Repealing Title II Classification: Scaling Back Net Neutrality As a Right Step Towards Internet Freedom

Last week, the Federal Communications Commission (FCC) took a swing at the net neutrality laws by releasing its draft order entitled Restoring Internet Freedom. If the FCC successfully votes on this next month, this Order will roll back the net neutrality laws that were enacted in 2015 under President Obama. Net neutrality proponents are bemoaning the possible end of the Internet, whereas opponents are cheering for Internet freedom. Since we live in a world prone to polarization and hyperbole, it's nice to revisit and refine arguments, so here are some points to consider as we approach the FCC's vote:

1. Title II is not the same as net neutrality. Although defining net neutrality is seemingly elusive, the best definition I found was "the government and Internet service providers providing equal treatment of all data contents, and Internet sites." You can read the piece I wrote on net neutrality three years ago here for further details and analysis. What was done during the Obama administration went beyond this definition of net neutrality. In 2015, the FCC decided to classify Internet under Title II classification. Title II is a classification per the Communications Act of 1934 that categorizes a service as a public utility. The current FCC is looking to repeal this Title II classification and return it to pre-2015 laws. I wrote on Title II classification in early 2015. I thought back then that is was a bad idea to treat the Internet like a public utility, least of all because the Internet is not a public utility nor does it function in a monopolistic market. In its policy brief on Title II (Mayo et al., 2017), the McDonough School of Business at Georgetown University illustrates how Title II makes the Internet less competitive. As the American Enterprise Institute explains in its article on net neutrality versus Title II, repealing Title II does not mean the end of net neutrality, let alone the Internet. The Internet was evolving well before the Title II classification came along in mid-2015. 
2. Net neutrality is basically a solution in search of a problem. The Internet "as we know it" was built without the Title II regulations, and did well without Title II. This is not to say that there has never been anticompetitive behavior. However, the instances of blocking or slowing down service are few and far in between. When attempting to justify net neutrality back in 2010, the FCC was only able cite four examples of anticompetitive behavior, all relatively minor (FCC, 2010, p. 17925). As the Heritage Foundation illustrates in detail, many of these cases involved challengers introducing practices that could have lowered prices for consumers. 
3. The government still has ample oversight. Net neutrality proponents provide a scary hypothetical in which ISPs block content from its competitors. Think of it as a "Wild West of the Internet" scenario. As elucidated upon in the previous point, net neutrality violations are rare. Even if the FCC stepped aside completely from regulating the Internet, the Federal Trade Commission has both the authority and knowhow to stop unfair practices (see 15 U.S. Code §45). State-level Attorney Generals also can enact their own antitrust and other consumer protection laws. 
4. Influence on telecom infrastructure investment. Research suggests that in anticipation of classifying the Internet under Title II, telecommunications companies did not invest as much capital expenditure (Ford, 2017). George Washington University economist Hal Singer estimated that ISP capital expenditures declined by $3.5B since Title II became law. Assuming that Title II had an adverse impact, removing should incentivize telecommunications companies to invest more. 
5. Price Discrimination versus Price Differentiation: Increasing Competitiveness. California Representative Ro Kahanna tweeted an infographic to illustrate the importance of net neutrality. Ironically enough, he showed how repealing net neutrality would help. Why? Because it undermines the pro-net neutrality argument. The proponents complain because charging separately will drive up prices. Let's say that I don't want to have to pay for gaming services. Instead of paying for all services, I can opt not to pay for gaming services, thereby decreasing my Internet bill. By allowing for separate charges, broadband providers can provide customers with more personalized offerings and packages. We have already seen this price differentiation play out in the mobile phone market (Greenstein and Mazzeo, 2006). 

Postscript: The FCC is more than justified in repealing Title II classification. This repeal does not mean the end of net neutrality. Even if it did, there is more than ample reason to believe that net neutrality makes for unsound economics (also see here, here, and here) that does not help the consumer (Gans and Katz, 2016; Melugin and Radia, 2017). Based on the lack of anticompetitive behavior from ISPs and broadband companies, there is a lack of ex ante justification for net neutrality (Struble and Kane, 2017).

What will help out many of the issues brought up by net neutrality proponents is more broadband competition. Instead of supporting local broadband monopolies, the government should get out of the way and allow for more broadband deployment. When compared to the European market, the light-touch approach to broadband regulation has worked well in the United States (see Harvard Business Review article here). The Title II regulations are a major barrier to Internet competitiveness and freedom, and I hope the FCC repeals Title II classification for the Internet next month.

