Let's Capitalize on our Largest Advantage

As I've been reading about the immigration debate, one thing that's struck me is how often those who want to deport illegal immigrants (there are 12 million, good luck) and make it harder for them to enter this country use the economic burden argument.  I'm not sure it's warranted.

In a great interview with the Wall Street Journal, Bob Doll, the Chief Equity Strategist of BlackRock (the largest asset manager in the world), talked about the number one advantage we have over the rest of the developed world: population growth.  "Over the next 20 years, the U.S. work force is going to grow by 11%, Europe's going to fall by five, and Japan's going to fall by 17. This alone tells me the U.S. has a huge advantage over Europe and a bigger one over Japan for growth," he says.  Economic growth is determined by the size of the work force multiplied by productivity.  So Japan and Europe will have to realize much larger productivity gains than we will to achieve positive growth.  Advantage U.S.A.

One thing we know is that wealthier societies create fewer babies.  Whether that’s due to women in the workforce or better access to birth control there is a direct correlation between income per capita and birth rates.  But while Eurpore and Japan have a negative fertility rate, the U.S. actually boasts a fertility rate that accounts for about half of that 11% we're expecting.

The other half comes from the ace up our sleeve--we have become an incredibly diverse society.  So a member of any race, culture or religion can emigrate here and find a home.  We can use this enormous advantage to maintain positive population growth for decades and stay ahead of our homogenous competitors, even if our fertility rate falls.

If you see studies about the economic burden of illegal immigrants, be wary.  Some count the cost of educating their children, typically our biggest cost.  I've even seen studies that count children of illegal residents who were born here and are naturalized citizens. We spend money to educate all children, and from that we receive a long-term benefit.  We will benefit greatly from the immigrant children we are educating, just as we always have. 

Also, most studies focus on the lack of taxes this group pays, but that masks their true economic benefit as well.  First, this would be mitigated by making them legal.  Second, they help produce goods that improve the lifestyle of Americans and make us more competitive abroad.  Third, they are consumers pumping money into the economy. 

Finally, are they taking our jobs?  That’s tough to say, but we have been at what economists call “full-employment” during times when we’ve had millions of illegal immigrants.  My guess is that, similar to legal employees, their productivity and innovation create more opportunities and not less.

Our immigration policy should reflect these realities.  We clearly have people who want to be here to the benefit of our nation.  We need to let significantly more people live and work here legally.  We also need a path to amnesty for those already here.  Let’s stop shooting ourselves in the foot.

Taxes Need to be Part of the Equation

Between 2003 and 2008 we had positive quarterly growth between near 0% and over 6%.  The period also was marked by a long period of strong growth between the end of 2003 and end of 2006.  Yet during that time, we increased our spending rate by more than a percent, when the responsible fiscal policy would have been to decrease spending and/or increase taxes.   Revenues as a percent of GDP did rise about 2%, which had the deficit slowly decreasing, but this is after it was created from surpluses.  If the Republicans wanted to act on ideology, and make government systemically smaller, that was the time to do it.

Now, we need all the bullets we can muster because the investment community is all over our budget woes.  Our deficit and debt as a percentage of GNP are too high and an effective plan is warranted.  We are in a tight spot.  If the US cuts a ton of spending up front, bond investors will worry that the decreased cash in the economy will stall a fragile recovery.  

Unfortunately, we also have long-term confidence concerns.  Our government’s credibility when it comes to sticking to tough decisions is, well, mixed.  Treasuries investors don’t like mixed.  They like the AAA rating and historic impeccability.   So if Congress puts all cuts off until later, the lack of trust could cause the government (and consumers) to pay increased interest rates, which would make even deeper cuts necessary.

There is reason to believe that putting taxes into the mix offers a better way out of our fix (hey, that rhymes). There is a stimulative difference between what a billionaire and the middle class do with a dollar earned.  The billionaire is likely to invest some, if not all, of that dollar.  This raises asset prices, which has some benefit, but a lot of that accrues to already wealthy individuals or retirement plans where that money doesn’t get spent.  But the person from the middle class likely spends most or all of that dollar, so it goes directly to a business that employs people.  The only way to get at billionaires is through taxes, where the working class is more exposed to spending cuts.

