Linkage
August 2, 2006, 6:46 pm
Posted by J. Peter Nixon
Since we’ve been talking about proposals to repeal or reduce the Estate Tax, I thought I would provide a little update. Congressional Republicans are supporting a bill that would tie reductions in the estate tax to an increase in the minimum wage.
Some things just leave you speechless. I wonder how the Catholic Social Teaching experts over at Mirror of Justice would parse this one…:-)
Granted, there may be a certain unlovliness in tying the two together, but there’s nothing about either position, simply in principle, that places it in constrast with CST.
It’s perfectly reasonable to believe that the common good can be served by both 1) lowering or removing the estate tax and 2) not artificially creating wage levels.
Of course, holding such positions does not lend itself to moral grandstanding on economic issues.
I don’t see how the common good is served by lowering/eliminating the estate tax. These folks can afford the tax.
Nothing wrong with artifically creating/elevating wage levels. “Artificial” is per se neither good nor bad. Fact is a lot of working families are unable to make ends meet on current federal minimum wage.
There is a general revulsion where I live about the Republicans holding minimum wage legislation hostage to the future of the estate tax.
Perceptions do count, after all. In fact, perceptions ARE reality in the minds of voters.
Attaching a “poison pill” or conversely attaching something unpopular to a very popular item of legislation to get it passed has been around for a long time. In fact, I think the method was perfected by the Democrats in the 60′s and 70′s – but then, that was Democrats, so it was OK.
WIthout getting into the specific merits of this legislation, what leaves me “speechless” is this tendancy to treat what were hithertoo known and commonly practiced methods of governance as somehow shocking and unconscionable, while things like fillibustering presidential appointments (which are historically rare) are treated like time honored traditions of the republic.
Harold Meyerson has a column about this (“Minimum Wage, Maximum Gall”) in Wednesday’s Washington Post http://www.washingtonpost.com/wp-dyn/content/article/2006/08/01/AR2006080101071.html
In fact the bundling of disparate items may be even more bizarre. In yesterday’s New York Sun we read that along with the minimum wage and estate tax items a provision to fund a rail link to Kennedy Airport is included in the Trifecta Bill. As a result NY Senators Schumer and Clinton may vote against the bill and against the interest of many New Yorkers who want a convenient trip to the airport.
But I believe the linkage of many unrelated items in a single piece of legislation is simply an example of logrolling, as old as the Constitution and even older. Logrolling often deals with the intensity of preferences better than simple reform or “good government” proposals. If logrolling is forbidden or discouraged by Catholic Social Teaching or any other source the quality of political outcomes might well be inferior.
If this bill is passed, maybe the Uniter Nt The Divider can add another signing statement.
I cannot agree with mlj’s idea that reducing the estate tax helps the common good – unnless his starting point is that his political philosophy defines the common good,
In fairness, though, CST seems poorly eqipped to deal with the complexities of how the Washington game is played.
Perhaps a good clue to the common good is he deep disgust around our country with the current congress(if one beleives the polls,) That seems more trstworthy than the idelogical media pundits who think whatever is good for the economy is good for us (to all those sweltering in the East, and if you have power to read this, global waming is still an unproved theory; also, if those soon to be approved by EPA pesticides haven’t gotten you yet.)
And there you have it – a dig at signing statements. Clinton issued 140, but no one seems to have heard of them or cared about them (there’s little reason they should because of their lack of legal authority beyond stating a contemporaneous objection to a statute) until GWB used them.
NPR reported tonight that this bill also includes a rider that would offer benefits to the lumber industry, an attempt to woo Democratic senators in the Pacific Northwest to vote for the measure. (Pardon if this was included in the original link; I was unable to get through the NYT’s registration procedure.)
Those senators said the lumber teaser would not entice them to vote for the bill, and NPR predicted the bill would die.
So, for now it looks like we’ll retain the $735 billion over 10 years that Meyerson (Gene’s link) reported we’d lose if the estate tax were eliminated.
Democrats will argue, of course, that they have saved this revenue which may preserve programs to help the working poor.
But, of course, there are no guarantees that estate taxes will actually go to benefits for the poor, while a rise in the minimum wage would.
Meanwhile, the Republicans will exult over having “outfoxed” the Democrats (in the words of the inimitable Zach Wamp), and retained their power in the Senate. Though, of course, they will not have achieved their estate tax cut.
My guess is that the Democrats are hoping to gain seats in the off-year elections this November, which would allow them to introduce and pass a minimum wage hike more to their liking.
But their success in the next round may depend on adding some new enticement to garner Republican support
It’s all more fun to watch than Celebrity Poker.
Unless, of course, you’re trying to live on five bucks an hour.
Does anybody really think that raising the minimum wage doesn’t come at other costs to low wage earners?
You obviously do, mlj, so enlighten us.
I am truly stymied about why conservatives think it is more fair for workers at the bottom tier to have to limp along on substandard wages than for individuals in the top tier to pay estate taxes on assets they didn’t even earn.
My conservative friends tell me that when rich people inherit more wealth, they’ll give more to charity. That argument would hold more water with me if they offered evidence for that assertion.
Jean,
What stymies me is that so-called progressives insist on promoting economic policies that sound nice but hurt the very people they claim to champion. It is economic common sense. When you raise the price of a commodity, including labor, especially artificially (that is not in response to demand) the consumer invariably seeks to buy less of it. Over 97% of Americans over the age of 30 earn more (mostly way more) than the minimum wage. The remaining 3% overwhelmingly are supplementing a family income or are single. The vast majority of minimum wage earners are young, unskilled workers. The most immediate impact of an increase in the minimum wage will be fewer of such jobs and fewer hours worked by such workers.