Is There a Such Thing as a Right to Health Care? If Not, Should We Still Treat It As Such?

Health care is one of those important facets of life. It is a vital determinant for physical and mental wellbeing. It is important enough where it is a debate in the United States as to whether it is a right. In other developed countries, the government de jure provides some form of universal health, whether in the form of single-payer, two-tier, or a health insurance mandate. For those who advocate for greater government involvement, the argument is that it is a right, and that the United States should catch up with the rest of the developed world. That sentiment is growing within the United States. According to Pew Research, a majority of Americans believe that the government should be involved in providing health care for all. The question I hope to answer today is whether or not health care is a right.

This is a question that gets us into the realm of political theory and political philosophy, which means that data or studies cannot inform us in a more empirical fashion per se. One way to distinguish rights is to look at the difference between natural and legal rights. Natural rights state that rights do not come from the law, but rather are derived from human nature or a deity. Under the framework of natural rights, they are universal and innate. Under natural-rights libertarianism, for example, the idea is that the individual possesses certain natural rights, mainly that of individual sovereignty. That means that fraud or coercion are a violation of said rights. Natural-rights libertarianism comes with two major flaws. One, these rights are guaranteed according to whom? To G-d? Not everyone believes in G-d. There is no objective authority or arbitrator to determine that rights are natural. There are enough political philosophies out there that could not care less about individual sovereignty, which leads to my second point: throughout history, government has been involved in the individual's decision-making process, for better or worse (usually worse). It is for those reasons I consider myself a consequentialist libertarian, as opposed to a deontological libertarian.

That would lead us to the idea of legal rights, which means that it is the societal, economic, and political contexts that determine whether or not an individual or group of individuals has access to a certain good or service. If rights only exist in a certain socio-political context, then that means that the government can take away rights just as quickly as it granted them. Under the idea of legal rights, it would mean that the right to health care is neither an absolute nor a guarantee. That being the case, this brings up a follow-up question: should the government treat health care as if it were a natural right? Another way to ask it: should the right to health care be a legal right?

Let's start with the assumption that under the law, we should treat health care as a right. To answer the question about treating health care as a right, let's start with a practical series of questions:

1. How do we define the scope of a right to health care? Does it only entail treatment or does it include preventative health care? If it is the latter, then a lot more will have to be covered than if that right solely entails curing people of already-existing ailments. Do we include experimental or unproven tests and procedures? Should this include such procedures as cosmetic surgery or infertility treatment? The ambiguity presented in this bullet point alone brings up a point: a minimum requirement of a right should be the ability to unequivocally define it. The fact that these questions cannot be answered with certainty tells us a lot about whether health care is really a right. This is also the reason why a positive right cannot be exercised in absolute or can be scalable like a negative right can, but let's continue a bit longer with the assumption that health care is a right....
2. Who is going to pay for the right to health care? Freedom of speech does not require that someone else pays for that right, nor does it infringe upon someone else's freedom of speech. With freedom of press, journalists don't force someone else to pay for producing their publications and media. Freedom of religion can be exercised in a pluralistic way and others practice their religions without infringing upon others' right to religion. With health care, someone would have to be forced to pay for that right. When looking at it through the lens of individual rights, a right should not be conditioned on an ability to pay. The extent of how distributive the tax system would be to pay for this would be contingent upon the scope of goods services rendered [per Point #1 above]. 
3. Who is responsible for providing this right? A right to possess something implies that someone has the corollary duty to provide health care to all individuals. With the right to a fair trial, that right is provided by the judicial system and a jury of twelve peers. Who delivers under a framework of health care being a right? Do we force private-sector doctors to perform all procedures? Do we socialize government and have every medical professional be an employee of the government? This also gets messy because if health care were a positive right, then it is an imperative that resources are channeled for that purpose. Those resources include doctors, nurses, physicians, and other health care professionals being conscripted to providing those services. It is unclear as to who holds the right to provide these services, which thereby creates more doubt as to whether health care is actually a right. 
4. What sort of incentives would a right to health care create? First, let's think of this in terms of consumption. For one, how much incentive would a consumer have to take care of their own health if health care were treated as a right? They could simply get treated if/when things got bad enough instead of taking personal responsibility for their own health. Also, if a consumer has full access to all treatments at little to no cost, what incentive is there for restraint in consumption? Single-payer systems in practice show that overconsumption is a concern. If overconsumption is a concern, then that also means that medical care professionals are overextended. This is not simply a matter of doctors not being where they are most needed. What sort of disincentive would this create for people to enter the medical profession? 

