Category: Politics

Is the Reliability of Public Opinion Surveys Declining?

Public opinion surveys provide a wealth of information about beliefs in America and around the world. For example, they document how much public approval for same-sex marriage has been increasing, how Facebook has infiltrated many of our daily lives, and how humanitarian aid affects how citizens of other nations view America.

But pollsters face a significant challenge. As the Pew Research Center for the People & the Press notes in a new study, survey response rates continue to plummet:

Fifteen years ago, more than one in three of households responded to surveys. Today, that rate is less than one in ten.

That increases the cost of reliable surveys — to get a reasonable sample, you need to try to contact more households. Even more important, declining participation raises the question of whether the minority of respondents are representative of the population as a whole. The Pew Research Center study took a close look at that question:

The general decline in response rates is evident across nearly all types of surveys, in the United States and abroad. At the same time, greater effort and expense are required to achieve even the diminished response rates of today. These challenges have led many to question whether surveys are still providing accurate and unbiased information. Although response rates have decreased in landline surveys, the inclusion of cell phones – necessitated by the rapid rise of households with cell phones but no landline – has further contributed to the overall decline in response rates for telephone surveys.

A new study by the Pew Research Center for the People & the Press finds that, despite declining response rates, telephone surveys that include landlines and cell phones and are weighted to match the demographic composition of the population continue to provide accurate data on most political, social and economic measures. This comports with the consistent record of accuracy achieved by major polls when it comes to estimating election outcomes, among other things.

This is not to say that declining response rates are without consequence. One significant area of potential non-response bias identified in the study is that survey participants tend to be significantly more engaged in civic activity than those who do not participate, confirming what previous research has shown. People who volunteer are more likely to agree to take part in surveys than those who do not do these things. This has serious implications for a survey’s ability to accurately gauge behaviors related to volunteerism and civic activity. For example, telephone surveys may overestimate such behaviors as church attendance, contacting elected officials, or attending campaign events.

However, the study finds that the tendency to volunteer is not strongly related to political preferences, including partisanship, ideology and views on a variety of issues. Republicans and conservatives are somewhat more likely than Democrats and liberals to say they volunteer, but this difference is not large enough to cause them to be substantially over-represented in telephone surveys.

In short, opinion surveys likely overstate civic activity, but otherwise appear to track other observable political, social, and economic variables.

Fixing Medicare’s Double-Counting Problem

Last week I argued that budgeting for Medicare’s hospital insurance program is flawed. Today, I offer two ways to fix it (and reject a third).

Medicare Part A is one of several federal programs that control spending through a “belt and suspenders” combination of regular program rules (the belt) and an overall limit (the suspenders). But it’s the only one that allows legislated savings to offset the costs of policy changes in other programs and extend the time before the overall limit constrains operations.

Congress can’t increase Social Security payroll taxes to pay for increased health care spending or reduce flood insurance subsidies to pay for tax cuts; in both cases, the resources stay within the affected programs. And when it cuts spending on Medicare Parts B and D to pay for other spending, no one claims those cuts will also postpone the day when trust fund exhaustion will disrupt their operations.

Such double counting is possible only in Medicare Part A. And it’s a real problem, creating needless confusion and reinforcing the sense that Washington plays fast and loose with budget numbers.

Happily, Congress knows how to fix this problem. All it needs to do is apply to Medicare A the practices used by one of the other programs that have “belt and suspenders” budgeting but avoid potential double counting.

One approach would be the rules used by the National Flood Insurance Program. As I discussed in more detail last week, those rules require that any legislated savings remain in the program. Lawmakers can’t reduce NFIP subsidies to pay for new spending in other programs. Instead, any savings are automatically earmarked to pay future NFIP claims that would go unpaid because of the program’s borrowing limit. (For an example, see here.)

This approach brings the overall limit explicitly into the budget. But it makes for weird budgeting. For example, the budget baseline would show Medicare A breaking even over the long run, since the trust fund limit would take precedence over its fundamental deficits.

A better approach would adopt the rules used by Social Security. Those rules show Social Security running deficits far into the future in the budget baseline, but they still take the trust fund seriously when examining new legislation. Any proposed cuts to the program’s spending or increases in its revenues are “off budget”. The Congressional Budget Office reports them, but Congress can’t use them to pay for other spending.