Our taxation policies with corporations also offer some opportunities.  We have numerous loopholes in the books that encourage corporations to leave money overseas, and similarly we tax the repatriation of foreign earnings, which also encourages overseas investments.  Modification of these codes may have less of a near-term impact on our economy as some spending cuts, but they are off the table.  

These are only two examples, but it serves my point, which is to say that the no tax stance of Republicans is ideology run amok.  It’s like being anti-war while we’re being invaded.  I strongly encourage Republicans to recognize that at this point, US citizens would applaud the bravery in taking a detour off a very reckless path.

A Closer Shouldn't Come Close

It always amazes me when baseball pundits suggest a relief pitcher over a position player for Rookie of the Year, which is what I’ve seen a few times in writers’ picks for midseason NL Rookie of the Year.  In this case it’s Craig Kimbrel over Danny Espinosa.  Let’s have a look.

Kimbrel has arguably been the best closer in the National League for the first half—an amazing accomplishment for a rookie.  He currently leads the NL with 31 saves, has a microscopic ERA of 2.16 but shouldn’t even be part of the conversation.

Espinosa is currently hitting just .236, fourth worst among qualifying NL second basemen.  His defense is slightly below average at 2B (albeit a difficult defensive position).  Yet when it comes down to Espinosa versus Kimbrel, the latter should garner zero votes.  Why?  Because he plays just 22% as many plays at Espinosa.  The idea of giving Kimbrel the award is almost akin to giving the NFL ROY to a kicker.

Kimbrel has faced 201 batters this year.  Espinosa has 420 plate appearances.  So right there, Espinosa’s impact on the season of his team is twice as large. Espinosa also plays defense, however, where he has had 477 chances to make an out.  So Espinosa has been directly involved in a play where a batter either makes an out or gets on base 897 times compared to Kimbrel’s 201.

So why are the experts missing this?  I think one reason is the save.  This artificial stat rewards players who make the 25^th, 26^th and 27^th outs of the game rather than outs 7, 8 and 9.  In reality each half inning represents the same three outs.  Espinosa is involved in more than four times as many outs.

Finally, I guess I should mention why Espinosa is in the ROY discussion.  Only two 2B in baseball have hit more dingers than Espinosa’s 17, he had the most HRs by the All Star break by a rookie 2B ever, and he leads his team in RBI.  Espinosa for ROY!

If I Were President: An Executive Order for Families

This is a fun game I’ll play from time to time.  I’ll tell you an idea I have, and it has to be more legal than If I Were Supreme Commander of the World.  That would be more idealistic (as would If I Were Congress, because they make the laws).  If you have an If I Were President Idea too, let us know.

If I were president, I’d issue an executive order that all federal employees with children less than two years old be offered part-time work for part-time pay.  People could obviously continue to work full-time if they choose.  This would not change maternity leave laws, but if both parents are federal employees, it would only apply to one parent.  Certain necessary jobs would be exempted.  I’d also hope that this would spread to private corporations.  Many companies use pro-family policies as a way to lure the best and brightest.

This order would be great for women because it gives them more options.  Just like men, women are vital raising children and in the workplace, but the fact is that moms tend to sacrifice work for families more than dads.  With this order, women have another option in dealing with what has become an impossible balance for them.

The old saying is that money is power, and so this order also increases women’s power in our society and puts them on more equal footing with men.  This would allow women to continue to take on more of the burden of raising families than men, but not all of the burden, if they choose.  For a lot of women, working is a safe and empowering way to raise a family.

This order is great for families.  We can stick our head in the sand and say there’s only one-way to raise a family, or we can face reality.  While some women who would have stayed home may stay in the workplace, other women who would have worked full time are now spending more time with their kids.  And for people who need money but don’t want to or can’t leave their kids all day, I think this is invaluable.

I haven’t seen any studies on what something like this would cost.  That’s an important factor, but when we consider priorities, strong families should be near the top.  And by keeping more women in the workplace, their college skills will not atrophy, and we’ll benefit over time.  Oh and finally, I'd get re-elected because it's such a popular idea.

An Inspired Performance

On Monday, the Washington Nationals went into their game at Houston with an exhausted bullpen.  The relief crew had thrown 241 pitches over the past three days, and asking them to pitch much Monday night would be inhumane.