The truth is that health care is not a privilege or a de facto right: it is a commodity. Not only that, health care is a finite commodity, which makes it all the more impractical to define it as a right. Food, clothing, and shelter are vital as health care is, but you don't see universal "food care." As the Cato Institute points out, there are only so many hospitals, doctors, and health care-related goods that exist. Whether it is by bureaucratic fiat (e.g., United Kingdom), waiting lines (e.g., Canada), or by higher prices (e.g., the United States), there is going to be some sort of rationing mechanism, much like there is in other markets. We have the right to use our hard-earned money to seek medical treatment. We should use our rights to help our less fortunate neighbors seek treatment. However, whether we look at it through the lens of natural or legal rights, there is no guaranteed right to health care.

Even if there were a guaranteed right, do we really want government to guarantee that right? We see what happens when health care is treated as a right under a single-payer system: overconsumption of health care, fewer choices, a limit in supply, and most importantly, an inability to contain health care costs. As a side note, these countries with single-payer have as much innovation as they have in the first place because of the spillover effects from the United States' health care innovation.

It might be a more heavily regulated market, but health care is a market with goods, services, supply, and demand.  Having a mature and rational discussion about how to ration and allocate health care is a must, but advocating for health care as a right is nothing more than political grandstanding at a time when we need to find actual ways to make health care more accessible and affordable.

Parsha Vayetze: Two Wrongs Don't Make a Right, Especially in Business Transactions

When looking at the Torah, Jacob had a very interesting life story. He starts out as fighting with his brother, Esau, in the womb (Genesis 25:26). When he grows up, he tricks Esau into giving Jacob his birthright for lentil soup (25:34). Jacob then tricks his father, Isaac, the blessing of the first-born (27:34-40). Jacob eventually has to flee his homeland because he screwed over his brother twice. He then works for his future father-in-law, Laban. Laban promises Jacob to have Rachel's hand in marriage if Jacob works for Laban for seven years. Laban pulls off a bait-and-switch by having Jacob marry his other daughter, Leah. Laban then convinces Jacob to work for Laban for another seven years. Amazingly enough, Jacob works for Laban for an extra six years (31:41). During this twenty-year period, Jacob did not receive a raise. He had his wages lowered a hundred times (31:42)! As I pointed out in a blog entry seven years ago, Jacob had every right to be angry for Laban's mistreatment of Jacob. He could have harmed Laban because Laban exploited Jacob for two decades of his life. Jacob's response is interesting. He didn't kill Laban or steal from him. Jacob rebuked Laban. What is interesting about the rebuke is not simply the fact that Jacob did not become blind with rage, but also the content of the rebuke:

Jacob spoke and said to Laban, "What is my transgression? What is my sin that you have hotly pursued me?.... These twenty years I have been with you, your ewes and she-goats never miscarried, nor did I ear rams of your flock. That which was mangled I never brought you. I myself would bear the loss, from me you would exact it, whether it was stolen by day or stolen by night. This is how I was: By day scorching heat consumed me, and frost by night; my sleep drifted from my eyes. 

-Genesis 31:36, 38-40

Laban had accused Jacob of stealing a few verses earlier, but his accusation was ultimately unjustified (Haamek Davar). Jacob unsurprisingly felt a sense of moral indignation. He recalled his hardship under Laban's service while pointing out something important: Jacob never slighted Laban in his business dealings. For one, Laban would have figured out that Jacob was being dishonest because it would not have been possible to have done so over a twenty-year period (Or HaChaim). It was not simply a matter that Jacob did not slight Laban during this period. It is also that he performed at his best for Laban. Jacob made sure the sheep had enough water and pasture so that miscarriages did not happen (Rashbam on Genesis 31:38). Jacob was so exemplary that he made sure the flocks were never attacked (R' Bachya on Genesis 31:38) and Jacob provided restitution even when he was not at fault (Sforno on Genesis 31:39). 

In the Talmud (Shabbat 31a), it states that when people die and are brought before the Heavenly Court, the first question that G-d will ask of us is whether we were honest in our business dealings. This is how important business ethics are to G-d, and fortunately for us, Jacob provides us a good example of how we should behave on the job. If there are legitimate grievances, they need to be addressed. I think that Jacob addressed them a tad too late, but that's why I said Jacob is a good example and not a perfect one. On the other hand, we still make sure we do our best when we are responsible for others' belongings and business. Jacob's example is great because it is two-fold. One, he did not steal or defraud his employer. Two, he made sure that the business ran to the best of Jacob's ability, even when it was at Jacob's expense. And given that Near Easter law custom absolved Jacob from taking responsibility in the case of a force majeure (JPS Commentary), Jacob's behavior is all the more exemplary. May we strive to be as honest and upright as Jacob was in his business dealings!     