A recent Senate bill provides a telling example. The bill would expand the type of income subject to payroll taxes in order to pay for a one-year extension of low interest rates on student loans. Those low rates would cost $6 billion, but the Senate proposal would raise $9 billion. The bill had to overshoot that much because $3 billion comes from higher Social Security taxes and is thus off limits. Meanwhile, the $6 billion in usable revenues comes from Medicare Part A, which is considered “on budget” despite having a trust fund just like Social Security’s.

That difference highlights the inconsistency in current budgeting. If policymakers believe the Part A trust fund is as sacrosanct as Social Security’s, they should provide the same budgetary protection: Part A savings should be off budget, where they couldn’t be used to pay for health reform, student loans, tax cuts, or anything else outside the hospital insurance program.

If Congress doesn’t believe the trust fund deserves that protection, it should adopt a third approach: make the Part A fund as operationally toothless as the one for Medicare B and D. Those programs spend much more than they receive, so their trust fund has unlimited ability to draw on general revenues. If the same were true for Medicare Part A, program changes could be used to pay for health reform (as they were in 2010) or anything else, just like any other mandatory program. But we wouldn’t have any confusion over whether those changes also extend the program’s ability to operate.

The Social Security and Medicare B and D approaches both make more sense than the mishmash that applies to Medicare A today. I think the Medicare B and D approach is the better of the two, not least because it would put all the parts of Medicare on equal footing. But one could certainly argue for the Social Security approach instead. That’s the discussion we should have now so that we can avoid needless double-counting debates in the future.

P.S. Several readers noted an important qualification to my Social Security discussion in my earlier post. Many experts believe past Social Security surpluses have been used to finance deficits in the rest of the budget and, as a result, Social Security resources have been paying for higher spending or lower revenues elsewhere in government. I agree. My comments in these posts apply only to explicit budgeting decisions, like those in 2010’s health reform or today’s student loan legislation. In that context, Social Security savings cannot be legislatively used to pay for other programs. But they still might have indirect effects. For example, by reducing future unified budget deficits, Social Security savings might weaken future congressional efforts to reduce deficits outside Social Security.

The Fight over Medicare Double Counting

The recent double-counting dispute isn’t just about politics; it also reveals a flaw in budgeting for Medicare Part A.

Budget experts are waging a spirited battle over the Medicare changes that helped pay for 2010’s health reform. In April, Chuck Blahous, one of two public trustees of the program, released a study arguing that the Affordable Care Act (ACA) would increase the deficit by at least $340 billion by 2021, a sharp contrast from the $210 billion in deficit reduction estimated by the Congressional Budget Office (CBO).

Chuck bases his estimates on several factors, but the item that has garnered the most attention is his charge that the ACA’s spending cuts and revenue increases in Medicare Part A are being double counted: once to help pay for the ACA’s coverage expansion and a second time to improve the finances of the Part A trust fund, whose predicted exhaustion was delayed by several years.

Chuck notes that those resources can be used only once: They can either offset some costs of health reform or strengthen Medicare, but not both. He believes those resources will ultimately finance additional Medicare spending and thus can’t offset any health reform costs. For that reason, he concludes that the ACA would increase deficits, rather than reduce them.

That argument inspired a host of commentary from leading budget experts, ranging from denunciation to affirmation. See, for example, Jeffrey Brown, Howard Gleckman, Peter Orszag, Robert Reischauer (as quoted by Jonathan Chait), and Paul Van de Water, and a follow up by Chuck and Jim Capretta.

Why does this dispute exist? It can’t just be politics. If it were, we’d have double-counting disputes about every program. But we don’t. We thus need an explanation for why this debate has erupted around Medicare Part A, which provides hospital insurance, but not around other programs. Part A is not unique in controlling spending by a “belt and suspenders” combination of regular program rules (the “belt”) and an overall limit (the “suspenders”). Such budgeting also applies to Social Security, Medicare Parts B and D (which cover physician visits and prescription drugs), and the National Flood Insurance Program. The federal debt limit acts as “suspenders” for the entire budget. But none of those give rise to double-counting disputes.

That suggests that there is something unusual—perhaps flawed—about budgeting for Medicare Part A. To see what that is, it helps to boil the dispute down to two basic questions about programs subject to “belt and suspenders” budgeting.
First, can spending reductions or revenue increases in the program offset spending increases or revenue reductions in other programs? In short, can budget savings pay for other programs? Or must they stay within the program itself?

