November 4, 2013

Barack Obama campaign ad criticizing Mitt Romney's tax stance

Joshua Holland of offers an important counterpoint to today’s slanted political dialogue with his new essay on “the high cost of low taxes.” This hidden cost needs to become the center of our public debate. Washington’s obsession with tax cuts and deficit reduction is distracting the American people from the slow dismantling of the social contract, and its devastating impact – financial and otherwise – on all but the wealthiest among us.

Our political discourse focuses far too much on the cost of taxation, while all but ignoring its benefits. Journalists and politicians rarely discuss the direct or indirect costs Americans often encounter when forced to rely on the private sector for services which might be more efficiently provided through government.

The Low-Tax Scam

Any politician who promises to save every household $1,000 in taxes might be guaranteed an electoral victory. But if Americans then learned that nobody was patrolling their streets, checking the safety of their buildings or water, operating their buses, teaching their children, or collecting their garbage, that politician’ popularity would be sure to fall.

And if they then discovered that it would cost them, say, $10,000 to buy those services on the private market? That politician would be best advised to get into another line of work.

That, at least in my mind, is “the high cost of low taxes.” Conservatives like to complain about politicians who promise too much. But when politicians claim that Americans can pay less in taxes, spend less on government, and sacrifice nothing in the way of services, that may be the biggest scam of all. To American clichés come to mind: The first is, there ain’t no free lunch. The second is, pay now or pay later.

Sick and Stuck

The “high cost of low taxes” isn’t hypothetical. Our privatized healthcare system costs us every bit as much as the public healthcare systems and other developed countries. And the coverage we get is much worse.

Americans spend far more on health care, and receive far less, than any other developed country. The last study by the OECD showed that Americans paid $7,960 per year on average for health care, more than twice the $3,233 average for other developed countries . These figures are influenced by the enormous out-of-pocket costs Americans experience during catastrophic injuries, and also by our lack of effective cost controls – controls which would be very difficult for the private sector to put into place, even if it wanted to.

Despite our historically high levels of uninsured – a figure that should thankfully fall under the ACA – American physicians and facilities over treat their patients, leading to much higher utilization of high-cost procedures and is found in other countries. Use of MRI scanners in the US is more than twice the average for developed nations. We average 213 knee replacements for every 100,000 people, compared to the OECD average of 116. Cardiac surgeons performed 377 coronary angioplasties per 100,000, double the OECD average of 188.

Studies show that the greatest influence on rates of US cardiac surgeries, regardless of patient demographics or health status, was the number of cardiac surgeons per person in each region. (See the Dartmouth Atlas of Cardiovascular Health Care.) There are strong suggestions of a correlation between increasing overtreatment and the increasing privatization of medical delivery. (We discussed that phenomenon in “Sick Money: How Mitt Romney’s Bain Investments Are Exploding the Deficit and Hurting Our Health.”)

And yet, despite this overtreatment, our health status is worse. Life expectancy at birth in the United States is 78.2 years, compared with 79.5 years in other developed countries. (Japan’s life expectancy is 83 years.) US expected lifespan is, in fact, the shortest of any among the countries we normally think of as “developed.” Our infant mortality rate is 6.5 deaths per 1,000 live births, half again as high as other developed countries (a category which includes newly-developed nations like Turkey and Russia).


And that’s just healthcare. The “high cost of low taxes” can be found in many areas of our economy. We have a long-standing practice in this country of semi-privatizing retirement income through corporate pensions. But guaranteed-income pensions are becoming a thing of the past, and Social Security compares very unfavorably to pension programs and other developed nations.

And yet the privatization juggernaut, driven by our nation’s blind hostility toward taxation in any form, rolls on. Chicagoans may have enjoyed a slight reduction in their taxes after their parking meters were privatized. But they pay for it every time they park their cars. Americans may have enjoyed a slight tax break as the Federal government downsized its budget (although those breaks have largely gone to corporations and high earners).

The deficit frenzy recent years has cost nearly 1,000,000 jobs, according to the most conservative estimate, and 0.6% in growth to the GDP. Even those of us who are fortunate enough to have jobs are paying the price for that in lost prosperity. Meanwhile students pay the price in larger classrooms, hungry mothers and children pay in daily deprivation, air travelers in lost convenience – and the beat goes on.

Pushing Back

The anti-tax mantra is generally accompanied by a belief that innovation comes from the private sector, not government. But as economist Mariana Mazzucato points out, “it is ideology, not evidence that fuels this image.” Most of the great innovations in recent memory, including the computer chip in the Internet, were originally funded by the government.

It’s almost impossible to calculate the contributions these innovations and made to our personal lives – and they were financed by taxes.

And yet the anti-tax fervor continues. That’s a victory for corporations, the wealthy, and the Right in general. As Holland says, “Delinking taxes from the services they pay for has arguably been the modern conservative movement’s greatest success.” It’s a success that Democrats have done far too little to challenge. In fact, too many have chosen to reinforce this trope.

Joshua Holland has made an important contribution to the conversation. Let’s hope more people pick up on it in the weeks and months to come.

Crossposted at Campaign for America's Future.

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