The U.S. Doesn't Need More Patrol Agents on the Border

Since he was on the presidential campaign trail, President Trump has had an obsession with immigration, specifically with regards to border security. Trump already tried building his infamous wall on the border, a wall that will do next to nothing to benefit the United States. But for Trump, building a huge wall on the border is not enough. He wants to make sure there are more border patrol agents making sure that the border stays safe. In January, Trump signed two executive orders to hire 5,000 more border patrol agents and 10,000 more agents for Immigration and Customs Enforcement (ICE).

Trump might put on this show about how we need more border patrol agents, but the truth is that we don't need more. That's not just my opinion. Earlier this month, the Department of Homeland Security (DHS) released a policy memo saying that very thing:

Neither CBP [Custom Border Protection] nor ICE could provide complete data to support the operational need or deployment strategies for the 15,000 additional agents and officers they were directed to hire (DHS, p. 4).

If that were not enough, let us consider the amount of work that border patrol agents actually do. Back in 1986, the average border patrol agent was making 42 apprehensions a month. By 2016, that figure fell to two apprehensions a month.

Source: Custom and Border Protection (see here and here)

The fact that less apprehensions are being made per agent is not a surprise. Since 2006, there has been a net decrease in Mexican immigrants coming to the United States. Having less to do compounds the personnel issues that exist within the CBP. In its recent policy analysis, the Cato Institute outlines how CBP border patrol agents are more likely to get fired than other federal law enforcement agents. In addition to the retention challenges, CBP also has considerable hiring challenges, as are illustrated in the Brookings Institution June 2017 policy paper on the topic.

We can get into more indirectly related topics, such as how illegal immigrants/undocumented workers are nowhere near as bad as Trump makes them out to be, cutting immigration hurts the economy, or the issues behind the CBP's ability to bypass the Fourth Amendment by using the 100-mile border zone. What I will end with, though, is the following. There is no justification to increase the number of border patrol agents on the border. Even if there were, there would need to be considerable reform to address systematic operating issues before having a mass hiring of such agents. In short, the U.S. doesn't need more patrol agents on the border.


11-29-2017 Addendum: This little gem from the Government Accountability Office (GAO) shows how the resources poured into border patrol agents are not justified from an enforcement standpoint.

Humanitarian Crisis in Myanmar and a Brief Look at Economic Sanctions as a Possible Remedy

There is so much craziness that is going on in the world as of late: North Korea, Catalonian independence, mass shootings, hurricanes. It feels like a marathon keeping up with global affairs. The scale of these events have been so large that it has sadly overshadowed what is going on in Myanmar (Burma). Until recently, I was completely unaware that the Burmese army was oppressing the Rohingya, a predominantly Muslim, stateless Indo-Aryan people that primarily resided in Myanmar. The accusations of human rights infringements range from arson to gang rape to extrajudicial killings.

Prior to this humanitarian crisis, about a million Rohingya resided in Myanmar. Since then, 600,000 Rohingya have fled Myanmar to escape the oppression. The United Nations Secretary General said last Friday that it is an essential priority to stop the violence against the Rohingya, allow the Rohingya to return home, and be granted legal status. Freedom House, which is a non-governmental organization [NGO] focused on the research and advocacy of political freedom, democracy, and human rights, had something to say on the issue. Last week, Freedom House co-signed a letter with 58 NGOs to urge the U.S. government to impose targeted sanctions on Myanmar. This letter brought up an interesting question for me: how well do economic sanctions work?

A short primer on economic sanctions: Economic sanctions are commercial and financial penalties enacted by one or more country to target a certain country, group, or individual. An economic sanction can take multiple forms, including steep tariffs, quotas, restrictions on financial transactions, asset freezes or seizures, or other non-tariff barriers. Depending on the scenario, the purpose of an economic sanction can be to prevent a national security threat (e.g., North Korea), to bring about regime change, or to punish for human rights violations, as we see with Myanmar. Economic sanctions are used as an alternative to war in order to engender certain foreign policy goals. The appeal to economic sanctions is that they do not spill blood and they do not cost a lot of money to implement. Even so, there is the debate as to whether they work.