It is always the people at the low end that pay the price for artificial economic controls like this. Look at the great rent control movement of the 60’s and 70’s. NY, Boston, San Francisco all wanted to keep housing affordable, and now there’s almost no decent housing for poor and middle income people. This is why I object so strenuously to those that throw around CST as imposing a moral obligation on me to support government imposed economic solutions. The reason I don’t support things like the minimum wage is not because I don’t think we should support policies that help the poor, but because I do think we should help the poor.
In response to Jean:
What Sean said.
To rephrase one of the above quotes:
“Does anybody really think that raising the minimum wage doesn’t come at other costs to high wage earners and inheritors?”
And my answer is I do so think, and these folks can afford the higher costs once we get enough greedy Republicans out of Congress and the White House.
Perceptions are reality to voters.
>>”Does anybody really think that raising the minimum wage doesn’t come at other costs to high wage earners and inheritors?….And my answer is I do so think.<<
Well that’s nice you think that. It’s remarkable that more than two generation of failed redistributive schemes have had so little effect in changing the minds of some people. It’s as if it Just Can’t Be True that two generations of liberal economic policy hurt the poor, while “greedy Republicans” may have done more to help the world’s poor than any political party on the planet.
Thanks to Sean for enlarging on the conservative view.
I don’t find anything illogical about your arguments, but what about this:
There’s no law that says an employer must pass higher labor costs on to consumers leading to fewer jobs/hours, is there?
An employer COULD choose to share more of its profits with workers instead of keeping line employees on minimum wage and spending all the profits on upper-level managers and stockholders, couldn’t he?
If more employers augmented minimum wage with profit sharing, might governmentally imposed wage controls be less of an issue?
MLJ, you asked whether anybody “really” thought raising the minimum wage wouldn’t cost higher earners and their inheritors, and you got your answer. Then you snottily replied, restating the obvious Novakian position, utterly free of argument. This is your pattern. It’s time you supplied some reasons for your readers to believe your claims. Not everyone here follows First Things.
I think Sean has put things better than I could.
Jean asks whether it *could* be the case that employers take the lumps themselves after a wage increase. Well, of course, they could, but they don’t.
My position isn’t exactly Novak’s or “following First Things.” The free market doesn’t “follow” anything. It reflects economic reality.
I truly have nothing ideoloigically at stake here. I want what’s best for the common good, keeping in mind all the while the position of the least among us. I’m persuaded empirically (and on those grounds alone) that the position you label as “Novak’s” to be vastly superior for the poor and the common good than liberal redistributivism. I would be happy to be persuaded otherwise. I don’t have a dog in this fight.
Jean,
Your idea about not passing on wage increases isn’t only unrealistic, it’s immoral.
Business owners can already pass on more of their profits to their employees if they want to. What you are proposing is that we use the power and force of the government to make them pay more.
The increase in wages is meant to be passed on to the consumer and it should be. The only thing that makes an increase in the minimum wage even vaguely fair is that we all at least share in the cost of helping out the working poor – in theory.
I say in theory, because it only works that way on the very margins. There are three ways that an employer can deal with the increase in the minimum wage. He can take it out of hide, as you suggest. As I said, if this made sense, he probably would have done it already – and most have. He can raise his prices – risky depending on competition, and most businesses that pay the minimum wage are in very competitive sectors. Finally, he can cut back on the labor he uses, either among the MW earners or those just above – or relatedly he can pay everyone less. The third alternative is almost always the one taken.
Finally, the whjole issue is a red herring. In reality, very, very, very few people are paid the minimum wage (less than 1% and that doesn’t count what these people earn in tips – my son always earns more in tips from his job than he does in wages). Even fewer actually live on the minimum wage. The two single largest groups of minimum wage earners are teenagers living at home, and single-childless adults under 25.
The people who are most likely to be affected are teenagers and young adults entering the labor force. The minimum wage is just a mild version of France’s guaranteed job rules – look what that has done.
Try telling folks here in NM (where living wage laws have been enacted in major metropolises) t that very few people (sic)are affected by minimum wage. And as to tax linkage, from today’s NY Times Week in Review, “A Senate Report ontax fraud shiws that so many ultrarich Americans evade taxes through offshore accounts that complete enforcement is impossible.”
So why not a straight up or down on minimum wage anway?
Sean H said:
“Jean,
Your idea about not passing on wage increases isn’t only unrealistic, it’s immoral.
Business owners can already pass on more of their profits to their employees if they want to. What you are proposing is that we use the power and force of the government to make them pay more.”
I’m not proposing that we force businesses to do anything; I’m just asking questions to try to figure out how conservatives draw the lines between appropriate and inappropriate government intervention..
My libertarian friends believe the government shouldn’t be forcing employers to pay a minimum wage. They also believe it’s immoral to use government force to ban abortion, gay marriage, growing marijuana and assisted suicide.
Libertarians are nice and logical, and I understand where they draw the lines between moral and immoral government intervention, even if I disagree with them.
I’m in murkier waters when I talk to conservatives because I don’t understand where their lines are.
For instance, if it is immoral to require an employer to provide a certain percentage of profits to an employee or impose a minimum wage, why is it not immoral to prevent an employee from supplementing a low income by growing dope and selling it to consenting adults?