Bogeyman Taxes

Ezra Klein had an op ed in yesterday’s Los Angeles Times titled “Give bigger government a chance” online and “Government by Bake Sale” in the print edition. Ezra argues that there’s a backlash growing against conservative arguments that “smaller” government is always better, taxes are always “too high,” and privatization is the answer to all problems. He writes,

Libertarian humorist P.J. O’Rourke likes to say that “Republicans are the party that says government doesn’t work, and then they get elected and prove it.” Over the last few years, that’s been true. But government can work, and increasingly, Americans appear to be anticipating its return. A new Pew Research Center poll finds that public support for a societal safety net and for government protections is at its highest levels in more than a decade — which suggests that Americans don’t think bake sales are the way to fund their schools or that Philip Morris is really who they want subsidizing law enforcement. And in recent elections, the once popular “Taxpayer’s Bill of Rights” amendments that seemed so unstoppable a decade ago are being rejected and, in Colorado, repealed, as voters finally tire of paying the costs in broken infrastructure and insufficient public services.

Digby adds:

The Republicans just run on cutting taxes while promising all kinds of government largesse to get elected and get their hands on the treasury. It’s a very nice little racket that has far less to do with any kind of political philosophy and more to do with their inherent greed and corruption. They go as far as they can until the nation gets fed up and then they leave the field to the Democrats to clean up the carnage. …

… It’s not that taxes were ever popular, any more than paying your electric bill is “popular” or buying a new furnace is “popular.” But until the GOP hit on their free lunch propaganda they were just considered a fact of life (“death and taxes”) as long as the rich weren’t perceived to be getting off easy and the government was delivering services to the people. Republican campaign tactics and governance have pretty much destroyed that resigned acceptance by making people believe that taxes are inherently evil and if the government needs to do something it will magically find the money some other way. The truth is that the Republicans have been running a game that’s the equivalent of you or I taking off work without pay for weeks so we can go to Vegas and play roulette with our credit cards. One only hopes “the grown-ups” haven’t gone so far that we will have to spend the next decade suffering from the hangover.

What is it with Americans and taxes? I’m sure if you went about asking people “Do you think taxes are too high?” most of them would say yes, because that’s what they think they’re supposed to say. We’ve had years of politicians and pundits shrieking at us that taxes are too high, so it must be true, right? When some notion becomes embedded into our national mythos it can take real courage to say out loud no, I don’t think that. So most people reflexively will concur that taxes are too high, whether they are or not.

Of course, then you have to consider what “too high” means, and compared to what? Americans, I believe, pay lower taxes overall than people in many other industrialized democracies. But let’s just say “too high” is “more than I think I ought to be paying.”

Right after the 2006 midterm elections, Lawrence Levy of New York Newsday wrote a column about the suburban voters who had swung away from Republicans and voted for Democrats.

Suburbanites are not anti-change, just anti-extremism of any stripe – whether Democrats in the ’70s or Republicans in the ’90s. They’re not anti-government. Many people move here for more and better government services. And they’re not anti-tax. They’re willing to pay high taxes, to a point, if they feel they’re getting good value.

That’s true generally of northeastern suburbanites, up to a point. Many years ago I moved from suburban Ohio to suburban New Jersey. New Jersey property taxes were many times higher. But my old Ohio suburb had crummy public schools (conventional wisdom said that public schools are always bad, and if you cared about your child’s education you sent him to Catholic school whether you were Catholic or not), and if there was a snowstorm you could wait days before the street in front of your house was plowed. The New Jersey suburb I moved to valued good public schools, and roads were cleared before the last snowflake fell.

But a few years later I witnessed the state of New Jersey gripped by mass hysteria over taxes. As explained in this Wikipedia article about Democratic Governor Jim Florio,

The Florio administration started during the late 1980s recession. Faced with a projected 1991 deficit of $3 billion, Florio asked for a $2.8 billion tax increase. It was the largest increase of any state in U.S. history. The money generated would balance the budget, increase aid to public schools and increase property tax relief programs. Governor Florio also eliminated 1,500 government jobs and cut perks for state officials.

A grassroots taxpayer revolt in 1990, spearheaded by a citizens group named “Hands Across New Jersey” founded by John Budzash, a postal worker from Howell Township.

My problem, as always, is that I actually read newspapers, and I knew that the new income taxes were very progressive (there was also a 1 cent sales tax increase). My state income taxes didn’t change at all, because my income wasn’t all that glorious. But people all around me were going nuts over the tax increase, whether it affected them or not. I saw “Dump Florio” bumper stickers on cars of people who appeared to make even less than I did. In fact, at one point a secretary where I worked was going around with a big “Dump Florio” pin on her chest, and I knew good and well she made less than I did. When I told her that her taxes weren’t going to go up, and explained to her how much one actually had to make before they did, she was dumbfounded. She’d been worried she wouldn’t have enough money left over from the new state taxes to live on.