Countries that are subject to economic sanctions tend to have smaller economies. Knowing that these economics are more prone to vulnerabilities could help target these regimes. On the other hand, these same countries tend to be more corrupt, which means the target government will pillage its citizens and continue oppressing its people, even with the economic sanctions. Even then, I think the success of economic sanctions comes down to "it depends." There are multiple factors in play, including the balance of power dynamics, the decision-making process of those in charge of the target country, as well as the economic composition and levels of corruption of the target country. As the Council on Foreign Relations [CFR] brings up in its primer on economic sanctions, we can only determine correlation (as opposed to causation) since so many domestic and international factors are in play.

Based on the Peterson Institute's ranking, economic sanctions were much more successful in the 1960s, and the success waned since then. A lot of research on economic sanctions is more dated (e.g., Harvard report), such as this 1992 report from the Government Accountability Office that states that economic sanctions are not effective at the primary directive (e.g., regime change). With the example of Iran, the sanctions boosted military spending more than it hurt the Iranian economy (McDonald and Reitano, 2016). One recent report from the University of Chicago goes as far as saying that economic sanctions do not have the desired effects on the target economy (Shin et al., 2016). Calling the success of economic sanctions as mixed seems to be an understatement, but over the years, a few suggestions (primarily from the CFR) on best practices for economic sanctions have come about:

• Make sure the goals of the sanctions are targeted. Economic sanctions cannot simply be a knee-jerk reaction of the United States flexing its soft power. If the embargo on Cuba has taught us anything, the less ambitious and more targeted the sanctions are, the better. 
• Have a more comprehensive and well-rounded plan. Take Libya as an example. Not only were there economic sanctions and threats of military action, but there was also the positive inducement of financial aid in the event that Libya behaved accordingly. Many countries can weather the storm in more ways in one, so it is helpful to have multiple incentives pointing the target country in the desired direction. 
• There is also research to suggest that comprehensive sanctions have more of an impact on bilateral trade between the sanctioning and target countries than selective sanctions do (Yang et al., 2004).
• Have multilateral economic sanctions. If the United States unilaterally imposes economic sanctions, they are less likely to succeed than if multiple countries team up with the United States. Unless the United States has a monopoly in a certain market, the effect that economic sanctions will have will be less in comparison to multilateral sanctions. A 1998 report from the International Trade Commission admits that unilateral sanctions lack the transparency and discipline to be effective.

How would the sanctions work specifically for Myanmar? Sanctions on Myanmar date back to 1997, but were removed in 2016. Past sanctions on Myanmar seem to have been more targeted at select individuals. Former Burmese Deputy Minister of Commerce Pwint San admitted the success of the economic sanctions on Myanmar, and was happy to see them removed so that it could boost the economy. The counterargument against the sanctions' success is that it did not even take a year for the Burmese government to start systematically oppressing an ethnic minority. Whether another round of economic sanctions on Myanmar would be successful remains unclear. Depending on how they are targeted and who sanctions them, as well as intended goals, will affect the outcome, as will other international factors. What I do know is that if there is indeed another round of sanctions, it should be carefully crafted so it is more than a case of good intentions.

The GOP Tax Plan: The Good and Bad News of the Tax Cuts and Jobs Act

During his presidential campaign, President Trump made tax reform one of the pillars of his platform. Cutting income taxes, reducing corporate taxes, improving the child tax credit, eliminate the estate tax: these were a few of Trump's proposed ideas. The much awaited Tax Cuts and Jobs Act (TCJA) was released last Thursday. If this Act passes, it will be the largest overhaul of the U.S. tax system since the Tax Reform Act of 1986. When legislation or public policy this complex and overarching is in the process of being enacted, there are multiple facets of the bill that hardly make it a "black and white"/"either-or" statement. Nevertheless, one can make a general conclusion after looking at the individual parts. This was similar when I looked at the Trans-Pacific Partnership about a year ago, a multilateral trade agreement that Trump nixed on his first day in office. While I did not like everything in the TPP, I generally thought that the TPP was a step in the right direction for freer trade. I would like to take a look at the major provisions of the TCJA in the same spirit to analyze the components, as well as determine whether or not this would be a net benefit.

Here Is The Good News...