Second, would hitting the overall budget limit affect program operations? In other words, do budget savings extend the period during which the program can operate at full capacity? Or is the limit operationally toothless?

As shown above, policymakers have answered these questions differently for different programs (for further details, see the appendix).

This comparison reveals the unique feature of Medicare Part A: It is the only one of these programs that allows budget savings to pay for other programs and has a trust fund with real operational teeth. It alone answers Yes to both questions. That is why Medicare Part A is the only program that creates the possibility of double counting and suffers from the reality of a double-counting dispute.

Double counting isn’t possible in Social Security or the NFIP because budget rules require that savings stay in the program. It isn’t possible for the budget as a whole since there are, by definition, no other programs to fund. And double counting isn’t possible in Medicare Parts B and D because its trust fund does nothing to limit operations.

But double counting is possible in Medicare Part A. That happens whenever someone claims that the health reform legislation both reduces deficits and provides additional resources to Medicare Part A. I will leave it to others to adjudicate whether any health reform proponents committed that error. I will note, however, that every budget expert, including Chuck Blahous, agrees that CBO didn’t do so (its baseline ignores the trust fund, so savings reduce deficits and have no effect on program operations).

Bottom line: The peculiar budget rules for Medicare Part A make it possible for analysts, pundits, and policymakers—whether willfully or inadvertently—to double count budget savings in Medicare Part A. That needless confusion is a significant flaw. To correct it, Congress could adopt the budget practices it uses in Social Security, Medicare B & D, or the NFIP. In a follow-up post, I will examine the pros and cons of these alternatives.

 Appendix: How “Belt and Suspenders” Budgeting Works

Continue reading “The Fight over Medicare Double Counting”

The Rhetoric of Economic Policy: Inequality vs. Dispersion

Rhetoric matters in economic policy debates. Would allowing people to purchase health insurance from the federal government be a public option, a government plan, or a public plan? Would investment accounts in Social Security be private accounts, personal accounts, or individual accounts? (See my post on the rule of three.) Are tax breaks really tax cuts or spending in disguise? Is the tax levied on the assets of the recently departed an estate tax or a death tax?

In an excellent piece in the New York Times, Eduardo Porter describes another important example, how we characterize differences in income:

Alan Krueger, Mr. Obama’s top economic adviser, offers a telling illustration of the changing views on income inequality. In the 1990s he preferred to call it “dispersion,” which stripped it of a negative connotation.

 In 2003, in an essay called “Inequality, Too Much of a Good Thing” Mr. Krueger proposed that “societies must strike a balance between the beneficial incentive effects of inequality and the harmful welfare-decreasing effects of inequality.” Last January he took another step: “the rise in income dispersion — along so many dimensions — has gotten to be so high, that I now think that inequality is a more appropriate term.”

More on “Tribes” and Perception

My recent post on “tribes” inspired some thoughtful reader comments about natural selection and stereotyping, and two book recommendations to steel yourself against your brain’s instinctive us vs. them wiring:

I’ve added both to my aspirational reading pile (if electrons can be piled).

Of note to readers in New York, reader Roger K. also noted the apposite opening of Nina Raine’s latest play:

How Your “Tribe” Affects Your Perception

NPR aired an interesting trio of segments this morning about inconsistency and flip-flopping. I particularly enjoyed Alix Spiegel’s report on Jamie Barden, a psychology professor at Howard University. Barden’s work considers how “tribal” affiliation affects our perceptions of inconsistent behavior by politicians. In one experiment, Barden asked students their view of a hypothetical political operative named Mike who crashed while driving drunk and then, a few weeks later, gave a speech against drunk driving:

Now obviously there are two possible interpretations of Mike’s actions. The first interpretation is that Mike is a hypocrite. Privately he’s driving into poles. Publicly he’s making proclamations. He’s a person whose public and private behavior is inconsistent.

The other interpretation is that Mike is a changed man. Mike had a hard experience. Mike learned. Mike grew.

So when do we see hypocrisy and when do we see growth?

What Barden found is that this decision is based much less on the facts of what happened, than on tribe.

Half the time the hypothetical Mike was described to the students in the study as a Repubican, and half the time he was described as a Democrat.

When participants were making judgments of a Mike who was in their own party, only 16 percent found him to be a hypocrite. When participants were making judgments about a Mike from the opposing party, 40 percent found him to be a hypocrite.

I suspect this is the same phenomenon that leads sports fans to systemtically disagree with referee decisions against their favorite team.

