Brian Lehrer: It's the Brian Lehrer Show on WNYC. Good morning, everyone. April is Ask The Mayor tryouts month on the Brian Lehrer Show, and later this hour we'll have tryout number one, my questions and yours for New York City mayoral candidate Maya Wiley. Scott Stringer Wednesday, by the way, but Maya Wiley with Ask The Mayor tryout number one in about a half-hour. Also today, the business of prison food. Who profits off what incarcerated people eat, and how the private contractor's profits determine how much, how healthy, and how tasty or not?
Dr. Syra Madad later in the program to clarify the CDC's latest changes in their guidelines for who can safely travel and the safety of people those travelers stay with at their destinations. Also in that segment, we'll invite your calls if you went out to the first weekend of live music and theater coming back to some venues in New York City, proof of vaccines or negative test status required. We have many interesting things coming up, I think, and we begin with this. The really interesting Washington Post columnist Catherine Rampell on the Biden infrastructure bill, why it seems to pay for itself eventually, but Catherine Rampell would rather a tax hike on a few more people to pay for it more quickly.
Also, how much of the Biden infrastructure bill is about infrastructure. This is becoming a primary talking point for Republicans who oppose the bill. For example, here's Missouri senator Roy Blunt yesterday, on ABC this week with George Stephanopoulos.
Senator Roy Blunt: There's more in the package, George, for charging stations for electric vehicles, 174 billion, than there is for roads, bridges, and airports, and ports. When people think about infrastructure, they're thinking about roads, bridges, ports, and airports. That's a very small part of what they're calling an infrastructure package that does so much more than infrastructure.
Brian Lehrer: Senator Roy Blunt on ABC this week. Here's Biden's Transportation Secretary Pete Buttigieg responding to critiques like that, on Fox.
Pete Buttigieg: We're talking about roads and bridges. We're talking about rail and transit, we're talking about airports and ports. As you mentioned, we're talking about things like the grid. I don't know why anybody would say it's a mistake to invest in the grid, after what we just witnessed in Texas. We saw US citizens living in Texas, melting snow in their bathtubs to be able to flush their toilets in the United States of America. That is unacceptable. So yes, infrastructure includes energy infrastructure. You know what else is part of infrastructure now? Broadband.
Even though it's a little outside my lane on the transportation side, I'm proud of the fact that we're going to finally get broadband out to every American because we know, especially in rural areas, how much that's cutting people off from opportunity.
Brian Lehrer: There's Pete Buttigieg. A Washington Post fact check concludes that if you count transportation and broadband and utility grid investments, 24% of the bill goes to traditional infrastructure. 24%. If you add housing, schools and colleges, childcare facilities and federal buildings, including VA hospitals, it's 54%. Now, that still leaves a lot on what they're calling the human infrastructure or human services side, but a majority of the money can be called infrastructure spending in the brick and mortar plus broadband sense, says the Washington Post.
With that, we welcome Washington Post syndicated opinion columnist Catherine Rampell. She's also a political and economics commentator at CNN, and special correspondent for the PBS NewsHour. She even used to be a theater critic. One of her recent columns is called, I knew I'd miss Theater When Broadway Shuttered. I Didn't Know I'd miss Audiences. Hi, Catherine. Always great to have you on. Welcome back to WNYC.
Catherine Rampell: Great to join you again.
Brian Lehrer: Before we get into all this economics and infrastructure politics, you want to give us a quick thought on what you as a theatre person have missed about audiences, not just the place?
Catherine Rampell: Sure. I knew in advance, I think, that I would miss the diversion of theater and the ability to exalt in human talent and beautiful singing and exuberant dancing and great monologues and writing and all of that. I think a year ago if you had asked me whether I would miss audiences, I would have laughed in the sense that audiences probably only really registered with me to the extent that somebody like misbehaved around me. They crinkled a candy wrapper or they coughed really loudly, or they obstructed my view or what have you.