Then what’s everyone so worked up about? she asked. You tell me, I said. You’re one of the people who is worked up; I’m not.

Mr. Budzash was on television and radio every time I turned around. Someone pointed out to him that, given what he probably made, his personal tax increase (if any) was negligible, and that Howell Township schools — a poorer district — would benefit a great deal. These facts appeared to throw him; apparently they were news to him. But he quickly recovered and declared he didn’t want to tax rich people overmuch because he might be rich some day himself.

Notice that some of the income tax money was to be applied to property tax relief programs. A few years later, when Republican Christie Whitman became governor, she lowered the Florio income and sales taxes. But to pay for this she cut the amount of state money going to public schools, fiddled a bit with state pensions, and outsourced the New Jersey Department of Motor Vehicles to demons from the Fourth Circle of Hell. In many parts of the state property taxes had to be cranked up even more to make up the difference.

The moral here is that in America, taxes are the bogeyman.

On the other hand, I think Lawrence Levy is right when he says people are less bothered by taxes when they feel they are getting value for their money. And they’re more willing to tax themselves when they value the services the government is providing. My neighbors in Ohio (who included Mean Jean Schmidt) were not bothered by crumbling public schools and snow-covered roads, but my neighbors in New Jersey wouldn’t have put up with them for a minute.

Another point: When I was a child, the grownups used to complain about their tax money going to foreign aid, but they didn’t gripe so much about domestic spending. I don’t believe most (white) voters got worked up over “entitlements” until they realized a substantial part of Lyndon Johnson’s “war on poverty” programs were helping blacks.

The moral to that is that people are less bothered by taxes if they think they (or some group they identify with) are getting the benefit of whatever the government is doing with the taxes.

That’s why it makes me crazy when people say government is “too big” without explaining what they mean by that. Awhile back some pollster asked people if they thought government was doing “too much” or “not enough.” Most people were true to their conditioning and said “too much.” But too much of what? Not enough of what? Seems to me the government is doing way too much that it shouldn’t be doing but not enough of what it should be doing.

I think large parts of the American public might agree with the argument that we should be using our tax dollars to invest in ourselves rather than burying it in the sand of Iraq. Instead of vague promises to cut taxes and spending (the latter of which never seems to happen) Democrats should be telling people “We’re going to see to it that you get value from your tax dollars.” Then deliver lower college education costs, better infrastructure, universal health care. I’d like to see it tried, anyway.

Unhealthy Care

I found some newspaper items this morning that provide a good follow up to the “Demand Supply” post from last week. The first is from an editorial in today’s Atlanta Constitution:

After two decades of steady improvement, the death rate for Georgia babies could soon be on its way up again. While neonatologists in specialized nurseries have achieved remarkable success at saving the lives of medically fragile infants, the rate of babies born too soon to Georgia mothers has been slowly rising since 1994. These babies are at a much higher risk of death in their first 12 months of life.

More ominously, the percentage of Georgia women getting adequate and early prenatal care has actually declined since 1999. Experts believe the lack of prenatal care, as well as chronic conditions such as diabetes and obesity that are more prominent in young mothers today than a generation ago, will result in higher infant mortality rates in the years to come, as has already happened in Mississippi and several other southern states.

If Georgia could achieve the U.S. average in infant mortality, the lives of approximately 220 babies would be saved each year. As it is now, approximately 1,100 Georgia babies don’t make it. Merely approaching the U.S. average will require much more intensive, targeted public health nursing in communities where teenage pregnancy rates and births to unwed mothers remain exceptionally high. That intense approach occurs now in only a handful of Georgia counties.

The price of such early intervention is small compared to the high cost of caring for premature babies, which can reach $4,000 to $5,000 a day in neonatal units and often extends well beyond the nursery in treatment for chronic lung problems, cerebral palsy and other conditions.

This illustrates nicely why our health care “system” is, essentially, screwy. The U.S. health care industry is driven by profit. On the whole we do a bang-up job at creating and marketing innovative health care products that make somebody a lot of money. But we neglect those functions that are not profitable. Thus, many U.S. hospitals have sparkling state-of-the-art intensive care units for newborns with all the equipment, medicines, bells and whistles one might want. Babies born with health problems get excellent care in them. It’s also very expensive care, and somebody makes a nice profit from selling the equipment, medicines, bells and whistles to hospitals.

