Our public school system is failing too many students, not in terms of grades but in terms of achievements.  Too many teachers are too lazy or fearful to give students D’s and F’s.  Instead, the system supports advancing pupils all the way through high school when they can’t even read at an 8^th Grade level.  The blame shouldn’t fall on teachers as individuals.  The problem starts with a culture that talks about “self esteem” as if it’s given to children with “We’re All Winners” stickers instead of earned through hard work.  It continues with the failure of parents to teach their children values. How can we fault teachers for failing to give students adequate math skills when much of their time is spent trying to make their classrooms quiet and safe?

Our private sector discriminates against the poor.  It does so by allocating scarce goods and services based on incomes and prices.  Our public sector also discriminates against the poor.  It does so by not making school choice the law of the land.

School vouchers are a good tool to advance educational opportunity at the early levels where research shows we get the most bang for the buck.  Vouchers are patronizing in the sense that they try to control parental spending rather than just raising incomes, but there are plenty of good precedents for this kind of guide to expenditures.  Food stamps, subsidized heating and housing, sub-prime mortgages, and health-insurance vouchers spring immediately to mind.

In the case of education, vouchers have the other salutary effect of encouraging good competition – the kind that improves quality.  Public schools in low-income areas without voucher and scholarship programs have a virtual monopoly in their market. Children either attend them or drop out.  Incentives for innovation and other improvements are muted.

For most of the 21^st Century, Congress has been discussing school choice.  Their first debates over “No Children Left Behind” (NCLB) occurred in 2001.  The house voted 273 against, 155 for, an amendment to give students scholarships so they’d no longer be trapped in schools that were both high in danger and low in academic performance.  The Senate rejected another pilot program for scholarships with a vote of 58 against, 41 for. Both amendments would have passed if Congressmen who sent their own children to private schools voted to make this choice a possibility for people without their privileges.

Six years later, Congressmen were sending their children to private schools at more than four times the national rate. Their higher than average salaries – $165,200 a year – meant that they could afford this extra expense.  The low quality of D.C. public schools also explains the statistics – 37% of our House Reps and 45% of our Senators in the 110th Congress chose private over public education for their children.

Liberal Democrats Teddy Kennedy and Hillary Clinton were among those who enrolled their own children in private schools.  How can we blame them or any other politicians for wanting the best education they can afford for their children?  We can’t. What we can – and should – criticize them for is not supporting government programs to give the less financially fortunate similar choices.  Kennedy and Clinton we amongst those most ardently opposed to expanding educational opportunities for other children. Kennedy even led an anti-voucher rally in 2004.

Concerns articulated by some politicians are that parents don’t know best for their children, that support for funding public education will wane as more of the population opts out of the system, and that public schools will do worse and worse as the “better” children and their more ambitious parents abandon them.  The first is appallingly arrogant.  It is also properly a slippery slope that should lead to places none of us would be openly willing to go: needing a license to become a parent.  The other two focus on possible costs and ignore definite benefits.  They also underline the hypocrisy of many Congressmen who preach one thing and practice another.  How with these views can they justify pulling their own children out of the system?  “Taking advantage of the system while working to fix it?”  Well, then, why not let those of lesser means take this same advantage while the work gets honestly and vigorously started continues with this energy?

The 2004 event that inspired Kennedy’s rally began a year earlier with the passage of “The D.C. Choice Incentive Act of 2003” (H.R. 2673), which passed by only one vote (209-208).  The vote was partisan, with only 3 Democrats in favor and only 15 Republicans against the new program.  The Senate then approved the program, 64 to 28, as part of an omnibus spending bill, H.R. 2673.  The first federally funded voucher program, it was helping more than 1,800 students by 2007.  Coming from families with average incomes of $21,100, they were able to attend any of 66 participating private schools in D.C. because of the “Washington D.C. Opportunity Scholarship Program.”

No longer.  When President Obama signed his $450 billion spending bill last December, he effectively dismantled the program.  Like members of Congress, President Obama has the salary and private wealth to choose private education over public, and he made this choice for his two daughters.  How dare he — and so many other elected representatives making the same decision today – deny it to parents in lower economic classes?  The unspoken explanation probably starts with this fact: the teachers union is the single largest contributor to federal-level political campaigns in America.

Memorial Day became a national holiday by formal declaration on May 30, 1868.  Originally named “Decoration Day”, it followed and expanded local traditions of setting time aside for quiet reverence while decorating the graves of the Civil War dead.