I think I didn't really appreciate at the time what a social experience it is to be a member of an audience. I just took that for granted,, that when you're there in the theater, the intrinsic part of the experience or an intrinsic part of the experiences is laughing along with other people and sobbing along with other people and sometimes having a completely different interaction or reaction to what's going on on stage than your fellow theater patrons and then arguing with them during the intermission. I think that there's really a value there in that collective experience and watching the performers play off of the audience and the audience members feed off of the energy of each other, that I now am much more cognizant of.
In the same way that I think I've heard other people who are sports fans talk about how they miss going to live athletic events, in part because they get to cheer along with fellow fans or boo or what have you. That social experience is really valuable in a way that maybe we took for granted before.
Brian Lehrer: Indeed, and music as a communal experience too. Again listeners, if you were among the people who tiptoed back into the first weekend of live music and theater at a limited number of venues in New York over the weekend, with your negative test or proof of vaccines in hand, we will take some calls later in the show on how that went. Sports too, if you went to one of the opening games on opening weekend at Yankee Stadium. Meanwhile, your column last week was headlined How Biden's Tax Pledge Undercuts his Own Initiatives. Want to take us there?
Catherine Rampell: Sure. Biden has proposed a number of new visions for what government should be doing, not just on infrastructure. You mentioned infrastructure earlier in the show, but he's also talked about expanding the social safety net, having a more robust welfare state, providing greater subsidies for things like child care, paid family leave, et cetera.
I think my own politics are that I think these are worthwhile initiatives for the most part, but to the extent that the conversation has been about, "Biden is presenting a new vision of government, one in which it's more new deal like, or more great society like, or bringing us back to the pre-Reagan era where big government could be a solution and not just the problem."
I think that's only half true, in the sense that there is a lot of popular support for a more robust role for government for the shared benefits of more generous government services, but not so much robust support for the shared sacrifice, or at least shared financial responsibility for paying for those kinds of expansions of government. At least that's the calculation that Biden seems to be making, because he has restricted the pay force. He said that he wants to pay for the things he wants to do, or at least partially. He's restricted that to corporations and the wealthy.
My own view is that, yes, corporations and high-income households should be paying more in taxes. They've gotten a lot of tax cuts over the years, and inequality has grown. Those two things combined suggests that they're shouldering less of the burden than they could, but if you look at the magnitude of the kinds of things that Biden wants to do, it's going to be really hard to actually fund all of these things solely on the back of higher taxes for the wealthy.
Brian Lehrer: For example, Obama defined wealthy, you say, for tax rate purposes as $250,000 a year or more. Biden defines it at 400,000. You know we can get lots of calls from families raising kids who will say, "Yes, I'm doing well if $250,000, but I'm upper-middle class, not rich in New York, or New Jersey, or Connecticut, or San Francisco, or LA's cost of living. What would you say to them?
Catherine Rampell: Well, look, it is true that it's more expensive in New York or in San Francisco when or other places with a high cost of living, but objectively speaking, those people are still towards the top of the income distribution, even in those places. There is a fraction of people who make a ton more money. If you're comparing yourself to the Joneses, if the Joneses around you or hedge funders, you're not going to feel as rich. Just look at the data, that's the case. I think the argument that I would like to hear Biden making, essentially, is that these programs are valuable and we will make sure that the very high-income people and corporations pay their fair share, which we don't think that they've been doing et cetera.
We should all be invested in the financial success of these programs. If we want to have a welfare state that looks more like those in Scandinavia, say, you look at how their tax system works. In those places, in Sweden, in Denmark, it's not just that the tax rates are higher, but they're much more broader base, that even the middle class pays higher tax rates there than they do here. The middle-class here actually pays relatively low tax rates compared to many other industrialized countries. That's the trade-off that we're making. If you want more government services, yes, make sure that the very highest income people pay their fair share.
People at the $200,000 mark, the $250,000 mark, maybe even the $150,000 mark, they will probably need to foot some of the bill as well, through some broader base taxes. That doesn't necessarily even mean income taxes. There are other reasons why imposing this constraint is probably a bad policy move, not just for revenue, including that. For example, if we really want to get serious about climate change, there's almost unanimous support among economists for the idea of a carbon tax as the most effective way to reorient our economy towards more climate friendly technologies.
