Notes from the Left Coast

Drummond Pike’s Blog

The Wall Street Journal reports that the effort to extend the current Estate Tax regime through next year has failed. As part of the Bush tax cuts, the exemption, above which taxes are due, has been slowly rising. The Conservative plan, put in place in 2001, phases out the tax entirely next year, and then, in the following year, reverts to the 2001 rates and much lower exemption. They couldn’t make it permanent then, as they wanted to do, because it simply cut too much revenue out of the equation, even for the then-dominant Republican leadership on both ends of Pennsylvania Avenue.

Beneath the din of the healthcare debate, and Joe Lieberman’s stunning profile in cowardice and betrayal of his constituency, the inexorable process of displacing taxes from the super-wealthy to the middle class continues its stealthy pace. It is stunning to me that in these particularly dire economic times, the progressive majority in both the House and Senate has squandered the opportunity to extend current year provisions into next year. Neither the House nor the Senate could muster the will to adopt the extension. Lieberman-type leadership at its best?

And the conservatives – wow, they are a whole other kettle of fish. Cynical beyond measure, they figure a bankrupt government is better than no government at all. (Remember that stellar statement by neo-conservative, Grover Norquist: “I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” So helpful in tough times.)

But this Estate Tax matter is really serious for the non-profit sector – not that you’d really understand that from the way many in philanthropy have used their considerable resources. The Council on Foundations, for instance, does support making permanent the current estate tax regime, though the matter shows up way down their list of public policy priorities, and one has rarely if ever heard the Council’s leadership making the case for the Estate Tax. Even with the more broadly-based, and often far more insightful, Independent Sector, this issue has not really achieved traction with the membership despite the best efforts of its leadership to remind us all of its importance.

Best estimates suggest that the sector will lose $25 billion each year, if the estate tax is abolished. The incentives for the creation of new foundations or the making of very large testamentary gifts to churches and non-profit organizations shift from financial to purely altruistic. In other words, without the tax deductions, people give less. And it means that if a billionaire expires during the next calendar year, she will pass down that entire fortune to her children or other beneficiaries intact. No taxes. No obligation to share with the society that enabled the accumulation of that fortune in the first place. As Bill Gates, Sr. has often commented, these huge fortunes are not easily assembled in other parts of the globe. The infrastructure, educational systems, regulated financial markets (okay, so we still have some work to do!), transportation systems, and everything else that contributes to the creation of successful businesses needs to be supported somehow, and the Estate Tax is a valuable tool for this.

Even more compelling to me, though, are the tragic social and economic consequences evolving from the advent of a new, permanent Upper Class. Declining family size almost ensures that fortunes of $100 million or more can become self-perpetuating fiefdoms in economic terms. In a manner similar to the nobility of the Middle Ages, who reigned over their lands with impunity through primogeniture (i.e. the oldest son gets the whole thing), the new economic elite will become sequestered and insulated from the broader society. Taxes on the income or realized gains from a large fortune will hardly dent its ability to be self-perpetuating. I just fail to see how this benefits society, this diverse and dynamic set of economic and social forces that has created so much in the world. In Kevin Phillips’ Wealth and Democracy, the author draws out the inextricable tie between social equity and the vibrancy of our democratic practice. The fact is inescapable – government must dampen the accumulation of “super-wealth”, and use the proceeds to create opportunity for “the many,” for, after all, the latter is what has always produced the best that America has achieved.

One cannot escape the media frenzy about the sweet young 11 year old girl kidnapped for 18 years by some wacko in Antioch. Details cannot be minute enough to elude broadcast — what the tents looked like, the vacant stare of the victim’s daughter, fathered by the wacko, the way the victim answered phone calls for his printing business, and all the rest.

In contrast, we can’t seem to find an article that accurately analyzes the benefits that the proposed reforms of the broken healthcare system might produce, or the damages brought down on us by the unwieldy patchwork that is the current system. Instead, we seem deluged by scary stories about “death panels” and how “the government is going to pull the plug on grandma” and the like. Fox News, of course, treats this drivel as fact. The rest seem to treat it as reasonable debate with virtually not a word about how the current system does much worse.

Tides Momentum Conference Website

Crystal Hayling,
Roger Hickey, Anthony Wright, and Jacob Hacker, Momentum presenters.

At our Momentum Conference, beginning this coming Monday afternoon, we hope to bring some rationality to the conversation about healthcare. Last year, Jacob Hacker (author of the “public option” idea) laid out his view of the prospects for real reform if Obama were to win the General Election. Now that we are there, and this is the highest thing on the President’s agenda, we’ve witnessed, as we have so often, the devolution of an intelligent policy debate into a mud-slinging contest in which alarmists are decrying things that don’t exist (death panels and plug pullers) and progressives — ever the earnest ones — are trying to convince people through complicated rational arguments.