Here is General Order No. 11:

The 30th of May, 1868, is designated for the purpose of strewing with flowers, or otherwise decorating the graves of comrades who died in defense of their country during the late rebellion, and whose bodies now lie in almost every city, village, and hamlet churchyard in the land. In this observance no form of ceremony is prescribed, but posts and comrades will in their own way arrange such fitting services and testimonials of respect as circumstances may permit.

More than 150 years later, a civil war still rages.  Most of the combatants aren’t in military attire, although some wear identifiable uniforms of the street.  They are our inner-city youth.  Too many lose their lives.  Many, many more lose their potential.  What are we going to do about this carnage?  Their future is our future.  Will we fight to save it?  What will our weapons be?

Too many American children face the structural violence of poverty on a daily basis.  They have been experiencing deprivation, physical and cultural violence since birth.  When these children are asked what they want to be when they grow up, some of them begin their reply, “If I grow up, I want to be…” Theirs is a contingent approach to adulthood; they live with death.  Why forego any of today’s pleasures if the future is so uncertain?  Why study?  Why develop discipline?  Even if they saw their value, there aren’t enough mature adults around to support study and teach discipline by lecture and example.

The situation is particularly bad — and symbolically appalling — in our capital.  During the Civil War, the North feared invasion of Washington D.C. by the Confederacy.  This kind of attack Abraham Lincoln, his government and his army forestalled.  But let there be no doubt: D.C. has now been invaded, and once again the war is among Americans – “civil” in that sense but in no other.

Our capital has repeatedly been deemed “the murder capital of America.”   A study three years ago may also make it “the illiteracy capital of America”: 36% of D.C. residents were then “functionally illiterate”, compared to 21% nationwide.  Compounding the severity of this situation is the fact that 47% of the jobs in D.C. require college or graduate-school degrees, compared to 26% nationally.

D.C.’s Chamber of Commerce – which helped fund the study — reported that its city lost $107 million in taxes every year because of the shortage of skilled job applicants.  At least this fact is now probably outdated: data on migration among states show the greatest immigration to our capital.  Government is where all the new jobs are.    But how will D.C.’s youth ever qualify for positions requiring so many advanced degrees when they are without role models, mentors, self-esteem and hope?  Could we at least give them a good education?

Every Memorial Day we should also commemorate those Americans whose hopes and potential have also been killed even if their bodies are still alive.  Every day, we should be working to win the war against poverty.    The Confederacy did not conquer Washington, D.C., but its ugly underpinning, racism, is part of a devastating legacy.  It is today enslaving African – American youth in many places just as profoundly as it did in the old South. Poverty, however, is a problem that crosses race lines.

Not only are certain DC youth without roll models, mentors, self-esteem and hope, they’re also without a decent school system. In return for risking their lives to save the world, World War II combatants were given free education with choices through the GI bill.  Why don’t we have similar programs, most likely through school vouchers, for those scarred by urban violence?  Theirs is a war just as surely as those formally declared by Congress.  It’s time to return to the War on Poverty, and the best way to arm those fighting their way out is through education.

That Barack Obama’s real goal has always been a single-payer healthcare system seems obvious when his history on the issue is tracked before and during his campaign for President.  Here is a video the Hillary Clinton campaign dug up during the election in which Obama clearly indicates he favors a single-payer system.  He also notes that it might be a long process, saying “we may not get there immediately”.    When confronted with the video during the campaign, Obama claimed that he favored a single-payer system if the United States were “starting from scratch,” but since the country already has an employer-based system, he actually favored building upon it.

However, at a  candidates’ forum Obama admitted that preservation of the employer-based system was only a transition to something else.

But I don’t think we’re going to be able to eliminate employer coverage immediately. There’s going to be potentially some transition process. I can envision a decade out or 15 years out or 20 years out where we’ve got a much more portable system. Employers still have the option of providing coverage, but many people may find that they get better coverage, or at least coverage that gives them more for health care dollars than they spend outside of their employer. And I think we’ve got to facilitate that and let individuals make that choice to transition out of employer coverage.

The transition would be to a “public option,” through which the United States would finally adopt a single-payer system.  Obama unconvincingly denied that the public option was a “Trojan horse” for a single-payer system. Even though the President vigorously campaigned behind the scenes for the public option, the US Senate was having no part of it and left the public option out of its final bill.