If you say nobody who's making under $400,000 can pay a dollar more in taxes, you've effectively ruled out a carbon tax or even a gas tax, which the Biden administration has said that they're not considering right now, even though did have bipartisan support and has funded infrastructure in the past. Still does. I think there are a lot of reasons to say, "Look, we're all in this together, we should still have a progressive tax system, but if you want a more robust government, you're going to have to pitch in a little bit more. I know you don't feel rich, but that's just how the math works out." There are just too many constraints to satisfy.
Otherwise you can say, "Maybe we'll just won't pay for it and that may be where we end up." As I said, the Biden administration, I think to its credit, has said, "We are going to try to pay for these things."
Brian Lehrer: Listeners who wants to engage on rightsizing taxes with Washington Post columnist, Catherine Rampell, or anything else relevant to the infrastructure bill? 646-435-7280. Our phones are open for anyone, any political point of view. 646-435-7280, or you can tweet a comment or a question @BrianLehrer. Catherine, what about corporate taxes? Biden is trying to be a moderate here too, by his lights. Trump lowered the corporate tax rate from 35% to 21%, Biden would bring it back half way to 28% and add what he calls a corporate minimum tax and a tax on overseas profits. What do you think of the corporate tax changes that he's proposing?
Catherine Rampell: I think as a policy matter and a political matter, there're pretty strong cases for doing this. The statutory tax rate before was probably too high. Statutory tax rate, meaning what the books said corporations had to pay, 35%. That was higher than what companies in other countries pay. However, there are so many loopholes and deductions and complications in the tax school that their effective tax rate was actually much lower than that. I think there was some value to bringing down the statutory tax rate and broadening the base, simplifying it.
Unfortunately, in my view, the Tax Cuts and Jobs Act under former President Trump lowered the rate, but didn't really do much in the way of base broadening. I think there's value to bringing that rate up, ideally doing some simplification. As the Biden folks have argued the rate that Trump delivered was actually lower than a lot of companies were even asking for. Maybe there's some happy middle ground here. As I said, there're not just revenue reasons for doing this. I'm not terribly worried about the scaremongering from Republican politicians that if you raise the corporate tax rate that'll destroy jobs, et cetera.
I think the evidence on that is not particularly strong, at least within the range of tax rates that we're talking about here. Besides the policy merits, politically it is definitely a slam dunk. As I said, the idea of raising taxes on higher income people and corporations is extremely popular, has long been extremely popular. This is true even among Republican voters, not for Republican politicians, of course. I think that that is a fair place to begin to pay for many of these initiatives, even if I think ultimately if we're going to make a more permanent structural change to the role of government, it will probably require a value added tax or some other broader base tax system.
Brian Lehrer: By the way, I don't think that you've written about this that I've seen, but you happen to know how a corporate minimum tax would work? That's in there and I'm sure it's a very interesting concept to a lot of our listeners. We do hear these outrageous horror stories sometimes about this mega corporation or that mega corporation that wound up having a zero corporate income tax bail because of the way they can manipulate the books legally. Do you know what a corporate minimum tax looks like under Biden?
Catherine Rampell: I don't know exactly what it would look like, and I'm not sure that they've put out sufficient details. One of the challenges with any policy proposal like this is what gets defined as income. That's where you can play a lot of games with the tax code, whether you're a corporation or an individual. If you're a mega corporation, you probably have a pretty deep bench of tax attorneys and accountants on call who can help you legally manipulate the books. It may be worth pursuing. I think it's going to be more complicated than people think to say, "We're going to have a minimum tax rate."
If you have a minimum tax rate, I'm just making this up, of 20% or something, but a corporation says, "We lost money last year," and they can legally get the math to work out that way then 20% of zero, because they're claiming no income, is still zero. I think it's going to be challenging, but I would defer to the tax practitioners within our listenership who may have more specific guidance on that. That's just my instinct.
