The Federal minimum wage has been stuck at $5.15 since September 1, 1997.  Come this December, you will tie the longest spell on record for ignoring the labor market’s wage floor (i.e., the Reagan years, from 1981 to 1990, when Bush I signed an increase).  And since it is not adjusted for inflation, its buying power has eroded by 25% since then.

That’s why the current minimum wage, in real terms, is at its lowest value since 1955.  Compared to the average wage, it’s at 31%, the lowest level on record going back to 1947, meaning those stuck at or near the minimum wage are falling further behind the rest of us.

As always, your rationale for not raising the minimum is that it would hurt low-wage workers, whose employers would have to fire them when the wage mandate priced them out of the labor market (one can’t help but note that this concern doesn’t come up when you mandate your own pay hikes).

That would be a plausible argument, were it not for the fact that tons of careful research has disproved it.  The federal minimum wage has been raised 19 times by Congress since its introduction in 1938.  Eighteen states, covering about half of the national workforce, have minimum wages above that of the Federal level.  And over 100 cities have living wages—a higher minimum that applies to workers on city contracts or at firms with local government subsidies. 

In other words, more than any economic policy, we’ve had hundreds of “pseudo-experiments”—rare in economics—that allow us to test the impact of wage mandates on various outcomes.  These experiments allow us to compare before and after, or, even better, compare nearby places that face similar economic conditions but have different minimum wage laws.

The question that has received the most scrutiny is whether increases in the minimum wage lead employers to lay workers off.  You probably don’t want to hear the results from me, but here’s how Nobel laureate in economics, Robert Solow, put it: “The main thing about this research is that the evidence of job loss is weak. And the fact that the evidence is weak suggests that the impact on jobs is small.”

A great example comes from the last Federal minimum wage increase, back in 1996-97.  The usual suspects predicted massive job losses among those affected by the increase from $4.25 to the current level of $5.15.  Instead, low-wage workers experienced the strongest job market in 30 years.  Poverty fell to historic lows, particularly for the most disadvantaged workers, such as less-skilled minorities and single-mothers. 

On the other hand, there no such body of evidence supporting your claims that cutting taxes for the rich actually accomplishes anything beyond distributing wealth up to the scale.  Did I mention that profits as a share of national income are at a 39-year high?

Now, don’t get me wrong.  I’m not implying for a nanosecond that an increase in the minimum wage would offset the damage you guys have done over the past few years.  In that scheme of things, raising the pay of about seven million low-wage workers by less than two bucks is a token gesture which you will hopefully be forced to make so you can show your faces again in public.

But it would make an important difference to those workers, so you should do it.  The fact that I even have to argue with you about it is what’s so painful.