A few weeks ago, with the public option dead, President Obama finally came out with an outline for his own plan, as distinct from the House and Senate bills.  Interestingly, the one new dimension he added was a measure permitting the government to regulate insurance-premium prices.  Health insurance companies would become like utilities, quasi-public entities.  Or, with new and expensive mandates on one side and price controls on the other, private health insurance could be squeezed out of existence entirely.

Most troubling is President Obama’s less-than-candid approach throughout the debate. The Democratic leadership claims that their aim is to give consumers more choices, but really the goal appears to be only one government-controlled option.

During the campaign candidate Obama hammered Hillary Clinton for her insistence that there must be a universal mandate that everyone buy insurance who can afford it.  He made Hillary’s plan sound coercive.  But since becoming President, Obama has adopted Clinton’s position.  He knows now, as he must have known then, that everyone must be compelled to carry insurance in order to make it illegal for insurance companies to deny coverage for pre-existing conditions.  Otherwise, many people would simply wait until they got sick before buying insurance.

Today the President insists that his healthcare bill pays for itself, when clearly it does not.  It robs Medicare of $500 billion dollars and collects taxes and makes cuts for ten years while paying out for only six years in the new program. Controlling healthcare costs is what most voters mean when they say they want healthcare reform, but the Democrats are offering healthcare expansion without much if any cost control.

Ideologically pushing unpopular policies is politically foolish.  Pushing them in an obviously dishonest way heightens the political consequences even more. It did not have to be like this.  And we can insist that our government do better in the future.

Progressives have long held that every American should be guaranteed health insurance.  It is a noble and worthy goal.  Policies of insurance companies denying coverage or boosting premiums to unaffordable levels due to pre-existing conditions strike almost every American as inherently unfair. This practice must end.  The problem with the Democrats’ approach is not the ends, but the means.

From a policy point of view, they have shunned the market approaches to comprehensive healthcare in favor of their single-payer dream.  Only market-based reform realistically holds out the promise of maintaining the quality of American medicine while cutting costs.

From a political point of view, the Democratic Leadership has made no meaningful compromises at all.  The most important compromise is to abandon the state-centered approach to healthcare reform in exchange for demanding universal medical-insurance coverage.   Here is the grand bargain:  Republicans and moderate Democrats get market-based reforms while Progressives get universal coverage.

Progressives are pretending that such a bargain was not possible.  They are wrong.  Most of the Republican bills claim to aim at universal coverage.  They may not all realistically get there, but in conceding the goal, they signal a readiness to make a deal.  A number of Senate Republicans jumped on board the bipartisan Wyden-Bennett bill, which embodies many of the necessary compromises and reforms.  If progressives could accept market means to progressive ends, a large coalition could be assembled ranging from the left wing of the Democratic Party all the way over into the center of the Republican Party.

Here is a list of the sort of actions that might comprise a market-based approach to healthcare reform without sacrificing universality:

· Eliminate the tax-free status of the most expensive “Cadillac” employee healthcare plans. It’s regressive and drives up healthcare costs.

· Eliminate the tax-free status of all employee healthcare plans in order to pay for universal healthcare insurance and move away from the employer-based system.

· Require employers to offer their employees the cash equivalent of what the employers spend for them on healthcare so that the employees can purchase their own insurance in an open market.

· Make insurance companies subject to the anti-trust laws.

· Allow people to purchase insurance across state lines.

· Reform tort law by capping award damages for pain and suffering and creating specialized courts where expert judges rule on medical-malpractice cases.

·  Encourage the use of high-deductible plans with health-savings accounts so that healthcare consumers will have incentives to demand reasonable healthcare costs.

·  Provide tax credits to help the middle class pay for healthcare insurance.

·  Provide vouchers for healthcare insurance to the working poor.

The great healthcare bargain is out there waiting to be made if voters insist upon it:  universal coverage in exchange for the kind of market-based and legal reforms listed above.  It won’t happen in the near term.  President Obama and the Democratic Congressional Leadership have their jihad in full throttle.  Republicans smell blood in the water and are now in no mood to compromise.

Perhaps the greatest myth being peddled as truth is that it is now or never for healthcare reform.

If the Democratic state-centered healthcare bill somehow passes, the political system will be doomed to three more years of intense partisan warfare as Republicans campaign to repeal it. It won’t be pretty.  Republicans will be especially furious and unyielding if they get rolled in the “Reconciliation Process.” On the other hand, if the Democratic bill fails there may again be a chance for compromise and consensus on healthcare. Republicans will have more power in Congress.  President Obama will still be in the White House. The great bargain will still be possible. Citizens of goodwill should insist upon it.