The Coming Budget Showdown of 2012

My latest column at the Christian Science Monitor discusses the many fiscal pressures that will come to a head at the end of the year. Here’s an excerpt:

Start with our tattered tax code, which now contains a six-pack of temporary tax cuts. The largest are the Bush-era cuts originally enacted in 2001 and 2003 that were scheduled to expire in 2010. Rather than decide their fate, President Obama and Congress extended them another two years.

That legislation also included additional tax cuts championed by Mr. Obama and an estate tax compromise, all of which expire – along with the original tax cuts – at the end of 2012.

Then there’s the dreaded alternative minimum tax. It expired Dec. 31, but Congress for years has passed an annual “patch” preventing the AMT from hitting more middle-class families. A hodgepodge of temporary tax breaks known, tellingly, as the “extenders,” also expired at the end of last year, but many lawmakers and beneficiaries want to bring them back. Various stimulus measures, including the payroll tax holiday and corporate investment incentives, are set to lapse soon, too.

If those six tax-cut packages expire, annual federal tax revenues would rise by about $1 trillion annually, the Congressional Budget Office projects [See correction below]. It’s hard to imagine that lawmakers will actually let that happen. As the CBO itself notes, such a sharp increase would weaken the economy at a time when it’s struggling to recover from the Great Recession.

On the spending side of the ledger, the most egregious example of can-kicking is the formula by which Medicare sets payments for doctors. That formula has called for dramatic cuts for years. But every time those cuts come near, Congress overrides them temporarily, and often “pays for” that by scheduling even bigger cuts in the future. That’s why doctors face a 27 percent cut in payment rates at the end of March and more in years ahead.

And then there are the roughly $1 trillion in across-the-board spending cuts, spread over nine years, that are scheduled to begin next January. Congress didn’t really intend those cuts to happen; instead, they were meant to pressure last year’s “super committee” to find real budget savings. That didn’t occur, and now Washington is rife with speculation that policymakers will flinch from letting the cuts go through, at least until the economy strengthens.


We will also hit the debt limit again late in 2012 or early in 2013. Add it all up, and there’s quite the fiscal showdown looming for later this year.

Correction: That sentence leaves the wrong impression. It makes it sound like the six tax items add up to $1 trillion in annual revenue, but that is not correct (ht Loren A.). My apologies for missing this during editing. Here’s the full explanation from the first draft of my column:

The expiration of those six packages of tax cuts, plus the arrival of some new taxes created in the health reform legislation, would boost tax revenues sharply in the next few years. The Congressional Budget Office projects that tax revenues will increase from $2.3 trillion in fiscal 2011 to $3.3 trillion in 2014 if all these scheduled changes occur. That trillion-dollar increase, a 44 percent gain, would far outstrip the expected 11 percent growth of the economy.

In short, the $1 trillion increase reflects the six tax items, new taxes from health reform, and the growing (we hope) economy. Sorry for the confusion.

Lose an Election, Gain a Think Tank

Over at National Affairs, Tevi Troy reviews the evolution–and, he believes, devaluation–of America’s think tanks. He leads off by noting how many think tanks have shifted toward political combat and rapid response and away from non-partisan research:

One of the most peculiar, and least understood, features of the Washington policy process is the extraordinary dependence of policymakers on the work of think tanks. Most Americans — even most of those who follow politics closely — would probably struggle to name a think tank or to explain precisely what a think tank does [DM: This is true; even close friends and family often wonder what I do.]. Yet over the past half-century, think tanks have come to play a central role in policy development — and even in the surrounding political combat.

Over that period, however, the balance between those two functions — policy development and political combat — has been steadily shifting. And with that shift, the work of Washington think tanks has undergone a transformation. Today, while most think tanks continue to serve as homes for some academic-style scholarship regarding public policy, many have also come to play more active (if informal) roles in politics. Some serve as governments-in-waiting for the party out of power, providing professional perches for former officials who hope to be back in office when their party next takes control of the White House or Congress. Some serve as training grounds for young activists. Some serve as unofficial public-relations and rapid-response teams for one of the political parties — providing instant critiques of the opposition’s ideas and public arguments in defense of favored policies.

Some new think tanks have even been created as direct responses to particular, narrow political exigencies. As each party has drawn lessons from various electoral failures over recent decades, their conclusions have frequently pointed to the need for new think tanks (often modeled on counterparts on the opposite side of the political aisle).

