Monday, November 21, 2011

Why the Supercommittee Failed

Woodrow Wilson once observed “Congress in committee is Congress at work.” But what was once a keen observation is now little more than an anachronism describing a Congress that no longer exists.  In theory, the committee structure is crucial to a functioning Congress. By dividing the work among specialized “mini-congresses” the committee system allows Congress to become greater than the sum of its parts. Committees allow Congress to overcome the challenges of managing a diverse and numerous body through specialization and structure. Perhaps of greater import, committees offer the promise of deliberation, moderation, and compromise as a multitude of voices contribute to the crafting of legislation. In theory…

The joint select committee on deficit reduction, or supercommittee as it is commonly known, failed because it represented an attempt to return to a congressional approach to legislating that is foreign to most current members and party leaders, especially in the House of Representatives, lawmaking by committee.
In reality, the committee system in Congress has become increasingly irrelevant, especially with regard to what might be considered major or controversial legislation. Instead, most major policy decisions are made, not through a process of deliberation, but through the concerted efforts of party leadership and often with the total exclusion of not only minority party members but most of the rank and file membership of the majority party as well.
How did the committee system die? It was actually an accidental death caused by commendable efforts to open Congress and empower individual members. In the 1970s, a series of internal Congressional reforms, beginning with the Legislative Reorganization Act of 1970, sought to decrease the tremendous power held by committee chairs. At that time, chairmanships were determined by seniority and the most senior members came from the safest seats. For Democrats, the majority party of the time, that meant seats held by conservative Southern Democrats.  An increasingly liberal Democratic party bristled under the agenda control exercised by Southern Democrats.
In response, a series of institutional and party reforms were enacted to reign in committee chairs. Chairs were made subject to secret ballot approval, committee hearings were opened to the public, subcommittees were given autonomous control of agendas and resources, minority party members were given access to staff and resources.
The result of these reforms, however, was a Congress more difficult to manage. Though southern Democrats lost control of the agenda through committee chairmanships they could work with newly empowered and emboldened minority party Republicans to take advantage of arcane rules of debate and amendment to influence legislation.
In response, Democratic members instituted additional reforms, but rather than further empowering members the new reforms strengthened party leadership in general and the Speaker of the House specifically.  The Speaker was given the power to determine the majority party make-up of the House Rules Committee, a committee empowered to determine the rules of debate and amendment for nearly every piece of legislation brought to the floor. The appointment of committee members was turned over to a new committee mostly consisting of party leadership. The Speaker was also given the power to refer legislation to more than one committee. When Republicans claimed Congress in 1995 they continued the terk away from the committee system. The net effect of these changes was a severely neutered committee system. Committee chairs were increasingly little more than arms of the party leadership and committee consideration of legislation was increasingly more a luxury than a necessity.
The Senate is a bit different. Senate majority party leadership has much less power than House leadership, but even in the Senate committees are increasingly bypassed. Though Senate rules have long made it rather easy to bypass a committee it was once rare for committees to be bypassed. With regard to major legislation, committees were bypassed only about 7 percent of the time from the 1960s-1980s. In more recent years that has risen to over 40 percent - rivaling the House.
In both chambers, when committees are allowed to do their work, substantial postcommittee adjustment is now common. During this stage of the process, sometimes substantive changes are made to legislation after being reported by committee but before being introduced on the floor. These changes are typically made by party leadership and opportunities for full member consideration and debate are then restricted on the floor. Indeed, fully 40 percent of major legislation has been subject to such postcommittee adjustments in the House and Senate in recent years.
Increasingly, the true work in Congress is performed not by committees with expertise on the issues considered, but rather by party leadership simply pursuing a partisan agenda. It is a system where committee members and rank and file members are increasingly irrelevant in every stage of legislating except the very last stage – voting. And that voting, on major and controversial measures, is typically along party lines.
So when Congress voted to create the supercommittee with equal chamber and party membership tasked with identifying at least $1.2 trillion in deficit reduction over ten years, it was voting for failure. In the House, and to a lesser extent the Senate, the legislative process is dominated by majority party leaders crafting legislation that will secure bare partisan majorities. In a Congress where the House is controlled by Republicans and Senate by Democrats no supercommittee was going to succeed where majority party leadership had failed  - in crafting legislation amenable to opposing partisan majorities in each chamber. Perhaps that could have been accomplished in era when committees still mattered, but that era is a distant memory.