MINIMUM WAGES
In May of 2007, during the Bush 43 Administration, Congress passed legislation that raised America’s hourly minimum wage in three stages from $5.15 to $7.25 – an increase of 41% in slightly over two years. The stated purpose of minimum-wage requirements is laudable: it’s to give every worker a living wage.

“How nice,” good-hearted readers may respond; “it’s hard enough to get by on $7.25 an hour, but making due with $5.15 is nearly impossible these days.  And imagine trying to feed yourself, much less clothe and shelter yourself, if some fat-cat boss could get away with paying you even less!”  They’re right.  And low-skilled individuals who keep their jobs are decidedly better off with the higher minimum wages.

The problem is the unintended consequences.  Not everyone gets to keep his or her job when the rules change.  Because the government cannot force private enterprises to hire new workers or continue employing existing labor when the cost of doing so goes up, raising the minimum wage prices people with unexceptional skills out of the market.  For all their good intentions, minimum wages accordingly create more unemployment and more poverty for society as a whole.

The third increase in the minimal wage, the one that raised the rate from $6.55 to $7.25, took effect in July of 2009.  The timing was terrible.  In the midst of high and rising unemployment, and halfway through a year where cost-of-living indices actually declined, we made old jobs and new hires even less affordable to companies that were already losing sales and cutting back their workforces.

It’s much harder to get by with $0.00 an hour than with a market-determined wage.  But the consequences for the future may be even worse than the poverty of the present. When the starting wage gets too high, not only do some workers get laid off, but others can’t even join the workforce in the first place.  Their entry-level job skills simply aren’t worth $7.25/hour.  Educating one’s way out of poverty occurs just as much in the office as it does in the classroom.  When people fail to find employment, they don’t just lose wage income today, they also lose the on-the-job training that makes future advancement to better jobs possible – all this on top of the destructive effect unemployment has on existing skills and attitude.

This problem is particularly acute for individuals seeking their first jobs. The Wall Street Journal’s lead editorial on March 5 is entitled “The Lost Wages of Youth” and has some stern and startling unemployment statistics for teenagers in general and teenagers of color in particular. The situation is so bad that the Journal condemns in no uncertain terms going through with last summer’s last step in 2007’s three-stage wage legislation:

To raise the cost of unskilled labor precisely when the jobless rate is heading towards 10% is an act of almost willful economic stupidity.  A Congress that has spent $862 billion to create jobs thus managed to harm tens of thousands of entry-level job seekers.  And it did so in the name of “compassion” and a “living wage.”

The WSJ could have said much more.  Because it’s a national standard, the wage floor is even more destructive for teenagers in parts of the country with low costs of living than the averages indicate for the United States as a whole.  Teenagers living in rural Mississippi, for example, have a much harder time finding employment when the starting wage is $7.25 than their counterparts in Anchorage, Alaska, where the cost of living is so high that the minimum wage may be below market rates and therefore irrelevant.  Mississippi itself suffers even more than loss of employment and associated production.  It also loses some of the competitive advantage it would otherwise gain from lower labor costs.  In a sense, minimum-wage legislation is a subsidy to the pricier states and cities in our nation.

PAYROLL TAXES
The Wall Street Journal also could have, and should have, extended its critique to payroll taxes and the disincentives they add to an already ugly picture of market distortion and unintended consequences.  The omission is surprising for a newspaper of its conservative nature and caliber.  Each of the five taxes has a raison  d’etre, but none of the benefits at this time is worth the associated costs.

All wages up to a ceiling of $106,800 are taxed to “fund” Social Security and Medicare.  The idea is to “smooth” consumption and make people “save” for the days when they’re too old or too sick to work.  But the revenues are not in fact saved, and they aggravate unemployment and poverty issues.

Employers pay half these payroll taxes themselves and withhold the other half from the checks they cut for their employees’ take-home pay.  When markets set wages, it’s highly likely that companies shift some of their payroll-tax burden to their employees by reducing their pre-tax wages.  When workers are paid minimum wage, none of this shifting is possible.  While shifting at first glance seems morally opprobrious, it’s a heckuva lot less heinous than firing.

Social Security payroll tax rates are currently 6.2% for both employer and employee, and Medicare adds another 1.45% to both sides.  The $106,800 ceiling is irrelevant for minimum-wage workers, and there’s no exemption for low incomes.  The result is to increase employers’ hourly-wage cost for each of their lowest-skilled workers to more than $7.80, while reducing take-home pay initially to less than $6.70.