What seems to command attention on Fox are these senior citizens who want to “keep the government out of the health insurance business” but even more adamantly demand that Congress keep its hands off Medicare…one of those government-run healthcare programs. That media really don’t say that much in response to such irrational debate is fascinating…and sad.

First thing next Tuesday, we are convening three very different folks to bring us up to date on where we stand — Anthony Wright leads Health Access California and has led numerous state and local campaigns for health reform; Crystal Hayling, CEO of Blue Shield of California Foundation and has worked tirelessly on healthcare delivery especially to women and children, and Roger Hickey, co-Director of Campaign for America’s Future, a leading advocate for national reform. It should be a refreshing session, especially if you are a Fox News watcher.

Why is it, I cannot help but wonder, that the current folks entrusted to oversee most covered people are getting off the hook in the midst of this swirling debate? The insurance companies are no one’s friend. Anyone you know who has dealt with a serious medical situation would hardly argue for the current system. These companies engage in terrible practices, trying desperately to pursue their business model that says they should collect as much money as possible and pay out as little as possible. How can anyone think this is going to lead to good health outcomes. Nor can anyone explain how having these companies provide health insurance to everyone will change anything. Yes, they may be forced to accept pre-existing conditions, but, bottom line, they will collect as much as they can, pay out as little as possible, and pocket the rest. The French, with their excellent single payer system, are laughing their heads off. Hopefully, though, we’ll move on from town hall meetings and get this thing done in some acceptable form. Tuesday morning at Momentum, we’ll be trying to figure out how that might be possible.

I sit here watching two high performance sailboats getting ready to race on this crystal clear day in San Francisco. It’s a wonderful time of year in the late summer, when the fog retreats and the people come out to the shore. Absolutely glorious. But me? I’m hunkered down in front of my screen trying to sort through my opening remarks for Momentum, our fourth conference highlighting the best of new ideas to advance progressive public policy.

Don Hazen, the character who conceived of and has built AlterNet, the wonderful aggregator of progressive news and commentary, has asked me a couple of provocative questions about Momentum. Several revolved around the idea that progressives are confused about how to speak to the new Administration. Are we supporters or critics? Have we already been so burned by the healthcare debate that we are ready to turn on the new team, or what? He wanted to know if our conference, very nearly sold out, much to our surprise in this most difficult of years, was going to answer some of these questions.

As I told him in response, that’s not really our role. First, the progressive community is larger — much larger — than the 300 plus folks who will assemble on Monday afternoon at the W (SF). One would have to be seriously delusional to think we might speak for the entire progressive community, although to hear Glenn Beck talk about us, well maybe we do! However, I digress.

News people, like Hazen, want a story, and they are very good at getting them. At Momentum, though, we are looking for what might become a story in the future. All good political stories begin with ideas that somehow take flight, get traction, and sometimes become policies, or at least political fights about policy, that really are newsworthy. At Momentum, we concentrate on the ideas. Last year, for instance, Jacob Hacker held forth on the transition from our current broken healthcare system and argued brilliantly for an approach that saw a "public option" as a pivotal tool that would help move the chances for change forward. Little did he know that his "compromise" position might so quickly have become the lightning rod for the debate we see this year.

One voice on this year’s program that should be galvanizing is Sony Kapoor from Europe. He will be talking in very direct and compelling ways about the critical need for international financial reform, picking up from last year’s speaker Rob Johnson who sharply depicted an "oligopoly" comprised of 6 firms that traded derivatives among themselves while telling all it was a "marketplace." Some of us, of course, wish we’d paid just a tad more attention to Johnson. We could have avoided much of the meltdown, but that’s another story. Kapoor, who worked in the belly of the beast, will describe how the problem is really much bigger than the U.S. Solving it, needless to say, will take more than reforms in Washington. And speaking of that fair city, we’ll also be hearing from Laura Quinn about Catalist, one of the most important new tools for progressive advocacy and voter engagement groups in a generation. Then, early Wednesday, we’re delighted to have John Kao (author of Innovation Nation) talk about what is needed to truly foster imagination and innovation in society. It’s all going to be quite a ride.

So, this all is probably not a very good answer to Mr. Hazen, but what I can assure him is that if he spends a couple of days next week with us, he will likely take away more than a few ideas that he probably hasn’t heard before. For change really to happen, isn’t that where it all begins?