On the way to the game, Nats manager Davey Johnson asked that night's starting pitcher, Jason Marquis, to merely pitch a complete game, a feat that, in today's game, only the best accomplish more than a few times in a season.  Marquis responded with a dazzling eight-inning, nine-strikeout, one-walk gem.

He was clearly inspired to that performance, and he admitted as much after the game.  This leads me to two observations.  First, he must believe in this team.  And second, especially if the first is true, it makes me think less of the idea of trading him.  I get why we'd trade him--we have more pressing areas that we could fill by dealing a back-of-rotation starter--but if we can sign a good extension with a guy who has won at least 10 games five of the past six seasons and shows that level of character, the Nats should be looking only at deals that knock our socks off.

Democrats and the Value of a Tax Dollar

The focus of Washington (and much of the world it seems) is on raising the debt ceiling.  However, the reason why it's suddenly an important issue is because Republicans want to use the debt ceiling as a cudgel to deal with the deficit their way.

But as much as Republicans talk about deficit reduction and responsible governance, this is about spending.  This is an important distinction.  Republicans want to use the debt ceiling to advocate slashing spending to as low as 18% of GDP.  This is not about getting our books in order to please Moody's or the investment community, it's about ideology: smaller government because, and this is key, government is bad.

There is some reason to believe the GOP is winning this argument.  As David Brooks pointed out in the New York Times last week, Republicans would typically jump at the chance to reduce the deficit with four dollars in spending cuts for every one dollar in tax increases.  And yet many are scoffing at that prospect.  (We'll see if that holds up.)

How did it come to this?  Some will argue it's the power of Reagan, or that people are sick of Washington, or it's the bad economy, or it's misinformation (and certainly that's part of it).  But I think the answer is simpler: Republicans have gotten away with arguing a tax dollar spent is a dollar wasted.  The only path to a better America is less government.  The debate has become less about priorities and more about "out of control government."  I'll blame the Democrats for this.

When Mitch McConnell argues against raising taxes by asking why we'd give more money to the people who have proven to be poor managers, nobody is punching back.  I'm not arguing that government is perfect, but the private sector has similar problems.  How many times have you purchased a product that did not live up to its billing?  Have you every waited too long to speak to a customer service representative?  Has a stock you owned ever fallen because of irresponsible corporate governance?

In fact, we as a society effectively pool our resources for the greater good.  The government provides a suite of services that make the U.S.A. stronger and more competitive.  The merits of these endeavors should be, and are, subject to the highest level of scrutiny, but to wholesale say the value of a tax dollar is near worthless is just irresponsible.  So I ask Democrats, where are you?

When Republicans scream that the Consumer Financial Protection Bureau is a burden on banks, where are Democrats to remind people that lack of regulation in the consumer mortgage market was a strong factor contributing to the financial mess we're in?  When Republicans brand government as a job-killing waste of money, who is standing up for programs and regulations that keep our fisheries from collapsing, our poor children fed, oil out of our oceans and discrimination out of our workplace.

Ask any taxpayer, and they'll agree that each of these goals has value, and yet the thought of finding the proper revenue base to pay for these priorities is so easily fought off with, "don't tread on me".  Don't take more of my money and flush it down the toilet.

It's time that Democrats hold Republicans accountable, and make a clear case to the American people.  We have been cutting taxes at an unsustainable pace for the past 20 years.  We can keep your taxes at that rate, but innovative drugs will be slower to the market, coal plants will continue to spew mercury into the air, fewer kids will go to college, and most importantly, the middle class will shrink, as it has been. If people are OK with that, then we can race to the bottom of the tax revenue barrel.  My guess is people will instead be fighting mad.

About Policy and Baseball

I have been following politics and policy for, well forever, but it's been a part of my career for about 15 years.  So I have a lot on my mind that I want to share.  I dedicate thought and energy to baseball too, so I'll also write about that (and probably other things too).

I write about government as a voter and about baseball as a fan (of the sport and specifically the Nationals).  You may not be into everything I write, so read what you want, but I do try to make everything accessible.  I don't work with an editor, so I'll apologize up front for that. 

My hope is that this becomes a place for people to discuss, debate, learn, speak their mind and have fun.  I hope to have unencumbered discussion, which is always aided by mutual respect.

If you have any comments, requests, accolades or insults that are directly for me, send them to mike.lee.hall.dc@gmail.com.

Thanks for tuning in.

Mike