Fortunately, low-paid employees with a certain savvy can file an Earned Income Credit (EIC) form with the IRS and, depending on their income and number of dependents, restore part, if not most, all or even more than all, of their gross earned income.  (Sometimes they can even get more money from the government than was withheld from their paychecks.)  Unfortunately, there’s no such program to reduce taxes on the employers’ side, where heightened labor costs continue to cause layoffs and deter job creation.

Add to this business burden Workmen’s Comp taxes, paid by employers, with rates based on how many previously employed workers have filed for injury claims. Keep going with Federal and State Unemployment Tax Acts (FUTA and SUTA).  FUTA levies another 6.2% employer tax on the first $7000 each employee earned. Although much of this “unemployment insurance funding” can be offset by a refund if paid in a timely fashion, it still remains regressive because of the salary ceilings. And isn’t it ironic in all times, but particularly these, that companies creating  and maintaining employment are also penalized through payroll taxes that make them fund unemployment programs?

Could there be more obvious deterrents to new hires in precarious economic times than the chaotic array of legislation we’ve now discussed?  Actually, yes: continuing to make health insurance a required, regressive, and tax-subsidized perk of employment for businesses over a certain size.  But that’s step three in addressing economic reforms to reduce unemployment, deficits and debt, and the purview of another piece.

CONCLUSION
Minimum-wage legislation is an abomination for society as a whole.  While it benefits some low-skilled workers, it does so at the expense of the even more vulnerable, whose poverty it only deepens.  Minimum wages should be abolished.

Five different payroll taxes add to the damage.  They further discourage employment, and for some workers they also take away sizeable chunks of incomes that are already perilously low.  The good-hearted readers who – at least initially – applauded the concept of the “living wage” as achieved through minimum-wage legislation should now rise up in outrage over policies that take money back from those who keep their jobs but either don’t qualify for full refunds through EIC or don’t know enough to file.  Payroll taxes should be suspended for both sides, at all wage levels, at least while unemployment rates are so high.

The goals for all six of these wage and tax policies are admirable.  But the best of intentions often create the worst of programs.  They do so because of unintended consequences.  They do so because we cannot overturn the laws of economics, we can only work with them.

The best way to help poor people is to help them help themselves.  We should reform formal education so that everyone can read, write, and think.  We should encourage employment not only for the earned income but for the on-the-job education that leads to better jobs.  And we should ease the transition to a living wage.  For those of us who believe in the ability of poor people to make decisions on their own and to learn from their mistakes, the best transitional tool is the negative income tax.  For those of us who prefer to protect them and guide their choices,  vouchers are the way to go.  Minimum wages and payroll taxes are getting in the way for both sides.

The problem that holds back reform is that we must also work with the laws of politics.  Unions, for example, love minimum wages: they keep some nonunion labor competition at bay.  And the majority of politicians in power today – the Democrats — are deeply indebted to unions.  How else to explain the government bailout-takeovers of Chrysler and General Motors?

If there is ever a time when we can overcome the political power of vested interests and eliminate minimum-wage laws and suspend payroll taxes, that time is now. Rates of unemployment that all of us find ethically and economically unacceptable demand solutions, and alternative approaches are not working well. A lot of the “stimulus” programs have yet to be implemented, well over a year into recession.  For those that have, it looks as if each job “saved” has cost six-figure sums of added deficits.  These results are appalling at all times, but particularly when soaring deficits and debt undermine confidence and credit ratings.

Eliminating minimum-wage laws is fast and free.  Suspending payroll taxes is a quicker, more equitable, and arguably much cheaper approach to reducing unemployment than the government spending the Administration has endorsed and pursued so far.  And let’s be clear: EIC has already nullified, reduced or reversed half of the biggest payroll taxes — those associated with Social Security and Medicare — for many with low income.  Let’s give the same break to businesses for all of the payroll taxes they pay.  Suspension would have to be fairly long term to generate results, and it also provides an opening wedge to eliminating these highly regressive taxes altogether.

For a man who admires speed, pledges fiscal sobriety, and talks the populist line as much as President Obama now does, the obstacles to these suggested reform are political, not economic. Each government program, whether it be taxing, spending or regulating, creates its own protective constituency. If our President can bring to Washington the change we once believed in, we can emerge from recession in better – stronger, more equitable – shape than ever before.  The time to act, Mr. President, is now.