The Big Con

I'm reading the new book from New Republic senior editor Jonathan Chait, The Big Con. It's really good, describing how "American politics has been hijacked by a tiny coterie of right-wing economic extremists, some of them ideological zealots, others merely greedy, a few of them possibly insane." Chait shows how a combination of crackpot (i.e. supply-side) economics, big business interests, and Republican political strategy led to a unified theory of governance monomaniacally centered on tax cuts for the wealthy, the cost of which the nation is only beginning to pay.

While this ostensibly a book about taxes and politics, there are also several important lessons for education.

First, tax policy matters. Education finance analyses generally takes place at one of three altitudes: There's the 500-foot perspective, which looks at how school districts distribute funds among schools. There's the always-popular 5,000-foot analysis of how states distribute money among school districts. And there's even the 20,000-foot look at how the federal government distributes funds among states.

But school funding analysis rarely rises to the upper-atmosphere perspective of tax and budget policy writ large. Which is too bad, because these issues often matter most of all.

Illinois is a perfect example. The state has what is widely acknowledged as a terrible school funding system. Gaps in per-student funding between the richest and poorest districts are among the highest in the nation, as are disparities between high- and low-minority districts. Not surprisingly, achievement gaps for disadvantaged kids are also unusually large.

The solution to this problem is also widely known. The state needs to increase state taxes, preferably by increasing it's 3.0 % income tax, which is low and--unlike federal and most other state income taxes--flat, with the richest Illinois resident paying the same rate as the poorest. It then needs to use that money to replace local school property taxes, the source of the inequity.

This could be accomplished in a completely revenue-neutral way--a dollar reduction in local property taxes for every dollar increase in state income taxes. But because Illinois Governor Rod Blagojevich--a Democrat--ran for election on the standard "no new taxes" pledge borne of the virulent anti-tax mania Chait describes, needed school finance reforms in Illinois have been stymied at every turn. What began in the 1970s as a Wall Street Journal editorial page fantasy--the "Laffer curve" idea that cutting taxes on the rich could raise revenues--is damaging the education of millions of disadvantaged students in Illinois and similar states today.

Second, irrational tax hatred hurts students in lots of ways beyond short-changing the schools themselves. Some people think we expect too much of public education when it comes to poor kids, that we'd be better off strengthening the income, housing, health care, and nutrition of low-income families. If that's your take on things, Grover Norquist-type tax haters are still your enemy, since they pretty much confine their animus to taxes on rich people and huge corporations. As a result, the income of low- and middle-income people is reduced because they pay more taxes (mostly payroll and sales taxes) than they should. Plus, the haters have undermined the fiscal integrity of states and the federal government, reducing resources available for the housing, health care, food, etc. that disadvantaged children need.

Finally, The Big Con is in many ways a primer on the power of ideas. In this case, an unbelievably bad idea, but those are important to understand too. As Chait notes, the anti-tax orthodoxy that has come to define the Republican party has neither a theoretical nor a popular foundation. Supply-side economics are bunk and always have been, and poll after poll shows that given a choice, most Americans don't want to slash taxes for the well-off when they could use the money to cut deficits or invest in schools instead.

Yet anti-tax crusaders have won victory after victory by linking superficially compelling rhetoric with political interests and a general willingness to lie. The magnitude of the result in reshaping the nation's political and fiscal landscape for the worse is hard to overstate. The lesson is clear: ideas make a difference. Bad ideas need to be understood and dealt with, and good ideas can move mountains, if they're expressed and used in the right way. If, as Chait makes clear, an unforgivably wrong idea can make education and many other things much worse, a correspondingly great idea could make it that much better.