• No changes for 401(k) payments. There had been rumors circulating that the Republicans were going to lower or eliminate the current deduction for the 401(k). Fortunately, this did not take place because a lower deduction would have made it more difficult for people to save. 
• Lower cap on the mortgage interest deduction (MID). Starting next year, the cap on the MID would decrease from $1M to $500K. Reducing the cap is important because it reduces the percent of eligible households from 21 percent to less than 4 percent. Considering that a) the MID does not increase household ownership rates, and b) it causes other unintended consequences, I'm happy to see this make it into the bill. It doesn't downright eliminate the MID, but it is a step in the right direction. 
• Estate tax phasing out and repeal. If this TCJA passes, then the estate tax will have the exemption doubled immediately, followed by a repeal six years later. Considering how I feel about the estate tax (a.k.a. the death tax), I would consider this a win. 
• Simplified tax code. One of the things that makes the tax code burdensome is the complexity. A simpler tax code with a broadened tax base would mean less compliance costs for taxpayers and less administrative costs for the government. Not only does the TCJA reduce the number of income tax brackets from seven to four, but it also eliminates a number of tax breaks (e.g., sports stadiums, medical expense deduction, adoption tax credit).
• Elimination of the alternative minimum tax (AMT). The AMT is a supplemental, flat income tax that was created in 1969 to target millionaires in order prevent the wealthy from reducing their tax base through the use of tax preference items. However, it targets those making between $250K and $1M, as well as those in high-cost states and those with children. Since the AMT affects 30 million people, it affects more of the middle class than upper class. Additionally, the AMT is quite a complex tax, which increases compliance and administrative costs. As such, it is a good thing that AMT is being repealed. 
• Creation of a territorial tax system for business taxes. To make a long story short, I am in favor of this change in tax policy. 
• Elimination of state and local tax deduction. The state and local tax (SALT) deduction allows for taxpayers who itemize on federal income tax to deduct state and local real estate, property, and income taxes. The SALT deduction acts as an indirect federal subsidy to state and local governments in the sense that decreases the net cost of nonfederal taxes. 
• Proponents argue that repeal could end up being more regressive and allow for double taxation (although there is a counterargument on the "double taxation" argument). On the other hand, the SALT deduction acts as an indirect subsidy towards high-income, high-tax states, as well as towards higher-income individuals. Plus, the existence of SALT incentivizes states to increase taxes and government spending, thereby increasing state-level government debt.
•  Not only does the Center for Freedom and Prosperity estimate that 99.7 percent of taxpayers would benefit from this repeal, but the Heritage Foundation estimates that it would generate $1.6T of revenue over the next decade. 
• The SALT deduction for income and sales tax will be repealed, but the SALT deductions for property and business remain. 

Here is The Bad News...

• Huge deficits. The bill contains $5.8T in tax cuts and $4.3T in revenue raisers. According to the Joint Committee on Taxation, this tax plan is going to add a net $1.487T deficit over the next decade (see a policy-by-policy breakdown here). The CFRB calculates that this would increase the estimated 2027 debt-to-GDP ratio from 91 percent to 99 percent (see below). Another way of phrasing that is "debt will increase by about 9 percent with the passage of this bill." This assumes that the true cost of the TCJA is not being hidden with accounting gimmicks. 
• Because it causes a deficit, it might not get enough votes to pass. Senator Bob Corker (R-TN) already said he would not support a bill that adds to the deficit. If one more Senator feels the same way and votes accordingly, then the TCJA will not pass. 
• Senate budget rules, especially the Byrd rule, state that the budget cannot add deficits outside the next decade, which means that the TCJA will need to undergo modifications before enactment.
• The deficits are simply not an issue of a higher debt-to-GDP ratio. As the Brookings Institution points out, this is bad fiscal policy. Right now, we are near full employment, which means we should be running a surplus. This is the time for contractionary fiscal policy, not expansionary. 

• Corporate tax rate reform will not be enough. Under this plan, the corporate tax rate is to decrease from 35 to 20 percent. Needless to say, I'm all for lowering the corporate tax (see here and here). Even so, there is still a question of how assets overseas are treated in order to get a sense of the overall corporate tax plan. But that is not the only concern. Per the previous point, the deficit is causing procedural issues with the TCJA passing. For this Act to pass, there will need to be deficit reduction. The best way to achieve less deficit is weakening the corporate tax reform, which means that this reduction will only be temporary and have minimal effect. 
• Employer-sponsored health insurance. The employer-sponsored health insurance tax break is the largest in the tax code, and yet it remains untouched. Employer-sponsored health insurance has multiple adverse effects, including driving up health costs, causing excess consumption in health care goods and services, incentivizing employers to offer more expensive plans instead of offering higher wages, and exacerbating income inequality. If you want a good reason as to why health care costs are higher in the United States versus other countries, this tax break is a major reason. 
• Some lower- and middle-class households will have higher taxes while the rich benefit. There is a lot in play in the TCJA: child tax credit reform, the doubling of the standard deduction, the elimination of personal deductions, and raising the lowest marginal tax rate to 12 percent. Some will experience tax increases, others tax deductions, and for some, it will not change. It really depends on multiple factors, including income bracket, geographic location, size of household, and composition of household. The Tax Policy Center found that 28 percent of households will have their taxes raised, whereas the JCT puts the figure at 18 percent. 
• 11-10-2017 Addendum: The Tax Policy Center had to retract and reissue its report on the TCJA. It found that only 7 percent of households will experience tax increases in 2018. However, that number will increase to 25.5 percent by 2027 (See below). 