He summarizes this trend as “lose an election, gain a think tank”. Looking ahead, he then notes:

As they become more political, however, think tanks — especially the newer and more advocacy-oriented institutions founded in the past decade or so — risk becoming both more conventional and less valuable. At a moment when we have too much noise in politics and too few constructive ideas, these institutions may simply become part of the intellectual echo chamber of our politics, rather than providing alternative sources of policy analysis and intellectual innovation. Given these concerns, it is worth reflecting on the evolution of the Washington think tank and its consequences for the nation.

Needless to say, I hope–and intend–that there remains a place for policy research separate from the political noise.

In addition to recounting the origins and activities of many prominent think tanks, including the American Enterprise Institute, the Brookings Institution, the Center for American Progress, and the Heritage Foundation, Tevi offers some interesting facts about the industry, including the rising number of think tanks (1,800 today versus 45 after the Second World War) and the declining share of Ph.D.s on think tank staffs (13% of scholars in think tanks founded since 1980 vs. 53% in those founded before 1960).

The entire essay is well worth your time if you are interested in the evolving role of think tanks in policy discussions.

P.S. Tevi’s article make no mention of my research center, the Tax Policy Center, or my employer, the Urban Institute.

Flat-tax Simplicity with a Progressive Twist

My latest column for the Christian Science Monitor. One of the perils of writing a monthly column is the multi-week lag between writing and publication. Rick Perry and Herman Cain were near the top of GOP contenders when I wrote this. Today? Not so much. But the ideas are still worth analysis. And Newt Gingrich is promoting a flat tax, although it hasn’t been a central part of his campaign thus far.

Tax reform has emerged as a key issue for GOP presidential hopefuls. Texas Gov. Rick Perry wants to scrap our current system and replace it with a 20 percent flat tax on individual and corporate incomes. Former Speaker of the House Newt Gingrich wants to do the same, but with even lower rates.

Then there’s pizza magnate Herman Cain. His “9-9-9” plan would replace today’s income and payroll taxes with a trio of levies: a 9 percent flat tax on individuals, another on businesses, and a 9 percent retail sales tax. But Mr. Cain’s ultimate vision is to eliminate anything remotely resembling today’s tax system in favor of a national retail sales tax, which proponents call the FairTax.

These three plans have much in common. Catchy names, for one. More important, they all focus on taxing consumption – what people spend – rather than income.

The flat tax is most famous, of course, for applying a single rate to all corporate earnings and to all individual earnings above some exemption. It’s also famous for allowing taxpayers to file their returns on a postcard by eliminating all the special deductions, credits, and other rules that complicate today’s tax code. (It also proved too radical for Governor Perry and Mr. Gingrich; their modified flat taxes keep some select deductions, including for charity and mortgage interest, and they also allow individuals to choose to remain in the current system.)

Equally important, however, is the way the flat tax handles investment income. Individuals would pay taxes on their labor income but not on capital gains, dividends, or interest.

That doesn’t mean capital income would escape taxation. Instead, the taxes would be collected at the business level. Businesses would pay taxes on all their income, regardless of whether it’s paid out as dividends or interest. They would also be allowed to write off the entire cost of new investments when they are made.

The net result of these rules is that people would be taxed only to the extent that they consume. In the words of Robert Hall and Alvin Rabushka, the economists who invented the flat tax 30 years ago, “people are taxed on what they take out of the economy, not on what they put in.”

The flat tax is thus a very close cousin to the FairTax and other retail sales taxes (which many Republicans like) and to value-added taxes (which they don’t). The logistics differ: A sales tax is collected on retail purchases, a VAT from businesses at each stage of the supply chain, and a flat tax from individuals and businesses. But the underlying economics work out the same: People get taxed only on their consumption.

There are good reasons to favor a simpler tax system that emphasizes taxes on consumption over income. Some policy experts across the political spectrum embrace exactly that approach to tax reform. But all these plans would be much less progressive than our current income tax, and that’s neither appropriate nor politically viable.

What we need are tax-reform proposals that would maintain progressivity while harvesting many of the benefits of simplicity and consumption taxation. The late Princeton economist David Bradford offered one simple approach: Add progressive rates to a flat tax. Columbia Law School Prof. Michael Graetz offered another: Pair a broad-based VAT with an income tax for folks with high incomes. These ideas might not have much traction among GOP primary voters. But they offer a much better starting point for reform than the plans on the table today.