But there’s no profit to be made from providing basic prenatal care to poor, uninsured women, so on the whole we’re not doing that well at all. When compared to babies born in other industrialized nations, U.S. babies come into the world with a higher rate of health complications, which results in infant mortality rates that are higher than they should be, in spite of our superior intensive care gizmos.

I want to add that you absolutely cannot explain this problem to a rightie. The usual excuse for our infant mortality problem is that in U.S. physicians count some hopelessly compromised infants as “live births” that would be considered “stillbirths” in other countries, even though they might live for a very brief time. Stillbirths are not counted in infant mortality rate, which is calculated from the number of babies born in a nation that die before their first birthdays. Thus, righties argue, our high infant mortality rates are just a statistical illusion. This Wikipedia article discusses the issue.

On the other hand, as Ampersand documents here, if you factor in stillbirths — thus wiping out the discrepancies — the U.S. still doesn’t compare well. So much for the statistical illusion.

And if you see the huge differences in infant mortality rates among states and populations within the United States, I can’t see how anyone can claim there isn’t a problem. But righties are wondrous creatures who can not see any problem if it might require a tax increase to fix it.

See also this editorial in today’s New York Times

The explosion in the use of three anti-anemia drugs to treat cancer and kidney patients illustrates much that is wrong in the American pharmaceutical marketplace. Thanks to big payoffs to doctors, and reckless promotional ads permitted by lax regulators, the drugs have reached blockbuster status. Now we learn that the dosage levels routinely injected or given intravenously in doctors’ offices and dialysis centers may be harmful to patients.

As Alex Berenson and Andrew Pollack laid bare in The Times on May 9, wide use of the medicines — Aranesp and Epogen, from Amgen; and Procrit, from Johnson & Johnson — has been propelled by the two companies paying out hundreds of millions of dollars in so-called rebates. Doctors typically buy the drugs from the companies, get reimbursed for much of the cost by Medicare and private insurers, and on top of that get these rebates based on the amount they have purchased.

Although many doctors complain that they barely break even or even lose money on the costly drugs, for high-volume providers the profits can be substantial. One group of six cancer doctors in the Pacific Northwest earned a profit of about $1.8 million last year thanks to rebates from Amgen, while a large chain of dialysis centers gets an estimated 25 percent of its revenue, and a higher percentage of its profits, from the anemia drugs. It seems likely that these financial incentives have led to wider use and the prescribing of higher doses than medically desirable.

You might have seen the television ads in which people declare “I’m ready to start my chemotherapy!” I think those are for Procrit, but I’m not sure. Expensive ad campaigns for prescription drugs have always struck me as weird, but if they didn’t drive up demand for prescription drugs I’m sure the pharmaceutical companies would stop the ads.

Finally, here is an article that refutes the claim that American cancer patients survive at higher rates because they get advanced drugs that are not available elsewhere.

The clinical reality for metastatic colorectal cancer is that the FDA-approved combination regimen of IFL (irinotecan, bolus fluorouracil, and leucovorin) plus Avastin increases median overall survival by 4.7 months. This small increase comes with a host of side effects, which impinge upon quality of life, as well as placing a burden on the patient and the healthcare system.

While this small increase is hailed by the FDA as being impressive, the clinical reality is that there is no cure for metastatic colorectal cancer. The much-vaunted blockbuster drug Avastin is simply an antibody supplement incorporated into an already complex chemotherapeutic drug regimen that may slow down the cancer process depending on the genetic constitution of that individual. The cost of drugs for metastatic colorectal cancer alone would exceed $1.5 billion per year if all the patients in the U.S. received treatment.

The clinical reality for metastatic breast cancer is similar. The latest treatment with Herceptin followed by lapatinib and capecitabine only increased the median time to progression from 4.4 to 8.4 months. Furthermore, 70% of patients do not respond to Herceptin, and resistance develops in virtually all patients.

Of these two big killers, both remain incurable, and this sobering fact contrasts with the glowing reports on Avastin and Herceptin emanating from the financial and tabloid media.

The authors (George L. Gabor Miklos, Ph.D., Phillip J. Baird, M.D., Ph.D.) also say,

It’s easy to tell when an area has run out of ideas. The hype becomes extreme, and technology substitutes for brainpower. The cancer research area has reached this sorry state. The tiniest increase in the survival time of drug-treated cancer patients or median time to progression is touted as a cure, and wildly unrealistic claims about personalized cancer medicine emanate from the highest governmental and academic sources. …

…Is the future of cancer medicine one in which doctors become financial advisors, telling their patients whether they can or cannot afford expensive treatments of dubious survival value?

Although the authors don’t say this explicitly, I infer that cancer research itself is being driven by the desire for new money-making products rather than by science or even the well-being of patients.