Brian Lehrer: My guest is Washington Post columnist and CNN political and economics commentator, and PBS NewsHour special correspondent Catherine Rampell, 646-435-7280. To go one level deeper on this before we take a few calls, you cite the comparisons we're hearing between Biden's ambitions for a new economic paradigm involving government to FDRs in the '30s, or LBJs, President Lyndon B. Johnson's, in the '60s. I'm curious how you start to compare them. You heard in my intro about the percentages going to infrastructure per se, in the old sense, 54% by the Washington Post fact checkers' most generous math, leaving almost half that's not, which will likely go more to what's called human infrastructure or the care infrastructure or fighting economic inequality through family leave and home care and safety net programs and other things.
It's not at all to say that's bad, but is it fair and accurate for him to call this an infrastructure bill as opposed to a new paradigm bill or something more sweeping?
Catherine Rampell: Depending on who was making the talking points, sometimes they're referring to it as an infrastructure bill. Sometimes when I've had conversations with White House officials, they say it's a jobs plan. "It's not about infrastructure per se, it's a jobs plan." I think they're using whatever branding they can. On the point of the criticism that this is not all infrastructure, and this is supposed to be thematically related to infrastructure, as a political strategy, I think there are some weaknesses in it. One is that a number of the things, the particular priorities that Republicans have called out as not being "infrastructure" because they're not physical brick and mortar, transportation systems, roads, and bridges, et cetera.
Some of those things Republicans themselves have in the past referred to as infrastructure and endorsed. For example, the governor of South Dakota made some comment about, she was shocked by how much money doesn't go into infrastructure saying, it goes to housing and pipes. In the past she has endorsed upgrading and delighting plumbing systems pipes as "water infrastructure." Rob Portman, who's a Senator from Ohio, had slammed Biden's inclusion of workforce development as an initiative that he said was a far cry from what we've ever defined as infrastructure.
A couple of years ago, he sponsored a bill called Building U.S. Infrastructure by Leveraging Demands for Skills, the BUILDS Act. He said at the time something to the effect of, "If we're going to invest in our nation's infrastructure, we need a skilled workforce." Some of the talking points are going to present some problems for them. Then the other issue is, yes, there are some things in here that really are a stretch, like piece of this elder care services piece of this, which is a little undefined in the proposal. I think it's harder to make the case, or it's more of a stretch to make the case that that looks like what we traditionally call infrastructure.
It's still really popular, and if you look at polling on that, even if it doesn't count as infrastructure, people still support it. I'm not sure that particular critique is going to have a lot of purchase. I spoke with a democratic pollster yesterday who told me, I wrote down, "If you're going to tell me that the way that the Republicans are going to try to capitalize on this is by going negative on the Democrats for trying to improve eldercare I say, bring it on." It may be technically true that that's a stretch, but if people still like the idea, then maybe voters won't care.
Brian Lehrer: He hasn't formally introduced the eldercare piece of it. That's coming later this month so that should be very interesting.
Catherine Rampell: No actually, that's what's confusing about it. The American jobs plan does include money for home-based eldercare disability care services. There is a separate bill, or proposal I should say, I don't know that there's legislative text, coming later this month that focuses more on other parts of the care economy like childcare. I don't know why they decided to package the eldercare stuff with infrastructure, because it seems like it would make them vulnerable to this critique. As I said, if voters support it then I don't know that it really matters whether to put it in column A or column B.
Brian Lehrer: Obviously I missed that piece of it, so I stand corrected by you. Do you know if more elderly people than currently would qualify for subsidized home health aids or what that actually means?
Catherine Rampell: I don't think they've been very specific about what the eldercare piece would do. They just say that they would have funding for it but I don't want to misspeak. It may be that they expand who was eligible. I know that there was a lot of money for caretaking, eldercare related caretaking. It's $400 billion in this particular proposal, but I don't exactly know how it's spent.