• There is a complaint that the top 1 percent would reap 50 percent of the tax cuts (Institute on Taxation and Economic Policy). On the other hand, the top 1 percent pay nearly 40 percent of all income taxes. On the other hand, our tax system is more progressive than other countries, which is why, in large part, the rich benefit more from tax reform. 

Source of Graph: Slate

• Increase the child tax credit. I have commented on the Child Tax Credit (CTC) before, and I am not a fan (see here and here). The modifications of the CTC not only make the current flaws of the CTC more pronounced, but it will add an extra $640B to the debt over the next decade (JCT). 
• Modified education savings plan. The Coverdell Education Savings Account is a tax-deferred trust account that encourages parents to save for future education costs. This Savings Account is to be rolled into the 529 savings plan (see here for difference between Coverdell and 529). The people over at Heritage Foundation were thrilled about rolling the Coverdell into the 529 because it supposedly encourages education choice. I do not share this enthusiasm. As the Brookings Institution illustrates, the 529 savings plan drives up the very college costs that it was meant to help meet. This is no surprise since federal loan subsidies for college do the very same thing (see here and here). Needless to say, this does not leave me inspirited about higher education costs. 
• Graduate Students: Tax Exemption. If you are a graduate student, you might end up paying more under the TCJA. The TCJA is expected to roll back or eliminate tax breaks used by graduate students who are research or teacher assistants. About 177,000 students use the Qualified 117(d) Reduction. If repealed, it could cost these students an average of $2,000 a year, which adds up for those in years-long PhD programs. 

Conclusion
There are quite a few features of the TCJA that I like, and I am happy to see a bill address some major issues with the tax code. At the same, I think still comes with major issues, the foremost being that of increasing the deficit. Don't get me wrong. High tax rates have an adverse effect on the economy (e.g., here), but at the same time, tax cuts are only part of the solution. Without reduced spending, tax cuts become tax-shifting, which means that we would pay with higher tax rates in the future. Even the libertarian Cato Institute and Mercatus Center acknowledge that real tax reform is not about lowering or eliminating tax deductions, but rather about raising revenue in the least distorting way possible with the longer-term goal of paying off debt so we don't get pummeled by it in the future. Plus, lowering taxes while raising spending is one of the worst ways to go about fiscal policy since it exacerbates the debt-to-GDP ratio.

If I had to grade the TCJA as a whole, I would give it a B/B-. Yes, it takes a serious attempt at tax reform. At the same time, it increases debt. Additionally, it does not even address the largest tax exemption, the very one that needlessly drives up our healthcare costs. I would feel much better if the TCJA were more revenue-neutral and eliminated the deduction for employer-sponsored insurance. Even so, there is an argument to be made that the TCJA allows for revenue to be collected in a more efficient and less destructive manner.

Furthermore, the Tax Foundation is estimating that on net, it will create more jobs and create bigger tax cuts on average. Like any major bill, there are going to be winners and losers. We also know that this is not the final version (especially since it creates a deficit, not to mention that the Senate version needs to line up with the House version). At the same time, we have a sense of where Republicans are going with tax reform. I definitely think some modifications are in order, but I am happy to see that Congress making a concerted effort to make taxation a simpler, more efficient process.

Parsha Vayera: Abraham's Argument About Sodom and Building a Relationship with G-d

Sometimes it seems difficult to have a relationship with G-d. One reason has to do with the very nature of G-d. After all, G-d is Infinite, Transcendent Oneness. In that respect, G-d is completely other. At least from a Jewish standpoint, mysticism is an attempt to bridge that gap and understand that which is incomprehensible. Fortunately, we don't have to go towards something as esoteric or abstract as mysticism. We can simply take a look at this week's Torah portion. In this week's Torah portion, we see an exchange between Abraham and G-d about the fate of Sodom (Genesis 18:17-33). This is the famous scene where G-d announces that He is going to destroy Sodom and Gomarrah. Abraham pleads with G-d to save the cities for the sake of the righteous. Abraham is able to successfully bargain with G-d and asks that G-d save the cities provided there are ten righteous men. G-d agrees, but as the story goes, the cities are ultimately destroyed since there are not even ten righteous men.

