two days in DC

An interesting couple of days in DC this week. I attended part of the annual "Funding State Services" conference put on by the Center on Budget and Policy Priorities. This meeting brings in state-level researchers and advocates who are trying to understand their state's tax system, budget process, health programs, etc., basically with the goal of getting good things funded. It's always a huge conference, but this year's was bigger than ever, and gave one a sense that there are an incredible number of very talented people all across the country working hard to turn the policy debate around, and learning from one another.

John Podesta of the Center for American Progress gave a very good, substantive speech which showed how valuable that institution is becoming. He made one interesting point that had not occurred to me, and I hope I can explain it as succinctly. Basically, his point, or my interpretation of it, was that the Republicans have more in mind in their plan to shift taxes from work onto investment than just to make the investor class richer. Their motive is very similar to their ideology of the "Lucky Duckies," which holds that the many innovations of the past decades that effectively eliminated taxes for working poor families were in fact a bad thing, because they created a class of people who do not "feel" taxes and therefore don't rebel against the size or cost of government.

Podesta's point was that shifting taxes off investment, through reducing dividend taxes or creating more tax-exempt accounts, actually has the effect of making the working middle class, which gets its income from work, more tax-sensitive since any tax increase will fall exclusively on them. Put another way (this is my own interpretation of what Podesta was getting at), suppose that the latest package of tax-exempt accounts being planned by Secretary Snow pass next year. And then four years from now, there is finally a Congress willing -- or, more likely, forced -- to deal with the huge deficit. With so much income taken off the table by having been moved into these accounts, the only way to increase revenues will be to increase marginal tax rates, which will then fall exclusively on income from labor, and therefore have to be higher than it would be if the taxes were falling on the broad base of income. The tax revolt is all the more likely. And once income has been moved into these accounts, it will be impossible to go back and make them taxable, although it would be possible to end new investment in them.

Interesting. it just goes to show, which the crowd that's in power, you have to follow every conspiracy out to its end. And all the more reason to stop fussing about which tax cut to repeal and make the case for a complete overhaul.

Otherwise, a beautiful couple of days in Washington. Especially if you stay consistently within a half-mile radius of DuPont Circe. One of the things that always bothered me about Washington, compared to New York, is that it is such a segregated city. Certainly by race, although that's finally changing, especially in the Shaw neighborhood around U Street. But in every respect -- the gay neighborhoods always seem to be 80% gay and the other neighborhoods seem to have very few gay residents; the families-with-kids neighborhoods are totally families with kids. (These are totally impressionistic, by the way, and not based on census block analysis.) I find that kind of dividing-up a little stifling after a while. But DC is also hilariously segregated by ideology. Sometimes I'll spend a day in Washington, downtown or around Capitol Hill, and really feel like I'm immersed in Bush country. The short-sleeved dress shirts, the interns from SMU, etc. But you can also spend the day in a completely like-minded liberal world. I visited someone at the New America Foundation, another colleague who works on campaign finance reform, had a spontaneous meeting at the Alliance for Justice, met Ruy Teixera for a cup of coffee, and had a meeting at the Tabard Inn. Everyone around looks like someone you know, or someone you'd like to know, or vaguely remember because they used to work for Senator Paul Simon. It's like living in a zone of a partitioned city. Strange, but very comfortable.

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On the segregation of DC. The opposite occurred in Communist countries. My wife grew up in Warsaw, and people were mostly assigned apartments randomly as they became available. This meant that doctors would live next to factory workers, etc. -- very little social segregation. This is good and bad, of course. If you happened to live next to a drunken party animal, there was no recourse, since moving was effectively impossible for you or him. But you would also end up meeting people that the normal social self-sorting would preclude.

This is all changing now, of course -- there is a free market in apartments, and people move around much more easily now.

Posted by: bob cox | 11/20/2003 at 09:41 AM