Brian Lehrer: 400 billion out of the 2 trillion. That's a good chunk of it. Obviously listeners, we will follow up on that probably with its own segment as soon as we can wrestle up the details. Jennifer in Charleston, South Carolina, you're on WNYC with Washington Post columnist, Catherine Rampell. Hi Jennifer.
Jennifer: Hi Brian. Hi Catherine. Thank you so much for taking my question. First I have to say I'm a Democrat, practically a socialist. I absolutely believe in paying my fair share. I absolutely believe that this is a way for just and fair society to exist. Paying more in taxes doesn't bother me, but my husband and I live in New Jersey and we make a low six-figure salary. By all intents and purposes, we're doing quite well, except we're also burdened with the cost of living in New Jersey and we live literally paycheck-to-paycheck. I have to make very difficult decisions about what to buy for my family. It's tough.
I would be willing to pay more, but I just wondered if there wasn't a possibility of including the variable of cost of living in the calculation of income tax. I think you would get a lot more buy-in from middle-class people even, and upper middle-class people, in lowering that income threshold from 400,000 to 200,000 or something like that, or 150 or 100, if there was that variable. If you're in a small town in the Midwest and you make what we make, you're doing a lot better than we are, probably.
Brian Lehrer: It's a great question. Have they ever tried to index for cost of living in different parts of the country and federal tax rates, Catherine?
Catherine Rampell: I'm not aware of a serious legislative proposal, by which something that closely nearly made it into law that did that, there may be something.
Brian Lehrer: Do you think it could be done?
Catherine Rampell: I think in theory it could be done. It would make the tax code more complicated, of course, right? People are paying different rates depending on which side of some geographic divide they live in and I don't know how that would shake out politically. I think it's an interesting idea. We do index other kinds of things for cost of living in the tax code. For example if you're traveling for business and you take a per diem on your expenses that, I believe, is still adjusted based on the cost of living of where you're going. If you're going to rural Ohio versus San Francisco, the amount you can deduct is different.
It's not like a completely novel concept. I'm not aware of a nearly successful legislative proposal that did that for the marginal tax rates themselves, but maybe there are tax historians out there that can prove me wrong. I haven't asked about so I don't know.
Brian Lehrer: Jennifer, it's a great question and tomorrow we're going to have another segment on the infrastructure bill with Long Island and Queens Congressman Tom Suozzi. His big issue is related to this in a certain respect. He wants to make sure that the limit on state and local income tax deductions for the federal tax, the so-called salt tax deductions, get put back the way they were before Trump. Otherwise, he says he won't vote for the bill. That's a big ball of wax on its own and we'll talk about that with Congressman Suozzi, but I'm going to try to put your question to him tomorrow because it's very, very related to what I think he's interested in, in his high cost of living, but high income district on the North shore of Queens and the Island. Jose in Queens, you're on WNYC. Hi Jose.
Jose: Hi Brian. Hi Catherine. Thanks for taking my call. I just want to really quick go back to the conversation on raising the tax rate. I don't necessarily believe that it's an issue about bringing that rate up. It's more of people's preconceived notion that the US government is labeled as being very inefficient. The conversation on those Scandinavian countries, they're smaller in scale and they were brought up with the idea that their government works very efficiently, and in a lot of ways they do. Compared to that here, Republicans have done an absolutely suburb job, well at least in their eyes, at chipping away at people's trust in government.
I think if we could do a little bit of a better job at fixing that relationship between people and government, because we're one and the same essentially, that would go a long way. I think the last caller about indexing those tax rates by state, that was also an awesome point which I totally back.
Brian Lehrer: Jose, thank you. Catherine, how about on that transparency piece, for example?
Catherine Rampell: I think one of the challenges historically in the US is that we have a lot of distrust in government. That has increased over time and that has been linked to budget cuts for government, that in some cases become self-fulfilling prophecies. That if you cut funding for the postal service because people think the postal service isn't a good use of money and postal service quality gets worse, then that justifies more cuts. It becomes a vicious cycle. You have two challenges here. One is to actually improve the functioning of government and one is to convince people that it is worth improving the functioning and efficiency of government.