What I find interesting about this passage it that provides some guidance for how to have a relationship with G-d. Since G-d is this powerful, all-knowing being, He is clearly higher in the hierarchy. In that respect, G-d sets the tone for how to have a relationship with Him. G-d allows for us to have a relationship with Him, and we see that from this passage. How so? For one, G-d wonders if He should hide the announcement of destroying Sodom from Abraham (Genesis 18:17). G-d is not asking for Abraham's input or assumes that it would influence divine judgement. Nevertheless, G-d expresses concern about Abraham's opinion and whether He should let Abraham know. This concern implies that Abraham's potential reaction could have longer-term implications for their relationship.

The second point is that G-d "goes down to Sodom" (Genesis 18:20) before formally rendering a verdict. Rashi teaches that G-d did not literally ascend because G-d is not only omnipresent, but He is all-knowing. Rather, it is to teach us that a judge must not give a verdict in a court case without examining the evidence. If Abraham is expected to behave justly and righteously, Abraham needs to see that behavior exhibited by G-d. It is at this point in the story that G-d is setting the tone for a more profound relationship between Him and Abraham. Once we see G-d opening the door, we see Abraham walk through and give us a few pointers on how to interact with G-d:

1. Abraham was "but dust and ashes" (Genesis 18:27). Humility is a recurring theme throughout the Hebrew Scriptures (Tanach), and this verse illustrates Abraham's humility. The prophet Micah (6:8) teaches us what G-d requires from us, and it's not sacrifices. G-d teaches that we should act justly, love mercy, and finally, walk humbly with G-d. We see Abraham walk humbly with G-d when he refers to himself as "dust and ashes." 
2. Abraham remained standing before G-d (Genesis 18:22). How could Abraham be humble and remain standing before G-d?  In a religion such as Islam, practitioners are prostrated before G-d to act humbly. Not so in Judaism. R. Simcha Bunim of Peshischa, an 18th-century Hasidic rabbi, attempts to resolve the paradox. He taught that we should carry two notes in our pockets. The first should be the aforementioned verse from Genesis 18:27: "I am but dust and ashes." The second should say "For my sake was the universe created" (Mishnah Sanhedrin 4:5). Remember, Moses was "very humble," but his humility did not stop him from leading the Jewish people. It was a necessary component. It reminds us that humility is not about being weak or meek, but rather about having a balanced and accurate understanding of the self. It is with that humility that Abraham remains standing before G-d. 
3. G-d wants us to argue and be engaged (Genesis 18:23-32). The fact that Abraham has this argument with G-d says a lot. One is that Abraham should be engaged with the process. The fact that Abraham was able to negotiate with G-d, and get the number of required righteous people down from 50 to 10 says a lot about the process. It is not as if Abraham was going to let the people of Sodom and Gomorrah completely off the hook. He stopped at ten, which shows how we have give and take in any relationship, including that with G-d. 
4. Our definition of justice goes beyond what happens in the home (Genesis 18:24). The passage asks if there are 50 righteous in "the midst of the city" (בתוך העיר). This phrase teaches us that righteousness is not about what we do privately, but how we treat others publicly. Furthermore, righteousness is still a standard to abide by, regardless of the environment (Artscroll). 
5. We are to intercede for others, regardless of their shortcomings (Genesis 18:23-24). How those of Sodom behaved was the antithesis of Abraham. Sodom sinned because they were prideful and did not care for the poor or needy (Ezekiel 16:48-49). Abraham was the opposite of Sodom. Nevertheless, he negotiated with G-d on their behalf. This shows the vigor and tenacity that we should argue with G-d (R. Avigdor Miller).

In a sense, our relationship with G-d is to be one of balance. We take into account the idea of justice, as well as love, thereby creating mercy. We are to balance our inferiority to G-d while acknowledging that we are still created in His Image. We are to argue with G-d, but there is still a point that even after the arguing and negotiating, that one eventually accepts. If this exchange is to remind us of anything, it is that building a relationship with G-d is complicated. We might not completely accept or agree with what is to happen or does happen, but it does not mean we cannot develop a meaningful relationship with G-d. It just means it's not as straightforward as some would like to think.