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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

Today’s Policy Agenda: Economic Segregation Is a Growing and Devastating Phenomenon



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The Highway Trust Fund is almost out of money. How should we keep funding it?

President Obama spoke yesterday about the need to resolve the looming transportation funding crisis, and Rebecca Kaplan of CBS had the details:

The Department of Transportation (DOT) predicts that the fund, which has traditionally drawn its revenue from the federal gas tax of 18.4 cents per gallon, will be depleted by late August. As a result, the funding that states get from the federal government for highway projects – about 45 percent – will start to shrink. Transportation Secretary Anthony Foxx warned reporters in May that letting the account expire could lead to 700,000 Americans losing jobs in road work, bridge-building and transit maintenance as 112,000 highway and 5,600 transit projects underway come to a halt…The administration recently put forward a four-year, $302 billion transportation plan that would be funded in part by the existing gas tax, and in part by vaguely-defined “pro-growth business tax reform.” The proposal actually increases both highway and transit funding, and allows states to charge tolls on interstate highways as a way to raise funds.

While the devil will likely be in the details on the president’s so-called “pro-growth tax reform,” allowing states to charge tolls is a step in the right direction toward a usage-based funding mechanism for roads. As pointed out by Rick Geddes and Brad Wassink, the problem with the gas tax is that improved fuel efficiency has reduced the revenue collected by a gas tax and has likely done so in a regressive manner (the wealthy are more likely to have new cars, Teslas, hybrids, etc.). Moving explicitly to taxing based on miles driven rather than gallons of fuel consumed would have a number of benefits including making the costs of infrastructure more noticeable to those who use it, and most important, allowing states and cities to set prices based on the traffic level. That would help fight what should be a major target of the pro-work, pro-family party: congestion.

The federal backstop for huge multi-employer pension plans could go very deep into the red, really soon.

John McKinnon reports in the Wall Street Journal on the apparent vulnerability of the Pension Benefit Guaranty Corporation program that covers multi-employer pensions:

The federal safety net for a type of private-sector pension plan common in the transportation, construction and other industries is at risk of collapse in coming years, according to a report released Monday. Such an outcome has the potential to affect more than a million people. . . . But the likely failure of several big plans means that the PBGC’s limited resources for helping retirees in failed multi-employer plans likely will be tapped out in coming years. This year’s report estimates that the $8.3 billion long-term deficit the federal backup plan for multi-employer plans faced in fiscal year 2013 will widen to $49.6 billion by fiscal year 2023. . . . The options for lawmakers are politically difficult. Bailouts of troubled plans or of the safety-net program itself could spark a backlash among voters, while forcing benefit cuts on beneficiaries—particularly current retirees—would be painful and unpopular.

The drumbeat of failing pension plans is getting louder, as it becomes obvious that from these private pensions to state and local pensions to federal entitlements, we’ve way overpromised and because of demographic shifts, can no longer hide it. There’s likely no pain-free fix for such poorly designed plans at this point, but a greater sense of urgency – even from Republican heroes – is needed for reforming these future liabilities before the debts become so large that either hugely hurtful cuts to seniors or big cuts to other public priorities are the only options.

After Hobby Lobby, what’s next for contraception? Making the pill over-the-counter?

For the Volokh Conspiracy at the Washington Post, Jonathan Adler looks at the possible ways  the federal government will try to address contraception coverage in the wake of the Hobby Lobby case.

The easiest and most rapid response would be for the Department of Health and Human Services (HHS) to provide objecting for-profit employers with the same accommodation offered to religious institutions.  Indeed, the very existence of this accommodation undermined the administration’s position before the Supreme Court, as it was hard to simultaneously argue that there was no less restrictive way to provide access to contraception while providing just such an alternative to religious institutions . . . 

A more direct way to enhance contraception coverage would be for the federal government to provide such coverage directly.  Yet while Congress could authorize such a program, it is not clear that HHS has the authority to take this step on its own . . . A final step the administration could take would be to enhance access to contraception by making all forms of oral contraception available over-the-counter without a prescription (and not just “Plan B”).  While this would not make contraception “free” it would reduce the cost, and help alleviate some of the non-monetary obstacles women face.

Making contraception available over the counter seems like an intuitive approach to move us past this issue that has become, as Megan McArdle explains, an emotional flashpoint far exceeding what any practical effects could merit. Phil Klein lays out the conservative case for allowing over-the-counter sale here.

Economic segregation is a growing and devastating phenomenon.

The Census Bureau came out Monday with a new report by Alemayehu Bishaw detailing how poverty has become more and more geographically concentrated over the past decade:

In 2010, approximately 14.9 percent of the total U.S. population lived in poverty. However, poverty is not distributed evenly across neighborhoods. The U.S. Census Bureau designates any census tract with a poverty rate of 20.0 percent or more as a “poverty area.” . . . Between 2000 and 2010, the percentage of people living in poverty areas grew from 18.1 percent to 25.7 percent. While the overall population grew by 10 percent over the decade, the number of people living in poverty areas grew by about 56 percent.

It’s worth going through the report to see the maps of where “poverty areas” claim more of the population, specifically the South. One of the major findings from the celebrated recent study by Raj Chetty and colleagues on economic mobility was that economic segregation is one of the four best predictors of upward mobility, and a host of academic studies confirm that concentrated poverty can be devastating for economic, educational, and health outcomes. How conservatives should address this through policy is obviously complicated, though Reihan has put forward thoughts on several occasions.

The first priority for conservative reformers should be getting rid of barriers upwardly mobile, poor Americans face in escaping “poverty areas.” Repealing land-use regulations designed to keep out the poor come to mind here, as do school choice and Michael Strain’s idea of buses going straight from poor neighborhoods to major job centers.

It’s also worth noting that a major force perpetuating segregation is that many poor individuals don’t feel comfortable leaving a social network of friends and loved ones behind. Furthermore, it’s harder to accumulate the capital needed to afford new housing when every month a member of that social network has, say, a car break down, needs your help, and drains your savings. This suggests forced savings programs — which is how the EITC effectively works — that deliver large lump sum payments could be helpful to low-income people in accumulating the wealth needed to leave in a way that doesn’t get dispersed throughout the social network.



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