Those are both very challenging tasks because when you're dealing with a big bureaucracy ringing out so-called waste fraud and abuse, is easier said than done. Also, because there has been this PR war against government as a possible source of solutions for so long, that even if you do have a more efficiently run government agency, if people don't trust that it's efficiently run and then that can, you know.
Brian Lehrer: I think that's part of the Biden project, being the new FDR, the new LBJ, is to show people that government is having a measurable impact and noticeable impact on their lives for the better and that it would shake out over time. Time will tell. Let me sneak in one more for you. We're almost at the end of the segment, but Katie in Manhattan has a question that several people are calling with. Katie, you get to ask it, but we've got about 20 seconds for you. Hi there.
Katie: Good morning. Love you. Anyway, it's the issue that just follows on what you just said about the IRS has been hollowed out, is does Biden have a specific plan to resurrect that and to get some smart lawyers who can out-fox the corporate lawyers who now get away with everything?
Brian Lehrer: Katie, thank you so much. Is it true, Catherine, as you understand it, that the way Trump hollowed out the IRS actually affects the ability to collect taxes?
Catherine Rampell: Yes and no, it predates Trump. Over the last 10 years the IRS's budget has been hacked away at. This basically goes back to, I want to say 2011 or so. It's rise of tea party era and partly connected to that scandal that you may remember about auditing groups that had patriot in the title or what have you. That was the excuse. The IRS has been hollowed out, its budget has fallen. I think something like 20% in inflation adjusted terms, I forget the exact number. They've lost a lot of their enforcement officials. Their auditors, for example, the people who specialize in auditing complex tax returns in particular, which are the tax returns usually filed by large corporations and high income individuals or individuals or households.
Audit rates for the wealthy and for big corporations have plummeted. As a result, we are probably leaving a lot of money on the table, just because if you are a tax cheat and you are actually breaking the law, your chances of getting caught have gone down. The tax law has enough gray areas that even if you're not outright cheating, but you're taking a really aggressive position on what counts as income, or what's a valid deductible expense, et cetera, you know that the IRS is outgunned and they're probably not going to audit you, or if they do they're just going to be outmatched because you have tons of tax attorneys at your disposal. All of these things put together suggest that we're leaving a ton of money on the table.
The size of the tax gap was already quite large. The tax gap, meaning the difference between what we're supposed to be collecting and what the IRS is actually collecting, was already quite large. It's probably gotten larger. There's some research suggesting that there's probably more money being hidden off shore by rich people than we even thought. All of those things put together suggest that, yes, this is a great example of like a self fulfilling prophecy. You cut the IRS, they become a less effective enforcement and revenue collection agency and you end up losing out on money in the process.
The treasury has estimated that every additional dollar that could be spent on the IRS would probably collect another $6 in revenue, just in direct revenue by catching people who owed more than they actually paid, and would probably have some deterrent effect as well. That's harder to measure because people might be more afraid of getting caught. They'd be less likely to cheat or again, take really aggressive tax positions in the years ahead. Great way to get free money especially, but also a great way, I think, to increase public morale about the tax system.
If Americans feel like the very wealthy and corporations are not paying their fair share, which is generally what the polling data show, they are going to be more averse to having their own taxes raised because they say, "How come those guys seem to be getting away with murder? How come that big company is paying nothing in taxes, or that rich person I suspect has been cheating on his taxes and hasn't been ponying up? Why should I have to pay my fair share?"
Brian: There we leave it. Always an interesting conversation with Washington Post syndicated columnist, Catherine Rampell, who was also a political and economic commentator at CNN and special correspondent for the PBS NewsHour. We also got a couple of good ideas for follow up segments there. One to talk about how that 400 billion in home care assistance for the elderly on top of what we spend now would be spent and who that would actually provide home care or other services to. Also what a corporate minimum tax actually would be. We will follow up on those things. Catherine, as always, great conversation. Thanks a lot. Thanks for joining us today.
Catherine: Anytime, thanks for having me.
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