Friday, November 11, 2011

Occupy Maryland: Where Millionaires Play and the Working Class Pay

Congratulations Maryland! According to a story in today's Washington Post, the Free State leads the country in Millionaires. Approximately 7.22% of Marylander households are part of the exclusive millionaires club.

There are about 2.4 million households in Maryland so that translates into roughly 173,000 millionaire households. I'm glad this information was released, because the state is currently considering, and Governor O'Malley appears to be supporting, a series of proposals to increase any number of taxes - the gas tax, the flush tax, car titling and registration fees, and the auto emissions testing fee. Indeed, the one tax that O'Malley does not seem interested in increasing is the income tax.

A few months ago, O'Malley accused the GOP of "worshipping" tax cuts for the wealthy. That may be, but it's clear here in Maryland that O'Malley is happy to bow down before the alter of tax increases on the poor and working class.

Now the data on millionaires is specific to families with at least $1 million in liquid assets, but let's consider questions of income in Maryland - afterall, the higher your income, the more likely you are to accrue $1 million in liquid assets. The median household income in Maryland is $69,000 a year. Under Maryland's tax schedule, the median household would face an effective tax rate on 4.67%. A household earning between $500,000 and $1 million would face an effective tax rate of 5.2%, earn over $1 million and your effective tax rate slowly approaches a maximum of 6.25%.

Nationally, the median income is $50,000 a year. Under the current federal marginal tax rates, the median household would face a tax burden of $6,650 - an effective tax rate of 13.3%. A household earning $1 million dollars would pay $290,000 for an effective tax rate of 29%.

In Maryland, the effective tax rate imposed upon a millionaire is roughly 11% greater than the effective rate charged the median household. Nationally, the effective tax rate assessed on a millionaire is 118% greater than the rate assessed on the median household.

Compared to Maryland's current marginal income tax rates, the current federal rates (signed into law by George W. Bush) are far more progressive.

So before the state considers placing an even greater tax burden on poor and working class Marylanders, lawmakers may want to consider making the state's income tax more progressive. Perhaps the burden of supporting the state should rest more heavily on those who can best afford to support it and who best benefit from the services and stability the state provides.

As pointed out in a prior post, according to the Congressional Budget Office, the bottom 20% of wage earners pay nearly 1% of their income on excise taxes on gasoline and motor fuel alone. By contrast, the top 20% pay only 0.3% of their income on such taxes. When all federal excise taxes are considered, the proportional burden placed on the bottom 20% rises to nearly 2.8%, while the burden placed on the top 20% is only 0.5%. A 3% burden compared to a 0.5% burden... that's the very definition of a regressive tax folks.

And lest we forget, Maryland's sales tax was already increased by 20% under O'Malley's watch and an analysis conducted by the Maryland Budget and Tax Policy Institute determined "Increasing the sales tax rate has a seven times greater impact on the lowest income families compared to the highest income families." Further with regard to state and local taxes the poorest 20 percent of Maryland families paid nearly twice as much, as a percentage of their income, in taxes as did the very richest Maryland families.

No wonder Maryland tops the nation in millionaires, what millionaire wouldn't want to live in a state with a nearly flat income tax and an increasingly regressive tax burden shifted to the poor? Who wouldn't want to tow their yacht to the Bay on roads and bridges disproportionately funded by the excise taxes and fees imposed on commuters, construction workers, single parents shuttling between school drop-offs and two part time jobs, or the unemployed driving to job interviews?

Perhaps the thinking is millionaires can pack up and move if their taxes are increased, but the poor are stuck here and will have no choice but too stay and pay? That's certainly not progressive thinking. Perhaps it's time to occupy Annapolis?